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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2006

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission
File Number: 001-32837

North American Insurance Leaders, Inc.

(Exact name of registrant as specified in its charter)



|                                                 |  |                                        
|------------------------------------------------ |  | ---------------------------------------
|Delaware                                         |  | 20-3284412                             
|(State or other jurisdiction of incorporation)   |  | (I.R.S. Employer Identification Number)
|                                                 | 
|885 Third Avenue, 31st Floor, New York, New York |  | 10022                                  
|(Address of principal executive offices)         |  | (Zip Code)                             

(212) 319-9407

(Registrants telephone number, including area code)

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 ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act:

Large
accelerated filer ̈Accelerated
filer ̈Non-accelerated
filer  x

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

Number of shares of common stock outstanding as of November 10, 2006: 17,968,750.



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##### Table of Contents

Table of Contents



|                              |  |                                                                                       |  |    
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | ---
|PART I. FINANCIAL INFORMATION |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Financial Statements                                                                  |  | 1  
|                              |  |                                                                                      
|                              |  | Balance Sheets                                                                        |  | F-1
|                              |  | Statements of Operations                                                              |  | F-2
|                              |  | Statement of Stockholders Equity                                                     |  | F-3
|                              |  | Statements of Cash Flows                                                              |  | F-4
|                              |  | Notes to Financial Statements                                                         |  | F-5
|                              |  |                                                                                      
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 2  
|                              |  |                                                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 4  
|                              |  |                                                                                      
|Item 4.                       |  | Controls and Procedures                                                               |  | 4  
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                      
|                              |  |                                                                                      
|Item 1A.                      |  | Risk Factors                                                                          |  | 4  
|                              |  |                                                                                      
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 4  
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits                                                                              |  | 5  
|                              | 
|SIGNATURES                    |  | 6                                                                                    



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

NORTH AMERICAN INSURANCE
LEADERS, INC.

(a development stage company)

Index to Financial Statements



|                                  |  |     
|--------------------------------- |  | ----
|                                  |  | Page
|Balance sheets                    |  | F-1 
|Statements of Operations          |  | F-2 
|Statement of Stockholders Equity |  | F-3 
|Statements of Cash Flows          |  | F-4 
|Notes to Financial Statements     |  | F-5 



1



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Balance Sheets



|                                                                                                                                                                 |  |                   |             |               |   |            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | ------------- | - | -----------
|                                                                                                                                                                 |  | September 30,2006 |             | June 30, 2006
|                                                                                                                                                                 |  | (Unaudited)       |             |              
|ASSETS                                                                                                                                                           |  |                   |             |               |   |            
|Current assets:                                                                                                                                                  |  |                   |             |               |   |            
|Cash and cash equivalents                                                                                                                                        |  | $                 | 646,500     |               | $ | 281,677    
|Cash and cash equivalents in Trust Account                                                                                                                       |  |                   | 111,635,596 |               |   | 111,291,949
|Prepaid expenses                                                                                                                                                 |  |                   | 295,714     |               |   | 348,570    
|Other assets                                                                                                                                                     |  |                   |            |               |   | 2,677      
|                                                                                                                                                                 |  |                   |             |               |   |            
|Total assets                                                                                                                                                     |  | $                 | 112,577,810 |               | $ | 111,924,873
|                                                                                                                                                                 |  |                   |             |               |   |            
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                             |  |                   |             |               |   |            
|Current liabilities:                                                                                                                                             |  |                   |             |               |   |            
|Accounts payable                                                                                                                                                 |  | $                 | 135,386     |               | $ | 9,875      
|Deferred underwriting fee                                                                                                                                        |  |                   | 2,875,000   |               |   | 2,875,000  
|Income taxes payable                                                                                                                                             |  |                   | 415,150     |               |   | 536,359    
|                                                                                                                                                                 |  |                   |             |               |   |            
|Total current liabilities                                                                                                                                        |  | $                 | 3,425,536   |               | $ | 3,421,234  
|                                                                                                                                                                 |  |                   |             |               |   |            
|Common stock, subject to possible conversion, 2,874,999 shares at conversion value                                                                               |  | $                 | 22,172,808  |               | $ | 22,164,446 
|                                                                                                                                                                 |  |                   |             |               |   |            
|COMMITMENTS                                                                                                                                                      |  |                   |             |               |   |            
|STOCKHOLDERS EQUITY                                                                                                                                             |  |                   |             |               |   |            
|Preferred stock0.0001 par value; 1,000,000 shares authorized; 0 issued and outstanding                                                                          |  |                   |            |               |   |           
|Common stock0.0001 par value; 100,000,000 shares authorized; 17,968,750 issued and outstanding (which includes 2,874,999 shares subject
to possible conversion) |  |                   | 1,797       |               |   | 1,797      
|Additional paid in capital                                                                                                                                       |  |                   | 85,666,176  |               |   | 85,674,538 
|Retained earnings accumulated during the development stage                                                                                                       |  |                   | 1,311,493   |               |   | 662,858    
|                                                                                                                                                                 |  |                   |             |               |   |            
|Total stockholders equity                                                                                                                                       |  |                   | 86,979,466  |               |   | 86,339,193 
|                                                                                                                                                                 |  |                   |             |               |   |            
|Total liabilities and stockholders equity                                                                                                                       |  | $                 | 112,577,810 |               | $ | 111,924,873
|                                                                                                                                                                 |  |                   |             |               |   |            

