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 x 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 ~~May~~August 1, 2013, the Registrant had 995,253 common shares, $1.00 par value per share, outstanding.

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,” “could,” “should,” “would,” “estimate,” “anticipate,” “intend,” “plan,” “target,” “goal” 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.


	As of March 31, 2013			As of December 31, 2012			As of June 30, 2013			As of December 31, 2012
ASSETS
INVESTMENTS
Fixed maturity investments, available for sale, at fair value (amortized cost $7,583,013 and $7,340,536)	$	7,942,088		$	7,665,482
Equity securities, available for sale, at fair value (cost $7,004,516 and $7,119,690)		12,898,446			12,583,820
Fixed maturity investments, available for sale, at fair value (amortized cost $8,078,432 and $7,340,536)							$	8,192,166		$	7,665,482
Equity securities, available for sale, at fair value (cost $7,205,853 and $7,119,690)								12,914,081			12,583,820

TOTAL INVESTMENTS		20,840,534			20,249,302			21,106,247			20,249,302
Cash and cash equivalents		869,385			1,034,485			1,458,465			1,034,485
Restricted cash and cash equivalents		1,136,771			1,349,744			684,008			1,349,744
Other invested assets		1,470,000			1,470,000			1,470,000			1,470,000
Assumed reinsurance balances receivable		368,171			274,526			372,241			274,526
Accrued investment income		82,369			77,620			73,134			77,620
Property and equipment		543,307			589,296			492,544			589,296
Deferred policy acquisition costs		362,808			268,643			398,068			268,643
Prepaid expenses and other assets		399,220			412,065			594,131			412,065

TOTAL ASSETS	$	26,072,565		$	25,725,681		$	26,648,838		$	25,725,681

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Unpaid losses and loss adjustment expenses	$	1,571,275		$	1,408,190		$	1,897,146		$	1,408,190
Unearned premium		980,565			726,044			1,075,859			726,044
Assumed reinsurance balances payable		15,665			178,880			171,348			178,880
Accrued expenses and other liabilities		1,167,175			1,490,727			1,362,430			1,490,727

TOTAL LIABILITIES	$	3,734,680		$	3,803,841		$	4,506,783		$	3,803,841

SHAREHOLDERS’ EQUITY
Common shares, $1 par value, 2013 and 2012: 2,000,000 shares authorized, 995,253 issued and outstanding	$	995,253		$	995,253		$	995,253		$	995,253
Additional paid-in capital		6,287,293			6,287,293			6,287,293			6,287,293
Retained earnings		16,301,564			16,349,448			16,431,777			16,349,448
Accumulated other comprehensive income		6,253,005			5,789,076			5,821,962			5,789,076
Shares held by Subsidiary (319,835 and 319,835 shares) at cost		(7,499,230	)		(7,499,230	)
Shares held by Subsidiary (316,580 and 319,835 shares) at cost								(7,394,230	)		(7,499,230	)

TOTAL SHAREHOLDERS’ EQUITY		22,337,885			21,921,840			22,142,055			21,921,840

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	26,072,565		$	25,725,681		$	26,648,838		$	25,725,681

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


	Three Months Ended March 31, 2013			Three Months Ended March 31, 2012			Six Months Ended June 30, 2013			Six Months Ended June 30, 2012			Three Months Ended June 30, 2013			Three Months Ended June 30, 2012
REVENUE
Net premiums earned	$	329,876		$	176,821		$	790,333		$	453,272		$	460,457		$	276,451
Commission income		303,562			214,944			601,910			405,576			298,348			190,632
Other income		—			98,156			—			98,156			—			—
Net investment income		65,292			95,266			148,076			207,120			82,784			111,854
Net realized gain on investments		760,702			609,093			1,827,747			612,028			1,067,045			2,935

TOTAL REVENUE		1,459,432			1,194,280			3,368,066			1,776,152			1,908,634			581,872

LOSSES AND EXPENSES
Losses and loss adjustment expenses		206,173			110,514			704,725			283,295			498,552			172,781
Policy acquisition costs		122,061			65,424			292,431			168,667			170,370			103,243
Operating and management expenses		1,010,228			935,954			2,119,727			1,943,337			1,109,499			1,007,383

TOTAL LOSSES AND EXPENSES		1,338,462			1,111,892			3,116,883			2,395,299			1,778,421			1,283,407

NET INCOME BEFORE TAX	$	120,970		$	82,388
NET INCOME (LOSS) BEFORE TAX								251,183			(619,147	)		130,213			(701,535	)
Income tax expense								—			—			—			—
NET INCOME (LOSS) AFTER TAX							$	251,183		$	(619,147	)	$	130,213		$	(701,535	)

Income tax expense		—			—
NET INCOME AFTER TAX	$	120,970		$	82,388
OTHER COMPREHENSIVE INCOME
Net unrealized holding gains arising during the period		1,224,631			1,320,606
Reclassification adjustment for gains included in net income		(760,702	)		(609,093	)
OTHER COMPREHENSIVE INCOME (LOSS)
Net unrealized holding gains (losses) arising during the period								1,860,633			982,600			636,002			(338,006	)
Reclassification adjustment for gains included in net income (loss)								(1,827,747	)		(612,028	)		(1,067,045	)		(2,935	)

OTHER COMPREHENSIVE INCOME		463,929			711,513
OTHER COMPREHENSIVE INCOME (LOSS)								32,886			370,572			(431,043	)		(340,941	)

COMPREHENSIVE INCOME	$	584,899		$	793,901
COMPREHENSIVE INCOME (LOSS)							$	284,069		$	(248,575	)	$	(300,830	)	$	(1,042,476	)

RETAINED EARNINGS, BEGINNING OF PERIOD	$	16,349,448		$	17,411,533		$	16,349,448		$	17,411,533		$	16,301,564		$	17,337,601
Net income		120,970			82,388
Net income (loss)								251,183			(619,147	)		130,213			(701,535	)
Dividends		(168,854	)		(156,320	)		(168,854	)		(156,320	)		—			—

RETAINED EARNINGS, END OF PERIOD		16,301,564			17,337,601		$	16,431,777		$	16,636,066		$	16,431,777		$	16,636,066

Per share amounts
Basic and diluted income per share	$	0.18		$	0.12
Basic and diluted income (loss)							$	0.37	��	$	(0.90	)	$	0.19		$	(1.02	)

