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 22, 2009

United America Indemnity, Ltd.

(Exact name of registrant as specified in its charter)

Cayman Islands	000-50511	98-0417107
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Walker House, 87 Mary Street, George Town, Grand Cayman KY1-9002, Cayman Islands	None
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (345) 949-0100

Not Applicable

(Former name or former address, if changed since last report.)

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 CFR 240.14d-2(b))

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

Item 2.02 Results of Operations and Financial Condition.

On October 22, 2009, United America Indemnity, Ltd. (the “Company”) issued a press release announcing the Company’s financial results for its third quarter and fiscal quarter ended September 30, 2009.

The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release dated October 22, 2009.

SIGNATURES

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 hereunto duly authorized.

	United America Indemnity, Ltd.
October 22, 2009	By:	/s/ Thomas M. McGeehan Name: Thomas M. McGeehan
		Title: Interim Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description
	99.1	Press Release dated October 22, 2009.

EX-99.1

Exhibit 99.1

For release:	October 22, 2009
Contact:	Media
	J. Nicole Pryor
	Senior Corporate Counsel
	(610) 660-6803
	npryor@uaigroupinc.com

United America Indemnity, Ltd. Reports Third Quarter 2009 Financial Results

George Town, Grand Cayman, Cayman Islands (October 22, 2009) — United America Indemnity, Ltd. (NASDAQ:INDM) today reported net income of $27.4 million or $0.45 per share for the three months ended September 30, 2009 compared to net loss of $(19.6) million or $(0.56) per share for the same period of 2008. Results for the nine months ended September 30, 2009 include net income of $50.8 million or $1.04 per share compared to net loss of $(21.1) million or $(0.57) per share for the same period of 2008.

Selected Operating and Balance Sheet Data

	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
(Dollars in millions, except per share data)	2009		2008			2009		2008
Net income / (loss)	$	27.4	$	(19.6	)	$	50.8	$	(21.1	)
Net income / (loss) per share	$	0.45	$	(0.56	)	$	1.04	$	(0.57	)
Operating income / (loss)	$	22.6	$	(5.8	)	$	48.8	$	(5.1	)
Operating income / (loss) per share	$	0.37	$	(0.17	)	$	1.00	$	(0.14	)

Operating income, a non-GAAP financial measure, is equal to net income excluding after-tax net realized investment gains (losses). A reconciliation of operating income is set forth at the end of this press release.

	As of
	September 30,
(Dollars in millions except per share amounts)	2009
Book value per share	$	13.51
Shareholders’ equity	$	817.8
Cash & invested assets	$	1,742.0

Selected Financial Data for the Three Months Ended September 30, 2009:

• Operating income of $22.6 million or $0.37 per share.

• Gross premiums written of $75.8 million.

• Current accident year combined ratio of 93.4.

• After tax annualized investment return of 10.7%, including $25.7 million of after tax unrealized gains.

• Shareholders’ equity and book value per share both grew 7.1% from June 30, 2009 to September 30, 2009.

Selected Financial Data for the Nine Months Ended September 30, 2009:

• Operating income of $48.8 million or $1.00 per share.

• Gross premiums written of $266.5 million.

• Current accident year combined ratio of 98.9.

• After tax annualized investment return of 7.2%, including $40.3 million of after tax unrealized gains.

• Shareholders’ equity growth of 14.9% from December 31, 2008 to September 30, 2009, excluding the impact of the Rights Offering.

United America Indemnity’s Combined Ratio for the Three Months Ended September 30, 2009 and 2008

The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:

	Three Months Ended September 30,
	2009			2008
Loss Ratio:
Current Accident Year		55.6			80.3
Changes to Prior Accident Year		(2.2	)		4.8
Loss Ratio — Calendar Year		53.4			85.1
Expense Ratio		37.8			37.1
Combined Ratio		91.2			122.2

For the three months ended September 30th, the calendar year loss ratio improved 31.7 points to 53.4 points in 2009 from 85.1 points in 2008.

