Landamerica Financial Group Inc – ‘S-3’ on 1/8/98

As of:  Thursday, 1/8/98   ·   Accession #:  1002105-98-1   ·   File #:  333-43913

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Registration Statement for Securities Offered Pursuant to a Transaction   —   Form S-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-3         S-3 Filed by Lawyers Title Corporation               153    814K 
 2: EX-5        Exhibits 5.1 and 23.1                                  1      6K 
 3: EX-23       Exhibit 23.2                                           1      6K 
 4: EX-23       Exhibit 23.3                                           1      6K 

S-3   —   S-3 Filed by Lawyers Title Corporation
Document Table of Contents

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        As filed with the Securities and Exchange Commission on January 8, 1998.
                                         Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-3
REGISTRATION STATEMENT
 UNDER
THE SECURITIES ACT OF 1933
____

 LAWYERS TITLE CORPORATION
(Exact name of registrant as specified in its charter)

    Virginia                                  54-1589611
(State or other jurisdiction of                   (I.R.S. Employer    
incorporation or organization)                 Identification Number) 

6630 West Broad Street
Richmond, Virginia 23230
(804) 281-6700
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

 Russell W. Jordan, III, Esquire
 Lawyers Title Corporation
6630 West Broad Street
Richmond, Virginia 23230
(804) 281-6700
 (Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies of Communications to:

Theodore L. Chandler, Jr., Esquire             Joseph L. Seiler III, Esquire    
  Robert E. Spicer, Jr., Esquire          LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Williams Mullen Christian & Dobbins                125 West 55th Street         
1021 East Cary Street, 16th Floor             New York, New York 10019-5389   
Richmond, Virginia 23219                                              

         Approximate  date of  commencement  of proposed sale to the public:  as
soon as practicable after the Registration Statement becomes effective.         
         If the only securities  being registered on this Form are being offered
pursuant to dividend or interest  reinvestment plans, please check the following
box. [ ]                                                                        
         If any of the  securities  being  registered  on  this  Form  are to be
offered  on a  delayed  or  continuous  basis  pursuant  to Rule 415  under  the
Securities Act of 1933,  other than  securities  offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]           
         If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. [ ]                     
         If this  Form is a  post-effective  amendment  filed  pursuant  to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act  registration   statement  number  of  the  earlier  effective  registration
statement for the same offering. [ ]                                            
         If the delivery of the  prospectus  is expected to be made  pursuant to
Rule 434, please check the following box. [ ]                                   

 CALCULATION OF REGISTRATION FEE

                                                        [Enlarge/Download Table]


===================================== ====================== ======================= ======================= =====================
       Title of Each Class of                Amount             Proposed Maximum        Proposed Maximum                          
           Securities to                      to be              Offering Price            Aggregate              Amount of       
           be Registered                  Registered(1)           Per Share(2)         Offering Price(2)       Registration Fee   

===================================== ====================== ======================= ======================= =====================
                                                                                                                                  
Common Stock,  no par value             2,012,500 Shares             $31.66               $63,715,750              $18,797        
Rights to Purchase Series A Junior                                                                                                
  Participating Preferred Stock, no                                                                                               
  par value                             2,012,500 Rights              N/A                     (3)                    (3)          
===================================== ====================== ======================= ======================= =====================

(1)  Includes 262,500 shares which the Underwriters  have the option to purchase
to cover over-allotments, if any.                                     
(2)  Pursuant to Rule 457(c),  the  offering  price is based upon the average of
     the high ($31.9375) and low ($31.375) prices reported on the New York Stock
Exchange Composite Tape on January 5, 1998.                           
(3)  The Rights to Purchase Series A Junior  Participating  Preferred Stock will
     be  attached  to and will  trade with the  shares of Common  Stock  offered
     hereby. Value attributable to such Rights, if any, will be reflected in the
market price of the shares of the Common Stock.                       

The Registrant hereby amends this  Registration  Statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this Registration  Statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933  or  until  the  Registration  Statement  shall  become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.                                                                  

================================================================================

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Information   contained  herein  is  subject  to  completion  or  amendment.   A
registration  statement  relating  to these  securities  has been filed with the
Securities  and Exchange  Commission.  These  securities may not be sold nor may
offers to buy be accepted prior to the time the registration  statement  becomes
effective.  This  prospectus  shall  not  constitute  an  offer  to  sell or the
solicitation of an offer to buy nor shall there be any sale of these  securities
in any state in which such offer,  solicitation  or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.   

PROSPECTUS                                                                      
________ __, 1998                                                               
Subject to Completion, Dated ________ __, 1998

1,750,000 Shares

[LOGO]

 LAWYERS TITLE CORPORATION
Common Stock

         All of the 1,750,000  shares of Common Stock, no par value (the "Common
Stock"),  offered  hereby  (the  "Shares")  are  being  sold  by  Lawyers  Title
Corporation  (the  "Company").  The Common Stock is listed on the New York Stock
Exchange under the symbol "LTI" ("LFG" upon consummation of the Acquisition,  as
defined below).  On January 2, 1998, the closing sales price of the Common Stock
as reported on the New York Stock Exchange  Composite Tape was $31.69 per share.
See "Price Range of Common Stock and Dividends."                                

         The net proceeds of this offering (the  "Offering") to the Company will
be used to fund part of the cash  portion of the  consideration  for the pending
acquisition  (the  "Acquisition")  by the  Company  of  Commonwealth  Land Title
Insurance Company and Transnation Title Insurance Company (collectively referred
to as  "Commonwealth/Transnation")  from Reliance  Insurance Company ("RIC"),  a
subsidiary of Reliance Group Holdings, Inc. Consummation of the Acquisition is a
condition to the consummation of the Offering. See "The Acquisition" and "Use of
Proceeds."                                                                      

         See "Risk  Factors"  beginning on page 14 for a  discussion  of certain
factors that should be considered in connection with an investment in the Common
Stock.                                                                          

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
 SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 

--------------------------------------------------------------------------------
                          Price           Underwriting              Proceeds
                        to the           Discounts and              to the
                          Public          Commissions(1)            Company(2)
--------------------------------------------------------------------------------
Per Share..........        $                 $                          $       
Total (3)..........        $                 $                          $       
--------------------------------------------------------------------------------

(1)  The  Company  has agreed to  indemnify  the  Underwriters  against  certain
     liabilities,  including  liabilities  under the  Securities Act of 1933, as
amended. See "Underwriting."                                          
(2)  Before deducting expenses,  estimated at $430,000,  which,  pursuant to the
     terms of the  Acquisition,  will be deducted  from  amounts  payable to RIC
thereunder. See "Use of Proceeds."                                    
(3)  The Company has granted the Underwriters an option,  exercisable  within 30
     days after the date of this  Prospectus,  to purchase  up to an  additional
     262,500  shares  of  Common  Stock,  at  the  Price  to  the  Public,  less
     Underwriting Discounts and Commissions, solely to cover over-allotments, if
     any. If such option is  exercised  in full,  the total Price to the Public,
     Underwriting  Discounts and Commissions and Proceeds to the Company will be
$________, $________ and $________, respectively. See "Underwriting." 

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

         The  Shares   offered   hereby  are  being   offered  by  the   several
Underwriters,  subject to prior sale,  when, as and if delivered to and accepted
by the  Underwriters  and subject to various prior  conditions,  including their
right to reject orders in whole or in part. See  "Underwriting."  It is expected
that  delivery  of the Shares  will be made in New York,  New York,  on or about
________ __, 1998.                                                              

Donaldson, Lufkin & Jenrette                                                    
Securities Corporation                                              
Furman Selz             
                        Wheat First Butcher Singer
                                                             Ferris, Baker Watts
                                                              Incorporated

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 LAWYERS TITLE CORPORATION
 OPERATING TERRITORY

 [Map of United States showing existing operations
of the Company and Commonwealth/Transnation]

*   Lawyers Title Offices                                                       

*   Commonwealth/Transnation Offices                                            

         The map above sets forth,  as of January 7, 1998,  the locations of the
direct  operations  and  national  sales  offices  of  both  Lawyers  Title  and
Commonwealth/Transnation,  excluding offices of independent  agents and approved
attorneys. The map assumes consummation of the Acquisition.                     

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         CERTAIN   PERSONS   PARTICIPATING   IN  THIS  OFFERING  MAY  ENGAGE  IN
TRANSACTIONS  THAT  STABILIZE,  MAINTAIN  OR  OTHERWISE  AFFECT THE PRICE OF THE
COMMON STOCK.  SPECIFICALLY,  THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH
THE OFFERING, AND MAY BID FOR, AND PURCHASE,  SHARES OF COMMON STOCK IN THE OPEN
MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."              

         THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE  SOLICITATION
OF AN  OFFER TO BUY  SECURITIES  IN ANY  JURISDICTION  IN  WHICH  SUCH  OFFER OR
SOLICITATION  IS  UNLAWFUL.  THERE  ARE  RESTRICTIONS  ON THE  OFFER AND SALE OF
SECURITIES IN THE UNITED  KINGDOM.  ALL  APPLICABLE  PROVISIONS OF THE FINANCIAL
SERVICES  ACT 1986 AND THE PUBLIC  OFFERS OF  SECURITIES  REGULATIONS  1995 WITH
RESPECT TO ANYTHING DONE BY ANY PERSON IN RELATION TO ANY SECURITIES IN, FROM OR
OTHERWISE   INVOLVING   THE  UNITED   KINGDOM   MUST  BE  COMPLIED   WITH.      

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

 AVAILABLE INFORMATION

         The  Company  is  subject  to  the  informational  requirements  of the
Securities  Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),  and in
accordance therewith files reports,  proxy statements and other information with
the Securities and Exchange Commission (the "Commission").  Such reports,  proxy
statements  and other  information  filed by the  Company can be  inspected  and
copied at the public reference  facilities  maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,  D.C. 20549-1004, and
at the following Regional Offices of the Commission: New York Regional Office, 7
World Trade Center,  Suite 1300, New York,  New York 10048 and Chicago  Regional
Office, 500 West Madison Street, Suite 1400, Chicago,  Illinois 60661. Copies of
such materials can also be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street,  N.W.,  Judiciary  Plaza,  Washington,  D.C.
20549-1004,   at  prescribed   rates.  The  Commission   maintains  a  Web  site
(http://www.sec.gov)   that  contains   reports,   proxy  statements  and  other
information regarding registrants, such as the Company, that file electronically
with the Commission.  The Common Stock is listed on the New York Stock Exchange,
Inc. (the "NYSE"),  and such reports,  proxy  statements  and other  information
relating  to the Company can also be  inspected  at the offices of the NYSE,  20
Broad Street, New York, New York 10005.                                         

         This Prospectus  constitutes a part of a registration statement on Form
S-3 (the  "Registration  Statement")  filed by the Company  with the  Commission
under  the  Securities  Act of 1933,  as  amended  (the  "Securities  Act").  As
permitted by the rules and regulations of the Commission,  this Prospectus omits
certain  information  contained  in  the  Registration  Statement.  For  further
information,  reference is hereby made to the Registration  Statement and to the
exhibits  thereto,  which may be  inspected  and copied in the manner and at the
locations described above.  Statements contained herein concerning provisions of
any document filed as an exhibit to the Registration Statement,  incorporated by
reference  into this  Prospectus or otherwise  filed with the Commission are not
necessarily  complete,  and each such  statement is qualified in its entirety by
reference to the copy of such document filed with the Commission.               

 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The  following  reports  and other  documents  previously  filed by the
Company with the Commission under the Exchange Act are incorporated by reference
into this Prospectus:                                                           

         (a)      the  Company's  Annual  Report on Form 10-K for the year ended
December 31, 1996 (the "Form 10-K");                                            

         (b)      the portions of the Company's  Proxy  Statement for the Annual
Meeting of  Shareholders  held on May 20,  1997 that have been  incorporated  by
reference into the Form 10-K;                                                   

         (c)      the Company's  Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997;                     

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         (d)      the Company's  Current  Reports on Form 8-K filed September 2,
1997, November 20, 1997 and December 23, 1997;                                  

         (e)      the  description of the Common Stock and associated  preferred
share purchase rights contained in the Registration  Statement on Form 8-A dated
September  29, 1995 and filed October 2, 1995, as amended by Amendment No. 1 and
Amendment  No.  2  thereto,  dated  August  29,  1997  and  December  23,  1997,
respectively,  and filed September 2, 1997 and December 23, 1997,  respectively;
and                                                                             

         (f)      the  Company's  preliminary  Proxy  Statement  for the Special
Meeting of Shareholders  to be held in February 1998,  filed with the Commission
on December 24, 1997.                                                           

         All  reports  and other  documents  filed by the  Company  pursuant  to
Sections  13(a),  13(c),  14 or 15(d) of the Exchange Act after the date of this
Prospectus  and prior to the  termination  of the offering  contemplated  hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such  reports  and other  documents.  Any
statement contained herein or in a report or document  incorporated or deemed to
be incorporated by reference into this Prospectus shall be deemed to be modified
or  superseded  for purposes of this  Prospectus  to the extent that a statement
contained  herein  (or in any other  subsequently  filed  document  that also is
incorporated  or deemed to be  incorporated  by reference into this  Prospectus)
modifies or supersedes such previous  statement.  Any such statement so modified
or  superseded  shall not be deemed,  except as so  modified or  superseded,  to
constitute a part of this Prospectus.                                           

         The Company will provide,  without charge,  to each person to whom this
Prospectus  is delivered,  on the written or oral request of any such person,  a
copy of any or all of the foregoing  documents  incorporated  by reference  into
this Prospectus  (other than certain exhibits to such  documents).  Requests for
such copies should be directed to Russell W. Jordan, III, Esquire, Secretary and
General Counsel,  Lawyers Title Corporation,  6630 West Broad Street,  Richmond,
Virginia 23230, telephone number (804) 281-6700.                                

 FORWARD-LOOKING AND CAUTIONARY STATEMENTS

         Certain  information that is included or incorporated by reference into
this  Prospectus  includes  "forward-looking  statements"  within the meaning of
Section 27A of the  Securities  Act and Section 21E of the Exchange  Act.  Among
other things,  these statements relate to the financial  conditions,  results of
operations  and  businesses  of the  Company and  Commonwealth/Transnation  and,
assuming the  consummation of the  Acquisition,  the combined  operations of the
Company  and  Commonwealth/Transnation   (the  "Combined  Company"),   including
statements  relating to: (i) the cost savings and accretion to reported earnings
that will be realized from the  Acquisition;  and (ii) the  potential  impact on
financial  ratios,  margins,  revenues  and  profitability  as a  result  of the
Acquisition.  These  forward-looking  statements  are  generally  identified  by
phrases such as "the Company expects" or words of similar import.  These forward
looking  statements  involve certain risks and  uncertainties  and other factors
that may cause the actual results,  performance or achievements to be materially
different  from any future  results,  performance or  achievements  expressed or
implied by such forward-looking statements, as discussed in the sections of this
Prospectus in which they appear and in the documents  incorporated  by reference
into this Prospectus.  Further, any such statement is specifically  qualified in
its  entirety by the  following  cautionary  statements  and the "Risk  Factors"
appearing elsewhere in this Prospectus. See "Risk Factors."                     

         In  connection  with the  Acquisition,  factors  that may cause  actual
results to differ  materially from those  contemplated  by such  forward-looking
statements   include  the  following:   (i)  expected  costs  savings  from  the
Acquisition cannot be fully realized or realized within the expected time frame;
(ii) costs or  difficulties  related to the integration of the businesses of the
Company and  Commonwealth/Transnation  are greater than expected; (iii) revenues
following the Acquisition are lower than expected;  (iv) competitive pressure in
the title  insurance  industry  increases  significantly;  (v) general  economic
conditions,  either  nationally  or in one or more of the  states  in which  the
Combined  Company will conduct  business,  are less favorable than expected;  or
(vi) legislation or regulatory changes adversely affect the businesses conducted
by the Combined Company.                                                        

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         In connection  with the title  insurance  industry in general,  factors
that may cause actual results to differ  materially  from those  contemplated by
such  forward-looking  statements  include  the  following:  (i)  the  costs  of
producing  title  evidence are relatively  high,  whereas  premium  revenues are
subject  to  regulatory  and  competitive  restraints;  (ii) the amount of title
insurance  business  available is influenced by housing starts,  housing resales
and commercial real estate transactions;  (iii) real estate activity levels have
historically  been cyclical and are influenced by such factors as interest rates
and the  condition  of the  overall  economy;  (iv) the  value of the  Company's
investment portfolio is subject to fluctuation based on similar factors; (v) the
title insurance  industry may be exposed to substantial  claims by large classes
of claimants;  and (vi) the industry is regulated by state laws that require the
maintenance  of minimum  levels of capital  and surplus  and that  restrict  the
amount of dividends  that may be paid by the  Company's  insurance  subsidiaries
without prior regulatory approval.                                              

         The Company cautions that the foregoing lists of important  factors are
not  exclusive.  The Company does not  undertake  to update any  forward-looking
statement that may be made from time to time by or on behalf of the Company.    

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

         Upon consummation of the Acquisition, the Company will own, directly or
indirectly,  all of the  shares of  capital  stock of  certain  title  insurance
companies domiciled or deemed  commercially  domiciled in the states of Alabama,
Arizona,  California,  Florida,  Maryland,  New Jersey,  New York, Ohio, Oregon,
Pennsylvania,  Tennessee,  Texas and Virginia. The insurance laws of such states
require prior approval by their respective state insurance  regulatory officials
of  any  acquisition  of  control  of a  domestic  (or  commercially  domiciled)
insurance  company or any company  which  controls a domestic  (or  commercially
domiciled)  insurance company.  "Control" is generally presumed to exist through
the ownership, direct or indirect, or the holding of proxies with respect to 10%
(5% in Alabama and  Florida) or more of the voting  securities  of an  insurance
company or of any company which controls an insurance company.  Any purchaser of
Common Stock holding the power to vote 5% or more of the  outstanding  shares of
Common Stock will be presumed to have acquired control of the Company's  Alabama
and Florida title insurance company subsidiaries unless the insurance regulatory
official of those states,  following  application by such purchaser,  determines
otherwise;  and any  purchaser of 10% or more of such shares will be presumed to
have acquired  control of the Company's  title  insurance  company  subsidiaries
domiciled or commercially  domiciled in any of the other named states unless the
relevant  insurance   regulatory   official  of  such  other  state,   following
application by such purchaser, determines otherwise.                            

         No action has been or will be taken in any  jurisdiction by the Company
or by any Underwriter that would permit a public offering of the Common Stock or
possession or distribution of this Prospectus in any  jurisdiction  where action
for that  purpose is  required,  other than in the United  States.  Persons into
whose  possession  this  Prospectus  comes are  required  by the Company and the
Underwriters to inform  themselves  about and to observe any  restrictions as to
the offering of the Shares and the distribution of this Prospectus.             

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PROSPECTUS SUMMARY

         The following summary is qualified in its entirety by the more detailed
information and financial  statements  appearing  elsewhere in this  Prospectus.
Unless  otherwise  indicated,  all  information  in this  Prospectus  assumes no
exercise  of  the  Underwriters'   over-allotment  option.  Unless  the  context
otherwise requires, (i) the "Company" refers to Lawyers Title Corporation,  (ii)
"Lawyers  Title" refers to Lawyers Title  Insurance  Corporation,  the Company's
principal operating subsidiary, (iii) "Commonwealth" refers to Commonwealth Land
Title  Insurance  Company,   (iv)  "Transnation"  refers  to  Transnation  Title
Insurance  Company,  (v)  "Commonwealth/Transnation"   refers  to  the  combined
operations of Commonwealth and Transnation,  (vi) the "Combined  Company" refers
to   the    post-Acquisition    combined   operations   of   the   Company   and
Commonwealth/Transnation,  (vii)  "Reliance"  refers to Reliance Group Holdings,
Inc.,  (viii)  "RIC"  refers to Reliance  Insurance  Company,  a  subsidiary  of
Reliance, (ix) all of the foregoing defined terms refer to such corporations and
their  respective  subsidiaries  and  (x)  all  financial  information  in  this
Prospectus  is  presented  in  accordance  with  generally  accepted  accounting
principles  ("GAAP"),  unless  specified as being in accordance  with  statutory
accounting practices.                                                           

 The Company

         The Company, through its principal operating subsidiary, Lawyers Title,
is one of the largest  companies in the United States  issuing  title  insurance
policies and performing other real estate-related  services for both residential
and  commercial  real estate  transactions,  based on premium and fee  revenues.
Title insurance is generally accepted as the most efficient means of determining
title to, and priority of  interests  in, real estate in nearly all parts of the
United States.  In addition to title  coverage,  Lawyers Title provides  search,
examination,  escrow and closing  services to a broad-based  customer group that
includes lenders,  developers,  real estate brokers,  attorneys and home buyers.
The Company has a strong presence in the residential real estate market and is a
premier  provider of title  insurance for  commercial  transactions.  Commercial
transactions  tend to be  more  profitable  than  residential  transactions  and
historically the volume of such  transactions has not been as directly  affected
by interest rate movements as residential business.                             

         The  Company's  long term  objective  is to become the premier low cost
national provider of diversified real estate-related services, providing a broad
array of title  insurance,  information  and closing  services for  transactions
involving the transfer and financing of real estate.  The Company's  strategy is
to  maximize  profits  by: (i)  improving  margins  through  revenue  growth and
aggressive  management of operating costs in the title insurance business;  (ii)
diversifying  its earnings  stream through the expansion of real  estate-related
services other than title  insurance  through both internal growth and selective
acquisitions;  (iii)  improving  efficiency  and  customer  service  through the
development  and  integration  of  innovative  technology  solutions;  and  (iv)
increasing  its share of the title  insurance  market  through the  provision of
responsive,  flexible  and high  quality  service to lenders,  developers,  real
estate agents,  attorneys and other real estate  professionals who influence the
placement of title insurance.                                                   

 The Acquisition

         The Company has entered  into a Stock  Purchase  Agreement by and among
the Company,  Lawyers  Title,  RIC and Reliance  dated as of August 20, 1997, as
amended and restated by an Amended and Restated Stock Purchase  Agreement by and
among  such  parties,  dated  as of  December  11,  1997  (the  "Stock  Purchase
Agreement"),  under  which  the  Company  will  acquire  all of the  issued  and
outstanding  shares of capital stock of Commonwealth  and  Transnation  from RIC
(the  "Acquisition").  With the  acquisition  of  Commonwealth/Transnation,  the
Company  will grow from the sixth  largest to the largest  title  insurer in the
U.S.,  based on pro forma  1996 title  operating  revenues  (premiums  and title
search,  escrow and other fees) of the  Combined  Company of over $1.3  billion.
Management believes that the Acquisition will afford the Company (i) significant
expense savings, (ii) a broader distribution network with added geographic reach
and  diversity,  (iii)  increased  ability  to make  and  derive  benefits  from
investments  in  technology,  (iv)  greater  product  breadth and (v) a stronger
position in the commercial title insurance business. See "The Combined Company."
Management  projects  that in the near  term the  Acquisition  will  result in a

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significant  increase  in  earnings  per  share  as  expense  savings  from  the
Acquisition  are  realized  and  that in the  long  term  the  Acquisition  will
significantly   enhance  the  Company's  competitive  position.  In  particular,
management  believes that the Acquisition will enhance the Company's position as
a low cost provider of title insurance and real estate-related services.        

         Management  anticipates  that  the  Combined  Company  will  be able to
materially  reduce annual  operating  expenses in the near term by consolidating
infrastructure,  reducing management and administrative expenses and negotiating
better  terms with third  party  vendors  in areas  such as  employee  benefits,
telecommunications and office supplies.  While title insurers generally have low
claims loss  experience  compared  to other  insurance  underwriters,  operating
expenses  tend to be  significantly  higher  due to the  costs  associated  with
maintaining  local marketing offices and production  centers,  and the personnel
required  to process  forms,  search  titles,  collect  information  on specific
properties and prepare title insurance  commitments  and policies.  By combining
the  operations  of  Lawyers  Title  and  Commonwealth/Transnation,  duplicative
headquarters will be eliminated, substantially all corporate departments will be
consolidated and the number of regional  production centers and field head count
will be  reduced.  As a result,  management  of the  Company  believes  that the
combination of the two operations will yield  recurring  pre-tax cost savings of
approximately  $40.0 million. To implement the changes necessary to realize such
earnings,  the Combined Company will incur certain expenses,  including expenses
associated  with  severance and lease  terminations.  Accordingly,  the Combined
Company anticipates that in the quarter in which the Acquisition occurs, it will
record a one-time after-tax charge to earnings ranging from approximately  $16.3
million to $19.5 million  (approximately  $25.0 million to $30.0 million  before
tax).                                                                           

         The Acquisition will significantly  broaden the Company's  distribution
network  and  increase  its  geographic  reach and  diversity.  In  addition  to
providing  geographic   diversification  of  earnings,  the  Combined  Company's
increased presence  throughout the United States and particularly in the largest
real  estate  markets  will  enable it to  better  service  the  large  national
residential  mortgage  originators  who prefer to work with title companies that
can  service  their  needs in all  geographic  locations.  This is  particularly
important  since  these  large  national   mortgage   originators  are  becoming
increasingly  dominant;  the market  share of the top ten  national  residential
mortgage originators increased from 15.3% in 1989 to 27.3% in 1996, according to
the Mortgage Market Statistical Annual for 1997 of Inside Mortgage Finance.     

         The Company believes that the continued  application of new information
technology  will enable it to lower unit costs, as well as increase the speed of
delivery of products and services to customers.  The Combined  Company will have
greater  resources to make  investments in technology and will be able to spread
such  investments  over its larger  revenue  base.  The amount  budgeted  by the
Combined  Company for  investments  in technology in 1998 is equal to the sum of
the separate pre-Acquisition technology budgets of Commonwealth/Transnation  and
the Company.  Elimination of certain  duplicative  expenditures  will enable the
Combined  Company  to fund  additional  projects  and  thereby  acquire  greater
technological  capabilities.  Technology enhancements will include the continued
automation  of  title  plants   (compilations  of  public  title  records  which
facilitate the preparation of title  reports),  the  implementation  of enhanced
title escrow productions systems, document imaging, and on-line order taking and
delivery of  information  and multiple  products to customers and lenders,  thus
streamlining paper-intensive processes.                                         

         The Acquisition  will improve the Company's market position and product
breadth in real-estate related services.  While real estate-related  services --
such as relocation services,  flood  certification,  appraisal  management,  tax
disbursement  processing services,  credit reporting and document preparation to
mortgage  originators -- presently  represent only a small part of the Company's
revenues, management believes that these services are strategically important to
the Combined Company's success and will provide an increasing  percentage of the
Company's  revenues and income in the future.  The Acquisition  will broaden the
Company's  product  offerings and enable it to better  compete for business from
national  customers.  Management  believes that the Combined  Company,  with its
broader product  offerings and customer base,  will have a stronger  competitive
position in marketing such ancillary  products and services.  The major mortgage
originators  are  increasingly  purchasing  from a limited number of vendors who
offer the full array of such products and services.                             

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         Management  believes that Lawyers  Title and  Commonwealth//Transnation
are two of the leading providers of title insurance for commercial transactions.
As a result,  the Combined Company will rank among the strongest  competitors in
the commercial title insurance market. In addition, the Combined Company will be
one of the most  strongly  capitalized  title  insurers in the industry  with an
aggregate  statutory  surplus  of  $353.0  million  as of  September  30,  1997.
Management  believes  that this  will  enhance  its  commercial  title  business
capabilities,  enabling the Combined Company to underwrite larger title policies
without having to purchase third party reinsurance. Also, management anticipates
that the increased  capital  position  will enhance the Company's  claims-paying
ability rating,  an important factor in competing for commercial title insurance
business.                                                                       

 The Stock Purchase Agreement and Related Agreements

         Pursuant to the Stock Purchase Agreement,  the Company will acquire all
of the  issued  and  outstanding  shares of capital  stock of  Commonwealth  and
Transnation  from RIC. The purchase price for  Commonwealth and Transnation will
consist of a combination  of cash from bank  financing,  shares of Common Stock,
shares of the Company's 7% Series B Cumulative  Convertible Preferred Stock (the
"Series B  Preferred  Stock") and the net  proceeds  from the  1,750,000  Shares
offered  hereunder.  In addition,  the Company,  Reliance and RIC have agreed to
enter  into a Voting  and  Standstill  Agreement  (the  "Voting  and  Standstill
Agreement") to be executed at the closing of the Acquisition  that provides for,
among other things,  the  designation by RIC of three  directors to the Board of
Directors of the Company and certain  prohibitions  and requirements on Reliance
and RIC and their affiliates with respect to (i) acquiring  additional shares of
Common  Stock or Series B Preferred  Stock,  (ii) voting  their shares of Common
Stock, (iii) selling or transferring  shares of Common Stock, shares of Series B
Preferred  Stock and shares of Common  Stock  issuable  upon  conversion  of the
Series B Preferred Stock, and (iv) converting shares of Series B Preferred Stock
into shares of Common Stock. See "The Acquisition."                             

         The  purchase  price  to be  paid  by the  Company  in the  Acquisition
consists  specifically of (i) 4,039,473  shares of Common Stock,  (ii) 2,200,000
shares of Series B Preferred Stock, which shares are initially  convertible into
4,824,561 shares of Common Stock, (iii) the greater of the net proceeds from the
sale of 1,750,000 shares offered by the Company hereunder, or $31.6 million; and
(iv) $207.5 million in cash, subject to reduction in certain  circumstances,  to
be financed by a senior credit facility in an aggregate  principal  amount of up
to  $237.5  million  with  a  group  of  financial   institutions  (the  "Credit
Facility").  The Company anticipates that the Acquisition will close in February
1998,  subject to the receipt of shareholder and regulatory  approval.  See "The
Acquisition" and "Use of Proceeds."                                             

         Upon the  consummation of the Acquisition and approval of the change in
the name of the Company by its shareholders, the Company will change its name to
"LandAmerica  Financial  Group,  Inc." The new name is  intended  to reflect the
broader  array of services and increased  geographic  coverage to be provided by
the Combined Company.                                                           

Lawyers Title and Commonwealth/Transnation

         Currently,  Lawyers Title markets through its nationwide  branch office
network, consisting of 14 National Division offices and approximately 260 branch
and closing/escrow  offices, and through  approximately 3,800 independent agents
and 36,000 approved attorneys.  Lawyers Title has two wholly owned non-insurance
subsidiaries  devoted to  computer  automation  of various  aspects of the title
insurance business, including on-line title plants, policy issuance, and closing
documentation and support functions.  In 1996, Lawyers Title further diversified
its business by engaging in two separate  joint  ventures  with third parties to
provide  employee  relocation and flood  certification  services.  Lawyers Title
conducts  business in 49 states (Iowa does not authorize title insurance) and in
the District of Columbia,  Puerto Rico, the U.S. Virgin Islands, the Bahamas and
a number of Canadian  provinces.  Lawyers Title became an independent  entity in
1991 when it was spun-off from its former  parent,  Universal  Corporation.  See
"Business -- Lawyers Title."                                                    

         The Company's  executive offices are located at 6630 West Broad Street,
Richmond, Virginia 23230, and its telephone number is (804) 281-6700.           

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         Founded in 1876, Commonwealth/Transnation is the oldest title insurance
underwriter  for  residential  and commercial  real estate in the United States.
Commonwealth/Transnation  operates  as a  single  organization  under  a  single
management  team, and comprises the third largest title  insurance  operation in
the    United    States,    based   on   1996   total    premiums    and   fees.
Commonwealth/Transnation,  through its  respective  subsidiaries  and divisions,
provides a complete  range of title and closing  services  through an  extensive
network of more than 4,000 policy-issuing locations nationwide, including branch
offices, independent agents and approved attorneys.  Commonwealth/Transnation is
organized into five regions with approximately 340 offices in 49 states, as well
as the  District of  Columbia,  Puerto  Rico and the U.S.  Virgin  Islands.  See
"Business -- Commonwealth/Transnation."                                         

The Stock Offering

Common Stock Offered by the Company.......   1,750,000 shares                   

Common Stock to be Outstanding                                                  
After the Offering (1)..................   14,757,843 shares                

Use of Proceeds...........................   The net  proceeds  of the  Offering
                                             will be  used  to fund  part of the
                                             cash  portion of the  consideration
                                             for  the  Acquisition.  If the  net
                                             proceeds  of the  Offering  are not
                                             adequate,  the  Company  expects to
                                             utilize additional borrowings under
                                             the  Credit   Facility.   See  "The
                                             Acquisition" and "Use of Proceeds."

Dividend Policy...........................   The  Company  initially  intends to
                                             continue to pay quarterly dividends
                                             of $0.05 per share of Common  Stock
                                             ($0.20  annually).  The declaration
                                             of   dividends   will   be  in  the
                                             discretion    of   the   Board   of
                                             Directors  and  subject  to certain
                                             regulatory  and other  constraints.
                                             See  "Price  Range of Common  Stock
                         and Dividends."

Conditions to the Offering................   Consummation  of the Acquisition is
                                             a condition to the  consummation of
                       the Offering.

NYSE Symbol...............................   "LTI" ("LFG" upon  consummation  of
                          the Acquisition)
------------                                                                    

(1)      Based  on  8,968,370  shares  outstanding  as of January  7, 1998,  and
includes  4,039,473  shares issuable in the Acquisition and excludes (i) 732,897
shares  issuable  upon the  exercise  of  outstanding  stock  options,  (ii) the
conversion  of the 2,200,000  shares of Series B Preferred  Stock into shares of
Common Stock,  and (iii) 262,500 shares of Common Stock which may be sold by the
Company upon exercise of the Underwriters' over-allotment option.               

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SUMMARY HISTORICAL AND
 PRO FORMA COMBINED FINANCIAL DATA

         The  following  tables  set  forth  (i)  certain  selected   historical
financial  information for the Company and certain unaudited  combined pro forma
financial  information giving effect to the Acquisition as if it had occurred on
the dates and for the periods indicated  herein,  after giving effect to the pro
forma  adjustments  described in the notes to the unaudited  pro forma  combined
financial  statements  appearing elsewhere in this Prospectus,  and (ii) certain
selected historical financial  information for Commonwealth and Transnation on a
combined  basis.  The  pro  forma  financial   information  is  not  necessarily
indicative of the results that actually would have occurred had the  Acquisition
been  consummated on the dates  indicated or that may be obtained in the future.
See "Pro Forma Condensed Combined Financial Statements (Unaudited)."            

         The historical operating results data, per share data and balance sheet
data for the  Company  are  derived  from  the  consolidated  audited  financial
statements of the Company for the five year period ended  December 31, 1996. The
historical  operating  results  data,  per share data and balance sheet data set
forth below for the nine months  ended  September  30, 1996 and 1997 are derived
from unaudited financial statements.  The unaudited financial statements include
all adjustments, consisting of normal recurring accruals only, which the Company
considers  necessary for a fair  presentation of the financial  position and the
results of operations for these periods.  Operating  results for the nine months
ended September 30, 1997 are not  necessarily  indicative of results that may be
expected for the entire year ending December 31, 1997.                          

         The  historical  operating  results  data and  balance  sheet  data for
Commonwealth  and  Transnation  on a combined basis are derived from the audited
combined financial  statements of Commonwealth and Transnation for the five year
period ended  December  31,  1996.  The  historical  operating  results data and
balance sheet data set forth below for the nine months ended  September 30, 1996
and  1997  are  derived  from  unaudited  financial  statements.  The  unaudited
financial  statements  include all  adjustments,  consisting of normal recurring
accruals only, which Commonwealth and Transnation  consider necessary for a fair
presentation  of the financial  position and the results of operations for these
periods.  Operating results for the nine months ended September 30, 1997 are not
necessarily  indicative  of results  that may be  expected  for the entire  year
ending December 31, 1997.                                                       

         All historical operating results data, per share data and balance sheet
data set  forth  below  should  be read in  conjunction  with  the  consolidated
financial  statements,  related  notes and other  financial  information  of the
Company included or incorporated by reference into this Prospectus.             

         The unaudited  pro forma  financial  data  presented do not reflect any
future events that may occur after the  Acquisition  has been  consummated.  The
Company believes that operating expense synergies of the combined  operations of
the Company and Commonwealth/Transnation  will be realized after the Company has
completed the Acquisition.  However, for the purposes of the unaudited pro forma
financial data presented herein, these synergies have not been reflected because
their realization cannot be assured.                                            

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 Lawyers Title Corporation
Summary Historical and Pro Forma Combined Financial Data

                                                        [Enlarge/Download Table]


                                                                           Years Ended December 31,                             
                                              ----------------------------------------------------------------------------------
                                                                                                                     Pro Forma  
                                                  1992          1993          1994          1995         1996         1996(1)   
                                                  ----          ----          ----          ----         ----         ----      

                                                     (Dollars in thousands, except per share and other data)                    
                                                                                                                                
Operating Results Data:                                                                                                         
  Revenues:                                                                                                                     
    Title insurance premiums................     $  389,279    $  405,080    $  413,857   $  385,871    $  456,377    $1,125,184
    Title search, escrow and other fees.....         59,274        78,965        73,200       81,490       101,381       212,731
                                                     ------        ------        ------       ------       -------       -------
    Operating revenues......................        448,553       484,045       487,057      467,361       557,758     1,337,915
    Net investment income...................         12,444        11,850        12,478       12,501        13,053        43,508
    Net realized investment gains...........         10,164         7,986         1,665        2,970        23,371       _23,717
                                                     ------        ------        ------       ------       -------       -------
        Total revenues......................        471,161       503,881       501,200      482,832       594,182     1,405,140
  Expenses:                                                                                                                     
    Salaries and employee benefits..........        118,672       137,328       143,817      155,920       184,274       390,357
    Agents' commissions.....................        199,636       192,454       205,147      167,031       192,590       548,424
    Provision for policy and contract claims                                                                                    
      (2)...................................         59,594        54,139        46,775       24,297        29,211        90,327
    General, administrative and other.......         81,395        90,995        96,492      111,724       132,567       301,764
                                                     ------        ------        ------      -------       -------       -------
        Total expenses......................        459,297       474,916       492,231      458,972       538,642     1,330,872

  Income before income taxes................         11,864        28,965         8,969       23,860        55,540        74,268
  Provision for income taxes................             --            --         2,155        6,809        19,021        25,420
                                                     ------        ------        ------       ------       -------       -------
  Net income................................      $  11,864     $  28,965      $  6,814    $  17,051     $  36,519        48,848
                                                  =========     =========      ========    =========     =========              
  Preferred stock dividends.................                                                                               7,700
                                                                                                                      ----------
  Net income available to common shareholders                                                                          $  41,148
                                                                                                                       =========

Per Share Data:                                                                                                                 
  Earnings per common and common equivalent                                                                                     
   share (3)................................        $  1.85       $  4.23       $  0.79      $  1.89       $  4.01       $  2.76
  Earnings per common share assuming full                                                                                       
   dilution (3).............................           1.84          4.21          0.79         1.87          4.01          2.48
  Operating earnings per common share                                                                                           
   assuming full dilution (4)...............           0.82          3.46          0.67         1.66          2.34          1.69
  Weighted average number of common and                                                                                         
   common equivalent shares outstanding                                                                                         
   (000s)...................................          6,424         6,853         8,606        9,039         9,102        14,891
  Weighted average number of shares assuming                                                                                    
   full dilution (000s).....................          6,437         6,876         8,607        9,099         9,118        19,732
  Dividends declared per common share.......             --       $  0.06       $  0.12      $  0.18       $  0.20       $  0.20

Other Data:                                                                                                                     
  Title policies issued.....................        812,770       923,065       866,621      670,447       790,829     2,025,484
  Title insurance operating revenues:                                                                                           
    Percentage direct operations............          43.0%         47.6%         44.1%        51.7%         53.5%         46.4%
    Percentage agency operations............          57.0%         52.4%         55.9%        48.3%         46.5%         53.6%
  Employees at period end...................          2,800         3,429         3,453        3,523         3,757         7,691

  Loss ratio (5)............................          13.3%         11.2%          9.6%         5.2%          5.2%          6.8%
  Expense ratio (6).........................          88.9%         86.7%         91.2%        92.5%         91.0%         91.1%
                                                      -----         -----         -----        -----         -----         -----
  Combined ratio (7)........................         102.2%         97.9%        100.8%        97.7%         96.2%         97.9%
                                                     ======         =====        ======        =====         =====         =====

                                                        [Enlarge/Download Table]


                                                           Nine Months Ended                    
                                                             September 30,                      
                                                ----------------------------------------        
                                                                             Pro Forma          
                                                    1996          1997        1997(1)           
                                                    ----          ----        ----              

                                         (Dollars in thousands, except per share and other data)
                                                                                                
Operating Results Data:                                                                         
  Revenues:                                                                                     
    Title insurance premiums................       $  328,438   $  353,775    $  871,697        
    Title search, escrow and other fees.....           74,503       85,769       180,744        
                                                       ------       ------       -------        
    Operating revenues......................          402,941      439,544     1,052,441        
    Net investment income...................           10,057       12,299        35,535        
    Net realized investment gains...........            5,381          120         1,307        
                                                       ------       ------       -------        
        Total revenues......................          418,379      451,963     1,089,283        
  Expenses:                                                                                     
    Salaries and employee benefits..........          137,127      148,596       322,443        
    Agents' commissions.....................          134,116      149,944       418,904        
    Provision for policy and contract claims                                                    
      (2)...................................           21,075       23,910        53,380        
    General, administrative and other.......           96,396      102,994       238,755        
                                                       ------      -------       -------        
        Total expenses......................          388,714      425,444     1,033,482        

  Income before income taxes................           29,665       26,519        55,801        
  Provision for income taxes................           10,046        9,220        19,201        
                                                       ------       ------       -------        
  Net income................................       $  19,619     $  17,299        36,600        
                                                   ==========    =========                      
  Preferred stock dividends.................                                       5,775        
                                                                               ---------        
  Net income available to common shareholders                                  $  30,825        
                                                                               =========        

Per Share Data:                                                                                 
  Earnings per common and common equivalent                                                     
   share (3)................................          $  2.16      $  1.87       $  2.06        
  Earnings per common share assuming full                                                       
   dilution (3).............................             2.14         1.85          1.83        
  Operating earnings per common share                                                           
   assuming full dilution (4)...............             1.76         1.85          1.79        
  Weighted average number of common and                                                         
   common equivalent shares outstanding                                                         
   (000s)...................................            9,097        9,231        14,973        
  Weighted average number of shares assuming                                                    
   full dilution (000s).....................            9,158        9,332        19,946        
  Dividends declared per common share.......          $  0.15      $  0.15       $  0.15        

Other Data:                                                                                     
  Title policies issued.....................          572,141      594,837     1,524,527        
  Title insurance operating revenues:                                                           
    Percentage direct operations............            54.9%        54.4%         48.3%        
    Percentage agency operations............            45.1%        45.6%         51.7%        
  Employees at period end...................            3,785        3,932         8,075        

  Loss ratio (5)............................             5.2%         5.4%          5.1%        
  Expense ratio (6).........................            90.9%        91.0%         91.5%        
                                                        -----        -----         -----        
  Combined ratio (7)........................            96.1%        96.4%         96.6%        
                                                        =====        =====         =====        

                                                        [Enlarge/Download Table]


                                                                 At December 31,                              At September 30,     
                                             ---------------------------------------------------------  ---------------------------
                                                                                                                       Pro Forma   
                                              1992       1993          1994        1995      1996            1997         1997     
                                              ----       ----          ----        ----      ----            ----         ----     
                                                                                                                                   
Balance Sheet Data:                                                                                                                
  Cash and investments...................... $  233,146 $  269,370    $  252,011 $  285,472 $  316,052   $  317,715    $  781,675  
  Total assets..............................    363,673    438,140       453,259    475,843    520,968      540,944     1,460,384  
  Total debt................................      1,218      1,165         8,872      4,146      4,200        8,216       215,716  
  Reserve for policy and contract claims                                                                                           
    (2).....................................    179,022    187,619       198,906    193,791    196,285      199,865       465,458  
  Shareholders' equity......................    143,978    201,161       203,323    238,385    262,168      281,330       640,854  
  Book value per share......................      22.26      23.90         22.89      26.83      29.49        31.51         31.61  

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(1)      The Company expects to achieve approximately $40.0 million of recurring
         annual  pre-tax  operating  cost savings  through  reductions in staff,
         consolidation  of data processing and elimination of certain  duplicate
         or excess  facilities.  It is expected  to take four  quarters to fully
         realize these expense  savings.  No adjustment has been included in the
         unaudited pro forma condensed financial  statements for the anticipated
         expense  savings.  There can be no assurance that  anticipated  expense
      savings will be achieved in the amounts or at the times anticipated.
(2)      In the fourth quarter of 1996, the Company made a change from reporting
         policy and  contract  claims on a discounted  basis to  reporting  such
         claims on an undiscounted  basis. In addition,  the Company changed its
         estimate  of  reserves  for policy and  contract  claims to reflect the
         favorable  loss  experience  that has emerged  over the past few years.
         These  changes had no material net effect on the  provision  for policy
         and  contract  claims.  See  "Lawyers  Title  Corporation  Management's
         Discussion   and  Analysis  of  Financial   Condition  and  Results  of
Operations" and "Index to Financial Statements."              
(3)      The increase in price of the Common  Stock during the third  quarter of
         1997  resulted  in  there  being   outstanding   potentially   dilutive
         securities  having a dilutive  effect in excess of 3% on the  Company's
         earnings per share for the nine months ended September 30, 1997.  Prior
         to September 30, 1997, the effect of outstanding  potentially  dilutive
         securities  was  immaterial  and   accordingly   the  Company  has  not
         previously  reported  fully  diluted  and primary  earnings  per share.
         Earnings per share as  previously  reported (as shown in the  financial
statements included herein) were as follows:                  

                                                                [Download Table]


                          At December 31,                         At September 30, 
-------------------------------------------------------------  --------------------
       1992       1993        1994       1995       1996              1996         
       ----       ----        ----       ----       ----              ----         
                                                                                   
      $ 1.88     $ 4.31      $ 0.80     $ 1.92     $ 4.11            $ 2.21        

(4)      Excludes after tax net realized investment gains.                      
(5)      Provision  for policy and contract  claims as a percentage of operating
revenues.                                                     
(6)      Total operating expenses  excluding  interest expense,  amortization of
         goodwill and provision  for policy and contract  claims as a percentage
of operating revenues.                                        
(7)      The sum of the loss ratio and the expense ratio.                       

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Commonwealth Land Title Insurance Company and 
Transnation Title Insurance Company 
Summary Historical Combined Financial Data

                                                        [Enlarge/Download Table]


                                                                      Years Ended December 31,                          
                                               -------------------------------------------------------------------------
                                                    1992         1993            1994           1995           1996     
                                                    ----         ----            ----           ----           ----     

                                                                     (Dollars in thousands, except other data)          
                                                                                                                        
Operating Results Data:                                                                                                 
  Revenues:                                                                                                             
    Title insurance premiums...................     $ 704,110    $ 747,202       $ 792,919     $ 582,329       $ 668,807
    Title search, escrow and other fees........        66,409      146,148          63,843        89,607         111,350
                                                      -------      -------         -------       -------         -------
    Operating revenues.........................       770,519      893,350         856,762       671,936         780,157
    Net investment income......................        15,126       24,224          26,455        27,933          30,455
    Net realized investment gains..............         1,576        4,786             516         1,729             346
                                                      -------      -------         -------       -------         -------
        Total revenues.........................       787,221      922,360         883,733       701,598         810,958

  Expenses:                                                                                                             
    Salaries and employee benefits.............       185,443      219,904         211,150       188,097         206,083
    Agents' commissions........................       374,419      426,885         432,041       310,729         355,834
    Provision for policy and contract claims...        68,210       81,803          75,867        58,486          61,116
    General, administrative and other..........       127,114      133,002         132,871       130,076         149,345
                                                      -------      -------         -------       -------         -------
        Total expenses.........................       755,186      861,594         851,929       687,388         772,378

  Income before income taxes...................        32,035       60,766          31,804        14,210          38,580
  Provision for income taxes...................        10,248       20,480          10,809         4,755          13,347
  Income from continuing operations............        21,787       40,286          20,995         9,455          25,233
  Income from discontinued mortgage insurance                                                                           
   operations, net of taxes....................        10,649           --              --            --              --
  Gain on disposal of discontinued mortgage                                                                             
   insurance operations, net of taxes..........         7,549           --              --            --              --
  Cumulative effect of change in accounting for                                                                         
   income taxes................................            --        1,316              --            --              --
                                                      -------      -------         -------       -------         -------
  Net income...................................      $ 39,985     $ 41,602        $ 20,995       $ 9,455        $ 25,233
                                                     ========     ========        ========       =======        ========

Common stock dividends.........................      $ 22,700     $ 19,500        $ 19,000       $ 4,000        $ 18,216

Per Share Data (1)                                                                                                      

Other Data:                                                                                                             
  Title policies issued........................     1,496,960    1,651,806       1,736,134     1,094,467       1,234,655
  Title insurance operating revenues:                                                                                   
    Percentage direct operations...............         40.0%        40.9%           35.0%         40.2%           41.4%
    Percentage agency operations...............         60.0%        59.1%           65.0%         59.8%           58.6%
  Employees at end of period...................         3,977        4,623           4,035         3,755           3,934

  Loss ratio (2)...............................          9.0%         9.3%            8.9%          8.7%            7.8%
  Expense ratio (3)............................         89.1%        87.3%           90.5%         93.5%           91.1%
                                                        -----        -----           -----         -----           -----
  Combined ratio (4)...........................         98.1%        96.6%           99.4%        102.2%           98.9%
                                                        =====        =====           =====        ======           =====

                                                        [Enlarge/Download Table]


                                                         Nine Months Ended             
                                                            September 30,              
                                                    ------------------------------     
                                                         1996            1997          
                                                         ----            ----          

                                              (Dollars in thousands, except other data)
                                                                                       
Operating Results Data:                                                                
  Revenues:                                                                            
    Title insurance premiums...................           $488,980        $517,922     
    Title search, escrow and other fees........             87,000          94,975     
                                                           -------         -------     
    Operating revenues.........................            575,980         612,897     
    Net investment income......................             22,663          23,236     
    Net realized investment gains..............                376           1,187     
                                                           -------         -------     
        Total revenues.........................            599,019         637,320     

  Expenses:                                                                            
    Salaries and employee benefits.............            153,695         173,847     
    Agents' commissions........................            263,138         268,960     
    Provision for policy and contract claims...             47,461          29,470     
    General, administrative and other..........            109,880         120,872     
                                                           -------         -------     
        Total expenses.........................            574,174         593,149     

  Income before income taxes...................             24,845          44,171     
  Provision for income taxes...................              8,520          15,192     
  Income from continuing operations............             16,325          28,979     
  Income from discontinued mortgage insurance                                          
   operations, net of taxes....................                 --              --     
  Gain on disposal of discontinued mortgage                                            
   insurance operations, net of taxes..........                 --              --     
  Cumulative effect of change in accounting for                                        
   income taxes................................                 --              --     
                                                           -------         -------     
  Net income...................................          $  16,325        $ 28,979     
                                                         =========        ========     

Common stock dividends.........................                 --        $ 21,000     

Per Share Data (1)                                                                     

Other Data:                                                                            
  Title policies issued........................            925,052         929,690     
  Title insurance operating revenues:                                                  
    Percentage direct operations...............              41.3%           43.9%     
    Percentage agency operations...............              58.7%           56.1%     
  Employees at end of period...................              3,922           4,143     

  Loss ratio (2)...............................               8.2%            4.8%     
  Expense ratio (3)............................              91.4%           91.8%     
                                                             -----           -----     
  Combined ratio (4)...........................              99.6%           96.6%     
                                                             =====           =====     

                                                        [Enlarge/Download Table]


                                               ----------------------------------------------------------  -----------------------
                                                                       At December 31,                        At September 30,    
                                                    1992       1993       1994        1995      1996         1996         1997    
                                                    ----       ----       ----        ----      ----         ----         ----    
                                                                                                                                  
Balance Sheet Data:                                                                                                               
  Cash and investments.........................    $371,808   $423,801   $416,533   $440,071   $475,430     $458,425     $463,960 
  Total assets.................................     483,198    546,968    552,390    573,820    620,754      610,119      626,532 
  Total debt...................................          --         --         --         --         --           --           -- 
  Reserve for policy and contract claims.......     173,327    200,874    228,063    240,777    264,838      262,341      265,593 
  Shareholders' equity.........................     236,262    260,863    253,466    270,737    273,657      265,833      284,116 

--------------                                                                  
(1)      Per share data for  Commonwealth  and  Transnation  are not  meaningful
         because all of the  outstanding  shares of those  companies are held by
         one  shareholder,  RIC.  Therefore,  per share data of Commonwealth and
Transnation have not been provided.                           
(2)      Provision  for policy and contract  claims as a percentage of operating
revenues.                                                     
(3)      Total operating expenses  excluding  interest expense,  amortization of
         goodwill and provision  for policy and contract  claims as a percentage
of operating revenues.                                        
(4)      The sum of the loss ratio and the expense ratio.                       

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RISK FACTORS

         Prospective  investors should carefully consider the following factors,
in addition to the other  information  presented  elsewhere in this  Prospectus,
before purchasing the Shares offered hereby.                                    

Competition                                                                     

         The title  insurance  business is very  competitive,  primarily  in the
areas of price,  service and  expertise.  For larger  commercial  customers  and
mortgage  originators,  the size and financial strength of the title insurer are
also important factors.  Although the Company expects the Combined Company to be
one of the  largest  title  insurance  organizations  in the  country,  based on
premium and fee revenues, at least five other title insurance  underwriters have
the size,  capital  base and agency  networks  to compete  effectively  with the
Company.  Also, the removal of regulatory barriers in the future might result in
new competitors, including financial institutions,  entering the title insurance
business.  Intense competition among the major title insurance companies and any
such new entrants could lower premium and fee revenues for the Combined Company.
See "Business -- Competition."                                                  

Realization of Expense Savings                                                  

         While the Combined Company expects to realize  recurring annual pre-tax
expense savings of approximately  $40.0 million over the four quarters following
the  consummation  of  the  Acquisition  from  the  elimination  of  duplicative
personnel,  facilities  and  services,  no  assurance  can  be  given  that  any
particular level of savings will, in fact, be realized or that such savings will
be realized over any particular time period. See "The Combined Company."        

