10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________

FORM 10-K

_______________________

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

Commission File Number 000-52833

United Insurance Holdings Corp.

Delaware	75-3241967
(State of Incorporation)	(IRS Employer Identification Number)

360 Central Avenue, Suite 900

St. Petersburg, Florida 33701

727-895-7737

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $0.0001 PAR VALUE PER SHARE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  £    No  R

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  £    No  R

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  R    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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  R    No  £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   £

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	£	Accelerated filer	£
Non-accelerated filer	£	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  £    No  R

Non-affiliates held common stock issued by the registrant with an aggregate market value of $30,525,413 as of June 30, 2011, calculated using the closing sales price reported for such date on the Over-The-Counter-Bulletin Board. For purposes of this disclosure, shares of common stock held by persons who hold more than 10% of the outstanding shares of common stock and shares held by executive officers and directors of the registrant have been excluded because such persons may be deemed to be affiliates. This determination of executive officer or affiliate status is not necessarily a conclusive determination for other purposes.

As of March 14, 2012, 10,361,849 shares of common stock, par value $0.0001 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Form 10-K incorporates by reference certain information from the Proxy Statement for the 2012 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2011.

UNITED INSURANCE HOLDINGS CORP.

Forward-Looking Statements		3
Part I.
	Item 1. Business	4
	Item 1A. Risk Factors	15
	Item 1B. Unresolved Staff Comments	23
	Item 2. Properties	23
	Item 3. Legal Proceedings	23
	Item 4. Mine Safety Disclosures	23
Part II.
	Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
	Item 6. Selected Financial Information	25
	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 7A. Quantitative and Qualitative Disclosures about Market Risk	36
	Item 8. Financial Statements
	Auditor's Report	37
	Consolidated Balance Sheets	38
	Consolidated Statements of Income	39
	Consolidated Statements of Stockholders' Equity	40
	Consolidated Statements of Cash Flows	41
	Notes to Consolidated Financial Statements	42
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	65
	Item 9A. Controls and Procedures	65
	Item 9B. Other Information	66
Part III.
	Item 10. Directors, Executive Officers and Corporate Governance	67
	Item 11. Executive Compensation	67
	Item 12. Security Ownership of Certain Beneficial Owners and Management	67
	Item 13. Certain Relationships and Related Transactions, and Director Independence	67
	Item 14. Principal Accountant Fees and Services	67
Part IV.
	Item 15. Exhibits and Financial Statement Schedules	67
Exhibit Index		72
Signatures		74

Throughout this Form 10-K, we present amounts rounded to the nearest thousand, except for share amounts, per share

amounts, policy counts or where more specific language or context indicates a different presentation.

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UNITED INSURANCE HOLDINGS CORP.

FORWARD-LOOKING STATEMENTS

Statements in this Form 10-K for the year ended December 31, 2011 or in documents incorporated by reference that are not historical fact are “forward-looking statements” within the meaning of the Private Securities Reform Litigation Act of 1995. These forward-looking statements include statements about anticipated growth in revenues, earnings per share, estimated unpaid losses on insurance policies, investment returns and expectations about our liquidity. These statements are based on current expectations, estimates and projections about the industry and market in which we operate, and management’s beliefs and assumptions. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” or “continue” or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties include, without limitation, uncertainties related to estimates, assumptions and projections relating to unpaid losses and loss adjustment expenses and other accounting policies, losses from the hurricanes that occurred in 2005 and 2004 and in other estimates, assumptions and projections contained in this Form 10-K; inflation and other changes in economic conditions (including changes in interest rates and financial markets); the impact of new Federal or State regulations that affect the property and casualty insurance market; the costs of reinsurance; assessments charged by various governmental agencies; pricing competition and other initiatives by competitors; our ability to obtain regulatory approval for requested rate changes and the timing thereof; legislative and regulatory developments; the outcome of litigation pending against us, including the terms of any settlements; risks related to the nature of our business; dependence on investment income and the composition of our investment portfolio; the adequacy of our liability for loss and loss adjustment expense; insurance agents; claims experience; ratings by industry services; catastrophe losses; reliance on key personnel; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail); acts of war and terrorist activities; and other matters described from time to time by us in this Form 10-K and in our other filings with the SEC.

We caution you to not place reliance on these forward-looking statements, which are valid only as of the date they were made. We undertake no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise. In addition, we prepare our financial statements in accordance with U.S. generally accepted accounting principles (GAAP), which prescribes when we may reserve for particular risks, including litigation exposures. Accordingly, our results for a given reporting period could be significantly affected if and when we establish a reserve for a major contingency. Therefore, the results we report in certain accounting periods may appear to be volatile.

These forward-looking statements are subject to numerous risks, uncertainties and assumptions about us described in our filings with the SEC. The forward-looking events that we discuss in this Form 10-K are valid only as of the date of this Form 10-K and may not occur in light of the risks, uncertainties and assumptions that we describe in our filings with the SEC. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from our forward-looking statements is included in the section entitled “RISK FACTORS” in Part I, Item 1A of this Form 10-K. Except as required by applicable law, we undertake no obligation and disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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UNITED INSURANCE HOLDINGS CORP.

PART I

Item 1. Business

INTRODUCTION

We incorporated as a blank-check company in May 2007 under Delaware law, and became a publicly-traded company in October 2007. In September 2008, we acquired an insurance holding company and its subsidiaries, and changed our name to United Insurance Holdings Corp. (UIHC).

Through our wholly-owned subsidiaries, we write and service property and casualty insurance policies in Florida, South Carolina and Massachusetts. We incorporated three of our subsidiaries under Florida law, including United Property and Casualty Insurance Company (UPC), which writes insurance policies; United Insurance Management, L.C. (UIM), the managing general agent that manages substantially all aspects of UPC's business; and Skyway Claims Services, LLC (SCS), a claims adjusting company that provides services to UPC. In April 2011, we formed a fourth subsidiary, UPC Re. Operating as a reinsurer under the laws of the Cayman Islands, UPC Re provides reinsurance protection to UPC.

We conduct our operations under one business segment.

We believe our holding company structure provides us flexibility to expand our products and services in the future. In 2011, the insurance regulatory authority in Rhode Island authorized UPC to write in that state, and UPC has applied to insurance regulatory authorities in two additional states to write property and casualty lines.

Our office is located at 360 Central Avenue, Suite 900, St. Petersburg, FL 33701 and our telephone number at that location is (727) 895-7737.

NATURE OF THE INSURANCE INDUSTRY

Factors affecting the insurance industry may subject us to significant fluctuations in operating results. These factors include competition, catastrophe losses and general economic conditions, including interest rate changes and inflation, as well as legislative initiatives, the regulatory environment, the frequency of litigation, the size of judgments, severe weather conditions, climate changes or cycles, the role of federal or state government in the insurance market, judicial or other authoritative interpretations of laws and policies, market conditions for homeowner insurance and the availability and cost of reinsurance.

Historically, the financial performance of the property and casualty insurance industry has tended to fluctuate in cyclical patterns of soft markets followed by hard markets. A soft market is typically characterized by increased competition that results in lower pricing, expanded coverage terms and increased commissions paid to distribution sources to compete for business. A hard market, generally considered a beneficial industry trend, is characterized by reduced competition that results in higher pricing, reduced coverage terms and lower commissions paid to acquire business. Although an individual insurance company’s financial performance is dependent on its own specific business characteristics, the profitability of most property and casualty insurance companies tends to follow this cyclical market pattern. During 2011, a soft market for most lines of business continued to dominate the Florida property and casualty industry; however, we began to see indications of a hardening of the market for the homeowners line of business, which allowed us and our competitors to implement rate increases.

PRODUCT LINES

Policies we issue under our Protector Homeowner Program provide both structure and content coverage, while our Guardian Dwelling Fire Program allows policyholders to select differing types and levels of coverage. We use the term homeowners to collectively refer to our homeowner and our dwelling fire lines of business. We offer standardized policies for a broad range of exposures, and our policies include coverage options for standard single-family homeowners, tenants (renters), and condominium unit owners. We also write flood policies, on which we earn a commission while retaining no risk of loss, in all states in which we write our other products.

Though we have authorization to write a commercial line of business in Florida that includes auto and multi-peril coverage, we do not currently write commercial business.

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UNITED INSURANCE HOLDINGS CORP.

PRICING

We price our product at levels that we project will generate an acceptable underwriting profit. We generally use actuarial loss costs promulgated by Insurance Services Office, Inc. (ISO); a national provider of statistical, actuarial, underwriting and claims information; as a benchmark during the development of pricing for our products. With assistance from our actuary, we further adjust pricing to account for our historical loss experience as well as individual risk and coverage characteristics.

As demonstrated during 2009, rate regulation in the states in which we do business, as well as other factors, can prevent us from increasing our prices until some time after the costs associated with coverage have increased. Though in some circumstances we can raise our rates and subsequently request approval of those new rates from insurance regulatory authorities, how quickly we can change our rates in response to increased costs mostly depends upon the time it takes for us to submit a rate filing with the insurance regulatory authority in the appropriate state and upon the length of time the insurance regulatory authority takes to review and approve the filing. At times, our ability or willingness to raise prices, modify underwriting terms or reduce exposure may be limited due to considerations of public policy, the evolving political environment, competition and/or our social responsibilities.

The table below displays the average rate increases we have implemented during the years ended December 31, 2011, 2010 and 2009. Applying a rate increase to all policies that were in force on the date the increase became effective takes up to one year, and then we must recognize the increased premium pro rata over 12 months; therefore, rate increases may take as long as two years to fully impact net income. The rate increases we implemented during 2009 and 2010 have now been applied to all policies in force; the 2009 rate increases have already fully affected earned premium, but the 2010 rate increases will continue to impact earned premium into the first quarter of 2012. We continue to apply the rate increases we implemented during 2011 to renewals of policies in force, and the 2011 rate increases will continue to affect our earned premium through the fourth quarter of 2013.

	Average Rate Increase
	FL		SC
Homeowners Policies
Dec. 2011	—	%	6.0	%
Nov. 2011	7.5	%	—	%
May 2011	15.9	%	—	%
Mar. 2010	14.0	%	—	%
Sep. 2009	12.7	%	—	%
Dwelling Policies
Nov. 2011	15.0	%	—	%
Apr. 2010	14.7	%	—	%
Oct. 2009	15.0	%	—	%

COMPETITION

The property and casualty insurance industry is very competitive both as to rate and service. Except for certain regulatory considerations, the insurance industry has relatively few barriers to entry. We compete with large national insurance providers, smaller regional providers and even smaller providers that only write policies in one particular state. We primarily compete with Tower Hill Insurance Companies, Security First Insurance Company, Florida Peninsula Insurance Company and other similar companies. Also, due to legislation passed by the Florida legislature in 2007, Citizens Property Insurance Corporation, an insurer supported by the State of Florida, continues to compete directly with private insurers.

We compete primarily on the basis of underwriting criteria, our distribution network and high-quality service to our agents and policyholders because we believe that we compare favorably in these areas. New entrants to our markets may arise and create additional competition leading to potentially lower prices and higher limits offered. Although our pricing is influenced to some degree by the pricing of our competitors, we believe it is generally not in our best interest to compete on price.

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UNITED INSURANCE HOLDINGS CORP.

MARKETING AND DISTRIBUTION

To reach a broad range of prospective policyholders, we use more than 2,250 agents, including strategic partnerships with two national carriers and the Florida Association of Insurance Agents that allow their agents to write direct policies for us. We recruit, train and appoint the full-service insurance agents that distribute our products. Typically, a full-service agency is small to medium in size and represents several companies for both personal and commercial product lines. We depend upon our agents, who provide us with valuable marketing information about the homeowners’ insurance needs in the communities we serve, to produce new business for us. We compensate our agents primarily with a fixed-rate commission.

Our marketing representatives monitor and support our agents and also have the principal responsibility for recruiting and training our new agents. We manage our agents through periodic business reviews using established benchmarks/goals for premium volume and profitability. We review an agent’s performance and if a particular agent does not meet its established benchmarks/goals for premium volume and profitability, then we may terminate that agent.

We also appoint limited-service insurance agents that only service the policies we have assumed from Citizens. These limited-service agents are an outgrowth of the Consumer Choice amendment passed by the Florida legislature in 2003. We believe our large network of limited-service agents is valuable for quickly and effectively completing the transactions involving the policies we occasionally assume from Citizens.

POLICY ADMINISTRATION

We commit ourselves to providing the highest possible level of service to our insurance agents and our policyholders. We use a third-party administrator to manage our policy-related information systems and to perform the administrative duties of processing a policy. Using a third-party administrator allows us to obtain up-to-date technology at a reasonable cost and to achieve economies of scale without incurring significant fixed-overhead expenses.

Our third-party policy administrator provides us with integrated policy underwriting, billing, collection and reporting services. To provide these services, our policy administrator employs Internet-based systems for the on-line submission of applications, the underwriting of policies and the automated issuance of policies, allowing us to issue our policies efficiently and quickly and provide our agents with the ability to easily submit periodic requests for changes for our customers via the Internet.

We monitor the work of our policy administrator by conducting conference calls and monthly meetings, as well as periodically testing their data through our internal audit function.

UNDERWRITING

Our underwriting policies and procedures seek to minimize our risk of loss while maximizing our premium by optimizing our geographic exposure and diversifying our portfolio with respect to projected maximum loss, total insured value and average annual losses. To accomplish this optimization of our portfolio, we use our modeling software to strategically analyze our risk exposures, including wind exposures. During the optimization process, we analyze risk exposures at various levels of detail, such as by zip code or by street address, to provide us with objective data that we can use to close or re-open certain zip codes or to non-renew policies with unprofitable projected maximum loss potential.

We establish underwriting guidelines to provide a uniform approach to our risk selection and to achieve underwriting profitability. After we bind a new policy, with few exceptions, we have the insured property physically inspected. Our underwriters review the property inspection report during their risk evaluation and if the policy does not meet our underwriting criteria, we typically cancel the policy within 90 days.

We currently write policies throughout South Carolina and Massachusetts, and in most Florida counties. We currently do not write policies in counties or in zip codes where sinkhole losses would increase our risk, or in a few other counties or zip codes in which we will not accept the excessive hurricane risk exposure.

We use information provided by ISO as well as information resulting from our optimization process to divide the states in which we write policies into rating territories. Our homeowner rates vary from territory to territory. While we are required to

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UNITED INSURANCE HOLDINGS CORP.

maintain rates in our rating territories, our underwriting criteria determines in which territories we would write a policy. Our underwriting criteria can change over time by territory depending on the circumstances in each territory.

RESERVE FOR UNPAID LOSSES

We generally use the term loss(es) to collectively refer to both loss and loss adjusting expenses. We establish reserves for unpaid losses that have occurred at or before the balance sheet date for amounts we estimate we will be required to pay in the future. Our policy is to establish these loss reserves after considering all information known to us at each reporting period. At any given point in time, our loss reserve represents our best estimate of the ultimate settlement and administration cost of our insured claims incurred and unpaid. Since the process of estimating loss reserves requires significant judgment due to a number of variables, such as fluctuations in inflation, judicial decisions, legislative changes and changes in claims handling procedures, our ultimate liability will likely differ from these estimates. We revise our reserve for unpaid losses as additional information becomes available, and reflect adjustments, if any, in our earnings in the periods in which we determine they are necessary.

Reserves for unpaid losses fall into two categories: case reserves and reserves for claims incurred but not reported. See our CRITICAL ACCOUNTING POLICIES AND ESTIMATES section under Item 7 of this Form 10-K for a discussion of these two categories of reserves for unpaid losses and for a discussion of the methods we use to estimate those reserves.

On an annual basis, our actuary issues a statement of actuarial opinion that documents the actuary’s evaluation of the adequacy of our unpaid loss obligations under the terms of our policies. We review the analysis underlying the actuary's opinion and compare the projected ultimate losses per the actuary's analysis to our own projection of ultimate losses to ensure that our reserve for unpaid losses recorded at each annual balance sheet date is based upon our analysis of all internal and external factors related to known and unknown claims against us and to ensure our reserve is within guidelines promulgated by the National Association of Insurance Commissioners (NAIC).

We maintain an in-house claims staff that monitors and directs all aspects of our claims process. We assign the fieldwork to our third-party claims adjusting companies, none of whom have the authority to settle or pay any claims on our behalf. The claims adjusting companies conduct inspections of the damaged property and prepare initial estimates. We review the inspection reports and initial estimates to determine the amounts to be paid to the policyholder in accordance with the terms and conditions of the policy. Our exclusive contract with a particular claims adjusting company requires us to assign all catastrophe claims to that company through December 31, 2012; however, that particular company may choose to outsource catastrophe claims fieldwork to other claims adjusting companies. We also maintain strategic relationships with several claims adjusting companies which we can engage should we need additional non-catastrophe claims servicing capacity. As demonstrated during 2004 and 2005 when we had several catastrophic hurricanes, we believe all of our relationships provide an adequate level of claims servicing in the event catastrophes affect our policyholders in the future.

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UNITED INSURANCE HOLDINGS CORP.

The table below shows the analysis of our reserve for unpaid losses for each of our last three years on a GAAP basis:

	2011			2010		2009
Balance at January 1	$	47,414		$	44,112	$	40,098
Less: reinsurance recoverable on unpaid losses	23,814			23,447		20,906
Net balance at January 1	$	23,600		$	20,665	$	19,192
Incurred related to:
Current year	43,019			41,527		43,731
Prior years	(4,158		)	1,006		(2,976		)
Total incurred	$	38,861		$	42,533	$	40,755
Paid related to:
Current year	28,857			27,065		30,637
Prior years	3,322			12,533		8,645
Total paid	$	32,179		$	39,598	$	39,282
Net balance at December 31	$	30,282		$	23,600	$	20,665
Plus: reinsurance recoverable on unpaid losses	3,318			23,814		23,447
Balance at December 31	$	33,600		$	47,414	$	44,112
Composition of reserve for unpaid losses and LAE:
Case reserves	18,315			22,445		18,612
IBNR reserves	15,285			24,969		25,500
Balance at December 31	$	33,600		$	47,414	$	44,112

LOSS RESERVE DEVELOPMENT

The table on the next page displays UPC's loss reserve development, on a GAAP basis, for business written in each year from 2001 through 2011; it does not distinguish between catastrophic and non-catastrophic events. The following explanations of the main sections of the table should provide a better understanding of the information displayed:

Original net liability. The original net liability represents the original estimated amount of reserves for unpaid losses recorded at the balance sheet date for each of the years indicated in the column headings, net of reinsured losses. We record reserves related to claims arising in the current year and in all prior years that remained unpaid at the balance sheet date for each of the years indicated, including estimated losses that had been incurred but not reported.

Net cumulative paid as of. This section displays the net cumulative payments we have made for losses, as of the balance sheet date of each succeeding year, related to claims incurred prior to the balance sheet date of the year indicated in the column heading.

