UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the Quarterly Period ended March 31,June 30, 2010.

For the transition period from              to             .

Commission file number 000-28249

AMERINST INSURANCE GROUP, LTD.

(Exact Name of Registrant as Specified in its Charter)

(441) 296-3973

(Telephone number)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

As of MayAugust 1, 2010, the registrantRegistrant had 995,253 common shares, $1.00 par value per share, outstanding.

Introductory Note

Caution Concerning Forward-Looking Statements

Certain statements contained in this Form 10-Q, or otherwise made by our officers, including statements related to our future performance, our outlook for our businesses and respective markets, projections, statements of our management’s plans or objectives, forecasts of market trends and other matters, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and contain information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. The words “expect,” “believe,” “may” and similar expressions as they relate to us or our management are intended to identify forward-looking statements. Such statements reflect our management’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those reflected in any forward-looking statements. Our actual future results may differ materially from those set forth in our forward-looking statements. Factors that might cause such actual results to differ materially from those reflected in any forward-looking statements include, but are not limited to the factors discussed in detail in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this form 10-Q, as well as:

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our management’s analysis only as of the date they are made. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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Part I—FINANCIAL INFORMATION

AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, expressed in U.S. dollars)

See the accompanying notes to the unaudited condensed consolidated financial statements.

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AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS, COMPREHENSIVE (LOSS) INCOME (LOSS)

AND RETAINED EARNINGS

(Unaudited, expressed in U.S. dollars)

See the accompanying notes to the unaudited condensed consolidated financial statements.

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AMERINST INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, expressed in U.S. dollars)

See the accompanying notes to the unaudited condensed consolidated financial statements.

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AMERINST INSURANCE GROUP, LTD.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31,June 30, 2010

The condensed consolidated financial statements included herein have been prepared by AmerInst Insurance Group, Ltd. (“AmerInst”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC” or the “Commission”), and reflect all adjustments consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations as of the end of and for the periods presented. All intercompany transactions and balances have been eliminated on consolidation. These statements are condensed and do not incorporate all the information required under generally accepted accounting principles to be included in a full set of financial statements. In these notes, the terms “we”, ‘us”, “our” or “the Company” refer to AmerInst and its subsidiaries. It is suggested that these condensed statements be read in conjunction with the audited consolidated financial statements at and for the year ended December 31, 2009 and notes thereto, included in AmerInst’s Annual Report on Form 10-K for the year then ended.

Critical Accounting Policies

The Company’s critical accounting policies are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2009.

New Accounting Pronouncements – Accounting Standards Adopted

In January 2010, the Company adopted the revised guidance issued by the Financial Accounting Standard Board (“FASB”) for the disclosures about fair value measurements. The revised guidance requires additional disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. The revised guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The revised guidance is effective for the first reporting period (including interim periods) beginning after December 15, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of the revised guidance did not have an impact on the consolidated financial statements.

Subsequent Events

On February 24, 2010, the FASB amended its guidance on subsequent events to no longer require companies filing periodic reports with the Commission to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements in order to alleviate potential conflicts between the FASB’s guidance and the SEC’s filing requirements. This guidance was effective immediately upon issuance. The adoption of this guidance had no impact on the Company’s results of operations or financial condition. While the Company’s consolidated financial statements no longer disclose the date through which it has evaluated subsequent events, it continues to be required to evaluate subsequent events through the date when the Company’s financial statements are issued.

The cost or amortized cost, gross unrealized holding gains and losses, and estimated fair value of the Company’s fixed maturity investments, by major security type, and equity securities as of March 31,June 30, 2010 and December 31, 2009 are as follows:

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The following tables summarize the Company’s fixed maturity and equity securities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:

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As of March 31,June 30, 2010 and December 31, 2009, the number of available for sale fixed maturity securities in an unrealized loss position was 32 and 6 respectively, with an estimated fair value of $1,452,648$932,265 and $2,506,958 respectively. As of March 31,June 30, 2010 and December 31, 2009, none of these securities had been in an unrealized loss position for 12 months or greater. As of March 31,June 30, 2010, none of these securities were considered to be other than temporarily impaired. The Company has no intent to sell and it is not more likely than not that the Company will be required to sell these securities before their fair values recover above the adjusted cost. The unrealized losses from these securities were not a result of credit, collateral or structural issues.

