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


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


                                    FORM 8-K


                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                        Date of Report: February 27, 1998
                        (Date of earliest event reported)



                        LANDAMERICA FINANCIAL GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)



          Virginia                       1-13990                  54-1589611  
(State or Other Jurisdiction     (Commission File Number)       (IRS Employer
      of Incorporation)                                      Identification No.)

            6630 West Broad Street             
              Richmond, Virginia                         23230
   (Address of Principal Executive Offices)           (Zip Code)
  

                                 (804) 281-6700
               Registrant's telephone number, including area code


                            Lawyers Title Corporation
                       (former Name or Former Address, if
                           Changed Since Last Report)


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


<PAGE>



Item 2.  Acquisition or Disposition of Assets.

         On February 27,  1998,  LandAmerica  Financial  Group,  Inc.  (formerly
Lawyers  Title  Corporation)  (the  "Company")  acquired  all of the  issued and
outstanding   capital  stock  of  Commonwealth   Land  Title  Insurance  Company
("Commonwealth")   and  Transnation  Title  Insurance  Company   ("Transnation")
(collectively,  the  "Acquisition")  pursuant to an Amended and  Restated  Stock
Purchase Agreement (the "Stock Purchase Agreement"), dated December 11, 1997, by
and among the Company,  Lawyers Title Insurance Corporation  ("LTIC"),  Reliance
Group  Holdings,  Inc.  ("Reliance")  and Reliance  Insurance  Company  ("RIC").
Commonwealth and Transnation together comprise the third largest title insurance
operation in the United States based upon total  premiums and fees in 1996. As a
result of the  Acquisition,  Commonwealth  and  Transnation  became wholly owned
subsidiaries of the Company.

         The  purchase  price  paid  by  the  Company  in  connection  with  the
Acquisition  consisted of (i)  approximately  $200.7 million in cash funded by a
Revolving Credit Agreement, dated November 7, 1997, between the Company and Bank
of  America  National  Trust  and  Savings  Association,   individually  and  as
Administrative  Agent for a syndicate of 11 other financial  institutions,  (ii)
the issuance to RIC of 4,039,473 shares of the Company's Common Stock, (iii) the
issuance to RIC of  2,200,000  shares of the  Company's  7% Series B  Cumulative
Convertible Preferred Stock (the "Series B Preferred Stock"), which is initially
convertible  into  4,824,561  shares of Common Stock,  and (iv) $65.9 million in
cash,  representing the net proceeds from the sale of 1,750,000 shares of Common
Stock  offered to the  public by the  Company.  The  various  components  of the
purchase price were determined by arms-length  negotiations between the parties.
Based upon a value for the  4,039,473  shares of Common Stock of $175.0  million
and an estimated  value for the 2,200,000  shares of Series B Preferred Stock of
$224.8 million,  the aggregate  purchase price paid by the Company to RIC at the
closing of the Acquisition was approximately  $666.4 million. For information on
the  estimated  aggregate  purchase  price to be  recorded  by the  Company  for
accounting  purposes,  see  footnote  1 to  the  Pro  Forma  Condensed  Combined
Financial Statements set forth in "Item 7(b) - Pro Forma Financial  Information"
below.

         In connection with the consummation of the Acquisition, the Company (i)
amended its Articles of Incorporation to establish the Series B Preferred Stock,
(ii)  increased  the size of the Board of  Directors  from 10 to 14 and  elected
Herbert Wender,  Robert M. Steinberg,  Lowell C. Freiberg and George E. Bello as
additional directors of the Company,  (iii) completed the registration under the
Securities Act of 1933, as amended, of the 4,039,473 shares of Common Stock, the
2,200,000  shares of Series B Preferred Stock and the 4,824,561 shares of Common
Stock  issuable  upon  conversion  of the Series B Preferred  Stock  (subject to
adjustment as provided in the designation of the Series B Preferred Stock),  and
(iv) entered into a Voting and  Standstill  Agreement  with  Reliance and RIC as
described in the Company's definitive Proxy Statement for the Special Meeting of
Shareholders  held on  February  27,  1998,  a copy of which was filed  with the
Securities and Exchange Commission on January 29, 1998.

         As of the close of business on February 27,  1998,  the total number of
shares of Common Stock issued and  outstanding  was  15,044,593.  The  4,039,473
shares  of  Common  Stock  acquired  by RIC at the  closing  of the  Acquisition
represent  approximately  26.8% of the issued and  outstanding  shares of Common
Stock as of that date.

         In  addition,   the  Company  changed  its  name  from  "Lawyers  Title
Corporation" to "LandAmerica Financial Group, Inc." effective as of February 27,
1998.  The change in name for the Company is  intended  to signify,  among other
things,  an expansion of the products  and  services  beyond  traditional  title
insurance to be  developed  and offered by the combined  company  following  the
Acquisition.  LTIC,  Commonwealth and Transnation will continue to operate under
their current names for the foreseeable future.

         Effective  March 2, 1998, the Common Stock of the Company began trading
on the New York Stock  Exchange  ("NYSE")  under the symbol "LFG." Prior to that
date, the Common Stock traded on the NYSE under the symbol "LTI."



                                      -2-
<PAGE>

Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

         (a)     Financial Statements of Businesses Acquired.

         The following audited combined financial statements of Commonwealth and
Transnation and their subsidiaries are included in this report:

         Independent Auditors' Report

         Combined Statements of Income for the Three Years Ended
           December 31, 1997, 1996 and 1995

         Combined Balance Sheets at December 31, 1997 and 1996

         Combined  Statements of Changes in  Shareholder's  Equity for the
           Three Years Ended December 31, 1997, 1996 and 1995

         Combined  Statements  of Cash  Flows  for the Three  Years  Ended
           December 31, 1997, 1996 and 1995

         Notes to Combined Financial Statements



                                      -3-
<PAGE>

                          Independent Auditors' Report


Board of Directors and Shareholder
Commonwealth Land Title Insurance Company
Transnation Title Insurance Company
Philadelphia, Pennsylvania

We have audited the accompanying  combined  balance sheets of Commonwealth  Land
Title Insurance Company and subsidiaries  ("Commonwealth") and Transnation Title
Insurance  Company and  subsidiaries  ("Transnation")  (both of which are wholly
owned subsidiaries of Reliance Group Holdings, Inc.) as of December 31, 1997 and
1996, and the related  combined  statements of income,  changes in shareholder's
equity,  and cash flows for each of the three years in the period ended December
31,  1997.  Commonwealth  and  Transnation  (the  "Companies")  are under common
ownership  and  common   management.   These   financial   statements   are  the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  such  combined  financial  statements  present  fairly,  in all
material   respects,   the  combined  financial  position  of  Commonwealth  and
Transnation  at December 31, 1997 and 1996,  and the  combined  results of their
operations  and their  combined  cash  flows for each of the three  years in the
period ended December 31, 1997 in conformity with generally accepted  accounting
principles.


/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania
February 11, 1998
  (February 27, 1998 as to Note 10)



                                      -4-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                          COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                                     Year Ended December 31
                                                                  ----------------------------------------------------------
                                                                       1997                  1996                   1995
                                                                  -------------         -------------          -------------
<S>                                                               <C>                   <C>                    <C>          
REVENUES:
Premiums and fees................................................ $ 863,746,000         $ 780,157,000          $ 671,936,000

Net investment income............................................    30,990,000            30,455,000             27,933,000

Gain on sales of investments.....................................     1,596,000               346,000              1,729,000
                                                                  -------------         -------------          -------------

                                                                    896,332,000           810,958,000            701,598,000
                                                                  -------------         -------------          -------------

EXPENSES:
Commissions to agents............................................   379,755,000           355,834,000            310,729,000

Compensation and employee benefits...............................   240,950,000           206,083,000            188,097,000

Provision for losses.............................................    41,473,000            61,116,000             58,486,000

Taxes, other than federal income taxes...........................    13,397,000            12,923,000              9,782,000

Other operating expenses.........................................   155,852,000           136,422,000            120,294,000
                                                                  -------------         -------------          -------------

                                                                    831,427,000           772,378,000            687,388,000
                                                                  -------------         -------------          -------------

Income before income taxes.......................................    64,905,000            38,580,000             14,210,000

Provision for income taxes.......................................    22,729,000            13,347,000              4,755,000
                                                                  -------------         -------------          -------------

NET INCOME....................................................... $  42,176,000         $  25,233,000          $   9,455,000
                                                                  =============         =============          =============

</TABLE>






                  See notes to combined financial statements.



                                      -5-
<PAGE>



                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                             COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                                                      December 31
                                                                                           ---------------------------------
                                                                                                1997                1996
                                                                                           -------------       -------------
<S>                                                                                        <C>                 <C>   
ASSETS
Investments:
  Fixed maturities held-for-investment -- at amortized
    cost (quoted market $132,422,000 and $140,789,000).................................... $ 128,134,000       $ 139,798,000
  Fixed maturities available-for-sale -- at quoted market
    (amortized cost $273,162,000 and $284,381,000)........................................   284,173,000         289,991,000
  Short-term investments..................................................................    50,038,000          25,860,000
  First mortgage and other secured loans..................................................     6,840,000           5,453,000
Cash......................................................................................    19,742,000          14,328,000
Accounts receivable, less allowances of
  $5,886,000 and $5,663,000...............................................................    32,488,000          23,987,000
Real estate and equipment -- at cost, less accumulated
  depreciation of $19,551,000 and $25,746,000.............................................    25,306,000          15,373,000
Title plants..............................................................................    50,233,000          49,750,000
Deferred federal income tax benefit.......................................................    25,817,000          27,243,000
Goodwill..................................................................................    16,525,000          12,944,000
Other assets..............................................................................    13,192,000          16,027,000
                                                                                           -------------       -------------

                                                                                           $ 652,488,000       $ 620,754,000
                                                                                           =============       =============

LIABILITIES AND SHAREHOLDER'S EQUITY
Reserve for losses........................................................................ $ 272,792,000       $ 264,838,000
Accounts payable and accrued expenses.....................................................    91,079,000          76,168,000
Current federal income taxes..............................................................     6,707,000           6,091,000
                                                                                           -------------       -------------

                                                                                             370,578,000         347,097,000
                                                                                           -------------       -------------

Commitments and contingencies (Note 9)

Shareholder's equity:
  Common stock............................................................................    11,649,000          11,649,000
  Additional paid-in capital..............................................................   127,370,000         127,551,000
  Retained earnings.......................................................................   135,733,000         130,810,000
  Net unrealized gain on investments......................................................     7,158,000           3,647,000
                                                                                           -------------       -------------

                                                                                             281,910,000         273,657,000
                                                                                           -------------       -------------

                                                                                           $ 652,488,000       $ 620,754,000
                                                                                           =============       =============

</TABLE>



                                                                
                  See notes to combined financial statements.



                                      -6-
<PAGE>



                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

             COMBINED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>


                                                                                                        Net        
                                                              Additional                             Unrealized
                                             Common            Paid-in            Retained         Gain (Loss) on      Shareholder's
                                              Stock            Capital            Earnings           Investment           Equity
                                         -------------      -------------      -------------       -------------      -------------
<S>                                      <C>                <C>                <C>                 <C>                <C>          
BALANCE, JANUARY 1, 1995                 $  11,374,000      $ 127,278,000      $ 118,338,000       $ (3,524,000)      $ 253,466,000
Net income.........................                                                9,455,000                              9,455,000
Increase in par value of
   Commonwealth's common stock
   from $1.67 to $2.00 per share...            275,000          (275,000)
Dividends..........................                                              (4,000,000)                            (4,000,000)
Capital contribution...............                               548,000                                                   548,000
Appreciation after applicable
   deferred income tax provision
   of $6,068,000...................                                                                   11,268,000         11,268,000
                                         -------------      -------------      -------------       -------------      -------------

BALANCE, DECEMBER 31, 1995                  11,649,000        127,551,000        123,793,000           7,744,000        270,737,000
Net income.........................                                               25,233,000                             25,233,000
Dividends..........................                                             (18,216,000)                           (18,216,000)
Depreciation after applicable
   deferred income tax benefit
   of $2,207,000...................                                                                  (4,097,000)        (4,097,000)
                                         -------------      -------------      -------------       -------------      -------------

BALANCE, DECEMBER 31, 1996                  11,649,000        127,551,000        130,810,000           3,647,000        273,657,000
Net income.........................                                               42,176,000                             42,176,000
Dividends..........................                                             (37,253,000)                           (37,253,000)
Appreciation after applicable
   deferred income tax provision
   of $1,889,000...................                                                                    3,511,000          3,511,000
Stock Purchase Plan................                             (181,000)                                                 (181,000)
                                         -------------      -------------      -------------       -------------      -------------

BALANCE, DECEMBER 31, 1997               $  11,649,000      $ 127,370,000      $ 135,733,000       $   7,158,000      $ 281,910,000
                                         =============      =============      =============       =============      =============


</TABLE>





                  See notes to combined financial statements.



                                      -7-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                        COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                         Year Ended December 31
                                                                          -----------------------------------------------------
                                                                               1997               1996                1995
                                                                          --------------    ----------------    ---------------
<S>                                                                       <C>               <C>                 <C>            
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................   $   42,176,000    $     25,233,000    $     9,455,000
  Adjustments to reconcile net income to net cash
  provided from (used in) operating activities:
    Increase in reserve for losses.....................................        7,954,000          24,061,000         12,714,000
    Change in accounts receivable......................................       (9,894,000)          1,780,000            557,000
    Depreciation, bad debts and amortization...........................        9,481,000           7,797,000          6,838,000
    Change in accounts payable, accrued expenses and other.............       11,466,000           8,478,000        (13,539,000)
                                                                          --------------    ----------------    ---------------

NET CASH PROVIDED FROM OPERATING ACTIVITIES............................       61,183,000          67,349,000         16,025,000
                                                                          --------------    ----------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of:
  Fixed maturities available-for-sale..................................       47,049,000          88,225,000         29,677,000
  Fixed maturities held-for-investment.................................                            3,300,000          4,267,000
Maturities and repayments of:
  Fixed maturities available-for-sale..................................       18,361,000          13,671,000          2,869,000
  Fixed maturities held-for-investment.................................       15,893,000           2,700,000          2,005,000
Purchases of:
  Fixed maturities available-for-sale..................................     (53,647,000)       (138,310,000)       (37,922,000)
  Fixed maturities held-for-investment.................................      (3,443,000)        (24,817,000)       (10,982,000)
(Increase) decrease in short-term investments - net....................     (24,178,000)          15,360,000         13,055,000
Purchases of title plants - net........................................        (659,000)           (577,000)          (985,000)
Purchases of real estate and equipment - net...........................     (16,018,000)         (6,266,000)        (4,439,000)
Cash outlay for acquisitions...........................................                          (3,000,000)
Other - net............................................................      (1,693,000)           (321,000)        (1,730,000)
                                                                          --------------    ----------------    ---------------

NET CASH USED IN INVESTING ACTIVITIES..................................     (18,335,000)        (50,035,000)        (4,185,000)
                                                                          --------------    ----------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany receivables and payables - net............................                                             (1,909,000)
Stock Purchase Plan....................................................        (181,000)
Dividends..............................................................     (37,253,000)        (18,216,000)        (4,000,000)
Cash received from capital contribution................................                                                 40,000
                                                                          --------------    ----------------    ---------------

NET CASH USED IN FINANCING ACTIVITIES..................................     (37,434,000)        (18,216,000)        (5,869,000)
                                                                          --------------    ----------------    ---------------

INCREASE (DECREASE) IN CASH............................................        5,414,000            (902,000)         5,971,000
Cash, beginning of year................................................       14,328,000          15,230,000          9,259,000
                                                                          --------------    ----------------    ---------------

Cash, end of year......................................................   $   19,742,000    $     14,328,000    $    15,230,000
                                                                          ==============    ================    ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Federal income taxes paid..............................................   $   20,518,000    $     10,944,000    $     6,299,000
                                                                          ==============    ================    ===============
</TABLE>

                  See notes to combined financial statements.



