**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C.  20549**





**FORM
      10-Q**





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





For
      the
      Quarterly Period Ended September 30, 2007





or





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





For
      the
      transition period from _____________ to _______________





Commission
      File No.: 1-13990





**LANDAMERICA
      FINANCIAL GROUP, INC.**


(Exact
      name of registrant as specified in its charter)





**Virginia**
            
            **54-1589611**(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)**5600
                Cox Road**
              **Glen
                Allen, Virginia**
            
            **23060**(Address
                of principal executive offices)
            
            (Zip
                Code)





**(804)
      267-8000**


(Registrant's
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.





**Yes**x**No**o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer.  See definition of
“accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange
      Act.


**Large
      accelerated filer**x                                                **Accelerated
      filer**o                                    **Non-accelerated
      filer**o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


**Yes**o**No**x





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





Common
                Stock, No Par Value
            15,566,576
                shares
            
            October
                25, 2007











**LANDAMERICA
      FINANCIAL GROUP, INC. AND SUBSIDIARIES**








INDEXPage
                No.PART
                I.  FINANCIAL INFORMATIONITEM
                1.
            CONSOLIDATED
                FINANCIAL STATEMENTS:Consolidated
                Balance Sheets
            3Consolidated
                Statements of Operations
            5Consolidated
                Statements of Cash Flows
            6Consolidated
                Statements of Changes in Shareholders’ Equity
            7Notes
                to Consolidated Financial Statements
            8ITEM
                2.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            23ITEM
                3.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            45ITEM
                4.
            CONTROLS
                AND PROCEDURES
            47PART
                II.  OTHER INFORMATIONITEM
                1.
            LEGAL
                PROCEEDINGS
            47ITEM
                1A.
            RISK
                FACTORS
            47ITEM
                2.
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            48ITEM
                5.
            OTHER
                INFORMATION
            49ITEM
                6.
            EXHIBITS
            49SIGNATURE
            50








2





**PART
      I.  FINANCIAL INFORMATION**


**ITEM
        1. CONSOLIDATED
        FINANCIAL STATEMENTS**





**LANDAMERICA
      FINANCIAL GROUP, INC. AND SUBSIDIARIES**





CONSOLIDATED
      BALANCE SHEETS


(In
      millions)





September
                30,
            
            
            December
                31,2007
            
            
            2006(Unaudited)ASSETSINVESTMENTS:Fixed
                maturities available-for-sale -
                at fair value
                (amortized cost:  2007 -
                $1,041.2;
                2006 -
                $1,267.2)
            
            $
            1,046.2
            
            
            $
            1,275.8Equity
                securities available-for-sale -
                at fair value
                (cost:  2007 -
                $119.3; 2006
                -
                $111.3)
            
            
            122.8
            
            
            
            129.8Fixed
                maturities trading -
                at fair
                value
            
            
            137.8
            
            
            
            -Federal
                funds sold
            
            
            3.8
            
            
            
            50.4Short-term
                investments
            
            
            165.8
            
            
            
            403.0Total
                Investments
            
            
            1,476.4
            
            
            
            1,859.0CASH
            
            
            64.9
            
            
            
            82.5LOANS
                RECEIVABLE
            
            
            601.3
            
            
            
            535.8ACCRUED
                INTEREST RECEIVABLE
            
            
            16.2
            
            
            
            20.2NOTES
                AND ACCOUNTS RECEIVABLE:Notes
                (less allowance for doubtful accounts:  2007 -
                $1.6; 2006
                -
                $1.5)
            
            
            23.1
            
            
            
            19.3Trade
                accounts receivable (less allowance for doubtful accounts:  2007
                -
                $13.5;
                2006 -
                $10.2)
            
            
            152.8
            
            
            
            139.2Total
                Notes and Accounts Receivable
            
            
            175.9
            
            
            
            158.5INCOME
                TAXES RECEIVABLE
            
            
            -
            
            
            
            60.4PROPERTY
                AND EQUIPMENT -
                at cost (less
                accumulated depreciation and amortization:  2007 -
                $253.9; 2006
                -
                $224.5)
            
            
            147.6
            
            
            
            164.2TITLE
                PLANTS
            
            
            104.2
            
            
            
            105.0GOODWILL
            
            
            808.6
            
            
            
            783.4INTANGIBLE
                ASSETS (less accumulated amortization:  2007 -
                $94.7; 2006
                -
                $78.2)
            
            
            102.8
            
            
            
            135.2DEFERRED
                INCOME TAXES
            
            
            119.6
            
            
            
            84.1OTHER
                ASSETS
            
            
            222.5
            
            
            
            186.5Total
                Assets
            
            $
            3,840.0
            
            
            $
            4,174.8






See
          Notes
          to Consolidated Financial Statements.
 3






**LANDAMERICA
      FINANCIAL GROUP, INC. AND SUBSIDIARIES**





CONSOLIDATED
      BALANCE SHEETS


(In
      millions, except share amounts)








September
                30,
            
            
            December
                31,2007
            
            
            2006(Unaudited)LIABILITIESPOLICY
                AND CONTRACT CLAIMS
            
            $
            862.2
            
            
            $
            789.1DEPOSITS
            
            
            497.9
            
            
            
            618.2ACCOUNTS
                PAYABLE AND ACCRUED LIABILITIES
            
            
            348.1
            
            
            
            400.0NOTES
                PAYABLE
            
            
            586.7
            
            
            
            685.3DEFERRED
                SERVICE ARRANGEMENTS
            
            
            204.4
            
            
            
            218.6INCOME
                TAXES PAYABLE
            
            
            6.5
            
            
            
            -OTHER
                LIABILITIES
            
            
            79.9
            
            
            
            67.8Total
                Liabilities
            
            
            2,585.7
            
            
            
            2,779.0COMMITMENTS
                AND CONTINGENCIESSHAREHOLDERS’
                EQUITYCommon
                stock, no par value, 45,000,000 shares authorized, shares issued
                and
                outstanding:  2007 – 15,848,276; 2006 -
                17,604,632
            
            
            351.0
            
            
            
            465.3Accumulated
                other comprehensive loss
            
            
            (38.7
            )
            
            
            (32.2
            )Retained
                earnings
            
            
            942.0
            
            
            
            962.7Total
                Shareholders’ Equity
            
            
            1,254.3
            
            
            
            1,395.8Total
                Liabilities and Shareholders’ Equity
            
            $
            3,840.0
            
            
            $
            4,174.8








See
            Notes to Consolidated Financial
            Statements.
 4





**LANDAMERICA
      FINANCIAL GROUP, INC. AND SUBSIDIARIES**





CONSOLIDATED
      STATEMENTS OF OPERATIONS


THREE
      MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


(In
      millions, except per common share amounts)


(Unaudited)





Three
                Months Ended
              September
                30,
            
            
            Nine
                Months Ended
              September
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006REVENUEOperating
                revenue
            
            $
            874.0
            
            
            $
            954.2
            
            
            $
            2,756.8
            
            
            $
            2,827.6Investment
                and other income
            
            
            26.6
            
            
            
            31.7
            
            
            
            89.0
            
            
            
            93.9Net
                realized investment gains
            
            
            6.2
            
            
            
            6.1
            
            
            
            14.6
            
            
            
            5.5906.8
            
            
            
            992.0
            
            
            
            2,860.4
            
            
            
            2,927.0EXPENSESAgents’
                commissions
            
            
            357.4
            
            
            
            404.6
            
            
            
            1,062.4
            
            
            
            1,191.9Salaries
                and employee benefits
            
            
            272.2
            
            
            
            280.9
            
            
            
            896.0
            
            
            
            846.4General,
                administrative and other
            
            
            198.3
            
            
            
            176.0
            
            
            
            585.7
            
            
            
            517.5Provision
                for policy and contract claims
            
            
            80.4
            
            
            
            74.9
            
            
            
            221.6
            
            
            
            176.2Premium
                taxes
            
            
            9.1
            
            
            
            12.4
            
            
            
            30.3
            
            
            
            34.7Interest
                expense
            
            
            12.6
            
            
            
            11.3
            
            
            
            36.5
            
            
            
            30.2Amortization
                of intangible assets
            
            
            5.2
            
            
            
            6.8
            
            
            
            16.5
            
            
            
            19.4Impairment
                of intangible and long-lived assets
            
            
            -
            
            
            
            0.5
            
            
            
            20.8
            
            
            
            10.2935.2
            
            
            
            967.4
            
            
            
            2,869.8
            
            
            
            2,826.5(LOSS)
                INCOME BEFORE INCOME TAXES
            
            
            (28.4
            )
            
            
            24.6
            
            
            
            (9.4
            )
            
            
            100.5INCOME
                TAX (BENEFIT) EXPENSE
            
            
            (7.6
            )
            
            
            9.4
            
            
            
            (1.2
            )
            
            
            36.0NET
                (LOSS) INCOME
            
            $
            (20.8
            )
            
            $
            15.2
            
            
            $
            (8.2
            )
            
            $
            64.5NET
                (LOSS) INCOME PER COMMON SHARE
            
            $
            (1.28
            )
            
            $
            0.92
            
            
            $
            (0.49
            )
            
            $
            3.82WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
            
            
            16.2
            
            
            
            16.6
            
            
            
            16.7
            
            
            
            16.9NET
                (LOSS) INCOME PER COMMON SHARE ASSUMING DILUTION
            
            $
            (1.28
            )
            
            $
            0.89
            
            
            $
            (0.49
            )
            
            $
            3.69WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ASSUMING
                DILUTION
            
            
            16.2
            
            
            
            17.1
            
            
            
            16.7
            
            
            
            17.5CASH
                DIVIDENDS DECLARED PER COMMON SHARE
            
            $
            0.30
            
            
            $
            0.22
            
            
            $
            0.74
            
            
            $
            0.58








See
            Notes to Consolidated Financial
            Statements.
 5





**LANDAMERICA
      FINANCIAL GROUP, INC. AND SUBSIDIARIES**





CONSOLIDATED
      STATEMENTS OF CASH FLOWS


NINE
      MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


(In
      millions)


(Unaudited)


2007
            
            
            2006Cash
                flows from operating activities:Net
                (loss)
                income
            
            $
            (8.2
            )
            
            $
            64.5Adjustments
                to reconcile net income to cash provided by operating
                activities:Depreciation
                and amortization
            
            
            52.3
            
            
            
            43.0Amortization
                of bond premium
            
            
            4.7
            
            
            
            4.8Impairment
                of intangible and long-lived assets
            
            
            20.8
            
            
            
            10.2Net
                realized investment gains
            
            
            (14.6
            )
            
            
            (5.5
            )Net
                change in fixed maturities trading
            
            
            5.4
            
            
            
            -Deferred
                income tax benefit
            
            
            (29.7
            )
            
            
            (4.6
            )Change
                in assets and liabilities, net of businesses acquired:Accounts
                and notes receivable
            
            
            (6.2
            )
            
            
            7.7Income
                taxes receivable/payable
            
            
            60.0
            
            
            
            (20.4
            )Accounts
                payable and accrued expenses
            
            
            (57.0
            )
            
            
            (29.4
            )Pending
                trades of fixed maturities trading, net
            
            
            (1.0
            )
            
            
            -Policy
                and contract claims
            
            
            73.2
            
            
            
            46.2Deferred
                service arrangements
            
            
            (14.1
            )
            
            
            7.2Other
            
            
            (1.6
            )
            
            
            (0.8
            )Net
                cash provided by operating activities
            
            
            84.0
            
            
            
            122.9Cash
                flows from investing activities:Purchases
                of title plant, property and equipment, net
            
            
            (15.2
            )
            
            
            (49.1
            )Purchases
                of businesses, net of cash acquired
            
            
            (27.1
            )
            
            
            (211.7
            )Investments
                in unconsolidated affiliates
            
            
            (1.2
            )
            
            
            -Change
                in cash surrender value of life insurance
            
            
            (2.0
            )
            
            
            (1.8
            )Change
                in short-term investments
            
            
            237.1
            
            
            
            89.6Cost
                of investments acquired:Fixed
                maturities available-for-sale
            
            
            (226.6
            )
            
            
            (308.2
            )Equity
                securities available-for-sale
            
            
            (65.3
            )
            
            
            (51.7
            )Proceeds
                from investment sales or maturities:Fixed
                maturities available-for-sale
            
            
            304.1
            
            
            
            245.5Equity
                securities available-for-sale
            
            
            73.2
            
            
            
            47.8Net
                change in federal funds sold
            
            
            46.6
            
            
            
            (434.3
            )Change
                in loans receivable
            
            
            (71.5
            )
            
            
            (57.6
            )Net
                cash provided by (used in) investing activities
            
            
            252.1
            
            
            
            (731.5
            )Cash
                flows from financing activities:Net
                change in deposits
            
            
            (120.3
            )
            
            
            450.0Proceeds
                from the exercise of stock options
            
            
            2.8
            
            
            
            1.4Tax
                benefit of stock options exercised
            
            
            1.8
            
            
            
            0.9Common
                shares repurchased
            
            
            (126.7
            )
            
            
            (28.1
            )Dividends
                paid
            
            
            (12.5
            )
            
            
            (10.0
            )Proceeds
                from issuance of notes payable
            
            
            37.2
            
            
            
            303.5Payments
                on notes payable
            
            
            (136.0
            )
            
            
            (111.1
            )Net
                cash (used in) provided by financing activities
            
            
            (353.7
            )
            
            
            606.6Net
                decrease in cash
            
            
            (17.6
            )
            
            
            (2.0
            )Cash
                at beginning of period
            
            
            82.5
            
            
            
            89.1Cash
                at end of period
            
            $
            64.9
            
            
            $
            87.1Non-cash
                investing activities:Common
                shares issued for Capital
                Title merger
            
            $
            -
            
            
            $
            49.7Transfer
                of fixed maturities from
                available-for-sale to trading
            
            $
            142.6
            
            
            $
            -





See
            Notes to Consolidated Financial
            Statements.
 6





**LANDAMERICA
      FINANCIAL GROUP, INC. AND SUBSIDIARIES**





CONSOLIDATED
      STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


NINE
      MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


(In
      millions, except per share amounts)


(Unaudited)











Common
                Stock
            
            
            Accumulated
                Other Comprehensive
            
            
            Retained
            
            
            Total
                Shareholders’Shares
            
            
            Amounts
            
            
            Income
                (Loss)
            
            
            Earnings
            
            
            EquityBALANCE
                – December 31, 2005
            
            
            17.3
            
            
            $
            443.1
            
            
            $
            (42.3
            )
            
            $
            877.7
            
            
            $
            1,278.5Comprehensive
                income:Net
                income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            64.5
            
            
            
            64.5Other
                comprehensive income:Net
                unrealized gain on securities – net of tax expense of $1.1
            
            
            -
            
            
            
            -
            
            
            
            1.8
            
            
            
            -
            
            
            
            1.866.3Common
                stock retired
            
            
            (0.4
            )
            
            
            (28.1
            )
            
            
            -
            
            
            
            -
            
            
            
            (28.1
            )Common
                stock issued
            
            
            0.7
            
            
            
            49.7
            
            
            
            -
            
            
            
            -
            
            
            
            49.7Stock
                options and incentive plans
            
            
            0.2
            
            
            
            8.9
            
            
            
            -
            
            
            
            -
            
            
            
            8.9Common
                dividends ($0.58/share)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (10.0
            )
            
            
            (10.0
            )BALANCE
                – September 30, 2006
            
            
            17.8
            
            
            $
            473.6
            
            
            $
            (40.5
            )
            
            $
            932.2
            
            
            $
            1,365.3BALANCE
                – December 31, 2006
            
            
            17.6
            
            
            $
            465.3
            
            
            $
            (32.2
            )
            
            $
            962.7
            
            
            $
            1,395.8Comprehensive
                loss:Net
                loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (8.2
            )
            
            
            (8.2
            )Other
                comprehensive (loss) income:Net
                unrealized loss on securities – net of tax benefit of $6.5
            
            
            -
            
            
            
            -
            
            
            
            (11.9
            )
            
            
            -
            
            
            
            (11.9
            )Amortization
                of minimum pension liability – net of tax expense of $3.2
            
            
            -
            
            
            
            -
            
            
            
            5.4
            
            
            
            -
            
            
            
            5.4(14.7
            )Common
                stock retired
            
            
            (2.0
            )
            
            
            (126.7
            )
            
            
            -
            
            
            
            -
            
            
            
            (126.7
            )Stock
                options and incentive plans
            
            
            0.2
            
            
            
            12.4
            
            
            
            -
            
            
            
            -
            
            
            
            12.4Common
                dividends ($0.74/share)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (12.5
            )
            
            
            (12.5
            )BALANCE
                – September 30, 2007
            
            
            15.8
            
            
            $
            351.0
            
            
            $
            (38.7
            )
            
            $
            942.0
            
            
            $
            1,254.3

















See
            Notes to Consolidated Financial
            Statements.
 7





**LANDAMERICA
      FINANCIAL GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**








**1.**
            **INTERIM
                FINANCIAL INFORMATION**




The
        accompanying unaudited consolidated
        financial statements have been prepared in accordance with accounting principles
        generally accepted in the United States for interim financial information
        and
        with the instructions to Form 10-Q and Rule 10-01 of Regulation
        S-X.  They do not include all information and notes required by
        generally accepted accounting principles for complete financial
        statements.  These statements should be read in conjunction with the
        Consolidated Financial Statements and notes thereto included in the Annual
        Report on Form 10-K of LandAmerica Financial Group, Inc. for the year ended
        December 31, 2006.  In the opinion of management, all adjustments
        (consisting of normal and recurring adjustments) considered necessary for
        a fair
        presentation of this information have been reflected.  Due to the
        seasonal nature of our business, operating results for the interim periods
        are
        not necessarily indicative of results for a full year.
 