See notes to financial statements.



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Statements of Operations

(Unaudited)



|                                                                                   |  |                                         |            |   |                                                               |   |           |                                                              |  |   |           |  
|---------------------------------------------------------------------------------- |  | --------------------------------------- | ---------- | - | ------------------------------------------------------------- | - | --------- | ------------------------------------------------------------ |  | - | --------- | -
|                                                                                   |  | July 1, 2006 through September 30, 2006 |            |   | August 8, 2005 (Date of Inception) through September 30, 2005 |   |           | August 8, 2005(Date of Inception) through September 30, 2006 | 
|Interest income                                                                    |  | $                                       | 1,421,300  |   |                                                               | $ |          |                                                              |  | $ | 2,766,507 |  
|General and administrative expenses                                                |  |                                         | 220,124    |   |                                                               |   | 1,500     |                                                              |  |   | 366,114   |  
|                                                                                   |  |                                         |            |   |                                                               |   |           |                                                              |  |   |           |  
|Net income (loss) before provision for income taxes                                |  | $                                       | 1,201,176  |   |                                                               | $ | (1,500    | )                                                            |  | $ | 2,400,393 |  
|Provision for income taxes                                                         |  |                                         | 552,541    |   |                                                               |   |          |                                                              |  |   | 1,088,900 |  
|                                                                                   |  |                                         |            |   |                                                               |   |           |                                                              |  |   |           |  
|Net income (loss)                                                                  |  | $                                       | 648,635    |   |                                                               | $ | (1,500    | )                                                            |  | $ | 1,311,493 |  
|                                                                                   |  |                                         |            |   |                                                               |   |           |                                                              |  |   |           |  
|Accretion of Trust Account relating to common stock subject to possible conversion |  |                                         | (8,362     | ) |                                                               |   |          |                                                              |  |   | (182,816  | )
|                                                                                   |  |                                         |            |   |                                                               |   |           |                                                              |  |   |           |  
|Net income (loss) attributable to common stockholders                              |  | $                                       | 640,273    |   |                                                               | $ | (1,500    | )                                                            |  | $ | 1,128,677 |  
|                                                                                   |  |                                         |            |   |                                                               |   |           |                                                              |  |   |           |  
|Weighted average common shares outstanding subject to possible conversion          |  |                                         | 2,874,999  |   |                                                               |   |          |                                                              |  |   |           |  
|Basic and diluted net income per share subject to possible conversion              |  | $                                       |           |   |                                                               | $ |          |                                                              |  |   |           |  
|Weighted average common shares outstanding                                         |  |                                         | 15,093,751 |   |                                                               |   | 4,677,500 |                                                              |  |   |           |  
|Basic and diluted net income per share                                             |  | $                                       | 0.04       |   |                                                               | $ |          |                                                              |  |   |           |  

See notes to financial statements.



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Statement of Stockholders Equity