                                      -8-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                     NOTES TO COMBINED FINANCIAL STATEMENTS


1.   NATURE OF OPERATIONS/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Combination
--------------------

The combined  financial  statements of Commonwealth Land Title Insurance Company
("Commonwealth") and Transnation Title Insurance Company ("Transnation") include
the  accounts of all  subsidiaries  and have been  prepared in  conformity  with
generally  accepted  accounting  principles.  Such statements  include  informed
estimates and judgments of management  for those  transactions  that are not yet
complete  or for which the  ultimate  effects  cannot be  precisely  determined.
Actual results may differ from these estimates.  All  intercompany  accounts and
transactions have been eliminated.  Certain  reclassifications have been made to
the 1996 and 1995 combined financial statements to conform with the current year
presentation.

Commonwealth and Transnation (the "Companies") are wholly owned  subsidiaries of
Reliance Insurance Company ("Reliance Insurance"). Reliance Group Holdings, Inc.
("Reliance"),  through a  subsidiary,  owns 100% of the common stock of Reliance
Insurance.  Together the Companies  comprise the title  insurance  operations of
Reliance Insurance.

Certain  administrative  services,  primarily relating to risk management,  data
processing and investment  services,  are provided by Reliance  Insurance to the
Companies.  The costs of such services  amounted to  $5,141,000,  $4,422,000 and
$4,292,000  for 1997,  1996 and 1995,  respectively,  and are  reflected  in the
statements of income.  These costs were  allocated to the Companies  either on a
direct basis or using reasonable  allocation methods  including,  for investment
services,  a percentage of invested assets managed.  Management of the Companies
believes that the cost of these services are substantially  similar to the costs
that they would have  incurred if the  Companies  had  operated as  unaffiliated
entities.

Nature of Operations
--------------------

The  principal   operations  of  the  Companies   consist  of  title   insurance
underwriting.  The Companies write, through direct and agency operations,  title
insurance for  residential  and  commercial  real estate  nationwide and provide
escrow and settlement services in connection with real estate closings.

Investments
-----------

Fixed maturity investments include bonds, notes and redeemable preferred stocks.
Fixed  maturity  investments   classified  as   "available-for-sale"   represent
securities that will be held for an indefinite period of time and are carried at
quoted  market  value  with  the  net  unrealized   gain  or  loss  included  in
shareholder's  equity.  Such  investments  may be sold in response to changes in
interest  rates,  future  general  liquidity  needs and similar  factors.  Fixed
maturity  investments  classified  as   "held-for-investment"   are  carried  at
amortized cost since the Companies have the positive  intent and ability to hold
these securities to maturity. Short-term investments consist primarily of United
States  government  securities,  certificates  of deposit and  commercial  paper
carried at cost,  which  approximates  market  value.  First  mortgage and other
secured loans are carried at cost, which approximate their fair value.  Realized
gains and losses, determined on a specific identification basis, are included in
income.



                                      -9-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


1.   NATURE OF OPERATIONS/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Title Insurance
---------------

Direct title insurance premiums and fees are recognized as revenue when policies
become  effective.  Agency  insurance  premiums are  recognized  as revenue when
reported by the agent.  Title insurance  claims arise  principally  from unknown
title defects that exist at the time policies become effective.

At the time premiums are recorded as revenue,  the Companies  establish reserves
for the  estimated  ultimate  amounts  that  will be paid for  reported  claims,
incurred  but not reported  claims and the expenses  that will be paid to settle
these claims.  The reserves,  which are not discounted,  are based on historical
and  anticipated  loss  experience  including  societal  and  economic  factors.
Inflation is inherent in the reserves to the extent that it influenced  the past
claims patterns used to produce the reserve estimates. The process of estimating
claims is a complex  task and the actual  payments may be more or less than such
estimates indicate. Changes in loss estimates, based on subsequent developments,
are included in operations currently.

Title Plants
------------

Title plants are  capitalized at the lower of cost or appraised value at date of
acquisition.  Title  plants are not being  depreciated  since  there has been no
diminution of value; however, impairments of title plant carrying amounts deemed
to be other than temporary are expensed. Costs of maintaining and updating title
plants are expensed as incurred.

Fair Value of Financial Instruments
-----------------------------------

The estimated fair value of publicly traded financial  instruments is determined
by the Companies  using quoted market prices,  dealer quotes and prices obtained
from independent third parties.  For financial  instruments not publicly traded,
fair  values are  estimated  based on values  obtained  from  independent  third
parties or quoted market prices of comparable instruments.  However, judgment is
required  to  interpret  market  data to develop  the  estimates  of fair value.
Accordingly,  the estimates are not  necessarily  indicative of the amounts that
could be realized in a current market exchange.  See Note 2 regarding fair value
information for the Companies' financial instruments.

Income Taxes
------------

The  Companies  are included in the  consolidated  federal  income tax return of
Reliance.  Federal income taxes are computed as if Commonwealth  and Transnation
filed separate consolidated tax returns.

Adoption of New Accounting Standard
-----------------------------------

Effective  January  1,  1996,  the  Companies  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  121,  Accounting  for  the  Impairment  of
Long-Lived  Assets and for Long-Lived  Assets to be Disposed of. The adoption of
this  statement  had no material  effect on the  Companies'  combined  financial
statements.

Effective  January 1, 1997, the Companies  adopted SFAS No. 125,  Accounting for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities.
The adoption of this statement had no material effect on the Companies' combined
financial statements.



                                      -10-
<PAGE>

                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


1.   NATURE OF OPERATIONS/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

In 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS No. 130,
Reporting  Comprehensive  Income and SFAS No. 131, Disclosures About Segments of
and Enterprise and Related  Information.  In 1998, the FASB issued SFAS No. 132,
Employers'  Disclosures About Pensions and Other  Postretirement  Benefits.  The
adoption of these statements,  which is not required until 1998, is not expected
to have a material effect on the Companies' combined financial statements.


2.   INVESTMENTS
<TABLE>
<CAPTION>

Fixed maturities held-for-investment at December 31, 1997 consisted of:
                                                                                             Gross           Gross   
                                                           Amortized         Market       Unrealized      Unrealized
                                                              Cost           Value           Gains          Losses
---------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>            <C>             <C>      
Bonds and notes:
  U.S. Government and government
    agencies and authorities...........................   $          -   $          -   $          -    $          -
  Public utilities.....................................     81,509,000     83,627,000      2,223,000         105,000
  Corporate bonds and other............................     36,653,000     38,282,000      1,629,000               -
Redeemable preferred stock.............................      9,972,000     10,513,000        541,000               -
                                                          ------------   ------------   ------------    ------------

                                                          $128,134,000   $132,422,000   $  4,393,000    $    105,000
                                                          ============   ============   ============    ============
</TABLE>
<TABLE>
<CAPTION>

Fixed maturities available-for-sale at December 31, 1997 consisted of:
                                                                                             Gross           Gross   
                                                             Market         Amortized     Unrealized      Unrealized
                                                             Value            Cost           Gains          Losses
---------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>            <C>             <C>
Bonds and notes:
  U.S. Government and government
      agencies and authorities.........................   $ 81,922,000   $ 81,089,000   $    884,000    $     51,000
  Public utilities.....................................     94,755,000     92,228,000      2,531,000           4,000
  Corporate bonds and other............................     49,161,000     47,863,000      1,459,000         161,000
Redeemable preferred stock.............................     58,335,000     51,982,000      6,353,000               -
                                                          ------------   ------------   ------------    ------------

                                                          $284,173,000   $273,162,000   $ 11,227,000    $    216,000
                                                          ============   ============   ============    ============

</TABLE>



                                      -11-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


2.   INVESTMENTS - Continued
<TABLE>
<CAPTION>

Fixed maturities held-for-investment at December 31, 1996 consisted of:
                                                                                             Gross          Gross  
                                                           Amortized         Market       Unrealized     Unrealized
                                                              Cost           Value           Gains         Losses
-------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>             <C>             <C>  
Bonds and notes:
  U.S. Government and government
    agencies and authorities........................... $  1,053,000   $  1,069,000    $     16,000    $          -
  Public utilities.....................................   90,421,000     90,610,000       1,107,000         918,000
  Corporate bonds and other............................   36,621,000     37,211,000       1,330,000         740,000
Redeemable preferred stock.............................   11,703,000     11,899,000         196,000               -
                                                        ------------   ------------    ------------    ------------
                                                         
                                                        $139,798,000   $140,789,000    $  2,649,000    $  1,658,000
                                                        ============   ============    ============    ============
</TABLE>
<TABLE>
<CAPTION>

Fixed maturities available-for-sale at December 31, 1996 consisted of:
                                                                                           Gross           Gross   
                                                             Market       Amortized     Unrealized      Unrealized
                                                             Value          Cost           Gains          Losses
-------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>             <C>               <C>
Bonds and notes:
  U.S. Government and government
    agencies and authorities........................... $ 95,147,000   $ 95,345,000    $    660,000      $  858,000
  Public utilities.....................................   72,880,000     73,457,000         348,000         925,000
  Corporate bonds and other............................   63,619,000     62,713,000       1,671,000         765,000
Redeemable preferred stock.............................   58,345,000     52,866,000       5,487,000           8,000
                                                        ------------   ------------    ------------      ----------

                                                        $289,991,000   $284,381,000    $  8,166,000      $2,556,000
                                                        ============   ============    ============      ==========
</TABLE>

The carrying value of financial  instruments  not publicly  traded,  recorded at
estimated fair value,  was  $45,454,000 and $44,800,000 at December 31, 1997 and
1996, respectively.

The  contractual  maturities of fixed maturity  investments at December 31, 1997
were as follows:
<TABLE>
<CAPTION>

                                                            Held-for-Investment             Available-for-Sale
                                                        ---------------------------    ----------------------------
                                                         Amortized         Market        Amortized         Market
                                                           Cost            Value           Cost            Value
-------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>             <C>             <C>
Fixed maturity investments:
  Due within one year.................................. $          -   $          -    $ 10,737,000    $ 10,721,000
  Due after one year through five years................   11,421,000     11,669,000       6,782,000       6,969,000
  Due after five years through ten years...............   47,603,000     49,450,000      30,201,000      30,964,000
  Due after ten years..................................   59,138,000     60,790,000     105,805,000     108,723,000
Redeemable preferred stock.............................    9,972,000     10,513,000      51,982,000      58,335,000
Mortgage-backed securities.............................            -              -      67,655,000      68,461,000
                                                        ------------   ------------    ------------    ------------

                                                        $128,134,000   $132,422,000    $273,162,000    $284,173,000
                                                        ============   ============    ============    ============
</TABLE>



                                      -12-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


2.   INVESTMENTS - Continued
<TABLE>
<CAPTION>

Net investment income consisted of:

Year Ended December 31                                      1997             1996           1995
-----------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>
Investment income:
  Fixed maturities..................................... $ 30,311,000    $ 29,632,000    $ 26,971,000
  Short-term investments...............................    1,488,000       1,588,000       1,689,000
  Other................................................      804,000         883,000         773,000
                                                        ------------    ------------    ------------
                                                          32,603,000      32,103,000      29,433,000
Investment expenses....................................    1,613,000       1,648,000       1,500,000
                                                        ------------    ------------    ------------

                                                        $ 30,990,000    $ 30,455,000    $ 27,933,000
                                                        ============    ============    ============
</TABLE>
<TABLE>
<CAPTION>


Year Ended December 31                                      1997             1996           1995
----------------------------------------------------------------------------------------------------

Gain on sales of investments consisted of:
<S>                                                     <C>             <C>             <C>
Fixed maturities:
  Realized gains....................................... $  1,623,000    $  1,718,000    $  1,754,000
  Realized losses......................................     (27,000)     (1,372,000)        (25,000)
                                                        ------------    ------------    ------------
                                                        $  1,596,000    $    346,000    $  1,729,000
                                                        ============    ============    ============
</TABLE>

During 1997, the Companies sold no fixed maturities held for investment.  During
1996 and 1995, the Companies sold fixed  maturities  held for investment with an
amortized cost of $2,963,000 and $4,221,000, respectively, resulting in realized
gains of $337,000 and $45,000,  respectively.  These sales were  principally  in
response to a significant deterioration in the issuers' creditworthiness.