Other-Than-Temporary Impairment Process

Upon the adoption of ASCFASB’s Accounting Standard Codification (ASC) 320, Investments—Debt and Equity Securities, effective April 1, 2009, the Company changed its process for assessing whether declines in the fair value of its fixed maturity investments represented impairments that are other-than-temporary. The process now includes reviewing each fixed maturity investment that is impaired and (1) determining if the Company has the intent to sell the fixed maturity investment or if it is more likely than not that the Company will be required to sell the fixed maturity investment before its anticipated recovery; and (2) assessing whether a credit loss exists, that is, where the Company expects that the present value of the cash flows expected to be collected from the fixed maturity investment are less than the amortized cost basis of the investment.

The Company had no planned sales of its fixed maturity investments classified as available-for-sale that were in an unrealized loss position at March 31,June 30, 2010. In assessing whether it is more likely than not that the Company will be required to sell a fixed maturity investment before its anticipated recovery, the Company considers various factors including its future cash flow requirements, legal and regulatory requirements, the level of its cash, cash equivalents, short term investments and fixed maturity investments available for sale in an unrealized gain position, and other relevant factors. For the threesix months ended March 31,June 30, 2010, the Company did not recognize any other-than-temporary impairments due to required sales.

In evaluating credit losses, the Company considers a variety of factors in the assessment of a fixed maturity investment including: (1) the time period during which there has been a significant decline below cost; (2) the extent of the decline below cost and par; (3) the potential for the fixed maturity investment to recover in value; (4) an analysis of the financial condition of the issuer; (5) the rating of the issuer; and (6) failure of the issuer of the fixed maturity investment to make scheduled interest or principal payments.

If we conclude a security is other-than-temporarily impaired, we write down the amortized cost of the security to fair value, with a charge to net realized investment gains (losses) in the Consolidated Statement of Operations. Gross unrealized losses on the investment portfolio as of March 31,June 30, 2010 amounted to $7,915$3,006 compared to $42,142 as of December 31, 2009. This decrease was attributable to the increase in the fair value of fixed maturity securities which we determined were not other than temporarily impaired based on the process described above.as a result of improved market conditions. The unrealized losses on these available for sale fixed maturity securities were not as a result of credit, collateral or structural issues. DuringAs a result of the three months ended March 31, 2010,decline in fair value below cost, the Company did not record any other-than-temporary impairment charge on its equity securities compared torecorded a total other-than-temporary impairment charge of $817,286 recorded$123,310 and $30,603 on 25two and three equity securities during the threequarter ended June 30, 2010 and 2009, respectively. During the six months ended March 31, 2009.June 30, 2010 the Company recorded a total other-than-temporary impairment charge of $123,310 on two equity securities compared to $847,889 on twenty-eight equity securities whose fair value declined below cost, in line with its impairment policy.

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Fair Value of Investments

Under existing accounting principles generally accepted in the United States, we are required to recognize certain assets at their fair value in our consolidated balance sheets. This includes our fixed maturity investments and equity securities. In accordance with the Fair Value Measurements and Disclosures Topic of the FASB’s Accounting Standard CodificationASC 820, (“ASC 820”), fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair Value Measurements and Disclosures Topic of the ASC 820, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon whether the inputs to the valuation of an asset or liability are observable or unobservable in the market at the measurement date, with quoted market prices being the highest level (Level 1) and unobservable inputs being the lowest level (Level 3). A fair value measurement will fall within the level of the hierarchy based on the input that is significant to determining such measurement. The three levels are defined as follows:

At each measurement date, we estimate the fair value of the security using various valuation techniques. We utilize, to the extent available, quoted market prices in active markets or observable market inputs in estimating the fair value of our investments. When quoted market prices or observable market inputs are not available, we utilize valuation techniques that rely on unobservable inputs to estimate the fair value of investments. The following describes the valuation techniques we used to determine the fair value of investments held as of March 31,June 30, 2010 and what level within the fair value hierarchy theeach valuation technique resides.