|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                           |  |       |           |  |   |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ------ | ----- | -------------------------- | - | ----------- | --------------------------------------------------------- |  | ----- | --------- |  | - | ----------- | -
|                                                                                                                                                                              |  | Common Stock Shares |  | Amount |       | Additional Paid-In Capital |   |             | Retained Earnings Accumulated
During the DevelopmentStage |  | Total |          
|Balance at August 8, 2005(Date of inception)                                                                                                                                  |  |                    |  | $      |      |                            | $ |            |                                                           |  | $     |          |  | $ |            |  
|Issuance of common stock to initial stockholders                                                                                                                              |  | 3,593,750           |  |        | 359   |                            |   | 24,641      |                                                           |  |       |          |  |   | 25,000      |  
|Issuance of D&O rights in private placement                                                                                                                                   |  |                    |  |        |      |                            |   | 1,700,000   |                                                           |  |       |          |  |   | 1,700,000   |  
|Sale of 14,375,000 units (including the 1,875,000 units pursuant to the over-allotment option at a price of $8 per unit, net of
underwriters discount and offering expenses) |  | 14,375,000          |  |        | 1,438 |                            |   | 106,114,345 |                                                           |  |       |          |  |   | 106,115,783 |  
|Net proceeds subject to possible conversion of 2,874,999 shares                                                                                                               |  |                    |  |        |      |                            |   | (21,989,992 | )                                                         |  |       |          |  |   | (21,989,992 | )
|Net income for the period                                                                                                                                                     |  |                    |  |        |      |                            |   |            |                                                           |  |       | 662,858   |  |   | 662,858     |  
|Accretion of Trust Account relating to common stock subject to possible conversion                                                                                            |  |                    |  |        |      |                            |   | (174,454    | )                                                         |  |       |          |  |   | (174,454    | )
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                           |  |       |           |  |   |             |  
|Balance at June 30, 2006                                                                                                                                                      |  | 17,968,750          |  | $      | 1,797 |                            | $ | 85,674,538  |                                                           |  | $     | 662,858   |  | $ | 86,339,193  |  
|Net income for the period (unaudited)                                                                                                                                         |  |                    |  |        |      |                            |   |            |                                                           |  |       | 648,635   |  |   | 648,635     |  
|Accretion of Trust Account relating to common stock subject to possible conversion (unaudited)                                                                                |  |                    |  |        |      |                            |   | (8,362      | )                                                         |  |       |          |  |   | (8,362      | )
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                           |  |       |           |  |   |             |  
|Balance at September 30, 2006 (unaudited)                                                                                                                                     |  | 17,968,750          |  | $      | 1,797 |                            | $ | 85,666,176  |                                                           |  | $     | 1,311,493 |  | $ | 86,979,466  |  
|                                                                                                                                                                              |  |                     |  |        |       |                            |   |             |                                                           |  |       |           |  |   |             |  

See notes to financial statements.



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Statements of Cash Flows

(Unaudited)



|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|---------------------------------------------------------------------------------- |  | --------------------------------------- | -------- | - | ------------------------------------------------------------- | - | ------- | ------------------------------------------------------------- |  | - | ------------ | -
|                                                                                   |  | July 1, 2006 Through September 30, 2006 |          |   | August 8, 2005 (Date of Inception) through September 30, 2005 |   |         | August 8, 2005 (Date of Inception) through September 30, 2006 | 
|Cash flows from operating activities:                                              |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Net income                                                                         |  | $                                       | 648,635  |   |                                                               | $ | (1,500  | )                                                             |  | $ | 1,311,493    |  
|Adjustments to reconcile net income to net cash used in operating activities:      |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Changes in:                                                                        |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Interest income, net                                                               |  |                                         | (343,647 | ) |                                                               |   |        |                                                               |  |   | (1,685,598   | )
|Prepaid expenses                                                                   |  |                                         | 52,856   |   |                                                               |   |        |                                                               |  |   | (295,714     | )
|Accounts payable                                                                   |  |                                         | 125,511  |   |                                                               |   |        |                                                               |  |   | 135,386      |  
|Income taxes payable                                                               |  |                                         | (121,209 | ) |                                                               |   |        |                                                               |  |   | 415,150      |  
|Other assets                                                                       |  |                                         | 2,677    |   |                                                               |   |        |                                                               |  |   |             |  
|Accrued expenses                                                                   |  |                                         |         |   |                                                               |   | 1,500   |                                                               |  |   |             |  
|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Net cash used in operating activities                                              |  |                                         | 364,823  |   |                                                               |   |        |                                                               |  |   | (119,283     | )
|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Cash flows from investing activities:                                              |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Cash and cash equivalents deposited in Trust Account                               |  | $                                       |         |   |                                                               | $ |        |                                                               |  | $ | (109,950,000 | )
|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Cash flows from financing activities:                                              |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Net proceeds from public offering                                                  |  | $                                       |         |   |                                                               | $ |        |                                                               |  | $ | 108,990,783  |  
|Proceeds from notes payable to directors and officers                              |  |                                         |         |   |                                                               |   | 150,000 |                                                               |  |   | 150,000      |  
|Prepayment of notes payable to directors and officers                              |  |                                         |         |   |                                                               |   |        |                                                               |  |   | (150,000     | )
|Proceeds from issuance of D&O rights                                               |  |                                         |         |   |                                                               |   |        |                                                               |  |   | 1,700,000    |  
|Proceeds from issuance of common stock to initial stockholders                     |  |                                         |         |   |                                                               |   | 25,000  |                                                               |  |   | 25,000       |  
|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Net cash provided by financing activities                                          |  |                                         |         |   |                                                               |   | 175,000 |                                                               |  |   | 110,715,783  |  
|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Net increase in cash and cash equivalents                                          |  | $                                       | 364,823  |   |                                                               | $ | 175,000 |                                                               |  | $ | 646,500      |  
|Cash and cash equivalents - beginning of period                                    |  | $                                       | 281,677  |   |                                                               | $ |        |                                                               |  | $ |             |  
|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Cash and cash equivalents - end of period                                          |  | $                                       | 646,500  |   |                                                               | $ | 175,000 |                                                               |  | $ | 646,500      |  
|                                                                                   |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Supplemental disclosures of non-cash financing activity:                           |  |                                         |          |   |                                                               |   |         |                                                               |  |   |              |  
|Deferred underwriting fee                                                          |  | $                                       |         |   |                                                               | $ |        |                                                               |  | $ | 2,875,000    |  
|Accretion of Trust Account relating to common stock subject to possible conversion |  | $                                       | 8,362    |   |                                                               | $ |        |                                                               |  | $ | 182,816      |  
|Fair value of underwriter purchase option included in offering costs               |  | $                                       |         |   |                                                               | $ |        |                                                               |  | $ | 1,477,500    |  
|Cash paid for income taxes                                                         |  | $                                       | 673,750  |   |                                                               | $ |        |                                                               |  | $ | 673,750      |  