3.   PROVISION FOR INCOME TAXES

Income tax provision from operations consisted of:
<TABLE>
<CAPTION>

Year Ended December 31                                       1997            1996          1995
---------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>
Current ............................................... $ 21,135,000    $ 18,094,000    $ 5,066,000
Deferred...............................................    1,594,000     (4,747,000)      (311,000)
                                                        ------------    ------------    -----------

                                                        $ 22,729,000    $ 13,347,000    $ 4,755,000
                                                        ============    ============    ===========
</TABLE>



                                      -13-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


3.   PROVISION FOR INCOME TAXES - Continued

The  reconciliation  of  taxes  computed  at the  statutory  rate  of 35% to the
provision for income taxes is as follows:
<TABLE>
<CAPTION>

Year Ended December 31                                      1997            1996            1995
----------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>
Income from operations before income taxes............. $ 64,905,000    $ 38,580,000    $ 14,210,000
                                                        ============    ============    ============

Tax provision at statutory rate........................ $ 22,717,000    $ 13,503,000    $  4,974,000

Reconciliation to actual tax rate:
  Dividends received deduction.........................  (1,198,000)     (1,248,000)     (1,199,000)
  Goodwill.............................................      340,000         268,000         126,000
  Non-deductible meals and entertainment...............      808,000         652,000         578,000
  Tax exempt interest income...........................     (20,000)        (46,000)        (67,000)
  Other................................................       82,000         218,000         343,000
                                                        ------------    ------------    ------------

                                                        $ 22,729,000    $ 13,347,000    $  4,755,000
                                                        ============    ============    ============
</TABLE>

The tax effects of items  comprising  the Companies net deferred tax assets were
as follows:
<TABLE>
<CAPTION>

December 31                                                                  1997            1996
----------------------------------------------------------------------------------------------------
<S>                                                                     <C>             <C>
Deferred tax assets:
    Title loss reserves................................................ $ 87,445,000    $ 83,004,000
    Tax basis differential for equipment...............................    4,528,000       6,133,000
    Allowance for doubtful accounts....................................    2,248,000       2,044,000
    Pension reserves...................................................    4,769,000       3,318,000
    Other deferred tax assets..........................................    3,077,000       3,211,000
                                                                        ------------    ------------
                                                                         102,067,000      97,710,000
                                                                        ------------    ------------
Deferred tax liabilities:
    Statutory premium reserve.........................................   61,587,000      56,095,000
    Financing lease arrangement.......................................    3,434,000       5,222,000
    Unrealized security gains.........................................    5,509,000       1,963,000
    Other deferred tax liabilities....................................    5,720,000       7,187,000
                                                                       ------------    ------------
                                                                         76,250,000      70,467,000
                                                                       ------------      ----------

Net deferred tax assets............................................... $ 25,817,000    $ 27,243,000
                                                                       ============    ============
</TABLE>

4.   RESTRICTED ASSETS AND SHAREHOLDER'S EQUITY

State laws require the Companies to maintain  statutory premium reserves,  which
are restrictions on shareholder's  equity.  Qualified investments are maintained
in an amount equal to these reserves,  which aggregated $275,623,000 at December
31, 1997 and $258,729,000 at December 31, 1996.

The Companies had  investments on deposit with insurance  departments of various
states as required  by law with  aggregate  carrying  values of  $11,811,000  at
December 31, 1997 and $12,462,000 at December 31, 1996.



                                      -14-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


4.   RESTRICTED ASSETS AND SHAREHOLDER'S EQUITY - Continued

Commonwealth's common stock has a par value of $2 per share and 1,000,000 shares
were  authorized and 824,653 shares were issued and  outstanding at December 31,
1997 and 1996.  Transnation's  common  stock has a par value of $1 per share and
10,000,000  shares were authorized,  issued and outstanding at December 31, 1997
and 1996.  Total  shareholder's  equity of  Commonwealth  was  $189,899,000  and
$184,926,000 at December 31, 1997 and 1996,  respectively.  Total  shareholder's
equity of Transnation  was  $92,011,000 and $88,731,000 at December 31, 1997 and
1996, respectively.

Future  dividend  payments  by  Commonwealth  and  Transnation  are  limited  by
insurance  regulations  of the  Commonwealth  of  Pennsylvania  and the State of
Arizona,  respectively.  Under Pennsylvania law,  Commonwealth is limited to the
greater of 10% of policyholders' surplus at December 31 of the preceding year or
100% of the  prior  year's  statutory  net  income.  In  accordance  with  these
restrictions, $32,874,000 is available for dividends in 1998.

Under Arizona law, Transnation is limited to the lesser of 10% of policyholder's
surplus  at  December  31 of the  preceding  year or 100%  of the  prior  year's
statutory  net  investment  income.  In  accordance  with  these   restrictions,
$6,560,000 is available for dividends in 1998.

5.   POSTRETIREMENT BENEFIT PLANS

Retirement benefits,  covering substantially all employees, are provided under a
noncontributory  trusteed  defined  benefit pension plan.  Contributions  to the
pension  plan are based on the  minimum  funding  requirements  of the  Employee
Retirement Income Security Act of 1974.

Retirement benefits are paid to eligible employees based principally on years of
service and salary.  Pension plan assets  consist  primarily  of  corporate  and
government debt securities and 314,100 shares of Reliance common stock.

<TABLE>
<CAPTION>

Net periodic pension cost includes the following components:

Year Ended December 31                                       1997            1996            1995
-----------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>
Service cost -- benefits earned during the period...... $  3,761,000    $  3,945,000    $  3,076,000
Interest cost on projected benefit obligation..........    4,592,000       4,227,000       3,859,000
Actual return on plan assets...........................  (4,786,000)     (1,552,000)     (5,342,000)
Net amortization and deferral..........................    (714,000)     (3,770,000)       1,047,000
                                                        ------------    ------------    ------------

Net periodic pension cost.............................. $  2,853,000    $  2,850,000    $  2,640,000
                                                        ============    ============    ============

</TABLE>



                                      -15-
<PAGE>

                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


5.   POSTRETIREMENT BENEFIT PLANS - Continued

The  reconciliation  of the pension plan funded status with the accrued  pension
cost included in accounts payable and accrued expenses is as follows:
<TABLE>
<CAPTION>

December 31                                                                  1997            1996
-----------------------------------------------------------------------------------------------------
<S>                                                                     <C>             <C>
Actuarial present value of benefit obligation:
    Vested............................................................. $ 53,892,000    $  43,935,000
    Nonvested..........................................................    4,273,000        3,494,000
                                                                        ------------    -------------

Accumulated benefit obligation.........................................   58,165,000       47,429,000
Effect of anticipated future compensation levels.......................   14,118,000       10,911,000
                                                                        ------------    -------------

Projected benefit obligation...........................................   72,283,000       58,340,000
Plan assets at market value............................................ (52,917,000)     (49,313,000)
                                                                        ------------    -------------

Projected benefit obligation in excess of plan assets..................   19,366,000        9,027,000

Unrecognized net assets at date of plan adoption.......................    2,333,000        2,969,000
Unrecognized net loss.................................................. (12,400,000)      (4,319,000)
                                                                        ------------    -------------

Accrued pension cost................................................... $  9,299,000    $   7,677,000
                                                                        ============    =============
</TABLE>

Contributions  to the pension plan were  $1,231,000  in 1997 and  $3,985,000  in
1996. No contributions were made in 1995.

The assumptions used to measure the projected benefit obligation at December 31,
1997 and 1996  included  discount  rates of 7.25%  and 8.0%,  respectively,  and
weighted average rates of compensation increase of 3.9% and 4.0%,  respectively.
The expected  long-term  investment  rate of return on plan assets for the years
ended December 31, 1997 and 1996 was 10.0%.

In addition to pension benefits,  Commonwealth provides unfunded  postretirement
medical and life insurance  plans for certain  employees who were hired prior to
1990.
<TABLE>
<CAPTION>

Postretirement benefit cost includes the following components:

Year Ended December 31                                                1997            1996           1995
------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>              <C>
Service cost -- benefits earned during the period................ $    97,000    $    168,000     $  167,000
Interest cost on accumulated postretirement benefit obligation...     549,000         500,000        510,000
Net amortization and deferral....................................     346,000         346,000        303,000
                                                                  -----------    ------------     ----------

Postretirement benefit cost...................................... $   992,000    $  1,014,000     $  980,000
                                                                  ===========    ============     ==========
</TABLE>



                                      -16-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


5.   POSTRETIREMENT BENEFIT PLANS - Continued

The components of the accumulated  postretirement benefit obligation included in
accounts payable and accrued expenses were as follows:
<TABLE>
<CAPTION>

December 31                                                                  1997            1996
----------------------------------------------------------------------------------------------------
<S>                                                                     <C>             <C>
Accumulated postretirement benefit obligation:
  Retirees............................................................. $  5,433,000    $  3,462,000
  Other active plan participants.......................................    2,113,000       3,240,000
                                                                        ------------    ------------

Accumulated benefit obligation.........................................    7,546,000       6,702,000
Unrecognized net gain (loss)...........................................    (257,000)         559,000
Unrecognized transition obligation.....................................  (5,187,000)     (5,533,000)
                                                                        ------------    ------------

Accrued postretirement benefit cost.................................... $  2,102,000    $  1,728,000
                                                                        ============    ============
</TABLE>

The  assumed  health  care cost trend  rate used in  measuring  the  accumulated
postretirement  benefit  obligation  as of December  31, 1997 was 8.0% for 1998,
decreasing  until it reaches 6.0% in 2007,  after which it remains  constant.  A
one-percentage-point  change in the assumed health care cost trend rate for each
year would  change  the  accumulated  postretirement  benefit  obligation  as of
December  31,  1997  and  the  1997  net  postretirement  health  care  cost  by
approximately  1.5% and 1.4%,  respectively.  The assumed discount rates used in
determining the accumulated  postretirement  benefit  obligation at December 31,
1997 and 1996 were 7.25% and 8.0%, respectively.

6.   RESERVE FOR LOSSES

The reconciliation of the beginning to ending reserve for losses is as follows:
<TABLE>
<CAPTION>

December 31                                                            1997            1996            1995
---------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>             <C>
Reserve for losses, beginning of year............................ $264,838,000     $240,777,000    $228,063,000
                                                                  ------------     ------------    ------------

Provision for policy claims and related expenses:
  Provision for insured events of the current year...............   60,618,000       59,771,000      57,900,000
  (Decrease) increase in provision for insured events of
     prior years................................................. (19,145,000)        1,345,000         586,000
                                                                  ------------    -------------    ------------
     Total provision.............................................   41,473,000       61,116,000      58,486,000
                                                                  ------------     ------------    ------------

Payments, net of recoveries, for policy claims and related expenses:
  Attributable to insured events of the current year.............    1,468,000        1,755,000       2,187,000
  Attributable to insured events of prior years..................   32,051,000       35,300,000      43,585,000
                                                                  ------------     ------------    ------------
     Total payments..............................................   33,519,000       37,055,000      45,772,000
                                                                  ------------     ------------    ------------

Reserve for losses, end of year.................................. $272,792,000     $264,838,000    $240,777,000
                                                                  ============     ============    ============
</TABLE>

The favorable development in 1997 on the reserve for losses established in prior
years  reflects the  favorable  paid claims  experience  in recent  years.  This
favorable trend reflects  several  factors,  including the strong 1993 refinance
market, enhanced underwriting policies and procedures and technology advances in
the title production process.



                                      -17-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


7.   ESCROW FUNDS

Customers' funds held in escrow for real estate transactions are not included in
the combined balance sheet.

    These funds consisted of:

<TABLE>
<CAPTION>

December 31                                                  1997              1996
---------------------------------------------------------------------------------------
<S>                                                     <C>                <C>
Cash................................................... $  509,198,000     $ 263,348,000
Investments held for specific accounts.................    534,296,000       333,658,000
                                                        --------------     -------------

                                                        $1,043,494,000     $ 597,006,000
                                                        ==============     =============
</TABLE>

8.   STATUTORY INFORMATION

The  Companies  had  combined   policyholders'   surplus  of  $200,949,000   and
$199,587,000 at December 31, 1997 and 1996, respectively, and combined statutory
net income of  $45,215,000,  $40,094,000  and  $12,439,000  for the years  ended
December 31, 1997, 1996 and 1995, respectively.  Commonwealth had policyholders'
surplus  of  $135,347,000  and  $136,559,000  at  December  31,  1997 and  1996,
respectively,   and  statutory  net  income  of  $32,874,000,   $31,806,000  and
$10,580,000 for the years ended December 31, 1997, 1996 and 1995,  respectively.
Transnation  had  policyholders'  surplus  of  $65,603,000  and  $63,028,000  at
December  31,  1997  and  1996,  respectively,   and  statutory  net  income  of
$12,341,000,  $8,288,000  and  $1,859,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

Commonwealth and Transnation  have entered into a credit support  arrangement to
which each Company will commit credit support, if necessary, to the other and to
its wholly owned  subsidiaries.  This agreement  provides  financial  support in
order that each company remains solvent,  able to meet its financial obligations
as they come due in the ordinary course of business,  and protects the interests
of the policyholders.

9.   COMMITMENTS AND CONTINGENCIES

The  Companies  lease  certain  office  facilities  and  equipment  under  lease
agreements  that expire at various dates through 2011.  Rental  expense in 1997,
1996 and 1995 was  $33,036,000,  $31,552,000 and $30,956,000,  respectively.  At
December  31,  1997,  future  minimum  rental  commitments  under  noncancelable
operating leases, principally for office space, were:

Year Ended December 31                                    
------------------------------------------------------------
1998    .......................................................... $  17,902,000
1999    ..........................................................    14,047,000
2000    ..........................................................    10,301,000
2001    ..........................................................     6,633,000
2002    ..........................................................     3,695,000
2003 and later....................................................     5,034,000
                                                                   -------------

                                                                   $  57,612,000
                                                                   =============



                                      -18-
<PAGE>


                  COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued


9.    COMMITMENTS AND CONTINGENCIES - Continued

The Companies are involved in certain  litigation arising in the course of their
businesses,  some of which involve claims of substantial  amounts.  Although the
ultimate  outcome of these matters  cannot be  ascertained at this time, and the
results of legal proceedings  cannot be predicted with certainty,  the Companies
are contesting the  allegations of the complaints in each pending action against
them and  believe,  based on  current  knowledge  and  after  consultation  with
counsel,  that the resolution of these matters will not have a material  adverse
effect on the combined financial statements of the Companies.

10.   SUBSEQUENT EVENT

On February 27,  1998,  Reliance  Insurance  sold the  Companies to  LandAmerica
Financial Group,  Inc.  (formerly  Lawyers Title  Corporation) for cash,  common
stock and convertible preferred stock.


                                   * * * * * *



                                      -19-
<PAGE>


         (b)           Pro Forma Financial Information.

               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
                PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
                                   (Unaudited)

         The following  unaudited Pro Forma Condensed  Combined Balance Sheet as
of December 31, 1997 and the unaudited Pro Forma Condensed Combined Statement of
Operations  for the year  ended  December  31,  1997 (the "Pro  Forma  Financial
Statements")  are  based  upon the  respective  consolidated/combined  financial
statements  of the Company  and of  Commonwealth/Transnation.  The  consolidated
financial  statements of the Company will be filed with the Company's  Form 10-K
for the fiscal year ended  December 31, 1997 on or before  March 31,  1998.  The
combined    financial     statements    of    Commonwealth    and    Transnation
("Commonwealth/Transnation")  are included in this  Current  Report on Form 8-K.
See "Item 7(a) - Financial Statements of Businesses Acquired."