To validate prices, we complete quantitative analyses to compare the performance of the overall investment portfolio to the performance of an appropriate benchmark, with significant differences identified and investigated.

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There have been no material changes to any of our valuation techniques from what was used as of December 31, 2009. Since the fair value of a security is an estimate of what a willing buyer would pay for our asset if we sold it, we will not know the ultimate value of our securities until they are sold. We believe the valuation techniques utilized provide us with the best estimate of the price that would be received to sell our assets or transfer our liabilities in an orderly market transaction between participants at the measurement date.

The following tables show the fair value of the Company’s investments in accordance with FASB’s ASC 820, “Fair Value Measurements and Disclosures” as of March 31,June 30, 2010 and December 31, 2009.

The following table presents a reconciliation of the beginning and ending balance of investments measured at fair value on a recurring basis using significant unobservable (Level 3) inputs for the six months ended June 30, 2010 and June 30, 2009.

The following table presents a reconciliation of the beginning and ending balance of investments measured at fair value on a recurring basis using significant unobservable (Level 3) inputs for the quarters ended March 31,June 30, 2010 and March 31,June 30, 2009.

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The cost or amortized cost and estimated fair value of fixed maturity investments as of March 31,June 30, 2010 and December 31, 2009 by contractual maturity are shown below. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations without penalties.

Information on sales and maturities of investments during the six months ended June 30, 2010 and 2009 are as follows:

Information on sales and maturities of investments during the quarters ended March 31,June 30, 2010 and 2009 are as follows:

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Major categories of net interest and dividend income during the six months ended June 30, 2010 and 2009 are summarized as follows:

Major categories of net interest and dividend income during the quarters ended March 31,June 30, 2010 and 2009 are summarized as follows:

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The tables below disclose segment income and loss for the following AmerInst has three operating segments: 1) reinsuranceReinsurance activity, 2) RINITS™, its insurance financing product, which is in the marketing phase of development, and 3) insurance activity.

The results for the reinsurance activity were as follows:

The RINITS™ segment offers a mechanism to securitize insurance and reinsurance risk, involving property, casualty, life and health lines of insurance. This segment as of March 31, 2010, had generated no revenue. Operatinginsurance, and management expenses are as follows:

The3) insurance segmentactivity, which offers accountants’ professional liability and lawyers’ professional liability insurance coverage. The results asRINITS™ segment is in the marketing phase of March 31, 2010 are as follows:development.

The combined total net (loss) income for all segments is as follows:

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AmerInst Professional Services Limited (“APSL”), a subsidiary of AmerInst, has entered into a number of employment agreements with four key members of senior management. One such employment agreement grantsmanagement which grant them phantom shares of the employeeCompany. Under these agreements, these employees were initially granted a total of 75,018 phantom shares of the Company calculated as $1,500,000 divided byon the net book valuedate of the Company’s common shares at December 31, 2009, resulting in approximately 37,509 phantom shares.their employment. The phantom shares are eligible for phantom dividends paid at the same rate as regular dividends.dividends on the Company’s common shares. The phantom dividends may be used only to purchase additional phantom shares with the purchase price of such phantom shares being the current net book value of the Company’s actual common shares. Approximately 441 phantom shares were purchased from phantom dividends duringas at the end of the previous quarter. During the three months ended March 31,June 30, 2010, no phantom shares were granted since no dividends were declared on the Company’s common shares. During the six months ended June 30, 2010, approximately 882 phantom shares were granted arising from the dividends declared on the Company’s common shares. Approximately 75,900 phantom shares were outstanding at June 30, 2010.

The employee’semployees’ interest in the phantom shares initially awarded andgranted as well as any additional shares purchasedgranted from dividends declared will vest on January 1, 2015. The proceedsliability payable to the employees under this phantom share plan is equal to the difference between the value of the phantom shares based on the net book value of the Company’s actual common shares at the end of the previous quarter less the initial $1,500,000 will be paidvalue and is payable in cash toupon the earlier of the employee on attaining sixty-five65 years of age or within sixty60 days of death or permanent disability including if such death or permanent disability occurs before January 1, 2015.