Net liability re-estimated as of. This section displays the re-estimated amount of the previously recorded liability based on experience as of the end of each succeeding year. An increase or decrease from the original reserve estimate is caused by a combination of factors, including i) claims being settled for amounts different than originally estimated, ii) reserves being increased or decreased for claims remaining open as more information becomes available on those individual claims and iii) more or fewer claims being reported after the year end than estimated.

Cumulative redundancy (deficiency) at December 31, 2011. The cumulative redundancy or deficiency results from the comparison of the net liability re-estimated as of the current balance sheet date to the original net liability, and it indicates an overestimation of the original net liability (a redundancy) or an underestimation of the original net liability (a deficiency).

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UNITED INSURANCE HOLDINGS CORP.

It is important to note that the table presents a run-off of balance sheet liability for the periods indicated rather than accident or policy loss development for those periods. Therefore, each amount in the table includes the cumulative effects of changes in liability for all prior periods. Conditions and trends that have affected liabilities in the past may not necessarily occur in the future.

	2011		2010			2009			2008			2007			2006			2005			2004			2003			2002			2001
Original net liability	$	30,282	$	23,600		$	20,665		$	19,192		$	21,559		$	23,735		$	20,447		$	8,449		$	3,590		$	4,513		$	2,078
Net cumulative paid as of:
One year later			3,918			13,028			8,984			9,707			9,047			12,872			10,962			4,549			4,530			1,707
Two years later						7,902			13,148			12,127			13,083			14,363			13,871			6,097			6,065			2,065
Three years later									6,030			14,310			14,115			15,582			14,868			6,594			6,779			2,258
Four years later												6,113			15,395			16,312			15,021			6,382			7,185			2,260
Five years later															7,032			17,356			15,214			6,368			6,967			2,250
Six years later																		8,722			15,291			6,463			6,929			2,067
Seven years later																					15,322			6,664			6,927			2,067
Eight years later																								6,668			6,930			2,067
Nine years later																											6,934			2,067
Ten years later																														2,067
Net liability re-estimated as of:
End of year	$	30,282	$	23,600		$	20,665		$	19,192		$	21,559		$	23,735		$	20,447		$	8,449		$	3,590		$	4,513		$	2,078
One year later			20,040			22,169			16,556			16,864			17,652			18,802			12,989			6,061			5,252			2,315
Two years later						18,677			17,472			15,759			16,707			17,675			15,260			6,358			6,523			2,279
Three years later									14,400			16,505			16,337			17,355			15,586			7,051			6,981			2,378
Four years later												13,688			16,781			17,814			15,582			6,561			7,438			2,260
Five years later															14,140			18,052			15,672			6,730			7,066			2,259
Six years later																		15,604			15,409			6,794			6,932			2,068
Seven years later																					15,376			6,680			6,928			2,067
Eight years later																								6,668			6,931			2,067
Nine years later																											6,934			2,067
Ten years later																														2,067
Cumulative redundancy (deficiency) at December 31, 2011			$	3,560		$	1,988		$	4,792		$	7,871		$	9,595		$	4,843		$	(6,927	)	$	(3,078	)	$	(2,421	)	$	11
Cumulative redundancy (deficiency) as a % of reserves originally established			15.1		%	9.6		%	25.0		%	36.5		%	40.4		%	23.7		%	(82.0		)%	(85.7		)%	(53.6		)%	0.5		%
Net reserves	$	30,282	$	23,600		$	20,665		$	19,192		$	21,559		$	23,735		$	20,447		$	8,449		$	3,590		$	4,513		$	2,078
Ceded reserves	3,318		23,814			23,447			20,907			14,445			33,440			153,768			4,100			—			—			—
Gross reserves	$	33,600	$	47,414		$	44,112		$	40,099		$	36,004		$	57,175		$	174,215		$	12,549		$	3,590		$	4,513		$	2,078
Net re-estimated			$	20,040		$	18,677		$	14,400		$	13,688		$	14,140		$	15,604		$	15,376		$	6,668		$	6,934		$	2,067
Ceded re-estimated			20,222			21,190			15,687			9,171			19,922			117,347			7,461			—			—			—
Gross re-estimated			$	40,262		$	39,867		$	30,087		$	22,859		$	34,062		$	132,951		$	22,837		$	6,668		$	6,934		$	2,067

Note: The cash we received in relation to the commutation of our 2005 contract with the Florida Hurricane Catastrophe Fund caused the decrease in the net cumulative paid amounts beginning in the 2005 column in the table above.

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UNITED INSURANCE HOLDINGS CORP.

MANAGEMENT OF EXPOSURE TO CATASTROPHIC LOSSES

As with all property and casualty insurers, we are exposed to potentially numerous insured losses arising out of one or more natural catastrophes. We expect to and will incur some losses related to catastrophes and with the approval of the various insurance regulatory authorities, we will attempt to price our policies accordingly. Our exposure to catastrophic losses arises principally out of windstorms such as hurricanes. Through the use of standard industry modeling techniques, we manage our exposure to such losses. As discussed below in the REINSURANCE section, we also obtain reinsurance coverage to mitigate the financial impact of catastrophe-related losses.

REINSURANCE

Reinsurance involves transferring all or a portion of the risk exposure on policies we write to another insurer. We purchase reinsurance to allow us to limit our exposure to the financial impact of losses and to reduce our net liability on individual risks. The property and casualty reinsurance industry is subject to the same market conditions as the direct property and casualty insurance market.

We determine the amount of reinsurance coverage to purchase each year based on a number of factors, including an evaluation of the risks we write, regulatory and rating bureau requirements, consultations with reinsurance representatives and a review of market conditions, including the availability and pricing of reinsurance. See Note 6 in our consolidated financial statements for details on the reinsurance coverage we have in place at December 31, 2011, and see Item 1A of this Form 10-K for an explanation of risks associated with catastrophes and reinsurance.

We use per-risk, excess-of-loss agreements for our non-catastrophe homeowner and dwelling programs. We retain no risk of loss on our Flood policies because the National Flood Insurance Program (a division of the Federal Emergency Management Agency) reinsures those policies completely.

Each year, we purchase catastrophe reinsurance coverage in an amount such that our proposed retained loss plus the reinsurance coverage equals or exceeds our estimated projected maximum loss associated with a single one-in-100-year storm event, as calculated at the date of purchase. For the 2011-2012 reinsurance contracts, we would retain the first $15,000 of catastrophe-related losses for the first and second event. To manage our reinsurance costs, we internally analyze our projected maximum loss on a regular basis using a licensed catastrophe-modeling software program. For our catastrophe reinsurance program, we have excess-of-loss contracts with a group of private reinsurers and with the Florida Hurricane Catastrophe Fund. The private contract provides coverage against severe weather events such as hurricanes, tropical storms and tornadoes. The contract with the FHCF only provides coverage against any storm that the National Hurricane Center designates as a hurricane at landfall. Our catastrophe reinsurance agreements coincide with the seasonality of Florida’s hurricane season; therefore, our agreements cover the period from June 1 to May 31.

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The following table summarizes our reinsurance exposures by reinsurer at December 31, 2011:

	AM Best Rating	Total Recoverable		Ceded Balances Payable		Net Recoverable		Letters of Credit		Net Unsecured Recoverable
ACE Tempest Reinsurance Ltd	A+	$	309	$	—	$	309	$	246	$	63
Alea London Ltd	NR	133		—		133		—		133
Alterra Re Bermuda	A	346		279		67		13		54
American Southern Insurance Company	A	9		2		7		—		7
Amlin Bermuda Ltd	—	420		338		82		82		—
Arch Re Bermuda	A+	836		673		163		32		131
Argo Re	A	147		119		28		29		—
Axis Reinsurance Company	A	90		109		—		—		—
Catlin Insurance Company Ltd	A	30		—		30		19		11
DaVinci Reinsurance Ltd	A	4,012		2,647		1,365		—		1,365
Everest Re	A+	2,516		2,028		488		—		488
Flagstone Reassurance Suisse SA	A-	751		606		145		146		—
Florida Hurricane Catastrophe Fund	—	13,924		529		13,395		—		13,395
Hanover Ruckversicherungs Ag	A	90		109		—		—		—
Harco National Insurance Group	A-	849		32		817		—		817
Hartford Steam Boiler Inpection & Ins Co	A++	291		43		248		—		248
Hiscox Insurance Co Ltd	A	199		145		54		11		43
Identity Theft Fraud Solutions	—	21		5		16		—		16
Lloyd’s Syndicates	A s	6,742		3,531		3,211		—		3,211
Markel International	A	97		72		25		—		25
Montpelier Reinsurance Ltd	A-	241		—		241		37		204
Munich Reinsurance America Inc	A+	214		172		42		—		42
National Flood Insurance Program	—	5,508		—		5,508		—		5,508
Odyssey America Reinsurance	A	421		271		150		—		150
Partner Re Bermuda	A+	105		84		21		—		21
Platinum Underwriters Reinsurance Inc	A	123		—		123		—		123
Renaissance Reinsurance Ltd	A+	6,019		3,971		2,048		—		2,048
Scor Reinsurance Company	A	180		218		—		—		—
Tokio Millennium Re Ltd	A++	336		271		65		13		52
Torus Insurance (Bermuda) Ltd	A-	—		—		—		—		—
Transatlantic	A	393		317		76		—		76
WR Berkley Europe Ltd	A	8		—		8		5		3
Wurttembergische Versicherung Ag	NR	66		—		66		59		7
		$	45,426	$	16,571	$	28,931	$	692	$	28,241

Note: If our ceded balance payable to a reinsurer exceeds our total recoverable from that reinsurer, we reflect the net recoverable from that reinsurer as “—” in this schedule as we do not have a right of offset with the other reinsurance carriers.

The net unsecured recoverable amount from the FHCF decreased from $29,665 at December 31, 2010, to $13,395 at December 31, 2011. Effective June 1, 2011, we commuted our 2005 contract with the FHCF; any catastrophe losses we incur (in excess of amounts we reported to the FHCF as of June 1, 2011) on events that occurred during the 2005 contract year that would otherwise have been covered by the FHCF contract prior to commutation will not be reimbursed by the FHCF, though our contracts with our private reinsurers remain in effect with respect to such losses. We settled all outstanding claims with the FHCF related to Hurricane Wilma for $12,738, which we received during the third quarter of 2011. At the time we commuted the contract, our reinsurance recoverable included $13,630 of unpaid losses related to Hurricane Wilma. As a result of settling for less than what we had already recorded as ceded losses, our catastrophe losses incurred for prior accident years increased by $892. Since we have settled all outstanding claims with the FHCF, the net unsecured recoverable amount represents the unearned portion of the premiums we paid to the FHCF for the most current contract year.

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REGULATION

We are subject to the laws and regulations of the states in which we conduct business, and will become subject to the laws and regulations of any other states in which we seek to conduct business in the future. The regulations are generally designed to protect the interests of insurance policyholders, as opposed to the interests of shareholders. Such regulations relate to authorized lines of business, maintenance of reserves, risk-based capital, capital and surplus requirements, allowable rates and forms, investment parameters, underwriting limitations, transactions with affiliates, dividend limitations, changes in control, market conduct, maximum amount allowable for premium financing service charges, dealings with policyholders and a variety of other financial and non-financial components of our business. From time to time, individual states and/or the NAIC propose new regulations and/or legislation that affect us. We can neither predict whether any of these proposals in the various jurisdictions might be adopted, nor what effect, if any, their adoption may have on our results of operations or financial position.

The various insurance regulatory authorities have broad regulatory, supervisory and administrative powers over insurance companies. Such powers include, among others, the granting and revocation of licenses to transact business, the licensing of agents, the creation of solvency standards, the imposition of restrictions on the type, quality and/or concentration of investments, the approval of policy forms and rates, the review of reinsurance contracts, the periodic examination of the affairs of insurance companies, and the specification of the form and content of required financial statements.

Our UPC subsidiary provides audited statutory financial statements to the various insurance regulatory authorities. With regard to periodic examinations of an insurance company's affairs, insurance regulatory authorities, in general, defer to the insurance regulatory authority in the state in which an insurer is domiciled; however, insurance regulatory authorities from any state in which we operate may conduct examinations at their discretion. Florida's insurance regulatory authority completed its most recent financial examination pertaining to our December 31, 2009 Annual Statement in September 2010 and reported no material adverse findings. We are currently awaiting the results of the most recent market conduct examination completed by Florida's insurance regulatory authority in November 2011.

Florida state law requires UPC to maintain adequate surplus as to policyholders such that 90% of written premiums divided by surplus does not exceed the ratio of 10:1 for gross written premiums or 4:1 for net written premiums. The ratio of net written premium to surplus as of December 31, 2011 was 2.13:1, and UPC’s surplus as to policyholders exceeded the minimum capital required by state laws.

We are subject to various assessments imposed by governmental agencies or certain quasi-governmental entities. While we can recover from policyholders any assessments imposed upon us, our payment of the assessments and our recoveries through policy surcharges may not offset each other in the same fiscal period in our financial statements. See Note 2(j) in the Notes to Consolidated Financial Statements for more information regarding our accounting policy for assessments, and Note 10 in the Notes to Consolidated Financial Statements for additional information regarding the assessments that we are currently collecting.

RESTRICTIONS ON DIVIDEND PAYMENTS

Under Florida law, a Florida-domiciled insurer like UPC may not pay any dividend or distribute cash or other property to its shareholders except out of its available and accumulated surplus funds which is derived from realized net operating profits on its business and net realized capital gains. Additionally, Florida-domiciled insurers may not make dividend payments or distributions to shareholders without the prior approval of the insurance regulatory authority if the dividend or distribution would exceed the larger of:

1. the lesser of:

a. ten percent of UPC’s capital surplus, or

b. net income, not including realized capital gains, plus a two-year carryforward

2. ten percent of capital surplus with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains, or

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3. the lesser of:

a. ten percent of capital surplus, or

b. net investment income plus a three-year carryforward with dividends payable constrained to unassigned funds minus 25% of unrealized capital gains.

Alternatively, UPC may pay a dividend or distribution without the prior written approval of the insurance regulatory authority when:

1. the dividend is equal to or less than the greater of:

a. ten percent of the insurer’s surplus as to policyholders derived from realized net operating profits on its business and net realized capital gains, or

b. the insurer’s entire net operating profits and realized net capital gains derived during the immediately preceding calendar year, and:

2. the insurer will have surplus as to policyholders equal to or exceeding 115% of the minimum required statutory surplus as to policyholders after the dividend or distribution is made, and

3. the insurer files a notice of the dividend or distribution with the insurance regulatory authority at least ten business days prior to the dividend payment or distribution, and

4. the notice includes a certification by an officer of the insurer attesting that, after the payment of the dividend or distribution, the insurer will have at least 115% of required statutory surplus as to policyholders.

Except as provided above, a Florida-domiciled insurer may only pay a dividend or make a distribution (i) subject to prior approval by the insurance regulatory authority, or (ii) 30 days after the insurance regulatory authority has received notice of intent to pay such dividend or distribution and has not disapproved it within such time.

RISK-BASED CAPITAL REQUIREMENTS

To enhance the regulation of insurer solvency, the NAIC published risk-based capital guidelines for insurance companies designed to assess capital adequacy and to raise the level of protection statutory surplus provides for policyholders. The guidelines measure three major areas of risk facing property and casualty insurers: (i) underwriting risks, which encompass the risk of adverse loss developments and inadequate pricing; (ii) declines in asset values arising from credit risk; and (iii) other business risks. Most states, including Florida, have enacted the NAIC guidelines as statutory requirements, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. Insurance regulatory authorities could require UPC to cease operations in the event it fails to maintain the required statutory capital. At December 31, 2011, UPC exceeded the risk-based capital requirements.

INSURANCE HOLDING COMPANY REGULATION

As a holding company of an insurance subsidiary, we are subject to laws governing insurance holding companies in Florida. These laws, among other things, (i) require us to file periodic information with the insurance regulatory authority, including information concerning our capital structure, ownership, financial condition and general business operations, (ii) regulate certain transactions between our affiliates and us, including the amount of dividends and other distributions and the terms of surplus notes and (iii) restrict the ability of any one person to acquire certain levels of our voting securities without prior regulatory approval. Any purchaser of 5% or more of the outstanding shares of our common stock could be presumed to have acquired control of us unless the insurance regulatory authority, upon application, determines otherwise.

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Insurance holding company regulations also govern the amount any affiliate of the holding company may charge UPC for services (e.g., management fees and commissions). We have a long-term management agreement between UPC and UIM, which presently provides for monthly management fees. The Florida insurance regulatory authority must approve any changes to this agreement.

UNDERWRITING AND MARKETING RESTRICTIONS

During the past several years, various regulatory and legislative bodies have adopted or proposed new laws or regulations to address the cyclical nature of the insurance industry, catastrophic events and insurance capacity and pricing. These regulations (i) created “market assistance plans” under which insurers are induced to provide certain coverage; (ii) restrict the ability of insurers to reject insurance coverage applications, to rescind or otherwise cancel certain policies in mid-term, and to terminate agents; (iii) restrict certain policy non-renewals and require advance notice on certain policy non-renewals; and (iv) limit rate increases or decrease rates permitted to be charged. These laws may affect our ability to earn a profit on our underwriting operations.

Most states also have insurance laws requiring that rate schedules and other information be filed with the insurance regulatory authority, either directly or through a rating organization with which the insurer is affiliated. The insurance regulatory authority may disapprove a rate filing if it finds that the rates are inadequate, excessive or unfairly discriminatory.

Most states require licensure or insurance regulatory authority approval prior to the marketing of new insurance products. Typically, licensure review is comprehensive and includes a review of a company’s business plan, solvency, reinsurance, character of its officers and directors, rates, forms and other financial and non-financial aspects of a company. The insurance regulatory authorities may prohibit entry into a new market by not granting a license or by withholding approval.

INVESTMENTS

With respect to our investments, we primarily attempt to preserve capital, maximize after-tax investment income, maintain liquidity and minimize risk. To accomplish our goals, we purchase debt securities in sectors that represent the most attractive relative value, and we maintain a moderate equity exposure. We must comply with applicable state insurance regulations that prescribe the type, quality and concentrations of investments UPC can make; therefore, our current investment policy limits investment in non-investment-grade fixed maturities and limits total investment amounts in preferred stock, common stock and mortgage notes receivable. We do not invest in derivative securities.

An outside asset management company, which has authority and discretion to buy and sell securities for us, manages our investments subject to (i) the guidelines established by our Board of Directors, and (ii) the direction of management. We have the ability to direct our asset manager to make changes and to hold, buy or sell securities in our portfolio.

The Investment Committee of our Board of Directors reviews and approves our investment policy on a regular basis. Our cash, cash equivalents and investment portfolio totaled $165,898 at December 31, 2011.