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

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

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



                                      -20-
<PAGE>


               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                   PRO FORMA CONDENSED COMBINED BALANCE SHEET
                                December 31, 1997
                            (In thousands of dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                             Lawyers          Commonwealth/                                        
                                                              Title            Transnation           Pro Forma
                                                            Historical          Historical          Adjustments            Pro Forma
                                                            ----------          ----------          -----------            ---------
<S>                                                        <C>                 <C>                  <C>                    <C>    
ASSETS
  Investments..........................................    $ 297,644           $ 469,185                    -              $ 766,829
  Cash.................................................       35,629              19,742            $ 200,681     [1d]        65,324
                                                                                                       65,921     [1b]
                                                                                                    (200,681)     [1d]
                                                                                                    ( 65,921)     [1b]
                                                                                                        9,953     [4]
  Notes and accounts receivable........................       36,962              32,488                   -                  69,450
  Property and equipment - net.........................       21,896              25,306                   -                  47,202
  Title plants.........................................       48,984              50,233                   -                  99,217
  Goodwill.............................................       57,687              16,525              306,120     [1]        367,679
                                                                                                     (12,653)     [2]
  Deferred income tax benefit..........................       21,610              25,817               17,653     [2]         65,080
  Other assets.........................................       34,281              13,192                   -                  47,473
                                                           ---------              ------             --------                 ------

       Total assets....................................    $ 554,693           $ 652,488            $ 321,073             $1,528,254
                                                           =========           =========            =========             ==========

LIABILITIES
  Policy and contract claims...........................    $ 202,477           $ 272,792                   -               $ 475,269
  Accounts payable and accrued
    expenses...........................................       52,818              97,786                5,000     [1e]       170,604
                                                                                                       10,000     [1f]
                                                                                                        5,000     [2]
  Debt.................................................        6,994                   -              200,681     [1d]       207,675
                                                           ---------            --------              -------                -------
       Total liabilities...............................      262,289             370,578              220,681                853,548
                                                           ---------             -------              -------                -------

SHAREHOLDERS' EQUITY
  Preferred stock......................................                                -              175,700     [1c]       175,700
                                                                   -
  Common stock.........................................      168,066              11,649              130,728     [1a]       374,668
                                                                                                       65,921     [1b]
                                                                                                        9,953     [4]
                                                                                                     (11,649)     [1]
  Additional paid in capital...........................                          127,370            (127,370)     [1]              -
                                                                   -
  Unrealized gains.....................................        7,536               7,158              (7,158)     [1]          7,536
  Retained earnings....................................      116,802             135,733            (135,733)     [1]        116,802
                                                           ---------             -------            ---------                -------

       Total shareholders' equity......................      292,404             281,910              100,392                674,706
                                                           ---------             -------              -------                -------

  Total liabilities and
    shareholders' equity...............................    $ 554,693           $ 652,488            $ 321,073            $ 1,528,254
                                                           =========           =========            =========            ===========
</TABLE>

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


                                      -21-
<PAGE>


               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

              PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 1997
           (In thousands of dollars, except shares and per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                       Lawyers           Commonwealth/                     
                                                        Title             Transnation        Pro Forma         
                                                     Historical           Historical        Adjustments          Pro Forma
<S>                                                   <C>                 <C>                 <C>              <C>
REVENUES
  Premiums                                            $ 504,024           $ 833,895           $      -         $ 1,337,919
  Title search, escrow and other..................      118,757              29,851                  -             148,608
  Net investment income...........................       16,555              30,990                  -              47,545
  Realized investment gains.......................        (237)               1,596           -                      1,359
                                                          -----               -----           --------           ---------
                                                        639,099             896,332                  -           1,535,431
                                                        -------             -------           --------           ---------

EXPENSES
  Salaries and employee benefits..................      200,488             240,950                  -             441,438
  Agents' commissions.............................      218,358             379,755                  -             598,113
  Provision for policy and contract
    claims........................................       33,749              41,473                  -              75,222
  General, administrative and other...............      146,035             169,249             19,277   [3]       334,561
                                                        -------             -------             ------           ---------

                                                        598,630             831,427             19,277           1,449,334
                                                        -------             -------             ------           ---------

OPERATING INCOME BEFORE
  INCOME TAXES....................................       40,469              64,905           (19,277)              86,097

INCOME TAX EXPENSE................................       14,312              22,729            (6,747)   [3]        30,294
                                                       --------           ---------        -----------              ------

NET INCOME........................................     $ 26,157            $ 42,176         $ (12,530)              55,803
                                                       ========            ========         ==========              ======

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

INCOME AVAILABLE TO                 
  COMMON SHAREHOLDERS..............................                                                               $ 48,103
                                                                                                                    ======

NET INCOME PER COMMON SHARE........................      $ 2.93                                                     $ 3.21

NET INCOME PER COMMON SHARE ASSUMING DILUTION......      $ 2.84
                                                                                                                    $ 2.78

WEIGHTED AVERAGE NUMBER OF 
  COMMON SHARES OUTSTANDING.......................        8,924                                                     14,976
                                                                                                                        
WEIGHTED AVERAGE NUMBER OF  
  COMMON SHARES OUTSTANDING
  ASSUMING DILUTION...............................        9,224                                                     20,100

</TABLE>

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


                                      -22-
<PAGE>


               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements


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

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

    b.  The sale of 1,750,000  shares of Common Stock at $40.125 (based upon the
        closing  sales price of the Common Stock on February 24, 1998) per share
        concurrently with the closing of the Acquisition.  The recorded proceeds
        have been adjusted for estimated  offering costs of  approximately  $4.3                  65,921
        million.

    c.  The issuance of 2,200,000  shares of Series B Preferred  Stock at $79.86
        per share. The per share value was determined by applying the conversion
        ratio of 2.19298 to the Common  Stock  price of $32.363  per share in a.
        above and  adding an amount  of $8.89  per share  which  represents  the
        present  value of the  dividends  on the Series B Preferred  Stock for a
        period of five years from the date of issuance until the first available
        call date thereon,  discounted by 5.75%,  the interest rate on five year
        treasury  securities  at  December  11,  1997,  less a 7%  discount  for
        illiquidity  and the  inability  to hedge the Series B  Preferred  Stock
        using  the  underlying   Common  Stock  of  the  Company.   Wheat  First
        Securities, Inc., as financial advisor to the Company in connection with
        the Acquisition,  presented the Company with an independent valuation of
        the Series B Preferred Stock.                                                            175,700

    d.  The  incurrence by the Company of  approximately  $200.7 million of debt
        from  bank  financing,  the  proceeds  of  which  were  paid  to  RIC in
        connection with the Acquisition. See Note 7 below.                                       200,681

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

    f.  Estimated  employee  termination and relocation  costs of $10.0 million.               
        See Note 5 below.                                                                         10,000
                                                                                                --------
                                                                                                        
        Total recorded purchase price                                                           $588,030
                                                                                                ========
                                                                                                  
</TABLE>

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


                                      -23-
<PAGE>

               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements


3.  This pro forma adjustment reflects: (i) interest incurred on debt assumed in
    connection with the Acquisition at an assumed  interest rate of 5.950%,  the
    Interbank  Offered Rate ("IBOR") at February 24, 1998 plus 0.325%,  or $12.0
    million for the year ended December 31, 1997, (ii)  amortization of goodwill
    acquired at the time of the Acquisition over a period of forty years or $7.3
    million for the year ended December 31, 1997 and (iii) income taxes incurred
    at the federal  statutory rate of 35.0%,  or $6.7 million for the year ended
    December  31, 1997.  A change of 0.125% in the assumed  interest  rate would
    increase or decrease interest expense approximately $0.3 million.

4.  This pro forma adjustment  reflects the issuance of 262,500 shares of Common
    Stock  at  $40.125  per  share  in  connection  with  the  exercise  of  the
    over-allotment  option  by the  underwriters  in the  public  offering.  The
    recorded  proceeds  have  been  adjusted  for  estimated  offering  costs of
    approximately $0.6 million.

5.  Management has identified  certain expense savings which it believes will be
    achieved through  reductions in staff,  consolidation of data processing and
    elimination  of  certain  duplicate  or  excess  facilities.  The  number of
    regional  offices and field head count will be reduced with the  elimination
    of redundant title plants and back office production centers.  These expense
    savings have been identified by members of senior  management of the Company
    who have served on task forces devoted to various aspects of integrating the
    operations  of the  Company  and  Commonwealth/Transnation.  Management  has
    identified  approximately 20 metropolitan  markets where the back office and
    title production facilities will be combined.  These multi-county production
    facilities will service each of the Company's  title insurance  subsidiaries
    following the Acquisition.  As a result,  management of the Company believes
    that the  combination  of the two  operations  will yield  recurring  annual
    pre-tax expense savings of  approximately  $40.0 million.  It is expected to
    take four quarters to fully realize these expense savings. No adjustment has
    been included in these Pro Forma Condensed Combined Financial Statements for
    the anticipated expense savings.  There can be no assurance that anticipated
    expense savings will be achieved in the amounts or at the times anticipated.

    To implement the changes necessary to realize such savings, the Company will
    incur certain expenses,  primarily  relating to the termination of leases on
    certain offices to be closed and the payment of employee severance benefits.
    Pursuant to EITF 95-3,  the Company has included in the Pro Forma  Condensed
    Combined  Balance Sheet a pro forma  adjustment of $10.0 million relating to
    anticipated  exit,  employee  termination  and relocation  costs for certain
    Commonwealth  and  Transnation   leases  and  employees.   Of  this  amount,
    approximately  $5.8  million is  expected  to be  incurred  relating  to the
    termination of leases,  $3.5 million is expected to be incurred  relating to
    employee  severance  benefits  and $0.7  million is  expected to be incurred
    relating to relocation  costs.  At this time, the Company has not determined
    precisely  which  leases will be canceled or which  employee  groups will be
    terminated  and the plan  has not  been  communicated  to  employees.  It is
    anticipated that the plan will be finalized shortly after the Acquisition is
    consummated  and will be  completed  within  one year  from that  date.  Any
    adjustments  to  the  $10.0  million  accrual  for  exit,   termination  and
    relocation  costs  will  result  in an  addition  to  or  reduction  of  the
    Commonwealth/Transnation purchase price.



                                      -24-
<PAGE>

               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements


5.  (continued)

    In addition,  the Company anticipates that, in the first quarter of 1998, it
    will record a one-time  after-tax charge to earnings of  approximately  $9.8
    million  (approximately $15.0 million before tax) relating to exit, employee
    termination  and relocation  costs of Company leases and employees.  At this
    time, the Company has not determined precisely which leases will be canceled
    and which  employee  groups will be terminated.  It is anticipated  that the
    plan will be  finalized  and  communicated  to employees  shortly  after the
    Acquisition is consummated  and the costs  associated  with the plan will be
    recognized as an expense at that time.

    On February 23, 1998, the FTC accepted an Agreement Containing Consent Order
    with the Company (the "Consent Order").  The Consent Order requires that the
    Company divest, within six months from the date of the Consent Order, either
    the rights,  title and interest held by the Company prior to consummation of
    the Acquisition or the rights,  title and interest held by Reliance prior to
    consummation  of the  Acquisition  of all title  plants  serving  each of 12
    localities  named in the  Consent  Order.  Seven of such  localities  are in
    Florida, three are in Michigan, and one each is in Washington, D.C., and St.
    Louis,  Missouri. The Consent Order further requires that the Company divest
    all user or access  agreements  pertaining to each divested title plant.  In
    addition,  the Company cannot acquire,  without prior notice to the FTC, any
    interest in a title plant in any of the named  localities for a period of 10
    years following the date of the Consent Order. The Company believes that the
    divestitures  will not result in a material loss nor will such  divestitures
    have a material effect on future  operations due to the Company's  access to
    other title plants in these markets.

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

        Book value of Commonwealth/Transnation      
          net assets acquired at December 31, 1997
          (including title plants of $50,233)..........                $ 281,910
        Adjustments:
          Increase in deferred income tax asset........  $ 17,653
          Increase in accounts payable and
            accrued expenses for OPEB liability........   (5,000)      
                                                                       ---------
        Total adjustments..............................                   12,653
        Goodwill.......................................                  293,467
                                                                       ---------
                 Total purchase price...................               $ 588,030
                                                                       =========

    For purposes of these Pro Forma Condensed Combined Financial Statements, the
    assets and liabilities  acquired reflect their recorded book value except as
    noted above.  The  allocation  of the purchase  price is  preliminary  since
    appraisals  of the  Commonwealth/Transnation  title  plants  have  not  been
    completed.  Once the appraisals  are completed the Company  expects that the
    value  assigned to title plants will be increased and the amount of goodwill
    recorded will be decreased.  However,  the Company does not believe that the
    difference  between the  recorded  book value and the fair value  ultimately
    assigned to the title  plants will have a material  impact on the  Company's
    pro forma  financial  position or results of  operations.  In addition,  the
    Company  believes that, with the exception of title plants,  the fair values
    of the assets and liabilities of Commonwealth/Transnation  approximate their
    recorded book values in all material respects.



                                      -25-
<PAGE>

               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements


7.  The Stock Purchase  Agreement  provided for adjustment of the $207.5 million
    cash portion of the purchase price in certain circumstances.  Based upon the
    unused  dividend  capacity of  Commonwealth/Transnation  as of February  27,
    1998, the Company adjusted the cash portion of the purchase price payable to
    RIC by  approximately  $6.8 million to $200.7  million at the closing of the
    Acquisition.



                                      -26-
<PAGE>


         (c)    Exhibits.

                Exhibit No.        Description
                -----------        -----------

                    2.1            Amended   and   Restated    Stock    Purchase
                                   Agreement,  dated  December 11, 1997,  by and
                                   among  the  Registrant,   Lawyers   Insurance
                                   Corporation,  Reliance  Insurance Company and
                                   Reliance Group Holdings,  Inc.,  incorporated
                                   by   reference   to   Appendix   A   to   the
                                   Registrant's  definitive  Proxy Statement for
                                   its  Special  Meeting of  Shareholders  to be
                                   held on  February  27,  1998,  filed with the
                                   Commission on January 29, 1998.



                                      -27-
<PAGE>

                                    SIGNATURE

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


                                        LANDAMERICA FINANCIAL GROUP, INC.



Dated: March 16, 1998                   By: /s/ Charles H. Foster, Jr.
                                            -----------------------------------
                                            Charles H. Foster, Jr.
                                            Chairman and Chief Executive Officer




<PAGE>

                                INDEX TO EXHIBITS


No.                   Description
---                   -----------

2.1                   Amended  and  Restated  Stock  Purchase  Agreement,  dated
                      December 11, 1997,  by and among the  Registrant,  Lawyers
                      Insurance  Corporation,  Reliance  Insurance  Company  and
                      Reliance Group Holdings,  Inc.,  incorporated by reference
                      to  Appendix  A  to  the  Registrant's   definitive  Proxy
                      Statement for its Special  Meeting of  Shareholders  to be
                      held on February 27, 1998,  filed with the  Commission  on
                      January 29, 1998.
[{"type": "8-K", "sequence": "1", "description": "8-K FILED BY LANDAMERICA FINANCIAL GROUP, INC.", "secsgml_size_bytes": 98900}]
{"company-data": {"conformed-name": "LANDAMERICA FINANCIAL GROUP INC", "cik": "0000877355", "assigned-sic": "6361", "irs-number": "541589611", "state-of-incorporation": "VA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-13990", "film-number": "98566302"}, "business-address": {"street1": "6630 W BROAD ST", "street2": "PO BOX 27567", "city": "RICHMOND", "state": "VA", "zip": "23230", "phone": "8042816700"}, "mail-address": {"street1": "6630 WEST BROAD ST", "street2": "PO BOX 27567", "city": "RICHMOND", "state": "VA", "zip": "23230"}, "former-company": {"former-conformed-name": "LAWYERS TITLE CORP", "date-changed": "19930328"}}
================================================================================

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

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                        Date of Report: February 27, 1998
                        (Date of earliest event reported)

                        LANDAMERICA FINANCIAL GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)

          Virginia                       1-13990                  54-1589611  
(State or Other Jurisdiction     (Commission File Number)       (IRS Employer
      of Incorporation)                                      Identification No.)

