Exhibit 10.1

AMENDED AND RESTATED

UNITED AMERICA INDEMNITY, LTD.

ANNUAL INCENTIVE AWARDS PROGRAM

(Effective as of January 1, 2005)

1

Amended and Restated
United America Indemnity, Ltd.
Annual Incentive Awards Program

I. Purpose: The purposes of this Annual Incentive Awards Program (the “Program”)
are:

  1.   To encourage increased efficiency and profitability of United America
Indemnity, Ltd. (the “Company” or “UAI”).

2. To reward Participants’ contributions to corporate success.

II. Compensation Philosophy.

UAI wishes to provide a comprehensive, competitive compensation program for its
officers and certain other employees. The Program is intended to be an integral
part of the total compensation opportunity offered by the organization to such
employees. This incentive program is an adjunct to other forms of compensation
provided by UAI and its subsidiaries.

III. Definition of Terms.

For purposes of the Program, terms have meanings as follows:

  A.   “Award” means the amount earned by a Participant pursuant to the
provisions of the Program.

  B.   “Base Salary” means a Participant’s W-2 wages for a calendar year
excluding any extraordinary compensation such as bonuses, stock options,
deferred compensation or benefits which are taxable for federal income tax
purposes. For purposes of the Program, Base Salary shall also include, however,
any salary deferrals which represent the employee’s portion of contributions to
a qualified benefit plan or deferred compensation plan offered by UAI and
subsidiaries.

  C.   “Beneficiary” or “Beneficiaries” means the person or persons designated
by the Participant to receive any payments due from the Program in the event of
the Participant’s death. Such a designation may, without notice to the
Beneficiary, be changed or revoked by the Participant at any time and from time
to time. The designation of the Beneficiary, and any change or revocation
thereof, shall be made in writing and shall not be effective unless and until
filed with and acknowledged by the Committee.

If a Participant fails to designate a Beneficiary, or if no designated
Beneficiary survives the Participant, the amount payable from the Program shall
be paid to the Participant’s estate.

If a person designated as a Beneficiary shall be a minor or a person who has
been judged legally incompetent, UAI shall make payment on behalf of such
Beneficiary to the Beneficiary’s guardian or conservator, but only if such
guardian or conservator has provided to the Committee documentary evidence
satisfactory to it as to the legal, valid and continuing authority of such
guardian or conservator to act on behalf of such Beneficiary. Upon payment to
such guardian or conservator, neither the Board of Directors (the “Board”), UAI,
the Committee or any other agent, employee or officer of any of them shall have
any further liability for such payment.

  D.   “Code” means the Internal Revenue Code of 1986, as amended, and any
successor thereto.

  E.   “Code Section 162(m)” means the exception for performance-based
compensation under Section 162(m) of the Code or any successor section and the
Treasury regulations promulgated thereunder.

  F.   “Committee” means the Compensation Committee of UAI, as designated from
time to time by the Board, or its designee. When pertaining to Covered
Participants and as otherwise necessary to comply with Code Section 162(m),
“Committee” shall mean a subcommittee thereof consisting solely of “outside”
directors, as such term is defined by Code Section 162(m).

  G.   “Covered Participant” means a Participant who, on the last day of UAI’s
taxable year, is the chief executive officer of UAI or is among the four highest
compensated officers (other than the chief executive officer) of UAI as
determined under Code Section 162(m).

  H.   “Disability” means (i) “disability” as defined by long-term disability
plan maintained by UAI or by the subsidiary or division thereof by which the
Participant is employed and under which the Participant is covered or (ii) as
determined by the Committee in its reasonable judgment.

  I.   “Participant” means any employee of UAI or subsidiary who has been
designated by the Committee as eligible to participate in the Program.

  J.   “Performance Goals” means the objective performance goals established by
the Committee, and if desirable for purposes of Code Section 162(m), based on
one or more Performance Criteria (as defined in Annex A).

  K.   “Program Year” means a twelve-month consecutive period commencing on each
January 1 and ending on each December 31.

  L.   “Retirement” means the Participant’s voluntary resignation in
circumstances acceptable to the Committee.

IV. Designation of Participants.

A. The Participants shall be those employees (or class of employees) of UAI and
subsidiaries who are designated by the Committee as being eligible to
participate in the Program. The Committee shall create different sets of Award
opportunities (“Tiers”) and shall assign Participants to such Tiers. With
respect to non-Covered Participants, the Committee may designate, should it so
choose, certain employees who would determine eligibility, Award opportunities
and/or Award amounts from a bonus pool designated by the Committee for such
non-Covered Participants (or Tiers thereof).

B. In order to be eligible to be a Participant for any Program Year, an
individual must meet the criteria set forth in the Program both at the beginning
and the end of the Program Year, except in those cases where a Participant’s
employment with UAI and its subsidiaries has terminated due to Retirement, death
or Disability, as provided in Section VI. Any deviation from this clause
requires the prior written approval of the Committee.