Dividends	$	0.25		$	0.25		$	0.25		$	0.25		$	0.00		$	0.00

Weighted average number of shares outstanding for the entire period		675,418			689,485
Weighted average number of shares outstanding for the entire period (for basic and diluted)								676,503			687,321			677,046			685,157

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


	Three Months Ended March 31, 2013			Three Months Ended March 31, 2012			Six Months Ended June 30, 2013			Six Months Ended June 30, 2012
OPERATING ACTIVITIES
Net Cash used in Operating Activities	$	(831,964	)	$	(628,148	)	$	(1,053,640	)	$	(950,825	)

INVESTING ACTIVITIES
Movement in restricted cash and cash equivalents		212,973			155,506			665,736			199,853
Purchases of property and equipment		(3,132	)		—			(5,132	)		—
Purchases of available-for-sale securities		(1,086,822	)		(822,467	)		(3,308,013	)		(1,457,483	)
Proceeds from sales of available-for-sale securities		1,462,699			1,284,200			3,463,883			1,513,832
Proceeds from redemptions of fixed maturity investments								—			500,000
Proceeds from maturities of fixed maturity investments		250,000			200,000			830,000			200,000

Net Cash provided by Investing Activities		835,718			817,239			1,646,474			956,202

FINANCING ACTIVITIES
Dividends paid		(168,854	)		(156,320	)		(168,854	)		(156,320	)

Net Cash used in Financing Activities		(168,854	)		(156,320	)		(168,854	)		(156,320	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(165,100	)		32,771
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS								423,980			(150,943	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	1,034,485		$	904,485		$	1,034,485		$	904,485

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	869,385		$	937,256		$	1,458,465		$	753,542

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

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 (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. These condensed statements should be read in conjunction with the audited consolidated financial statements at and for the year ended December 31, 2012 and notes thereto, included in AmerInst’s Annual Report on Form 10-K for the year then ended.

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-11, “Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). The objective of ASU 2011-11 was to enhance disclosures by requiring improved information about financial instruments and derivative instruments in relation to netting arrangements. ASU 2011-11 was effective for interim and annual periods beginning on or after January 1, 2013. As the new guidance affects disclosures only, its adoption did not have a material impact on the Company’s consolidated financial statements.

~~The Company has determined that all recently issued accounting pronouncements do~~Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income (“AOCI”)

Effective January 1, 2013, we adopted FASB’s guidance requiring additional disclosures about reclassification adjustments from AOCI. As this guidance is disclosure-related only and did not ~~apply~~amend existing guidance on the reporting of net income available to ~~its operations.~~common shareholders or other comprehensive income, adoption did not impact our results of operations, financial condition or liquidity.

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, 2013 and December 31, 2012 are as follows:


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Cost or Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of March 31, 2013
As of June 30, 2013
Fixed maturity investments:												��
U.S. government agency securities	$	446,837	$	19,611	$	—		$	466,448	$	446,961		$	2,823	$	—		$	449,784
Obligations of states and political subdivisions		6,810,744		325,018		(4,510	)		7,131,252		7,307,592			176,998		(76,990	)		7,407,600
Corporate debt securities		325,432		18,956		—			344,388		323,879			10,903		—			334,782

Total fixed maturity investments		7,583,013		363,585		(4,510	)		7,942,088		8,078,432			190,724		(76,990	)		8,192,166

Equity securities*		6,004,516		5,370,495		—			11,375,011		6,205,853			5,146,004		—			11,351,857
Hedge fund		1,000,000		523,435		—			1,523,435		1,000,000			562,224		—			1,562,224

Total equity securities		7,004,516		5,893,930		—			12,898,446		7,205,853			5,708,228		—			12,914,081

Total investments	$	14,587,529	$	6,257,515	$	(4,510	)	$	20,840,534	$	15,284,285		$	5,898,952	$	(76,990	)	$	21,106,247


	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Cost or Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of December 31, 2012
Fixed maturity investments:
U.S. government agency securities	$	446,713	$	19,644	$	—		$	466,357	$	446,713		$	19,644	$	—		$	466,357
Obligations of states and political subdivisions		6,566,849		302,324		(14,604	)		6,854,569		6,566,849			302,324		(14,604	)		6,854,569
Corporate debt securities		326,974		17,582		—			344,556		326,974			17,582		—			344,556

Total fixed maturity investments		7,340,536		339,550		(14,604	)		7,665,482		7,340,536			339,550		(14,604	)		7,665,482

Equity securities*		6,119,690		4,981,815		(2,836	)		11,098,669		6,119,690			4,981,815		(2,836	)		11,098,669
Hedge fund		1,000,000		485,151		—			1,485,151		1,000,000			485,151		—			1,485,151

Total equity securities		7,119,690		5,466,966		(2,836	)		12,583,820		7,119,690			5,466,966		(2,836	)		12,583,820

Total investments	$	14,460,226	$	5,806,516	$	(17,440	)	$	20,249,302	$	14,460,226		$	5,806,516	$	(17,440	)	$	20,249,302

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:


															12 months or greater				Less than 12 months					Total
															Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
As of June 30, 2013
Fixed maturity investments:
U.S. government agency securities															$	—	$	—	$	—	$	—		$	—	$	—
Obligations of states and political subdivisions																—		—		2,614,367		(76,990	)		2,614,367		(76,990	)
Corporate debt securities																—		—		—		—			—		—

Total fixed maturity investments																—		—		2,614,367		(76,990	)		2,614,367		(76,990	)

Equity securities																—		—		—		—			—		—
Hedge fund																—		—		—		—			—		—

Total equity securities																—		—		—		—			—		—

Total investments															$	—	$	—	$	2,614,367	$	(76,990	)	$	2,614,367	$	(76,990	)


	12 months or greater				Less than 12 months					Total					12 months or greater				Less than 12 months					Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
As of December 31, 2012
Fixed maturity investments:
U.S. government agency securities	$	—	$	—	$	—	$	—		$	—	$	—		$	—	$	—	$	—	$	—		$	—	$	—
Obligations of states and political subdivisions		—		—		660,084		(14,604	)		660,084		(14,604	)		—		��		660,084		(14,604	)		660,084		(14,604	)
Corporate debt securities		—		—		—		—			—		—			—		—		—		—			—		—

Total fixed maturity investments		—		—		660,084		(14,604	)		660,084		(14,604	)		—		—		660,084		(14,604	)		660,084		(14,604	)