See notes to financial statements.



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes to Financial Statements



---

NOTE AORGANIZATION AND BUSINESS OPERATIONS

North American Insurance Leaders, Inc. (the Company) was incorporated in Delaware on August 8, 2005. The Company was formed to effect a merger, capital stock exchange, asset acquisition, stock
purchase and/or other similar transaction with one or more businesses in the insurance or insurance services industry in North America (Business Combination). The Company has not generated revenue to date other than interest income. The
Company is considered to be in the development stage and is subject to the risks associated with activities of development stage companies. The Company has selected June 30th as its fiscal year end.

The registration statement for the Companys initial public offering (the Public Offering) was declared effective on March 21,
2006. On that date, the Company consummated a private placement of 1,700,000 D&O rights (the Private Placement) for an aggregate purchase price of $1,700,000. On March 27, 2006, the Company consummated the Public Offering
(together with the over-allotment offering, the Offering) of 14,375,000 units (Units) for net proceeds of approximately $106,000,000 (net of deferred underwriting fees).

The Companys management has broad discretion with respect to the specific application of the net proceeds of the Offering of Units, although the
Company intends to apply substantially all of the net proceeds of the Offering toward consummating a Business Combination with one or more insurance-related businesses. Furthermore, there is no assurance that the Company will be able to successfully
effect a Business Combination. Upon the closing of the Offering and the Private Placement, $109,950,000 (including $2,875,000 of underwriting fees which have been deferred by the underwriters as described in Note C) was placed in a trust account
(the Trust Account) and invested in money market funds or accounts meeting conditions of the Investment Company Act of 1940 and/or securities principally issued or guaranteed by the U.S. government until the earlier of (1) the
consummation of the Companys first Business Combination or (2) the distribution of the Trust Account as described below. The balance in the Trust Account including interest on September 30, 2006 was $111,635,596. In each quarter
commencing July 2006, half of the interest earned during the preceding quarter on the amounts held in the Trust Account (net of taxes payable) will be released to the Company to cover a portion of its working capital requirements up to an aggregate
of $1,000,000. (During the quarter ended September 30, 2006, $402,794 was transferred to working capital.) This interest and the proceeds of the Offering that were not deposited in the Trust Account may be used to pay for business, legal, and
accounting due diligence costs incurred in connection with prospective Business Combinations and continuing general and administrative expenses. The Company will seek stockholder approval before it effects an initial Business Combination, even if
the nature of the Business Combination would not ordinarily require stockholder approval under applicable state law. The Company will proceed with such a Business Combination only if a majority of the shares of common stock voted by the public
stockholders of the Company (the Public Stockholders) are voted in favor of the Business Combination and Public Stockholders owning less than 20% of the shares sold in the Offering both vote against the Business Combination and exercise
their conversion rights as described below. In no event will the pre-Public Offering stockholders of the Company (the Initial Stockholders) be considered Public Stockholders for purposes of voting for or against a Business Combination.
Public Stockholders who convert their stock into an allocable share of the Trust Account will still have the right to exercise the warrants that they receive as part of the Units. In the event that Public Stockholders owning 20% or more of the stock
sold in the Offering vote against the Business Combination and exercise their conversion rights described below, the Business Combination will not be consummated. Accordingly, Public Stockholders holding 19.99% of the aggregate number of shares
owned by all Public Stockholders may seek conversion of their shares in the event of such a Business Combination. Such Public Stockholders are entitled to receive their per share interest in the Trust Account computed without regard to the shares
held by the Initial Stockholders. In this respect, $22,196,462 (including accretion of $182,816, comprised of interest income of $508,625 minus income taxes of $245,250 and $80,559 transferred to working capital) has been classified as common stock
subject to possible conversion at September 30, 2006. Voting against the initial Business Combination alone will not result in an election to exercise a stockholders conversion rights. A stockholder must also affirmatively exercise such
conversion rights at or prior to the time the Business Combination is voted upon by