            6630 West Broad Street             
              Richmond, Virginia                         23230
   (Address of Principal Executive Offices)           (Zip Code)
  

                                 (804) 281-6700
               Registrant's telephone number, including area code

                            Lawyers Title Corporation
                       (former Name or Former Address, if
                           Changed Since Last Report)

================================================================================
Item 2.  Acquisition or Disposition of Assets.

         On February 27,  1998,  LandAmerica  Financial  Group,  Inc.  (formerly
Lawyers  Title  Corporation)  (the  "Company")  acquired  all of the  issued and
outstanding   capital  stock  of  Commonwealth   Land  Title  Insurance  Company
("Commonwealth")   and  Transnation  Title  Insurance  Company   ("Transnation")
(collectively,  the  "Acquisition")  pursuant to an Amended and  Restated  Stock
Purchase Agreement (the "Stock Purchase Agreement"), dated December 11, 1997, by
and among the Company,  Lawyers Title Insurance Corporation  ("LTIC"),  Reliance
Group  Holdings,  Inc.  ("Reliance")  and Reliance  Insurance  Company  ("RIC").
Commonwealth and Transnation together comprise the third largest title insurance
operation in the United States based upon total  premiums and fees in 1996. As a
result of the  Acquisition,  Commonwealth  and  Transnation  became wholly owned
subsidiaries of the Company.

         The  purchase  price  paid  by  the  Company  in  connection  with  the
Acquisition  consisted of (i)  approximately  $200.7 million in cash funded by a
Revolving Credit Agreement, dated November 7, 1997, between the Company and Bank
of  America  National  Trust  and  Savings  Association,   individually  and  as
Administrative  Agent for a syndicate of 11 other financial  institutions,  (ii)
the issuance to RIC of 4,039,473 shares of the Company's Common Stock, (iii) the
issuance to RIC of  2,200,000  shares of the  Company's  7% Series B  Cumulative
Convertible Preferred Stock (the "Series B Preferred Stock"), which is initially
convertible  into  4,824,561  shares of Common Stock,  and (iv) $65.9 million in
cash,  representing the net proceeds from the sale of 1,750,000 shares of Common
Stock  offered to the  public by the  Company.  The  various  components  of the
purchase price were determined by arms-length  negotiations between the parties.
Based upon a value for the  4,039,473  shares of Common Stock of $175.0  million
and an estimated  value for the 2,200,000  shares of Series B Preferred Stock of
$224.8 million,  the aggregate  purchase price paid by the Company to RIC at the
closing of the Acquisition was approximately  $666.4 million. For information on
the  estimated  aggregate  purchase  price to be  recorded  by the  Company  for
accounting  purposes,  see  footnote  1 to  the  Pro  Forma  Condensed  Combined
Financial Statements set forth in "Item 7(b) - Pro Forma Financial  Information"
below.

         In connection with the consummation of the Acquisition, the Company (i)
amended its Articles of Incorporation to establish the Series B Preferred Stock,
(ii)  increased  the size of the Board of  Directors  from 10 to 14 and  elected
Herbert Wender,  Robert M. Steinberg,  Lowell C. Freiberg and George E. Bello as
additional directors of the Company,  (iii) completed the registration under the
Securities Act of 1933, as amended, of the 4,039,473 shares of Common Stock, the
2,200,000  shares of Series B Preferred Stock and the 4,824,561 shares of Common
Stock  issuable  upon  conversion  of the Series B Preferred  Stock  (subject to
adjustment as provided in the designation of the Series B Preferred Stock),  and
(iv) entered into a Voting and  Standstill  Agreement  with  Reliance and RIC as
described in the Company's definitive Proxy Statement for the Special Meeting of
Shareholders  held on  February  27,  1998,  a copy of which was filed  with the
Securities and Exchange Commission on January 29, 1998.

         As of the close of business on February 27,  1998,  the total number of
shares of Common Stock issued and  outstanding  was  15,044,593.  The  4,039,473
shares  of  Common  Stock  acquired  by RIC at the  closing  of the  Acquisition
represent  approximately  26.8% of the issued and  outstanding  shares of Common
Stock as of that date.

         In  addition,   the  Company  changed  its  name  from  "Lawyers  Title
Corporation" to "LandAmerica Financial Group, Inc." effective as of February 27,
1998.  The change in name for the Company is  intended  to signify,  among other
things,  an expansion of the products  and  services  beyond  traditional  title
insurance to be  developed  and offered by the combined  company  following  the
Acquisition.  LTIC,  Commonwealth and Transnation will continue to operate under
their current names for the foreseeable future.

         Effective  March 2, 1998, the Common Stock of the Company began trading
on the New York Stock  Exchange  ("NYSE")  under the symbol "LFG." Prior to that
date, the Common Stock traded on the NYSE under the symbol "LTI."

                                      -2-
Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits.

         (a)     Financial Statements of Businesses Acquired.

         The following audited combined financial statements of Commonwealth and
Transnation and their subsidiaries are included in this report:

         Independent Auditors' Report

         Combined Statements of Income for the Three Years Ended
           December 31, 1997, 1996 and 1995

         Combined Balance Sheets at December 31, 1997 and 1996

         Combined  Statements of Changes in  Shareholder's  Equity for the
           Three Years Ended December 31, 1997, 1996 and 1995

         Combined  Statements  of Cash  Flows  for the Three  Years  Ended
           December 31, 1997, 1996 and 1995

         Notes to Combined Financial Statements

                                      -3-
Independent Auditors' Report

Board of Directors and Shareholder
Commonwealth Land Title Insurance Company
Transnation Title Insurance Company
Philadelphia, Pennsylvania

We have audited the accompanying  combined  balance sheets of Commonwealth  Land
Title Insurance Company and subsidiaries  ("Commonwealth") and Transnation Title
Insurance  Company and  subsidiaries  ("Transnation")  (both of which are wholly
owned subsidiaries of Reliance Group Holdings, Inc.) as of December 31, 1997 and
1996, and the related  combined  statements of income,  changes in shareholder's
equity,  and cash flows for each of the three years in the period ended December
31,  1997.  Commonwealth  and  Transnation  (the  "Companies")  are under common
ownership  and  common   management.   These   financial   statements   are  the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  such  combined  financial  statements  present  fairly,  in all
material   respects,   the  combined  financial  position  of  Commonwealth  and
Transnation  at December 31, 1997 and 1996,  and the  combined  results of their
operations  and their  combined  cash  flows for each of the three  years in the
period ended December 31, 1997 in conformity with generally accepted  accounting
principles.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania
February 11, 1998
  (February 27, 1998 as to Note 10)

                                      -4-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                          COMBINED STATEMENTS OF INCOME
Year Ended December 31
                                                                  ----------------------------------------------------------
                                                                       1997                  1996                   1995
                                                                  -------------         -------------          -------------
REVENUES:
Premiums and fees................................................ $ 863,746,000         $ 780,157,000          $ 671,936,000

Net investment income............................................    30,990,000            30,455,000             27,933,000

Gain on sales of investments.....................................     1,596,000               346,000              1,729,000
                                                                  -------------         -------------          -------------

                                                                    896,332,000           810,958,000            701,598,000
                                                                  -------------         -------------          -------------

EXPENSES:
Commissions to agents............................................   379,755,000           355,834,000            310,729,000

Compensation and employee benefits...............................   240,950,000           206,083,000            188,097,000

Provision for losses.............................................    41,473,000            61,116,000             58,486,000

Taxes, other than federal income taxes...........................    13,397,000            12,923,000              9,782,000

Other operating expenses.........................................   155,852,000           136,422,000            120,294,000
                                                                  -------------         -------------          -------------

                                                                    831,427,000           772,378,000            687,388,000
                                                                  -------------         -------------          -------------

Income before income taxes.......................................    64,905,000            38,580,000             14,210,000

Provision for income taxes.......................................    22,729,000            13,347,000              4,755,000
                                                                  -------------         -------------          -------------

NET INCOME....................................................... $  42,176,000         $  25,233,000          $   9,455,000
                                                                  =============         =============          =============
See notes to combined financial statements.

                                      -5-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                             COMBINED BALANCE SHEETS
December 31
                                                                                           ---------------------------------
                                                                                                1997                1996
                                                                                           -------------       -------------
ASSETS
Investments:
  Fixed maturities held-for-investment -- at amortized
    cost (quoted market $132,422,000 and $140,789,000).................................... $ 128,134,000       $ 139,798,000
  Fixed maturities available-for-sale -- at quoted market
    (amortized cost $273,162,000 and $284,381,000)........................................   284,173,000         289,991,000
  Short-term investments..................................................................    50,038,000          25,860,000
  First mortgage and other secured loans..................................................     6,840,000           5,453,000
Cash......................................................................................    19,742,000          14,328,000
Accounts receivable, less allowances of
  $5,886,000 and $5,663,000...............................................................    32,488,000          23,987,000
Real estate and equipment -- at cost, less accumulated
  depreciation of $19,551,000 and $25,746,000.............................................    25,306,000          15,373,000
Title plants..............................................................................    50,233,000          49,750,000
Deferred federal income tax benefit.......................................................    25,817,000          27,243,000
Goodwill..................................................................................    16,525,000          12,944,000
Other assets..............................................................................    13,192,000          16,027,000
                                                                                           -------------       -------------

                                                                                           $ 652,488,000       $ 620,754,000
                                                                                           =============       =============

LIABILITIES AND SHAREHOLDER'S EQUITY
Reserve for losses........................................................................ $ 272,792,000       $ 264,838,000
Accounts payable and accrued expenses.....................................................    91,079,000          76,168,000
Current federal income taxes..............................................................     6,707,000           6,091,000
                                                                                           -------------       -------------

                                                                                             370,578,000         347,097,000
                                                                                           -------------       -------------

Commitments and contingencies (Note 9)

Shareholder's equity:
  Common stock............................................................................    11,649,000          11,649,000
  Additional paid-in capital..............................................................   127,370,000         127,551,000
  Retained earnings.......................................................................   135,733,000         130,810,000
  Net unrealized gain on investments......................................................     7,158,000           3,647,000
                                                                                           -------------       -------------

                                                                                             281,910,000         273,657,000
                                                                                           -------------       -------------

                                                                                           $ 652,488,000       $ 620,754,000
                                                                                           =============       =============
See notes to combined financial statements.

                                      -6-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

             COMBINED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
Net        
                                                              Additional                             Unrealized
                                             Common            Paid-in            Retained         Gain (Loss) on      Shareholder's
                                              Stock            Capital            Earnings           Investment           Equity
                                         -------------      -------------      -------------       -------------      -------------
BALANCE, JANUARY 1, 1995                 $  11,374,000      $ 127,278,000      $ 118,338,000       $ (3,524,000)      $ 253,466,000
Net income.........................                                                9,455,000                              9,455,000
Increase in par value of
   Commonwealth's common stock
   from $1.67 to $2.00 per share...            275,000          (275,000)
Dividends..........................                                              (4,000,000)                            (4,000,000)
Capital contribution...............                               548,000                                                   548,000
Appreciation after applicable
   deferred income tax provision
   of $6,068,000...................                                                                   11,268,000         11,268,000
                                         -------------      -------------      -------------       -------------      -------------

BALANCE, DECEMBER 31, 1995                  11,649,000        127,551,000        123,793,000           7,744,000        270,737,000
Net income.........................                                               25,233,000                             25,233,000
Dividends..........................                                             (18,216,000)                           (18,216,000)
Depreciation after applicable
   deferred income tax benefit
   of $2,207,000...................                                                                  (4,097,000)        (4,097,000)
                                         -------------      -------------      -------------       -------------      -------------

BALANCE, DECEMBER 31, 1996                  11,649,000        127,551,000        130,810,000           3,647,000        273,657,000
Net income.........................                                               42,176,000                             42,176,000
Dividends..........................                                             (37,253,000)                           (37,253,000)
Appreciation after applicable
   deferred income tax provision
   of $1,889,000...................                                                                    3,511,000          3,511,000
Stock Purchase Plan................                             (181,000)                                                 (181,000)
                                         -------------      -------------      -------------       -------------      -------------

BALANCE, DECEMBER 31, 1997               $  11,649,000      $ 127,370,000      $ 135,733,000       $   7,158,000      $ 281,910,000
                                         =============      =============      =============       =============      =============
See notes to combined financial statements.

                                      -7-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                        COMBINED STATEMENTS OF CASH FLOWS
Year Ended December 31
                                                                          -----------------------------------------------------
                                                                               1997               1996                1995
                                                                          --------------    ----------------    ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................   $   42,176,000    $     25,233,000    $     9,455,000
  Adjustments to reconcile net income to net cash
  provided from (used in) operating activities:
    Increase in reserve for losses.....................................        7,954,000          24,061,000         12,714,000
    Change in accounts receivable......................................       (9,894,000)          1,780,000            557,000
    Depreciation, bad debts and amortization...........................        9,481,000           7,797,000          6,838,000
    Change in accounts payable, accrued expenses and other.............       11,466,000           8,478,000        (13,539,000)
                                                                          --------------    ----------------    ---------------

NET CASH PROVIDED FROM OPERATING ACTIVITIES............................       61,183,000          67,349,000         16,025,000
                                                                          --------------    ----------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of:
  Fixed maturities available-for-sale..................................       47,049,000          88,225,000         29,677,000
  Fixed maturities held-for-investment.................................                            3,300,000          4,267,000
Maturities and repayments of:
  Fixed maturities available-for-sale..................................       18,361,000          13,671,000          2,869,000
  Fixed maturities held-for-investment.................................       15,893,000           2,700,000          2,005,000
Purchases of:
  Fixed maturities available-for-sale..................................     (53,647,000)       (138,310,000)       (37,922,000)
  Fixed maturities held-for-investment.................................      (3,443,000)        (24,817,000)       (10,982,000)
(Increase) decrease in short-term investments - net....................     (24,178,000)          15,360,000         13,055,000
Purchases of title plants - net........................................        (659,000)           (577,000)          (985,000)
Purchases of real estate and equipment - net...........................     (16,018,000)         (6,266,000)        (4,439,000)
Cash outlay for acquisitions...........................................                          (3,000,000)
Other - net............................................................      (1,693,000)           (321,000)        (1,730,000)
                                                                          --------------    ----------------    ---------------

NET CASH USED IN INVESTING ACTIVITIES..................................     (18,335,000)        (50,035,000)        (4,185,000)
                                                                          --------------    ----------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany receivables and payables - net............................                                             (1,909,000)
Stock Purchase Plan....................................................        (181,000)
Dividends..............................................................     (37,253,000)        (18,216,000)        (4,000,000)
Cash received from capital contribution................................                                                 40,000
                                                                          --------------    ----------------    ---------------

NET CASH USED IN FINANCING ACTIVITIES..................................     (37,434,000)        (18,216,000)        (5,869,000)
                                                                          --------------    ----------------    ---------------

INCREASE (DECREASE) IN CASH............................................        5,414,000            (902,000)         5,971,000
Cash, beginning of year................................................       14,328,000          15,230,000          9,259,000
                                                                          --------------    ----------------    ---------------

Cash, end of year......................................................   $   19,742,000    $     14,328,000    $    15,230,000
                                                                          ==============    ================    ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Federal income taxes paid..............................................   $   20,518,000    $     10,944,000    $     6,299,000
                                                                          ==============    ================    ===============
See notes to combined financial statements.

