10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2005

OR

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

For the transition period from                      to                     

Commission file number 1-12688

STEWART INFORMATION SERVICES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	74-1677330
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1980 Post Oak Blvd., Houston TX 77056

(Address of principal executive offices) (Zip Code)

(713) 625-8100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 29, 2005.

Common	17,084,681
Class B Common	1,050,012

FORM 10-Q
QUARTERLY REPORT
Quarter Ended June 30, 2005

TABLE OF CONTENTS

Item No.		Page
	Part I — FINANCIAL INFORMATION
1.	Financial Statements		1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		7
3.	Quantitative and Qualitative Disclosures About Market Risk		13
4.	Controls and Procedures		13
	Part II — OTHER INFORMATION
1.	Legal Proceedings		14
4.	Submission of Matters to a Vote of Security Holders		14
5.	Other Information		15
6.	Exhibits		15
	Signature		16
Summary of Agreements
2005 Long-Term Incentive Plan
Certification Co-CEO Pursuant to Section 302
Certification Co-CEO Pursuant to Section 302
Certification CFO Pursuant to Section 302
Certification Co-CEO Pursuant to Section 906
Certification Co-CEO Pursuant to Section 906
Certification CFO Pursuant to Section 906
Details of Investments

As used in this report, “we”, “us”, “our” and “Stewart” mean Stewart Information Services Corporation and our subsidiaries, unless the context indicates otherwise.

STEWART INFORMATION SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 2005 AND 2004

	THREE MONTHS ENDED					SIX MONTHS ENDED
	JUNE 30		JUNE 30			JUNE 30			JUNE 30
	2005		2004			2005			2004
			($000 omitted)
Revenues
Title insurance:
Direct operations		278,941		241,578			491,815			424,112
Agency operations		341,500		300,595			615,185			558,482
Real estate information services		20,688		17,711			38,315			35,326
Investment income		7,149		5,170			13,457			10,322
Investment and other gains — net		2,801		402			3,269			2,106
		651,079		565,456			1,162,041			1,030,348
Expenses
Amounts retained by agencies		279,637		245,403			503,224			455,455
Employee costs		173,873		152,453			329,490			286,803
Other operating expenses		91,967		81,747			172,964			155,728
Title losses and related claims		30,213		25,807			52,344			45,087
Depreciation and amortization		8,244		8,282			16,050			15,258
Interest		778		272			1,395			490
Minority interests		5,597		3,860			8,520			6,008
		590,309		517,824			1,083,987			964,829
Earnings before taxes		60,770		47,632			78,054			65,519
Income taxes		23,543		17,671			30,161			24,418
Net earnings		37,227		29,961			47,893			41,101
Average number of shares outstanding — basic (000 omitted)		18,130		18,101			18,127			18,086
Average number of shares outstanding — assuming dilution (000 omitted)		18,227		18,192			18,226			18,187
Earnings per share — basic		2.05		1.66			2.64			2.27
Earnings per share — diluted		2.04		1.65			2.63			2.26
Comprehensive earnings:
Net earnings		37,227		29,961			47,893			41,101
Changes in other comprehensive earnings, net of taxes of $2,144, ($5,409), ($617) and ($4,509)		3,982		(10,046	)		(1,145	)		(8,373	)
Comprehensive earnings		41,209		19,915			46,748			32,728

See notes to condensed consolidated financial statements.

-1-

STEWART INFORMATION SERVICES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2005 AND DECEMBER 31, 2004

	JUN 30			DEC 31
	2005			2004
	($000 omitted)
Assets
Cash and cash equivalents		119,610			121,383
Short-term investments		201,852			181,195
Investments — statutory reserve funds		429,824			401,814
Investments — other		80,924			68,793
Receivables		86,723			80,277
Property and equipment		85,379			83,391
Title plants		55,548			52,679
Goodwill		146,424			124,636
Intangible assets		16,728			16,988
Other assets		60,685			62,197
		1,283,697			1,193,353
Liabilities
Notes payable		64,840			49,930
Accounts payable and accrued liabilities		103,833			101,544
Estimated title losses		319,667			300,749
Deferred income taxes		33,963			29,335
Minority interests		16,768			14,482
		539,071			496,040
Contingent liabilities and commitments
Stockholders’ equity
Common and Class B Common Stock and additional paid-in capital		144,700			144,135
Retained earnings		591,188			543,295
Accumulated other comprehensive earnings		12,643			13,788
Treasury stock — 325,669 Common shares		(3,905	)		(3,905	)
Total stockholders’ equity (18,134,693 and 18,120,552 shares outstanding)		744,626			697,313
		1,283,697			1,193,353

See notes to condensed consolidated financial statements.

-2-

STEWART INFORMATION SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

	SIX MONTHS ENDED
	JUNE 30			JUNE 30
	2005			2004
	($000 omitted)
Cash provided by operating activities (Note)		87,369			84,810
Investing activities:
Purchases of property and equipment and title plants — net		(16,847	)		(13,896	)
Proceeds from investments matured and sold		258,053			196,205
Purchases of investments		(317,699	)		(224,539	)
Increases in notes receivable		(926	)		(1,953	)
Collections on notes receivable		539			1,697
Cash paid for equity investee and related intangibles — net		(850	)		(2,940	)
Cash paid for acquisitions of subsidiaries — net (see below)		(9,403	)		(25,903	)
Proceeds from sale of equity investees		7,775			—
Cash used by investing activities		(79,358	)		(71,329	)
Financing activities:
Distributions to minority interests		(6,468	)		(6,005	)
Proceeds from exercise of stock options		—			873
Proceeds from notes payable		6,592			3,610
Payments on notes payable		(8,418	)		(5,051	)
Cash used by financing activities		(8,294	)		(6,573	)
Effect of changes in foreign currency exchange rates		(1,490	)		(1,286	)
(Decrease) increase in cash and cash equivalents		(1,773	)		5,622
Note: Reconciliation of net earnings to the above amounts
Net earnings		47,893			41,101
Add (deduct):
Depreciation and amortization		16,050			15,258
Provisions for title losses in excess of payments		18,903			11,881
Provisions for uncollectible amounts — net		607			268
(Increase) decrease in receivables — net		(6,098	)		9,818
Increase (decrease) in payables and accrued liabilities — net		1,648			(1,245	)
Minority interest expense		8,520			6,008
Net earnings from equity investees		(3,088	)		(3,576	)
Dividends received from equity investees		1,716			2,258
Realized investment and other gains — net		(3,269	)		(2,106	)
Stock bonuses		565			1,202
Increase in deferred income taxes		5,245			4,071
Increase in other assets		(1,418	)		(1,256	)
Other — net		95			1,128
Cash provided by operating activities — see above		87,369			84,810
Supplemental information:
Net assets acquired:
Goodwill		20,363			30,323
Title plants		1,876			4,501
Property and equipment		881			5,930
Intangible assets		3,033			3,804
Other		473			2,071
Liabilities assumed		(600	)		(3,704	)
Debt issued		(16,623	)		(17,022	)
Cash paid for acquisitions of subsidiaries — net		9,403			25,903

See notes to condensed consolidated financial statements.

-3-

STEWART INFORMATION SERVICES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Interim financial statements

The financial information contained in this report for the six month periods ended June 30, 2005 and 2004, and as of June 30, 2005, is unaudited. In the opinion of the Company’s management, all adjustments necessary for a fair presentation of this information for all unaudited periods, consisting only of normal recurring accruals, have been made. The results of operations for the interim periods are not necessarily indicative of results for a full year. This report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

Certain amounts in the 2004 condensed consolidated financial statements have been reclassified for comparative purposes. Net earnings, as previously reported, were not affected.

Note 2: Stock option plans

The Company combined its two stock option plans into a single plan in May 2005. The Company accounts for the plan under the intrinsic value method. Accordingly, no stock-based employee compensation cost is reflected in net earnings, as all options granted under the plans had an exercise price equal to the market value of the underlying Common Stock on the date of grant.

The Company applies APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations in accounting for its plans. Under SFAS No. 123(R), “Share-Based Payment,” compensation cost would be recognized for the fair value of the employees’ purchase rights, which is estimated using the Black-Scholes Model. The Company assumed a dividend yield of 1.1% and 1.0%, an expected life of ten years, an expected volatility of 34.5% and 34.9% and a risk-free interest rate of 5.5% and 4.0% for the two quarters ended June 30, 2005 and 2004, respectively.

In April 2005 the Securities and Exchange Commission announced the adoption of a new rule that amends the effective date for SFAS No. 
123(R). Although the Company is not required to comply with SFAS No. 123(R) until the first quarter of 2006, we may adopt it in an earlier period. Had compensation cost for the Company’s plans been determined consistent with SFAS No. 123(R), the Company’s net earnings and earnings per share would have been reduced to the pro forma amounts indicated below:

	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30			JUNE 30			JUNE 30			JUNE 30
	2005			2004			2005			2004
	($000 omitted, except per share amounts)
Net earnings:
As reported		37,227			29,961			47,893			41,101
Stock-based employee compensation determined under fair value method, net of tax		(303	)		(232	)		(1,186	)		(1,164	)
Pro forma		36,924			29,729			46,707			39,937
Earnings per share:
Net earnings – basic		2.05			1.66			2.64			2.27
Pro forma – basic		2.04			1.64			2.58			2.21
Net earnings – diluted		2.04			1.65			2.63			2.26
Pro forma – diluted		2.03			1.63			2.56			2.20

-4-

Note 3: Segment information

The Company’s two reportable segments are title and real estate information. Selected financial information related to these segments follows:

			Real estate
	Title		information		Total
			($000 omitted)
Revenues:
Three months ended
June 30, 2005		630,391		20,688		651,079
June 30, 2004		547,745		17,711		565,456
Six months ended
June 30, 2005		1,123,726		38,315		1,162,041
June 30, 2004		995,022		35,326		1,030,348
Pretax earnings:
Three months ended
June 30, 2005		57,861		2,909		60,770
June 30, 2004		46,417		1,215		47,632
Six months ended
June 30, 2005		74,073		3,981		78,054
June 30, 2004		63,070		2,449		65,519
Identifiable assets:
June 30, 2005		1,237,692		46,005		1,283,697
December 31, 2004		1,151,563		41,790		1,193,353

Intersegment revenues are insignificant and have been eliminated from the above amounts.

Note 4: Earnings per share

The Company’s basic earnings per share was calculated by dividing net earnings by the weighted average number of shares of Common Stock and Class B Common Stock outstanding during the reporting period.

To calculate diluted earnings per share, the number of shares determined above was increased by assuming the issuance of all dilutive shares during the same reporting period. The treasury stock method was used to calculate the additional number of shares. The only potentially dilutive effect on earnings per share relates to the Company’s stock option plans.

In calculating the effect of the options and determining diluted earnings per share, the average number of shares used in calculating basic earnings per share was increased by 97,000 and 91,000 for the three-month periods ended June 30, 2005 and 2004, respectively, and 99,000 and 101,000 for the six-month periods ended June 30, 2005 and 2004, respectively.