Equity securities		—		—		45,526		(2,836	)		45,526		(2,836	)		—		—		45,526		(2,836	)		45,526		(2,836	)
Hedge fund		—		—		—		—			—		—			—		—		—		—			—		—

Total equity securities		—		—		45,526		(2,836	)		45,526		(2,836	)		—		—		45,526		(2,836	)		45,526		(2,836	)

Total investments	$	—	$	—	$	705,610	$	(17,440	)	$	705,610	$	(17,440	)	$	—	$	—	$	705,610	$	(17,440	)	$	705,610	$	(17,440	)

As of ~~March 31,~~June 30, 2013 and December 31, 2012, there were ~~two~~ten and four securities in an unrealized loss position with an estimated fair value of ~~$727,990~~$2,614,367 and $705,610, respectively. Of these securities, none had been in an unrealized loss position for 12 months or greater. As of ~~March 31,~~June 30, 2013 and December 31, 2012, 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 as a result of credit, collateral or structural issues.

At ~~March 31,~~June 30, 2013 and December 31, 2012, the Company had investments in certificates of deposit (“CD”) in the amount of $1,470,000 comprising of fully insured time deposits placed with Federal Deposit Insurance Corporation (“FDIC”) insured commercial banks and savings associations. The FDIC, an independent agency of the United States government, protects depositors up to an amount of $250,000 per depositor, per insured institution. FDIC insurance is backed by the full faith and credit of the United States government. The stated interest rate of an FDIC insured CD varies greatly among commercial banks and savings associations, depending on the term of the CD and the institution’s need for funding. The liquidity of “marketable” CDs is marginal, even though they are assigned an FDIC number, a CUSIP number and are held in book-entry form through the Depository Trust Company. Depending on market liquidity and conditions, the bid price for an FDIC insured CD would reflect the supply of and the demand for deposits of the particular bank or savings association, as well as prevailing interest rates, the remaining term of the deposit, specific features of the CD, and compensation of the broker arranging the sale of the CD. These time deposits have maturities ranging from two to five years and are classified as other invested assets on the Company’s consolidated balance sheet.

The Company assesses whether declines in the fair value of its fixed maturity investments classified as available-for-sale represent impairments that are other-than-temporary by 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, 2013. 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 ~~three~~six months ended ~~March 31,~~June 30, 2013, 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, 2013 and December 31, 2012, relating to ~~two~~ten and three fixed maturity securities and none and one equity security, amounted to ~~$4,510~~$76,990 and $17,440, respectively. ~~This decrease~~The reduction in the fair values of our fixed maturity securities was attributable to higher interest rates combined with the ~~increase in the fair value~~widening of ~~certain~~credit spreads on our fixed ~~maturity securities as a result of a strong performance in the bond market~~income portfolio during the ~~quarter.~~three months ended June 30, 2013 compared to the same period in 2012. The unrealized losses on these available for sale fixed maturity securities were not as a result of credit, collateral or structural issues. During the ~~quarters~~six months ended ~~March 31,~~June 30, 2013, the Company recorded a total other-than-temporary impairment charge of $81,154 on one equity security, as a result of the decline in fair value below cost. No other-than-temporary impairment charges were recorded during the three months ended June 30, 2013. During the six months ended and three months ended June 30, 2012, the Company recorded a total other-than-temporary impairment charge of ~~$81,154~~$165,611 and ~~$64,189,~~$101,422, respectively, on ~~one~~two equity ~~security,~~securities, as a result of the decline in fair value below cost.

Under existing U.S. GAAP, 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 FASB’s Accounting Standards Codification (“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. 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, 2013 and what level within the fair value hierarchy each valuation technique resides:

the yields for the risk-free U.S. Treasury yield curve are observable market inputs, the fair values of U.S. government agency securities are included in the Level 2 fair value hierarchy. AmerInst considers a liquid market to exist for these types of securities held. Broker quotes are not used for fair value pricing.

While we obtain pricing from independent pricing services, management is ultimately responsible for determining the fair value measurements for all securities. To ensure fair value measurement is applied consistently and in accordance with U.S. GAAP, we periodically update our understanding of the pricing methodologies used by the independent pricing services. We also challenge any prices we believe may not be representative of fair value under current market conditions. Our review process includes, but is not limited to: (i) initial and ongoing evaluation of the pricing methodologies and valuation models used by outside parties to calculate fair value; (ii) quantitative analysis; (iii) a review of multiple quotes obtained in the pricing process and the range of resulting fair values for each security, if available, and (iv) randomly selecting purchased or sold securities and comparing the executed prices to the fair value estimates provided by the independent pricing sources.

There have been no material changes to our valuation techniques from what was used as of December 31, 2012. 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 a reasonable 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 ASC 820 as of ~~March 31,~~June 30, 2013 and December 31, 2012:


					Fair value measurement using:										Fair value measurement using:
	Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Carrying amount		Total fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
As of March 31, 2013
As of June 30, 2013
U.S. government agency securities	$	466,448	$	466,448	$	—	$	466,448	$	—	$	449,784	$	449,784	$	—	$	449,784	$	—
Obligations of state and political subdivisions		7,131,252		7,131,252				7,131,252				7,407,600		7,407,600				7,407,600
Corporate debt securities		344,388		344,388				344,388				334,782		334,782				334,782

Total fixed maturity investments		7,942,088		7,942,088								8,192,166		8,192,166

Equity securities (excluding the hedge fund)		11,375,011		11,375,011		11,375,011						11,351,857		11,351,857		11,351,857
Hedge fund		1,523,435		1,523,435						1,523,435		1,562,224		1,562,224						1,562,224

Total equity securities		12,898,446		12,898,446								12,914,081		12,914,081

Total investments	$	20,840,534	$	20,840,534	$	11,375,011	$	7,942,088	$	1,523,435	$	21,106,247	$	21,106,247	$	11,351,857	$	8,192,166	$	1,562,224

There were no transfers between Levels 1 and 2 during the ~~three~~six months ended ~~March 31,~~June 30, 2013 and the year ended December 31, 2012.

