----

----

**SECURITIES        AND EXCHANGE COMMISSION**

**FORM        10-Q**

**September 30, 2007 **

**0-3978**

**UNICO        AMERICAN CORPORATION**

*(Exact        Name of Registrant as Specified in Its Charter)*

| Nevada                                                                                                  | **95-2583928**                            |
|---------------------------------------------------------------------------------------------------------|-------------------------------------------|
| (*State                  or Other Jurisdiction of*                                                 |  *(I.R.S.                  Employee* |
|  *Incorporation                  or Organization)*                                                 | *Identification                  No.)*    |
|                                                                                                    |                                      |
|  **23251                  Mulholland Drive,  Woodland Hills, California ****91364** |
|  (*Address                  of Principal Executive Offices) **(Zip                  Code)*    |

**(818)        591-9800**

*(Registrant's        Telephone Number, Including Area Code)*

**No        Change**

*(Former        Name, Former Address and Former Fiscal Year, if Changed Since Last        Report)*

**5,625,308**

*Number        of shares of common stock outstanding as of November 9,        2007*

----

**PART        1 - FINANCIAL INFORMATION**

|                                                                                                                                                                                                                                                                                                                                |   | September                  30 |        |   | December                  31 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------|--------|------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                |   | 2007                          |        |   | 2006                         |   |
|                                                                                                                                                                                                                                                                                                                                |   | (Unaudited)                   |        |   |                         |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                          |   |                          |        |   |                         |   |
| Investments                                                                                                                                                                                                                                                                                                                         |   |                          |        |   |                         |   |
|    Available                  for sale:                                                                                                                                                                                                                                                                              |   |                          |        |   |                         |   |
|          Fixed                  maturities, at fair value (amortized cost:  September 30,                  2007                             $139,446,753; December 31,                  2006  $140,492,328) |   | $                             | 140,579,293 |   |                         | $      | 140,164,942 |   |
|    Short-term                  investments, at cost                                                                                                                                                                                                                                                                  |   |                          | 7,344,807   |   |                         |   | 6,820,007 |   |
| Total                  Investments                                                                                                                                                                                                                                                                                                  |   |                          | 147,924,100 |   |                         |   | 146,984,949 |   |
| Cash                                                                                                                                                                                                                                                                                                                                |   |                          | 78,199      |   |                         |   | 34,535 |   |
| Accrued                  investment income                                                                                                                                                                                                                                                                                          |   |                          | 1,901,971   |   |                         |   | 1,762,586 |   |
| Premiums                  and notes receivable, net                                                                                                                                                                                                                                                                                 |   |                          | 5,336,543   |   |                         |   | 5,841,749 |   |
| Reinsurance                  recoverable:                                                                                                                                                                                                                                                                                           |   |                          |        |   |                         |   |   |   |
|    Paid                  losses and loss adjustment expenses                                                                                                                                                                                                                                                         |   |                          | 353,616     |   |                         |   | 268,355 |   |
|    Unpaid                  losses and loss adjustment expenses                                                                                                                                                                                                                                                       |   |                          | 25,824,929  |   |                         |   | 23,519,687 |   |
| Deferred                  policy acquisition costs                                                                                                                                                                                                                                                                                  |   |                          | 5,851,844   |   |                         |   | 6,430,265 |   |
| Property                  and equipment (net of accumulated depreciation)                                                                                                                                                                                                                                                           |   |                          | 638,777     |   |                         |   | 739,080 |   |