                                      -8-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

                     NOTES TO COMBINED FINANCIAL STATEMENTS

1.   NATURE OF OPERATIONS/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Combination
--------------------

The combined  financial  statements of Commonwealth Land Title Insurance Company
("Commonwealth") and Transnation Title Insurance Company ("Transnation") include
the  accounts of all  subsidiaries  and have been  prepared in  conformity  with
generally  accepted  accounting  principles.  Such statements  include  informed
estimates and judgments of management  for those  transactions  that are not yet
complete  or for which the  ultimate  effects  cannot be  precisely  determined.
Actual results may differ from these estimates.  All  intercompany  accounts and
transactions have been eliminated.  Certain  reclassifications have been made to
the 1996 and 1995 combined financial statements to conform with the current year
presentation.

Commonwealth and Transnation (the "Companies") are wholly owned  subsidiaries of
Reliance Insurance Company ("Reliance Insurance"). Reliance Group Holdings, Inc.
("Reliance"),  through a  subsidiary,  owns 100% of the common stock of Reliance
Insurance.  Together the Companies  comprise the title  insurance  operations of
Reliance Insurance.

Certain  administrative  services,  primarily relating to risk management,  data
processing and investment  services,  are provided by Reliance  Insurance to the
Companies.  The costs of such services  amounted to  $5,141,000,  $4,422,000 and
$4,292,000  for 1997,  1996 and 1995,  respectively,  and are  reflected  in the
statements of income.  These costs were  allocated to the Companies  either on a
direct basis or using reasonable  allocation methods  including,  for investment
services,  a percentage of invested assets managed.  Management of the Companies
believes that the cost of these services are substantially  similar to the costs
that they would have  incurred if the  Companies  had  operated as  unaffiliated
entities.

Nature of Operations
--------------------

The  principal   operations  of  the  Companies   consist  of  title   insurance
underwriting.  The Companies write, through direct and agency operations,  title
insurance for  residential  and  commercial  real estate  nationwide and provide
escrow and settlement services in connection with real estate closings.

Investments
-----------

Fixed maturity investments include bonds, notes and redeemable preferred stocks.
Fixed  maturity  investments   classified  as   "available-for-sale"   represent
securities that will be held for an indefinite period of time and are carried at
quoted  market  value  with  the  net  unrealized   gain  or  loss  included  in
shareholder's  equity.  Such  investments  may be sold in response to changes in
interest  rates,  future  general  liquidity  needs and similar  factors.  Fixed
maturity  investments  classified  as   "held-for-investment"   are  carried  at
amortized cost since the Companies have the positive  intent and ability to hold
these securities to maturity. Short-term investments consist primarily of United
States  government  securities,  certificates  of deposit and  commercial  paper
carried at cost,  which  approximates  market  value.  First  mortgage and other
secured loans are carried at cost, which approximate their fair value.  Realized
gains and losses, determined on a specific identification basis, are included in
income.

                                      -9-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

1.   NATURE OF OPERATIONS/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Title Insurance
---------------

Direct title insurance premiums and fees are recognized as revenue when policies
become  effective.  Agency  insurance  premiums are  recognized  as revenue when
reported by the agent.  Title insurance  claims arise  principally  from unknown
title defects that exist at the time policies become effective.

At the time premiums are recorded as revenue,  the Companies  establish reserves
for the  estimated  ultimate  amounts  that  will be paid for  reported  claims,
incurred  but not reported  claims and the expenses  that will be paid to settle
these claims.  The reserves,  which are not discounted,  are based on historical
and  anticipated  loss  experience  including  societal  and  economic  factors.
Inflation is inherent in the reserves to the extent that it influenced  the past
claims patterns used to produce the reserve estimates. The process of estimating
claims is a complex  task and the actual  payments may be more or less than such
estimates indicate. Changes in loss estimates, based on subsequent developments,
are included in operations currently.

Title Plants
------------

Title plants are  capitalized at the lower of cost or appraised value at date of
acquisition.  Title  plants are not being  depreciated  since  there has been no
diminution of value; however, impairments of title plant carrying amounts deemed
to be other than temporary are expensed. Costs of maintaining and updating title
plants are expensed as incurred.

Fair Value of Financial Instruments
-----------------------------------

The estimated fair value of publicly traded financial  instruments is determined
by the Companies  using quoted market prices,  dealer quotes and prices obtained
from independent third parties.  For financial  instruments not publicly traded,
fair  values are  estimated  based on values  obtained  from  independent  third
parties or quoted market prices of comparable instruments.  However, judgment is
required  to  interpret  market  data to develop  the  estimates  of fair value.
Accordingly,  the estimates are not  necessarily  indicative of the amounts that
could be realized in a current market exchange.  See Note 2 regarding fair value
information for the Companies' financial instruments.

Income Taxes
------------

The  Companies  are included in the  consolidated  federal  income tax return of
Reliance.  Federal income taxes are computed as if Commonwealth  and Transnation
filed separate consolidated tax returns.

Adoption of New Accounting Standard
-----------------------------------

Effective  January  1,  1996,  the  Companies  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  121,  Accounting  for  the  Impairment  of
Long-Lived  Assets and for Long-Lived  Assets to be Disposed of. The adoption of
this  statement  had no material  effect on the  Companies'  combined  financial
statements.

Effective  January 1, 1997, the Companies  adopted SFAS No. 125,  Accounting for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities.
The adoption of this statement had no material effect on the Companies' combined
financial statements.

                                      -10-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

1.   NATURE OF OPERATIONS/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

In 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS No. 130,
Reporting  Comprehensive  Income and SFAS No. 131, Disclosures About Segments of
and Enterprise and Related  Information.  In 1998, the FASB issued SFAS No. 132,
Employers'  Disclosures About Pensions and Other  Postretirement  Benefits.  The
adoption of these statements,  which is not required until 1998, is not expected
to have a material effect on the Companies' combined financial statements.

2.   INVESTMENTS
Fixed maturities held-for-investment at December 31, 1997 consisted of:
                                                                                             Gross           Gross   
                                                           Amortized         Market       Unrealized      Unrealized
                                                              Cost           Value           Gains          Losses
---------------------------------------------------------------------------------------------------------------------
Bonds and notes:
  U.S. Government and government
    agencies and authorities...........................   $          -   $          -   $          -    $          -
  Public utilities.....................................     81,509,000     83,627,000      2,223,000         105,000
  Corporate bonds and other............................     36,653,000     38,282,000      1,629,000               -
Redeemable preferred stock.............................      9,972,000     10,513,000        541,000               -
                                                          ------------   ------------   ------------    ------------

                                                          $128,134,000   $132,422,000   $  4,393,000    $    105,000
                                                          ============   ============   ============    ============
Fixed maturities available-for-sale at December 31, 1997 consisted of:
                                                                                             Gross           Gross   
                                                             Market         Amortized     Unrealized      Unrealized
                                                             Value            Cost           Gains          Losses
---------------------------------------------------------------------------------------------------------------------
Bonds and notes:
  U.S. Government and government
      agencies and authorities.........................   $ 81,922,000   $ 81,089,000   $    884,000    $     51,000
  Public utilities.....................................     94,755,000     92,228,000      2,531,000           4,000
  Corporate bonds and other............................     49,161,000     47,863,000      1,459,000         161,000
Redeemable preferred stock.............................     58,335,000     51,982,000      6,353,000               -
                                                          ------------   ------------   ------------    ------------

                                                          $284,173,000   $273,162,000   $ 11,227,000    $    216,000
                                                          ============   ============   ============    ============
-11-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

2.   INVESTMENTS - Continued
Fixed maturities held-for-investment at December 31, 1996 consisted of:
                                                                                             Gross          Gross  
                                                           Amortized         Market       Unrealized     Unrealized
                                                              Cost           Value           Gains         Losses
-------------------------------------------------------------------------------------------------------------------
Bonds and notes:
  U.S. Government and government
    agencies and authorities........................... $  1,053,000   $  1,069,000    $     16,000    $          -
  Public utilities.....................................   90,421,000     90,610,000       1,107,000         918,000
  Corporate bonds and other............................   36,621,000     37,211,000       1,330,000         740,000
Redeemable preferred stock.............................   11,703,000     11,899,000         196,000               -
                                                        ------------   ------------    ------------    ------------
                                                         
                                                        $139,798,000   $140,789,000    $  2,649,000    $  1,658,000
                                                        ============   ============    ============    ============
Fixed maturities available-for-sale at December 31, 1996 consisted of:
                                                                                           Gross           Gross   
                                                             Market       Amortized     Unrealized      Unrealized
                                                             Value          Cost           Gains          Losses
-------------------------------------------------------------------------------------------------------------------
Bonds and notes:
  U.S. Government and government
    agencies and authorities........................... $ 95,147,000   $ 95,345,000    $    660,000      $  858,000
  Public utilities.....................................   72,880,000     73,457,000         348,000         925,000
  Corporate bonds and other............................   63,619,000     62,713,000       1,671,000         765,000
Redeemable preferred stock.............................   58,345,000     52,866,000       5,487,000           8,000
                                                        ------------   ------------    ------------      ----------

                                                        $289,991,000   $284,381,000    $  8,166,000      $2,556,000
                                                        ============   ============    ============      ==========
The carrying value of financial  instruments  not publicly  traded,  recorded at
estimated fair value,  was  $45,454,000 and $44,800,000 at December 31, 1997 and
1996, respectively.

The  contractual  maturities of fixed maturity  investments at December 31, 1997
were as follows:
Held-for-Investment             Available-for-Sale
                                                        ---------------------------    ----------------------------
                                                         Amortized         Market        Amortized         Market
                                                           Cost            Value           Cost            Value
-------------------------------------------------------------------------------------------------------------------
Fixed maturity investments:
  Due within one year.................................. $          -   $          -    $ 10,737,000    $ 10,721,000
  Due after one year through five years................   11,421,000     11,669,000       6,782,000       6,969,000
  Due after five years through ten years...............   47,603,000     49,450,000      30,201,000      30,964,000
  Due after ten years..................................   59,138,000     60,790,000     105,805,000     108,723,000
Redeemable preferred stock.............................    9,972,000     10,513,000      51,982,000      58,335,000
Mortgage-backed securities.............................            -              -      67,655,000      68,461,000
                                                        ------------   ------------    ------------    ------------

                                                        $128,134,000   $132,422,000    $273,162,000    $284,173,000
                                                        ============   ============    ============    ============
-12-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

2.   INVESTMENTS - Continued
Net investment income consisted of:

Year Ended December 31                                      1997             1996           1995
-----------------------------------------------------------------------------------------------------
Investment income:
  Fixed maturities..................................... $ 30,311,000    $ 29,632,000    $ 26,971,000
  Short-term investments...............................    1,488,000       1,588,000       1,689,000
  Other................................................      804,000         883,000         773,000
                                                        ------------    ------------    ------------
                                                          32,603,000      32,103,000      29,433,000
Investment expenses....................................    1,613,000       1,648,000       1,500,000
                                                        ------------    ------------    ------------

                                                        $ 30,990,000    $ 30,455,000    $ 27,933,000
                                                        ============    ============    ============
Year Ended December 31                                      1997             1996           1995
----------------------------------------------------------------------------------------------------

Gain on sales of investments consisted of:
Fixed maturities:
  Realized gains....................................... $  1,623,000    $  1,718,000    $  1,754,000
  Realized losses......................................     (27,000)     (1,372,000)        (25,000)
                                                        ------------    ------------    ------------
                                                        $  1,596,000    $    346,000    $  1,729,000
                                                        ============    ============    ============
During 1997, the Companies sold no fixed maturities held for investment.  During
1996 and 1995, the Companies sold fixed  maturities  held for investment with an
amortized cost of $2,963,000 and $4,221,000, respectively, resulting in realized
gains of $337,000 and $45,000,  respectively.  These sales were  principally  in
response to a significant deterioration in the issuers' creditworthiness.

3.   PROVISION FOR INCOME TAXES

Income tax provision from operations consisted of:
Year Ended December 31                                       1997            1996          1995
---------------------------------------------------------------------------------------------------
Current ............................................... $ 21,135,000    $ 18,094,000    $ 5,066,000
Deferred...............................................    1,594,000     (4,747,000)      (311,000)
                                                        ------------    ------------    -----------

                                                        $ 22,729,000    $ 13,347,000    $ 4,755,000
                                                        ============    ============    ===========
-13-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

3.   PROVISION FOR INCOME TAXES - Continued

The  reconciliation  of  taxes  computed  at the  statutory  rate  of 35% to the
provision for income taxes is as follows:
Year Ended December 31                                      1997            1996            1995
----------------------------------------------------------------------------------------------------
Income from operations before income taxes............. $ 64,905,000    $ 38,580,000    $ 14,210,000
                                                        ============    ============    ============

Tax provision at statutory rate........................ $ 22,717,000    $ 13,503,000    $  4,974,000

Reconciliation to actual tax rate:
  Dividends received deduction.........................  (1,198,000)     (1,248,000)     (1,199,000)
  Goodwill.............................................      340,000         268,000         126,000
  Non-deductible meals and entertainment...............      808,000         652,000         578,000
  Tax exempt interest income...........................     (20,000)        (46,000)        (67,000)
  Other................................................       82,000         218,000         343,000
                                                        ------------    ------------    ------------

                                                        $ 22,729,000    $ 13,347,000    $  4,755,000
                                                        ============    ============    ============
The tax effects of items  comprising  the Companies net deferred tax assets were
as follows:
December 31                                                                  1997            1996
----------------------------------------------------------------------------------------------------
Deferred tax assets:
    Title loss reserves................................................ $ 87,445,000    $ 83,004,000
    Tax basis differential for equipment...............................    4,528,000       6,133,000
    Allowance for doubtful accounts....................................    2,248,000       2,044,000
    Pension reserves...................................................    4,769,000       3,318,000
    Other deferred tax assets..........................................    3,077,000       3,211,000
                                                                        ------------    ------------
                                                                         102,067,000      97,710,000
                                                                        ------------    ------------
Deferred tax liabilities:
    Statutory premium reserve.........................................   61,587,000      56,095,000
    Financing lease arrangement.......................................    3,434,000       5,222,000
    Unrealized security gains.........................................    5,509,000       1,963,000
    Other deferred tax liabilities....................................    5,720,000       7,187,000
                                                                       ------------    ------------
                                                                         76,250,000      70,467,000
                                                                       ------------      ----------

Net deferred tax assets............................................... $ 25,817,000    $ 27,243,000
                                                                       ============    ============
4.   RESTRICTED ASSETS AND SHAREHOLDER'S EQUITY

State laws require the Companies to maintain  statutory premium reserves,  which
are restrictions on shareholder's  equity.  Qualified investments are maintained
in an amount equal to these reserves,  which aggregated $275,623,000 at December
31, 1997 and $258,729,000 at December 31, 1996.