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The following table summarizes our investments, by type:

	December 31, 2011				December 31, 2010
	Estimated Fair Value		Percent of Total		Estimated Fair Value		Percent of Total
U.S. government and agency securities	$	48,119	38.7	%	$	32,895	60.3	%
States, municipalities and political subdivisions	18,366		14.8	%	12,979		23.8	%
Corporate securities	53,356		43.0	%	4,047		7.4	%
Redeemable preferred stocks	537		0.4	%	762		1.4	%
Total fixed maturities	120,378		96.9	%	50,683		92.9	%
Common stocks	3,123		2.5	%	3,048		5.6	%
Nonredeemable preferred stocks	458		0.4	%	567		1.0	%
Total equity securities	3,581		2.9	%	3,615		6.6	%
Other long-term investments	300		0.2	%	300		0.5	%
Total investments	$	124,259	100.0	%	$	54,598	100.0	%

FINANCIAL STABILITY RATING

Financial stability ratings are important to insurance companies in establishing their competitive position and such ratings may impact an insurance company’s sales. Demotech maintains a letter-scale financial stability rating system ranging from A** (A double prime) to L (licensed by insurance regulatory authorities); they have assigned UPC a financial stability rating of A, which is the third highest of six rating levels. According to Demotech, "Regardless of the severity of a general economic downturn or deterioration in the insurance cycle, insurers earning a Financial Stability Rating of A possess Exceptional financial stability related to maintaining surplus as regards policyholders at an acceptable level.” With a financial stability rating of A, we expect our property insurance policies will be acceptable to the secondary mortgage marketplace and mortgage lenders. This rating is intended to provide an independent opinion of an insurer’s financial strength and is not an evaluation directed at our investors. At least annually, based on year-to-date results as of the third quarter, Demotech reviews our rating and may revise it upward, downward or revoke it at their sole discretion.

EMPLOYEES

As of March 2012, we have 50 full-time employees, including two executive officers. We are neither party to any collective bargaining agreements nor have we experienced any work stoppages or strikes as a result of labor disputes. We believe we have good working relationships with our employees.

AVAILABLE INFORMATION

We make available, free of charge through our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. You may view these reports at www.upcic.com.

These reports may also be obtained at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. You may also access this information at the SEC’s website (www.sec.gov). This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

Item 1A. Risk Factors

Many factors affect our business and results of operations, some of which are beyond our control. Additional risks and uncertainties we are unaware of, or we currently deem immaterial, also may become important factors that affect us. If any of

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the following risks occur, our business, financial conditions or results of operations may be materially and adversely affected. In that event, the trading price of our securities could decline, and our shareholders could lose all or part of their investment in our securities. This discussion contains forward-looking statements. See the section entitled FORWARD-LOOKING STATEMENTS for a discussion of uncertainties, risks and assumptions associated with these statements.

RISKS RELATED TO OUR BUSINESS

As a property and casualty insurer, we may experience significant losses and our financial results may vary from period to period due to our exposure to catastrophic events and severe weather conditions, the incidence and severity of which could be affected by climate change.

Our property and casualty insurance operations expose us to claims arising from catastrophes. Catastrophes can be caused by various natural events, including hurricanes, windstorms, earthquakes, hail, severe winter weather and fires; they can also be man-made, such as terrorist attacks (including those involving nuclear, biological, chemical or radiological events) or consequences of war or political instability. We may incur catastrophe losses that exceed the amount of:

1) catastrophe losses that we experienced in prior years;

2) catastrophe losses that, using third-party catastrophe modeling software, we projected could be incurred;

3) catastrophe losses that we used to develop prices for our products; or

4) our current reinsurance coverage (which would cause us to have to pay such excess losses).

The incidence and severity of weather conditions are largely unpredictable, but the frequency and severity of property claims generally increase when severe weather conditions occur. A body of scientific evidence seems to indicate that climate change may be occurring. Climate change, to the extent that it may affect weather patterns, may cause an increase in the frequency and/or the severity of catastrophic events or severe weather conditions which, in addition to the attendant increase in claims-related costs, may also cause an increase in our reinsurance costs and/or negatively impact our ability to provide homeowners insurance to our policyholders in the future. Governmental entities may also respond to climate change by enacting laws and regulations that may adversely affect our cost of providing homeowners insurance in the future.

Catastrophes may cause a material adverse effect on our results of operations during any reporting period; they may also materially harm our financial position, which in turn may materially harm our liquidity and impair our ability to raise capital on acceptable terms or at all. In addition to catastrophes, the accumulation of losses from smaller weather-related events in any reporting period may cause a material adverse effect on our results of operations and liquidity in that period.

Because we conduct the majority of our business in Florida, our financial results substantially depend on the regulatory, economic and weather conditions present in that state.

Though we expanded into South Carolina during 2010 and Massachusetts in 2011, we still write approximately 95% of our premium in Florida; therefore, prevailing regulatory, legal, economic, political, demographic, competitive, weather and other conditions in Florida affect our revenues and profitability. Changes in conditions could make doing business in Florida less attractive for us and would have a more pronounced effect on us than it would on other insurance companies that are more geographically diversified.

We are subject to increased exposure to certain catastrophic events such as hurricanes, as well as an increased risk of losses. The occurrence of one or more catastrophic events or other conditions affecting losses in Florida may cause a material adverse effect on our results of operations and financial position.

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Because we depend on two agency groups for a large portion of our revenues, the loss of business provided by them would adversely effect our results of operations and financial condition.

We utilize a large network of agency groups and individual agencies to distribute our products; however, two agency groups produce approximately 55% of our gross premiums written (exclusive of any premiums assumed). During 2011, the agency group producing the most business for us generated approximately 31% of our direct premiums written, while the agency group producing the next largest amount of business for us generated approximately 24% of our direct premiums written. Loss of all or a substantial portion of the business provided through these two producing agency groups may cause a material adverse effect on our results of operations.

Actual claims incurred may exceed our loss reserves for claims, which could adversely affect our results of operations and financial condition.

Loss reserves represent our estimate of ultimate unpaid losses for claims that have been reported and claims that have been incurred but not yet reported. Loss reserves do not represent an exact calculation of liability, but instead represent our best estimate, generally utilizing actuarial expertise, historical information and projection techniques at a given reporting date.

The process of estimating our loss reserves involves a high degree of judgment and is subject to a number of variables. These variables can be affected by both internal and external events, such as changes in claims handling procedures, economic inflation, legal trends, legislative changes, and varying judgments and viewpoints of the individuals involved in the estimation process, among others.

Because of the inherent uncertainty in estimating loss reserves, including reserves for catastrophes, additional liabilities resulting from one insured event, or an accumulation of insured events, may exceed our existing loss reserves and cause a material adverse effect on our results of operations and our financial position.

Our financial results may vary from period to period based on the timing of our collection of government-levied assessments from our policyholders.

Our insurance subsidiary is subject to assessments levied by various governmental and quasi-governmental entities in the states in which we operate. While we can recover these assessments from policyholders through policy surcharges, our payment of the assessments and our recoveries may not offset each other in the same reporting period in our financial statements and may cause a material adverse effect on our results of operations.

Violation(s) of certain debt covenants related to our note payable to the Florida State Board of Administration could allow the Florida SBA to call the note, which could cause a material adverse effect on our financial position.

With regard to our note payable to the Florida SBA, we incurred additional interest expense during the first quarter of 2011 because we did not write enough premiums during the fourth quarter of 2010 to exceed the threshold required by the writing ratio covenants. As a remedy for covenant violations related to the note payable, the Florida SBA may make the note due and payable upon demand. Any demand by the Florida SBA for payment related to the note, whether immediate payment of the full balance or some other amount, is subject to approval by the insurance regulatory authority in Florida. Should the insurance regulatory authority grant approval of a demand for immediate full payment, such payment could cause a material adverse effect on our cash flows and financial position. We did not violate any of the covenants during the year ended December 31, 2011.

Our failure to implement and maintain adequate internal controls over financial reporting in our business could have a material adverse effect on our business, financial condition, results of operations and stock price.

We have complied with the provisions regarding annual management assessments of the effectiveness of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002 during 2011.

If we fail to achieve and maintain the adequacy of our internal controls in accordance with applicable standards as then in effect, and as supplemented or amended from time to time, we may be unable to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. Moreover, effective internal controls are

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necessary for us to produce reliable financial reports. If we cannot produce reliable financial reports or otherwise maintain appropriate internal controls, our business, financial condition and results of operations could be harmed, investors could lose confidence in our reported financial information, and the market price for our stock could decline.

If we experience difficulties with technology, data security and/or outsourcing relationships, our ability to conduct our business could be negatively impacted.

While technology can streamline many business processes and ultimately reduce the cost of operations, technology initiatives present certain risks. Our business is highly dependent upon our contractors' and third-party administrators' ability to perform, in an efficient and uninterrupted fashion, necessary business functions such as the processing of policies and the adjusting of claims. Because our information technology and telecommunications systems interface with and depend on these third-party systems, we could experience service denials if demand for such service exceeds capacity or a third-party system fails or experiences an interruption. If sustained or repeated, such a business interruption, system failure or service denial could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. Computer viruses, hackers and other external hazards could expose our data systems to security breaches. These increased risks, and expanding regulatory requirements regarding data security, could expose us to data loss, monetary damages, damage to our reputation and significant increases in compliance costs. As a result, our ability to conduct our business might be adversely affected.

Our success has been and will continue to be greatly influenced by our ability to attract and retain the services of senior management.

Our senior executive officers play an integral role in the development and management of our business.  We do not maintain any key person life insurance policies on any of our officers or employees.  The loss of the services of any of our senior executive officers could have an adverse effect on our business, financial condition, results of operations, cash flows and/or future prospects.

In August 2011, our Chief Executive Officer, Donald Cronin, advised the Board of his desire to retire at the end of the 2011 hurricane season, or at such earlier time as his successor is identified.  On November 14, 2011, we entered into an employment and advisor agreement with Mr. Cronin, which provides that he will remain in his position as Chief Executive Officer of the Company until the earlier of May 1, 2012, or the appointment of his successor.   Effective February 13, 2012, Mr. Cronin began a temporary leave of absence for health reasons.   We have not established a detailed management succession plan; therefore, our Board of Directors may have to search outside of our company for a qualified permanent replacement for our Chief Executive Officer.  The search may be prolonged and we cannot assure you that we will be able to locate and hire a qualified replacement. Effective transition to Mr. Cronin's successor will be important to the future success of our business strategies and operations.

RISKS RELATED TO THE INSURANCE INDUSTRY

Because we are smaller than many of our competitors, we may lack the resources to increase or maintain our market share.

The property and casualty insurance industry is highly competitive, and we believe it will remain highly competitive for the foreseeable future. The principal competitive factors in our industry are price, service, commission structure and financial condition. We compete with other property and casualty insurers that write coverage in the same territories in which we write coverage; some of those insurers have greater financial resources and have a longer operating history than we do. Based on legislation passed in 2007, Citizens, an insurer supported by the State of Florida, is also authorized to compete with us. In addition, our competitors may offer products for alternative forms of risk protection. Competition could limit our ability to retain existing business or to write new business at adequate rates, and such limitation may cause a material adverse effect on our results of operations and financial position.

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State regulations limiting rate increases and requiring us to underwrite business in certain areas are beyond our control and may adversely affect our results of operation and financial condition.

States have from time to time passed legislation, and regulators have taken action, that has the effect of limiting the ability of insurers to manage catastrophe risk, such as legislation prohibiting insurers from reducing exposures or withdrawing from catastrophe-prone areas, or mandating that insurers participate in residual markets. In addition, following catastrophes, there are sometimes legislative initiatives and court decisions which seek to expand insurance coverage for catastrophe claims beyond the original intent of the policies. Further, our ability to increase pricing to the extent necessary to offset rising costs of catastrophes requires approval of insurance regulatory authorities. Our ability or willingness to manage our catastrophe exposure by raising prices, modifying underwriting terms or reducing exposure to certain geographies may be limited due to considerations of public policy, the evolving political environment and our ability to penetrate other geographic markets, which may cause a material adverse effect on our results of operations, financial position and cash flows. We cannot predict whether and to what extent new legislation and regulations that would affect our ability to manage our exposure to catastrophic events will be adopted, the timing of adoption or the effects, if any, they would have on our ability to manage our exposure to catastrophic events.

The insurance industry is heavily regulated and further restrictive regulation may reduce our profitability and limit our growth.

The insurance industry is extensively regulated and supervised. Insurance regulatory authorities generally design insurance rules and regulations to protect the interests of policyholders, and not necessarily the interests of insurers, their stockholders and other investors. Regulatory systems also address authorization for lines of business, capital and surplus requirements, limitations on the types and amounts of certain investments, underwriting limitations, licensing, transactions with affiliates, dividend limitations, changes in control, premium rates and a variety of other financial and non-financial components of an insurer’s business.

In February 2012, we received a letter from the Florida Office of Insurance Regulation indicating that the OIR determined that UPC and Kingsway Amigo Insurance Company (Kingsway), and all of their existing subsidiaries and affiliates, are affiliated entities due to their common managerial control.  As a result of the foregoing, among other things, UPC may not transfer any assets to Kingsway or any of its affiliates without the prior written approval of the OIR.  Potential further restrictive regulation may sometimes lead to additional expenses, increased legal exposure, limit our ability to grow or or to improve the profitability of our business.

In recent years, the state insurance regulatory framework has come under increased federal scrutiny, and some state legislatures have considered or enacted laws that may alter or increase state authority to regulate insurance companies and insurance holding companies. Further, the NAIC and state insurance regulators continually reexamine existing laws and regulations, specifically focusing on modifications to holding company regulations, interpretations of existing laws and the development of new laws and regulations. In addition, Congress and some federal agencies from time to time investigate the current condition of insurance regulation in the United States to determine whether to impose federal or national regulation or to allow an optional federal charter, similar to the option available to most banks. We cannot predict what effect, if any, proposed or future legislation or NAIC initiatives may have on the manner in which we conduct our business.

Although the United States federal government does not directly regulate the insurance business, changes in federal legislation, regulation and/or administrative policies in several areas, including changes in financial services regulation and federal taxation, could negatively affect the insurance industry.

As part of ongoing, industry-wide investigations, we may from time to time receive subpoenas and written requests for information from government agencies and authorities at the state or federal level. If we are subpoenaed for information by government agencies and authorities, potential outcomes could include enforcement proceedings or settlements resulting in fines, penalties and/or changes in business practices that could cause a material adverse effect on our results of operations. In addition, these investigations may result in changes to laws and regulations affecting the industry.

Changes to insurance laws or regulations, or new insurance laws and regulations, may be more restrictive than current laws or regulations and could cause material adverse effects on our results of operations and our prospects for future growth. Additionally, our failure to comply with certain provisions of applicable insurance laws and regulations may cause a material adverse effect on our results of operations or financial position.

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UNITED INSURANCE HOLDINGS CORP.

Our inability to obtain reinsurance on acceptable terms may increase our loss exposure or limit our ability to underwrite policies.

We use, and we expect to continue to use, reinsurance to help manage our exposure to property and casualty risks. The availability and costof reinsurance are each subject to prevailing market conditions beyond our control which can affect business volume and profitability. We may be unable to maintain our current reinsurance coverage, to obtain additional reinsurance coverage in the event our current reinsurance coverage is exhausted by a catastrophic event, or to obtain other reinsurance coverage in adequate amounts or at acceptable rates. Similar risks exist whether we are seeking to replace coverage terminated during the applicable coverage period or to renew or replace coverage upon its expiration. We provide no assurance that we can obtain sufficient reinsurance to cover losses resulting from one or more storms in the future, or that we can obtain such reinsurance in a timely or cost-effective manner. If we are unable to renew our expiring coverage or to obtain new reinsurance coverage, either our net exposure to risk would increase or, if we are unwilling to accept an increase in net risk exposures, we would have to reduce the amount of risk we underwrite. Either increasing our net exposure to risk or reducing the amount of risk we underwrite may cause a material adverse effect on our results of operations and our financial position.

Our inability to collect from our reinsurers on our reinsurance claims could cause a material adverse affect on our results of operation and financial condition.

Although reinsurers are liable to us to the extent of the reinsurance coverage we purchase, we remain primarily liable as the direct insurer on all risks that we reinsure; therefore, our reinsurance agreements do not eliminate our obligation to pay claims. As a result, we are subject to risk with respect to our ability to recover amounts due from reinsurers. The risk could arise in two situations: i) our reinsurers may dispute some of our reinsurance claims based on contract terms, and we may

ultimately receive partial or no payment, or ii) the amount of losses that reinsurers incur related to worldwide catastrophes may materially harm the financial position of our reinsurers and cause them to default on their obligations.

While we will attempt to manage these risks through underwriting guidelines, collateral requirements and other oversight mechanisms, our efforts may not be successful. As a result, our exposure to credit risk may cause a material adverse effect on our results of operations, financial position and cash flow.

Our investments are subject to market risks that may result in reduced returns or losses.

We expect investment returns to contribute to our overall profitability. Accordingly, fluctuations in interest rates or in the fixed-maturity, equity or alternative-investment markets may cause a material adverse effect on our results of operations.

Changes in the general interest rate environment will affect our returns on, and the fair value of, our fixed maturities and short-term investments. A decline in interest rates reduces the returns available on new investments, thereby negatively impacting our net investment income. Conversely, rising interest rates reduce the fair value of existing fixed maturities. In addition, defaults under, or impairments of, any of these investments as a result of financial problems with the issuer and, where applicable, its guarantor of the investment could reduce our net investment income and net realized investment gains or result in investment losses.

We may decide to invest an additional portion of our assets in equity securities or other investments, which are subject to greater volatility than fixed maturities. General economic conditions, stock market conditions and many other factors beyond our control can adversely affect the fair value of our equity securities or other investments, and could adversely affect the realization of net investment income. As a result of these factors, we may not realize an adequate return on our investments, we may incur losses on sales of our investments and we may be required to write down the value of our investments, which could reduce our net investment income and net realized investment gains or result in investment losses.

The fair value of our investment portfolio is also subject to valuation uncertainties. The valuation of investments is more subjective when the markets are illiquid and may increase the risk that the estimated fair value of our investment portfolio is not reflective of prices at which actual transactions would occur.

Our determination of the amount of other-than-temporary impairment to record varies by investment type and is based upon our periodic evaluation and assessment of known and inherent risks associated with the respective investment type. We revise our evaluations and assessments as conditions change and new information becomes available, and we reflect changes in other-than-temporary impairments in our Consolidated Statements of Income. We base our assessment of whether other-than-temporary impairments have occurred on our case-by-case evaluation of the underlying reasons for the decline in fair value.

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We can neither provide assurance that we have accurately assessed whether the impairment of one or more of our investments is temporary or other-than-temporary, nor that we have accurately recorded amounts for other-than-temporary impairments in our financial statements. Furthermore, historical trends may not be indicative of future impairments and additional impairments may need to be recorded in the future.