| Deferred                  income taxes                                                                                                                                                                                                                                                                                              |   |                          | 1,054,730   |   |                         |   | 1,473,024 |   |
| Other                  assets                                                                                                                                                                                                                                                                                                       |   |                          | 1,145,691   |   |                         |   | 747,606 |   |
| Total                  Assets                                                                                                                                                                                                                                                                                                       |   | $                             | 190,110,400 |   |                         | $      | 187,801,836 |   |
|                                                                                                                                                                                                                                                                                                                                |   |                          |        |   |                         |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                           |   |                          |        |   |                         |   |   |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                                                                     |   |                          |        |   |                         |   |   |   |
| Unpaid                  losses and loss adjustment expenses                                                                                                                                                                                                                                                                         |   | $                             | 93,104,002  |   |                         | $      | 93,596,117 |   |
| Unearned                  premiums                                                                                                                                                                                                                                                                                                  |   |                          | 23,124,444  |   |                         |   | 26,434,187 |   |
| Advance                  premium and premium deposits                                                                                                                                                                                                                                                                               |   |                          | 2,496,403   |   |                         |   | 1,802,243 |   |
| Income                  taxes payable                                                                                                                                                                                                                                                                                               |   |                          | -           |   |                         |   | 1,605,385 |   |
| Accrued                  expenses and other liabilities                                                                                                                                                                                                                                                                             |   |                          | 4,386,649   |   |                         |   | 3,492,882 |   |
| Total                  Liabilities                                                                                                                                                                                                                                                                                                  |   | $                             | 123,111,498 |   |                         | $      | 126,930,814 |   |
|                                                                                                                                                                                                                                                                                                                                |   |                          |        |   |                         |   |   |   |
| **STOCKHOLDERS'  EQUITY**                                                                                                                                                                                                                                                                                                 |   |                          |        |   |                         |   |   |   |
| Common                  stock, no par – authorized 10,000,000 shares; issued                  and                  outstanding                     shares 5,625,208 at September 30, 2007, and 5,592,119 at December                  31,                  2006                                                     |   | $                             | 3,662,512   |   |                         | $      | 3,236,745 |   |
| Accumulated                  other comprehensive income (loss)                                                                                                                                                                                                                                                                      |   |                          | 747,477     |   |                         |   | (216,074 | ) |
| Retained                  earnings                                                                                                                                                                                                                                                                                                  |   |                          | 62,588,913  |   |                         |   | 57,850,351 |   |
| Total                  Stockholders’                  Equity                                                                                                                                                                                                                                                                  |   | $                             | 66,998,902  |   |                         | $      | 60,871,022 |   |
|                                                                                                                                                                                                                                                                                                                                |   |                          |        |   |                         |   |   |   |
| Total                  Liabilities and                  Stockholders' Equity                                                                                                                                                                                                                                                        |   | $                             | 190,110,400 |   |                         | $      | 187,801,836 |   |

