----

----

| T | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware                                                       | 56-2393241                        |
|----------------------------------------------------------------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |

| Large accelerated filer o | Accelerated filer T | Non-accelerated filer o | Smaller reporting company o |
|---------------------------|---------------------|-------------------------|-----------------------------|

| Class                         | Shares outstanding as of August 6, 2010 |
|-------------------------------|-----------------------------------------|
| Common Stock, $0.01 Par Value | 22,023,529                              |

----

----

----

SeaBr

|       |                                                                                                             | Page   |
|------------|------------------------------------------------------------------------------------------------------------------|--------|
|       |                                                                                                             |   |
| Part I.    | Financial Information                                                                                            |   |
|       |                                                                                                             |   |
| Item 1.    | Financial Statements (unaudited)                                                                                 | 2      |
|       |                                                                                                             |   |
|       | Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009                                  | 2      |
|       |                                                                                                             |   |
|       | Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2010 and 2009 | 3      |
|       |                                                                                                             |   |
|       | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009                  | 4      |
|       |                                                                                                             |   |
|       | Notes to Unaudited Condensed Consolidated Financial Statements                                                   | 5      |
|       |                                                                                                             |   |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                      | 14     |
|       |                                                                                                             |   |
| Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                                                       | 21     |
|       |                                                                                                             |   |
| Item 4.    | Controls and Procedures                                                                                          | 21     |
|       |                                                                                                             |   |
| Part II.   | Other Information                                                                                                |   |
|       |                                                                                                             |   |
| Item 1A.   | Risk Factors                                                                                                     | 21     |
|       |                                                                                                             |   |
| Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                                      | 22     |
|       |                                                                                                             |   |
| Item 6.    | Exhibits                                                                                                         | 22     |
|       |                                                                                                             |   |
| Signatures | 23                                                                                                               |

----

Index

 1

SEA

|                                                                                                                                                                      |   | June 30,2010                                  |      |   | December 31,2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|-----------|--------|-----------------------|--------|
|                                                                                                                                                                      |   | (Unaudited)                                        |      |   | (Audited)             |   |
|                                                                                                                                                                      |   | (in thousands, except share and per share amounts) |      |
| ASSETS                                                                                                                                                                    |   |                                               |      |   |                  |   |
|                                                                                                                                                                      |   |                                               |      |   |                  |   |
| Fixed income securities available for sale, at fair value (amortized cost $645,166 in 2010 and $608,222 in 2009)                                                          |   | $                                                  | 666,949   |   |                  | $      | 626,608 |   |
| Cash and cash equivalents                                                                                                                                                 |   |                                               | 19,907    |   |                  |   | 12,896 |   |
| Accrued investment income                                                                                                                                                 |   |                                               | 6,941     |   |                  |   | 6,734 |   |
| Premiums receivable, net of allowance                                                                                                                                     |   |                                               | 15,509    |   |                  |   | 14,477 |   |
| Deferred premiums                                                                                                                                                         |   |                                               | 188,266   |   |                  |   | 182,239 |   |
| Service income receivable                                                                                                                                                 |   |                                               | 221       |   |                  |   | 317 |   |
| Reinsurance recoverables                                                                                                                                                  |   |                                               | 44,343    |   |                  |   | 34,339 |   |
| Due from reinsurer                                                                                                                                                        |   |                                               | 5,783     |   |                  |   | 6,707 |   |
| Receivable under adverse development cover                                                                                                                                |   |                                               | 3,010     |   |                  |   | 3,010 |   |
| Prepaid reinsurance                                                                                                                                                       |   |                                               | 5,651     |   |                  |   | 6,760 |   |
| Property and equipment, net                                                                                                                                               |   |                                               | 5,635     |   |                  |   | 5,356 |   |
| Federal income tax recoverable                                                                                                                                            |   |                                               | 10,765    |   |                  |   | 4,774 |   |
| Deferred income taxes, net                                                                                                                                                |   |                                               | 20,866    |   |                  |   | 21,861 |   |
| Deferred policy acquisition costs, net                                                                                                                                    |   |                                               | 27,105    |   |                  |   | 25,537 |   |
| Intangible assets, net                                                                                                                                                    |   |                                               | 1,391     |   |                  |   | 1,431 |   |
| Goodwill                                                                                                                                                                  |   |                                               | 2,794     |   |                  |   | 4,321 |   |
| Other assets                                                                                                                                                              |   |                                               | 10,409    |   |                  |   | 7,494 |   |
| Total assets                                                                                                                                                              |   | $                                                  | 1,035,545 |   |                  | $      | 964,861 |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                |   |                                               |      |   |                  |   |   |   |
|                                                                                                                                                                      |   |                                               |      |   |                  |   |   |   |
|                                                                                                                                                                      |   |                                               |      |   |                  |   |   |   |
| Liabilities:                                                                                                                                                              |   |                                               |      |   |                  |   |   |   |
| Unpaid loss and loss adjustment expense                                                                                                                                   |   | $                                                  | 411,865   |   |                  | $      | 351,496 |   |
| Unearned premiums                                                                                                                                                         |   |                                               | 180,609   |   |                  |   | 175,766 |   |
| Reinsurance funds withheld and balances payable                                                                                                                           |   |                                               | 6,371     |   |                  |   | 7,312 |   |
| Premiums payable                                                                                                                                                          |   |                                               | 7,290     |   |                  |   | 4,786 |   |
| Accrued expenses and other liabilities                                                                                                                                    |   |                                               | 63,689    |   |                  |   | 54,028 |   |
| Surplus notes                                                                                                                                                             |   |                                               | 12,000    |   |                  |   | 12,000 |   |
| Total liabilities                                                                                                                                                         |   |                                               | 681,824   |   |                  |   | 605,388 |   |
|                                                                                                                                                                      |   |                                               |      |   |                  |   |   |   |
| Commitments and contingencies                                                                                                                                             |   |                                               |      |   |                  |   |   |   |
|                                                                                                                                                                      |   |                                               |      |   |                  |   |   |   |
| Stockholders’ equity:                                                                                                                                               |   |                                               |      |   |                  |   |   |   |
| Series A preferred stock, $0.01 par value; 750,000 shares authorized; no shares issued and outstanding                                                                    |   |                                               | −   |   |                  |   | − |   |
| Undesignated preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued and outstanding                                                             |   |                                               | –   |   |                  |   | – |   |
| Common stock, $0.01 par value; 75,000,000 shares authorized; issued and outstanding – 22,024,321 shares at June 30, 2010 and 21,675,786 shares at December 31, 2009 |   |                                               | 220       |   |                  |   | 217 |   |
| Paid-in capital                                                                                                                                                           |   |                                               | 207,259   |   |                  |   | 205,079 |   |
| Accumulated other comprehensive income                                                                                                                                    |   |                                               | 15,135    |   |                  |   | 12,927 |   |
| Retained earnings                                                                                                                                                         |   |                                               | 131,107   |   |                  |   | 141,250 |   |
| Total stockholders’ equity                                                                                                                                          |   |                                               | 353,721   |   |                  |   | 359,473 |   |
| Total liabilities and stockholders’ equity                                                                                                                          |   | $                                                  | 1,035,545 |   |                  | $      | 964,861 |   |