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 ~~three~~six months ended ~~March 31,~~June 30, 2013 and 2012:


	Hedge Fund Investment Three Months ended				Hedge Fund Investment Six Months ended
	March 31, 2013		March 31, 2012		June 30, 2013		June 30, 2012
Balance classified as Level 3, beginning of period	$	1,485,151	$	1,395,933	$	1,485,151	$	1,395,933
Total gains or losses included in earnings:		—		—		—		—
Net realized gains		—		—		—		—
Change in fair value of hedge fund investment		38,284		58,368		77,073		36,688
Purchases		—		—		—		—
Sales		—		—		—		—
Transfers in and/or out of Level 3		—		—		—		—

Ending balance, end of period	$	1,523,435	$	1,454,301	$	1,562,224	$	1,432,621

There were no transfers into or from the Level 3 category during the six months ended June 30, 2013 and 2012.

There were no transfers into or from the Level 3 category during the three months ended ~~March 31,~~June 30, 2013 and 2012.

The cost or amortized cost and estimated fair value of fixed maturity investments as of ~~March 31,~~June 30, 2013 and December 31, 2012 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.


	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
March 31, 2013
As of June 30, 2013
Due in one year or less	$	830,360	$	835,324	$	695,915	$	709,146
Due after one year through five years		3,406,727		3,598,381		5,313,346		5,422,096
Due after five years through ten years		3,156,998		3,314,491		1,881,622		1,890,297
Due after ten years		188,928		193,892		187,549		170,627

Total	$	7,583,013	$	7,942,088	$	8,078,432	$	8,192,166


					Amortized Cost		Estimated Fair Value
As of December 31, 2012
Due in one year or less					$	1,081,039	$	1,094,775
Due after one year through five years						3,410,272		3,603,525
Due after five years through ten years						2,658,925		2,775,483
Due after ten years						190,300		191,699

Total					$	7,340,536	$	7,665,482

Information on sales and maturities of investments during the six months ended June 30, 2013 and 2012 are as follows:

Information on sales and maturities of investments during the three months ended ~~March 31,~~June 30, 2013 and 2012 are as follows:


	March 31, 2013			March 31, 2012			June 30, 2013		June 30, 2012
Total proceeds on sales of available-for-sale securities	$	1,462,699		$	1,284,200		$	2,001,184	$	229,632
Proceeds from redemptions of fixed maturity investments								—		500,000
Total proceeds from maturities of fixed maturity investments		250,000			200,000			580,000		—
Gross gains on sales		841,856			673,282			1,067,045		104,357
Impairment losses		(81,154	)		(64,189	)		—		(101,422	)

Major categories of net interest and dividend income during the six months ended June 30, 2013 and 2012 are summarized as follows:

Major categories of net interest and dividend income during the three months ended ~~March 31,~~June 30, 2013 and 2012 are summarized as follows:

AmerInst has two operating segments: (1) reinsurance activity, which also includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F, as defined in the “Overview” section below.

The tables below summarize the results of our operating segments for the ~~three~~six months ended ~~March 31,~~June 30, 2013 and 2012.


	Three Months Ended March 31, 2013							Six Months Ended June 30, 2013
	Reinsurance Segment		Insurance Segment			Total		Reinsurance Segment		Insurance Segment			Total
Revenues	$	1,155,745	$	303,687		$	1,459,432	$	2,765,968	$	602,098		$	3,368,066
Total losses and expenses		634,652		703,810			1,338,462		1,696,573		1,420,310			3,116,883
Segment income (loss)	$	521,093	$	(400,123	)	$	120,970	$	1,069,395	$	(818,212	)	$	251,183
Identifiable assets	$	—	$	543,307		$	543,307	$	—	$	492,544		$	492,544

	Three Months Ended March 31, 2012							Six Months Ended June 30, 2012
	Reinsurance Segment		Insurance Segment			Total		Reinsurance Segment		Insurance Segment			Total
Revenues	$	979,199	$	215,081		$	1,194,280	$	1,370,328	$	405,824		$	1,776,152
Total losses and expenses		440,423		671,469			1,111,892		1,126,450		1,268,849			2,395,299
Segment income (loss)	$	538,776	$	(456,388	)	$	82,388	$	243,878	$	(863,025	)	$	(619,147	)
Identifiable assets	$	—	$	696,995		$	696,995	$	—	$	648,207		$	648,207

The tables below summarize the results of our operating segments for the three months ended June 30, 2013 and 2012.

AmerInst Professional Services Limited (“APSL”), a subsidiary of AmerInst, has employment agreements with four key members of senior management, which grant them phantom shares of the Company. Under these agreements, these employees were initially granted a total of 75,018 phantom shares of the Company on the date of their employment. The phantom shares are eligible for phantom dividends paid at the same rate as regular 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 net book value of the Company’s actual common shares as of the end of the previous quarter. During the three months ended ~~March 31,~~June 30, 2013, no phantom shares were granted because no dividends were declared on the Company’s common shares. During the six months ended June 30, 2013, 610 phantom shares were granted arising from the dividends declared on the Company’s common shares. 79,927 phantom shares were outstanding at ~~March 31,~~June 30, 2013.

Three employees’ and one employee’s interest in the phantom shares initially granted as well as any additional shares granted from dividends declared will vest on January 1, 2015 and January 1, 2018, respectively. The liability payable to the three employees and one employee under this phantom share plan is equal to 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 value of phantom shares initially granted and is payable in cash upon the earlier of the employee attaining 65 years of age or within 60 days of such employee’s death or permanent disability, including if such death or permanent disability occurs before January 1, 2015 and January 1, 2018, respectively.

During the first quarter of 2013, one key member of APSL’s senior management forfeited his interest in his 12,009 phantom shares as a result of his departure from APSL prior to the phantom ~~share’s~~shares’ January 1, 2015 vesting date. Also during the first quarter of 2013, a new key member of APSL’s senior management entered into an employment agreement with APSL and was granted 11,252 phantom shares of the Company on the date of ~~their~~his employment.

The following table provides a reconciliation of the beginning and ending balance of non-vested phantom shares for the ~~three~~six months ended ~~March 31,~~June 30, 2013:

The liability relating to these phantom shares is recalculated quarterly based on the net book value of the Company’s common shares at the end of each quarter. As a result of the overall decrease in the book value of the Company’s common shares since the grant dates, no liability has been recorded by the Company relating to these phantom shares at ~~March 31,~~June 30, 2013.

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 condensed 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,” “could,” “should,” “would,” “estimate,” “anticipate,” “intend,” “plan,” “target,” “goal” 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 our 2012 Annual Report on Form 10-K, as updated in our subsequent quarterly reports filed on Form 10-Q, and in our other filings made from time to time with the Commission after the date of this report 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.