Stock option grants for the three-month and six-month periods ended June 30, 2005 to purchase 141,000 and 125,000 shares, respectively, were excluded from the computation of diluted earnings per share as these options were considered anti-dilutive. Stock option grants for the three-month and six-month periods ended June 30, 2004 to purchase 67,000 and 55,000 shares, respectively, were excluded from the computation of diluted earnings per share as these options were considered anti-dilutive.

-5-

Note 5: Equity investees

Unconsolidated investees, owned 20% through 50% and where the Company exercises significant influence, are accounted for by the equity method. The amount of earnings from equity investees was $2.2 million and $2.6 million for the quarters ended June 30, 2005 and 2004, respectively, and $3.1 million and $3.6 million for the six-month periods ended June 30, 2005 and 2004, respectively. These amounts are included in “title insurance — direct operations” in the condensed consolidated statements of earnings and comprehensive earnings.

Note 6: Contingent liabilities and commitments

On June 30, 2005, the Company was contingently liable for guarantees of indebtedness owed primarily to banks and others by certain third parties. The guarantees relate primarily to business expansion and generally expire no later than 2019. The maximum potential future payments on the guarantees amounted to $12,813,000. Management believes that the related underlying assets and the collateral available, primarily title plants and corporate stock, would enable the Company to recover any amounts paid under the guarantees. The Company believes no provision for losses is needed because no loss is expected on these guarantees. The Company’s accrued liability related to the non-contingent value of third-party guarantees was $393,000 at June 30, 2005.

In the ordinary course of business, the Company guarantees the third-party indebtedness of its consolidated subsidiaries. At June 30, 2005 the maximum potential future payments on the guarantees is not more than the notes payable recorded in the condensed consolidated balance sheets. The Company also has unused letters of credit amounting to $2,850,000 related primarily to workers’ compensation insurance policies.

-6-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s overview. We reported net earnings of $37.2 million for the three months ended June 30, 2005, compared with net earnings of $30.0 million for the same period of 2004. On a diluted per share basis, net earnings were $2.04 for the second quarter of 2005, compared with net earnings of $1.65 for the second quarter of 2004. Revenues for the second quarter increased 15.1% to $651.1 million from $565.5 million for the same period last year.

The increase in revenues in the second quarter of 2005 over the same period in 2004 resulted primarily from a lower interest rate environment. Our pretax profit margin percentage also increased. Acquisitions made since the second quarter of 2004 contributed to the higher profit margin. Employee costs and other expenses increased at rates less than the increase in revenues, also improving the margin. While technology costs could have been maintained at previous levels, we believe our on-going investment in technology provides potential for growth in future profits, productivity and market share.

Critical accounting estimates. Actual results can differ from the estimates we report. However, we believe there is no material risk of a change in our accounting estimates that is likely to have a material impact on our reported financial condition or operating performance for the six-month periods ended June 30, 2005 and 2004.

Title loss reserves. Our most critical accounting estimate is providing for title loss reserves. Our liability for estimated title losses comprises both known claims and claims expected to be reported in the future. The amount of the reserve represents the aggregate future payments, net of recoveries, that we expect to incur on policy and escrow losses and in costs to settle claims.

We base our estimates on reported claims, historical loss experience, title industry averages and the current legal and economic environment. In making estimates, we use moving-average ratios of recent actual policy loss payment experience, net of recoveries, to premium revenues. Provisions for title losses, as a percentage of title operating revenues, were 4.7% and 4.6% for the first six months of 2005 and 2004, respectively. A change of 0.1% in this percentage would have changed the provision for title losses and pretax earnings by approximately $1.1 million for the six months ended June 30, 2005.

Estimating future loss payments is difficult and our assumptions are subject to the risk of change. Claims, by their very nature, are complex and involve uncertainties as to the dollar amount and timing of individual payments. Claims are often paid up to 20 years or more after a policy is issued.

We have consistently followed the same basic method of estimating loss payments for more than ten years. Third-party consulting actuaries review our title loss reserves annually and have historically found our reserves to be adequate at each year end for more than nine years.

Goodwill and other long-lived assets. Based on events that may indicate impairment of title plants and other long-lived assets, and our annual June 30^th evaluation of goodwill, we estimate and expense any loss in value to our current operations. The process of determining impairment relies on projections of future cash flows, operating results and market conditions. Uncertainties exist in these projections and bear the risk of change related to factors such as interest rates and overall real estate markets. Actual market conditions and operating results may vary materially from our projections. There were no impairment write-offs of goodwill during the six months ended June 30, 2005 and 2004. We use third-party appraisers to assist us in determining the fair value of our reporting units and assessing whether an impairment of goodwill exists.

Policy-issuing agency revenues. We recognize premium revenues on title insurance policies written by independent agencies when the policies are reported to us. In addition, because of the time lag between the closing of an insured real estate transaction and the time the policy is reported to us, we also accrue for unreported policies (policies issued prior to period end but not reported to the underwriter until after period end) where reasonable estimates can be made. We believe that reasonable estimates can be made when recent and consistent policy issuance and cash remittance information is available. Our estimates are based on historical reporting patterns and other information about our agencies. We also use current trends in our direct operations and in the title industry. In this accrual, we are not estimating future transactions. We are estimating policies that have already been issued but not yet received by us. We have consistently followed the same basic method of estimating unreported policies for more than ten years.

-7-

What we do. Our primary business is title insurance and settlement-related services. We close transactions and issue title policies on homes, commercial properties and other real property located in all 50 states, the District of Columbia and foreign countries through more than 8,000 policy-issuing offices and agencies. We also sell electronically delivered real estate services and information, as well as mapping products and geographic information systems, to domestic and foreign governments and private entities. Our current levels of non-USA operations are immaterial with respect to our consolidated financial results.

Our business has two main segments: title insurance-related services and real estate information (REI). These segments are closely related due to the nature of their operations and common customers.

Factors affecting revenues. The principal factors that contribute to increases in our operating revenues for our title and REI segments include:

• declining mortgage interest rates, which usually increase home sales and refinancing transactions;

• rising home prices;

• higher premium rates;

• increased number of households;

• increased market share;

• opening of new offices and acquisitions; and

• a higher ratio of commercial transactions that, although relatively few in number, typically yield higher premiums.

These factors may override the seasonal nature of the title business. Generally, the third quarter is the most active in terms of real estate sales and the first quarter is the least active. In addition, when interest rates decline, the number of refinancing transactions and associated revenues generally increase.

Our employee costs and certain other operating costs are sensitive to inflation. To the extent inflation causes increases in the prices of homes and other real estate, premium revenues are also increased. Premiums are determined in part by the insured values of the transactions we handle.

RESULTS OF OPERATIONS

Factors contributing to fluctuations in results of operations are presented in their order of monetary significance. We have quantified, where appropriate, significant changes.

SIX MONTHS ENDED JUNE 30, 2005 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2004

Operating environment. According to published industry data, interest rates for 30-year fixed-rate mortgages, excluding points, for the first six months of 2005 averaged 5.7% as compared with 5.9% for the same period in 2004. Mortgage interest rates decreased steadily in the third quarter of 2004 and remained relatively stable through February 2005. Following a slight increase in March 2005, rates again declined throughout the second quarter of 2005. The rate at the end of June 2005 was 5.6%, which was 40 basis points lower than the rate at the end of June 2004.

Real estate activity was stronger in the first half of 2005 as compared with the first six months of 2004. According to published data, existing home sales increased 5.7% in the first six months of 2005 compared with the same period in 2004. The annualized pace in June 2005 was a record 7.33 million, compared with 7.02 million one year earlier. The median price of an existing home for the first six months of 2005 was $200,800, an increase of 12.6% over the comparable year ago median price. Refinancing transactions declined nationwide in the first half of 2005. The ratio of refinancing transactions to total loan applications was 47.5% for the first six months of 2005, compared with 57.9% for the same period in 2004. Refinancing transactions usually have lower title insurance premium rates than sales transactions.

Order counts for the first six months of 2005 were 2.9% higher than the comparable 2004 period. Even though orders in March and April 2005 were lower than those in the comparable months of 2004, order counts for the second quarter of 2005 were 10.6% higher than the same period in 2004. Our order levels for the month of June 2005 were 22.2% higher than the month of June 2004.

-8-

Title revenues. Our revenues from direct operations increased $67.7 million or 16.0% in the first six months of 2005 as compared with the first half of 2004. Acquisitions since June 2004 added revenues of $29.8 million in the first six months of 2005. The total number of direct closings we handled increased 0.9% in the first six months of 2005 compared with the same period in 2004. The average revenue per closing increased 15.6% in the first six months of 2005 compared with the first six months of 2004 due to an increase in home prices, an increase in commercial transactions, and a lower ratio of refinancing transactions closed by our direct operations. The largest revenue increases were in Texas, Florida, Utah, California and Arizona. Direct operations relate only to files closed by our underwriters and subsidiaries and do not include closings by independent agencies.

Premium revenues from agencies increased $56.7 million or 10.2% to $615.2 million in the first six months of 2005 from $558.5 million in the first six months of 2004. An increased number of agencies contributed to the increase in 2005, offset somewhat by our acquisition of certain previously independent agencies. The largest agency revenue increases in 2005 were primarily in Florida, Pennsylvania, Maryland, Texas and Michigan, offset somewhat by a decrease in California.

The Texas Department of Insurance reduced title insurance premium rates by 6.5% effective July 1, 2004. Our revenues and net earnings were reduced by approximately $8.8 million and an estimated $2.4 million, respectively, for the six months ended June 30, 2005 as a result of this rate decrease.

REI revenues. Real estate information revenues were $38.3 million in the first six months of 2005 and $35.3 million in the first six months of 2004. While revenues related to Section 1031 tax deferred exchanges for the six months ended June 30, 2005 increased over the same period in 2004, those increases were offset in part by decreases in certain origination services such as electronic mortgage document preparation.

Investments. Investment income increased 30.4% in the first six months of 2005 compared with the first six months of 2004 due to increases in average balances invested as well as higher yields. Investment and other gains included a pretax gain of $1.9 million realized in the second quarter of 2005 from the sale of our ownership interest in an equity investee.

Agency retention. The amounts retained by agencies, as a percentage of revenues from agency operations, were 81.8% and 81.6% in the first six months of 2005 and 2004, respectively. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. The percentage that amounts retained by agencies bears to agency revenues may vary from period to period because of the geographical mix of agency operations and the volume of title revenues.

Employee costs. Employee costs for the combined business segments increased $42.7 million or 14.9% in the first six months of 2005. We had approximately 9,700 and 8,600 employees at June 30, 2005 and 2004, respectively. Of the increase in staff, approximately 890 employees and $15.4 million in employee costs resulted from acquisitions. Certain acquisitions made in higher-cost markets, along with the continued development of technology-driven products and new services, contributed to the increase in employee costs and the ratio of employee costs to revenues. In our REI segment, employee costs increased slightly due to increased staff in the Section 1031 tax deferred exchange business, offset by decreases in the mortgage information business.

