United America Indemnity (INDM) 8-K United America Indemnity, Ltd. Reports Second Quarter 2009 Financial Results

Exhibit 99.1

For release:	August 4, 2009
Contact:	Media
	J. Nicole Pryor
	Senior Corporate Counsel
	(610) 660-6803
	npryor@uaigroupinc.com

United America Indemnity, Ltd. Reports Second Quarter 2009 Financial Results

George Town, Grand Cayman, Cayman Islands (August 4, 2009)— United America Indemnity, Ltd. (NASDAQ:INDM) today reported net income of $16.3 million or $0.32 per share for the three months ended June 30, 2009 compared to net loss of $(9.0) million or $(0.24) per share for the same period of 2008. Results for the six months ended June 30, 2009 include net income of $23.4 million or $0.54 per share compared to net loss of $(1.5) million or $(0.04) per share for the same period of 2008.

Selected Operating and Balance Sheet Data

	For the Three Months					For the Six Months
(Dollars in millions, except per share data)	Ended June 30,					Ended June 30,
	2009		2008			2009		2008
Net income / (loss)	$	16.3	$	(9.0	)	$	23.4	$	(1.5	)
Net income / (loss) per share	$	0.32	$	(0.24	)	$	0.54	$	(0.04	)
Operating income / (loss)	$	12.7	$	(7.4	)	$	26.2	$	0.7
Operating income / (loss) per share	$	0.25	$	(0.20	)	$	0.61	$	.02

Operating income, a non-GAAP financial measure, is equal to net income excluding after-tax net realized investment gains (losses). A reconciliation of operating income is set forth at the end of this press release.

	As of
(Dollars in millions)	June 30, 2009
Book value per share	$	12.62
Tangible book value per share	$	12.52
Cash & invested assets	$	1,678.7

Selected Financial Data for the Three Months Ended June 30, 2009:

• Operating income of $12.7 million or $0.25 per share.

• Gross premiums written of $91.5 million.

• Current accident year combined ratio of 101.9.

• After tax annualized investment return of 8.6%, including $15.8 million of after tax unrealized gains.

• $91.5 million of capital raised through the Rights Offering announced in the 1^st quarter of 2009.

• Equity growth of 5.2% excluding the impact of the Rights Offering.

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Selected Financial Data for the Six Months Ended June 30, 2009:

• Operating income of $26.2 million or $0.61 per share.

• Gross premiums written of $190.7 million.

• Current accident year combined ratio of 101.5.

• After tax annualized investment return of 5.5%, including $14.7 million of after tax unrealized gains.

• Equity growth of 6.3% excluding the impact of the Rights Offering.

United America Indemnity’s Three Months Ended June 30, 2009 and 2008 Gross and Net Premiums Written Results by Business Unit

(Dollars in thousands)	Three Months Ended June 30,
	Gross Premiums Written				Net Premiums Written
	2009		2008		2009		2008
Insurance Operations
Penn-America	$	34,256	$	49,166	$	27,500	$	45,511
United National		16,607		24,370		13,222		20,963
Diamond State		21,824		21,319		18,069		17,697
Total Insurance Operations		72,687		94,855		58,791		84,171
Reinsurance Operations
Wind River		18,793		9,463		18,687		1,038
Total	$	91,480	$	104,318	$	77,478	$	85,209

Insurance Operations:Gross premiums written for the three months ended June 30, 2009 decreased 23.4%, and net premiums written for the three months ended June 30, 2009 decreased 30.2%, compared to the same period in 2008. The reduction in gross premium is comprised mainly of the following:

• $9.6 million of the decline is due to terminated programs and agents.

• $12.6 million of the decline is due to price decreases in aggregate of approximately 3.0% and other market factors.

Reinsurance Operations:Gross premiums written for the three months ended June 30, 2009 increased $9.3 million and net premiums written increased $17.6 million, excluding the intercompany reinsurance treaty, compared to the same period in 2008. The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.