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

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~~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. Our principal offices are c/o Cedar Management Limited, 25 Church Street, Continental Building, P.O. Box HM 1601, Hamilton, Bermuda, HM GX.

AmerInst Insurance Group, Ltd. is a Bermuda holding company formed in 1998 that provides insurance protection for professional service firms and engages in investment activities. AmerInst has two operating segments: (1) reinsurance activity, which includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms. The revenues of the reinsurance activity operating segment and the insurance activity operating segment were ~~$1,155,745~~$2,765,968 and ~~$303,687~~$602,098 for the ~~three~~six months ended ~~March 31,~~June 30, 2013 compared to ~~$979,199~~$1,370,328 and ~~$215,081~~$405,824 for the ~~three~~six months ended ~~March 31,~~June 30, 2012, respectively. The revenues for both operating segments were derived from business operations in the United States other than interest income on bank accounts maintained in Bermuda.

On 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 in all 50 states of the United States and the District of Columbia. The initial term of the Agency Agreement iswas for four years with automatic one-year renewals thereafter.

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 agreed to cede, and AMIC Ltd. agreed to accept as reinsurance, a 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.’s surplus limitations. The initial term of the Reinsurance Agreement iswas for four years with automatic one-year renewals thereafter.

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’ professional liability business.

We decided not to renew the CAMICO contract and permitted the contract to expire pursuant to its terms on May 31, 2009. We remain potentially liable for claims related to coverage through May 31, 2009.

On January 1, 2003, we entered into a 15% participation of Professionals Direct Insurance Company’s (“PDIC”) attorneys’ professional liability first excess cover. This participation terminated on December 31, 2003. The final reported claim was closed during 2011. Although we no longer anticipate any claims, we may be liable for further claims related to this period of coverage.

Cedar Management Limited provides the day-to-day services necessary for the administration of our business. Our agreement with Cedar Management Limited renewed for one year beginning January 1, 2013 and ending December 31, 2013. Mr. Stuart Grayston, our President, was formerly a director and officer of Cedar Management Limited, and Mr. Thomas R. McMahon, our Treasurer and Chief Financial Officer, is a shareholder, officer, director and employee of Cedar Management Limited.

Lawrence Carlson, a certified public accountant and an independent contractor, provides the primary accounting functions to APSL. Our agreement with him, which was effective January 1, 2013, has no ending date but can be terminated by either party upon 30 days written notice.

The Country Club Bank of Kansas City, Missouri, provides portfolio management of fixed-income 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 Oliver Wyman, an independent casualty actuarial consulting firm, to render advice regarding actuarial matters.

~~Three~~Six months ended ~~March 31,~~June 30, 2013 compared to ~~three~~six months ended ~~March 31,~~June 30, 2012

We recorded a net income of ~~$120,970 during~~$251,183 for the ~~first quarter of~~six months ended June 30, 2013 compared to a net ~~income~~loss of ~~$82,388~~$619,147 for the same period in 2012. The increase in net income is ~~mainly~~ attributable to (i) the increase in commission income from ~~$214,944 in~~$405,576 for the ~~first quarter of~~six months ended June 30, 2012 to ~~$303,562 in~~$601,910 for the ~~first quarter of~~six months ended June 30, 2013 as a result of a higher volume of premiums written under the Agency Agreement and (ii) the increase in net realized gains on investments from ~~$609,093~~$612,028 in 2012 to ~~$760,702~~$1,827,747 in 2013, as discussed in further detail below.

Our net premiums earned ~~during~~for the ~~first quarter of~~six months ended June 30, 2013 were ~~$329,876~~$790,333 compared to ~~$176,821 during~~$453,272 for the ~~first quarter of~~six months ended June 30, 2012, an increase of ~~$153,055~~$337,061 or ~~86.6%~~74.4%. The net premiums earned ~~during~~for the ~~quarters~~six months ended ~~March 31,~~June 30, 2013 and 2012 were attributable to cessions from C&F under the Reinsurance Agreement. The increase in net premiums earned under the Reinsurance Agreement during the first six months of 2013 compared to the corresponding period in 2012 resulted from increased cessions from C&F in 2013, arising from a higher level of underwriting activity under the Agency Agreement due to the continued marketing of the program by ~~APSL.~~APSL resulting in increasing penetration in targeted markets.

~~For~~During the ~~quarters~~six months ended ~~March 31,~~June 30, 2013 and 2012, we recorded commission income under the Agency Agreement of ~~$303,562~~$601,910 and ~~$214,944,~~$405,576, respectively, an increase of ~~$88,618~~$196,334 or ~~41.2%~~48.4%. This increase resulted from a higher volume of premiums written under the Agency Agreement in 2013.

We recorded other income of $98,156 ~~during~~for the ~~quarter~~six months ended ~~March 31,~~June 30, 2012, which ~~represented~~included (1) a $60,000 refund of non-resident withholding tax that was erroneously deducted from dividend income earned on our equity investment portfolio in prior years and (2) net interest received from PDIC in the amount of $38,156 in relation to funds that were held in deposit by PDIC pursuant to the 2003 excess of loss reinsurance agreement between AMIC Ltd. and PDIC. No other income was recorded ~~for~~during the ~~quarter~~six months ended ~~March 31,~~June 30, 2013.

We recorded net investment income of ~~$65,292~~$148,076 for the ~~quarter~~six months ended ~~March 31,~~June 30, 2013 compared to ~~$95,266~~$207,120 for the ~~quarter~~six months ended ~~March 31,~~June 30, 2012. The decline in net investment income is due to (i) the reduction in the investment portfolio due to ~~sales~~the disposition of certain fixed income and equity securities and (ii) ~~from~~ lower yielding fixed income securities held in the Company’s investment portfolio during the ~~first quarter of~~six months ended June 30, 2013 compared to the same period in 2012. The annualized investment yield, calculated as total interest and dividends divided by the net average amount of total investments and cash and cash equivalents, was ~~1.1%~~1.2% for the ~~quarter~~six months ended ~~March 31,~~June 30, 2013, compared to the ~~1.6%~~1.7% yield earned for the ~~quarter~~six months ended ~~March 31,~~June 30, 2012.