 When
        used in these notes, the terms
“LandAmerica,” “we,” “us” or “our” means LandAmerica Financial Group, Inc. and
        all entities included in our Consolidated Financial Statements.


**Recent
      Accounting Pronouncements**





In
      March
      2007, the Financial Accounting Standards Board (“FASB”) ratified Emerging Issues
      Task Force (“EITF”) Issue No. 06-10, *Accounting for Collateral Assignment
      Split-Dollar Life Insurance Arrangements* (“EITF No.
      06-10”).  EITF No. 06-10 requires an employer to recognize a liability
      for the post-retirement benefit related to a collateral assignment split-dollar
      life insurance arrangement in accordance with either Statement of Financial
      Accounting Standards (“SFAS”) No. 106 or Accounting Principles Board (“APB”)
      Opinion No. 12 if the employer has agreed to maintain a life insurance policy
      during the employee’s retirement or provide the employee with a death
      benefit.  EITF No. 06-10 also requires an employer to recognize and
      measure an asset based on the nature and substance of the collateral assignment
      split-dollar life insurance arrangement.  EITF No. 06-10 is effective
      for fiscal years beginning after December 15, 2007 with early adoption
      permitted.  We have determined that the adoption of EITF No. 06-10
      will not have a material effect on our financial statements.





In
      February 2007, FASB issued SFAS No.
      159, *The Fair Value Option for Financial Assets and Financial Liabilities**-**Including
      an amendment of FASB Statement No. 115*(“SFAS No. 159”).  SFAS
      No. 159 provides companies with an option to report selected financial assets
      and liabilities at fair value.  Unrealized gains and losses on items
      for which the fair value option has been elected are reported in
      earnings.  SFAS No. 159 is effective as of the beginning of an
      entity’s first fiscal year that begins after November 15, 2007 with early
      adoption permitted.  We are evaluating the effect that the adoption of
      SFAS No. 159 will have on our financial statements.





8





In
      September 2006, FASB issued SFAS No.
      158, *Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and
      132(R)* (“SFAS No. 158”).  This standard requires employers to
      recognize the underfunded or overfunded status of a defined benefit
      post-retirement plan as an asset or liability in its statement of financial
      position and to recognize changes in the funded status in the year in which
      the
      changes occur through accumulated other comprehensive
      income.  Additionally, SFAS No. 158 requires employers to measure the
      funded status of a plan as of the date of its year-end statement of financial
      position.  The new reporting requirement and related new footnote
      disclosure rules of SFAS No. 158 are effective for fiscal years ending after
      December 15, 2006 and have been adopted.  See Note 7, “Pensions and
      Other Post-Retirement Benefits.”  The new measurement date requirement
      applies for fiscal years ending after December 15, 2008.





In
      September 2006, FASB issued SFAS No.
      157, *Fair Value Measurements*(“SFAS No. 157”).  SFAS No. 157
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles and expands disclosures about fair
      value measurements. SFAS No. 157 is effective for financial statements issued
      for fiscal years beginning after November 15, 2007 with earlier application
      encouraged.  We are evaluating the effect that the adoption of SFAS
      No. 157 will have on our financial statements.





**2.**
            **EARNINGS
                PER SHARE**





The
      following table sets forth the computation of basic and diluted (loss) earnings
      per common share:





Three
                Months Ended
              September
                30,
            
            
            Nine
                Months Ended
              September
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006(In
                millions, except per common share amounts)Numerator:Net
                (loss) income – numerator for basic and diluted (loss) earnings per common
                share
            
            $
            (20.8
            )
            
            $
            15.2
            
            
            $
            (8.2
            )
            
            $
            64.5Denominator:Weighted
                average shares – denominator for basic (loss) earnings per common
                share
            
            
            16.2
            
            
            
            16.6
            
            
            
            16.7
            
            
            
            16.9Effect
                of dilutive securities:Convertible
                debt
            
            
            -
            
            
            
            0.4
            
            
            
            -
            
            
            
            0.4Employee
                stock options and restricted stock
            
            
            -
            
            
            
            0.1
            
            
            
            -
            
            
            
            0.2Denominator
                for diluted (loss) earnings per common share
            
            
            16.2
            
            
            
            17.1
            
            
            
            16.7
            
            
            
            17.5Basic
                (loss) earnings per common share
            
            $
            (1.28
            )
            
            $
            0.92
            
            
            $
            (0.49
            )
            
            $
            3.82Diluted
                (loss) earnings per common share
            
            $
            (1.28
            )
            
            $
            0.89
            
            
            $
            (0.49
            )
            
            $
            3.69








9





For
      the three months and nine months
      ended September 30, 2007, 0.5 million common shares and 1.3 million common
      shares, representing all potential dilutive shares for each period,
      respectively, were excluded from the diluted common share total due to the
      net
      loss for the period.





**3.**
            **MERGERS
                AND ACQUISITIONS**





We
      have completed a number of
      acquisitions during the first nine months of 2007 that are not individually
      significant.





On
      September 8, 2006, we completed the
      merger with Capital Title Group, Inc. (“Capital Title”) whereby Capital Title
      became a wholly-owned subsidiary of LandAmerica.  Capital Title
      consists of a title insurance underwriter, several title and escrow agency
      operations, a property appraisal company, a settlement services provider, and
      other related companies.  Capital Title serves customers primarily in
      Arizona, California and Nevada in addition to providing lender services on
      a
      national basis.  We believe that our merger with Capital Title has
      strengthened our presence in key western states and added scale to the services
      we provide to our mortgage lending customers.





The
      merger with Capital Title was
      accounted for using the purchase method in accordance with FASB SFAS No. 141,
      *Business Combinations*(“SFAS No. 141”)*.*Under the terms of the
      merger agreement, we acquired 100 percent of Capital Title’s common stock for
      approximately $252.6 million which consisted of $202.9 million of cash,
      including direct transaction costs of $3.6 million, and $49.7 million of our
      common stock, which represented 775,576 shares.  In recording the
      merger, the value of the 775,576 shares issued was determined based on the
      measurement criteria in EITF 99-12, *Determination of the Measurement Date
      for the Market Price of Acquirer Securities Issued in a Purchase Business
      Combination*.





Selected
      unaudited pro forma results of
      operations, assuming the merger had occurred as of January 1, 2006, are set
      forth below:





Three
                Months Ended
            
            
            Nine
                Months EndedSeptember
                30, 2006
            
            
            September
                30, 2006(In
                millions, except per common share amounts)Total
                revenue
            
            $
            1,049.8
            
            
            $
            3,148.9Net
                income
            
            
            6.8
            
            
            
            52.6Net
                income per common share
            
            
            0.39
            
            
            
            2.99Net
                income per common share assuming dilution
            
            
            0.38
            
            
            
            2.89





The
      above pro forma results include
      consultant fees of $3.3 million and the effect of final intangible asset
      valuations related to the merger, and do not include any synergies we expect
      to
      realize.  The pro forma results are presented for information purposes
      only and may not be indicative of the operating results that would have occurred
      had this merger been consummated





10





as
      of the
      beginning of 2006.  The results of operations of Capital Title have
      been included in our consolidated financial statements since the merger
      date.





**4.           INVESTMENTS**





We
      classify our fixed-maturity and
      equity investments as trading or available-for-sale.  Trading
      investments are bought and held principally for the purpose of selling them
      in
      the near term.  All fixed-maturity and equity investments not
      classified as trading are classified as available-for-sale.  During
      first quarter 2007, we transferred $142.6 million of our fixed-maturity
      securities from available-for-sale securities to trading
      securities.  Additionally $2.3 million of unrealized gains on these
      available-for-sale securities which were previously included in accumulated
      other comprehensive income (loss) were reclassified and recorded in the
      consolidated statement of operations caption “Net realized investment
      gains.”  We did not transfer any of our securities between investment
      categories during second quarter or third quarter 2007.  Trading and
      available-for-sale investments are recorded at fair market
      value.  Unrealized holding gains and losses on trading investments are
      included in earnings.  Unrealized holding gains and losses on
      available-for-sale investments are excluded from earnings and are reported
      as a
      separate component of accumulated other comprehensive income (loss), net of
      income taxes, until realized.  Realized gains and losses from the sale
      of available-for-sale and trading investments are determined on a
      specific-identification basis.  Dividend and interest income are
      recognized when earned.





On
      January 1, 2007, we adopted the
      provisions of SFAS No. 155, *Accounting for Certain Hybrid Financial
      Instruments, an amendment of FASB Statements No. 133 and 140*(“SFAS No.
      155”).  SFAS No. 155 permits remeasurement for certain financial
      instruments, clarifies which financial instruments are not subject to the
      requirements of Statement No. 133, establishes a requirement to evaluate certain
      interests in securitized financial assets, and makes certain amendments to
      Statement No. 140 regarding a qualifying special-purpose entity’s ability to
      hold certain types of financial instruments.  Our adoption of the
      provisions of SFAS No. 155 did not have a material effect on our financial
      statements for third quarter 2007 or for the nine months ended September 30,
      2007.





**5.           INCOME
      TAXES**





Our
      effective income tax rate was 13.2
      percent for the nine months ended September 30, 2007 and 35.8 percent for the
      nine months ended September 30, 2006.  The difference in the effective
      tax rate was due primarily to reduced pretax income in relation to permanent
      differences, changes in the mix of state taxable income or loss, and the release
      of tax reserves (see further details below).





As
      a result of an audit of the
      2003-2004 tax years, the Internal Revenue Service (“IRS”) has proposed certain
      adjustments relating to our tax treatment of agency
      revenue.  Currently, revenue from title policies issued through
      independent agents is recognized when the policies are reported by the agent
      for
      book and tax purposes.  The IRS believes that we are required to
      estimate the income and commissions associated with the sale of policies by
      agents during the





11





tax
      year.  The increased tax liability, which would result in an increase
      in deferred tax assets, is approximately $35 million.  However, we are
      disputing the proposed adjustment as we continue to believe that our tax
      treatment of these transactions is correct and we believe that we will prevail
      in any dispute with the IRS related to this matter.  Accordingly, no
      interest or penalties have been accrued for this proposed IRS adjustment as
      of
      September 30, 2007.  We expect to defend the matter vigorously through
      the IRS appeal process and, if necessary, through litigation. We expect the
      ultimate resolution of this matter will have no material adverse effect on
      our
      financial condition or results of operations.





On
      January 1, 2007, we adopted the
      provisions of FASB Interpretation No. 48*, Accounting for Uncertainty in
      Income Taxes, an interpretation of FASB Statement No. 109* (“FIN 48”) and
      FASB Staff Position FIN 48-1, *Definition of Settlement in FASB
      Interpretation No. 48*(“FSP FIN 48-1”).  FIN 48 prescribes a
      recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return.  FSP FIN 48-1 provides guidance on how an enterprise
      should determine whether a tax position is effectively settled for the purpose
      of recognizing previously unrecognized tax benefits.  At January 1,
      2007, the balance of the unrecognized tax benefits was $4.0
      million.  If recognized, this amount would affect our effective tax
      rate.  We have elected to treat any interest and penalties as tax
      expense in accordance with the provisions of FIN 48.





We
      file tax returns in the US federal
      jurisdiction and various state and foreign jurisdictions.  For federal
      and most state and local taxes, the statute of limitations has expired and
      we
      are no longer subject to examinations by tax authorities for years prior to
      2003.





Since
      December 31, 2006, there have
      been no events that have had a material impact on our tax accounts other than
      the following issue:





In
      third
      quarter, the IRS conceded in full, an issue related to a proposed adjustment
      from the 2003-2004 audit.  Accordingly, we consider this issue
      effectively settled under FIN 48, resulting in a reduction in the FIN 48
      liability of $1.7 million.  However it is reasonably possible that
      within the next twelve months the amount of unrecognized tax benefits will
      increase as a result of other tax positions taken during the current period,
      the
      nature of which are consistent with those unrecognized tax benefits at January
      1, 2007.  The estimated range of the increase is from $0.6 million to
      $0.8 million.





**6.**
            **POLICY
                AND CONTRACT CLAIMS**





We
      review
      our claims experience quarterly, and in conjunction with our outside actuaries,
      evaluate the adequacy of our claims reserve.  We consider factors such
      as historical timing of reported claims and claims payment over the period
      in
      which policies are effective against actual experience by year of policy issue
      to determine the amount of claims liability required for each year for which
      policies are outstanding.  We also consider the impact of current
      trends in marketplace activity, including refinance activity (which may shorten
      the time period a policy is outstanding), bankruptcies, and individual large
      claims attributable to any particular period in determining the expected
      liability associated with each year.





12





Based
      on
      our quarterly review of the underlying claims data and trends therein, we have
      provided for claims losses using approximately 9.9 percent and 8.0 percent
      of
      operating revenue from the Title Operations segment for the third quarters
      of
      2007 and 2006, respectively, and approximately 8.6 percent and 6.3 percent
      of
      operating revenue from the Title Operations segment for the nine months ended
      September 30, 2007 and 2006, respectively.  The increase in the claims
      provision ratio in third quarter 2007 was primarily due to upward development
      of
      the 2005 policy year of 60 basis points and an increase in the initial claims
      rate for the 2007 policy year from 6.0 percent to 6.4 percent.  The
      increase in the claims provision ratio in the nine months ended September 30,
      2007 was due to upward development for the 2004 through 2006 policy years and
      the increase in the initial claims rate for the 2007 policy
      year.  Since we are subject to liability on claims for an extended
      period of time, slight changes in current claims experience can have a
      significant effect on the amount of liability required for potential Incurred
      But Not Reported (“IBNR”) claims.  We believe that we have reserved
      appropriately for all reported and IBNR claims at September 30, 2007 based
      on
      the results of the actuarial evaluation and evaluation of any known
      trend.





**7.**
            **PENSIONS
                AND OTHER POST-RETIREMENT
                BENEFITS**





The
      following presents the estimated
      net pension expense recorded in the financial statements for the three and
      nine
      months ended September 30, 2007 and 2006.





The
      amounts are as
      follows:





Three
                Months Ended September 30,Pension
                Benefits
            
            
            Other
                Benefits2007
            
            
            2006
            
            
            2007
            
            
            2006(In
                millions)Components
                of net pension expense:Service
                cost
            
            $
            -
            
            
            $
            -
            
            
            $
            0.3
            
            
            $
            0.2Interest
                cost
            
            
            3.2
            
            
            
            3.6
            
            
            
            0.8
            
            
            
            0.9Expected
                return on plan assets
            
            
            (4.1
            )
            
            
            (4.5
            )
            
            
            -
            
            
            
            -Amortization
                of unrecognized transition obligation
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            0.3Recognized
                prior service cost
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            0.1Recognized
                loss
            
            
            1.5
            
            
            
            1.8
            
            
            
            -
            
            
            
            0.2Loss
                (gain) due to settlement or curtailment
            
            
            1.1
            
            
            
            (2.0
            )
            
            
            -
            
            
            
            -Net
                pension expense
            
            $
            1.7
            
            
            $
            (1.1
            )
            
            $
            1.1
            
            
            $
            1.7








13








Nine
                Months Ended September 30,Pension
                Benefits
            
            
            Other
                Benefits2007
            
            
            2006
            
            
            2007
            
            
            2006(In
                millions)Components
                of net pension expense:Service
                cost
            
            $
            -
            
            
            $
            -
            
            
            $
            0.9
            
            
            $
            0.7Interest
                cost
            
            
            10.5
            
            
            
            10.8
            
            
            
            2.2
            
            
            
            2.7Expected
                return on plan assets
            
            
            (13.5
            )
            
            
            (13.5
            )
            
            
            -
            
            
            
            -Amortization
                of unrecognized transition obligation
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            0.9Recognized
                prior service cost
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            0.3Recognized
                loss
            
            
            4.4
            
            
            
            5.4
            
            
            
            -
            
            
            
            0.5Loss
                due to settlement or curtailment
            
            
            4.1
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
                pension expense
            
            $
            5.5
            
            
            $
            2.7
            
            
            $
            3.1
            
            
            $
            5.1








On
      December 31, 2004, we froze the accumulation of benefits available under our
      principal pension plan.