Our portfolio may benefit from certain tax laws, including, but not limited to, those governing dividends-received deductions and tax credits. Federal and/or state tax legislation could be enacted that would lessen or eliminate some or all of these tax advantages and could adversely affect the value of our investment portfolio. This result could occur in the context of deficit reduction or various types of fundamental tax reform.

The property and casualty insurance industry is historically cyclical and the pricing and terms for our products may decline, which would adversely affect our profitability.

Historically, the financial performance of the property and casualty insurance industry has been cyclical, characterized by periods of severe price competition and excess underwriting capacity, or soft markets, followed by periods of high premium rates and shortages of underwriting capacity, or hard markets. We cannot predict how long any given hard or soft market will last. Downturns in the property and casualty market may cause a material adverse effect on our results of operations and our financial position.

The effects of emerging claim and coverage issues are uncertain and may increase our loss exposure under the policies that we underwrite.

As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. Examples of emerging claims and coverage issues include, but are not limited to:

• adverse changes in loss cost trends, including inflationary pressures in home repair costs;

• judicial expansion of policy coverage and the impact of new theories of liability; and

• plaintiffs targeting property and casualty insurers in purported class-action litigation relating to claims-handling and other practices.

In some instances, these emerging issues may not become apparent to us for some time after our issuance of the affected insurance policies. As a result, we may not know the full extent of liability under insurance policies we issue for many years after the policies are issued.

It is very difficult for us to predict the effects of these and other unforeseen emerging claim and coverage issues that may cause a material adverse effect on our results of operations and financial position.

A downgrade in our financial strength rating could adversely impact our business volume and our ability to access additional debt or equity financing.

Financial strength ratings have become increasingly important to an insurer’s competitive position. Rating agencies review their ratings periodically, and our current ratings may not be maintained in the future. A downgrade in our rating could negatively impact our business volumes, as it is possible demand for our products in certain markets may be reduced or our ratings could fall below minimum levels required to maintain existing business. Additionally, we may find it more difficult to access the capital markets and we may incur higher borrowing costs. If significant losses, such as those resulting from one or more major catastrophes, or significant reserve additions were to cause our capital position to deteriorate significantly, or if one or more rating agencies substantially increase their capital requirements, we may need to raise equity capital in the future to maintain our ratings or limit the extent of a downgrade. For example, a trend of more frequent and severe weather-related catastrophes may lead rating agencies to substantially increase their capital requirements.

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We cannot guarantee that UPC will maintain its current A rating by Demotech. Any downgrade of this rating could reduce our ability to retain and attract policyholders and agents and our ability to compete, which may cause a material adverse effect on our results of operations and financial position.

RISKS RELATED TO INVESTING IN UNITED’S COMMON STOCK

Trading of our common stock is limited, which may make it difficult for you to sell your shares at times and at prices that you find appropriate.

Investors trade our common stock via the Over-The-Counter Bulletin Board, which provides less liquidity than national securities exchanges. In addition to the already less liquid market, trading in our common stock has been extremely limited, further reducing its liquidity. The lack of liquidity in our common stock results not only from limited trading, but also from delays in the timing of transactions and a dearth in security analysts’ and the media’s coverage of United. As a result, you may obtain lower prices for our common stock than you might otherwise obtain in more liquid markets and you may experience a larger spread between the bid and ask prices for our common stock. In addition, requirements imposed by the SEC on brokers engaging in “penny stock” transactions may further reduce the market liquidity of our securities.

Dividend payments on our common stock in the future is uncertain.

We have paid dividends on our common stock in the past; however, we provide no assurance or guarantee that we will continue to pay dividends in the future. Therefore, investors who purchase our common stock may only realize a return on their investment if the value of our common stock appreciates.

The declaration and payment of dividends will be at the discretion of our Board of Directors and will be dependent upon our profits, financial requirements and other factors, including legal and regulatory restrictions on the payment of dividends, general business conditions and such other factors as our Board of Directors deems relevant.

The substantial ownership of our common stock by our officers and directors allows them to exert significant control over matters submitted to our stockholders.

Our officers and directors beneficially own approximately 31% of UIHC at December 31, 2011. As a result, they can exert significant influence over the following:

• the nomination, election and removal of our Board of Directors;

• the adoption of amendments to our charter documents;

• management and policies; and

• the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets.

Our officers’ and directors’ interests may conflict with the interests of other holders of our common stock and our officers and directors may take action affecting us with which other stockholders may disagree.

Provisions in our charter documents and state law may make it harder for others to obtain control of us even though some stockholders might consider such a development to be favorable.

Our charter and bylaws contain provisions that may discourage unsolicited takeover proposals our stockholders may consider to be in their best interests. Our Board of Directors is divided into two classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year. At a given annual meeting, only a portion of our Board of Directors may be considered for election. Since our “staggered board” may prevent our stockholders from replacing a majority of our Board of Directors at certain annual meetings, it may entrench our management and discourage unsolicited

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stockholder proposals that may be in the best interests of our stockholders. Moreover, our Board of Directors has the ability to designate the terms of and issue a new series of preferred stock.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control in our company. Together these provisions may make the removal of our management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Item 1B. Unresolved Staff Comments

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act; therefore, the instructions to Form 10-K do not require us to make disclosures under this Item.

Item 2. Properties

We currently lease approximately 15,000 square feet of office space at 360 Central Avenue, Suite 900, St. Petersburg, Florida 33701. We initially made rent payments of $21.50 per square foot, and that amount increases each year through the final year, in which we will pay rent of $26.16 per square foot, plus our percentage of increase in the common area maintenance charge. This lease expires in July 2014 with two five-year renewal options. We consider our current office facility suitable for our business as it is presently conducted. We do not own any real estate or other physical properties. Our facility is in good condition.

Item 3. Legal Proceedings

We are involved in claims-related legal actions arising in the ordinary course of business. We accrue amounts resulting from claims-related legal actions in unpaid losses and loss adjustment expenses during the period that we determine an unfavorable outcome becomes probable and we can estimate the amounts. Management makes revisions to our estimates based on its analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.

On August 5, 2010, Synovus Bank (Synovus), a Georgia banking corporation filed a lawsuit in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida against several defendants, including UIHC and UIH.  With respect to UIHC and UIH, the complaint: (1) sought to foreclose on a security interest in membership units of UIH owned by a UIH shareholder named as a defendant, including the proceeds thereof (the United Collateral), (2) sought a declaratory judgment requiring UIHC and UIH to deliver proceeds of the United Collateral to Synovus (including shares of UIHC and warrants to purchase shares of UIHC or the equivalent value thereof in cash, and a cash distribution), (3) alleged tortious interference with a contract between the UIH shareholder named as a defendant and Synovus relating to the United Collateral, (4) sought conversion of the United Collateral, and (5) alleged negligence in connection with the delivery of the United Collateral.  Synovus sought unspecified damages and other relief in connection with the foregoing.

On January 3, 2011, Synovus Bank voluntarily dismissed its case without prejudice against UIH and UIHC. We did not establish any reserves regarding this action because we were not able to predict the probable outcome of the action. 

Item 4. Mine Safety Disclosures

Not applicable

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

MARKET INFORMATION

Our common stock, which commenced public trading on November 7, 2007, is traded on the Over-the-Counter Bulletin Board under the symbol UIHC.

The table below sets forth, for the calendar quarter indicated, the high and low bid quotations of our common stock as reported on the Over-the-Counter Bulletin Board. The over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily reflect actual transactions.

	Bid Quotation
	High		Low
2011
Fourth Quarter	$	4.43	$	4.00
Third Quarter	4.25		4.25
Second Quarter	4.50		2.00
First Quarter	3.60		2.95
2010
Fourth Quarter	4.15		2.05
Third Quarter	2.95		1.85
Second Quarter	3.60		2.95
First Quarter	4.75		3.10

Prior to the fourth quarter of 2011, warrants, each allowing for the purchase of one share of our common stock, and units, consisting of one share of our common stock and one warrant, remained outstanding and could be traded. In October 2011, all outstanding warrants, including those attached to units, expired.

HOLDERS OFCOMMON EQUITY

As of March 14, 2012, we had 45 holders of record of our common stock.

DIVIDENDS

In the fourth quarter of 2011, we declared and paid a quarterly dividend of $0.05 per share. In the second quarter of 2010, we paid a quarterly dividend of $0.05 per share that we declared in the first quarter of 2010. We did not pay any other dividends during 2011 or 2010. Any future dividend payments will be at the discretion of our Board of Directors and will depend upon our profits, financial requirements and other factors, including legal and regulatory restrictions on the payment of dividends, general business conditions and such other factors as our Board of Directors deems relevant.

See Note 10 to our consolidated financial statements for a discussion of restrictions on future payments of dividends by UPC.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

We have no compensation plans or arrangements under which equity securities are authorized for issuance.

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RECENT SALES OF UNREGISTERED SECURITIES

During 2011, we did not have any unregistered sales of our equity securities.

REPURCHASES OF EQUITY SECURITIES

During the fourth quarter of 2011, we did not repurchase any of our equity securities.

Item 6. Selected Financial Data

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act; therefore, pursuant to Regulation S-K we are not required to make disclosures under this Item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those which are not within our control.

OUR BUSINESS

Through our wholly-owned subsidiaries, we write and service property and casualty insurance policies in Florida, South Carolina and Massachusetts. We incorporated three of our subsidiaries under Florida law, including United Property and Casualty Insurance Company (UPC), which writes insurance policies; United Insurance Management, L.C. (UIM), the managing general agent that manages substantially all aspects of UPC's business; and Skyway Claims Services, LLC (SCS), a claims adjusting company that provides services to UPC. In April 2011, we formed a fourth subsidiary, UPC Re. Operating as a reinsurer under the laws of the Cayman Islands, UPC Re provides reinsurance protection to UPC.

We offer standardized policies for a broad range of exposures, and our policies include coverage options for standard single-family homeowners, tenants (renters), and condominium unit owners. We also write flood policies, on which we earn a commission while retaining no risk of loss, in all states in which we write our other products.

Though we have authorization to write a commercial line of business in Florida that includes auto and multi-peril coverage, we do not currently write such policies.

On July 1, 2010, UPC began writing policies in South Carolina and assumed a book of business in that state. On November 1, 2011, UPC began writing policies in Massachusetts. Also during 2011, the insurance regulatory authority in Rhode Island authorized UPC to write and service property and casualty lines in that state, and we currently expect UPC to begin writing policies in Rhode Island during the first quarter of 2012. We have applied to insurance regulatory authorities in two additional states to allow UPC to write property and casualty lines. We began operating in new states in an effort to reduce our geographic concentration of exposure to catastrophic losses, as well as our geographic concentration of credit risk.

To reach a broad range of prospective policyholders, we use numerous independent agents to produce policies for us, and we also assume policies from Citizens Property Insurance Corporation and from other carriers. We refer to policies produced by our agents as direct policies or direct business. As of December 31, 2011, policies we originally assumed from Citizens represented only 13% of our homeowner in-force policies, while direct policies and policies we assumed from other carriers represent 87% of our homeowner in-force policies. At December 31, 2011, we had approximately 101,800 homeowner policyholders, compared to 80,500 at December 31, 2010.

The table below displays the average rate increases we have implemented during the years ended December 31, 2011, 2010 and 2009. Applying a rate increase to all policies that were in force on the date the increase became effective takes up to one

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year, and then we must recognize the increased premium pro rata over 12 months; therefore, rate increases may take as long as two years to fully impact net income. The rate increases we implemented during 2009 and 2010 have now been applied to all policies in force; the 2009 rate increases have already fully affected earned premium, but the 2010 rate increases will continue to impact earned premium into the first quarter of 2012. We continue to apply the rate increases we implemented during 2011 to renewals of policies in force, and the 2011 rate increases will continue to affect our earned premium through the fourth quarter of 2013.

	Average Rate Increase
	FL		SC
Homeowners Policies
Dec. 2011	—	%	6.0	%
Nov. 2011	7.5	%	—	%
May 2011	15.9	%	—	%
Mar. 2010	14.0	%	—	%
Sep. 2009	12.7	%	—	%
Dwelling Policies
Nov. 2011	15.0	%	—	%
Apr. 2010	14.7	%	—	%
Oct. 2009	15.0	%	—	%

We file for rate increases when necessary to ensure that we collect enough premium to pay valid insured claims, reinsurance costs and other expenses. Insurance regulatory authorities must approve or deny any proposed rate increase we file. We currently do not have any pending rate increases.

Effective June 1, 2011, we commuted our 2005 contract with the FHCF; any catastrophe losses we incur (in excess of amounts we reported to the FHCF as of June 1, 2011) on events that occurred during the 2005 contract year that would otherwise have been covered by the FHCF contract prior to commutation will not be reimbursed by the FHCF, though our contracts with our private reinsurers remain in effect with respect to such losses. We settled all outstanding claims with the FHCF related to Hurricane Wilma for $12,738, which we received during the third quarter of 2011. At the time we commuted the contract, our reinsurance recoverable included $13,630 of unpaid losses related to Hurricane Wilma. As a result of settling for less than what we had already recorded as ceded losses, our losses incurred increased by $892.

On August 29, 2011, we entered into a Management Services Agreement (MSA) with 1347 Advisors, LLC, a wholly-owned subsidiary of Kingsway Financial Services, Inc., a property and casualty insurance company. One of our directors, Larry Swets, serves as the President and Chief Executive Officer of Kingsway, as well as a Managing Director of 1347 Advisors. Mr. Swets also serves as a managing director of the limited liability company that serves as the general partner of Acadia Acquisition Partners, L.P., the parent company of Hamilton Risk Management Co. (HRM). The MSA, which is effective for a six-month period with automatic three-month extensions unless otherwise terminated, stipulates that 1347 Advisors shall provide us with the services of an interim CFO, in addition to actuarial and other analysis services. Hassan Baqar serves as our interim CFO under the MSA. Mr. Baqar also serves as a Managing Director of 1347 Advisors and a Vice President of Kingsway America, Inc., a wholly-owned subsidiary of Kingsway Financial Services, Inc. In exchange for the services, we pay 1347 Advisors a monthly consulting fee of $60 plus any reasonable expenses.

RECENT ACCOUNTING STANDARDS

Please refer to Note 2(o) in the Notes to Consolidated Financial Statements for a discussion of recent accountings standards that may affect us.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

When we prepare our consolidated financial statements and accompanying notes in conformity with GAAP, we are required to make estimates and assumptions about future events that affect the amounts reported. Certain of these estimates

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result from judgments that can be subjective and complex; therefore, our actual results may differ, perhaps substantially, from the estimates.

RESERVES FOR UNPAID LOSSES

General Discussion of Loss Reserving Process

Reserves for unpaid losses represent the most significant accounting estimate inherent in the preparation of our financial statements. These reserves represent management’s best estimate of the amount we will ultimately pay for losses and we base the amount upon the application of various actuarial reserve estimation techniques as well as considering other material facts and circumstances known at the balance sheet date.

We establish two categories of loss reserves as follows:

• Case reserves – When a claim is reported, we establish an automatic minimum case reserve for that claim type that represents our initial estimate of the losses that will ultimately be paid on the reported claim. Our initial estimate for each claim is based upon averages of loss payments for our prior closed claims made for that claim type. Then, our claims personnel perform an evaluation of the type of claim involved, the circumstances surrounding each claim and the policy provisions relating to the loss and adjust the reserve as necessary. As claims mature, we increase or decrease the reserve estimates as deemed necessary by our claims department based upon additional information we receive regarding the loss, the results of on-site reviews and any other information we gather while reviewing the claims.

• Reserves for loss incurred but not reported (IBNR reserves) – Our IBNR reserves include true IBNR reserves plus "bulk" reserves. Bulk reserves represent additional amounts that cannot be allocated to particular claims, but which are necessary to estimate ultimate losses on known claims. We estimate our IBNR reserves by projecting the ultimate losses using the methods discussed below and then deducting actual loss payments and case reserves from the projected ultimate losses. We review and adjust our IBNR reserves on a quarterly basis based on information available to us at the balance sheet date.

When we establish our reserves, we analyze various factors such as our historical loss experience and that of the insurance industry, claims frequency and severity, our business mix, our claims processing procedures, legislative enactments, judicial decisions and legal developments in imposition of damages, and general economic conditions, including inflation. A change in any of these factors from the assumptions implicit in our estimates will cause our ultimate loss experience to be better or worse than indicated by our reserves, and the difference could be material. Due to the interaction of the aforementioned factors, there is no precise method for evaluating the impact of any one specific factor in isolation, and an element of judgment is ultimately required. Due to the uncertain nature of any projection of the future, the ultimate amount we will pay for losses will be different from the reserves we record.

We determine our ultimate loss reserves by selecting a point estimate within a relevant range of indications that we calculate using generally accepted actuarial techniques. Our selection of the point estimate is influenced by the analysis of our paid losses and incurred losses since inception. For each accident year, we estimate the ultimate incurred losses for both known and unknown claims. In establishing this estimate, we calculate high, low, and expected values from the distribution of ultimate loss estimates compiled from the results of the actuarial models discussed below.

Estimation of the Reserves for Unpaid Losses

We calculate our estimate of ultimate losses by using the following actuarial models. We separately calculate the models using paid loss data and incurred loss data. In the versions of these models based on incurred loss data, the incurred losses are defined as paid losses plus case reserves. For this discussion of our loss reserving process, the word "segment" refers to a subgrouping of our claims data, such as by geographic area and/or by particular line of business; it does not refer to operating segments.

• Loss Development – This model estimates ultimate losses based on the historical development patterns of losses by accident year. Data known as loss development factors drive the loss-development-based models. We calculate loss development factors by age period (i.e., 12-24 months, 24-36 months, etc.) by taking the total incurred or paid losses

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for each accident year as of the current period's balance sheet date and dividing by the total incurred or paid losses for each accident year as of the prior period's balance sheet date. We then calculate averages of the resulting loss development factors in each age period, such as the three-year average, five-year average, cumulative average, and cumulative average excluding the high and low. Finally, we evaluate the calculated loss development factors and their resulting averages and use judgment to select a particular loss development factor per age period, which we then use to project expected ultimate losses by accident year.

• Actual versus Expected Loss Development – This model estimates ultimate losses by adjusting the ultimate losses as projected in the prior period's analysis for the actual experience during the most recent period. For example, if the 2010 actuarial analysis projected that we would pay losses of $1,000 for the 2010 accident year during 2011 for a particular segment, but we actually paid losses of $800 during 2011 for the 2010 accident year for that segment, then we lower estimated ultimate losses for that segment by $200.

• Bornhuetter-Ferguson Pure Premium – This model estimates ultimate losses based on earned exposures, expected pure premium and the historical development patterns of losses. We use earned exposures as a proxy for the number of risks insured, and we calculate pure premium as the amount of incurred losses divided by earned exposures. Whereas the Actual versus Expected Loss Development model uses a fixed amount (ultimate losses as calculated in the prior year's analysis) as its starting point, this Bornhuetter-Ferguson model uses data from the prior year's analysis to recalculate a starting expectation of ultimate losses based on pure premium. From then on, this model functions like the Actual versus Expected Loss Development model in that we adjust the starting expectation of ultimate losses for the actual experience during the most recent period.