Susceptibility to Change in Economic Conditions                                 

         The amount of title  insurance  business  available is dependent  upon,
among  other  things,  the volume of  commercial  and  residential  real  estate
transactions.  The volume of such  transactions has historically been influenced
by such factors as interest  rates and the health of the overall  economy.  When
interest rates are increasing,  real estate activity  typically declines and the
title insurance  industry tends to experience  lower revenues.  Accordingly,  no
assurance can be given that  historical  levels of premiums and fees received by
the Company  and  Commonwealth/Transnation  will be  available  to the  Combined
Company in the future.  See "Lawyers Title Corporation  Management's  Discussion
and Analysis of Financial  Condition  and Results of  Operations -- General" and
"Business -- Seasonality, Backlog and Cyclicality."                             

Increased Leverage                                                              

         The Company  historically  has utilized  little or no funded  debt.  To
finance the  Acquisition,  the Company has entered into the Credit  Facility and
anticipates thereby financing $207.5 million of the cash portion of the purchase
price.  This  debt,  and  the  issuance  of  Series  B  Preferred  Stock  in the
Acquisition,  will  create  increased  demands  upon the  available  cash of the
Company to pay debt service on the Credit Facility and dividends on the Series B
Preferred  Stock. No assurance can be given that such increased debt service and
preferred  stock  dividend  requirements  will not have an adverse impact on the
Company's  liquidity  and  capital  position.  See  "Lawyers  Title  Corporation
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  -- Liquidity and Capital  Resources"  and "The  Acquisition  -- Bank
Financing."                                                                     

Concentration of Share Ownership                                                

         Upon consummation of the Acquisition and the issuance by the Company of
1,750,000  shares  of Common  Stock in this  Offering,  RIC will hold  4,039,473
shares  of Common  Stock  representing  approximately  27.4% of the  issued  and
outstanding  shares of Common  Stock.  As a  result,  RIC will be a  substantial
shareholder  and,  subject  to the  limitations  of the  Voting  and  Standstill
Agreement,  will have  significant  influence on the outcome of certain  matters
requiring  a  shareholder   vote.  See  "The   Acquisition  --  Certain  Related
Agreements."  To the extent that the Company's  Articles of  Incorporation  (the
"Company's Charter") requires the affirmative vote of the holders of at         

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least  80%  of  the  Common  Stock  to  approve  certain  business   combination
transactions,  RIC and its affiliates  will be able to prevent  approval of such
transactions  so long as it holds at least  20% of the  issued  and  outstanding
shares of Common Stock. See "Description of Capital Stock -- Certain  Provisions
of the Company's Charter and Bylaws."                                           

         In addition,  upon  consummation of the  Acquisition,  RIC will acquire
shares of Series B Preferred Stock that are initially convertible into 4,824,561
shares of Common Stock. Under the terms of the Voting and Standstill  Agreement,
unless  certain  specified  events occur,  RIC and its affiliates are prohibited
from converting the Series B Preferred Stock into Common Stock until RIC and its
affiliates  dispose  completely of the 4,039,473 shares of Common Stock acquired
by RIC on the date upon  which the  Acquisition  is  consummated  (the  "Closing
Date"). See "The Acquisition -- Certain Related  Agreements" and "Description of
Capital Stock -- Series B Preferred Stock." However, if any of certain specified
events were to occur,  then RIC and its affiliates would be able to convert some
or all of the Series B Preferred  Stock into Common Stock.  If all of the shares
of Series B Preferred Stock were converted into 4,824,561 shares of Common Stock
following the  Acquisition and RIC and its affiliates had not disposed of any of
the shares of Common Stock  acquired on the Closing Date, RIC and its affiliates
would hold in the aggregate  8,864,034  shares of Common Stock, or approximately
45.3%  of  the  issued  and   outstanding   shares  of  Common  Stock  following
consummation  of all of the  transactions  contemplated  by the  Stock  Purchase
Agreement.  As a  result,  RIC and its  affiliates  would  be able to  exercise,
subject to the limitations of the Voting and Standstill  Agreement,  significant
influence  on  the  outcome  of  matters   requiring  a  shareholder  vote.  See
"Description  of Capital Stock -- Series B Preferred  Stock" and "-- Acquisition
Covenants Regarding Non-Performance Remedies."                                  

Potential Change of Control                                                     

         The  Voting  and  Standstill   Agreement  provides  that  RIC  and  its
affiliates  will vote the shares of Common Stock held by them (i) in  accordance
with the  recommendation  of the  Company's  Board of Directors  with respect to
nominees  to the  Board  of  Directors  (other  than  the  three  (3)  directors
designated  by RIC),  (ii) with  respect  to any  contest  for the  election  of
directors in  connection  with any tender offer,  in the same  proportion as the
total votes cast by or on behalf of all shareholders of the Company,  (iii) with
respect to any matters  related to share  issuance,  mergers,  acquisitions  and
divestitures,  in  accordance  with  the  independent  judgment  of RIC  and its
affiliates,  and (iv) with respect to all other matters not otherwise  provided,
in accordance with the  recommendation of the Company's Board of Directors.  See
"The  Acquisition  -- Certain  Related  Agreements."  These voting  requirements
terminate  if  certain  events  occur.  See  "Description  of  Capital  Stock  -
Acquisition Covenants Regarding Non-Performance Remedies."                      

         The  provisions  of the Series B Preferred  Stock  provide that, in the
event  of  certain  defaults  related  primarily  to  the  Company's   financial
performance and to dividend  payments on the shares of Series B Preferred Stock,
the  size of the  Company's  Board  of  Directors  will be  increased  by  three
directors and RIC will be entitled to designate  three  additional  directors to
fill the increased  seats.  In addition,  if the Company  defaults on any of its
material debt  obligations  in excess of $15,000,000 or the Company fails to pay
the stated dividend on the Series B Preferred Stock on three occasions,  whether
or not consecutive, the Company must increase the size of the Board of Directors
to allow additional directors to be designated by RIC such that the total number
of  RIC  designated  directors  will  constitute  a  majority  of the  Board  of
Directors.  See "Description of Capital Stock -- Acquisition Covenants Regarding
Non-Performance Remedies."                                                      

Dilution                                                                        

         As  discussed  under  "Dilution,"  after  giving  effect to sale of the
Common Stock offered  hereby,  purchasers in the Offering will suffer  immediate
and  substantial  dilution in the net tangible book value of their  shares.  See
"Dilution."                                                                     

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Holding Company Structure; Reliance on Dividends from Insurance Subsidiaries    

         As a holding company whose  principal  assets are the securities of its
insurance  subsidiaries,  the  Combined  Company's  ability to meet debt service
obligations and pay operating expenses and dividends, if authorized by its Board
of Directors, depends primarily on the receipt of sufficient dividends from such
insurance  subsidiaries.  The  insurance  statutes  and related  regulations  of
Virginia,  Pennsylvania and Arizona, among other states, require the maintenance
of minimum amounts of statutory capital and place certain  restrictions upon the
amount of dividends that the insurance subsidiaries may pay. See "Price Range of
Common Stock and Dividends."                                                    

         The Company's ability to pay dividends on the Common Stock will also be
subject to the  dividend  priority of the Series B  Preferred  Stock and certain
financial  covenants  relating to the Credit  Facility.  See "The Acquisition --
Bank Financing" and "Description of Capital Stock -- Series B Preferred Stock." 

Regulation                                                                      

         The  Company's  subsidiaries  are  subject to  regulation  by the state
insurance authorities of the various states in which they transact business. The
nature and extent of such regulation vary from jurisdiction to jurisdiction, but
typically involve regulation of dividend payments and other transactions between
affiliates,  prior  approval  of the  acquisition  and  control of an  insurance
company or of any  company  controlling  an  insurance  company,  regulation  of
certain  transactions  entered  into by an  insurance  company  with  any of its
affiliates,  approval of premium rates for insurance,  standards of solvency and
minimum  amounts of capital  surplus which must be  maintained,  limitations  on
types and amounts of investments, restrictions on the size of risks which may be
insured by a single  company,  licensing  of insurers  and  agents,  deposits of
securities for the benefit of policyholders,  approval of policy forms,  methods
of accounting,  establishing  reserves for losses and loss adjustment  expenses,
regulation of underwriting  and marketing  practices,  regulation of reinsurance
and filing of annual and other  reports with  respect to financial  condition or
other matters. These regulations may impede, or impose burdensome conditions on,
rate  increases or other  actions that the Company might want to take to enhance
its operating results.  Such regulation is generally intended for the protection
of policyholders  rather than security  holders.  In addition,  state regulatory
examiners perform periodic examinations of insurance companies.                 
See "Business -- Regulation."                                                   

         The  insurance  regulatory  framework  has  recently  been  subject  to
increased scrutiny by the National  Association of Insurance  Commissioners (the
"NAIC"),  state  legislators  and  insurance  regulators  in the  United  States
Congress.  No  assurance  can be given that  future  legislative  or  regulatory
changes  resulting  from such activity will not adversely  affect the Company or
its subsidiaries.                                                               

Provisions Having Possible Anti-Takeover Effects                                

         The  Company's  Charter and Bylaws and the Amended and Restated  Rights
Agreement, as well as Virginia corporation law and the insurance laws of various
states,   all  contain  certain   provisions  that  could  have  the  effect  of
discouraging  a prospective  acquiror  from making a tender offer,  or which may
otherwise  delay,  defer or  prevent a change in  control  of the  Company.  See
"Description of Capital Stock -- Preferred  Share Purchase  Rights," "-- Certain
Provisions of the Company's  Charter and Bylaws," "-- Affiliated  Transactions,"
"-- Control Share Acquisitions," and "Business -- Regulation."                  

Uncertainties Relating to Integration of Operations                             

         The Company  has entered  into the Stock  Purchase  Agreement  with the
expectation  that  the  Acquisition  will  result  in  operating  and  strategic
benefits. The anticipated benefits of the Acquisition may not be achieved unless
the  operations  of  the  Company  are  successfully   combined  with  those  of
Commonwealth/Transnation  in a  coordinated,  timely and efficient  manner,  and
there can be no assurance this will occur.  The transition to a combined company
will  require  substantial  attention  from  management.  Any  diversion  of the
attention of  management  and any  difficulties  encountered  in the  transition
process could have an adverse  impact on the revenues and  operating  results of
the Combined  Company.  The  combination of the two operations will also require
integration  of the two  organizations'  product  offerings  and systems and the
coordination of their sales and                                                 

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marketing  efforts.  Difficulties  in  assimilation  may  be  increased  by  the
necessity of  integrating  personnel  with different  business  backgrounds  and
combining  two  different  corporate  cultures.  In  addition,  the  process  of
combining the Company and Commonwealth/Transnation  could cause the interruption
of,  or a loss  of  momentum  in,  the  activities  of  either  or  both  of the
organizations' businesses,  which could have an adverse effect on their combined
operations.  There can be no assurance that either  organization will retain its
key management,  technical,  sales and marketing  personnel or that the Combined
Company will realize any of the other  anticipated  benefits of the Acquisition.
Failure  to  achieve  the   anticipated   benefits  of  the  Acquisition  or  to
successfully integrate the operations of Commonwealth/Transnation  with those of
the Company could have a material  adverse  affect upon the business,  operating
results and financial condition of the Combined Company.                        

 USE OF PROCEEDS

         The net proceeds to the Company  from the sale of  1,750,000  Shares of
Common Stock offered  hereby,  based on an assumed  offering price of $31.94 per
Share, will be approximately  $53.1 million after deducting  estimated  offering
expenses  (approximately  $61.1  million  after  deducting  such expenses if the
Underwriters exercise their over-allotment option in full). Such net proceeds to
the Company from the sale of the  1,750,000  Shares will be used to fund part of
the cash portion of the consideration payable by the Company in the Acquisition.
Pursuant to the Stock Purchase Agreement, the Company is required to pay RIC, at
the closing of the Acquisition, the greater of the net proceeds of the 1,750,000
Shares offered by the Company  hereunder,  or $31.6 million.  To the extent that
the net  proceeds  of the  Offering  are less than $31.6  million,  the  Company
expects  to  obtain  the  funds  necessary  to  complete  the  Acquisition  from
borrowings under the Credit  Facility.  See "The Acquisition -- Bank Financing."
However,  the Company  anticipates  that such  borrowings  will not be necessary
unless the public offering price of the Shares is less than $19.00 per share.   

         The Stock Purchase  Agreement requires that any additional net proceeds
to the Company from the  exercise by the  Underwriters  of their  over-allotment
option will be used to pay  transaction  costs relating to the  Acquisition  and
reduce  indebtedness  under the Credit Facility that would otherwise be incurred
to fund the Acquisition.                                                        

         The  consummation of the Acquisition is a condition to the consummation
of the Offering.  Pursuant to the Stock Purchase Agreement,  the consummation of
the  Acquisition  is conditioned  upon the Company  completing a private sale or
public offering (such as the Offering) of 1,750,000  shares of Common Stock. See
"The Acquisition - Description of the Acquisition."                             

         Pending  application  of the net proceeds  for the  purposes  described
above,  all of the net proceeds will be managed in a manner  consistent with the
Company's current investment philosophy.                                        

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 PRICE RANGE OF COMMON STOCK AND DIVIDENDS

         Since October 1995,  the Common Stock has been listed on the NYSE under
the symbol  "LTI."  Before  October  1995,  the Common Stock was listed with The
Nasdaq  National  Market  under the symbol  "LTCO." The Company has reserved the
symbol  "LFG"  on the  NYSE for use upon  consummation  of the  Acquisition  and
shareholder  approval  of the  proposed  change  in the name of the  Company  to
"LandAmerica Financial Group, Inc."                                             

         The  following  table sets forth the reported high and low sales prices
per share of the Common  Stock on the NYSE  Composite  Tape,  based on published
financial sources,  and the dividends per share declared on the Common Stock for
the calendar quarter indicated.                                                 

                                                                [Download Table]


                                                   Market Price          Dividends

                                             High                 Low             
                                                                                  
Year Ended December 31, 1995                                                      
   First quarter                            $13.25               $10.50    $0.03  
   Second quarter                            15.88                12.38     0.05  
   Third quarter                             16.63                13.50     0.05  
   Fourth quarter                            19.25                14.63     0.05  
Year Ended December 31, 1996                                                      
   First quarter                            $19.13               $16.63    $0.05  
   Second quarter                            19.88                16.00     0.05  
   Third quarter                             22.38                17.38     0.05  
   Fourth quarter                            21.75                17.63     0.05  
Year Ended December 31, 1997                                                      
   First quarter                            $23.75               $19.00    $0.05  
   Second quarter                            21.13                16.75     0.05  
   Third quarter                             33.69                18.00     0.05  
   Fourth quarter                            33.38                28.25     0.05  
Year Ended December 31, 1998                                                      
   First quarter (through January 2, 1998)  $31.75               $31.00     --    

         On August 20, 1997, the last day on which the Common Stock traded prior
to the announcement of the Acquisition, the closing price of the Common Stock as
reported on the NYSE Composite Tape was $24.63 per share.  On December 11, 1997,
the day on which the original Stock Purchase Agreement was amended and restated,
the closing price of the Common Stock as reported on the NYSE Composite Tape was
$32.19 per share.  On January 2, 1998,  the closing price of the Common Stock as
reported on the NYSE Composite Tape was $31.69 per share.                       

         The  Company's  current  dividend  policy  anticipates  the  payment of
quarterly  dividends in the future.  The declaration and payment of dividends to
holders of Common  Stock will be in the  discretion  of the Board of  Directors,
will  be  subject  to  contractual  restrictions  contained  in a  Company  loan
agreement and will be dependent upon the future  earnings,  financial  condition
and capital  requirements of the Company and other factors.                     

         Because the Company is a holding company,  its ability to pay dividends
will  depend  largely on the  earnings  of, and cash flow  available  from,  its
subsidiaries.  In a number of states,  certain of the Company's subsidiaries are
subject to regulations  that require  minimum  amounts of statutory  surplus and
that  require  that the payment of any  extraordinary  dividends  receive  prior
approval  of  the  insurance  regulators  of  these  states.  Specifically,  the
insurance  regulations of Virginia restrict the amount of dividends that Lawyers
Title can  distribute  to the  Company  in any  12-month  period  without  prior
approval.  Under  Virginia  law,  payment of  dividends  or  distributions  by a
domestic  insurer in any  12-month  period  without  the prior  approval  of the
Virginia  Department  of  Insurance  is limited to the lesser of (i) 10% of such
insurer's  surplus as of the preceding  December 31 or (ii) the net income,  not
including  realized  capital gains,  of such insurer for the preceding  calendar
year. Accordingly, under                                                        

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this and other such  statutory  requirements,  the net  assets of the  Company's
consolidated  subsidiaries  aggregating  approximately  $269.0  million were not
available for dividends, loans or advances to the Company at September 30, 1997.

         Based on statutory  financial  results for the year ended  December 31,
1996,  Lawyers Title was able to distribute to the Company in calendar year 1997
aggregate  dividends not to exceed $14.1 million  without the prior  approval of
the  Virginia  insurance  commissioner.  Based  on the  amounts  that  had  been
distributed  in the  preceding  twelve-month  period,  as of September 30, 1997,
approximately  $12.3  million  was  available  for the payment of  dividends  by
Lawyers Title pursuant to the insurance regulations of Virginia.                

         In a number of states,  Commonwealth  and  Transnation  are  subject to
regulations  that require minimum amounts of statutory  surplus and that require
that the payment of any  extraordinary  dividends  receive prior approval of the
Insurance Commissioners of these states. Specifically, the insurance regulations
of Arizona and  Pennsylvania  restrict the amount of dividends that  Transnation
and  Commonwealth,  respectively,  can distribute to RIC in any 12-month  period
without prior approval. Under Arizona law, payment of dividends or distributions
by a domestic  insurer in any  12-month  period  without  prior  approval of the
Arizona  Department  of  Insurance  is  limited to the lesser of (i) 10% of such
insurer's  statutory  surplus  as of the  preceding  December  31 or  (ii)  such
insurer's  net  investment  income  for  the  preceding   calendar  year.  Under
Pennsylvania law, payment of dividends or distributions by a domestic insurer in
any 12-month period without the prior approval of the Pennsylvania Department of
Insurance may not exceed the greater of (i) 10% of such insurer's  surplus as of
the preceding year end or (ii) the net income of such insurer for such preceding
year. Under these and other such statutory  requirements,  the net assets of the
combined companies  aggregating  approximately $284.1 million were not available
for dividends, loans or advances to RIC at September 30, 1997.                  

         Based on statutory  financial  results for the year ended  December 31,
1996,  Commonwealth  and Transnation  were able to distribute to RIC in calendar
year 1997  aggregate  dividends  not to exceed $37.3  million  without the prior
approval of state  insurance  commissioners.  Based on the amounts that had been
distributed in the preceding  twelve-month  period, as of September 30, 1997, no
additional  amounts  were  currently  available  for the payment of dividends by
Commonwealth or Transnation without prior regulatory  approval.                 

         In  addition  to  regulatory  restrictions,  the  Company's  ability to
declare dividends is subject to restrictions under a Revolving Credit Agreement,
dated as of November 7, 1997 (the "Credit  Agreement"),  between the Company and
Bank of America  National  Trust and Savings  Association  ("Bank of  America"),
which  generally  limits the  aggregate  amount of all cash  dividends and stock
repurchases  by the  Company to 25% of its  cumulative  consolidated  net income
arising after  December 31, 1996. As of September 30, 1997,  approximately  $4.3
million was  available  for the payment of  dividends  by the Company  under the
Credit Agreement. Management does not believe that the restrictions contained in
the Credit  Agreement  will, in the  foreseeable  future,  adversely  affect the
Company's  ability to pay cash dividends at the current  dividend rate. See "The
Acquisition -- Bank Financing."                                                 

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CAPITALIZATION

         The following  table sets forth the  historical  capitalization  of the
Company, as of September 30, 1997, and the pro forma  capitalization as adjusted
to give  effect to (i) the  Offering  by the  Company  of the  1,750,000  Shares
offered  hereby and the use of the net  proceeds  from the Offering as described
under "Use of Proceeds," (ii) the Acquisition and (iii)  anticipated  borrowings
under the Credit  Facility.  See "Use of Proceeds." The information set forth in
the  table  should  be read in  conjunction  with  the  historical  consolidated
financial statements and notes thereto, the pro forma financial  information and
notes thereto, and "Management's  Discussion and Analysis of Financial Condition
and  Results  of  Operations,"  for the  Company  and  Commonwealth/Transnation,
respectively,  included  elsewhere in this  Prospectus.  See "Index to Financial
Statements,"  "Lawyers Title  Corporation and  Subsidiaries  Pro Forma Condensed
Combined  Financial   Statements,"   "Lawyers  Title  Corporation   Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
"Commonwealth  Land Title  Insurance  Company and  Transnation  Title  Insurance
Company Management's  Discussion and Analysis of Financial Condition and Results
of Operations."                                                                 

                                                        [Enlarge/Download Table]


                                                                      September 30, 1997           
                                                            ---------------------------------------
                                                                Historical            Pro Forma    
                                                            ------------------    -----------------
                                                                  (Dollars in thousands)           
                                                                                                   
Long term debt:                                                                                    
    Credit Facility........................................       $8,216              $215,716     
                                                                   -----               -------     

        Total long term debt...............................       $8,216              $215,716     
                                                                   -----               -------     

Shareholders' equity:                                                                              
    Preferred Stock, no par value, 5,000,000 shares                                                
        authorized; no shares of Series A Preferred                                                
        Stock issued or outstanding and 2,200,000                                                  
        shares of Series B Preferred Stock issued                                                  
        and outstanding pro forma..........................            -               175,700     

    Common Stock, no par value, 45,000,000 shares                                                  
        authorized; 8,928,041 shares issued and                                                    
        outstanding and 14,717,514 shares issued                                                   
        and outstanding pro forma (1)......................      167,621               351,445     

    Unrealized investment gains  (less related                                                     
         deferred income tax of $2,863)....................        5,317                 5,317     

    Retained earnings......................................      108,392               108,392     
                                                                 -------               -------     

         Total shareholders' equity........................      281,330               640,854     
                                                                 -------               -------     
             Total capitalization..........................     $289,546              $856,570     
                                                                 =======               =======     

-----------------------                                                         
(1)  Does not include  (i)  476,551  shares of Common  Stock  issuable  upon the
     exercise of stock options,  (ii) the conversion of the 2,200,000  shares of
     Series B Preferred  Stock into shares of Common  Stock,  and (iii)  262,500
     shares of Common  Stock which may be sold by the Company  upon  exercise of
the Underwriters' over-allotment option. See "Underwriting."          

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DILUTION

         At September 30, 1997, the Company had a consolidated net tangible book
value of  approximately  $222.5  million,  or $24.92 per share of Common  Stock.
After giving effect to the sale of the 1,750,000  Shares  offered by the Company
hereby at an assumed  public  offering price of $31.94 per share and the receipt
by the Company of approximately  $53.1 million in net proceeds from the Offering
after deducting  underwriting  discounts and offering expenses estimated at $2.8
million,  and after giving  effect to the  Acquisition  and payment of estimated
expenses of $5.0  million in  connection  therewith,  the pro forma net tangible
book value at September  30, 1997 would have been $114.8  million,  or $7.80 per
share of Common Stock,  assuming no  conversion of the Series B Preferred  Stock
issued to RIC in connection with the  Acquisition.  This represents an immediate
decrease in net tangible book value of $17.12 per share to existing shareholders
and an immediate  dilution of $24.14 per share to new  investors.  The following
table  illustrates  in Column (A) the pro forma per share  dilution  assuming no
conversion  of the Series B Preferred  Stock and in Column (B) the pro forma per
share  dilution  assuming  conversion  of the  Series  B  Preferred  Stock as of
September 30, 1997.                                                             

                                                        [Enlarge/Download Table]


                                                                                             (B)             
                                                              (A)                       Pro Forma Net        
                                                         Pro Forma Net                  Tangible Book        
                                                      Tangible Book Value              Value Assuming        
                                                          Assuming No                   Conversion of        
                                                     Conversion of Series                 Series B           
                                                       B Preferred Stock               Preferred Stock       
                                                 ------------------------------  ----------------------------
                                                                                                             
Public offering price per share...............                      $31.94                        $31.94     

     Historical net tangible book value per                                                                  
     share prior to the Offering and the                                                                     
     Acquisition (1)............................        $24.92                         $24.92                

     Increase per share in pro forma net                                                                     
     tangible book value attributable to the                                                                 
     Offering (2)...............................        $ 0.89                         $ 0.89                

     Decrease per share in pro forma net                                                                     
     tangible book value attributable to the                                                                 
     Acquisition (3)...........................         $18.01                         $10.94                

Pro forma net tangible book value per                                                                        
     share after the Offering and the                                                                        
     Acquisition (4)...........................                      $7.80                        $14.87     

Dilution per share to the new                                                                                
     investors (5)...............................                   $24.14                        $17.07     

Pro forma full book value per share after the                                                                
     Offering and the Acquisition................                   $31.61                        $32.79     

-----------------------                                                         
(1)  Historical  net tangible book value per share prior to the Offering and the
     Acquisition  represents the total amount of tangible  assets of the Company
     reduced  by the amount of its total  liabilities,  divided by the number of
shares of Common Stock outstanding.                                   
(2)  Based on the assumed offering price of $31.94 per share of Common Stock and
     after  deducting  underwriting  discounts  and  commissions  and  estimated
Offering expenses.                                                    

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(3)  Column B assumes the immediate conversion of the 2,200,000 shares of Series
     B Preferred  Stock issued to RIC in connection  with the  Acquisition  into
     4,824,561 shares of Common Stock. Unless certain events occur, the Series B
     Preferred Stock is not  convertible  into shares of Common Stock until such
     time as RIC and its affiliates  have sold,  conveyed or transferred  all of
     the 4,039,473 shares of Common Stock received by RIC in connection with the
     Acquisition.  See  "Description  of  Capital  Stock --  Series B  Preferred
Stock."                                                               
(4)  Based on total  pro  forma  net  tangible  book  value of  $114.8  million,
     assuming no conversion of preferred  stock,  and $290.5  million,  assuming
     conversion  of  preferred  stock,  divided by the total number of shares of
     Common Stock to be outstanding  upon  consummation  of the Offering and the
Acquisition.                                                          
(5)  Dilution is determined by subtracting  net tangible book value per share of
     Common Stock after the Offering and  Acquisition  from the public  offering
price of $31.94 per share of Common Stock.                            

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THE COMBINED COMPANY

Background                                                                      

         In 1995, the Company  adopted a long term strategy  focused on becoming
the premier,  low cost national provider of a broad array of information,  title
insurance and closing  services  related to transactions  involving the transfer
and financing of real estate.  Such services  would  include  traditional  title
insurance,  as well as title information,  closing,  relocation,  and other real
estate-related  services.  The  Company's  Board  of  Directors  and  management
determined that the acquisition of another large title insurance underwriter was
an attractive  means of implementing  this strategy.  Such an acquisition  would
create a platform for deriving  greater benefits from investments in technology,
diversify  the  Company's  product  offerings  and  customer  base,  broaden the
Company's distribution capabilities and improve the Company's market position in
the commercial title insurance business. During the period from 1995 through May
1997,  the Company  considered  the  potential  benefits of several  acquisition
candidates.  In  August  1997,  the  Company  entered  into the  Stock  Purchase
Agreement for the acquisition of Commonwealth/Transnation.                      

Benefits of the Acquisition                                                     

         Following  the  announcement  of the  Acquisition,  the Company  formed
several  task  forces  to  study  and  prepare  for the  integration  of the two
organizations.  Specific  areas  addressed  by these task forces  include  human
resources and benefits, claims, technology,  underwriting,  finance, real estate
and facilities,  field structure and combined production  centers.  These groups
have met  regularly  since  August 1997 and have  developed  detailed  plans for
realizing the anticipated expense savings and integrating the Combined Company's
business  operations.  Accordingly,  management  believes  that,  following  the
Acquisition,  the operations of the two  organizations  will be combined swiftly
and without undue disruption to the business of the Combined  Company,  although
there  can  be no  assurance  in  this  regard.  Management  believes  that  the
Acquisition will yield significant benefits as outlined below.                  

         Expense  Savings.  Management has identified  certain  expense  savings
which it believes  will be achieved by the Combined  Company in the near term by
consolidating   infrastructure   and  reducing   management  and  administrative
expenses.  While  title  insurers  generally  have low  claims  loss  experience
compared  to  other  insurance  underwriters,  operating  expenses  tend  to  be
significantly  higher  due  to  the  costs  associated  with  maintaining  local
marketing offices and production centers,  and the personnel required to process
forms, search titles, collect information on specific properties,  prepare title
insurance  commitments  and policies  and perform  closings.  By  combining  the
operations of the Company and  Commonwealth/Transnation,  duplicate headquarters
will be eliminated, substantially all corporate departments will be consolidated
and the Combined Company will be able to negotiate better terms with third party
vendors.  The number of  regional  offices  and field head count will be reduced
with the  elimination  of  redundant  title  plants and back  office  production
centers.  Management has identified  approximately 20 metropolitan markets where
the  back  office  and  title  production  facilities  will be  combined.  These
multi-county  production  facilities will service each of the Combined Company's
title insurance  subsidiaries.  As a result,  management of the Company believes
that the combination of the two operations  will yield recurring  annual pre-tax
expense  savings of  approximately  $40.0  million.  It is expected to take four
quarters to fully  realize  these  expense  savings.  To  implement  the changes
necessary  to realize such  savings,  the  Combined  Company will incur  certain
expenses,  primarily  relating to the payment of employee severance benefits and
the  termination  of leases on certain  offices to be closed.  Accordingly,  the
Combined  Company  anticipates  that,  in the  quarter in which the  Acquisition
occurs, it will record a one-time  after-tax charge to earnings of approximately
$16.3  million to $19.5  million  (approximately  $25.0 million to $30.0 million
before taxes).                                                                  

         Broader  Distribution   Network.  The  Acquisition  will  significantly
broaden  the  Company's  distribution  network,  resulting  in one  of the  most
extensive  branch  and  agency  networks  in  the  industry.   The  distribution
advantages of the  Acquisition  are  threefold.  First,  the Company will gain a
presence in markets where only a minimal representation existed previously.  For
example,  Commonwealth/Transnation has offices in the state of Washington and in
northern  California  where  the  Company  is not well  represented,  has a more
extensive  network than the Company in certain  other western  markets,  such as
Arizona  and  Colorado,  and has a strong  presence in western  Michigan,  which
complements  the  Company's  presence in the eastern  region of that state.  The
Combined                                                                        

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Company's increased presence  throughout the United States,  particularly in the
largest real estate  markets,  will enable it to better serve the large national
residential  mortgage  originators.  This is particularly  important since these
lenders are  becoming  increasingly  dominant;  the market  share of the top ten
national residential mortgage originators  increased from 15.3% in 1989 to 27.3%
in 1996,  according to the Mortgage Market Statistical Annual for 1997 of Inside
Mortgage Finance.                                                               

         The second  major  distribution  advantage  of the  Acquisition  is the
addition of branch offices in markets where the Company is currently represented
solely by agents. Such markets include northern California and upstate New York.
Generally  there is a higher profit margin for the Company on orders referred to
a branch office.                                                                

         Third,  each of  Lawyers  Title,  Commonwealth,  Transnation  and their
respective  subsidiaries  have  developed  brand name  recognition in particular
markets and long  standing  referral  networks.  Management  believes this brand
identity  can be  sustained  following  the  Acquisition  by  using a  "multiple
storefront  strategy."  Each of the  subsidiaries  of the Combined  Company will
continue to sell under its own name.  The separate  brand  identity and customer
contact  personnel of each title  insurance  operation can be maintained,  while
enabling  the  Company  to  realize  expense  savings  and  improve  service  by
consolidating  back  office  operations.   Management   believes  this  multiple
storefront  strategy takes advantage of established brand awareness,  will leave
important  customer/referral source relationships  essentially undisturbed,  and
will give the Combined  Company the ability to target  different market segments
with different brand names.                                                     

         Geographic  Diversity.  The  Combined  Company  will be  geographically
better  diversified  than  either  Lawyers  Title  or   Commonwealth/Transnation
individually,  thereby reducing its exposure to particular  regional real estate
markets.  Based on fiscal year 1996  combined  financial  results,  no one state
constituted more than 9.1% of total premiums with the exception of Texas,  which
generated  15.5%  of  total  premiums.  The top five  revenue  producing  states
accounted  for 47.5% of the  Combined  Company's  revenues in 1996.  The Company
anticipates that this  diversification  will reduce the Company's  exposure to a
regional  economic  downturn.  The  chart  below  shows the  Combined  Company's
breakdown of premiums by state for the fiscal year ended December 31, 1996.     

Combined Company
Combined 1996 Title Insurance Premiums
(Dollars in Thousands)

                            Amount                 %
                            ---------              -----
  Texas                 $    173,936              15.5
  Florida                    102,536               9.1
  California                 100,950               9.0
  New York                    81,414               7.2
  Pennsylvania                75,459               6.7
  Michigan                    61,472               5.5
  New Jersey                  42,676               3.8
  Washington                  36,264               3.2
  Ohio                        34,215               3.0
  Virginia                    32,021               2.8
  All others                 384,241              34.2
                             -------              ----

   Total                  $ 1,125,184             100.0%
                            =========             ======

         Platform for Investment in Technology. A major element of the Company's
strategic plan is the continued application of new information technology to its
operations.  Management  believes that  appropriate  investments  in information
technology  will  enable  it to reduce  unit  costs  and  increase  the speed of
delivery of products and  services to  customers.  The Combined  Company will be
able to derive greater  benefits from investments in technology and will be able
to spread such  investments  over its larger revenue base. For example,  in 1998
the amount  budgeted by the Combined  Company for  investments  in technology is
equal  to  the  sum  of  the                                                    

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separate pre-Acquisition technology budgets of Commonwealth/Transnation  and the
Company.  Elimination of duplicative items such as planned  expenditures for the
development of office automation  software - will enable the Combined Company to
fund additional projects and thereby acquire greater technological capabilities.

         Following the Acquisition,  planned technology enhancements include the
continued automation of title plants (compilations of public title records which
facilitate the preparation of title  reports),  the  implementation  of enhanced
title escrow production systems,  document imaging, and on-line order taking and
delivery of  information  and multiple  products to customers and lenders,  thus
streamlining  paper  intensive  processes.  Management  anticipates  that  these
improvements  will increase  productivity  and reduce staffing  levels,  thereby
lowering  the unit  costs of its  products  and  services.  An  example  of this
includes the introduction of "single seat underwriting," a concept made possible
by  the   application  of  imaging   technology  to  new  work  flow  processes.
Commonwealth/Transnation's  current  pilot  project  enables a single  person to
complete a substantial  portion of the entire title insurance process.  Advances
relating to electronic order taking should also significantly  speed up delivery
of the  Company's  services  and allow it to expand its delivery of bundled real
estate-related services, resulting in improved service quality.                 

         As a  result  of the  Acquisition,  the  Company  will  obtain  certain
beneficial  technology  and  technological  expertise  which  will  enable it to
continue to improve its service further.  Nite Owl, an innovative,  state of the
art  service  developed  by   Commonwealth/Transnation,   provides  real  estate
professionals with on-line access to property information over the Internet. Day
One, Inc., a Commonwealth/Transnation  subsidiary, develops and markets property
valuation  software.  The  importance  to the Company of  effectively  utilizing
information  technology is demonstrated by the establishment by the Company of a
new  executive  officer  position of  "Executive  Vice  President -  Information
Technology," which will be held by G. William Evans, the Company's current Chief
Financial Officer.                                                              

         Expanded Real Estate-Related Services. The Acquisition will improve the
Company's market position and product breadth in real  estate-related  services.
While real estate-related services,  other than title and closing,  constitute a
small part of the Company's  current  revenues,  management  believes that these
services are strategically  important to the Combined Company's success and will
constitute an increasing  percentage of the Company's revenues and income in the
future.  The major mortgage  originators  and other  national  customers such as
large  developers and realtors are  increasingly  purchasing  these products and
services  on a  "bundled/one  stop"  basis from a limited  number of vendors who
offer the full array of such products and services. The Acquisition will broaden
the Company's  product  offerings  and enable it to better  compete for business
from national customers. For example, CLT Appraisal Services, Inc., a subsidiary
of  Commonwealth/Transnation,  will add  appraisal  management  services  to the
Company's appraisal capabilities, which are currently supplied by a third party.
Management  believes  that  the  Combined  Company,  with  its  broader  product
offerings  and  customer  base,  will have a stronger  competitive  position  in
marketing such ancillary services as relocation  services,  flood certification,
appraisal management, tax disbursement processing services, credit reporting and
document preparation to mortgage originators.                                   

         Enhanced  Presence in Commercial Title Insurance.  Management  believes
that Lawyers Title and Commonwealth/Transnation are two of the leading providers
of title  insurance  for  commercial  transactions.  As a result,  the  Combined
Company  will  be  among  the  strongest  competitors  in the  commercial  title
insurance  market.  In addition,  the  Combined  Company will be one of the most
strongly  capitalized title insurers in the industry with an aggregate statutory
surplus of $353.0  million as of September  30, 1997.  Management  believes this
will enhance the Combined  Company's  commercial  title  business  capabilities,
enabling it to  underwrite  larger  title  policies  without  having to purchase
reinsurance  from a  third  party.  Also,  the  increased  capital  position  is
anticipated to enhance Lawyers Title's  claims-paying ability ratings. On August
21,  1997,  Duff & Phelps  Credit  Rating  Co.  ("Duff  &  Phelps")  placed  the
claims-paying  ability  rating of Lawyers Title on "Rating Watch - Up" following
the  announcement of the  Acquisition.  Duff & Phelps has indicated that it will
assign an "A" claims-paying ability rating to the Combined Company following the
consummation  of  the  Acquisition.  The  claims-paying  ability  rating  is  an
important factor in competing for commercial title insurance business.          

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         Seasoned   Management.   As   separate   companies,   the  Company  and
Commonwealth/Transnation  have  benefited  from the knowledge and  experience of
their  respective  management  teams,  which have both  successfully  integrated
significant acquisitions.  The Company has successfully completed and integrated
19  acquisitions  during the last four years,  with a combined value of over $50
million and total combined  pre-acquisition annual revenue of approximately $100
million. In 1990,  Commonwealth acquired and integrated  Transnation,  which had
pre-acquisition annual revenue of $209.8 million, equaling 45% of Commonwealth's
revenue   for   the   same   period.   Since   the   Transnation    acquisition,
Commonwealth/Transnation has made several other smaller acquisitions.           

Business and Growth Strategies                                                  

         The principal components of the Company's business and growth strategy,
many of which are furthered by the Acquisition, are as follows:                 

                  Develop  and  Integrate  Technology  to  Increase  the  Speed,
         Efficiency and Reliability of Product  Delivery.  The Company  believes
         that the proper application of information technology to its operations
         will be a key in determining its future success in the rapidly changing
         real  estate  services  marketplace.  Mortgage  lenders  and banks have
         already taken major strides in computerization, and have begun offering
         their services online. Consumers can now search for mortgage loans over
         the  Internet.  Lenders can search  data bases for credit,  employment,
         previous  mortgage or rent  history and deposit  information.  With the
         speedy  availability  of credit and mortgage  information,  lenders are
         beginning to demand that basic title information be made available more
         quickly as well.  Significantly,  the demand for a faster  real  estate
         transaction  process  is coming in  substantial  part from the  Federal
         National Mortgage  Association ("Fannie Mae") and the Federal Home Loan
         Mortgage Corporation ("Freddie Mac"). According to A.M. Best Co., these
         companies are committed to "the ambitious goal of reducing the time and
         expense of obtaining an average mortgage from several weeks to a matter
         of days time and reducing closing costs and associated charges by up to
         $2,000 within the next five years." (John H. Snyder,  "Title Insurance:
         An Industry on The Verge of Transformation," BestWeek Property Casualty
         Supplement  (A.M.  Best Co., April 15, 1996)).  Their intent is to make
home ownership more affordable for American families.         

                  Both Fannie Mae and Freddie Mac are developing online computer
         systems that are designed to standardize and facilitate the exchange of
         data between all parties in the mortgage origination process, including
         title  insurers  (or their  agents).  It is  anticipated  that all real
         estate-related  services  will be  ordered  and  provided  in a  single
         combined  package,  with title insurance being bundled and sold,  along
         with   appraisals,   credit  reports  and  other  necessary   services.
         Management  believes  that  this  will  eventually  result in most real
         estate  and  loan  closings  taking  place  electronically.  Given  the
         importance of Fannie Mae,  Freddie Mac and major primary lenders to the
         real estate transaction  process, the Company believes it must adapt to
         and take advantage of the automation  strategies being pursued by these
        organizations by continuing to enhance its technological capabilities.

                  Some mortgage  lenders are relying on title reports instead of
         title insurance for their smaller loan transactions.  Expansion of this
         practice could have the future effect of  transforming  title companies
         into suppliers of a wide range of title information and other data. The
         Company is already  supplying such data to certain second  mortgage and
         equity line  lenders  who obtain  "title  letters"  from the Company to
         confirm their lien position, without purchasing a title policy. Because
         of consumer  expectations  and  competitive  pressures,  these  lenders
         demand very quick  turnaround  of an order (48 hours or less).  If this
         trend  were  to  continue,  management  believes  that  the  successful
         competitors would be those that are  technologically  well advanced and
         offer exceptionally  quick,  reliable service. The Company's technology
         initiatives  are  intended to  position  the Company to be one of these
successful competitors.                                       

                  In these efforts,  the Company will be building on its history
         of  technological   innovation.   Elliptus  Software  Solutions,   Inc.
         ("Elliptus"), a Lawyers Title subsidiary develops and markets title and
         escrow production software. In 1997, Elliptus released Title Quest, the
         first title and escrow production  software to use 32 bit architecture.
         It  also  provides   Electronic  Data   Interchange   ("EDI")  software
         solutions.   Datatrace  Information  Services  Company,  Inc.,  also  a
subsidiary of Lawyers Title,  provides  automated title       

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         plant services. In 1996, Lawyers Title Services Company, Inc. ("LTSC"),
         a Lawyers Title subsidiary,  implemented electronic ordering of bundled
real estate-related services with its lender customers.       

                  Expand  Bundle  of  Services.  In  addition  to the  speed and
         convenience of the technological  solutions discussed above, lenders in
         recent  times have been  seeking  from title  insurers - in addition to
         title  services  - a variety  of real  estate  products  related to the
         mortgage  financing  process.  Lenders are increasingly  demanding that
         these real  estate-related  services be available  from and billed by a
         single source.  Further,  so called "Lender Pay"  legislation  has been
         proposed   which  would  amend  the  federal  Real  Estate   Settlement
         Procedures  Act to allow a consumer to purchase  all of his  settlement
         services in one place at a guaranteed  price.  Adoption of the proposed
         legislation  could  lead to  packaged  pricing  of all  closing  costs.
         Accordingly,  it is one of the Company's  strategies to offer "one stop
         shopping" to lenders,  developers,  attorneys,  real estate  agents and
         other real estate  professionals  who  influence the placement of title
         insurance.  The  Company  intends to be not merely a purveyor  of title
         insurance,  but rather a provider of a broad array of services relating
         to real  estate.  This  broad  based  service  strategy  also  seeks to
         diversify the Company's  earnings through product  diversification.  In
         certain cases, such as relocation  services,  it may have the effect of
        softening the impact of cyclical downturns in the real estate economy.

                  Pursuant to this strategy,  in 1996 the Company organized LTSC
         to  offer  and  coordinate  bundled  real  estate-related  services  to
         national  customers under the trade name "Single Source." Such services
         include  property   inspections  and  warranties,   credit   reporting,
         centralized closing,  document  preparation and regulatory  compliance,
         property appraisal and valuation,  flood  certification and real estate
         tax services.  These various services are provided through subsidiaries
         of Lawyers Title,  or joint ventures or strategic  alliances with third
         parties.  In 1996,  Single  Source began  working  with  several  large
         lenders in the southeast.  In 1997, its expanded customer base included
         lenders  throughout the United States  averaging more than 5,500 orders
per month in the fourth quarter of 1997.                      

                  The  Company  offers  employee  relocation  services  to large
         national customers such as General Motors Corporation  through Argonaut
         Relocation  Services,  LLC, and facilitates tax-free property exchanges
         pursuant to Section 1031 of the Internal  Revenue Code through  Lawyers
         Title Exchange Company.  Commonwealth/Transnation also has a relocation
         subsidiary and following the Acquisition,  the Combined Company will be
         one of the largest  providers  of  relocation  services in the U.S. See
"Business - Lawyers Title."                                   

                  The Acquisition will broaden the Company's product  offerings,
         primarily in the area of appraisal management. Commonwealth/Transnation
         offers bundled services through its Commonwealth  OneStop(R)  marketing
         umbrella.   Commonwealth   OneStop(R)  provides  appraisal   management
         services,  title insurance  services  through its National  Residential
         Title Services division,  employee relocation and property  disposition
         services,   and  appraisal  information  systems.   Where  appropriate,
         following the Acquisition, these services will be consolidated. See " -
         Benefits of the Acquisition" and "Business - Commonwealth/Transnation."

                  Diversify  and  Expand  through  Acquisitions.  Over  the past
         decade,  the Company has  diversified  and  expanded in part  through a
         strategy of carefully selected acquisitions. The primary focus has been
         on the  acquisition of small to medium-sized  title insurance  agencies
         and  underwriters,  and more  recently on joint  ventures to expand the
         Company's  product mix.  The  Acquisition  of  Commonwealth/Transnation
         represents a significant step in this strategy. See "Business - Lawyers
Title - Recent Acquisitions."                                 

                  Following the  consummation of the  Acquisition,  the Combined
         Company  intends to continue the  acquisition  strategy of the Company,
         albeit focusing primarily on relatively small to medium-sized additions
         in two separate areas. First, in order to diversify its product mix and
         strengthen existing product capabilities,  the Combined Company intends
         to  acquire,  and  engage in joint  ventures  with,  providers  of real
         estate-related  services.  In  expanding  its  portfolio of services in
         response to the changing real estate  marketplace,  management believes
         that, in many cases, the acquisition of established  organizations with

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         developed  expertise  or market  presence  with respect to a particular
         real estate-related  service will be more expedient and cost effective,
as opposed to de novo development by the Combined Company.    

                  Second,   the  Combined   Company  intends  to  make  selected
         acquisitions in order to enhance its distribution system and strengthen
         its presence in particularly  attractive  markets. In order to meet the
         needs of its national  customers,  the Combined Company intends to seek
         out  opportunities  to  expand  and  enhance  its  already  substantial
         geographic  presence and distribution  network through  acquisitions of
         both  providers  of  real  estate-related   services,  and  agents  and
underwriters with proven track records.                       

                  While the Company,  actively considers strategic acquisitions,
         as  discussed  above,  it does not have any  current or pending  plans,
         negotiations,  arrangements  or  understandings,  with  respect  to any
       material acquisitions, other than in connection with the Acquisition.

                  Provide  Customers with High Quality  Service.  Throughout its
         history,  the Company  has been  committed  to meeting  its  customers'
         individual needs and providing  superior service.  In order to maintain
         the accuracy and  integrity of its  products,  the Company  continually
         updates its records by  regularly  adding  information  from the public
         records and other  sources.  In certain  areas where  demand  warrants,
         title  plants have been  automated.  The Company has also placed  great
         emphasis on the application of technology to streamline paper intensive
         processes and speed up communications, in order to respond to customers
more quickly and to lower costs.                              

                  In addition,  the Company's primary source of business is from
         the real estate community,  such as attorneys,  real estate brokers and
         developers,  financial  institutions,  mortgage brokers and independent
         escrow  agents.   Maintenance  of  superior   service  is  critical  to
         maintaining  these  referral  sources.  The Company seeks to accomplish
         this by employing and retaining qualified professionals. As an example,
         the major  transaction  counsel and other real estate  professionals in
         Lawyers Title's National Division have gained it a favorable reputation
         for their expertise in handling and providing  customized solutions for
complex commercial and multi-property transactions.           

                  In the future,  management  believes that service quality will
         continue  to be a  critical  factor in the  industry.  With  respect to
         traditional title insurance products, the industry through its national
         and state trade associations has largely  standardized product language
         and  endorsements.  Management  believes  this  has  resulted  in title
         insurers  primarily  competing  on the basis of price and service  with
         respect to these traditional  services.  Also, service quality has been
         effectively  redefined by the Company's national residential  customers
         to include the providing of an extensive bundle of real  estate-related
         services very quickly through a national distribution network utilizing
         advanced  technology.  The Company intends to respond to this challenge
         by expanding its  technological  resources,  service  capabilities  and
         distribution  network through the Acquisition,  as well as implementing
         its complementary  strategies regarding  development and integration of
         technology,  expansion of its portfolio of services and its  commitment
to a widespread distribution network.                         

                  Aggressively   Manage   Operating   Costs.   Operating   costs
         constitute the largest  portion of a title  company's  expenses and are
         relatively  high  compared  to  other  types  of  insurers,  due to the
         necessity  of   establishing   and   maintaining  a  large  and  costly
         infrastructure  of field  personnel  and  title  plants.  As a  result,
         controlling  operating  expenses has been of  paramount  concern to the
         Company.  An example is the special staff and salary reduction  program
         which the Company  implemented  in 1994 in response to a severe fall in
         orders as a result of rising  interest  rates.  The Company was able to
         reduce  overall  head count on a same store  basis by 25% from its peak
         level, and effect salary  reductions for continuing  employees of up to
         10% for a period of approximately six months.  Because of high salaries
         expense,  the Company is committed to electronic commerce so orders can
         be  received  electronically,  thus  eliminating  the need to rekey the
         customer's  information.  Single  Source and OneStop  both utilize this
         electronic  commerce.  In  addition,  the  Company has begun a workflow
         redesign in many offices which will lower cost and improve service, the
         benefits of which will increase as additional  investments  are made in
technology.                                                   

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                  In the future,  management believes that controlling operating
         costs will  become even more  crucial,  as  significant  players in the
         national  mortgage  markets - such as Fannie  Mae,  Freddie Mac and the
         large national  lenders - seek to drastically  reduce mortgage  closing
         and related costs. Management believes that the leading title companies
        of the future will be the efficient, low cost, high service providers.

                  Through the  Acquisition  and the  elimination  of duplicative
         headquarters  and  other  redundant  operational  infrastructure,   the
         Combined  Company  will  further its goal of  becoming  the lowest cost
         provider of title  insurance  and other real  estate-related  services.
         Further, the Acquisition will provide the Company with the revenue base
         to  better  leverage   investments  in  technology,   which  management
         anticipates   will  result  in   additional   operating   efficiencies.
         Management  also believes that  automation of operations  will increase
         productivity,  thereby giving it more  flexibility to control costs and
         maintain  service quality during periods marked by sudden  increases in
volume.                                                       

                  Another  component  of the  Combined  Company's  cost  control
         strategy will be the  maintenance  of a balance  between direct offices
         and agents. Direct operations tend to be more profitable during periods
         of favorable  mortgage  activity,  given the size of agency commissions
         which range between  approximately 60% to 90% of the premium.  However,
         it is easier to  control  operating  costs of  agency-based  operations
         during periods of business contraction,  because of the extent to which
         operating costs are borne by agents and the lower fixed costs of agency
         operations.  For the year ended December 31, 1996,  approximately 53.5%
         of the  Company's  total title  insurance  revenues  were  derived from
         direct  operations   (company  branches  and  wholly  owned  subsidiary
         agencies)  and 46.5% came from  independent  agents.  During  this same
         period, approximately 40.0% of  Commonwealth/Transnation's  total title
         insurance  revenues were derived from direct  operations and 60.0% came
         from  agency  operations.   Based  on  1996  combined  title  insurance
         revenues,  the Combined  Company would have derived  approximately  48%
         from direct  operations and 52% from independent  agents.  The Combined
         Company's  goal will be to maintain the balance  between direct offices
         and  agents.  However,  as  opportunities  arise to  acquire  agents or
         regional underwriters, the percentage of revenue from agency operations
in any one calendar year may vary from 45% to 55%.            

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
 (Unaudited)

         The following  unaudited Pro Forma Condensed  Combined Balance Sheet as
of September 30, 1997 and the unaudited Pro Forma Condensed Combined  Statements
of  Operations  for the nine months  ended  September  30, 1997 and for the year
ended December 31, 1996 (the "Pro Forma  Financial  Statements")  are based upon
the respective  consolidated/combined financial statements of the Company and of
Commonwealth/Transnation,  which are  included  herein.  See "Index to Financial
Statements."                                                                    

         The Pro Forma Condensed Combined Balance Sheet as of September 30, 1997
is presented as if the  Acquisition  had occurred on September 30, 1997. The Pro
Forma  Condensed  Combined  Statements of  Operations  for the nine months ended
September 30, 1997 and the year ended  December 31, 1996 are presented as if the
Acquisition had occurred on January 1, 1996. The Pro Forma Financial  Statements
give  effect to the  Acquisition  under the  purchase  method of  accounting  in
accordance with Accounting Standards Board Opinion No. 16.                      