**8.**
            **COMMITMENTS
                AND CONTINGENCIES**





**General**





We
      are involved in certain litigation
      arising in the ordinary course of our businesses.  Although the
      ultimate outcome of these matters cannot be ascertained at this time and the
      results of legal proceedings cannot be predicted with certainty, based on
      current knowledge we believe,


that
      the
      resolution of these matters will not have a material adverse effect on our
      financial position or results of operations.





**Litigation
      Not in the Ordinary Course of Business**





On
      June 22, 2004, Gateway Title
      Company, Inc. (“Gateway”), Commonwealth Land Title Company, Inc. and LandAmerica
      Financial Group, Inc. (collectively, “Gateway Plaintiffs”) filed a Complaint,
      subsequently amended by a First Amended Complaint filed June 25, 2004, in the
      Superior Court of California, County of Los Angeles, Central District (the
      “Court”), against the Mercury Company and its affiliates Financial Title,
      Alliance Title, Investors Title and various individuals including Joseph
      DiChiacchio, a former manager of LandAmerica (Case No. BC 317441) (collectively,
      “Gateway Defendants”).  The lawsuit claimed substantial monetary and
      punitive damages for unfair competitive business practices in conjunction with
      Gateway Plaintiffs’ loss of over 300 employees in California, most of which
      appears to have occurred within an approximately twenty-four month
      period.  On December 13, 2004, Alliance Title Company, Inc., Financial
      Title Company, Inc., Roberto Olivera and Ray Arias filed a Cross-Complaint
      for
      unfair competitive business practices.  On December 13, 2004, Mr.
      DiChiacchio also filed a Cross-Complaint alleging similar claims, including
      back
      wages and additional bonus





14





payments,
      which Gateway Plaintiffs disputed.  After completion of discovery, a
      jury trial began in early May 2006 and resulted in a verdict for Gateway of
      approximately $8.3 million.  Judgment was not entered pending
      resolution of the Cross-Complaints.





On
      January 14, 2005, First California
      Title Company, New Century Title Company (“New Century”) and United Title
      Company (collectively, “Capital Title Plaintiffs”) filed a Complaint in the
      Superior Court of the State of California, County of Los Angeles, against
      Financial Title Company, Mercury Companies, Inc. (“Mercury”), Stacy Neves,
      Stephanie Howard, George Willard and Tony Becker (Case  No. BC 327332)
      (collectively, “Capital Title Defendants”).  The lawsuit claimed
      substantial monetary and punitive damages for unfair competitive business
      practices in conjunction with Capital Title Plaintiffs’ loss of approximately 80
      employees in California to Capital Title Defendants over an approximately eight
      month period.  The complaint was later amended to include Alliance
      Title Company and Christine De’Martini as named defendants.  On
      September 8, 2006, we completed a merger in which Capital Title Plaintiffs
      became affiliated companies.  A jury trial began on October 17,
      2006.  On December 28, 2006, the jury returned its verdict for Capital
      Title Plaintiffs in the approximate amount of $2 million.  The
      punitive damages phase of the bifurcated trial was held on January 2, 2007
      and
      resulted in a punitive damages award for Capital Title Plaintiffs in the
      approximate amount of $14.6 million.  Judgment was entered on March 8,
      2007. Capital Title Defendants filed several post-trial motions including
      motions for a new trial on the issue of punitive damages.  On March
      22, 2007, the trial court granted Mercury’s motion for new trial on the issue of
      punitive damages.  Having found that the punitive damages awarded by
      the jury in favor of plaintiff New Century violated due process, the trial
      court
      reduced the amount of the punitive damages awarded against Mercury from $11.6
      million to $2.9 million.  On April 18, 2007, the trial court issued a
      Minute Order modifying the previous judgment entered in favor of New Century
      to
      reflect this reduction of punitive damages.  The trial court denied
      similar motions for new
      trial
      brought by other Capital Title Defendants.  Accordingly, the total
      amount of punitive damages awarded against Capital Title Defendants, after
      the
      March 22, 2007 order, was $5.9 million.





Voluntary
      mediation beginning on April
      4, 2007 led the parties in both cases to a final settlement in July 2007
      pursuant to which Mercury paid to LandAmerica the amount of $12.5 million and
      the parties agreed to the resolution of all claims, including but not limited
      to
      cross claims, post-trial motions and appeals, thus eliminating the necessity
      for
      later scheduled trials, including the trial on the Cross Complaints, and appeal
      deadlines.  The settlement amount is reflected as a reduction of legal
      fees and costs expended in the litigation in the “General, administrative and
      other” line (approximately $11.7 million) and in the “Salaries and employee
      benefits” line (approximately $0.3 million) of the Consolidated Statements of
      Operations.





On
      January 25, 2002, Miles R. Henderson
      and Patricia A. Henderson (“Plaintiffs in the Henderson Suit”) filed a putative
      class action suit (the “Henderson Suit”) against Lawyers Title Insurance
      Corporation (“Lawyers Title”) in the Court of Common Pleas for Cuyahoga County,
      Ohio.  Lawyers Title removed the case to the District Court for the
      Northern District of Ohio on March 6, 2002, and Plaintiffs in the Henderson
      Suit
      amended the complaint on March 8, 2002.  On June 28, 2002, the
      District Court remanded the case to the Court of Common Pleas for





15





Cuyahoga
      County, Ohio.  A similar putative class action suit was filed against
      Commonwealth, by Rodney P. Simon and Tracy L. Simon (“Plaintiffs in the Simon
      Suit”) in the Court of Common Pleas for Cuyahoga County, Ohio on March 5, 2003.
      Plaintiffs’ complaints in both suits alleged that the defendants had a practice
      of charging original rates for owners title insurance policies when lower,
      reissue rates should have been charged.  Both defendants initially
      responded by demanding that the actions be arbitrated, but on final appeal
      to
      the Ohio Supreme Court, the Court ruled that arbitration was not required for
      either suit.  On remand to the trial court, Plaintiffs in the
      Henderson Suit are now seeking to have the case certified as a class action
      on
      behalf of all sellers and buyers of residential property in Ohio who paid the
      higher original rate from 1992 to the present. A mediation is scheduled for
      November 7-8, 2007.  The court is in the process of setting a class
      certification hearing date, which is expected to occur in December
      2007.  Plaintiffs in the Simon Suit are seeking to have the case
      certified as a class action on behalf of all sellers of residential property
      in
      Ohio, who paid the original rate from 1993 to the present, as requested in
      the
      original complaint, although no hearing date on the class certification has
      been
      scheduled.  Plaintiffs’ complaints in both cases demand an unspecified
      amount of compensatory damages, declaratory and injunctive relief, punitive
      damages, and attorneys’ fees and costs.  There have been no class
      certifications, and the defendants believe that they have meritorious
      defenses.





On
      September 20, 2004, Kenneth and
      Deette Higgins (“Plaintiffs in the Higgins Suit”) filed a putative class action
      suit (the “Higgins Suit”) against Commonwealth Land Title Insurance Company
      (“Commonwealth”) in the Circuit Court of Nassau County, Florida.  On
      February 3, 2005, Plaintiffs in the Higgins Suit filed an Amended Class Action
      Complaint.  Plaintiffs in the Higgins Suit allege that Commonwealth
      had a practice of charging refinance borrowers higher basic rates for title
      insurance, rather than the lower reissue rates for which they are alleged to
      have qualified, and of failing to disclose the potential availability of the
      lower rates.  Plaintiffs in the Higgins Suit seek to have the case
      certified as a class action on behalf of all Florida persons or entities who
      refinanced their mortgages or fee interests on the identical premises from
      July
      1, 1999 to the present where there was no change in the fee ownership and who
      were charged a premium in excess of the reissue premium.  Plaintiffs’
complaints in the Higgins Suit demand an unspecified amount of compensatory
      damages, declaratory relief, attorneys’ fees, costs and pre-judgment
      interest.  There has been no class certification, and Commonwealth
      believes it has meritorious defenses.





On
      July 24, 2006, A. D. Alberton
      (“Plaintiff in the Alberton Suit”) filed a putative class action suit (the
“Alberton Suit”) against Commonwealth which is currently pending in the United
      States District Court for the Eastern District of Pennsylvania.  A
      similar putative class action suit was filed against Lawyers Title by Shariee
      L.
      De Cooman (“Plaintiff in the De Cooman Suit”) in the Court of Common Pleas of
      Allegheny County, Pennsylvania on or about August 12, 2005.  On
      November 1, 2005, Plaintiff in the De Cooman Suit filed an Amended
      Complaint.  Plaintiff’s complaint in the Alberton Suit alleges that
      Commonwealth charged rates for title insurance in excess of statutorily mandated
      rates and/or failed to disclose to consumers that they were entitled to reduced
      title insurance premiums and seeks to certify a class on behalf of all consumers
      who paid premiums for the purchase of title insurance on Pennsylvania properties
      from Commonwealth at any time during the year 2000 until August 2005 and
      qualified for a





16





discounted
      refinance or reissue rate discount and did not receive such
      discount.  Plaintiff’s complaint in the De Cooman Suit alleges that
      Lawyers Title charged the basic rate rather than a reissue or discounted rate
      to
      certain consumers and seeks to certify a class on behalf of all owners of
      residential real estate in Pennsylvania who, at any time during the ten years
      prior to August 12, 2005 paid premiums for the purchase of title insurance
      from
      Lawyers Title, qualified for a reissue or other discounted rate, and did not
      receive such rate.  A class certification hearing was held on October
      16, 2007 in the Alberton Suit after which the judge instructed the parties
      to
      provide a proposed report on settlement negotiations in 20 days.  The
      trial is currently scheduled to commence on January 14, 2008. A class
      certification hearing was held on October 9, 2007 in the De Cooman
      Suit.  Plaintiff’s complaint in the Alberton Suit demands an
      unspecified amount of compensatory damages, declaratory relief, triple damages,
      restitution, pre-judgment and post-judgment interest and expert fees, attorneys’
fees and costs.  Plaintiff’s complaint in the De Cooman Suit demands
      an unspecified amount of compensatory damages, punitive damages, triple damages,
      prejudgment interest, and attorneys’ fees, litigation expenses and
      costs.  The defendants believe they have meritorious
      defenses.





With
      respect to the class action litigation disclosed above, the cases are subject
      to
      many uncertainties and complexities, including but not limited to the underlying
      facts of each matter, variations between jurisdictions in which matters are
      being litigated, differences in applicable laws and judicial interpretations,
      the length of time before many of these matters might be resolved by settlement
      or through litigation and, in some cases, the timing and structure of their
      resolution relative to other similar cases brought against other companies,
      the
      fact that many of these matters are putative class actions in which a class
      has
      not been certified and in which the purported class may not be clearly defined,
      and the current challenging legal environment faced by large corporations and
      insurance companies.  For the reasons specified above, at this stage
      of the litigation, the amount or range of loss that could result from an
      unfavorable outcome cannot be reasonably estimated, except with respect to
      a
      reserve of $10 million established during third quarter 2007 in connection
      with
      the Henderson and Alberton cases.





We
      are defendants in a number of other
      purported class action cases pending in various states that include allegations
      that certain consumers were overcharged for title insurance and/or related
      services. The dollar amount of damages sought has generally not been specified
      in these cases except for jurisdictional limits.  We intend to
      vigorously defend these actions.





**Regulatory
      Proceedings**





We
      have
      received certain information requests and subpoenas from various regulatory
      authorities relating to our business practices and those of the title insurance
      industry.





The
      Government Accountability Office released its final report on the title
      insurance industry on April 17, 2007 (the “Report”).  The Report makes
      recommendations regarding federal and state oversight of the title insurance
      industry, including but not limited to, better consumer information,
      consideration of the need for modification to the Real Estate Settlement
      Procedures Act and increased cooperation among regulators.





17





Various
      states are studying the title
      insurance product, market, pricing, business practices, and potential regulatory
      and legislative changes.  Multiple states, including California,
      Florida, Nevada, New Mexico, New York, Texas, and Washington, are examining
      pricing levels and/or title insurance regulations.  If it is
      determined that prices are not justified, rate changes may be implemented,
      including potential rate reductions.





Some
      of
      the pricing examinations, like those conducted in Texas and New Mexico, are
      conducted annually or biannually and usually result in adjustments to the prices
      we can charge.  Subsequent to the 2004 Texas Title Insurance Biennial
      Hearings in August 2006, the Texas Commissioner of Insurance ordered a rate
      reduction of 3.2 percent effective February 1, 2007.  The rulemaking
      hearing was held on September 5, 2007, and a decision is pending.  The
      ratemaking phase has been postponed to March 2008.





Subsequent
      to a hearing of the New Mexico title rate case concluded on January 18, 2007,
      the New Mexico Superintendent of Insurance (the “Superintendent”) issued an
      order on July 20, 2007 (the “Final Order”) mandating a rate reduction of 6.36
      percent and a change in the agent/underwriter split from 80/20 to 84.2/15.8
      effective September 1, 2007.  The New Mexico Land Title Association
      (the “NMLTA”) filed a Motion for Reconsideration with the Superintendent on
      August 3, 2007.  As a result of the Superintendent taking no action
      with respect to that Motion, on August 20, 2007, the NMLTA filed a Request
      for
      Review of Superintendent’s Final Order, a stay and hearing by the New Mexico
      Public Regulatory Commission (the “Commission”).  Various underwriters
      also filed an appeal to the Commission.  On August 28, 2007, the
      Superintendent issued an Order denying the NMLTA’s Motion for Reconsideration
      and granting the stay request until the Commission completes its review of
      the
      case with a requirement that the rate differential be escrowed during the stay
      and a notice of potential refund be provided to consumers.  If the
      Commission upholds the Final Order, it can then be appealed to a New Mexico
      district court, with further appellate review available up to the New Mexico
      Supreme Court.  The New Mexico Land Title Association and certain
      underwriters filed motions on October 19, 2007 seeking various remedies relating
      to the 2006 rate case, which could, if granted, result in certain Commissioners
      recusing themselves or vacating the 2006 rate decision.  The 2007 rate
      case is currently scheduled to begin November 16, 2007.  The New
      Mexico Attorney General has moved to intervene in the case, asked for new data
      collection and filed a motion with the Superintendent seeking to delay the
      rate
      hearing for 6 months.





The
      California Department of Insurance
      (“CA DOI”) submitted to the Office of Administrative Law (“OAL”) proposed
      regulations governing the rating of title insurance and related services that
      could impose future rate reductions and filing of mandated statistical plans
      that impose substantially higher costs on title insurance operations in
      California.  On February 21, 2007, OAL disapproved the regulatory
      action for failure to comply with certain standards and requirements and on
      February 28, 2007 issued a written decision detailing the reasons for
      disapproval. On June 28, 2007, CA DOI submitted revised regulations to OAL
      that
      were approved by OAL on July 25, 2007 and subsequently released by the
      California Secretary of State.  The date for compliance with the
      requirements of the regulations varies by provision during 2009 and
      2010.  LandAmerica and other title companies doing business in the
      California market have been engaged in discussions with CA DOI regarding
      alternative approaches to the





18





regulations
      but may pursue an appeal if such discussions are unsuccessful.  The
      Commissioner of CA DOI has agreed to propose substantial changes to the data
      call (i.e. a request to submit information for the insurance experience) and
      statistical plan portion of the regulations to simplify them and minimize
      compliance costs, including delaying the effective dates by one year, through
      a
      new rulemaking file.  The Commissioner has committed further to (i)
      eliminate the interim rate reduction if the industry helps CA DOI obtain an
      alternative method to enforce the data call and (ii) eliminate the maximum
      rate
      formula if the industry works with CA DOI to enact substantive alternate
      reforms.  The Commissioner has requested the California Land Title
      Association form an advisory group to work directly with CA DOI on these
      matters.





The
      Florida Office of Insurance
      Regulation (“FLOIR”) and Department of Financial Services (“FLDFS”) held a
      public hearing on August 23, 2007, in which numerous title insurance executives
      were questioned about Florida title insurance issues. The FLOIR has indicated
      that a second hearing may be held in November 2007, in preparation for a rate
      case proceeding, or in preparation for proposed regulatory changes.





In
      addition, a number of state
      inquiries have focused on captive reinsurance.  Captive reinsurance
      involves the provision of reinsurance by a reinsurance company that is owned
      by
      another entity, typically a lender, developer or other party that is a provider
      of real estate-related services.  From the inception of our captive
      reinsurance programs in 1997 through 2004, reinsurance premiums paid by us
      to
      captive reinsurers totaled approximately $12.0 million.  The revenues
      from these programs were not material to our results of
      operations.  We voluntarily terminated our captive reinsurance
      arrangements as of February 2005, notwithstanding our belief that we had
      operated the programs in accordance with applicable law.  We settled
      these investigations with six states, representing approximately 81.4 percent
      of
      our captive reinsurance business, without admitting any liability.