----

|                                                                            |   | Three                  Months Ended September 30 |       |   | Nine                  Months Ended September                  30  |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|--------|-----------------------------------------------------------------------------|--------|
|                                                                            |   | 2007                                             |       |   | 2006                                                                        |   |   | 2007 |   |   | 2006 |   |
| **REVENUES**                                                                    |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |
| Insurance                  Company Revenues                                     |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |
|   Premium                  earned                                     |   | $                                                | 12,053,155 |   |                                                                        | $      | 14,006,664 |   |   | $ | 37,185,654 |   |   | $ | 43,145,433 |   |
|   Premium                  ceded                                      |   |                                             | 2,853,754  |   |                                                                        |   | 3,330,008 |   |   |   | 8,793,510 |   |   |   | 10,449,076 |   |
|      Net                  premium earned               |   |                                             | 9,199,401  |   |                                                                        |   | 10,676,656 |   |   |   | 28,392,144 |   |   |   | 32,696,357 |   |
|   Net                  investment income                              |   |                                             | 1,716,618  |   |                                                                        |   | 1,522,453 |   |   |   | 4,999,898 |   |   |   | 4,276,772 |   |
|   Other                  income                                       |   |                                             | 27,740     |   |                                                                        |   | 22,394 |   |   |   | 57,240 |   |   |   | 69,614 |   |
|      Total                  Insurance Company Revenues |   |                                             | 10,943,759 |   |                                                                        |   | 12,221,503 |   |   |   | 33,449,282 |   |   |   | 37,042,743 |   |
|                                                                            |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Other                  Revenues from Insurance Operations                       |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
|   Gross                  commissions and fees                         |   |                                             | 1,362,736  |   |                                                                        |   | 1,242,068 |   |   |   | 3,966,485 |   |   |   | 3,766,748 |   |
|   Investment                  income                                  |   |                                             | 36,993     |   |                                                                        |   | 25,781 |   |   |   | 115,142 |   |   |   | 70,781 |   |
|   Finance                  charges and fees                           |   |                                             | 133,463    |   |                                                                        |   | 168,280 |   |   |   | 424,487 |   |   |   | 513,466 |   |
|   Other                  income                                       |   |                                             | 3,298      |   |                                                                        |   | 1,700 |   |   |   | 9,794 |   |   |   | 6,415 |   |
|      Total                  Revenues                   |   |                                             | 12,480,249 |   |                                                                        |   | 13,659,332 |   |   |   | 37,965,190 |   |   |   | 41,400,153 |   |
|                                                                            |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| **EXPENSES**                                                                    |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Losses                  and loss adjustment expenses                            |   |                                             | 5,685,253  |   |                                                                        |   | 5,718,427 |   |   |   | 17,103,329 |   |   |   | 18,289,995 |   |
| Policy                  acquisition costs                                       |   |                                             | 2,096,113  |   |                                                                        |   | 2,252,267 |   |   |   | 6,396,708 |   |   |   | 7,018,530 |   |
|                    Salaries and employee benefits                          |   |                                             | 1,431,967  |   |                                                                        |   | 1,434,854 |   |   |   | 4,316,618 |   |   |   | 4,117,907 |   |
|                    Commissions to agents/brokers                           |   |                                             | 266,661    |   |                                                                        |   | 136,787 |   |   |   | 707,158 |   |   |   | 447,213 |   |
|                    Other operating expenses                                |   |                                             | 827,958    |   |                                                                        |   | 712,350 |   |   |   | 2,291,805 |   |   |   | 2,194,547 |   |
|      Total                  Expenses                   |   |                                             | 10,307,952 |   |                                                                        |   | 10,254,685 |   |   |   | 30,815,618 |   |   |   | 32,068,192 |   |
|                                                                            |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Income                  Before Taxes                                            |   |                                             | 2,172,297  |   |                                                                        |   | 3,404,647 |   |   |   | 7,149,572 |   |   |   | 9,331,961 |   |
| Income                  tax provision                                           |   |                                             | 638,046    |   |                                                                        |   | 1,190,501 |   |   |   | 2,300,409 |   |   |   | 3,273,545 |   |
|      Net                  Income                       |   | $                                                | 1,534,251  |   |                                                                        | $      | 2,214,146 |   |   | $ | 4,849,163 |   |   | $ | 6,058,416 |   |
|                                                                            |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| **PER                  SHARE DATA:**                                            |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                           |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
|     Earnings                  Per Share                     |   | $                                                | 0.27       |   |                                                                        | $      | 0.40 |   |   | $ | 0.86 |   |   | $ | 1.09 |   |
|     Weighted                  Average Shares                |   |                                             | 5,624,724  |   |                                                                        |   | 5,590,452 |   |   |   | 5,610,274 |   |   |   | 5,559,820 |   |
| Diluted                                                                         |   |                                             |       |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
|     Earnings                  Per Share                     |   | $                                                | 0.27       |   |                                                                        | $      | 0.39 |   |   | $ | 0.85 |   |   | $ | 1.07 |   |
|     Weighted                  Average Shares                |   |                                             | 5,686,097  |   |                                                                        |   | 5,661,251 |   |   |   | 5,682,751 |   |   |   | 5,648,124 |   |

----

|                                                                                                                                                                                                    |   | Three                  Months Ended |      |   | Nine                  Months Ended |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|--------|------------------------------------|--------|
|                                                                                                                                                                                                    |   | September                  30       |      |   | September                  30      |   |
|                                                                                                                                                                                                    |   | 2007                                |      |   | 2006                               |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |
| Net                  Income                                                                                                                                                                             |   | $                                   | 1,534,251 |   |                               | $      | 2,214,146 |   |   | $ | 4,849,163 |   |   | $ | 6,058,416 |   |
| Other                  changes in comprehensive income, net of tax:                                                                                                                                     |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|    Unrealized                  gains on securities classified as available-for-sale                        arising during                  the period |   |                                | 1,021,881 |   |                               |   | 585,200 |   |   |   | 963,551 |   |   |   | 207,940 |   |
|                           Comprehensive Income                                                                                                                  |   | $                                   | 2,556,132 |   |                               | $      | 2,799,346 |   |   | $ | 5,812,714 |   |   | $ | 6,266,356 |   |