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Approximately 37,950The liability relating to these phantom shares are outstandingis recalculated quarterly based on the net book value of the Company’s common shares at March 31, 2010.the end of the previous quarter. For the three months and six months ended March 31,June 30, 2010, the Company has recognizedrecorded compensation expense in the amount of $17,837$40,951 and $58,788 respectively, relating to these phantom shares.

Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that have affected our financial condition and results of operation and should be read in conjunction with our consolidated financial statements and notes thereto included in this Form 10-Q.

Certain statements contained in this Form 10-Q, including this MD&A section, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and contain information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. The words “expect,” “believe,” “may” and similar expressions as they relate to us or our management are intended to identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements. Please see the Introductory Note and Item 1A “Risk Factors” of this Form 10-Q for a discussion of factors that could cause our actual results to differ materially from those in the forward-looking statements. However, the risk factors listed in Item 1A “Risk Factors” or discussed in this Form 10-Q should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our management’s analysis only as of the date they are made. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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The following discussion addresses our financial condition and results of operations for the periods and as of the dates indicated.

OVERVIEW

Unless otherwise indicated by the context, in this quarterly report we refer to AmerInst Insurance Group, Ltd. and its subsidiaries as the “Company”, “AmerInst,” “we” or “us.” “AMIC Ltd.” means AmerInst’s wholly-owned subsidiary, AmerInst Insurance Company, Ltd. “APSL” means AmerInst Professional Services, Limited, a Delaware corporation and wholly-owned subsidiary of AmerInst Mezco, Ltd. (“Mezco”) which is a wholly-owned subsidiary of AmerInst. “Investco” means AmerInst Investment Company, Ltd., a wholly-owned subsidiary of AMIC Ltd. “AMIG” means our predecessor entity, AmerInst Insurance Group, Inc., a Delaware corporation. Our principal offices are c/o Cedar Management Limited, 25 Church Street, Continental Building, P.O. Box HM 1601, Hamilton, Bermuda, HM GX.

AmerInst, a Bermuda holding company, was formed in 1998. Our mission is to be a Companycompany that provides insurance protection for professional service firms.firms and engages in investment activities.

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Entry into Agency Agreement

Effective September 25, 2009, APSL entered into an agency agreement (the “Agency Agreement”) with The North River Insurance Company, United States Fire Insurance Company, Crum & Forster Indemnity Company, Crum and Forster Insurance Company, and Crum & Forster Specialty Insurance Company (collectively, “C&F”) pursuant to which C&F appointed APSL as its exclusive agent for the purposes of soliciting, underwriting, quoting, binding, issuing, cancelling, non-renewing and endorsing accountants’ professional liability and lawyers’ professional liability insurance coverage within the 50 states of the United States and the District of Columbia. The initial term of the Agency Agreement is for four years with automatic one year renewals. No significant underwriting activity under the Agency Agreement occurred through March 31,June 30, 2010.

Entry into Reinsurance Agreement

We conduct our reinsurance business through AMIC Ltd., our subsidiary, which is a registered insurer in Bermuda. On September 25, 2009, AMIC Ltd. entered into a professional liability quota share agreement with C&F (the “Reinsurance Agreement”) pursuant to which C&F agrees to cede and AMIC Ltd. agrees to accept as reinsurance a fifty percent (50%) quota share of C&F’s liability under insurance written by APSL on behalf of C&F and classified by C&F as accountants’ professional liability and lawyers’ professional liability, subject to AMIC Ltd’sLtd.’s surplus limitations. The initial term of the Reinsurance Agreement is for four years with automatic one year renewals. No significant underwriting activity occurred under the Reinsurance Agreement through March 31,June 30, 2010.