In
      June 2005, we established reserves
      of $19.0 million to cover anticipated exposure to regulatory matters nationwide,
      an amount which includes settlements with the California, Arizona, Nevada,
      Virginia, Colorado, and North Carolina departments of
      insurance.  Based on these settlements and the status of inquiries, we
      released $6.7 million of this reserve back into earnings in fiscal year 2005
      and
      $0.8 million in fiscal year 2006.  The remaining reserve at September
      30, 2007 was approximately $1.9 million.





We
      may
      receive additional subpoenas and/or requests for information in the future
      from
      state or federal government agencies.  We will evaluate, and we intend
      to cooperate in connection with, all such subpoenas and requests.





Based
      on the information known to
      management at this time, it is not possible to predict the outcome of any of
      the
      currently pending governmental inquiries and investigations into the title
      insurance industry’s market, business practices, pricing levels, and other
      matters, or the market’s response thereto.  However, any material
      change in our business practices, pricing levels, or regulatory environment
      may
      have an adverse effect on our business, operating results and financial
      condition.





19





**Other
      Commitments and Guarantees**





We
      had guarantees of indebtedness of
      others of approximately $2.2 million at September 30, 2007 and approximately
      $3.4 million at December 31, 2006.





**9.**
            **SHAREHOLDERS’
                EQUITY**





In
      October 2005, the Board of Directors
      approved a share repurchase program expiring in July 2007 (the “2005 Program”)
      that authorized us to repurchase 1.25 million shares of our common
      stock.  During first quarter 2007, we repurchased 569,000 shares for
      $39.9 million, at an average cost of $70.18 per share.  As of March
      31, 2007, there were no authorized shares remaining under the 2005
      Program.





In
      February 2007, the Board of
      Directors approved a share repurchase program expiring in October 2008 (the
      “2007 Program”) that authorizes us to repurchase 1.5 million shares of our
      common stock.  Under the 2007 Program, we repurchased 474,000 shares
      during second quarter 2007 for $42.0 million, at an average cost of $88.54
      per
      share.  We repurchased 919,500 shares during third quarter 2007 for
      $44.9 million, at an average cost of $48.81 per share.  At September
      30, 2007, there were approximately 106,500 authorized shares remaining under
      the
      2007 Program.





In
      August 2007, the Board of Directors
      approved a share repurchase program expiring in March 2009 (the “2007 II
      Program”) that authorizes us to repurchase 1.5 million shares of our common
      stock.  As of September 30, 2007, no shares have been repurchased
      under the 2007 II Program.





Our
      3.25 percent convertible senior
      debentures due 2034 were convertible to common stock during third quarter 2007
      through and including September 30, 2007 and holders of the debentures may
      convert the debentures into shares of our common stock through the end of the
      fiscal quarter at the applicable conversion rate then in effect.  At
      September 30, 2007, the conversion rate was 18.7431 shares per $1,000 principal
      amount of the 2004 debentures, which was equivalent to a conversion price of
      approximately $53.35 per share of common stock.





Our
      3.125 percent convertible senior
      debentures due 2033 were convertible to common stock during third quarter 2007
      through and including September 30, 2007 and holders of the debentures may
      convert the debentures into shares of our common stock through the end of the
      fiscal quarter at the applicable conversion rate then in effect.  At
      September 30, 2007, the conversion rate was 15.2139 shares per $1,000 principal
      amount of the 2003 debentures, which was equivalent to a conversion price of
      approximately $65.73 per share of common stock.





**10.**
            **IMPAIRMENT
                OF INTANGIBLE AND OTHER LONG-LIVED
                ASSETS**





In
      first quarter 2007, we became aware
      that one of our tax and flood processing customers, Fremont General Corporation,
      received a cease and desist order from the Federal Deposit Insurance Corporation
      relating to lending practices in its mortgage origination business.





20





As
      a
      result of this probable loss of business from this customer, we conducted an
      impairment test of LandAmerica Tax and Flood Services, Inc.’s customer
      relationship intangible asset in accordance with SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets.*On April
      10, 2007, we determined it was probable that LandAmerica Tax and Flood Services,
      Inc.’s customer relationship intangible was impaired.  Additionally,
      we conducted an impairment test of the Lender Services segment’s goodwill
      balance in accordance with SFAS No. 142, *Goodwill and Other Intangible
      Assets,* before its annual testing date of October 1, 2007, as the probable
      loss of business was deemed to be an indicator of potential
      impairment.  In first quarter 2007, we recorded a customer
      relationship intangible impairment charge of $20.8 million, or $12.5 million
      net
      of taxes, which was reflected in our results of operations.  The
      impairment charge did not result in any future cash expenditures.  In
      addition, we concluded that the Lender Services segment’s goodwill balance was
      not impaired.





In
      January 2006, we announced our plan
      to relocate and consolidate our corporate offices and shared resources
      operations.  As a result, we wrote down the existing corporate offices
      and related assets to fair value less cost to sell.  For the
      nine months ended September 30, 2006, the impairment charge for the
      write down was approximately $10.2 million, or $6.6 million net of taxes, which
      was reflected in our consolidated results of operations.





**11.           SEGMENT
      INFORMATION**





We
      are engaged in the business of
      providing title insurance as well as a broad array of real estate transaction
      services through our subsidiaries.  We have three reporting segments
      that fall within three primary business segments: Title Operations, Lender
      Services, and Financial Services.  The remaining immaterial businesses
      have been combined into a category called Corporate and Other.





Title
      Operations includes residential
      and commercial title insurance business, escrow and closing services, commercial
      real estate services, and other real estate transaction management
      services.





Lender
      Services provides services to
      national and regional mortgage lenders consisting primarily of mortgage
      origination (e.g. real estate transaction management services, consumer mortgage
      credit reporting, flood zone determinations, residential appraisal, and
      valuation services, etc.), loan servicing (e.g. real estate tax processing
      and
      default management), and loan subservicing.





Financial
      Services consists of Orange
      County Bancorp and its wholly-owned subsidiary, Centennial Bank, a California
      industrial bank primarily engaged in the business of providing real estate
      loans
      in the Southern California market and, to a lesser degree, in Arizona and
      Nevada.





Corporate
      and Other includes home
      warranty, residential property inspection, commercial property valuations and
      assessment businesses, and due diligence services as well as the unallocated
      portion of the corporate expenses related to our corporate offices and
      unallocated interest expense.





21





We
      provide real estate transaction
      services through direct operations and agents throughout the United States
      and
      in Mexico, Canada, the Caribbean, Latin America, Europe, and
      Asia.  International operations account for less than 1 percent of our
      operating revenue.





The
      following tables provide selected
      financial information about our operations by segment for the three and nine
      months ended September 30, 2007 and 2006:





Three
                Months Ended September 30,Operating
              Revenue
            
            
            Personnel
              Cost
            
            
            Depreciation
            
            
            Amortization
                of Intangible
              Assets
            
            
            Impairment
              of
                Intangible
              and
                Long-
              Lived
                Assets
            
            
            Income
              Before
              Taxes(In
                millions)2007Title
                Operations
            
            $
            770.9
            
            
            $
            222.1
            
            
            $
            6.7
            
            
            $
            3.4
            
            
            $
            -
            
            
            $
            1.2Lender
                Services
            
            
            67.3
            
            
            
            24.3
            
            
            
            2.2
            
            
            
            1.3
            
            
            
            -
            
            
            
            (2.7
            )Financial
                Services
            
            
            0.2
            
            
            
            0.7
            
            
            
            0.1
            
            
            
            -
            
            
            
            -
            
            
            
            4.0Corporate
                and Other
            
            
            35.6
            
            
            
            25.1
            
            
            
            2.3
            
            
            
            0.5
            
            
            
            -
            
            
            
            (30.9
            )Total
            
            $
            874.0
            
            
            $
            272.2
            
            
            $
            11.3
            
            
            $
            5.2
            
            
            $
            -
            
            
            $
            (28.4
            )2006Title
                Operations
            
            $
            865.2
            
            
            $
            234.3
            
            
            $
            6.1
            
            
            $
            3.3
            
            
            $
            -
            
            
            $
            48.4Lender
                Services
            
            
            59.6
            
            
            
            23.4
            
            
            
            1.4
            
            
            
            2.6
            
            
            
            -
            
            
            
            3.4Financial
                Services
            
            
            0.2
            
            
            
            0.6
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4.1Corporate
                and Other
            
            
            29.2
            
            
            
            22.6
            
            
            
            1.0
            
            
            
            0.9
            
            
            
            0.5
            
            
            
            (31.3
            )Total
            
            $
            954.2
            
            
            $
            280.9
            
            
            $
            8.5
            
            
            $
            6.8
            
            
            $
            0.5
            
            
            $
            24.6








Nine
                Months Ended September 30,Operating
              Revenue
            
            
            Personnel
              Cost
            
            
            Depreciation
            
            
            Amortization
              of
                Intangible
              Assets
            
            
            Impairment
              of
                Intangible
              and
                Long-
              Lived
                Assets
            
            
            Income
              Before
              Taxes(In
                millions)2007Title
                Operations
            
            $
            2,425.6
            
            
            $
            738.9
            
            
            $
            20.9
            
            
            $
            8.8
            
            
            $
            -
            
            
            $
            65.7Lender
                Services
            
            
            219.1
            
            
            
            78.6
            
            
            
            6.5
            
            
            
            4.6
            
            
            
            20.8
            
            
            
            (9.7
            )Financial
                Services
            
            
            0.6
            
            
            
            2.4
            
            
            
            0.1
            
            
            
            0.1
            
            
            
            -
            
            
            
            14.1Corporate
                and Other
            
            
            111.5
            
            
            
            76.1
            
            
            
            8.3
            
            
            
            3.0
            
            
            
            -
            
            
            
            (79.5
            )Total
            
            $
            2,756.8
            
            
            $
            896.0
            
            
            $
            35.8
            
            
            $
            16.5
            
            
            $
            20.8
            
            
            $
            (9.4
            )2006Title
                Operations
            
            $
            2,566.2
            
            
            $
            703.1
            
            
            $
            17.3
            
            
            $
            8.8
            
            
            $
            -
            
            
            $
            171.8Lender
                Services
            
            
            177.1
            
            
            
            71.5
            
            
            
            3.7
            
            
            
            7.8
            
            
            
            -
            
            
            
            12.2Financial
                Services
            
            
            0.7
            
            
            
            1.8
            
            
            
            -
            
            
            
            0.1
            
            
            
            -
            
            
            
            12.5Corporate
                and Other
            
            
            83.6
            
            
            
            70.0
            
            
            
            2.6
            
            
            
            2.7
            
            
            
            10.2
            
            
            
            (96.0
            )Total
            
            $
            2,827.6
            
            
            $
            846.4
            
            
            $
            23.6
            
            
            $
            19.4
            
            
            $
            10.2
            
            
            $
            100.5








22





**12.**
            **SUBSEQUENT
                EVENTS**





On
      October 10, 2007, we received net
      proceeds of $100 million under our existing $200 million revolving credit
      agreement with SunTrust Bank (the “Credit Agreement”), as administrative agent
      for a syndicate of other banks, issuing bank and swingline
      lender.  All of the proceeds received were used to prepay the Notes as
      described below.





On
      October 10, 2007, we prepaid, in
      full, all of our outstanding 7.45% Senior Notes, Series B, Due 2008 (the “Series
      B Notes”), and all of our outstanding 7.88% Senior Notes, Series C, Due 2011
      (the “Series C Notes,” and collectively with the Series B Notes, the “Notes”),
      issued pursuant to that certain Note Purchase Agreement dated August 31, 2001
      (the “Note Agreement”), by and among LandAmerica and each of the purchasers of
      the Notes.  As of October 10, 2007, the aggregate principal amount of
      the Notes was $100 million.  The Notes were prepaid at our option in
      accordance with the terms of the Note Agreement at a price of $107.6 million,
      representing the aggregate principal amount of the Notes plus accrued and unpaid
      interest and a “make-whole” amount applicable to the Notes.  We
      anticipate a charge of $6.7 million in fourth quarter 2007 as a result of the
      make-whole payment.  The prepayment of the Notes was funded from the
      $100 million draw under the Credit Agreement and available cash.  As a
      result of the prepayment of the Notes, the Notes will be surrendered to us
      and
      cancelled and will not be reissued.  We exercised our option to prepay
      the Notes to enhance our financial flexibility.





**ITEM
                2.**
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS**





The
      following discussion and analysis
      of financial condition and results of operations updates and should be read
      in
      conjunction with our Annual Report on Form 10-K for the year ended December
      31,
      2006 as filed with the Securities and Exchange Commission on February 28,
      2007.  A description of our business segments and certain key factors
      that affect these businesses are provided in Note 11 to Consolidated Financial
      Statements included herein and in our Annual Report on Form 10-K for the year
      ended December 31, 2006.  For information on risks and uncertainties
      related to our business that may make past performances not indicative of future
      results, or cause actual results to differ materially from any forward-looking
      statements made by us, see “Forward-Looking and Cautionary
      Statements.”





**Overview**





***Revision
      of Prior Year
      Numbers***





In
      2007, we refined our definition and
      measurement of commercial revenue and have revised our 2006 commercial revenue
      to be comparable to the 2007 presentation.








23





***Operations***





As
      estimated by the Mortgage Bankers
      Association (“MBA”), industry-wide residential mortgage originations declined by
      approximately $147 billion, or 21.1 percent, in third quarter 2007 from the
      comparable period in 2006 and declined by approximately $161 billion, or 7.9
      percent, during the nine months ended September 30, 2007 compared to the nine
      months ended September 30, 2006 due to significant declines in the buy/sell
      and
      refinance markets.





Operating
      revenues were $874.0 million and $954.2 million for the three months ended
      September 30, 2007 and 2006, respectively, and $2,756.8 million and $2,827.6
      million for the nine months ended September 30, 2007 and 2006,
      respectively.  Pretax operating (loss) income was $(28.4) million and
      $24.6 million for the three months ended September 30, 2007 and 2006,
      respectively, and $(9.4) million and $100.5 million for the nine months ended
      September 30, 2007 and 2006, respectively.





Before
      the effect of mergers and acquisitions, our overall decrease in residential
      mortgage originations in third quarter 2007 resulted in a decline in operating
      revenues from agency and direct title operations in the Title Operations segment
      and declines in certain lines of the mortgage originations and loan servicing
      businesses in the Lender Services segment, as well as declines in the home
      warranty and property inspection businesses when compared with third quarter
      2006.  These declines were offset in part by growth in the title and
      non-title commercial operations and growth in the default management services
      business.  The nine months ended September 30, 2007 showed trends
      similar to third quarter 2007 yet were also positively affected by the
      acceleration of deferred revenue in the loan servicing business in first quarter
      2007.





Our
      provision for claims as a percentage of operating revenue has trended upward
      recently, primarily due to claims frequency and severity for recent policy
      years.  We have noted a similar upward trend in provisions for claims
      occurring throughout the title insurance industry.  Since we are
      subject to liability for claims for an extended period of time, slight increases
      in claims frequency and severity for more recent policy years can result in
      a
      significant increase in the amount of liability required for potential
      claims.





In
      first quarter 2007, we recorded a
      customer relationship intangible impairment charge of $20.8 million, or $12.5
      million net of taxes, as a result of the probable loss of business from Fremont
      General Corporation (“Fremont”), one of our tax and flood processing
      customers.  Fremont received a cease and desist order from the Federal
      Deposit Insurance Corporation related to lending practices in its mortgage
      origination business.  The impairment charge did not result in any
      future cash expenditures.  We also conducted an impairment test of the
      Lender Services segment’s goodwill balance as the probable loss of business was
      deemed to be an indication of potential impairment.  We concluded that
      the Lender Services segment goodwill balance was not impaired.  We
      have continued to service the Fremont loan portfolio that existed at the time
      the cease and desist order was issued.  For further details, see Note
      10, “Impairment of Intangible and Other Long-lived Assets” of the Notes to
      Consolidated Financial Statements in Part I, Item 1 of this report.





24





We
      completed the merger with Capital Title Group, Inc. (“Capital Title”) on
      September 8, 2006.  Capital Title has been integrated into the Title
      Operations and Lender Services segments.  As of September 30, 2007, we
      have achieved annualized pretax cost savings of approximately $16 million in
      conjunction with such integration.  For further details, see Note 3,
“Mergers and Acquisitions” of the Notes to Consolidated Financial Statements in
      Part I, Item 1 of this report.





During
      third quarter 2007, we announced
      additional cost reduction actions in response to the decline in mortgage
      originations and to improve operating efficiencies.  We expected to
      eliminate approximately 1,100 full-time equivalent (“FTE”) counts in the second
      half of 2007 in our residential and lender services groups and related
      functions; during third quarter 2007, we reduced FTE counts in these direct
      title and non-title operations by approximately 1,200.  We expect to
      continue reducing FTE counts in fourth quarter 2007.





In
      August 2007, we settled a lawsuit
      with Mercury Companies, Inc. and received a payment in the amount of $12.5
      million as part of the settlement.  The payment is reflected as a
      reduction of legal fees and costs expended in the litigation in the “General,
      administrative and other” line (approximately $11.7 million) and in the
“Salaries and employee benefits” line (approximately $0.3 million) of the
      Consolidated Statements of Operations.  For further details, see Note
      8, “Commitments and Contingencies” of the Notes to Consolidated Financial
      Statements in Part I, Item 1 of this report.





