8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): October 29, 2009

STEWART INFORMATION SERVICES CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE (STATE OR OTHER JURISDICTION) 001-02658 (COMMISSION FILE NO.) 74-1677330 (I.R.S. EMPLOYER IDENTIFICATION NO.)

1980 Post Oak Blvd, Houston, Texas 77056

(Address Of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (713) 625-8100

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CRF 240.14a-12)

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4))

ITEM 2.02.   RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 A press release issued by Stewart Information Services Corporation on October 29, 2009, regarding financial results for the three and nine months ended September 30, 2009, is attached hereto as Exhibit 99.1, and the first paragraph and the financial statements at the end of the release are incorporated herein by reference.  This information is not deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act registration statements.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

         (d) EXHIBITS

Exhibit No.          Description

99.1           Press release of Stewart Information Services Corporation dated October 29, 2009, reporting financial results for the three and nine months ended September 30, 2009.

SIGNATURE

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

STEWART INFORMATION SERVICES CORPORATION (Registrant)
By:	/s/ J. Allen Berryman
	(J. Allen Berryman,  Executive Vice President,
	Secretary, Treasurer and Principal Financial Officer)

Date:  October 29, 2009

EX-99.1

NEWS  from:

STEWART INFORMATION SERVICES CORPORATION

P.O. Box 2029, Houston, Texas 77252-2029

www.stewart.com

Contact:	Ted C. Jones
	Director - Investor Relations
	(713) 625-8014

FOR RELEASE AT 6AM CDT

Stewart Reports Financial Results for the Third Quarter 2009

HOUSTON, October 29, 2009 -- Stewart Information Services Corporation (NYSE-STC) reported the results of its operations for the quarter and nine months ended September 30, 2009 (dollar amounts are in millions, except per share figures):

	Third Quarter						Nine Months
	2009(a)			2008(b)			2009(a)			2008(b)
Total revenues	$	460.0		$	396.7		$	1,204.2		$	1,219.3
Pretax loss before noncontrolling interests		(21.6	)		(39.7	)		(72.0	)		(124.7	)
Income tax expense (benefit)  (c)		0.2			(11.3	)		3.8			(45.6	)
Net loss attributable to Stewart		(23.7	)		(30.0	)		(81.9	)		(83.9	)
Net loss per share attributable to Stewart		(1.30	)		(1.66	)		(4.51	)		(4.64	)

(a)   The third quarter of 2009 includes pretax charges of $12.5 million relating to title loss reserve strengthening adjustments for prior policy years, $3.8 million relating to an increase in the 2009 title loss provision rate, $8.6 million relating to large title losses and $2.2 million relating to the impairment of other assets. In addition to amounts noted above, the first nine months of 2009 also include pretax charges of $19.2 million relating to title loss reserve strengthening adjustments for prior policy years and $22.4 million relating to several agency defalcations and large title losses offset by $9.2 million relating to recoveries of previously recognized title losses.  In addition to the amounts above recorded in the third quarter of 2009, the first nine months of 2009 include credits of $5.9 million for the settlements of legal matters in the Company’s favor and a pretax charge of $8.9 million relating to the impairment of investment securities and other assets.

(b)   The third quarter of 2008 includes a pretax charge of $10.5 million relating to a reserve for large title losses offset by $10.0 million relating to recoveries of previously recognized title losses. The third quarter of 2008 also includes pretax charges of $2.6 million and $2.5 million relating to the impairment of investment securities and office closure costs, respectively.  In addition to the amounts noted above, the first nine months of 2008 include a title loss reserve strengthening adjustment of $14.0 million relating to prior policy years, $17.7 million relating to large title losses and agency defalcations and a software impairment charge of $6.1 million.

(c)   Income tax expense in 2009 is related to certain goodwill book/tax differences and taxes in foreign jurisdictions for our international operations, as well as taxes for subsidiaries not included in our consolidated federal tax return.  The Company did not recognize an income tax benefit during the first nine months of 2009 relating to its pretax loss due to the recording of a valuation allowance against deferred tax assets at year-end 2008.