Historical Relationship with CNA

Historically, the primary business activity of our wholly owned insurance subsidiary, AMIC Ltd., had been to act as a reinsurer of professional liability insurance policies that were issued under the Professional Liability Insurance Plan sponsored by the American Institute of Certified Public Accountants (“AICPA”). The AICPA plan offers professional liability coverage to accounting firms and individual CPAs in all 50 states.

Our reinsurance activity depends upon agreements with outside parties. AMIG, our predecessor entity, began our reinsurance relationship with CNA Financial Corporation (“CNA”) in 1993.

On January 5, 2009, AMIC Ltd. received written notice from CNA that CNA did not intend to renew the reinsurance program encompassed by the AmerInst Insurance Company Limited Accountants Professional Liability Treaty and the Value Plan Policies Accountants Professional Liability Quota Share Treaty (the “Reinsurance Treaties”). In 2008, the business relationship with CNA accounted for approximately 95% of AmerInst’s net premiums earned.

On May 15, 2009, AMIC Ltd. and CNA entered into a Commutation and Release Agreement (the “Commutation Agreement”) whereby:

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In 2009 the Company reduced its estimated liability for unpaid losses and loss adjustment expenses by approximately $5,400,000 to reflect the impact of the Commutation Agreement.

Included in net income for the twelve12 months ended December 31, 2009 was earned premium of approximately $2,800,000, losses and loss adjustment expenses and policy acquisition costs of approximately $2,000,000 and $800,000, respectively, relating to the commuted treaties. Since the Commutation Agreement rescinded and terminated the 2009 Reinsurance Treaties retroactive to their inception, such treaties were not recorded in the 2009 consolidated financial statements.

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Historical Relationship with CAMICO

From June 1, 2005 through May 31, 2009, we were a party to a reinsurance contract with CAMICO Mutual Insurance Company (“CAMICO”) a California-based writer of accountants’ professionally liability business.

Effective June 1, 2009, we decided not to renew the CAMICO contract and permitted the contract to expire pursuant to its terms. In 2008, the business relationship with CAMICO accounted for approximately 5% of AmerInst’s net premiums earned. We remain potentially liable for claims related to coverage provided through May 31, 2009.

VSC Payment

On July 22, 2009, the Company received a payment of $500,891 from Virginia Surety Company (“VSC”) in satisfaction of certain recoveries not previously remitted by VSC under retrocession contracts between the Company and VSC for the years 1989-1993. The $500,891 payment was recorded as a decrease in losses and loss adjustment expenses in the year ended December 31, 2009. The Company and VSC are in dispute with respect to over $500,000 in additional recoveries, fees and interest, which the Company currently expects to resolve via arbitration.

Attorneys’ Professional Liability Coverage

Effective January 1, 2003, we entered into a 15% quota share participation of the attorneys’ professional liability coverage provided by Professionals Direct Insurance Company (“PDIC”). This participation terminated on December 31, 2003. We remain potentially liable for claims related to this period of coverage.

Third-party Managers and Service Providers

Cedar Management Limited provides the day-to-day services necessary for the administration of our business. Shareholder services are conducted by USA Risk Group of Vermont, Inc., an affiliate of Cedar Management Limited. Our agreement with Cedar Management Limited renewed for one year beginning January 1, 2010 and ending December 31, 2010. Mr. Stuart H. Grayston, our President, is a director and officer of Cedar Management Limited, and Mr. Thomas R. McMahon, our Vice President and Treasurer, is an officer, director and employee of Cedar Management Limited.

Mowery & Schoenfeld, LLC, an accounting firm affiliated with a former director and chairman emeritus, provides accounting functions to APSL pursuant to a letter of understanding dated January 21, 2010. The letter has an effective date of January 1, 2010 and terminates on December 31, 2010.

The Country Club Bank of Kansas City, Missouri, provides portfolio management of fixed maturity securities and directs our investments pursuant to guidelines approved by us. Harris Associates L.P. and Aurora Investment Management, LLC provide discretionary investment advice with respect to our equity investments. We have retained Milliman USA, an independent casualty actuarial consulting firm, to render advice regarding actuarial matters.