         The Pro  Forma  Financial  Statements  are  presented  for  comparative
purposes only and are not  necessarily  indicative of what the actual  financial
position  of the  Company  would  have  been  at  September  30,  1997  had  the
Acquisition  occurred at that date or of what the actual  results of the Company
would  have  been if the  Acquisition  had  occurred  on  January  1,  1996  nor
indicative  of the  results  of  operations  in  future  periods.  The Pro Forma
Financial  Statements  should be read in conjunction  with, and are qualified in
their  entirety by, the  respective  unaudited  financial  statements  and notes
thereto,  of the  Company  and of  Commonwealth/Transnation  for the nine months
ended September 30, 1997 and the respective  historical financial statements and
notes thereto of the Company and of Commonwealth/Transnation  for the year ended
December 31, 1996.                                                              

         The Pro Forma  Financial  Statements  presented  do not reflect  future
events that may occur after the  Acquisition has been  consummated.  The Company
believes  that  operating  expense  synergies of the combined  operations of the
Company  and  Commonwealth/Transnation  will be  realized  after the Company has
completed the Acquisition.  However, for the purposes of the Pro Forma Financial
Statements  presented  herein,  these synergies have not been reflected  because
their realization cannot be assured.                                            

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET
September 30, 1997
 (In thousands of dollars)
 (Unaudited)

                                                        [Enlarge/Download Table]


                                                            Lawyers   Commonwealth/                               
                                                             Title     Transnation      Pro Forma                 
                                                          Historical   Historical      Adjustments      Pro Forma 
                                                          ----------   ----------      -----------      --------- 
                                                                                                                  
ASSETS                                                                                                            
     Investments......................................... $ 281,457    $ 452,214                         $ 733,671
     Cash                                                    36,258       11,746      $207,500   [1d]       48,004
                                                                                        53,096   [1b]             
                                                                                      (207,500)  [1d]             
                                                                                      ( 53,096)  [1b]             
     Notes and accounts receivable.......................    33,506       31,664                            65,170
     Property and equipment - net........................    21,070       23,764                            44,834
     Title plants........................................    48,930       50,174                            99,104
     Goodwill............................................    58,813       16,209       287,908   [1]       350,354
                                                                                       (12,576)  [2]              
     Deferred income tax benefit.........................    25,500       26,237        17,576   [2]        69,313
     Other assets........................................    35,410       14,524                            49,934
                                                            -------      -------       -------             -------

            Total assets................................. $ 540,944    $ 626,532     $ 292,908         $ 1,460,384
                                                          =========    =========     =========         ===========

LIABILITIES                                                                                                       
     Policy and contract claims.......................... $ 199,865    $ 265,593                         $ 465,458
     Accounts payable and accrued                                                                                 
       expenses..........................................    51,533       76,823         5,000   [1e]      138,356
                                                                                         5,000   [2]              
     Long term debt......................................     8,216            -       207,500   [1d]      215,716
                                                              -----     --------       -------             -------
            Total liabilities............................   259,614      342,416       217,500             819,530
                                                            -------      -------       -------             -------

SHAREHOLDERS' EQUITY                                                                                              
     Preferred stock.....................................                              175,700   [1c]      175,700
     Common stock........................................   167,621       11,649       130,728   [1a]      351,445
                                                                                        53,096   [1b]             
                                                                                       (11,649)  [1]              

    Additional paid in capital...........................                127,551      (127,551)  [1]             0

    Unrealized gains.....................................     5,317        6,127        (6,127)  [1]         5,317
     Retained earnings...................................   108,392      138,789      (138,789)  [1]       108,392
                                                            -------      -------      ---------            -------

            Total shareholders' equity...................   281,330      284,116         75,408            640,854
                                                            -------      -------         ------            -------

    Total liabilities and                                                                                         
      shareholders' equity...............................  $540,944    $ 626,532      $ 292,908        $ 1,460,384
                                                           ========    =========      =========        ===========

See notes to the pro forma condensed  combined financial  statements.  Bracketed
numbers to the right of the "Pro Forma Adjustments" column refer to such notes. 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
 For the Nine Months
Ended September 30, 1997 (In
thousands of dollars, except
shares and per share data)
 (Unaudited)

                                                        [Enlarge/Download Table]

                                                          Lawyers   Commonwealth/                             
                                                           Title     Transnation       Pro Forma              
                                                        Historical    Historical      Adjustments    Pro Forma
                                                        ----------    ----------      -----------    ---------
                                                                                                              
REVENUES                                                                                                      
     Premiums.......................................... $ 353,775    $ 517,922                       $ 871,697
     Title search, escrow and other....................    85,769       94,975                         180,744
     Net Investment income.............................    12,299       23,236                          35,535
     Realized investment gains.........................       120        1,187                           1,307
                                                              ---        -----                           -----
                                                          451,963      637,320           $ 0         1,089,283
                                                          -------      -------             -         ---------

EXPENSES                                                                                                      
     Salaries and employee benefits....................   148,596      173,847                         322,443
     Agents' commissions...............................   149,944      268,960                         418,904
     Provision for policy and contract                                                                        
       claims..........................................    23,910       29,470                          53,380
     General, administrative and other.................   102,994      120,872        14,889    [3]    238,755
                                                          -------      -------        ------           -------
                                                          425,444      593,149        14,889         1,033,482
                                                          -------      -------        ------         ---------

OPERATING INCOME BEFORE                                                                                       
     INCOME TAXES......................................    26,519       44,171      (14,889)            55,801

INCOME TAX EXPENSE.....................................     9,220       15,192       (5,211)   [3]      19,201
                                                            -----       ------       -------            ------

NET INCOME............................................   $ 17,299     $ 28,979     $ (9,678)            36,600
                                                         ========     ========     =========                  

PREFERRED STOCK DIVIDENDS..............................                                                  5,775
                                                                                                      --------

INCOME AVAILABLE TO COMMON                                                                                    
   SHAREHOLDERS........................................                                               $ 30,825
                                                                                                      ========

EARNINGS PER COMMON SHARE AND                                                                                 
   COMMON EQUIVALENT SHARE.............................    $ 1.87                                       $ 2.06

EARNINGS PER COMMON SHARE                                                                                     
   ASSUMING FULL DILUTION..............................    $ 1.85                                       $ 1.83

WEIGHTED AVERAGE NUMBER OF                                                                                    
   COMMON AND COMMON EQUIVALENT                                                                               
   SHARES OUTSTANDING..................................     9,231                                       14,973

WEIGHTED AVERAGE NUMBER OF                                                                                    
   SHARES OUTSTANDING                                                                                         
   ASSUMING FULL DILUTION..............................     9,332                                       19,946

NET OPERATING EARNINGS PER                                                                                    
   COMMON SHARE ASSUMING FULL                                                                                 
   DILUTION............................................     $1.85                                        $1.79


See notes to the pro forma condensed  combined financial  statements.  Bracketed
numbers to the right of the "Pro Forma Adjustments" column refer to such notes. 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Year Ended
 December 31, 1996 (In thousands
 of dollars, except shares and
 per share data)
 (Unaudited)

                                                        [Enlarge/Download Table]

                                                          Lawyers   Commonwealth/                               
                                                           Title     Transnation       Pro Forma                
                                                        Historical    Historical      Adjustments     Pro Forma 
                                                        ----------    ----------      -----------     --------- 
                                                                                                                
REVENUES                                                                                                        
     Premiums.......................................... $ 456,377     $ 668,807                      $ 1,125,184
     Title search, escrow and other....................   101,381       111,350                          212,731
     Net investment income.............................    13,053        30,455                           43,508
     Realized investment gains.........................    23,371           346                           23,717
                                                           ------           ---                           ------
                                                          594,182       810,958          $ 0           1,405,140
                                                          -------       -------            -           ---------

EXPENSES                                                                                                        
     Salaries and employee benefits....................   184,274       206,083                          390,357
     Agents' commissions...............................   192,590       355,834                          548,424
     Provision for policy and contract                                                                          
       claims..........................................    29,211        61,116                           90,327
     General, administrative and other.................   132,567       149,345       19,852    [3]      301,764
                                                          -------       -------       ------             -------

                                                          538,642       772,378       19,852           1,330,872
                                                          -------       -------       ------           ---------

OPERATING INCOME BEFORE                                                                                         
     INCOME TAXES......................................    55,540        38,580      (19,852)             74,268

INCOME TAX EXPENSE.....................................    19,021        13,347       (6,948)   [3]       25,420
                                                           ------        ------       -------             ------

NET INCOME.............................................  $ 36,519      $ 25,233    $ (12,904)             48,848
                                                         ========      ========    ==========                   

PREFERRED STOCK DIVIDENDS..............................                                                    7,700
                                                                                                       ---------

INCOME AVAILABLE TO                                                                                             
     COMMON SHAREHOLDERS...............................                                                 $ 41,148
                                                                                                        ========

EARNINGS PER COMMON SHARE AND                                                                                   
     COMMON EQUIVALENT SHARE...........................    $ 4.01                                         $ 2.76

EARNINGS PER COMMON SHARE                                                                                       
     ASSUMING FULL DILUTION............................    $ 4.01                                         $ 2.48

WEIGHTED AVERAGE NUMBER OF                                                                                      
     COMMON AND COMMON EQUIVALENT                                                                               
     SHARES OUTSTANDING................................     9,102                                         14,891

WEIGHTED AVERAGE NUMBER OF                                                                                      
     SHARES OUTSTANDING ASSUMING FULL                                                                           
     DILUTION..........................................     9,118                                         19,732

NET OPERATING EARNINGS PER                                                                                      
     COMMON SHARE ASSUMING FULL                                                                                 
     DILUTION..........................................     $2.34                                          $1.69


  See notes to the pro forma condensed combined financial statements.  Bracketed
numbers to the right of the "Pro Forma Adjustments" column refer to such notes. 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 Pro Forma Condensed Combined Financial Statements
September 30, 1997 and December 31, 1996
 Notes to Pro Forma Financial Statements

1.   This pro forma  adjustment  reflects the issuance and sale of preferred and
     common stock and incurrence of debt in connection  with the  acquisition of
Commonwealth/Transnation by the Company resulting in:                 

                                                                      Recorded
                                                                       Value

a.  The  issuance  of  4,039,473  shares of Common                    
Stock to RIC at a price of $32.363  per share.                
In  accordance  with EITF  95-19,  the assumed                
Common  Stock  issuance  price of $32.363  per                
share  represents  the average  closing Common                
Stock  price  on the  NYSE  for the  five  day                
period  beginning  two days prior  through two                
days following the Company's  execution of the                
Amended and Restated Stock Purchase  Agreement                
         on December 11, 1997.                                          $130,728

b.  The sale of  1,750,000  shares of Common Stock                    
at  $31.9375  (based  upon the  closing  sales                
price  of the  Common  Stock on  December  16,                
1997) per share  concurrently with the closing                
of the Acquisition. The recorded proceeds have                
been adjusted for estimated  offering costs of                
         $2,795,000.                                                      53,096

c.  The issuance of  2,200,000  shares of Series B                    
Preferred  Stock at $79.86 per share.  The per                
share value was  determined  by  applying  the                
conversion  ratio  of  2.19298  to the  Common                
Stock  price of $32.363  per share in a. above                
and adding an amount of $8.89 per share  which                
represents  the  present  value of the  future                
dividends  on  the  Series B  Preferred  Stock                
         and an adjustment for illiquidity.                              175,700

d.  The   incurrence  by  the  Company  of  $207.5                    
million of debt from bank financing,  which is                
assumed  paid to RIC in  connection  with  the                
         Acquisition.                                                    207,500

     e.  Assumed transaction costs of $5.0 million.                        5,000
                                                                      ----------

         Total recorded purchase price                                  $572,024
                                                                      ==========

2.   This pro forma adjustment  reflects  adjustment to deferred taxes resulting
     from     purchase     accounting     changes    and    the    accrual    of
     Commonwealth/Transnation's  existing  OPEB (Other  Postretirement  Employee
Benefits) transition obligation.                                      

3.   This pro forma adjustment reflects (i) interest incurred on debt assumed in
     connection with the Acquisition at an assumed interest rate of 6.250%,  the
     Interbank  Offered  Rate  ("IBOR") at December  16,  1997 plus  0.375%,  or
     $12,969 for the year ended December 31, 1996 and $9,727 for the nine months
     ended  September 30, 1997, (ii)  amortization  of goodwill  acquired at the
     time of the Acquisition over a period of forty years or $6,883 for the year
     ended December 31, 1996 and $5,162 for the nine months ended  September 30,
     1997 and (iii) income taxes incurred at the federal  statutory rate of 35%,
     or $6,948  for the year  ended  December  31,  1996 and $5,211 for the nine
months ended September 30, 1997.                                      

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 Pro Forma Condensed Combined Financial Statements
September 30, 1997 and December 31, 1996
 Notes to Pro Forma Financial Statements

4.   The Company  expects to achieve  approximately  $40.0  million of recurring
     annual  pre-tax  operating expense savings  through  reductions  in  staff,
     consolidation  of data processing and  elimination of certain  duplicate or
     excess  facilities.  It is expected to take four quarters to  fully realize
     these expense savings.  In  addition, the Company  anticipates  that in the
     quarter  in  which  the  Acquisition  occurs,  it will  record  a  one-time
     after-tax  charge to earnings ranging from  approximately  $16.3 million to
     $19.5 million (approximately $25.0 million to $30.0 million before tax). No
     adjustment has been included in the unaudited pro forma condensed financial
     statements for the anticipated cost savings. There can be no assurance that
     anticipated  operating  cost  savings will be achieved in the amounts or at
the times anticipated.                                                

5.   The significant adjustments comprising the purchase price allocation are as
follows:                                                              

                                                                [Download Table]

                                                                              
Book value of Commonwealth/Transnation net                                    
 assets acquired at September 30, 1997                                        
 (including title plants of $50,174)............                      $284,116
Adjustments:                                                                  
  Increase in deferred income tax asset.........          $ 17,576            
  Increase in accounts payable and                                            
   accrued expenses for OPEB liability..........            (5,000)           
                                                                      --------
Total adjustments...............................                        12,576
Goodwill........................................                       275,332
                                                                      --------
     Total purchase price.......................                      $572,024
                                                                      ========

         For  purposes  of  these  Pro  Forma   Condensed   Combined   Financial
Statements,  the assets and  liabilities  acquired  reflect their  recorded book
value except as noted above. The allocation of the purchase price is preliminary
since  appraisals  of the  Commonwealth/Transnation  title  plants have not been
completed.  Once the appraisals are completed the Company expects that the value
assigned to title plants will be increased  and the amount of goodwill  recorded
will be  decreased.  Management  does not expect  that this  adjustment  will be
material to the Pro Forma Condensed  Combined  Financial  Statements  taken as a
whole.  In  addition,  management  believes  that,  with the  exception of title
plants,    the   fair    values   of   the    assets    and    liabilities    of
Commonwealth/Transnation  will not vary  significantly  from their recorded book
values.                                                                         

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 LAWYERS TITLE CORPORATION
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

         The historical operating results data, per share data and balance sheet
data set  forth  below  are  derived  from the  consolidated  audited  financial
statements of the Company for the five-year  period ended December 31, 1996. The
historical  operating  results  data,  per share data and balance sheet data set
forth below for the nine months  ended  September  30, 1996 and 1997 are derived
from unaudited financial statements.  The unaudited financial statements include
all adjustments, consisting of normal recurring accruals only, which the Company
considers  necessary for a fair  presentation of the financial  position and the
results of operations for these periods.  Operating  results for the nine months
ended September 30, 1997 are not necessarily indicative of results that might be
expected for the entire year ending December 31, 1997.                          

         The historical operating results data, per share data and balance sheet
data set  forth  below  should  be read in  conjunction  with  the  consolidated
financial  statements,  related  notes and other  financial  information  of the
Company included or incorporated by reference into this Prospectus.             

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 Lawyers Title Corporation
Selected Consolidated Financial and Other Data

                                                        [Enlarge/Download Table]


                                                                     Years Ended December 31,                        
                                              -----------------------------------------------------------------------
                                                    1992          1993          1994          1995         1996      
                                                    ----          ----          ----          ----         ----      

                                                         (Dollars in thousands, except per share and other data)     
                                                                                                                     
Operating Results Data:                                                                                              
  Revenues:                                                                                                          
    Title insurance premiums................     $  389,279    $  405,080    $  413,857   $  385,871    $  456,377   
    Title search, escrow and other fees.....         59,274        78,965        73,200       81,490       101,381   
                                                     ------        ------        ------       ------       -------   
    Operating revenues......................        448,553       484,045       487,057      467,361       557,758   
    Net investment income...................         12,444        11,850        12,478       12,501        13,053   
    Net realized investment gains...........         10,164         7,986         1,665        2,970        23,371   
                                                     ------        ------        ------       ------       -------   
        Total revenues......................        471,161       503,881       501,200      482,832       594,182   
  Expenses:                                                                                                          
    Salaries and employee benefits..........        118,672       137,328       143,817      155,920       184,274   
    Agents' commissions.....................        199,636       192,454       205,147      167,031       192,590   
    Provision for policy and contract claims                                                                         
      (1)...................................         59,594        54,139        46,775       24,297        29,211   
    General, administrative and other.......         81,395        90,995        96,492      111,724       132,567   
                                                     ------        ------        ------       ------       -------   
        Total expenses......................        459,297       474,916       492,231      458,972       538,642   

  Income before income taxes................         11,864        28,965         8,969       23,860        55,540   
  Provision for income taxes................             --            --         2,155        6,809        19,021   
                                                     ------        ------        ------       ------       -------   
  Net income................................      $  11,864     $  28,965      $  6,814    $  17,051     $  36,519   
                                                  =========     =========      ========    =========     =========   

Per Share Data:                                                                                                      
  Earnings per common and common equivalent                                                                          
   share (2)................................        $  1.85       $  4.23       $  0.79      $  1.89       $  4.01   
  Earnings per common share assuming full                                                                            
   dilution (2).............................           1.84          4.21          0.79         1.87          4.01   
  Operating earnings per common share                                                                                
   assuming full dilution (3)...............           0.82          3.46          0.67         1.66          2.34   
  Weighted average number of common and                                                                              
   common equivalent shares outstanding                                                                              
   (000s)...................................          6,424         6,853         8,606        9,039         9,102   
  Weighted average number of shares assuming                                                                         
   full dilution (000s).....................          6,437         6,876         8,607        9,099         9,118   
  Dividends declared per common share.......             --       $  0.06       $  0.12      $  0.18       $  0.20   

Other Data:                                                                                                          
  Title policies issued.....................        812,770       923,065       866,621      670,447       790,829   
  Title insurance operating revenues:                                                                                
    Percentage direct operations............          43.0%         47.6%         44.1%        51.7%         53.5%   
    Percentage agency operations............          57.0%         52.4%         55.9%        48.3%         46.5%   
  Employees at period end...................          2,800         3,429         3,453        3,523         3,757   

  Loss ratio (4)............................          13.3%         11.2%          9.6%         5.2%          5.2%   
  Expense ratio (5).........................          88.9%         86.7%         91.2%        92.5%         91.0%   
                                                      -----         -----         -----        -----         -----   
  Combined ratio (6)........................         102.2%         97.9%        100.8%        97.7%         96.2%   
                                                     ======         =====        ======        =====         =====   

                                                        [Enlarge/Download Table]

                                                    Nine Months Ended                     
                                                      September 30,                       
                                              ------------------------------              
                                                    1996          1997                    
                                                    ----          ----                    
                                   (Dollars in thousands, except per share and other data)
                                                                                          
Operating Results Data:                                                                   
  Revenues:                                                                               
    Title insurance premiums................     $  328,438    $  353,775                 
    Title search, escrow and other fees.....         74,503        85,769                 
                                                     ------        ------                 
    Operating revenues......................        402,941       439,544                 
    Net investment income...................         10,057        12,299                 
    Net realized investment gains...........          5,381           120                 
                                                     ------        ------                 
        Total revenues......................        418,379       451,963                 
  Expenses:                                                                               
    Salaries and employee benefits..........        137,127       148,596                 
    Agents' commissions.....................        134,116       149,944                 
    Provision for policy and contract claims                                              
      (1)...................................         21,075        23,910                 
    General, administrative and other.......         96,396       102,994                 
                                                     ------        ------                 
        Total expenses......................        388,714       425,444                 

  Income before income taxes................         29,665        26,519                 
  Provision for income taxes................         10,046         9,220                 
                                                     ------        ------                 
  Net income................................     $   19,619     $  17,299                 
                                                 ==========     =========                 

Per Share Data:                                                                           
  Earnings per common and common equivalent                                               
   share (2)................................        $  2.16       $  1.87                 
  Earnings per common share assuming full                                                 
   dilution (2).............................           2.14          1.85                 
  Operating earnings per common share                                                     
   assuming full dilution (3)...............           1.76          1.85                 
  Weighted average number of common and                                                   
   common equivalent shares outstanding                                                   
   (000s)...................................          9,097         9,231                 
  Weighted average number of shares assuming                                              
   full dilution (000s).....................          9,158         9,332                 
  Dividends declared per common share.......        $  0.15       $  0.15                 

Other Data:                                                                               
  Title policies issued.....................        572,141       594,837                 
  Title insurance operating revenues:                                                     
    Percentage direct operations............          54.9%         54.4%                 
    Percentage agency operations............          45.1%         45.6%                 
  Employees at period end...................          3,785         3,932                 

  Loss ratio (4)............................           5.2%          5.4%                 
  Expense ratio (5).........................          90.9%         91.0%                 
                                                      -----         -----                 
  Combined ratio (6)........................          96.1%         96.4%                 
                                                      =====         =====                 
                                                        [Enlarge/Download Table]


                                                                    At December 31,                               At September 30, 
                                            ------------------------------------------------------------------  -------------------

                                                1992          1993          1994          1995         1996            1997        
                                                ----          ----          ----          ----         ----            ----        
                                                                                                                                   
Balance Sheet Data:                                                                                                                
  Cash and investments...................... $  233,146    $  269,370    $  252,011   $  285,472    $  316,052     $  317,715      
  Total assets..............................    363,673       438,140       453,259      475,843       520,968        540,944      
  Total debt................................      1,218         1,165         8,872        4,146         4,200          8,216      
  Reserve for policy and contract claims (1)                                                                                       
    (1).....................................    179,022       187,619       198,906      193,791       196,285        199,865      
  Shareholders' equity......................    143,978       201,161       203,323      238,385       262,168        281,330      
  Book value per share......................      22.26         23.90         22.89        26.83         29.49          31.51      

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--------------                                                                  
(1)   In the fourth  quarter of 1996,  the Company made a change from  reporting
      policy and contract claims on a discounted  basis to reporting such claims
      on an undiscounted basis. In addition, the Company changed its estimate of
      reserves  for policy and  contract  claims to reflect the  favorable  loss
      experience that has emerged over the past few years.  These changes had no
      material net effect on the provision for policy and contract  claims.  See
      "Lawyers  Title  Corporation   Management's  Discussion  and  Analysis  of
      Financial  Condition  and Results of  Operations"  and "Index to Financial
Statements."                                                        
(2)   The increase in price of the Common Stock during the third quarter of 1997
      resulted in there being outstanding potentially dilutive securities having
      a dilutive effect in excess of 3% on the Company's  earnings per share for
      the nine months ended September 30, 1997. Prior to September 30, 1997, the
      effect of outstanding  potentially  dilutive securities was immaterial and
      accordingly  the Company has not  previously  reported  fully  diluted and
      primary earnings per share.  Earnings per share as previously reported (as
shown in the financial statements included herein) were as follows: 

                       At December 31,                        At September 30,
       ----------------------------------------------------  -------------------
  1992     1993        1994        1995       1996            1996
  ----     ----        ----        ----       ----            ----
  $ 1.88   $ 4.31      $ 0.80      $ 1.92     $ 4.11          $ 2.21

(3)   Excludes after tax net realized investment gains.                         
(4)   Provision  for policy and  contract  claims as a  percentage  of operating
revenues.                                                           
(5)   Total  operating  expenses  excluding  interest  expense,  amortization of
      goodwill and provision  for policy and contract  claims as a percentage of
operating revenues.                                                 
(6)   The sum of the loss ratio and the expense ratio.                          

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 LAWYERS TITLE CORPORATION
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General                                                                         

Overview                                                                        

         The Company reported  improved earnings in 1996 compared to 1995, which
had been a significant  improvement over 1994. The Company's primary business is
the  insurance of titles to real  property,  which is greatly  influenced by the
real estate economy. Underlying economic factors adversely affected 1994 results
due to upward  pressures on mortgage loan interest rates as the Federal  Reserve
responded to inflationary fears. During the three year period from 1994 to 1996,
the Company  benefited  from the  execution  of three  distinct  portions of its
business  strategy.  Operations  were expanded  through the acquisition of title
insurance  agents  and   underwriters,   expenses  were  tightly  monitored  and
controlled, and claims experience improved due to quality control efforts and an
improved claims environment.                                                    

Revenues                                                                        

         The Company's  operating  revenues are  dependent on overall  levels of
real  estate  activity  which are  influenced  by a number of factors  including
interest  rates,  access to capital,  housing  starts,  housing  resales and the
general state of the economy.  In addition,  the Company's revenues are affected
by the Company's sales and marketing  efforts,  its acquisition  program and its
strategic  decisions  based on the rate  structure  and  claims  environment  in
particular markets.                                                             

         Premiums and related fees are  determined  both by  competition  and by
state regulation. Operating revenues from direct title operations are recognized
at the time real estate  transactions  close,  which is generally  sixty (60) to
ninety (90) days after the opening of a title  order.  Operating  revenues  from
agents are  recognized  when the issuance of a policy is reported to the Company
by an agent.  Although  agents  generally  report the  issuance of policies on a
monthly basis, heightened levels of real estate activity may slow this reporting
process. This typically results in delays of thirty (30) to sixty (60) days from
the closing of real estate  transactions  until the recognition of revenues from
agents.  As a result,  there can be a significant lag between changes in general
real estate activity and their impact on the Company's revenues.                

         In  addition  to the  premiums  and related  fees,  the  Company  earns
investment  income from its portfolio of fixed-maturity  and equity  securities.
Investment  income includes  dividends and interest as well as realized  capital
gains or losses on the portfolio. The Company regularly reexamines its portfolio
strategies  in light of  changing  earnings  or tax  situations.  In the  fourth
quarter of 1996 the Company  shifted its investment  strategy,  eliminating  its
investment  in equity  securities  and  beginning to move all of its  investment
portfolio into  fixed-maturity  securities.  The  repositioning of the portfolio
eliminated  the exposure of the  regulated  surplus of the  Company's  insurance
subsidiaries to market fluctuations inherent in equity portfolios. Additionally,
the commensurate  increase in fixed-maturity  securities  increased the level of
more stable, predictable interest income earned.                                

Factors Affecting Profit Margins and Pre-Tax Profits                            

         The Company's profit margins are affected by several factors, including
the volume of real estate activity,  policy amount and the nature of real estate
transactions.  Volume is an important  determinant of profitability  because the
Company,  like any other title  insurance  company,  has a significant  level of
fixed costs arising from  personnel,  occupancy  costs and  maintenance of title
plants.  Because  premiums  are based on the face amount of the  policy,  larger
policies   generate  higher  premiums  although  expenses  of  issuance  do  not
necessarily  increase in proportion to policy size.  Profit margins are lower on
refinancings  than on sales due to premium  discounts  and  higher  cancellation
rates generally experienced on refinancings.  Cancellations affect profitability
because costs  incurred both in opening and in processing  orders  typically are
not offset by fees.                                                             

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         The  Company's  principal  variable  expense  is  commissions  paid  to
independent  agents.  The Company  regularly  reviews the  profitability  of its
agency revenues,  adjusting commission levels or cancelling certain agents where
profitability  objectives  are not  being  met and  expanding  operations  where
acceptable  levels of  profitability  are  available.  The  Company  continually
monitors its expense ratio,  which is the sum of salaries and employee benefits,
agency  commissions  and other  expenses  expressed as a percentage of operating
revenues.                                                                       

Claims                                                                          

         Generally,  title  insurance claim rates are lower than for other types
of insurance  because  title  insurance  policies  insure  against  prior events
affecting the quality of real estate titles, rather than against unforeseen, and
therefore less  predictable,  future  events.  A provision is made for estimated
future claim  payments at the time  revenue is  recognized.  Both the  Company's
experience and industry data indicate that claims activity  continues through 20
years  after the policy is  issued.  Management  uses  actuarial  techniques  to
estimate future claims by analyzing past claim payment patterns.  Management has
continued to emphasize and  strengthen  claims  prevention  and product  quality
programs.                                                                       

         In the fourth  quarter of 1996 the Company made a change from reporting
policy and contract claims on a discounted to an undiscounted basis. This change
was  made to  conform  with  industry  practice  and  because  it is  considered
preferable by rating agencies and investment analysts.  The effect of the change
for 1996 was to increase the  provision  for policy and  contract  claims by $76
million  and  decrease  net  income by $49  million  and net income per share by
$5.51.                                                                          

         In addition,  during the fourth quarter of 1996, the Company determined
that the trend of favorable loss  experience  that has emerged over the past few
years could be relied upon, and the Company changed its estimate of the ultimate
net cost of all reported and unreported  losses incurred  through  September 30,
1996 to reflect this favorable experience.  The effect of the change in estimate
was to decrease the provision for policy and contract  claims by $78 million and
to increase net income by $50.7 million and net income per share by $5.70.      

         Because the change in accounting principle to no longer discount policy
and contract claims is inseparable  from the change in estimate,  both have been
accounted  for as a change in estimate.  Accordingly,  the net effect of the two
changes,  a  decrease  of $2 million in the  provision  for policy and  contract
claims,  has been  included  in  operations  for the fourth  quarter.  The above
changes were both made to conform with general  industry  practice.  The changes
are  included  in the  provision  for  policy and  contract  claims and no prior
amounts have been restated.                                                     

Other Expenses                                                                  

         The most  significant  components of other expenses are rent for office
space,  outside  costs of title  production,  travel,  communications  and taxes
levied by states on premiums.                                                   

Seasonality                                                                     

         Historically,  real estate  activity has been  generally  slower in the
winter months with volumes  showing  significant  improvements in the spring and
summer  months.  The percentage of title orders closed to title orders opened is
typically  lower  in the  first  six  months  than at year end  because  of this
seasonal  variance.  See "Business -- Seasonality,  Backlog and Cyclicality." In
recent years low levels of mortgage  interest rates have caused  fluctuations in
real estate activity levels outside of the usual,  seasonal pattern. The Company
cannot predict  whether or when the historical  seasonal  pattern of real estate
activity will resume.                                                           

Contingencies                                                                   

         There are no material  pending legal  proceedings,  other than ordinary
routine  litigation  incidental to the business,  to which the Company or any of
its subsidiaries is a party or of which any of their property is subject.       

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Results of Operations                                                           

Comparison of Three and Nine Months Ended September 30, 1997
and Three and Nine Months Ended September 30, 1996

Net Income                                                                      

         Net income for the three and nine months ended  September 30, 1997, was
$8.4 million and $17.3 million, respectively, compared to $6.1 and $19.6 million
for the same periods in 1996. The 1996 results  included after tax capital gains
of $0.6  million and $3.5  million,  respectively,  for the three and nine month
periods while there were no significant gains in 1997. Excluding realized gains,
net  operating  income grew 54.8% to $8.4 million and 6.8% to $17.2  million for
the three and nine months ended September 30, 1997, respectively,  when compared
to the same periods in 1996.                                                    

         The Company's results for the three and nine months ended September 30,
1997  compare  favorably  to  those  for  the   corresponding   period  in  1996
notwithstanding the fact that the Company experienced an unusually high level of
refinancing  in the first  quarter of 1996 which  bolstered the results for that
period.  This favorable  comparison  results from strong revenue  growth,  tight
expense management and continued favorable loss experience.                     

Operating Revenues                                                              

         Operating revenues,  which include premiums,  title search,  escrow and
other fees, increased 13.2% to $160.4 million and 9.1% to $439.5 million for the
three and nine months ended  September 30, 1997,  respectively,  compared to the
same periods in 1996.                                                           

         Premium  revenue  increased  11.6% to $128.6 million and 7.7% to $353.8
million for the three and nine months ended  September  30, 1997,  respectively.
These  increases  reflect  a  favorable   interest  rate  and  general  economic
environment which resulted in an increased number of new home sales and mortgage
refinancings.                                                                   

         Title  search,  escrow and other fee revenue  increased  20.0% to $31.7
million and 15.1% to $85.8 million for the three and nine months ended September
30, 1997, respectively,  compared to the same periods in 1996. This increase can
be  attributed  to  increased  title  order  activity  in the  Company's  direct
operations.  Additionally,  the increase in other fee revenue has been favorably
affected by increased  revenues in the Company's  real  estate-related  services
such as relocation services.                                                    

         Orders  opened  in  the  Company's  direct  operations  grew  12.6%  to
approximately 109,600 for the three months ended September 30, 1997, compared to
approximately  97,300 for the same period in 1996.  While there is no  assurance
that opened orders will close,  management believes that the current order level
is a favorable indication for fourth quarter 1997 operating revenues.           

Investment Income                                                               

         Investment  income  excluding  realized gains increased to $4.0 million
and $12.3 million for the three and nine month periods ended September 30, 1997,
respectively,  from $3.7  million  and $10.1 for the same  periods in 1996.  The
increase was due to an overall  increase in the size of the portfolio as well as
the higher  component of fixed income  investments  resulting from the Company's
sale of its equity investments in the fourth quarter of 1996.                   

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Expenses                                                                        

         Salaries and Employee  Benefits.  The  Company's  expense  ratio (total
expenses less the  provision  for policy and contract  claims as a percentage of
operating revenues,  and excluding goodwill) for the three and nine months ended
September  30,  1997 was 88.7% and 91.0%,  respectively,  compared  to 91.2% and
90.9% for the  comparable  periods in 1996. The decrease in the expense ratio in
the third quarter of 1997 reflects  increased  operating leverage resulting from
the Company's  growth in revenues.  The  Company's  expense  ratios  reflect its
continuing focus on expense management.                                         

         Salaries  and  employee  benefits  for the three and nine months  ended
September 30, 1997 increased  9.3% to $51.8 million and 8.4% to $148.6  million,
respectively, primarily as a result of higher business volumes.                 

         Operating  revenue net of agents'  commissions  on a per employee basis
was $76,000 for the nine months ended  September  30, 1997,  compared to $73,000
for the comparable period in 1996.                                              

         Agents' Commissions.  Agents' commissions for the three and nine months
ended  September 30, 1997  increased  13.5% to $54.2 million and 11.8% to $149.9
million,  respectively.  These  increases  are largely  tied to higher  business
volumes.                                                                        

         Provision for Policy and Contract Claims. The loss ratio (the provision
for policy and contract  claims as a percentage of operating  revenues) was 5.4%
for the three and nine months ended September 30, 1997 compared to 5.3% and 5.2%
for the same  periods in 1996.  The 1997 ratios  reflect a  continuation  of the
favorable loss trends that the Company has experienced in recent periods. Claims
paid as a percentage of operating  revenues were 4.2% and 4.6% for the three and
nine months ended  September 30, 1997,  respectively,  compared to 4.6% and 5.0%
for the comparable periods in 1996.                                             

Income Taxes                                                                    

         Income tax  expense  was $4.6  million  and $9.2  million for the three
month and nine month periods ending September 30, 1997. This represented a 35.3%
and 34.8% effective tax rate, respectively.                                     

Comparison of Years Ended December 31, 1996,
 December 31, 1995 and December 31, 1994

Net Income                                                                      

         Net income was $36.5 million in 1996,  $17.1 million in 1995,  and $6.8
million  in 1994.  The 1996 net  income  increase  was  attributable  in part to
capital gains resulting from a shift in the Company's  investment portfolio from
equities to fixed income  securities,  as discussed  under  "Investment  Income"
below. Net operating income (which excludes realized investment gains) was $21.3
million, $15.1 million, and $5.7 million in the fiscal years ending December 31,
1996,  1995,  and  1994,  respectively.  The 1996 and 1995  increases  reflected
improved results from operations.                                               

Operating Revenues                                                              

         Operating revenues improved 19.3% to $557.8 million in 1996 compared to
$467.4  million  in 1995.  This 1995  level was a 4.0%  reduction  from the 1994
amount.                                                                         

         The 1996  results  benefited  from a  favorable  economic  environment.
Average  mortgage  rates were 7.0% in January  1996 and,  although  fluctuating,
never  exceeded 8.3% for any month in 1996. The favorable  economic  environment
led to increased  levels of housing starts and housing  resales in 1996 compared
to 1995. Business volumes for direct and agency business improved  approximately
18% from 670,000 transactions in 1995 to 790,000 in 1996.                       

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         Conversely,  revenue fell for the full year of 1995 compared to 1994 as
a result of interest rate  pressures.  Average  mortgage  rates were 9.2% at the
beginning of 1995,  fell gradually to 7.6% by the end of the first half of 1995,
averaged  7.5% in the second half of the year and were 7.2% at year end.  Due to
the lag  between the closing of  transactions  by agents and income  recognition
when such agents report the issuance of policies,  increased  revenues resulting
from this  increased  real  estate  activity  in 1995  (relating  to the fall in
interest  rates) were realized in 1996.  Interest rate related  business  volume
reductions were offset in part by revenue from  acquisitions of $68.0 million in
1995.                                                                           

         The volume of orders for title insurance opened in the Company's direct
operations  increased  14.2% in 1996  compared  to 1995  after  improving  16.2%
between  1995 and 1994.  Exclusive  of  acquisitions,  orders in 1995 would have
fallen 9.9% compared to 1994.                                                   

Investment Income                                                               

         Investment  income  increased  significantly  to $36.4  million in 1996
compared to $15.5 million in 1995 after  increasing  from $14.1 million in 1994.
The increases were due  principally  to increased  levels of capital gains which
were $23.4  million  in 1996,  $3.0  million  in 1995 and $1.7  million in 1994.
Excluding these gains, the remaining  components of investment income (dividends
and  interest)  amounted to $14.2  million,  $14.0  million and $13.2 million in
1996, 1995 and 1994, respectively.                                              

         In the  fourth  quarter  of 1996 the  Company  changed  its  investment
strategy, selling all of its equity portfolio and beginning to move the proceeds
into  fixed-maturity  securities.  This sale  resulted in capital gains of $17.4
million.                                                                        

Expenses                                                                        

         Salaries  and  Employee  Benefits.  Personnel  related  expenses  are a
significant portion of total operating expenses in the title insurance industry.
These expenses require management through the often rapidly changing  conditions
in the real estate economy.  Salaries and employee  benefits  increased 18.2% in
1996 compared to 1995. This increase was largely tied to higher business volumes
which  necessitated  increased staffing levels to meet customer service demands,
incentive  increases  and normal merit  raises.  Accordingly,  the expense ratio
improved in 1996 to 91.3% from 93.0% in 1995.  Salaries  and  employee  benefits
increased 8.4% in 1995 over 1994, and the 1995 expense ratio  increased to 93.0%
from 91.5% in 1994. In the fourth  quarter of 1994, in response to a severe fall
in order counts,  a special staff and salary  reduction  program was implemented
that  lasted  through the second  quarter of 1995.  On a same store  basis,  the
Company  reduced  its  overall  headcount  by about  25%  from  its peak  level.
Additionally,  the Company effected salary  reductions of up to 10% for a period
of approximately six months.  As an offset to these reductions,  staffing levels
increased  between  1995  and  1994 due to the  Company's  acquisition  program.
Operating revenue net of agents' commissions improved on a per employee basis to
$99,000 in 1996 from $87,000 in 1995 and $85,000 in 1994.                       

         Agents' Commissions. Commissions paid to title insurance agents are the
largest single expense  incurred by the Company.  The commission  rate varies by
geographic area in which the commission was earned.  Commissions as a percentage
of  agency  revenue  were  74.2%,  73.9%  and  75.4%  in 1996,  1995  and  1994,
respectively.                                                                   

         General,  Administrative  and  Other  Expenses.  The  most  significant
components of other  expenses are rent for office space,  outside costs of title
production,  travel,  communications  and taxes  levied  by states on  premiums.
Portions of these  expenses  vary with the volume of business  transacted by the
Company.                                                                        

         Provision  for  Policy  and  Contract  Claims.   The  Company's  claims
experience has shown  improvement in recent years. The loss ratio was 5.2%, 5.2%
and  9.6% in 1996,  1995  and  1994,  respectively.  The loss  ratio in 1994 was
adversely  affected by a $5.0 million agency  defalcation,  which  increased the
loss ratio by 1.0%. As previously  discussed,  the Company changed its method of
reporting policy and contract claims in the fourth quarter of 1996.  Claims paid
as a percentage of operating revenues were 4.8%, 6.5% and 7.6% in 1996, 1995 and
1994, respectively.                                                             

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Income Taxes                                                                    

         The Company  pays U.S.  federal and state income taxes based on laws in
the jurisdictions in which it operates. The effective tax rates reflected in the
income statement for 1996, 1995 and 1994 differ from the U.S. federal  statutory
rate principally due to non-taxable  interest,  dividend deductions,  travel and
entertainment and company-owned life insurance.                                 

         At December  31, 1996 the Company had  recorded  deferred tax assets of
$32.2  million  related  primarily  to policy and  contract  claims and employee
benefit  plans.  Substantially  all of this  deferred tax asset balance could be
realized in the future  through  the  reversal  of  existing  temporary  taxable
differences.  Accordingly,  it is more  likely  than  not that  the  income  tax
benefits will be realized for all the temporary deductible  differences existing
at December 31, 1996.                                                           

         The Company  reassesses the  realization of deferred  assets  quarterly
and, if necessary, adjusts its valuation allowance accordingly.                 

Liquidity and Capital Resources                                                 

         Cash  provided  by  operating  activities  was $8.8  million  and $24.3
million for the nine months ended  September  30, 1997 and  September  30, 1996,
respectively.  At September 30, 1997, the Company held cash of $63.0 million and
fixed-maturity  securities of $252.6 million.  Additionally,  the Company had no
long-term debt and had unutilized lines of credit totaling $30.0 million.       

         Cash provided by operating activities was $33.2 million,  $22.0 million
and $6.4 million for the fiscal years ended December 31, 1996, 1995 and 1994. In
addition to $95.6 million of cash and invested  cash on hand and $218.2  million
of fixed-maturity  securities at December 31, 1996, the Company had no long-term
debt and  maintained a $35.0 million  working  capital line of credit,  of which
$34.0 million was unused at December 31, 1996.                                  

         Historically,  the Company  has not  maintained  significant  levels of
debt. Upon closing the Acquisition,  the Company expects to incur debt of $207.5
million  under  the  Credit  Facility  and have 2.2  million  shares of Series B
Preferred Stock  outstanding.  The Company estimates that servicing the debt and
preferred  stock  will  require  approximately  $20.0  million  per year,  which
management expects to be funded largely from increased cash flow from operations
resulting from the  Acquisition.  Additionally,  management  believes that these
cash  requirements  will be partially  offset by  approximately  $7.0 million of
federal income tax benefits related to the tax deductibility of interest expense
and goodwill  amortization.  In view of the historic  ability of the Company and
Commonwealth/Transnation  to  generate  strong,  positive  cash  flows,  and the
projected  strong  cash  position  and  relatively  conservative  capitalization
structure of the Combined Company following consummation of the Acquisition, the
Company  believes that the Combined  Company will have sufficient  liquidity and
adequate capital  resources to meet both its short- and long-term capital needs.
Further,  the Company expects to maintain  approximately $30.0 million in unused
credit facilities.                                                              

Emerging Issues                                                                 

         Many existing  computer programs use only two digits to identify a year
in  the  date  field.   These  programs  were  designed  and  developed  without
considering the impact of the upcoming change in the century.  If not corrected,
many computer  applications  could fail or create erroneous results by or in the
year 2000. The potential costs and uncertainties to companies in addressing this
issue (the "Year 2000  issue")  will  depend on a number of  factors,  including
their software and hardware and the nature of their  industries.  Companies must
also  coordinate  with other entities with which they  electronically  interact,
both  domestically  and globally,  including  suppliers,  customers,  creditors,
borrowers and financial service organizations.                                  

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         The Company has closely  examined the Year 2000 issue and the potential
costs and  consequences  to the Company in addressing this issue. As part of its
business  and  growth  strategy,  the  Company  is  currently  investing  in new
information  technology,  including  the  replacement  of  multiple  independent
personal  computer  systems  throughout its direct  operations  with an upgraded
centralized system, that is "Year 2000" compliant.  See "The Combined Company --
Business and Growth  Strategies." The Company is also  communicating  with third
parties with which it does business to coordinate further action with respect to
the Year 2000 issue. As a result, management believes that, with the replacement
of certain  computer  systems  as  described  above,  the Year 2000 issue is not
expected to have a material impact on the Company's operations and that the cost
of the  Company's  addressing  the Year 2000  issue is not a  material  event or
uncertainty  that  would  cause its  reported  financial  information  not to be
necessarily indicative of future operating results or financial condition.      

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 COMMONWEALTH LAND TITLE INSURANCE COMPANY
 AND
 TRANSNATION TITLE INSURANCE COMPANY
COMBINED SELECTED FINANCIAL AND OTHER DATA

         The  historical  operating  results  data and  balance  sheet  data for
Commonwealth  and  Transnation  on a combined basis are derived from the audited
combined financial  statements of Commonwealth and Transnation for the five year
period ended December 31, 1996. The historical operating results data, per share
and balance  sheet data set forth below for the nine months ended  September 30,
1996 and 1997 are derived from  unaudited  financial  statements.  The unaudited
financial  statements  include all  adjustments,  consisting of normal recurring
accruals,  which  Commonwealth  and  Transnation  consider  necessary for a fair
presentation  of the financial  position and the results of operations for these
periods.  Operating results for the nine months ended September 30, 1997 are not
necessarily  indicative  of results  that may be  expected  for the entire  year
ending December 31, 1997.                                                       

         The historical  operating results data and balance sheet data set forth
below  should be read in  conjunction  with the combined  financial  statements,
related  notes  and  other  financial  information  of  Commonwealth/Transnation
included herein.                                                                

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 Commonwealth Land Title Insurance Company and
Transnation Title Insurance Company 
Selected Combined Financial Data

                                                        [Enlarge/Download Table]


                                                                          Years Ended December 31,                          
                                                 ---------------------------------------------------------------------------
                                                      1992           1993            1994           1995           1996     
                                                      ----           ----            ----           ----           ----     

                                                                   (Dollars in thousands, except other data)                
                                                                                                                            
Operating Results Data:                                                                                                     
  Revenues:                                                                                                                 
    Title insurance premiums...................       $ 704,110      $ 747,202       $ 792,919     $ 582,329       $ 668,807
    Title search, escrow and other fees........          66,409        146,148          63,843        89,607         111,350
                                                       --------       --------        --------       -------        --------
    Operating revenues.........................         770,519        893,350         856,762       671,936         780,157
    Net investment income......................          15,126         24,224          26,455        27,933          30,455
    Net realized investment gains..............           1,576          4,786             516         1,729             346
                                                       --------       --------        --------       -------        --------
        Total revenues.........................         787,221        922,360         883,733       701,598         810,958

  Expenses:                                                                                                                 
    Salaries and employee benefits.............         185,443        219,904         211,150       188,097         206,083
    Agents' commissions........................         374,419        426,885         432,041       310,729         355,834
    Provision for policy and contract claims...          68,210         81,803          75,867        58,486          61,116
    General, administrative and other..........         127,114        133,002         132,871       130,076         149,345
                                                       --------       --------        --------       -------        --------
        Total expenses.........................         755,186        861,594         851,929       687,388         772,378

  Income before income taxes...................          32,035         60,766          31,804        14,210          38,580
  Provision for income taxes...................          10,248         20,480          10,809         4,755          13,347
  Income from continuing operations............          21,787         40,286          20,995         9,455          25,233
  Income from discontinued mortgage insurance                                                                               
   operations, net of taxes....................          10,649             --              --            --              --
  Gain on disposal of discontinued mortgage                                                                                 
   insurance operations, net of taxes..........           7,549             --              --            --              --
  Cumulative effect of change in accounting for                                                                             
   income taxes................................              --          1,316              --            --              --
                                                       --------       --------        --------       -------        --------
  Net income...................................        $ 39,985       $ 41,602        $ 20,995       $ 9,455        $ 25,233
                                                       ========       ========        ========       =======        ========

Common stock dividends.........................        $ 22,700       $ 19,500        $ 19,000       $ 4,000        $ 18,216

Per Share Data (1)                                                                                                          

Other Data:                                                                                                                 
  Title policies issued........................       1,496,960      1,651,806       1,736,134     1,094,467       1,234,655
  Title insurance operating revenues:                                                                                       
    Percentage direct operations...............           40.0%          40.9%           35.0%         40.2%           41.4%
    Percentage agency operations...............           60.0%          59.1%           65.0%         59.8%           58.6%
  Employees at end of period...................           3,977          4,623           4,035         3,755           3,934

  Loss ratio (2)...............................            9.0%           9.3%            8.9%          8.7%            7.8%
  Expense ratio (3)............................           89.1%          87.3%           90.5%         93.5%           91.1%
                                                          -----          -----           -----         -----           -----
  Combined ratio (4)...........................           98.1%          96.6%           99.4%        102.2%           98.9%
                                                          =====          =====           =====        ======           =====

                                                        [Enlarge/Download Table]

                                                           Nine Months Ended            
                                                             September 30,              
                                                     ------------------------------     
                                                          1996            1997          
                                                          ----            ----          
                                               (Dollars in thousands, except other data)
                                                                                        
Operating Results Data:                                                                 
  Revenues:                                                                             
    Title insurance premiums...................            $488,980        $517,922     
    Title search, escrow and other fees........              87,000          94,975     
                                                          ---------        --------     
    Operating revenues.........................             575,980         612,897     
    Net investment income......................              22,663          23,236     
    Net realized investment gains..............                 376           1,187     
                                                          ---------        --------     
        Total revenues.........................             599,019         637,320     

  Expenses:                                                                             
    Salaries and employee benefits.............             153,695         173,847     
    Agents' commissions........................             263,138         268,960     
    Provision for policy and contract claims...              47,461          29,470     
    General, administrative and other..........             109,880         120,872     
                                                          ---------        --------     
        Total expenses.........................             574,174         593,149     

  Income before income taxes...................              24,845          44,171     
  Provision for income taxes...................               8,520          15,192     
  Income from continuing operations............              16,325          28,979     
  Income from discontinued mortgage insurance                                           
   operations, net of taxes....................                  --              --     
  Gain on disposal of discontinued mortgage                                             
   insurance operations, net of taxes..........                  --              --     
  Cumulative effect of change in accounting for                                         
   income taxes................................                  --              --     
                                                          ---------        --------     
  Net income...................................           $  16,325        $ 28,979     
                                                          =========        ========     

Common stock dividends.........................                  --        $ 21,000     

Per Share Data (1)                                                                      

Other Data:                                                                             
  Title policies issued........................             925,052         929,690     
  Title insurance operating revenues:                                                   
    Percentage direct operations...............               41.3%           43.9%     
    Percentage agency operations...............               58.7%           56.1%     
  Employees at end of period...................               3,922           4,143     

  Loss ratio (2)...............................                8.2%            4.8%     
  Expense ratio (3)............................               91.4%           91.8%     
                                                              -----           -----     
  Combined ratio (4)...........................               99.6%           96.6%     
                                                              =====           =====     


                                                        [Enlarge/Download Table]


                                                                        At December 31,                        At September 30,  
                                                ----------------------------------------------------------  ---------------------
                                                     1992        1993       1994        1995        1996       1996        1997  
                                                     ----        ----       ----        ----        ----       ----        ----  
                                                                                                                                 
Balance Sheet Data:                                                                                                              
  Cash and investments.........................    $371,808    $423,801   $416,533   $440,071     $475,430   $458,425    $463,960
  Total assets.................................     483,198     546,968    552,390    573,820      620,754    610,119     626,532
  Total debt...................................          --          --         --         --           --         --          --
  Reserve for policy and contract claims.......     173,327     200,874    228,063    240,777      264,838    262,341     265,593
  Shareholders' equity.........................     236,262     260,863    253,466    270,737      273,657    265,833     284,116

--------------                                                                  
(1)   Per share data for Commonwealth and Transnation are not meaningful because
      all  of  the  outstanding  shares  of  those  companies  are  held  by one
      shareholder,   RIC.   Therefore,   per  share  data  of  Commonwealth  and
Transnation have not been provided.                                 
(2)   Provision  for policy and  contract  claims as a  percentage  of operating
revenues.                                                           
(3)   Total  operating  expenses  excluding  interest  expense,  amortization of
      goodwill and provision  for policy and contract  claims as a percentage of
operating revenues.                                                 
(4)   The sum of the loss ratio and the expense ratio.                          

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 COMMONWEALTH LAND TITLE INSURANCE COMPANY
 AND
 TRANSNATION TITLE INSURANCE COMPANY

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General                                                                         

Revenues                                                                        

         Commonwealth/Transnation's  premiums and fees are  dependent on overall
levels of real  estate  activity  which are  influenced  by a number of  factors
including interest rates, access to capital, housing starts, housing resales and
the  general  state  of the  economy.  In  addition,  Commonwealth/Transnation's
premiums  and fees are  affected  by its sales  and  marketing  efforts  and its
strategic  decisions  based on the rate and  claims  environment  in  particular
markets.                                                                        

         Premiums  and  fees are  determined  both by  competition  and by state
regulation.  Operating  revenues from direct title  operations are recognized at
the time real estate transactions close, which is generally sixty (60) to ninety
(90) days after the opening of a title order. Operating revenues from agents are
recognized   upon  an  agent's   reporting  of  the  issuance  of  a  policy  to
Commonwealth/Transnation.  Although  agents  generally  report the  issuance  of
policies on a monthly basis,  heightened levels of real estate activity may slow
this reporting process. This typically results in delays of sixty (60) to ninety
(90) days from the closing of real estate  transactions until the recognition of
revenues  from agents.  Approximately  60% of  Commonwealth/Transnation's  title
insurance revenues are generated by agents.                                     

         In addition to the  premiums and fees,  Commonwealth/Transnation  earns
investment   income   from  its   portfolio   of  fixed   maturity   securities.
Commonwealth/Transnation holds no equity securities in its investment portfolio.

Factors Affecting Profit Margins and Pre-Tax Profits                            

         Commonwealth/Transnation's  operating  results are  affected by several
factors,  including  volume,  policy  amount and type of real  estate  activity.
Volume    is    an    important    determinant    of    profitability    because
Commonwealth/Transnation,   like  other  title   insurance   companies,   has  a
significant  level of fixed costs arising from  personnel,  occupancy  costs and
maintenance  of title  plants.  Because a premium is based on the face amount of
the policy,  larger  policies  generate  higher  premiums  although  expenses of
issuance  do not  necessarily  increase in  proportion  to policy  size.  Profit
margins are lower on  refinancings  than on sales due to premium  discounts  and
higher cancellation rates generally  experienced on refinancings.  Cancellations
affect  profitability  because costs  incurred both in opening and in processing
orders are not necessarily offset by fees.                                      

         Commonwealth/Transnation's  principal  variable  expense is commissions
paid to  independent  agents.  Commonwealth/Transnation  regularly  reviews  the
profitability  of  its  agency  revenues.  Commonwealth/Transnation  continually
monitors its operating  margin,  which is the  percentage of operating  revenues
less salaries,  employee benefits, agency commissions and other similar expenses
to operating revenues.                                                          

Claims                                                                          

         Generally,  title  insurance claim rates are lower than for other types
of insurance  because  title  insurance  policies  insure  against  prior events
affecting the quality of real estate title, rather than against unforeseen,  and
therefore less predictable,  future events.  Estimated future claim payments are
provided for at the time revenue is  recognized.  The reserve for title  losses,
which is based on historical and  anticipated  loss  experience,  represents the
estimated costs to settle  reported claims and estimated  future claims relating
to policies issued.                                                             

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Contingencies                                                                   

         Commonwealth/Transnation  is involved in certain  litigation arising in
the ordinary  course of its  business.  Although  the ultimate  outcome of these
matters cannot be ascertained at this time, and the results of legal proceedings
cannot be predicted with certainty,  Commonwealth/Transnation  is contesting the
allegations  of the  complaints in each pending  action against it and believes,
based on  current  knowledge  and  after  consultation  with  counsel,  that the
resolution  of these  matters  will not have a  material  adverse  effect on the
combined financial statements of Commonwealth/Transnation.                      