United America Indemnity’s Combined Ratio for the Three Months Ended June 30, 2009 and 2008

The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:

	Three Months Ended June 30,
	2009			2008
Loss Ratio:
Current Accident Year		61.8			66.7
Changes to Prior Accident Year		(2.9	)		16.4
Loss Ratio — Calendar Year		58.9			83.1
Expense Ratio		40.1			37.9
Combined Ratio		99.0			121.0

The calendar year loss ratio improved 24.2 points to 58.9 points in 2009 from 83.1 points in 2008.

• The current accident year loss ratio improved 4.9 points to 61.8 points from 66.7 points in 2008 due to improvements in both the property and casualty loss ratios.

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• The property loss ratio improved 7.3 points to 51.9 points in 2009 from 59.2 points in 2008 due primarily to the growth and performance of our property business in reinsurance operations.

• The casualty loss ratio improved 1.5 points to 69.3 points in 2009 from 70.8 points in 2008 due primarily to improved performance in our reinsurance operations.

• A 19.3 point improvement in net loss and loss adjustment expense related to prior accident years. In 2009, $2.2 million of reserves were released due to positive emergence primarily in the property lines, compared to $16.5 million of prior year adverse reserve development in 2008 related primarily to liability lines.

The expense ratio increased from 37.9 in 2008 to 40.1 in 2009.

• The expense ratio increase is mainly attributable to a decline in net premiums earned.

United America Indemnity’s Six Months Ended June 30, 2009 and 2008 Gross and Net Premiums Written Results by Business Unit

(Dollars in thousands)	Six Months Ended June 30,
	Gross Premiums Written				Net Premiums Written
	2009		2008		2009		2008
Insurance Operations
Penn-America	$	66,595	$	93,348	$	54,657	$	84,914
United National		31,927		50,239		25,639		43,071
Diamond State		41,785		44,560		33,964		36,854
Total Insurance Operations		140,307		188,147		114,260		164,839
Reinsurance Operations
Wind River		50,361		15,233		49,831		2,334
Total	$	190,668	$	203,380	$	164,091	$	167,173

Insurance Operations:Gross premiums written for the six months ended June 30, 2009 decreased 25.4%, and net premiums written for the six months ended June 30, 2009 decreased 30.7%, compared to the same period in 2008. The reduction in gross premium is comprised mainly of the following:

• $21.8 million of the decline is due to terminated programs and agents.

• $26.0 million of the decline is due to price decreases in aggregate of approximately 3.0% and other market factors.

Reinsurance Operations:Gross premiums written for the six months ended June 30, 2009 increased $35.1 million and net premiums written increased $47.5 million, excluding the intercompany reinsurance treaty, compared to the same period in 2008. The increase in gross and net premiums written is primarily due to new excess of loss and quota share treaties.

United America Indemnity’s Combined Ratio for the Six Months Ended June 30, 2009 and 2008

The combined ratio is a key measure of insurance profitability. The components comprising the combined ratio are as follows:

	Six Months Ended June 30,
	2009			2008
Loss Ratio:
Current Accident Year		61.8			67.3
Changes to Prior Accident Year		(1.9	)		7.7
Loss Ratio — Calendar Year		59.9			75.0
Expense Ratio		39.7			35.7
Combined Ratio		99.6			110.7

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The calendar year loss ratio improved by 15.1 points to 59.9 points in 2009 from 75.0 points in 2008.

• The current accident year loss ratio improved by 5.5 points to 61.8 points in 2009 from 67.3 points in 2008 due to improvements in both the property and casualty loss ratios.

• The property loss ratio improved by 11.1 points to 52.2 points in 2009 from 63.3 points in 2008 due primarily to the growth and performance of our property business in reinsurance operations and improved performance of our property business in insurance operations.

• The casualty loss ratio improved 0.7 points to 68.7 points in 2009 from 69.4 points in 2008 due primarily to improved performance in our reinsurance operations.

• A 9.6 point improvement in net loss and loss adjustment expense related to prior accident years. In 2009, $2.9 million of reserves were released due to positive emergence primarily in the property lines, compared to $16.5 million of prior year adverse reserve development in 2008 related primarily to liability lines.