Sales of securities during the ~~quarter~~six months ended ~~March 31,~~June 30, 2013 resulted in realized gains on investments net of impairment of ~~$760,702~~$1,827,747 compared to ~~$609,093 during~~$612,028 for the ~~quarter~~six months ended ~~March 31,~~June 30, 2012, an increase of ~~$151,609.~~$1,215,719. The increase in realized gains primarily related to increased sales of equity securities in an unrealized gain position during the first six months of 2013 compared to the same period in 2012.

For the ~~quarters~~six months ended ~~March 31,~~June 30, 2013, ~~and 2012,~~ we recorded loss and loss adjustment expenses of ~~$206,173 and $110,514, respectively,~~$704,725, which represents (i) $493,958 in losses incurred derived by multiplying our estimated loss ratio of 62.5% and the net premiums earned under the Reinsurance Agreement of ~~$329,876~~$790,333 and ~~$176,821, respectively.~~(ii) a $210,767 increase in CAMICO Incurred But Not Reported (“IBNR”) loss reserves which resulted from unfavorable development in policy years 2007/2008 and 2008/2009 during the second quarter. For the six months ended June 30, 2012, we recorded loss and loss adjustment expenses of $283,295 derived by multiplying our estimated loss ratio of 62.5% and the net premiums earned under the Reinsurance Agreement of $453,272.

We recorded policy acquisition costs of ~~$122,061 in~~$292,431 for the ~~first quarter of~~six months ended June 30, 2013 compared to ~~$65,424~~$168,667 for the same period in 2012. Policy acquisition costs, which are primarily ceding commissions paid to the ceding insurer, are established as a percentage of premiums earned; therefore, any increase or decrease in premiums earned will result in a similar increase or decrease in policy acquisition costs. The policy acquisition costs recorded during the ~~first quarter of~~six months ended June 30, 2013 and 2012 were approximately 37% of the net premiums earned under the Reinsurance Agreement of ~~$329,876~~$790,333 and ~~$176,821,~~$453,272, respectively.

We expensed operating and management expenses of ~~$1,010,228 in~~$2,119,727 for the ~~first quarter of~~six months ended June 30, 2013 compared to ~~$935,954~~$1,943,337 for the same period in 2012, an increase of ~~$74,274~~$176,390 or ~~7.9%~~9.1%. The ~~primary reason for this~~ increase was ~~due~~primarily attributable to ~~an increase~~increased salaries and related costs associated with APSL’s hiring of additional marketing personnel in ~~directors’ fees and expenses.~~2013.

The tables below summarize the results of the following AmerInst operating segments: (1) reinsurance activity, which also includes investments and other activities, and (2) insurance activity, which offers professional liability solutions to professional service firms under the Agency Agreement with C&F.


	Three Months Ended March 31, 2013							Six Months Ended June 30, 2013
	Reinsurance Segment		Insurance Segment			Total		Reinsurance Segment		Insurance Segment			Total
Revenues	$	1,155,745	$	303,687		$	1,459,432	$	2,765,968	$	602,098		$	3,368,066
Total losses and expenses		634,652		703,810			1,338,462		1,696,573		1,420,310			3,116,883
Segment income (loss)	$	521,093	$	(400,123	)	$	120,970	$	1,069,395	$	(818,212	)	$	251,183
Identifiable assets	$	—	$	543,307		$	543,307	$	—	$	492,544		$	492,544

	Three Months Ended March 31, 2012							Six Months Ended June 30, 2012
	Reinsurance Segment		Insurance Segment			Total		Reinsurance Segment		Insurance Segment			Total
Revenues	$	979,199	$	215,081		$	1,194,280	$	1,370,328	$	405,824		$	1,776,152
Total losses and expenses		440,423		671,469			1,111,892		1,126,450		1,268,849			2,395,299
Segment income (loss)	$	538,776	$	(456,388	)	$	82,388	$	243,878	$	(863,025	)	$	(619,147	)
Identifiable assets	$	—	$	696,995		$	696,995	$	—	$	648,207		$	648,207

We recorded a net income of $130,213 for the second quarter of 2013 compared to a net loss of $701,535 for the same period in 2012. The increase in net income is mainly attributable to (i) the increase in commission income from $190,632 in the second quarter of 2012 to $298,348 in the second quarter of 2013 as a result of a higher volume of premiums written under the Agency Agreement and (ii) the increase in net realized gains on investments from $2,935 in 2012 to $1,067,045 in 2013, as discussed in further detail below.

Our net premiums earned for the second quarter of 2013 were $460,457 compared to $276,451 for the second quarter of 2012, an increase of $184,006 or 66.6%. The net premiums earned for the quarters ended June 30, 2013 and 2012 were attributable to cessions from C&F under the Reinsurance Agreement. The increase in net premiums earned under the Reinsurance Agreement during the second quarter of 2013 compared to the same period in 2012 resulted from increased cessions from C&F in 2013, arising from a higher level of underwriting activity under the Agency Agreement due to the continued marketing of the program by APSL resulting in increasing penetration in targeted markets.

For the quarters ended June 30, 2013 and 2012, we recorded commission income under the Agency Agreement of $298,348 and $190,632, respectively, an increase of $107,716 or 56.5%. This increase resulted from a higher volume of premiums written under the Agency Agreement in 2013.

We recorded net investment income of $82,784 for the quarter ended June 30, 2013 compared to $111,854 for the quarter ended June 30, 2012. The decline in net investment income is due to (i) the reduction in the investment portfolio due to the disposition of certain fixed income and equity securities and (ii) lower yielding fixed income securities held in the Company’s investment portfolio during the second quarter of 2013 compared to the same period in 2012. The annualized investment yield, calculated as total interest and dividends divided by the net average amount of total investments and cash and cash equivalents, was 1.4% for the quarter ended June 30, 2013, compared to the 1.8% yield earned for the quarter ended June 30, 2012.

Sales of securities for the quarter ended June 30, 2013 resulted in realized gains on investments net of impairment of $1,067,045 compared to $2,935 during the quarter ended June 30, 2012, an increase of $1,064,110. The increase in realized gains primarily related to increased sales of equity securities in an unrealized gain position compared to 2012 and to the decrease in other-than-temporary impairment charges during the second quarter of 2013 compared to the second quarter of 2012.

For the quarter ended June 30, 2013, we recorded loss and loss adjustment expenses of $498,552, which represents (i) $287,785 in losses incurred derived by multiplying our estimated loss ratio of 62.5% and the net premiums earned under the Reinsurance Agreement of $460,457 and (ii) a $210,767 increase in CAMICO IBNR loss reserves which resulted from unfavorable development in policy years 2007/2008 and 2008/2009 during the second quarter. For the quarter ended June 30, 2012, we recorded loss and loss adjustment expenses of $172,781 derived by multiplying our estimated loss ratio of 62.5% and the net premiums earned under the Reinsurance Agreement of $276,451.