Seasonality                                                                     

         Historically,  real estate  activity has been  generally  slower in the
winter months with volumes  showing  significant  improvements in the spring and
summer months.  The percentage of title orders opened is typically  lower in the
first six months than at year end because of this seasonal  variance.  In recent
years low levels of mortgage  interest  rates have caused  fluctuations  in real
estate   activity   levels   outside  of  the   historical   seasonal   pattern.
Commonwealth/Transnation  cannot predict whether or when the historical seasonal
pattern of real estate will resume.                                             

Results of Operations                                                           

Comparison of Three and Nine Months Ended September 30, 1997
and Three and Nine Months Ended September 30, 1996

Net Income                                                                      

         Net income for the three and nine months ended  September 30, 1997, was
$13.4  million and $29.0  million,  respectively,  compared to $8.9  million and
$16.3 million for the same periods in 1996. The figures include capital gains of
$0.1  million  and $1.2  million  for the three  and nine  month  periods  ended
September 30, 1997, respectively,  compared to $0.8 million and $0.4 million for
the three and nine month periods ended  September 30, 1996.  Excluding  realized
gains,  net  operating  income grew 63.9% to $13.3  million,  and 74.3% to $27.8
million  for the  three  and  nine  month  periods  ended  September  30,  1997,
respectively, when compared to the same periods in 1996.                        

         Commonwealth/Transnation's results for the three and nine month periods
ended  September  30, 1997,  compare  favorably  to those for the  corresponding
periods in 1996  primarily  due to premium  growth and the decline in provisions
for  claims  losses  due to  Commonwealth/Transnation's  favorable  paid  claims
experience in recent years.                                                     

Operating Revenues                                                              

         Premiums  and fees  from  title  operations  increased  8.7% to  $226.2
million and 6.4% to $612.9  million for the three and nine month  periods  ended
September 30, 1997, respectively, when compared to the same periods in 1996. The
increase in premiums and fees in 1997 reflects the continued strong  residential
and commercial real estate markets.  Mortgage interest rates remained relatively
stable and low during the first nine months of 1997 and,  with the  exception of
one month, remained below 8%.                                                   

         Orders  opened in  Commonwealth/Transnation's  direct  operations  grew
23.2% to approximately  113,400 and 6.6% to approximately  320,300 for the three
and nine month  periods  ended  September  30, 1997,  when  compared to the same
periods in 1996.  While there is no  assurance  that  opened  orders will close,
management  believes that the current order level is a favorable  indication for
fourth quarter 1997 operating revenues.                                         

         Net investment income  (excluding  realized gains and losses) decreased
slightly to $7.5 million for the three month period  ended  September  30, 1997,
from $7.8 million for the same period in 1996,  due to a decrease in the size of
the portfolio in 1997  resulting from a $21.0 million  dividend  payment in June
1997. Net investment income                                                     

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increased  2.5% to $23.2  million for the nine month period ended  September 30,
1997 when compared to the same period in 1996,  reflecting growth in the average
size of Commonwealth/Transnation's investment portfolio.                        

Expenses                                                                        

         Commonwealth/Transnation's  expense  ratio for the three and nine month
periods ended September 30, 1997, was 89.5% and 91.8%, respectively, compared to
90.0% and 91.4% for the  comparable  periods in 1996.  Agency  commissions,  the
largest component of operating expenses,  were relatively flat for the three and
nine month  periods  ended  September  30,  1997,  at $98.5  million  and $269.0
million,  respectively,  compared to $98.7  million  and $263.1  million for the
comparable  1996  periods.  Other  expenses,   such  as  employee  compensation,
increased as a result of higher levels of business activity.                    

         The loss ratio (the  provision  for  policy  and  contract  claims as a
percentage  of operating  revenues)  for the three and nine month  periods ended
September 30, 1997, was 4.7% and 4.8%,  respectively,  compared to 7.5% and 8.2%
for the same periods in 1996. These decreases reflect favorable loss trends that
the Company has experienced in recent periods.                                  

         Claims paid as a percentage  of operating  revenues  were 3.1% and 4.7%
for the three and nine months ended September 30, 1997,  respectively,  compared
to 2.4% and 4.5% for the  comparable  periods in 1996. The 1997 ratios reflect a
continuation  of the  favorable  loss trends that  Commonwealth/Transnation  has
experienced in recent periods.                                                  

         Income tax expense was $6.7 million and $15.2 million for the three and
nine month periods ended September 30, 1997. This  represented a 33.4% and 34.4%
effective tax rate, respectively.                                               

Comparison of Years Ended December 31, 1996,
 December 31, 1995 and December 31, 1994

Net Income                                                                      

         Net income for the years ended  December  31,  1996,  1995 and 1994 was
$25.2 million, $9.5 million and $21.0 million, respectively. The increase in net
income in 1996 compared to 1995 resulted from an increase in residential  resale
and new home sale activity,  reflecting a strong economy and favorable  mortgage
interest rates. In addition, Commonwealth/Transnation achieved a record level of
commercial title insurance  premiums in 1996. The decline in net income in 1995,
when compared to 1994,  resulted primarily from decreased agency revenues due to
the weak real estate  markets  that  existed in late 1994 and early  1995.  Such
market weakness was tied to the level of mortgage  interest  rates,  which rates
were 9.2% at the beginning of 1995.                                             

         The net income figures above include  investment gains of $0.3 million,
$1.7 million and $0.5 million,  for the years ended December 31, 1996,  1995 and
1994,   respectively.   Excluding  investment  gains,   Commonwealth/Transnation
reported net operating income of $38.2 million,  $12.5 million and $31.3 million
for the years ended December 31, 1996, 1995 and 1994, respectively.             

Operating Revenues                                                              

         Operating  revenues,  consisting of title insurance premiums and search
and other fees,  grew 16.1% to $780.2  million for the year ended  December  31,
1996.  This  growth  from 1995  resulted  from the  above-described  increase in
residential resale and new home sale activity. Average mortgage rates were 7% in
January 1996 and,  although  fluctuating,  never  exceeded 8.4% for any month in
1996.  Also,  such  growth was aided by the  record  level of  commercial  title
insurance premiums achieved by  Commonwealth/Transnation in 1996. The decline in
operating  revenues  in 1995,  when  compared  to  1994,  was due  primarily  to
decreased agency revenues, discussed above.                                     

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Net Investment Income                                                           

         Net investment income  (excluding  realized gains and losses) increased
9.0% to $30.5 million in 1996,  and 5.6% to $27.9 million in 1995 from the $26.5
million  reported in 1994.  These  increases  reflect  growth in the size of the
fixed maturity investment portfolio.                                            

Expenses                                                                        

         Agency commissions represent the portion of premiums retained by agents
pursuant    to   the    terms    of    their    agency    contracts    and   are
Commonwealth/Transnation's  single  largest  expense.  Agency  commissions  were
$355.8  million in 1996,  $310.7 million in 1995 and $432.0 million in 1994, and
as a percentage of agency revenue have remained  relatively  constant during the
past three years at 77.8% in 1996, 77.3% in 1995 and 77.6% in 1994.             

         Remaining expenses, other than agency commissions and the provision for
policy claims,  include personnel costs relating to marketing activities,  title
searches,  information  gathering  on specific  properties  and  preparation  of
insurance  policies,  as well as costs  associated with the maintenance of title
plants. Such expenses were $355.4 million in 1996, compared to $318.2 million in
1995   and   $344.0    million   in   1994,    and   the   expense    ratio   of
Commonwealth/Transnation  (which includes agency  commissions) was 91.1% in 1996
compared to 93.5% in 1995 and 90.5% in 1994. The decline in the expense ratio in
1996, when compared to 1995, resulted from an increase in direct title insurance
premiums and effective cost control measures. The expense ratio increase in 1995
was the result of a reduction in revenues in 1995.                              

         The loss  ratio  was  7.8%,  8.7% and 8.9%  for  1996,  1995 and  1994,
respectively. Claims paid as a percentage of operating revenues were 4.7%, 7.3%,
and 5.7% for 1996,  1995 and 1994,  respectively.  Commonwealth/Transnation  has
benefited from  favorable paid claims  experience in recent years, a trend which
is  expected  to  continue.  This  favorable  trend  reflects  several  factors,
including the strong 1993 refinance market,  enhanced  underwriting policies and
procedures and technology advancements in the title production process.         

Income Taxes                                                                    

         Commonwealth/Transnation pays U.S. federal and state income taxes based
on laws in the  jurisdictions  in which it  operates.  The  effective  tax rates
reflected in the income  statement for 1996,  1995 and 1994 differ from the U.S.
federal  statutory  rate  principally  due  to  non-taxable  interest,  dividend
deductions, travel and entertainment and goodwill.                              

         At December 31, 1996,  Commonwealth/Transnation  had recorded  deferred
tax assets of $27.2 million related  primarily to policy and contract claims and
employee  benefit  plans.  Substantially  all of this deferred tax asset balance
could be realized  in the future  through  the  reversal  of existing  temporary
taxable differences.  Accordingly,  it is more likely than not that deferred tax
benefits will be realized for all the temporary deductible  differences existing
at December 31, 1996.                                                           

         Commonwealth/Transnation  reassesses the realization of deferred assets
quarterly and, if necessary, adjusts its valuation allowance accordingly.       

Liquidity and Capital Resources                                                 

         Cash  provided  by  operating  activities  was $13.0  million and $34.7
million  for  the  nine  month  periods  ended  September  30,  1997  and  1996,
respectively. At September 30, 1997, Commonwealth/Transnation held cash of $11.7
million and  fixed-maturity  securities of $406.6 million,  and had no long term
debt.                                                                           

         Cash  provided by  operating  activities  was $67.3  million for fiscal
1996,    $16.0    million    for   1995   and    $39.9    million    for   1994.
Commonwealth/Transnation  had $14.3 million of cash and $429.8  million of fixed
maturity securities and no long term debt at December 31, 1996.                 

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         Based on these  sources and  Commonwealth/Transnation's  historic  cash
flows,  management believes that  Commonwealth/Transnation  will have sufficient
liquidity and adequate  capital  resources to meet both its short-and  long-term
capital needs.                                                                  

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BUSINESS

The Company                                                                     

         The  Company  is a  holding  company  organized  under  the laws of the
Commonwealth of Virginia on June 24, 1991. The Company's  principal  subsidiary,
Lawyers  Title,  has been engaged  since 1925  primarily in the title  insurance
business  through its network of branches,  service  offices,  subsidiaries  and
agencies.  As  a  holding  company,  the  Company  has  greater  flexibility  in
conducting certain operations,  especially with regard to capital  transactions,
while the operating title insurance subsidiaries remain subject to regulation by
the various states. See "-- Regulation."                                        

The Title Insurance Industry                                                    

         Title  insurance  policies are insured  statements  of the condition of
title to real property,  showing  ownership as indicated by public  records,  as
well as outstanding liens, encumbrances and other matters of record, and certain
other matters not of public  record.  Many of the  principal  customers of title
insurance  companies buy insurance for the accuracy and reliability of the title
search as well as for the indemnity features of the policy. The beneficiaries of
title  insurance  policies are  generally  owners or buyers of real  property or
parties  who make loans on the  security  of real  property.  An owner's  policy
protects  the named  insured  against  title  defects,  liens  and  encumbrances
existing as of the date of the policy and not specifically  excluded or excepted
from its  provisions,  while a lender's  policy,  in addition to the  foregoing,
insures  against the invalidity of the lien of the insured  mortgage and insures
the priority of the lien as stated in the title policy.                         

         The  premium  for  title  insurance  is  due in  full  when  the  title
transaction is closed,  and the policy amount is usually based upon the purchase
price of the property or the amount of the loan secured by the  property.  While
most other forms of insurance provide for the assumption of risk of loss arising
out  of  unforeseen  future  events,  title  insurance  serves  to  protect  the
policyholder  from the risk of loss from events that predate the issuance of the
policy.  This  distinction  underlies  the low claims loss  experience  of title
insurers as compared to other insurance  underwriters.  Losses  generally result
either from judgment errors or mistakes made in the title search and examination
process or the escrow  process or from hidden  defects  such as fraud,  forgery,
incapacity or missing heirs.  Operating expenses,  on the other hand, are higher
for  title  insurance  companies  than  for  other  companies  in the  insurance
industry.  Most title insurers incur  considerable  costs related to maintaining
local  marketing  offices and production  centers and the personnel  required to
process forms,  search titles,  collect  information on specific  properties and
prepare title insurance  commitments and policies. To facilitate the preparation
of title reports,  copies of public records,  maps and documents may be compiled
and indexed to specific  properties  in an area.  This  compilation  is called a
"title   plant."  Title  insurers  incur ongoing  costs   associated   with  the
establishment, operation and maintenance of title plants.                       

Direct and Agency Operations                                                    

         A title policy can be issued  directly by a title insurer or indirectly
on behalf of a title insurer through agents that are not themselves  licensed as
insurers. Where the policy is issued by a title insurer, the search is performed
by or at the  direction of the title  insurer,  and the premium is collected and
retained by the title insurer.  Where the policy is issued through an agent, the
agent  generally  performs the search (in some areas  searches are  performed by
approved  attorneys),  examines  the title,  collects  the premium and retains a
portion of the  premium.  The  remainder of the premium is remitted to the title
insurer as  compensation  for  bearing  the risk of loss in the event a claim is
made under the policy. The percentage of the premium retained by an agent varies
from region to region and is  sometimes  regulated  by the  states.  The agent's
commission  generally ranges between 60% and 90% of the premium. A title insurer
is obligated to pay title claims in  accordance  with the terms of its policies,
regardless  of whether it issued its policy  directly or  indirectly  through an
agent.                                                                          

         The title insurance business is very competitive.  Competition is based
primarily on price,  service and expertise.  The size and financial  strength of
the  insurer  are also  important  factors,  particularly  for large  commercial
customers.  Title insurance underwriters also compete for agents on the basis of
service and commission levels.                                                  

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The Title Policy Process                                                        

         A brief  description of the process of issuing a title insurance policy
is as follows:                                                                  

                  (i)   The  customer,  typically a real estate  salesperson  or
     broker, escrow agent or lender, places an order for a title policy.

                  (ii)  Sales  personnel  note the  specifics  of the  order and
     place a request with the title department for a preliminary report.

                  (iii) After the  relevant  historical  data on the property is
         compiled,   the  title  officer  prepares  a  preliminary  report  that
         documents  (a) the  current  status of title to the  property,  (b) any
         exclusions,  exceptions  and/or  limitations  that  the  Company  might
         include in the policy and (c) specific issues that need to be addressed
         and resolved by the parties to the transaction  before the title policy
         will be issued. The preliminary report is circulated to all the parties
for satisfaction of any specific issues.                      

                  (iv)  After the specific issues  identified in the preliminary
         report  are  satisfied  an  escrow  agent  closes  the  transaction  in
         accordance  with the  instructions  of the  parties  and the  Company's
conditions.                                                   

                  (v)   Once the  transaction is closed and all monies have been
         released,  the  Company  issues the  policies  (a) to the owner and the
         lender,  on a  resale  transaction,  or (b) to the  lender  only,  on a
refinancing transaction.                                      

         The  title  insurance  industry  is  subject  to  regulation  by  state
regulatory  authorities  who possess  broad powers  relating to the granting and
revoking of licenses,  the type and amount of  investments  which title insurers
may  make,  insurance  rates,  forms of  policies  and the form and  content  of
required annual statements,  as well as the power to audit and examine financial
records of those  companies.  Under  state laws,  certain  levels of capital and
surplus must be maintained and certain  amounts of portfolio  securities must be
segregated or deposited  with  appropriate  state  officials.  State  regulatory
policies also restrict the amount of dividends which insurance companies may pay
without prior regulatory approval.                                              

Lawyers Title                                                                   

         General.  Lawyers  Title is engaged in the business of providing  title
insurance  and other  real  estate-related  services  for both  residential  and
commercial real estate transactions.  In addition to writing title insurance, in
some states  Lawyers  Title  furnishes  certificates  of title and  abstracts of
title. Incidental to the issuance of title insurance,  Lawyers Title also offers
a closing  protection letter to lenders and owners who purchase title insurance,
and in  some  areas  it  serves  as an  escrow  agent  in  closing  real  estate
transactions.  Lawyers Title also acts as nominee for some national companies in
the  acquisition of title to employees'  residences  and the subsequent  sale of
such residences when employees are transferred.                                 

         Most  title   insurance   policies   sold  by  Lawyers  Title  and  its
subsidiaries are underwritten by Lawyers Title.  However,  one subsidiary,  Land
Title Insurance  Company ("Land Title") also reissues policies it has previously
issued,  principally in  California.  The Company also issues  policies  through
Oregon Title Insurance  Company  ("Oregon  Title") (in Oregon) and through Title
Insurance Company of America ("TICA").                                          

         Lawyers  Title's  business  is  conducted  in 49 states  (Iowa does not
authorize title  insurance) and in the District of Columbia,  the territories of
Puerto Rico and the U.S.  Virgin  Islands,  the Bahamas and a number of Canadian
provinces.  Geographical  coverage  is provided  by a  nationwide  network of 14
National  Division  offices  and  approximately  260 branch  and  closing/escrow
offices, and through  approximately 3,800 independent agents and 36,000 approved
attorneys.                                                                      

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         Sales and Marketing.  Because  Lawyers  Title's  strategy is to provide
title  insurance  services in accordance with local  practices,  title insurance
policies are written  through and issued by branch  offices of Lawyers Title and
its  underwriting   subsidiaries  or  by  title  insurance  agents  or  by  some
combination thereof.  Agencies may be either independently owned or subsidiaries
of Lawyers  Title.  In the western  states,  Lawyers  Title  operates  primarily
through  independent  agents and subsidiaries  (Lawyers Title Company,  American
Title Group, Inc., Lawyers Title of Arizona,  Inc. and Oregon Title),  while its
eastern  operations are conducted  primarily through branch offices,  agents and
approved  attorneys.  In the fiscal year ended December 31, 1996,  approximately
53.5% of total title  insurance  revenues  were derived  from direct  operations
(company  branches and wholly  owned  subsidiary  agencies)  and 46.5% came from
independent agents.                                                             

         As of September 30, 1997, no single  independent  agent was responsible
for more than 5% of Lawyers  Title's  title  insurance  revenues.  In  addition,
Lawyers Title is not dependent  upon any single  customer or any single group of
customers. The loss of any one customer would not have a material adverse effect
on Lawyers Title.                                                               

         Although  Lawyers  Title  enhances  its  business  development  through
general advertising, it believes its primary source of business is from the real
estate community,  including lenders,  developers, real estate agents, attorneys
and other  real  estate  professionals  who  influence  the  placement  of title
insurance.  Lawyers Title's business  results from  construction and sale of new
housing, resales and refinancings of residential real estate and from commercial
real estate  activity.  In the 1990s Lawyers Title has placed a renewed emphasis
on residential real estate activity while  maintaining a leadership  position in
insuring  commercial  real estate  transactions.  Although  precise data are not
available to compare the  percentage of total premium  revenues of Lawyers Title
derived from commercial versus residential real estate  activities,  83% of such
revenues in 1996 resulted from policies providing coverage of $1 million or less
(which tend to be residential)  and 17% of such revenues  resulted from policies
providing coverage in excess of $1 million.                                     

         Regional  differences  exist in  Lawyers  Title's  sales and  marketing
emphasis.  These  differences  occur in part due to regional  variations  in the
dynamics  of the  business.  In the eastern  United  States,  Lawyers  Title has
developed  a strong  presence  with  title  insurance  agents  and  real  estate
attorneys.  In western  markets,  it has a greater  presence  through its direct
operations,  which call on realtors and lenders to develop business from resales
and refinancings of residential real estate.                                    

         To increase profits and improve margins, Lawyers Title is expanding its
direct operations in markets with projected  growth,  attractive title insurance
rates and favorable claims  experience.  Since 1992,  Lawyers Title has acquired
title operations in Texas, North Carolina, Oregon, Florida, Virginia,  Maryland,
the  District of  Columbia,  Ohio,  Maine,  Michigan,  New  Mexico,  New Jersey,
Pennsylvania and Wisconsin.  See "-- Recent  Acquisitions." In addition,  within
the last three years  Lawyers Title has added  closing/escrow  offices and sales
representatives in many markets.                                                

         Lawyers  Title  has  gained a  favorable  reputation  for its  National
Division offices,  which specialize in the sale and servicing of title insurance
for complex  commercial and  multi-property  transactions.  Lawyers Title has 14
such offices  located in strategic  metropolitan  areas  throughout the country.
Each of these National  Division  offices markets title  insurance  products and
services to large  commercial  customers  in its area and serves the  customer's
title insurance needs throughout the country.                                   

         LTSC  also  services  national  lenders  which  seek  to  obtain  title
insurance  products  and  services  as well as a variety  of other  real  estate
related  products  and  services  such  as  appraisals,   tax  services,   flood
certifications,  surveys and document  preparation through a single source. LTSC
is able to offer lenders one stop shopping for such products and services  based
on the internal capabilities of Lawyers Title and strategic alliances with other
providers.                                                                      

         Underwriting.  Lawyers  Title  issues  policies on the basis of a title
report,  which is prepared  pursuant to  underwriting  guidelines  prescribed in
manuals published by Lawyers Title,  after a search of the public records,  maps
and documents to ascertain the existence of easements,  restrictions,  rights of
way, conditions, encumbrances, liens or other matters affecting the title to, or
use of, real property. In certain instances, a visual inspection of the property
is  also  made.  Title  examinations  may be made by  branch  employees,  agency
personnel or approved                                                           

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attorneys,  whose  reports are  utilized by or rendered to a branch or agent and
are the basis for the issuance of policies by such branch or agent.             

         In the  case of  difficult  or  unusual  legal or  underwriting  issues
involving  potential  title risks,  the branch  office or agent is instructed to
consult with a supervising Lawyers Title office. Contracts with agencies require
that the agent  seek  prior  approval  of  Lawyers  Title in order to commit the
Company to assume a risk over a stated  dollar  limit.  The agents may be either
direct subsidiaries of Lawyers Title or independently owned.  Pursuant to agency
agreements,  Lawyers  Title  assumes  all of the  risks to the  insured,  in the
absence of certain types of misconduct by the agent,  in return for a portion of
the premium received.                                                           

         Lawyers Title owns a number of title plants and in some areas leases or
participates  with other title insurance  companies or agents in the cooperative
operating of such plants.  In many of the larger  markets,  the title plants and
search  procedures  have  been  automated.  To  maintain  the value of the title
plants,  Lawyers  Title  continually  updates  its records by  regularly  adding
current  information  from the public  records and other  sources.  In this way,
Lawyers Title  maintains the ability to produce quickly and at minimum expense a
statement  of the  legal  documents  that  constitute  the  chain  of title to a
particular property.                                                            

         Other Products and Services.  Lawyers Title and its  subsidiaries  also
provide escrow services to customers in various areas of the country.  Primarily
in the western  states,  it is a general  practice,  incident to the issuance of
title insurance policies,  to hold funds and documents in escrow for delivery in
real estate transactions upon fulfillment of the conditions to such delivery. In
the mid-western states, Florida and some eastern cities, it is customary for the
title company to close the  transaction  and disburse the sale or loan proceeds.
Fees for such escrow services are generally separate and distinct from the title
insurance premiums.                                                             

         Lawyers  Title has two wholly  owned  subsidiaries  devoted to computer
automation of various aspects of the title insurance business, including on-line
title plants,  policy issuance and closing  documentation and support functions.
Datatrace  Information  Services Company,  Inc. provides  computerized access to
public record information such as deeds, mortgages,  liens and judgments for the
cities  of  Cleveland,  Detroit,  Fort  Lauderdale,  Miami  and  Tampa and their
metropolitan areas and surrounding  counties.  Elliptus develops  production and
automation  software for the title insurance industry and software solutions for
transactions  through EDI. Another  subsidiary,  Lawyers Title Exchange Company,
facilitates tax-free property exchanges pursuant to Section 1031 of the Internal
Revenue Code by holding the sale  proceeds from one  transaction  until a second
acquisition occurs,  thereby assisting customers in deferring the recognition of
taxable income.                                                                 

         In 1996,  Lawyers  Title formed a new  subsidiary,  LTSC, to coordinate
residential  real estate  transactions for national lenders and to provide other
real estate related  products and services  (such as  appraisals,  tax services,
flood certification, surveys, and document preparation) through a single source.
LTSC is currently qualified in 22 states. Early in 1996, the Company purchased a
minority  interest  in Palma  Lazar & Ulsh,  a provider  of flood  certification
services. Also in 1996, Lawyers Title, through a newly formed subsidiary, Global
Corporate  Services,   Inc.  acquired  a  50%  ownership  interest  in  Argonaut
Relocation  Services,  LLC ("Argonaut"),  a Michigan limited liability  company.
Argonaut,  which employs  approximately  120 individuals,  offers a full line of
employee  relocation  services to  companies  moving  employees  anywhere in the
world.  General Motors Corporation holds the remaining 50% ownership interest in
Argonaut.                                                                       

Title Insurance Premium Revenues                                                

         In the years ended December 31, 1996, 1995 and 1994,  premiums from the
issuance of title policies represented 76.8%, 79.9% and 82.6%, respectively,  of
the Company's consolidated revenues.                                            

         The table below sets forth, for the years ended December 31, 1994, 1995
and 1996,  the  approximate  dollars  and  percentages  of the  Company's  title
insurance  premium  revenues  for  the  ten  states   representing  the  largest
percentages of such revenues and for all other states combined:                 

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                                                        [Enlarge/Download Table]


                                 Years Ended December 31,                             
                                  (Dollars in thousands)                              

                      1994                           1995                 1996        
                      ----                           ----                 ----        
                 Amount      %                  Amount       %       Amount      %    
                                                                                      
Texas          $ 63,487      15.3             $ 82,604      21.4   $ 98,762      21.6 
Florida          29,173       7.1               26,852       7.0     33,340       7.3 
California       33,984       8.2               28,530       7.4     32,148       7.0 
Pennsylvania     28,929       7.0               29,468       7.6     30,223       6.6 
New York         23,268       5.6               17,396       4.5     24,318       5.3 
Michigan         24,304       5.9               20,625       5.3     23,067       5.1 
Virginia         21,958       5.3               19,968       5.2     20,613       4.5 
Ohio             20,001       4.8               14,503       3.8     18,130       4.0 
New Jersey       18,364       4.5               14,123       3.7     15,391       3.4 
Massachusetts    13,716       3.3               11,187       2.9     13,356       2.9 
All Others      136,673      33.0              120,615      31.2    147,029      32.3 
                -------     -----              -------     -----    -------     ----- 
Totals         $413,857     100.0%            $385,871     100.0%  $456,377     100.0%
               ========     =====             ========     =====   ========     ===== 

Investment Policies                                                             

         Lawyers Title earns investment income from its portfolio of securities.
Historically,  as a general  policy,  Lawyers Title limited its  investments  in
equity  securities to approximately 50% of its statutory  surplus.  In 1996, the
Company changed its strategy for insurance  company  portfolios by shifting away
from  investments  in  equity  securities  and into  fixed-maturity  securities.
Lawyers Title believes that the effect on future  operations  will be to replace
the lower dividend  yields and variable  capital gains  experience of the equity
securities with the more steady and  predictable  stream of interest income from
fixed-maturity  securities.  The fixed-maturity portfolio consists of investment
grade  securities  and is designed to comply with the various  state  regulatory
requirements  while  maximizing  yield.  Historically,  Lawyers  Title  has  not
committed any portion of its investment  portfolio to mortgages,  and it has not
sought to  enhance  the  return on its  portfolio  with  derivative  securities.
Lawyers  Title  regularly  re-examines  its  portfolio  strategies  in  light of
changing  earnings or tax situations.  See Note 3 to the Company's  Consolidated
Financial  Statements  for the  major  categories  of  investments,  contractual
maturities and income received.                                                 

Insured Risk on Policies in Force                                               

         The amount of the insured risk or "face  amount" of  insurance  under a
title  insurance  policy is generally  equal to either the purchase price of the
property or the amount of the loan secured by the property.  The insurer is also
responsible  for the cost of defending the insured title against covered claims.
The insurer's actual exposure at any time is  significantly  less than the total
face amount of policies in force because the risk on an owner's  policy is often
reduced  over time as a result of  subsequent  transfers of the property and the
reissuance of title  insurance by other title  insurance  underwriters,  and the
coverage of a lender's  policy is reduced and eventually  terminated as a result
of payment of the mortgage loan. Because of these factors,  the total contingent
liability of a title  underwriter  on outstanding  policies  cannot be precisely
ascertained.                                                                    

         In the ordinary course of business,  Lawyers Title and its underwriting
subsidiaries  represent and defend the interests of their insureds,  and provide
on their books for estimated losses and loss adjustment expenses. Title insurers
are sometimes subject to unusual claims (such as claims of Indian tribes to land
formerly  inhabited  by  them)  and to  claims  arising  outside  the  insurance
contract,  such as for alleged  negligence  in search,  examination  or closing,
alleged  improper claims handling and alleged bad faith.  The damages alleged in
such claims arising  outside the insurance  contract may often exceed the stated
liability limits of the policies  involved.  While Lawyers Title in the ordinary
course of its  business  has been  subject  from time to time to these  types of
claims,  Lawyers Title's losses to date on such claims have not been significant
in number or material in dollar amount relative to its financial condition.     

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         Liabilities for estimated losses and loss adjustment expenses represent
the estimated  ultimate net cost of all reported and unreported  losses incurred
through  December 31, 1996.  The reserves for unpaid losses and loss  adjustment
expenses are estimated using  individual  case-basis  valuations and statistical
analyses.  Those estimates are subject to the effects of trends in loss severity
and frequency.  Although considerable variability is inherent in such estimates,
management  believes that the reserves for losses and loss  adjustment  expenses
are adequate.  The estimates are continually  reviewed and adjusted as necessary
as experience  develops or new information  becomes known;  such adjustments are
included in current operations.  The provision for policy and contract claims as
a percentage of operating revenues for 1996 was 5.2%, for 1995 was 5.2%, and for
1994 was 9.6%.  See  "Lawyers  Title  Corporation  Management's  Discussion  and
Analysis  of  Financial  Condition  and  Results  of  Operations  --  Results of
Operations."                                                                    

         Lawyers  Title  generally  pays losses in cash;  however,  it sometimes
settles claims by purchasing the interest of the insured in the real property or
the interest of the claimant  adverse to the  insured.  Assets  acquired in this
manner are carried at the lower of cost or estimated  realizable  value,  net of
any indebtedness thereon.                                                       

         Lawyers Title places a high priority on maintaining  effective  quality
assurance and claims administration programs.  Lawyers Title's quality assurance
program  focuses  on  quality  control,   claims  prevention  and  product  risk
assessment in its branches,  subsidiaries and independent  agencies.  The claims
administration program focuses on improving liability analysis, prompt, fair and
effective handling of claims, prompt evaluation of settlement or litigation with
first- and third-party claimants and appropriate use of ADR (Alternative Dispute
Resolution) in claims processing. In addition, to reduce the incidence of agency
defalcations,  Lawyers  Title  has  strengthened  its  procedures  for  renewing
existing  agents,  has expanded its due diligence  requirements in acquiring new
agents and has intensified its Agency Audit Program.  Lawyers Title continues to
refine its  systems  for  maintaining  effective  quality  assurance  and claims
administration programs.                                                        

Reinsurance and Coinsurance                                                     

         Lawyers  Title  distributes  large title  insurance  risks  through the
mechanisms of  reinsurance  and  coinsurance.  In  reinsurance  agreements,  the
reinsurer  accepts that part of the risk which the primary  insurer (the "ceding
company" or "ceder") decides not to retain,  in  consideration  for a portion of
the  premium.  A number  of  factors  may enter  into a  company's  decision  to
reinsure,  including retention limits imposed by state law, customer demands and
the risk retention philosophy of the company. The ceder, however, remains liable
to the  insured  for the total  risk,  whether  or not the  reinsurer  meets its
obligation.  As a general rule,  when Lawyers Title  purchases  reinsurance on a
particular  risk it will  retain a primary  risk of 5% of the total  risk with a
minimum  primary  risk of $5 million  and may  participate  with  reinsurers  on
liability  amounts above the primary level on a secondary  level. In the absence
of specific  approval by management,  reinsurance  generally is purchased if the
risk is greater than $35 million.                                               

         Lawyers  Title also  assumes  reinsurance  from other  title  insurance
underwriters  pursuant to a standard  reinsurance  agreement concerning specific
title  insurance  risks for  properties  on which it  assumes  a portion  of the
liability.  Lawyers Title has entered into numerous reinsurance  agreements with
other title  insurance  underwriters on specific  transactions.  Lawyers Title's
exposure on all  reinsurance  assumed is reduced due to  retention by the ceding
company of a substantial  primary risk level. In addition,  exposure under these
agreements  generally ceases upon a transfer of the insured properties and, with
respect to insured loans,  is decreased by reductions in mortgage loan balances.
Because of this,  the actual  exposure  is much less than the total  reinsurance
which Lawyers Title has assumed. Lawyers Title provides loss reserves on assumed
reinsurance business on a basis consistent with reserves for direct business.   

         Lawyers  Title  also  utilizes  coinsurance  to  enable  it to  provide
coverage in amounts greater than it would be willing or able to undertake on its
own. Under coinsurance transactions, each individual underwriting company issues
its individual policy and assumes a fraction of the overall total risk. There is
liability for each participating company for the particular fraction of the risk
it assumes.                                                                     

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         Lawyers Title enters into reinsurance and coinsurance arrangements with
most  of the  larger  participants  in  the  title  insurance  market  and  such
arrangements  are not materially  concentrated  with any single title  insurance
company.  Revenues  and claims  from  reinsurance  are not  material  to Lawyers
Title's business as a whole.                                                    

Regulation                                                                      

         The  title  insurance   business  is  regulated  by  state   regulatory
authorities  who possess  broad powers  relating to the granting and revoking of
licenses and to the type and amount of  investments  which Lawyers Title and its
insurance subsidiaries may make. These state authorities also regulate insurance
rates, forms of policies and the form and content of required annual statements,
and have  the  power  to  audit  and  examine  the  financial  records  of these
companies.  Under state  laws,  certain  levels of capital  and surplus  must be
maintained  and certain  amounts of portfolio  securities  must be segregated or
deposited with  appropriate  state  officials.  State  regulatory  policies also
restrict the amount of dividends which insurance companies may pay without prior
regulatory approval. See "Price Range of Common Stock and Dividends."           

         The NAIC has adopted model  legislation which if enacted would regulate
title  insurers and agents  nationally and change  certain  statutory  reporting
requirements.  The proposed  legislation  also would require  title  insurers to
audit agents  periodically and require licensed agents to maintain  professional
liability   insurance.   Lawyers  Title  cannot  predict  whether  the  proposed
legislation  or any provision  thereof will be adopted in Virginia (the state of
domicile  of Lawyers  Title),  or any other  state.  In 1996,  Virginia  enacted
legislation requiring an annual certification of reserve adequacy by a qualified
actuary.                                                                        

         A  substantial   portion  of  the  assets  of  Lawyers  Title  and  its
underwriting subsidiaries consists of their portfolios of investment securities.
As a title insurance company domiciled in Virginia, Lawyers Title is required by
state statute to maintain  assets of a statutorily  defined quality in an amount
equal to its total  liabilities,  determined on a statutory  basis,  plus 50% of
statutory  equity.  For  statutory  purposes,  the insurer's  total  liabilities
include a statutory  premium  reserve,  reserves  established  for losses in the
course  of  settlement  ("case  reserves")  and  other  liabilities  related  to
operations.                                                                     

         The  statutorily  required  assets are  maintained  by Lawyers Title in
investment-grade  corporate  securities  and  United  States,  state  and  local
obligations.   In  addition  to  these  investments,   Lawyers  Title  maintains
portfolios of cash and  cash-equivalents.  The investment portfolios are managed
by  professional  investment  advisors whose work is reviewed by the Pension and
Portfolio Committee of the Company's Board of Directors.                        

         Land Title, TICA and Oregon Title,  domiciled in California,  Tennessee
and Oregon, respectively,  are similarly required to maintain certain levels and
qualities of assets.                                                            

         Many  state  insurance  regulatory  laws  intended  primarily  for  the
protection of policyholders  contain provisions that require advance approval by
state  agencies of any change in control of an  insurance  company or  insurance
holding  company that is domiciled (or, in some cases,  doing  business) in that
state.  Under such current laws, any future  transaction that would constitute a
change in control of the Company would generally  require  approval by the state
insurance  departments  of  Virginia,  California,  Tennessee,  Texas,  Ohio and
Oregon.  Such requirement may have the effect of delaying or preventing  certain
transactions  affecting  the control of the Company or the  ownership  of Common
Stock,  including transactions that could be advantageous to the shareholders of
the Company.                                                                    

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Seasonality, Backlog and Cyclicality                                            

         The title  insurance  business is closely  related to overall levels of
real estate  activity.  Historically,  real estate  activity has been  generally
slower in the winter months with volumes showing significant improvements in the
spring and summer months.  The percentage of title orders closed to title orders
opened is  typically  lower in the first six months  than at year end because of
this seasonal  variance.  In addition,  the title insurance business is cyclical
due to the effect of  interest  rate  fluctuations  on the level of real  estate
activity.  Periods of high interest rates adversely  affect real estate activity
and therefore premium revenues.                                                 

Employees                                                                       

         As of  September  30,  1997,  the  Company  had  3,932  employees.  The
Company's  relationship  with its  employees is good. No employees are currently
covered by any collective bargaining agreements, and the Company is not aware of
any union organizing activity relating to its employees.                        

Recent Acquisitions                                                             

         A  strategic  focus  of the  Company  is on  growth  through  carefully
selected acquisitions.  Primarily,  this focus is centered on the acquisition of
small- to medium-sized title insurance  agencies and underwriters.  Although the
Company  generally  does not  expect  any  single  acquisition,  other  than the
Acquisition, to be material, it believes that such acquisitions in the aggregate
over time will  enhance  profitability.  The Company  continually  assesses  the
growth  potential  for its  business  in its  existing  markets as well as those
markets in which it is not  currently  participating.  Through  acquisitions  of
independent  agencies with a track record of  profitability  and the prospect of
growth in the future,  the  Company can expand  revenues  while  increasing  its
profit  margins  and  control  over the  acquired  agencies.  In  assessing  the
acquisition of an underwriter,  the Company  reviews,  among other factors,  the
underwriter's profitability,  location, growth potential in its existing market,
claims experience and adequacy of its reserves.                                 

         Since 1992, the Company has made several acquisitions in furtherance of
its  acquisition  strategy.  In 1992, it acquired an agency in Medina,  Ohio. In
1993, the Company acquired agencies in Houston,  Texas; El Paso, Texas; Madison,
Wisconsin; and Jackson, Michigan; and an agency with five branch offices located
in Charlotte, Winston-Salem, Raleigh, Greensboro and Wilmington, North Carolina.
In 1994,  the  Company  acquired an agency in Rio  Rancho,  New  Mexico;  a full
service title agency operation with  approximately 17 offices (including closing
offices) in the Orlando, Florida area; an underwriter headquartered in Portland,
Oregon with  approximately 15 offices  (including  escrow  offices);  and a full
service  title agency  operation  in Texas with  offices in Dallas,  Fort Worth,
Austin and San  Antonio,  along with  numerous  closing  offices.  In 1995,  the
Company acquired a full service title agency operation with offices in Maryland,
the  District of  Columbia  and  northern  Virginia;  an agency in Grand  Blanc,
Michigan;  and agency operations in Maryland,  Pennsylvania and New Jersey which
have been  converted  to branch  offices.  In 1996,  the Company  acquired  full
service title agency operations in Cuyahoga Falls, Ohio and in Portland,  Maine;
entered into joint venture  arrangements which resulted in the Company acquiring
controlling interests in two title agencies,  one located in Columbus,  Ohio and
the  other  in  Nashville,  Tennessee;  acquired  an  interest  in  Argonaut,  a
relocation  company,  in a joint venture with General  Motors  Corporation;  and
acquired  an  interest  in a flood  certification  company  located in  Bristol,
Pennsylvania.  In  most of  these  instances,  the  existing  management  of the
acquired company has remained in place to supervise the day-to-day operations of
the business.                                                                   

         On August 20,  1997,  the Company and Lawyers  Title  entered  into the
Stock Purchase Agreement to acquire Commonwealth/Transnation; the Stock Purchase
Agreement was amended and restated on December 11, 1997.  Upon the  consummation
of such  Acquisition,  the Company will become the largest  title insurer in the
United  States  based on pro forma 1996 title  operating  revenues  of over $1.3
billion.  See "The Acquisition."  While the Company actively considers strategic
acquisitions,  it does not have any  current  or  pending  plans,  negotiations,
arrangements,  or  understandings,  with  respect to any  material  acquisitions
(excluding the Acquisition) other than preliminary discussions.  The Company has
not entered into any agreements  (excluding the Stock Purchase  Agreement)  with
respect to any material acquisitions.                                           

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Environmental Matters                                                           

         Recent title insurance policies  specifically exclude any liability for
environmental  risks or  contamination.  Older policies,  while not specifically
addressing  environmental  risks, are not considered to provide any coverage for
such matters,  and the Company does not expect any significant  expenses related
to environmental claims.                                                        

         Lawyers Title sometimes acts as a temporary title holder to real estate
under a nominee holding  agreement and Lawyers Title,  through its subsidiaries,
sometimes participates in holding agreements involving  tax-deferred  exchanges.
Lawyers Title's  customers in such situations  generally are financially  strong
entities from whom it secures  indemnification  for potential  environmental and
other  claims.  In other  situations  where Lawyers Title might acquire title to
real  estate,  it  will  generally  require  that an  appropriate  environmental
assessment be made to evaluate and avoid any potential liability.               

Properties                                                                      

         The Company conducts its business operations primarily in leased office
space. Lawyers Title leases approximately 83,300 square feet of office space for
its  corporate  headquarters  in  Richmond,  Virginia.  This  lease  expires  on
September  30,  2000.  Lawyers  Title has  numerous  other leases for its branch
offices  and  subsidiaries  throughout  the  states  in  which it  operates.  In
addition,  it owns several properties which in aggregate are not material to its
business taken as a whole.                                                      

         Lawyers Title's title plants  constitute a principal asset. Such plants
comprise  copies  of public  records,  maps,  documents,  previous  reports  and
policies  which are indexed to specific  properties  in an area.  The plants are
generally located at the office that serves a particular  locality.  They enable
title  personnel to examine title matters  relating to a specific parcel of real
property as reflected in the title plant, and eliminate or reduce the need for a
separate  search of the public  records.  They  contain  material  dating back a
number of years and are kept current on a daily or other  frequent  basis by the
addition of copies of  documents  filed of record  that  affect  real  property.
Lawyers  Title  maintains  title plants  covering  many of the areas in which it
operates,  although certain offices utilize jointly owned and maintained plants.
Lawyers Title  capitalizes  only the initial cost of title  plants.  The cost of
maintaining such plants is charged to expense as incurred.                      

         The title plants and title  examination  procedures have been automated
and  computerized to a large extent in many areas.  To protect against  casualty
loss,  Lawyers Title's offices maintain duplicate files and backups of all title
plants.                                                                         

         The  Company  believes  that  its  properties  are  maintained  in good
operating  condition  and are  suitable and adequate for its purposes at current
sales levels.                                                                   

Legal Proceedings                                                               

         There are no material  pending legal  proceedings,  other than ordinary
routine  litigation  incidental to the business,  to which the Company or any of
its subsidiaries is a party or of which any of their property is subject.       

Competition                                                                     

         The title insurance business is very competitive.  Competition is based
primarily on price,  service and expertise.  The size and financial  strength of
the insurer  are also  important  factors,  particularly  for larger  commercial
customers.  Title insurance underwriters also compete for agents on the basis of
service and commission levels.                                                  

         Lawyers Title is one of the largest title insurance underwriters in the
United States based on gross title revenues. Its principal competitors are other
major title  insurance  underwriters  and their agency  networks.  These include
Chicago  Title  Insurance  Company,  First  American  Title  Insurance  Company,
Commonwealth  Land Title  Insurance  Company (which the Company is to acquire in
the Acquisition),  Stewart Title Guaranty  Company,  Old Republic National Title
Insurance  Company and Fidelity  National Title Insurance  Company.  Of the more
than 100                                                                        

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title insurance underwriting companies licensed in the United States,  according
to the American  Land Title  Association,  the top seven  companies  account for
approximately 90% of the title insurance market.                                

         Lawyers  Title and its title  insurance  subsidiaries  are  subject  to
regulation by the insurance authorities of the states in which they do business.
See "-- Regulation."  Within this regulatory  framework,  Lawyers Title competes
with respect to premium rates, coverage,  risk evaluation,  service and business
development.                                                                    

         State  regulatory  authorities  impose  underwriting  limits  on  title
insurers based primarily on levels of available capital and surplus.  While such
limits may theoretically hinder Lawyers Title's assumption of a particular large
underwriting  liability,  in  practice  Lawyers  Title has  established  its own
internal risk limits at levels  substantially  lower than those allowed by state
law.  Therefore,  statutory  capital-based  risk  limits are not  considered  by
Lawyers Title to be a significant  factor in the amount or size of  underwriting
that  it may  undertake.  However,  some of  Lawyers  Title's  competitors  have
available much greater  capital  resources and are able to assume greater levels
of individual policy risk without  distributing  such risk through  reinsurance.
Therefore,  such companies may have a certain  competitive  advantage in bidding
for larger  policies over Lawyers  Title,  which has to arrange  reinsurance  or
coinsurance  coverage.  The Company expects that any such disadvantage should be
substantially   eliminated   upon   consummation  of  the  Acquisition  and  the
accompanying significant increase in the Company's capital resources.           

Commonwealth/Transnation                                                        

         General.  Commonwealth was founded as a title insurance company in 1876
and was  incorporated  in the  Commonwealth  of  Pennsylvania  on April 1, 1944.
Commonwealth is licensed by the insurance departments of 49 states, the District
of  Columbia,  Puerto  Rico  and  the  U.S.  Virgin  Islands.   Transnation  was
incorporated  as an insurance  company in the State of Arizona on September  15,
1992.  Transnation is the successor by merger to  Transamerica  Title  Insurance
Company,   a   California   corporation   incorporated   on   March   26,   1910
("Transamerica").  The current name of the  corporation was adopted on September
20, 1995.  Transnation is licensed by the insurance departments of 40 states and
the District of Columbia.                                                       

         Commonwealth  and Transnation,  and their  respective  subsidiaries and
divisions,  provide a complete  range of title and closing  services  through an
extensive  network  of more  than  4,000  policy-issuing  locations  nationwide,
including  branch  offices,   independent   agents,   and  approved   attorneys.
Commonwealth/Transnation  operates  as a  single  organization  under a  unified
management team and comprises the third largest title insurance operation in the
United   States,    in   terms   of   total   premiums   and   fees   in   1996.
Commonwealth/Transnation had premiums and fees of $780.2 million, $671.9 million
and $856.8 million for the years 1996, 1995 and 1994, respectively.             

         Commonwealth/Transnation   is   organized   into  five   regions   with
approximately  340 offices in 49 states,  the District of Columbia,  Puerto Rico
and the U.S. Virgin Islands.  In 1996,  California,  Texas,  Florida,  New York,
Pennsylvania,  Washington and Michigan accounted for approximately 11.0%, 10.5%,
9.6%,  7.7%,  6.4%,  6.0% and 5.7%,  respectively,  of revenues for premiums and
services related to title  insurance.  No other state accounted for more than 5%
of such revenues.                                                               

         The table below sets forth,  for the years  ending  December  31, 1994,
1995   and    1996,    the    approximate    dollars    and    percentages    of
Commonwealth/Transnation's title insurance premium revenues for the seven states
representing  the largest  percentages of such revenues and for all other states
combined:                                                                       

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                                                        [Enlarge/Download Table]


                                  Years Ended December 31,                               
                                   (Amounts in thousands)                                

                      1994                            1995                   1996        
                      ----                            ----                   ----        
                  Amount      %                  Amount       %         Amount       %   
                                                                                         
California    $   89,221     10.4            $   75,996      11.3   $   85,530      11.0 
Texas             90,615     10.6                72,517      10.8       82,160      10.5 
Florida           88,624     10.3                66,651       9.9       74,732       9.6 
New York          57,294      6.7                48,630       7.2       59,722       7.7 
Pennsylvania      69,127      8.1                44,578       6.6       49,601       6.4 
Washington        52,567      6.1                41,620       6.2       46,521       6.0 
Michigan          46,781      5.5                39,646       5.9       44,580       5.7 
All Others       362,533     42.3               282,298      42.1      337,311      43.1 
                 -------     ----               -------      ----      -------      ---- 
Totals         $ 856,762    100.0%            $ 671,936     100.0%   $ 780,157     100.0%
               =========    =====             =========     =====    =========     ===== 

         The principal  executive  offices of  Commonwealth  and Transnation are
located  at  1700  Market  Street,  Philadelphia,  Pennsylvania  19103,  and the
telephone number is (215) 241-6000.                                             

         Commonwealth and Transnation are wholly owned  subsidiaries of RIC. RIC
is a wholly owned  subsidiary  of Reliance  Financial  Services  Corporation,  a
Delaware corporation,  which is a wholly owned subsidiary of Reliance.  Reliance
is a  publicly  held  Delaware  corporation  whose  principal  business  is  the
ownership  of  property  and  casualty  and  title  insurance  companies  and an
information  technology  consulting  company.  The common  stock of  Reliance is
traded on the NYSE under the symbol "REL."                                      

         Title  Insurance  and  Other  Services.   Through  various   divisions,
Commonwealth/Transnation  writes title  insurance for residential and commercial
real estate nationwide and provides escrow and settlement services in connection
with  real  estate   closings.   The  National   Title   Services   division  of
Commonwealth/Transnation  provides  specialized  title  services  for  large and
multi-state  commercial  transactions.  In  addition  to  its  nationwide  title
insurance   operations,   Commonwealth/Transnation   offers  a  full   range  of
residential  real estate  services to the national  mortgage  lending  community
through its Commonwealth  OneStop(R) network.  Commonwealth  OneStop(R) provides
(i)  appraisal  management  services  through the CLT Appraisal  Services,  Inc.
subsidiary, (ii) title insurance services through the National Residential Title
Services division,  (iii) employee relocation and property  disposition services
through  Commonwealth  Relocation  Services,  Inc.,  (iv) appraisal  information
systems through the Day One, Inc. subsidiary and (v) additional services through
independent service providers.                                                  

         National Title Services Division.  The National Title Services division
of  Commonwealth/Transnation,  with  thirteen  (13)  offices  located  in  major
metropolitan  areas  nationwide,  delivers  complete  customized title insurance
packages  for  large   commercial,   multi-site  and   interstate   real  estate
transactions.  The division consists of numerous title insurance and real estate
professionals  that comprise an entire  network of national  branch  offices and
agents.  Expertise  on  the  local  level  provides  the  division  with  a full
understanding of varying real estate customs and requirements.                  

         Commonwealth OneStop(R). Through the Commonwealth OneStop(R) operation,
based in Wayne,  Pennsylvania,  Commonwealth/Transnation  provides  national and
regional lenders with a full range of residential closing services.  Lenders can
obtain  all of the  services  necessary  to  complete  residential  real  estate
transactions  through  a single  point of  contact.  Such  services  are  easily
accessible    through    EDI,    by    facsimile    or    through    COSMOS    -
Commonwealth/Transnation's   electronic  mail  ordering  system.  COSMOS  offers
lenders that have not yet converted to the EDI standard an  opportunity to place
their orders  electronically.  The key services on the  Commonwealth  OneStop(R)
network are appraisal  management services through CLT Appraisal Services,  Inc.
and title insurance  services  through the National  Residential  Title Services
division.                                                                       

         CLT Appraisal Services,  Inc. CLT Appraisal Services, Inc. provides the
mortgage  lending  industry with  appraisal  services  through  state-of-the-art
technology.  A  nationwide  network of  independent  licensed or  certified     

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fee  appraisers  provides  unbiased,   third-party   opinions  from  experienced
professionals  with  knowledge  of their  local  markets.  Through a  customized
computer interface,  telephone or facsimile, branch offices can communicate with
the national processing center in Wayne, Pennsylvania, which handles all aspects
of the process from order placement to status reporting and delivery. Appraisers
are screened  before being  admitted to the network,  and they must meet certain
standards in education, training, licensing and experience.                     

         National  Residential  Title  Services  Division.  In  connection  with
technological advancements that allow real estate transactions to close quickly,
the National  Residential Title Services division provides lenders with a single
point of contact for a full range of residential title services.  The service of
this division extends to Commonwealth/Transnation's  entire network of more than
4,000 policy-issuing locations nationwide, including branch offices, independent
agents and approved  attorneys.  National  Residential  Title Services  provides
lenders with the convenience of one-stop shopping and the flexibility of setting
up procedures that meet with their individual requirements.                     

         The National  1031  Exchange  Corporation.  The National  1031 Exchange
Corporation  serves  as  an  independent,  third  party  advisor  to  facilitate
tax-deferred real property exchanges under Section 1031 of the Code.            

         Commonwealth   Relocation  Services,   Inc.   Commonwealth   Relocation
Services, Inc. ("CRS") is a full-service national relocation management company.
CRS  provides  complete,  diversified  services  that  seek to  keep  relocation
activities  and costs under  control.  Founded in 1967, CRS is one of the oldest
firms in the relocation business.                                               

         Day One, Inc. Day One, Inc. is a supplier of software for the appraisal
and property inspection industry.                                               

         Claims-Paying  Ability.   Standard  &  Poors  Corporation  ("S&P")  has
assigned    an    "A-"    rating    to    the    claims-paying     ability    of
Commonwealth/Transnation.  As a result, Commonwealth/Transnation falls under the
major  rating  category  of "A."  According  to S&P, an "A"  category  rating is
assigned to those companies which have good financial security,  but capacity to
meet  policyholder  obligations is somewhat  susceptible to adverse economic and
underwriting conditions. The addition of plus (+) or minus (-) to a major rating
category  (in this case,  "A") is  considered  a modifier  to show the  relative
standing of the insurer within the major rating  category.  There is no separate
definition for an "A-" rating.  Duff & Phelps has assigned an "A+" rating to the
claims-paying  ability of  Commonwealth/Transnation.  Duff & Phelps  ratings are
based on a quantitative and qualitative  analysis,  with particular  emphasis on
fundamental  factors,  recent operating  results,  reserves,  capitalization and
invested assets. According to Duff & Phelps, an "A+" rating is assigned to those
companies  which  have a high  claims-paying  ability,  protection  factors  are
average  and there is an  expectation  of  variability  in risk over time due to
economic and/or underwriting  conditions.  The S&P and Duff & Phelps ratings are
not  designed  for  the   protection   of  investors   and  do  not   constitute
recommendations to buy, sell or hold any security.                              