Other operating expenses. Other operating expenses for the combined business segments increased $17.2 million or 11.1% in the first six months of 2005. The increase was primarily from acquisitions and rent, which contributed approximately $7.6 million and $3.3 million, respectively, of the increase. Other significant increases were in certain REI expenses and premium taxes. Other operating expenses also included business promotion, search fees, telephone, supplies, title plant expenses and litigation costs. Most of these operating expenses follow, to varying degrees, the changes in transaction volume and revenues.

Title losses. Provisions for title losses, as a percentage of title operating revenues, were 4.7% in the first six months of 2005 compared with 4.6% in the first six months of 2004.

Minority interests. Minority interests for the combined business segments increased $2.5 million or 41.8% in the first six months of 2005. The increase resulted from acquisitions and improved profitability of our largest minority owned affiliate.

-9-

Income taxes. The provisions for federal, state and foreign income taxes represented effective tax rates of 38.6% and 37.3% in the first six months of 2005 and 2004, respectively. The annual effective tax rate for 2004 was 38.1%.

THREE MONTHS ENDED JUNE 30, 2005 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2004

Operating environment. According to published industry data, interest rates for 30-year fixed-rate mortgages, excluding points, for the three months ended June 30, 2005 averaged 5.7% as compared with 6.1% for the same period in 2004. At the end of March 2005, interest rates were at 5.9%. Rates decreased from April through June 2005. The rates were 5.6% and 6.0% at the end of June 2005 and 2004, respectively.

Real estate activity was stronger in the second quarter of 2005 as compared with the second quarter of 2004. According to published data, existing home sales increased 3.3% in the second quarter of 2005 as compared with the second quarter of 2004. The annualized pace in June 2005 was a record 7.33 million home sales, compared with 7.02 million one year earlier. The median price of an existing home in the three months ended June 30, 2005 was $209,900, an increase of 14.1% compared with the same period in 2004. Refinancing transactions declined nationwide in the second quarter of 2005 as compared with the second quarter of 2004. The ratio of refinancing transactions to total loan applications was 41.0% for the three months ended June 30, 2005, compared with 53.0% for the same period in 2004. Refinancing transactions usually have lower title insurance premium rates than sales transactions.

Our orders for the second quarter of 2005 increased 8.8% as compared with the second quarter of 2004. Order levels for the month of June 2005 were 22.2% higher than for the month of June 2004.

Title revenues. Our revenues from direct operations increased $37.4 million or 15.5% in the second quarter of 2005 as compared with the second quarter of 2004. Acquisitions since the second quarter of 2004 added revenues of $16.6 million in the second quarter of 2005. The total number of direct closings we handled decreased 0.5% in the three months ended June 30, 2005 compared with the same period in 2004. The decrease in the number of direct closings we handled was offset by an increase in the average revenue per closing, which increased 16.9% in the second quarter of 2005 compared with the second quarter of 2004. The increase in average revenue per closing was due to an increase in home prices, an increase in commercial transactions, and a lower ratio of refinancing transactions closed by our direct operations. The largest revenue increases were in Texas and Florida.

Premium revenues from agencies increased $40.9 million or 13.6% in the second quarter of 2005 as compared with the second quarter of 2004. An increased number of agencies contributed to the increase in 2005. The largest revenue increases in 2005 were primarily in Florida, Texas, Pennsylvania, Maryland and Illinois, offset somewhat by decreases in California and New Jersey.

The Texas Department of Insurance reduced title insurance premium rates by 6.5% effective July 1, 2004. Our revenues and net earnings were reduced by approximately $4.9 million and an estimated $1.3 million, respectively, for the three months ended June 30, 2005 as a result of this rate decrease.

REI revenues. Real estate information revenues were $20.7 million in the second quarter of 2005 and $17.7 million in the second quarter of 2004. The increase was due primarily to an increase in revenues related to Section 1031 tax deferred exchanges.

Investments. Investment income increased 38.3% in the second quarter of 2005 compared with the second quarter of 2004 due to increases in average balances invested as well as higher yields. Investment and other gains included a pretax gain of $1.9 million realized in the second quarter of 2005 from the sale of our ownership interest in an equity investee. Certain investment gains and losses were realized as part of the ongoing management of the investment portfolio for the purpose of improving performance.

Agency retention. The amounts retained by agencies, as a percentage of revenues from agency operations, were 81.9% and 81.6% in the second quarters of 2005 and 2004, respectively. Amounts retained by title agencies are based on agreements between agencies and our title underwriters. The percentage that amounts retained by agencies bears to agency revenues may vary from period to period because of the geographical mix of agency operations and the volume of title revenues.

-10-

Employee costs. Employee costs for the combined business segments increased $21.4 million or 14.1% in the second quarter of 2005 compared with the second quarter of 2004. We had approximately 9,700 and 8,600 employees at June 30, 2005 and 2004, respectively. Of the increase in staff, approximately 890 employees, and $8.7 million in employee costs resulted from acquisitions. Continued development of technology-driven products and new services also contributed to the increase in employee costs. In our REI segment, employee costs increased 10.3% due primarily to an increase in the Section 1031 tax deferred exchange business.

Other operating expenses. Other operating expenses for the combined business segments increased $10.2 million or 12.5% in the second quarter of 2005 compared with the second quarter of 2004. Acquisitions contributed approximately $2.9 million of the increase. The most significant increases were in rent and premium taxes. Other operating expenses also included search fees, business promotion, certain REI expenses, telephone, supplies, title plant expenses and litigation costs. Most of these operating expenses follow, to varying degrees, the changes in transaction volume and revenues.

Title losses. Provisions for title losses, as a percentage of title operating revenues, were 4.9% in the second quarter of 2005, compared with 4.8% in the second quarter of 2004.

Minority interests. Minority interests for the combined business segments increased $1.7 million or 45.0% in the second quarter of 2005 compared with the second quarter of 2004. The increase resulted from acquisitions and improved profitability of our largest minority owned affiliate.

Income taxes. The provisions for federal, state and foreign income taxes represented effective tax rates of 38.7% and 37.1% in the first six months of 2005 and 2004, respectively. The annual effective tax rate for 2004 was 38.1%.
 
 

Liquidity and capital resources. Cash provided by operations was $87.4 million and $84.8 million for the first six months of 2005 and 2004, respectively. Cash flow from operations has been the primary source of financing for additions to property and equipment, expanding operations, dividends to stockholders and other requirements. This source may be supplemented by bank borrowings.

The most significant non-operating sources of cash were from proceeds of investments matured and sold in the amount of $258.1 million and $196.2 million in the first six months of 2005 and 2004, respectively. We used cash for the purchases of investments in the amounts of $317.7 million and $224.5 million in the first six months of 2005 and 2004, respectively.

A substantial majority of consolidated cash and investments was held by Stewart Title Guaranty Company (Guaranty) and its subsidiaries. Cash transfers between Guaranty and its subsidiaries and the Company are subject to certain legal restrictions. See Notes 2 and 3 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2004.

Our liquidity, excluding Guaranty and its subsidiaries, is comprised of cash and investments aggregating $38.5 million and short-term liabilities of $2.6 million at June 30, 2005. We know of no commitments or uncertainties that are likely to materially affect our ability to fund cash needs.

Our loss reserves are fully funded, segregated and invested in high-quality securities and short-term investments. This is required by the insurance regulators of the states in which our underwriters are domiciled. At June 30, 2005, these investments aggregated $444.2 million and our estimated title loss reserves were $319.7 million.

The State of Texas enacted legislation, effective September 1, 2005, that will reduce the statutory premium reserve requirements for title insurers. The change does not directly impact amounts reported for our earnings or loss reserves under U.S. generally accepted accounting principles. However, based on the additions to statutory premium reserves for the year 2004, the change would have freed $32 million, or approximately $23 million after tax, in low-risk and low-yield statutory reserve investments, making this portion of our future cash flow available for other uses.

-11-

Historically, our operating cash flow has been sufficient to pay all title policy losses incurred. With our annual cash flow from operations combined with securities maturing in less than one year, we do not expect foreseeable loss payments to create a liquidity problem for us. Beyond providing funds for losses, we manage the maturities of our investment portfolio to provide safety of capital, improve earnings and mitigate interest rate risks.

Acquisitions during the first six months of 2005 and 2004 resulted in additions to goodwill, excluding reallocations, of $19.8 million and $30.3 million, respectively.

We consider our capital resources to be adequate, as our capital resources are represented by a low debt-to-equity ratio. Notes payable were $64.8 million and stockholders’ equity was $744.6 million at June 30, 2005. We are not aware of any trends, either favorable or unfavorable, that would materially affect notes payable or stockholders’ equity. We do not expect any material changes in the cost of such resources. Significant acquisitions in the future could materially affect the notes payable or stockholders’ equity balances.

Off-balance sheet arrangements. We do not have any material source of liquidity or financing that involves off-balance sheet arrangements.

Forward-looking statements. All statements included in this report, other than statements of historical facts, addressing activities, events or developments that we expect or anticipate will or may occur in the future, are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties including, among other things, changes in mortgage interest rates, employment levels, actions of competitors, changes in real estate markets, general economic conditions, legislation (primarily legislation relating to title insurance) and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission.

-12-

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our investment strategies, types of financial instruments held or the risks associated with such instruments which would materially alter the market risk disclosures made in our Annual Report on Form 10-K for the year ended December 31, 2004.

Item 4. Controls and Procedures

Our principal executive officers and our principal financial officer, based upon their evaluation of our disclosure controls and procedures conducted as of June 30, 2005, have concluded that those disclosure controls and procedures are effective.

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. As a result, no corrective actions were required or undertaken.

-13-

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to routine lawsuits incidental to our business, most of which involve disputed policy claims. In many of these suits, the plaintiffs seek exemplary or treble damages in excess of policy limits based on the alleged malfeasance of an issuing agent. We do not expect that any of these proceedings will have a material adverse effect on our consolidated financial condition. Additionally, we have received various inquiries from governmental regulators concerning practices in the insurance industry. Many of these practices do not concern title insurance and we do not anticipate they will materially affect the consolidated financial condition of the Company. We, along with the other major title insurance companies, are party to a number of class actions concerning the title insurance industry. We believe that we have adequate reserves for these contingencies and that the likely resolution of these matters will not materially affect the consolidated financial condition of the Company.

Item 4. Submission of Matters to a Vote of Security Holders

(a) Our Annual Meeting of Stockholders was held on April 29, 2005 for the purpose of electing our Board of Directors.

(b) Proxies for the meeting were solicited pursuant to Section 14 (a) of the Securities Exchange Act of 1934, and there was no solicitation in opposition to management’s solicitations. All of the Registrant’s nominees were elected and the 2005 Long-Term Incentive Plan was adopted.