OPERATIONS

ThreeSix months ended March 31,June 30, 2010 compared to threesix months ended March 31, 2009:June 30, 2009

We recorded a net loss of $434,829$781,902 for the firstsix months ended June 30, 2010 compared to net income of $4,652,478 for the six months ended June 30, 2009. The net loss recorded during the six months ended June 30, 2010 was attributable to the following; (1) the increased expenses incurred by APSL which commenced operations in late 2009 following the execution of its Agency Agreement with C&F effective September 25, 2009; (2) the reduction in net premiums earned from $3,055,875 in 2009 to $98,603 following the commutation and termination of the CNA relationship and non-renewal of the CAMICO policies in 2009 and (3) the reduced net investment income from $607,326 in 2009 to $194,871 in 2010 due to the reduction in the investment portfolio following the liquidation of fixed maturity investments in May 2009 to settle the payment of $20.55 million due to CNA as a result of the Commutation Agreement entered into between the Company and CNA in 2009. These were partially offset by the increased realized

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gain on investments, net of impairment from $83,847 in 2009 to $943,212 in 2010 arising from the sale of equity securities following improved market conditions. The net income recorded for the six months ended June 30, 2009 is mainly attributable to the reduction of approximately $5,400,000 in loss and loss adjustment expenses in recognition of the positive development recorded as a result of updating the estimated liability for unpaid losses and loss adjustment expenses on the finalization of the Commutation Agreement with CNA, as discussed below.

Our net premiums earned were $98,603 for the six months ended June 30, 2010 compared to $3,055,875 for the six months ended June 30, 2009. The change of $2,957,272 represented a 96.8% decrease. This decrease is due to the 2009 Reinsurance Treaties being rescinded and terminated retroactive to their inception.

We recorded realized gains, net of impairment, of $943,212 during the six months ended June 30, 2010 compared to $83,847 in the same period of 2009. The significant increase in realized gains recorded in 2010 relates to reduced impairment charges of $123,310 in 2010 compared to $847,889 in 2009 netted off against realized gains on the sale of equity securities. Net investment income earned during the six months ended June 30, 2010 was $194,871 compared to $607,326 for the same period of 2009. The decline in net investment income is due to a lower amount of investments invested in 2010 compared to 2009. Annualized investment yield, calculated as total interest and dividend income divided by the net average amount of total investments, was 2.1% for the six months ended June 30, 2010 compared to 3.2% for the six months ended June 30, 2009.

For the six months ended June 30, 2010 we recorded loss and loss adjustment expense of $1,371, which represents an estimated loss ratio of 62.5% times the premiums earned under the Reinsurance Agreement. For the six months ended June 30, 2009, we recorded loss and loss adjustment recoveries of $3,189,219 as a result of (1) the reduction in loss reserves related to the CNA treaty following the determination of the ultimate settlement amount after the finalization of the Commutation Agreement, and (2) the recognition of the payment of $500,891 received from VSC in satisfaction of certain recoveries not previously remitted by VSC under retrocession contracts between AMIC Ltd. and VSC for the years 1989-1993. To determine total losses for the six months of 2009, we multiplied an estimated loss ratio of 70% times the AICPA Professional Liability Insurance Plan net premiums earned and the CAMICO net premiums earned. We will continue to monitor our reserve for losses and loss expenses for any new claims information and adjust our reserve for losses and loss expenses accordingly.

We recorded policy acquisition recoveries of $27,481 for the six months ended June 30, 2010 compared to policy acquisition costs of $857,652 for the six months ended June 30, 2009, a decrease of $885,133 or 103.2%. The policy acquisition recoveries recorded for the six months ended June 30, 2010 were attributable to the revisions to the CAMICO premium estimates and PDIC for prior years, net of policy acquisition costs recorded on premiums earned under the Reinsurance Agreement. For the six months ended June 30, 2009, policy acquisition costs were 28.1% of net premiums earned. Policy acquisition costs are the sum of ceding commissions paid to ceding companies determined contractually pursuant to reinsurance agreements and federal excise taxes paid on premiums written to ceding companies.

