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                                                                   EXHIBIT 10.20

October 14, 2004

Joseph F. Morris
420 S. York Road
Hatboro, PA 19040

Dear Joe:

Reference is made to Executive Employment Agreement dated as of October 14, 2004
(the "Agreement") between you and Penn-America Group, Inc. and its insurance
subsidiaries (the "Company"). Capitalized terms not otherwise defined herein
shall have the same meaning as their counterparts in the Agreement.

If the Company terminates Executive's employment on or before the first
anniversary date of the Closing, and if it shall be determined that as a result
of such termination that any amount or benefit paid or distributed to the
Executive pursuant to the Agreement, taken together with any amounts or benefits
otherwise paid or distributed to the Executive in connection with the merger
contemplated by the Agreement and Plan of Merger ("Merger Agreement"), dated as
of the date hereof, by and among United National Group, Ltd., Cheltenham
Acquisition Corp., U.N. Holdings II, Inc. (collectively, "UNGL") and the Company
(collectively, the "Covered Payments"), would be an "excess parachute payment"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and would thereby subject the Executive to the tax (the "Excise Tax")
imposed under Section 4999 of the Code (or any similar tax that may hereafter be
imposed), then the Company will reimburse the Executive in an amount equal to
the "Tax Gross-Up Amount" (as defined in the next sentence). The Tax Gross-Up
Amount means an amount equal to the sum of the Excise Tax, any other similar
federal tax and the amount of any other additional federal, state and/or local
tax, including but not limited to any additional income tax, arising as a result
of any payment pursuant to this letter, which sum may be due and payable by the
Executive or withheld by the Company (collectively, the "Total Taxes") so that
the Executive receives actual payments or benefits, after payment or
withholding, in an amount no less than that which would have been received by
him if no obligation for Total Taxes had arisen.

In addition to the foregoing, all of the reasonable fees and expenses of any
accounting firm or other firm selected by the Company in performing the
determinations and valuations referred to in the preceding paragraph shall be
borne solely by the Company. The Company shall control all proceedings relating
to any contest of any alleged Excise Tax. Executive shall promptly return to the
Company a refund of any amount previously advanced by the Company as part of the
Tax Gross-up Amount.

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Joseph F. Morris
October 14, 2004
Page 2

You agree at all times, both during and after your employment, to cooperate
fully with the Company in connection with any inquiries or proceedings regarding
matters relating to the obligations described in this letter, including any
payments or benefits provided to you under the Agreement, and you agree further
to coordinate your positions and responses in advance with the Company so as to
eliminate or minimize to the maximum degree possible any basis for the Covered
Payments.

Please indicate your acceptance to the terms above by signing below.

Sincerely,

PENN-AMERICA GROUP, INC.

/s/ Garland P. Pezzuolo
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Garland P. Pezzuolo
Vice President, Secretary & General Counsel

AGREED AND ACCEPTED:

/s/ Joseph F. Morris                                 10/14/2004
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Joseph F. Morris                                           Date