The expense ratio increased from 35.7 in 2008 to 39.7 in 2009.

• The expense ratio increase is mainly attributable to a decline in net premiums earned.

About United America Indemnity, Ltd.

United America Indemnity, Ltd. (NASDAQ:INDM), through its several direct and indirect wholly owned subsidiary insurance and reinsurance companies, is a national and international provider of excess and surplus lines and specialty property and casualty insurance and reinsurance, both on an admitted and non-admitted basis. The Company’s four principal divisions include:

• Insurance Operations:

• Penn-America, which includes property and general liability products for small commercial businesses distributed through a select network of wholesale general agents with specific binding authority;

• United National, which includes property, general liability, and professional lines products distributed through program administrators with specific binding authority;

• Diamond State, which includes property, general liability, and professional lines products distributed through wholesale brokers and program administrators with specific binding authority.

• Reinsurance Operations:

• Wind River Reinsurance Company, Ltd., a Bermuda based treaty and facultative reinsurer of excess and surplus lines and specialty property and casualty insurance.

For more information, visit the United America Indemnity, Ltd. website atwww.uai.ky.

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Teleconference and Webcast for Interested Parties

Larry A. Frakes, President and Chief Executive Officer of United America Indemnity Ltd., and Thomas McGeehan, Interim Chief Financial Officer of United America Indemnity, Ltd. will conduct a teleconference for interested parties on August 5, 2009 at 8:30 a.m. Eastern Time to discuss the second quarter 2009 results.

To participate in the teleconference, please telephone (800) 288-8975 (U.S. and Canada) or (612) 332-0345 (International) and you will be greeted by an operator. Please reference UAI Second Quarter Earnings Release Call or reference Larry Frakes.

The teleconference is being webcast by AT&T and can be accessed at the Company’s website atwww.uai.ky. Please access the site at least 15 minutes prior to the teleconference to register, download and install any necessary software. The webcast is also being distributed over AT&T’s Audio-Only Web ConferenceCast. To access live or archived event, please use this URL:http://65.197.1.5/att/confcast, Conference ID#: 109543 and click GO.

The teleconference will be available for replay beginning at 10:30 a.m. Eastern Time on August 5, 2009 until 11:59 p.m. September 5, 2009. To listen to the replay, please telephone (800) 475-6701 (U.S. and Canada) or (320) 365-3844 (International) then enter 109543.

Forward-Looking Information

This release contains forward-looking information about United America Indemnity, Ltd. and the operations of United America Indemnity, Ltd. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of the transactions, and statements about the future performance, operations, products and services of the companies.

The business and operations of United America Indemnity, Ltd. is and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: (1) the ineffectiveness of United America Indemnity, Ltd.’s business strategy due to changes in current or future market conditions; (2) the effects of competitors’ pricing policies, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products; (3) greater frequency or severity of claims and loss activity than United America Indemnity, Ltd.’s underwriting, reserving or investment practices have anticipated; (4) decreased level of demand for United America Indemnity, Ltd.’s insurance products or increased competition due to an increase in capacity of property and casualty insurers; (5) risks inherent in establishing loss and loss adjustment expense reserves; (6) uncertainties relating to the financial ratings of United America Indemnity, Ltd.’s insurance subsidiaries; (7) uncertainties arising from the cyclical nature of United America Indemnity, Ltd.’s business; (8) changes in United America Indemnity, Ltd.’s relationships with, and the capacity of, its general agents; (9) the risk that United America Indemnity, Ltd.’s reinsurers may not be able to fulfill obligations; (10) investment performance and credit risk; and (11) uncertainties relating to governmental and regulatory policies. The foregoing review of important factors should be read in conjunction with the other cautionary statements that are included in United America Indemnity, Ltd.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as well as in the materials filed and to be filed with the U.S. Securities and Exchange Commission (SEC). United America Indemnity, Ltd. does not make any commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.