We expensed operating and management expenses of $2,057,019 for the six months ended June 30, 2010 compared to $1,426,137 for the six months ended June 30, 2009, an increase of $630,882 or 44.2%. The primary reason for this increase is the increased expenses incurred by APSL, which commenced operations in late 2009 following the execution of its Agency Agreement with C&F effective September 25, 2009.

The tables below disclose segment income and loss for the following AmerInst operating segments: 1) Reinsurance activity, 2) RINITS™, its financing product, which offers a mechanism to securitize insurance and reinsurance risk, involving property, casualty, life and health lines of insurance, and 3) insurance activity, which offers accountants’ and lawyers’ professional liability insurance coverage. The RINITS™ segment is in the marketing phase of development.

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Three months ended June 30, 2010 compared to three months ended June 30, 2009

We recorded a net loss of $347,072 for the second quarter of 2010 compared to a net income of $4,291,582$360,897 for the same period in 2009. The net loss recorded during the firstsecond quarter of 2010 was attributable to the following; (1) the increased expenses incurred by APSL which commenced operations in late 2009 following the execution of its Agency Agreement with C&F effective September 25, 2009; (2) the reduction in net premiums earned from $1,623,652$1,432,223 in 2009 to $96,410$2,193 following the commutation and termination of the CNA relationship and non-renewal of the CAMICO policies in 2009 and2009; (3) the reduced net investment income from $391,236$216,090 in 2009 to $77,172$117,699 in 2010 due to the liquidation of fixed maturity investments in May 2009 to settle the payment of $20.55 million due to CNA as a result of the Commutation Agreement entered into between the Company and CNA in 2009.2009; and (4) lower net realized gain on investments of $630,843 compared to $919,378 in 2009 as a result of reduced sales of available-for-sale securities. The net income recorded for the firstsecond quarter of 2009 was mainly attributable to the reduction of approximately $5,400,000 in loss and loss adjustment expenses in recognition of the positive development recorded as a result of updating the estimated liability for unpaid losses and loss adjustment expenses on the finalization of the Commutation Agreement with CNA, as discussed above.

Our net premiums earned for the firstsecond quarter of 2010 were $96,410$2,193 compared to $1,623,652$1,432,223 for the firstsecond quarter of 2009, a decrease of $1,527,242$1,430,030 or 94.1%99.8%. Net premiums written for the three months ended March 31,June 30, 2010 were $96,410,$12,952, compared to $(28,300)$(563,496) for the firstsecond quarter of 2009, an increase of $124,710$576,448 or 440.7%107.7%. The net premiums earned of $96,410$2,193 during the firstsecond quarter of 2010 waswere attributable to revisions to CAMICO premium estimates for prior years.premiums written under the Reinsurance Agreement. The firstsecond quarter of 2009 was negatively impacted due to the 2009 Reinsurance Treaties being rescinded and terminated retroactive to their inception. No significant underwriting activity occurred under the Reinsurance Agreement or the Agency Agreement through March 31, 2010.

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We recorded net investment income of $77,172$117,699 for the quarter ended March 31,June 30, 2010 compared to $391,236$216,090 for the quarter ended March 31,June 30, 2009, a decrease of $314,064$98,391 or 80.3%45.5%. The reduced net investment income was attributable to the reduction in the investment portfolio following the liquidation of fixed maturity investments in May 2009 to settle the payment of $20.55 million due to CNA as a result of the Commutation Agreement entered into between the Company and CNA in 2009. Annualized investment yield, calculated as total interest and dividendsdividend income divided by the net average amount of total investments, was 1.0%2.3% for the quarter ended March 31,June 30, 2010 compared to 3.4%2.4% for the quarter ended March 31,June 30, 2009.

Sales of securities during the quarter ended March 31,June 30, 2010, resulted in realized gains on investments net of $312,368impairment of $630,843 compared to losses of $835,531$919,378 during the quarter ended March 31,June 30, 2009. The significant increasedecrease in realized gains recorded in the firstsecond quarter of 2010 primarily related to reduced sales of equity securities.available-for-sale securities compared to 2009.