(c) Stockholder votes with respect to the election of directors at our annual meeting were as follows:

     (1) Directors elected by Common Stockholders:

	Number of Shares
	Votes For		Votes Withheld/Against
Robert L. Clarke		14,526,312		1,788,504
Nita B. Hanks		13,981,508		2,333,308
Dr. E. Douglas Hodo		13,831,318		2,483,498
Laurie C. Moore		14,528,552		1,786,264
Dr. W. Arthur Porter		14,078,482		2,236,334

     (2) Directors elected by Class B Common Stockholders:

	Number of Shares
	Votes For		Votes Withheld/Against
Max Crisp		1,050,012		0
Paul W. Hobby		1,050,012		0
Malcolm S. Morris		1,050,012		0
Stewart Morris, Jr.		1,050,012		0

(d) Stockholder votes with respect to the adoption of the 2005 Long-Term Incentive Plan at our annual meeting were as follows:

Votes For:	12,726,741
Votes Withheld/Against:	3,050,214

-14-

There were no broker non-votes with respect to the election of directors. There were 1,587,873 broker non-votes with respect to the adoption of the 2005 Long-Term Incentive Plan.

Item 5. Other Information

We paid regular quarterly cash dividends on our Common Stock from 1972 through 1999. During 1999, our Board of Directors approved a plan to repurchase up to 5% (680,000 shares) of our outstanding Common Stock. The Board also determined that our regular quarterly dividend should be discontinued in favor of returning those and additional funds to stockholders through the stock repurchase plan. Under this plan, we repurchased 116,900 shares of Common Stock during 2000 and none in 2001 through June 30, 2005. An additional 208,769 shares of treasury stock were acquired primarily in the second quarter of 2002. The majority of these shares were acquired as a result of the consolidation of a majority-owned subsidiary that was previously held as an equity investee. All of these shares were held by us as treasury shares at June 30, 2005.

No cash dividends were paid from 2000 until December 2003. In response to favorable tax law changes, the Board of Directors declared and paid annual cash dividends of $0.46 per share in December 2004 and in December 2003 to Common stockholders. Our Certificate of Incorporation provides that no cash dividends may be paid on the Class B Common Stock.

We had a book value per share of $41.06 and $38.48 at June 30, 2005 and December 31, 2004, respectively. At June 30, 2005, this measure is based on approximately $744.6 million in stockholders’ equity and 18.1 million shares outstanding. At December 31, 2004, this measure was based on approximately $697.3 million in stockholders’ equity and 18.1 million shares outstanding.

Item 6. Exhibits

Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Index to Exhibits immediately preceding the exhibits filed herewith and such listing is incorporated herein by reference.

-15-

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, we have duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

August 4, 2005
Date
		Stewart Information Services Corporation
		Registrant
	By:	/s/ Max Crisp
		Max Crisp, Executive Vice President and Chief Financial Officer, Secretary-Treasurer, Director and Principal Financial Officer

-16-

INDEX TO EXHIBITS

Exhibit

	3.1	-	Certificate of Incorporation of the Registrant, as amended March 19, 2001 (incorporated by reference in this report from Exhibit 3.1 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2000)
	3.2	-	By-Laws of the Registrant, as amended March 13, 2000 (incorporated by reference in this report from Exhibit 3.2 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2000)
	4.1	-	Rights of Common and Class B Common Stockholders (incorporated by reference in this report from Exhibit 4.1 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2004)
* †	10.1	-	Summary of agreements as to payment of bonuses to certain executive officers
* †	10.2	-	Stewart Information Services Corporation 2005 Long-Term Incentive Plan
*	31.1	-	Certification of Co-Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*	31.2	-	Certification of Co-Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*	31.3	-	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*	32.1	-	Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*	32.2	-	Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*	32.3	-	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*	99.1	-	Details of Investments at June 30, 2005 and December 31, 2004

*	Filed herewith
†	Management contract or compensation plan

EX-10.1

Exhibit 10.1

STEWART INFORMATION SERVICES CORPORATION AND SUBSIDIARIES

Executive Officers’ Bonus Plans
June 30, 2005

The following summarizes the terms of the bonus arrangements approved by our Compensation Committee with respect to our executive officers:

MALCOLM S. MORRIS, as Chairman of the Board and Co-Chief Executive Officer, shall receive, in addition to his salary, 1.00% on the first $20,000,000 of the consolidated income before taxes of Stewart Title Guaranty Company as reported to its stockholder, 0.75% of the profits from $20,000,001 to $40,000,000, 0.50% of the profits from $40,000,001 to $60,000,000 and 0.25% of the profits exceeding $60,000,000. For the calendar year 2005, Mr. Malcolm S. Morris shall receive no less than $250,000 in bonus compensation.

STEWART MORRIS, JR., as President and Co-Chief Executive Officer, shall receive, in addition to his salary, 1.00% on the first $20,000,000 of the consolidated income before taxes of Stewart Title Guaranty Company as reported to its stockholder, 0.75% of the profits from $20,000,001 to $40,000,000, 0.50% of the profits from $40,000,001 to $60,000,000 and 0.25% of the profits exceeding $60,000,000. For the calendar year 2005, Mr. Stewart Morris, Jr. shall receive no less than $250,000 in bonus compensation.

CARLOSS MORRIS, as Chairman of the Executive Committee, shall receive, in addition to his salary, 1.00% of the first $16,500,000 of the consolidated income before taxes of Stewart Title Guaranty Company as reported to its stockholder. For the calendar year 2005, Mr. Carloss Morris shall receive no more than $165,000 in bonus compensation.

STEWART MORRIS, as Vice Chairman of the Executive Committee, shall receive, in addition to his salary, 1.00% of the first $16,500,000 of the consolidated income before taxes of Stewart Title Guaranty Company as reported to its stockholder. For the calendar year 2005, Mr. Stewart Morris shall receive no more than $165,000 in bonus compensation.

MAX CRISP, as Executive Vice President, Chief Financial Officer and Secretary-Treasurer, shall receive, in addition to his salary, 0.50% of the first $50,000,000 of the consolidated income before taxes of Stewart Title Guaranty Company as reported to its stockholder, 0.40% of the profits from $50,000,001 to $75,000,000, 0.30% of the profits from $75,000,001 to $100,000,000 and 0.20% of the profits exceeding $100,000,000. For the calendar year 2005, Mr. Crisp shall receive no less than $145,000 in bonus compensation and his bonus may not exceed 75.00% of the total base plus bonus earned by either of the Co-Chief Executive Officers.

MATTHEW W. MORRIS, as Senior Vice President, Planning and Development, shall receive, in addition to his salary, 0.10% of the consolidated income before taxes of Stewart Title Guaranty Company as reported to its stockholder. For the calendar year 2005, Mr. Matthew W. Morris shall receive no less than $75,000 in bonus compensation. In addition, Mr. Matthew W. Morris may be eligible to receive up to $25,000 of discretionary bonuses based on the completion of certain projects.

EX-10.2

Exhibit 10.2

STEWART INFORMATION SERVICES CORPORATION

2005 LONG-TERM INCENTIVE PLAN

Exhibit 10.2
(continued)

TABLE OF CONTENTS

	Section
ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION
Establishment		1.1
Purpose of the Plan		1.2
Duration of Authority to Make Grants Under the Plan		1.3
ARTICLE II DEFINITIONS
“Affiliate”		2.1
“Associate”		2.2
“Associate Stock Bonuses”		2.3
“Award”		2.4
“Award Agreement”		2.5
“Board”		2.6
“Change in Control”		2.7
“Code”		2.8
“Committee”		2.9
“Company”		2.10
“Corporate Change”		2.11
“Directors’ Shares”		2.12
“Effective Date”		2.13
“Exchange Act”		2.14
“Executive Officer”		2.15
“Executive Option”		2.16
“Fair Market Value”		2.17
“Fiscal Year”		2.18
“Holder”		2.19
“Incentive Stock Option”		2.20
“Mature Shares”		2.21
“Minimum Statutory Tax Withholding Obligation”		2.22
“Nonqualified Stock Option”		2.23
“Option”		2.24
“Option Price”		2.25
“Optionee”		2.26
“Option Agreement”		2.27
“Performance Goals”		2.28
“Plan”		2.29
“Region Manager”		2.30
“Region Manager Option”		2.31
“Section 409A”		2.32
“Service Award”		2.33
“STC”		2.34
“STG”		2.35

Exhibit 10.2
(continued)

TABLE OF CONTENTS

(Continued)

	Section
“Stock”		2.36
“Ten Percent Stockholder”		2.37
“Termination of Employment”		2.38
ARTICLE III ELIGIBILITY AND PARTICIPATION
Eligibility		3.1
Participation		3.2
ARTICLE IV GENERAL PROVISIONS RELATING TO AWARDS
Authority to Grant Awards		4.1
Dedicated Shares; Maximum Awards		4.2
Non-Transferability		4.3
Requirements of Law		4.4
Changes in the Company’s Capital Structure		4.5
Election Under Section 83(b) of the Code		4.6
Forfeiture for Cause		4.7
Forfeiture Events		4.8
ARTICLE V GENERAL PROVISIONS RELATING TO OPTIONS
Type of Options Available		5.1
Stock Appreciation Rights		5.2
Option Price		5.3
Maximum Value of Stock Subject to Options that are Incentive Stock Options		5.4
Exercise of Options		5.5
Transferability of Options		5.6
Duration of Options		5.7
Employment Obligation		5.8
Option Agreement		5.9
Substitution Options		5.10
No Rights as Stockholder		5.11
ARTICLE VI EXECUTIVE OPTIONS
ARTICLE VII REGION MANAGER OPTIONS
ARTICLE VIII DIRECTORS’ SHARES
Annual Grant to Directors		8.1
Amount of Award		8.2

Exhibit 10.2
(continued)

TABLE OF CONTENTS

(Continued)

	Section
ARTICLE IX ASSOCIATES STOCK BONUSES
Award of Stock Bonuses		9.1
Valuation		9.2
ARTICLE X SERVICE AWARDS
ARTICLE XI SUBSTITUTION AWARDS
ARTICLE XII ADMINISTRATION
Awards		12.1
Authority of the Committee		12.2
Decisions Binding		12.3
No Liability		12.4
ARTICLE XIII AMENDMENT OR TERMINATION OF PLAN
Amendment, Modification, Suspension, and Termination		13.1
Awards Previously Granted		13.2
ARTICLE XIV MISCELLANEOUS
Unfunded Plan/ No Establishment of a Trust Fund		14.1
No Employment Obligation		14.2
Tax Withholding		14.3
Written Agreement		14.4
Indemnification of the Committee		14.5
Gender and Number		14.6
Severability		14.7
Headings		14.8
Other Compensation Plans		14.9
Other Awards		14.10
Successors		14.11
Law Limitations/ Governmental Approvals		14.12
Delivery of Title		14.13
Inability to Obtain Authority		14.14
Investment Representations		14.15
Persons Residing Outside of the United States		14.16
No Fractional Shares		14.17
Arbitration of Disputes		14.18
Governing Law		14.19

Exhibit 10.2
(continued)

ARTICLE I

ESTABLISHMENT, PURPOSE AND DURATION

      1.1     Establishment. The Company hereby establishes an incentive compensation plan, to be known as “Stewart Information Services Corporation 2005 Long-Term Incentive Plan,” as set forth in this document. The Plan permits the grant of Executive Options, Region Manager Options, Directors’ Shares, Associates Stock Bonuses, and Service Awards. The Plan shall become effective on the latest of (a) the date the Plan is approved by the Board, (b) the date the Plan is approved by the holders of at least a majority of the outstanding shares of voting stock of the Company and (c) if the provisions of the corporate charter, by-laws or applicable state law prescribes a greater degree of stockholder approval for this action, the approval by the holders of that percentage, at a meeting of stockholders (the “Effective Date”), and shall remain in effect as provided in Section 1.3.