• The current accident year loss ratio improved 24.7 points to 55.6 points from 80.3 points in 2008 due to improvements in both the property and casualty loss ratios.

• The property loss ratio improved 58.5 points to 39.4 points in 2009 from 97.9 points in 2008 due in part to the growth and performance of our property business in reinsurance operations and improved performance of our property business in insurance operations. In addition, 2008 results include $16.5 million of net loss and loss adjustment expense related to catastrophes, primarily the result of hurricanes Ike and Gustav.

• The casualty loss ratio improved 1.9 points to 68.5 points in 2009 from 70.4 points in 2008 due primarily to improved performance in both our insurance and reinsurance operations.

• A 7.0 point improvement in net loss and loss adjustment expense related to prior accident years. In 2009, $1.6 million of reserves were released due to positive emergence in the casualty lines related to accident years 2004 and prior, compared to $4.2 million of prior year adverse reserve development in 2008 related primarily to an increase in the reinsurance allowance.

For the three months ended September 30^th, the expense ratio increased from 37.1 in 2008 to 37.8 in 2009.

• The expense ratio increase is mainly attributable to a decline in net premiums earned and the incurrence of infrastructure costs related to new product development, information technology upgrades, additional office locations, and redomestication.

2

United America Indemnity’s Three Months Ended September 30, 2009 and 2008 Gross and Net Premiums Written Results by Business Unit

	Three Months Ended September 30,
	Gross Premiums Written				Net Premiums Written
(Dollars in thousands)	2009		2008		2009		2008
Insurance Operations
Penn-America	$	31,687	$	44,321	$	25,016	$	40,988
United National		14,446		20,927		11,433		17,076
Diamond State		21,235		27,210		18,061		21,075
Total Insurance Operations		67,368		92,458		54,510		79,139
Reinsurance Operations
Wind River		8,438		6,572		8,422		567
Total	$	75,806	$	99,030	$	62,932	$	79,706

Insurance Operations: Gross premiums written for the three months ended September 30, 2009 decreased 27.1%, and net premiums written for the three months ended September 30, 2009 decreased 31.1%, compared to the same period in 2008. The reduction in gross premium is comprised mainly of the following:

• $7.9 million of the decline is due to terminated programs and agents.

• $17.2 million of the decline is due to price decreases in aggregate of approximately 2.0% and other market factors.

Reinsurance Operations: Gross premiums written for the three months ended September 30, 2009 increased $1.9 million and net premiums written increased $7.9 million, excluding the intercompany reinsurance treaty, compared to the same period in 2008. The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.

United America Indemnity’s Combined Ratio for the Nine Months Ended September 30, 2009 and 2008

The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:

	Nine Months Ended September 30,
	2009			2008
Loss Ratio:
Current Accident Year		59.8			71.1
Changes to Prior Accident Year		(2.0	)		6.9
Loss Ratio — Calendar Year		57.8			78.0
Expense Ratio		39.1			36.1
Combined Ratio		96.9			114.1

For the nine months ended September 30th, the calendar year loss ratio improved by 20.2 points to 57.8 points in 2009 from 78.0 points in 2008.

• The current accident year loss ratio improved by 11.3 points to 59.8 points in 2009 from 71.1 points in 2008 due to improvements in both the property and casualty loss ratios.

• The property loss ratio improved by 25.8 points to 47.9 points in 2009 from 73.7 points in 2008 due in part to the growth and performance of our property business in reinsurance operations and improved performance of our property business in insurance operations. In addition, 2008 results include $21.2 million of net loss and loss adjustment expense related to catastrophes, primarily the result of hurricanes Ike and Gustav in the third quarter, and storms in the Midwest during the first half of 2008.

3

• The casualty loss ratio improved 1.1 points to 68.6 points in 2009 from 69.7 points in 2008 due primarily to the growth and improved performance in our reinsurance operations.

• An 8.9 point improvement in net loss and loss adjustment expense related to prior accident years. In 2009, $4.6 million of reserves were released due to positive emergence of approximately $2.4 million in property lines, approximately $1.8 million in casualty lines and a decrease in the reinsurance allowance of approximately $0.4 million compared to $15.5 million of prior year adverse reserve development in 2008 related primarily to liability lines, and a $5.3 million increase in the reinsurance reserve allowance.