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements



---



the stockholders. All of the Companys Initial Stockholders, including all of the directors at the time of the Offering and officers of the Company,
have agreed to vote all of the shares of common stock held by them in accordance with the vote of the majority in interest of all other stockholders of the Company, other than the Initial Stockholders, with respect to any initial Business
Combination.

In the event that the Company does not consummate a Business Combination within 18 months after the completion of the
Offering, or 24 months after the completion of the Offering if certain extension criteria have been satisfied, the proceeds then on deposit in the Trust Account will be distributed to the Companys Public Stockholders, excluding Initial
Stockholders, to the extent of their initial stock holdings. In the event of the distribution, it is likely that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the
initial public offering price per share in the Offering (assuming no value is attributed to the Warrants included in the Units offered in the Offering as discussed in Note C).

On March 15, 2006, the Company effected a two-for-three reverse stock split. Following this reverse stock split, there were 3,125,000 shares of
common stock outstanding. Immediately after the reverse stock split, the Company issued a stock dividend of 468,750 shares of common stock in order to ensure that, after the Offering, regardless of whether the underwriters exercised their
over-allotment option in part or in full, the Companys Initial Stockholders would maintain control over 20% of the Companys outstanding shares of common stock after consummation of the Offering. Following this stock dividend and
immediately prior to the Offering, there were 3,593,750 shares of common stock outstanding. All references in the accompanying financial statements to the number of shares of common stock and net income per share have been retroactively restated to
reflect the reverse stock split and the stock dividend.

NOTE BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1] Basis of Presentation:

The accompanying financial
statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, certain information
and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These financial
statements should be read in conjunction with the audited financial statements that were included in the Companys Form 10-K for the fiscal year ended June 30, 2006.

In the Companys opinion, all adjustments (consisting primarily of normal accruals) have been made that are necessary to present fairly the
financial position of the Company. Operating results for the interim period presented are not necessarily indicative of the results to be expected for a full year.

[2] Cash and Cash Equivalents:

The Company considers all highly liquid investments with original maturities of three months
or less to be cash equivalents.

[3] Net Income Per Common Share:

Basic net income per share is calculated by dividing net income attributable to (1) common stockholders and (2) common stockholders subject to possible conversion by their weighted average number of common
shares outstanding during the period. Calculation of the weighted average common shares outstanding during the period is comprised of 3,125,000 initial shares outstanding throughout the period from August 8, 2005 (date of inception) to
September 30, 2006 and an additional 14,843,750 shares (including 2,874,999 subject to possible conversion) outstanding after the



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##### Table of Contents

NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements



---



effective date of the Offering in March 2006. No effect has been given to potential issuances of common stock from warrants or the underwriter option in the
diluted computation, as the effect would not be dilutive.

[4] Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

[5] Income Taxes:

Deferred income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. A
valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. There were no deferred taxes as of September 30, 2006.

[6] Recently Issued Accounting Standards:

Management does not believe that any recently issued, but
not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

NOTE COFFERING

In the Offering, the Company sold 14,375,000 Units. The underwriters were paid fees equal to 4.5%
of the gross proceeds of the Offering, or $5,175,000, and have agreed to defer an additional $2,875,000 (the Deferred Fees) of their underwriting fees until the consummation of a Business Combination. Each Unit consists of one share of
the Companys common stock, par value $0.0001 per share, and one warrant exercisable to purchase one share of common stock (Warrant). Upon consummation of a Business Combination, the Company will pay such Deferred Fees out of the
proceeds of the Offering held in the Trust Account. The underwriters will not be entitled to any interest accrued on the Deferred Fees. The underwriters have agreed to forfeit any rights to, or claims against, such proceeds if the Company does not
successfully complete a Business Combination. Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $6.00 commencing on the later of (a) March 21, 2007 or (b) the completion of
a Business Combination, and will expire on March 21, 2010, or earlier upon redemption. The Warrants will be redeemable at a price of $0.01 per Warrant upon 30 days notice after the Warrants become exercisable, only in the event that
the last sale price of the common stock is at least $11.50 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which notice of redemption is given. The D&O warrants referenced in
Note DCommitments have identical rights to those of the Warrants but will not be transferable or salable by the Companys directors and officers and the spouse of one of the Companys officers, as designee, until the later of
March 21, 2007 or the consummation of a Business Combination.