The Companies had  investments on deposit with insurance  departments of various
states as required  by law with  aggregate  carrying  values of  $11,811,000  at
December 31, 1997 and $12,462,000 at December 31, 1996.

                                      -14-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

4.   RESTRICTED ASSETS AND SHAREHOLDER'S EQUITY - Continued

Commonwealth's common stock has a par value of $2 per share and 1,000,000 shares
were  authorized and 824,653 shares were issued and  outstanding at December 31,
1997 and 1996.  Transnation's  common  stock has a par value of $1 per share and
10,000,000  shares were authorized,  issued and outstanding at December 31, 1997
and 1996.  Total  shareholder's  equity of  Commonwealth  was  $189,899,000  and
$184,926,000 at December 31, 1997 and 1996,  respectively.  Total  shareholder's
equity of Transnation  was  $92,011,000 and $88,731,000 at December 31, 1997 and
1996, respectively.

Future  dividend  payments  by  Commonwealth  and  Transnation  are  limited  by
insurance  regulations  of the  Commonwealth  of  Pennsylvania  and the State of
Arizona,  respectively.  Under Pennsylvania law,  Commonwealth is limited to the
greater of 10% of policyholders' surplus at December 31 of the preceding year or
100% of the  prior  year's  statutory  net  income.  In  accordance  with  these
restrictions, $32,874,000 is available for dividends in 1998.

Under Arizona law, Transnation is limited to the lesser of 10% of policyholder's
surplus  at  December  31 of the  preceding  year or 100%  of the  prior  year's
statutory  net  investment  income.  In  accordance  with  these   restrictions,
$6,560,000 is available for dividends in 1998.

5.   POSTRETIREMENT BENEFIT PLANS

Retirement benefits,  covering substantially all employees, are provided under a
noncontributory  trusteed  defined  benefit pension plan.  Contributions  to the
pension  plan are based on the  minimum  funding  requirements  of the  Employee
Retirement Income Security Act of 1974.

Retirement benefits are paid to eligible employees based principally on years of
service and salary.  Pension plan assets  consist  primarily  of  corporate  and
government debt securities and 314,100 shares of Reliance common stock.
Net periodic pension cost includes the following components:

Year Ended December 31                                       1997            1996            1995
-----------------------------------------------------------------------------------------------------
Service cost -- benefits earned during the period...... $  3,761,000    $  3,945,000    $  3,076,000
Interest cost on projected benefit obligation..........    4,592,000       4,227,000       3,859,000
Actual return on plan assets...........................  (4,786,000)     (1,552,000)     (5,342,000)
Net amortization and deferral..........................    (714,000)     (3,770,000)       1,047,000
                                                        ------------    ------------    ------------

Net periodic pension cost.............................. $  2,853,000    $  2,850,000    $  2,640,000
                                                        ============    ============    ============
-15-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

5.   POSTRETIREMENT BENEFIT PLANS - Continued

The  reconciliation  of the pension plan funded status with the accrued  pension
cost included in accounts payable and accrued expenses is as follows:
December 31                                                                  1997            1996
-----------------------------------------------------------------------------------------------------
Actuarial present value of benefit obligation:
    Vested............................................................. $ 53,892,000    $  43,935,000
    Nonvested..........................................................    4,273,000        3,494,000
                                                                        ------------    -------------

Accumulated benefit obligation.........................................   58,165,000       47,429,000
Effect of anticipated future compensation levels.......................   14,118,000       10,911,000
                                                                        ------------    -------------

Projected benefit obligation...........................................   72,283,000       58,340,000
Plan assets at market value............................................ (52,917,000)     (49,313,000)
                                                                        ------------    -------------

Projected benefit obligation in excess of plan assets..................   19,366,000        9,027,000

Unrecognized net assets at date of plan adoption.......................    2,333,000        2,969,000
Unrecognized net loss.................................................. (12,400,000)      (4,319,000)
                                                                        ------------    -------------

Accrued pension cost................................................... $  9,299,000    $   7,677,000
                                                                        ============    =============
Contributions  to the pension plan were  $1,231,000  in 1997 and  $3,985,000  in
1996. No contributions were made in 1995.

The assumptions used to measure the projected benefit obligation at December 31,
1997 and 1996  included  discount  rates of 7.25%  and 8.0%,  respectively,  and
weighted average rates of compensation increase of 3.9% and 4.0%,  respectively.
The expected  long-term  investment  rate of return on plan assets for the years
ended December 31, 1997 and 1996 was 10.0%.

In addition to pension benefits,  Commonwealth provides unfunded  postretirement
medical and life insurance  plans for certain  employees who were hired prior to
1990.
Postretirement benefit cost includes the following components:

Year Ended December 31                                                1997            1996           1995
------------------------------------------------------------------------------------------------------------
Service cost -- benefits earned during the period................ $    97,000    $    168,000     $  167,000
Interest cost on accumulated postretirement benefit obligation...     549,000         500,000        510,000
Net amortization and deferral....................................     346,000         346,000        303,000
                                                                  -----------    ------------     ----------

Postretirement benefit cost...................................... $   992,000    $  1,014,000     $  980,000
                                                                  ===========    ============     ==========
-16-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

5.   POSTRETIREMENT BENEFIT PLANS - Continued

The components of the accumulated  postretirement benefit obligation included in
accounts payable and accrued expenses were as follows:
December 31                                                                  1997            1996
----------------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
  Retirees............................................................. $  5,433,000    $  3,462,000
  Other active plan participants.......................................    2,113,000       3,240,000
                                                                        ------------    ------------

Accumulated benefit obligation.........................................    7,546,000       6,702,000
Unrecognized net gain (loss)...........................................    (257,000)         559,000
Unrecognized transition obligation.....................................  (5,187,000)     (5,533,000)
                                                                        ------------    ------------

Accrued postretirement benefit cost.................................... $  2,102,000    $  1,728,000
                                                                        ============    ============
The  assumed  health  care cost trend  rate used in  measuring  the  accumulated
postretirement  benefit  obligation  as of December  31, 1997 was 8.0% for 1998,
decreasing  until it reaches 6.0% in 2007,  after which it remains  constant.  A
one-percentage-point  change in the assumed health care cost trend rate for each
year would  change  the  accumulated  postretirement  benefit  obligation  as of
December  31,  1997  and  the  1997  net  postretirement  health  care  cost  by
approximately  1.5% and 1.4%,  respectively.  The assumed discount rates used in
determining the accumulated  postretirement  benefit  obligation at December 31,
1997 and 1996 were 7.25% and 8.0%, respectively.

6.   RESERVE FOR LOSSES

The reconciliation of the beginning to ending reserve for losses is as follows:
December 31                                                            1997            1996            1995
---------------------------------------------------------------------------------------------------------------
Reserve for losses, beginning of year............................ $264,838,000     $240,777,000    $228,063,000
                                                                  ------------     ------------    ------------

Provision for policy claims and related expenses:
  Provision for insured events of the current year...............   60,618,000       59,771,000      57,900,000
  (Decrease) increase in provision for insured events of
     prior years................................................. (19,145,000)        1,345,000         586,000
                                                                  ------------    -------------    ------------
     Total provision.............................................   41,473,000       61,116,000      58,486,000
                                                                  ------------     ------------    ------------

Payments, net of recoveries, for policy claims and related expenses:
  Attributable to insured events of the current year.............    1,468,000        1,755,000       2,187,000
  Attributable to insured events of prior years..................   32,051,000       35,300,000      43,585,000
                                                                  ------------     ------------    ------------
     Total payments..............................................   33,519,000       37,055,000      45,772,000
                                                                  ------------     ------------    ------------

Reserve for losses, end of year.................................. $272,792,000     $264,838,000    $240,777,000
                                                                  ============     ============    ============
The favorable development in 1997 on the reserve for losses established in prior
years  reflects the  favorable  paid claims  experience  in recent  years.  This
favorable trend reflects  several  factors,  including the strong 1993 refinance
market, enhanced underwriting policies and procedures and technology advances in
the title production process.

                                      -17-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

7.   ESCROW FUNDS

Customers' funds held in escrow for real estate transactions are not included in
the combined balance sheet.

    These funds consisted of:
December 31                                                  1997              1996
---------------------------------------------------------------------------------------
Cash................................................... $  509,198,000     $ 263,348,000
Investments held for specific accounts.................    534,296,000       333,658,000
                                                        --------------     -------------

                                                        $1,043,494,000     $ 597,006,000
                                                        ==============     =============
8.   STATUTORY INFORMATION

The  Companies  had  combined   policyholders'   surplus  of  $200,949,000   and
$199,587,000 at December 31, 1997 and 1996, respectively, and combined statutory
net income of  $45,215,000,  $40,094,000  and  $12,439,000  for the years  ended
December 31, 1997, 1996 and 1995, respectively.  Commonwealth had policyholders'
surplus  of  $135,347,000  and  $136,559,000  at  December  31,  1997 and  1996,
respectively,   and  statutory  net  income  of  $32,874,000,   $31,806,000  and
$10,580,000 for the years ended December 31, 1997, 1996 and 1995,  respectively.
Transnation  had  policyholders'  surplus  of  $65,603,000  and  $63,028,000  at
December  31,  1997  and  1996,  respectively,   and  statutory  net  income  of
$12,341,000,  $8,288,000  and  $1,859,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

Commonwealth and Transnation  have entered into a credit support  arrangement to
which each Company will commit credit support, if necessary, to the other and to
its wholly owned  subsidiaries.  This agreement  provides  financial  support in
order that each company remains solvent,  able to meet its financial obligations
as they come due in the ordinary course of business,  and protects the interests
of the policyholders.

9.   COMMITMENTS AND CONTINGENCIES

The  Companies  lease  certain  office  facilities  and  equipment  under  lease
agreements  that expire at various dates through 2011.  Rental  expense in 1997,
1996 and 1995 was  $33,036,000,  $31,552,000 and $30,956,000,  respectively.  At
December  31,  1997,  future  minimum  rental  commitments  under  noncancelable
operating leases, principally for office space, were:

Year Ended December 31                                    
------------------------------------------------------------
1998    .......................................................... $  17,902,000
1999    ..........................................................    14,047,000
2000    ..........................................................    10,301,000
2001    ..........................................................     6,633,000
2002    ..........................................................     3,695,000
2003 and later....................................................     5,034,000
                                                                   -------------

                                                                   $  57,612,000
                                                                   =============

                                      -18-
COMMONWEALTH LAND TITLE INSURANCE COMPANY AND
                       TRANSNATION TITLE INSURANCE COMPANY

               NOTES TO COMBINED FINANCIAL STATEMENTS - Continued

9.    COMMITMENTS AND CONTINGENCIES - Continued

The Companies are involved in certain  litigation arising in the course of their
businesses,  some of which involve claims of substantial  amounts.  Although the
ultimate  outcome of these matters  cannot be  ascertained at this time, and the
results of legal proceedings  cannot be predicted with certainty,  the Companies
are contesting the  allegations of the complaints in each pending action against
them and  believe,  based on  current  knowledge  and  after  consultation  with
counsel,  that the resolution of these matters will not have a material  adverse
effect on the combined financial statements of the Companies.

10.   SUBSEQUENT EVENT

On February 27,  1998,  Reliance  Insurance  sold the  Companies to  LandAmerica
Financial Group,  Inc.  (formerly  Lawyers Title  Corporation) for cash,  common
stock and convertible preferred stock.

                                   * * * * * *

                                      -19-
(b)           Pro Forma Financial Information.

               LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES
                PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
                                   (Unaudited)

         The following  unaudited Pro Forma Condensed  Combined Balance Sheet as
of December 31, 1997 and the unaudited Pro Forma Condensed Combined Statement of
Operations  for the year  ended  December  31,  1997 (the "Pro  Forma  Financial
Statements")  are  based  upon the  respective  consolidated/combined  financial
statements  of the Company  and of  Commonwealth/Transnation.  The  consolidated
financial  statements of the Company will be filed with the Company's  Form 10-K
for the fiscal year ended  December 31, 1997 on or before  March 31,  1998.  The
combined    financial     statements    of    Commonwealth    and    Transnation
("Commonwealth/Transnation")  are included in this  Current  Report on Form 8-K.
See "Item 7(a) - Financial Statements of Businesses Acquired."