V. Awards for Participants:

A. Basis for Earning Awards: Unless otherwise provided herein, Participants will
earn an Award on the basis of achievement of the Performance Goals, as such
goals are selected and determined by the Committee. If the Committee so elects,
certain Participants who are not Covered Participants may be eligible for
discretionary bonuses based on their individual performance.

B. Award Opportunities:

A Participant’s Award opportunity shall be determined by the Committee, or its
designate, as provided in Section IV, and may provide for different levels of
Awards depending on varying achievement of the Performance Goals.

Award opportunities under the Program may be expressed as a percentage of the
Base Salary, and may range from 5% to 200%, or may be expressed as specific
dollar amounts; provided that in no event shall an Award under the Program
exceed $1,000,000.

C. Determination of Awards Earned:

The Committee will establish the specific Performance Goals which must be
attained in order to receive Awards hereunder. With respect to Covered
Participants, such goals shall be established in writing prior to the beginning
of a Program Year or at such later date as permitted under Code Section 162(m)
and while the outcome of the Performance Goals is substantially uncertain.

Upon receipt of the audited financials for the Company, the Committee (or with
respect to Committee-designated non-Covered Participants, such Participants’
supervisors) shall determine whether and to what extent the Performance Goals
for the Program Year were achieved. The Committee may, in its sole discretion,
disregard (or adjust for) changes in accounting methods, corporate transactions
(including, without limitation, dispositions and acquisitions) and other similar
type events or circumstances; provided however that, to the extent such
discretion would be impermissible under Code Section 162(m) or otherwise violate
Code Section 162(m), the Committee shall not exercise such discretion with
respect to any Covered Participant’s Award.

Notwithstanding the foregoing, the Committee may, in its sole discretion, elect
to pay a Participant an amount that is less than or more than what the
Participant’s Award would otherwise be hereunder; provided that in no instance
shall the Committee increase the amounts otherwise payable to a Covered
Participant.

VI. Payment of Awards.

A Participant shall be entitled to receive payment in an amount equal to his/her
Award no later than March 15 of the year following the Program Year to which
payment relates. Notwithstanding the foregoing, in order to be eligible for
payment of an Award for any Program Year, a Participant must be continuously
employed by UAI or its subsidiaries through the close of the Program Year,
except in the case of a Participant whose employment terminates on account of
Retirement, death, or Disability. In the case of a Participant whose employment
has terminated during the Program Year due to Retirement, death or Disability,
that Participant or his/her Beneficiary will qualify for a pro-rated portion of
the Participant’s Award, based on (i) the number of complete calendar months of
service which the Participant completed during that Program Year and (ii) the
actual achievement of the Performance Goals for such Program Year, to be paid on
or about the same time Awards are paid to active Participants under the Program.
Any deviation from this clause requires the prior authorization of the
Committee.

Any payments due to Beneficiaries under the Program will be paid at the time
payment would otherwise have been made to the Participant, provided the identity
and validity of such Beneficiary has been legally established.

Notwithstanding any other provision herein, (A) if an individual’s employment
with UAI and subsidiaries is terminated on account of conduct detrimental to
UAI’s best interests, then the Committee, in its sole discretion (and not
subject to challenge by the Participant in any way), may cancel payment of any
Award that has been earned under the Program but has not yet been paid and
(B) if a Participant resigns for any reason prior to the payment of an Award,
the Participant shall not be entitled to any payment under the Program.

No Award shall be paid to any Covered Participant before the Committee certifies
in writing that the relevant Performance Goals (except to the extent permitted
under Code Section 162(m) and provided above with regard to Retirement, death or
Disability) were in fact satisfied.

VII. Program Administration.

The Program shall be administered by the Committee. The Committee shall have the
authority to (i) interpret the Program in its sole and absolute discretion based
upon the Program’s provisions, (ii) certify attainment of Performance Goals, and
(iii) make all other determinations necessary or desirable for the Program’s
administration; and such decisions of the Committee shall be final, conclusive
and binding on all parties. The Program is intended to comply with Code Section
162(m) with respect to Covered Participants, and all provisions contained herein
shall be limited, construed and interpreted in a manner to so comply.

The designation of an individual as a Participant for a particular Program Year
shall not confer upon such individual the right to be designated as a
Participant in a subsequent Program Year.

An individual who has been designated by the Committee as a Participant for a
Program Year shall be notified in writing no later than April 30 of the Program
Year of such designation, provided that Covered Participants shall be notified
in writing prior to the beginning of such Program Year or at such later date as
permitted under Code Section 162(m).

UAI shall deduct from any distributions made to Participants or Beneficiaries
under the Program any applicable federal, state or local taxes which UAI may be
required to deduct under the law and all amounts distributed under the Program
are stated herein before any such deductions.

No Participant or other person shall have an interest in any fund or any
specific assets of UAI and subsidiaries by reason of being a Participant in the
Program or any right to receive any distribution under the Program except and to
the extent expressly provided in the Program.