# # #
Note: Tables Follow

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UNITED AMERICA INDEMNITY, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and shares in thousands, except per share data)

	For the Three Months					For the Six Months
	Ended June 30,					Ended June 30,
	2009		2008			2009			2008
Gross premiums written	$	91,480	$	104,318		$	190,668		$	203,380
Net premiums written	$	77,478	$	85,209		$	164,091		$	167,173
Net premiums earned	$	74,732	$	100,673		$	153,272		$	213,730
Investment income, net		16,605		17,072			38,782			34,858
Net realized investment gains (losses)		5,398		(2,480	)		(3,198	)		(3,550	)
Total revenues		96,735		115,265			188,856			245,038
Net losses and loss adjustment expenses		44,047		83,644			91,787			160,294
Acquisition costs and other underwriting expenses		29,972		38,112			60,786			76,307
Corporate and other operating expenses		3,663		2,269			7,638			6,214
Interest expense		1,832		2,188			3,686			4,727
Income before income taxes		17,221		(10,948	)		24,959			(2,504	)
Income tax expense (benefit)		2,758		(2,003	)		3,481			(1,442	)
Net income before equity in net income (loss) of partnership		14,463		(8,945	)		21,478			(1,062	)
Equity in net income (loss) of partnership, net of tax		1,798		(26	)		1,933			(469	)
Net income	$	16,261	$	(8,971	)	$	23,411		$	(1,531	)
Weighted average shares outstanding—basic		50,824		37,679			43,005			38,194
Weighted average shares outstanding—diluted		50,863		37,679			43,038			38,194
Net income per share — basic	$	0.32	$	(0.24	)	$	0.54		$	(0.04	)
Net income per share — diluted	$	0.32	$	(0.24	)	$	0.54		$	(0.04	)
Combined ratio analysis:
Loss ratio		58.9		83.1			59.9			75.0
Expense ratio		40.1		37.9			39.7			35.7
Combined ratio		99.0		121.0			99.6			110.7

Certain prior period amounts have been reclassified to conform to the 2009 presentation.

In 2008, “Diluted” loss per share is the same as “Basic” loss per share since there was a net loss for the quarter and six months ended June 30, 2008.

The loss ratio, expense ratio and combined ratio are non-GAAP financial measures that are generally viewed in the insurance industry as indicators of underwriting profitability. The loss ratio is the ratio of net losses and loss adjustment expenses to net premiums earned. The expense ratio is the ratio of acquisition costs and other underwriting expenses to net premiums earned. The combined ratio is the sum of the loss and expense ratios.

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UNITED AMERICA INDEMNITY, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share data)

	As of			As of
	June 30,			December 31,
ASSETS	2009			2008
Bonds:
Available for sale securities, at fair value (amortized cost: 2009 - $1,254,330 and 2008 - $1,192,385)	$	1,286,530		$	1,204,974
Preferred shares:
Available for sale securities, at fair value (cost: 2009 - $3,561 and 2008 - $4,665)		4,308			4,665
Common shares:
Available for sale securities, at fair value (cost: 2009 - $44,418 and 2008 - $46,316)		50,724			50,613
Other invested assets:
Available for sale securities, at fair value (cost: 2009 - $3,644 and 2008 - $19,689)		10,627			39,219
Securities classified as trading, at fair value (cost: $35,151 and $5,151)		40,190			7,453
Total investments		1,392,379			1,306,924
Cash and cash equivalents		286,375			292,604
Agents’ balances		78,873			57,117
Reinsurance receivables		620,101			679,277
Federal income taxes receivables		14,954			16,487
Deferred federal income taxes		19,247			32,532
Deferred acquisition costs		37,481			34,734
Intangible assets		9,272			9,309
Prepaid reinsurance premiums		18,848			23,960
Other assets		27,871			24,115
Total assets	$	2,505,401		$	2,477,059
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses	$	1,394,818		$	1,506,429
Unearned premiums		155,383			149,677
Ceded balances payable		19,664			25,165
Contingent commissions		7,274			6,695
Notes and debentures payable		121,712			121,845
Other liabilities		43,188			35,255
Total liabilities		1,742,039			1,845,066
Shareholders’ equity:
Common shares, $0.0001 par value, 900,000,000 common shares authorized; Class A common shares issued: 42,385,514 and 25,032,618, respectively; Class A common shares outstanding: 36,350,388 and 19,013,462, respectively; Class B common shares issued and outstanding: 24,122,744 and 12,687,500, respectively		7			4
Additional paid-in capital		617,750			524,345
Accumulated other comprehensive income		33,507			25,108
Class A common shares in treasury, at cost: 6,035,126 and 6,019,156 shares, respectively		(100,615	)		(100,446	)
Retained earnings		212,713			182,982
Total shareholders’ equity		763,362			631,993
Total liabilities and shareholders’ equity	$	2,505,401		$	2,477,059