The Company sold to CRT Capital Group LLC, for $100, an option to
purchase up to a total of 750,000 units, consisting of one share of common stock and one warrant, at $8.80 per unit, commencing on the later of the consummation of the Business Combination and one year after the date of the final prospectus for the
Offering and expiring four years after the date of the final prospectus. The warrants underlying the units have terms that are identical to those issued in the Offering, with the exception of the exercise price, which is set at $7.50 per warrant.
The purchase option also contains a cashless exercise feature that allows the holder or holders of the purchase option to receive units on a net exercise basis. In addition, the purchase option provides for registration rights that permit the holder
or holders of the purchase option to demand that a registration statement be filed with respect to all or any part of the securities underlying the purchase option within five years of the completion of the Offering. Further, the holder or holders
of the purchase option are entitled to piggy-back registration rights in the event the Company



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NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements



---



undertakes a subsequent registered offering within seven years of the completion of the Offering. Warrants issued and outstanding as a result of the exercise
of the purchase option will be subject to the Companys right of redemption.

The sale of the option was accounted for as a cost
attributable to the Offering. Accordingly, there was no net impact on the Companys financial position or results of operations, except for the recording of the $100 proceeds from the sale. The underwriters, on behalf of the Company, used a
volatility of 15.86% to calculate the value of the underwriter option. This volatility measurement was based on the average four-year volatility of the S&P 600 Small-Cap Insurance Index. The S&P 600 Small-Cap Insurance Index is a sub-set of
the S&P 600 Small-Cap Index and includes fourteen companies with a range of market capitalizations from $230 million to $1.5 billion operating in the insurance sector. The Company believes this index provides an objective and reasonable estimate
for the price volatility of other small-cap companies operating in the insurance sector. The Company has reviewed the estimates and believes, based upon a Black-Scholes model, that the fair value of the option on the date of sale was approximately
$1,477,500, using an expected life of four years, volatility of 15.86%, and a risk-free rate of 4.71%.

NOTE DCOMMITMENTS

The Company presently occupies office space provided by an affiliate of several of its directors. Pursuant to an office administration agreement, the
affiliate has furnished the Company with office facilities, equipment and clerical services at the facilities for $10,000 per month commencing on January 1, 2006. An amount of $30,000 has been included in general and administrative expenses for
the three-month period ended September 30, 2006 for such services. The office administration agreement may be terminated by either party without penalty upon 30 days written notice to the other party.

The Companys directors at the time of the Offering and officers and the spouse of one of the Companys officers, as designee, purchased from
the Company on the closing date of the Offering an aggregate of 1,700,000 rights (D&O rights) in a Private Placement, at a purchase price of $1.00 per right, convertible into warrants (D&O warrants). The $1.7 million
proceeds from the issuance and sale of the D&O rights were placed in the Trust Account and are part of the liquidating distribution to the Companys Public Stockholders in the event of liquidation prior to the Companys Business
Combination or in the event that less than 20% of the Companys Public Stockholders elect to convert their shares of common stock in connection with a Business Combination.

The D&O rights automatically converted into 2,383,957 D&O warrants on the 120th day following the effective date of the Offering, July 19,
2006. The conversion ratio of D&O rights into D&O warrants was calculated by dividing $1.00 by the conversion price of $0.7131. The conversion price was equal to the weighted average of all sale prices of the warrants as reported on the AMEX
during the 20 trading days prior to the conversion date.

The D&O warrants have terms and provisions that are identical to those of the
warrants sold as part of the units in the Offering but will not be transferable or salable by the Companys directors and officers and the spouse of one of the Companys officers, as designee, until the later of March 21, 2007 or the
consummation of the initial Business Combination. In the event of liquidation prior to the Companys Business Combination, the D&O warrants will expire worthless.

Holders of the D&O warrants are permitted to transfer D&O warrants in certain limited circumstances, such as by will in the event of their death.
However, the transferees receiving such D&O warrants will be subject to the same sale restrictions imposed on the Companys directors and officers and the spouse of one of the Companys officers, as designee, who initially purchased
the D&O rights from the Company.



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NORTH AMERICAN INSURANCE LEADERS, INC.

(a development stage company)

Notes
to Financial Statements



---



NOTE EPREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the board of directors.

NOTE FCOMMON STOCK

At September 30,
2006, 18,258,957 shares of common stock were reserved for issuance upon exercise of redeemable warrants and underwriters unit purchase option.

NOTE GINCOME TAXES

Provision for Income Taxes

Provision for current income taxes consists of:

|                                                             |  |         |         |       |   |               |  |   |          
|------------------------------------------------------------ |  | ------- | ------- | ----- | - | ------------- |  | - | ---------
|                                                             |  | Federal |         | State |   | Total Current
|Period from July 1, 2006 to September 30, 2006               |  | $       | 408,400 |       | $ | 144,141       |  | $ | 552,541  
|                                                             |  |         |         |       |   |               |  |   |          
|Period from August 8, 2005 (inception) to September 30, 2006 |  | $       | 742,571 |       | $ | 346,329       |  | $ | 1,088,900
|                                                             |  |         |         |       |   |               |  |   |          



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Unless the context otherwise requires, references in this report to the Company, we, us, and our refer to
North American Insurance Leaders, Inc.

The following discussion should be read in conjunction with our financial statements and related
notes thereto included elsewhere in this report.

Forward-Looking Statements

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve substantial risks and uncertainties. We have based these forward-looking statements on our current expectations, estimates and projections about our
industry, our beliefs, our assumptions and future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such
as may, should, could, would, expect, plan, anticipate, believe, estimate, continue, or the negative of such terms or other
similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in this report and our other Securities and Exchange Commission (SEC) filings, including the risks
discussed in the section entitled Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 30, 2006 (the Form 10-K), and the following:



| |  |  | our blank check structure, limited operating history and the extremely limited basis upon which to evaluate our ability to achieve our business objective;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | liquidation if no business combination occurs;
| | - |  | ----------------------------------------------



| |  |  | allocation of our managements time to other businesses;
| | - |  | --------------------------------------------------------



| |  |  | decreases in interest rates;
| | - |  | ----------------------------



| |  |  | potential conflicts of interest involving our directors and officers;
| | - |  | ---------------------------------------------------------------------



| |  |  | our ability to hire and retain key personnel;
| | - |  | ---------------------------------------------



| |  |  | pervasive and increasing federal and state regulation of the insurance industry, including the possibility that regulation will delay or prevent a business combination; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a target business having insufficient reserves and being potentially subject to unforeseeable and/or catastrophic natural and man-made events.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------

Managements Discussion and Analysis of Financial Condition and Results of Operations

We are a blank check company organized under the laws of the State of Delaware on August 8, 2005. We were formed to effect a merger,
capital stock exchange, asset acquisition, stock purchase and/or other similar transaction with one or more businesses in the insurance or insurance services industry in North America, which we refer to as a business combination. We have
not generated revenue to date other than interest income. We are considered to be in the development stage and are subject to the risks associated with activities of development stage companies. Since our initial public offering in March 2006, we
have been actively engaged in sourcing a suitable business combination candidate. We have met with target companies, service professionals and other intermediaries to discuss our company, the background of our management and our combination
preferences. However, as of the date of filing of this report, we have not consummated any business combination. We have selected June 30 as our fiscal year end. Our securities trade on the American Stock Exchange.

On March 27, 2006, we consummated our initial public offering of 14,375,000 units including the over-allotment option and received gross proceeds of
$115,000,000. The underwriters were paid fees of 4.5% of the gross proceeds, or $5,175,000, and have agreed to defer an additional $2,875,000 of their underwriting fees until the



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##### Table of Contents

consummation of a business combination. Upon the closing of the offering, $109,950,000 was placed in a trust account (the trust account),
including $2,875,000 of deferred underwriting fees and $1,700,000 from the March 2006 private placement of rights to our directors at that time and officers and the spouse of one of our officers, as designee (D&O rights). The balance
in the trust account including interest on September 30, 2006 was $111,635,596.

We intend to use substantially all of the net
proceeds of our initial public offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the business combination. To
the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance the operations of the
business we acquire.

Net income for the three-month period ended September 30, 2006 was $648,635 and consisted of interest income of
$1,421,300 earned predominantly on the trust account, offset by a $552,541 provision for income taxes and $220,124 of general and administrative expenses (primarily attributable to $125,000 of legal and accounting fees unrelated to our initial
public offering, $49,830 of insurance expense and $30,000 in fees for a monthly administrative services agreement that commenced January 1, 2006). Net income attributable to common stockholders was $640,273 after allowing for the $8,362
accretion of the trust account relating to common stock subject to possible conversion. The accretion was comprised of net investment income of $129,727, partially offset by the addition of $80,559 to working capital and $40,806 of prior period
taxes.

Net loss for the period since inception on August 8, 2005 to September 30, 2005 was $1,500 and consisted of $1,500 of
general and administrative expenses.

