<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549


                                   FORM 10-Q

               QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period from OCTOBER 1, 1995 TO DECEMBER 31, 1995


                          COMMISSION FILE NO. 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


         Securities registered pursuant to Section 12(b) of the Act:
                                      NONE
                             (Title of each class)


           Securities registered pursuant to section 12(g) of the Act:
                           COMMON STOCK, NO PAR VALUE
                                (Title of Class)


                                   NO CHANGE
             (Former name, former address and former fiscal year,
                          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 preceding 12 months (or for such shorter period that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.  Yes X  No
                                              ---    ---

                                  5,957,738
   Number of shares of common stock outstanding as of February 9, 1996


                                    1 of 10

<PAGE>

                                                                          PART 1
FINANCIAL STATEMENTS                                       FINANCIAL INFORMATION

                          UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                 DECEMBER 31,         MARCH 31,
                                                                     1995               1995
                                                                 ------------        ----------
<S>                                                              <C>                 <C>
ASSETS
Investments
  Fixed maturities, available-for-sale at market value
    (amortized cost $66,171,956 at December 31,
     1995, and $60,707,261 at March 31, 1995)                      $67,973,654       $60,438,930
  Short-term investments, at cost                                    4,344,438         3,382,301
                                                                     ---------         ---------
      Total Investments                                             72,318,092        63,821,231
Cash                                                                       951           173,232
Accrued investment income                                            1,282,940         1,368,773
Accounts and notes receivable, net                                   8,445,087         8,061,352
Reinsurance recoverable:
   Paid losses & loss adjustment expenses                               66,389            56,173
   Unpaid losses & loss adjustment expenses                          5,016,527         4,737,448
Prepaid reinsurance premiums                                         1,464,504         2,784,432
Deferred policy acquisition costs                                    4,220,086         4,113,936
Property and equipment (net of accumulated depreciation)               309,138           335,495
Deferred income taxes                                                1,122,503         1,610,075
Other assets                                                           797,599           394,554
                                                                    ----------        ----------
       Total Assets                                                $95,043,816       $87,456,701
                                                                    ----------        ----------
                                                                    ----------        ----------

                             LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Unpaid losses and loss adjustment expenses                         $36,696,882       $32,370,752
Unearned premium reserve                                            19,362,092        19,569,975
Advance premiums                                                     1,553,156         1,652,377
Funds held as security for performance                                 782,774           750,824
Accrued expenses and other liabilities                               2,304,794         2,174,560
Income taxes payable                                                    88,363           315,385
Note payable - Bank                                                  2,895,001         3,975,001
Note payable - Related Party                                               -             500,000
                                                                    ----------        ----------
    Total Liabilities                                              $63,683,062       $61,308,874
                                                                    ----------        ----------

STOCKHOLDERS' EQUITY
Common stock, no par - authorized 10,000,000 shares,
  issued and outstanding shares 5,957,738 at December 31, 1995,
  and 5,957,645 at March 31, 1995                                    2,834,801         2,834,801
  Net unrealized investment gains (losses)                           1,180,200          (177,098)
Retained  earnings                                                  27,345,753        23,490,124
                                                                    ----------        ----------
    Total Stockholders' Equity                                      31,360,754        26,147,827
                                                                    ----------        ----------

    Total Liabilities and Stockholders' Equity                     $95,043,816        $87,456,701
                                                                    ----------         ----------
                                                                    ----------         ----------
 </TABLE>


                See notes to consolidated financial statements.


                                     2 of 10

<PAGE>


                            UNICO AMERICAN CORPORATION

                               AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                 NINE MONTHS ENDED
                                                          DECEMBER 31,                      DECEMBER 31,
                                                    1995               1994              1995            1994
                                                  ---------------------------         --------------------------
<S>                                               <C>            <C>                  <C>           <C>
REVENUES
Insurance Company Revenues
  Premium earned                                  $9,353,066      $9,845,285          $28,260,638    $28,847,865
  Premium ceded                                    1,270,569       2,352,549            4,997,038      7,044,675
                                                  ----------      ----------          -----------    -----------
  Net premium earned                               8,082,497       7,492,736           23,263,600     21,803,190
  Investment income                                  958,867         833,330            2,750,935      2,347,073
  Net realized investment gains                       29,009               -               36,201          7,552
  Other income (expense)                                  60         (14,816)                 773        (14,346)
                                                  ----------      ----------          -----------    -----------
    Total Insurance Company Revenue               9,070,433        8,311,250           26,051,509     24,143,469