In
      September 2007, we established
      reserves of $10.0 million for anticipated exposure to class action
      litigation.  For further details, see Note 8, “Commitments and
      Contingencies” of the Notes to Consolidated Financial Statements in Part I, Item
      1 of this report.





On
      October 10, 2007, we received net
      proceeds of $100 million under our existing $200 million revolving credit
      agreement with SunTrust Bank.  All of the proceeds received were used
      to prepay certain senior notes.  For further details, see Note 12,
“Subsequent Events” of the Notes to Consolidated Financial Statements in Part I,
      Item 1 of this report.





***Critical
      Accounting
      Estimates***





The
      preparation of our financial
      statements requires management to make estimates and judgments that affect
      the
      reported amounts of certain assets, liabilities, revenue, expenses and related
      disclosures surrounding contingencies and commitments.  A summary of
      our significant critical accounting estimates can be found in Management’s
      Discussion and Analysis in our Annual Report on Form 10-K for the year ended
      December 31, 2006 as filed with the Securities and Exchange
      Commission.  Actual results could differ from these
      estimates.





***Recent
      Accounting Pronouncements***





In
      March 2007, the Financial Accounting
      Standards Board (“FASB”) ratified Emerging Issues Task Force (“EITF”) Issue No.
      06-10, *Accounting for Collateral Assignment Split-Dollar Life Insurance
      Arrangements* (“EITF No. 06-10”).  EITF No. 06-10 requires an
      employer to





25





recognize
      a liability for the post-retirement benefit related to a collateral assignment
      split-dollar life insurance arrangement in accordance with either Statement
      of
      Financial Accounting Standards (“SFAS”) No. 106 or Accounting Principles Board
      (“APB”) Opinion No. 12 if the employer has agreed to maintain a life insurance
      policy during the employee’s retirement or provide the employee with a death
      benefit.  EITF No. 06-10 also requires an employer to recognize and
      measure an asset based on the nature and substance of the collateral assignment
      split-dollar life insurance arrangement.  EITF No. 06-10 is effective
      for fiscal years beginning after December 15, 2007 with early adoption
      permitted.  We have determined that the adoption of EITF No. 06-10
      will not have a material effect on our financial statements.





In
      February 2007, FASB issued SFAS No. 159, *The Fair Value Option for Financial
      Assets and Financial Liabilities**-**Including
      an amendment of FASB Statement No. 115*(“SFAS No. 159”).  SFAS
      No. 159 provides companies with an option to report selected financial assets
      and liabilities at fair value.  Unrealized gains and losses on items
      for which the fair value option has been elected are reported in
      earnings.  SFAS No. 159 is effective as of the beginning of an
      entity’s first fiscal year that begins after November 15, 2007 with early
      adoption permitted.  We are evaluating the effect that the adoption of
      SFAS No. 159 will have on our financial statements.





In
      September 2006, FASB issued SFAS No.
      158, *Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and
      132(R)* (“SFAS No. 158”).  This standard requires employers to
      recognize the underfunded or overfunded status of a defined benefit
      post-retirement plan as an asset or liability in its statement of financial
      position and to recognize changes in the funded status in the year in which
      the
      changes occur through accumulated other comprehensive
      income.  Additionally, SFAS No. 158 requires employers to measure the
      funded status of a plan as of the date of its year-end statement of financial
      position.  The new reporting requirement and related new footnote
      disclosure rules of SFAS No. 158 are effective for fiscal years ending after
      December 15, 2006 and have been adopted.  See Note 7, “Pensions and
      Other Post-Retirement Benefits” of the Notes to Consolidated Financial
      Statements in Part I, Item 1 of this report.  The new measurement date
      requirement applies for fiscal years ending after December 15, 2008 and has
      not
      yet been adopted.





In
      September 2006, FASB issued SFAS No.
      157, *Fair Value Measurements*(“SFAS No. 157”).  SFAS No. 157
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles and expands disclosures about fair
      value measurements. SFAS No. 157 is effective for financial statements issued
      for fiscal years beginning after November 15, 2007 with earlier application
      encouraged.  We are evaluating the effect that the adoption of SFAS
      No. 157 will have on our financial statements.





***Seasonality***





The
      residential title insurance
      business tends to be seasonal.  Residential buy/sell activity is
      generally slower in the winter, when fewer families buy or sell homes, with
      increased volumes in the spring and summer.  Residential refinancing
      activity is generally more uniform throughout the seasons, but is subject to
      interest rate variability.  We typically report our lowest
      revenue





26





from
      agency and direct title operations in the first quarter, with such revenue
      increasing into the second quarter and through the third quarter.  Due
      to the weak residential real estate environment and the sharp contraction of
      the
      credit markets in the third quarter, we did not experience the typical seasonal
      pickup in volume during second and third quarter 2007 that we have seen in
      recent years.  Third quarter 2007 revenue was lower than the first
      quarter of this year, which is typically the weakest seasonal
      quarter.





**Results
      of Operations**





***Operating
      Revenue***





The
      following table
      provides**a summary of our operating revenue for the three and nine
      months ended September 30, 2007 and 2006:





Three
                Months Ended September 30,2007
            
            
            2006(Dollars
                in millions)Title
                OperationsDirect
                Operations
            
            $
            326.9
            
            
            
            37.4
            %
            
            $
            361.6
            
            
            
            37.9
            %Agency
                Operations
            
            
            444.0
            
            
            
            50.8
            
            
            
            503.6
            
            
            
            52.8770.9
            
            
            
            88.2
            
            
            
            865.2
            
            
            
            90.7Lender
                Services
            
            
            67.3
            
            
            
            7.7
            
            
            
            59.6
            
            
            
            6.2Financial
                Services
            
            
            0.2
            
            
            
            -
            
            
            
            0.2
            
            
            
            -Corporate
                and Other
            
            
            35.6
            
            
            
            4.1
            
            
            
            29.2
            
            
            
            3.1Total
            
            $
            874.0
            
            
            
            100.0
            %
            
            $
            954.2
            
            
            
            100.0
            %








Nine
                Months Ended September 30,2007
            
            
            2006(Dollars
                in millions)Title
                OperationsDirect
                Operations
            
            $
            1,106.3
            
            
            
            40.1
            %
            
            $
            1,079.1
            
            
            
            38.2
            %Agency
                Operations
            
            
            1,319.3
            
            
            
            47.9
            
            
            
            1,487.1
            
            
            
            52.62,425.6
            
            
            
            88.0
            
            
            
            2,566.2
            
            
            
            90.8Lender
                Services
            
            
            219.1
            
            
            
            8.0
            
            
            
            177.1
            
            
            
            6.3Financial
                Services
            
            
            0.6
            
            
            
            -
            
            
            
            0.7
            
            
            
            -Corporate
                and Other
            
            
            111.5
            
            
            
            4.0
            
            
            
            83.6
            
            
            
            2.9Total
            
            $
            2,756.8
            
            
            
            100.0
            %
            
            $
            2,827.6
            
            
            
            100.0
            %








27





*Title
      Operations**-***Operating
      revenue from direct title operations decreased by $34.7 million, or 9.6 percent,
      in third quarter 2007 from third quarter 2006 and increased by $27.2
      million, or 2.5 percent, in the nine months ended September 30, 2007 over the
      comparable period in 2006. During the third quarter and first nine
      months of 2007, direct operating revenue was negatively affected by a reduction
      in volume from the sharp decline in residential mortgage
      originations.  This decline was offset in part by incremental volume
      from the merger with Capital Title and strong commercial revenue.





Revenue
      from direct title commercial operations was $103.1 million in third
      quarter 2007 compared to $85.7 million in third quarter 2006,
      an increase of 20.3 percent, and $322.8 million in the nine months ended
      September 30, 2007 compared to $263.7 million in the nine months ended September
      30, 2006, an increase of 22.4 percent.





Closed
      orders from our direct title
      operations were approximately 140,000 in third quarter 2007 compared
      to approximately 174,000 in third quarter 2006.  Closed orders from
      direct title operations for the nine months ended September 30, 2007 were
      approximately 486,000 compared to approximately 524,000 for the nine months
      ended September 30, 2006.  Direct revenue per direct order closed increased
      approximately 9.5 percent, from approximately $2,100 in the third quarter
      and nine months ended September 30,2006
      to
      approximately $2,300 in the third quarter and nine months ended September
      30,2007
      due to
      the mix of commercial versus residential business.





Operating
      revenue from agency title operations in third quarter 2007 decreased
      by $59.6 million, or 11.8 percent, from third quarter 2006. Operating
      revenue from agency title operations for the nine months ended September 30,
      2007 decreased by $167.8 million, or 11.3 percent, compared to the nine months
      ended September 30, 2006 due to the sharp decline in market conditions across
      most regions, particularly in certain southeastern markets.





The
      MBA
      has forecasted that 2007 and 2008 residential mortgage originations will be
      lower than 2006 levels by approximately 15 percent and 31 percent,
      respectively.  We can provide no assurance that the effect of our
      acquisitions, commercial revenues, cost reduction measures, and direct operating
      revenue per direct order closed will offset the effect of the forecasted decline
      in the residential real estate market on our title revenues and
      profitability.  We are seeing early signs of softening in the
      commercial markets.





*Lender
      Services**-*****Operating
      revenue for Lender Services increased by $7.7 million, or 12.9 percent, in
      third
      quarter 2007 compared to third quarter 2006.  Operating revenue
      increased by $42.0 million, or 23.7 percent, for Lender Services for the nine
      months ended September 30, 2007 over the comparable period in
      2006.  Revenue for third quarter 2007 and for the nine months ended
      September 30, 2007 was positively affected by increased business as a
      result of the merger with Capital Title and growth in default management
      services.  Revenue in the nine months ended September 30, 2007 was
      also positively affected by the acceleration of deferred revenue in the loan
      servicing business in first quarter 2007.  These increases were offset
      in part by lower volumes in certain product lines in the mortgage origination
      business and the loan





28





servicing
      business due to declines in the residential real estate
      market.  The default management services business experienced growth
      in volume in third quarter 2007 and in the nine months ended September 30,
      2007
      due to increased demand for lien monitoring, broker price opinions and
      appraisals, foreclosures, reconveyances and other related services as a result
      of the downturn in the residential real estate market.





*Corporate
      and Other**-*** Operating
      revenue for Corporate and Other increased by $6.4 million, or 21.9 percent,
      in
      third quarter 2007 over third quarter 2006 and increased by $27.9 million,
      or 33.4 percent, in the nine months ended September 30, 2007 over the nine
      months ended September 30, 2006.  The increase in operating revenue
      was primarily due to continued strength in the commercial
      market.  Revenue from commercial operations was $23.4 million in third
      quarter 2007 compared to $15.7 million in third quarter 2006, an increase of
      49.0 percent.  Revenue from commercial operations was $67.4 million in
      the nine months ended September 30, 2007 compared to $42.5 million in the nine
      months ended September 30, 2006, an increase of 58.6
      percent.  Improvements in commercial operations in third quarter 2007
      and in the nine months ended September 30, 2007 were offset in part by declines
      in the home warranty and property inspection businesses.





***Investment
      and Other
      Income***





Investment
      and other income decreased
      by approximately 16.1 percent in third quarter 2007 from third quarter 2006
      and
      decreased by approximately 5.2 percent in the nine months ended September 30,
      2007 from the first nine months of 2006.  Investment and other income
      includes income generated from our investment and loan portfolios and income
      generated from our equity interests in unconsolidated
      affiliates.  Income from our unconsolidated affiliates has declined in
      the third quarter and nine months ended September 30, 2007 when compared with
      the third quarter and nine months ended September 30, 2006, respectively,
      following the overall decline in the residential real estate market, and was
      offset in part by increases in investment income from a larger loan portfolio
      and a modest increase in interest rates.





***Net
      Realized Investment
      Gains***





Net
      realized investment gains were $6.2
      million in third quarter 2007 compared to $6.1 million in third quarter 2006
      and
      $14.6 million in the nine months ended September 30, 2007 compared to $5.5
      million in the nine months ended September 30, 2006.  Net realized
      investment gains in third quarter 2007 consisted primarily of gains on the
      sale
      of equity securities and unrealized gains on trading investments offset in
      part
      by losses on the sale of portions of our bond portfolio.  Net realized
      investment gains in third quarter 2006 were primarily from the repositioning
      of
      our REIT portfolio.  The increase in net realized investment gains for
      the nine months ended September 30, 2007 compared to the nine months ended
      September 30, 2006 was primarily due to gains from the continued repositioning
      of our REIT portfolio and the reclassification of unrealized net gains on
      trading investments from accumulated other comprehensive income (loss) in first
      quarter 2007, and gains on the sale of equity securities and unrealized gains
      on
      trading investments offset in part by losses on the sale of portions of our
      bond
      portfolio in third quarter 2007.  We recognized approximately $1.6
      million of realized





29





losses
      in
      second quarter 2006 on fixed income securities that were deemed to be
      other-than-temporarily impaired. We did not recognize losses on the impairment
      of investments in 2007.  For further details, see Note 4,
“Investments” of the Notes to Consolidated Financial Statements in Part I, Item
      1 of this report.





***Salary
      and Employee
      Benefits***





The
      following table provides a summary
      of our salary and employee benefit costs for the three and nine months ended
      September 30, 2007 and 2006:





Three
                Months Ended September 30,2007
            
            
            2006(Dollars
                in millions)Title
                Operations
            
            $
            222.1
            
            
            
            81.6
            %
            
            $
            234.3
            
            
            
            83.4
            %Lender
                Services
            
            
            24.3
            
            
            
            8.9
            
            
            
            23.4
            
            
            
            8.3Financial
                Services
            
            
            0.7
            
            
            
            0.3
            
            
            
            0.6
            
            
            
            0.2Corporate
                and Other
            
            
            25.1
            
            
            
            9.2
            
            
            
            22.6
            
            
            
            8.1Total
            
            $
            272.2
            
            
            
            100.0
            %
            
            $
            280.9
            
            
            
            100.0
            %








Nine
                Months Ended September 30,2007
            
            
            2006(Dollars
                in millions)Title
                Operations
            
            $
            738.9
            
            
            
            82.5
            %
            
            $
            703.1
            
            
            
            83.1
            %Lender
                Services
            
            
            78.6
            
            
            
            8.8
            
            
            
            71.5
            
            
            
            8.4Financial
                Services
            
            
            2.4
            
            
            
            0.2
            
            
            
            1.8
            
            
            
            0.2Corporate
                and Other
            
            
            76.1
            
            
            
            8.5
            
            
            
            70.0
            
            
            
            8.3Total
            
            $
            896.0
            
            
            
            100.0
            %
            
            $
            846.4
            
            
            
            100.0
            %








*Title
      Operations –*Title
      Operations salary and employee benefit costs decreased by $12.2 million, or
      5.2
      percent, in third quarter 2007 compared to third quarter 2006, and increased
      by
      $35.8 million, or 5.1 percent, in the nine months ended September 30, 2007
      over
      the comparable period in 2006.  Average Full Time Equivalent (“FTE”)
      counts for the Title Operations segment were approximately 10,400 in third
      quarter 2007 versus approximately 10,700 in third quarter





30





2006,
      a
      decrease of 2.8 percent.  Salary and employee benefit costs and FTE
      counts decreased in third quarter 2007 compared to third quarter 2006 primarily
      as a result of announced cost reduction actions offset in part by incremental
      salary and employee benefit costs and FTE counts from the Capital Title
      merger.  FTE counts for the Title Operations segment increased to
      approximately 11,000 in the nine months ended September 30, 2007 from
      approximately 10,600 in the nine months ended September 30, 2006, or 3.8
      percent.  Salary and employee benefit costs and FTE counts increased
      in the first nine months of 2007 from the first nine months of 2006 primarily
      to
      service additional business from the merger with Capital Title and the increase
      in commercial business.  These increases were offset in part by
      declines in staffing levels in the agency and direct title operations in
      response to declines in the residential real estate market.





*Lender
      Services*– Lender
      Services salary and employee benefit costs increased by $0.9 million, or 3.8
      percent, in third quarter 2007 compared to third quarter 2006, and increased
      by
      $7.1 million, or 9.9 percent, in the nine months ended September 30, 2007
      compared to the nine months ended September 30, 2006.  FTE counts for
      the Lender Services segment were approximately 1,700 in third quarter 2007
      versus approximately 1,600 in third quarter 2006, an increase of 6.2
      percent.  FTE counts for the Lender Services segment were
      approximately 1,800 in the nine months ended September 30, 2007 versus
      approximately 1,600 in the nine months ended September 30, 2006, an increase
      of
      12.5 percent.  Salary and employee benefit costs and FTE counts
      increased primarily to service additional business as the result of the merger
      with Capital Title. These increases were offset in part by reductions in FTE
      counts in certain product lines in the loan servicing business and in the
      mortgage origination business to adjust for lower business volume.