The loss-development-based models are easy to use and comparable to industry benchmarks, but potential volatility in the calculated factors, as well as an element of subjectivity in the selected factors, slightly weakens the effectiveness of the method. The volatility arises from a number of factors such as inflation, changes in reserving practices, changes in underwriting criteria and geographic concentration.

The Bornhuetter-Ferguson model is generally more stable than the loss-development-based models, but this relative strength comes at the cost of less responsiveness to real changes in loss experience.

Reliance and Selection of Methods. The various models we use have strengths and weaknesses that depend upon the circumstances of the segment and the age of the claims experience we analyze. The nature of our book of business allows us to place substantial, but not exclusive, reliance on the loss-development-based models. Ultimately, this means the main assumptions of the loss-development-based models, the selected loss development factors, represent the most critical aspect of our loss reserving process. We use the same set of loss development factors in the models during our loss reserving process that we also use to calculate the premium necessary to pay expected ultimate losses.

Reasonably-Likely Changes in Variables. As previously noted, we evaluate several factors when exercising our judgment in the selection of the loss development factors that ultimately drive the determination of our loss reserves. The process of establishing our reserves is complex and necessarily imprecise, as it involves using judgment that is affected by many variables. We believe a reasonably-likely change in almost any of these aforementioned factors could have an impact on our reported results, financial position and liquidity. However, we do not believe any reasonably likely changes in the frequency or severity of claims would have a material impact on us.

FAIR VALUE OF INVESTMENTS

As discussed in Note 2(c) in our Notes to Consolidated Financial Statements, we value our investments at fair value using quoted prices from active markets, to the extent available. For securities for which quoted prices in active markets are unavailable, we use observable inputs such as quoted prices in inactive markets, quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes and other relevant inputs. We do not have any investments in our portfolio which require us to use unobservable inputs. The fair value for our fixed-maturities is calculated by a third-party pricing service using methods described in Note 3. Any change in the estimated fair value of our securities would impact the amount of unrealized gain or loss we have recorded, which could change the amount we have recorded for our investments and other comprehensive income on our Consolidated Balance Sheets.

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INVESTMENT PORTFOLIO IMPAIRMENTS

Quarterly, we perform an assessment of our available-for-sale investments to determine if any are other-than-temporarily impaired. See Note 2(b) in our Notes to Consolidated Financial Statements for further information regarding our impairment testing.

The assessment of whether an other-than-temporary impairment (OTTI) exists involves a high degree of subjectivity and judgment, and we base our assessment on the information available to us at a given point in time. Significant changes in the factors we consider when evaluating investments for impairment losses could result in a significant change in impairment losses reported within our consolidated financial statements if future events, information and the passage of time cause us to determine that a decline in value is other-than-temporary. Any change in the determination of whether the impairment is temporary or other-than-temporary would affect the amount of OTTI charges we record within our Consolidated Statements of Income and the amount of unrealized loss we record in other comprehensive income within our Consolidated Balance Sheets.

ANALYSIS OF FINANCIAL CONDITION - DECEMBER 31, 2011 COMPARED TO DECEMBER 31, 2010

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our accompanying consolidated financial statements and related notes.

Investments

We classify all of our investments as available-for-sale. Our investments at December 31, 2011 and 2010 consisted mainly of U.S. government and agency securities and securities of high-quality corporate issuers. Our equity holdings consist mainly of securities issued by companies in the energy, consumer products, healthcare, technology and telecommunications industries. Most of the corporate bonds we hold reflect a similar diversification. At December 31, 2011, approximately 85% of our fixed maturities are U.S. Treasuries or corporate bonds rated “A” or better, and 15% are corporate bonds rated “BBB”.

During the fourth quarters of 2011 and 2010, we recorded impairment charges of $31 and $97, respectively, after determining that impairments related to one of our equity securities and three of our equity securities, respectively, were other-than-temporary.

In December 2010, we sold $52,570 of fixed maturities to realize the gains related to those securities. We made the decision to recognize the gains at that time rather than in the future because of the uncertainty regarding capital gains taxes and whether the Federal government would increase such taxes. We also believed that interest rates on fixed maturities would begin to increase; therefore, we wanted to have more cash on hand to buy what we expected would be securities with higher interest rates than the interest rates on the securities we sold. Early in 2011, we had not yet found the higher-yield fixed maturities we expected, so we slowly began to reinvest portions of the proceeds from the December 2010 sales in US Treasury securities. Beginning approximately in the late second quarter of 2011, we began to find the higher-yield corporate bonds that we had expected, and we reinvested the remaining portions of the proceeds from the December 2010 sales.

The overall change in our net unrealized holding gains (losses) primarily resulted from the realization of gains on sales of our fixed maturities in December 2010. At December 31, 2011, securities in an unrealized loss position for a period of twelve months or longer reflected gross unrealized losses of $64; approximately $42 of the total related to five fixed maturities for which we have no plan to sell and for which we expect to fully recover our cost basis. The other four securities are equity securities with total unrealized losses of $22. We reviewed these securities and determined that we did not need to record impairment charges at December 31, 2011.

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Various states in which we operate require us, by statute, to maintain deposits to secure the payment of claims. The table below summarizes our statutorily-required deposits as of December 31, 2011.

	Type of Security Deposited	Cost/Amortized Cost		Fair Value
Florida	Certificate of Deposit	$	300	$	300
Amount reflected in other long-term investments		300		300
South Carolina	U.S. Treasury Note	1,001		1,003
Massachusetts	Municipal Bond	104		111
Amount reflected in fixed maturities		1,105		1,114
Securities deposited with insurance regulatory authorities		$	1,405	$	1,414

The CD we deposited with the Florida insurance regulatory authority is a twelve-month, automatically renewing CD. The par values of the securities we deposited with the South Carolina and Massachusetts insurance regulatory authorities are $1,000 and $100, respectively.

Reinsurance-Related Accounts

We entered into the following reinsurance agreements for the period commencing June 1, 2011 through May 31, 2012:

• Property Catastrophe Excess of Loss Reinsurance Agreement (Private Agreement) between United Property & Casualty Insurance Company and Various Reinsurance Companies,

• Florida Hurricane Catastrophe Fund Reimbursement Contract (FHCF Agreement) between United Property & Casualty Insurance Company and the State Board of Administration of Florida,

• Reinstatement Premium Protection Reinsurance Agreement (RPP Agreement) between United Property & Casualty Insurance Company and Various Reinsurance Companies, and

• Multi-Line Per Risk Excess of Loss Reinsurance Agreement (Per Risk Agreement) between United Property & Casualty Insurance Company and Various Reinsurance Companies.

Our catastrophe reinsurance agreements provide us coverage against severe weather events. For our catastrophe reinsurance program, we entered into the Private Agreement for a total premium of $40,774, which was finalized on September 30, 2011 without adjustment. We entered into the FHCF Agreement for a total premium of $33,659. The Private Agreement provides coverage against severe weather events such as hurricanes, tropical storms and tornadoes. The FHCF Agreement provides coverage only against storms that are designated as hurricanes by the National Hurricane Center. We entered into our RPP Agreement for a premium of $11,509, and our Per Risk Agreement for a premium of $870. See Note 6 in our Notes to Consolidated Financial Statements for additional information regarding our reinsurance program.

We signed our 2011-2012 reinsurance agreements for a cost that exceeded the prior year's contract cost by $2,183. As a result, our prepaid reinsurance costs and reinsurance payable increased over the respective amounts at December 31, 2010.

Reinsurance recoverable decreased from the amount at December 31, 2010 primarily as a result of our commutation of the 2005 FHCF contract. We collected $3,347 from the FHCF in 2011 prior to the commutation, and the FHCF paid us $12,738 directly related to the commutation during the third quarter of 2011. The remaining decrease resulted from collections of 2010's reinsurance recoverable amounts and the continually decreasing number of open claims subject to reimbursement by our reinsurers.

RESULTS OF OPERATIONS - 2011 COMPARED TO 2010

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UNITED INSURANCE HOLDINGS CORP.

Gross Premiums Written

Two factors primarily caused the $45,169 increase in our gross premiums written: (i) we wrote more policies during 2011, and (ii) previously-discussed rate increases continued to have a positive effect.

We wrote approximately 22,250 more policies during 2011 than we did during 2010. Though we renewed approximately 2,700 policies during the year that we originally assumed from Citizens, the remainder of the increase in policies written resulted from our efforts to increase writings in less risk-prone geographic areas of Florida, as well as from writing for a full year in South Carolina during 2011 versus only six months during 2010. An increase in policyholder retention to 90% from 85% also contributed to the increase in policies written.

Gross Premiums Earned

Our gross premiums earned increased $25,530 due to the increase in policies written and the effects of the rate increases we implemented.

Net Investment Income and Net Realized Gains

For the reasons discussed in the Investments subsection of ANALYSIS OF FINANCIAL CONDITION - DECEMBER 31, 2011 COMPARED TO DECEMBER 31, 2010, we reinvested proceeds in 2011 from investment sales we made in December 2010 to realize a specific pool of unrealized gains. Because we had to reinvest the proceeds in low-yield US Treasury securities early in the year and did not begin investing the proceeds in higher-yield fixed maturities until later in the year, we recognized less interest income in 2011 than we did during 2010, primarily contributing to the decrease of $1,056 in net investment income.

Our realized investment gains decreased $4,188 primarily because we did not sell a significant amount of our investment securities during 2011, as we did during 2010.

Losses

Losses decreased $3,672 because, during 2011, we paid less than we expected to pay for non-catastrophe claims incurred in prior years and for catastrophe claims incurred in prior years. The favorable development we experienced totaled approximately $3,564, consisting of $1,414 favorable development on non-catastrophe claims incurred in prior years and $2,150 on catastrophe claims incurred in prior years. As a result of the favorable development, we reduced our estimate of ultimate non-catastrophe losses and catastrophe-related losses, most of which we no longer cede to reinsurers. In addition, our loss ratio improved from the prior year's loss ratio; therefore, losses and LAE did not increase in conjunction with the increase in policies written as they otherwise would have if the loss ratio had remained the same as in the same period of the prior year.

Policy Acquisition Costs

Policy acquisition costs increased $4,155 because, during 2011, we amortized more agents' commissions and policy administration costs as a result of the increase in premiums written that began during the second half of 2010 and continued throughout 2011.

Operating Expenses

Operating expenses increased $1,122 primarily as a result of our continuing efforts to expand and geographically diversify our book of business. Our efforts caused our marketing and advertising expenses to increase by $258. The resulting increase in premiums written caused our home inspection expenses to increase $388 and our underwriting report expenses to increase $486.

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UNITED INSURANCE HOLDINGS CORP.

General and Administrative Expenses

Our expansion efforts also caused an increase of $2,168 in our general and administrative expenses, primarily due to salary and payroll-related costs which increased $1,071. Salaries increased by $524 because we added a net total of five employees during the year and because we awarded merit increases to most employees. Payroll-related costs increased by $122, mostly a result of increasing health care expenses. We also awarded $425 in bonuses during the year, while we did not award bonuses during 2010. In addition to the increases in salary and payroll-related costs, our use of actuarial and consulting services increased $345 primarily due to additional rate filings and additional loss reserve reviews, our amortization increased $167 because we recorded a full year of amortization on the intangible asset related to the assumption from Sunshine State Insurance Company, and we incurred $110 in fees related to a market conduct exam performed by the Florida insurance regulatory authority during the year.

Interest Expense

The decrease of $1,219 in interest expense related to the fact that we had the 11% merger-related notes payable during 2010 until we retired those notes in May of that year. We also had a $4,327 loan outstanding until February of 2010. We have not increased our debt since retiring the aforementioned obligations.

Provision (Benefit) for Income Tax

We recorded a provision for income taxes for 2011, compared to a benefit in 2010 resulting from our operating loss. Our effective tax rate for 2011 was 37.9%, compared to 34.3% for 2010.

RESULTS OF OPERATIONS - 2010 COMPARED TO 2009

Gross Premiums Written

Two factors primarily caused the increase of $2,797 in our gross premiums written: (i) an increase in average in-force premium per policy, partially offset by (ii) a decrease in policies-in-force.

Our average in-force premium per policy increased from $1,663 for 2009, to $1,878 for 2010. The implementation of the rate increases in late 2009 and in early 2010 contributed to the per policy increase of $215, or 12.9%. See the PRICING section in Item 1 of this Form 10-K for a more detailed discussion of the rate increases that we implemented. The rate increases did not have a significant effect on our policy retention rate.

The number of our homeowner policies-in-force at December 31, 2010, decreased to approximately 80,500 from approximately 93,000 at December 31, 2009, as a result of our actions to reduce risk exposures.

Gross Premiums Earned

Two factors caused the decrease of $1,086 in our gross premiums earned: (i) a $3,833 increase in gross unearned premiums that resulted from our writing $4,066 more during the fourth quarter of 2010 compared to the fourth quarter of 2009, offset by (ii) an increase in gross written premiums discussed above.

The impact of wind-mitigation credits continued to suppress the amount of gross premiums we would otherwise have earned, but had less of an effect than it did in the prior year. By the end of 2010, 63% of our policies in force reflected wind-mitigation credits with an impact on premium in force totaling $71,732, while 61% of our policies in force at the end of 2009 reflected the credits with an impact on premium in force totaling $83,108. As we continue to redistribute our policies into areas in which the premium associated with wind peril is less, the impact of wind-mitigations credits on gross premiums earned will also continue to decrease.

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UNITED INSURANCE HOLDINGS CORP.

Ceded Premiums Earned

Ceded premiums earned increased $10,240 because the cost of our 2008-2009 contracts was $34,528 lower than the cost of our 2009-2010 contracts. As a result, for the first five months of 2009, our reinsurance costs were substantially less than our reinsurance costs for the first five months of 2010. The effect of the increase described was partially offset because we recorded contractually-allowed reductions to our 2010-2011 reinsurance premium totaling $3,921, while we recorded adjustments to increase our 2009-2010 reinsurance premium by $1,737.

Net Investment Income

The decrease of $952 in our net investment income primarily resulted from a $556 decrease in bond interest income. Also contributing to the overall decline was a $242 decrease in interest income related to our cash and short-term securities due to lower investment yields.

Bond interest income decreased because we sold fixed maturities or allowed them to mature in an amount totaling $155,616 throughout 2010. As noted earlier, $52,570 of the $155,616 originated from sales during December 2010, and at December 31, 2010, we were still holding a portion of the proceeds from those December sales and from earlier sales and maturities to reinvest in what we expected would be securities with higher interest rates than the interest rates on the securities we sold.

Net Realized Investment Gains

Net realized investment gains increased $2,509 because, during December 2010, we sold $52,570 of fixed maturities to realize the gains related to those securities. We made the decision to recognize the gains at that time rather than in the future because of the uncertainty regarding capital gains taxes and whether the Federal government would increase such taxes. We also believed that interest rates on fixed maturities would begin to increase; therefore, we wanted to have more cash on hand to buy what we expected would be securities with higher interest rates than the interest rates on the securities we sold. In 2009, we did not sell securities on the scale that we did in 2010.

Other-Than-Temporary Impairments

Other-than-temporary impairments decreased $1,781 because we only recorded an impairment charge of $97 related to three equity securities in 2010 compared to an impairment charge of $1,878 related to 29 equity securities in 2009.

Losses

The increase of $1,778 in losses incurred during 2010 primarily resulted from $1,006 adverse loss development on prior year claims. The adverse development resulted from claims payments that exceeded prior year estimations and from increases we made to our estimates of ultimate losses on prior year claims. We also increased our estimates of ultimate losses on claims incurred during 2010 as a result of the adverse development described. During 2009, we experienced positive development of $2,976 on prior year claims, mostly related to our homeowners policies.

Although we experienced adverse development on prior accident years, our losses incurred in the 2010 accident year improved. In addition to accident-year decreases in our claims frequency, claims severity and loss incurred per exposure, a decrease in homeowners exposures, coupled with the premium rate increases, impacted the 2010 accident year incurred losses.

Policy Acquisition Costs

Policy acquisition costs decreased $1,061 primarily for two reasons. We amortized less agents' commissions in 2010 as a result of the reduction in premiums written in late 2009 and early 2010. Also, we incurred additional fees from Computer Sciences Corporation in 2009 related to their conversion and processing of data from our former policy administrator; we incurred no such fees during 2010.

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UNITED INSURANCE HOLDINGS CORP.

Operating Expenses

The decrease of $1,250 in our operating expenses primarily resulted because we incurred a $1,045 assessment during 2009 that we did not incur during 2010, offset by various changes in other operating expenses.

General and Administrative Expenses

The increase of $474 in our general and administrative expenses primarily resulted from a $234 increase in professional fees and from $159 of amortization related to the intangible asset that resulted from the assumption of South Carolina policies. The remaining increases were in expense categories that were individually not significant.

Other Income (Expenses)

Other income (expenses) increased $726 because we recorded a $726 loss on the early extinguishment of our $18,280 merger-related notes during the second quarter of 2010. The $726 represents the unamortized original issue discount that we wrote off upon extinguishing the notes.

Provision for (Benefit From) Income Taxes

Due to our operating loss for 2010, we recorded a benefit for income taxes compared to recording tax expense for 2009. Our effective tax rate for 2010 was 34.3%, compared to 35.9% for 2009.

LIQUIDITY AND CAPITAL RESOURCES

We generate cash through premium collections, reinsurance recoveries, investment income and the sale or maturity of invested assets. We use our cash to pay reinsurance premiums, claims and related costs, policy acquisition costs, salaries and employee benefits, other expenses and stockholder dividends, as well as to purchase investments.

We do not conduct any business operations of our own; UPC, UIM, UPC Re and SCS conduct the business operations of the consolidated group. As a result, we rely on cash dividends or intercompany loans from UIM to pay our general and administrative expenses. Insurance regulatory authorities in the states in which we operate heavily regulate UPC, including restricting any dividends paid by UPC and requiring approval of any management fee UPC pays to UIM for services rendered; however, nothing restricts our non-insurance company subsidiaries from paying us dividends other than state corporate laws regarding solvency. Our non-insurance company subsidiaries may pay us dividends from any positive net cash flows that they generate. Our UIM subsidiary pays us dividends primarily using cash from the collection of management fees from UPC, pursuant to a management agreement in effect between those entities.

Operating Activities

During the year ended December 31, 2011, our operations generated cash of $38,649, compared to using $7,943 during the same period in 2010. The increase in cash generated by our operating activities resulted primarily because:

•we collected $40,991 more in premiums from our policyholders,

•we paid $6,344 less in losses to our policyholders,

• we paid $8,942 less to our reinsurers than during 2010 because of a change in the reinsurance premium payment schedule in 2010,

• we recovered $4,831 more from our reinsurers due to the commutation of the 2005 FHCF contract,

• we paid $5,243 more commission to agents as a result of our increased writings, and

• we paid $4,360 of income tax deposits during 2011 after making no income tax payments in 2010.