Our loss ratios for the firstsecond quarter of 2010 and 2009 were 0.0%62.5% and (257.4)%69.1% respectively. ForTo determine the first quarter of 2010, the Company paid total losses amounting to $106,376 in respect of claims which had been specifically reserved for. The specific reserves held by the Company for these claims were consequently reduced to nil explaining the 0.0% loss ratio for the second quarter ended March 31, 2010.of 2010 we multiplied an estimated loss ratio of 62.5% times the premium earned under the Reinsurance Agreement. For the first quarter of 2009 the negative loss ratio was attributable to the reduction of the loss reserves related to the CNA treaty following the determination of the ultimate settlement amount in view of the finalization of the Commutation Agreement. The loss ratio represents the impact of the Commutation Agreement and management’s then estimate of the effective loss rate selected in consultation with our independent consulting actuary. For the firstsecond quarter of 2009, we took into account the impact of the Commutation Agreement on the Reinsurance Treaties with CNA in addition to multiplying an estimated loss ratio of 70% times the CAMICO net premiums earned to determine the total loss and loss adjustment recoveries recorded. At this time we believe, based on the claims information received to date that our recorded Incurred But Not Reported Losses (“IBNR”) is adequate to meet any potential subprime and credit related losses. We will continue to monitor our reserve for losses and loss expenses for any new claims information and adjust our reserve for losses and loss expenses accordingly.

We recorded policy acquisition recoveriescosts of $29,175$1,694 in the firstsecond quarter of 2010 compared to costs of $469,304$388,347 for the same period of 2009, a decrease of $498,479$386,653 or 106.2%99.6% in the expense. The policy acquisition recoveriescosts recorded in the firstsecond quarter of 2010 were attributable to37% of the premium earned under the Reinsurance Agreement adjusted for revisions to the CAMICO premium estimates for prior years noted above.period PDIC estimates. For the quarter ended March 31,June 30, 2009, policy acquisition costs were 28.9%27.1% of net premiums earned. Policy acquisition costs are the sum of ceding commissions paid to ceding companies determined contractually pursuant to reinsurance agreements and federal excise taxes paid on premiums written to ceding companies.

We expensed operating and management expenses of $951,211$1,105,806 in the firstsecond quarter of 2010 compared to $597,641$828,495 for the same period of 2009, an increase of $353,570$277,311 or 59.2%33.5%. The primary reason for this increase was due tois the increased expenses incurred by APSL, which commenced operations in late 2009 following the execution of its Agency Agreement with C&F effective September 25, 2009.

The tables below disclose segment income and loss for the following AmerInst has three operating segments: 1) reinsuranceReinsurance activity, 2) RINITS™, its insurance financing product, which is in the marketing phase of development, and 3) insurance activity. See Note 3, Segment Information, of the notes to these condensed consolidated financial statements for financial information relating to these segments.

The reinsurance segment had revenues of $485,894 for the quarter ended March 31, 2010 and $1,179,357 for the quarter ended March 31, 2009. Total losses and expenses for this segment were $311,141 for the quarter ended March 31, 2010 and $(3,267,598) for the quarter ended March 31, 2009. This resulted in segment income of $174,753 for the quarter ended March 31, 2010 and $4,446,955 for the quarter ended March 31, 2009.

The RINITS™ segment offers a mechanism to securitize insurance and reinsurance risk, involving property, casualty, life and health lines of insurance. Thisinsurance, and 3) insurance activity, which offers accountants’ and lawyers’ professional liability insurance coverage. The RINITS™ segment as of March 31, 2010 had generated no revenue. Operating and management expensesis in the marketing phase of development, being segment loss were $3,146 for the quarter ended March 31, 2010 and $103,018 for the quarter ended March 31, 2009.

The insurance segment offers accountants’ professional liability and lawyers’ professional liability insurance coverage and had revenues of $1,313 for the quarter ended March 31, 2010. Operating and management expenses were $607,749 for the quarter ended March 31, 2010 and $52,355 for the quarter ended March 31, 2009. This resulted in segment loss of $606,436 for the quarter ended March 31, 2010 and $52,355 for the quarter ended March 31, 2009.development.

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