 THE ACQUISITION

Description of the Acquisition                                                  

         On August 20,  1997,  the Company and its  subsidiary,  Lawyers  Title,
entered into the original  Stock  Purchase  Agreement with Reliance and RIC. The
parties  subsequently amended and restated the original Stock Purchase Agreement
in an Amended and Restated  Stock  Purchase  Agreement  dated as of December 11,
1997. The Stock Purchase  Agreement  provides that the Company will acquire from
RIC all of the issued and  outstanding  shares of capital stock of  Commonwealth
and  Transnation,  both of which will become  wholly owned  subsidiaries  of the
Company.  The purchase  price to be paid by the Company for the  acquisition  of
Commonwealth and Transnation  consists of (i) $207.5 million in cash (subject to
reduction pursuant to the Stock Purchase  Agreement) financed through the Credit
Facility,  (ii) the issuance to RIC of 4,039,473  shares of Common Stock,  (iii)
the issuance to RIC of 2,200,000 shares of Series B Preferred Stock, which as of
the closing of the Acquisition  (the  "Closing")  will be initially  convertible
into 4,824,561  shares of Common Stock, and (iv) a cash sum in an amount that is
the  greater  of (a)  $31,587,500  or (b) the net  proceeds  from the  public or
private offering of 1,750,000 shares of Common Stock after payment of applicable
underwriting  discounts and commissions or placement agents'                    

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commissions  and the fees and expenses of the offering.  The Company has entered
into  the  Credit   Agreement  with  Bank  of  America,   individually   and  as
Administrative  Agent for a syndicate  of eleven (11) other  banks,  pursuant to
which the Credit  Facility is available to fund the $207.5  million cash portion
of the purchase price.  See "-- Bank  Financing." The 4,039,473 shares of Common
Stock, the 2,200,000 shares of Series B Preferred Stock and the 4,824,561 shares
of Common  Stock  issuable  upon  conversion  of the  Series B  Preferred  Stock
(subject to adjustment as provided in the  designation of the Series B Preferred
Stock) to be issued by the  Company to RIC in  connection  with the  Acquisition
(collectively, the "Acquisition Shares") will be registered for resale under the
Securities Act,  pursuant to the terms of a Registration  Rights Agreement to be
executed  by the  Company  and  RIC at the  Closing.  See  "--  Certain  Related
Agreements."                                                                    

         The Stock  Purchase  Agreement  provides  that the $207.5  million cash
portion of the purchase  price payable by the Company to RIC at the Closing will
be reduced by the greater of (i) the amount,  if any, by which the stockholders'
equity  of  Commonwealth/Transnation,  as set  forth on the  unaudited  combined
balance  sheet of  Commonwealth/Transnation  at September 30, 1997, is less than
$270 million,  and (ii) the amount,  if any, by which the unused dividend paying
capacity of Commonwealth/Transnation, determined on a statutory basis, as of the
Closing Date is less than (x) $9.0 million for calendar year 1997 if the Closing
takes  place on or  before  December  31,  1997,  (y) $9.0  million  immediately
available for  dividends if the Closing takes place between  January 1, 1998 and
February 28, 1998,  or (z) $4.5 million  immediately  available for dividends if
the Closing takes place on or after March 1, 1998. The Company presently expects
the Closing to occur in February 1998 and, as of the date hereof,  has no reason
to believe that  Commonwealth/Transnation  will not have $9.0 million  available
for dividends as of the expected Closing Date. To the extent,  however, that the
unused dividend capacity of  Commonwealth/Transnation  is less than $9.0 million
at Closing, the $207.5 million cash purchase price would be reduced accordingly.
The provisions of the Stock Purchase Agreement relating to reduction of the cash
portion   of   the   purchase   price   if   the    stockholders'    equity   of
Commonwealth/Transnation  is less than $270 million at  September  30, 1997 will
not result in a reduction  based upon a  stockholders'  equity of  approximately
$284 million as reflected in Commonwealth/Transnation's balance sheet as of that
date.                                                                           

         In connection with the transactions  contemplated by the Stock Purchase
Agreement,  the  Company,  Reliance and RIC have agreed to enter into the Voting
and Standstill  Agreement,  which will be executed at Closing and which provides
for,  among  other  things,  the  designation  by RIC of three  directors  to be
nominated and  recommended for election to the Board of Directors of the Company
(the "RIC  Directors") and certain  prohibitions on and requirements of Reliance
and RIC and their affiliates with respect to (i) acquiring  additional shares of
Common  Stock or Series B Preferred  Stock,  (ii) voting  their shares of Common
Stock, (iii) selling or transferring  shares of Common Stock, shares of Series B
Preferred  Stock and shares of Common  Stock  issuable  upon  conversion  of the
Series B  Preferred  Stock,  and (iv)  converting  shares of Series B  Preferred
Stock. See "-- Certain Related Agreements."                                     

         Subject to the conditions  set forth in the Stock  Purchase  Agreement,
the  Closing  Date  will be such  date as is  mutually  agreed  by the  parties,
provided that all  conditions  to Closing have been  satisfied or waived and the
Closing  Date  is no  earlier  than  the  date of  delivery  to the  Company  of
Commonwealth/Transnation's  financial statements for the quarter ended September
30,  1997  nor  later  than  March  31,  1998.   The  financial   statements  of
Commonwealth/Transnation for the quarter ended September 30, 1997 were delivered
to the Company in November  1997.  It is expected that the  Acquisition  will be
consummated  in  February  1998,  subject  to the  receipt  of  shareholder  and
regulatory approval. See "-- Regulatory Approvals." In addition, the approval of
the  shareholders of the Company will be required to consummate the Acquisition.
The Board of Directors  of the Company  approved  the  original  Stock  Purchase
Agreement and the transactions  contemplated thereby at a meeting held on August
20, 1997,  approved certain  amendments  thereto and a restatement  thereof at a
meeting held December 5, 1997, and have recommended the proposed  Acquisition to
the shareholders of the Company.  The Shareholders will consider the Acquisition
at a Special Meeting to be held in February 1998.                               

         The  consummation of the Acquisition is a condition to the consummation
of the Offering.  As described  above,  the Acquisition is conditioned  upon the
sale by the Company of 1,750,000 shares of Common Stock in a private offering or
a public offering such as the Offering hereunder.                               

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Bank Financing                                                                  

         Generally.  On November 7, 1997,  the Company  entered  into the Credit
Agreement with Bank of America,  individually and as  Administrative  Agent (the
"Agent")  for a  syndicate  of eleven (11) other  banks  (together  with Bank of
America,  the "Banks"),  pursuant to which the Credit Facility,  in an aggregate
principal amount of up to $237.5 million, is available,  subject to satisfaction
of certain conditions described below, to (i) finance the $207.5 million payment
to RIC in connection  with the  Acquisition,  and (ii) provide up to $30 million
for general  corporate  purposes.  A copy of the Credit Agreement has been filed
with the  Commission  on Form 8-K and is  incorporated  by  reference  into this
Prospectus.  The  following  summary of the  material  provisions  of the Credit
Agreement is qualified in its entirety by reference to the complete  text of the
actual agreement.                                                               

         Conditions.  Each  extension  of credit  under the Credit  Facility  (a
"Loan")  is  conditioned  upon (i) the  receipt  by the  Agent  of a  Notice  of
Borrowing,  (ii) the continuing  validity of the  representations and warranties
made by the Company in the Credit  Agreement as if made on and as of the date of
each Loan (except to extent such  representations and warranties expressly refer
to an earlier  date);  and (iii) the  absence of any Default or Event of Default
(as such terms are defined in the Credit  Agreement)  as of, or resulting  from,
such Loan. As of December 31, 1997, the Company had an aggregate  amount of $4.0
million in Loans  outstanding  under the Credit Facility,  representing  amounts
that were outstanding under prior credit facilities.                            

         The  initial  Loan  that  causes  the  aggregate  principal  amount  of
outstanding   Loans  under  the  Credit  Agreement  to  exceed  $30  million  is
conditioned  upon,  among  other  things,   (i)  substantially   contemporaneous
consummation of the Acquisition; (ii) there being no Default or Event of Default
at such time or arising therefrom;  and (iii) satisfaction of certain additional
conditions  customary to financing  transactions of the kind contemplated by the
Credit Facility.                                                                

         Term. The Credit  Facility is a five-year  senior  unsecured  revolving
credit facility which will terminate with all outstanding  amounts being due and
payable November 7, 2002 (the "Termination  Date"),  unless extended as provided
in the Credit Agreement. On November 7, 1998 and November 7, 1999, the first and
second anniversaries of the closing date of the Credit Facility, the Termination
Date may be extended at the  request of the Company for one  additional  year if
unanimously approved by the Banks in their discretion.                          

         Interest Rate.  Prior to an Event of Default,  interest shall accrue on
the outstanding  principal balance of the Loans, at the Company's option,  based
upon (i) the IBOR (reserve  adjusted) for one, two, three or six months, or (ii)
Bank of  America's  Base Rate as  defined in the  Credit  Agreement.  During the
pendency of any Event of Default,  interest on the outstanding principal balance
of the Loans will accrue at a rate equal to Bank of America's Base Rate plus two
percent (2.0%) per annum.                                                       

         Dividend Restrictions.  The Credit Agreement contains certain covenants
which restrict, or may have the effect of restricting,  the payment of dividends
or  distributions,  and the purchase or redemption by the Company of its capital
stock.  The Credit  Agreement  generally limits the aggregate amount of all cash
dividends  and  stock  repurchases  by the  Company  to  25%  of its  cumulative
consolidated  net income arising after December 31, 1996.  However,  the Company
may declare and make dividend payments or other distributions  payable solely in
its Common Stock, and is also permitted to repurchase shares of its Common Stock
with the proceeds  from a  substantially  concurrent  issue of new shares of its
Common Stock.                                                                   

         The Credit Agreement also sets forth certain  financial  covenants that
may indirectly restrict the payment of cash dividends by the Company. The Credit
Agreement  requires  the  Company's  insurance  subsidiary,  Lawyers  Title,  to
maintain a statutory  surplus of  approximately  $120.5  million and,  following
consummation  of  the  Acquisition,  Commonwealth  is  required  to  maintain  a
statutory surplus of approximately $108.4 million. As of September 30, 1997, the
statutory  surplus of Lawyers Title was  approximately  $150.6 million,  and the
statutory surplus of Commonwealth was approximately  $135.4 million. The Company
is required to maintain a debt to total capitalization ratio of 40%, 37.5%, 35%,
32% and 30%, for the fiscal years ending December 31, 1998, 1999, 2000, 2001 and
after 2001, respectively. The Company also must maintain a debt service coverage
ratio greater than or equal to 2.25 to 1.0.                                     

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         Management  does not believe  that the  restrictions  contained  in the
Credit Agreement will, in the foreseeable future, adversely affect the Company's
ability to pay cash dividends at the current dividend rate.                     

         Covenants,  Warranties  and Events of  Default.  The  Credit  Agreement
contains  customary  affirmative  covenants  including  covenants  pertaining to
compliance with laws, delivery of financial statements, maintenance of corporate
existence,  maintenance of property,  maintenance of appropriate insurance,  and
maintenance of books and records.  In addition to the  restrictions on dividends
described above, the Credit Agreement also includes various negative  covenants,
including restrictions on certain additional  indebtedness,  guarantees,  liens,
and share repurchases,  and restrictions on certain asset dispositions,  certain
loans and investments, transactions with affiliates and acquisitions.           

         The aggregate  Credit Facility  commitment  shall be reduced by 100% of
the net cash  proceeds from the issuance of debt or 75% of the net cash proceeds
from the issuance of any equity  (excluding any equity issuances  related to the
Acquisition).   In  addition,   the  Credit  Agreement  contains  (i)  customary
provisions  protecting the Banks in the event of the  unavailability of funding,
illegality,  increased costs,  change of circumstance,  capital adequacy charges
and  funding  losses  and  indemnities;   (ii)  representations  and  warranties
customary to credit agreements for similar transactions; (iii) events of default
customary  for  financings of a similar kind,  including  defaults  arising from
non-payment  of  principal  and interest  and fees,  failure to meet  covenants,
inaccurate or false  representations  and warranties,  bankruptcy or insolvency,
default under other indebtedness and change of control.                         

         Indemnification. The Credit Agreement requires the Company to indemnify
and hold harmless each of the Agent, BancAmerica Robertson Stephens (as Arranger
of the Credit  Facility),  the Banks and their respective  directors,  officers,
employees and affiliates from and against any and all losses,  claims,  damages,
liabilities (or actions or other proceedings  commenced or threatened in respect
thereof) and expenses that arise out of, result from or in any way relate to the
Credit Agreement, and to reimburse each indemnified person, upon its demand, for
any  legal  or  other   expenses   reasonably   incurred  in   connection   with
investigating,  defending  or  participating  in any such loss,  claim,  damage,
liability or action or other  proceeding,  except to the extent  incurred by any
indemnified  person by reason of the gross  negligence or willful  misconduct of
such person.                                                                    

Amendment to Articles of Incorporation of the Company                           

         Upon the consummation of the Acquisition, the Company's Charter will be
amended to (i) establish a series of the Preferred Stock to be designated as "7%
Series B Cumulative  Convertible  Preferred  Stock," (ii) change the name of the
Company from "Lawyers Title Corporation" to "LandAmerica  Financial Group, Inc."
and  (iii)  increase  the  number  of  authorized  shares  of  Series  A  Junior
Participating Preferred Stock to 200,000 in order to reserve a sufficient number
of shares for issuance in  connection  with the Rights (as defined  below) under
the Amended and Restated Rights  Agreement (as defined  below).  See "-- Certain
Related Agreements."                                                            

Stock Exchange Listing                                                          

         The  Common  Stock is listed  and  trades on the NYSE  under the symbol
"LTI." It is a condition to the  consummation of the Acquisition that the shares
of the Common  Stock to be issued to RIC on the  Closing  Date and the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock shall have
been  approved  for  listing on the NYSE,  subject  only to  official  notice of
issuance.                                                                       

         The  Company  has  reserved  the symbol  "LFG" on the NYSE for use upon
consummation of the Acquisition and shareholder  approval of the proposed change
in the name of the Company to "LandAmerica Financial Group, Inc." This symbol is
expected to be effective on and after the Closing Date.                         

Resales of the Company's Securities                                             

         All of the Acquisition Shares to be issued to RIC pursuant to the Stock
Purchase  Agreement  will be registered  under the Securities Act by the Company
for resale into the public market in accordance with the terms of               

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a Registration  Rights  Agreement (the  "Registration  Rights  Agreement") to be
executed  by  the  Company  and  RIC on  the  Closing  Date.  As a  result,  the
Acquisition Shares may be sold pursuant to an effective  registration  statement
as provided by the Registration  Rights Agreement or pursuant to Rule 144 or any
other  applicable  exemption from  registration  under the  Securities  Act. See
"Shares Eligible for Future Sale."                                              

The Stock Purchase Agreement                                                    

         Representations  and Warranties  and Certain  Covenants of the Parties.
The Stock Purchase Agreement contains customary  representations  and warranties
by each of the Company, Lawyers Title and RIC. In addition, RIC has agreed that,
prior to the Closing Date, RIC will cause  Commonwealth and Transnation to carry
on  their  respective  businesses  only  in the  ordinary  course  of  business,
consistent  with regular custom and practice,  and RIC will use its Best Efforts
(as  defined  in the Stock  Purchase  Agreement)  to  maintain  the value of the
Commonwealth and Transnation  businesses as going concerns and the relationships
of Commonwealth and Transnation with customers,  suppliers,  vendors, employees,
agents,  referral  sources  and  governmental  authorities.  The Stock  Purchase
Agreement  contains covenants that, among other things, (i) restrict the actions
of the  parties  regarding  the  solicitation  of  takeover  proposals  and  the
solicitation  of employment of individuals  who are employees of Commonwealth or
Transnation,  or any of their  subsidiaries,  by RIC,  (ii) prohibit RIC and its
affiliates  for a certain  period of time from competing with the Company in the
title  insurance  business  following  consummation  of the  Acquisition,  (iii)
provide for the public or private  sale of  1,750,000  shares of Common Stock by
the Company, and (iv) are customary to transactions similar to the Acquisition. 

         Closing Conditions.  The obligation of the Company and RIC to close the
Acquisition is subject to various  conditions,  including  approval of the Stock
Purchase  Agreement and the transactions  contemplated  thereby by the Company's
shareholders;  the  receipt  of  all  requisite  approvals  by  the  appropriate
regulatory  agencies;  the  absence  of  any  action  to  delay  or  enjoin  the
consummation  of the  Acquisition;  the  absence  of  any  law  prohibiting  the
Acquisition;  the accuracy of each party's  representations and warranties as of
the Closing Date and the performance by each party of all  obligations  required
to be  performed  by it under the Stock  Purchase  Agreement  at or prior to the
Closing Date; the execution by the parties of each of the closing  agreements to
which they are a party and the receipt of opinions  of counsel  with  respect to
certain legal matters; and the delivery by each party of a written update of its
disclosure letter delivered upon execution of the Stock Purchase  Agreement.  In
addition to the foregoing, the Company's obligation to close is conditioned upon
the absence of any "affiliate debt" (as defined in the Stock Purchase Agreement)
or other debt or  advances  owed to  Commonwealth,  Transnation  or any of their
subsidiaries  by RIC or its  affiliates  or by any  present or former  employee,
officer,  shareholder or director of RIC. The obligation of RIC to close is also
subject to additional  conditions,  including the delivery by the Company of the
purchase price for the Acquisition;  the listing on the NYSE of the Common Stock
to be issued to RIC and the shares of Common Stock  issuable upon  conversion of
the Series B Preferred  Stock;  the  continued  effectiveness  of the  Company's
Amended  and  Restated  Rights  Agreement;  and the  election  of the  directors
designated by RIC to the Company's  Board of Directors as required by the Voting
and Standstill Agreement. Any of the foregoing conditions to Closing (other than
conditions relating to approval by the Company's shareholders and the receipt of
all necessary regulatory approvals) may be waived by the parties.               

         No  assurances  can be provided as to when or if all of the  conditions
precedent  to  the  Acquisition  can or  will  be  satisfied  or  waived  by the
appropriate party. As of the date of this Prospectus,  the Company has no reason
to believe that any of the conditions set forth in the Stock Purchase  Agreement
will not be satisfied.                                                          

         Amendment,  Waiver and  Termination.  The Company and RIC may amend the
Stock  Purchase  Agreement  by  written  agreement  at any time  before or after
approval by the shareholders of the Company.  The Stock Purchase  Agreement also
permits a party to waive  compliance by another party with any of the provisions
thereof. The Stock Purchase Agreement may be terminated at any time prior to the
Closing  Date (i) by mutual  written  consent of the  Company and RIC or (ii) by
written notice by either the Company or RIC in the event of certain  breaches or
failures to satisfy the conditions to Closing.                                  

         If either the Company or RIC terminates  the Stock  Purchase  Agreement
pursuant to the exercise of its fiduciary duties,  then the terminating party is
required to pay the  non-terminating  party the sum of $14.0  million in        

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cash in immediately available funds  contemporaneously  with the delivery of its
written notice of termination.  In addition, the Company is obligated to pay RIC
the sum of $14.0 million in cash if the Company's  shareholders  fail to approve
the transaction following certain public announcements.                         

Certain Related Agreements                                                      

         Voting and  Standstill  Agreement.  The Company,  Reliance and RIC have
agreed to enter into the Voting  and  Standstill  Agreement  to be  executed  at
Closing that,  among other things,  (i) provides for the  designation  by RIC of
three (3) directors to be nominated and recommended for election to the Board of
Directors of the Company,  (ii) prohibits  Reliance and RIC and their affiliates
from acquiring any additional shares of Common Stock or Series B Preferred Stock
(except as permitted under the Voting and Standstill Agreement),  (iii) requires
that Reliance and RIC and their  affiliates vote their shares of Common Stock in
a certain  manner  depending  upon the  matter  that is subject to a vote of the
Company's shareholders, (iv) requires the sale of all 4,039,473 shares of Common
Stock received by RIC from the Company pursuant to the Stock Purchase  Agreement
within 6 1/2 years after the effective date of the resale registration statement
for such shares  (subject to extension as provided in the Voting and  Standstill
Agreement),  (v)  requires  RIC,  with  respect to the Series B Preferred  Stock
received by RIC from the  Company on the  Closing  Date and any shares of Common
Stock received upon  conversion of such shares of Series B Preferred  Stock,  to
sell so many of the shares of Series B Preferred Stock or shares of Common Stock
received upon conversion thereof held by it or its affiliates as is necessary to
reduce the RIC Ownership  Percentage  (as defined below) to less than 20% of the
Adjusted  Outstanding  Shares (as  defined  below) by not later than 8 1/2 years
after the effective date of the registration  statement for such shares (subject
to extension as provided in the Voting and Standstill Agreement), (vi) restricts
the  ability  of RIC and its  affiliates  to  convert  the  shares  of  Series B
Preferred  Stock then held by them until all of the  4,039,473  shares of Common
Stock (and  certain  additional  shares that may be issued with  respect to such
shares)  have  been  sold to  persons  that  are not,  at the time of the  sale,
conveyance  or transfer,  an affiliate of RIC,  provided  that such  restriction
shall not apply upon the occurrence of certain specified events set forth in the
Voting and Standstill Agreement, and (vii) prohibits the knowing transfer of the
Acquisition Shares to any person or group if, as a result of such transfer, such
person or group would have beneficial  ownership of Common Stock representing in
the  aggregate  more than 9.9% of the  issued and  outstanding  shares of Common
Stock (subject to exceptions set forth in the Voting and Standstill Agreement). 

         "RIC Ownership  Percentage"  means,  at any time, the percentage of the
Adjusted  Outstanding  Shares that is beneficially owned in the aggregate by RIC
and its affiliates.  "Adjusted  Outstanding  Shares" means, at any time and with
respect to the  determination  of the RIC Ownership  Percentage as it relates to
RIC and its  affiliates,  the total number of shares of Common Stock then issued
and  outstanding  together  with the total  number of shares of Common Stock not
then issued and  outstanding  that would be outstanding if (x) all then existing
shares of Series B Preferred  Stock had been converted and (y) all then existing
warrants and options  exercisable into shares of Common Stock had been exercised
(other than underwriters' over-allotment options and stock options granted under
benefit plans of the Company or any of its affiliates), but excluding any rights
that  may be  exercisable  under  the  Company's  Amended  and  Restated  Rights
Agreement.                                                                      

         Covenants  Regarding  Non-Performance  Remedies.  The provisions of the
Series B Preferred Stock will contain covenants that will entitle RIC to certain
rights in specific  default  situations.  Upon the occurrence of certain events,
RIC will be entitled to additional  seats on the  Company's  Board of Directors,
and  Reliance,  RIC and their  affiliates  will no longer be  subject to certain
restrictions under the Voting and Standstill Agreement.  Such events include the
following:  (i) the Company's combined ratio exceeds the weighted average of the
combined ratios of certain predetermined comparable title insurance companies by
more than five  percentage  points for any twelve month period and the Company's
claims-paying ability rating is downgraded by two ratings agencies to or below a
rating of "BBB -";  (ii) the  Company  fails to pay a  dividend  on the Series B
Preferred Stock on one occasion,  on two occasions,  whether or not consecutive,
and on three  occasions,  whether  or not  consecutive,  and (iii)  the  Company
defaults  on any of its  material  debt  obligations  in excess  of $15  million
(individually or at any one time in the aggregate).  See "Description of Capital
Stock -- Acquisition Covenants Regarding Non-Performance Remedies."             

         Amended  and  Restated  Rights   Agreement.   Pursuant  to  the  Rights
Agreement,  dated as of October 1, 1991,  between the  Company and Sovran  Bank,
N.A., as Rights Agent, one preferred share purchase right (a "Right") was       

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issued for each share of Common Stock then outstanding. The Rights Agreement was
amended on June 22, 1992 to appoint  Wachovia Bank of North  Carolina,  N.A., as
the  successor to the Rights  Agent.  In  connection  with the  execution of the
original  Stock  Purchase  Agreement  on August  20,  1997 and the  Amended  and
Restated Stock Purchase  Agreement on December 11, 1997, the Company executed an
Amended and  Restated  Rights  Agreement,  dated  August 20,  1997,  and a First
Amendment to Amended and Restated  Rights  Agreement,  dated  December 11, 1997,
with Wachovia Bank, N.A., as Rights Agent  (together,  the "Amended and Restated
Rights  Agreement"),  copies of which  have been filed  with the  Commission  on
Current  Reports  on Form  8-K and  are  incorporated  by  reference  into  this
Prospectus.  See "Available Information" and "Incorporation of Certain Documents
by Reference."                                                                  

         The Amended and Restated Rights Agreement provides, among other things,
that (i) the approval, execution, delivery and performance of the original Stock
Purchase  Agreement,  the Amended and Restated Stock  Purchase  Agreement or the
Voting and Standstill  Agreement,  and any acquisition of the Acquisition Shares
by RIC  or its  affiliates  as  contemplated  by  the  original  Stock  Purchase
Agreement,  the Amended and Restated Stock Purchase  Agreement or the Voting and
Standstill Agreement, will not cause the Rights to become exercisable,  (ii) the
exercise  price of the Rights shall be $85 per Right,  an increase  from $65 per
Right  to  reflect  current  conditions,  and  (iii)  the  Rights  shall  not be
exercisable after August 20, 2007, thereby extending the termination date of the
Rights from  October 1, 2001.  See  "Description  of Capital  Stock -- Preferred
Share Purchase Rights."                                                         

         Registration Rights Agreement. On the Closing Date, the Company and RIC
will  enter into the  Registration  Rights  Agreement.  In  accordance  with the
procedures set forth in the Registration Rights Agreement, the Company will file
one or more  Registration  Statements with the Commission to register the resale
of the Acquisition  Shares under the Securities Act and, after such Registration
Statement(s)   become   effective,   use  its  best   efforts  to  maintain  the
effectiveness of any such Registration Statement(s) for specified time periods. 

Regulatory Approvals                                                            

         Antitrust.  Under the Hart-Scott-Rodino  Antitrust  Improvements Act of
1976 (the "HSR Act") and the rules and regulations promulgated thereunder by the
Federal Trade  Commission  (the "FTC"),  the  Acquisition may not be consummated
until  notifications have been given and certain  information has been furnished
to the FTC and the Antitrust Division of the Department of Justice and specified
waiting period requirements have been satisfied.  The Company and Reliance filed
notification  and report forms under the HSR Act with the FTC and the Department
of Justice on September 5, 1997. On October 3, 1997,  prior to the expiration of
the required  thirty (30) day waiting  period under the HSR Act, the Company and
Reliance received a request for additional information from the FTC. The request
for  additional  information  has the effect of  extending  the thirty  (30) day
waiting  period until twenty (20) days after the Company and Reliance  have each
"substantially  complied"  (as such term is defined under the HSR Act) with such
request,  unless the FTC or the Department of Justice voluntarily terminates the
waiting period prior to substantial compliance. On October 31, 1997 and November
25, 1997,  the Company and Reliance  filed  responses to the FTC's  request that
provided additional information.  On December 16, 1997, the Company and Reliance
notified the FTC of the amendment and restatement of the original Stock Purchase
Agreement.  As of the date hereof, the additional twenty (20) day waiting period
has not commenced and the FTC has not voluntarily terminated the waiting period.
At any time before or after the consummation of the Acquisition,  the FTC or the
Department  of Justice  could take such action  under the  antitrust  laws as it
deems necessary or desirable in the public interest, including seeking to enjoin
the consummation of the Acquisition or seeking  divestiture of certain assets of
the  Company  or  Commonwealth/Transnation.  At any time  before  or  after  the
consummation of the Acquisition,  and  notwithstanding  that the HSR Act waiting
period has expired, any state could take such action under the antitrust laws as
it deems  necessary  or  desirable  in the public  interest.  Such action  could
include  seeking  to enjoin  the  consummation  of the  Acquisition  or  seeking
divestiture  of  certain  assets  of the  Company  or  Commonwealth/Transnation.
Private  parties may also seek to take legal  action  under the  antitrust  laws
under certain circumstances.                                                    

         Based  upon  available  information,  the  Company  believes  that  the
Acquisition can be effected in compliance with federal and state antitrust laws.
However,  there can be no assurance that a challenge to the  consummation of the
Acquisition  on antitrust  grounds will not be made or that, if such a challenge
is made,  the                                                                   

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Company would prevail or would not be required to accept  certain  conditions in
order to consummate the Acquisition.                                            

         Insurance.  The Acquisition is also subject to the receipt of necessary
approvals  from various state  insurance  departments.  In September  1997,  the
Company and Reliance (and certain of its  affiliates)  filed an Application  for
Approval of Acquisition of Control of or Merger with a Domestic Insurer (Form A)
in a total of thirteen (13) states where such filings were required. On December
15, 1997, the Company and Reliance notified state insurance  departments,  where
required  to do so, of the  amendment  and  restatement  of the  original  Stock
Purchase Agreement.  The insurance laws and regulations of certain of the states
wherein such Form A filings were made  require  hearings by the state  insurance
departments  before  deciding  whether  to  grant  approval  of  an  acquisition
described in a Form A filing. As of December 9, 1997, all such required hearings
had been completed. In certain of the states that do not require a hearing prior
to  approval,  the  Company and  Reliance  would be entitled to a hearing in the
event the state insurance  department proposed not to grant the approval.  As of
the date hereof,  approvals have been obtained in six (6) states and are pending
in the remaining seven (7) states. The Company has no reason to believe that the
remaining approvals will not be obtained.                                       

         In addition to the Form A filings, on October 24, 1997, the Company and
Reliance  filed  Pre-Acquisition  Notification  Forms  Regarding  the  Potential
Competitive  Impact of a Proposed  Merger or  Acquisition  by a  Non-Domiciliary
Insurer  Doing  Business  in this  State or by a  Domestic  Insurer  (Form E) in
seventeen (17) states where such filings were  required.  The Form E filings are
generally reviewed within thirty (30) days after filing with the state insurance
departments,  which may request additional information on the competitive impact
of a proposed  acquisition.  The thirty (30) day time period expired on November
24, 1997.  As of that date,  the Company and Reliance had received  requests for
supplemental information from four (4) states. Although the Company and Reliance
have  responded to such  requests,  the applicable  state  insurance  department
generally  may  take up to an  additional  thirty  (30)  days  from  the date it
receives the response  containing  the  requested  supplemental  information  to
approve an  acquisition.  In three (3) of those  four (4) states,  approvals are
pending.  The Company and Reliance  have  received the approval of the remaining
fourteen (14) states where the Form E's were filed.                             

Accounting Treatment                                                            

         The  Acquisition  will  be  accounted  for by  the  Company  using  the
"purchase"  method of accounting in accordance with Accounting  Principles Board
Opinion  No.  16.  Under  purchase  accounting,  the  fair  market  value of the
consideration  given,  and the market value of the liabilities  assumed,  by the
Company in the Acquisition  will be used as the basis of the purchase price. The
assets and  liabilities  of  Commonwealth/Transnation  will be revalued to their
respective  fair market  values.  The  financial  statements of the Company will
reflect the combined operations of the Company and Commonwealth/Transnation from
the Closing Date of the Acquisition.                                            

Certain Federal Income Tax Consequences                                         

         The  consummation  of the  Acquisition  will not be a taxable event for
federal income tax purposes for the Company or the shareholders of the Company. 

         Pursuant to the Stock Purchase Agreement, RIC agreed to (i) sell all of
the capital stock of  Commonwealth  and Transnation to the Company and (ii) join
with the Company in the filing of an election  under  Section  338(h)(10) of the
Internal  Revenue Code of 1986,  as amended  (the  "Code"),  and any  comparable
election under state, local or foreign tax law. These elections should result in
the  Acquisition  being  deemed  to  be a  sale  of  Commonwealth's  assets  and
Transnation's  assets for federal  income tax  purposes  with  Commonwealth  and
Transnation being deemed to have sold their assets while still a member of RIC's
"affiliated group" (as defined in the Code). Accordingly, the economic burden of
taxation  resulting from the deemed asset sale by  Commonwealth  and Transnation
will be borne by RIC.                                                           

         The  discussion  set forth above as to the material  federal income tax
consequences  of the  Acquisition  is based  upon the  provisions  of the  Code,
applicable  Treasury  Regulations  thereunder,  judicial  decisions  and current
administrative rulings, any of which may be changed at any time with retroactive
effect.  The discussion  does not                                               

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address any aspect of state, local or foreign taxation.  No rulings have been or
will be  requested  from the IRS with  respect to any of the  matters  discussed
herein.  There  can  be  no  assurance  that  future  legislation,  regulations,
administrative  rulings or court decisions would not alter the tax  consequences
set forth above.                                                                

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MANAGEMENT AND OWNERSHIP OF THE COMBINED COMPANY

Board of Directors                                                              

         Upon the consummation of the Acquisition, the Company will increase the
size of its Board of Directors from ten (10) to fourteen (14) directors. At that
time, the Company will appoint  Herbert Wender,  the Chief Executive  Officer of
Commonwealth  and  Transnation,  as a director to fill one of the newly  created
vacancies  on the Board of  Directors.  In  addition,  the Company  will appoint
Robert M.  Steinberg,  George E. Bello and  Lowell C.  Freiberg  as initial  RIC
Directors to fill the remaining  vacancies on the Board of  Directors.  See "The
Acquisition  --  Description  of  the   Acquisition"  and  "--  Certain  Related
Agreements."  Similar to its current structure,  the  post-Acquisition  Board of
Directors will be divided into three classes,  two of which will consist of five
directors each and one of which will consist of four directors.  Mr. Wender will
be placed in Class I, and one RIC  Director  will be placed in each of the three
classes.                                                                        

         The current members of the Board of Directors will continue to serve in
their respective  classes and will serve staggered  three-year terms expiring in
1998, 1999 and 2000,  respectively.  Mr. Wender and the RIC Directors will serve
as directors until the 1998 annual meeting of  shareholders  of the Company.  At
that meeting, the Board of Directors will present for election such directors to
serve for the remaining terms of their respective classes,  expiring in 1999 and
2000 (for  Classes II and III) and for a three-year  term  expiring in 2001 (for
Class I).                                                                       

         The  following  table  sets  forth  the  composition  of the  Board  of
Directors following the consummation of the Acquisition.                        

                                                                [Download Table]


                                                                          
         Class I                 Class II                 Class III       
 (Term Expiring in 1998)  (Term Expiring in 1999)  (Term Expiring in 2000)

  Charles H. Foster, Jr.     J. Garnett Nelson         Janet A. Alpert    
     Herbert Wender*      Robert F. Norfleet, Jr.      Michael Dinkins    
    George E. Bello**      Robert M. Steinberg**         James Ermer      
Theodore L. Chandler, Jr.     Eugene P. Trani       Lowell C. Freiberg**  
   Marshall B. Wishnack                                John P. McCann     

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

*        Chief Executive Officer of Commonwealth and Transnation.               
**       RIC Director.                                                          

         Charles H. Foster, Jr. will continue to serve as Chairman of the Board,
and Herbert Wender will become Vice-Chairman of the Board.                      

         The following paragraphs set forth certain information,  as of December
5, 1997,  for each of the persons who are  expected to serve as directors of the
Company  following  the  consummation  of  the  Acquisition.   Unless  otherwise
indicated, each director has held his or her current position for more than five
years.                                                                          

 Class I (Term Expiring in 1998)

         George E. Bello,  62, has been  Executive Vice President and Controller
and a director  of  Reliance  since  1982.  Mr.  Bello is a  director  of Zenith
National  Insurance  Corp.,  United Dental Care,  Inc. and Horizon Mental Health
Management, Inc.                                                                

         Theodore L. Chandler, Jr., 45, has been a director of the Company since
1991 and is a member of  Williams  Mullen  Christian  &  Dobbins,  a law firm in
Richmond,  Virginia.  Mr.  Chandler  is a director of Hilb,  Rogal and  Hamilton
Company and Open Plan Systems,  Inc. Williams Mullen Christian & Dobbins acts as
counsel to the Company. See "Legal Matters."                                    

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         Charles H. Foster,  Jr.,  53, has been a director of the Company  since
1991 and is Chairman of the Board and Chief Executive Officer of the Company and
of Lawyers Title Corporation. Mr. Foster is a director of Universal Corporation.

         Herbert Wender,  60, has been Chairman and Chief  Executive  Officer of
Commonwealth  since 1983 and Chairman and Chief Executive Officer of Transnation
since 1990.  Mr. Wender has also been  Chairman of the Board of CMAC  Investment
Corporation, a private mortgage insurance company, since 1992.                  

         Marshall B. Wishnack, 50, has been a director of the Company since 1991
and has been Chairman and Chief Executive Officer of Wheat First Butcher Singer,
Inc. ("Wheat"),  an investment banking and securities  brokerage company,  since
April 1, 1997.  Prior to April 1, 1997,  he was  President  and Chief  Executive
Officer of Wheat, a position that he held for more than five years. Mr. Wishnack
is a director of Best  Products,  Inc.  and S&K Famous  Brands.  Wheat  provides
investment  management and  securities  brokerage  services to the Company.  See
"Underwriting."                                                                 

Class II (Term Expiring in 1999)

         J. Garnett  Nelson,  57, has been a director of the Company  since 1991
and has been  President of  Mid-Atlantic  Holdings,  L.L.C.,  a  consulting  and
business  acquisitions  company.  Prior to  February  1995,  he was Senior  Vice
President - Investments  of The Life Insurance  Company of Virginia,  and Senior
Executive Director of Aon Advisors, Inc., an investment advisor,  positions that
he held for more than five  years.  Mr.  Nelson is a director  of Mentor  Income
Fund,  Inc., Aon Asset  Management  Fund, Inc. and Life of Virginia Series Fund,
Inc.                                                                            

         Robert F.  Norfleet,  Jr., 56, has been a director of the Company since
1991 and has been a consultant  in the capacity of director of Client  Relations
for the Trust and Investment  Management Group of Crestar Bank since March 1996.
Prior to March 1996, he was Corporate Executive Vice President and Senior Credit
Officer of Crestar  Bank.  Prior to 1994,  Mr.  Norfleet was President - Capital
Region and  Executive  Vice  President  -  Corporate  Banking  of Crestar  Bank,
positions that he held for more than five years.                                

         Robert M. Steinberg, 55, has been President and Chief Operating Officer
of Reliance since 1982 and a director of Reliance since 1981. Mr.  Steinberg has
also been Chairman of the Board and Chief  Executive  Officer of RIC since 1984.
Mr. Steinberg is a director of Zenith National Insurance Corp.                  

         Eugene P. Trani,  57, has been a director of the Company since 1993 and
is President of Virginia  Commonwealth  University,  an urban,  public  research
university.  Mr.  Trani is a  director  of  Crestar  Financial  Corporation  and
Heilig-Meyers Company.                                                          

 Class III (Term Expiring in 2000)

         Janet A. Alpert,  50, has been a director of the Company since 1994 and
has been  President  and Chief  Operating  Officer of the Company and of Lawyers
Title since 1992.  From October 1991 to December  1992, Ms. Alpert was Executive
Vice President of the Company,  and, from January 1989 to December 1992, she was
Executive Vice President - Western Operations of Lawyers Title.                 

         Michael Dinkins,  43, has been a director of the Company since 1997 and
has been Senior Vice President of Finance and Administration and Chief Financial
Officer of  CulturalAccessWorldwide,  Inc.,  an  outsourced  marketing  services
company, since 1997. Prior to joining CulturalAccessWorldwide, Inc., Mr. Dinkins
was  President  of the  Graphic  Communications  Group of Cadmus  Communications
Corporation  ("Cadmus"),  a printing,  marketing and  publishing  company.  From
September 1993 to May 1995, he was Vice President and Chief Financial Officer of
Cadmus,  and, from 1992 to 1993, he was Manager  Finance (for  Marketing in 1993
and for Sales in 1992) for GE Appliances, a division of General Electric Co.    

         James Ermer,  54, has been a director of the Company  since 1991 and is
retired.  From April 1995 to December  1996, he was Executive  Vice  President -
Strategic  Planning and Corporate  Development  of CSX                          

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Corporation ("CSX"), a railroad and transportation company. Prior to April 1995,
he was Senior Vice  President - Finance  and Chief  Financial  Officer of CSX, a
position  that he held for more than five  years.  Mr.  Ermer is a Director  and
trustee of Nations Fund Group of Mutual Funds.                                  

         Lowell C. Freiberg,  58, has been Chief  Financial  Officer of Reliance
since 1985 and Senior Vice  President and a director of Reliance since 1982. Mr.
Freiberg  also  served as  Treasurer  of Reliance  from 1982 to March 1994.  Mr.
Freiberg is a director of Symbol Technologies, Inc.                             

         John P. McCann,  52, has been a director of the Company  since 1997 and
is  Chairman,  President  and Chief  Executive  Officer and a director of United
Dominion  Realty Trust,  Inc., an apartment Real Estate  Investment  Trust.  Mr.
McCann is also a director of Storage USA, Inc.                                  

Continuing Board Representation of RIC                                          

         The  continuing  representation  of RIC on the  Board of  Directors  is
provided for in the Voting and Standstill  Agreement.  The Board of Directors is
required,  during the term of the Voting and Standstill  Agreement,  to nominate
and recommend for election the three RIC Directors  that RIC is entitled to have
thereunder.  However,  as a condition to his or her  appointment to the Board of
Directors,  each RIC Director will execute a  resignation  agreement and provide
the same to the Company and RIC. Such agreement will require the RIC Director to
resign from the Board of  Directors  as RIC reduces its holdings of Common Stock
and Series B Preferred  Stock,  as described  below.  As long as RIC owns,  on a
fully-diluted  basis, 20% or more of the issued and outstanding shares of Common
Stock,  RIC will be entitled to three members of the Board of Directors.  At the
time when such ownership percentage is less than 20%, but more than 15%, the two
RIC  Directors  with the shortest  remaining  terms of office  (i.e.,  those RIC
Directors  that are scheduled to stand for election as directors at the next two
annual  meetings  of the  Company's  shareholders  at that  time)  shall  resign
immediately from the Board of Directors. The third RIC Director may complete the
remainder of his unexpired  term at that time,  but such  director  shall resign
upon the earlier of (i) the date that RIC's  ownership  percentage  is less than
15% or (ii) the  expiration of the period in which RIC is required to dispose of
its  shares  of Series B  Preferred  Stock.  If RIC's  fully  diluted  ownership
percentage  shall be  reduced  from  more  than 20% to less than 15% at the same
time, all three RIC Directors then in office shall resign immediately.  See "The
Acquisition  --  Description  of  the   Acquisition"  and  "--  Certain  Related
Agreements."                                                                    

Nominating Committee                                                            

         To facilitate the Company's  compliance with its obligations  under the
Voting  and  Standstill  Agreement,  the Board of  Directors  will  establish  a
Nominating Committee effective as of the Closing Date of the Acquisition.  It is
expected that the Nominating Committee will consist of at least three directors,
one of whom will be a RIC Director.                                             

Committee Representation of RIC                                                 

         The  representation of the RIC Directors on the committees of the Board
of  Directors  is  subject  to the  provisions  of  the  Voting  and  Standstill
Agreement.  See "The  Acquisition  -- Description  of the  Acquisition"  and "--
Certain  Related  Agreements."  RIC will be  entitled  to have one RIC  Director
represented on each committee of the Board of Directors until the earlier of (i)
the date that RIC's ownership percentage is less than 20% or (ii) the expiration
of the  period in which RIC is  required  to  dispose  of its shares of Series B
Preferred  Stock.  Once the number of RIC Directors has been reduced to one, the
remaining RIC Director may maintain his  membership on any committee on which he
may then be serving  until the earliest of (i) the  expiration  of his term as a
director,  (ii) the date that RIC's  ownership  percentage  is less than 15%, or
(iii) the  expiration  of the period in which RIC is  required to dispose of its
shares of Series B Preferred Stock.                                             

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Executive Officers                                                              

         Following  the   consummation   of  the   Acquisition,   the  following
individuals are expected to serve initially as the principal  executive officers
of the Company.                                                                 

                                                        [Enlarge/Download Table]


Name                   Current Position                             Expected Position                   

                                                                                                        
Charles H. Foster, Jr. Chairman and Chief Executive Officer of      Chairman and Chief Executive Officer
                       the Company                                                                      

Herbert Wender         Chairman and Chief Executive Officer of      Vice-Chairman and Chief Operating   
                       Commonwealth and Transnation                 Officer                             

Janet A. Alpert        President and Chief Operating Officer of     President                           
                       the Company                                                                      

Jeffrey A. Tischler    Executive Vice President and Chief           Executive Vice President            
                       Financial and Administrative Officer of      and Chief Financial Officer         
                       Commonwealth and Transnation                                                     

G. William Evans       Vice President and Treasurer of the Company  Executive Vice President -          
                                                                    Information Technology              

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DESCRIPTION OF CAPITAL STOCK

         The following  summary  description of the capital stock of the Company
is qualified in its entirety by reference to  applicable  provisions of Virginia
law and the Company's Charter and Bylaws, the complete text of which are on file
with the Commission.                                                            

Authorized and Outstanding Capital Stock                                        

         The Company's authorized capital stock consists of 45,000,000 shares of
Common  Stock,  without par value,  and  5,000,000  shares of  preferred  stock,
without  par value (the  "Preferred  Stock").  At  January  7, 1998,  there were
8,968,370 shares of Common Stock issued and outstanding,  No shares of Preferred
Stock have been issued.                                                         

Common Stock                                                                    

         The holders of Common  Stock are entitled to one vote for each share on
all matters voted on by  shareholders,  including  elections of directors,  and,
except as otherwise required by law or provided in any resolution adopted by the
Board of Directors with respect to any series of Preferred Stock, the holders of
such shares exclusively possess all voting power. The Company's Charter does not
provide  for  cumulative  voting in the  election of  directors.  Subject to any
preferential  rights of any outstanding series of Preferred Stock created by the
Board of Directors  from time to time,  the holders of Common Stock are entitled
to such dividends as may be declared from time to time by the Board of Directors
from funds available therefor,  and upon liquidation are entitled to receive pro
rata all assets of the Company available for distribution to such holders.      

Preferred Stock                                                                 

         Under  the  Company's   Charter,   the  Board  of  Directors,   without
shareholder approval, is authorized to issue shares of Preferred Stock in one or
more series and to  designate,  with  respect to each such  series of  Preferred
Stock, the number of shares in each such series, the dividend rates, preferences
and date of payment,  voluntary and  involuntary  liquidation  preferences,  the
availability of redemption and the prices at which it may occur,  whether or not
dividends shall be cumulative  and, if cumulative,  the date or dates from which
the  same  shall  be  cumulative,  the  sinking  fund  provisions,  if any,  for
redemption  or  purchase  of  shares,  the  rights,  if any,  and the  terms and
conditions on which shares can be converted  into or exchanged for shares of any
other class or series, and the voting rights, if any. Any Preferred Stock issued
may be senior to the Common Stock as to dividends and as to  distribution in the
event of liquidation,  dissolution or winding up of the Company.  The ability of
the Board of Directors to issue Preferred Stock, while providing  flexibility in
connection with possible acquisitions and other corporate purposes, could, among
other things, adversely affect the voting power of holders of Common Stock.     

         The Board of Directors has  authorized  and reserved  200,000 shares of
Series A Junior Participating  Preferred Stock, without par value (the "Series A
Preferred  Stock"),  for  issuance  upon the  exercise  of the  preferred  share
purchase rights (the "Rights") described below. See "-- Preferred Share Purchase
Rights." Upon the approval of the Acquisition by the Company's shareholders, the
Board of Directors will have further authorized and reserved 2,200,000 shares of
Series B  Preferred  Stock  for  issuance  to RIC upon the  consummation  of the
Acquisition.  See "-- Series B  Preferred  Stock." The  reservation  of both the
Series A Preferred  Stock and Series B Preferred  Stock as described  above will
become effective upon amendment of the Company's Charter with the Virginia State
Corporation Commission in conjunction with the consummation of the Acquisition. 

         The creation and issuance of any other series of Preferred  Stock,  and
the relative  rights and  preferences of such series,  if and when  established,
will depend upon,  among other things,  the future capital needs of the Company,
then-existing  market  conditions and other factors that, in the judgment of the
Board of Directors, might warrant the issuance of Preferred Stock.              

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Preemptive Rights                                                               

         No  holder  of any share of  Common  Stock or  Preferred  Stock has any
preemptive  right to subscribe to any  securities  of the Company of any kind or
class.                                                                          

Series B Preferred Stock                                                        

         General.  The following  summary is a brief description of the terms of
the  Series B  Preferred  Stock to be  issued  to RIC upon  consummation  of the
Acquisition. The description of the Series B Preferred Stock is qualified in its
entirety  by  reference  to the  exhibit to the  Articles  of  Amendment  to the
Company's  Charter that contain the designation of the Series B Preferred Stock,
the complete text of which is on file with the Commission (the "Preferred  Stock
Designation"). See "Incorporation of Certain Documents by Reference."           

         Dividend  Rights.  The  holders  of Series B  Preferred  Stock  will be
entitled to receive when and as declared by the Board of Directors, out of funds
legally  available  therefor,  quarterly  cumulative cash dividends at an annual
rate of seven percent (7%) of the stated value of $50.00 per share, or $3.50 per
share. Such dividends will be payable on the last day of March, June,  September
and December of each year,  commencing on the date on which shares of the Series
B Preferred  Stock are initially  issued by the Company (the  "Initial  Issuance
Date").                                                                         

         Dividends  on the Series B  Preferred  Stock will be  cumulative.  As a
result,  if the Board of  Directors  chooses  not to declare a  dividend  on the
Series B Preferred Stock for a particular dividend period, holders of the Series
B Preferred  Stock will retain the right to receive that dividend in the future.
The Board of Directors may declare dividends that are in arrears at any time.   

         The Series B Preferred Stock will be senior to the Common Stock and the
Series A Preferred Stock. Accordingly, no dividends may be declared, paid or set
aside, on the Common Stock and the Series A Preferred Stock unless all dividends
on the  Series B  Preferred  Stock,  including  all  unpaid  dividends  for past
periods,  have been paid in cash or cash sums sufficient  therefor have been set
aside.                                                                          

         Each  dividend  on the  Series B  Preferred  Stock  will be  payable to
holders  of  record as of the 15th day of the  month in which  the  dividend  is
payable or such other date as may be fixed by the Board of Directors, which date
shall  not be  less  than 10 days or  more  than 30 days  prior  to the  date of
payment.                                                                        

         Holders of the Series B Preferred Stock will not be entitled to receive
any dividends in excess of the dividends described above and, except as provided
in the  provisions  of the Series B  Preferred  Stock,  will not be  entitled to
participate in the earnings or assets of the Company.                           

         Conversion  Rights.  Shares of the  Series B  Preferred  Stock  will be
convertible  at any  time  at the  option  of the  holder  into  fully-paid  and
nonassessable  shares of Common Stock at a conversion  price of $22.80 per share
of Common Stock (equivalent to a Conversion Ratio of approximately  2.193 shares
of  Common  Stock  for each  share of  Series B  Preferred  Stock),  subject  to
adjustment as described below (the "Conversion Price").                         

         To protect against  dilution,  the Conversion  Price will be subject to
adjustment  from time to time upon  certain  events,  including  the issuance of
Common Stock as a dividend or distribution on shares of Common Stock,  splits or
combinations of outstanding  shares of Common Stock,  the issuance to holders of
Common Stock  generally of options,  rights or warrants to subscribe  for Common
Stock or other  securities of the Company at less than the current  market price
of the Common  Stock,  or the  issuance of Common Stock upon the exercise of the
Rights.                                                                         

         If the Company (i)  consolidates  with or merges into any other  person
and is not the  continuing or surviving  corporation  of such  consolidation  or
merger,  (ii)  permits any other  person to  consolidate  with or merge into the
Company and the Company is the continuing or surviving person but, in connection
with such consolidation or merger, the Common Stock is changed into or exchanged
for stock or other securities of any other person or cash or any other property,
(iii)  transfers  all or  substantially  all of the  assets or  property  of the
Company  to any  other  person,  or (iv)  effects a  capital  reorganization  or
reclassification  of the Common  Stock (other than a capital                    

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reorganization or  reclassification  resulting in the issue of additional shares
of Common Stock for which  adjustment in the Conversion  Price is required to be
made), then there will be no adjustment of the Conversion Price, but each holder
of Series B Preferred Stock,  upon the conversion  thereof at any time after the
consummation  of  such  consolidation,   merger,   exchange,   sale,   transfer,
reorganization  or  reclassification,  shall  be  entitled  to  receive  (at the
Conversion Price in effect at the time of such consummation) the kind and amount
of shares of stock and other securities, cash and property that the holder would
have owned or been  entitled to receive  immediately  after such  consolidation,
merger,  exchange,  sale,  transfer,  reorganization or reclassification if such
share had been converted immediately before such event.                         

         Upon conversion of any shares of Series B Preferred  Stock,  the holder
thereof shall remain entitled to receive any unpaid  dividends in respect of the
shares so converted,  provided that such holder held such shares on the date for
determination  of holders of the Series B  Preferred  Stock  entitled to receive
payment of such dividends.                                                      

         Fractional   shares  of  Common  Stock  will  not  be  delivered   upon
conversion.  Instead,  a cash  adjustment  will  be  paid  in  respect  of  such
fractional  interest,  in an amount equal to the Conversion Price as of the date
of conversion multiplied by such fractional interest.                           