Other Revenues from Insurance Operations
  Gross commissions and fees                       1,460,637       1,382,148            4,311,429      4,214,778
  Investment income                                   36,308          40,144              112,312        102,166
  Finance charges and late fees earned               332,941         338,397              986,225        982,215
  Other income                                         2,747           2,991               11,384         29,933
                                                  ----------      ----------          -----------    -----------
     Total Revenues                               10,903,066      10,074,930           31,472,859     29,472,561
                                                  ----------      ----------          -----------    -----------
COSTS AND EXPENSES
  Losses & loss adjustment expenses                4,515,311       4,380,024           12,910,188     13,656,858
  Policy acquisition costs                         2,140,709       2,135,029            6,354,266      6,158,911
  Salaries and employee benefits                     943,312         996,190            2,772,308      2,864,220
  Commissions to agents/brokers                      364,316         333,239            1,022,088      1,011,378
  Other operating expenses                           759,654         862,873            2,402,808      2,426,609
                                                  ----------      ----------          -----------    -----------
     Total Costs and Expenses                      8,723,302       8,707,355           25,461,658     26,117,976
                                                  ----------      ----------          -----------    -----------

     Income Before Taxes                           2,179,764       1,367,575            6,011,201      3,354,585
Income Tax Provision                                 648,551         335,486            1,738,537        812,763
                                                  ----------      ----------          -----------    -----------
     Net Income                                   $1,531,213      $1,032,089            4,272,664      2,541,822
                                                  ==========     ===========
   Dividends Paid to Stockholders                                                         417,035        417,169

Retained Earnings April 1,                                                             23,490,124     20,115,131
                                                                                      -----------    -----------
Retained Earnings December 31,                                                        $27,345,753    $22,239,784
                                                                                      ===========    ===========
PER SHARE DATA
Weighted Average Common
   Shares Outstanding:                             6,162,667       6,026,359            6,132,356      6,056,922
Earnings Per Share:                                    $0.25           $0.17               $0.70           $0.42


</TABLE>


               See notes to consolidated financial statements.


                                    3 of 10

<PAGE>

                           UNICO AMERICAN CORPORATION
                               AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                            FOR THE NINE MONTHS ENDED

<TABLE>
<CAPTION>
                                                              DECEMBER 31,      DECEMBER 31,
                                                                  1995             1994
                                                              ------------      ------------
<S>                                                          <C>                <C>
                                                              $4,272,664         $2,541,822
Charges (credits)  to reconcile net
  income to net cash from operations
  Depreciation & amortization                                     87,707             90,716
  Bond amortization, net                                         421,039            542,346
  Accrued investment income                                       85,833           (280,425)
  Accounts receivable                                           (383,735)          (634,859)
  Deferred policy acquisition costs                             (106,150)          (408,536)
  Reinsurance recoverable                                       (289,295)          (830,600)
  Other assets                                                  (403,045)           (99,494)
  Reserve for unpaid losses & loss adjustment expenses         4,326,130          5,673,186
  Prepaid reinsurance premiums                                 1,319,928             47,439
  Unearned premium reserve                                      (207,883)         1,766,631
  Net realized (gains) on sales of fixed maturities               (7,192)          (131,199)
  Net realized (gains) on sales of equity securities             (29,009)           123,647
  Funds held as security & advanced premiums                     (67,271)            13,388
  Income taxes current/deferred                                 (452,179)          (134,011)
  Accrued expenses & other liabilities                           130,235            (18,258)
                                                             -----------        -----------
       Net cash provided from operations                       8,697,777          8,261,793
                                                             -----------        -----------
Investing Activities
  Purchase of fixed maturity investments                     (17,703,299)       (17,958,535)
  Proceeds from maturity of fixed maturity investments        11,824,754          9,538,570
  Purchase of equity securities at cost                         (299,840)            (5,933)
  Proceeds from sale of equity securities                        328,849          1,051,216
  Net decrease (increase) in short-term investments             (962,137)          (625,180)
  Additions to property & equipment                              (61,350)          (179,040)
                                                             -----------        -----------
     Net cash (used) by investing activities                  (6,873,023)        (8,178,902)
                                                             -----------        -----------
Financing Activities
  Proceeds from issuance of common stock                            -                35,000
  Proceeds (repayment) of note payable - Bank                 (1,080,000)           267,000
  Repayment of note payable - Related party                     (500,000)              -
  Dividends paid to Stockholders                                (417,035)          (417,169)
                                                             -----------        -----------
     Net cash provided (used) by financing activities         (1,997,035)          (115,169)
                                                             -----------        -----------
Net increase (decrease) in cash                                 (172,281)           (32,278)
Cash at beginning of period                                      173,232            205,612
                                                             -----------        -----------
    Cash at end of period                                           $951           $173,334
                                                             ===========        ===========
Supplemental cash flow information
  Cash paid during the period for:
     Interest                                                 $  243,205           $266,062
     Income taxes                                             $2,192,000           $802,000