We recorded policy acquisition costs of $170,370 in the second quarter of 2013 compared to $103,243 for the same period in 2012. Policy acquisition costs, which are primarily ceding commissions paid to the ceding insurer, are established as a percentage of premiums earned; therefore, any increase or decrease in premiums earned will result in a similar increase or decrease in policy acquisition costs. The policy acquisition costs recorded during the second quarter of 2013 and 2012 were approximately 37% of the net premiums earned under the Reinsurance Agreement of $460,457 and $276,451, respectively.

We expensed operating and management expenses of $1,109,499 in the second quarter 2013 compared to $1,007,383 for the same period in 2012, an increase of $102,116 or 10.1%. The increase was primarily attributable to increased salaries and related costs associated with APSL’s hiring of additional marketing personnel in 2013.

As of ~~March 31,~~June 30, 2013, our total investments were ~~$20,840,534,~~$21,106,247, an increase of ~~$591,232,~~$856,945 or ~~2.9%~~4.2%, from $20,249,302 at December 31, 2012. ~~The increase~~This was primarily due to the increase in the fair value of certain equity securities as a result of favorable market conditions, partially offset by the sales of certain equity ~~securities.~~securities in an unrealized gain position. The cash and cash equivalents balance ~~decreased~~increased from $1,034,485 at December 31, 2012 to ~~$869,385~~$1,458,465 at ~~March 31,~~June 30, 2013, ~~a decrease~~an increase of ~~$165,100~~$423,980 or ~~16%~~41%. The amount of cash and cash equivalents varies depending on the maturities of fixed term investments and on the level of funds invested in money market funds. The restricted cash and cash equivalents balance decreased from $1,349,744 at December 31, 2012 to ~~$1,136,771~~$684,008 at ~~March 31,~~June 30, 2013, a decrease of ~~$212,973.~~$665,736. The decrease is due to the timing of sales and maturities of investments held as restricted cash at ~~March 31,~~June 30, 2013 that have not yet been reinvested. Other invested assets remained unchanged at $1,470,000 as at ~~March 31,~~June 30, 2013 and December 31, 2012. The ratio of cash, total investments and other invested assets to total liabilities at ~~March 31,~~June 30, 2013 was ~~6.51:~~5.48:1, compared to a ratio of 6.34:1 at December 31, 2012.

The assumed reinsurance balances receivable represents the current assumed premiums receivable less commissions payable to the fronting carriers. As of ~~March 31,~~June 30, 2013, the balance was ~~$368,171~~$372,241 compared to $274,526 as of December 31, 2012. The increase resulted from a higher level of premiums assumed under the Reinsurance Agreement.

The assumed reinsurance payable represents current reinsurance losses payable to the fronting carriers. As of ~~March 31,~~June 30, 2013, the balance was ~~$15,665~~$171,348 compared to $178,880 as of December 31, 2012. This balance fluctuates due to the timing of reported ~~losses.~~losses under the policies we insure.

Deferred policy acquisition costs, which represent the deferral of ceding commission expense related to premiums not yet earned, increased from $268,643 at December 31, 2012 to ~~$362,808~~$398,068 at ~~March 31,~~June 30, 2013. The increase in deferred policy acquisition costs in 2013 was due to the increase in both net premiums written and unearned premiums assumed under the Reinsurance Agreement compared to the prior year. The ceding commission rate under the Reinsurance Agreement is 37%.

Prepaid expenses and other assets were ~~$399,220~~$594,131 at ~~March 31,~~June 30, 2013, ~~a decrease~~an increase of ~~3.1%~~44.2% from December 31, 2012. The balance primarily relates to (1) prepaid directors’ and officers’ liability insurance costs, (2) the prepaid directors’ retainer, (3) prepaid professional fees and (4) premiums due to APSL under the Agency Agreement. The ~~decrease~~increase in the balance was mainly attributable to ~~a decrease~~the directors’ retainer payments made in ~~premiums due to APSL under the Agency Agreement. This balance fluctuates due~~May 2013 relating to the ~~timing of the premium receipts by APSL.~~period from June 1, 2013 to May 31, 2014.

Accrued expenses and other liabilities primarily represent premiums payable by APSL to C&F under the Agency Agreement and expenses accrued relating largely to professional fees. The balance decreased from $1,490,727 at December 31, 2012 to ~~$1,167,175~~$1,362,430 at ~~March 31,~~June 30, 2013, a decrease of ~~$323,552~~$128,297 or ~~21.7%~~8.6%. The decrease in the balance was attributable to a ~~decrease in premiums payable by APSL to C&F under the Agency Agreement and to a~~ reduction in expenses accrued in relation to ~~professional fees. This balance fluctuates due to the timing of the (1) premium payments to C&F and (2) payments of~~ professional fees.

Our cash needs consist of settlement of losses and expenses under our reinsurance treaties and funding day-to-day operations. During the continued implementation of our business plan, our management expects to meet these cash needs from cash flows arising from our investment portfolio. Because substantially all of our assets are marketable securities, we expect that we will have sufficient flexibility to provide for unbudgeted cash needs which may arise without resorting to borrowing, subject to regulatory limitations.

Total cash, investments and other invested assets increased from $24,103,531 at December 31, 2012 to ~~$24,316,690~~$24,718,720 at ~~March 31,~~June 30, 2013, an increase of ~~$213,159~~$615,189 or ~~0.9%~~2.6%. The net increase resulted primarily from the increase in the fair value of certain equity securities as a result of favorable market conditions and positive cash inflows in relation to net investment income and net premiums received under the Reinsurance Agreement in the amount of ~~$106,036.~~$435,091. These increases were partially offset by net cash outflows to fund the operations of APSL and dividends of $168,854 paid during the first quarter of 2013.

The Bermuda Monetary Authority has authorized Investco to purchase the Company’s common shares from shareholders who have died or retired from the practice of public accounting and on a negotiated basis. During the six months and three months ended ~~March 31,~~June 30, 2013, no such transactions occurred. Through ~~March 31,~~June 30, 2013, Investco had purchased 152,801 common shares from shareholders who had died or retired for a total purchase price of $4,229,376. From time to time, Investco has also purchased shares in privately negotiated transactions. Through ~~March 31,~~June 30, 2013, Investco had purchased an additional 75,069 common shares in such privately negotiated transactions for a total purchase price of $1,109,025.