----

Index

SEAB

|                                                                        |   | Three Months Ended June 30,                                |       |   | Six Months Ended June 30, |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------------|------------|--------|--------------------------------|--------|
|                                                                        |   | 2010                                                            |       |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                                                        |   | (in thousands, except share and earnings per share information) |       |
| Revenue:                                                                    |   |                                                            |       |   |                           |   |   |   |   |   |   |   |
| Premiums earned                                                             |   | $                                                               | 65,621     |   |                           | $      | 60,029 |   |   | $ | 126,251 |   |   | $ | 118,033 |   |
| Claims service income                                                       |   |                                                            | 224        |   |                           |   | 243 |   |   |   | 437 |   |   |   | 489 |   |
| Other service income                                                        |   |                                                            | 52         |   |                           |   | 47 |   |   |   | 85 |   |   |   | 111 |   |
| Net investment income                                                       |   |                                                            | 5,880      |   |                           |   | 5,651 |   |   |   | 11,959 |   |   |   | 11,298 |   |
| Other-than-temporary impairment losses:                                     |   |                                                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Total other-than-temporary impairment losses                                |   |                                                            | –    |   |                           |   | (258 | ) |   |   | – |   |   |   | (258 | ) |
| Less portion of losses recognized in accumulated other comprehensive income |   |                                                            | –    |   |                           |   | – |   |   |   | – |   |   |   | – |   |
| Net impairment losses recognized in earnings                                |   |                                                            | –    |   |                           |   | (258 | ) |   |   | – |   |   |   | (258 | ) |
| Other net realized gains (losses) recognized in earnings                    |   |                                                            | 3,851      |   |                           |   | (86 | ) |   |   | 10,383 |   |   |   | (75 | ) |
| Other income                                                                |   |                                                            | 896        |   |                           |   | 977 |   |   |   | 1,726 |   |   |   | 2,208 |   |
|                                                                        |   |                                                            | 76,524     |   |                           |   | 66,603 |   |   |   | 150,841 |   |   |   | 131,806 |   |
| Losses and expenses:                                                        |   |                                                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Loss and loss adjustment expenses                                           |   |                                                            | 79,696     |   |                           |   | 41,212 |   |   |   | 122,445 |   |   |   | 79,776 |   |
| Underwriting, acquisition and insurance expenses                            |   |                                                            | 17,059     |   |                           |   | 16,090 |   |   |   | 35,816 |   |   |   | 35,884 |   |
| Interest expense                                                            |   |                                                            | 132        |   |                           |   | 152 |   |   |   | 260 |   |   |   | 326 |   |
| Goodwill impairment                                                         |   |                                                            | 1,527      |   |                           |   | –  |   |   |   | 1,527 |   |   |   | –  |   |
| Other expenses                                                              |   |                                                            | 2,402      |   |                           |   | 2,642 |   |   |   | 4,892 |   |   |   | 4,714 |   |
|                                                                        |   |                                                            | 100,816    |   |                           |   | 60,096 |   |   |   | 164,940 |   |   |   | 120,700 |   |
| Income (loss) before taxes                                                  |   |                                                            | (24,292    | )      |                           |   | 6,507 |   |   |   | (14,099 | ) |   |   | 11,106 |   |
|                                                                        |   |                                                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense (benefit)                                                |   |                                                            | (8,762     | )      |                           |   | 2,205 |   |   |   | (6,156 | ) |   |   | 2,816 |   |
| Net income (loss)                                                           |   | $                                                               | (15,530    | )      |                           | $      | 4,302 |   |   | $ | (7,943 | ) |   | $ | 8,290 |   |
|                                                                        |   |                                                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per share                                             |   | $                                                               | (0.74      | )      |                           | $      | 0.21 |   |   | $ | (0.38 | ) |   | $ | 0.40 |   |
| Diluted earnings (loss) per share                                           |   | $                                                               | (0.74      | )      |                           | $      | 0.20 |   |   | $ | (0.38 | ) |   | $ | 0.39 |   |
|                                                                        |   |                                                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average basic shares outstanding                                   |   |                                                            | 20,893,983 |   |                           |   | 20,724,956 |   |   |   | 20,820,281 |   |   |   | 20,670,130 |   |
| Weighted average diluted shares outstanding                                 |   |                                                            | 20,893,983 |   |                           |   | 21,412,646 |   |   |   | 20,820,281 |   |   |   | 21,383,475 |   |
|                                                                        |   |                                                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Dividends declared per share                                                |   | $                                                               | 0.05       |   |                           | $      | – |   |   | $ | 0.10 |   |   | $ | – |   |