----

|                                                                                                        |   | For                  the Nine Months Ended |        |
|-------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-------------|
|                                                                                                        |   | September                  30              |        |
|                                                                                                        |   | 2007                                       |        |   | 2006 |   |
| Cash                  Flows from Operating Activities:                                                      |   |                                       |        |   |   |   |
|    Net                  Income                                                               |   | $                                          | 4,849,163   |   |   | $ | 6,058,416 |   |
|    Adjustments                  to reconcile net income to net cash from operations          |   |                                       |        |   |   |   |   |   |
|       Depreciation                                                            |   |                                       | 182,317     |   |   |   | 177,600 |   |
|       Bond                  amortization, net                                 |   |                                       | (44,746     | ) |   |   | (19,041 | ) |
|    Changes                  in assets and liabilities                                        |   |                                       |        |   |   |   |   |   |
|       Premium,                  notes and investment income receivable        |   |                                       | 365,821     |   |   |   | 131,904 |   |
|       Reinsurance                  recoverable                                |   |                                       | (2,390,503  | ) |   |   | 2,762,817 |   |
|       Deferred                  policy acquisitions costs                     |   |                                       | 578,421     |   |   |   | 764,040 |   |
|       Other                  assets                                           |   |                                       | (42,320     | ) |   |   | 72,755 |   |
|       Reserve                  for unpaid losses and loss adjustment expenses |   |                                       | (492,115    | ) |   |   | (970,047 | ) |
|       Unearned                  premium reserve                               |   |                                       | (3,309,743  | ) |   |   | (3,728,730 | ) |
|       Funds                  held as security and advanced premiums           |   |                                       | 694,160     |   |   |   | 275,465 |   |
|       Accrued                  expenses and other liabilities                 |   |                                       | 893,767     |   |   |   | (149,802 | ) |
|       Tax                  benefit from disqualified incentive stock options  |   |                                       | (129,402    | ) |   |   | (196,464 | ) |
|       Income                  taxes current/deferred                          |   |                                       | (1,909,830  | ) |   |   | 460,533 |   |
| Net                  Cash (Used in) Provided by                  Operations                                 |   |                                       | (755,010    | ) |   |   | 5,639,446 |   |
|                                                                                                        |   |                                       |        |   |   |   |   |   |
| Investing                  Activities                                                                       |   |                                       |        |   |   |   |   |   |
| Purchase                  of fixed maturity                  investments                                    |   |                                       | (44,609,678 | ) |   |   | (51,454,624 | ) |
| Proceeds                  from maturity of fixed                  maturity investments                      |   |                                       | 45,700,000  |   |   |   | 51,047,000 |   |
| Net                  (increase) in short-term                  investments                                  |   |                                       | (524,800    | ) |   |   | (5,564,818 | ) |
| Additions                  to property and                  equipment                                       |   |                                       | (82,014     | ) |   |   | (132,040 | ) |
| Net                  Cash Provided by (Used in)                  Investing Activities                       |   |                                       | 483,508     |   |   |   | (6,104,482 | ) |
|                                                                                                        |   |                                       |        |   |   |   |   |   |
| Financing                  Activities                                                                       |   |                                       |        |   |   |   |   |   |
| Proceeds                  from exercise of stock                  options                                   |   |                                       | 301,025     |   |   |   | 313,132 |   |
|   Tax                  benefit from disqualified incentive stock options                          |   |                                       | 129,402     |   |   |   | 196,464 |   |
| Repurchase                  of common                  stock                                                |   |                                       | (115,261    | ) |   |   | - |   |
| Net                  Cash Provided by Financing                  Activities                                 |   |                                       | 315,166     |   |   |   | 509,596 |   |
|                                                                                                        |   |                                       |        |   |   |   |   |   |
| Net                  increase in cash                                                                       |   |                                       | 43,664      |   |   |   | 44,560 |   |
| Cash                  at beginning of                  period                                               |   |                                       | 34,535      |   |   |   | 13,472 |   |
| Cash                  at End of                  Period                                                     |   | $                                          | 78,199      |   |   | $ | 58,032 |   |
|                                                                                                        |   |                                       |        |   |   |   |   |   |
| Supplemental                  Cash Flow Information                                                         |   |                                       |        |   |   |   |   |   |
| Cash                  paid during the period for                  Income Taxes                              |   | $                                          | 4,200,701   |   |   | $ | 3,050,651 |   |