*Corporate
      and Other*– Corporate
      and Other salary and employee benefit costs increased by $2.5 million, or 11.1
      percent, in third quarter 2007 over third quarter 2006 and increased by $6.1
      million, or 8.7 percent, in the nine months ended September 30, 2007 over the
      nine months ended September 30, 2006.  Salary and employee benefit
      costs increased primarily to support continued strong commercial business
      included in the Corporate and Other category.





***Provision
      for Policy and Contract
      Claims***





Based
      on our quarterly review of the
      underlying claims data and trends therein, we have provided for claims losses
      using approximately 9.9 percent and 8.0 percent of operating revenue from the
      Title Operations segment for the third quarters of 2007 and 2006, respectively,
      and approximately 8.6 percent and 6.3 percent of operating revenue from the
      Title Operations segment for the nine months ended September 30, 2007 and 2006,
      respectively.  The increase in the claims provision ratio in third
      quarter 2007 was primarily due to upward development of the 2005 policy year
      of
      60 basis points and an increase in the initial claims rate for the 2007 policy
      year from 6.0 percent to 6.4 percent.  The increase in the claims
      provision ratio in the nine months ended September 30, 2007 was due to upward
      development for the 2004 through 2006 policy years and the increase in the
      initial claims rate for the 2007 policy year.  Since we are subject to
      liability on claims for an extended period of time, slight changes in current
      claims experience can have a significant effect on the amount of liability
      required for potential Incurred But Not Reported (“IBNR”) claims.  We
      believe that we have reserved appropriately for all





31





reported
      and IBNR claims at September 30, 2007 based on the results of the actuarial
      evaluation and evaluation of any known trend.  For further details,
      see Note 6, “Policy and Contract Claims” of the Notes to Consolidated Financial
      Statements in Part I, Item 1 of this report.




***Impairment
                  of Intangible and Other Long-Lived
                  Assets***




In
      first quarter 2007, we recorded an
      impairment of $20.8 million related to our customer relationship intangible
      asset of our tax and flood business in the Lender Services
      segment.  The effect of the impairment is expected to reduce
      amortization expense by approximately $3.2 million on an annual
      basis.  No impairments were recorded in second quarter or third
      quarter 2007.  In first quarter 2006, we wrote down our existing
      building and related assets to fair value less cost to sell by approximately
      $9.7 million in connection with the relocation and consolidation of our
      corporate offices and shared resources operations. We adjusted the
      write-down of the corporate office building and related assets to fair value
      less cost to sell by approximately $0.5 million in third quarter
      2006.  For further details, see Note 10, “Impairment of Intangible and
      Other Long-Lived Assets” of the Notes to Consolidated Financial Statements in
      Part I, Item 1 of this report.





***Amortization***





Amortization
      expense decreased by $1.6
      million in third quarter 2007 compared to third quarter 2006 and decreased
      by
      $2.9 million in the nine months ended September 30, 2007 compared to the nine
      months ended September 30, 2006.  These declines were primarily due to
      the impairment of a customer relationship intangible asset in the tax and flood
      business of our Lender Services segment.  For further details, see
      Note 10, “Impairment of Intangible and Other Long-lived Assets” of the Notes to
      Consolidated Financial Statements in Part I, Item 1 of this report.





***Interest
      Expense***





Interest
      expense is comprised of
      interest paid on long-term debt primarily in the Corporate and Other category
      and interest paid to holders of demand deposits in the Financial Services
      segment.  Interest expense increased by $1.3 million in third quarter
      2007 compared to third quarter 2006 primarily due to an increase in interest
      on
      demand deposits due to an increase in balances and interest
      rates.  Interest expense increased by $6.3 million in the nine months
      ended September 30, 2007 compared to the nine months ended September 30, 2006
      primarily due to interest on our senior notes and credit facility that were
      used
      to pay a portion of the purchase price for Capital Title and an increase in
      interest on demand deposits due to an increase in balances and interest
      rates.  See “Liquidity and Capital Resources” for further
      details.








32





***General,
      Administrative, and
      Other***





The
      following table provides a summary
      of our general, administrative, and other expenses for the three and nine months
      ended September 30, 2007 and 2006:





Three
                Months Ended September 30,2007
            
            
            2006(Dollars
                in millions)Title
                Operations
            
            $
            121.8
            
            
            
            61.4
            %
            
            $
            116.5
            
            
            
            66.2
            %Lender
                Services
            
            
            43.2
            
            
            
            21.8
            
            
            
            30.2
            
            
            
            17.2Financial
                Services
            
            
            0.4
            
            
            
            0.2
            
            
            
            0.7
            
            
            
            0.4Corporate
                and Other
            
            
            32.9
            
            
            
            16.6
            
            
            
            28.6
            
            
            
            16.2Total
            
            $
            198.3
            
            
            
            100.0
            %
            
            $
            176.0
            
            
            
            100.0
            %








Nine
                Months Ended September 30,2007
            
            
            2006(Dollars
                in millions)Title
                Operations
            
            $
            374.5
            
            
            
            63.9
            %
            
            $
            353.5
            
            
            
            68.3
            %Lender
                Services
            
            
            120.0
            
            
            
            20.5
            
            
            
            84.9
            
            
            
            16.4Financial
                Services
            
            
            0.9
            
            
            
            0.2
            
            
            
            1.3
            
            
            
            0.3Corporate
                and Other
            
            
            90.3
            
            
            
            15.4
            
            
            
            77.8
            
            
            
            15.0Total
            
            $
            585.7
            
            
            
            100.0
            %
            
            $
            517.5
            
            
            
            100.0
            %








*Title
      Operations –*Title
      Operations general, administrative, and other expenses increased by $5.3
      million, or 4.5 percent, in third quarter 2007 from third quarter 2006 primarily
      due to higher expenses to support additional business as a result of the merger
      with Capital Title and commercial operations, $10.0 million related to a legal
      accrual for two class action lawsuits, and approximately $6.4 million related
      to
      incremental lease termination costs offset in part by proceeds from a lawsuit
      settlement of approximately $12 million.  General, administrative, and
      other expenses increased by $21.0 million, or 5.9 percent, in the nine months
      ended September 30, 2007 from the nine months ended September 30, 2006 primarily
      to support additional business as a result of the merger with Capital Title
      and commercial operations as well as $10.0 million related to a legal accrual
      for two class action lawsuits and approximately $8.0 million related to
      incremental lease termination costs.  The increases in the first nine
      months were





33





partially
      offset by cost reductions to match declines in residential business volume
      and
      by the proceeds from a lawsuit settlement.  For further details, see
      Note 8, “Commitments and Contingencies” of the Notes to Consolidated Statements
      in Part I, Item 1 of this report.





*Lender
      Services –*Lender
      Services general, administrative, and other expenses increased by $13.0 million,
      or 43.0 percent, in third quarter 2007 from third quarter 2006 and increased
      by
      $35.1 million, or 41.3 percent, in the nine months ended September 30, 2007
      from
      the comparable period in 2006.  The increase in general and
      administrative expenses was primarily due to the merger with Capital Title
      and
      other acquisitions and to support growth in the default management services
      line
      within the loan servicing business.  These increases were offset in
      part by declines in the credit services line of the mortgage originations
      business to match declines in business volume.





*Corporate
      and Other*– Corporate
      and Other general, administrative, and other expenses increased by $4.3 million,
      or 15.0 percent, in third quarter 2007 from third quarter 2006 and increased
      by
      $12.5 million, or 16.1 percent, in the nine months ended September 30, 2007
      from
      the first nine months of 2006.  The increase in general,
      administrative, and other expenses was primarily to support increased commercial
      business.  We recorded $3.8 million in third quarter 2006 and $5.2
      million in the first nine months of 2006 related to costs associated with the
      relocation and consolidation of our corporate offices.





***Income
      Taxes***





Our
      effective income tax rate, which
      includes a provision for state income and franchise taxes for non-insurance
      subsidiaries, was 13.2 percent for the nine months ended September 30, 2007
      and
      35.8 percent for the nine months ended September 30, 2006.  The change
      in the effective tax rate was due primarily to the reduced pretax income in
      relation to permanent differences, the mix of state taxable income or loss
      from
      our non-insurance subsidiaries, and the release of a tax reserve.  For
      further details, see Note 5, “Income Taxes” of the Notes to Consolidated
      Financial Statements in Part I, Item 1 of this report.





***Net
      (Loss)
      Income***





Our
      reported net loss was $(20.8)
      million or $(1.28) per common share on a diluted basis in third quarter 2007
      compared to net income of $15.2 million or $0.89 per common share on a diluted
      basis in third quarter 2006.  Net loss in third quarter 2007 reflected
      the sharp decline in the residential housing market, a $10.0 million legal
      accrual for two class action lawsuits, or $6.4 million net of taxes, $7.7
      million of incremental severance and lease termination costs, or $4.7 million
      net of taxes, and an increase in the claims provision offset in part by
      continued strength in the commercial market and proceeds from a lawsuit
      settlement of approximately $12 million, or approximately $7 million net of
      taxes.





Our
      reported net loss was $(8.2)
      million or $(0.49) per common share on a diluted basis for the nine months
      ended
      September 30, 2007 compared to net income of $64.5 million or $3.69 per common
      share on a diluted basis for the nine months ended September 30,
      2006.  Net loss for





34





the
      nine
      months ended September 30, 2007 reflected an impairment charge in first quarter
      2007 for a customer relationship intangible asset in the Lender Services segment
      of $20.8 million, or $12.5 million net of taxes, a higher claims provision
      ratio, the effects of the sharp decline in the residential housing market,
      a
      $10.0 million legal accrual for two class action lawsuits, or $6.4 million
      net
      of taxes, and $9.7 million of incremental severance and lease termination costs,
      or $5.9 million net of taxes.  These items were offset in part by
      continued strength in the commercial market and proceeds from a lawsuit
      settlement of approximately $12 million, or approximately $7 million net of
      taxes. Net income for the nine months ended September 30, 2006 included the
      write down of the corporate offices to fair value less cost to sell of $10.2
      million, or $6.6 million net of taxes.  For further details, see Note
      6, “Policy and Contract Claims,” Note 8, “Commitments and Contingencies,” and
      Note 10, “Impairment of Intangible and Other Long-Lived Assets” of the Notes to
      Consolidated Financial Statements in Part I, Item 1 of this report.





**Liquidity
      and Capital Resources**





***Consolidated***





Cash
      provided by operating activities
      was $84.0 million for the nine months ended September 30, 2007 compared to
      $122.9 million for the nine months ended September 30, 2006. The decrease in
      cash provided by operating activities was primarily due to the decline in net
      income.  Cash provided by investing activities was $252.1 million for
      the nine months ended September 30, 2007 compared to cash used in investing
      activities of $(731.5) million for the nine months ended September 30,
      2006.  The increase in cash provided by investing activities was due
      primarily to declines in investments in federal funds sold, a decrease in the
      purchases of businesses, net of cash acquired, proceeds from the sale of
      short-term investments, proceeds from the sale or maturity of fixed-maturity
      and
      equity securities, and a decline in the cost of additions to the fixed
      maturities investment portfolio.  Cash used in financing activities
      was $(353.7) million for the nine months ended September 30, 2007 compared
      to
      cash provided by financing activities of $606.6 million for the nine months
      ended September 30, 2006.  The change in cash from financing
      activities was due primarily to the decline in escrow deposits held by
      Centennial Bank which trended with the general decline in the real estate
      market, a decline in the issuance of debt, and an increase in share
      repurchases.  At September 30, 2007, we held cash of $64.9 million and
      investments of $1,476.4 million.  At September 30, 2006, we invested a
      temporary commercial customer deposit in federal funds sold investments of
      $407.9 million.





***Parent
      Company***





For
      the nine months ended September 30,
      2007, our primary uses of funds at the holding company level included repayment
      of the credit arrangement that was used to fund, in part, the merger with
      Capital Title, share repurchases, funding the working capital needs of our
      subsidiaries, and payment of dividends on our common stock.  At
      September 30, 2007, at the holding company level, approximately $42.2 million
      of
      cash, short-term investments and marketable securities was available for general
      corporate purposes, payment of dividends, and





35





share
      repurchases.  The holding company’s principal source of funds is
      dividends from its title insurance subsidiaries.





***Regulatory***





In
      June 2006, we completed the process
      of redomesticating our three principal title insurance subsidiaries,
      Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation,
      and Transnation Title Insurance Company from the states of Pennsylvania,
      Virginia, and Arizona, respectively, to the state of Nebraska.  The
      redomestication of these title insurance subsidiaries has resulted in
      streamlined regulatory, tax, and statutory accounting functions derived from
      having these subsidiaries subject to the same laws and
      regulations.  Under Nebraska insurance laws and regulations,
      approximately $137.0 million of the net assets of our consolidated insurance
      subsidiaries are available during the remainder of 2007 for ordinary dividends,
      loans, or advances to us.  We believe that the redomestication of
      these subsidiaries will increase net income and the cumulative amount of surplus
      that is available to pay dividends to the holding company from the release
      of
      these subsidiaries’ excess statutory reserves over GAAP claims reserves, subject
      to certain annual limitations and any approval that may be required by the
      Nebraska Department of Insurance.  As part of our annual release of
      statutory premium reserves, our subsidiaries released $147.2 million of excess
      statutory over GAAP claims reserves in the third quarter of 2007.  We
      received approximately $15 million and $100 million in dividends from our three
      principal title insurance subsidiaries during the third quarter and the nine
      months ended September 30, 2007, respectively.





***Investment
      Strategy***





During
      first quarter 2007, we
      transferred $142.6 million of our fixed-maturity securities from
      available-for-sale securities to trading securities.  We did not
      transfer any of our securities between investment categories during the second
      or third quarters of 2007.  For further details, see Note 4,
“Investments” of the Notes to Consolidated Financial Statements in Part I, Item
      1 of this report.





***Mergers
      and Acquisitions***





On
      September 8, 2006, we completed the
      merger with Capital Title which consists of a title insurance underwriter,
      several title and escrow agency operations, a property appraisal company, a
      settlement services provider and other related companies.  Capital
      Title serves customers primarily in Arizona, California and Nevada in addition
      to providing lender services on a national basis.  We believe that our
      merger with Capital Title has strengthened our presence in key western states
      and added scale to our Lender Services platform.  We acquired 100
      percent of Capital Title’s common stock for approximately $252.6 million, which
      consisted of $202.9 million of cash, including direct transaction costs of
      $3.6
      million, and $49.7 million of our common stock, which represented 775,576
      shares.  Capital Title has been integrated into the Title Operations
      and Lender Services segments as of the merger date.  As of September
      30, 2007, we have achieved annualized pretax cost savings of approximately
      $16
      million in conjunction





36





with
      such
      integration.  For further details, see Note 3, “Mergers and
      Acquisitions” of the Notes to Consolidated Financial Statements in Part I, Item
      1 of this report.





***Shareholders’
      Equity***





In
      October 2005, the Board of Directors
      approved a share repurchase program expiring in July 2007 (the “2005 Program”)
      that authorized us to repurchase 1.25 million shares of our common
      stock.  During first quarter 2007, we repurchased 569,000 shares for
      $39.9 million, at an average cost of $70.18 per share.  As of March
      31, 2007, there were no authorized shares remaining under the 2005
      Program.





In
      February 2007, the Board of
      Directors approved a share repurchase program expiring in October 2008 (the
      “2007 Program”) that authorizes us to repurchase 1.5 million shares of our
      common stock.  Under the 2007 Program, we repurchased 474,000 shares
      during second quarter 2007 for $42.0 million, at an average cost of $88.54
      per
      share.  We repurchased 919,500 shares during third quarter 2007 for
      $44.9 million, at an average cost of $48.81 per share.  At September
      30, 2007, there were approximately 106,500 authorized shares remaining under
      the
      2007 Program.





In
      August 2007, the Board of Directors
      approved a share repurchase program expiring in March 2009 (the “2007 II
      Program”) that authorizes us to repurchase 1.5 million shares of our common
      stock.  As of September 30, 2007, no shares have been repurchased
      under the 2007 II Program.





Our
      3.25 percent convertible senior
      debentures due 2034 were convertible to common stock during third quarter 2007
      through and including September 30, 2007 and holders of the debentures may
      convert the debentures into shares of our common stock through the end of the
      fiscal quarter at the applicable conversion rate then in effect.  At
      September 30, 2007, the conversion rate was 18.7431 shares per $1,000 principal
      amount of the 2004 debentures, which was equivalent to a conversion price of
      approximately $53.35 per share of common stock.





Our
      3.125 percent convertible senior
      debentures due 2033 were convertible to common stock during third quarter 2007
      through and including September 30, 2007 and holders of the debentures may
      convert the debentures into shares of our common stock through the end of the
      fiscal quarter at the applicable conversion rate then in effect.  At
      September 30, 2007, the conversion rate was 15.2139 shares per $1,000 principal
      amount of the 2003 debentures, which was equivalent to a conversion price of
      approximately $65.73 per share of common stock.