      1.2     Purpose of the Plan. The purpose of the Plan is to reward corporate officers and other Associates of the Company and its Affiliates by enabling them to acquire shares of common stock of the Company and to receive other compensation based on the increase in value of the common stock of the Company or certain other performance measures. The Plan is intended to advance the best interests of the Company, its Affiliates and its stockholders by providing those persons who have substantial responsibility for the management and growth of the Company and its Affiliates with additional performance incentives and an opportunity to obtain or increase their proprietary interest in the Company, thereby encouraging them to continue in their employment with the Company and its Affiliates.

      1.3     Duration of Authority to Make Grants Under the Plan. No Awards may be granted under the Plan on or after the tenth anniversary of the Effective Date. The applicable provisions of the Plan will continue in effect with respect to an Award granted under the Plan for as long as such Award remains outstanding.

ARTICLE II

DEFINITIONS

      The words and phrases defined in this Article shall have the meaning set out below throughout the Plan, unless the context in which any such word or phrase appears reasonably requires a broader, narrower or different meaning.

      2.1     “Affiliate” means any corporation, partnership, limited liability company or association, trust or other entity or organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (a) to vote more than 50 percent (50%) of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise.

      2.2     “Associate” means (a) a person employed by the Company or any Affiliate as a common law employee, (b) a person who has agreed to become a common law employee of the Company or any Affiliate and is expected to become such within six (6) months from the date of a determination made for purposes of the Plan or (c) a director or advisory director of the Company who is not an employee of the Company or any Affiliate.

      2.3     “Associate Stock Bonuses” means an Award granted pursuant to Article IX of the Plan.

      2.4     “Award” means, individually or collectively, a grant under the Plan of Executive Options, Region Manager Options, Directors’ Shares, Associates Stock Bonuses, and Service Awards, in each case subject to the terms and provisions of the Plan.

      2.5     “Award Agreement” means an agreement that sets forth the terms and conditions applicable to an Award granted under the Plan.

Exhibit 10.2
(continued)

      2.6     “Board” means the board of directors of the Company.

      2.7     “Change in Control” means the occurrence of any of the following events: (a) there shall be consummated (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Stock would be converted into cash, securities or other property, other than a merger of the Company where a majority of the Board of the surviving corporation is, and for a two-year period after the merger continues to be, persons who were directors of the Company immediately prior to the merger or were elected as directors, or nominated for election as director, by a vote of at least two-thirds of the directors then still in office who were directors of the Company immediately prior to the merger, or (ii) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; (b) the shareholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company; or (c) (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than the Company or a subsidiary thereof or any Associate benefit plan sponsored by the Company or a subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing 20 percent or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, and (ii) at any time during a period of two years after such “person” becomes such a beneficial owner, individuals who immediately prior to the beginning of such period constituted the Board shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination by the Board for election by the Company’s shareholders of each new director during such period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

      2.8     “Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

      2.9     “Committee” means a committee of at least two persons, who are members of the Compensation Committee of the Board and are appointed by the Compensation Committee of the Board, or, to the extent it chooses to operate as the Committee, the Compensation Committee of the Board. Each member of the Committee in respect of his or her participation in any decision with respect to an Award intended to satisfy the requirements of section 162(m) of the Code must satisfy the requirements of “outside director” status within the meaning of section 162(m) of the Code; provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. As to Awards, grants or other transactions that are authorized by the Committee and that are intended to be exempt under Rule 16b-3 under the Exchange Act, the requirements of Rule 16b-3(d)(1) under the Exchange Act with respect to committee action must also be satisfied.

      2.10     “Company” means Stewart Information Services Corporation, a Delaware corporation, or any successor (by reincorporation, merger or otherwise).

      2.11     “Corporate Change” shall have the meaning ascribed to that term in Section 4.5(c).

      2.12     “Directors’ Shares” means an Award granted pursuant to Article VIII.

      2.13     “Effective Date” shall have the meaning ascribed to that term in Section 1.1.

      2.14     “Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time to time.

      2.15     “Executive Officer” has the meaning given such term in the rules and regulations of the Securities and Exchange Commission.

      2.16     “Executive Option” means an Option granted pursuant to Article VI.

      2.17     “Fair Market Value” of the Stock as of any particular date means (1) if the Stock is traded on a stock exchange, the closing sale price of the Stock on that date as reported on the principal securities exchange on which the Stock is traded, or (2) if the Stock is traded in the over-the-counter market, the average between the high bid and low asked price on that date as reported in such over-the-counter market; provided that (a) if

Exhibit 10.2
(continued)

the Stock is not so traded, (b) if no closing price or bid and asked prices for the Stock was so reported on that date or (c) if, in the discretion of the Committee, another means of determining the Fair Market Value of a share of Stock at such date shall be necessary or advisable, the Committee may provide for another means for determining such Fair Market Value.

      2.18     “Fiscal Year” means the Company’s fiscal year.

      2.19     “Holder” means a person who has been granted an Award or any person who is entitled to receive shares of Stock under an Award.

      2.20     “Incentive Stock Option” means an Option granted under the Plan that is designated by the Committee as an “Incentive Option” and satisfies the requirements of section 422 of the Code.

      2.21     “Mature Shares” means shares of Stock that the Holder has held for at least six months.

      2.22     “Minimum Statutory Tax Withholding Obligation” means the amount the Company or an Affiliate is required to withhold for federal, state and local taxes based upon the applicable minimum statutory withholding rates required by the relevant tax authorities.

      2.23     “Nonqualified Stock Option” means an Option granted under the Plan other than an Incentive Option.

      2.24     “Option” means an option to purchase Stock granted pursuant to Article V. An Option may be in the form of either an Incentive Stock Option or a Nonqualified Stock Option.

      2.25     “Option Price” shall have the meaning ascribed to that term in Section 5.3.

      2.26     “Optionee” means a person who is granted an Option under the Plan.

      2.27     “Option Agreement” means a written contract setting forth the terms and conditions of an Option.

      2.28     “Performance Goals” means one or more of the criteria described in Article VIII on which the performance goals applicable to an Award are based.

      2.29     “Plan” means Stewart Information Services Corporation 2005 Long-Term Incentive Plan, as set forth in this document and as it may be amended from time to time.

      2.30     “Region Manager” means a Region Manager of the Company or an Associate determined by the Committee to have comparable responsibilities.

      2.31     “Region Manager Option” means an Option granted pursuant to Article VII.

      2.32     “Section 409A” means section 409A of the Code and Department of Treasury rules and regulations issued thereunder.

      2.33     “Service Award” means an Award granted pursuant to Article X.

      2.34     “STC” means Stewart Title Company, a subsidiary of the Company.

      2.35     “STG” means Stewart Title Guaranty Company, a subsidiary of the Company.

      2.36     “Stock” means the common stock of the Company, $1.00 par value per share (or such other par value as may be designated by act of the Company’s stockholders).

      2.37     “Ten Percent Stockholder” means an individual who owns stock possessing more than ten percent of the combined voting power of all classes of stock of the Company and its Affiliates. For this purpose, an individual will be considered as owning the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants; and stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust will be considered as being owned proportionately by or for its shareholders, partners or beneficiaries.

      2.38     “Termination of Employment” means the termination of the Award recipient’s employment relationship with the Company and all Affiliates.

Exhibit 10.2
(continued)

ARTICLE III

ELIGIBILITY AND PARTICIPATION

      3.1     Eligibility. The persons who are eligible to receive Awards under the Plan are as follows:

Type of Award	Eligible Associates
Executive Options	Executive Officers of the Company
Region Manager Options	Region Managers of the Company and persons determined by the Committee to have equivalent responsibilities.
Directors’ Shares	Directors who are not full-time employees of the Company upon their election or re-election.
Associates Stock Bonuses	Associates selected by the Committee who are awarded cash bonuses.
Service Awards	Associates who have completed at least five years of service with the Company or an Affiliate as the Committee shall determine from time to time; provided, that no Executive Officer or director of the Company shall be eligible to receive any Service Award.

      3.2     Participation. Subject to the terms and provisions of the Plan, the Committee may, from time to time, select the Associates to whom Awards shall be granted and shall determine the nature and amount of each Award.

ARTICLE IV

GENERAL PROVISIONS RELATING TO AWARDS

      4.1     Authority to Grant Awards. The Committee may grant Awards to those Associates as the Committee shall from time to time determine, under the terms and conditions of the Plan. Subject only to any applicable limitations set out in the Plan, the number of shares of Stock or other value to be covered by any Award to be granted under the Plan shall be as determined by the Committee in its sole discretion.

      4.2     Dedicated Shares; Maximum Awards. The aggregate number of shares of Stock with respect to which Awards may be granted under the Plan is 1,360,000. The aggregate number of shares of Stock with respect to which the following types of Awards may be granted under the Plan is:

	Maximum Number of Shares
			Per Associate in Any
Type of Award	Aggregate		One Fiscal Year
Executive Options		600,000		35,000
Region Manager Options		300,000		2,500
Directors’ Shares		30,000
Associates Stock Bonuses		350,000
Service Awards		80,000		10

Each of the foregoing numerical limits stated in this Section 4.2 shall be subject to adjustment in accordance with the provisions of Section 4.5. The number of shares of Stock stated in this Section 4.2 shall also be increased by such number of shares of Stock as become subject to substitute Awards granted pursuant to Article XI; provided, however, that such increase shall be conditioned upon the approval of the stockholders of the Company to the extent stockholder approval is required by law or applicable stock exchange rules. If shares of Stock are withheld from payment of an Award to satisfy tax obligations with respect to the Award, such shares of Stock will count against the aggregate number of shares of Stock with respect to which Awards may be granted under the Plan. To the extent that any outstanding Award is forfeited or cancelled for any

Exhibit 10.2
(continued)

reason or is settled in cash in lieu of shares of Stock, the shares of Stock allocable to such portion of the Award may again be subject to an Award granted under the Plan.