----

Index

SEAB

|                                                                                 |   | Six Months Ended June 30, |     |
|--------------------------------------------------------------------------------------|--------|--------------------------------|----------|
|                                                                                 |   | 2010                           |     |   | 2009 |   |
|                                                                                 |   | (in thousands)                 |     |
|                                                                                 |   |                           |     |   |   |   |
| Cash flows from operating activities:                                                |   |                           |     |   |   |   |
| Net income (loss)                                                                    |   | $                              | (7,943   | ) |   | $ | 8,290 |   |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: |   |                           |     |   |   |   |   |   |
| Amortization of deferred policy acquisition costs                                    |   |                           | 22,745   |   |   |   | 22,039 |   |
| Policy acquisition costs deferred                                                    |   |                           | (24,313  | ) |   |   | (24,510 | ) |
| Provision for depreciation and amortization                                          |   |                           | 3,136    |   |   |   | 2,532 |   |
| Compensation cost on restricted shares of common stock                               |   |                           | 2,268    |   |   |   | 2,144 |   |
| Compensation cost on stock options                                                   |   |                           | 438      |   |   |   | 351 |   |
| Net realized (gain) loss on investments                                              |   |                           | (10,383  | ) |   |   | 333 |   |
| Deferred income tax benefit                                                          |   |                           | (140     | ) |   |   | (1,708 | ) |
| Changes in certain assets and liabilities:                                           |   |                           |     |   |   |   |   |   |
| Unpaid loss and loss adjustment expense                                              |   |                           | 60,369   |   |   |   | 30,701 |   |
| Income tax payable                                                                   |   |                           | (5,992   | ) |   |   | (1,095 | ) |
| Reinsurance recoverables, net of reinsurance withheld                                |   |                           | (8,912   | ) |   |   | (10,362 | ) |
| Unearned premiums, net of deferred premiums and premiums receivable                  |   |                           | (2,216   | ) |   |   | 6,335 |   |
| Accrued investment income                                                            |   |                           | (207     | ) |   |   | (144 | ) |
| Other assets and other liabilities                                                   |   |                           | 4,189    |   |   |   | (591 | ) |
| Net cash provided by operating activities                                            |   |                           | 33,039   |   |   |   | 34,315 |   |
|                                                                                 |   |                           |     |   |   |   |   |   |
| Cash flows from investing activities:                                                |   |                           |     |   |   |   |   |   |
| Purchases of investments                                                             |   |                           | (254,446 | ) |   |   | (80,670 | ) |
| Sales of investments                                                                 |   |                           | 205,597  |   |   |   | 15,042 |   |
| Maturities and redemption of investments                                             |   |                           | 25,649   |   |   |   | 30,682 |   |
| Purchases of property and equipment                                                  |   |                           | (1,207   | ) |   |   | (1,713 | ) |
| Net cash used in investing activities                                                |   |                           | (24,407  | ) |   |   | (36,659 | ) |
|                                                                                 |   |                           |     |   |   |   |   |   |
| Cash flows from financing activities:                                                |   |                           |     |   |   |   |   |   |
| Proceeds from exercise of stock options                                              |   |                           | 26       |   |   |   | – |   |
| Grant of restricted shares of common stock                                           |   |                           | 4        |   |   |   | 4 |   |
| Surrender of stock in connection with restricted stock vesting                       |   |                           | (553     | ) |   |   | (473 | ) |
| Stockholder dividends paid                                                           |   |                           | (1,098   | ) |   |   | – |   |
| Net cash used in financing activities                                                |   |                           | (1,621   | ) |   |   | (469 | ) |
|                                                                                 |   |                           |     |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                 |   |                           | 7,011    |   |   |   | (2,813 | ) |
| Cash and cash equivalents at beginning of period                                     |   |                           | 12,896   |   |   |   | 22,872 |   |
| Cash and cash equivalents at end of period                                           |   | $                              | 19,907   |   |   | $ | 20,059 |   |
|                                                                                 |   |                           |     |   |   |   |   |   |
| Supplemental disclosures:                                                            |   |                           |     |   |   |   |   |   |
| Interest paid on surplus notes                                                       |   | $                              | 257      |   |   | $ | 348 |   |
| Federal income taxes paid                                                            |   |                           | –  |   |   |   | 5,400 |   |
| Accrued expenses for purchases of investments                                        |   |                           | 8,424    |   |   |   | 1,072 |   |
| Receivable for sales of investments                                                  |   |                           | 2,936    |   |   |   | – |   |