Net income for the period since inception on August 8, 2005 to September 30, 2006 was
$1,311,493 and consisted of interest income of $2,766,507 earned predominantly on the trust account, offset by a $1,088,900 provision for income taxes and $366,114 of general and administrative expenses (primarily attributable to $132,982 of legal
and accounting fees unrelated to our initial public offering, $106,160 of insurance expense and $90,000 in fees for a monthly administrative services agreement that commenced January 1, 2006). Accretion of the trust account relating to common
stock subject to possible conversion totaled $182,816. Net income attributable to common stockholders was $1,128,677.

During each quarter
commencing July 2006, half of the interest earned on the trust account (net of taxes payable) during the preceding quarter will be released to the Company to cover a portion of working capital requirements up to an aggregate of $1,000,000. This
interest and the net proceeds of our initial public offering that were not deposited in the trust account will be used to pay business, legal, and accounting due diligence costs incurred in connection with prospective business combinations and to
pay continuing general and administrative expenses. During the three-month period ended September 30, 2006, $402,794 of the $805,588 in interest that was earned on the trust account (net of taxes payable) during the preceding quarter was
released.

We believe that we have sufficient available funds outside of the trust account to operate through March 2008, assuming that a
business combination is not consummated during that time. We do not believe we will need to raise additional funds during this time in order to meet the expenditures required to meet our operating expenses. However, we may issue additional capital
stock, debt or a combination of capital stock and debt to complete one or more business combinations.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported.
Actual results could materially differ from those estimates. We have determined that we currently are not subject to any critical accounting policies.



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

To date, our efforts have been limited to organizational activities and activities relating to our initial public offering and the identification of a target business. We have not generated any revenue other than interest income. As the
proceeds from our initial public offering held in trust have been invested in short term investments, our only market risk exposure relates to fluctuations in interest.

As of September 30, 2006, $111,635,596 of the net proceeds of our initial public offering (including interest) was held in trust for the purposes of consummating a business combination. The proceeds held in trust
have been invested in money market funds at JPMorgan Chase Bank, which invest in United States Treasury Bills, commercial paper and other money market instruments. JPMorgan Chase Bank also acts as trustee. As of September 30, 2006, the
effective annualized interest rate payable on our investment was 5.02%.

We have not engaged in any hedging activities since our inception
on August 8, 2005. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.



|Item 4. | Controls and Procedures.
|------- | ------------------------

We maintain disclosure
controls and procedures designed to ensure that information required to be disclosed in our periodic filings with the SEC under the Exchange Act, including this report, is recorded, processed, summarized and reported on a timely basis. These
disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to our management on a timely basis to allow decisions regarding
required disclosure. Management, including our chief executive officer and chief financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rules 13a-15(e) and
15(d)-15(e) of the Exchange Act) as of September 30, 2006. Based upon that evaluation, management has concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. During the most
recently completed fiscal quarter, there has been no significant change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION



|Item 1A. | Risk Factors.
|-------- | -------------

See Item 1A. Risk
Factors in the Form 10-K.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

On March 27, 2006, we consummated our initial public offering of 14,375,000 units including the over-allotment option and received gross proceeds of $115,000,000. The securities sold in our initial public
offering were registered under the Securities Act of 1933, as amended, on a registration statement on Form S-1 (No. 333-127871). The SEC declared the registration statement effective on March 21, 2006. The underwriters were paid fees of 4.5% of
the gross proceeds, or $5,175,000, and have agreed to defer an additional $2,875,000 of their underwriting fees until the consummation of a business combination. Upon the closing of the offering, $109,950,000 was placed in the trust account,
including $2,875,000 of deferred underwriting fees and $1,700,000 from the March 2006 private placement of D&O rights. The balance in the trust account including interest on September 30, 2006 was $111,635,596. For a description of the use
of proceeds generated in our initial public offering, see Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations in Part I of this report.



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##### Table of Contents

|Item 6. | Exhibits.
|------- | ---------

Listed below are the exhibits that are
furnished herewith as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):

Exhibit No. Description of
Document



|     |  |                                                                                                                                                        
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certificate pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 of the Principal Executive Officer                                    
|     | 
|31.2 |  | Certificate pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 of the Principal Financial Officer                                    
|     | 
|32.1 |  | Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
|     | 
|32.2 |  | Certificate Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer



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##### Table of Contents

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 thereunto duly authorized.



|                  |  |  |  |                                       
|----------------- |  |  |  | --------------------------------------
|                  |  |  |  | NORTH AMERICAN INSURANCE LEADERS, INC.
|                  |  | 
|November 14, 2006 |  |  |  | /s/ William R. de Jonge               
|Date              |  |  |  | Name: William R. de Jonge             
|                  |  |  |  | Title: President                      



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