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UNITED INSURANCE HOLDINGS CORP.

Increases in various other operating expense payments also offset the increases in operating cash.

During 2011, we initially recorded a reinsurance premium payable of $86,812 related to our 2011-2012 reinsurance contracts. We paid our reinsurance premium installments of $30,492 during the third quarter of 2011, $39,933 during the fourth quarter of 2011 and we will pay $16,387 during the first four months of 2012.

Under our current reinsurance contracts, should a single hurricane occur, we retain the first $15,000 of losses and LAE, before our reinsurance agreements provide coverage. Should a single, non-hurricane catastrophic event occur, we retain the first $25,000 of losses, before our reinsurance agreements provide coverage. If catastrophe losses exceed our reinsurance coverage, we will be liable for the excess losses as well. We are dependent on the creditworthiness of our reinsurers and if they do not reimburse us for the claims they reinsure, we remain primarily liable for those claims. For additional information regarding our reinsurance coverage, please see Note 6 in our Notes to Consolidated Financial Statements included herein.

As noted earlier, we commuted our 2005 contract with the FHCF; therefore, any catastrophe losses we incur (in excess of amounts we reported to the FHCF as of June 1, 2011) on events that occurred during the 2005 contract year that would otherwise have been covered by the FHCF contract prior to commutation will not be reimbursed by the FHCF. We received the $12,738 related to the commutation during the third quarter of 2011.

Investing Activities

During the year ended December 31, 2011, our investing activities used $68,155 of cash compared to providing $79,921 of cash because our purchases of securities totaled $65,870 more than our sales of securities, a result of our reinvestment of the proceeds from the securities we sold in December 2010 as well as a portion of the excess cash provided by operations. We also purchased a $2,250 note receivable from HRM during 2011.

See Note 3 in our Notes to Consolidated Financial statements for a table that summarizes our fixed maturities at December 31, 2011, by contractual maturity periods.

Financing Activities

During the year ended December 31, 2011, our financing activities used $499 compared to using $27,420 in 2010. The decrease occurred primarily because we retired $22,607 of debt in 2010 while we retired no debt in 2011. We also reduced our bank overdrafts in 2010 by $2,813, while we increased bank overdrafts in 2011 by $1,626.

During May 2011, we became a member of the Federal Home Loan Bank of Atlanta, which provides us access to credit facilities should we choose to make use of financing options. Any use of the credit facilities requires credit approval. In the near term, we do not anticipate a need to access such credit facilities.

The note payable to Florida's State Board of Administration requires UPC to maintain statutory surplus equal to or greater than $50,000 less repayments of principal on the SBA note, catastrophic losses paid since the note originated and any deferred acquisition costs related to Florida policies. At December 31, 2011, the required statutory surplus amount was $41,966. We monitor the surplus as regards policyholders at UPC each quarter and, for various reasons, we occasionally provide additional capital to UPC. During 2011 and 2010, we recorded $3,800 and $4,865 of capital contributions to UPC, respectively. We currently do not foresee a need for any material contributions of capital to UPC; however, any future contributions of capital will depend on circumstances at the time.

Our SBA note requires that we maintain a 2:1 ratio of net written premium to surplus (the SBA note agreement defines surplus as the $20,000 of capital contributed to UPC under the agreement plus the outstanding balance of the note) or a 6:1 ratio of gross written premium to surplus to avoid additional interest penalties. Should we fail to exceed either a net writing ratio of 1.5:1 or a gross writing ratio of 4.5:1, our interest rate will increase by 450 basis points above the stated rate of the note. Any other writing ratio deficiencies result in an interest rate penalty of 25 basis points above the stated rate of the note. Our SBA note further provides that the SBA may, among other things, declare its loan immediately due and payable for all defaults existing under the SBA note; however, any payment is subject to approval by the insurance regulatory authority. At December 31, 2011, we were in compliance with the covenants of the SBA note.

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UNITED INSURANCE HOLDINGS CORP.

In accordance with Florida law, UPC may pay dividends or make distributions out of that part of statutory surplus derived from its net operating profit and its net realized capital gains. The law further provides calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authority and the amount of dividends or distributions that would require prior approval of the insurance regulatory authority. The risk-based capital guidelines published by the National Association of Insurance Commissioners may further restrict UPC’s ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause surplus as to policyholders to fall below minimum risk-based capital guidelines. Most states, including Florida, have adopted the NAIC requirements, and insurers having less surplus as to policyholders than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. Insurance regulatory authorities could require us to cease operations in the event we fail to maintain the statutory capital required. At December 31, 2011, UPC's surplus as regards policyholders exceeded minimum risk-based capital requirements.

We prepare our financial statements in accordance with GAAP; which differs in some respects from reporting practices prescribed or permitted by insurance regulatory authorities. To retain our certificate of authority, Florida law requires UPC to maintain surplus as to policyholders equal to the greater of 10% of our total liabilities or $5,000. At December 31, 2011, UPC’s surplus as to policyholders was $48,188, exceeding the minimum requirements. Florida law also requires UPC to adhere to prescribed premium-to-capital surplus ratios, with which we were in compliance at December 31, 2011.

We repurchased shares of our common stock in May of 2011. While we have not adopted a formal stock repurchase plan at this time, we may repurchase additional shares of our common stock from time to time as financial conditions permit. We consider several factors in determining whether to make share repurchases, including among other things, our cost of equity, our after-tax cost of borrowing, our debt-to-total-capitalization targets and our expected future cash needs.

On November 9, 2011, our Board of Directors declared a $0.05 per share dividend. We paid the $518 dividend on December 15, 2011 to shareholders of record on November 30, 2011. On March 14, 2012, our Board declared a $0.05 per share dividend. We will pay the $518 dividend on April 5, 2012 to shareholders of record on March 26, 2011. Any future dividends will depend upon circumstances at the time, and our Board must approve and declare any such dividends.

We believe our current capital resources, together with cash provided from our operations, will be sufficient to meet currently anticipated working capital requirements. We cannot provide assurance, however, that such will be the case in the future.

OFF-BALANCE SHEET ARRANGEMENTS

At December 31, 2011, we have no off-balance-sheet arrangements.

RELATED PARTY TRANSACTIONS

See Note 13 in our Notes to Consolidated Financial Statements for a discussion of our related party transactions, including those with HRM and 1347 Advisors.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act; therefore, pursuant to Regulation S-K we are not required to make disclosures under this Item.

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UNITED INSURANCE HOLDINGS CORP.

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

United Insurance Holdings Corp.

We have audited the accompanying consolidated balance sheets of United Insurance Holdings Corp. and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedules of United Insurance Holdings Corp. listed in Item 15. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Insurance Holdings Corp. and subsidiaries as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ McGladrey & Pullen, LLP

Kansas City, MO

March 14, 2012

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UNITED INSURANCE HOLDINGS CORP.

Consolidated Balance Sheets

	December 31,
	2011			2010
ASSETS
Investments available for sale, at fair value:
Fixed maturities (amortized cost of $116,863 and $50,984, respectively)	$	120,378		$	50,683
Equity securities (adjusted cost of $3,284 and $3,666, respectively)	3,581			3,615
Other long-term investments	300			300
Total investments	124,259			54,598
Cash and cash equivalents	41,639			71,644
Accrued investment income	986			414
Premiums receivable, net	11,205			7,825
Reinsurance recoverable on paid and unpaid losses	4,458			27,304
Prepaid reinsurance premiums	40,968			38,307
Deferred policy acquisition costs	12,324			9,342
Other assets	4,376			4,187
Total Assets	$	240,215		$	213,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses	$	33,600		$	47,414
Unearned premiums	100,130			77,161
Reinsurance payable	16,571			14,982
Other liabilities	17,866			10,536
Notes payable	17,059			18,235
Total Liabilities	185,226			168,328
Commitments and contingencies (Note 11)
Stockholders' Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding	—			—
Common stock, $0.0001 par value; 50,000,000 shares authorized; 10,573,932 issued; 10,361,849 and 10,573,932 outstanding, respectively	1			1
Additional paid-in capital	75			75
Treasury shares, at cost; 212,083 and zero shares, respectively	(431		)	—
Accumulated other comprehensive income	2,341			(216		)
Retained earnings	53,003			45,433
Total Stockholders' Equity	54,989			45,293
Total Liabilities and Stockholders' Equity	$	240,215		$	213,621

See accompanying notes to consolidated financial statements.

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UNITED INSURANCE HOLDINGS CORP.

Consolidated Statements of Income

	Year Ended December 31,
	2011			2010			2009
REVENUE:
Gross premiums written	$	203,806		$	158,637		$	155,840
Decrease (increase) in gross unearned premiums	(22,969		)	(3,330		)	553
Gross premiums earned	180,837			155,307			156,393
Ceded premiums earned	(90,757		)	(88,452		)	(78,212		)
Net premiums earned	90,080			66,855			78,181
Net investment income	2,823			3,879			4,831
Net realized gains	158			4,346			1,837
Other-than-temporary impairments	(31		)	(97		)	(1,878		)
Other revenue	3,388			5,008			5,498
Total revenue	96,418			79,991			88,469
EXPENSES:
Losses and loss adjustment expenses	38,861			42,533			40,755
Policy acquisition costs	29,054			24,899			25,960
Operating expenses	5,090			3,968			5,218
General and administrative expenses	9,674			7,506			7,032
Interest expense	548			1,767			3,177
Total expenses	83,227			80,673			82,142
Income (loss) before other expenses	13,191			(682		)	6,327
Other expenses	175			726			—
Income (loss) before income taxes	13,016			(1,408		)	6,327
Provision for (benefit from) income taxes	4,928			(483		)	2,270
Net income (loss)	$	8,088		$	(925	)	$	4,057
OTHER COMPREHENSIVE INCOME (LOSS):
Change in net unrealized gain on investments	4,291			2,093			4,152
Reclassification adjustment for net realized investment gains	(158		)	(4,346		)	(1,837		)
Reclassification adjustment for other-than-temporary impairments	31			97			1,878
Income tax expense related to items of other comprehensive income	(1,607		)	832			(1,595		)
Total comprehensive income (loss)	$	10,645		$	(2,249	)	$	6,655
Weighted average shares outstanding
Basic and Diluted	10,442,034			10,573,932			10,568,247
Earnings (loss) per share
Basic and Diluted	$	0.77		$	(0.09	)	$	0.38
Dividends declared per share	$	0.05		$	0.05		$	0.15

See accompanying notes to consolidated financial statements.

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UNITED INSURANCE HOLDINGS CORP.

Consolidated Statements of Stockholders' Equity

				Additional Paid-in Capital	Treasury Stock		Accumulated Other Comprehensive Income (loss)		Retained Earnings		Total Stockholders' Equity
	Common Stock
	Shares		Amount
December 31, 2008	10,548,932		1	—	—		(1,490	)	44,416		42,927
Net income	—		—	—	—		—		4,057		4,057
Net unrealized change in investments, net of tax	—		—	—	—		2,598		—		2,598
Issuance of common stock to officers	25,000		—	75	—		—		—		75
Cash dividends on common stock	—		—	—	—		—		(1,586	)	(1,586	)
December 31, 2009	10,573,932		1	75	—		1,108		46,887		48,071
Net loss	—		—	—	—		—		(925	)	(925	)
Net unrealized change in investments, net of tax	—		—	—	—		(1,324	)	—		(1,324	)
Cash dividends on common stock	—		—	—	—		—		(529	)	(529	)
December 31, 2010	10,573,932		1	75	—		(216	)	45,433		45,293
Net income	—		—	—	—		—		8,088		8,088
Net unrealized change in investments, net of tax	—		—	—	—		2,557		—		2,557
Acquisition of treasury stock	(212,083	)	—	—	(431	)	—		—		(431	)
Cash dividends on common stock	—		—	—	—		—		(518	)	(518	)
December 31, 2011	10,361,849		1	75	(431	)	2,341		53,003		54,989

See accompanying notes to consolidated financial statements.

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UNITED INSURANCE HOLDINGS CORP.

Consolidated Statements of Cash Flows

	Year Ended December 31,
	2011			2010			2009
OPERATING ACTIVITIES
Net income (loss)	$	8,088		$	(925	)	$	4,057
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,218			1,106			1,188
Net realized gains	(158		)	(4,346		)	(1,837		)
Other-than-temporary impairments	31			97			1,878
Amortization of discount on notes payable	—			159			419
Loss on extinguishment of debt	—			726			—
Provision for uncollectible premiums	23			42			83
Deferred income taxes, net	(600		)	352			1,255
Stock-based compensation	—			—			75
Changes in operating assets and liabilities:
Accrued investment income	(572		)	705			273
Premiums receivable	(3,403		)	(323		)	2,589
Reinsurance recoverable on paid and unpaid losses	22,846			(1,827		)	(2,873		)
Prepaid reinsurance premiums	(2,660		)	1,978			(13,767		)
Deferred policy acquisition costs, net	(2,982		)	(86		)	958
Other assets	371			(398		)	(3,047		)
Unpaid losses and loss adjustment expenses	(13,814		)	3,302			4,014
Unearned premiums	22,969			3,330			(553		)
Reinsurance payable	1,589			(13,180		)	11,468
Other liabilities	5,703			1,345			267
Net cash provided by (used in) operating activities	38,649			(7,943		)	6,447
INVESTING ACTIVITIES
Proceeds from sales and maturities of investments available for sale	36,594			160,648			81,931
Purchases of investments available for sale	(102,464		)	(80,343		)	(85,124		)
Purchase of note receivable	(2,250		)	—			—
Cost of property and equipment acquired	(20		)	(73		)	(108		)
Cost of capitalized software acquired	(15		)	(311		)	(206		)
Net cash provided by (used in) investing activities	(68,155		)	79,921			(3,507		)
FINANCING ACTIVITIES
Repayments of borrowings	(1,176		)	(24,078		)	(294		)
Repurchases of common stock	(431		)	—			—
Dividends	(518		)	(529		)	(1,586		)
Bank overdrafts	1,626			(2,813		)	(3,468		)
Net cash used in financing activities	(499		)	(27,420		)	(5,348		)
Increase (decrease) in cash	(30,005		)	44,558			(2,408		)
Cash and cash equivalents at beginning of period	71,644			27,086			29,494
Cash and cash equivalents at end of period	$	41,639		$	71,644		$	27,086
Supplemental Cash Flows Information
Interest paid	$	553		$	2,298		$	2,592
Income taxes paid	$	4,360		$	—		$	3,987

See accompanying notes to consolidated financial statements.

41

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

1)    ORGANIZATION, CONSOLIDATION AND PRESENTATION

(a)Business

We incorporated as a blank-check company in May 2007 under Delaware law, and became a publicly-traded company in October 2007. In September 2008, we acquired an insurance holding company and its subsidiaries, and changed our name to United Insurance Holdings Corp. (UIHC).

Through our wholly-owned subsidiaries, we write and service property and casualty insurance policies in Florida, South Carolina and Massachusetts. We incorporated three of our subsidiaries under Florida law, including United Property and Casualty Insurance Company (UPC), which writes insurance policies; United Insurance Management, L.C. (UIM), the managing general agent that manages substantially all aspects of UPC's business; and Skyway Claims Services, LLC (SCS), a claims adjusting company that provides services to UPC. In April 2011, we formed a fourth subsidiary, UPC Re. Operating as a reinsurer under the laws of the Cayman Islands, UPC Re provides reinsurance protection to UPC.

The insurance regulatory authorities in Florida, South Carolina and Massachusetts have authorized UPC to write homeowner and dwelling property and casualty lines, as well as flood coverage under the National Flood Insurance Program. In 2011, the insurance regulatory authority in Rhode Island authorized UPC to write in that state, and UPC has applied to insurance regulatory authorities in two additional states to write property and casualty lines. Though the insurance regulatory authority has authorized UPC to write a commercial line of business in Florida that includes auto and multi-peril coverage, we voluntarily discontinued writing that line as of May 31, 2009.

We operated exclusively in Florida until July 1, 2010, when we began writing our policies in South Carolina. We also assumed a book of business in South Carolina from Sunshine State Insurance Company as of July 1, 2010, representing $5,294 of in-force homeowner premium. On November 1, 2011, we began writing policies in Massachusetts. We expanded outside of Florida to reduce our geographic concentration of exposure to catastrophic losses and our geographic concentration of credit risk.

We write our policies utilizing our agency network, though we occasionally supplement those writings by assuming policies from Citizens Property Insurance Corporation (Citizens), an insurer supported by the State of Florida.

We conduct our operations under one business segment.

(b)Consolidation and Presentation

We prepare our financial statements in conformity with U.S. generally accepted accounting principles (GAAP). While preparing our financial statements, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require us to make extensive use of estimates include our reserves for unpaid losses and loss adjustment expenses, reinsurance recoverable, deferred policy acquisition costs, and investments. Except for the captions on our Consolidated Balance Sheets and Consolidated Statements of Income, we generally use the term loss(es) to collectively refer to both loss and loss adjustment expenses.

We include all of our subsidiaries in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation.

We reclassified certain amounts in the 2010 and 2009 financial statements to conform to the 2011 presentation. These reclassifications had no impact on our results of operations, cash flows or stockholders' equity as previously reported.

42

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

2)    SIGNIFICANT ACCOUNTING POLICIES

(a) Cash and Cash Equivalents

Our cash and cash equivalents include demand deposits with financial institutions and short-term, highly-liquid instruments with original maturities of three months or less when purchased.

(b) Investments

We currently classify all of our investments in fixed maturities and equity securities as available-for-sale, and report them at fair value. Subsequent to our acquisition of available-for-sale securities, we record changes in value through the date of disposition as unrealized holding gains and losses, net of tax effects, and include them as a component of accumulated other comprehensive income included in stockholders’ equity. We include realized gains and losses, which we calculate using the specific-identification method for determining the cost of securities sold, in net income. We amortize any premium or discount on fixed maturities over the remaining maturity period of the related securities using the effective interest method, and we report the amortization in net investment income. We recognize dividends and interest income when earned.

Quarterly, we perform an assessment of our investments to determine if any are other-than-temporarily impaired. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of our assessment process, we determine whether the impairment is temporary or other-than-temporary. We base our assessment on both quantitative criteria and qualitative information, considering a number of factors including, but not limited to: how long the security has been impaired; the amount of the impairment; whether, in the case of equity securities, we intend to hold, and have the ability to hold, the security for a period sufficient for us to recover our cost basis, or whether, in the case of debt securities, we intend to sell the security or it is more likely than not that we will have to sell the security before we recover the amortized cost; the financial condition and near-term prospects of the issuer; whether the issuer is current on contractually-obligated interest and principal payments; key corporate events pertaining to the issuer and whether the market decline was affected by macroeconomic conditions.