----

----

|                                                                      |   | Three                  Months Ended |      |   | Nine                  Months Ended |   |
|---------------------------------------------------------------------------|--------|-------------------------------------|-----------|--------|------------------------------------|--------|
|                                                                      |   | September                  30       |      |   | September                  30      |   |
|                                                                      |   | 2007                                |      |   | 2006                               |   |   | 2007 |   |   | 2006 |   |
| Basic                  Earnings Per Share                                 |   |                                |      |   |                               |   |   |   |   |   |   |   |
| Net                  income numerator                                     |   | $                                   | 1,534,251 |   |                               | $      | 2,214,146 |   |   | $ | 4,849,163 |   |   | $ | 6,058,416 |   |
|                                                                      |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding denominator          |   |                                | 5,624,724 |   |                               |   | 5,590,452 |   |   |   | 5,610,274 |   |   |   | 5,559,820 |   |
|                                                                      |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|      Basic                  Earnings Per Share   |   | $                                   | 0.27      |   |                               | $      | 0.40 |   |   | $ | 0.86 |   |   | $ | 1.09 |   |
|                                                                      |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  Earnings Per Share                               |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income numerator                                     |   | $                                   | 1,534,251 |   |                               | $      | 2,214,146 |   |   | $ | 4,849,163 |   |   | $ | 6,058,416 |   |
|                                                                      |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding                      |   |                                | 5,624,724 |   |                               |   | 5,590,452 |   |   |   | 5,610,274 |   |   |   | 5,559,820 |   |
| Effect                  of diluted securities                             |   |                                | 61,373    |   |                               |   | 70,799 |   |   |   | 72,477 |   |   |   | 88,304 |   |
| Diluted                  shares outstanding denominator                   |   |                                | 5,686,097 |   |                               |   | 5,661,251 |   |   |   | 5,682,751 |   |   |   | 5,648,124 |   |
|                                                                      |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|      Diluted                  Earnings Per Share |   | $                                   | 0.27      |   |                               | $      | 0.39 |   |   | $ | 0.85 |   |   | $ | 1.07 |   |

----

* *

----

|                                                                |   | Three                  Months Ended September 30 |       |   |  Nine                  Months EndedSeptember 30 |   |
|---------------------------------------------------------------------|--------|--------------------------------------------------|------------|--------|------------------------------------------------------|--------|
|                                                                |   | 2007                                             |       |   | 2006                                                 |   |   | 2007 |   |   | 2006 |   |
| Revenues                                                            |   |                                             |       |   |                                                 |   |   |   |   |   |   |   |
| Insurance                  company operation                        |   | $                                                | 10,943,759 |   |                                                 | $      | 12,221,503 |   |   | $ | 33,449,282 |   |   | $ | 37,042,743 |   |
|                                                                |   |                                             |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Other                  insurance operations                         |   |                                             | 4,687,663  |   |                                                 |   | 5,110,087 |   |   |   | 13,930,898 |   |   |   | 15,183,942 |   |
| Intersegment                  eliminations (1)                      |   |                                             | (3,151,173 | )      |                                                 |   | (3,672,258 | ) |   |   | (9,414,990 | ) |   |   | (10,826,532 | ) |
|    Total                  other insurance operations |   |                                             | 1,536,490  |   |                                                 |   | 1,437,829 |   |   |   | 4,515,908 |   |   |   | 4,357,410 |   |
|                                                                |   |                                             |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|    Total                  Revenues                   |   | $                                                | 12,480,249 |   |                                                 | $      | 13,659,332 |   |   | $ | 37,965,190 |   |   | $ | 41,400,153 |   |
|                                                                |   |                                             |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (Loss) Before Income Taxes                  |   |                                             |       |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| Insurance                  company operation                        |   | $                                                | 2,618,111  |   |                                                 | $      | 3,540,983 |   |   | $ | 8,713,122 |   |   | $ | 10,046,390 |   |
| Other                  insurance operations                         |   |                                             | (445,814   | )      |                                                 |   | (136,336 | ) |   |   | (1,563,550 | ) |   |   | (714,429 | ) |
|    Total                  Income Before Income Taxes |   | $                                                | 2,172,297  |   |                                                 | $      | 3,404,647 |   |   | $ | 7,149,572 |   |   | $ | 9,331,961 |   |

|                                                                                   |   | As                  of September 30 |        |
|----------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|
|                                                                                   |   | 2007                                |        |   | 2006 |   |
| Assets                                                                                 |   |                                |        |   |   |   |
| Insurance                  company operation                                           |   | $                                   | 170,551,590 |   |   | $ | 170,387,293 |   |
| Intersegment                  eliminations (2)                                         |   |                                | (1,186,345  | ) |   |   | (1,407,216 | ) |
|      Total                  insurance company operation  |   |                                | 169,365,245 |   |   |   | 168,980,077 |   |
| Other                  insurance operations                                            |   |                                | 20,745,155  |   |   |   | 19,519,940 |   |
|      Total                  Assets                            |   | $                                   | 190,110,400 |   |   | $ | 188,500,017 |   |

| (1)   | Intersegment                  revenue eliminations reflect commission paid by Crusader to Unifax                  Insurance Systems, Inc., (Unifax) a wholly owned subsidiary of                  the                  Company. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Intersegment                  asset eliminations reflect the elimination of Crusader receivables                  and                  Unifax payables. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