For the nine months ended September 30th, the expense ratio increased from 36.1 in 2008 to 39.1 in 2009.

• The expense ratio increase is mainly attributable to a decline in net premiums earned and the incurrence of infrastructure costs related to new product development, information technology upgrades, additional office locations, and redomestication.

United America Indemnity’s Nine Months Ended September 30, 2009 and 2008 Gross and Net Premiums Written Results by Business Unit

	Nine Months Ended September 30,
	Gross Premiums Written				Net Premiums Written
(Dollars in thousands)	2009		2008		2009		2008
Insurance Operations
Penn-America	$	98,282	$	137,669	$	79,673	$	125,902
United National		46,373		71,166		37,072		60,147
Diamond State		63,020		71,770		52,025		57,929
Total Insurance Operations		207,675		280,605		168,770		243,978
Reinsurance Operations
Wind River		58,799		21,805		58,253		2,901
Total	$	266,474	$	302,410	$	227,023	$	246,879

Insurance Operations: Gross premiums written for the nine months ended September 30, 2009 decreased 26.0%, and net premiums written for the nine months ended September 30, 2009 decreased 30.8%, compared to the same period in 2008. The reduction in gross premium is comprised mainly of the following:

• $31.7 million of the decline is due to terminated programs and agents.

• $41.2 million of the decline is due to price decreases in aggregate of approximately 3.0% and other market factors.

Reinsurance Operations: Gross premiums written for the nine months ended September 30, 2009 increased $37.0 million and net premiums written increased $55.4 million, excluding the intercompany reinsurance treaty, compared to the same period in 2008. The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.

4

About United America Indemnity, Ltd.

United America Indemnity, Ltd. (NASDAQ:INDM), through its several direct and indirect wholly owned subsidiary insurance and reinsurance companies, is a national and international provider of excess and surplus lines and specialty property and casualty insurance and reinsurance, both on an admitted and non-admitted basis. The Company’s four principal divisions include:

• Insurance Operations:

• Penn-America, which includes property and general liability products for small commercial businesses distributed through a select network of wholesale general agents with specific binding authority;

• United National, which includes property, general liability, and professional lines products distributed through program administrators with specific binding authority;

• Diamond State, which includes property, general liability, and professional lines products distributed through wholesale brokers and program administrators with specific binding authority.

• Reinsurance Operations:

• Wind River Reinsurance Company, Ltd., a Bermuda based treaty and facultative reinsurer of excess and surplus lines and specialty property and casualty insurance.

For more information, visit the United America Indemnity, Ltd. website at www.uai.ky.

5

Forward-Looking Information

This release contains forward-looking information about United America Indemnity, Ltd. and the operations of United America Indemnity, Ltd. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of the transactions, and statements about the future performance, operations, products and services of the companies.

The business and operations of United America Indemnity, Ltd. is and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: (1) the ineffectiveness of United America Indemnity, Ltd.’s business strategy due to changes in current or future market conditions; (2) the effects of competitors’ pricing policies, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products; (3) greater frequency or severity of claims and loss activity than United America Indemnity, Ltd.’s underwriting, reserving or investment practices have anticipated; (4) decreased level of demand for United America Indemnity, Ltd.’s insurance products or increased competition due to an increase in capacity of property and casualty insurers; (5) risks inherent in establishing loss and loss adjustment expense reserves; (6) uncertainties relating to the financial ratings of United America Indemnity, Ltd.’s insurance subsidiaries; (7) uncertainties arising from the cyclical nature of United America Indemnity, Ltd.’s business; (8) changes in United America Indemnity, Ltd.’s relationships with, and the capacity of, its general agents; (9) the risk that United America Indemnity, Ltd.’s reinsurers may not be able to fulfill obligations; (10) investment performance and credit risk; and (11) uncertainties relating to governmental and regulatory policies. The foregoing review of important factors should be read in conjunction with the other cautionary statements that are included in United America Indemnity, Ltd.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as well as in the materials filed and to be filed with the U.S. Securities and Exchange Commission (SEC). United America Indemnity, Ltd. does not make any commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.

# # #

Note: Tables Follow

6

UNITED AMERICA INDEMNITY, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands, except per share data)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2009			2008			2009		2008
Gross premiums written	$	75,806		$	99,030		$	266,474	$	302,410
Net premiums written	$	62,932		$	79,706		$	227,023	$	246,879
Net premiums earned	$	72,893		$	89,511		$	226,165	$	303,241
Investment income, net		15,267			16,627			54,049		51,485
Net realized investment gains / (losses)		6,613			(20,510	)		3,415		(24,060	)
Total revenues		94,773			85,628			283,629		330,666
Net losses and loss adjustment expenses		38,887			76,134			130,674		236,428
Acquisition costs and other underwriting expenses		27,564			33,164			88,350		109,471
Corporate and other operating expenses		4,676			3,189			12,314		9,403
Interest expense		1,776			1,963			5,462		6,690
Income / (loss) before income taxes		21,870			(28,822	)		46,829		(31,326	)
Income tax expense / (benefit)		(2,673	)		(10,312	)		808		(11,754	)
Net income before equity in net income / (loss) of partnership		24,543			(18,510	)		46,021		(19,572	)
Equity in net income / (loss) of partnership, net of tax		2,809			(1,088	)		4,742		(1,557	)
Net income / (loss)	$	27,352		$	(19,598	)	$	50,763	$	(21,129	)
Weighted average shares outstanding — basic		60,290			35,022			48,806		37,086
Weighted average shares outstanding — diluted		60,311			35,022			48,846		37,086
Net income / (loss) per share — basic	$	0.45		$	(0.56	)	$	1.04	$	(0.57	)
Net income / (loss) per share — diluted	$	0.45		$	(0.56	)	$	1.04	$	(0.57	)
Combined ratio analysis:
Loss ratio		53.4			85.1			57.8		78.0
Expense ratio		37.8			37.1			39.1		36.1
Combined ratio		91.2			122.2			96.9		114.1

Certain prior period amounts have been reclassified to conform to the 2009 presentation.

In 2008, “Diluted” loss per share is the same as “Basic” loss per share since there was a net loss for the quarter and nine months ended September 30, 2008.

The loss ratio, expense ratio and combined ratio are non-GAAP financial measures that are generally viewed in the insurance industry as indicators of underwriting profitability. The loss ratio is the ratio of net losses and loss adjustment expenses to net premiums earned. The expense ratio is the ratio of acquisition costs and other underwriting expenses to net premiums earned. The combined ratio is the sum of the loss and expense ratios.

7

UNITED AMERICA INDEMNITY, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share data)

	As of			As of
	September 30,			December 31,
	2009			2008
ASSETS
Bonds:
Available for sale securities, at fair value (amortized cost: 2009 — $1,351,959 and 2008 — $1,192,385)	$	1,413,135		$	1,204,974
Preferred shares:
Available for sale securities, at fair value (cost: 2009 — $3,405 and 2008 — $4,665)		4,358			4,665
Common shares:
Available for sale securities, at fair value (cost: 2009 — $47,294 and 2008 — $46,316)		59,311			50,613
Other invested assets:
Available for sale securities, at fair value (cost: 2009 — $3,676 and 2008 — $19,689)		8,664			39,219
Securities classified as trading, at fair value (cost: $35,151 and $5,151)		43,828			7,453
Total investments		1,529,296			1,306,924
Cash and cash equivalents		212,739			292,604
Agents’ balances		74,072			57,117
Reinsurance receivables		577,823			679,277
Federal income taxes receivables		5,365			16,487
Deferred federal income taxes		12,507			32,532
Deferred acquisition costs		35,571			34,734
Intangible assets		9,254			9,309
Prepaid reinsurance premiums		18,175			23,960
Other assets		25,525			24,115
Total assets	$	2,500,327		$	2,477,059
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,340,594		$	1,506,429
Unearned premiums		144,756			149,677
Ceded balances payable		18,139			25,165
Contingent commissions		9,622			6,695
Notes and debentures payable		121,640			121,845
Other liabilities		47,745			35,255
Total liabilities		1,682,496			1,845,066
Shareholders’ equity:
Common shares, $0.0001 par value, 900,000,000 common shares authorized; Class A common shares issued: 42,450,892 and 25,032,618, respectively; Class A common shares outstanding: 36,398,464 and 19,013,462, respectively; Class B common shares issued and outstanding: 24,122,744 and 12,687,500, respectively		7			4
Additional paid-in capital		619,123			524,345
Accumulated other comprehensive income		59,329			25,108
Class A common shares in treasury, at cost: 6,052,428 and 6,019,156 shares, respectively		(100,693	)		(100,446	)
Retained earnings		240,065			182,982
Total shareholders’ equity		817,831			631,993
Total liabilities and shareholders’ equity	$	2,500,327		$	2,477,059