As previously announced on October 15, 2009, Stewart successfully closed its issuance of $65 million of Convertible Senior Notes due 2014.  The approximately $62.2 million in net proceeds were used to replace bank debt on which repayment could have been demanded at any time, thereby extending Stewart's maturities for this debt to October 2014 if not converted into shares of common stock before or at maturity.  The notes pay interest semiannually at a rate of 6 percent per annum beginning on April 15, 2010. The notes are, subject to certain limitations, convertible into shares of Stewart's common stock at a conversion rate of 77.6398 shares per $1,000 principal amount of notes (equal to a conversion price of $12.88 per share), which will be adjusted in certain circumstances.  The conversion price represents a 25 percent premium above the $10.30 per share closing price of Stewart's common stock on the New York Stock Exchange on October 8, 2009.

Total revenues for the third quarter of 2009 increased 16.0 percent from the same period a year ago and decreased 1.2 percent in the first nine months of 2009 compared to the first nine months of 2008.  Title revenues were up 14.4 percent for the third quarter of 2009 compared to the third quarter of 2008 and lower by 1.7 percent for the year-to-date period of 2009 compared with the same period in the prior year.  Title revenues from our agency operations increased for both the third quarter and first nine months of 2009 compared with the same periods in 2008 as a result of new revenues from the addition of lower-risk agencies as well as significant increases in revenues from existing agencies.  We have enhanced our new agency qualification process to reduce our risk and increase remittances, in addition to canceling more than 3,200 underperforming agencies since the beginning of 2007.  As a result of these efforts to enhance our agency network, revenues from agency operations have increased in most states during 2009.

Revenues from direct operations decreased in the first nine months of 2009 compared with 2008 due to the impact of closing 217 unprofitable branch offices since the beginning of 2008.   Revenues from direct operations were also impacted by declines in our international and commercial revenues. Revenues in our real estate information services business (REI) increased 50.8 percent and 22.9 percent for the quarter and year-to-date periods of 2009 compared to the comparable periods in 2008, respectively.  The increase in REI revenues is predominantly due to loan modification services begun in the second quarter of 2009.

For the most recent two quarters, our quarterly pretax operating results improved significantly compared to the same quarters in the prior year.  Extensive, ongoing expense reduction efforts undertaken since 2008 have made our core operations profitable.  Our reported pretax losses are primarily a result of the negative impacts of reserve strengthening charges attributable to prior policy years and large title losses in both the second and third quarters of 2009, which also relate to prior policy years. The third quarter of 2009 includes an additional $12.5 million of title loss reserve strengthening expenses relating to prior policy years and $8.6 million reserve for large title losses. Adjusting for these items, our provisions for title losses for the third quarter of 2009 were 8.0 percent of title revenues compared with 7.0 percent for the same period of 2008.  In the previous 30 years, total reserve strengthening adjustments have aggregated only $71.2 million out of  $1.5 billion in total loss provision reserves.  In addition, during the third quarter we revised our title loss accrual rate for the year-to-date 2009 period, resulting in a $3.8 million catch-up adjustment to title losses.

Employee costs were 10.7 percent less in the third quarter of 2009 compared with the third quarter of 2008. As a percentage of operating revenues, employee costs fell to 27.2 percent in the third quarter of 2009 from 35.3 percent in the third quarter of 2008. Overall, headcount has continued to decline from year end 2008 even while revenues have increased for the third quarter of 2009 compared with the third quarter of 2008 as we focus on improving productivity in our title production and back-office while delivering high-quality customer service in the front office. In addition, other operating costs declined 12.5 percent in the third quarter of 2009 compared with the same period in 2008.

We continue to achieve gains in productivity, cost reductions and improved accuracy in our regional production centers which perform title searches, examinations and commitments for multiple offices.  By leveraging economies of scale while developing local experts in search and examination, we are already achieving reduced costs per order, and anticipate measurable reductions in future claims arising from search and exam errors.

Our back-office shared-services initiatives remain on target and continue to generate expense reductions in 2009 in the areas of human resources, finance and accounting, procurement and information technology through reduced salary and overhead costs and leverage of buying power. We anticipate additional savings once we substantially complete implementation of our enterprise systems in late 2010.

Title orders opened for the current quarter and year-to-date periods were comparable to the same periods of 2008.  Orders opened for the first three weeks of October 2009 have increased on a per workday basis compared to the same period in 2008 and over September month-to-date.

Existing home sales were up 9.2 percent in September compared to the same month a year ago on a seasonally-adjusted annualized basis.  Offsetting these increases in the number of sales, however, was a decline in prices.  Existing home median prices averaged $177,900 in the third quarter of 2009, down 11.7 percent from the same period in 2008.  New home sales, at a seasonally-adjusted annualized rate of 402,000, were down 12 percent in September 2009 when compared to September 2008.  The average median new home sales price in the third quarter of 2009 of $203,367 was down 9.1 percent from the same period in 2008. Generally, a 5 percent decline in home selling prices reduces title revenues by 3 to 4 percent (however, this varies significantly from state-to-state and within price levels).

Freddie Mac reported on October 1, 2009, that interest rates for 30-year, fixed-rate loans averaged 4.94 percent nationwide. To place this low rate in perspective, in the more than 500 weeks since January 2000, rates have been lower just 10 times.

"We are profitable for 2009 year-to-date in our affiliated title operations as well as in the REI segment in what remains a challenging real estate market," said Stewart Morris, Jr., president and co-chief executive officer. "Our focus is to continue to adjust staffing and expenses for profitable results in changing market conditions and improving productivity while providing exceptional customer service, leading to gains in market share and revenues.  Stewart’s national market share rose from 12.5 to 13.1 percent from the second quarter of 2008 to the second quarter of 2009.  We remain focused on increasing the productivity of our associates and operations while advancing the cost reduction measures ongoing since 2008."

"We are seeing positive developments and improved performance in almost all facets of our operations as well as in the residential real estate market," said Malcolm S. Morris, chairman and co-chief executive officer. “We are extremely pleased to have successfully replaced callable bank debt with the 6 percent Convertible Senior Notes due 2014 held by non-bank institutional investors.  Although we had already repaid more than $50 million of this debt year-to-date, this note issuance removed the short-term repayment requirements of our former bank debt.  Progress continues to be made in increasing title premium rates charged or modifying agency splits, and we remain committed to pursuing pricing improvements in our underwriter operations where possible.  We are aggressively working at reducing title loss expense with a target of less than 5 percent of title revenues by 2012.  Since our claims expenses are taken at the time of recognition without regard to potential future recovery, we anticipate reduced claims expense as recoveries are realized in the future.”

Stewart Information Services Corporation (NYSE-STC) is a customer-driven, technology-enabled, strategically competitive real estate information, title insurance and transaction management company. Stewart provides title insurance and related information services required for settlement by the real estate and mortgage industries throughout the United States and in international markets. Stewart also provides post-closing lender services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, flood certificates, document preparation, background checks and expertise in tax-deferred exchanges. More information can be found at www.stewart.com.

Forward-looking statements. Certain statements in this news release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to future, not past, events and often address our expected future business and financial performance. These statements often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "will" or other similar words. Forward-looking statements by their nature are subject to various risks and uncertainties that could cause our actual results to be materially different than those expressed in the forward-looking statements. These risks and uncertainties include, among other things, the severity and duration of current financial and economic conditions; continued weakness or further adverse changes in the level of real estate activity; changes in mortgage interest rates and availability of mortgage financing; our ability to respond to and implement technology changes, including the completion of the implementation of our enterprise systems; the impact of unanticipated title losses on the need to further strengthen our policy loss reserves; any effect of title losses on our cash flows and financial condition; the impact of our increased diligence and inspections in our agency operations; changes to the participants in the secondary mortgage market and the rate of refinancings that affect the demand for title insurance products; regulatory non-compliance, fraud or defalcations by our title insurance agents or employees; our ability to timely and cost-effectively respond to significant industry changes and introduce new products and services; the impact of changes in governmental and insurance regulations, including any future reductions in the pricing of title insurance products and services; our dependence on our operating subsidiaries as a source of cash flow; the continued realization of expected expense savings resulting from our expense reduction steps taken since 2008; our ability to access the equity and debt financing markets; our ability to grow our international operations; and our ability to respond to the actions of our competitors. These risks and uncertainties, as well as others, are discussed in more detail in our documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2008 and our Current Reports on Form 8-K. We expressly disclaim any obligation to update any forward-looking statements contained in this news release to reflect events or circumstances that may arise after the date hereof, except as may be required by applicable law.