In
      connection with the issuance of the
      2004 debentures, we entered into a call option designed to mitigate the
      potential dilution from the conversion of the 2004 debentures.  Under
      the ten-year term of the call option, we may require a counterparty to deliver
      approximately 2.3 million shares of our common stock to us at a price which
      approximates the conversion price of the 2004 debentures.








37





***Financing***





On
      October 10, 2007, we received net proceeds of $100 million under our existing
      $200 million revolving credit agreement with SunTrust Bank (the “Credit
      Agreement”), as administrative agent for a syndicate of other banks, issuing
      bank and swingline lender.  All of the proceeds received were used to
      prepay our outstanding 7.45% Senior Notes, Series B, Due 2008 (the “Series B
      Notes”), and all of our outstanding 7.88% Senior Notes, Series C, Due 2011 (the
“Series C Notes” and collectively with the Series B Notes, the “Notes”), issued
      pursuant to that certain Note Purchase Agreement dated August 31, 2001 (the
      “Note Agreement”), by and among LandAmerica and each of the purchasers of the
      Notes.  As of October 10, 2007, the aggregate principal amount of the
      Notes was $100 million.  The Notes were prepaid at our option in
      accordance with the terms of the Note Agreement at a price of $107.6 million,
      representing the aggregate principal amount of the Notes plus accrued and unpaid
      interest and a “make-whole” amount applicable to the Notes. We anticipate a
      charge of $6.7 million in fourth quarter 2007 as a result of the make-whole
      payment.  The prepayment of the Notes was funded from the $100 million
      draw under the Credit Agreement and available cash.  As a result of
      the prepayment of the Notes, the Notes will be surrendered to us and cancelled
      and will not be reissued.  We exercised our option to prepay the Notes
      to enhance our financial flexibility.  For further details, see Note
      12, “Subsequent Events” of the Notes to consolidated Financial Statements in
      Part I, Item 1 of this report.





***Summary***





We
      believe our revolving credit
      facilities and anticipated cash flows from operations will provide us with
      sufficient liquidity to meet our operating requirements for the foreseeable
      future.  For further information about our borrowings, see our Annual
      Report on Form 10-K for the year ended December 31, 2006.





**Pending
      Legal Proceedings**





***General***





We
      are involved in certain litigation
      arising in the ordinary course of our businesses.  Although the
      ultimate outcome of these matters cannot be ascertained at this time and the
      results of legal proceedings cannot be predicted with certainty, based on
      current knowledge we believe, that the resolution of these matters will not
      have
      a material adverse effect on our financial position or results of
      operations.





***Litigation
      Not in the Ordinary Course
      of Business***





On
      June 22, 2004, Gateway Title
      Company, Inc. (“Gateway”), Commonwealth Land Title Company, Inc. and LandAmerica
      Financial Group, Inc. (collectively, “Gateway Plaintiffs”) filed a Complaint,
      subsequently amended by a First Amended Complaint filed June 25, 2004, in the
      Superior Court of California, County of Los Angeles, Central District (the
      “Court”), against the Mercury Company and its affiliates Financial Title,
      Alliance Title, Investors Title and various





38





individuals
      including Joseph DiChiacchio, a former manager of LandAmerica (Case No. BC
      317441) (collectively, “Gateway Defendants”).  The lawsuit claimed
      substantial monetary and punitive damages for unfair competitive business
      practices in conjunction with Gateway Plaintiffs’ loss of over 300 employees in
      California, most of which appears to have occurred within an approximately
      twenty-four month period.  On December 13, 2004, Alliance Title
      Company, Inc., Financial Title Company, Inc., Roberto Olivera and Ray Arias
      filed a Cross-Complaint for unfair competitive business practices.  On
      December 13, 2004, Mr. DiChiacchio also filed a Cross-Complaint alleging similar
      claims, including back wages and additional bonus payments, which Gateway
      Plaintiffs disputed.  After completion of discovery, a jury trial
      began in early May 2006 and resulted in a verdict for Gateway of approximately
      $8.3 million.  Judgment was not entered pending resolution of the
      Cross-Complaints.





On
      January 14, 2005, First California
      Title Company, New Century Title Company (“New Century”) and United Title
      Company (collectively, “Capital Title Plaintiffs”) filed a Complaint in the
      Superior Court of the State of California, County of Los Angeles, against
      Financial Title Company, Mercury Companies, Inc. (“Mercury”), Stacy Neves,
      Stephanie Howard, George Willard and Tony Becker (Case  No. BC 327332)
      (collectively, “Capital Title Defendants”).  The lawsuit claimed
      substantial monetary and punitive damages for unfair competitive business
      practices in conjunction with Capital Title Plaintiffs’ loss of approximately 80
      employees in California to Capital Title Defendants over an approximately eight
      month period.  The complaint was later amended to include Alliance
      Title Company and Christine De’Martini as named defendants.  On
      September 8, 2006, we completed a merger in which Capital Title Plaintiffs
      became affiliated companies.  A jury trial began on October 17,
      2006.  On December 28, 2006, the jury returned its verdict for Capital
      Title Plaintiffs in the approximate amount of $2 million.  The
      punitive damages phase of the bifurcated trial was held on January 2, 2007
      and
      resulted in a punitive damages award for Capital Title Plaintiffs in the
      approximate amount of $14.6 million.  Judgment was entered on March 8,
      2007. Capital Title Defendants filed several post-trial motions including
      motions for a new trial on the issue of punitive damages.  On March
      22, 2007, the trial court granted Mercury’s motion for new trial on the issue of
      punitive damages.  Having found that the punitive damages awarded by
      the jury in favor of plaintiff New Century violated due process, the trial
      court
      reduced the amount of the punitive damages awarded against Mercury from $11.6
      million to $2.9 million.  On April 18, 2007, the trial court issued a
      Minute Order modifying the previous judgment entered in favor of New Century
      to
      reflect this reduction of punitive damages.  The trial court denied
      similar motions for new
      trial
      brought by other Capital Title Defendants.  Accordingly, the total
      amount of punitive damages awarded against Capital Title Defendants, after
      the
      March 22, 2007 order, was $5.9 million.





Voluntary
      mediation beginning on April
      4, 2007 led the parties in both cases to a final settlement in July 2007
      pursuant to which Mercury paid to LandAmerica the amount of $12.5 million and
      the parties agreed to the resolution of all claims, including but not limited
      to
      cross claims, post-trial motions and appeals, thus eliminating the necessity
      for
      later scheduled trials, including the trial on the Cross Complaints, and appeal
      deadlines.  The settlement amount is reflected as a reduction of legal
      fees and costs expended in the litigation in the “General,





39





administrative
      and other” line (approximately $11.7 million) and in the “Salaries and employee
      benefits” line (approximately $0.3 million) of the Consolidated Statements of
      Operations.





On
      January 25, 2002, Miles R. Henderson
      and Patricia A. Henderson (“Plaintiffs in the Henderson Suit”) filed a putative
      class action suit (the “Henderson Suit”) against Lawyers Title Insurance
      Corporation (“Lawyers Title”) in the Court of Common Pleas for Cuyahoga County,
      Ohio.  Lawyers Title removed the case to the District Court for the
      Northern District of Ohio on March 6, 2002, and Plaintiffs in the Henderson
      Suit
      amended the complaint on March 8, 2002.  On June 28, 2002, the
      District Court remanded the case to the Court of Common Pleas for Cuyahoga
      County, Ohio.  A similar putative class action suit was filed against
      Commonwealth, by Rodney P. Simon and Tracy L. Simon (“Plaintiffs in the Simon
      Suit”) in the Court of Common Pleas for Cuyahoga County, Ohio on March 5, 2003.
      Plaintiffs’ complaints in both suits alleged that the defendants had a practice
      of charging original rates for owners title insurance policies when lower,
      reissue rates should have been charged.  Both defendants initially
      responded by demanding that the actions be arbitrated, but on final appeal
      to
      the Ohio Supreme Court, the Court ruled that arbitration was not required for
      either suit.  On remand to the trial court, Plaintiffs in the
      Henderson Suit are now seeking to have the case certified as a class action
      on
      behalf of all sellers and buyers of residential property in Ohio who paid the
      higher original rate from 1992 to the present. A mediation is scheduled for
      November 7-8, 2007.  The court is in the process of setting a class
      certification hearing date, which is expected to occur in December
      2007.  Plaintiffs in the Simon Suit are seeking to have the case
      certified as a class action on behalf of all sellers of residential property
      in
      Ohio, who paid the original rate from 1993 to the present, as requested in
      the
      original complaint, although no hearing date on the class certification has
      been
      scheduled.  Plaintiffs’ complaints in both cases demand an unspecified
      amount of compensatory damages, declaratory and injunctive relief, punitive
      damages, and attorneys’ fees and costs.  There have been no class
      certifications, and the defendants believe that they have meritorious
      defenses.





On
      September 20, 2004, Kenneth and
      Deette Higgins (“Plaintiffs in the Higgins Suit”) filed a putative class action
      suit (the “Higgins Suit”) against Commonwealth Land Title Insurance Company
      (“Commonwealth”) in the Circuit Court of Nassau County, Florida.  On
      February 3, 2005, Plaintiffs in the Higgins Suit filed an Amended Class Action
      Complaint.  Plaintiffs in the Higgins Suit allege that Commonwealth
      had a practice of charging refinance borrowers higher basic rates for title
      insurance, rather than the lower reissue rates for which they are alleged to
      have qualified, and of failing to disclose the potential availability of the
      lower rates.  Plaintiffs in the Higgins Suit seek to have the case
      certified as a class action on behalf of all Florida persons or entities who
      refinanced their mortgages or fee interests on the identical premises from
      July
      1, 1999 to the present where there was no change in the fee ownership and who
      were charged a premium in excess of the reissue premium.  Plaintiffs’
complaints in the Higgins Suit demand an unspecified amount of compensatory
      damages, declaratory relief, attorneys’ fees, costs and pre-judgment
      interest.  There has been no class certification, and Commonwealth
      believes it has meritorious defenses.





On
      July 24, 2006, A. D. Alberton
      (“Plaintiff in the Alberton Suit”) filed a putative class action suit (the
“Alberton Suit”) against Commonwealth which is currently pending in the
      United





40





States
      District Court for the Eastern District of Pennsylvania.  A similar
      putative class action suit was filed against Lawyers Title by Shariee L. De
      Cooman (“Plaintiff in the De Cooman Suit”) in the Court of Common Pleas of
      Allegheny County, Pennsylvania on or about August 12, 2005.  On
      November 1, 2005, Plaintiff in the De Cooman Suit filed an Amended
      Complaint.  Plaintiff’s complaint in the Alberton Suit alleges that
      Commonwealth charged rates for title insurance in excess of statutorily mandated
      rates and/or failed to disclose to consumers that they were entitled to reduced
      title insurance premiums and seeks to certify a class on behalf of all consumers
      who paid premiums for the purchase of title insurance on Pennsylvania properties
      from Commonwealth at any time during the year 2000 until August 2005 and
      qualified for a discounted refinance or reissue rate discount and did not
      receive such discount.  Plaintiff’s complaint in the De Cooman Suit
      alleges that Lawyers Title charged the basic rate rather than a reissue or
      discounted rate to certain consumers and seeks to certify a class on behalf
      of
      all owners of residential real estate in Pennsylvania who, at any time during
      the ten years prior to August 12, 2005 paid premiums for the purchase of title
      insurance from Lawyers Title, qualified for a reissue or other discounted rate,
      and did not receive such rate.  A class certification hearing was held
      on October 16, 2007 in the Alberton Suit after which the judge instructed the
      parties to provide a proposed report on settlement negotiations in 20
      days.  The trial is currently scheduled to commence on January 14,
      2008. A class certification hearing was held on October 9, 2007 in the De Cooman
      Suit.  Plaintiff’s complaint in the Alberton Suit demands an
      unspecified amount of compensatory damages, declaratory relief, triple damages,
      restitution, pre-judgment and post-judgment interest and expert fees, attorneys’
fees and costs.  Plaintiff’s complaint in the De Cooman Suit demands
      an unspecified amount of compensatory damages, punitive damages, triple damages,
      prejudgment interest, and attorneys’ fees, litigation expenses and
      costs.  The defendants believe they have meritorious
      defenses.





With
      respect to the class action litigation disclosed above, the cases are subject
      to
      many uncertainties and complexities, including but not limited to the underlying
      facts of each matter, variations between jurisdictions in which matters are
      being litigated, differences in applicable laws and judicial interpretations,
      the length of time before many of these matters might be resolved by settlement
      or through litigation and, in some cases, the timing and structure of their
      resolution relative to other similar cases brought against other companies,
      the
      fact that many of these matters are putative class actions in which a class
      has
      not been certified and in which the purported class may not be clearly defined,
      and the current challenging legal environment faced by large corporations and
      insurance companies.  For the reasons specified above, at this stage
      of the litigation, the amount or range of loss that could result from an
      unfavorable outcome cannot be reasonably estimated, except with respect to
      a
      reserve of $10 million established during third quarter 2007 in connection
      with
      the Henderson and Alberton cases.





We
      are defendants in a number of other
      purported class action cases pending in various states that include allegations
      that certain consumers were overcharged for title insurance and/or related
      services. The dollar amount of damages sought has generally not been specified
      in these cases except for jurisdictional limits.  We intend to
      vigorously defend these actions.








41





***Regulatory
      Proceedings***





We
      have
      received certain information requests and subpoenas from various regulatory
      authorities relating to our business practices and those of the title insurance
      industry.





The
      Government Accountability Office released its final report on the title
      insurance industry on April 17, 2007 (the “Report”).  The Report makes
      recommendations regarding federal and state oversight of the title insurance
      industry, including but not limited to, better consumer information,
      consideration of the need for modification to the Real Estate Settlement
      Procedures Act and increased cooperation among regulators.





Various
      states are studying the title
      insurance product, market, pricing, business practices, and potential regulatory
      and legislative changes.  Multiple states, including California,
      Florida, Nevada, New Mexico, New York, Texas, and Washington, are examining
      pricing levels and/or title insurance regulations.  If it is
      determined that prices are not justified, rate changes may be implemented,
      including potential rate reductions.





Some
      of
      the pricing examinations, like those conducted in Texas and New Mexico, are
      conducted annually or biannually and usually result in adjustments to the prices
      we can charge.  Subsequent to the 2004 Texas Title Insurance Biennial
      Hearings in August 2006, the Texas Commissioner of Insurance ordered a rate
      reduction of 3.2 percent effective February 1, 2007.  The rulemaking
      hearing was held on September 5, 2007, and a decision is pending.  The
      ratemaking phase has been postponed to March 2008.





Subsequent
      to a hearing of the New Mexico title rate case concluded on January 18, 2007,
      the New Mexico Superintendent of Insurance (the “Superintendent”) issued an
      order on July 20, 2007 (the “Final Order”) mandating a rate reduction of 6.36
      percent and a change in the agent/underwriter split from 80/20 to 84.2/15.8
      effective September 1, 2007.  The New Mexico Land Title Association
      (the “NMLTA”) filed a Motion for Reconsideration with the Superintendent on
      August 3, 2007.  As a result of the Superintendent taking no action
      with respect to that Motion, on August 20, 2007, the NMLTA filed a Request
      for
      Review of Superintendent’s Final Order, a stay and hearing by the New Mexico
      Public Regulatory Commission (the “Commission”).  Various underwriters
      also filed an appeal to the Commission.  On August 28, 2007, the
      Superintendent issued an Order denying the NMLTA’s Motion for Reconsideration
      and granting the stay request until the Commission completes its review of
      the
      case with a requirement that the rate differential be escrowed during the stay
      and a notice of potential refund be provided to consumers.  If the
      Commission upholds the Final Order, it can then be appealed to a New Mexico
      district court, with further appellate review available up to the New Mexico
      Supreme Court.  The New Mexico Land Title Association and certain
      underwriters filed motions on October 19, 2007 seeking various remedies relating
      to the 2006 rate case, which could, if granted, result in certain Commissioners
      recusing themselves or vacating the 2006 rate decision.  The 2007 rate
      case is currently scheduled to begin November 16, 2007.  The New
      Mexico Attorney General has moved to intervene in the case, asked for new data
      collection and filed a motion with the Superintendent seeking to delay the
      rate
      hearing for 6 months.