The designation of an individual as a Participant under the Program shall not be
construed as conferring upon such individual any right to remain in the employ
of UAI and subsidiaries. With respect to any Participant, UAI and subsidiaries’
right to discipline, promote, demote, reassign or terminate for any reason they
deem fit shall not be affected in any manner by reason of such individual’s
designation as a Participant in the Program.

All questions or controversies arising in any manner between the parties or
persons in connection with the Program or its operation, whether as to any claim
for benefits, or as to the construction of language or meaning of the Program,
or rules and regulations adopted by the Committee, or as to any writing,
decision, instrument or account in connection with the operation of the Program
or otherwise, shall be submitted to the Committee for decision.

VIII. No Assignment or Alienation.

Except as otherwise required by law, no right or interest (which right shall
simply be a contractual right) of any Participant hereunder shall be assigned,
transferred or pledged voluntarily or involuntarily and any attempt to do so
shall be void, nor shall such rights or interests be subject to attachment or
other claims of creditors.

IX. General.

All actions taken or determinations made by the Committee shall be final and
binding and all concerned and nothing in the Program shall be deemed to give any
Participant, Beneficiary, legal representatives or assigns any right to
participate in the Program except as determined by the Committee pursuant to the
provisions in the Program.

X. Program Amendment and Termination.

The Company reserves the right in the Board (or a duly authorized committee
thereof) to amend, suspend or terminate the Program or to adopt a new plan in
place of the Program at any time; provided, that no such amendment shall,
without the prior approval of the Company’s shareholders in accordance with
applicable law to the extent required for the Program to continue to comply with
the requirements of Code Section 162(m): (i) materially alter the Performance
Criteria (as defined in Annex A) set forth in Annex A; (ii) change the class of
eligible employees set forth in Article IV; (iii) increase the maximum amount
set forth in Article V; or (iv) implement any other change to a provision of the
Program. Furthermore, no amendment, suspension or termination shall, without the
consent of the Participant, alter or impair a Participant’s right to receive
payment of an Award for a Program Year otherwise payable hereunder.

XI. Governing Law.

The Program and any amendments thereto shall be construed, administered, and
governing in all respects in accordance with the laws of the Commonwealth of
Pennsylvania (regardless of the law that might otherwise govern under applicable
principles of conflict of laws).

2

ANNEX A

UNITED AMERICA INDEMNITY, LTD.
PERFORMANCE CRITERIA

Performance Goals intended to comply with Code Section 162(m) shall be based on
one or more of the following performance criteria (“Performance Criteria”):
(i) the attainment of certain target levels of, or a specified percentage
increase in, revenues, income before taxes and extraordinary items, net income,
operating income, earnings before income tax, earnings before interest, taxes,
depreciation and amortization or a combination of any or all of the foregoing;
(ii) the attainment of certain target levels of, or a percentage increase in,
after-tax or pre-tax profits including, without limitation, that attributable to
continuing and/or other operations; (iii) the attainment of certain target
levels of, or a specified increase in, operational cash flow; (iv) the
achievement of a certain level of, reduction of, or other specified objectives
with regard to limiting the level of increase in, all or a portion of, the
Company’s bank debt or other long-term or short-term public or private debt or
other similar financial obligations of the Company, which may be calculated net
of such cash balances and/or other offsets and adjustments as may be established
by the Committee; (v) earnings per share or the attainment of a specified
percentage increase in earnings per share or earnings per share from continuing
operations; (vi) the attainment of certain target levels of, or a specified
increase in return on capital employed or return on invested capital; (vii) the
attainment of certain target levels of, or a percentage increase in, after-tax
or pre-tax return on stockholders’ equity; (viii) the attainment of certain
target levels of, or a specified increase in, economic value added targets based
on a cash flow return on investment formula; (ix) the attainment of certain
target levels in the fair market value of the shares of the Company’s common
stock; (x) the growth in the value of an investment in the Company’s common
stock assuming the reinvestment of dividends; (xi) the attainment of certain
GAAP insurance operating ratios; or (xii) the attainment of a certain level of,
reduction of, or other specified objectives with regard to limiting the level in
or increase in, all or a portion of controllable expenses or costs or other
expenses or costs. For purposes of item (i) above, “extraordinary items” shall
mean all items of gain, loss or expense for the fiscal year determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to a
corporate transaction (including, without limitation, a disposition or
acquisition) or related to a change in accounting principle, all as determined
in accordance with standards established by Opinion No. 30 of the Accounting
Principles Board.

In addition, such Performance Criteria may be based upon the attainment of
specified levels of Company (or subsidiary, division or other operational unit
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations. To the extent permitted under
Section 162(m) of the Code, but only to the extent permitted under Section
162(m) of the Code (including, without limitation, compliance with any
requirements for stockholder approval), the Committee may: (i) designate
additional business criteria on which the Performance Criteria may be based or
(ii) adjust, modify or amend the aforementioned business criteria.

3