STEWART INFORMATION SERVICES CORPORATION

STATEMENTS OF OPERATIONS (condensed)

(In thousands of dollars, except per share amounts and except where noted)

	Three months ended September 30						Nine months ended September 30
	2009			2008			2009			2008
Revenues
Title insurance:
Direct operations		176,795			176,713			502,915			557,988
Agency operations		263,822			208,558			648,015			613,124
Real estate information		15,394			10,210			44,532			36,228
Investment income		4,952			7,016			15,763			22,550
Investment and other losses– net		(972	)		(5,832	)		(7,013	)		(10,541	)
		459,991			396,665			1,204,212			1,219,349
Expenses
Amounts retained by agencies		216,798			169,333			534,254			499,457
Employee costs		124,968			140,006			362,108			438,045
Other operating expenses		76,616			87,541			213,889			260,787
Title losses and related claims		55,462			29,644			141,325			108,961
Depreciation and amortization		6,962			8,360			21,823			32,413
Interest		756			1,433			2,847			4,369
		481,562			436,317			1,276,246			1,344,032
Loss before taxes and non-controlling interests		(21,571	)		(39,652	)		(72,034	)		(124,683	)
Income tax expense (benefit)		249			(11,269	)		3,786			(45,557	)
Net loss		(21,820	)		(28,383	)		(75,820	)		(79,126	)
Less net earnings attributable to noncontrolling interests		1,876			1,592			6,121			4,730
Net loss attributable to Stewart		(23,696	)		(29,975	)		(81,941	)		(83,856	)
Net loss per share attributable to Stewart		(1.30	)		(1.66	)		(4.51	)		(4.64	)
Average number of basic shares (000)		18,196			18,109			18,177			18,082
Segment information:
Title revenues		444,597			386,455			1,159,680			1,183,121
Title pretax loss before noncontrolling interests		(27,199	)		(35,118	)		(82,517	)		(112,425	)
REI revenues		15,394			10,210			44,532			36,228
REI pretax earnings (loss) before noncontrolling interests		5,628			(4,534	)		10,483			(12,257	)
Selected financial information:
Cash provided (used) by operations		4,151			(25,066	)		(10,714	)		(71,706	)
Title loss payments - net of recoveries		38,732			30,809			110,190			100,272
Other comprehensive earnings (loss)		10,291			(10,331	)		19,450			(17,827	)
Number of title orders opened (000):
July		38.1			39.6
August		35.0			35.3
September		36.6			34.9
Quarter		109.7			109.8
Number of title orders closed (000):
Quarter		88.5			78.4

	September 30  2009		Dec 31  2008
Stockholders’ equity		440,198		501,186
Number of shares outstanding (000)		18,239		18,142
Book value per share		24.14		27.63

STEWART INFORMATION SERVICES CORPORATION

BALANCE SHEETS (condensed)

(In thousands of dollars)

	September 30			Dec 31
	2009			2008
Assets
Cash and cash equivalents		96,445			76,558
Cash and cash equivalents-statutory reserve funds		12,276			9,688
Total cash and cash equivalents		108,721			86,246
Short-term investments		30,519			37,120
Investments – statutory reserve funds		391,530			374,508
Investments – other		78,717			156,267
Receivables – premiums from agencies		31,778			35,707
Receivables – other		81,394			87,895
Allowance for uncollectible amounts		(19,675	)		(17,504	)
Property and equipment		71,134			83,633
Title plants		78,428			78,363
Goodwill		212,763			210,901
Intangible assets		6,711			8,448
Other assets		66,933			84,105
Investments – pledged, at fair value		221,405			222,684
		1,360,358			1,448,373
Liabilities
Notes payable		82,475			135,276
Line of credit, secured by pledged investments		221,405			222,684
Accounts payable and accrued liabilities		96,394			112,306
Estimated title losses		499,274			463,084
Deferred income taxes		20,612			13,837
		920,160			947,187
Contingent liabilities and commitments
Stockholders' equity
Common and Class B Common Stock and additional paid-in capital		145,439			143,811
Retained earnings		266,011			347,952
Accumulated other comprehensive earnings		19,743			293
Treasury stock		(4,330	)		(4,097	)
Stockholders’ equity attributable to Stewart		426,863			487,959
Noncontrolling interests		13,335			13,227
Total stockholders' equity		440,198			501,186
		1,360,358			1,448,373