      4.3     Non-Transferability. Except as specified in the applicable Award Agreements or in domestic relations court orders, Options shall not be transferable by the Holder other than by will or under the laws of descent and distribution, and shall be exercisable, during the Holder’s lifetime, only by him or her. In the discretion of the Committee, any attempt to transfer an Award other than under the terms of the Plan and the applicable Award Agreement may terminate the Award.

      4.4     Requirements of Law. The Company shall not be required to sell or issue any shares of Stock under any Award if issuing those shares of Stock would constitute or result in a violation by the Holder or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically, in connection with any applicable statute or regulation relating to the registration of securities, upon exercise of any Option or pursuant to any other Award, the Company shall not be required to issue any shares of Stock unless the Committee has received evidence satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in accordance with applicable law, including receipt of an opinion of counsel satisfactory to the Company to the effect that any proposed transfer complies with applicable law. The determination by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register any shares of Stock covered by the Plan pursuant to applicable securities laws of any country or any political subdivision. In the event the shares of Stock issuable on exercise of an Option or pursuant to any other Award are not registered, the Company may imprint on the certificate evidencing the shares of Stock any legend that counsel for the Company considers necessary or advisable to comply with applicable law, or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisable to comply with applicable law. The Company shall not be obligated to take any other affirmative action in order to cause or enable the exercise of an Option or any other Award, or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of any governmental authority.

      4.5     Changes in the Company’s Capital Structure.

      (a) The existence of outstanding Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior preference shares ahead of or affecting the Stock or Stock rights, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise.

      (b) If the Company shall effect a subdivision or consolidation of Stock or other capital readjustment, the payment of a Stock dividend, or other increase or reduction of the number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (1) the number, class or series and per share price of Stock subject to outstanding Options or other Awards under the Plan shall be appropriately adjusted in such a manner as to entitle a Holder to receive upon exercise of an Option or other Award, for the same aggregate cash consideration, the equivalent total number and class or series of Stock the Holder would have received had the Holder exercised his or her Option or other Award in full immediately prior to the event requiring the adjustment, and (2) the number and class or series of Stock then reserved to be issued under the Plan shall be adjusted by substituting for the total number and class or series of Stock then reserved, that number and class or series of Stock that would have been received by the owner of an equal number of outstanding shares of Stock of each class or series of Stock as the result of the event requiring the adjustment.

      (c) If while unexercised Options or other Awards remain outstanding under the Plan (1) the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than an entity that was wholly-owned by the Company immediately prior to such merger, consolidation or other reorganization), (2) the Company sells, leases

Exhibit 10.2
(continued)

or exchanges or agrees to sell, lease or exchange all or substantially all of its assets to any other person or entity (other than an entity wholly-owned by the Company), (3) the Company is to be dissolved or (4) the Company is a party to any other corporate transaction (as defined under section 424(a) of the Code and applicable Department of Treasury regulations) that is not described in clauses (1), (2) or (3) of this sentence (each such event is referred to herein as a “Corporate Change”), then, except as otherwise provided in an Award Agreement (provided that such exceptions shall not apply in the case of a reincorporation merger), or as a result of the Committee’s effectuation of one or more of the alternatives described below, there shall be no acceleration of the time at which any Award then outstanding may be exercised, and no later than ten days after the approval by the stockholders of the Company of such Corporate Change, the Committee, acting in its sole and absolute discretion without the consent or approval of any Holder, shall act to effect one or more of the following alternatives, which may vary among individual Holders and which may vary among Awards held by any individual Holder (provided that, with respect to a reincorporation merger in which Holders of the Company’s ordinary shares will receive one ordinary share of the successor corporation for each ordinary share of the Company, none of such alternatives shall apply and, without Committee action, each Award shall automatically convert into a similar award of the successor corporation exercisable for the same number of common shares of the successor as the Award was exercisable for common shares of Stock of the Company):

      (1) accelerate the time at which some or all of the Awards then outstanding may be exercised so that such Awards may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all such Awards that remain unexercised and all rights of Holders thereunder shall terminate;

      (2) require the mandatory surrender to the Company by all or selected Holders of some or all of the then outstanding Awards held by such Holders (irrespective of whether such Awards are then exercisable under the provisions of the Plan or the applicable Award Agreement evidencing such Award) as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee shall thereupon cancel such Award and the Company shall pay to each such Holder an amount of cash per share equal to the excess, if any, of the per share price offered to stockholders of the Company in connection with such Corporate Change over the exercise prices under such Award for such shares;

      (3) with respect to all or selected Holders, have some or all of their then outstanding Awards (whether vested or unvested) assumed or have a new award of a similar nature substituted for some or all of their then outstanding Awards under the Plan (whether vested or unvested) by an entity which is a party to the transaction resulting in such Corporate Change and which is then employing such Holder or which is affiliated or associated with such Holder in the same or a substantially similar manner as the Company prior to the Corporate Change, or a parent or subsidiary of such entity, provided that (A) such assumption or substitution is on a basis where the excess of the aggregate Fair Market Value of the Stock subject to the Award immediately after the assumption or substitution over the aggregate exercise price of such Stock is equal to the excess of the aggregate Fair Market Value of all Stock subject to the Award immediately before such assumption or substitution over the aggregate exercise price of such Stock, and (B) the assumed rights under such existing Award or the substituted rights under such new Award as the case may be will have the same terms and conditions as the rights under the existing Award assumed or substituted for, as the case may be;

      (4) provide that the number and class or series of Stock covered by an Award (whether vested or unvested) theretofore granted shall be adjusted so that such Award when exercised shall thereafter cover the number and class or series of Stock or other securities or property (including, without limitation, cash) to which the Holder would have been entitled pursuant to the terms of the agreement or plan relating to such Corporate Change if, immediately prior to such Corporate Change, the Holder had been the holder of record of the number of shares of Stock then covered by such Award; or

Exhibit 10.2
(continued)

      (5) make such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Corporate Change (provided, however, that the Committee may determine in its sole and absolute discretion that no such adjustment is necessary).

      In effecting one or more of alternatives in (3), (4) or (5) immediately above, and except as otherwise may be provided in an Award Agreement, the Committee, in its sole and absolute discretion and without the consent or approval of any Holder, may accelerate the time at which some or all Awards then outstanding may be exercised.

      (d) In the event of changes in the outstanding Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 4.5, any outstanding Award and any Award Agreements evidencing such Award shall be subject to adjustment by the Committee in its sole and absolute discretion as to the number and price of Stock or other consideration subject to such Award. In the event of any such change in the outstanding Stock, the aggregate number of shares of Stock available under the Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.

      (e) The issuance by the Company of stock of any class or series, or securities convertible into, or exchangeable for, stock of any class or series, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe for them, or upon conversion or exchange of stock or obligations of the Company convertible into, or exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such issuance shall be made with respect to, the number, class or series, or price of shares of Stock then subject to outstanding Options or other Awards.

      4.6     Election Under Section 83(b) of the Code. No Holder shall exercise the election permitted under section 83(b) of the Code with respect to any Award without the written approval of the Chief Financial Officer of the Company. Any Holder who makes an election under section 83(b) of the Code with respect to any Award without the written approval of the Chief Financial Officer of the Company may, in the discretion of the Committee, forfeit any or all Awards granted to him or her under the Plan.

      4.7     Forfeiture for Cause. Notwithstanding any other provision of the Plan or an Award Agreement, if the Committee finds by a majority vote that a Holder, before or after his Termination of Employment (a) committed a fraud, embezzlement, theft, felony or an act of dishonesty in the course of his employment by the Company or an Affiliate which conduct damaged the Company or an Affiliate or (b) disclosed trade secrets of the Company or an Affiliate, then as of the date the Committee makes its finding, any Awards awarded to the Holder that have not been exercised by the Holder (including all Awards that have not yet vested) will be forfeited to the Company. The findings and decision of the Committee with respect to such matter, including those regarding the acts of the Holder and the damage done to the Company, will be final for all purposes. No decision of the Committee, however, will affect the finality of the discharge of the individual by the Company or an Affiliate.

      4.8     Forfeiture Events. The Committee may specify in an Award Agreement that the Holder’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, Termination of Employment for cause, termination of the Holder’s provision of services to the Company or its Affiliates, violation of material policies of the Company and its Affiliates, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Holder, or other conduct by the Holder that is detrimental to the business or reputation of the Company and its Affiliates.

Exhibit 10.2
(continued)

ARTICLE V

GENERAL PROVISIONS RELATING TO OPTIONS

      5.1     Type of Options Available. The Committee may grant the following Options any time during the term of the Plan to any eligible Associate that it chooses:

      (a) Incentive Stock Options. The Committee may grant to an Associate who is a key employee of the Company or an Affiliate that is a corporation an Option, or Options, to buy a stated number of shares of Stock under the terms and conditions of the Plan, which Option or Options would be an “incentive stock option” within the meaning of section 422 of the Code.

      (b) Nonqualified Options. The Committee may grant to any Associate an Option, or Options, to buy a stated number of shares of Stock under the terms and conditions of the Plan, which Option or Options would not constitute an “incentive stock option” within the meaning of section 422 of the Code.

      5.2     Stock Appreciation Rights. Stock appreciation rights (“Stock Appreciation Rights”) may be included in each Option granted under the Plan to allow the holder of an Option (an “Optionee”) to surrender that Option (or a portion of the part that is then exercisable) and receive in exchange, upon a written request from the Optionee describing the special circumstances that exist which create the need to use such Stock Appreciation Rights and subject to any other conditions and limitations set by the Committee, an amount equal to the excess of the Fair Market Value of the Stock covered by the Option (or the portion of it surrendered), determined as of the date of surrender, over the aggregate option price of the Stock. The payment will be made in shares of Stock valued at Fair Market Value. Stock Appreciation Rights may be exercised only when the Fair Market Value of the Stock covered by the Option surrendered exceeds the option price of the Stock.

      Upon the surrender of an Option, or a portion of it, for Stock Appreciation Rights, the shares represented by the Option (or that part of it surrendered) shall not be available for reissuance under the Plan.

      Each of the Stock Appreciation Rights (a) will expire not later than the expiration of the underlying Option, (b) may be for no more than 100 percent of the difference between the exercise price of the underlying Option and the Fair Market Value of a share of the Stock at the time the Stock Appreciation Right is exercised, and (c) may be exercised only when the underlying Option is eligible to be exercised.

      5.3     Option Price. The price at which shares of Stock may be purchased pursuant to an Option that is an Incentive Stock Option shall be not less than the Fair Market Value of the shares of Stock on the date the Option is granted. The Committee in its discretion may provide that the price at which shares may be purchased shall be more than the minimum price required. If an individual is a Ten Percent Stockholder, the option price at which shares may be purchased under an Option that is an Incentive Stock Option shall be not less than 110 percent of the Fair Market Value of the Stock on the date the Option is granted.