If we determine that an equity security has incurred an other-than-temporary impairment, we permanently reduce the cost of the security to fair value and recognize an impairment charge in our Consolidated Statements of Income. If a debt security is impaired and we either intend to sell the security or it is more likely than not that we will have to sell the security before we are able to recover the amortized cost, then we record the full amount of the impairment in our Consolidated Statements of Income. If we determine that an impairment of a debt security is other-than-temporary and we neither intend to sell the security nor it is more likely than not that we will have to sell the security before we are able to recover its cost or amortized cost, then we separate the impairment into (a) the amount of impairment related to credit loss and (b) the amount of impairment related to all other factors. We record the amount of the impairment related to the credit loss as an impairment charge in our Consolidated Statements of Income, and we record the amount of the impairment related to all other factors in accumulated other comprehensive income.

A large portion of our investment portfolio consists of fixed maturities, which may be adversely affected by changes in interest rates as a result of governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. A rise in interest rates would decrease the net unrealized holding gains of our investment portfolio, offset by our ability to earn higher rates of return on funds reinvested. Conversely, a decline in interest rates would increase the net unrealized holding gains of our investment portfolio, offset by lower rates of return on funds reinvested.

(c)Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). When reporting the fair values of our financial instruments, we prioritize those fair value measurements into one of three levels based on the nature of the inputs, as follows:

• Level 1 – Valuations based on quoted prices in active markets for identical assets and liabilities;

43

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

• Level 2 – Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and quoted prices in active markets for similar, but not identical instruments; and

• Level 3 – Valuations based on unobservable inputs, which are based upon the best available information when external market data is limited or unavailable.

We estimate the fair value of our investments using the closing prices on the last business day of the reporting period, obtained from active markets such as the NYSE, NASDAQ, and AMEX. For securities for which quoted prices in active markets are unavailable, we use observable inputs such as quoted prices in inactive markets, quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes and other relevant inputs. We do not have any investments in our portfolio which require us to use unobservable inputs. Our estimates of fair value reflect the interest rate environment that existed as of the close of business on December 31, 2011, and 2010. Changes in interest rates subsequent to December 31, 2011, may affect the fair value of our investments.

The carrying amounts for the following financial instrument categories approximate their fair values at December 31, 2011 and 2010 because of their short-term nature: cash and cash equivalents, accrued investment income, premiums receivable, reinsurance recoverable, reinsurance payable, and accounts payable and accrued expenses. The carrying amounts of notes receivable and notes payable also approximate their fair values as the interest rate on the note payable is variable and the note receivable, which we recorded at fair value using a discounted cash flow methodology, is due in less than three years.

(d)Premiums

We record premiums as revenue, net of ceded amounts, on a daily pro rata basis over the contract period of the related policies that are in force. For any portion of premiums not earned at the end of the reporting period, we record an unearned premium liability.

Premiums receivable represents amounts due from our policyholders for billed premiums and related policy fees. We perform a policy-level evaluation to determine the extent to which the balance of premium receivable exceeds the balance of unearned premium. We then age any resulting exposure based on the last date the policy was billed to the policyholder, and we establish an allowance for credit losses for any amounts outstanding for more than 90 days. When we receive payments on amounts previously charged off, we credit bad debt expense in the period we receive the payment. The balances of our allowance for uncollectible premiums totaled $77 and $61 at December 31, 2011, and 2010, respectively.

When we receive premium payments from policyholders prior to the effective date of the related policy, we record an advance premiums liability. On the policy effective date, we reduce the advance premium liability and record the premiums as described above.

(e)Policy Acquisition Costs

We incur policy acquisition costs that vary with, and are directly related to, the production of new business. Policy acquisition costs consist primarily of the following three items: i) commissions paid to outside agents at the time of policy issuance and commissions paid to Citizens for policies assumed, net of commissions refunded for cancelled policies; ii) policy administration fees paid to a third-party administrator at the time of policy issuance; and iii) premium tax. We capitalize policy acquisition costs to the extent recoverable, then we amortize those costs over the contract period of the related policy, except for assumed commissions. We amortize our assumed commissions on a pro rata basis over the 12-month period from the date of assumption, and we amortize any subsequent changes in the amount of commission over the months remaining in the original 12-month period.

At each reporting date, we determine whether we have a premium deficiency. A premium deficiency would result if the sum of our expected losses, deferred policy acquisition costs, and policy maintenance costs (such as costs to store records and costs incurred to collect premiums and pay commissions) exceeded our related unearned premiums plus investment income.

44

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

Should we determine that a premium deficiency exists, we would write off the unrecoverable portion of deferred policy acquisition costs.

(f)Long-lived Assets

i)Property and Equipment

We classify our property and equipment, which we record at cost less accumulated depreciation and amortization, within other assets on our Consolidated Balance Sheets because the total net amount ($223 at December 31, 2011) is not material to our consolidated financial statements. We use the straight-line method of calculating depreciation over the estimated useful lives of the assets, which are three to five years. We also use the straight-line method to calculate amortization of leasehold improvements over the estimated useful lives of the assets or the term of the lease, whichever is shorter. We periodically review estimated useful lives and, where appropriate, we make changes prospectively. We charge maintenance and repair costs to expense as incurred.

ii)Capitalized Software

We capitalize certain direct development costs associated with internal-use software related to our policy administrator and, because the total amount ($872 at December 31, 2011) is not material to our consolidated financial statements, we classify it within other assets on our Consolidated Balance Sheets. We amortize capitalized software costs over the unexpired portion of the contract term. The contract term at the time we put the software into use, which is six years, is the minimum period of time we expect the software to be useful to us.

iii)Impairment of Long-lived Assets

We annually review our long-lived assets, including intangible assets, to determine if their carrying amounts are recoverable. If the non-discounted future cash flows expected to result from the use and eventual disposition of the assets are less than their carrying amounts, we reduce their carrying amounts to fair value and recognize an impairment loss.

(g)Unpaid Losses and Loss Adjustment Expenses

Our reserves for unpaid losses represent the estimated ultimate cost of settling all reported claims plus all claims we incurred related to insured events that have occurred as of the reporting date, but that policyholders have not yet reported to us (incurred but not reported, or IBNR, claims).

We estimate our reserves for unpaid losses using individual case-basis estimates for reported claims and actuarial estimates for IBNR claims, and we continually review and adjust our estimated losses as necessary based on our historical experience and as we obtain new information. If our unpaid loss reserves prove to be deficient or redundant, we increase or decrease the liability in the period in which we identify the difference, thereby impacting net income. Though our estimate of the ultimate cost of settling all reported and unreported claims may change at any point in the future, a reasonable possibility exists that our estimate may vary significantly in the near term from the estimated amounts included in our consolidated financial statements.

On our Consolidated Balance Sheets, we report our reserves for unpaid losses gross of the amounts related to unpaid losses recoverable from reinsurers. On our Consolidated Statements of Income, we report losses net of amounts ceded to reinsurers. We do not discount our loss reserves for financial statement purposes.

(h)Managing General Agent Fees and Policy Fees

Our policy fees consist of the managing general agent fee and a pay-plan fee. Florida law allows managing general agents to charge policyholders a $25.00 fee on each policy written; we defer such fees as unearned revenue and then include them in

45

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

income on a pro rata basis over the term of the underlying policies. We record our pay-plan fees, which we charge to all policyholders that pay their premium in more than one installment, as income when collected. We report all policy-related fees in other revenue on our Consolidated Statements of Income.

(i)Reinsurance

Our reinsurance agreements are short-term, prospective contracts. We record an asset, prepaid reinsurance premiums, and a liability, reinsurance payable, for the entire contract amount upon commencement of our new reinsurance agreements. We amortize our prepaid reinsurance premiums over the 12-month contract period.

We record amounts recoverable from our reinsurers on paid losses plus an estimate of amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is a function of our liability for unpaid losses associated with the reinsured policies; therefore, the amount changes in conjunction with any changes to our estimate of unpaid losses. Though our estimate of amounts recoverable from reinsurers on unpaid losses may change at any point in the future because of its relation to our reserves for unpaid losses, a reasonable possibility exists that our estimate may change significantly in the near term from the amounts included in our consolidated financial statements.

We estimate uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. We recorded no bad debt expense related to reinsurance during the years ended December 31, 2011, 2010 or 2009.

(j)Assessments

We record guaranty fund and other insurance-related assessments imposed upon us as an expense in the period the regulatory agency imposes the assessment. To recover the assessment, we use a process, created by Florida statute, known as Use and File (neither South Carolina nor Massachusetts have imposed any assessments upon us). We calculate and begin collecting a policy surcharge that will allow us to collect the entire assessment over a 12-month period, based on our estimate of the number of policies we expect to write. We then submit a filing to the insurance regulatory authority requesting formal approval of the policy surcharge. The process may be repeated in successive 12-month periods until we collect the entire assessment. We record the recoveries as revenue in the period that we collect the cash. While current regulations allow us to recover from policyholders the amount of assessments imposed upon us, our payment of the assessments and our recoveries may not offset each other in the same fiscal period in our financial statements.

We collect assessments imposed upon policyholders as a policy surcharge and we record the amounts collected as a liability until we remit the amounts to the regulatory agency that imposed the assessment.

(k)Income Taxes

Under a tax sharing agreement we entered into with each of our subsidiaries, we file consolidated tax returns. We allocate taxes to each subsidiary in proportion to the amount of taxable income that each subsidiary contributes to the consolidated taxable income.

We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. Should a change in tax rates occur, we recognize the effect on deferred tax assets and liabilities in operations in the period that includes the enactment date. Realization of our deferred income tax assets depends upon our generation of sufficient future taxable income.

We record any income tax penalties and income-tax-related interest as income tax expense in the period incurred. We did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2011, 2010 or 2009.

46

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

(l)Advertising Costs

We expense all advertising costs when we incur those costs. For the years ended December 31, 2011, 2010 or 2009, we incurred advertising costs of $1,041, $783, and $712, respectively.

(m)Earnings Per Share

We report both basic earnings per share and diluted earnings per share. To calculate basic earnings per share, we divide net income by the weighted-average number of common stock shares outstanding during the period. We calculate diluted earnings per share by dividing net income by the weighted-average number of common stock shares and common stock equivalents outstanding during the period. Prior to the expiration of our warrants, we used the treasury stock method to calculate common stock equivalents.

(n)Concentrations of Risk

Our current operations subject us to the following concentrations of risk:

•a concentration of revenue because we write primarily homeowners policies

• a concentration in our distribution network because two agency groups provide approximately 55% of our direct premiums written

• a geographic concentration resulting from the fact that, though we now operate in three states, we still write approximately 95% of our premium in Florida

• a group concentration of credit risk with regard to our reinsurance recoverable, since all of our reinsurers engage in similar activities and have similar economic characteristics that could cause their ability to repay us to be similarly affected by changes in economic or other conditions

• a concentration of credit risk with regard to our cash, because we choose to deposit all our cash at two financial institutions

We mitigate our geographic and group concentrations of risk by entering into reinsurance contracts with financially-stable reinsurers, and by securing irrevocable letters of credit from reinsurers when necessary.

With regard to our cash, we had $3,299 and $55,443 in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits at December 31, 2011, and December 31, 2010, respectively. For calendar years 2011 and 2012, the FDIC expanded its insurance coverage to 100% of any amount in a non-interest-bearing deposit account. As a result, the only uninsured cash amount we had as of December 31, 2011 related to our interest-bearing money market account.

(o)Pending Accounting Pronouncements

In October 2010, the FASB issued ASU No. 2010-26, Financial Services—Insurance (Topic 944): Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. The amendments in ASU No. 2010-26 address diversity in practice regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral; they clarify which costs should be deferred and which costs should be expensed when incurred. The amendments in ASU No. 2010-26 become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. Since we already record deferred acquisition costs as specified by the amendments, we do not expect that our adoption of ASU No. 2010-26 will have a material effect on our consolidated financial statements.

47

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments in ASU No. 2011-05 give entities the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments in ASU No. 2011-05 become effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. Since we already present the total of comprehensive income, the components of net income, and the components of other comprehensive income in a single continuous statement as specified by the amendments, our adoption of ASU No. 2011-05 did not have a material effect on our consolidated financial statements.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. The amendments in ASU No. 2011-12 delay the effective date of certain provisions in ASU No. 2011-05 that relate to reclassification items until such time as the Financial Accounting Standards Board has time to re-deliberate the presentation of those items. All other provisions of ASU No. 2011-05 take effect on the date originally noted in that ASU.

3)    INVESTMENTS

The following table details the difference between cost or adjusted/amortized cost and estimated fair value, by major investment category, at December 31, 2011, and 2010:

	Cost or Adjusted/Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2011
U.S. government and agency securities	$	48,011	$	219	$	111	$	48,119
States, municipalities and political subdivisions	17,159		1,207		—		18,366
Corporate securities	51,135		2,366		145		53,356
Redeemable preferred stocks	558		—		21		537
Total fixed maturities	116,863		3,792		277		120,378
Common stocks	2,807		359		43		3,123
Nonredeemable preferred stocks	477		—		19		458
Total equity securities	3,284		359		62		3,581
Other long-term investments	300		—		—		300
Total investments	$	120,447	$	4,151	$	339	$	124,259
December 31, 2010
U.S. government and agency securities	$	32,841	$	119	$	65	$	32,895
States, municipalities and political subdivisions	13,305		10		336		12,979
Corporate securities	4,029		18		—		4,047
Redeemable preferred stocks	809		—		47		762
Total fixed maturities	50,984		147		448		50,683
Common stocks	3,061		47		60		3,048
Nonredeemable preferred stocks	605		—		38		567
Total equity securities	3,666		47		98		3,615
Other long-term investments	300		—		—		300
Total investments	$	54,950	$	194	$	546	$	54,598

48

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

When we sell investments, we calculate the gain or loss realized on the sale by comparing the sales price (fair value) to the cost or adjusted/amortized cost of the security sold. We determine the cost or adjusted/amortized cost of the security sold using the specific-identification method. The following tables detail our realized gains (losses) by major investment category for the years ended December 31, 2011, 2010 and 2009:

	2011					2010					2009
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
Fixed maturities	$	231		$	21,803	$	4,278		$	105,637	$	1,545		$	40,418
Equity securities	10			65		149			2,731		1,165			4,977
Total realized gains	241			21,868		4,427			108,368		2,710			45,395
Fixed maturities	(58		)	3,191		(43		)	15,700		(51		)	1,574
Equity securities	(25		)	335		(38		)	1,310		(822		)	1,111
Total realized losses	(83		)	3,526		(81		)	17,010		(873		)	2,685
Net realized investment gains	$	158		$	25,394	$	4,346		$	125,378	$	1,837		$	48,080

Various states in which we operate or will be operating require us, by statute, to maintain deposits to secure the payment of claims. The table below summarizes our statutorily-required deposits at December 31, 2011.

	Type of Security Deposited	Cost/Amortized Cost		Fair Value
Florida	Certificate of Deposit	$	300	$	300
Amount reflected in other long-term investments		300		300
South Carolina	U.S. Treasury Note	1,001		1,003
Massachusetts	Municipal Bond	104		111
Amount reflected in fixed maturities		1,105		1,114
Securities deposited with insurance regulatory authorities		$	1,405	$	1,414

The CD we deposited with the Florida insurance regulatory authority is a twelve-month, automatically renewing CD. The par value of the securities we deposited with the South Carolina and Massachusetts insurance regulatory authorities are $1,000 and $100, respectively.

The table below summarizes our fixed maturities at year end by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturity of those obligations.

	December 31, 2011
	Cost or Amortized Cost		Percent of Total		Fair Value		Percent of Total
Due in one year or less	$	37,870	32.4	%	$	37,795	31.4	%
Due after one year through five years	31,252		26.8	%	31,662		26.3	%
Due after five years through ten years	30,761		26.3	%	32,809		27.3	%
Due after ten years	16,980		14.5	%	18,112		15.0	%
Total	$	116,863	100.0	%	$	120,378	100.0	%

49

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

The following table summarizes our net investment income by major investment category:

	Year Ended December 31,
	2011			2010			2009
Fixed maturities	$	2,628		$	3,639		$	4,274
Equity securities	142			203			293
Cash, cash equivalents and short-term investments	19			37			264
Other investments	$	34		$	—		$	—
Net investment income	$	2,823		$	3,879		$	4,831
Investment expenses	(140		)	(147		)	(164		)
Net investment income, less investment expenses	$	2,683		$	3,732		$	4,667

The following table presents an aging of our unrealized investment losses by investment class:

	Less Than Twelve Months					Twelve Months or More
	Number of Securities*	Gross Unrealized Losses		Fair Value		Number of Securities*	Gross Unrealized Losses		Fair Value
December 31, 2011
U.S. government and agency securities	2	$	90	$	16,915	1	$	21	$	1,627
Corporate securities	3	145		3,924		—	—		—
Redeemable preferred stocks	—	—		—		4	21		537
Total fixed maturities	5	235		20,839		5	42		2,164
Common stocks	12	40		740		1	3		9
Nonredeemable preferred stocks	—	—		—		3	19		458
Total equity securities	12	40		740		4	22		467
Total	17	$	275	$	21,579	9	$	64	$	2,631
December 31, 2010
U.S. government and agency securities	7	$	65	$	9,611	—	$	—	$	—
States, municipalities and political subdivisions	13	336		11,951		—	—		—
Redeemable preferred stocks	—	—		—		6	47		763
Total fixed maturities	20	401		21,562		6	47		763
Common stocks	19	17		810		4	43		423
Nonredeemable preferred stocks	—	—		—		4	38		567
Total equity securities	19	17		810		8	81		990
Total	39	$	418	$	22,372	14	$	128	$	1,753

* This amount represents the actual number of discrete securities, not the number of shares of those securities. The number is not presented in thousands.

During the years ended December 31, 2011, 2010 and 2009, we recorded other-than-temporary impairment charges of $31, $97, and $1,878, respectively. We have never recorded an OTTI charge on our debt-security investments.

50

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

During our quarterly evaluations of our securities for impairment, we determined that, other than the one security on which we recorded an other-than-temporary impairment charge, none of our investments in debt and equity securities that reflected an unrealized loss position were other-than-temporarily impaired. The issuers of our debt securities continue to make interest payments on a timely basis and have not suffered any credit rating reductions.  We do not intend to sell nor is it likely that we would be required to sell the debt securities before we recover our amortized cost basis. All the issuers of the equity securities we own had near-term prospects that indicated we could recover our cost basis, and we also have the ability and the intent to hold these securities until their value equals or exceeds their cost.