----

Index

SEABR

| 1. | Basis of Presentation |
|----|-----------------------|

|          |   | Three Months Ended June 30, 2009 |   |   | Six Months Ended June 30, 2009 |   |
|---------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|          |   | As Reported                           |   |   | Adjustment                          |   |   | As Revised |   |   | As Reported |   |   | Adjustment |   |   | As Revised |   |
|          |   | (in thousands)                        |   |
| Other income  |   | $                                     | 1,645  |   |                                | $      | (668 | ) |   | $ | 977 |   |   | $ | 4,322 |   |   | $ | (2,114 | ) |   | $ | 2,208 |   |
| Other expense |   |                                  | 3,310  |   |                                |   | (668 | ) |   |   | 2,642 |   |   |   | 6,828 |   |   |   | (2,114 | ) |   |   | 4,714 |   |

| 2. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

----

Index

|                                                                                                                           |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                                                                                                                           |   | 2010                             |    |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                           |   | (in thousands)                   |    |
| Basic weighted average shares outstanding                                                                                      |   |                             | 20,894  |   |                           |   | 20,725 |   |   |   | 20,820 |   |   |   | 20,670 |   |
| Weighted average dilutive shares issuable upon exercise of outstanding stock options and vesting of nonvested restricted stock |   |                             | – |   |                           |   | 688 |   |   |   | – |   |   |   | 713 |   |
| Diluted weighted average shares outstanding                                                                                    |   |                             | 20,894  |   |                           |   | 21,413 |   |   |   | 20,820 |   |   |   | 21,383 |   |

|                                                                                            |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|-------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                                                                                            |   | 2010                             |    |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                                                                            |   | (in thousands)                   |    |
| Net income (loss)                                                                               |   | $                                | (15,530 | )      |                           | $      | 4,302 |   |   | $ | (7,943 | ) |   | $ | 8,290 |   |
| Reclassification adjustment for net realized (gains) losses recorded into income                |   |                             | (3,851  | )      |                           |   | 344 |   |   |   | (10,383 | ) |   |   | 333 |   |
| Tax expense (benefit) related to reclassification adjustment gains (losses)                     |   |                             | 1,348   |   |                           |   | (120 | ) |   |   | 3,633 |   |   |   | (117 | ) |
| Increase in unrealized gains/losses on investment securities available for sale                 |   |                             | 12,262  |   |                           |   | 3,051 |   |   |   | 13,780 |   |   |   | 8,994 |   |
| Tax expense related to unrealized gains (losses)                                                |   |                             | (4,291  | )      |                           |   | (1,068 | ) |   |   | (4,822 | ) |   |   | (3,148 | ) |
| Tax effect of change in deferred tax asset valuation allowance recorded in comprehensive income |   |                             | – |   |                           |   | 854 |   |   |   | – |   |   |   | 812 |   |
| Total comprehensive income (loss)                                                               |   | $                                | (10,062 | )      |                           | $      | 7,363 |   |   | $ | (5,735 | ) |   | $ | 15,164 |   |

----

Index

| 3. | Investments |
|----|-------------|

|                                           |   | Cost or Amortized Cost |    |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Estimated Fair Value |   |   | Carrying Value |    |
|------------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|--------|-------------------------|--------|--------|----------------------|--------|--------|----------------|---------|
|                                           |   | (in thousands)         |    |   |                   |   |
| U.S. Treasury securities                       |   | $                      | 21,202  |   |                   | $      | 785    |                    |   | $      | –              |   |   | $              | 21,987  |   |   | $ | 21,987 |   |
| Government sponsored agency securities         |   |                   | 24,135  |   |                   |   | 1,258  |                    |   |   | –              |   |   |           | 25,393  |   |   |   | 25,393 |   |
| Corporate securities                           |   |                   | 149,781 |   |                   |   | 5,836  |                    |   |   | (62                  | )      |   |           | 155,555 |   |   |   | 155,555 |   |
| Tax-exempt municipal securities                |   |                   | 305,871 |   |                   |   | 8,753  |                    |   |   | (293                 | )      |   |           | 314,331 |   |   |   | 314,331 |   |
| Mortgage pass-through securities               |   |                   | 59,515  |   |                   |   | 3,449  |                    |   |   | –              |   |   |           | 62,964  |   |   |   | 62,964 |   |
| Collateralized mortgage obligations            |   |                   | 26,214  |   |                   |   | 388    |                    |   |   | (52                  | )      |   |           | 26,550  |   |   |   | 26,550 |   |
| Asset-backed securities                        |   |                   | 58,448  |   |                   |   | 1,721  |                    |   |   | –              |   |   |           | 60,169  |   |   |   | 60,169 |   |
| Total investment securities available for sale |   | $                      | 645,166 |   |                   | $      | 22,190 |                    |   | $      | (407                 | )      |   | $              | 666,949 |   |   | $ | 666,949 |   |

|                                |   | Less Than 12 Months  |   |   | 12 Months or More         |   |   | Total                |   |
|-------------------------------------|--------|----------------------|--------|--------|---------------------------|--------|--------|----------------------|--------|
| Investment Category                 |   | Aggregate Fair Value |   |   | Aggregate Unrealized Loss |   |   | Aggregate Fair Value |   |   | Aggregate Unrealized Loss |   |   | Aggregate Fair Value |   |   | Aggregate Unrealized Loss |   |
|                                |   |                 |   |   | (in thousands)            |   |   |                 |   |
| Corporate securities                |   | $                    | 8,632  |   |                      | $      | (62    | )                    |   | $ | – |   |   | $ | – |   |   | $ | 8,632 |   |   | $ | (62 | ) |
| Tax-exempt municipal securities     |   |                 | 37,296 |   |                      |   | (249   | )                    |   |   | 5,796 |   |   |   | (44 | ) |   |   | 43,092 |   |   |   | (293 | ) |
| Collateralized mortgage obligations |   |                 | 1,862  |   |                      |   | (5     | )                    |   |   | 164 |   |   |   | (47 | ) |   |   | 2,026 |   |   |   | (52 | ) |
| Total                               |   | $                    | 47,790 |   |                      | $      | (316   | )                    |   | $ | 5,960 |   |   | $ | (91 | ) |   | $ | 53,750 |   |   | $ | (407 | ) |