      5.4     Maximum Value of Stock Subject to Options that are Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined as of the date the Option is granted) of the Stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee in any calendar year (under the Plan and any other incentive stock option plan(s) of the Company and any parent and subsidiary corporation) exceeds $100,000, the Options shall be treated as Nonqualified Options. In making this determination, Options shall be taken into account in the order in which they were granted.

      5.5     Exercise of Options. Each Option shall be exercised by request to the Committee setting forth the number of shares of Stock with respect to which the Option is to be exercised. Except in the case of exercise by a third-party broker, as provided below, payment of the exercise price and any applicable tax withholding amounts must be made at the time of exercise by any combination of the following: (a) cash, certified check, bank draft or postal or express money order payable to the order of the Company for an amount equal to the exercise price under the Option, (b) Mature Shares with a Fair Market Value on the date of exercise equal to the exercise price under the Option, (c) an election to make a cashless exercise through a registered broker-dealer (if approved in advance by the Committee or by an executive officer of the Company) or (d) except as specified below, any other form of payment which is acceptable to the Committee. As promptly as practicable

Exhibit 10.2
(continued)

after receipt of the Holder’s request and payment, the Company shall deliver to the Holder the number of shares with respect to which the Option has been exercised. If Mature Shares are used for payment by the Holder, the aggregate Fair Market Value of the shares of Stock tendered must be equal to or less than the aggregate exercise price of the shares being purchased upon exercise of the Option, and any difference must be paid by cash, certified check, bank draft or postal or express money order payable to the order of the Company.

      The Committee shall not permit a Holder to pay such Holder’s exercise price upon the exercise of an Option by having the Company reduce the number of shares of Stock that will be delivered to the Holder pursuant to the exercise of the Option. In addition, the Committee shall not permit a Holder to pay such Holder’s exercise price upon the exercise of an Option by using shares of Stock other than Mature Shares.

      An Option may not be exercised for a fraction of a share of Stock.

      5.6     Duration of Options. Unless the Option Agreement specifies a shorter general term, an Option shall expire on the earliest of the date that is (a) the tenth anniversary of the date the Option is granted (the fifth anniversary of the date the Option is granted in the case of an Incentive Stock Option granted to a Ten Percent Stockholder), or (b) one day less than three months after the date of the Holder’s Termination of Employment (other than by reason of the Holder’s death) or (c) the date that is one year after the date of the Holder’s death. Unless the Holder’s Option Agreement specifies otherwise, an Option shall not continue to vest after the severance of the employment relationship between the Company and all Affiliates.

      Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment relationship between the Company and the Optionee shall be determined by the Committee at the time thereof.

      In the event of the death of the holder of any Option while in the employ of the Company and before the date of expiration of such Option, such Option shall continue in effect until the date of expiration of the Option. After the death of the Optionee, his executors, administrators or any person or person to whom his Option may be transferred by will or by the laws of descent and distribution, shall have the right, any time before the termination of an Option, to exercise the Option in respect to the number of shares that the Optionee would have been entitled to exercise if he had exercised the Option on the date of his death while in employment.

      Notwithstanding the foregoing provisions of this Article V, in the case of an Option that is a Nonqualified Option, the Committee may provide for a different option termination date in the option agreement with respect to such Option. For purposes of Incentive Stock Options issued under the Plan, an employment relationship between the Company and the Optionee shall be deemed to exist during any period in which the Optionee is employed by the Company, by any parent or subsidiary corporation, by a corporation issuing or assuming an option in a transaction to which section 424(a) of the Code, as amended, applies, or by a parent or subsidiary corporation of such corporation issuing or assuming an option. For purposes of Nonqualified Options issued under the Plan, an employment relationship between the Company and the Optionee will exist under the circumstances described above for Incentive Stock Options and will also exist if the Optionee is transferred to an affiliate corporation approved by the Committee.

      5.7     Option Agreement. Each Option grant under the Plan shall be evidenced by an Option Agreement that shall specify (a) the Option Price, (b) the duration of the Option, (c) the number of shares of Stock to which the Option pertains, (d) the exercise restrictions, if any, applicable to the Option, (e) whether the Option is intended to be an Incentive Option or a Nonqualified Option, and (f) such other provisions as the Committee shall determine that are not inconsistent with the terms and provisions of the Plan.

      5.8     Substitution Options. Options may be granted under the Plan from time to time in substitution for stock options held by employees of other corporations who are about to become employees of or affiliated with the Company or any Affiliate as the result of a merger or consolidation of the employing corporation with the Company or any Affiliate, or the acquisition by the Company or any Affiliate of the assets of the employing corporation, or the acquisition by the Company or any Affiliate of stock of the employing corporation as the result of which it becomes an Affiliate of the Company. The terms and conditions of the substitute Options

Exhibit 10.2
(continued)

granted may vary from the terms and conditions set out in the Plan to the extent the Committee, at the time of grant, may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted.

      5.9     No Rights as Stockholder. No Holder, as such, shall have any rights as a stockholder.

ARTICLE VI

EXECUTIVE OPTIONS

      The individuals who shall be eligible to receive grants of Executive Options shall be the Executive Officers of the Company. No individual shall be eligible to receive an Option under the Plan while that individual is a member of the Committee.

ARTICLE VII

REGION MANAGER OPTIONS

      The Committee may grant Options to those eligible Region Managers as it shall from time to time determine, under the terms and conditions of the Plan. Factors the Committee may consider include, without limitation:

•  Region rank of consolidated STG/ STC pretax profit (dollars) in the Region Manager’s territory as reported on the Region Manager’s consolidated profit center statement;

•  Region rank of profit percentage in the Region Manager’s territory as reported on the Region Manager’s STG/ STC profit center statement;

•  Region rank of percentage of policy losses to premiums generated YTD as reported on the Region Performance Summary Report;

•  Market share increase in the Region Manger’s territory over the prior year as reported on the quarterly ALTA statistics on market share. Market share weight will be increased with market share growth in key states and percentage of state responsibility of Region Manager;

•  Region rank of percentage increase in Cash to Houston remittances as reported on the Region Performance Summary Report;

•  Region rank of percentage of delinquent premium YTD;

•  Net expansion of territory via acquisitions, branch offices, increased number of agents;

•  Region Manager incorporation and pursuit of SISCO Strategies and Ten Standards in region’s goals;

•  Other contributions towards overall company performance or failure to comply with company requests. Items considered may include Region Manager rollout of technology, new products or other programs sponsored by the company, completion of agency visits, follow-up on audits and training and benefit participation.

The Committee shall evaluate the relative importance of these factors, and the Region Manager’s standing among the recipient group, in its sole and absolute discretion and shall have full power and authority to determine, according to the above criteria, the amount of shares subject to any option, subject only to any applicable limitations set out in the Plan.

ARTICLE VIII

DIRECTORS’ SHARES

      8.1     Annual Grant to Directors. Each person who is not a full-time employee of the Company or any of its subsidiaries and who shall be elected or re-elected as a director of the Company shall be awarded shares

Exhibit 10.2
(continued)

of Stock annually on the first business day following the Company’s annual meeting of stockholders at which such person was elected or re-elected to serve, provided that the Plan is in effect on that day. Each person who is not a full-time employee of the Company or any of its subsidiaries and who shall be elected or re-elected as an Advisory Director of the Company shall be awarded shares of Stock annually on the first business day following the Company’s annual meeting of directors at or subsequent to which such person was elected or re-elected to serve, provided that the Plan is in effect on that day.

      8.2     Amount of Award. The number of shares of Stock to be awarded pursuant to this Article VII shall be the amount determined by dividing the amount authorized by the Company’s Board of Directors by the Fair Market Value of a share of the Stock on the date of the award.

ARTICLE IX

ASSOCIATES STOCK BONUSES

      9.1     Award of Stock Bonuses. The Company shall, during the first quarter of each Fiscal Year during the term of the Plan, issue Stock to each Associate selected by the Committee having a value (as determined below) equal to one-ninth of the total amount of cash bonus earned by such Associate for the previous Fiscal Year pursuant to the established bonus policy of STG or STC, as the case may be. Any such Award shall be granted no later than March 15 following the close of the Fiscal Year with respect to which the applicable bonus was earned. The fact that an Associate is granted an Award pursuant to this Article IX with respect to one Fiscal Year shall not entitle the Associate to receive such a grant in a subsequent Fiscal Year.

      9.2     Valuation. The shares of Stock to be issued pursuant to the Plan shall be valued as of their closing price on the day following the Company’s year-end earnings release.

ARTICLE X

SERVICE AWARDS

      Service Awards of ten shares of Stock will be made to each eligible Associate selected by the Committee upon his completion of the Associate’s first five years of service for the Company and its Affiliates.

ARTICLE XI

SUBSTITUTION AWARDS

      Awards may be granted under the Plan from time to time in substitution for stock options and other awards held by employees of other entities who are about to become Associates, or whose employer is about to become an Affiliate as the result of a merger of consolidation of the Company with another corporation, or the acquisition by the Company of substantially all the assets of another corporation, or the acquisition by the Company of at least 50 percent (50%) of the issued and outstanding stock of another corporation as the result of which it becomes a subsidiary of the Company. The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in the Plan to such extent as the Board at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the Award in substitution for which they are granted, but with respect to Options that are Incentive Stock Options, no such variation shall be such as to affect the status of any such substitute Option as an Incentive Stock Option under section 422 of the Code.

ARTICLE XII

ADMINISTRATION

12.1     Awards. The Plan shall be administered by the Committee or, in the absence of the Committee, the Plan shall be administered by the Board. The members of the Committee shall serve at the discretion of the Board. The Committee shall have full and exclusive power and authority to administer the Plan and to take all

Exhibit 10.2
(continued)

actions that the Plan expressly contemplates or are necessary or appropriate in connection with the administration of the Plan with respect to Awards granted under the Plan.

12.2     Authority of the Committee. The Committee shall have full and exclusive power to interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of the Plan. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting. Any decision or determination reduced to writing and signed by a majority of the members shall be as effective as if it had been made by a majority vote at a meeting properly called and held. All questions of interpretation and application of the Plan, or as to award granted under the Plan, shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including but not limited to the exercise of any power or discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct. In carrying out its authority under the Plan, the Committee shall have full and final authority and discretion, including but not limited to the following rights, powers and authorities, to:

      (a) determine the persons to whom and the time or times at which Awards will be made;

      (b) determine the number and exercise price of shares of Stock covered in each Award, subject to the terms and provisions of the Plan;

      (c) determine the terms, provisions and conditions of each Award, which need not be identical and need not match the default terms set forth in the Plan;

      (d) accelerate the time at which any outstanding Award will vest;

      (e) prescribe, amend and rescind rules and regulations relating to administration of the Plan; and

      (f) make all other determinations and take all other actions deemed necessary, appropriate or advisable for the proper administration of the Plan.

      The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary or desirable to further the Plan’s objectives. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of the Plan. As permitted by law and the terms and provisions of the Plan, the Committee may delegate its authority as identified in Section 11.3.