</TABLE>

                    See notes to consolidated financial statements.


                                    4 of 10


<PAGE>


                            UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1995

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS
Unico American Corporation is an insurance holding company.  Unico American and
its subsidiaries, all of which are wholly owned (the "Company"), provides
primarily in California, property, casualty, health and life insurance, and
related premium financing.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Unico American
Corporation and its subsidiaries.  All significant inter-company accounts and
transactions have been eliminated in consolidation.

BASIS OF PRESENTATION
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles (GAAP) which differ in some respects
from those followed in reports to insurance regulatory authorities.

INVESTMENTS
Although all of the Company's fixed maturity investments are classified as
available-for-sale and are stated at market value, the Company's investment
guidelines place primary emphasis on buying and holding high-quality
investments.  Investments in equity securities are carried at market value.  The
unrealized gains or losses from fixed maturities and equity securities are
reported as a separate component of stockholders' equity, net of any deferred
tax effect.  Short-term investments are carried at cost which approximates
market value. When a decline in the value of a fixed maturity or equity security
is considered other than temporary, a loss is recognized in the consolidated
statement of operations.  Realized gains and losses are included in the
consolidated statements of operations  based upon the specific identification
method.

PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using accelerated depreciation methods over the
estimated useful lives of the related assets.

INCOME TAXES
The provision for income taxes is computed on the basis of income as reported
for financial reporting purposes under generally accepted accounting principles.
Deferred income taxes arise principally from certain assets and liabilities
which are recognized for income tax purposes in different periods than for
financial statements.

NOTE 2 - RESTRICTED FUNDS
As required by law, the Company segregates from its operating accounts premiums
collected from insureds into separate trust accounts.  As of December 31, 1995,
these trust funds represent $3,032,058 of the Company's cash and short-term
investments.  In addition, $725,000 of the Company's investments represent
statutory deposits of Crusader which are assigned to and held by the California
State Treasurer and the Insurance Commissioner of the State of Nevada.  These
deposits are required for Crusader to write certain lines of business in
California and for its admission in states other than California.

NOTE 3 - FUNDS HELD AS SECURITY
Funds held as security for performance represent funds received in order to
guarantee the contractual obligations entered into with customers.


                                    5 of 10

<PAGE>


                             UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1995

NOTE 4 - STATUTORY CAPITAL AND SURPLUS
As of December 31, 1995, Crusader's statutory capital and surplus were deemed
sufficient to support its present insurance premium writings.

NOTE 5 - INCENTIVE STOCK OPTION PLAN
The Company's 1985 stock option plan provides for the grant of "incentive stock
options" to officers and key employees.  The plan covers an aggregate of
1,500,000 shares of the Company's common stock (subject to adjustment in the
case of stock splits, reverse stock splits, stock dividends, etc.).  As of
December 31, 1995, 680,000 options were outstanding, of which 504,670 were
currently exercisable.  There are no additional options available for future
grant under the 1985 plan.

NOTE 6 - CLAIMS AND LITIGATION
The Company, by virtue of the nature of the business conducted by it, becomes
involved in numerous legal proceedings in which it may be named as either
plaintiff or defendant.  The Company is required to resort to legal proceedings
from time-to-time in order to enforce collection of premiums and other
commissions or fees for the services rendered to customers or to their agents.
These routine items of litigation do not materially affect the Company and are
handled on a routine basis by the Company through its general counsel.