**Overview**

----

|                                                               |   | Three                    Months Ended September 30 |      |   | Nine                    Months Ended September 30 |   |
|--------------------------------------------------------------------|--------|----------------------------------------------------|-----------|--------|---------------------------------------------------|--------|
|                                                               |   | 2007                                               |      |   | 2006                                              |   |   | Increase(Decrease) |   |   | 2007 |   |   | 2006 |   |   | Increase(Decrease) |   |
|                                                               |   |                                               |      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    premium earned                              |   | $                                                  | 9,199,401 |   |                                              | $      | 10,676,656 |   |   | $ | (1,477,255 | ) |   | $ | 28,392,144 |   |   | $ | 32,696,357 |   |   | $ | (4,304,213 | ) |
|                                                               |   |                                               |      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                                              |   |                                               |      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Losses                    and loss adjustment expenses             |   |                                               | 5,685,253 |   |                                              |   | 5,718,427 |   |   |   | (33,174 | ) |   |   | 17,103,329 |   |   |   | 18,289,995 |   |   |   | (1,186,666 | ) |
| Policy                    acquisition costs                        |   |                                               | 2,096,113 |   |                                              |   | 2,252,267 |   |   |   | (156,154 | ) |   |   | 6,396,708 |   |   |   | 7,018,530 |   |   |   | (621,822 | ) |
|      Total                                |   |                                               | 7,781,366 |   |                                              |   | 7,970,694 |   |   |   | (189,328 | ) |   |   | 23,500,037 |   |   |   | 25,308,525 |   |   |   | (1,808,488 | ) |
|                                                               |   |                                               |      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Underwriting                    Profit (Before Income Taxes) |   | $                                                  | 1,418,035 |   |                                              | $      | 2,705,962 |   |   | $ | (1,287,927 | ) |   | $ | 4,892,107 |   |   | $ | 7,387,832 |   |   | $ | (2,495,725 | ) |

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**Liquidity        and Capital Resources**

----

**Results        of Operations**

**Premium        written **

**Premium        earned**

----

|                                                                                                                            |   | Three                  Months Ended September 30 |       |   | Nine                  Months Ended September 30 |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|--------|-------------------------------------------------|--------|
|                                                                                                                            |   |                                             |       |   |                                            |   |   | Increase |   |   |   |   |   |   |   |   | Increase |   |
|                                                                                                                            |   | 2007                                             |       |   | 2006                                            |   |   | (Decrease) |   |   | 2007 |   |   | 2006 |   |   | (Decrease) |   |
|                                                                                                                            |   |                                             |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Direct                  earned premium                                                                                          |   | $                                                | 12,053,155 |   |                                            | $      | 14,006,664 |   |   | $ | (1,953,509 | ) |   | $ | 37,185,654 |   |   | $ | 43,145,433 |   |   | $ | (5,959,779 | ) |
| Earned                  ceded premium:                                                                                          |   |                                             |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ExExcluding                  provisionally rated                        ceded premium             |   |                                             | 2,852,967  |   |                                            |   | 3,422,262 |   |   |   | (569,295 | ) |   |   | 8,822,079 |   |   |   | 10,517,027 |   |   |   | (1,694,948 | ) |
| Provisionally                  rated ceded premium                                                                              |   |                                             | 787        |   |                                            |   | (92,254 | ) |   |   | 93,041 |   |   |   | (28,569 | ) |   |   | (67,951 | ) |   |   | 39,382 |   |
|    Total                  Earned Ceded Premium                                                                   |   |                                             | 2,853,754  |   |                                            |   | 3,330,008 |   |   |   | (476,254 | ) |   |   | 8,793,510 |   |   |   | 10,449,076 |   |   |   | (1,655,566 | ) |
|                                                                                                                            |   |                                             |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ceding                  commission                                                                                              |   |                                             | (875,065   | )      |                                            |   | (1,081,140 | ) |   |   | 206,075 |   |   |   | (2,706,611 | ) |   |   | (3,330,526 | ) |   |   | 623,915 |   |
|                                                                                                                            |   |                                             |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Total                  Earned Ceded Premium                      Net of Ceding Commission |   | $                                                | 1,978,689  |   |                                            | $      | 2,248,868 |   |   | $ | (270,179 | ) |   | $ | 6,086,899 |   |   | $ | 7,118,550 |   |   | $ | (1,031,651 | ) |