         Limitation  on  RIC's  Conversion  Rights.  The  right  of RIC  and its
affiliates to convert  shares of Series B Preferred  Stock into shares of Common
Stock will be subject to additional  restrictions.  The Series B Preferred Stock
held by RIC and its affiliates  shall not be  convertible  into shares of Common
Stock  until  such  time  as RIC and  its  affiliates  have  sold,  conveyed  or
transferred all of the 4,039,473 shares of Common Stock received by RIC from the
Company in connection with the Acquisition and such additional  shares of Common
Stock that the  Company may issue with  respect to such  shares  pursuant to any
stock    splits,    stock    dividends,    recapitalizations,    restructurings,
reclassifications  or similar  transactions  or pursuant to the  exercise of any
Rights.  RIC and its affiliates  shall not be subject to such restriction in the
event that (i) the Company  calls for the  redemption  of the Series B Preferred
Stock  held by RIC or (ii)  either  the  Company  declares  a regular  quarterly
dividend on the Common  Stock of $.40 or more during any calendar  year,  or the
Company  declares one or more  non-regular  dividends on the Common Stock during
any  calendar  year in an  aggregate  amount  of $.50 or  more,  or the  Company
declares  dividends on the Common Stock,  whether regular or non-regular,  in an
aggregate amount of $1.60 or more during any calendar year. If the Company calls
for redemption less than all of the Series B Preferred Stock held by RIC and its
affiliates, then RIC and its affiliates shall be entitled to convert into shares
of Common Stock only that number of the Series B Preferred  Stock that have been
so called for redemption.                                                       

         Furthermore,  in the event that the Board of Directors has approved any
negotiated  tender or exchange  offer with a third party or approved any merger,
consolidation,    share   exchange,    business   combination,    restructuring,
recapitalization  or  similar  transaction  involving  the  Company in which the
holders of Common  Stock are  entitled to tender or exchange  their  holdings of
Common Stock for, or to otherwise  receive for their  holdings of Common  Stock,
other consideration  (whether cash, non-cash or some combination  thereof),  the
Company  will  either (i) permit RIC and its  affiliates  to convert  all of the
Series B Preferred Stock then held by them contingent upon, and effective as of,
the  closing  of such  transaction  and  without  the right of RIC or any of its
affiliates to vote the shares of Common Stock received upon any such  conversion
on any matter in  connection  with such  transaction,  or (ii) make  appropriate
provision to provide to RIC and any of its affiliates holding Series B Preferred
Stock as of the  closing  date of such  transaction  the same kind and amount of
consideration receivable by the holders of the Common Stock in such transaction.
If the Company elects to make such appropriate provision, RIC and its affiliates
shall  not be  entitled  thereafter  to  receive  any  shares  of  stock,  other
securities,  cash or  property  with  respect to such of the Series B  Preferred
Stock as has received full payment of the consideration.                        

         Redemption.  At any  time on or  after  the  fifth  anniversary  of the
Initial Issuance Date, the Company, at the option of the Board of Directors, may
redeem all or part of the  outstanding  shares of the Series B  Preferred  Stock
upon the specified notice. If less than all of the outstanding  shares of Series
B  Preferred  Stock are to be  redeemed,  the  Company  shall  redeem a pro rata
portion from each holder of Series B Preferred Stock.                           

         If the  Company  elects to redeem  the Series B  Preferred  Stock on or
after the fifth  anniversary of the Initial Issuance Date, the Company shall pay
the  stated  value of $50.00 per share plus a premium  over such  $50.00,  which

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premium shall be 4% on the fifth  anniversary  of the Initial  Issuance Date and
decline by 1% per year over the next five  years.  At that time and  thereafter,
the Series B Preferred  Stock may be  redeemed at $50.00 per share.  The Company
shall also pay upon redemption all accrued and unpaid dividends to and including
the dated fixed for redemption. The Series B Preferred Stock places no limits on
the  source of funds to be used for any  redemption  of the  Series B  Preferred
Stock.                                                                          

         No shares of Series B  Preferred  Stock  may be  redeemed,  unless  all
dividends  on the  Series B  Preferred  Stock  have  been  declared  and paid or
declared and a sum sufficient for the payment  thereof set apart for payment for
all prior dividend periods and the current dividend period;  provided,  however,
that the foregoing  shall not prevent the purchase or  acquisition  of shares of
Series B Preferred  Stock by the Company  pursuant to a purchase or  acquisition
made on the  same  terms  to  holders  of all  outstanding  shares  of  Series B
Preferred Stock.                                                                

         Liquidation.  In the event of any voluntary or involuntary dissolution,
liquidation,  or winding up of the  Company,  the  holders of shares of Series B
Preferred  Stock shall be entitled to be paid,  out of the assets of the Company
available for distribution to its shareholders, before any payment shall be made
in  respect  of the  Common  Stock or any  other  class of stock of the  Company
ranking junior to the Series B Preferred  Stock, a liquidation  preference equal
to $50.00 plus  accrued and unpaid  dividends to the date of such  payment.  If,
upon such  dissolution,  liquidation  or winding up, the amounts  payable as the
liquidation  preference  to  holders of Series B  Preferred  Stock and any other
shares of stock  ranking as to such  distribution  on a parity with the Series B
Preferred  Stock are not paid in full,  the holders of Series B Preferred  Stock
and of such other shares will share ratably in any such  distribution  of assets
in  proportion  to the  liquidation  preference  that each holder is entitled to
receive.                                                                        

         Voting. The holders of Series B Preferred Stock will not be entitled to
vote at any  meeting of the  Company's  shareholders,  except as required by the
Virginia Stock Corporation Act (the "Virginia Act") and as described below.     

         Whenever  dividends on any shares of Series B Preferred  Stock shall be
in arrears for six or more quarterly  periods,  whether or not consecutive,  the
holders of such shares,  voting  separately as a class, will be entitled to vote
for the election of two additional directors of the Company at a special meeting
called by the holders of record of at least 10% of the Series B Preferred  Stock
so in arrears or at the next annual meeting of shareholders,  if such request is
received less than 60 days before the date fixed for the next annual  meeting of
the  shareholders.  Such  holders  will  continue to be entitled to vote for the
election of two additional directors at each subsequent annual meeting until all
dividends  accumulated  on such  shares  of  Series B  Preferred  Stock for past
dividend periods and the then current dividend period shall have been fully paid
in cash.  Each such director  elected as described above shall be elected by the
affirmative  vote of the holders of record of a majority of the shares of Series
B Preferred Stock present and voting at such meeting,  at a meeting called, held
and conducted in accordance with the terms of the Series B Preferred Stock. Each
such director shall serve as a director until all dividends  accumulated on such
shares  of  Series B  Preferred  Stock for past  dividend  periods  and the then
current  dividend  period shall have been fully paid in cash,  at which time the
term of each such director shall  terminate and the number of directors shall be
reduced accordingly.                                                            

         The  holders of Series B  Preferred  Stock will be entitled to one vote
per share on matters subject to a vote by such holders.                         

Preferred Share Purchase Rights                                                 

         Pursuant to the  Amended  and  Restated  Rights  Agreement,  each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Preferred Stock at a price of $85 per one one-hundredth of a
share of Series A Preferred Stock (the "Purchase Price"), subject to adjustment.

         The  Rights  will  become  exercisable  only if a  person  or  group of
affiliated or associated  persons has acquired  beneficial  ownership of, or has
announced a tender  offer for, 20% or more of the  outstanding  shares of Common
Stock.  Under  certain  circumstances,  the Board of  Directors  may reduce this
threshold  percentage  to 10%. If a person or group of  affiliated or associated
persons has acquired  beneficial  ownership  of, or has announced a             

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tender  offer  for,  the  threshold  percentage,  each Right  will  entitle  the
registered  holder,  other  than such  person or group,  to buy shares of Common
Stock or  Series A  Preferred  Stock  having a market  value  equal to twice the
exercise  price.  If the  Company  is  acquired  in a merger  or other  business
combination,  each Right will  entitle the  registered  holder,  other than such
person or group, to purchase securities of the surviving company having a market
value equal to twice the  Purchase  Price.  The Rights will expire on August 20,
2007,  and may be redeemed or  exchanged  by the Company at any time before they
become exercisable.                                                             

         Until the Rights become  exercisable,  they are evidenced by the Common
Stock certificates and are transferred with and only with such certificates.    

         Pursuant to the Amended and Restated Rights  Agreement,  the Rights are
not,  and will not become,  exercisable  by virtue of the  approval,  execution,
delivery or performance of the original  Stock Purchase  Agreement,  the Amended
and Restated Stock Purchase Agreement or the Voting and Standstill Agreement, or
by the  acquisition of shares of Common Stock or Series B Preferred Stock by RIC
or  any  affiliate  of RIC  as  contemplated  by  the  original  Stock  Purchase
Agreement,  the Amended and Restated Stock Purchase  Agreement or the Voting and
Standstill Agreement. See "The Acquisition -- Certain Related Agreements."      

         The  foregoing  summary of certain  terms of the Rights is qualified in
its entirety by reference to the Amended and Restated  Rights  Agreement,  which
has been filed with the  Commission and is  incorporated  by reference into this
Prospectus. See "Incorporation of Certain Documents by Reference."              

Certain Provisions of the Company's Charter and Bylaws                          

         The Company's Charter and Bylaws contain  provisions which may have the
effect of  delaying  or  preventing  a change in  control  of the  Company.  The
Company's  Charter and Bylaws provide (i) for division of the Board of Directors
into three classes, with one class elected each year to serve a three-year term;
(ii) that directors may be removed only for cause and only upon the  affirmative
vote of the holders of at least 80% of the outstanding  shares entitled to vote;
(iii) that a vacancy on the Board of Directors  shall be filled by the remaining
directors;  and (iv) that the affirmative vote of the holders of at least 80% of
the outstanding  shares  entitled to vote is required to alter,  amend or repeal
the foregoing provisions.  The Company's Bylaws require advance notification for
a shareholder to bring business before a shareholders'  meeting or to nominate a
person for  election as a director.  The  Company's  Charter and Bylaws  provide
that, subject to the rights of holders of any series of Preferred Stock, special
meetings of  shareholders  may be called only by the  Chairman of the Board or a
majority of the total  number of directors  which the Board of  Directors  would
have if there were no vacancies, and may not be called by the shareholders.  The
business  permitted to be conducted at any special  meeting of  shareholders  is
limited to the business brought before the meeting by or at the direction of the
Board of Directors.                                                             

         The  Company's   Charter  also  contains  an  "affiliated   transaction
provision"  that  provides  that,  in the event that holders of Common Stock are
entitled to vote on certain transactions, a supermajority of at least 80% of all
the votes that the holders of Common Stock are entitled to cast thereon shall be
required  for the approval of such  transactions.  Such  supermajority  approval
would be  required  for (i) a merger or  consolidation  involving  any person or
entity who  directly or  indirectly  owns or controls  10% or more of the voting
power of the  Company  (an  "Interested  Shareholder")  at the  record  date for
determining  shareholders entitled to vote and (ii) a sale, lease or exchange of
substantially  all of the Company's  assets or property to or with an Interested
Shareholder,  or for the approval of a sale,  lease or exchange of substantially
all of the  assets  or  property  of an  Interested  Shareholder  to or with the
Company.  In addition,  the  Company's  Charter  provides that the same 80% vote
shall  be  required  for  the  approval  of  certain  transactions  including  a
reclassification of securities,  recapitalization or other transaction  designed
to decrease the number of holders of Common Stock after any person or entity has
become  an  Interested   Shareholder.   Notwithstanding   the   foregoing,   the
supermajority  approval  requirement  does not apply to any transaction  that is
approved  by the  Board  of  Directors  prior to the  time  that the  Interested
Shareholder  becomes  an  Interested  Shareholder.   Upon  consummation  of  the
Acquisition,  RIC and its affiliates will become Interested  Shareholders within
the meaning of these provisions. However, the supermajority approval requirement
does not apply to the Acquisition  because of its prior approval by the Board of
Directors.                                                                      

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         The  shares  of Common  Stock and  Preferred  Stock  authorized  by the
Company's  Charter  provide the Board of Directors  with as much  flexibility as
possible in using such shares for corporate purposes.  However, these additional
shares may also be used by the Board of Directors  to deter  future  attempts to
gain  control of the  Company.  The Board of  Directors  has sole  authority  to
determine  the terms of any  series of the  Preferred  Stock,  including  voting
rights, conversion rates and liquidation preferences. As a result of the ability
to fix voting rights for a series of Preferred Stock, the Board of Directors has
the power to issue a series of Preferred Stock to persons friendly to management
in order to attempt to block a post-tender  offer merger or other transaction by
which a third party seeks a change in control of the Company.                   

         The  foregoing  provisions  of the  Company's  Charter  and  Bylaws are
intended to prevent inequitable shareholder treatment in a two-tier takeover and
to reduce the  possibility  that a third party could effect a sudden or surprise
change in majority control of the Board of Directors  without the support of the
incumbent Board of Directors, even if such a change were desired by, or would be
beneficial  to,  a  majority  of the  Company's  shareholders.  Such  provisions
therefore may have the effect of discouraging certain unsolicited offers for the
Company's capital stock.                                                        

Liability and Indemnification of Directors and Officers                         

         As permitted  by the  Virginia  Act,  the  Company's  Charter  contains
provisions  that  indemnify  directors  and  officers of the Company to the full
extent permitted by Virginia law and seek to eliminate the personal liability of
directors and officers for monetary  damages to the Company or its  shareholders
for breach of their fiduciary duties,  except to the extent such indemnification
or elimination of liability is prohibited by the Virginia Act. These  provisions
do not limit or eliminate the rights of the Company or any  shareholder  to seek
an  injunction  or any other  non-monetary  relief in the event of a breach of a
director's or officer's fiduciary duty. In addition, these provisions apply only
to claims against a director or officer arising out of his role as a director or
officer and do not relieve a director or officer from  liability for  violations
of statutory law, such as certain  liabilities  imposed on a director or officer
under the federal securities laws.                                              

         In addition,  the Company's Charter provides for the indemnification of
both directors and officers for expenses incurred by them in connection with the
defense or settlement  of claims  asserted  against them in their  capacities as
directors and officers. In certain cases, this right of indemnification  extends
to judgments or penalties  assessed  against  them.  The Company has limited its
exposure  to  liability  for   indemnification  of  directors  and  officers  by
purchasing directors and officers liability insurance coverage.                 

         The purpose of these  provisions  is to assist the Company in retaining
qualified  individuals  to serve as  directors  by  limiting  their  exposure to
personal liability for serving as such.                                         

         The Company is not aware of any pending or threatened  action,  suit or
proceeding  involving any of its  directors,  officers,  employees or agents for
which indemnification from the Company may be sought. Insofar as indemnification
for liabilities arising under the Securities Act, may be permitted to directors,
officers  and  controlling  persons of the  Company,  or of an  affiliate of the
Company pursuant to the Company's  Charter or otherwise,  the Board of Directors
has been advised that, in the opinion of the Commission, such indemnification is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
unenforceable.                                                                  

Affiliated Transactions                                                         

         The   Virginia   Act   contains   provisions   governing    "Affiliated
Transactions."   Affiliated  Transactions  include  certain  mergers  and  share
exchanges,  material dispositions of corporate assets not in the ordinary course
of business,  any dissolution of the corporation  proposed by or on behalf of an
Interested  Shareholder  (as defined  below),  or  reclassifications,  including
reverse stock splits,  recapitalizations  or mergers of the corporation with its
subsidiaries which have the effect of increasing the percentage of voting shares
beneficially owned by an Interested Shareholder by more than 5%. For purposes of
the Virginia Act, an Interested  Shareholder is defined as any beneficial  owner
of  more  than  10%  of  any  class  of  the  voting  securities  of a  Virginia
corporation.                                                                    

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         Subject to certain exceptions discussed below, the provisions governing
Affiliated  Transactions  require that, for three years  following the date upon
which any shareholder becomes an Interested Shareholder,  a Virginia corporation
cannot  engage in an Affiliated  Transaction  with such  Interested  Shareholder
unless  approved by the  affirmative  vote of the holders of  two-thirds  of the
outstanding  shares of the corporation  entitled to vote,  other than the shares
beneficially  owned by the  Interested  Shareholder,  and by a majority (but not
less than two) of the "Disinterested Directors." A Disinterested Director means,
with respect to a particular Interested Shareholder, a member of a corporation's
board of directors  who (i) was a member before the later of January 1, 1988 and
the date on which an Interested Shareholder became an Interested Shareholder and
(ii) was  recommended  for  election  by, or was  elected to fill a vacancy  and
received the affirmative vote of, a majority of the Disinterested Directors then
on the  corporation's  board of directors.  At the  expiration of the three year
period,  these  provisions  require  approval of Affiliated  Transactions by the
affirmative  vote of the holders of two-thirds of the outstanding  shares of the
corporation  entitled  to  vote,  other  than  those  beneficially  owned by the
Interested Shareholder.                                                         

         The principal  exceptions to the special  voting  requirement  apply to
Affiliated  Transactions  occurring after the three-year  period has expired and
require  either  that  the   transaction  be  approved  by  a  majority  of  the
Disinterested  Directors  or that the  transaction  satisfy  certain  fair price
requirements of the statute.  In general,  the fair price  requirements  provide
that the shareholders  must receive the highest per share price for their shares
as was paid by the  Interested  Shareholder  for his  shares or the fair  market
value of their shares,  whichever is higher.  The fair price  requirements  also
require that,  during the three years preceding the announcement of the proposed
Affiliated  Transaction,  all required  dividends  have been paid and no special
financial  accommodations have been accorded the Interested Shareholder,  unless
approved by a majority of the Disinterested Directors.                          

         None of the  foregoing  limitations  and  special  voting  requirements
applies  to an  Affiliated  Transaction  with an  Interested  Shareholder  whose
acquisition  of  shares  making  such a person  an  Interested  Shareholder  was
approved  by a  majority  of the  corporation's  Disinterested  Directors.  Upon
consummation of the Acquisition,  RIC and its affiliates will become  Interested
Shareholders  whose acquisition of the Acquisition Shares has been approved by a
majority of the Board of Directors, each of whom is a Disinterested Director.   

         These  provisions were designed to deter certain  takeovers of Virginia
corporations.  In addition,  the statute provides that, by affirmative vote of a
majority  of the  voting  shares  other  than  shares  owned  by any  Interested
Shareholder, a corporation may adopt, by meeting certain voting requirements, an
amendment  to its  articles  of  incorporation  or  bylaws  providing  that  the
Affiliated  Transactions  provisions  shall  not apply to the  corporation.  The
Company has not adopted such an amendment.                                      

Control Share Acquisitions                                                      

         The Virginia Act also contains  provisions  regulating certain "control
share  acquisitions,"  which are transactions causing the voting strength of any
person  acquiring  beneficial  ownership  of shares of a public  corporation  in
Virginia to meet or exceed certain  threshold  percentages  (20%, 33% or 50%) of
the total  votes  entitled  to be cast for the  election  of  directors.  Shares
acquired in a control share  acquisition  have no voting rights unless:  (i) the
voting  rights are granted by a majority  vote of all  outstanding  shares other
than those held by the acquiring  person or any officer or employee  director of
the  corporation,  or (ii)  the  articles  of  incorporation  or  bylaws  of the
corporation  provide  that  these  Virginia  law  provisions  do  not  apply  to
acquisitions  of its shares.  The  acquiring  person may require  that a special
meeting of the  shareholders  be held to consider the grant of voting  rights to
the shares acquired in the control share acquisition. The Company's Charter make
these provisions inapplicable to acquisitions of shares of the Company.         

Acquisition Covenants Regarding Non-Performance Remedies                        

         On or before the  Closing  Date,  the  Company  will file  Articles  of
Amendment to its Charter that contain the designation for the Series B Preferred
Stock.  The  provisions of the Series B Preferred  Stock will contain  covenants
that will entitle RIC to certain rights in specific  default  situations.  These
covenants  may affect  the rights of  Reliance,  RIC and their  affiliates  in a
manner  that could be adverse  to the  rights of  holders  of Common  Stock.  As
described below, upon the occurrence of certain events,  RIC will be entitled to
additional  seats on the  Company's                                             

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Board of Directors,  and Reliance,  RIC and their  affiliates  will no longer be
subject to certain restrictions under the Voting and Standstill  Agreement.  See
"The Acquisition -- Certain Related Agreements."                                

         Such rights are  cumulative and are available only until the earlier of
(i) the date that the RIC Ownership Percentage is less than twenty percent (20%)
or (ii) the  expiration  of the time in which RIC is  required to dispose of all
shares of  Series B  Preferred  Stock  pursuant  to the  Voting  and  Standstill
Agreement.  In addition,  such rights are exercisable  solely and exclusively by
RIC, whether RIC holds all shares of the Series B Preferred Stock or RIC and any
of its affiliates  hold any shares of Series B Preferred  Stock.  The rights are
not  transferable or assignable to subsequent  holders of the Series B Preferred
Stock.  Any sale,  conveyance  or  transfer  of shares of the Series B Preferred
Stock by RIC to any  person who is not an  affiliate  of RIC at the time of such
sale,  conveyance or transfer  shall render these rights null and void as to the
shares of Series B Preferred Stock so sold, conveyed or transferred.            

         Industry-Related Defaults. In the event that (i) the Company's combined
ratio  exceeds  the  weighted   average  of  the  combined   ratios  of  certain
predetermined  comparable title insurance companies by more than five percentage
points for any twelve  month  period  (beginning  with the twelve  month  period
commencing  January 1, 1998), with such calculation to be determined as of March
31, June 30,  September 30 and December 31 of each year for the previous  twelve
months,  and (ii) any two of S&P, Duff & Phelps or A.M. Best have downgraded the
Company's  claims-paying  ability rating to or below a rating of "BBB -" (or its
equivalent),  the Company  will take such action as may be necessary to increase
the size of the Board of Directors by three directors,  fill the three vacancies
created  thereby with additional RIC Directors and recommend such additional RIC
Directors for election as directors at the next annual  meeting of the Company's
shareholders.  Furthermore,  in the  event  of the  defaults  described  in this
paragraph,  RIC and its  affiliates  will no longer be  required to (i) sell the
shares of Common  Stock that RIC  acquired  in the  Acquisition  within the time
period set forth in the Voting and Standstill Agreement, (ii) sell the shares of
Series B Preferred  Stock that RIC acquired in the  Acquisition  within the time
period set forth in the Voting and  Standstill  Agreement,  (iii)  refrain  from
taking certain actions prohibited by the standstill provisions of the Voting and
Standstill  Agreement (other than the prohibition on acquiring additional shares
of Common  Stock),  (iv) vote the  shares  of Common  Stock  held by them in the
manner required by the Voting and Standstill Agreement or (v) sell the shares of
Common Stock held by them before  converting  shares of Series B Preferred Stock
into  additional  shares of Common  Stock ((i)  through  (v)  collectively,  the
"Restriction Releases").                                                        

         The title  insurance  companies  to be included in the  combined  ratio
analysis  described  above are Chicago Title Insurance  Company,  First American
Title  Insurance  Company,  Fidelity  National Title  Insurance  Company and Old
Republic  Title  Insurance  Company.  As of December  22,  1997,  the  Company's
claims-paying  ability  rating  was "A-" as  determined  by Duff &  Phelps.  For
additional  information  on  claims-paying  ability  ratings,  see  "Business --
Commonwealth  Land Title  Insurance  Company  and  Transnation  Title  Insurance
Company -- Claims-Paying Ability."                                              

         Dividend  Payment  Defaults.  In the event that RIC or any affiliate of
RIC  beneficially  owns shares of the Series B  Preferred  Stock and the Company
fails to pay in cash the full  amount of the  dividend on the Series B Preferred
Stock on one occasion within five days of the applicable  dividend payment date,
the Company  will take such action as may be  necessary  to increase the size of
the Board of  Directors  of the  Company by three  directors  and fill the three
vacancies  created  thereby with  additional  RIC Directors  and recommend  such
additional RIC Directors for election as directors at the next annual meeting of
the Company's shareholders.  Furthermore,  in the event of the default described
in this  paragraph,  RIC and its affiliates  will be entitled to the Restriction
Releases.                                                                       

         In the event that RIC or any affiliate of RIC beneficially  owns shares
of the Series B Preferred  Stock and the  Company  fails to pay in cash the full
amount of the dividend on the Series B Preferred Stock on two occasions, whether
or not consecutive,  within five days of the applicable  dividend payment dates,
RIC and its affiliates  will no longer be required to (i) refrain from acquiring
additional  shares of Common Stock or (ii) refrain from selling shares of Common
Stock or Series B Preferred  Stock to any person or group if, as a result of the
sale, such person or group would  beneficially own on a fully diluted basis more
than 9.9% of the issued and outstanding shares of Common Stock.                 

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         In the event that RIC or any affiliate of RIC beneficially  owns shares
of the Series B Preferred  Stock and the  Company  fails to pay in cash the full
amount of the  dividend  on the  Series B  Preferred  Stock on three  occasions,
whether or not consecutive,  within five days of the applicable dividend payment
dates,  the Company  will take such action as may be  necessary  to increase the
size of the Board of  Directors  to a number that will permit the  addition of a
sufficient  number of RIC Directors  such that the total number of RIC Directors
will constitute a majority of the Board of Directors, fill the vacancies created
thereby  with  additional  RIC  Directors  and  recommend  such  additional  RIC
Directors for election as directors at the next annual  meeting of the Company's
shareholders.  Furthermore,  in the  event  of the  default  described  in  this
paragraph,  RIC and its  affiliates  will no  longer  be  subject  to any of the
restrictions placed on them in the Voting and Standstill Agreement.             

         Material Obligation Defaults. In the event that the Company defaults on
any of its material debt  obligations in excess of $15,000,000  (individually or
at any one time in the  aggregate)  (a  "Material  Default"),  and the  Material
Default is not cured or waived  within the time period and manner  prescribed by
the applicable  agreements or instruments and results in the acceleration of the
amounts due thereunder, the Company will take such action as may be necessary to
increase  the size of the Board of  Directors  to a number  that will permit the
addition of a sufficient  number of RIC Directors  such that the total number of
RIC Directors  will  constitute a majority of the Board of  Directors,  fill the
vacancies  created  thereby with  additional  RIC Directors  and recommend  such
additional RIC Directors for election as directors at the next annual meeting of
the Company's shareholders.  Furthermore,  in the event of the default described
in this  paragraph,  RIC and its affiliates  will no longer be subject to any of
the restrictions placed on them in the Voting and Standstill Agreement.         

Rights Plan Amendments                                                          

         In connection with the execution of the Stock Purchase  Agreement,  the
Company executed the Amended and Restated Rights Agreement. See "The Acquisition
-- Certain  Related  Agreements."  The Amended  and  Restated  Rights  Agreement
provides,  among other things,  that (i) the approval,  execution,  delivery and
performance  of the  Stock  Purchase  Agreement  or the  Voting  and  Standstill
Agreement,  or any  acquisition  of shares of Common Stock or Series B Preferred
Stock by RIC or its affiliates as contemplated  by the Stock Purchase  Agreement
or the  Voting  and  Standstill  Agreement,  will not cause the Rights to become
exercisable,  (ii) the exercise  price of the Rights shall be $85 per Right,  an
increase from $65 per Right to reflect current conditions,  and (iii) the Rights
shall  not  be  exercisable  after  August  20,  2007,   thereby  extending  the
termination  date of the Rights from October 1, 2001.  See "--  Preferred  Share
Purchase Rights."                                                               

 SHARES ELIGIBLE FOR FUTURE SALE

         As of January 7, 1998, the Company had outstanding  8,968,370 shares of
Common  Stock,  all of which  are  freely  tradable.  All of the  Shares  in the
Offering  will  be  freely  transferable  and  may  be  resold  without  further
registration  under the  Securities  Act. As of January 7, 1998, the Company had
outstanding options to purchase 732,897 shares of Common Stock, of which 553,310
were exercisable, at an average exercise price of $13.72 per share.             

         Approximately   9,433,094   shares  of  Common  Stock  (which  includes
4,039,473  shares of Common  Stock to be  issued to RIC in the  Acquisition  and
4,824,561  shares of Common  Stock into which the  Series B  Preferred  Stock is
convertible)  and  2,200,000  shares of Series B Preferred  Stock are or will be
held by persons who may be deemed to be  "affiliates"  of the Company  under the
Securities Act and may be resold by them only in transactions  registered  under
the Securities  Act or permitted by the provisions of Rule 144.  Persons who may
be deemed to be affiliates  include  individuals  or entities that control,  are
controlled  by, or are under  common  control  with such  party and may  include
certain  officers,  directors  and  principal  shareholders  of such  party.  In
general,  under Rule 144 as  currently  in effect,  a person (or  persons  whose
shares are aggregated) who has beneficially owned "restricted securities" for at
least one year may, under certain  circumstances,  resell within any three-month
period  such  number of shares as does not exceed the  greater of 1% of the then
outstanding shares or the average weekly trading volume during the four calendar
weeks prior to such resale. Rule 144 also permits,  under certain circumstances,
the  resale  of shares  without  any  quantity  limitation  by a person  who has
satisfied  a two-year  holding  period and who is not,  and has not been for the
preceding  three  months,  an  affiliate of the  Company.  In addition,  holding
periods of  successive  non-affiliate                                           

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owners are aggregated for purposes of determining compliance with these one- and
two-year holding period requirements.                                           

         Pursuant to the Registration Rights Agreement,  at or about the time of
the closing of the Acquisition,  the Company will file one or more  registration
statements  under the  Securities  Act to register  the  Acquisition  Shares for
resale  to the  public.  Once such  registration  statements  become  effective,
4,039,473  shares of Common  Stock and  2,200,000  shares of Series B  Preferred
Stock, as well as the 4,824,561  shares of Common Stock into which such Series B
Preferred Stock is convertible, will be available for resale in either public or
private offerings and will be freely transferable.                              

         The  availability  of shares for sale or actual  sales  under Rule 144,
pursuant to an effective  registration  statement  under the  Securities  Act or
otherwise  may have an adverse  effect on the market price of the Common  Stock.
Sales  pursuant  to an  effective  registration  statement  or under Rule 144 or
otherwise also could impair the Company's  ability to market  additional  equity
securities.                                                                     

UNDERWRITING

         Subject to the terms and conditions of the Underwriting  Agreement (the
"Underwriting  Agreement")  among  the  Company,  Donaldson,  Lufkin &  Jenrette
Securities Corporation ("DLJ"),  Furman Selz LLC, Wheat, First Securities,  Inc.
("Wheat  First")  and Ferris,  Baker  Watts,  Incorporated,  which are acting as
representatives  (the  "Representatives")  for the underwriters named below (the
"Underwriters"),  the Company has agreed to sell to the Underwriters and each of
the Underwriters has severally agreed to purchase the number of Shares set forth
opposite its name below:                                                        

                  Underwriters                                  Number of Shares

Donaldson, Lufkin & Jenrette Securities Corporation.......                      
Furman Selz LLC...........................................                      
Wheat, First Securities, Inc..............................                      
Ferris, Baker Watts, Incorporated.........................                      

       Total    .........................................        ___________

         The Underwriting Agreement provides that the obligations of the several
Underwriters  to purchase and accept  delivery of the Shares  offered hereby are
subject to approval  of certain  legal  matters by their  counsel and to certain
other conditions. The Underwriters are obligated to purchase and accept delivery
of all of the Shares  offered  hereby  (other than those  Shares  covered by the
over-allotment option described below), if any are purchased.                   

         The  Underwriters  initially  propose  to offer  the  Shares,  in part,
directly to the public at the  initial  public  offering  price set forth on the
cover page of this Prospectus  and, in part, to certain  dealers  (including the
Underwriters)  at such price less a  concession  not in excess of  $_______  per
share.  The  Underwriters  may allow,  and such dealers may reallow,  to certain
other dealers,  a concession not in excess of $___ per share.  After the initial
Offering,  the public  offering  price and other selling terms may be changed by
the Representatives at any time without notice.                                 

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         The  Company  has granted to the  Underwriters  an option,  exercisable
within 30 days after the date of this Prospectus, to purchase from time to time,
in whole or in part, up to an aggregate of 262,500  additional  shares of Common
Stock at the initial public offering price, less the underwriting  discounts and
commissions. The Underwriters may exercise such option solely for the purpose of
covering  over-allotments,  if any, made in connection with the Offering. To the
extent such option is  exercised  by the  Underwriters,  each  Underwriter  will
become  obligated,  subject  to certain  conditions,  to  purchase  its pro rata
portion  of  such  additional  shares  based  on such  Underwriter's  percentage
underwriting commitment as indicated in the preceding table.                    

         The Company has agreed to indemnify the  Underwriters  against  certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.      

         Each of the Company,  its executive  officers and directors and RIC has
agreed, subject to certain exceptions,  not to (i) offer, pledge, sell, contract
to sell,  sell any  option or  contract  to  purchase,  purchase  any  option or
contract to sell,  grant any option,  right or warrant to purchase or  otherwise
transfer or dispose of,  directly or  indirectly,  any shares of Common Stock or
any securities  convertible into or exercisable or exchangeable for Common Stock
or (ii) enter into any swap or other arrangement that transfers all or a portion
of the economic  consequences  associated with the ownership of any Common Stock
(regardless of whether any of the  transactions  described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other  securities,  in
cash or  otherwise)  for a period of 90 days  after the date of this  Prospectus
without the prior written consent of DLJ. In addition,  during such period,  the
Company has also  agreed not to file any  registration  statement  (other than a
registration  statement  required  pursuant to the Acquisition) with respect to,
and each of its executive  officers and directors and RIC has agreed not to make
any demand for, and each of its executive  officers and directors has agreed not
to exercise any right with respect to, the  registration of any shares of Common
Stock or any securities  convertible  into or exercisable  or  exchangeable  for
Common Stock without DLJ's prior written consent.                               

         Other  than in the  United  States,  no  action  has been  taken by the
Company or the Underwriters that would permit a public offering of the shares of
Common Stock offered hereby in any jurisdiction where action for that purpose is
required.  The shares of Common Stock offered hereby may not be offered or sold,
directly or indirectly,  nor may this Prospectus or any other offering  material
or  advertisements  in connection  with the offer and sale of any such shares of
Common  Stock be  distributed  or published  in any  jurisdiction,  except under
circumstances  that will  result in  compliance  with the  applicable  rules and
regulations of such jurisdiction.  Persons into whose possession this Prospectus
comes are advised to inform  themselves  about and to observe  any  restrictions
relating  to  the  Offering  and  the  distribution  of  this  Prospectus.  This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any shares of Common Stock offered hereby in any  jurisdiction in which such
an offer or a solicitation is unlawful.                                         

         In  connection  with the  Offering,  the  Underwriters  may  engage  in
transactions  that  stabilize,  maintain  or  otherwise  affect the price of the
Common  Stock.  Specifically,  the  Underwriters  may  over-allot  the Offering,
creating a syndicate short position.  In addition,  the Underwriters may bid for
and purchase  shares of Common Stock in the open market to cover such  syndicate
short position or to stabilize the price of the Common Stock.  These  activities
may stabilize or maintain the market price of the Common Stock above independent
market levels.  The Underwriters are not required to engage in these activities,
and may end any of these activities at any time.                                

         In November 1993, Wheat First and Furman Selz LLC served as co-managing
underwriters  of an offering by the Company of its Common Stock.  DLJ was one of
the  underwriters  in such  offering.  In  addition,  Wheat  First  serves  as a
financial  advisor to the Company.  Wheat First is also serving as the financial
advisor to the Company,  and DLJ is serving as the financial advisor to Reliance
and RIC, in connection with the Acquisition.  Marshall B. Wishnack, Chairman and
Chief Executive Officer of Wheat First Butcher Singer,  Inc., the parent company
of Wheat First, is a director of the Company.                                   

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 LEGAL MATTERS

         The  validity  of the shares of Common  Stock  offered  hereby  will be
passed  upon for the Company by  Williams,  Mullen,  Christian & Dobbins,  P.C.,
Richmond,  Virginia.  Certain legal matters in connection with the Offering will
be passed upon for the Underwriters by LeBoeuf,  Lamb, Greene & MacRae,  L.L.P.,
New York, New York. Theodore L. Chandler, Jr., a principal in Williams,  Mullen,
Christian  & Dobbins,  is a director of the  Company  and  beneficially  owns an
aggregate  of 19,000  shares of  Common  Stock as of  December  4,  1997.  Other
attorneys of that firm beneficially  owned an aggregate of approximately  32,182
shares of Common Stock as of that date.                                         

 EXPERTS

         The consolidated financial statements (including schedules incorporated
herein by  reference)  of  Lawyers  Title  Corporation  and  subsidiaries  as of
December  31, 1996 and 1995 and for each of the three years in the period  ended
December 31, 1996 appearing in this Prospectus and the  Registration  Statement,
have been audited by Ernst & Young, LLP, independent  auditors,  as set forth in
their reports thereon appearing and incorporated by reference  elsewhere herein,
and are included in reliance  upon such reports given upon the authority of such
firm as experts in accounting and auditing.                                     

         The combined financial statements of Commonwealth and Transnation as of
December  31, 1996 and 1995 and for each of the three years in the period  ended
December 31, 1996 included in this  Prospectus  and the  Registration  Statement
have been audited by Deloitte & Touche LLP, independent  auditors,  as stated in
their report appearing herein and elsewhere in the Registration  Statement,  and
have been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.                                

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 INDEX TO FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]


                                                                                                           Page  

LAWYERS TITLE CORPORATION                                                                                        

                                                                                                                 
Report of Independent Auditors ........................................................................... F - 2 
Consolidated Balance Sheets at December 31, 1996 and 1995................................................. F - 3 
Consolidated Statements of Operations for the Three Years Ended                                                  
  December 31, 1996, 1995 and 1994........................................................................ F - 5 
Consolidated Statements of Cash Flows for the Three Years Ended                                                  
  December 31, 1996, 1995 and 1994........................................................................ F - 6 
Consolidated Statements of Changes in Shareholders' Equity for the Three Years Ended                             
  December 31, 1996, 1995 and 1994........................................................................ F - 7 
Notes to Consolidated Financial Statements................................................................ F - 8 
Consolidated Balance Sheets at September 30, 1997 and December 31, 1996 (unaudited)....................... F - 32
Consolidated Statements of Operations and Retained Earnings for the Quarter and                                  
  the Nine Months Ended September 30, 1997 and 1996 (unaudited)........................................... F - 34
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997                               
  and 1996 (unaudited) ................................................................................... F - 35
Notes to Consolidated Financial Statements (unaudited).................................................... F - 36

COMMONWEALTH TITLE INSURANCE COMPANY AND                                                                         
TRANSNATION TITLE INSURANCE COMPANY                                                                              

Independent Auditor's Report ............................................................................. F - 37
Combined Statement of Income for the Three Years Ended                                                           
  December 31, 1996, 1995 and 1994........................................................................ F - 38
Combined Balance Sheet at December 31, 1996 and 1995...................................................... F - 39
Combined Statement of Changes in Shareholder's Equity for the Three Years Ended                                  
  December 31, 1996, 1995 and 1994........................................................................ F - 40
Combined Statement of Cash Flows for the Three Years Ended                                                       
  December 31, 1996, 1995 and 1994........................................................................ F - 41
Notes to Combined Financial Statements.................................................................... F - 42
Combined Statement of Income for the Quarter and the Nine Months Ended September 30, 1997                        
  and 1996 (unaudited).................................................................................... F - 53
Combined Balance Sheet at September 30, 1997 and December 31, 1996 (unaudited)............................ F - 54
Combined Statement of Changes in Shareholder's Equity for the Nine Months Ended                                  
  September 30, 1997 (unaudited).......................................................................... F - 55
Combined Statement of Cash Flows for the Quarter and the Nine Months Ended September 30, 1997                    
  and 1996 (unaudited) ................................................................................... F - 56
Notes to Combined Financial Statements (unaudited)........................................................ F - 57


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REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders                                         
Lawyers Title Corporation                                                       

We have audited the  accompanying  consolidated  balance sheets of Lawyers Title
Corporation and  subsidiaries as of December 31, 1996, and 1995, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows for each of the three years in the period ended  December 31, 1996.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.                                                                     

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Lawyers
Title  Corporation  and  subsidiaries  at December 31, 1996,  and 1995,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity  with generally
accepted accounting principles.                                                 

As discussed in Note 2 to the financial statements,  in 1996 the Company changed
its method of accounting for policy and contract  claims and in 1994 the Company
changed its method of accounting for certain debt and equity securities.        

                                                           /s/ ERNST & YOUNG LLP

Richmond, Virginia                                                              
February 19, 1997                                                               

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

CONSOLIDATED BALANCE SHEETS, DECEMBER 31                                        

                                                                [Download Table]


(In thousands of dollars)                                      

ASSETS                                         1996       1995 
------                                         ----       ---- 

                                                               
INVESTMENTS (Notes 2 and 3):                                   
  Fixed maturities available-for-sale                          
        - at fair value (amortized cost:                       
        1996 - $214,875; 1995 - $179,182)    $218,224  $187,270
    Equity securities - at fair value                          
        (cost: 1996 - $930; 1995 - $43,327)     1,725    56,540
  Mortgage loans (less allowance for                           
        doubtful accounts: 1996 and                            
        1995 - $150)                              480     1,015
  Invested cash                                71,626    21,805
                                             --------  --------

        Total investments                     292,055   266,630

CASH                                           23,997    18,842

NOTES AND ACCOUNTS RECEIVABLE:                                 
  Notes (less allowance for                                    
        doubtful accounts: 1996 - $1,008;                      
        1995 - $365)                            6,657     7,565
  Premiums (less allowance for                                 
        doubtful accounts: 1996 - $2,197;                      
        1995 - $1,898)                         16,429    17,242
    Income tax benefits                            -        301
                                             --------  --------

        Total notes and accounts receivable    23,086    25,108

PROPERTY AND EQUIPMENT - at cost (less                         
  accumulated depreciation and amortiza-                       
    tion: 1996 - $44,670; 1995 - $36,581)      21,959    20,850

TITLE PLANTS                                   48,536   648,731

GOODWILL (less accumulated amortiza-                           
    tion: 1996 - $12,393; 1995 - $10,174)      59,669    53,645

DEFERRED INCOME TAXES (Note 8)                 23,435    16,127

OTHER ASSETS                                   28,231    25,910
                                             --------  --------

                                             $520,968  $475,843
                                             ========  ========

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

CONSOLIDATED BALANCE SHEETS, DECEMBER 31                                        

                                                                [Download Table]


(In thousands of dollars)                                  

LIABILITIES                               1996      1995   
-----------                               ----      ----   

                                                           
POLICY AND CONTRACT CLAIMS                                 
    (Notes 2 and 4)                     $196,285  $193,791 

ACCOUNTS PAYABLE AND ACCRUED EXPENSES     47,211    34,933 

FEDERAL INCOME TAXES                       5,721        -  

OTHER                                      9,583     8,734 
                                        --------  -------- 

        Total liabilities                258,800   237,458 
                                        --------  -------- 

COMMITMENTS AND CONTINGENCIES                              
  (Notes 10, 11 and 12)                                    

SHAREHOLDERS' EQUITY (Notes 6 and 7)                       
--------------------                                       

Preferred stock, no par value,                             
  authorized 5,000,000 shares, none                        
  issued or outstanding                       -         -  

Common stock, no par value, authorized                     
    45,000,000 shares, issued and                          
    outstanding, 8,889,791 in 1996                         
    and 8,885,991 in 1995                167,044   167,006 

Unrealized investment gains (less                          
    related deferred income tax                            
    expense  of $1,450 in 1996 and                         
    $7,456 in 1995)                        2,694    13,845 

Retained earnings                         92,430    57,689 

Receivable from employee benefit plan         -       (155)
                                        --------  -------- 

    Total shareholders' equity           262,168   238,385 
                                        --------  -------- 

                                        $520,968  $475,843 
                                        ========  ======== 

See Notes to Consolidated Financial Statements.                                 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

CONSOLIDATED STATEMENTS OF OPERATIONS                                           
YEARS ENDED DECEMBER 31                                                         

                                                        [Enlarge/Download Table]


(In thousands of dollars except per common share amounts)                                   

                                                              1996        1995       1994   
                                                              ----        ----       ----   

REVENUES                                                                                    
                                                                                            
  Premiums (Note 5)                                         $456,377    $385,871   $413,857 
  Title search and escrow                                    101,381      81,490     73,200 
  Investment income - net                                                                   
    (Note 3)                                                  36,424      15,471     14,143 
                                                            --------    --------   -------- 

                                                             594,182     482,832    501,200 
                                                            --------    --------   -------- 
EXPENSES (Notes 4, 9 and 10)                                                                
  Salaries and employee                                                                     
    benefits                                                 184,274     155,920    143,817 
  Agents' commissions                                        192,590     167,031    205,147 
  Provision for policy and                                                                  
    contract claims                                           29,211      24,297     46,775 
  General, administrative and                                                               
        other                                                132,567     111,724     96,492 
                                                            --------    --------   -------- 

                                                             538,642     458,972    492,231 
                                                            --------    --------   -------- 

INCOME BEFORE INCOME TAXES                                    55,540      23,860      8,969 

INCOME TAX EXPENSE (BENEFIT)                                                                
    (Note 8)                                                                                
  Current                                                     20,320       3,628      2,729 
  Deferred                                                    (1,299)      3,181       (574)
                                                            --------    --------   -------- 

                                                              19,021       6,809      2,155 
                                                            --------    --------   -------- 

NET INCOME                                                  $ 36,519    $ 17,051   $  6,814 
                                                            ========    ========   ======== 

EARNINGS PER COMMON SHARE                                      $4.11       $1.92      $0.80 
                                                               =====       =====      ===== 

AVERAGE NUMBER OF COMMON                                                                    
  SHARES OUTSTANDING                                       8,888,310   8,885,191  8,494,067 
                                                           =========   =========  ========= 

See Notes to Consolidated Financial Statements.                                 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

CONSOLIDATED STATEMENTS OF CASH FLOWS                                           
YEARS ENDED DECEMBER 31                                                         

                                                                [Download Table]


(In thousands of dollars)                              1996       1995      1994  
                                                       ----       ----      ----  

                                                                                  
Cash flows from operating activities:                                             
    Net income                                      $ 36,519    $17,051   $ 6,814 
        Depreciation & amortization                    9,927      8,108     6,460 
        Amortization of bond premium                     722      1,087     1,610 
        Realized investment gains                    (23,430)    (2,966)   (1,681)
        Deferred income tax                           (1,299)     3,181      (574)
        Change in assets & liabilities, net                                       
          of businesses acquired:                                                 
           Premiums receivable                           813       (168)    3,833 
           Income taxes receivable/payable             6,061      3,810    (8,219)
           Policy & contract claims                    2,494     (5,905)   11,062 
           Accounts payable and accrued                                           
               expenses                                5,772     (3,043)   (7,925)
           Cash surrender value of life                                           
               insurance                              (3,148)    (3,231)   (3,061)
           Other                                      (1,219)       359    (1,901)
                                                    --------    -------   ------- 
    Net cash provided by                                                          
        operating activities                          33,212     18,283     6,418 
                                                   ---------    -------   ------- 
Cash flows from investing activities:                                             
    Purchase of property & equipment, net             (8,612)    (5,369)   (5,689)
    Purchase of businesses, net of                                                
        cash acquired                                 (2,320)    (8,026)  (20,802)
    Cost of investments acquired:                                                 
        Fixed maturities - available-for-sale       (115,731)   (76,131)  (99,430)
        Equity securities                            (34,815)   (40,103)  (47,362)
    Proceeds from investment sales or maturities:                                 
        Fixed maturities - available-for-sale         79,324     75,985    96,758 
        Equity securities                            100,533     45,975    33,492 
    Other                                              1,443        206      (157)
                                                    --------   --------   ------- 
    Net cash provided by (used in) investing                                      
        activities                                    19,822     (7,463)  (43,190)
                                                    --------    -------   ------- 

Cash flows from financing activities:                                             
    Proceeds of cash surrender value loan              3,891      3,673    16,023 
    Dividends paid                                    (1,778)    (1,599)   (1,025)
    Decrease in notes payable                           (171)    (4,236)   (1,793)
                                                    --------    -------   ------- 
    Net cash provided by (used in)                                                
        financing activities                           1,942     (2,162)   13,205 
                                                    --------    -------   ------- 
    Net increase (decrease) in cash and                                           
        invested cash                                 54,976      8,658   (23,567)
Cash & invested cash at beginning of year             40,647     31,989    55,556 
                                                    --------    -------   ------- 
Cash & invested cash at end of year                 $ 95,623    $40,647   $31,989 
                                                    ========    =======   ======= 

See Notes to Consolidated Financial Statements.                                 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY                      
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994                                    

                                                        [Enlarge/Download Table]


(In thousands of dollars)                                                                 Receivable           
                                                                      Net                    from       Total  
                                                                   Unrealized   Retained   Employee     Share- 
                                                Common Stock          Gains    Earnings     Benefit    holders'
                                        Shares           Amount     (Losses)   (Deficit)     Plan       Equity 
                                        ------           ------     --------   ---------     ----       ------ 

                                                                                                               
BALANCE - December 31, 1993           8,418,209          $162,879    $ 3,513    $36,448     $(1,679)  $201,161 

Net Income                                   -                 -          -       6,814          -       6,814 
Issuance of common stock                425,020             3,883         -          -           -       3,883 
Adjustment to beginning balance                                                                                
  for change in accounting method,                                                                             
  net of income taxes of $2,055              -                 -       3,816         -           -       3,816 
Exercise of stock options                41,282               229         -          -           -         229 
Repayment from employee benefit plan         -                 -          -          -          672        672 
Net unrealized losses                        -                 -     (12,227)        -           -     (12,227)
Dividends ($.12/share)                       -                 -          -      (1,025)         -      (1,025)
                                      ---------          --------    -------    -------     -------   -------- 
BALANCE - December 31, 1994           8,884,511           166,991     (4,898)    42,237      (1,007)   203,323 

Net Income                                   -                 -          -      17,051          -      17,051 

Exercise of stock options                 1,500                15         -          -           -          15 
Repayment from employee benefit plan         -                 -          -          -          852        852 
Net unrealized gains                         -                 -      18,743         -           -      18,743 
Dividends ($.18/share)                       -                 -          -      (1,599)         -      (1,599)
Other                                       (20)               -          -          -           -          -  
                                      ---------          --------    -------    -------     -------   -------  
BALANCE - December 31, 1995           8,885,991           167,006     13,845     57,689        (155)   238,385 

Net Income                                   -                 -          -      36,519          -      36,519 

Exercise of stock options                 3,800               38          -          -           -          38 
Repayment from employee benefit plan         -                 -          -          -          155        155 
Net unrealized losses                        -                 -     (11,151)        -           -     (11,151)
Dividends ($.20/share)                       -                 -          -      (1,778)         -      (1,778)
                                      ---------          --------    -------    -------     -------   -------- 
BALANCE - December 31, 1996           8,889,791          $167,044    $ 2,694    $92,430     $    -    $262,168 
                                      =========          ========    =======    =======     =======   ======== 

See Notes to Consolidated Financial Statements.                                 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Basis of Presentation                                         

         The  accompanying  consolidated  financial  statements of Lawyers Title
         Corporation (the Company) and its wholly owned  subsidiaries  have been
         prepared in conformity with generally  accepted  accounting  principles
         ("GAAP") which, as to the insurance company  subsidiaries,  differ from
         statutory  accounting  practices  prescribed or permitted by regulatory
authorities.                                                  

Organization                                                  

         The Company is engaged  principally  in the title  insurance  business.
         Title  insurance  policies are insured  statements  of the condition of
         title to real  property,  showing  ownership  as  indicated  by  public
         records,  as well as outstanding liens,  encumbrances and other matters
         of record and  certain  other  matters  not of public  record.  Lawyers
         Title's business results from commercial real estate activity,  resales
         and  refinancings of residential  real estate and construction and sale
         of new housing.  The Company  conducts its business on a national basis
         through a network of branch and agency offices with approximately 46.2%
         of  consolidated  premium  revenue  generated  in the  states of Texas,
California, Florida and Pennsylvania.                         

Use of Estimates                                              

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect the amounts  reported  in the  financial
         statements  and  accompanying  notes.  Actual results could differ from
those estimates.                                              

Principles of Consolidation                                   

         The accompanying consolidated financial statements include the accounts
         and  operations,  after  intercompany  eliminations,  of Lawyers  Title
         Corporation,  and its wholly owned  subsidiaries,  principally  Lawyers
Title Insurance Corporation.                                  

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    (Continued)              

Investments                                                   

         The Company adopted the Financial  Accounting  Standards Board ("FASB")
         Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting
         for Certain  Investments in Debt and Equity  Securities," as of January
1, 1994.                                                      

         As  required by SFAS No. 115,  the Company  records its  fixed-maturity
         investments  which are classified as  available-for-sale  at fair value
         and reports the change in the unrealized  appreciation and depreciation
         as a separate component of shareholders'  equity. The amortized cost of
         fixed-maturity investments classified as available-for-sale is adjusted
         for   amortization  of  premiums  and  accretion  of  discounts.   That
 amortization or accretion is included in net investment income.

         Realized  gains and losses on sales of  investments,  and  declines  in
         value  considered  to  be  other  than  temporary,  are  recognized  in
operations on the specific identification basis.              

Title Plants                                                  

         Title plants consist of title records  relating to a particular  region
         and are  generally  stated at cost.  Expenses  associated  with current
         maintenance such as salaries and supplies are charged to expense in the
         year  incurred.  The costs of acquired title plants and the building of
         new title plants, prior to the time that a plant is put into operation,
         are  capitalized.  Properly  maintained  title plants are not amortized
because there is no indication of diminution in their value.  

Goodwill                                                      

         The excess of cost over fair value of net assets of businesses acquired
 (goodwill) is amortized on a straight-line basis over 40 years.

Depreciation                                                  

         Property and equipment is depreciated  principally on the straight-line
         method over the useful  lives of the various  assets,  which range from
three to 40 years.                                            

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    (Continued)              

Revenue Recognition                                           

         Premiums on title  insurance  written by the  Company's  employees  are
         recognized  as revenue  when the  Company  is legally or  contractually
         entitled  to collect the  premium.  Premiums  on  insurance  written by
         agents are generally recognized when reported by the agent and recorded
         on a "gross"  versus  "net"  basis.  Title  search and escrow  fees are
recorded as revenue when an order is closed.                  

Policy and Contract Claims                                    

         Liabilities for estimated losses and loss adjustment expenses represent
         the estimated  ultimate net cost of all reported and unreported  losses
         incurred through December  31,1996.  The reserves for unpaid losses and
         loss  adjustment  expenses are estimated  using  individual  case-basis
         valuations and statistical analyses. Those estimates are subject to the
         effects of trends in loss severity and frequency. Although considerable
         variability is inherent in such estimates, management believes that the
         reserves  for losses and loss  adjustment  expenses are  adequate.  The
         estimates  are  continually  reviewed  and  adjusted  as  necessary  as
         experience  develops or new information becomes known; such adjustments
are included in current operations.                           

Income Taxes                                                  

         Deferred  income taxes reflect the tax  consequences on future years of
         differences  between the tax bases of assets and  liabilities and their
         financial reporting amounts.  Future tax benefits are recognized to the
    extent that realization of such benefits are more likely than not.

Escrow and Trust Deposits                                     

         As a service to its customers, the Company administers escrow and trust
         deposits which amounted to approximately $444,000 at December 31, 1996,
         representing  undisbursed  amounts received for settlements of mortgage
         loans and indemnities against specific title risks. These funds are not
         considered assets of the Company and, therefore,  are excluded from the
accompanying consolidated balance sheets.                     

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    (Continued)              

Deferred Land Exchanges                                       

         Through  several  non-insurance  subsidiaries  the Company  facilitates
         tax-free property  exchanges for customers  pursuant to Section 1031 of
         the Internal  Revenue  Code.  Acting as a qualified  intermediary,  the
         Company  holds  the  sale  proceeds  from  sales  transactions  until a
         qualifying  acquisition  occurs,  thereby  assisting  its  customers in
         deferring the recognition of taxable  income.  At December 31, 1996 and
         1995, the Company was holding $261,000 and $234,000,  respectively,  of
         such proceeds which are not  considered  assets of the Company and are,
        therefore, excluded from the accompanying consolidated balance sheets.

Statement of Cash Flows                                       

         For  purposes  of  the  statement  of  cash  flows,  invested  cash  is
         considered a cash equivalent.  Invested cash includes all highly liquid
     investments with a maturity of three months or less when purchased.

Earnings per Common Share                                     

         Earnings per common share is based on the  weighted  average  number of
         common shares  outstanding  during each year.  Potential  dilution that
  could result from the exercise of stock options is not material.

Fair Values of Financial Instruments                          

         The carrying  amounts  reported in the balance  sheet for invested cash
         and short-term investments  approximate those assets' fair values. Fair
         values for investment securities are based on quoted market prices. The
Company has no other material financial instruments.          

Stock Based Compensation                                      

         The  Company  grants  stock  options  for a fixed  number  of shares to
         employees  with an exercise price equal to the fair value of the shares
         at the date of grant.  The Company  accounts for stock option grants in
         accordance  with APB Opinion No. 25,  "Accounting  for Stock  Issued to
         Employees," and accordingly, recognizes no compensation expense for the
stock option grants.                                          

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    (Continued)              

Reclassifications                                             

         Certain  1995  amounts  have been  reclassified  to conform to the 1996
presentation.                                                 

2.       ACCOUNTING CHANGE                                                      

         In the fourth  quarter of 1996 the Company made a change from reporting
         policy and contract  claims on a discounted to an  undiscounted  basis.
         This change was made to conform with  industry  practice and because it
         is considered preferable by rating agencies and analysts. The effect of
         the  change  for 1996 was to  increase  the  provision  for  policy and
         contract  claims by $76 million and  decrease net income by $49 million
and net income per share by $5.51.                            

         In addition,  during the fourth quarter of 1996 the Company  determined
         that the trend of favorable loss experience  which has emerged over the
         past  few  years  could be  relied  upon and the  Company  changed  its
         estimate of the ultimate net cost of all reported and unreported losses
         incurred   through   September  30,  1996  to  reflect  this  favorable
         experience.  The effect of the change in estimate  was to decrease  the
         provision for policy and contract claims by $78 million and to increase
net income by $50.7 million and net income per share by $5.70.

         Because the change in accounting principal to no longer discount policy
         and contract  claims is inseparable  from the change in estimate,  both
         have been accounted for as a change in estimate.  Accordingly,  the net
         effect of the two  changes,  a decrease of $2 million in the  provision
         for policy and contract claims, has been included in operations for the
         fourth  quarter  and no prior  amounts  have been  restated.  The above
   changes were both made to conform with general industry practice.

         In May 1993 the FASB  issued  SFAS No.  115,  "Accounting  for  Certain
         Investments  in Debt and Equity  Securities."  The Company  adopted the
         provisions of the new standard for  investments  held as of or acquired
after January 1, 1994.                                        

         In accordance with SFAS No. 115, prior period financial statements have
         not been  restated to reflect the change in accounting  principle.  The
         adoption  of SFAS No.  115 as of  January  1, 1994 had no effect on net
income. The opening                                           

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

2.       ACCOUNTING CHANGE    (Continued)                                       

         balance of shareholders'  equity was increased $3,816 (net of $2,055 in
         deferred  income  taxes) to reflect the  recognition  in  shareholders'
         equity of unrealized  appreciation for the Company's investment in debt
         securities determined to be  available-for-sale,  previously carried at
amortized cost.                                               

3.       INVESTMENTS                                                            

         The amortized  cost and estimated  fair value of  investments  in fixed
maturities at December 31, 1996, and 1995 were as follows:    

                                                        [Enlarge/Download Table]

                                                          1996                                      
                      ------------------------------------------------------------------------------
Estimated                                       Gross              Gross                            
                          Amortized          Unrealized          Unrealized             Fair        
                             Cost               Gains              Losses              Value        
                             ----               -----              ------              -----        

                                                                                                    
U.S. Treasury              $ 62,206             $1,709               $547            $ 63,368       
 securities and                                                                                     
 obligations of                                                                                     
 U.S. Government                                                                                    
 corporations                                                                                       
 and agencies                                                                                       

Obligations of               76,203              1,065                143              77,125       
 states and                                                                                         
 political                                                                                          
 subdivisions                                                                                       

Fixed maturities                345                 38                  -                 383       
 issued by foreign                                                                                  
 governments                                                                                        

Public utilities              4,550                 24                 17               4,557       

Corporate                    61,195              1,364                147              62,412       
  securities                                                                                        

Mortgage backed              10,376                 79                 76              10,379       
  securities                 ------                 --                 --              ------       

Fixed maturities           $214,875             $4,279               $930            $218,224       
  available-for-sale       ========             ======               ====            ========       


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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

3.       INVESTMENTS    (Continued)                                             

                                                        [Enlarge/Download Table]


                                                          1995                                      
                      ------------------------------------------------------------------------------
Estimated                                       Gross              Gross                            
                          Amortized          Unrealized          Unrealized             Fair        
                             Cost               Gains              Losses              Value        
                             ----               -----              ------              -----        

                                                                                                    
U.S. Treasury              $ 51,569              $3,881                $ 8           $ 55,442       
 securities and                                                                                     
 obligations of                                                                                     
 U.S. Government                                                                                    
 corporations                                                                                       
 and agencies                                                                                       

Obligations of               57,783               1,286                 13             59,056       
 states and                                                                                         
 political                                                                                          
 subdivisions                                                                                       

Fixed maturities                344                  24                  2                366       
 issued by foreign                                                                                  
 governments                                                                                        

Public utilities              1,997                  58                  -              2,055       

Corporate                    67,489               2,865                  3             70,351       
  securities                 ------               -----                  -             ------       

Fixed maturities           $179,182              $8,114                $26           $187,270       
  available-for-sale       ========              ======                ===           ========       


         The  amortized  cost  and  estimated   fair  value  of   fixed-maturity
         securities  at December  31, 1996 by  contractual  maturity,  are shown
         below.  Actual  maturities  will  differ  from  contractual  maturities
     because borrowers may have the right to call or prepay obligations.

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

3.       INVESTMENTS    (Continued)                                             

                                                                [Download Table]

                                          Estimated 
                              Amortized      Fair   
                                 Cost       Value   
                                 ----       -----   

                                                    
Due in one year or less         $  7,797    $  7,840

Due after one year through        63,499      64,315
  five years                                        

Due after five years through      72,090      73,423
  ten years                                         

Due after ten years               61,113      62,268

Mortgage backed securities        10,376      10,378
                                  ------      ------

                                $214,875    $218,224
                                ========    ========

         Earnings  on  investments  and net  realized  gains for the three years
ended December 31, follow:                                    

                                                                [Download Table]


                           1996      1995      1994   
                           ----      ----      ----   

                                                      
Fixed maturities          $12,453   $11,283   $11,052 
Equity securities             692       916       809 
Invested cash and other       979     1,587     1,235 
  short-term investments                              
Mortgage loans                 88       170        75 
Net realized gains         23,371     2,970     1,665 
                           ------     -----     ----- 

Total investment income    37,583    16,926    14,836 

Investment expenses        (1,159)   (1,455)     (693)
                           ------    ------      ---- 

   Net investment income  $36,424   $15,471   $14,143 
                          =======   =======   ======= 

         Realized  and  unrealized  gains  (losses)  representing  the change in
         difference between fair value and cost (principally  amortized cost for
         fixed  maturities) on fixed  maturities  and equity  securities for the
three years ended December 31, are summarized below:          

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

3.       INVESTMENTS    (Continued)                                             

                                                                [Download Table]


                                  Change in
                       Realized  Unrealized
                       --------  ----------
                                           
1996                                       
    Fixed maturities   $   (50)   $( 4,739)
    Equity securities   23,421     (12,418)
                       -------    -------- 

                       $23,371    $(17,157)
                       =======    ======== 

1995                                       
    Fixed maturities   $  (120)    $16,920 
    Equity securities    3,090      11,916 
                       -------     ------- 

                       $ 2,970     $28,836 
                       =======     ======= 

1994                                       
    Fixed maturities   $(1,063)    $(5,741)
    Equity securities    2,728      (2,670)
                       -------     --------

                       $ 1,665     $(8,411)
                       =======     ======= 

         Gross unrealized  gains and (losses)  relating to investments in equity
securities were $960 and $(165) at December 31, 1996.         

         Proceeds from sales of investments in fixed maturities, net of calls or
         maturities  during  1996,  1995  and 1994  were  $67,425,  $73,339  and
         $93,286, respectively. Gross gains of $502, $422 and $788 in 1996, 1995
         and 1994,  respectively,  and gross losses of $552,  $542 and $1,843 in
  1996, 1995 and 1994, respectively, were realized on those sales.

4.       POLICY AND CONTRACT CLAIMS                                             

         The  Company's  estimate  of net costs to settle  reported  claims  and
         claims  incurred but not reported has not been  discounted  at December
         31, 1996. Such estimates were discounted at a weighted-average  rate of
         7.5% at December 31, 1995 and 1994. The rates used for discounting loss
         reserves on 1995 and 1994 issues were  determined  at the  beginning of
         those years. The discount rate established for 1995 issues was 7.5% and
         for 1994 issues was 6.5%. If these estimates had not been discounted at
         December  31,  1995 and 1994,  reserves  would have been  increased  by
$80,000 and $78,000, respectively.                            

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

4.       POLICY AND CONTRACT CLAIMS    (Continued)                              

         Activity  in the  liability  for  unpaid  claims  and claim  adjustment
expenses is summarized as follows:                            

                                                                [Download Table]


                          1996      1995       1994   
                          ----      ----       ----   

                                                      
Balance at January 1    $193,791  $198,906   $187,619 

Incurred related to:                                  
    Current year          28,930    44,322     56,765 
    Prior years              281   (20,025)    (9,990)
                        --------  --------   -------- 

Total incurred            29,211    24,297     46,775 
                        --------  --------   -------- 

Paid related to:                                      
    Current year           1,549     1,797      7,465 
    Prior years           25,168    28,562     29,761 
                        --------  --------   -------- 

Total paid                26,717    30,359     37,226 
                        --------  --------   -------- 

Amounts related to                                    
    purchase of                                       
    subsidiaries              -        947      1,738 
                        --------  --------   -------- 

Balance at December 31  $196,285  $193,791   $198,906 
                        ========  ========   ======== 

         Balances at January 1, 1996, 1995 and 1994 and balances at December 31,
         1995 and 1994 are  reported  on a  discounted  basis.  The  balance  at
         December 31, 1996 is reported on an undiscounted basis. Losses incurred
         in 1996 include the effects of the accounting changes discussed in Note
2.                                                            

         The favorable  development on 1994 and prior year loss reserves  during
         1995 was attributable to successful  recovery  efforts,  development on
         previously reserved large claims and lower than expected payment levels
         on the 1992 and 1993 issue years which  included a high  proportion  of
refinance business.                                           

5.       REINSURANCE                                                            

         The Company  cedes and  assumes  title  policy  risks to and from other
         insurance  companies  in order to limit and  diversify  its  risk.  The
         Company  cedes  insurance  on risks in excess of  certain  underwriting
limits which provides for recovery of a                       

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

5.       REINSURANCE    (Continued)                                             

         portion of  losses.  The  Company  remains  contingently  liable to the
         extent that reinsuring  companies cannot meet their  obligations  under
reinsurance agreements.                                       

         The Company has not paid or recovered any  reinsured  losses during the
         three years ended  December 31, 1996.  The total amount of premiums for
         assumed and ceded risks was less than 1.0% of title premiums in each of
the last three years.                                         

6.       SHAREHOLDERS' EQUITY                                                   

Rights Agreement                                              

         The Company has issued one preferred  share  purchase right (a "Right")
         with  each  share  of  Common  Stock   issued.   As  adjusted  for  the
         three-for-two  split  of the  Common  Stock  in May  1993,  each  Right
         entitles the holder to buy  two-thirds of  one-hundredth  of a share of
         Series  A  Junior  Participating  Preferred  Stock  ("Junior  Preferred
         Stock"). The purchase price for each one-hundredth of a share of Junior
         Preferred Stock is $60,  subject to adjustment.  The Rights will become
         exercisable  only if a person or group  acquires or  announces a tender
         offer for 20.0% or more of the  outstanding  Common Stock.  At any time
         before the rights become exercisable, the Board of Directors may reduce
         this threshold  percentage to not less than 10.0%. If a person or group
         acquires the  threshold  percentage  of Common  Stock,  each Right will
         entitle the holder,  other than the acquiring  person, to buy shares of
         Common Stock or Junior  Preferred  Stock having a market value of twice
         the  exercise  price.  If the  Company is acquired in a merger or other
         business  combination,  each Right will entitle the holder,  other than
         the acquiring person,  to purchase  securities of the surviving company
         having a market value equal to twice the purchase  price of the Rights.
         The Rights will  expire on October 1, 2001,  and may be redeemed by the
         Company at a price of one cent per Right at any time before they become
         exercisable. Until the Rights become exercisable, they are evidenced by
         the Common Stock  certificates  and are transferred  with and only with
such certificates.                                            

Stock Options                                                 

         The Company has elected to follow  Accounting  Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees"            

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

6.       SHAREHOLDERS' EQUITY    (Continued)                                    

         ("APB 25") and related  Interpretations  in accounting for its employee
         stock options  because,  as discussed below, the alternative fair value
         accounting  provided  under FASB  Statement  No. 123,  "Accounting  for
         Stock-Based  Compensation"  ("Statement  123"),  requires use of option
         valuation  models that were not developed  for use in valuing  employee
         stock  options.  Under  APB  25,  because  the  exercise  price  of the
         Company's  employee  stock  options  equals  the  market  price  of the
         underlying  stock on the date of  grant,  no  compensation  expense  is
recognized.                                                   

         Under  the  Company's  1991  Stock  Incentive  Plan,  as  amended  (the
         "Incentive Plan"), officers, directors and key employees of the Company
         and its  subsidiaries may receive grants and/or awards of common stock,
         restricted stock, phantom stock, incentive stock options, non-qualified
         stock  options  and stock  appreciation  rights.  As  amended  in 1995,
         commencing  January 1,  1996,  the  maximum  number of shares of common
         stock  available for grants and awards under the Incentive Plan in each
         calendar  year  is  equal  to  1.5%  of  the  shares  of  common  stock
         outstanding as of the first business day of that year,  plus the number
         of shares  available  for  grants  and  awards  in prior  years but not
         covered by grants  and  awards in those  years and any shares of common
        stock as to which grants and awards have been terminated or forfeited.

         Pursuant to the 1992 Stock Option Plan for Non-Employee  Directors (the
         "Directors' Plan"), each non-employee  director is granted an option to
         purchase  1,500  shares of  common  stock of the  Company  on the first
         business day following the annual meeting of shareholders. Up to 60,000
         shares of the Company's common stock may be issued under the Directors'
Plan.                                                         

         All options which have been granted  under the  Incentive  Plan and the
         Directors' Plan are non-qualified  stock options with an exercise price
         equal to the fair market value of a share of the Company's common stock
         on the date of grant.  Options granted in 1992 under the Incentive Plan
         and all options granted under the Directors' Plan expire ten years from
         the date of grant.  All other options which have been granted under the
         Incentive  Plan  expire  seven  years  from the date of grant.  Options
generally vest ratably over a four-year period.               

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

6.       SHAREHOLDERS' EQUITY    (Continued)                                    

         Pro forma  information  regarding  net income and earnings per share is
         required by Statement  123, and has been  determined  as if the Company
         had  accounted  for its  employee  stock  options  under the fair value
         method of that Statement. The fair value of these options was estimated
         at the date of grant using the Black-Scholes  option pricing model with
         the following weighted-average assumptions for 1996: risk-free interest
         rate of  7.50%,  dividend  yield of  1.00%,  volatility  factor  of the
         expected  market  price  of the  Company's  common  stock  of .34 and a
         weighted-average  expected life of the options of 5 years.  The effects
         of  applying  Statement  123 on a pro  forma  basis  for  1995 and 1996
         options are not likely to be  representative of the effects on reported
pro forma net income in future years.                         

         The  Black-Scholes  option  valuation  method was  developed for use in
         estimating  the fair  value of traded  options  which  have no  vesting
         restrictions and are fully transferable.  In addition, option valuation
         models require the input of highly  subjective  assumptions,  including
         the expected  stock price  volatility.  Because the Company's  employee
         stock options have characteristics  significantly  different from those
         of  traded  options,  and  because  changes  in  the  subjective  input
         assumptions  can  materially   affect  the  fair  value  estimate,   in
         management's  opinion, the existing models do not necessarily provide a
         reliable  single  measure  of the  fair  value  of its  employee  stock
options.                                                      

         For purposes of pro forma disclosures,  the estimated fair value of the
         options is amortized to expense over the options'  vesting period.  The
         Company's  pro forma  information  follows  (in  thousands  except  for
earnings per share information):                              

                                   1996             1995
                                   ----             ----

       Pro forma net income       $36,187          $16,922

Pro forma earnings                          
          per share                 $4.07            $1.90

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

6.       SHAREHOLDERS' EQUITY    (Continued)                                    

         A  summary  of  the  Company's   stock  option   activity  and  related
information for the years ended December 31 follows:          

                                                        [Enlarge/Download Table]

                                       1996                              1995               

                           ------------------------------  ---------------------------------
                                             Weighted-                         Weighted-    
                                              Average                           Average     
                              Options        Exercise          Options          Exercise    
                              -------        --------          -------          --------    
                                               Price                              Price     
                                               -----                              -----     
                                                                                            
Outstanding -                                                                               
  beginning of year          523,576             $11           421,576             $12      
Granted                      178,000              19           112,000              11      
Exercised                      3,800              10             1,500              10      
Forfeited                      6,050              16             8,500              22      
                               -----                             -----                      

Outstanding -                                                                               
  end of year                691,726             $13           523,576             $11      
                             =======                           =======                      

Available for                                                                               
future grant                  55,856                           103,018                      

Exercisable at                                                                              
  end of year                366,356             $11           278,651             $10      

Weighted-average fair                                                                       
  value of options                                                                          
  granted during the year      $7.38                             $4.77                      

         Exercise prices for options  outstanding as of December 31, 1996 ranged
         from $3 to $22.  The  weighted-average  remaining  contractual  life of
those options is 5 years.                                     

Savings and Stock Ownership Plan                              

         The Company has  registered  600,000  shares of common stock for use in
         connection  with the Lawyers Title  Insurance  Corporation  Savings and
         Stock Ownership Plan. Substantially all of the employees of the Company
         are eligible to  participate  in the Plan. On July 1, 1992, the Company
         issued  323,400  shares  of such  stock to the Plan in  exchange  for a
         $2,156 promissory note bearing interest at 8.0%. These shares were used
         for matching  contributions for plan participants  through June of 1996
         and were  allocated to  participants  quarterly in the same  proportion
         that the quarterly  principal and interest payments on the note bore to
         the total  principal  and interest  payments over the life of the note.
         Subsequent to June 1996, the Plan Trustee  purchased shares on the open
market to use in matching                                     

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

6.       SHAREHOLDERS' EQUITY    (Continued)                                    

         employee  contributions.  The  level  of  contributions  to the Plan is
         discretionary and set by the Board of Directors annually. In 1996, 1995
         and  1994,  38,997,   94,096  and  115,990  shares  were  allocated  to
         participants  at a cost of $143,  $631 and $832,  respectively,  to the
         Company.  Additionally,  100,502  shares  were  purchased  at a cost of
$1,851 and allocated to employees in 1996.                    

7.       STATUTORY FINANCIAL CONDITION AND RESULTS OF OPERATIONS                

         The accompanying  consolidated  financial statements have been prepared
         in conformity  with generally  accepted  accounting  principles  (GAAP)
         which  differ in some  respects  from  statutory  accounting  practices
         prescribed or permitted in the preparation of financial  statements for
         submission   to  insurance   regulatory   authorities.   Unconsolidated
         statutory equity of Lawyers Title was $140,973 and $116,016 at December
         31,  1996 and 1995,  respectively.  The  difference  between  statutory
         equity and equity  determined  on the basis of GAAP is primarily due to
         differences  between  the  provision  for  policy and  contract  claims
         included in the  accompanying  financial  statements  and the statutory
         unearned  premium  reserve,  which is  calculated  in  accordance  with
         statutory  requirements,  and statutory  regulations  that preclude the
         recognition of certain assets  including  goodwill and deferred  income
         tax assets.  Unconsolidated  statutory  net income of Lawyers Title was
         $38,473,  $18,516 and $13,993 for the years ended  December  31,  1996,
1995 and 1994, respectively.                                  

         In a number of states,  Lawyers Title is subject to  regulations  which
         require minimum amounts of statutory  equity and which require that the
         payment of any  extraordinary  dividends  receive prior approval of the
         Insurance  Commissioners of these states. An extraordinary  dividend is
         generally  defined as one which,  when added to other dividends paid in
         the  preceding  twelve  months,  would  exceed  the  lesser of 10.0% of
         statutory equity accounts as of the preceding year end or statutory net
         income  excluding  realized capital gains for the preceding year. Under
         such statutory  regulations,  net assets of  consolidated  subsidiaries
         aggregating  $248,071  were  not  available  for  dividends,  loans  or
advances to the Company at December 31, 1996.                 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

8.       INCOME TAXES                                                           

         The Company  files a  consolidated  federal  income tax return with its
         subsidiaries.  Significant  components  of the  Company's  deferred tax
      assets and liabilities at December 31, 1996 and 1995 are as follows:

                                                       1996           1995
                                                       ----           ----

Deferred tax assets:                            
                  Policy and contract claims          $24,430        $23,021
                  Employee benefit plans                6,235          7,195
                  Other                                 1,499          1,382
                                                      -------        -------
                                                       32,164         31,598
                                                      -------        -------
Deferred tax liabilities:                       
                  Pension benefits                        530            885
                  Title plant basis differences         4,961          4,961
                  Unrealized gains                      1,451          7,455
                  Other                                 1,787          2,170
                                                      -------        -------
                                                        8,729         15,471
                                                      -------        -------
              Net deferred tax asset                  $23,435        $16,127
                                                      =======        =======

         The Company is required to  establish a "valuation  allowance"  for any
         portion of the deferred tax asset that management  believes will not be
         realized. In the opinion of management, it is more likely than not that
         the Company  will  realize the benefit of the net  deferred  tax asset,
         and,  therefore,  no such valuation  allowance has been  established at
December 31, 1996 and 1995.                                   

         The  provision  for  income  tax is less than the  amount of income tax
         determined by applying the applicable  U.S.  statutory  income tax rate
   (35%) to pre-tax income as a result of the following differences:

                                           1996         1995        1994
                                           ----         ----        ----

Computed expected expense                                     
        at statutory rate                 $19,439       $8,351      $3,139
       Non-taxable interest                   (932)        (828)       (734)
       Dividend deductions                    (146)        (187)       (170)
       Company-owned life insurance           (575)        (645)       (532)
      Travel and entertainment                709          421         357
      Other                                   526         (303)         95
                                          -------        ------     ------
      Income tax expense                  $19,021       $6,809      $2,155
                                          =======       ======      ======

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

8.       INCOME TAXES    (Continued)                                            

         Taxes  (recovered) paid were $14,542 in 1996, $(252) in 1995 and $9,207
in 1994.                                                      

9.       PENSION PLAN AND POSTRETIREMENT BENEFITS                               

         The Company has a noncontributory defined benefit retirement plan which
         covers  substantially  all employees.  Benefits are based on salary and
         years  of  service.   The  Company's  funding  policy  is  to  annually
         contribute  the  statutory   required  minimum.   Plan  assets  include
         marketable equity securities, U.S. government and corporate obligations
         and cash  equivalents.  Prior service costs are amortized  equally over
the average remaining service period of employees.            

         The  following  table  sets forth the  plan's  funded  status as of the
September 30 measurement dates:                               

                                                                [Download Table]


                                                      1996             1995   
                                                      ----             ----   
                                                                              
Actuarial present value of benefit obligations:                               

       Vested                                        $ 93,545        $ 85,297 
       Nonvested                                        6,743           5,728 
                                                     --------        -------- 

Total accumulated benefit                                                     
    obligations                                      $100,288        $ 91,025 
                                                     ========        ======== 

Plan assets at fair value                            $112,684        $104,190 

Projected benefit obligations                         115,606         104,043 
                                                     --------        -------- 

Plan assets (less than) in excess                                             
    of projected benefit obligations                   (2,922)            147 

Unrecognized net asset from                                                   
    transition                                           (162)         (1,982)

Unrecognized prior service costs                          172             245 

Unrecognized net gain                                   6,156           5,621 
                                                     --------        -------- 

Prepaid pension asset at                                                      
    December 31                                      $  3,244        $  4,031 
                                                     ========        ======== 

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

9.       PENSION PLAN AND POSTRETIREMENT BENEFITS    (Continued)                

         The  weighted-average  discount rate used in determining  the actuarial
         present value of the projected  benefit  obligations  was 7.75% in 1996
         and 1995.  The average rate of increase in future  compensation  levels
         used was 4.3% in 1996 and 1995.  The expected  long-term rate of return
on plan assets was 8.75% for 1996, 1995 and 1994.             

The components of pension cost include the following:         

                                          1996          1995          1994
                                          ----          ----          ----

Benefits earned during                                        
           the year                      $ 3,124       $ 2,795       $ 3,000

Interest cost on projected                                    
         benefit obligations               7,834         6,985         6,676

        Actual return on plan assets      (13,854)      (16,125)         (562)
Net amortization and                                          
            deferral                        3,684         6,337        (9,003)
                                         -------       -------       -------

       Pension cost                      $   788       $    (8)      $   111
                                         =======       =======       =======

         The Company  sponsors  defined  benefit life and health care plans that
         provide postretirement  medical,  dental and life insurance benefits to
         fulltime  employees  who have  attained  age 55 and  have ten  years of
         service after age 40. The plans are  contributory,  with  contributions
         adjusted  annually,  and contain  other  cost-sharing  features such as
         deductibles and  coinsurance.  Currently,  the Company does not require
         contributions  from  employees  who  retired  prior  to  1991.  Medical
         benefits are funded as claims are incurred. Contributions are made to a
         premium  deposit  fund  with  a  life  insurance  company  for  retired
participants upon reaching age 65.                            

         The following  table presents the plan's funded status  reconciled with
 amounts recognized in the Company's consolidated balance sheet:

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

9.       PENSION PLAN AND POSTRETIREMENT BENEFITS    (Continued)                

                                                        [Enlarge/Download Table]


                                              December 31, 1996        December 31, 1995    
                                              -----------------        -----------------    
                                              Medical/                 Medical/             
                                               Dental           Life    Dental         Life 
                                               ------           ----    ------         ---- 
                                                                                            
Accumulated postretirement benefit obligation:                                              
   Retirees                                   $11,878          $5,414  $11,335        $5,280
   Fully eligible active                                                                    
      plan participants                         2,448             980    2,162           908
   Other active plan                                                                        
      participants                              3,340           1,079    2,945         1,089
                                              -------           -----  -------        ------
                                               17,666           7,473   16,442         7,277
Plan assets invested in                                                                     
   a premium deposit fund,                                                                  
   at fair value                                   -            2,244       -          2,288
                                              -------           -----  -------        ------

Accumulated postretirement                                                                  
   benefit obligation in                                                                    
   excess of plan assets                       17,666           5,229   16,442         4,989

Unrecognized net (gain)                                                                     
   or loss                                     (5,961)          1,582   (6,353)        1,704
Unrecognized transition                                                                     
   obligation                                  16,305           2,471   17,324         2,625
                                              -------           -----  -------        ------
Accrued postretirement                                                                      
   benefit cost                               $ 7,322          $1,176  $ 5,471        $  660
                                              =======          ======  =======        ======

         Net  periodic   postretirement  benefit  cost  included  the  following
components:                                                   

                                                                [Download Table]

                       December 31, 1996   December 31, 1995     December 31, 1994  
                       -----------------   ------------------   ------------------- 
                       Medical/              Medical/            Medical/           
                       Dental       Life     Dental      Life    Dental        Life 
                       ------       ----     ------      ----    ------        ---- 

                                                                                    
Service cost           $  532       $170     $  476     $ 168     $  520      $ 148 
Interest                1,238        548      1,795       535      1,597        375 
Actual return on                                                                    
  plan assets               -       (200)        -       (183)        -        (167)
Amortization of net                                                                 
  (gain) loss            (256)        52         -         -          -          -  
Amortization of                                                                     
  transition obliga-                                                                
  tion  over 20 years   1,019        155      1,019       155      1,019        155 
                       ------       ----     ------      ----     ------      ----- 
Net periodic post-                                                                  
  retirement benefit                                                                
  cost                 $2,533       $725     $3,290      $675     $3,136      $ 511 
                       ======       ====     ======      ====     ======      ===== 


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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

9.       PENSION PLAN AND POSTRETIREMENT BENEFITS    (Continued)                

         The assumed  health  care cost trend rate used to measure the  expected
         cost of  benefits  covered  by the plan is 10.0%  for 1997 and 9.5% for
         1998,  and is assumed to  decrease  0.5% per year until 2004 and remain
         level at 6.25%  thereafter.  The health care cost trend rate assumption
         has a significant  effect on the amounts reported.  For example, a 1.0%
         increase in the annual  health care cost trend rate would  increase the
         accumulated  postretirement  benefit obligation as of December 31, 1996
         and 1995 by $854 and $1,731,  respectively,  and the  aggregate  of the
         service and interest  cost  components  of net periodic  postretirement
benefit cost for 1996 by $67.                                 

         The  weighted-average  discount  rate used to estimate the  accumulated
         postretirement  benefit  was 7.75% at December  31, 1996 and 1995.  The
         average rate of increase in future compensation levels used was 4.3% in
1996 and 1995.                                                

10.      LEASE COMMITMENTS                                                      

         The  Company  conducts a major  portion of its  operations  from leased
         office  facilities  under operating leases that expire over the next 10
         years.  Additionally,  the  Company  leases data  processing  and other
     equipment under operating leases expiring over the next five years.

         Following  is a schedule of future  minimum  rental  payments  required
         under  operating  leases that have initial or remaining  non-cancelable
lease terms in excess of one year as of December 31, 1996.    

      1997                                 $18,593
      1998                                  15,104
      1999                                  11,521
      2000                                   6,440
      2001                                   2,732
      2002 and subsequent                    1,365
                                           -------

                                           $55,755
                                           =======

         Rent  expense  was  $22,551,  $22,649  and  $19,124 for the years ended
December 31, 1996, 1995 and 1994, respectively.               

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

11.      CREDIT ARRANGEMENTS                                                    

         At December 31, 1996,  the Company had working  capital lines of credit
         with three banks totaling $35,000 that may be drawn on as needed,  with
         interest at LIBOR plus 1.5% or the prime rate at the Company's  choice.
         At that date $1,000 was drawn against  these lines.  These credit lines
         require a commitment fee of 0.16% and expire May 31,1997, although they
       may be extended beyond that date at the sole discretion of the banks.

12.      PENDING LEGAL PROCEEDINGS                                              

         Lawyers Title, in the ordinary course of its title insurance  business,
         is  sometimes  named as a  defendant  in  litigation  involving  claims
         arising  outside of the title insurance  contract,  such as for alleged
         negligence in title examination,  improper claims administration or bad
         faith.  While it is the Company's policy to handle all claims promptly,
         efficiently,  fairly,  and in  accordance  with the  provisions  of the
         policy and all  applicable  laws,  the Company  may,  nevertheless,  be
         subjected  to  plaintiffs'  allegations  seeking   extracontractual  or
punitive damages.                                             

13.      ACQUISITIONS                                                           

         During the year ended  December  31,  1996 the Company  acquired  three
         title  insurance  agencies  and an  ancillary  service  business  at an
         aggregate  cost of  $7,900  of which  $3,000  was paid in cash with the
         balance payable in future periods. These acquisitions were not material
to the Company's operations.                                  

         Effective November 1, 1994, the Company acquired all of the outstanding
         stock of Oregon Title Insurance  Company (OTIC) in exchange for 425,020
         shares of the Company's common stock valued at $3,883.  OTIC is engaged
         in the title insurance business. The acquisition has been accounted for
         under the purchase method of accounting. Goodwill of approximately $500
is being amortized over 40 years.                             

         Effective   November  30,  1994,  the  Company   acquired  all  of  the
         outstanding stock of American Title Group, Inc. (ATG) for approximately
         $19,000 in cash.  To provide  indemnification  to the  Company  for the
         warranties of the sellers, $4,500 of the purchase price was placed with
an escrow agent to be released                                

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

13.      ACQUISITIONS    (Continued)                                            

         over four years as the  warranties  expire.  At  December  31, 1996 the
         balance  remaining  in escrow was  $2,250.  ATG is engaged in the title
         insurance  business.  The  acquisition has been accounted for under the
         purchase  method of  accounting.  Goodwill of  approximately  $7,200 is
being amortized over 40 years.                                

         The following  unaudited pro forma summary  presents  information as if
         the OTIC and ATG  acquisitions  had  occurred at the  beginning  of the
         fiscal year.  The pro forma  information  is provided  for  information
         purposes  only.  It is based  on  historical  information  and does not
         necessarily  reflect the actual results that would have occurred nor is
         it  necessarily  indicative  of future  results  of  operations  of the
combined enterprise.                                          

                                                 Unaudited
                                                  Year Ended
                                                 December 31, 1994
                                                 -----------------

Premium and title search                                      
  and escrow revenue                                  $545,748

Net income                                            $  3,857
                                                      ========

Earnings per common share                             $    .43
                                                      ========

         In  addition,  during  the year ended  December  31,  1994 the  Company
         acquired two title  insurance  agencies at an aggregate  cost of $5,786
         which was paid in cash.  These  acquisitions  were not  material to the
Company's operations.                                         

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

14.      UNAUDITED QUARTERLY FINANCIAL DATA                                     

Selected quarterly financial information follows:             

                                                                [Download Table]


                       First    Second    Third     Fourth  
                      Quarter   Quarter   Quarter   Quarter 
                      -------   -------   -------   ------- 
                                                            
1996                                                        
  Premiums, title                                           
    search, escrow                                          
    and other         $117,469  $143,793  $141,679  $154,817
  Net investment                                            
    income               5,345     5,500     4,593    20,986
  Income before                                             
    income taxes         6,717    13,798     9,150    25,875
  Net income             4,521     9,044     6,054    16,900
  Income  per common                                        
    share                 $.51     $1.02      $.68     $1.90
1995                                                        
  Premiums, title                                           
    search, escrow                                          
    and other         $104,838  $111,742  $118,479  $132,302
  Net investment                                            
    income               3,301     3,036     4,566     4,568
  Income before                                             
    income taxes         1,395     4,549     8,565     9,351
  Net income             1,015     3,196     6,237     6,603
  Income per                                                
    common share          $.11      $.36      $.70      $.74


         In the  fourth  quarter  of 1996 the  Company  changed  its  investment
         strategy by selling all of its equity  portfolio  and began to move the
         proceeds into fixed-maturity securities.  This sale resulted in capital
gains of $17.4 million in the quarter.                        

         Income per common share is computed  using the weighted  average number
of shares of common stock outstanding during each quarter.    

15.      ACCOUNTING PRONOUNCEMENTS                                              

         In March  1995,  the FASB  issued  SFAS No.  121,  "Accounting  for the
         Impairment  of  Long-Lived  Assets  and  for  Long-Lived  Assets  to Be
         Disposed  Of,"  which  requires  impairment  losses to be  recorded  on
         long-lived  assets used in operations when indicators of impairment are
         present and the  undiscounted  cash flows  estimated to be generated by
those assets are less than                                    

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)                         

15.      ACCOUNTING PRONOUNCEMENTS    (Continued)                               

         the assets' carrying amount. SFAS No. 121 also addresses the accounting
         for long-lived  assets that are expected to be disposed of. The Company
         adopted SFAS No. 121 in the first quarter of 1996.  The adoption had no
         effect  on the  Company's  financial  statements  for  the  year  ended
December 31, 1996.                                            

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 (In thousands of dollars)
 (Unaudited)

                                                                [Download Table]


                                                        September 30,   December 31,
ASSETS                                                      1997            1996    
------                                                      ----            ----    

                                                                                    
INVESTMENTS:                                                                        
    Fixed maturities available-for-sale - at fair                                   
        value (amortized cost: 1997 - $245,161;                                     
        1996 - $214,875)                              $    252,564     $    218,224 
    Equity securities - at fair value (cost: 1997 -                                 
        $887; 1996 - $930)                                   1,664            1,725 
    Mortgage loans (less allowance for doubtful                                     
        accounts: 1997 and 1996 - $150)                        456              480 
    Invested cash                                           26,773           71,626 
                                                      ------------     ------------ 

        Total investments                                  281,457          292,055 

CASH                                                        36,258           23,997 

NOTES AND ACCOUNTS RECEIVABLE:                                                      
    Notes (less allowance for doubtful accounts:                                    
        1997 - $1,083; 1996 - $1,008)                        6,050            6,657 
    Accounts receivable (less allowance for doubtful                                
        accounts: 1997 - $2,571; 1996 - $2,197)             27,456           20,003 
                                                      ------------     ------------ 

        Total notes and accounts receivable                 33,506           26,660 

PROPERTY AND EQUIPMENT - at cost (less                                              
    accumulated depreciation and amortization:                                      
    1997 - $50,584; 1996 - $44,670)                         21,070           21,959 

TITLE PLANTS                                                48,930           48,536 

GOODWILL (less accumulated amortization:                                            
    1997 - $13,670; 1996 - $12,393)                         58,813           59,669 

DEFERRED INCOME TAXES                                       25,500           23,435 

OTHER ASSETS                                                35,410           24,657 
                                                      ------------     ------------ 

                                                      $    540,944     $    520,968 
                                                      ============     ============ 

 See Accompanying Notes.

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 (In thousands of dollars)
 (Unaudited)

                                                                [Download Table]


                                                     September 30,   December 31,
LIABILITIES                                              1997            1996    
-----------                                              ----            ----    

                                                                                 
POLICY AND CONTRACT CLAIMS                         $    199,865     $    196,285 

ACCOUNTS PAYABLE AND                                                             
    ACCRUED EXPENSES                                     43,288           47,211 

INCOME TAXES PAYABLE                                      3,982            5,721 

OTHER LIABILITIES                                        12,479            9,583 
                                                   ------------     ------------ 

        Total liabilities                               259,614          258,800 
                                                   ------------     ------------ 

COMMITMENTS AND CONTINGENCIES                                                    

SHAREHOLDERS' EQUITY                                                             
--------------------                                                             

Preferred stock, no par value, authorized                                        
    5,000,000 shares, none issued or outstanding              -                - 

Common stock, no par value, authorized 45,000,000                                
    shares, issued and outstanding, 8,928,041 in                                 
    1997 and 8,889,791 in 1996                          167,621          167,044 

Unrealized investment gains  (less related                                       
    deferred income tax expense of $2,863                                        
    in 1997 and $1,450 in 1996)                           5,317            2,694 

Retained earnings                                       108,392           92,430 
                                                   ------------     ------------ 

    Total shareholders' equity                          281,330          262,168 
                                                   ------------     ------------ 

                                                   $    540,944     $    520,968 
                                                   ============     ============ 


 See Accompanying Notes.

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS AND
 RETAINED EARNINGS
NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(In thousands of dollars except per share amounts)
 (Unaudited)

                                                        [Enlarge/Download Table]


                                                    Nine Months Ended            Three Months Ended     
                                                      September 30,                 September 30,       
                                                  1997             1996           1997           1996   
                                                  ----             ----           ----           ----   

                                                                                                        
REVENUES                                                                                                
    Premiums                                  $   353,775      $   328,438   $   128,635    $   115,251 
    Title search, escrow and other                 85,769           74,503        31,721         26,428 
    Investment income                              12,419           15,438         4,036          4,593 
                                              -----------      -----------   -----------    ----------- 
                                                  451,963          418,379       164,392        146,272 
                                              -----------      -----------   -----------    ----------- 
EXPENSES                                                                                                
    Salaries and employee benefits                148,596          137,127        51,778         47,359 
    Agents' commissions                           149,944          134,116        54,178         47,731 
    Provision for policy and contract claims       23,910           21,075         8,590          7,491 
    General, administrative and other             102,994           96,396        36,805         34,541 
                                              -----------      -----------   -----------    ----------- 
                                                  425,444          388,714       151,351        137,122 
                                              -----------      -----------   -----------    ----------- 
OPERATING INCOME BEFORE                                                                                 
    INCOME TAXES                                   26,519           29,665        13,041          9,150 

INCOME TAX EXPENSE                                                                                      
    Current                                        12,919           12,642         5,259          5,107 
    Deferred                                       (3,699)          (2,596)         (659)        (2,011)
                                              -----------      -----------   -----------    ----------- 
                                                    9,220           10,046         4,600          3,096 
                                              -----------      -----------   -----------    ----------- 
NET INCOME                                         17,299           19,619         8,441          6,054 

DIVIDENDS                                          (1,337)          (1,333)         (446)          (444)

RETAINED EARNINGS BEGINNING                                                                             
    OF PERIOD                                      92,430           57,689       100,397         70,365 
                                              -----------      -----------   -----------    ----------- 

RETAINED EARNINGS END OF PERIOD               $   108,392      $    75,975   $   108,392    $    75,975 
                                              ===========      ===========   ===========    =========== 

EARNINGS PER COMMON AND COMMON                                                                          
    EQUIVALENT SHARE                          $      1.87      $      2.16   $      0.91    $      0.66 
                                              ===========      ===========   ===========    =========== 

EARNINGS PER COMMON SHARE ASSUMING                                                                      
    FULL DILUTION                                    1.85             2.14          0.90           0.66 

AVERAGE NUMBER OF COMMON AND                                                                            
    COMMON EQUIVALENT SHARES                                                                            
    OUTSTANDING                                     9,231            9,097         9,260          9,135 

AVERAGE NUMBER OF SHARES OUTSTANDING                                                                    
    ASSUMING FULL DILUTION                          9,332            9,158         9,340          9,159 

 See Accompanying Notes.

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
 (In thousands of dollars)
 (Unaudited)

                                                        [Enlarge/Download Table]


                                                                         Nine Months Ended     
                                                                           September 30,       
                                                                       1997            1996    
                                                                       ----            ----    
                                                                                               
Cash flows from operating activities:                                                          
    Net income                                                     $   17,299      $    19,619 
        Depreciation & amortization                                     7,736            6,517 
    Amortization of bond premium                                          339              568 
        Realized investment gains                                        (113)          (5,399)
        Deferred income tax                                            (3,699)          (2,596)
        Change in assets & liabilities:                                                        
           Notes receivable                                               607              800 
           Premiums receivable                                         (7,453)             (51)
           Current income taxes                                        (1,739)           4,865 
        Policy & contract claims                                        3,580              973 
           Accounts payable and accrued expenses                       (3,923)           1,354 
        Cash surrender value of life insurance                         (1,081)           3,050 
           Other                                                       (2,740)          (5,443)
                                                                  -----------       ---------- 
               Net cash provided by operating activities                8,813           24,257 
                                                                  -----------       ---------- 
Cash flows from investing activities:                                                          
    Purchase of property & equipment - net                             (5,090)          (6,600)
    Purchase of businesses, net of cash acquired                            -           (2,320)
    Cost of investments acquired:                                                              
        Fixed maturities                                              (84,128)         (77,093)
        Equity securities                                                  (6)         (27,780)
        Mortgage loans                                                      -                - 
    Proceeds from investment sales or maturities:                                              
        Fixed maturities                                               53,575           59,938 
        Equity securities                                                  90           33,961 
        Mortgage loans                                                     24              341 
                                                                  -----------       ---------- 
               Net cash used in investing activities                  (35,535)         (19,553)
                                                                  -----------       ---------- 
Cash flows from financing activities:                                                          
    Repayment of cash surrender value loan                             (7,713)               - 
    Dividends paid                                                     (1,337)          (1,333)
    Change in notes payable                                             3,180              (48)
                                                                  -----------       ---------- 
               Net cash provided by financing activities               (5,870)          (1,381)
                                                                  -----------       ---------- 
               Net (decrease) increase in cash and invested cash      (32,592)           3,323 
Cash & invested cash at beginning of period                            95,623           40,647 
                                                                  -----------       ---------- 
Cash & invested cash at end of period                             $    63,031       $   43,970 
                                                                  ===========       ========== 

 See Accompanying Notes.

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LAWYERS TITLE CORPORATION AND SUBSIDIARIES                                      

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

1.       Interim Financial Information                                          

         The  unaudited  consolidated  financial  information  included  in this
         report has been prepared in conformity  with the accounting  principles
         and  practices  reflected  in  the  consolidated  financial  statements
         included  in the Form 10-K for the year ended  December  31, 1996 filed
         with the  Commission  under the Securities  Exchange Act of 1934.  This
         report should be read in conjunction with the aforementioned Form 10-K.
         In the opinion of  management,  all  adjustments  (consisting of normal
         recurring   accruals)   necessary  for  a  fair  presentation  of  this
         information  have been made.  The results of operations for the interim
    periods are not necessarily indicative of results for a full year.

         Certain  1996  amounts  have been  reclassified  to conform to the 1997
presentation.                                                 

2.       Pending Legal Proceedings                                              

         For additional information,  see Pending Legal Proceedings on page F-27
of the December 31, 1996 Form 10-K.                           

3.       Accounting Pronouncements                                              

         In February  1997,  the  Financial  Accounting  Standards  Board issued
         Statement  No.  128,  Earnings  per  Share  (Statement  128),  which is
         required to be adopted on December 31, 1997. At that time,  the Company
         will be  required  to  change  the  method  currently  used to  compute
         earnings  per share and to  restate  all prior  periods.  Under the new
         requirements  for calculating  primary earnings per share, the dilutive
         effect of stock  options  will be  excluded  and dual  presentation  is
         required  regardless  of  the  difference  between  basic  and  diluted
         earnings per share.  The impact of Statement 128 on the  calculation of
         primary  and  diluted  earnings  per share for  these  quarters  is not
expected to be material.                                      

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Independent Auditors' Report

Board of Directors and Shareholder                                              
Commonwealth Land Title Insurance Company                                       
Transnation Title Insurance Company                                             
Philadelphia, Pennsylvania                                                      

We have audited the accompanying  combined  balance sheets of Commonwealth  Land
Title Insurance Company and subsidiaries  ("Commonwealth") and Transnation Title
Insurance  Company and  subsidiaries  ("Transnation")  (both of which are wholly
owned subsidiaries of Reliance Group Holdings, Inc.) as of December 31, 1996 and
1995, and the related  combined  statements of income,  changes in shareholder's
equity,  and cash flows for each of the three years in the period ended December
31,  1996.  Commonwealth  and  Transnation  (the  "Companies")  are under common
ownership  and  common   management.   These   financial   statements   are  the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these financial statements based on our audits.                      

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion,  such  combined  financial  statements  present  fairly,  in all
material   respects,   the  combined  financial  position  of  Commonwealth  and
Transnation  at December 31, 1996 and 1995,  and the  combined  results of their
operations and their combined cash flows for the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.  

/s/ Deloitte & Touche LLP                                                       

Philadelphia, Pennsylvania                                                      
February 12, 1997                                                               

(August 20, 1997 as to Note 10)                               

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED STATEMENT OF INCOME                                                    

                                                        [Enlarge/Download Table]


Year Ended December 31                                                              1996              1995             1994
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                           
REVENUES:                                                                                                                  
Premiums and fees......................................................  $   780,157,000  $    671,936,000  $   856,762,000

Net investment income..................................................       30,455,000        27,933,000       26,455,000

Gain on sale of investments............................................          346,000         1,729,000          516,000
                                                                         ---------------  ----------------  ---------------

                                                                             810,958,000       701,598,000      883,733,000
                                                                         ---------------  ----------------  ---------------

EXPENSES:                                                                                                                  
Commissions to agents..................................................      355,834,000       310,729,000      432,041,000

Compensation and employee benefits.....................................      206,083,000       188,097,000      211,150,000

Provision for losses...................................................       61,116,000        58,486,000       75,867,000

Taxes, other than federal income taxes.................................       12,923,000         9,782,000        8,082,000

Other operating expenses...............................................      136,422,000       120,294,000      124,789,000
                                                                         ---------------  ----------------  ---------------

                                                                             772,378,000       687,388,000      851,929,000
                                                                         ---------------  ----------------  ---------------

Income before income taxes.............................................       38,580,000        14,210,000       31,804,000

Provision for income taxes.............................................       13,347,000         4,755,000       10,809,000
                                                                         ---------------  ----------------  ---------------

NET INCOME.............................................................  $    25,233,000  $      9,455,000  $    20,995,000
                                                                         ===============  ================  ===============


 See notes to combined financial statements.

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED BALANCE SHEET                                                          

                                                        [Enlarge/Download Table]


ASSETS                                                                       December 31              1996             1995
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                           
Investments:                                                                                                               
   Fixed maturities held for investment -- at amortized                                                                    
     cost (quoted market $140,789,000 and $126,623,000).................................  $    139,798,000  $   120,545,000
   Fixed maturities available for sale -- at quoted market                                                                 
     (amortized cost $284,381,000 and $248,280,000).....................................       289,991,000      260,194,000
   Short-term investments...............................................................        25,860,000       41,220,000
   First mortgage and other secured loans...............................................         5,453,000        2,882,000
Cash ...................................................................................        14,328,000       15,230,000
Accounts receivable, less allowances of                                                                                    
   $5,663,000 and $5,006,000............................................................        23,987,000       26,372,000
Real estate and equipment -- at cost, less accumulated                                                                     
   depreciation of $25,746,000 and $22,685,000..........................................        15,373,000       14,303,000
Title plants............................................................................        49,750,000       49,208,000
Deferred federal income tax benefit.....................................................        27,243,000       20,366,000
Goodwill................................................................................        12,944,000        9,163,000
Other assets............................................................................        16,027,000       14,337,000
                                                                                          ----------------  ---------------
                                                                                          $    620,754,000  $   573,820,000
                                                                                          ================  ===============

LIABILITIES AND SHAREHOLDER'S EQUITY                                                                                       

Reserve for losses......................................................................  $    264,838,000  $   240,777,000
Accounts payable and accrued expenses...................................................        76,168,000       62,306,000
Current federal income taxes............................................................         6,091,000                -
                                                                                          ----------------  ---------------

                                                                                               347,097,000      303,083,000
                                                                                          ----------------  ---------------
Commitments (Note 9)                                                                                                       

Shareholder's equity:                                                                                                      
   Common stock.........................................................................        11,649,000       11,649,000
   Additional paid-in capital...........................................................       127,551,000      127,551,000
   Retained earnings....................................................................       130,810,000      123,793,000
   Net unrealized gain on investments...................................................         3,647,000        7,744,000
                                                                                          ----------------  ---------------

                                                                                               273,657,000      270,737,000
                                                                                          ----------------  ---------------
                                                                                          $    620,754,000  $   573,820,000
                                                                                          ================  ===============

 See notes to combined financial statements.

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY                           

                                                        [Enlarge/Download Table]


                                                                                                       Net                  
                                                             Additional                         Unrealized                  
                                          Common                Paid-in         Retained    Gain (loss) on    Shareholder's 
                                          Stock                 Capital         Earnings       Investments           Equity 
                                          -----                 -------         --------       -----------           ------ 

                                                                                                                            
Balance, January 1, 1994..............$    11,374,000  $    127,278,000  $   116,343,000  $      5,868,000  $   260,863,000 
Net income............................              -                 -       20,995,000                 -       20,995,000 
Dividends.............................              -                 -      (19,000,000)                -      (19,000,000)
Depreciation after applicable deferred                                                                                      
  income tax benefit of $5,058,000....              -                 -                -        (9,392,000)      (9,392,000)
                                      ---------------  ----------------  ---------------  ----------------  --------------- 

Balance, December 31, 1994............     11,374,000       127,278,000      118,338,000        (3,524,000)     253,466,000 
Net income............................              -                 -        9,455,000                 -        9,455,000 
Increase in par value of                                                                                                    
  Commonwealth's common stock                                                                                               
  from $1.67 to $2.00 per share.......        275,000          (275,000)               -                 -                - 
Dividends.............................              -                 -       (4,000,000)                -       (4,000,000)
Capital contribution..................              -           548,000                -                 -          548,000 
Appreciation after applicable deferred                                                                                      
  income tax provision of $6,068,000..              -                 -                -        11,268,000       11,268,000 
                                      ---------------  ----------------  ---------------  ----------------  --------------- 

Balance, December 31, 1995............     11,649,000       127,551,000      123,793,000         7,744,000      270,737,000 
Net income............................              -                 -       25,233,000                 -       25,233,000 
Dividends.............................              -                 -      (18,216,000)                -      (18,216,000)
Depreciation after applicable deferred                                                                                      
  income tax benefit of $2,207,000....              -                 -                -        (4,097,000)      (4,097,000)
                                      ---------------  ----------------  ---------------  ----------------  --------------- 

Balance, December 31, 1996..........  $    11,649,000  $    127,551,000  $   130,810,000  $      3,647,000  $   273,657,000 
                                      ===============  ================  ===============  ================  =============== 


 See notes to combined financial statements.