We paid dividends of $0.25 per share during the first quarter of 2013, which amounted to total ordinary cash dividends of $168,854. Since we began paying dividends in 1995, our original shareholders have received $19.62 in cumulative dividends per share. When measured by a total rate of return calculation, this has resulted in an effective annual rate of return of approximately ~~9.6%~~9.5% from the inception of the Company, based on a per share purchase price of $8.33 paid by the original shareholder, and using an unaudited book value of ~~$33.07~~$32.63 per share as of ~~March 31,~~June 30, 2013. Although we have paid cash dividends on a regular basis in the past, the declaration and payment of cash dividends in the future will be at the discretion of our board of directors and will depend on, among other things, our financial condition, results of operations, current and anticipated cash needs and other factors that our board of directors considers relevant.

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, 2012.

We file annual, quarterly, and current reports, proxy statements and other information with the Commission. You may read any public document we file with the Commission at the Commission’s public reference room at 100 F Street, NE, Washington, DC 20549. Please call the Commission at 1-800-SEC-0330 for information on the public reference room. The Commission maintains an internet site that contains annual, quarterly, and current reports, proxy and information statements and other information that issuers (including AmerInst) file electronically with the Commission. The Commission’s internet site iswww.sec.gov.

Our internet site iswww.amerinst.bm. We make available free of charge through our internet site our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Commission. We also make available, through our internet site, via links to the Commission’s internet site, statements of beneficial ownership of our equity securities filed by our directors, officers, 10% or greater shareholders and others under Section 16 of the Securities Exchange Act. In addition, we post onwww.amerinst.bm our Memorandum of Association, our Bye-Laws, our Statement of Share Ownership Policy, Charters for our Audit Committee and Governance and Nominations Committee, as well as our Code of Business Conduct and Ethics. You can request a copy of these documents, excluding exhibits, at no cost, by writing or telephoning us c/o Cedar Management Limited, 25 Church Street, Continental Building, P.O. Box HM 1601 Hamilton, Bermuda HMGX, Attention: Investor Relations (441) 295-6015. The information on our internet site is not incorporated by reference into this report.

As of ~~March 31,~~June 30, 2013, the end of the period covered by this Form 10-Q, our management, including our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer each concluded that as of ~~March 31,~~June 30, 2013, the end of the period covered by this Form 10-Q, we maintained effective disclosure controls and procedures.

Our management, including our Principal Executive Officer and Principal Financial Officer, has reviewed our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). There have been no significant changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are party to various legal proceedings generally arising in the normal course of our business. While any proceeding contains an element of uncertainty, we do not believe that the eventual outcome of any litigation or arbitration proceeding to which we are presently a party will have a material adverse effect on our financial condition or business. Pursuant to our insurance and reinsurance agreements, disputes are generally required to be finally settled by arbitration.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our 2012 Annual Report on Form 10-K, as updated in our subsequent quarterly reports. The risks described in our 2012 Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Filed with the Quarterly Report on Form 10-Q for the Quarter Ended ~~March 31,~~June 30, 2013


BERMUDA		98-0207447
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

c/o Cedar Management Limited 25 Church Street, Continental Building P.O. Box HM 1601, Hamilton, Bermuda		HMGX
(Address of Principal Executive Offices)		(Zip Code)


	June 30, 2013			June 30, 2012
Interest earned:
Fixed maturity investments	$	137,371		$	174,355
Short term investments and cash and cash equivalents		230			325
Dividends earned		73,848			97,297
Investment expenses		(63,373	)		(64,857	)

Net investment income	$	148,076		$	207,120


	March 31, 2013			March 31, 2012
Interest earned:
Fixed maturity investments	$	68,037		$	87,377
Short term investments and cash and cash equivalents		152			157
Dividends earned		28,617			39,673
Investment expenses		(31,514	)		(31,941	)

Net investment income	$	65,292		$	95,266


	June 30, 2013			June 30, 2012
Interest earned:
Fixed maturity investments	$	69,334		$	86,978
Short term investments and cash and cash equivalents		78			168
Dividends earned		45,231			57,624
Investment expenses		(31,859	)		(32,916	)

Net investment income	$	82,784		$	111,854


	Amortized Cost		Estimated Fair Value
December 31, 2012
Due in one year or less	$	1,081,039	$	1,094,775
Due after one year through five years		3,410,272		3,603,525
Due after five years through ten years		2,658,925		2,775,483
Due after ten years		190,300		191,699

Total	$	7,340,536	$	7,665,482


	Three Months Ended June 30, 2013
	Reinsurance Segment			Insurance Segment			Total
Revenues	$	1,610,223		$	298,411		$	1,908,634
Total losses and expenses		1,061,921			716,500			1,778,421
Segment income (loss)	$	548,302		$	(418,089	)	$	130,213
Identifiable assets	$	—		$	492,544		$	492,544

	Three Months Ended June 30, 2012
	Reinsurance Segment			Insurance Segment			Total
Revenues	$	391,129		$	190,743		$	581,872
Total losses and expenses		686,027			597,380			1,283,407
Segment loss	$	(294,898	)	$	(406,637	)	$	(701,535	)
Identifiable assets	$	—		$	648,207		$	648,207


	Number of Phantom Shares
Outstanding - beginning		80,074
Granted – initial grant on the employment date		11,252
Granted – arising from dividends declared during the quarter		610
Forfeited – due to departure from APSL prior to vesting date		(12,009	)

Outstanding - ending		79,927


Exhibit Number		Description

31.1		Certification of Stuart H. Grayston pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Thomas R. McMahon pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Stuart H. Grayston pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Thomas R. McMahon pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document


Dated: ~~May~~August 14, 2013	AMERINST INSURANCE GROUP, LTD.
	(Registrant)

	By:	/s/ STUART H. GRAYSTON
		Stuart H. Grayston
		President (Principal Executive Officer, duly authorized to sign this Report in such capacity and on behalf of the Registrant)

	By:	/S/ THOMAS R. MCMAHON
		Thomas R. McMahon
		Chief Financial Officer (Principal Financial Officer, duly authorized to sign this Report in such capacity and on behalf of the Registrant)

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