Likewise, the Company is sometimes named as a cross-defendant in litigation
which is principally directed against that insurer who has issued a policy of
insurance directly or indirectly through the Company.  Incidental actions are
sometimes brought by customers or other agents which relate to disputes
concerning the issuance or non-issuance of individual policies.  These items are
also handled on a routine basis by the Company's general counsel, and they do
not materially affect the operations of the Company. Management is confident
that the ultimate outcome of pending litigation should not have an adverse
effect on  the Company's consolidated operation or financial position.


NOTE 7 - LEASE COMMITMENTS AND CONTINGENCIES
The Company presently occupies a 46,000 square foot building located at 23251
Mulholland Drive, Woodland Hills, California, under a master lease expiring
March 31, 2007.  The lease provides for an annual gross rental of $1,025,952.
Erwin Cheldin, the Company's president, chairman and principal stockholder, is
the owner of the building.  The terms of the lease at inception and at the time
the lease extension was executed were at least as favorable to the Company as
could have been obtained from unaffiliated third parties.

The Company utilizes for its own operation 100% of the space it leases.

NOTE 8
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all necessary adjustments, which consist of normal recurring
adjustments, to present fairly the results of operations for the three months
and nine months ended December 31, 1995, and December 31, 1994.

NOTE 9
The results of operations for the three and nine months ended December 31, 1995,
should not be considered as necessarily indicative of the results to be expected
for the full year.


                                    6 of 10

<PAGE>


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

(A)  LIQUIDITY AND CAPITAL RESOURCES:

Due to the nature of the Company's business (insurance and insurance services)
and whereas Company growth does not normally require material reinvestment of
profits into property or equipment, the cash flow generated from operations
usually results in improved liquidity for the Company.

Crusader's loss and loss adjustment expense  payments are the most
significant cash flow requirement of the Company.  These payments are
continually monitored and projected to ensure that the Company has the
liquidity to cover these payments without the need to liquidate its
investments.  As of December 31, 1995, the Company had cash and cash
investments of $70,517,345 (at amortized cost) of which $67,328,931 (95%)
were investments of Crusader.

As of the quarter ended December 31, 1995, the Company had invested
$66,171,956 (at amortized cost) or 94% of its invested assets in fixed
maturity obligations. Although all of the Company's fixed maturity
investments are classified as available-for-sale, the Company's investment
guidelines place primary emphasis on buying and holding high quality
investments.  The balance of the  Company's investments are in U.S. treasury
bills, high quality short-term investments which include bank money market
accounts, certificates of deposit, commercial paper and a short-term treasury
money market fund.

The Company's investments in fixed maturity obligations of $66,171,956
include $35,158,603 (53%) of tax exempt, pre-refunded state and municipal
bonds.  The tax exempt interest income earned for  the three and nine months
ended December 31, 1995, was $401,298 and $1,328,311, respectively.

The Company's investment policy limits investments in any one company to no
more than $1,000,000.  This limitation excludes bond premiums paid in excess
of par value and U.S. Government or U.S. Government guaranteed issues.  All
Unico investments are high grade investment quality.

There are no material commitments for capital expenditures as of the date of
this report.

The Company's premium finance subsidiary, American Acceptance Corporation
("AAC"), has a bank credit line of $6,000,000 with a variable rate of
interest based on fluctuations in the London Inter Bank Offered Rate
("LIBOR").  This credit line is only used to provide AAC with funds to
finance insurance premiums.

The Company believes that its cash and short-term investments at the quarter
end, net of trust restriction of $3,032,058 and statutory deposits of
$725,000 and dividend restriction between Crusader and Unico plus the cash to
be generated from operations, should be sufficient to meet its operating
requirements (excluding funds to finance insurance premiums discussed above)
during the next twelve months without the necessity of borrowing additional
funds.

Although the Company was not dependent upon dividends from Crusader during
the three months ended December 31, 1995, it received a $500,000 dividend on
December 28, 1995.


                                    7 of 10

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (continued)

(B)  RESULTS OF OPERATIONS:

All comparisons made in this discussion are comparing the three and nine
months ended December 31, 1995, to the three and nine months ended December
31, 1994, unless otherwise indicated.

The Company recognized  net income of $1,531,213 for the three months and
$4,272,664 for the nine months ended December 31, 1995, compared to net
income of $1,032,089 for the three months and  $2,541,822 for the nine months
ended December 31, 1994.

Total revenues for the Company increased $828,136 (8%) for the three months
and $2,000,298 (7%) for the nine months ended December 31, 1995, when
compared to the three and nine months ended December 31, 1994.