----

Index

|             |   |   | Insured Bonds   |    |   | Uninsured Bonds    |   |    | Total Municipal Portfolio Based On |   |
|------------------|--------|--------|-----------------|---------|--------|--------------------|--------|---------|------------------------------------|--------|
| Rating           |   |   | Insured Ratings |    |   | Underlying Ratings |   |    | Ratings                            |   |   | Overall Ratings (1) |   |   | Underlying Ratings |   |
|             |   |   | (in thousands)  |    |
| AAA              |   |   | $               | 8,820   |   |               | $      | 8,820   |                               |   | $ | 26,426 |   |   | $ | 35,246 |   |   | $ | 35,246 |   |
| AA+              |   |   |            | 28,975  |   |               |   | 23,562  |                               |   |   | 55,308 |   |   |   | 84,283 |   |   |   | 78,870 |   |
| AA               |   |   |            | 34,889  |   |               |   | 32,083  |                               |   |   | 45,656 |   |   |   | 80,545 |   |   |   | 77,739 |   |
| AA-              |   |   |            | 45,799  |   |               |   | 42,933  |                               |   |   | 25,926 |   |   |   | 71,725 |   |   |   | 68,859 |   |
| A+               |   |   |            | 16,450  |   |               |   | 26,370  |                               |   |   | 7,595 |   |   |   | 24,045 |   |   |   | 33,965 |   |
| A                |   |   |            | 4,985   |   |               |   | 4,985   |                               |   |   | 11,307 |   |   |   | 16,292 |   |   |   | 16,292 |   |
| A-               |   |   |            | 3,166   |   |               |   | 3,166   |                               |   |   | 518 |   |   |   | 3,684 |   |   |   | 3,684 |   |
| BBB+             |   |   |            | – |   |               |   | 1,165   |                               |   |   | 3,376 |   |   |   | 3,376 |   |   |   | 4,541 |   |
| BBB              |   |   |            | – |   |               |   | – |                               |   |   | 2,257 |   |   |   | 2,257 |   |   |   | 2,257 |   |
| Pre-refunded (2) |   |   |            | 12,132  |   |               |   | 12,132  |                               |   |   | 10,526 |   |   |   | 22,658 |   |   |   | 22,658 |   |
| Total            |   |   | $               | 155,216 |   |               | $      | 155,216 |                               |   | $ | 188,895 |   |   | $ | 344,111 |   |   | $ | 344,111 |   |

|   | (1) | Represents insured ratings on insured bonds and ratings on uninsured bonds. |
|--------|-----|-----------------------------------------------------------------------------|

|   | (2) | These bonds have been pre-refunded by the issuer depositing highly rated government-issued securities into irrevocable trust funds established for payment of principal and interest. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   |       |   |   | Insurer Ratings |   |   | Average Underlying |   |
|-----------------------------------------------|--------|------------|--------|--------|-----------------|--------|--------|--------------------|--------|
| Bond Insurer                                  |   | Fair Value |   |   | S&P         |   |   | Moody’s      |   |   | Bond Rating |   |
|                                          |   | (Millions) |   |   |            |   |   |               |   |   |   |   |
| National Public Finance Guarantee Corporation |   | $          | 68.7   |   |            |   | A      |               |   |   | Baa1 |   |   |   | AA- |   |

| Maturity                                     |   | Cost or Amortized Cost |    |   | Estimated Fair Value |   |
|----------------------------------------------|--------|------------------------|---------|--------|----------------------|--------|
|                                         |   | (in thousands)         |    |
| Due in one year or less                      |   | $                      | 32,409  |   |                 | $      | 32,856 |   |
| Due after one year through five years        |   |                   | 177,678 |   |                 |   | 185,500 |   |
| Due after five years through ten years       |   |                   | 251,227 |   |                 |   | 258,257 |   |
| Due after ten years                          |   |                   | 39,676  |   |                 |   | 40,653 |   |
| Securities not due at a single maturity date |   |                   | 144,176 |   |                 |   | 149,683 |   |
| Total fixed income securities                |   | $                      | 645,166 |   |                 | $      | 666,949 |   |

----

Index

| 4. | Premiums |
|----|----------|

|                            |   | June 30,2010 |   |   | December 31,2009 |   |
|---------------------------------|--------|-------------------|--------|--------|-----------------------|--------|
|                            |   | (in thousands)    |   |
| Premiums receivable             |   | $                 | 16,103 |   |                  | $      | 15,057 |   |
| Allowance for doubtful accounts |   |              | (594   | )      |                  |   | (580 | ) |
|                            |   | $                 | 15,509 |   |                  | $      | 14,477 |   |

| 5. | Reinsurance |
|----|-------------|

| 6. | Unpaid Loss and Loss Adjustment Expenses |
|----|------------------------------------------|

|                                       |   | Three Months Ended June 30, |    |   | Six Months Ended June 30, |   |
|--------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|                                       |   | 2010                             |    |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                       |   | (in thousands)                   |    |
| Beginning balance:                         |   |                             |    |   |                           |   |   |   |   |   |   |   |
| Unpaid loss and loss adjustment expense    |   | $                                | 361,905 |   |                           | $      | 308,701 |   |   | $ | 351,496 |   |   | $ | 292,027 |   |
| Reinsurance recoverables                   |   |                             | (36,853 | )      |                           |   | (25,669 | ) |   |   | (34,080 | ) |   |   | (18,231 | ) |
| Net balance, beginning of year             |   |                             | 325,052 |   |                           |   | 283,032 |   |   |   | 317,416 |   |   |   | 273,796 |   |
| Incurred related to:                       |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Current period                             |   |                             | 49,113  |   |                           |   | 38,280 |   |   |   | 91,987 |   |   |   | 75,946 |   |
| Prior periods                              |   |                             | 30,583  |   |                           |   | 2,932 |   |   |   | 30,458 |   |   |   | 3,256 |   |
| Receivable under adverse development cover |   |                             | − |   |                           |   | − |   |   |   | − |   |   |   | 574 |   |
| Total incurred                             |   |                             | 79,696  |   |                           |   | 41,212 |   |   |   | 122,445 |   |   |   | 79,776 |   |
| Paid related to:                           |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Current period                             |   |                             | (6,505  | )      |                           |   | (10,682 | ) |   |   | (11,536 | ) |   |   | (15,970 | ) |
| Prior periods                              |   |                             | (30,430 | )      |                           |   | (18,866 | ) |   |   | (60,512 | ) |   |   | (42,332 | ) |
| Total paid                                 |   |                             | (36,935 | )      |                           |   | (29,548 | ) |   |   | (72,048 | ) |   |   | (58,302 | ) |
| Receivable under adverse development cover |   |                             | − |   |                           |   | − |   |   |   | − |   |   |   | (574 | ) |
| Net balance, end of period                 |   |                             | 367,813 |   |                           |   | 294,696 |   |   |   | 367,813 |   |   |   | 294,696 |   |
| Reinsurance recoverables                   |   |                             | 44,052  |   |                           |   | 28,032 |   |   |   | 44,052 |   |   |   | 28,032 |   |
| Unpaid loss and loss adjustment expense    |   | $                                | 411,865 |   |                           | $      | 322,728 |   |   | $ | 411,865 |   |   | $ | 322,728 |   |

----

Index

| 7. | Contingencies |
|----|---------------|

| 8. | Share-Based Payment Arrangements |
|----|----------------------------------|

----

Index

|                             |   | Shares Subject to Options |      |   | Weighted Average Exer- cise Price per Share |   |   | Weighted Average Re- maining Con- tractual Life(years) |   |   | Aggregate Intrinsic Value(in thousands) |   |
|----------------------------------|--------|---------------------------|-----------|--------|---------------------------------------------|--------|--------|--------------------------------------------------------|--------|--------|-----------------------------------------|--------|
| Outstanding at December 31, 2009 |   |                      | 1,225,660 |   |                                        | $      | 11.19  |                                                   |   |   | 6.2                                     |   |   | $ | 368 |   |
| Granted                          |   |                      | 169,613   |   |                                        |   | 10.99  |                                                   |   |   | –                                 |   |   |   | – |   |
| Forfeited                        |   |                      | (12,561   | )      |                                        |   | 13.24  |                                                   |   |   | –                                 |   |   |   | – |   |
| Exercised                        |   |                      | (4,000    | )      |                                        |   | 6.54   |                                                   |   |   | –                                 |   |   |   | – |   |
| Cancelled                        |   |                      | (10,776   | )      |                                        |   | 14.24  |                                                   |   |   | –                                 |   |   |   | – |   |
| Outstanding at June 30, 2010     |   |                      | 1,367,936 |   |                                        |   | 11.13  |                                                   |   |   | 6.2                                     |   |   |   | – |   |
|                             |   |                      |      |   |                                        |   |   |                                                   |   |   |                                    |   |   |   |   |   |
| Exercisable at June 30, 2010     |   |                      | 929,563   |   |                                        |   | 10.82  |                                                   |   |   | 5.0                                     |   |   |   | – |   |

|                             |   | Number of Shares |      |   | Weighted Average Grant Date Fair Value |   |
|----------------------------------|--------|------------------|-----------|--------|----------------------------------------|--------|
| Outstanding at December 31, 2009 |   |             | 936,020   |   |                                   | $      | 13.78 |   |
| Granted                          |   |             | 412,270   |   |                                   |   | 11.02 |   |
| Vested                           |   |             | (213,514  | )      |                                   |   | 17.93 |   |
| Forfeited                        |   |             | (17,250   | )      |                                   |   | 12.14 |   |
| Outstanding at June 30, 2010     |   |             | 1,117,526 |   |                                   |   | 12.00 |   |

|                                         |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|----------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                         |   | 2010                             |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                         |   | (in thousands)                   |   |
| Stock-based compensation expense related to: |   |                             |   |   |                           |   |   |   |   |   |   |   |
| Nonvested restricted stock                   |   | $                                | 1,159  |   |                           | $      | 1,059 |   |   | $ | 2,268 |   |   | $ | 2,144 |   |
| Stock options                                |   |                             | 242    |   |                           |   | 192 |   |   |   | 438 |   |   |   | 351 |   |
| Total                                        |   | $                                | 1,401  |   |                           | $      | 1,251 |   |   | $ | 2,706 |   |   | $ | 2,495 |   |
|                                         |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Total related tax benefit                    |   | $                                | 439    |   |                           | $      | 387 |   |   | $ | 845 |   |   | $ | 754 |   |

| 9. | Fair Values of Assets and Liabilities |
|----|---------------------------------------|

----

Index

|   | • | Cash and cash equivalents, premiums receivable, accruedexpenses, other liabilities and surplus notes: The carrying amounts for these financial instruments as reported in the accompanying condensed consolidated balance sheets approximate their fair values. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Investment securities:   The Company measures and reports its financial assets and liabilities, including investment securities, in accordance with the Fair Value Measurement and Disclosure Topic of the Codification. The estimated fair values for available-for-sale securities are generally based on quoted market value prices for securities traded in the public marketplace. The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity. Additional information with respect to fair values of the Company’s investment securities is disclosed in Note 3. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 includes U.S. Treasury securities that are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Level 2 valuations are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 2 includes government sponsored agency securities, corporate fixed-income securities, municipal bonds, mortgage pass-through securities, collateralized mortgage obligations and asset-backed securities. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. As of June 30, 2010, the Company had no Level 3 financial assets or liabilities. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                          |   | Total          |    |   | Level 1 (1) |   |   | Level 2 |   |   | Level 3 |   |
|-------------------------------|--------|----------------|---------|--------|-------------|--------|--------|---------|--------|--------|---------|--------|
|                          |   | (in thousands) |    |
| Securities available for sale |   | $              | 666,949 |   |        | $      | 21,987 |    |   | $      | 644,962 |   |   | $ | – |   |

| (1) | Consists of the Company’s investments in U.S. Treasury securities. |
|-----|--------------------------------------------------------------------------|

----

Index

| 10. | Goodwill |
|-----|----------|

|                                 |   | SBIC           |    |   | THM    |   |    | BWNV   |   |   | Total   |   |
|--------------------------------------|--------|----------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|
|                                 |   | (in thousands) |    |
| Balance as of April 1, 2010:         |   |           |    |   |   |   |    |   |   |   |    |   |
| Goodwill                             |   | $              | 1,527   |   |   | $      | 1,355   |   |   | $      | 1,439   |   |   | $ | 4,321 |   |
| Accumulated impairment losses        |   |           | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
|                                 |   |           | 1,527   |   |   |   | 1,355   |   |   |   | 1,439   |   |   |   | 4,321 |   |
| Goodwill acquired during the quarter |   |           | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Impairment losses                    |   |           | (1,527  | )      |   |   | – |   |   |   | – |   |   |   | (1,527 | ) |
| Balance as of June 30, 2010:         |   |           |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Goodwill                             |   |           | 1,527   |   |   |   | 1,355   |   |   |   | 1,439   |   |   |   | 4,321 |   |
| Accumulated impairment losses        |   |           | (1,527  | )      |   |   | – |   |   |   | – |   |   |   | (1,527 | ) |
|                                 |   | $              | – |   |   | $      | 1,355   |   |   | $      | 1,439   |   |   | $ | 2,794 |   |

----

Index

| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement |
|---------|------------------------------------------------------------------------------------------------------------------|

|   | • | greater frequency or severity of claims and loss activity, including as a result of catastrophic events, than our underwriting, reserving or investment practices anticipate based on historical experience or industry data; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes in the U.S. economy and workforce levels; |
|--------|---------|---------------------------------------------------|

|   | • | our dependency on a concentrated geographic market; |
|--------|---------|-----------------------------------------------------|

|   | • | changes in the availability, cost or quality of reinsurance and failure of our reinsurers to pay claims timely or at all; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------|

|   | • | changes in regulations or laws applicable to us, our subsidiaries, brokers or customers; |
|--------|---------|------------------------------------------------------------------------------------------|

|   | • | potential downgrades in our rating or changes in rating agency policies or practices; |
|--------|---------|---------------------------------------------------------------------------------------|

|   | • | ineffectiveness or obsolescence of our business strategy due to changes in current or future market conditions; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------|

|   | • | unexpected issues relating to claims or coverage and changes in legal theories of liability under our insurance policies; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------|

|   | • | increased competition on the basis of pricing, capacity, coverage terms or other factors; |
|--------|---------|-------------------------------------------------------------------------------------------|

|   | • | developments in financial and capital markets that adversely affect the performance of our investments; |
|--------|---------|---------------------------------------------------------------------------------------------------------|

|   | • | loss of the services of any of our executive officers or other key personnel; |
|--------|---------|-------------------------------------------------------------------------------|

|   | • | our inability to raise capital in the future; |
|--------|---------|-----------------------------------------------|

----

Index

|   | • | our status as an insurance holding company with no direct operations, which could adversely affect our ability to pay dividends in the future; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | our reliance on independent insurance brokers; |
|--------|---------|------------------------------------------------|

|   | • | increased assessments or other surcharges by states in which we write policies; |
|--------|---------|---------------------------------------------------------------------------------|

|   | • | our potential exposure to losses if LMC were to be placed into receivership; |
|--------|---------|------------------------------------------------------------------------------|

|   | • | the effects of acquisitions that we may undertake; |
|--------|---------|----------------------------------------------------|

|   | • | failure of our customers to pay additional premium under our retrospectively rated policies; |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | • | the effects of acts of terrorism or war; |
|--------|---------|------------------------------------------|

|   | • | cyclical changes in the insurance industry; |
|--------|---------|---------------------------------------------|

|   | • | changes in accounting policies or practices; and |
|--------|---------|--------------------------------------------------|

|   | • | changes in general economic conditions, including inflation and other factors. |
|--------|---------|--------------------------------------------------------------------------------|

----

Index

----

Index

|       |   | Six Months Ended June 30, |   |
|------------|--------|--------------------------------|--------|
|       |   | 2010                           |   |   | 2009 |   |
|       |   | Direct Premiums Earned         |   |   | % |   |   | Direct Premiums Earned |   |   | % |   |
|       |   | ($ in thousands)               |   |
| California |   | $                              | 62,559 |   |   |   | 46.4 | % |   | $ | 49,915 |   |   |   | 39.8 | % |
| Louisiana  |   |                           | 12,262 |   |   |   | 9.1 |   |   |   | 13,081 |   |   |   | 10.4 |   |
| Illinois   |   |                           | 7,448  |   |   |   | 5.5 |   |   |   | 9,751 |   |   |   | 7.8 |   |
| Texas      |   |                           | 7,228  |   |   |   | 5.4 |   |   |   | 7,396 |   |   |   | 5.9 |   |
| Alaska     |   |                           | 6,855  |   |   |   | 5.1 |   |   |   | 7,167 |   |   |   | 5.7 |   |
| Total      |   | $                              | 96,352 |   |   |   | 71.5 | % |   | $ | 87,310 |   |   |   | 69.6 | % |

----

Index

----

Index

----

Index

----

Index

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

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

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

----

Index

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

|                                             |   | (a)Total Number of Shares (or Units) Purchased |    |   | (b)Average Price Paid per Share (or Unit) |   |    | (c)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |   |   | (d)Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |   |
|--------------------------------------------------|--------|------------------------------------------------|---------|--------|-------------------------------------------|--------|---------|------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------|--------|
| Month # 1 (April 1, 2010 through April 30, 2010) |   |                                           | – |   |                                      |   | – |                                                                                           |   |   | –                                                                                                                    |   |   |   | – |   |
| Month # 2 (May 1, 2010 through May 31, 2010)     |   |                                           | 2,378   |   |                                      | $      | 11.16   |                                                                                           |   |   | –                                                                                                                    |   |   |   | – |   |
| Month # 3 (June 1, 2010 through June 30, 2010)   |   |                                           | – |   |                                      |   | – |                                                                                           |   |   | –                                                                                                                    |   |   |   | – |   |

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

----

Index

SIGN

|                 | SEABRIGHT HOLDINGS, INC. |                                                                          |
|----------------------|--------------------------|-------------------------------------------------------------------------------|
|                 |                     |                                                                          |   |
|                 |                     |                                                                          |   |
| Date: August 9, 2010 |                     |                                                                          |   |
|                 |                     |                                                                          |   |
|                 | By:                      | /s/ John G. Pasqualetto                                                       |   |
|                 |                     | John G. Pasqualetto                                                           |   |
|                 |                     | Chairman, President and Chief Executive Officer                               |   |
|                 |                     | (Principal Executive Officer)                                                 |   |
|                 |                     |                                                                          |   |
|                 | By:                      | /s/ Scott H. Maw                                                              |   |
|                 |                     | Scott H. Maw                                                                  |   |
|                 |                     | Senior Vice President – Chief Financial Officer and Assistant Secretary |   |
|                 |                     | (Principal Financial Officer)                                                 |   |

----

Index

| Exhibit |   |                                                                                                                                                                                                          |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description                                                                                                                                                                                                   |
| 3.1     |   | Amended and Restated Certificate of Incorporation of the Company (incorporated by refence to the Company’s Registration Statement on Form S-8 (file No. 333-123319), filed on March 15, 2005).          |
|    |   |                                                                                                                                                                                                          |
| 3.2     |   | Amendment to the Company’s Amended and Restated Certificate of Incorporation (incorporated by reference to the Company’s Current Report on Form 8-K (file No. 001-34204), filed on May 24, 2010). |
|    |   |                                                                                                                                                                                                          |
| 10.1    |   | SeaBright Holdings, Inc. Amended and Restated 2005 Long-Term Equity Incentive Plan (incorporated by reference to the Company’s Current Report on Form 8-K (file No. 001-34204), filed on May 24, 2010). |
|    |   |                                                                                                                                                                                                          |
| 10.2    |   | SeaBright Holdings, Inc. 2010 Bonus Plan (incorporated by reference to the Company’s Current Report on Form 8-K (file No. 001-34204), filed on May 24, 2010).                                           |
|    |   |                                                                                                                                                                                                          |
| 31.1    |   | Rule 13a-14(a) Certification (Chief Executive Officer)                                                                                                                                                        |
|    |   |                                                                                                                                                                                                          |
| 31.2    |   | Rule 13a-14(a) Certification (Chief Financial Officer)                                                                                                                                                        |
|    |   |                                                                                                                                                                                                          |
| 32.1    |   | Section 1350 Certification (Chief Executive Officer)                                                                                                                                                          |
|    |   |                                                                                                                                                                                                          |
| 32.2    |   | Section 1350 Certification (Chief Financial Officer)                                                                                                                                                          |

----