      The actions of the Committee in exercising all of the rights, powers, and authorities set out in this Article XI and all other Articles of the Plan, when performed in good faith and in its sole judgment, shall be final, conclusive and binding on all persons. The Committee may employ attorneys, consultants, accountants, agents, and other persons, any of whom may be an Associate, and the Committee, the Company, and its officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such persons.

      12.3     Decisions Binding. All determinations and decisions made by the Committee or the Board, as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions of the Committee or the Board, as the case may be, shall be final, conclusive and binding on all persons, including the Company, its stockholders, Associates, Holders and the estates and beneficiaries of Associates and Holders.

      12.4     No Liability. Under no circumstances shall the Company, the Board or the Committee incur liability for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan or the Company’s, the Committee’s or the Board’s roles in connection with the Plan.

Exhibit 10.2
(continued)

ARTICLE XIII

AMENDMENT OR TERMINATION OF PLAN

      13.1     Amendment, Modification, Suspension, and Termination. Subject to Section 12.2 the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company’s stockholders and except as provided in Section 4.5, the Committee shall not directly or indirectly lower the Option Price of a previously granted Option, and no amendment of the Plan shall be made without stockholder approval if stockholder approval is required by applicable law or stock exchange rules.

      13.2     Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, suspension, or modification of the Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Holder holding such Award.

ARTICLE XIV

MISCELLANEOUS

      14.1     Unfunded Plan/ No Establishment of a Trust Fund. Holders shall have no right, title, or interest whatsoever in or to any investments that the Company or any of its Affiliates may make to aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as expressly set forth in the Plan. No property shall be set aside nor shall a trust fund of any kind be established to secure the rights of any Holder under the Plan. All Holders shall at all times rely solely upon the general credit of the Company for the payment of any benefit which becomes payable under the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

      14.2     No Employment Obligation. The granting of any Award shall not constitute an employment contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ or continue to employ, or utilize the services of, any Holder. The right of the Company or any Affiliate to terminate the employment of any person shall not be diminished or affected by reason of the fact that an Award has been granted to him, and nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate any Holder’s employment at any time or for any reason not prohibited by law.

      14.3     Tax Withholding. The Company or any Affiliate shall be entitled to deduct from other compensation payable to each Holder any sums required by federal, state or local tax law to be withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award. In the alternative, the Company may require the Holder (or other person validly exercising the Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check within one day after the date of vesting, exercise or lapse of restrictions. In the discretion of the Committee, and with the consent of the Holder, the Company may reduce the number of shares of Stock issued to the Holder upon such Holder’s exercise of an Option to satisfy the tax withholding obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of Stock held back shall not exceed the Company’s or the Affiliate’s Minimum Statutory Tax Withholding Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory Tax Withholding Obligation arising upon the grant or vesting (as applicable) of an Award granted pursuant to Article VIII, IX or X by delivering to the Holder of the Award a reduced number of shares of Stock in the manner specified herein. If permitted by the Committee and acceptable to the Holder, at the time of grant or vesting (as applicable) of an Award granted pursuant to Article VIII, IX or X, the Company shall

Exhibit 10.2
(continued)

(a) calculate the amount of the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation on the assumption that all such vested shares are made available for delivery, (b) reduce the number of such shares of Stock made available for delivery so that the Fair Market Value of the shares of Stock withheld on the vesting date approximates the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation and (c) in lieu of the withheld shares of Stock, remit cash to the United States Treasury and other applicable governmental authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax Withholding Obligation. The Company shall withhold only whole shares of Stock to satisfy its Minimum Statutory Tax Withholding Obligation. Where the Fair Market Value of the withheld shares of Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares of Stock with a Fair Market Value slightly less than the amount of then Minimum Statutory Tax Withholding Obligation and the Holder must satisfy the remaining minimum withholding obligation in some other manner permitted under this Section 14.3. The withheld shares of Stock not made available for delivery by the Company shall be retained as treasury shares or will be cancelled and, in either case, the Holder’s right, title and interest in such shares of Stock shall terminate. The Company shall have no obligation upon vesting or exercise of any Award or lapse of restrictions on any Award until the Company or an Affiliate has received payment sufficient to cover the Minimum Statutory Tax Withholding Obligation with respect to that vesting, exercise or lapse of restrictions. Neither the Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the amount which it will be required to withhold.

      14.4 Written Agreement. Each Award shall be embodied in a written agreement or statement which shall be subject to the terms and conditions of the Plan. The Award Agreement shall be signed by a member of the Committee on behalf of the Committee and the Company or by an executive officer of the Company, other than the Holder, on behalf of the Company, and may be signed by the Holder to the extent required by the Committee. The Award Agreement may specify the effect of a Change in Control on the Award. The Award Agreement may contain any other provisions that the Committee in its discretion shall deem advisable which are not inconsistent with the terms and provisions of the Plan.

      14.5 Indemnification of the Committee. The Company shall indemnify each present and future member of the Committee against, and each member of the Committee shall be entitled without further action on his or her part to indemnity from the Company for, all expenses (including attorney’s fees, the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by such member in connection with or arising out of any action, suit or proceeding in which such member may be involved by reason of such member being or having been a member of the Committee, whether or not he or she continues to be a member of the Committee at the time of incurring the expenses, including, without limitation, matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been negligent in the performance of such member’s duty as a member of the Committee. However, this indemnity shall not include any expenses incurred by any member of the Committee in respect of matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as a member of the Committee. In addition, no right of indemnification under the Plan shall be available to or enforceable by any member of the Committee unless, within 60 days after institution of any action, suit or proceeding, such member shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. This right of indemnification shall inure to the benefit of the heirs, executors or administrators of each member of the Committee and shall be in addition to all other rights to which a member of the Committee may be entitled as a matter of law, contract or otherwise.

      14.6     Gender and Number. If the context requires, words of one gender when used in the Plan shall include the other and words used in the singular or plural shall include the other.

      14.7     Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

Exhibit 10.2
(continued)

      14.8     Headings. Headings of Articles and Sections are included for convenience of reference only and do not constitute part of the Plan and shall not be used in construing the terms and provisions of the Plan.

      14.9     Other Compensation Plans. The adoption of the Plan shall not affect any other option, incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other forms of incentive compensation arrangements for Associates.

      14.10     Other Awards. The grant of an Award shall not confer upon the Holder the right to receive any future or other Awards under the Plan, whether or not Awards may be granted to similarly situated Holders, or the right to receive future Awards upon the same terms or conditions as previously granted.

      14.11     Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

      14.12     Law Limitations/ Governmental Approvals. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

      14.13     Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for shares of Stock issued under the Plan prior to:

      (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

      (b) completion of any registration or other qualification of the Stock under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

      14.14     Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such shares of Stock as to which such requisite authority shall not have been obtained.

      14.15     Investment Representations. The Committee may require any person receiving Stock pursuant to an Award under the Plan to represent and warrant in writing that the person is acquiring the Shares for investment and without any present intention to sell or distribute such Stock.

      14.16     Persons Residing Outside of the United States. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company or any of its Affiliates operates or has Associates, the Committee, in its sole discretion, shall have the power and authority to:

      (a) determine which Affiliates shall be covered by the Plan;

      (b) determine which persons employed outside the United States are eligible to participate in the Plan;

      (c) amend or vary the terms and provisions of the Plan and the terms and conditions of any Award granted to persons who reside outside the United States;

      (d) establish subplans and modify exercise procedures and other terms and procedures to the extent such actions may be necessary or advisable — any subplans and modifications to Plan terms and procedures established under this Section 13.16 by the Committee shall be attached to the Plan document as Appendices; and

      (e) take any action, before or after an Award is made, that it deems advisable to obtain or comply with any necessary local government regulatory exemptions or approvals.

Exhibit 10.2
(continued)

      Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law or governing statute or any other applicable law.

      14.17     No Fractional Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, additional Awards, or other property shall be issued or paid in lieu of fractional shares of Stock or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

      14.18     Arbitration of Disputes. Any controversy arising out of or relating to the Plan or an Option Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of the American Arbitration Association. The arbitration shall be final and binding on the parties.

      14.19     Governing Law. The provisions of the Plan and the rights of all persons claiming thereunder shall be construed, administered and governed under the laws of the State of Texas.

EX-31.1 4 h27744exv31w1.htm CERTIFICATION CO-CEO PURSUANT TO SECTION 302

Exhibit 31.1

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Malcolm S. Morris, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Stewart Information Services Corporation (registrant);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f))for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 2, 2005

/s/ Malcolm S. Morris  

Title: Co-Chief Executive Officer and 

Chairman of the Board of Directors 

EX-31.1

exv31w1

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stewart Morris, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Stewart Information Services Corporation (registrant);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f))for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 2, 2005

/s/ Stewart Morris, Jr.  

Title: Co-Chief Executive Officer, 

President and Director 

EX-31.3

Exhibit 31.3

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Max Crisp, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Stewart Information Services Corporation (registrant);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f))for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 2, 2005

/s/ Max Crisp  

Title: Executive Vice President and 

Chief Financial Officer, Secretary- Treasurer, Director and Principal Financial Officer 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Stewart Information Services Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Malcolm S. Morris, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2005

/s/ Malcolm S. Morris

Name: Malcolm S. Morris

Title: Co-Chief Executive Officer
and Chairman of the Board of Directors

A signed original of this written statement required by Section 906 has been provided to Stewart Information Services Corporation and will be retained by Stewart Information Services Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Stewart Information Services Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stewart Morris, Jr., Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2005

/s/ Stewart Morris, Jr.

Name: Stewart Morris, Jr.

Title: Co-Chief Executive Officer,
President and Director

A signed original of this written statement required by Section 906 has been provided to Stewart Information Services Corporation and will be retained by Stewart Information Services Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

Exhibit 32.3

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Stewart Information Services Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Max Crisp, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2005

/s/ Max Crisp

Name: Max Crisp

Title: Executive Vice President and Chief Financial Officer, Secretary-

Treasurer, Director and Principal

Financial Officer

A signed original of this written statement required by Section 906 has been provided to Stewart Information Services Corporation and will be retained by Stewart Information Services Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

STEWART INFORMATION SERVICES CORPORATION

DETAILS OF INVESTMENTS

JUNE 30, 2005 AND DECEMBER 31, 2004

	JUN 30		DEC 31
	2005		2004
	($000 omitted)
Investments, at market, partially restricted:
Short-term investments		201,852		181,195
Municipal bonds		205,483		196,884
Corporate bonds		158,914		151,344
Foreign		85,047		69,978
U.S. Treasury and agency obligations		35,219		28,905
Equity securities		25,796		23,201
Mortgage-backed securities		289		295
TOTAL INVESTMENTS		712,600		651,802

NOTE: These totals are the sum of three separate line item amounts on the condensed consolidated balance sheets contained herein as:

	JUN 30		DEC 31
	2005		2004
	($000 omitted)
Short-term investments		201,852		181,195
Investments – statutory reserve funds		429,824		401,814
Investments – other		80,924		68,793
		712,600		651,802