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

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

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

                                      -20-
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                   PRO FORMA CONDENSED COMBINED BALANCE SHEET
                                December 31, 1997
                            (In thousands of dollars)
                                   (Unaudited)
Lawyers          Commonwealth/                                        
                                                              Title            Transnation           Pro Forma
                                                            Historical          Historical          Adjustments            Pro Forma
                                                            ----------          ----------          -----------            ---------
ASSETS
  Investments..........................................    $ 297,644           $ 469,185                    -              $ 766,829
  Cash.................................................       35,629              19,742            $ 200,681     [1d]        65,324
                                                                                                       65,921     [1b]
                                                                                                    (200,681)     [1d]
                                                                                                    ( 65,921)     [1b]
                                                                                                        9,953     [4]
  Notes and accounts receivable........................       36,962              32,488                   -                  69,450
  Property and equipment - net.........................       21,896              25,306                   -                  47,202
  Title plants.........................................       48,984              50,233                   -                  99,217
  Goodwill.............................................       57,687              16,525              306,120     [1]        367,679
                                                                                                     (12,653)     [2]
  Deferred income tax benefit..........................       21,610              25,817               17,653     [2]         65,080
  Other assets.........................................       34,281              13,192                   -                  47,473
                                                           ---------              ------             --------                 ------

       Total assets....................................    $ 554,693           $ 652,488            $ 321,073             $1,528,254
                                                           =========           =========            =========             ==========

LIABILITIES
  Policy and contract claims...........................    $ 202,477           $ 272,792                   -               $ 475,269
  Accounts payable and accrued
    expenses...........................................       52,818              97,786                5,000     [1e]       170,604
                                                                                                       10,000     [1f]
                                                                                                        5,000     [2]
  Debt.................................................        6,994                   -              200,681     [1d]       207,675
                                                           ---------            --------              -------                -------
       Total liabilities...............................      262,289             370,578              220,681                853,548
                                                           ---------             -------              -------                -------

SHAREHOLDERS' EQUITY
  Preferred stock......................................                                -              175,700     [1c]       175,700
                                                                   -
  Common stock.........................................      168,066              11,649              130,728     [1a]       374,668
                                                                                                       65,921     [1b]
                                                                                                        9,953     [4]
                                                                                                     (11,649)     [1]
  Additional paid in capital...........................                          127,370            (127,370)     [1]              -
                                                                   -
  Unrealized gains.....................................        7,536               7,158              (7,158)     [1]          7,536
  Retained earnings....................................      116,802             135,733            (135,733)     [1]        116,802
                                                           ---------             -------            ---------                -------

       Total shareholders' equity......................      292,404             281,910              100,392                674,706
                                                           ---------             -------              -------                -------

  Total liabilities and
    shareholders' equity...............................    $ 554,693           $ 652,488            $ 321,073            $ 1,528,254
                                                           =========           =========            =========            ===========
See notes to the pro forma condensed  combined financial  statements.  Bracketed
numbers to the right of the "Pro Forma Adjustments" column refer to such notes.

                                      -21-
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

              PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 1997
           (In thousands of dollars, except shares and per share data)
                                   (Unaudited)
Lawyers           Commonwealth/                     
                                                        Title             Transnation        Pro Forma         
                                                     Historical           Historical        Adjustments          Pro Forma
REVENUES
  Premiums                                            $ 504,024           $ 833,895           $      -         $ 1,337,919
  Title search, escrow and other..................      118,757              29,851                  -             148,608
  Net investment income...........................       16,555              30,990                  -              47,545
  Realized investment gains.......................        (237)               1,596           -                      1,359
                                                          -----               -----           --------           ---------
                                                        639,099             896,332                  -           1,535,431
                                                        -------             -------           --------           ---------

EXPENSES
  Salaries and employee benefits..................      200,488             240,950                  -             441,438
  Agents' commissions.............................      218,358             379,755                  -             598,113
  Provision for policy and contract
    claims........................................       33,749              41,473                  -              75,222
  General, administrative and other...............      146,035             169,249             19,277   [3]       334,561
                                                        -------             -------             ------           ---------

                                                        598,630             831,427             19,277           1,449,334
                                                        -------             -------             ------           ---------

OPERATING INCOME BEFORE
  INCOME TAXES....................................       40,469              64,905           (19,277)              86,097

INCOME TAX EXPENSE................................       14,312              22,729            (6,747)   [3]        30,294
                                                       --------           ---------        -----------              ------

NET INCOME........................................     $ 26,157            $ 42,176         $ (12,530)              55,803
                                                       ========            ========         ==========              ======

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

INCOME AVAILABLE TO                 
  COMMON SHAREHOLDERS..............................                                                               $ 48,103
                                                                                                                    ======

NET INCOME PER COMMON SHARE........................      $ 2.93                                                     $ 3.21

NET INCOME PER COMMON SHARE ASSUMING DILUTION......      $ 2.84
                                                                                                                    $ 2.78

WEIGHTED AVERAGE NUMBER OF 
  COMMON SHARES OUTSTANDING.......................        8,924                                                     14,976
                                                                                                                        
WEIGHTED AVERAGE NUMBER OF  
  COMMON SHARES OUTSTANDING
  ASSUMING DILUTION...............................        9,224                                                     20,100
See notes to the pro forma condensed combined financial statements.  Bracketed
numbers to the right of the "Pro Forma Adjustments" column refer to such notes.

                                      -22-
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements

1.  This pro forma  adjustment  reflects the issuance and sale of preferred  and
    common stock and  incurrence of debt in connection  with the  acquisition of
    Commonwealth/Transnation by the Company resulting in:
Recorded
                                                                                                 Value
a.  The  issuance of  4,039,473  shares of Common Stock to RIC at a price of
$32.363 per share.  In accordance  with EITF 95-19,  the assumed  Common
        Stock issuance price of $32.363 per share represents the average closing
        Common  Stock  price on the NYSE for the five day period  beginning  two
        days prior through two days  following  the  Company's  execution of the
        Stock Purchase Agreement on December 11, 1997.                                          $130,728

    b.  The sale of 1,750,000  shares of Common Stock at $40.125 (based upon the
        closing  sales price of the Common Stock on February 24, 1998) per share
        concurrently with the closing of the Acquisition.  The recorded proceeds
        have been adjusted for estimated  offering costs of  approximately  $4.3                  65,921
        million.

    c.  The issuance of 2,200,000  shares of Series B Preferred  Stock at $79.86
        per share. The per share value was determined by applying the conversion
        ratio of 2.19298 to the Common  Stock  price of $32.363  per share in a.
        above and  adding an amount  of $8.89  per share  which  represents  the
        present  value of the  dividends  on the Series B Preferred  Stock for a
        period of five years from the date of issuance until the first available
        call date thereon,  discounted by 5.75%,  the interest rate on five year
        treasury  securities  at  December  11,  1997,  less a 7%  discount  for
        illiquidity  and the  inability  to hedge the Series B  Preferred  Stock
        using  the  underlying   Common  Stock  of  the  Company.   Wheat  First
        Securities, Inc., as financial advisor to the Company in connection with
        the Acquisition,  presented the Company with an independent valuation of
        the Series B Preferred Stock.                                                            175,700

    d.  The  incurrence by the Company of  approximately  $200.7 million of debt
        from  bank  financing,  the  proceeds  of  which  were  paid  to  RIC in
        connection with the Acquisition. See Note 7 below.                                       200,681

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

    f.  Estimated  employee  termination and relocation  costs of $10.0 million.               
        See Note 5 below.                                                                         10,000
                                                                                                --------
                                                                                                        
        Total recorded purchase price                                                           $588,030
                                                                                                ========
2.  This pro forma  adjustment  reflects  adjustment to deferred taxes resulting
    from     purchase     accounting     changes     and    the    accrual    of
    Commonwealth/Transnation's  existing  OPEB  (Other  Postretirement  Employee
    Benefits) transition obligation.

                                      -23-
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements

3.  This pro forma adjustment reflects: (i) interest incurred on debt assumed in
    connection with the Acquisition at an assumed  interest rate of 5.950%,  the
    Interbank  Offered Rate ("IBOR") at February 24, 1998 plus 0.325%,  or $12.0
    million for the year ended December 31, 1997, (ii)  amortization of goodwill
    acquired at the time of the Acquisition over a period of forty years or $7.3
    million for the year ended December 31, 1997 and (iii) income taxes incurred
    at the federal  statutory rate of 35.0%,  or $6.7 million for the year ended
    December  31, 1997.  A change of 0.125% in the assumed  interest  rate would
    increase or decrease interest expense approximately $0.3 million.

4.  This pro forma adjustment  reflects the issuance of 262,500 shares of Common
    Stock  at  $40.125  per  share  in  connection  with  the  exercise  of  the
    over-allotment  option  by the  underwriters  in the  public  offering.  The
    recorded  proceeds  have  been  adjusted  for  estimated  offering  costs of
    approximately $0.6 million.

5.  Management has identified  certain expense savings which it believes will be
    achieved through  reductions in staff,  consolidation of data processing and
    elimination  of  certain  duplicate  or  excess  facilities.  The  number of
    regional  offices and field head count will be reduced with the  elimination
    of redundant title plants and back office production centers.  These expense
    savings have been identified by members of senior  management of the Company
    who have served on task forces devoted to various aspects of integrating the
    operations  of the  Company  and  Commonwealth/Transnation.  Management  has
    identified  approximately 20 metropolitan  markets where the back office and
    title production facilities will be combined.  These multi-county production
    facilities will service each of the Company's  title insurance  subsidiaries
    following the Acquisition.  As a result,  management of the Company believes
    that the  combination  of the two  operations  will yield  recurring  annual
    pre-tax expense savings of  approximately  $40.0 million.  It is expected to
    take four quarters to fully realize these expense savings. No adjustment has
    been included in these Pro Forma Condensed Combined Financial Statements for
    the anticipated expense savings.  There can be no assurance that anticipated
    expense savings will be achieved in the amounts or at the times anticipated.

    To implement the changes necessary to realize such savings, the Company will
    incur certain expenses,  primarily  relating to the termination of leases on
    certain offices to be closed and the payment of employee severance benefits.
    Pursuant to EITF 95-3,  the Company has included in the Pro Forma  Condensed
    Combined  Balance Sheet a pro forma  adjustment of $10.0 million relating to
    anticipated  exit,  employee  termination  and relocation  costs for certain
    Commonwealth  and  Transnation   leases  and  employees.   Of  this  amount,
    approximately  $5.8  million is  expected  to be  incurred  relating  to the
    termination of leases,  $3.5 million is expected to be incurred  relating to
    employee  severance  benefits  and $0.7  million is  expected to be incurred
    relating to relocation  costs.  At this time, the Company has not determined
    precisely  which  leases will be canceled or which  employee  groups will be
    terminated  and the plan  has not  been  communicated  to  employees.  It is
    anticipated that the plan will be finalized shortly after the Acquisition is
    consummated  and will be  completed  within  one year  from that  date.  Any
    adjustments  to  the  $10.0  million  accrual  for  exit,   termination  and
    relocation  costs  will  result  in an  addition  to  or  reduction  of  the
    Commonwealth/Transnation purchase price.

                                      -24-
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements

5.  (continued)

    In addition,  the Company anticipates that, in the first quarter of 1998, it
    will record a one-time  after-tax charge to earnings of  approximately  $9.8
    million  (approximately $15.0 million before tax) relating to exit, employee
    termination  and relocation  costs of Company leases and employees.  At this
    time, the Company has not determined precisely which leases will be canceled
    and which  employee  groups will be terminated.  It is anticipated  that the
    plan will be  finalized  and  communicated  to employees  shortly  after the
    Acquisition is consummated  and the costs  associated  with the plan will be
    recognized as an expense at that time.

    On February 23, 1998, the FTC accepted an Agreement Containing Consent Order
    with the Company (the "Consent Order").  The Consent Order requires that the
    Company divest, within six months from the date of the Consent Order, either
    the rights,  title and interest held by the Company prior to consummation of
    the Acquisition or the rights,  title and interest held by Reliance prior to
    consummation  of the  Acquisition  of all title  plants  serving  each of 12
    localities  named in the  Consent  Order.  Seven of such  localities  are in
    Florida, three are in Michigan, and one each is in Washington, D.C., and St.
    Louis,  Missouri. The Consent Order further requires that the Company divest
    all user or access  agreements  pertaining to each divested title plant.  In
    addition,  the Company cannot acquire,  without prior notice to the FTC, any
    interest in a title plant in any of the named  localities for a period of 10
    years following the date of the Consent Order. The Company believes that the
    divestitures  will not result in a material loss nor will such  divestitures
    have a material effect on future  operations due to the Company's  access to
    other title plants in these markets.

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

        Book value of Commonwealth/Transnation      
          net assets acquired at December 31, 1997
          (including title plants of $50,233)..........                $ 281,910
        Adjustments:
          Increase in deferred income tax asset........  $ 17,653
          Increase in accounts payable and
            accrued expenses for OPEB liability........   (5,000)      
                                                                       ---------
        Total adjustments..............................                   12,653
        Goodwill.......................................                  293,467
                                                                       ---------
                 Total purchase price...................               $ 588,030
                                                                       =========

    For purposes of these Pro Forma Condensed Combined Financial Statements, the
    assets and liabilities  acquired reflect their recorded book value except as
    noted above.  The  allocation  of the purchase  price is  preliminary  since
    appraisals  of the  Commonwealth/Transnation  title  plants  have  not  been
    completed.  Once the appraisals  are completed the Company  expects that the
    value  assigned to title plants will be increased and the amount of goodwill
    recorded will be decreased.  However,  the Company does not believe that the
    difference  between the  recorded  book value and the fair value  ultimately
    assigned to the title  plants will have a material  impact on the  Company's
    pro forma  financial  position or results of  operations.  In addition,  the
    Company  believes that, with the exception of title plants,  the fair values
    of the assets and liabilities of Commonwealth/Transnation  approximate their
    recorded book values in all material respects.

                                      -25-
LANDAMERICA FINANCIAL GROUP, INC. AND SUBSIDIARIES

                Pro Forma Condensed Combined Financial Statements
                                December 31, 1997
                     Notes to Pro Forma Financial Statements

7.  The Stock Purchase  Agreement  provided for adjustment of the $207.5 million
    cash portion of the purchase price in certain circumstances.  Based upon the
    unused  dividend  capacity of  Commonwealth/Transnation  as of February  27,
    1998, the Company adjusted the cash portion of the purchase price payable to
    RIC by  approximately  $6.8 million to $200.7  million at the closing of the
    Acquisition.

                                      -26-
(c)    Exhibits.

                Exhibit No.        Description
                -----------        -----------

                    2.1            Amended   and   Restated    Stock    Purchase
                                   Agreement,  dated  December 11, 1997,  by and
                                   among  the  Registrant,   Lawyers   Insurance
                                   Corporation,  Reliance  Insurance Company and
                                   Reliance Group Holdings,  Inc.,  incorporated
                                   by   reference   to   Appendix   A   to   the
                                   Registrant's  definitive  Proxy Statement for
                                   its  Special  Meeting of  Shareholders  to be
                                   held on  February  27,  1998,  filed with the
                                   Commission on January 29, 1998.

                                      -27-
SIGNATURE

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

                                        LANDAMERICA FINANCIAL GROUP, INC.

Dated: March 16, 1998                   By: /s/ Charles H. Foster, Jr.
                                            -----------------------------------
                                            Charles H. Foster, Jr.
                                            Chairman and Chief Executive Officer
INDEX TO EXHIBITS

No.                   Description
---                   -----------

2.1                   Amended  and  Restated  Stock  Purchase  Agreement,  dated
                      December 11, 1997,  by and among the  Registrant,  Lawyers
                      Insurance  Corporation,  Reliance  Insurance  Company  and
                      Reliance Group Holdings,  Inc.,  incorporated by reference
                      to  Appendix  A  to  the  Registrant's   definitive  Proxy
                      Statement for its Special  Meeting of  Shareholders  to be
                      held on February 27, 1998,  filed with the  Commission  on
                      January 29, 1998.