**Investment        income**

----

|                                                        |   | Three                  Months Ended September 30 |        |   | Nine                  Months Ended September 30 |   |
|-------------------------------------------------------------|--------|--------------------------------------------------|-------------|--------|-------------------------------------------------|--------|
|                                                        |   | 2007                                             |        |   | 2006                                            |   |   | 2007 |   |   | 2006 |   |
|                                                        |   |                                             |        |   |                                            |   |   |   |   |   |   |   |
| Average                  Invested Assets                    |   | $                                                | 146,845,497 |   |                                            | $      | 144,725,503 |   |   | $ | 147,051,948 |   |   | $ | 143,596,530 |   |
| Total                  Investment Income                    |   | $                                                | 1,753,611   |   |                                            | $      | 1,548,234 |   |   | $ | 5,115,040 |   |   | $ | 4,347,553 |   |
| Annualized                  Yield onAverage Invested Assets |   |                                             | 4.8         | %      |                                            |   | 4.3 | % |   |   | 4.6 | % |   |   | 4.0 | % |

|      Maturities                  by   Calendar                  Year |   |  Par Value |        |   | Amortized                  Cost |   |        | Fair                  Value |   |   | Weighted                  Average Yield |   |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------|-------------|--------|---------------------------------|--------|-------------|-----------------------------|--------|--------|-----------------------------------------|--------|
|                                                                                                         |   |                 |        |   |                            |   |        |                        |   |   |                                    |   |
| December                  31, 2007                                                                           |   | $                    | 24,575,000  |   |                            | $      | 24,573,875  |                        |   | $      | 24,584,160                              |   |   |   | 4.4 | % |
| December                  31, 2008                                                                           |   |                 | 49,360,000  |   |                            |   | 49,354,125  |                        |   |   | 49,578,841                              |   |   |   | 4.9 | % |
| December                  31, 2009                                                                           |   |                 | 33,200,000  |   |                            |   | 33,249,647  |                        |   |   | 33,594,183                              |   |   |   | 4.9 | % |
| December                  31, 2010                                                                           |   |                 | 100,000     |   |                            |   | 100,000     |                        |   |   | 100,000                                 |   |   |   | 4.1 | % |
| December                  31, 2011                                                                           |   |                 | 7,250,000   |   |                            |   | 7,234,272   |                        |   |   | 7,350,234                               |   |   |   | 4.6 | % |
| December                  31, 2012                                                                           |   |                 | 25,000,000  |   |                            |   | 24,934,834  |                        |   |   | 25,371,875                              |   |   |   | 4.7 | % |
|    Total                                                                                      |   | $                    | 139,485,000 |   |                            | $      | 139,446,753 |                        |   | $      | 140,579,293                             |   |   |   | 4.7 | % |

|                            |   |   |      |   | Gross      |   |
|---------------------------------|--------|--------|-----------|--------|------------|--------|
|                            |   | Market |      |   | Unrealized |   |
|                            |   | Value  |      |   | Loss       |   |
|                            |   |   |      |   |       |   |
| 0-6                  months     |   | $      | 1,077,225 |   |       | $      | 409 |   |
| 7-12                  months    |   |   | -         |   |       |   | - |   |
| Over                  12 months |   |   | 2,889,122 |   |       |   | 33,679 |   |
|   Total               |   | $      | 3,966,347 |   |       | $      | 34,088 |   |

