SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

** **

**FORM 10-Q**

(Mark One)

 

[**X**]   Quarterly Report under Section 13 or 15(d) of the SecuritiesExchange Act of 1934

 

For the quarterly period ended **March 31,2011**or

 

[  ]   Transition report pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934

 

Commission File No. **0-3978**

 

**UNICO AMERICAN CORPORATION**

*(Exact Name of Registrant as Specified inIts Charter)*

 

**                   Nevada                                                             95-2583928**

*(State or Other Jurisdiction of                                            (I.R.S. Employee*

*Incorporation or Organization)                                               Identification No.)*

 

**23251 Mulholland Drive, WoodlandHills, California 91364**

*(Address ofPrincipal Executive Offices) (Zip Code)*

 

**(818) 591-9800**

*(Registrant's Telephone Number, IncludingArea Code)*

 

**No Change****

*(Former Name, Former Address and Former FiscalYear, 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 preceding12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes  X No __ 

 

Indicate by check mark whether the registranthas submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files). Yes__ No__ 

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Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitionsof “large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2of the Exchange Act.  (Check one):

 

 Large accelerated filer __           Acceleratedfiler __

 

 Non-accelerated filer __             Smallerreporting company  X 

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  X 

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

 

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**PART 1 - FINANCIAL INFORMATION**

 

ITEM 1 – FINANCIAL STATEMENTS

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

See notes to unaudited consolidated financialstatements.

 

 

UNICO AMERICAN CORPORATION

 AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

  

  

 

See notes to unaudited consolidated financialstatements.

 

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

  

  

 

See notes to unaudited consolidated financialstatements.

 

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

See notes to unaudited consolidated financialstatements.

 

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

 

 

NOTE 1 – SUMMARY OF SIGNIFICANTACCOUNTING POLICIES

Nature of Business 

Unico American Corporation is an insurance holdingcompany that underwrites property and casualty insurance through its subsidiary Crusader Insurance Company (Crusader); providesproperty, casualty, and health insurance through its agency subsidiaries; and provides insurance premium financing and membershipassociation services through its other subsidiaries. Unico American Corporation is referred to herein as the "Company"or "Unico" and such references include both the corporation and its subsidiaries, all of which are wholly owned, unlessotherwise indicated. Unico was incorporated under the laws of Nevada in 1969.

 

Principles of Consolidation 

The accompanying consolidated financial statementsinclude the accounts of Unico American Corporation and its subsidiaries. All significant intercompany accounts and transactionshave been eliminated in consolidation.

 

Basis of Presentation

The accompanying unaudited consolidated financialstatements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial informationand the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information andfootnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normalrecurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three monthsended March 31, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.Quarterly financial statements should be read in conjunction with the consolidated financial statements and related notes in theCompany’s 2010 Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

 

Reclassifications

Certain reclassifications have been made toprior year balances to conform to current year presentations.

 

Use of Estimates in the Preparation of theFinancial Statements

The preparation of financial statements in conformitywith GAAP requires the Company to make estimates and assumptions that affect its reported amounts of assets and liabilities andits disclosure of any contingent assets and liabilities at the date of its financial statements, as well as its reported amountsof revenues and expenses during the reporting period. The most significant assumptions in the preparation of these consolidatedfinancial statements relate to losses and loss adjustment expenses. While every effort is made to ensure the integrity of suchestimates, actual results may differ.

 

Fair Value of Financial Instruments

The Company employs a fair value hierarchy thatprioritizes the inputs to valuation techniques used to measure fair value. The fair value of a financial instrument is the amountthat would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants atthe measurement date (the exit price). Financial assets and financial liabilities recorded on the consolidated balance sheets atfair value are categorized based on the reliability of inputs to the valuation techniques. (See Note 7.)

 

The Company has used the following methods andassumptions in estimating its fair value disclosures:

 

- Fixed Maturities:

o       Investment securities, excluding long-term certificates of deposit- Fair values are obtained from a national quotation service.

o       Long-term certificates of deposit - The carrying amounts reportedat cost in the balance sheet for these instruments approximate their fair values.

 

- Cash and short-term investments - The carryingamounts reported at cost in the balance sheet approximate their fair values given the short-term nature of these instruments.
- Premiums and notes receivable - The carryingamounts reported at cost in the balance sheet approximate their fair values given the short-term nature of these instruments.

 

NOTE 2 - REPURCHASE OF COMMON STOCK– EFFECTS ON STOCKHOLDERS’ EQUITY

On December 19, 2008, the Board of Directorsauthorized a stock repurchase program to acquire from time to time up to an aggregate of 500,000 shares of the Company’scommon stock. This program has no expiration date and may be terminated by the Board of Directors at any time. As of March 31,2011, the Company had remaining authority under the 2008 program to repurchase up to an aggregate of 247,356 shares of its commonstock. The 2008 program is the only program under which there is authority to repurchase shares of the Company’s common stock.The Company has retired all stock repurchased.

 

NOTE 3 - EARNINGS PER SHARE

The following table represents the reconciliationof the numerators and denominators of the Company's basic earnings per share and diluted earnings per share computations reportedon the Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010: