| Delaware                                                       | 65-0231984                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

|   | Large accelerated filer o                                             | Accelerated filer  x |
|--------|-----------------------------------------------------------------------|--------------------------------|
|   | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o    |

----

| PART I: FINANCIAL INFORMATION |                                                                                                                                   |
|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|
|                          |                                                                                                                                   |   |
| Item 1.                       | Financial Statements (Unaudited)                                                                                                       |   |
|                          |                                                                                                                                   |   |
|                          | Report of Independent Registered Public Accounting Firm                                                                                | 3 |
|                          |                                                                                                                                   |   |
|                          | Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009                                                        | 4 |
|                          |                                                                                                                                   |   |
|                          | Condensed Consolidated Statements of Operations for the Six-Month and Three-Month Periods Ended June 30, 2010 and 2009                 | 5 |
|                          |                                                                                                                                   |   |
|                          | Condensed Consolidated Statements of Stockholders’ Equity for the Six-Month and Three-Month Periods Ended June 30, 2010 and 2009 | 6 |
|                          |                                                                                                                                   |   |
|                          | Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2010 and 2009                                 | 7 |
|                          |                                                                                                                                   |   |
|                          | Notes to Condensed Consolidated Financial Statements                                                                                   | 8 |
|                          |                                                                                                                                   |   |
| Item 2.                       | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                            | 30 |
|                          |                                                                                                                                   |   |
| Item 3.                       | Quantitative and Qualitative Disclosures about Market Risk                                                                             | 49 |
|                          |                                                                                                                                   |   |
| Item 4.                       | Controls and Procedures                                                                                                                | 50 |
|                          |                                                                                                                                   |   |
| PART II:                      | OTHER INFORMATION                                                                                                                      |   |
|                          |                                                                                                                                   |   |
| Item 1.                       | Legal Proceedings                                                                                                                      | 52 |
|                          |                                                                                                                                   |   |
| Item 1A.                      | Risk Factors                                                                                                                           | 52 |
|                          |                                                                                                                                   |   |
| Item 2.                       | Unregistered Sales of Equity Securities and Use of Proceeds                                                                            | 52 |
|                          |                                                                                                                                   |   |
| Item 3.                       | Defaults Upon Senior Securities                                                                                                        | 52 |
|                          |                                                                                                                                   |   |
| Item 4.                       | (Removed and Reserved)                                                                                                                 | 52 |
|                          |                                                                                                                                   |   |
| Item 5.                       | Other Information                                                                                                                      | 52 |
|                          |                                                                                                                                   |   |
| Item 6.                       | Exhibits                                                                                                                               | 52 |
|                          |                                                                                                                                   |   |
| Signatures                    |                                                                                                                                   | 54 |

----

----

|                                                                                                   |   | (Unaudited) |        |   |         |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|
|                                                                                                   |   | June 30,    |        |   | December 31, |   |
| ASSETS                                                                                                 |   | 2010        |        |   | 2009         |   |
| Cash and cash equivalents                                                                              |   | $           | 262,444,768 |   |         | $      | 192,924,291 |   |
| Investments                                                                                            |   |        |        |   |         |   |   |   |
|   Fixed maturities available for sale, at fair value                                         |   |        | 60,447,710  |   |         |   | 41,389,008 |   |
|   Equity securities available for sale, at fair value                                        |   |        | 77,477,064  |   |         |   | 73,408,002 |   |
| Real estate, net                                                                                       |   |        | 4,335,589   |   |         |   | 3,289,893 |   |
| Prepaid reinsurance premiums                                                                           |   |        | 233,086,613 |   |         |   | 200,294,241 |   |
| Reinsurance recoverables                                                                               |   |        | 63,235,510  |   |         |   | 91,816,433 |   |
| Premiums receivable, net                                                                               |   |        | 49,351,405  |   |         |   | 37,363,110 |   |
| Receivable from securities                                                                             |   |        | 14,669,988  |   |         |   | 6,259,973 |   |
| Other receivables                                                                                      |   |        | 2,629,577   |   |         |   | 5,068,367 |   |
| Income taxes recoverable                                                                               |   |        | -           |   |         |   | 3,211,874 |   |
| Property and equipment, net                                                                            |   |        | 1,197,645   |   |         |   | 1,245,858 |   |
| Deferred policy acquisition costs, net                                                                 |   |        | 14,041,890  |   |         |   | 9,464,624 |   |
| Deferred income taxes                                                                                  |   |        | 12,853,266  |   |         |   | 11,894,289 |   |
| Other assets                                                                                           |   |        | 1,020,164   |   |         |   | 617,337 |   |
|           Total assets                               |   | $           | 796,791,189 |   |         | $      | 678,247,300 |   |
|                                                                                                   |   |        |        |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                   |   |        |        |   |         |   |   |   |
| LIABILITIES:                                                                                           |   |        |        |   |         |   |   |   |
| Unpaid losses and loss adjustment expenses                                                             |   | $           | 128,903,761 |   |         | $      | 127,197,753 |   |
| Unearned premiums                                                                                      |   |        | 355,735,699 |   |         |   | 278,370,544 |   |
| Advance premium                                                                                        |   |        | 20,058,953  |   |         |   | 17,078,558 |   |
| Accounts payable                                                                                       |   |        | 4,822,714   |   |         |   | 3,172,626 |   |
| Bank overdraft                                                                                         |   |        | 22,573,228  |   |         |   | 20,297,061 |   |
| Reinsurance payable, net                                                                               |   |        | 86,815,057  |   |         |   | 73,104,595 |   |
| Income taxes payable                                                                                   |   |        | 3,786,298   |   |         |   | 368,968 |   |
| Dividend payable to shareholder                                                                        |   |        | 3,916,724   |   |         |   | - |   |
| Payable for securities                                                                                 |   |        | 3,821,527   |   |         |   | - |   |
| Other accrued expenses                                                                                 |   |        | 18,855,334  |   |         |   | 20,750,385 |   |
| Long-term debt                                                                                         |   |        | 23,897,059  |   |         |   | 24,632,353 |   |
|           Total liabilities                          |   |        | 673,186,354 |   |         |   | 564,972,843 |   |
|                                                                                                   |   |        |        |   |         |   |   |   |
| STOCKHOLDERS' EQUITY:                                                                                  |   |        |        |   |         |   |   |   |
| Cumulative convertible preferred stock, $.01 par value                                                 |   |        | 1,077       |   |         |   | 1,087 |   |
|      Authorized shares - 1,000,000                                            |   |        |        |   |         |   |   |   |
|      Issued shares - 107,690 and 108,640                                      |   |        |        |   |         |   |   |   |
|      Outstanding shares - 107,690 and 108,640                                 |   |        |        |   |         |   |   |   |
|      Minimum liquidation preference - $287,240 and $288,190                   |   |        |        |   |         |   |   |   |
| Common stock, $.01 par value                                                                           |   |        | 408,772     |   |         |   | 402,146 |   |
|      Authorized shares - 55,000,000                                           |   |        |        |   |         |   |   |   |
|      Issued shares - 40,877,087 and 40,214,884                                |   |        |        |   |         |   |   |   |
|      Outstanding shares - 39,166,033 and 37,774,765                           |   |        |        |   |         |   |   |   |
|      Treasury shares, at cost - 1,711,054 and 1,809,119 shares                |   |        | (7,389,416  | )      |         |   | (7,948,606 | ) |
| Common stock held in trust, at cost - 0 and 631,000 shares                                             |   |        | -           |   |         |   | (511,110 | ) |
| Additional paid-in capital                                                                             |   |        | 37,802,927  |   |         |   | 36,666,914 |   |
| Accumulated other comprehensive (loss) income, net of taxes                                            |   |        | (403,247    | )      |         |   | 563,654 |   |
| Retained earnings                                                                                      |   |        | 93,184,722  |   |         |   | 84,100,372 |   |
|           Total stockholders' equity                 |   |        | 123,604,835 |   |         |   | 113,274,457 |   |
|           Total liabilities and stockholders' equity |   | $           | 796,791,189 |   |         | $      | 678,247,300 |   |
|                                                                                                   |   |        |        |   |         |   |   |   |

----

|                                                                               |   | For the Six                                                                                |   | For the Three                                                                                         |
|------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|
|                                                                               |   | Months Ended June 30,                                                                      |   | Months Ended June 30,                                                                                 |
|                                                                               |   | 2010                                                                                       |   | 2009                                                                                                  |   | 2010 |   | 2009 |
| PREMIUMS EARNED AND OTHER REVENUES                                                 |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|      Direct premiums written                              |   | $    368,119,332                                                       |   | $     301,984,289                                                                 |   $ | 208,019,687 |   | $156,772,144 |
|      Ceded premiums written                               |   | (248,872,199)                                                                              |   | (224,366,164)                                                                                         |   | (121,304,233) |   | (128,638,307) |
|         Net premiums written               |   | 119,247,133                                                                                |   | 77,618,125                                                                                            |   | 86,715,454 |   | 28,133,837 |
|      (Increase) decrease in net unearned premium          |   | (44,572,783)                                                                               |   | (2,483,735)                                                                                           |   | (45,354,667) |   | 9,242,901 |
|      Premiums earned, net                                 |   | 74,674,350                                                                                 |   | 75,134,390                                                                                            |   | 41,360,787 |   | 37,376,738 |
|      Net investment income                                |   | 310,571                                                                                    |   | 798,482                                                                                               |   | 117,619 |   | 461,774 |
|      Realized gains on investments                        |   | 8,152,024                                                                                  |   | 1,452,609                                                                                             |   | 4,457,307 |   | 341,276 |
|      Foreign currency transaction gains                   |   | 809,050                                                                                    |   | 72,316                                                                                                |   | 124,803 |   | 84,435 |
|       Other-than-temporary impairment of investments |   | (2,407,680)                                                                                |   | -                                                                                                     |   | - |   | - |
|      Commission revenue                                   |   | 17,521,299                                                                                 |   | 15,307,618                                                                                            |   | 8,783,428 |   | 7,862,769 |
|      Other revenue                                        |   | 2,020,332                                                                                  |   | 2,901,730                                                                                             |   | 1,016,078 |   | 1,422,353 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| Total premiums earned and other revenues                                           |   | 101,079,946                                                                                |   | 95,667,145                                                                                            |   | 55,860,022 |   | 47,549,345 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| OPERATING COSTS AND EXPENSES                                                       |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|      Losses and loss adjustment expenses                  |   | 48,486,605                                                                                 |   | 44,926,823                                                                                            |   | 24,834,893 |   | 24,506,159 |
|      General and administrative expenses                  |   | 23,577,980                                                                                 |   | 18,114,424                                                                                            |   | 13,389,331 |   | 10,599,196 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|         Total operating costs and expenses |   | 72,064,585                                                                                 |   | 63,041,247                                                                                            |   | 38,224,224 |   | 35,105,355 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| INCOME BEFORE INCOME TAXES                                                         |   | 29,015,361                                                                                 |   | 32,625,898                                                                                            |   | 17,635,798 |   | 12,443,990 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|      Income taxes, current                                |   | 11,656,144                                                                                 |   | 8,949,654                                                                                             |   | 8,171,931 |   | 367,037 |
|      Income taxes, deferred                               |   | (351,761)                                                                                  |   | 3,599,856                                                                                             |   | (1,302,863) |   | 4,438,395 |
|         Income taxes, net                  |   | 11,304,383                                                                                 |   | 12,549,510                                                                                            |   | 6,869,068 |   | 4,805,432 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| NET INCOME                                                                         |   | $    17,710,978                                                             |   | $     20,076,388                                                                  | $  | 10,766,730 |   | $    7,638,558 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| Basic net income per common share                                                  |   | $               0.45 |   | $                0.53      | $  | 0.27 |   | $             0.20 |
| Weighted average of common shares                                                  |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|      outstanding - Basic                                  |   | $    39,028,976                                                        |   | $     37,589,412                                                                  |   $ | 39,167,241 |   | $  37,617,174 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| Fully diluted net income per share                                                 |   | $               0.44 |   | $                0.50      |   $ | 0.27 |   | $             0.19 |
| Weighted average of common shares                                                  |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|      outstanding - Diluted                                |   | $    40,440,773                                                             |   | $     40,225,815                                                                  |   $ | 40,445,975 |   | $  40,529,702 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| Cash dividend declared per common share                                            |   | $              0.22       |   | $                0.34 |   $ | 0.10 |   | $             0.12 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|                                                                               |   | For the Six                                                                                |   | For the Three                                                                                         |
|                                                                               |   | Months Ended June 30,                                                                      |   | Months Ended June 30,                                                                                 |
|                                                                               |   | 2010                                                                                       |   | 2009                                                                                                  |   | 2010 |   | 2009 |
| Comprehensive Income:                                                              |   |                                                                                       |   |                                                                                                  |   |   |   |   |
|    Net income                                                       |   | $   17,710,978                                                                   |   | $    20,076,388                                                                        |   $ | 10,766,730 |   | $    7,638,558 |
| Change in net unrealized (losses) gains on investments, net of tax                 |   | (966,901)                                                                                  |   | 8,228,976                                                                                             |   | 790,675 |   |     5,672,835 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |
| Comprehensive Income                                                               |   | $   16,744,077                                                                   |   | $    28,305,364                                                                        |   $ | 11,557,405 |   | $  13,311,393 |
|                                                                               |   |                                                                                       |   |                                                                                                  |   |   |   |   |

----

|                                                                                   |   | Common Shares                          |       |   | Preferred Stock Shares |   |    | Common Stock Amount |   |    | Preferred Stock Amount |   |   | Additional Paid-In Capital |   |   | Retained Earnings |    |            | Accumulated Other Comprehensive (Loss) Income |   |    | Stock Held in Trust |   |   | Treasury Stock |      |   | Total Stockholders' Equity |    |     |   |   |
|----------------------------------------------------------------------------------------|--------|----------------------------------------|------------|--------|------------------------|--------|---------|---------------------|--------|---------|------------------------|--------|--------|----------------------------|--------|--------|-------------------|---------|-----------------|-----------------------------------------------|--------|---------|---------------------|--------|--------|----------------|-----------|--------|----------------------------|---------|----------|--------|--------|
| Balance,                                                                               |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |
|    December 31, 2009                                                    |   |                                   | 40,214,884 |   |                   |   | 108,640 |                |   | $       | 402,146                |   |   | $                          | 1,087  |   |              | $       | 36,666,914      |                                          |   | $       | 84,100,372          |   |   | $              | 563,654   |   |                       | $       | (511,110 | )      |   |   | (7,948,606 | ) |   |   | 113,274,457 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common shares                                                              |   |                                   | 1,900,206  |   |                   |   |    |                |   |    | 19,002                 |   |   |                       |   |   |              |    | 1,858,078       |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   | (4,715,261 | ) |   |   | (2,838,181 | ) |   |   |   |
| Preferred stock                                                                        |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|    conversion                                                           |   |                                   | 1,187      |   |                   |   | (950    | )                   |   |    | 12                     |   |   |                       | (10    | )      |              |    | (2              | )                                             |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | - |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Release of shares                                                                      |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|     from SGT                                                       |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    | 939,900         |                                          |   |    |                |   |   |           |      |   |                       |    | 511,110  |   |   |   | (2,328,859 | ) |   |   | (877,849 | ) |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Retirement of treasury shares                                                          |   |                                   | (1,239,190 | )      |                   |   |    |                |   |    | (12,388                | )      |   |                       |   |   |              |    | (7,591,863      | )                                             |   |    |                |   |   |           |      |   |                       |    |     |   |   |   | 7,603,310 |   |   |   | (941 | ) |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock compensation                                                                     |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|    plans                                                                |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    | 1,453,006       |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | 1,453,006 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                             |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    | 17,710,978          |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | 17,710,978 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Excess tax benefits  from stock-based  compensation                          |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    | 4,020,789  |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | 4,020,789  |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|  Amortization of deferredcompensation                                             |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    | 456,105         |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | 456,105 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Declaration of dividends                                                               |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    | (8,626,628          | )      |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | (8,626,628 | ) |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|  Change in net unrealized loss on invest., net of tax effect of $(607,216)        |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           | (966,901  | )      |                       |    |     |   |   |   |   |   |   |   | (966,901 | ) |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                                                                               |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|    June 30, 2010                                                        |   |                                   | 40,877,087 |   |                   |   | 107,690 |                |   |  $ | 408,772                |   |   |  $                    | 1,077  |   |              |  $ | 37,802,927      |                                          |   |  $ | 93,184,722          |   |   |  $        | (403,247  | )      |                       |  $ | -        |   |   |  $ | (7,389,416 | ) |   |  $ | 123,604,835 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   | For the Six Months Ended June 30, 2009 |       |   |                   |   |
| Balance,                                                                               |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|    December 31, 2008                                                    |   |                                   | 40,158,019 |   |                   |   | 138,640 |                |   |  $ | 401,578                |   |   |  $                    | 1,387  |   |              |  $ | 33,587,414      |                                          |   |  $ | 75,654,070          |   |   |  $        | 24,834    |   |                       |  $ | (733,860 | )      |   |  $ | (7,381,768 | ) |   |  $ | 101,553,655 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                                                        |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|    conversion                                                           |   |                                   | 75,000     |   |                   |   | (30,000 | )                   |   |    | 750                    |   |   |                       | (300   | )      |              |    | (450            | )                                             |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | - |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock compensation                                                                     |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|    plans                                                                |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    | 1,306,591       |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | 1,306,591 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                             |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    | 20,076,388          |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | 20,076,388 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of deferred                                                               |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|    compensation                                                         |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    | 325,989         |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | 325,989 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Declaration of dividends                                                               |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    | (12,799,814         | )      |   |           |      |   |                       |    |     |   |   |   |   |   |   |   | (12,799,814 | ) |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
|   Change in net unrealized gains on invest., net of tax effect of $1,595,467 |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           | 8,228,976 |   |                       |    |     |   |   |   |   |   |   |   | 8,228,976 |   |   |   |   |
|                                                                                   |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                                                                               |   |                                   |       |   |                   |   |    |                |   |    |                   |   |   |                       |   |   |              |    |            |                                          |   |    |                |   |   |           |      |   |                       |    |     |   |   |   |   |   |   |   |   |   |   |   |   |
| June 30, 2009                                                                          |   |                                   | 40,233,019 |   |                   |   | 108,640 |                |   |  $ | 402,328                |   |   |  $                    | 1,087  |   |              |  $ | 35,219,544      |                                          |   |  $ | 82,930,644          |   |   |  $        | 8,253,810 |   |                       |  $ | (733,860 | )      |   |  $ | (7,381,768 | ) |   |  $ | 118,691,785 |   |   |   |   |

----

|                                                                                                  |   | Six Months Ended |         |   | Six Months Ended |   |
|-------------------------------------------------------------------------------------------------------|--------|------------------|--------------|--------|------------------|--------|
|                                                                                                  |   | June 30, 2010    |         |   | June 30, 2009    |   |
| Cash flows from operating activities:                                                                 |   |             |         |   |             |   |
| Net Income                                                                                            |   | $                | 17,710,978   |   |             | $      | 20,076,388 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                     |   |             |         |   |             |   |   |   |
|      Bad debt expense                                                        |   |             | 629,816      |   |             |   | 788,142 |   |
|      Depreciation                                                            |   |             | 298,025      |   |             |   | 213,576 |   |
|      Amortization of cost of stock options                                   |   |             | 1,453,006    |   |             |   | 1,306,591 |   |
|      Amortization of restricted stock grants                                 |   |             | 456,105      |   |             |   | 325,989 |   |
|      Realized gains on investments                                           |   |             | (8,152,024   | )      |             |   | (1,452,609 | ) |
|      Foreign currency gains on investments                                   |   |             | (842,375     | )      |             |   | (72,316 | ) |
|      Other-than-temporary impairment of investments                          |   |             | 2,407,680    |   |             |   | - |   |
|      Amortization of premium / accretion of discount, net                    |   |             | 271,010      |   |             |   | 109,204 |   |
|      Deferred income taxes                                                   |   |             | 8,827        |   |             |   | 3,599,856 |   |
|      Other                                                                   |   |             | (15,035      | )      |             |   | 130,119 |   |
| Net change in assets and liabilities relating to operating activities:                                |   |             |         |   |             |   |   |   |
|      Prepaid reinsurance premiums                                            |   |             | (32,792,372  | )      |             |   | (37,102,247 | ) |
|      Reinsurance recoverables                                                |   |             | 28,580,923   |   |             |   | (3,867,369 | ) |
|      Premiums receivable, net                                                |   |             | (12,618,111  | )      |             |   | (9,665,210 | ) |
|      Accrued investment income                                               |   |             | (80,003      | )      |             |   | (702,324 | ) |
|      Other receivables                                                       |   |             | 2,518,613    |   |             |   | 178,739 |   |
|      Income taxes recoverable                                                |   |             | 3,211,876    |   |             |   | (5,176,904 | ) |
|      Deferred policy acquisition costs, net                                  |   |             | (4,577,266   | )      |             |   | (8,034,104 | ) |
|      Other assets                                                            |   |             | (425,268     | )      |             |   | (144,759 | ) |
|      Unpaid losses and loss adjustment expenses                              |   |             | 1,706,008    |   |             |   | 8,519,272 |   |
|      Unearned premiums                                                       |   |             | 77,365,154   |   |             |   | 39,585,983 |   |
|      Advance premium                                                         |   |             | 2,980,395    |   |             |   | 3,966,539 |   |
|      Accounts payable                                                        |   |             | 1,650,088    |   |             |   | 1,133,449 |   |
|      Reinsurance payable                                                     |   |             | 13,710,463   |   |             |   | 88,357,868 |   |
|      Income taxes payable                                                    |   |             | 3,417,329    |   |             |   | - |   |
|      Other accrued expenses                                                  |   |             | (1,895,051   | )      |             |   | 2,128,973 |   |
|           Net cash provided by operating activities |   |             | 96,978,791   |   |             |   | 104,202,846 |   |
| Cash flows from investing activities:                                                                 |   |             |         |   |             |   |   |   |
|      Proceeds from sale of property                                          |   |             | 15,108       |   |             |   | - |   |
|      Purchase of real estate                                                 |   |             | (1,016,921   | )      |             |   | - |   |
|      Building improvements                                                   |   |             | (93,955      | )      |             |   | - |   |
|      Purchases of fixed maturities                                           |   |             | (129,140,469 | )      |             |   | (126,035,995 | ) |
|      Proceeds from sales of fixed maturities                                 |   |             | 116,237,712  |   |             |   | 4,244,851 |   |
|      Purchases of equity securities, available for sale                      |   |             | (80,730,225  | )      |             |   | (78,530,195 | ) |
|      Proceeds from sales of equity securities, available for sale            |   |             | 70,680,944   |   |             |   | 11,005,564 |   |
|      Capital expenditures and building improvements                          |   |             | (184,706     | )      |             |   | (369,700 | ) |
|           Net cash used in investing activities     |   |             | (24,232,512  | )      |             |   | (189,685,475 | ) |
| Cash flows from financing activities:                                                                 |   |             |         |   |             |   |   |   |
|      Bank overdraft                                                          |   |             | 2,276,167    |   |             |   | 4,947,120 |   |
|      Preferred stock dividend                                                |   |             | (9,975       | )      |             |   | (17,475 | ) |
|      Common stock dividend                                                   |   |             | (4,699,926   | )      |             |   | (8,268,278 | ) |
|      Issuance of common stock                                                |   |             | 7,000        |   |             |   | - |   |
|      Treasury shares on option exercise                                      |   |             | (3,723,972   | )      |             |   | - |   |
|      Excess tax benefits from stock-based compensation                       |   |             | 3,660,198    |   |             |   | - |   |
|      Repayments of loans payable                                             |   |             | (735,294     | )      |             |   | - |   |
|           Net cash used in in financing activities  |   |             | (3,225,802   | )      |             |   | (3,338,633 | ) |
|                                                                                                  |   |             |         |   |             |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                  |   |             | 69,520,477   |   |             |   | (88,821,262 | ) |
| Cash and cash equivalents at beginning of period                                                      |   |             | 192,924,291  |   |             |   | 256,964,637 |   |
| Cash and cash equivalents at end of period                                                            |   | $                | 262,444,768  |   |             | $      | 168,143,375 |   |
|                                                                                                  |   |             |         |   |             |   |   |   |
| Non cash items:                                                                                       |   |             |         |   |             |   |   |   |
|      Dividends accrued                                                       |   | $                | 3,916,724    |   |             | $      | 4,514,061 |   |

----

|                                   |   | As Reported 3/31/2010 |        |   | Adjustment |   |       | As Restated 3/31/2010 |   |
|----------------------------------------|--------|-----------------------|-------------|--------|------------|--------|------------|-----------------------|--------|
| Net Income                             |   | $                     | 8,306,969   |   |       | $      | (1,362,721 | )                     |   | $ | 6,944,248 |   |
| Accumulated other comprehensive (loss) |   |                  | (2,672,839  | )      |       |   | 1,478,917  |                  |   |   | (1,193,922 | ) |
| Stockholders' equity                   |   |                  | 114,645,997 |   |       |   | 116,197    |                  |   |   | 114,762,194 |   |

----

----

|                               |   | As of June 30, |        |   |  As of December 31 |   |
|------------------------------------|--------|----------------|-------------|--------|-------------------------|--------|
| Reinsurer                          |   | 2010           |        |   | 2009                    |   |
| Everest Reinsurance Company        |   | $              | 229,629,621 |   |                    | $      | 208,129,753 |   |
| Florida Hurricane Catastrophe Fund |   |           | -           |   |                    |   | 24,888,534 |   |
|                               |   |           |        |   |                    |   |   |   |
|    Total            |   | $              | 229,629,621 |   |                    | $      | 233,018,287 |   |

----

| Wind Mitigation Credits |   |                                                |   |          |                                                                  |   |             |   |                                     |   |        |   |
|-------------------------|--------|-----------------------------------------------------|--------|---------------|-----------------------------------------------------------------------|--------|------------------|--------|------------------------------------------|--------|-------------|--------|
|                    |   |                                                |   |          | Reduction of in-force premium (only policies including wind coverage) |   |
| Date                    |   | Percentage of UPCIC policyholders receiving credits |   | Total credits |                                                                  |   | In-force premium |   | Percentage reduction of in-force premium |
| 6/1/2007                |   |                                                | 1.9    | %             |                                                                  | $      | 6,284,697        |   |                                     | $      | 487,866,319 |   |   |   | 1.3 | % |
| 12/31/2007              |   |                                                | 11.8   | %             |                                                                  | $      | 31,951,623       |   |                                     | $      | 500,136,287 |   |   |   | 6.0 | % |
| 3/31/2008               |   |                                                | 16.9   | %             |                                                                  | $      | 52,398,215       |   |                                     | $      | 501,523,343 |   |   |   | 9.5 | % |
| 6/30/2008               |   |                                                | 21.3   | %             |                                                                  | $      | 74,185,924       |   |                                     | $      | 508,411,721 |   |   |   | 12.7 | % |
| 9/30/2008               |   |                                                | 27.3   | %             |                                                                  | $      | 97,802,322       |   |                                     | $      | 515,560,249 |   |   |   | 16.0 | % |
| 12/31/2008              |   |                                                | 31.1   | %             |                                                                  | $      | 123,524,911      |   |                                     | $      | 514,011,138 |   |   |   | 19.4 | % |
| 3/31/2009               |   |                                                | 36.3   | %             |                                                                  | $      | 158,229,542      |   |                                     | $      | 530,029,572 |   |   |   | 23.0 | % |
| 6/30/2009               |   |                                                | 40.4   | %             |                                                                  | $      | 188,053,342      |   |                                     | $      | 544,646,437 |   |   |   | 25.7 | % |
| 9/30/2009               |   |                                                | 43.0   | %             |                                                                  | $      | 210,291,783      |   |                                     | $      | 554,378,761 |   |   |   | 27.5 | % |
| 12/31/2009              |   |                                                | 45.2   | %             |                                                                  | $      | 219,974,130      |   |                                     | $      | 556,577,449 |   |   |   | 28.3 | % |
| 3/31/2010               |   |                                                | 47.8   | %             |                                                                  | $      | 235,717,892      |   |                                     | $      | 569,870,173 |   |   |   | 29.3 | % |
| 6/30/2010               |   |                                                | 50.9   | %             |                                                                  | $      | 281,386,124      |   |                                     | $      | 620,276,858 |   |   |   | 31.2 | % |

----

----

|                                        |   | 2ndEvent                                                                                                                           |       |                                                                                                                                          | 3rdEvent |   |
|---------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------|----------|--------|
| Coverage           |   | $123,700,000 in excess of $36,300,000 each loss occurrence subject to an otherwise recoverable amount of $123,700,000 (placed 50%) |       | $130,000,000 in excess of $30,000,000 each loss occurrence subject to an otherwise recoverable amount of $260,000,000 (placed 100%) |
| Deposit premium (100%)                      |   | $                                                                                                                                  | 22,266,000 |                                                                                                                                          |     | $      | 9,100,000 |   |
| Minimum premium (100%)                      |   | $                                                                                                                                  | 17,812,800 |                                                                                                                                          |     | $      | 7,280,000 |   |
| Premium rate -% of total insured value |   |                                                                                                                               | 0.020088   | %                                                                                                                                             |     |   | 0.00821 | % |

----

----

|   | Six Months Ended June 30, 2010 |         |   | Six Months Ended June 30, 2009 |   |
|--------|--------------------------------|--------------|--------|--------------------------------|--------|
|   |                           |         |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Premiums                       |         |   | Premiums                       |   |   | Loss and Loss |   |   | Premiums |   |   | Premiums |   |   | Loss and Loss |   |
|   | Written                        |         |   | Earned                         |   |   | Adjustment |   |   | Written |   |   | Earned |   |   | Adjustment |   |
|   |                           |         |   |                           |   |   | Expenses |   |   |   |   |   |   |   |   | Expenses |   |
| Direct | $                              | 368,119,332  |   |                           | $      | 290,754,177 |   |   | $ | 97,025,344 |   |   | $ | 301,984,289 |   |   | $ | 262,398,307 |   |   | $ | 90,929,142 |   |
| Ceded  |                           | (248,872,199 | )      |                           |   | (216,079,827 | ) |   |   | (48,538,739 | ) |   |   | (224,366,164 | ) |   |   | (187,263,917 | ) |   |   | (46,002,319 | ) |
|   |                           |         |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net    | $                              | 119,247,133  |   |                           | $      | 74,674,350 |   |   | $ | 48,486,605 |   |   | $ | 77,618,125 |   |   | $ | 75,134,390 |   |   | $ | 44,926,823 |   |

|   | Three Months Ended June 30, 2010 |         |   | Three Months Ended June 30, 2009 |   |
|--------|----------------------------------|--------------|--------|----------------------------------|--------|
|   |                             |         |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Premiums                         |         |   | Premiums                         |   |   | Loss and Loss |   |   | Premiums |   |   | Premiums |   |   | Loss and Loss |   |
|   | Written                          |         |   | Earned                           |   |   | Adjustment |   |   | Written |   |   | Earned |   |   | Adjustment |   |
|   |                             |         |   |                             |   |   | Expenses |   |   |   |   |   |   |   |   | Expenses |   |
| Direct | $                                | 208,019,687  |   |                             | $      | 150,600,999 |   |   | $ | 50,345,476 |   |   | $ | 156,772,144 |   |   | $ | 134,106,112 |   |   | $ | 49,604,750 |   |
| Ceded  |                             | (121,304,233 | )      |                             |   | (109,240,212 | ) |   |   | (25,510,583 | ) |   |   | (128,638,307 | ) |   |   | (96,729,374 | ) |   |   | (25,098,591 | ) |
|   |                             |         |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net    | $                                | 86,715,454   |   |                             | $      | 41,360,787 |   |   | $ | 24,834,893 |   |   | $ | 28,133,837 |   |   | $ | 37,376,738 |   |   | $ | 24,506,159 |   |

----

|                                             |   | As of June 30, |        |   | As of December 31, |   |
|--------------------------------------------------|--------|----------------|-------------|--------|--------------------|--------|
|                                             |   | 2010           |        |   | 2009               |   |
|                                             |   |           |        |   |               |   |
| Prepaid reinsurance premiums                     |   | $              | 233,086,613 |   |               | $      | 200,294,241 |   |
|                                             |   |           |        |   |               |   |   |   |
| Reinsurance recoverable on unpaid losses and LAE |   | $              | 63,451,074  |   |               | $      | 62,900,913 |   |
| Reinsurance recoverable on paid losses           |   |           | (215,564    | )      |               |   | 28,915,520 |   |
| Reinsurance recoverables                         |   | $              | 63,235,510  |   |               | $      | 91,816,433 |   |

|                                              |   | As of June 30, |        |   | As of December 31, |   |
|---------------------------------------------------|--------|----------------|-------------|--------|--------------------|--------|
|                                              |   | 2010           |        |   | 2009               |   |
| Reinsurance payable, net of ceding commissions    |   |           |        |   |               |   |
|      due from reinsurers |   | $              | 124,157,228 |   |               | $      | 105,536,847 |   |
| Inuring premiums receivable                       |   |           | (37,342,171 | )      |               |   | (32,432,252 | ) |
|                                              |   |           |        |   |               |   |   |   |
| Reinsurance payable, net                          |   | $              | 86,815,057  |   |               | $      | 73,104,595 |   |

|                                                                              |   | For the Six Months Ended June 30, |     |
|-----------------------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                                              |   | 2010                              |     |   | 2009 |   |
| Cash and cash equivalents                                                         |   | $                                 | 51,330   |   |   | $ | 231,859 |   |
| Fixed maturities                                                                  |   |                              | 545,938  |   |   |   | 700,984 |   |
| Equity securities                                                                 |   |                              | 19,863   |   |   |   | 187,116 |   |
|      Total investment income                             |   |                              | 617,131  |   |   |   | 1,119,959 |   |
| Less investment expenses                                                          |   |                              | (306,560 | ) |   |   | (321,477 | ) |
|                                                                              |   |                              |     |   |   |   |   |   |
|           Net investment income |   | $                                 | 310,571  |   |   | $ | 798,482 |   |

----

|                                                                                     |   | As of June 30, 2010     |       |
|------------------------------------------------------------------------------------------|--------|-------------------------|------------|
| Financial Institution                                                                    |   | Cash                    |       |   | Money Market Funds |   |   | Total |   |   | % |   |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |
| U. S. Bank IT&C (1)                                                                  |   | $                       | -          |   |   | $ | 71,458,546 |   |   | $ | 71,458,546 |   |   |   | 27.2 | % |
| Evergreen Investment Management                                                          |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Company, L.L.C.                                                        |   |                    | -          |   |   |   | 2,909 |   |   |   | 2,909 |   |   |   | 0.0 | % |
| SunTrust Bank                                                                            |   |                    | 731,637    |   |   |   | - |   |   |   | 731,637 |   |   |   | 0.3 | % |
| SunTrust Bank Institutional                                                              |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Asset Services                                                         |   |                    | -          |   |   |   | 157,883,410 |   |   |   | 157,883,410 |   |   |   | 60.2 | % |
| Wachovia Bank, N.A.                                                                      |   |                    | 257,478    |   |   |   |   |   |   |   | 257,478 |   |   |   | 0.1 | % |
| Bank of New York Trust Fund                                                              |   |                    | -          |   |   |   | 11,340,087 |   |   |   | 11,340,087 |   |   |   | 4.3 | % |
| Deutsche Bank Alex Brown                                                                 |   |                    | 20,335,762 |   |   |   | - |   |   |   | 20,335,762 |   |   |   | 7.7 | % |
| All Other Banking Institutions                                                           |   |                    | 434,939    |   |   |   | - |   |   |   | 434,939 |   |   |   | 0.2 | % |
|                                                                                     |   | $                       | 21,759,816 |   |   | $ | 240,684,952 |   |   | $ | 262,444,768 |   |   |   | 100.0 | % |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)   Funds invested with Evergreen Investment Management Company, L.L.C. |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   | As of December 31, 2009 |       |
| Financial Institution                                                                    |   | Cash                    |       |   | Money Market Funds |   |   | Total |   |   | % |   |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U. S. Bank IT&C (1)                                                                  |   | $                       | -          |   |   | $ | 71,977,371 |   |   | $ | 71,977,371 |   |   |   | 37.3 | % |
| Evergreen Investment Management                                                          |   |                    | -          |   |   |   | 26,909 |   |   |   | 26,909 |   |   |   | 0.0 | % |
|    Company, L.L.C.                                                        |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SunTrust Bank                                                                            |   |                    | 1,063,785  |   |   |   | - |   |   |   | 1,063,785 |   |   |   | 0.5 | % |
| SunTrust Bank Institutional                                                              |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Asset Services                                                         |   |                    | -          |   |   |   | 102,257,833 |   |   |   | 102,257,833 |   |   |   | 53.0 | % |
| Wachovia Bank, N.A.                                                                      |   |                    | 489,051    |   |   |   | - |   |   |   | 489,051 |   |   |   | 0.3 | % |
| Bank of New York Trust Fund                                                              |   |                    | -          |   |   |   | 16,515,181 |   |   |   | 16,515,181 |   |   |   | 8.6 | % |
| All Other Banking Institutions                                                           |   |                    | 594,161    |   |   |   | - |   |   |   | 594,161 |   |   |   | 0.3 | % |
|                                                                                     |   | $                       | 2,146,997  |   |   | $ | 190,777,294 |   |   | $ | 192,924,291 |   |   |   | 100.0 | % |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                       |   | For the Six Months Ended     |       |   | For the Three Months Ended |   |
|------------------------------------------------------------|--------|------------------------------|------------|--------|----------------------------|--------|
|                                                       |   | June 30, 2010                |       |   | June 30, 2010         |   |
|                                                       |   | Realized Gains (Losses) |       |   | Fair Value at Sale         |   |   | Realized Gains (Losses) |   |   | Fair Value at Sale |   |
| Fixed maturities, available for sale                       |   | $                            | 1,896,101  |   |                       | $      | 91,064,319 |   |   | $ | 1,835,359 |   |   | $ | 85,102,515 |   |
| Equity securities                                          |   |                         | 7,194,119  |   |                       |   | 69,127,155 |   |   |   | 3,084,436 |   |   |   | 32,640,707 |   |
|    Total Realized Gains                     |   | $                            | 9,090,220  |   |                       | $      | 160,191,474 |   |   | $ | 4,919,795 |   |   | $ | 117,743,222 |   |
|                                                       |   |                         |       |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Fixed maturities, available for sale                       |   | $                            | (283,994   | )      |                       | $      | 25,173,393 |   |   | $ | (84,414 | ) |   | $ | 5,813,149 |   |
| Equity securities                                          |   |                         | (3,009,881 | )      |                       |   | 9,963,804 |   |   |   | (378,074 | ) |   |   | 4,114,560 |   |
| Other Investments                                          |   |                         | (52,000    | )      |                       |   | - |   |   |   |   |   |   |   |   |   |
|    Total Realized Losses                    |   | $                            | (3,345,875 | )      |                       | $      | 35,137,197 |   |   | $ | (462,488 | ) |   | $ | 9,927,709 |   |
|                                                       |   |                         |       |
| Net realized gains on investments/Total Fair Value at Sale |   | $                            | 5,744,345  |   |                       | $      | 195,328,671 |   |   | $ | 4,457,307 |   |   | $ | 127,670,931 |   |

|                                                               |   | June 30, 2010         |       |
|--------------------------------------------------------------------|--------|-----------------------|------------|
|                                                               |   | Amortized Cost / Cost |       |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Estimated Fair Value |   |
| Fixed maturities - available for sale:                             |   |                  |       |   |   |   |   |   |   |   |   |   |
|      US government and agency obligations |   | $                     | 49,536,007 |   |   | $ | 582,830 |   |   | $ | (7,022 | ) |   | $ | 50,111,815 |   |
|      Foreign obligations                  |   |                  | 10,961,595 |   |   |   | 5,767 |   |   |   | (631,467 | ) |   |   | 10,335,895 |   |
| Total fixed maturities - available for sale                        |   | $                     | 60,497,602 |   |   | $ | 588,597 |   |   | $ | (638,489 | ) |   | $ | 60,447,710 |   |
|                                                               |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities:                                                 |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commodities                                                        |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Common Stock                         |   | $                     | 78,066,419 |   |   | $ | 3,413,169 |   |   | $ | (4,002,524 | ) |   | $ | 77,477,064 |   |
| Total equity securities                                            |   | $                     | 78,066,419 |   |   | $ | 3,413,169 |   |   | $ | (4,002,524 | ) |   | $ | 77,477,064 |   |
|                                                               |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   | December 31, 2009     |       |
|                                                               |   | Amortized Cost / Cost |       |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Estimated Fair Value |   |
| Fixed maturities - available for sale:                             |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      US government and agency obligations |   | $                     | 42,296,727 |   |   | $ | 37,623 |   |   | $ | (945,342 | ) |   | $ | 41,389,008 |   |
| Total fixed maturities - available for sale                        |   | $                     | 42,296,727 |   |   | $ | 37,623 |   |   | $ | (945,342 | ) |   | $ | 41,389,008 |   |
|                                                               |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities:                                                 |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Common Stock                         |   | $                     | 71,536,033 |   |   | $ | 4,278,432 |   |   | $ | (2,406,463 | ) |   | $ | 73,408,002 |   |
| Total equity securities                                            |   | $                     | 71,536,033 |   |   | $ | 4,278,432 |   |   | $ | (2,406,463 | ) |   | $ | 73,408,002 |   |

----

|                                                               |   | Unrealized Investment Losses |   |
|--------------------------------------------------------------------|--------|------------------------------|--------|
|                                                               |   | Less than 12 months          |   |   | 12 months or longer |   |
|                                                               |   | Number of issues             |   |   | Fair value |   |   | Unrealized losses |   |   | Number of issues |   |   | Fair value |   |   | Unrealized losses |   |
| Fixed maturities, available for sale:                              |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      US government and agency obligations |   |                         | 1      |   |   | $ | 3,098,658 |   |   | $ | 7,022 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
|      Foreign obligations                  |   |                         | 6      |   |   |   | 5,274,630 |   |   |   | 631,467 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                               |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed maturities, available for sale                         |   |                         | 7      |   |   | $ | 8,373,288 |   |   | $ | 638,489 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
|                                                               |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities:                                                 |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Common stocks                        |   |                         | 51     |   |   | $ | 41,092,774 |   |   | $ | 4,002,524 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
| Total equity securities                                            |   |                         | 53     |   |   | $ | 41,092,774 |   |   | $ | 4,002,524 |   |   |   | - |   |   | $ | - |   |   | $ | - |   |

| Available-for-Sale                     |   | June 30, 2010  |       |   | December 31, 2009    |   |
|----------------------------------------|--------|----------------|------------|--------|----------------------|--------|
| Contractual or Expected Period:        |   | Amortized Cost |       |   | Estimated Fair Value |   |   | Amortized Cost |   |   | Estimated Fair Value |   |
| Due in one year or less                |   | $              | 4,190,254  |   |                 | $      | 3,886,762 |   |   | $ | - |   |   | $ | - |   |
| Due after one year through five years  |   |           | 16,140,691 |   |                 |   | 15,883,442 |   |   |   | 176,350 |   |   |   | 180,901 |   |
| Due after five years through ten years |   |           | 37,060,977 |   |                 |   | 37,578,848 |   |   |   | 2,909,446 |   |   |   | 2,942,497 |   |
| Due after ten years                    |   |           | 3,105,680  |   |                 |   | 3,098,658 |   |   |   | 39,210,931 |   |   |   | 38,265,610 |   |
|                                   |   |           |       |   |                 |   |   |   |   |   |   |   |   |   |   |   |
|      Total    |   | $              | 60,497,602 |   |                 | $      | 60,447,710 |   |   | $ | 42,296,727 |   |   | $ | 41,389,008 |   |

----

| 2010       |   |   | 367,647    |   |
|------------|--------|--------|------------|--------|
| 2011       |   |   | 1,470,588  |   |
| 2012       |   |   | 1,470,588  |   |
| 2013       |   |   | 1,470,588  |   |
| 2014       |   |   | 1,470,588  |   |
| Thereafter |   |   | 17,647,060 |   |
| Total      |   | $      | 23,897,059 |   |

----

----

| 9. | Income Tax Provision |
|----|----------------------|

|                                    |   | As of June 30, |       |   | As of December 31, |   |
|-----------------------------------------|--------|----------------|------------|--------|--------------------|--------|
|                                    |   | 2010           |       |   | 2009               |   |
| Deferred income tax assets:             |   |           |       |   |               |   |
| Unearned premiums                       |   | $              | 9,462,377  |   |               | $      | 6,023,587 |   |
| Advanced premiums                       |   |           | 1,155,654  |   |               |   | 1,266,152 |   |
| Unpaid losses                           |   |           | 1,869,068  |   |               |   | 1,836,061 |   |
| Regulatory assessments                  |   |           | 910,001    |   |               |   | 1,605,884 |   |
| Executive compensation                  |   |           | -          |   |               |   | 181,992 |   |
| Shareholder compensation                |   |           | 427,892    |   |               |   | 327,553 |   |
| Stock option expense                    |   |           | 3,214,001  |   |               |   | 3,037,961 |   |
| Accrued wages                           |   |           | 302,372    |   |               |   | 423,190 |   |
| Allowance for uncollectible receivables |   |           | 336,276    |   |               |   | 1,042,228 |   |
| Additional tax basis of securities      |   |           | 153,220    |   |               |   | 140,878 |   |
| Restricted stock grant                  |   |           | 185,824    |   |               |   | 9,882 |   |
| Net unrealized losses on investments    |   |           | 253,240    |   |               |   | - |   |
| Other                                   |   |           | -          |   |               |   | 3,876 |   |
|                                    |   |           |       |   |               |   |   |   |
| Total deferred income tax assets        |   |           | 18,269,925 |   |               |   | 15,899,244 |   |
|                                    |   |           |       |   |               |   |   |   |
| Deferred income tax liabilities:        |   |           |       |   |               |   |   |   |
| Deferred policy acquisition costs, net  |   |           | (5,416,659 | )      |               |   | (3,650,979 | ) |
| Net unrealized gains on investments     |   |           | -          |   |               |   | (353,976 | ) |
|                                    |   |           |       |   |               |   |   |   |
| Total deferred income tax liabilities   |   |           | (5,416,659 | )      |               |   | (4,004,955 | ) |
|                                    |   |           |       |   |               |   |   |   |
| Net deferred income tax asset           |   | $              | 12,853,266 |   |               | $      | 11,894,289 |   |

----

----

|                        |   |                   |       |   |                   |   |   |       |   |   |                |   |   | Aggregate   |   |
|-----------------------------|--------|------------------------|------------|--------|------------------------|--------|--------|------------|--------|--------|---------------------|--------|--------|-------------|--------|
|                        |   |                   |       |   | Option Price per Share |   |   | Intrinsic  |   |
|                        |   |                   |       |   |                   |   |   |       |   |   |                |   |   |        |   |
|                        |   |  Number of Shares |       |   |  Low              |   |   |  High |   |   |  Weighted Avg. |   |   |  Value |   |
|                        |   |                   |       |   |                   |   |   |       |   |   |                |   |   |        |   |   |   |   |   |   |
| Outstanding January 1, 2010 |   |                   | 6,345,000  |   |                   | $      | 0.50   |       |   | $      | 6.50                |   |   | $           | 3.21   |   |   | $ | 17,888,900 |   |
|   Granted         |   |                   | 1,620,000  |   |                   | $      | 4.87   |       |   | $      | 5.84                |   |   | $           | 5.08   |   |   |   |   |   |
|   Exercised       |   |                   | (2,230,000 | )      |                   | $      | 0.70   |       |   | $      | 3.90                |   |   | $           | 1.49   |   |   | $ | 10,423,300 |   |
|   Expired         |   |                   | -          |   |                   | $      | -      |       |   | $      | -                   |   |   | $           | -      |   |   |   |   |   |
| Outstanding June 30, 2010   |   |                   | 5,735,000  |   |                   | $      | 0.50   |       |   | $      | 6.50                |   |   | $           | 4.40   |   |   | $ | 3,825,700 |   |
|                        |   |                   |       |   |                   |   |   |       |   |   |                |   |   |        |   |   |   |   |   |   |
| Outstanding January 1, 2009 |   |                   | 6,650,000  |   |                   | $      | 0.50   |       |   | $      | 6.50                |   |   | $           | 3.15   |   |   | $ | 3,795,250 |   |
|   Granted         |   |                   | -          |   |                   | $      | -      |       |   | $      | -                   |   |   | $           | -      |   |   |   |   |   |
|   Exercised       |   |                   | -          |   |                   | $      | -      |       |   | $      | -                   |   |   | $           | -      |   |   |   |   |   |
|   Expired         |   |                   | -          |   |                   | $      | -      |       |   | $      | -                   |   |   | $           | -      |   |   |   |   |   |
| Outstanding June 30, 2009   |   |                   | 6,650,000  |   |                   | $      | 0.50   |       |   | $      | 6.50                |   |   | $           | 3.15   |   |   | $ | 14,766,500 |   |

----

|                                                | Issued Shares |   | Treasury Shares |   | Shares Held in Trust |   | Outstanding Shares |
|-----------------------------------------------------|---------------|--------|-----------------|--------|----------------------|--------|--------------------|
|                                                |          |   |            |   |                 |   |               |
| Balance, January 1, 2010                            | 40,214,883    |   | (1,809,118)     |   | (631,000)            |   | 37,774,765         |
| Issued Shares                                       | 2,394         |   | -               |   | -                    |   | 2,394              |
| Options exercised                                   | 1,599,000     |   | -               |   | 631,000              |   | 2,230,000          |
| Shares applied to exercise price and payroll taxes: |          |   |            |   |                 |   |               |
| Shares held in trust                                | -             |   | (1,141,126)     |   | -                    |   | (1,141,126)        |
| Shares cancelled                                    | (1,239,190)   |   | 1,239,190       |   | -                    |   | -                  |
| Restricted stock grant                              | 300,000       |   | -               |   | -                    |   | 300,000            |
|                                                |          |   |            |   |                 |   |               |
| Balance, June 30, 2010                              | 40,877,087    |   | (1,711,054)     |   | -                    |   | 39,166,033         |

----

|           |   | For the six-month period ended |   |   | For the six-month period ended |   |
|----------------|--------|--------------------------------|--------|--------|--------------------------------|--------|
|           |   | June 30, 2010                  |   |   | June 30, 2009                  |   |
|           |   | Per Share                      |   |   | Aggregate                      |   |   | Per Share |   |   | Aggregate |   |
|           |   | Amount                         |   |   | Amount                         |   |   | Amount |   |   | Amount |   |
| First Quarter  |   | $                              | 0.12   |   |                           | $      | 4,699,926 |   |   | $ | 0.22 |   |   | $ | 8,268,278 |   |
| Second Quarter |   | $                              | 0.10   |   |                           | $      | 3,916,724 |   |   | $ | 0.12 |   |   | $ | 4,516,461 |   |

----

| Employment Agreements and Potential Payments Upon Termination Of Employment |
|-----------------------------------------------------------------------------|

|                                                           |   | Six Months Ended                        |       |   | Six Months Ended |   |
|----------------------------------------------------------------|--------|-----------------------------------------|------------|--------|------------------|--------|
|                                                           |   | June 30, 2010                           |       |   | June 30, 2009    |   |
|                                                           |   | Income Available to Common Stockholders |       |   | Shares           |   |   | Per-Share Amount |   |   | Income Available to Common Stockholders |   |   | Shares |   |   | Per-Share Amount |   |
|                                                           |   |                                    |       |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                     |   | $                                       | 17,710,978 |   |             |   |   |   |   |   |   | $ | 20,076,388 |   |   |   |   |   |   |   |
|  Less: preferred stocks dividends                         |   |                                    | (9,975     | )      |             |   |   |   |   |   |   |   | (17,475 | ) |   |   |   |   |   |   |
| Income available to common stockholders                        |   | $                                       | 17,701,003 |   |             |   | 39,028,976 |   |   | $ | 0.45 |   |   | $ | 20,058,913 |   |   |   | 37,589,412 |   |   | $ | 0.53 |   |
|                                                           |   |                                    |       |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of dilutive securities:                                 |   |                                    |       |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                    |       |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Stock options and warrants                         |   |                                    | -          |   |             |   | 1,251,676 |   |   |   | (0.01 | ) |   |   | - |   |   |   | 2,447,903 |   |   |   | (0.03 | ) |
|   Preferred stock                                    |   |                                    | 9,975      |   |             |   | 160,121 |   |   |   | 0.00 |   |   |   | 17,475 |   |   |   | 188,500 |   |   |   | 0.00 |   |
| Income available to common stockholders and assumed conversion |   | $                                       | 17,710,978 |   |             |   | 40,440,773 |   |   | $ | 0.44 |   |   | $ | 20,076,388 |   |   |   | 40,225,815 |   |   | $ | 0.50 |   |

----

|                                                           |   | Three Months Ended                      |       |   | Three Months Ended |   |
|----------------------------------------------------------------|--------|-----------------------------------------|------------|--------|--------------------|--------|
|                                                           |   | June 30, 2010                           |       |   | June 30, 2009      |   |
|                                                           |   | Income Available to Common Stockholders |       |   | Shares             |   |   | Per-Share Amount |   |   | Income Available to Common Stockholders |   |   | Shares |   |   | Per-Share Amount |   |
|                                                           |   |                                    |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                     |   | $                                       | 10,766,730 |   |               |   |   |   |   |   |   | $ | 7,638,558 |   |   |   |   |   |   |   |
|  Less: preferred stocks dividends                         |   |                                    | (4,988     | )      |               |   |   |   |   |   |   |   | (6,821 | ) |   |   |   |   |   |   |
| Income available to common stockholders                        |   | $                                       | 10,761,742 |   |               |   | 39,167,241 |   |   | $ | 0.27 |   |   | $ | 7,631,737 |   |   |   | 37,617,174 |   |   | $ | 0.20 |   |
|                                                           |   |                                    |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of dilutive securities:                                 |   |                                    |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Stock options and warrants                         |   |                                    | 0          |   |               |   | 1,119,184 |   |   |   | - |   |   |   | - |   |   |   | 2,751,790 |   |   |   | (0.01 | ) |
|   Preferred stock                                    |   |                                    | 4,988      |   |               |   | 159,550 |   |   |   | - |   |   |   | 6,821 |   |   |   | 160,738 |   |   |   | - |   |
| Income available to common stockholders and assumed conversion |   | $                                       | 10,766,730 |   |               |   | 40,445,975 |   |   | $ | 0.27 |   |   | $ | 7,638,558 |   |   |   | 40,529,702 |   |   | $ | 0.19 |   |

|                                                    |   | For the Six Months  |       |   | For the Six Months  |   |
|---------------------------------------------------------|--------|---------------------|------------|--------|---------------------|--------|
|                                                    |   | Ended June 30, 2010 |       |   | Ended June 30, 2009 |   |
|                                                    |   | Pretax              |       |   |                |   | Tax |   |   |   |   | After-tax |   |   | Pretax |   |   | Tax |   |   | After-tax |   |
|                                                    |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized (losses) gains, on investments,              |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    net, arising during the periods       |   | $                   | 4,979,278  |   |                |   |   | $ | (1,920,756 | ) |   |   |   | $ | 3,058,522 |   |   | $ | 14,975,697 |   |   | $ | (5,810,036 | ) |   | $ | 9,165,661 |   |
| Less: reclassification adjustments of                   |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    realized gains on investments         |   |                | 8,152,024  |   |                |   |   |   | (3,144,643 | ) |   |   |   |   | 5,007,381 |   |   |   | 1,452,609 |   |   |   | (560,344 | ) |   |   | 892,265 |   |
| Plus: Other-than-temporary impairment                   |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    of investments                        |   |                | (2,407,680 | )      |                |   |   |   | 928,763 |   |   |   |   |   | (1,478,917 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Less: reclassification adjustments of                   |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    foreign currency gains on investments |   |                | 809,050    |   |                |   |   |   | (312,091 | ) |   |   |   |   | 496,959 |   |   |   | 72,316 |   |   |   | (27,896 | ) |   |   | 44,420 |   |
|                                                    |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in net unrealized gains                          |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| on investments                                          |   |                | (1,574,116 | )      |                |   |   |   | 607,215 |   |   |   |   |   | (966,901 | ) |   |   | 13,450,772 |   |   |   | (5,221,796 | ) |   |   | 8,228,976 |   |
|                                                    |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive (loss) income                       |   | $                   | (1,574,116 | )      |                |   |   | $ | 607,215 |   |   |   |   | $ | (966,901 | ) |   | $ | 13,450,772 |   |   | $ | (5,221,796 | ) |   | $ | 8,228,976 |   |
|                                                    |   |                |       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                    |   | For the Three Months |      |   | For the Three Months |   |
|---------------------------------------------------------|--------|----------------------|-----------|--------|----------------------|--------|
|                                                    |   | Ended June 30, 2010  |      |   | Ended June 30, 2009  |   |
|                                                    |   | Pretax               |      |   | Tax                  |   |   | After-tax |   |   | Pretax |   |   | Tax |   |   | After-tax |   |
|                                                    |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized (losses) gains, on investments,              |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    net, arising during the periods       |   | $                    | 5,869,330 |   |                 | $      | (2,264,094 | ) |   | $ | 3,605,236 |   |   | $ | 9,740,470 |   |   | $ | (3,806,142 | ) |   | $ | 5,934,328 |   |
| Less: reclassification adjustments of                   |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    realized gains on investments         |   |                 | 4,457,307 |   |                 |   | (1,719,406 | ) |   |   | 2,737,901 |   |   |   | 341,276 |   |   |   | (131,647 | ) |   |   | 209,629 |   |
| Less: reclassification adjustments of                   |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    foreign currency gains on investments |   |                 | 124,803   |   |                 |   | (48,143 | ) |   |   | 76,660 |   |   |   | 84,435 |   |   |   | (32,571 | ) |   |   | 51,864 |   |
|                                                    |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in net unrealized gains                          |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| on investments                                          |   |                 | 1,287,220 |   |                 |   | (496,545 | ) |   |   | 790,675 |   |   |   | 9,314,759 |   |   |   | (3,641,924 | ) |   |   | 5,672,835 |   |
|                                                    |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive (loss) income                       |   | $                    | 1,287,220 |   |                 | $      | (496,545 | ) |   | $ | 790,675 |   |   | $ | 9,314,759 |   |   | $ | (3,641,924 | ) |   | $ | 5,672,835 |   |
|                                                    |   |                 |      |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Level 1: |   | Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.                                                                                                                                                                                      |
|---------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                                                                                                                                                                                                    |
| Level 2: |   | Financial assets and financial liabilities whose values are based on inputs that utilize other than quoted prices included in Level I that are observable for similar assets, or unobservable inputs that are corroborated by market data.                                                                                                                              |
|          |   |                                                                                                                                                                                                                                                                                                                                                                    |
| Level 3: |   | Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect the Company's estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities. |

----

|                                                |   | Fair Value Measurements |        |
|-----------------------------------------------------|--------|-------------------------|-------------|
|                                                |   | Level 1                 |        |   | Level 2 |   |   |   | Level 3 |   |   | Total |   |
|                                                |   |                    |        |   |   |   |   |   |   |   |   |   |   |
|                                                |   | As of June 30, 2010     |        |
| US government obligations and agencies              |   | $                       | 50,111,815  |   |   | $ | - |   |   |   | $ | - |   |   | $ | 50,111,815 |   |
| Foreign obligations                                 |   |                    | 10,335,895  |   |   |   | - |   |   |   |   | - |   |   |   | 10,335,895 |   |
| Equity securities                                   |   |                    | 77,477,064  |   |   |   | - |   |   |   |   | - |   |   |   | 77,477,064 |   |
|                                                |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total invested assets |   | $                       | 137,924,774 |   |   | $ | - |   |   |   | $ | - |   |   | $ | 137,924,774 |   |
|                                                |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   | As of December 31, 2009 |        |
| US government obligations and agencies              |   | $                       | 41,389,008  |   |   | $ | - |   |   |   | $ | - |   |   | $ | 41,389,008 |   |
| Equity securities                                   |   |                    | 73,408,002  |   |   |   | - |   |   |   |   | - |   |   |   | 73,408,002 |   |
|                                                |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total invested assets |   | $                       | 114,797,010 |   |   | $ | - |   |   |   | $ | - |   |   | $ | 114,797,010 |   |
|                                                |   |                    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                                  |   | As of June 30, |        |   | As of December 31, |   |
|---------------------------------------|--------|----------------|-------------|--------|--------------------|--------|
| Type of Investment                    |   | 2010           |        |   | 2009               |   |
| Cash and cash equivalents             |   | $              | 262,444,768 |   |               | $      | 192,924,291 |   |
| Fixed maturities, available for sale  |   |           | 60,447,710  |   |               |   | 41,389,008 |   |
| Equity securities, available for sale |   |           | 77,477,064  |   |               |   | 73,408,002 |   |
| Real estate, net                      |   |           | 4,335,589   |   |               |   | 3,289,893 |   |
|                                  |   |           |        |   |               |   |   |   |
| Total Investments                     |   | $              | 404,705,131 |   |               | $      | 311,011,194 |   |
|                                  |   |           |        |   |               |   |   |   |

----

----

----

|                                    |   | Six months ended June 30, 2010 |        |
|-----------------------------------------|--------|--------------------------------|-------------|
|                                    |   | Direct                         |        |   | Ceded |   |   | Net |   |
|  Loss and loss adjustment expenses |   | $                              | 97,025,344  |   |   | $ | 48,538,739 |   |   | $ | 48,486,605 |   |
|  Premiums earned                   |   | $                              | 290,754,177 |   |   | $ | 216,079,827 |   |   | $ | 74,674,350 |   |
|  Loss & LAE ratios             |   |                           | 33.4%       |   |   |   | 22.5% |   |   |   | 64.9% |   |
|                                    |   |                           |        |   |   |   |   |   |   |   |   |   |
|                                    |   |                           |        |   |   |   |   |   |   |   |   |   |
|                                    |   | Six months ended June 30, 2009 |        |
|                                    |   | Direct                         |        |   | Ceded |   |   | Net |   |
|  Loss and loss adjustment expenses |   | $                              | 90,929,142  |   |   | $ | 46,002,319 |   |   | $ | 44,926,823 |   |
|  Premiums earned                   |   | $                              | 262,398,307 |   |   | $ | 187,263,917 |   |   | $ | 75,134,390 |   |
|  Loss & LAE ratios             |   |                           | 34.7%       |   |   |   | 24.6% |   |   |   | 59.8% |   |

----

----

|                              |   | Three months ended June 30, 2010 |        |
|-----------------------------------|--------|----------------------------------|-------------|
|                              |   | Direct                           |        |   | Ceded |   |   | Net |   |
| Loss and loss adjustment expenses |   | $                                | 50,345,476  |   |   | $ | 25,510,583 |   |   | $ | 24,834,892 |   |
| Premiums earned                   |   | $                                | 150,600,999 |   |   | $ | 109,240,212 |   |   | $ | 41,360,787 |   |
| Loss & LAE ratios             |   |                             | 33.4%       |   |   |   | 23.4% |   |   |   | 60.0% |   |
|                              |   |                             |        |   |   |   |   |   |   |   |   |   |
|                              |   |                             |        |   |   |   |   |   |   |   |   |   |
|                              |   | Three months ended June 30, 2009 |        |
|                              |   | Direct                           |        |   | Ceded |   |   | Net |   |
| Loss and loss adjustment expenses |   | $                                | 49,604,750  |   |   | $ | 25,098,591 |   |   | $ | 24,506,159 |   |
| Premiums earned                   |   | $                                | 134,106,112 |   |   | $ | 96,729,374 |   |   | $ | 37,376,738 |   |
| Loss & LAE ratios             |   |                             | 37.0%       |   |   |   | 25.9% |   |   |   | 65.6% |   |

----

| ● | The increase in cash provided by operating activities from net changes in unearned premiums were $77,365,154 and $39,585,983 for the six-month periods ended June 30, 2010 and 2009, respectively.  The increase of $37,779,171 relates primarily to an increase in direct written premiums.                                                           |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                             |
| ● | The increase in cash provided by operating activities from net changes in reinsurance payable were $13,710,463 and $88,357,868 for the six month periods ended June 30, 2010 and 2009, respectively.  The decrease of $74,647,405 relates primarily to the timing of the settlement of balances with UPCIC’s reinsurers.                         |
|    |                                                                                                                                                                                                                                                                                                                                                             |
| ● | The increase in cash provided by operating activities from reinsurance recoverables was $28,580,923 for the six month ended June 30, 2010 compared to a decrease of $3,867,369 for the six-month period ended June 30, 2009.  The increase of $32,448,292 relates primarily to the timing of the settlement of balances with UPCIC’s reinsurers. |

----

|                                      |   | Six Month Ended |         |
|-------------------------------------------|--------|-----------------|--------------|
|                                      |   | June 30, 2010   |         |   | June 30,2009 |   |
|                                      |   |            |         |   |   |   |
| Balance - January 1                       |   | $               | 114,797,010  |   |   | $ | 5,648,775 |   |
|                                      |   |            |         |   |   |   |   |   |
| Purchases of fixed maturities             |   |            | 132,306,493  |   |   |   | 126,289,215 |   |
| Purchases of equity securities            |   |            | 81,385,728   |   |   |   | 77,397,551 |   |
| Net amort of prem / accretion of discount |   |            | (271,010     | ) |   |   | (109,204 | ) |
| Sales of fixed maturities                 |   |            | (116,237,712 | ) |   |   | (4,244,851 | ) |
| Sales of equity securities                |   |            | (79,090,959  | ) |   |   | (11,396,182 | ) |
| Realized gains on investments             |   |            | 5,796,345    |   |   |   | 1,452,609 |   |
| Foreign currency gains on investments     |   |            | 842,377      |   |   |   | 72,316 |   |
| Unrealized (losses) gains                 |   |            | (1,603,498   | ) |   |   | 13,458,869 |   |
|                                      |   |            |         |   |   |   |   |   |
| Balance - June 30                         |   | $               | 137,924,774  |   |   | $ | 208,569,098 |   |

----

----

----

----

----

----

----

----

----

|                                                                              |   | For the Six Months Ended June 30, |     |
|-----------------------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                                              |   | 2010                              |     |   | 2009 |   |
| Cash and cash equivalents                                                         |   | $                                 | 51,330   |   |   | $ | 231,859 |   |
| Fixed maturities                                                                  |   |                              | 545,938  |   |   |   | 700,984 |   |
| Equity securities                                                                 |   |                              | 19,863   |   |   |   | 187,116 |   |
|      Total investment income                             |   |                              | 617,131  |   |   |   | 1,119,959 |   |
| Less investment expenses                                                          |   |                              | (306,560 | ) |   |   | (321,477 | ) |
|                                                                              |   |                              |     |   |   |   |   |   |
|           Net investment income |   | $                                 | 310,571  |   |   | $ | 798,482 |   |
|                                                                              |   |                              |     |   |   |   |   |   |

----

|                                                               |   | June 30, 2010 |        |   |     | December 31, 2009 |   |
|--------------------------------------------------------------------|--------|---------------|-------------|--------|----------|-------------------|--------|
|                                                               |   | Carrying      |        |   | Percent  |              |   |   | Carrying |   |   |   | Percent |   |
|                                                               |   | Amount        |        |   | of Total |              |   |   | Amount |   |   |   | of Total |   |
| Fixed maturities, available for sale, at fair value:               |   |          |        |   |     |              |   |   |   |   |   |   |   |   |
|      US government and agency obligations |   |          | 50,111,815  |   |     |              | 36.3   | % |   |   |   | 41,389,008 |   |   |   |   | 36.1 | % |
|      Foreign obligations                  |   |          | 10,335,895  |   |     |              | 7.5    | % |   |   |   | - |   |   |   |   | 0.0 | % |
| Equity securities, at market                                       |   |          | 77,477,064  |   |     |              | 56.2   | % |   |   |   | 73,408,002 |   |   |   |   | 63.9 | % |
|                                                               |   |          |        |   |     |              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total investments                                                  |   | $             | 137,924,774 |   |     |              | 100.00 | % |   |   | $ | 114,797,010 |   |   |   |   | 100.00 | % |
|                                                               |   |          |        |   |     |              |   |   |   |   |   |   |   |   |   |   |   |   |

|                                   |   | June 30, 2010  |       |   |                 | December 31, 2009 |       |
|----------------------------------------|--------|----------------|------------|--------|----------------------|-------------------|------------|
| Available-for-Sale                     |   | Amortized Cost |       |   | Estimated Fair Value |              |       |   | Amortized Cost |   |   |   | Estimated Fair Value |   |
| Due in one year or less                |   | $              | 4,190,254  |   |                 | $                 | 3,886,762  |   |   |   | $ | - |   |   |   | $ | - |   |
| Due after one year through five years  |   |           | 16,140,691 |   |                 |              | 15,883,442 |   |   |   |   | 176,350 |   |   |   |   | 180,901 |   |
| Due after five years through ten years |   |           | 37,060,977 |   |                 |              | 37,578,848 |   |   |   |   | 2,909,446 |   |   |   |   | 2,942,497 |   |
| Due after ten years                    |   |           | 3,105,680  |   |                 |              | 3,098,658  |   |   |   |   | 39,210,931 |   |   |   |   | 38,265,610 |   |
|                                   |   |           |       |   |                 |              |       |   |   |   |   |   |   |   |   |   |   |   |
|      Total    |   | $              | 60,497,602 |   |                 | $                 | 60,447,710 |   |   |   | $ | 42,296,727 |   |   |   | $ | 41,389,008 |   |
|                                   |   |           |       |   |                 |              |       |   |   |   |   |   |   |   |   |   |   |   |

----

|   | ● |   | Net income decreased by $1,362,721                        |
|--------|---------|--------|---------------------------------------------------------------------|
|   | ● |   | Accumulated other comprehensive income increased by $1,478,917 |
|   | ● |   | Diluted earnings per share decreased by $0.04                  |
|   | ● |   | Stockholders' equity increased by $116,197                     |

|   | ● | finance personnel receive and review duplicate trade confirmations before closing the books at each month end.                                                                                                                                                                                                                                                     |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                               |
|   | ● | the “Other-Than-Temporary Impairment Analysis” (“The Watch List”) prepared by the 15th of each month will be available to certain of the Company’s management as well as the Company’s brokerage firms to assist in ascertaining whether and how proposed trading activity may affect the Company’s financial reporting. |
|   |    |                                                                                                                                                                                                                                                                                                                                                               |
|   | ● | a “Review of Subsequent Trading Activity” report covering all trading activity since the prior month-end will be reviewed monthly by the Company’s finance personnel to identify trades that may involve securities with impaired values.                                                                                                        |
|   |    |                                                                                                                                                                                                                                                                                                                                                               |
|   | ● | a designated finance manager will solicit an attestation from the Company’s securities brokers that the Company’s finance department was informed of all trades involving securities on The Watch List.                                                                                                                                                |

----

| Exhibit No.  | Exhibit                                                                                                                 |
|-------------------|------------------------------------------------------------------------------------------------------------------------------|
| 3.1          | Registrant’s Restated Amended and Restated Certificate of Incorporation (1)                                            |
|              |                                                                                                                         |
| 3.2          | Certificate of Designation for Series A Convertible Preferred Stock dated October 11, 1994 (2)                          |
| 3.3          | Certificate of Designations, Preferences, and Rights of Series M Convertible Preferred Stock dated August 13, 1997 (3)  |

----

| 3.4   | Certificate of Amendment of Amended and Restated Certificate of Incorporation dated October 19, 1998 (2)                                                                                     |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.5   | Certificate of Amendment of Amended and Restated Certificate of Incorporation dated December 18, 2000 (2)                                                                                    |
| 3.6   | Certificate of Amendment of Certificate of Designations of the Series A Convertible Preferred Stock dated October 29, 2001 (2)                                                                    |
|       |                                                                                                                                                                                              |
| 3.7   | Certificate of Amendment of Amended and Restated Certificate of Incorporation dated December 7, 2005 (4)                                                                                          |
|       |                                                                                                                                                                                              |
| 3.8   | Certificate of Amendment of Amended and Restated Certificate of Incorporation dated May 18, 2007 (4)                                                                                              |
|       |                                                                                                                                                                                              |
| 3.9   | Amended and Restated Bylaws (5)                                                                                                                                                              |
| 31.1  | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               |
|       |                                                                                                                                                                                              |
| 31.2  | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               |
|       |                                                                                                                                                                                              |
| 32    | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Title 18, United States Code, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|       |                                                                                                                                                                                              |
| 99.1  | Schedule of Investments                                                                                                                                                                           |

| (1) | Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 33-51546) declared effective on December 14, 1992 |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Incorporated by reference to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2002                              |
| (3) | Incorporated by reference to the Registrant’s Annual Report on Form 10-KSB/A for the year ended April 30, 1997                               |
| (4) | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-QSB for period ended June 30, 2007                                 |
| (5) | Incorporated by reference to the Registrant’s Current Report on Form 8-K dated January 8, 2007                                               |

----

|                                                                                  |   | UNIVERSAL INSURANCE HOLDINGS, INC.                                                         |
|---------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
|                                                                                  |   |                                                                                       |
|                                                                                  |   |                                                                                       |
| Date:           August 9, 2010 |   | /s/ Bradley I. Meier                                                                       |   |
|                                                                                  |   | Bradley I. Meier, President and Chief Executive Officer                                    |
|                                                                                  |   |                                                                                       |
|                                                                                  |   |                                                                                       |
|                                                                                  |   | /s/ George R DeHeer                                                                        |   |
|                                                                                  |   | George R. DeHeer,  Acting Chief Accounting Officer(Principal Accounting Officer) |