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED STATEMENT OF CASH FLOWS                                                

                                                        [Enlarge/Download Table]


Year Ended December 31                                                              1996              1995             1994 
--------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                       
Net income.............................................................  $    25,233,000  $      9,455,000  $    20,995,000 
   Adjustments to reconcile net income to net cash                                                                          
   provided from operating activities:                                                                                      
     Increase in reserve for losses....................................       24,061,000        12,714,000       27,189,000 
     Change in accounts receivable.....................................        1,780,000           557,000        1,982,000 
     Depreciation, bad debts and amortization..........................        7,797,000         6,838,000        5,145,000 
     Change in accounts payable, accrued expenses and other............        8,478,000       (13,539,000)     (15,451,000)
                                                                         ---------------  ----------------  --------------- 

NET CASH PROVIDED FROM OPERATING ACTIVITIES............................       67,349,000        16,025,000       39,860,000 
                                                                         ---------------  ----------------  --------------- 

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                       
Proceeds from sales of:                                                                                                     
   Fixed maturities available for sale.................................       88,225,000        29,677,000       12,212,000 
   Fixed maturities held for investment................................        3,300,000         4,267,000        4,014,000 
Maturities and repayments of:                                                                                               
   Fixed maturities available for sale.................................       13,671,000         2,869,000        3,976,000 
   Fixed maturities held for investment................................        2,700,000         2,005,000        1,643,000 
Purchases of:                                                                                                               
   Fixed maturities available for sale.................................     (138,310,000)      (37,922,000)     (10,628,000)
   Fixed maturities held for investment................................      (24,817,000)      (10,982,000)     (36,266,000)
Proceeds from sales of short-term investments - net....................       15,360,000        13,055,000        3,730,000 
Purchases of title plants - net........................................         (577,000)         (985,000)        (378,000)
Purchases of real estate and equipment - net...........................       (6,266,000)       (4,439,000)      (5,563,000)
Cash outlay for acquisitions...........................................       (3,000,000)                -                - 
Other - net............................................................         (321,000)       (1,730,000)         (50,000)
                                                                         ---------------  ----------------  --------------- 

NET CASH USED IN INVESTING ACTIVITIES..................................      (50,035,000)       (4,185,000)     (27,310,000)
                                                                         ---------------  ----------------  --------------- 

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                       
Intercompany receivables and payables - net............................                -        (1,909,000)       2,423,000 
Dividends..............................................................      (18,216,000)       (4,000,000)     (19,000,000)
Cash received from capital contribution................................                -            40,000                - 
                                                                         ---------------  ----------------  --------------- 

NET CASH USED IN FINANCING ACTIVITIES..................................      (18,216,000)       (5,869,000)     (16,577,000)
                                                                         ---------------  ----------------  --------------- 

INCREASE (DECREASE) IN CASH............................................         (902,000)        5,971,000       (4,027,000)
Cash, beginning of year................................................       15,230,000         9,259,000       13,286,000 
                                                                         ---------------  ----------------  --------------- 

Cash, end of year......................................................  $   14,328,000   $     15,230,000  $     9,259,000 
                                                                         ===============  ================  =============== 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                           
Federal income taxes paid..............................................  $    10,944,000  $      6,299,000  $    18,073,000 
                                                                         ===============  ================  =============== 

 See notes to combined financial statements.

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS                                          

1.       NATURE OF OPERATIONS/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES        

Basis of Combination                                                            

The combined  financial  statements of Commonwealth Land Title Insurance Company
("Commonwealth") and Transnation Title Insurance Company ("Transnation") include
the  accounts of all  subsidiaries  and have been  prepared in  conformity  with
generally  accepted  accounting  principles.  Such statements  include  informed
estimates and judgments of management  for those  transactions  that are not yet
complete  or for which the  ultimate  effects  cannot be  precisely  determined.
Actual results may differ from these estimates.  All  intercompany  accounts and
transactions have been eliminated.  Certain  reclassifications have been made to
the 1995 and 1994  combined  financial  statements  to conform with current year
presentation.                                                                   

Commonwealth and Transnation (the "Companies") are wholly owned  subsidiaries of
Reliance Insurance Company ("Reliance Insurance"). Reliance Group Holdings, Inc.
("Reliance"),  through a  subsidiary,  owns 100% of the common stock of Reliance
Insurance.  Together the Companies  comprise the title  insurance  operations of
Reliance Insurance.                                                             

Certain  administrative  services  are  provided  by Reliance  Insurance  to the
Companies.  The costs for such services,  which have been determined  based on a
reasonable  allocation  of  actual  costs  incurred,   amounted  to  $1,096,000,
$919,000,  and  $1,019,000  for  1996,  1995 and 1994 and are  reflected  in the
statements of income.                                                           

Nature of Operations                                                            

The  principal   operations  of  the  Companies   consist  of  title   insurance
underwriting.  The Companies write, through direct and agency operations,  title
insurance for  residential  and  commercial  real estate  nationwide and provide
escrow and settlement services in connection with real estate closings.         

Investments                                                                     

Fixed maturity investments include bonds, notes and redeemable preferred stocks.
Fixed  maturity  investments   classified  as  "available  for  sale"  represent
securities that will be held for an indefinite period of time and are carried at
quoted  market  value  with  the  net  unrealized   gain  or  loss  included  in
shareholder's  equity.  Such  investments  may be sold in response to changes in
interest  rates,  future  general  liquidity  needs and similar  factors.  Fixed
maturity  investments  classified  as  "held  for  investment"  are  carried  at
amortized cost since the Companies have the positive  intent and ability to hold
these securities to maturity. Short-term investments consist primarily of United
States  government  securities,  certificates  of deposit and  commercial  paper
carried at cost,  which  approximates  market  value.  First  mortgage and other
secured loans are carried at cost, which approximates their fair value. Realized
gains and losses, determined on a specific identification basis, are included in
income.                                                                         

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

Title Insurance                                                                 

Direct title insurance premiums and fees are recognized as revenue when policies
become  effective.  Agency  insurance  premiums are  recognized  as revenue when
reported by the agent.  Title insurance  claims arise  principally  from unknown
title defects that exist at the time policies become effective.                 

At the time premiums are recorded as revenue,  the Companies  establish reserves
for the  estimated  ultimate  amounts  that  will be paid for  reported  claims,
incurred  but not reported  claims and the expenses  that will be paid to settle
these claims.  The reserves,  which are not discounted,  are based on historical
and  anticipated  loss  experience  including  societal  and  economic  factors.
Inflation is inherent in the reserves to the extent that it influenced  the past
claims patterns used to produce the reserve estimates. The process of estimating
claims is a complex  task and the actual  payments may be more or less than such
estimates indicate. Changes in loss estimates, based on subsequent developments,
are included in operations currently.                                           

Title Plants                                                                    

Title plants are  capitalized at the lower of cost or appraised value at date of
acquisition.  Title  plants are not being  depreciated  since  there has been no
diminution of value; however, impairments of title plant carrying amounts deemed
to be other than temporary are expensed. Costs of maintaining and updating title
plants are expensed as incurred.                                                

Fair Value of Financial Instruments                                             

The estimated fair value of publicly traded financial  instruments is determined
by the Companies  using quoted market prices,  dealer quotes and prices obtained
from independent third parties.  For financial  instruments not publicly traded,
fair  values are  estimated  based on values  obtained  from  independent  third
parties or quoted market prices of comparable instruments.  However, judgment is
required  to  interpret  market  data to develop  the  estimates  of fair value.
Accordingly,  the estimates are not  necessarily  indicative of the amounts that
could be realized in a current market exchange.  See Note 2 regarding fair value
information for the Companies' financial instruments.                           

Income Taxes                                                                    

The  Companies  are included in the  consolidated  federal  income tax return of
Reliance.  Federal income taxes are computed as if Commonwealth  and Transnation
filed separate consolidated tax returns.                                        

Adoption of New Accounting Standard                                             

Effective  January  1,  1996,  the  Companies  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for Long-Lived Assets to be Disposed of." The adoption of
this  Statement  had no material  effect on the  Companies'  combined  financial
statements.                                                                     

In June 1996,  the  Financial  Accounting  Standards  Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishing of
Liabilities".  The adoption of this Statement, which is not required until 1997,
is not expected to have a material effect on the Companies'  combined  financial
statements.                                                                     

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

2.       INVESTMENTS                                                            

Fixed maturities held for investment at December 31, 1996 consisted of:         

                                                        [Enlarge/Download Table]


                                                                                                    Gross            Gross
                                                             Amortized           Market        Unrealized       Unrealized
                                                                  Cost            Value             Gains           Losses
                                                                  ----            -----             -----           ------

                                                                                                                          
Bonds and notes:                                                                                                          
   U.S. government and government                                                                                         
     agencies and authorities........................ $      1,053,000  $     1,069,000  $         16,000  $             -
   Public utilities..................................       90,421,000       90,610,000         1,107,000          918,000
   Corporate bonds and other.........................       36,621,000       37,211,000         1,330,000          740,000
Redeemable preferred stock...........................       11,703,000       11,899,000           196,000                -
                                                      ----------------  ---------------  ----------------  ---------------

                                                      $    139,798,000  $   140,789,000  $      2,649,000  $     1,658,000
                                                      ================  ===============  ================  ===============

Fixed maturities available for sale at December 31, 1996 consisted of:          

                                                        [Enlarge/Download Table]


                                                                                                    Gross            Gross
                                                                Market        Amortized        Unrealized       Unrealized
                                                                 Value             Cost             Gains           Losses
                                                                 -----             ----             -----           ------
                                                                                                                          
Bonds and notes:                                                                                                          
   U.S. government and government                                                                                         
     agencies and authorities........................ $     95,147,000  $    95,345,000  $        660,000  $       858,000
   Public utilities..................................       72,880,000       73,457,000           348,000          925,000
   Corporate bonds and other.........................       63,619,000       62,713,000         1,671,000          765,000
Redeemable preferred stock...........................       58,345,000       52,866,000         5,487,000            8,000
                                                      ----------------  ---------------  ----------------  ---------------

                                                      $    289,991,000  $   284,381,000  $      8,166,000  $     2,556,000
                                                      ================  ===============  ================  ===============

Fixed maturities held for investment at December 31, 1995 consisted of:         

                                                        [Enlarge/Download Table]

                                                                                                    Gross            Gross
                                                             Amortized           Market        Unrealized       Unrealized
                                                                  Cost            Value             Gains           Losses
                                                                  ----            -----             -----           ------
                                                                                                                          
Bonds and notes:                                                                                                          
   U.S. government and government                                                                                         
     agencies and authorities........................ $      1,057,000  $     1,109,000  $         52,000  $             -
   Public utilities..................................       67,175,000       70,069,000         2,896,000            2,000
   Corporate bonds and other.........................       38,061,000       40,536,000         2,498,000           23,000
Redeemable preferred stock...........................       14,252,000       14,909,000           657,000                -
                                                      ----------------  ---------------  ----------------  ---------------

                                                      $    120,545,000  $   126,623,000  $      6,103,000  $        25,000
                                                      ================  ===============  ================  ===============

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NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

Fixed maturities available for sale at December 31, 1995 consisted of:          

                                                        [Enlarge/Download Table]

                                                                                                    Gross            Gross
                                                                Market        Amortized        Unrealized       Unrealized
                                                                 Value             Cost             Gains           Losses
                                                                 -----             ----             -----           ------
                                                                                                                          
Bonds and notes:                                                                                                          
   U.S. government and government                                                                                         
     agencies and authorities........................ $     43,875,000  $    42,929,000  $      1,003,000  $        57,000
   Public utilities..................................       88,655,000       85,795,000         2,963,000          103,000
   Corporate bonds and other.........................       75,904,000       72,207,000         3,833,000          136,000
Redeemable preferred stock...........................       51,760,000       47,349,000         4,411,000                -
                                                      ----------------  ---------------  ----------------  ---------------

                                                      $    260,194,000  $   248,280,000  $     12,210,000  $       296,000
                                                      ================  ===============  ================  ===============

The carrying value of financial  instruments  not publicly  traded,  recorded at
estimated fair value,  was  $44,800,000 and $43,800,000 at December 31, 1996 and
1995, respectively.                                                             

The  contractual  maturities of fixed maturity  investments at December 31, 1996
were as follows:                                                                

                                                        [Enlarge/Download Table]


                                                                 Held for Investment                Available for Sale    
                                                                 -------------------                ------------------    
                                                             Amortized           Market         Amortized           Market
                                                                  Cost            Value              Cost            Value
                                                                  ----            -----              ----            -----

                                                                                                                          
Fixed maturity investments:                                                                                               
   Due within one year............................... $      1,053,000  $     1,069,000  $      2,200,000  $     2,205,000
   Due after one year through five years.............        1,849,000        2,032,000        15,856,000       15,976,000
   Due after five years through ten years............       45,777,000       46,679,000        36,537,000       37,029,000
   Due after ten years...............................       79,416,000       79,110,000        96,960,000       96,705,000
                                                      ----------------  ---------------  ----------------  ---------------
                                                           128,095,000      128,890,000       151,553,000      151,915,000
Redeemable preferred stock...........................       11,703,000       11,899,000        52,866,000       58,345,000
Mortgage-backed securities...........................                -                -        79,962,000       79,731,000
                                                      ----------------  ---------------  ----------------  ---------------

                                                      $    139,798,000  $   140,789,000  $    284,381,000  $   289,991,000
                                                      ================  ===============  ================  ===============

Net investment income consisted of:                                             

                                                        [Enlarge/Download Table]


Year Ended December 31                                                              1996              1995             1994
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                           
Investment income:                                                                                                         
   Fixed maturities....................................................  $    29,632,000  $     26,971,000  $    25,987,000
   Short-term investments..............................................        1,588,000         1,689,000        1,590,000
   Other...............................................................          883,000           773,000          669,000
                                                                         ---------------  ----------------  ---------------
                                                                              32,103,000        29,433,000       28,246,000
Investment expenses....................................................        1,648,000         1,500,000        1,791,000
                                                                         ---------------  ----------------  ---------------

                                                                         $    30,455,000  $     27,933,000  $    26,455,000
                                                                         ===============  ================  ===============

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

Gain on sales of investments consisted of:                                      

                                                        [Enlarge/Download Table]


Year Ended December 31                                                              1996              1995             1994 
--------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                            
Fixed maturities held for investment:                                                                                       
   Realized gains......................................................    $     410,000     $     128,000    $     147,000 
   Realized losses.....................................................          (25,000)                -           (1,000)
                                                                           -------------     -------------    ------------- 
                                                                                 385,000           128,000          146,000 
                                                                           -------------     -------------    ------------- 
Fixed maturities available for sale:                                                                                        
   Realized gains......................................................        1,308,000         1,626,000          531,000 
   Realized losses.....................................................       (1,347,000)          (25,000)        (161,000)
                                                                           --------------    -------------    ------------- 
                                                                                 (39,000)        1,601,000          370,000 
                                                                           -------------     -------------    ------------- 

                                                                           $     346,000     $   1,729,000    $     516,000 
                                                                           =============     =============    ============= 

During  1996,  1995 and 1994,  the  Companies  sold  fixed  maturities  held for
investment  with an amortized  cost of  $2,963,000,  $4,221,000  and  $3,892,000
respectively,  resulting  in realized  gains of  $337,000,  $45,000 and $123,000
respectively.  These  sales  were  principally  in  response  to  a  significant
deterioration in the issuers' creditworthiness.                                 

3.       PROVISION FOR INCOME TAXES                                             

Income tax provision from operations consisted of:                              

                                                        [Enlarge/Download Table]


Year ended December 31                                                              1996              1995             1994 
--------------------------------------------------------------------------------------------------------------------------- 

                                                                                                                            
Current................................................................    $  18,094,000     $   5,066,000    $  16,265,000 

Deferred...............................................................       (4,747,000)         (311,000)      (5,456,000)
                                                                           -------------     -------------    ------------- 

                                                                           $  13,347,000     $   4,755,000    $  10,809,000 
                                                                           =============     =============    ============= 


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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

The  reconciliation  of  taxes  computed  at the  statutory  rate  of 35% to the
provision for income taxes is as follows:                                       

                                                        [Enlarge/Download Table]


Year Ended December 31                                                              1996              1995             1994 
--------------------------------------------------------------------------------------------------------------------------- 

                                                                                                                            
Income from operations before income taxes.............................    $  38,580,000     $  14,210,000    $  31,804,000 
                                                                           =============     =============    ============= 

Tax provision at U.S. statutory rate...................................    $  13,503,000     $   4,974,000    $  11,131,000 

Reconciliation to actual tax rate:                                                                                          

   Dividends received deduction........................................       (1,248,000)       (1,199,000)      (1,148,000)
   Goodwill............................................................          268,000           126,000           88,000 
   Non-deductible meals and entertainment..............................          652,000           578,000          644,000 
   Tax exempt interest income..........................................          (46,000)          (67,000)         (81,000)
   Other...............................................................          218,000           343,000          175,000 
                                                                         ---------------  ----------------  --------------- 

                                                                         $    13,347,000  $      4,755,000  $    10,809,000 
                                                                         ===============  ================  =============== 

The tax effects of items comprising the Companies net deferred tax asset were as
follows:                                                                        

                                                        [Enlarge/Download Table]


                                                                                   December 31        1996             1995
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                           
Deferred tax assets:                                                                                                       
   Title loss reserves..................................................................  $     83,004,000  $    73,422,000
   Tax basis differential for equipment.................................................         6,133,000        4,370,000
   Allowance for doubtful accounts......................................................         2,044,000        1,747,000
   Pension reserves.....................................................................         3,318,000        2,829,000
   Other deferred tax assets............................................................         3,211,000        4,055,000
                                                                                          ----------------  ---------------
                                                                                                97,710,000       86,423,000
                                                                                          ----------------  ---------------
Deferred tax liabilities:                                                                                                  
   Statutory premium reserve............................................................        56,095,000       50,887,000
   Financing lease arrangement..........................................................         5,222,000        3,740,000
   Unrealized security gains............................................................         1,963,000        4,170,000
   Other deferred tax liabilities.......................................................         7,187,000        7,260,000
                                                                                          ----------------  ---------------
                                                                                                70,467,000       66,057,000
                                                                                          ----------------  ---------------
Net deferred tax asset..................................................................  $     27,243,000  $    20,366,000
                                                                                          ================  ===============

4.       RESTRICTED ASSETS AND SHAREHOLDER'S EQUITY                             

State laws require the Companies to maintain  statutory premium reserves,  which
are restrictions on shareholder's  equity.  Qualified investments are maintained
in an amount equal to these reserves,  which aggregated $258,729,000 at December
31, 1996 and $239,993,000 at December 31, 1995.                                 

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

The Companies had  investments on deposit with insurance  departments of various
states as required  by law with  aggregate  carrying  values of  $12,462,000  at
December 31, 1996 and $14,150,000 at December 31, 1995.                         

Commonwealth's common stock has a par value of $2 per share and 1,000,000 shares
were  authorized and 824,653 shares were issued and  outstanding at December 31,
1996 and 1995.  Transnation's  common  stock has a par value of $1 per share and
10,000,000  shares were authorized,  issued and outstanding at December 31, 1996
and 1995.  Total  shareholder's  equity of  Commonwealth  was  $184,926,000  and
$180,640,000 at December 31, 1996 and 1995,  respectively.  Total  shareholder's
equity of Transnation  was  $88,731,000 and $90,097,000 at December 31, 1996 and
1995, respectively.                                                             

Future  dividend  payments  by  Commonwealth  and  Transnation  are  limited  by
insurance  regulations  of the  Commonwealth  of  Pennsylvania  and the State of
Arizona,  respectively.  Under Pennsylvania law,  Commonwealth is limited to the
greater of 10% of policyholders' surplus at December 31 of the preceding year or
100% of the  prior  year's  statutory  net  income.  In  accordance  with  these
restrictions, $30,950,000 is available for dividends in 1997.                   

Under Arizona law, Transnation is limited to the lesser of 10% of policyholders'
surplus  at  December  31 of the  preceding  year or 100%  of the  prior  year's
statutory  net  investment  income.  In  accordance  with  these   restrictions,
$6,303,000 is available for dividends in 1997.                                  

5.       POSTRETIREMENT BENEFIT PLANS                                           

Retirement benefits,  covering substantially all employees, are provided under a
noncontributory  trusteed  defined  benefit pension plan.  Contributions  to the
pension  plan are based on the  minimum  funding  requirements  of the  Employee
Retirement Income Security Act of 1974.                                         

Retirement benefits are paid to eligible employees based principally on years of
service and salary.  Pension plan assets  consist  primarily  of  corporate  and
government debt  securities and 314,100 shares of Reliance Group Holdings,  Inc.
common stock.                                                                   

Net periodic pension cost includes the following components:                    

                                                        [Enlarge/Download Table]


Year Ended December 31                                                              1996              1995             1994 
--------------------------------------------------------------------------------------------------------------------------- 

                                                                                                                            
Service cost -- benefits earned during the period......................  $     3,945,000  $      3,076,000  $     3,832,000 
Interest cost on projected benefit obligation..........................        4,227,000         3,859,000        3,563,000 
Actual return on plan assets...........................................       (1,552,000)       (5,342,000)       2,082,000 
Net amortization and deferral..........................................       (3,770,000)        1,047,000       (6,832,000)
                                                                         ---------------  ----------------  --------------- 

Net periodic pension cost..............................................  $     2,850,000  $      2,640,000  $     2,645,000 
                                                                         ===============  ================  =============== 


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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

The  reconciliation  of the pension plan funded status with the accrued  pension
cost included in accounts payable and accrued expenses is as follows:           

                                                        [Enlarge/Download Table]


                                                                         December 31                  1996             1995 
--------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                            
Actuarial present value of benefit obligation:                                                                              
   Vested...............................................................................  $     43,935,000  $    43,319,000 
   Nonvested............................................................................         3,494,000        3,971,000 
                                                                                          ----------------  --------------- 

Accumulated benefit obligation..........................................................        47,429,000       47,290,000 
Effect of anticipated future compensation levels........................................        10,911,000       11,736,000 
                                                                                          ----------------  --------------- 

Projected benefit obligation............................................................        58,340,000       59,026,000 
Plan assets at market value.............................................................       (49,313,000)     (43,087,000)
                                                                                          ----------------  --------------- 

Projected benefit obligation in excess of plan assets...................................         9,027,000       15,939,000 

Unrecognized net assets at date of plan adoption........................................         2,969,000        3,605,000 
Unrecognized net loss...................................................................        (4,319,000)     (10,732,000)
                                                                                          ----------------  --------------- 

Accrued pension cost....................................................................  $      7,677,000  $     8,812,000 
                                                                                          ================  =============== 

Contributions  to the pension plan were  $3,985,000  in 1996 and  $1,148,000  in
1994. No contributions were made in 1995.                                       

The assumptions used to measure the projected benefit obligation at December 31,
1996 and 1995  included  discount  rates of 8.0%  and  7.5%,  respectively,  and
weighted average rates of compensation increase of 4.0% and 4.5%,  respectively.
The expected  long-term  investment rates of return on plan assets for the years
ended December 31, 1996 and 1995 were 10.0% and 9.5%, respectively.             

In addition to pension benefits,  Commonwealth provides unfunded  postretirement
medical and life insurance  plans for certain  employees who were hired prior to
1990.                                                                           

Postretirement benefit cost includes the following components:                  

                                                        [Enlarge/Download Table]


Year Ended December 31                                                              1996              1995             1994
---------------------------------------------------------------------------------------------------------------------------

                                                                                                                           
Service cost -- benefits earned during the period......................  $       168,000  $        167,000  $       227,000
Interest cost on accumulated postretirement benefit obligation.........          500,000           510,000          468,000
Net amortization and deferral..........................................          346,000           303,000          342,000
                                                                         ---------------  ----------------  ---------------

Postretirement benefit cost............................................  $     1,014,000  $        980,000  $     1,037,000
                                                                         ===============  ================  ===============


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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

The components of the accumulated  postretirement benefit obligation included in
accounts payable and accrued expenses were as follows:                          

                                                        [Enlarge/Download Table]


                                                                             December 31              1996             1995 
--------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                            
Accumulated postretirement benefit obligation:                                                                              
   Retirees.............................................................................  $      3,462,000  $     3,234,000 
   Other active plan participants.......................................................         3,240,000        3,618,000 
                                                                                          ----------------  --------------- 

Accumulated benefit obligation..........................................................         6,702,000        6,852,000 
Unrecognized net gain...................................................................           559,000          371,000 
Unrecognized transition obligation......................................................        (5,533,000)      (5,879,000)
                                                                                          ----------------  --------------- 

Accrued postretirement benefit cost.....................................................  $      1,728,000  $     1,344,000 
                                                                                          ================  =============== 

The  assumed  health  care cost trend  rate used in  measuring  the  accumulated
postretirement  benefit  obligation  as of December 31, 1996 was 10.0% for 1997,
decreasing  until it reaches 6.0% in 2007,  after which it remains  constant.  A
one-percentage-point  change in the assumed health care cost trend rate for each
year would  change  the  accumulated  postretirement  benefit  obligation  as of
December  31,  1996  and  the  1996  net  postretirement  health  care  cost  by
approximately  2.6% and 2.2%,  respectively.  The assumed discount rates used in
determining the accumulated  postretirement  benefit  obligation at December 31,
1996 and 1995 were 8.0% and 7.5%, respectively.                                 

6.       RESERVE FOR LOSSES                                                     

The reconciliation of the beginning to ending reserve for losses is as follows: 

                                                        [Enlarge/Download Table]


                                                            December 31             1996              1995             1994
---------------------------------------------------------------------------------------------------------------------------

                                                                                                                           
Reserve for losses, beginning of year..................................  $   240,777,000  $    228,063,000  $   200,874,000
                                                                         ---------------  ----------------  ---------------

Provision for policy claims and related expenses:                                                                          
   Provision for insured events of the current year....................       59,771,000        57,900,000       71,060,000
   Increase in provision for insured events of prior years.............        1,345,000           586,000        4,807,000
                                                                         ---------------  ----------------  ---------------
     Total provision...................................................       61,116,000        58,486,000       75,867,000
                                                                         ---------------  ----------------  ---------------

Payments, net of recoveries, for policy claims and related expenses:                                                       
   Attributable to insured events of the current year..................        1,755,000         2,187,000        4,475,000
   Attributable to insured events of prior years.......................       35,300,000        43,585,000       44,203,000
                                                                         ---------------  ----------------  ---------------
     Total payments....................................................       37,055,000        45,772,000       48,678,000
                                                                         ---------------  ----------------  ---------------

Reserve for losses, end of year........................................  $   264,838,000  $    240,777,000  $   228,063,000
                                                                         ===============  ================  ===============


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NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

7.       ESCROW FUNDS                                                           

Customers' funds held in escrow for real estate transactions are not included in
the combined balance sheet. These funds consisted of:                           

                                                        [Enlarge/Download Table]


                                                                         December 31                  1996             1995
---------------------------------------------------------------------------------------------------------------------------

                                                                                                                           
Cash ...................................................................................  $    263,348,000  $   215,393,000
Investments held for specific accounts..................................................       333,658,000      249,830,000
                                                                                          ----------------  ---------------
                                                                                          $    597,006,000  $   465,223,000
                                                                                          ================  ===============

8.       STATUTORY INFORMATION                                                  

The  Companies  had  combined   policyholders'   surplus  of  $199,587,000   and
$182,167,000 at December 31, 1996 and 1995, respectively, and combined statutory
net income of  $40,094,000,  $12,439,000  and  $32,421,000  for the years  ended
December 31, 1996, 1995 and 1994, respectively.  Commonwealth had policyholders'
surplus  of  $136,559,000  and  $121,826,000  at  December  31,  1996 and  1995,
respectively,   and  statutory  net  income  of  $31,806,000,   $10,580,000  and
$26,244,0000 for the years ended December 31, 1996, 1995 and 1994, respectively.
Transnation  had  policyholders'  surplus  of  $63,028,000  and  $60,341,000  at
December  31,  1996  and  1995,  respectively,   and  statutory  net  income  of
$8,288,000,  $1,859,000  and  $6,177,000  for the years ended December 31, 1996,
1995 and 1994, respectively.                                                    

Commonwealth and Transnation  have entered into a credit support  arrangement to
which each Company will commit credit support, if necessary, to the other and to
its wholly owned  subsidiaries.  This agreement  provides  financial  support in
order that each company remains solvent,  able to meet its financial obligations
as they come due in the ordinary  course of business and protects the  interests
of the policyholders.                                                           

9.       COMMITMENTS                                                            

The  Companies  lease  certain  office  facilities  and  equipment  under  lease
agreements  that expire at various dates through 2011.  Rental  expense in 1996,
1995 and 1994 was  $31,552,000,  $30,956,000  and $29,860,000  respectively.  At
December  31,  1996,  future  minimum  rental  commitments  under  noncancelable
operating leases, principally for office space, were:                           

Year Ended December 31                                                          
1997 ................................................  $    17,651,000          
1998 ................................................       13,340,000          
1999 ................................................        9,643,000          
2000 ................................................        6,694,000          
2001 ................................................        4,377,000          
2002 and later.......................................        8,030,000          
                                             ---------------

                                             $    59,735,000
                                             ===============

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NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)                              

10.      SUBSEQUENT EVENT                                                       

One August 20, 1997,  Reliance  agreed to sell the  Companies  to Lawyers  Title
Corporation ("LTC") for cash, common stock and convertible  preferred stock. The
sale  is  subject  to  regulatory   approvals  as  well  as  approval  of  LTC's
shareholders.                                                                   

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED STATEMENT OF INCOME                                                    
(Unaudited)                                                                     

                                                        [Enlarge/Download Table]


                                                                                Quarter Ended                      Nine Months Ended
                                                                                 September 30                           September 30
                                                                     1997                1996               1997                1996
------------------------------------------------------------------------------------------------------------------------------------

REVENUES:                                                                                                                           
                                                                                                                                    
Premiums and fees....................................     $   226,194,000    $    208,173,000    $   612,897,000     $   575,980,000

Net investment income................................           7,464,000           7,831,000         23,236,000          22,663,000

Gain on sale of investments..........................              86,000             803,000          1,187,000             376,000
                                                          ---------------    ----------------    ---------------     ---------------

                                                              233,744,000         216,807,000        637,320,000         599,019,000
                                                          ---------------    ----------------    ---------------     ---------------

EXPENSES:                                                                                                                           
Commissions to agents................................          98,487,000          98,665,000        268,960,000         263,138,000

Compensation and employee benefits...................          61,694,000          50,660,000        173,847,000         153,695,000

Provision for losses.................................          10,725,000          15,648,000         29,470,000          47,461,000

Taxes, other than federal income.....................           3,291,000           2,906,000          9,238,000           9,326,000

Other operating expenses.............................          39,393,000          35,283,000        111,634,000         100,554,000
                                                          ---------------    ----------------    ---------------     ---------------

                                                              213,590,000         203,162,000        593,149,000         574,174,000
                                                          ---------------       -------------    ---------------       -------------

Income from operations before federal                                                                                               
   income taxes......................................          20,154,000          13,645,000         44,171,000          24,845,000

Income tax provision.................................           6,732,000           4,703,000         15,192,000           8,520,000
                                                          ---------------    ----------------    ---------------     ---------------

NET INCOME...........................................     $    13,422,000    $      8,942,000    $    28,979,000     $    16,325,000
                                                          ===============    ================    ===============     ===============


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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED BALANCE SHEET                                                          

                                                        [Enlarge/Download Table]


                                                                                                    September 30         December 31
ASSETS                                                                                                      1997                1996
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      (Unaudited)                   
                                                                                                                                    
Investments:                                                                                                                        
  Fixed maturities held for investment -- at amortized cost                                                                         
    (quoted market $141,685,000 and $140,789,000)............................................    $   138,381,000     $   139,798,000
  Fixed maturities available for sale -- at quoted market                                                                           
    (amortized cost $258,813,000 and $284,381,000)...........................................        268,240,000         289,991,000
  Short-term investments.....................................................................         33,887,000          25,860,000
  First mortgage and other secured loans.....................................................         11,706,000           5,453,000
Cash.........................................................................................         11,746,000          14,328,000
Accounts receivable, less allowances of $5,731,000 and $5,663,000............................         31,664,000          23,987,000
Real estate and equipment -- at cost, less accumulated                                                                              
  depreciation of $17,867,000 and $25,746,000................................................         23,764,000          15,373,000
Title plants.................................................................................         50,174,000          49,750,000
Deferred federal income tax benefit..........................................................         26,237,000          27,243,000
Goodwill.....................................................................................         16,209,000          12,944,000
Other assets.................................................................................         14,524,000          16,027,000
                                                                                                 ---------------     ---------------

                                                                                                 $   626,532,000     $   620,754,000
                                                                                                 ===============     ===============

LIABILITIES AND SHAREHOLDER'S EQUITY                                                                                                
------------------------------------------------------------------------------------------------------------------------------------

Reserve for losses...........................................................................    $   265,593,000     $   264,838,000
Accounts payable and accrued expenses........................................................         76,823,000          76,168,000
Current federal income taxes.................................................................                  -           6,091,000
                                                                                                 ---------------     ---------------

                                                                                                     342,416,000         347,097,000
                                                                                                 ---------------     ---------------

Commitments                                                                                                                         

Shareholder's equity:                                                                                                               
  Common stock...............................................................................         11,649,000          11,649,000
  Additional paid-in capital.................................................................        127,551,000         127,551,000
  Retained earnings..........................................................................        138,789,000         130,810,000
  Net unrealized gain on investments.........................................................          6,127,000           3,647,000
                                                                                                 ---------------     ---------------

                                                                                                     284,116,000         273,657,000
                                                                                                 ---------------     ---------------

                                                                                                 $   626,532,000     $   620,754,000
                                                                                                 ===============     ===============

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY                           
(Unaudited)                                                                     

                                                        [Enlarge/Download Table]


                                                                                           Net                
                                                       Additional                   Unrealized                
                                            Common        Paid-in      Retained        Gain on  Shareholder's 
                                              Stock       Capital      Earnings    Investments         Equity 
                                              -----       -------      --------    -----------         ------ 

                                                                                                              
Balance, January 1, 1997.............. $ 11,649,000  $127,551,000  $130,810,000   $  3,647,000   $273,657,000 
Net income............................            -             -    28,979,000              -     28,979,000 
Dividends.............................            -             -   (21,000,000)             -    (21,000,000)
Appreciation after applicable                                                                                 
  deferred income tax provision                                                                               
  of  $1,337,000......................            -             -             -      2,480,000      2,480,000 
                                       ------------  ------------  ------------   ------------   ------------ 

Balance, September 30, 1997........... $ 11,649,000  $127,551,000  $138,789,000   $  6,127,000   $284,116,000 
                                       ============  ============  ============   ============   ============ 


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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

COMBINED STATEMENT OF CASH FLOWS                                                
(Unaudited)                                                                     

                                                        [Enlarge/Download Table]


                                                                                               Nine Months Ended 
                                                                                                    September 30 
                                                                                         1997               1996 
---------------------------------------------------------------------------------------------------------------- 
                                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                            
Net income...........................................                        $     28,979,000    $    16,325,000 
Adjustments to reconcile net income to net                                                                       
  cash provided by operating activities:                                                                         
    Provision for losses.............................                              29,470,000         47,461,000 
    Change in premium and other receivables..........                              (8,501,000)          (685,000)
    Depreciation, bad debts and amortization.........                               6,563,000          5,423,000 
    Claims paid, net of recoveries...................                             (28,715,000)       (25,897,000)
    Change in accounts payable, accrued                                                                          
      expenses and other.............................                             (14,824,000)        (7,913,000)
                                                                             ----------------    --------------- 

                                                                                   12,972,000         34,714,000 
                                                                             ----------------    --------------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                            
Proceeds from sales of:                                                                                          
  Fixed maturities available for sale................                              47,049,000         86,276,000 
  Fixed maturities held for investment...............                                       -          3,300,000 
Maturities and repayments of:                                                                                    
  Fixed maturities available for sale................                              13,921,000         12,374,000 
  Fixed maturities held for investment...............                               5,264,000          2,489,000 
Purchases of:                                                                                                    
  Fixed maturities available for sale................                             (34,556,000)      (123,882,000)
  Fixed maturities held for investment...............                              (3,689,000)       (22,885,000)
(Increase) decrease in short-term                                                                                
  investments - net..................................                              (8,027,000)        10,919,000 
(Increase) decrease in title plants..................                                (459,000)          (525,000)
Cash outlay for acquisition..........................                                       -         (3,000,000)
Change in investments receivable/payable.............                                   4,000          1,976,000 
Purchases of real estate and equipment - net.........                             (12,747,000)        (6,237,000)
Other -- net.........................................                              (1,314,000)          (359,000)
                                                                             ----------------    --------------- 

                                                                                    5,446,000        (39,554,000)
                                                                             ----------------    --------------- 
CASH FLOW FROM FINANCING ACTIVITIES:                                                                             
Dividends............................................                             (21,000,000)                 - 
                                                                             ----------------    --------------- 

DECREASE IN CASH.....................................                              (2,582,000)        (4,840,000)
Cash, beginning of period............................                              14,328,000         15,230,000 
                                                                             ----------------    --------------- 

Cash, end of period..................................                        $     11,746,000    $    10,390,000 
                                                                             ================    =============== 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                               
Federal income taxes paid............................                        $     20,291,000    $     8,100,000 
                                                                             ================    =============== 

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COMMONWEALTH AND TRANSNATION TITLE INSURANCE COMPANIES                          

NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS                                  

1.     BASIS OF PRESENTATION                                                    

       The  unaudited   combined   financial   statements  of  Commonwealth  and
       Transnation  and their  respective  subsidiaries  have been  prepared  in
       conformity with generally accepted accounting principles.  Such financial
       statements  include  informed  estimates and judgments of management  for
       those  transactions  that are not yet  complete or for which the ultimate
       effects  cannot be precisely  determined.  Actual results may differ from
       these  estimates.  All intercompany  accounts and transactions  have been
eliminated.                                                       

       These financial statements, which are for interim periods, do not include
       all  disclosures  provided in the annual combined  financial  statements.
       These  unaudited  combined   financial   statements  should  be  read  in
       conjunction with the annual audited combined financial statements and the
       accompanying  footnotes.  The December 31, 1996 balance sheet was derived
       from  audited  combined  financial  statements,  but does not include all
disclosures required by generally accepted accounting principles. 

       In  the   opinion  of   management   of   Commonwealth/Transnation,   the
       accompanying   unaudited  combined   financial   statements  contain  all
       adjustments  (consisting of normal recurring  adjustments only) necessary
       for a fair  presentation  of the  financial  statements.  The  results of
       operations  for  the  nine  months  ended  September  30,  1997  are  not
     necessarily indicative of the results to be expected for the full year.

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                                                                [Download Table]


                                                                                   
No  dealer,  salesperson  or  other  person  has been                              
authorized  to give  any  information  or to make any                              
representation  other  than those  contained  in this                              
Prospectus and, if given or made, such information or                              
representation must not be relied upon as having been                              
authorized  by the Company or any  Underwriter.  This        1,750,000 Shares      
Prospectus  does not constitute an offer to sell or a                              
solicitation of an offer to buy any securities  other                              
than the securities to which it relates,  nor does it             [LOGO]           
constitute an offer to sell or the solicitation of an                              
offer to buy any of the securities  offered hereby in                              
any  jurisdiction in which such offer or solicitation         LAWYERS TITLE        
is not authorized, or in which the person making such          CORPORATION         
offer or  solicitation  is not qualified to do so, or                              
to any  person  to whom it is  unlawful  to make such                              
offer or  solicitation.  Neither the delivery of this          Common Stock        
Prospectus nor any sale made hereunder  shall,  under                              
any  circumstances,  create any implication  that the                              
information  contained  herein is  correct  as of any                              
time  subsequent to the date hereof or that there has                              
been no change in the  affairs of the  Company  since                              
the date hereof.                                                                   

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

                                                             ________________      
                 TABLE OF CONTENTS                                                 
                                                 Page           PROSPECTUS         
                                                             ________________      
Available Information..........................                                    
Incorporation of Certain Documents                                                 
  by Reference.................................                                    
Forward-Looking and Cautionary                                                     
  Statements...................................                                    
Prospectus Summary.............................                                    
Risk Factors...................................                                    
Use of Proceeds................................        DONALDSON, LUFKIN & JENRETTE
Price Range of Common Stock and                           Securities Corporation   
  Dividends....................................                                    
Capitalization.................................                                    
Dilution.......................................              FURMAN SELZ LLC       
The Combined Company...........................                                    
Lawyers Title Corporation and                                                      
  Subsidiaries Pro Forma                               WHEAT FIRST BUTCHER SINGER  
  Condensed Combined Financial Statements......                                    
Lawyers Title Corporation Selected                                                 
  Consolidated Financial and Other Data........           FERRIS, BAKER WATTS      
Lawyers Title Corporation Management's                        Incorporated         
  Discussion and Analysis of Financial                                             
  Condition and Results of Operations .........                                    
Commonwealth Land Title Insurance Company                                          
  and Transnation Title Insurance Company                                          
  Combined Selected Financial and Other Data...                                    
Commonwealth Land Title Insurance Company                                          
  and Transnation Title Insurance Company                                          
  Management's Discussion and Analysis                                             
  of Financial Condition and Results                                    , 1998     
  of Operations ...............................                                    
Business.......................................                                    
The Acquisition................................                                    
Management and Ownership of the Combined                                           
  Company......................................                                    
Description of Capital Stock...................                                    
Shares Eligible for Future Sale................                                    
Underwriting...................................                                    
Legal Matters..................................                                    
Experts........................................                                    
Index to Financial Statements..................                                    


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 PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.  Other Expenses of Issuance and Distribution                           

                                                                [Download Table]


                                                                      
Securities and Exchange Commission Registration Fee         $  18,797*
National Association of Securities Dealers Examination Fee      6,878*
Printing Expenses                                              50,000 
Accounting Fees and Expenses                                  100,000 
Legal Fees and Expenses                                       250,000 
Blue Sky Fees and Expenses                                      1,500 
Miscellaneous Expenses                                          2,825 
                                                            --------- 
        Total                                               $ 430,000 
                                                            ========= 

___________________                                           
   *  Represents actual expenses.  All other expenses are estimates.

Item 15.  Indemnification of Directors and Officers                             

         Article 10 of Chapter 9 of Title 13.1 of the Code of Virginia permits a
Virginia  corporation  to  indemnify  any  director  or officer  for  reasonable
expenses incurred in any legal proceeding in advance of final disposition of the
proceeding,  if the  director or officer  furnishes  the  corporation  a written
statement  of his good  faith  belief  that he has met the  standard  of conduct
prescribed by the Code,  and a  determination  is made by the board of directors
that such  standard  has been  met.  In a  proceeding  by or in the right of the
corporation,  no  indemnification  shall be made in  respect of any matter as to
which an officer or director is adjudged to be liable to the corporation, unless
the court in which the  proceeding  took place  determines  that,  despite  such
liability,  such person is reasonably entitled to indemnification in view of all
the relevant circumstances. In any other proceeding, no indemnification shall be
made if the  director or officer is adjudged  liable to the  corporation  on the
basis that personal  benefit was improperly  received by him.  Corporations  are
given the power to make any other or further indemnity, including advancement of
expenses,  to any director or officer that may be  authorized by the articles of
incorporation or any bylaw made by the shareholders,  or any resolution adopted,
before or after the event,  by the  shareholders,  except an  indemnity  against
willful misconduct or a knowing violation of the criminal law. Unless limited by
its  articles  of  incorporation,  indemnification  of a director  or officer is
mandatory when he entirely prevails in the defense of any proceeding to which he
is a party because he is or was a director or officer.                          

         The Articles of  Incorporation  of the undersigned  Registrant  contain
provisions indemnifying the directors and officers of the Registrant to the full
extent  permitted by Virginia  law. In addition,  the Articles of  Incorporation
eliminate the personal  liability of the Registrant's  directors and officers to
the  Registrant  or its  shareholders  for  monetary  damages to the full extent
permitted by Virginia law.                                                      

Item 16.  Exhibits                                                              

         The following exhibits are filed on behalf of the Registrant as part of
this Registration Statement:                                                    

1.1      Form of  Underwriting  Agreement  between  the  Registrant,  Donaldson,
         Lufkin & Jenrette Securities Corporation, Furman Selz LLC, Wheat, First
Securities, Inc., and Ferris, Baker Watts, Incorporated.*     
2.1      Amended and Restated Stock Purchase Agreement, dated December 11, 1997,
         by and among  the  Registrant,  Lawyers  Title  Insurance  Corporation,
         Reliance   Insurance   Company  and  Reliance  Group  Holdings,   Inc.,
         incorporated  by  reference to Appendix A to the  Registrant's  revised
         preliminary  Proxy Statement for its Special Meeting of Shareholders to
         be held in February  1998,  filed with the  Commission  on December 24,
1997.                                                         

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4.1      Articles of  Incorporation,  incorporated by reference to Exhibit 3A of
       the Registrant's registration statement on Form 10, File No. 0-19408.
4.2      Proposed  Articles of Amendment of the Articles of Incorporation of the
         Registrant, incorporated by reference to Appendix B to the Registrant's
         revised   preliminary  Proxy  Statement  for  its  Special  Meeting  of
         Shareholders to be held in February 1998,  filed with the Commission on
December 24, 1997.                                            
4.3      Bylaws,  incorporated  by reference  to Exhibit 3A of the  Registrant's
registration statement on Form 10, File No. 0-19408.          
4.4      Amended and  Restated  Rights  Agreement,  dated as of August 20, 1997,
         between the Registrant and Wachovia Bank, N.A., as Rights Agent,  which
         Amended and  Restated  Rights  Agreement  includes  an amended  Form of
         Rights  Certificate,  incorporated  by  reference to Exhibit 4.1 of the
Registrant's Current Report on Form 8-K dated August 20, 1997.
4.5      First Amendment to Amended and Restated Rights  Agreement,  dated as of
         December 11, 1997,  between the Registrant and Wachovia Bank,  N.A., as
         Rights  Agent,   incorporated  by  reference  to  Exhibit  4.1  of  the
 Registrant's Current Report on Form 8-K dated December 11, 1997
4.6      Form of Stock Certificate,  incorporated by reference to Exhibit 4.3 of
         the  Registrant's  Form 10-K for the year ended December 31, 1995, File
no. 1-13990.                                                  
5.1      Opinion of Williams Mullen Christian & Dobbins.                        
23.1     Consent of Williams  Mullen  Christian & Dobbins  (included  in Exhibit
5.1).                                                         
23.2     Consent of Ernst & Young LLP.                                          
23.3     Consent of Deloitte & Touche LLP.                                      
24.1     Powers of Attorney (included on signature page).                       

______________                                                                  
*  To Be Filed by Amendment                                                     

Item 17.  Undertakings                                                          

         The  undersigned  Registrant  hereby  undertakes  that, for purposes of
determining  any  liability  under the  Securities  Act of 1933, as amended (the
"Securities  Act"),  each filing of the  Registrant's  annual report pursuant to
Section 13(a) or 15(d) of the  Securities  Exchange Act of 1934, as amended (the
"Exchange  Act") (and,  where  applicable,  each  filing of an employee  benefit
plan's annual report  pursuant to 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.                                                          

         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.                                                     

The undersigned Registrant hereby undertakes that:            

                  (1)    For purposes of  determining  any  liability  under the
         Securities  Act, the  information  omitted from the form of  prospectus
         filed as part of this Registration Statement in reliance upon Rule 430A
         and contained in a form of prospectus filed by the Registrant  pursuant
         to Rule  424(b)(1) or (4) or 497(h) under the  Securities  Act shall be
         deemed to be part of this Registration  Statement as of the time it was
declared effective.                                           

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                  (2)    For the purpose of determining  any liability under the
         Securities Act, each  post-effective  amendment that contains a form of
         prospectus 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.                                                      

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SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the  requirements  for  filing  on  Form  S-3 and has  duly  caused  this
registration statement to be signed on its behalf by the undersigned,  thereunto
duly authorized, in the City of Richmond,  Commonwealth of Virginia, on December
31, 1997.                                                                       

                       LAWYERS TITLE CORPORATION

                             By:  /s/ Charles H. Foster, Jr.
                                            ------------------------------------
                              Charles H. Foster, Jr.
                                            Chairman and Chief Executive Officer

 POWER OF ATTORNEY

         Each of the undersigned hereby appoints Russell W. Jordan, III and John
M.  Carter,  each of whom may act  individually,  as attorney  and agent for the
undersigned,  with full power of  substitution,  for and in the name,  place and
stead of the undersigned,  in any and all capacities,  to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
any and all amendments and exhibits to this  registration  statement and any and
all  applications,  instruments  and  other  documents  to  be  filed  with  the
Securities and Exchange Commission  pertaining to the registration of securities
covered  hereby with full power and authority to do and perform any and all acts
and things whatsoever requisite or desirable.                                   

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this  registration  statement  has been signed by the  following  persons in the
capacities and on the dates indicated.                                          

                                                        [Enlarge/Download Table]


                  Signature                                  Title                       Date       

                                                                                                    
        /s/ Charles H. Foster, Jr.                       Chairman and              December 31, 1997
-------------------------------------------  Chief Executive Officer and Director                   
            Charles H. Foster, Jr.               (Principal Executive Officer)                      

           /s/ G. William Evans                  Vice President and Treasurer      December 31, 1997
-------------------------------------------     (Principal Financial Officer)                       
               G. William Evans                                                                     

           /s/ John R. Blanchard                          Controller               December 31, 1997
-------------------------------------------    (Principal Accounting Officer)                       
              John R. Blanchard                                                                     

            /s/ Janet A. Alpert                          President and             December 31, 1997
-------------------------------------------  Chief Operating Officer and Director                   
               Janet A. Alpert                                                                      

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       /s/ Theodore L. Chandler, Jr.                       Director                December 31, 1997
-------------------------------------------                                                         
          Theodore L. Chandler, Jr.                                                                 

            /s/ Michael Dinkins                            Director                December 31, 1997
-------------------------------------------                                                         
               Michael Dinkins                                                                      

              /s/ James Ermer                              Director                December 31, 1997
-------------------------------------------                                                         
                 James Ermer                                                                        

            /s/ John P. McCann                             Director                December 31, 1997
-------------------------------------------                                                         
                John P. McCann                                                                      

           /s/ J. Garnett Nelson                           Director                December 31, 1997
-------------------------------------------                                                         
              J. Garnett Nelson                                                                     

        /s/ Robert F. Norfleet, Jr.                        Director                December 31, 1997
-------------------------------------------                                                         
           Robert F. Norfleet, Jr.                                                                  

            /s/ Eugene P. Trani                            Director                December 31, 1997
-------------------------------------------                                                         
               Eugene P. Trani                                                                      

         /s/ Marshall B. Wishnack                          Director                December 31, 1997
-------------------------------------------                                                         
            Marshall B. Wishnack                                                                    


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 EXHIBIT INDEX

Exhibit                                                                         
No.                                    Document                             

  1.1       Form of Underwriting  Agreement  between the Registrant,  Donaldson,
            Lufkin & Jenrette  Securities  Corporation,  Furman Selz LLC, Wheat,
     First Securities, Inc. and Ferris, Baker Watts Incorporated.*

  2.1       Amended and Restated  Stock Purchase  Agreement,  dated December 11,
            1997, by and among the Registrant,  Lawyers  Insurance  Corporation,
            Reliance  Insurance  Company  and  Reliance  Group  Holdings,  Inc.,
            incorporated by reference to Appendix A to the Registrant's  revised
            preliminary  Proxy Statement for its Special Meeting of Shareholders
            to be held in February  1998,  filed with the Commission on December
24, 1997.                                               

  4.1       Articles of  Incorporation,  incorporated by reference to Exhibit 3A
            of the  Registrant's  registration  statement  on Form 10,  File No.
0-19408.                                                

  4.2       Proposed  Articles of Amendment of the Articles of  Incorporation of
            the  Registrant,  incorporated  by  reference  to  Appendix B to the
            Registrant's  revised  preliminary  Proxy  Statement for its Special
            Meeting of Shareholders to be held in February 1998,  filed with the
Commission on December 24, 1997.                        

  4.3       Bylaws,  incorporated by reference to Exhibit 3A of the Registrant's
registration statement on Form 10, File No.0-19408.     

  4.4       Amended and Restated Rights Agreement,  dated as of August 20, 1997,
            between the  Registrant  and Wachovia  Bank,  N.A., as Rights Agent,
            which Amended and Restated Rights Agreement includes an amended Form
            of Rights  Certificate,  incorporated by reference to Exhibit 4.1 of
          the Registrant's Current Report on Form 8-K dated August 20, 1997.

  4.5       First Amendment to Amended and Restated Rights  Agreement,  dated as
            of December  11, 1997,  between the  Registrant  and Wachovia  Bank,
            N.A., as Rights Agent,  incorporated  by reference to Exhibit 4.1 of
            the Registrant's Current Report on Form 8-K dated December 11, 1997.

  4.6       Form of Stock Certificate,  incorporated by reference to Exhibit 4.3
            of the Registrant's  Form 10-K for the year ended December 31, 1995,
File No. 1-13990.                                       

5.1       Opinion of Williams Mullen Christian & Dobbins.                   

  23.1      Consent of Williams Mullen Christian & Dobbins  (included in Exhibit
5.1).                                                   

23.2      Consent of Ernst & Young LLP.                                     

23.3      Consent of Deloitte & Touche LLP.                                 

23.4      Powers of Attorney (included on signature page).                  

_________________                                                               
*  To Be Filed by Amendment.                                                    

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-3’ Filing		Date		First		Last			Other Filings
		8/20/07		71		86
		11/7/02		67
		12/31/01		67					10-K405
		10/1/01		71		107
		12/31/00		67					10-K,  10-K/A
		9/30/00		62					10-Q
		12/31/99		67					10-K
		11/7/99		67
		12/31/98		19		67			10-K/A,  10-K405
		11/7/98		67
		3/31/98		66					10-Q
		3/1/98		66
		2/28/98		66
Filed on:		1/8/98		1
		1/7/98		3		86
		1/5/98		1
		1/2/98		2		19
		1/1/98		66		85
		12/31/97		11		152			10-K
		12/24/97		5		153			PRER14A
		12/23/97		5					8-A12B/A,  8-K
		12/22/97		85
		12/16/97		35		71
		12/15/97		72
		12/11/97		7		153			8-K
		12/9/97		72
		12/5/97		66		74
		12/4/97		89
		11/25/97		71
		11/24/97		72
		11/20/97		5					8-K
		11/7/97		20		67			8-K
		10/31/97		71
		10/24/97		72
		10/3/97		71
		9/30/97		4		146			10-Q,  10-Q/A,  PREM14A
		9/5/97		71
		9/2/97		5					8-A12B/A,  8-K
		8/29/97		5
		8/21/97		26
		8/20/97		7		153			8-K
		6/30/97		4					10-Q
		5/20/97		4					DEF 14A
		4/1/97		75
		3/31/97		4					10-Q
		2/19/97		91
		2/12/97		126					SC 13G/A
		1/1/97		144
		12/31/96		4		146			10-K/A,  10-K405
		9/30/96		11		124			10-Q
		4/15/96		27
		1/1/96		31		132
		12/31/95		19		153
		10/2/95		5
		9/29/95		5
		9/20/95		63
		1/1/95		106
		12/31/94		43		140
		11/30/94		117
		11/1/94		117
		1/1/94		98		129
		9/15/92		63
		7/1/92		110
		6/22/92		71
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