----

**Gross        commissions and fees **

|                                                                                                                                   |   | Three                  Months Ended September 30 |      |   | Nine                  Months Ended September 30 |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|-----------|--------|-------------------------------------------------|--------|
|                                                                                                                                   |   |                                             |      |   |                                            |   |   | Increase |   |   |   |   |   |   |   |   | Increase |   |
|                                                                                                                                   |   | 2007                                             |      |   | 2006                                            |   |   | (Decrease) |   |   | 2007 |   |   | 2006 |   |   | (Decrease) |   |
| Policy                  fee income                                                                                                     |   | $                                                | 589,775   |   |                                            | $      | 667,232 |   |   | $ | (77,457 | ) |   | $ | 1,761,359 |   |   | $ | 2,004,483 |   |   | $ | (243,124 | ) |
| Health                  insurance program                     commission income                                              |   |                                             | 607,921   |   |                                            |   | 409,098 |   |   |   | 198,823 |   |   |   | 1,656,781 |   |   |   | 1,211,772 |   |   |   | 445,009 |   |
| Membership                  and fee income                                                                                             |   |                                             | 78,386    |   |                                            |   | 75,474 |   |   |   | 2,912 |   |   |   | 232,462 |   |   |   | 228,602 |   |   |   | 3,860 |   |
| Other                  commission and fee income                                                                                       |   |                                             | (1,338    | )      |                                            |   | 7,707 |   |   |   | (9,045 | ) |   |   | 11,608 |   |   |   | 32,017 |   |   |   | (20,409 | ) |
| Daily                  automobile rental insurance program:                                                                       |   |                                             |      |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     Commission income (excluding                        contingent commission) |   |                                             | 87,992    |   |                                            |   | 82,557 |   |   |   | 5,435 |   |   |   | 257,736 |   |   |   | 236,236 |   |   |   | 21,500 |   |
|    Contingent                  commission                                                                          |   |                                             | -         |   |                                            |   | - |   |   |   | - |   |   |   | 46,539 |   |   |   | 53,638 |   |   |   | (7,099 | ) |
| Total                                                                                                                                  |   | $                                                | 1,362,736 |   |                                            | $      | 1,242,068 |   |   | $ | 120,668 |   |   | $ | 3,966,485 |   |   | $ | 3,766,748 |   |   | $ | 199,737 |   |

The        Company's subsidiary Insurance Club, Inc., DBA AAQHC An        Administrator (AAQHC), is an administrator for CIGNA HealthCare and is a        membership association that provides various consumer benefits to its members,        including participation in group health insurance policies that AAQHC negotiates        for the association.  For these services, AAQHC receives membership        and fee income from its members.

**Losses        and loss adjustment expenses**

----

**Policy        acquisition costs**

**Salaries        and employee benefits **

**Commissions        to agents/brokers**

----

**Other        operating expenses **

**Income        tax provision **

**Forward        Looking Statements**

Certain        statements contained herein, including the section        entitled “Management’s Discussion and Analysis of Financial Condition and        Results of Operations,” that are not historical facts are        forward-looking.  These statements, which may be identified by        forward-looking words or phrases such as “anticipate,” “believe,” ”expect,”“intend,” “may,” “should,” and “would,” involve risks and uncertainties, many of        which are beyond the control of the Company.  Such risks and        uncertainties could cause actual results to differ materially from these        forward-looking statements.  Factors which could cause actual results        to differ materially include underwriting actions not being effective, rate        increases for coverages not being sufficient, premium rate adequacy relating        to        competition or regulation, actual versus estimated claim experience, regulatory        changes or developments, unforeseen calamities, general market conditions,        and        the Company’s ability to introduce new profitable products.

|                                                                 |   | September                  30 2007 |        |   | December                  31 2006 |   |        | Increase                  (Decrease) |   |
|----------------------------------------------------------------------|--------|------------------------------------|-------------|--------|-----------------------------------|--------|-------------|--------------------------------------|--------|
|                                                                 |   |                               |        |   |                              |   |        |                                 |   |
| Fixed                  maturity bonds (at amortized value)           |   | $                                  | 139,046,753 |   |                              | $      | 140,092,328 |                                 |   | $ | (1,045,575 | ) |
| Short-term                  cash investments (at cost)               |   |                               | 7,344,807   |   |                              |   | 6,820,007   |                                 |   |   | 524,800 |   |
| Certificates                  of deposit (over 1 year, at cost)      |   |                               | 400,000     |   |                              |   | 400,000     |                                 |   |   | - |   |
|                                                                 |   |                               |        |   |                              |   |        |                                 |   |   |   |   |
|      Total                  Invested Assets |   | $                                  | 146,791,560 |   |                              | $      | 147,312,335 |                                 |   | $ | (520,775 | ) |

----

**PART        II - OTHER INFORMATION**

| 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.           UNICO                  AMERICAN CORPORATION |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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