8

UNITED AMERICA INDEMNITY, LTD.
SELECTED INVESTMENT DATA
(Unaudited)
(Dollars in millions)

	Market Value as of
	Sep 30,		Dec 31,
	2009		2008
Bonds	$	1,413.1	$	1,205.0
Cash & cash equivalents		212.7		292.6
Total bonds and cash and cash equivalents		1,625.8		1,497.6
Equities and other invested assets		116.2		101.9
Total cash and invested assets	$	1,742.0	$	1,599.5

	September 30, 2009 (a)
	Three Months			Nine Months
	Ended			Ended
Net investment income	$	12.6		$	37.9
Net realized investment gain		4.8			2.0
Net equity in net income of partnerships		2.8			4.7
Net unrealized investment gains		25.7			40.3
Net gain from liquidation of partnerships		—			5.6
Net realized and unrealized investment		33.3			52.6
Total investment return	$	45.9		$	90.5
Cash and invested assets December 2008				$	1,599.5
Cash and invested assets June 2009	$	1,678.7
Cash and invested assets September 2009		1,742.0			1,742.0
Sum of cash and invested assets	$	3,420.7		$	3,341.5
Average total cash and invested assets	$	1,710.4		$	1,670.8
Total investment return % annualized		10.7	%		7.2	%

(a) Amounts in this table are shown on an after-tax basis.

9

UNITED AMERICA INDEMNITY, LTD.
SUMMARY OF OPERATING INCOME / (LOSS)
(Unaudited)
(Dollars and shares in thousands, except per share data)

	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
	2009		2008			2009		2008
Operating income / (loss)	$	22,590	$	(5,834	)	$	48,773	$	(5,109	)
Adjustments:
Net realized investment gains / (losses), net of tax		4,762		(13,764	)		1,990		(16,020	)
Total after-tax adjustments		4,762		(13,764	)		1,990		(16,020	)
Net income / (loss)	$	27,352	$	(19,598	)	$	50,763	$	(21,129	)
Weighted average shares outstanding — basic		60,290		35,022			48,806		37,086
Weighted average shares outstanding — diluted		60,311		35,022			48,846		37,086
Operating income / (loss) per share — basic	$	0.37	$	(0.17	)	$	1.00	$	(0.14	)
Operating income / (loss) per share — diluted	$	0.37	$	(0.17	)	$	1.00	$	(0.14	)

In 2008, “Diluted” loss per share is the same as “Basic” loss per share since there was a net loss for the quarter and nine months ended September 30, 2008.

In computing the basic and diluted weighted share counts the number of shares outstanding prior to May 5, 2009 (the date that the common stock was issued in conjunction with the stockholders’ rights offering) was adjusted by a factor of 1.114 to reflect the impact of a bonus element associated with the rights offering in accordance with GAAP.

Note Regarding Operating Income

Operating income, a non-GAAP financial measure, is equal to net income excluding after-tax net realized investment gains (losses). Operating income is not a substitute for net income determined in accordance with GAAP, and investors should not place undue reliance on this measure.

10