INSURANCE COMPANY OPERATION

Insurance company underwriting income (net earned premium less loss and loss
adjustment expenses and policy acquisition costs) was $1,426,477 for the three
months and $3,999,146 for the nine months ended December 31, 1995, compared to
underwriting income of $977,683 for the three months and $1,987,421 for the nine
months ended December 31, 1994.

PREMIUM EARNED before reinsurance decreased $492,219 (5%) for the three months
and $587,227 (2%) for the nine months.  The decrease in premium earned was
primarily attributable to Crusader's decision to intentionally reduce its Other
Liability line in an effort to improve the utilization of its surplus.  The
decrease in the Other Liability line earned premium for the three months and
nine months ended December 31, 1995, was $1,693,898  and  $4,605,109
respectively.  Crusader's primary line of business is its Commercial Package
line, representing approximately 98% of total earned premium for the three
months and 94% for the nine months ended December 31, 1995.  This line of
business continued to grow with earned premium increasing $1,238,891 (16%) to
$9,154,874 for the three months and $4,319,557 (19%) to $26,578,542 for the nine
months ended December 31, 1995.

Ceded premium decreased from 24% of premium earned to 14% for the three months
ended and from 24% to 18% for the nine months ended December 31, 1995, primarily
as a result of the reduction in Other Liability premium (which cedes a higher
percentage of premium than Crusader's other lines) and a reduction in
reinsurance ceded due to an increase in loss retention from $100,000 to $150,000
on April 1, 1995.  The Company's net premium earned increased $589,761 (8%) for
the three months and $1,460,410 (7%) for the nine months ended December 31,
1995.

LOSSES AND LOSS ADJUSTMENT EXPENSES were 56% of net premium earned for the three
and nine months ending December 31, 1995, compared to 58% and 63% of net premium
earned for the three and nine months ended December 31, 1994 respectively.  The
decrease in the loss ratios for the quarter and year-to-date is primarily due to
the favorable development of prior period losses.

POLICY ACQUISITION COSTS consist of commissions, premium taxes, inspection fees,
and certain other underwriting costs which are directly or indirectly related to
the production of Crusader insurance policies.  These costs include both
Crusader expenses and allocated expenses of other Unico subsidiaries.
Crusader's reinsurer pays Crusader a ceding commission which is primarily a
reimbursement of the acquisition cost related to the ceded premium.

Policy acquisition costs, net of ceding commission, are deferred and amortized
as the related premiums are earned.  These costs increased by $5,680 (less than
1 %) for the three months and increased by $195,355 (3%) for the nine months due
to the related increase in Crusader's net earned premium.



                                    8 of 10

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (continued)

(B)  RESULTS OF OPERATIONS (CONTINUED):

INVESTMENT INCOME, excluding realized investment gains, increased $121,701 (14%)
for the three months and  $414,008 (17%) for the nine months ended December 31,
1995, compared to the three and nine months ending December 31, 1994.  This
increase was primarily due to a 15% increase (at amortized cost)  in invested
assets.

There were no significant changes in other revenue or expense items.

The effect of inflation on net income of the Company during the three and nine
months ended December 31, 1995, and 1994 was not significant.

There were no material items or significant elements included in the results of
operations which arose from or were not necessarily representative of the
Company's ongoing business.



                           PART II - OTHER INFORMATION

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:

         Exhibit 27 - Financial Data Schedule

(b)      Reports on Form 8-K:

         None



                                    9 of 10

<PAGE>


                           UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES


                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto authorized.


    UNICO AMERICAN CORPORATION



    Date: February 12, 1996        By: /s/ ERWIN CHELDIN
                                       -----------------------------------------
                                      Erwin Cheldin
                                      Chairman of the Board, President and Chief
                                      Executive Officer, (Principal Executive
                                      Officer)



   Date: February 12, 1996         By: /s/ Lester Alan Aaron
                                       ----------------------------------------
                                       Lester Alan Aaron
                                       Treasurer, Chief Financial Officer,
                                       (Principal Accounting and Principal
                                       Financial Officer)



                                    10 of 10


<PAGE>
                                  EXHIBIT INDEX
                                       TO
            UNICO AMERICAN CORPORATION QUARTERLY REPORT ON FORM 10-Q
                     FOR THE QUARTER ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
No.       Item
---       ----
<S>       <C>
27        FINANCIAL DATA SCHEDULE


</TABLE>