42





The
      California Department of Insurance (“CA DOI”) submitted to the Office of
      Administrative Law (“OAL”) proposed regulations governing the rating of title
      insurance and related services that could impose future rate reductions and
      filing of mandated statistical plans that impose substantially higher costs
      on
      title insurance operations in California.  On February 21, 2007, OAL
      disapproved the regulatory action for failure to comply with certain standards
      and requirements and on February 28, 2007 issued a written decision detailing
      the reasons for disapproval. On June 28, 2007, CA DOI submitted revised
      regulations to OAL that were approved by OAL on July 25, 2007 and subsequently
      released by the California Secretary of State.  The date for
      compliance with the requirements of the regulations varies by provision during
      2009 and 2010.  LandAmerica and other title companies doing business
      in the California market have been engaged in discussions with CA DOI regarding
      alternative approaches to the regulations but may pursue an appeal if such
      discussions are unsuccessful.  The Commissioner of CA DOI has agreed
      to propose substantial changes to the data call (i.e. a request to submit
      information for the insurance experience) and statistical plan portion of the
      regulations to simplify them and minimize compliance costs, including delaying
      the effective dates by one year, through a new rulemaking file.  The
      Commissioner has committed further to (i) eliminate the interim rate reduction
      if the industry helps CA DOI obtain an alternative method to enforce the data
      call and (ii) eliminate the maximum rate formula if the industry works with
      CA
      DOI to enact substantive alternate reforms.  The Commissioner has
      requested the California Land Title Association form an advisory group to work
      directly with CA DOI on these matters.





The
      Florida Office of Insurance
      Regulation (“FLOIR”) and Department of Financial Services (“FLDFS”) held a
      public hearing on August 23, 2007, in which numerous title insurance executives
      were questioned about Florida title insurance issues. The FLOIR has indicated
      that a second hearing may be held in November 2007, in preparation for a rate
      case proceeding, or in preparation for proposed regulatory changes.





In
      addition, a number of state
      inquiries have focused on captive reinsurance.  Captive reinsurance
      involves the provision of reinsurance by a reinsurance company that is owned
      by
      another entity, typically a lender, developer or other party that is a provider
      of real estate-related services.  From the inception of our captive
      reinsurance programs in 1997 through 2004, reinsurance premiums paid by us
      to
      captive reinsurers totaled approximately $12.0 million.  The revenues
      from these programs were not material to our results of
      operations.  We voluntarily terminated our captive reinsurance
      arrangements as of February 2005, notwithstanding our belief that we had
      operated the programs in accordance with applicable law.  We settled
      these investigations with six states, representing approximately 81.4 percent
      of
      our captive reinsurance business, without admitting any liability.





In
      June 2005, we established reserves
      of $19.0 million to cover anticipated exposure to regulatory matters nationwide,
      an amount which includes settlements with the California, Arizona, Nevada,
      Virginia, Colorado, and North Carolina departments of
      insurance.  Based on these settlements and the status of inquiries, we
      released $6.7 million of this reserve back into earnings in fiscal year 2005
      and
      $0.8 million in fiscal year 2006.  The remaining reserve at September
      30, 2007 was approximately $1.9 million.





43





We
      may
      receive additional subpoenas and/or requests for information in the future
      from
      state or federal government agencies.  We will evaluate, and we intend
      to cooperate in connection with, all such subpoenas and requests.





Based
      on the information known to
      management at this time, it is not possible to predict the outcome of any of
      the
      currently pending governmental inquiries and investigations into the title
      insurance industry’s market, business practices, pricing levels, and other
      matters, or the market’s response thereto.  However, any material
      change in our business practices, pricing levels, or regulatory environment
      may
      have an adverse effect on our business, operating results and financial
      condition.





**Forward-Looking
      and Cautionary Statements**





This
      Quarterly Report on Form 10-Q
      contains “forward-looking statements” within the meaning of Section 27A of the
      Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
      Among other things, these statements relate to our financial condition, results
      of operations and future business plans, operations, opportunities and
      prospects. In addition, we and our representatives may from time to time make
      written or oral forward-looking statements, including statements contained
      in
      other filings with the Securities and Exchange Commission and in our reports
      to
      shareholders. These forward-looking statements are generally identified by
      the
      use of words such as we “expect,” “believe,” “anticipate,” “could,” “should,”
“may,” “plan,” “will,” “predict,” “estimate” and similar expressions or words of
      similar import. These forward-looking statements are based upon our current
      knowledge and assumptions about future events and involve risks and
      uncertainties that could cause our actual results, prospects, performance or
      achievements to be materially different from any anticipated results, prospects,
      performance or achievements expressed or implied by such forward-looking
      statements. Such risks and uncertainties include: (i) our results of operations
      and financial condition are susceptible to changes in mortgage interest rates
      and general economic conditions;**(ii) changes to the participants
      in the secondary mortgage market could affect the demand for title insurance
      products;**(iii) we are subject to government regulation; (iv)
      heightened regulatory scrutiny of us and the title insurance industry, including
      any future resulting reductions in the pricing of title insurance products
      and
      services, could materially and adversely affect our business, operating results,
      and financial condition; (v) we may not be able to fuel our growth through
      acquisitions; (vi) our inability to integrate and manage successfully our
      acquired businesses could adversely affect our business, operating results,
      and
      financial condition; (vii) regulatory non-compliance, fraud or defalcations
      by
      our title insurance agents or employees could adversely affect our business,
      operating results, and financial condition; (viii) competition in our industry
      affects our revenue; (ix) significant industry changes and new product and
      service introductions require timely and cost-effective responses; (x) our
      litigation risks include substantial claims by large classes of claimants;
      (xi)
      our claims experience may require us to increase our provision for title losses
      or to record additional reserves, either of which may adversely affect our
      earnings; (xii) key accounting and essential product delivery systems are
      concentrated in a few locations; (xiii) provisions of our articles of
      incorporation and bylaws and applicable state corporation and insurance laws
      could limit another party’s ability to acquire us and could deprive shareholders
      of the opportunity to obtain a takeover premium for shares of common stock
      owned
      by them; (xiv)





44





our
      future success depends on our ability to continue to attract and retain
      qualified employees; (xv) our conduct of business in foreign markets creates
      financial and operational risks and uncertainties that may materially and
      adversely affect our business, operating results, and financial condition;
      and
      (xvi) various external factors including general market conditions, governmental
      actions, economic reports and shareholder activism may affect the trading
      volatility and price of our common stock. For a description of factors that
      may
      cause actual results to differ materially from such forward-looking statements,
      see our Annual Report on Form 10-K for the year ended December 31, 2006, and
      other reports from time to time filed with or furnished to the Securities and
      Exchange Commission. We caution investors not to place undue reliance on any
      forward-looking statements as these statements speak only as of the date when
      made. We undertake no obligation to update any forward-looking statements made
      in this report.





**ITEM
                3.**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**





Our
      primary exposure to market risk
      relates to interest rate risk and equity price risk.  Interest rate
      risk is generally related to certain investment securities, loans receivable,
      debt and certain deposits.  We are also subject to equity price risk
      through various portfolios of equity securities.  We have operations
      in certain foreign countries, but these operations, in the aggregate, are not
      material to our financial condition or results of operations.





The
      following table provides information about our financial instruments that are
      sensitive to changes in interest rates.  Values in the table present
      principal cash flows and related weighted-average interest rates by expected
      maturity dates. Actual cash flows could differ from the expected
      amounts.








45








Principal
                Amount by Expected MaturityAverage
                Interest Rate(Dollars
                in millions)2007
            
            
            2008
            
            
            2009
            
            
            2010
            
            
            2011
            
            
            2012
                and
              after
            
            
            Total
            
            
            Fair
              ValueAssets:Taxable
                available-for-sale securities:Book
                value
            
            $
            17.1
            
            
            
            31.5
            
            
            
            35.9
            
            
            
            28.1
            
            
            
            49.7
            
            
            
            412.8
            
            
            $
            575.1
            
            
            $
            573.5Average
                yield
            
            
            4.9
            %
            
            
            4.5
            %
            
            
            5.1
            %
            
            
            4.9
            %
            
            
            5.4
            %
            
            
            5.4
            %
            
            
            5.3
            %Non-taxable
                available-for-sale securities:Book
                value
            
            $
            -
            
            
            
            18.6
            
            
            
            15.8
            
            
            
            26.2
            
            
            
            30.5
            
            
            
            365.1
            
            
            $
            456.2
            
            
            $
            463.1Average
                yield
            
            
            -
            
            
            
            4.6
            %
            
            
            4.1
            %
            
            
            4.1
            %
            
            
            4.3
            %
            
            
            4.2
            %
            
            
            4.2
            %Taxable
                trading securities:Book
                value
            
            $
            -
            
            
            
            1.5
            
            
            
            2.6
            
            
            
            1.9
            
            
            
            6.7
            
            
            
            89.6
            
            
            $
            102.3
            
            
            $
            102.3Average
                yield
            
            
            -
            
            
            
            5.1
            %
            
            
            6.0
            %
            
            
            5.5
            %
            
            
            4.7
            %
            
            
            5.5
            %
            
            
            5.4
            %Non-taxable
                trading securities:Book
                value
            
            $
            -
            
            
            
            -
            
            
            
            2.2
            
            
            
            0.5
            
            
            
            3.3
            
            
            
            29.5
            
            
            $
            35.5
            
            
            $
            35.5Average
                yield
            
            
            -
            
            
            
            -
            
            
            
            4.3
            %
            
            
            3.6
            %
            
            
            3.7
            %
            
            
            4.2
            %
            
            
            4.2
            %Preferred
                stock available-for-sale:Book
                value
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            9.9
            
            
            $
            9.9
            
            
            $
            9.6Average
                yield
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3.6
            %
            
            
            3.6
            %Loans
                receivable, excluding reserves, discounts and other costs:Book
                value
            
            $
            -
            
            
            
            0.7
            
            
            
            2.9
            
            
            
            1.4
            
            
            
            8.3
            
            
            
            591.3
            
            
            $
            604.8
            
            
            $
            607.3Average
                yield
            
            
            -
            
            
            
            9.2
            %
            
            
            7.6
            %
            
            
            7.4
            %
            
            
            7.0
            %
            
            
            7.1
            %
            
            
            7.1
            %Liabilities:Interest
                bearing passbook liabilities:Book
                value
            
            $
            69.2
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            69.2
            
            
            $
            69.2Average
                yield
            
            
            4.7
            %
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4.7
            %Interest
                bearing certificate of deposit liabilities:Book
                value
            
            $
            67.2
            
            
            
            197.6
            
            
            
            40.8
            
            
            
            22.8
            
            
            
            6.2
            
            
            
            3.3
            
            
            $
            337.9
            
            
            $
            352.2Average
                yield
            
            
            5.0
            %
            
            
            5.2
            %
            
            
            4.6
            %
            
            
            4.8
            %
            
            
            5.2
            %
            
            
            5.1
            %
            
            
            5.1
            %





Changes
      in maturities and yields from
      December 31, 2006 to September 30, 2007 primarily relate to timing of purchases
      and sales of securities and the effect that the securities sold or purchased
      have on the average portfolio yield, timing of payments received from, and
      the
      extension of loans to, customers in the commercial real estate market and timing
      of amounts held for customers.





We
      also have non-interest bearing
      passbook deposit liabilities of $90.7 million at September 30, 2007 that are
      included in the accompanying consolidated balance sheets.  In
      addition, during first quarter 2007, we transferred $142.6 million of our
      fixed-maturity securities from available-for-sale securities to trading
      securities.  This transfer introduced incremental interest rate risk
      into our statements of operations.  We do not expect the incremental
      interest rate risk to have a material affect on our financial
      statements.  For further details, see Note 4, “Investments” of the
      Notes to Consolidated Financial Statements in Part I, Item 1 of this
      report.





46





There
      have been no material changes in
      other market risks that affect us since the filing of our Form 10-K for the
      year
      ended December 31, 2006.





**ITEM
                4.**
            **CONTROLS
                AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**





We
      maintain disclosure controls and
      procedures that are designed to provide assurances that information required
      to
      be disclosed by us in the reports that we file or submit under the Securities
      Exchange Act of 1934 (the “Exchange Act”), as amended, is recorded, processed,
      summarized and reported within the time periods required by the Securities
      and
      Exchange Commission.





Our
      management, under the direction of
      our Chief Executive Officer and our Chief Financial Officer, has evaluated
      the
      effectiveness of the design and operation of our disclosure controls and
      procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as
      of
      September 30, 2007.  Based upon this evaluation our management,
      including our Chief Executive Officer and our Chief Financial Officer, has
      concluded that our disclosure controls and procedures were effective as of
      September 30, 2007.





**Changes
      in Internal Controls**





There
      were no changes in our internal
      controls over financial reporting that occurred during the quarter ended
      September 30, 2007 that have materially affected, or are reasonably likely
      to
      materially affect, our internal controls over financial
      reporting.





**PART
      II.  OTHER INFORMATION**





**ITEM
                1.**
            **LEGAL
                PROCEEDINGS**





The
      information contained in Note 8
“Commitments and Contingencies” of the Notes to Consolidated Financial
      Statements filed as Part I, Item 1 of this Quarterly Report on Form 10-Q is
      incorporated herein by reference.





**ITEM
                1A.**
            **RISK
                FACTORS**





Our
      business is subject to various
      risks, including the risks described in our Form 10-K for the fiscal year ended
      December 31, 2006 and the risk described below.  Our business,
      operating results and financial condition could be materially and adversely
      affected by any of these risks. Please note that additional risks not presently
      known to us or that we currently deem immaterial may also impair our business
      and operations.








47





**The
      trading volatility and price of our common stock may be affected by various
      external factors.**





The
      volatility and price of our common stock are subject to various factors over
      which we have no control, such as general market conditions and governmental
      actions or reports about economic activity that may have a market-moving impact,
      regardless of whether the action or activity directly relates to our business.
      In addition, shareholder activism that seeks to influence corporate policies
      or
      affect our business strategies may lead to speculative trading activity in
      our
      common stock.  Any substantial trading activity, whether due to
      speculation or otherwise, has the potential to affect the market price and
      volatility of our stock.  We cannot predict the timing or impact of
      these factors on the volatility or price of our common stock.





**ITEM
                2.**
            **UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS**





(c)           The
      following table sets forth the details of purchases of common stock under our
      share purchase plans and our Executive Voluntary Deferral Plan and Outside
      Directors Deferral Plan that occurred in third quarter 2007:





Period
            
            Total
                Number
              of
                Shares
              Purchased
            
            
            Average
                Price
              Paid
                per Share
            
            
            Total
                Number of Shares
              Purchased
                as Part of
              Publicly
                Announced
              Plans
                or Programs
            
            
            Maximum
                Number of
              Shares
                that May Yet
              Be
                Purchased Under
              the
                Plans or ProgramsJuly
                1 through July 31, 2007
            
            
            826
            
            
            $
            96.92
            
            
            
            -
            
            
            
            1,581,819August
                1 through August 31, 2007
            
            
            420,193
            
            
            $
            56.08
            
            
            
            419,300
            
            
            
            1,161,626September
                1 through September 30, 2007
            
            
            505,667
            
            
            $
            42.80
            
            
            
            500,200
            
            
            
            655,959





(1)
            A
                total of 7,186 shares of our common stock were purchased in connection
                with two employee benefit plans during third quarter
                2007.  These repurchases were made in open-market transactions
                on behalf of a trust maintained by us for the Executive Voluntary
                Deferral
                Plan and the Outside Directors Deferral
                Plan.





(2)
            In
                February 2007, we announced an additional share repurchase plan providing
                for the purchase of up to 1,500,000 shares of our common stock expiring
                at
                the end of October 2008.  During third quarter 2007, we
                repurchased 919,500 shares under this purchase
                plan.





(3)
            In
                August 2007, we announced an additional share repurchase plan providing
                for the purchase of up to 1,500,000 shares of our common stock expiring
                at
                the end of March 2009.  As of September 30, 2007, no shares have
                been repurchased under this purchase
                plan.








48









**ITEM
                5.**
            **OTHER
                INFORMATION**




On
      August 20, 2007, the Company’s
      Preferred Share Purchase Rights Plan expired without being
      renewed.  Refer to Note 11 to the consolidated financial statements of
      the 2006 Form 10-K for additional information.





**ITEM
                6.**
            **EXHIBITS**





No.
            Description3.1
            Articles
                of Amendment*31.1
            Rule
                13a-14(a) Certification of Chief Executive Officer*31.2
            Rule
                13a-14(a) Certification of Chief Financial Officer*32.1
            Statement
                of Chief Executive Officer Pursuant to 18 U.S.C. Section
                1350*32.2
            Statement
                of Chief Financial Officer Pursuant to 18 U.S.C. Section
                1350*





49





**SIGNATURE**





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








**LANDAMERICA
                FINANCIAL GROUP, INC**.(Registrant)Date: 
                October 31, 2007
            
            /s/
                Christine R. VlahcevicChristine
                R. VlahcevicSenior
                Vice President – Corporate Controller(Principal
                Accounting Officer)











50





**EXHIBIT
      INDEX**





No.
            Description3.1
            Articles
                of Amendment*31.1
            Rule
                13a-14(a) Certification of Chief Executive Officer*31.2
            Rule
                13a-14(a) Certification of Chief Financial Officer*32.1
            Statement
                of Chief Executive Officer Pursuant to 18 U.S.C. Section
                1350*32.2
            Statement
                of Chief Financial Officer Pursuant to 18 U.S.C. Section
                1350*





*
      Filed
      herewith.








51