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UNITED AMERICA INDEMNITY, LTD.
SELECTED INVESTMENT DATA
(Unaudited)
(Dollars in millions)

	Market Value as of
	June 30,		Dec 31,
	2009		2008
Bonds	$	1,286.5	$	1,205.0
Cash & cash equivalents		286.4		292.6
Total bonds and cash and cash equivalents		1,572.9		1,497.6
Equities and other invested assets		105.8		101.9
Total cash and invested assets	$	1,678.7	$	1,599.5

	June 30, 2009 (a)
	Three Months			Six Months
	Ended			Ended
Net investment income	$	12.9		$	25.3
Net realized investment gain (loss)		3.5			(2.8	)
Net Equity in net income of partnerships		1.8			1.9
Net unrealized investment gains		15.8			14.7
Net gain from liquidation of partnerships		0.8			5.6
Net realized and unrealized investment		21.9			19.4
Total investment return	$	34.8		$	44.7
Total investment return annualized	$	139.3		$	89.5
Cash and invested assets December 2008				$	1,599.5
Cash and invested assets March 2009	$	1,574.7
Cash and invested assets June 2009		1,678.7			1,678.7
Sum of cash and invested assets	$	3,253.4		$	3,278.2
Average total cash and invested assets	$	1,626.7		$	1,639.1
Total investment return % annualized		8.6	%		5.5	%

(a) Amounts in this table are shown on an after-tax basis.

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UNITED AMERICA INDEMNITY, LTD.
SUMMARY OF OPERATING INCOME / (LOSS)
(Unaudited)
(Dollars and shares in thousands, except per share data)

	For the Three Months					For the Six Months
	Ended June 30,					Ended June 30,
	2009		2008			2009			2008
Operating income	$	12,712	$	(7,415	)	$	26,183		$	725
Adjustments:
Net realized investment gains (losses), net of tax		3,549		(1,556	)		(2,772	)		(2,256	)
Total after-tax adjustments		3,549		(1,556	)		(2,772	)		(2,256	)
Net income	$	16,261	$	(8,971	)	$	23,411		$	(1,531	)
Weighted average shares outstanding — basic		50,824		37,679			43,005			38,194
Weighted average shares outstanding — diluted		50,863		37,679			43,038			38,194
Operating income per share — basic	$	0.25	$	(0.20	)	$	0.61		$	0.02
Operating income per share — diluted	$	0.25	$	(0.20	)	$	0.61		$	0.02

In 2008, “Diluted” loss per share is the same as “Basic” loss per share since there was a net loss for the quarter and six months ended June 30, 2008.

In computing the basic and diluted weighted share counts the number of shares outstanding prior to May 5, 2009 (the date that the common stock was issued in conjunction with the stockholders’ rights offering) was adjusted by a factor of 1.116 to reflect the impact of a bonus element associated with the rights offering in accordance with SFAS 128, Earnings per Share.

Note Regarding Operating Income

Operating income, a non-GAAP financial measure, is equal to net income excluding after-tax net realized investment gains (losses). Operating income is not a substitute for net income determined in accordance with GAAP, and investors should not place undue reliance on this measure.

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