The following table presents the fair value measurements of our financial instruments by level at December 31, 2011 and December 31, 2010:

December 31, 2011	Total		Level 1		Level 2		Level 3
U.S. government and agency securities	$	48,119	$	24,176	$	23,943	$	—
States, municipalities and political subdivisions	18,366		—		18,366		—
Corporate securities	53,356		—		53,356		—
Redeemable preferred stocks	537		537		—		—
Total fixed maturities	120,378		24,713		95,665		—
Common stocks	3,123		3,123		—		—
Nonredeemable preferred stocks	458		458		—		—
Total equity securities	3,581		3,581		—		—
Other long-term investments	300		300		—		—
Total investments	$	124,259	$	28,594	$	95,665	$	—
December 31, 2010
U.S. government and agency securities	$	32,895	$	—	$	32,895	$	—
States, municipalities and political subdivisions	12,979		—		12,979		—
Corporate securities	4,047		—		4,047		—
Redeemable preferred stocks	762		762		—		—
Total fixed maturities	50,683		762		49,921		—
Common stocks	3,048		3,048		—		—
Nonredeemable preferred stocks	567		567		—		—
Total equity securities	3,615		3,615		—		—
Other long-term investments	300		300		—		—
Total investments	$	54,598	$	4,677	$	49,921	$	—

For our investments in U.S. government securities that do not have prices in active markets, agency securities, state and municipal governments, and corporate bonds, we obtain the fair values from Synovus Trust Company, NA, which uses a third-party valuation service. The valuation service calculates prices for our investments in the aforementioned security types on a month-end basis by using several matrix-pricing methodologies that incorporate inputs from various sources. The model the valuation service uses to price U.S. government securities and securities of states and municipalities incorporates inputs from active market makers and inter-dealer brokers. To price corporate bonds and agency securities, the valuation service calculates non-call yield spreads on all issuers, uses option-adjusted yield spreads to account for any early redemption features, then adds final spreads to the U.S. Treasury curve at 3 p.m. (ET) as of quarter end. Since the inputs the valuation service uses in their calculations are not quoted prices in active markets, but are observable inputs, they represent Level 2 inputs.

51

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

4)    EARNINGS PER SHARE

At December 31, 2010 and 2009, we had 7,077,375 warrants outstanding; each warrant could have been exercised for one share of common stock. On October 4, 2011, the warrants expired. For the years ended December 31, 2010 and 2009, the warrants were anti-dilutive.

At December 31, 2009, we had 350,000 unit purchase options outstanding; each unit consisted of a share of common stock and a warrant to purchase a share of common stock. On October 4, 2010, the unit purchase options expired. For the year ended December 31, 2009, the units were anti-dilutive.

5)    DEFERRED POLICY ACQUISITION COSTS

We anticipate that our deferred policy acquisition costs will be fully recoverable in the near term. The table below depicts the activity with regard to deferred policy acquisition costs:

	2011			2010
Balance at January 1	$	9,342		$	9,256
Policy acquisition costs deferred	29,744			23,407
Amortization	(26,762		)	(23,321		)
Balance at December 31	$	12,324		$	9,342

6)    REINSURANCE

We follow industry practice of reinsuring a portion of our risks. Reinsurance involves transferring, or “ceding”, all or a portion of the risk exposure on policies we write to another insurer, known as a reinsurer. To the extent that our reinsurers are unable to meet the obligations they assume under our reinsurance agreements, we remain liable for the entire insured loss.

Our catastrophe reinsurance agreements provide us coverage against severe weather events. We entered into excess-of-loss agreements with several private reinsurers and with the Florida Hurricane Catastrophe Fund. The private agreements provide coverage against severe weather events such as hurricanes, tropical storms and tornadoes. The agreement with the FHCF only provides coverage against storms that the National Hurricane Center designates as a hurricane at landfall.

For the policy year beginning June 1, 2011, we have a private catastrophe reinsurance agreement structured into layers. The coverage provided by one layer picks up, or “attaches”, at the point where coverage under the previous layer ends. Our agreement with the FHCF divides our coverage into three layers: the Limited-Apportionment Company layer, the Mandatory layer and the Temporary-Increase-in-Coverage-Limit layer.

For a single hurricane catastrophe, we have chosen to pay, or “retain”, the first $15,000 of catastrophe losses before our reinsurance contracts provide coverage. For a second catastrophe, we would also retain the first $15,000 of catastrophe losses. Our agreements will reimburse us as much as $520,000 for the first event.

For a single non-hurricane catastrophe, we would retain the first $25,000 of catastrophe losses. For a second non-hurricane catastrophe, we would also retain the first $25,000 of catastrophe losses. Our agreements will reimburse us as much as $129,000 for the first event.

With regard to all of our reinsurance agreements, we retain aggregate catastrophe losses, from all events, exceeding our reinsurance coverage.

Our agreement with the FHCF allows for one reinstatement of coverage provided by the LAC layer should losses resulting from one hurricane exhaust that coverage, while our agreement with the private reinsurers allows for one reinstatement of coverage on all the private layers should losses resulting from one or more severe weather events exhaust that coverage. The

52

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

FHCF LAC layer provides for reinstatement of coverage at no additional premium; however, our private agreement requires us to pay 100% additional premium to reinstate the coverage it provides. To protect us in the event a reinstatement of coverage under our private agreement becomes necessary, we purchased a reinsurance premium protection policy. Our RPP policy reimburses us 100% of the amount of any reinstatement premium that we would have to pay to reinstate coverage on the first private layer and 70% on the second private layer. Our agreement with the FHCF does not provide for reinstatement of the coverage provided by the Mandatory or TICL layers.

Our non-catastrophe reinsurance agreement provides excess-of-loss coverage for losses arising out of property business up to $1,700 in excess of $1,000 per risk. Should a loss recovery, or series of loss recoveries, exhaust the coverage provided under the agreement for losses arising out of property business, one reinstatement of the $1,700 of coverage limit is included at 50% additional premium. The agreement, including reinstatements, provides aggregate coverage of $3,400 for losses arising out of property business, while any single occurrence is limited to $1,700. The agreement also provides coverage for losses arising out of a combination of property and casualty business up to $2,200 in excess of $1,000 per occurrence, subject to a maximum recovery on any one loss occurrence, regardless of the number of risks involved for property or the number or type of insureds for casualty, of $2,200.

For the Garage program that we discontinued as of May 31, 2009, we entered into quota share reinsurance agreements for policy years prior to the 2009-2010 policy year, but we did not enter into a new quota share agreement after July 31, 2009. We recognized commission revenue on our previous quota share agreements totaling $(48), $924 and $405 for the years ended December 31, 2011, 2010, and 2009, respectively.

We write flood insurance under an agreement with the National Flood Insurance Program. We cede 100% of the premiums written and the related risk of loss. We earn commissions for the issuance of flood policies based upon a fixed percentage of net written premiums and the processing of flood claims based upon a fixed percentage of incurred losses, and we can earn additional commissions by meeting certain growth targets for the number of in-force policies. We recognized commission revenue from our flood program of $377, $516, and $436, for the years ended December 31, 2011, 2010 and 2009, respectively.

We amortize our prepaid reinsurance premiums over the annual agreement period, and we record that amortization in ceded premiums earned on our unaudited Consolidated Statements of Income. The table below summarizes the amounts of our ceded premiums written under the various types of agreements, as well as the amortization of prepaid reinsurance premiums:

	2011			2010			2009
Excess-of-loss	$	(82,832	)	$	(77,202	)	$	(82,402	)
Quota share	(587		)	(140		)	(1,039		)
Flood	(9,999		)	(9,132		)	(8,538		)
Ceded premiums written	$	(93,418	)	$	(86,474	)	$	(91,979	)
Increase (decrease) in ceded unearned premiums	2,661			(1,978		)	13,767
Ceded premiums earned	$	(90,757	)	$	(88,452	)	$	(78,212	)

Effective June 1, 2011, we commuted our 2005 contract with the FHCF; any catastrophe losses we incur (in excess of amounts we reported to the FHCF as of June 1, 2011) on events that occurred during the 2005 contract year that would otherwise have been covered by the FHCF contract prior to commutation will not be reimbursed by the FHCF, though our contracts with our private reinsurers remain in effect with respect to such losses. We settled all outstanding claims with the FHCF related to Hurricane Wilma for $12,738, which we received during the third quarter of 2011. At the time we commuted the contract, our reinsurance recoverable included $13,630 of unpaid losses related to Hurricane Wilma. As a result of settling for less than what we had already recorded as ceded losses, our catastrophe losses incurred for prior accident years increased by $892 during the second quarter.

53

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

The following table depicts written premiums, earned premiums and losses, showing the effects that our reinsurance transactions have on these components of our Consolidated Statements of Income:

	Year ended December 31,
	2011			2010			2009
Premium written:
Direct	$	199,606		$	155,875		$	154,339
Assumed	4,200			2,762			1,501
Ceded	(93,418		)	(86,475		)	(91,979		)
Net premium written	$	110,388		$	72,162		$	63,861
Change in unearned premiums:
Direct	$	(23,666	)	$	(2,603	)	$	(3,699	)
Assumed	697			(727		)	4,252
Ceded	2,661			(1,977		)	13,767
Net decrease (increase)	$	(20,308	)	$	(5,307	)	$	14,320
Premiums earned:
Direct	$	175,940		$	153,272		$	150,641
Assumed	4,897			2,035			5,752
Ceded	(90,757		)	(88,452		)	(78,212		)
Net premiums earned	$	90,080		$	66,855		$	78,181
Losses and LAE incurred:
Direct	$	35,774		$	60,508		$	58,447
Assumed	2,554			1,436			4,423
Ceded	533			(19,411		)	(22,115		)
Net losses and LAE incurred	$	38,861		$	42,533		$	40,755

Ceded losses incurred decreased by $19,944 during the year ended December 31, 2011 compared to the year ended December 31, 2010 primarily for two reasons: i) favorable loss development on prior-year claims allowed us to reduce our estimate of ultimate losses, and ii) we commuted the 2005 FHCF contract during 2011 and the 2004 FHCF contract in 2010. Additionally, the statute of limitations related to insured events occurring during the 2005 and 2004 storm years expired, so policyholders cannot report new claims as they could in the prior year, nor are policyholders reopening as many previously-closed claims as in the prior year. The losses we incurred in 2011, 2010 or 2009 related to storms that occurred in those same years did not exceed our retained loss threshold.

54

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

The following table highlights the effects that our reinsurance transactions have on unpaid losses and loss adjustment expenses and unearned premiums in our Consolidated Balance Sheets:

	December 31,
	2011			2010
Unpaid losses and LAE, net:
Direct	$	30,501		$	43,999
Assumed	3,099			3,415
Ceded	(3,318		)	(23,814		)
Net unpaid losses and LAE	$	30,282		$	23,600
Unearned premiums, net:
Direct	$	100,042		$	76,376
Assumed	88			785
Ceded	(40,968		)	(38,307		)
Net unearned premiums	$	59,162		$	38,854

Reinsurance recoverable at the balance sheet dates consists of the following:

	December 31,
	2011		2010
Reinsurance recoverable on unpaid losses and LAE	$	3,318	$	23,814
Reinsurance recoverable on paid losses and LAE	1,140		3,490
Reinsurance recoverable	$	4,458	$	27,304

During the years ended December 31, 2011, 2010 and 2009, we recognized recoveries totaling $22,278, $17,447 and $18,938, respectively, under our reinsurance agreements.

7)    RESERVE FOR UNPAID LOSSES

We determine the reserve for unpaid losses on an individual-case basis for all incidents reported. The liability also includes amounts for IBNR claims as of the balance sheet date.

55

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

The table below summarizes the activity related to our reserve for unpaid losses:

	2011			2010		2009
Balance at January 1	$	47,414		$	44,112	$	40,098
Less: reinsurance recoverable on unpaid losses	23,814			23,447		20,906
Net balance at January 1	$	23,600		$	20,665	$	19,192
Incurred related to:
Current year	43,019			41,527		43,731
Prior years	(4,158		)	1,006		(2,976		)
Total incurred	$	38,861		$	42,533	$	40,755
Paid related to:
Current year	28,857			27,065		30,637
Prior years	3,322			12,533		8,645
Total paid	$	32,179		$	39,598	$	39,282
Net balance at December 31	$	30,282		$	23,600	$	20,665
Plus: reinsurance recoverable on unpaid losses	3,318			23,814		23,447
Balance at December 31	$	33,600		$	47,414	$	44,112

Based upon our internal analysis and our review of the statement of actuarial opinion provided by our actuarial consultants, we believe that the reserve for unpaid losses reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.

As reflected by our losses incurred related to prior years, we had a reserve redundancy in 2011 compared to a reserve deficiency in 2010. Since we place substantial reliance on loss-development-based actuarial models when determining our estimate of ultimate losses, the redundancy in 2011 resulted from reductions to our estimate of ultimate losses because of continued favorable loss development on claims incurred in prior years.

8)    LONG-TERM DEBT

Our long-term debt at December 31, 2011 and 2010 consisted of a note payable to the Florida State Board of Administration. As of December 31, 2011 and 2010, we owed $17,059 and $18,235, respectively, on the note and the interest rate was 1.99% and 2.77%, respectively.

At December 31, 2011, the annual maturities of our long-term debt are as follows:

	Amount
2012	$	1,176
2013	1,176
2014	1,176
2015	1,176
2016	1,176
Thereafter	11,179
Total debt	17,059

We executed the 20-year, $20,000 note payable to the SBA under its Insurance Capital Build-Up Incentive Program, effective October 1, 2006. The stated rate for the SBA note is a rate equivalent to the 10-year U.S. Treasury Bond rate. We made quarterly interest-only payments for the first three years, then, as of October 1, 2009, we began making quarterly principal and interest payments.

56

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

We agreed to certain covenants, the violation of which could cause an event of default. Among others, these covenants include: 1) maintaining statutory surplus greater than or equal to $50,000 less repayments of principal on the note, catastrophic losses paid since the note incepted and any deferred acquisition costs related to Florida policies, calculated at December 31, 2011 as $41,966, 2) refraining from the payment of dividends when principal and/or interest payments related to the note are past due, and 3) maintaining a minimum writing ratio. The note permits us to meet either of the following ratios:

• a writing ratio based on net written premium to surplus of 2:1 ratio for the year beginning January 1, 2010 and thereafter for the remaining term of the note agreement, or

• a writing ratio based on gross written premium to surplus of 6:1 ratio for the year beginning January 1, 2010 and thereafter for the remaining term of the note agreement.

As part of the program, the SBA required that we contribute an equivalent amount of capital to UPC; therefore, UIM made a $20,000 capital contribution to UPC at the time we executed the note in 2006. For purposes of calculating the writing ratio on a quarterly basis, the amended note defines surplus as the sum of the $20,000 matching contribution of capital to UPC and the outstanding principal balance of the note. Should we fail to exceed either a net writing ratio of 1.5:1 or a gross writing ratio of 4.5:1, our interest rate will increase by 450 basis points above the stated rate of the note. Any other writing ratio deficiencies result in an interest rate penalty of 25 basis points above the stated rate of the note.

The SBA note states that if we fail to exceed either a net writing ratio of 1:1 or a gross writing ratio of 3:1 for three consecutive quarters, we will be obligated to repay a portion of the SBA note such that the appropriate minimum writing ratio will be obtained for the following quarter. Our SBA note further provides that the SBA may, among other things, declare its loan immediately due and payable for all defaults existing under the SBA note; however, the insurance regulatory authority in Florida would only authorize a payment to the SBA if such payment did not create a hazardous financial condition at UPC.

During 2011, and at December 31, 2011, we complied with all covenants as specified in the SBA note, though we paid some additional interest during the first quarter of 2011 as a result of violating the writing ratio covenant during the fourth quarter of 2010.

9)    Income Taxes

The following table summarizes the provision for income taxes:

	Year Ended December 31,
	2011		2010		2009
Federal:
Current	4,864		(843	)	868
Deferred	(656	)	423		1,058
Provision for (benefit from) Federal income tax expense	4,208		(420	)	1,926
State:
Current	664		8		148
Deferred	56		(71	)	196
Provision for (benefit from) State income tax expense	720		(63	)	344
Provision for (benefit from) income taxes	4,928		(483	)	2,270

57

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

The actual income tax expense differs from the expected income tax expense computed by applying the combined applicable effective federal and state tax rates to income before the provision for income taxes as follows:

	Year Ended December 31,
	2011		2010		2009
Expected income tax expense (benefit) at federal rate	4,425		(479	)	2,151
State tax expense (benefit), net of federal deduction benefit	472		(71	)	287
Dividend received deduction	(38	)	(60	)	(83	)
Other, net	69		127		(85	)
Reported income tax expense (benefit)	4,928		(483	)	2,270

Deferred income taxes, which is included in other assets or other liabilities as appropriate, reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The table below summarizes the significant components of our net deferred tax asset:

	December 31,
	2011		2010
Deferred tax assets:
Unearned premiums	4,356		2,998
Assessments	4		179
Tax-related discount on loss reserve	726		499
Bad debt expense	30		23
Other-than-temporary impairment	105		140
Acquired deferred tax asset	172		172
Other	304		178
Total deferred tax assets	5,697		4,189
Deferred tax liabilities:
Unrealized gain	(1,470	)	136
Deferred acquisitions costs	(4,285	)	(3,264	)
Capitalized software	(297	)	(323	)
Other	(104	)	(192	)
Total deferred tax liabilities	(6,156	)	(3,643	)
Less: valuation allowance	(172	)	(172	)
Net deferred tax asset (liability)	(631	)	374

In assessing the net realizable value of deferred tax assets, we consider whether it is more likely than not that we will not realize some portion or all of the deferred tax assets. The ultimate realization of deferred tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

The statute of limitations related to our consolidated Federal income tax returns and our Florida income tax returns expired for all tax years up to and including 2007; therefore, only the 2008 through 2011 tax years remain subject to examination by taxing authorities. No taxing authorities are currently examining any of our federal or state income tax returns.

As of December 31, 2011, we have not taken any uncertain tax positions with regard to our tax returns.

58

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

10)    STATUTORY ACCOUNTING AND REGULATION

The insurance industry is heavily-regulated. State laws and regulations, as well as national regulatory agency requirements, govern the operations of all insurers such as UPC. The various laws and regulations require that insurers maintain minimum amounts of statutory surplus and risk-based capital, they restrict insurers' ability to pay dividends, they specify allowable investment types and investment mixes, and they subject insurers to assessments.

Our UPC subsidiary is domiciled in Florida, and the laws of that state require that UPC maintain capital and surplus equal to the greater of 10% of its total liabilities or $5,000. Our statutory capital surplus was $48,188 at December 31, 2011. State law also requires UPC to adhere to prescribed premium-to-capital surplus ratios, with which we were in compliance at December 31, 2011.

The National Association of Insurance Commissioners published risk-based capital guidelines for insurance companies that are designed to assess capital adequacy and to raise the level of protection that statutory surplus provides for policy holders. Most states, including Florida, have enacted the NAIC guidelines as statutory requirements, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. State insurance regulatory authorities could require an insurer to cease operations in the event the insurer fails to maintain the required statutory capital. At December 31, 2011, UPC exceeded the minimum risk-based capital requirements.

Florida law permits an insurer to pay dividends or make distributions out of that part of statutory surplus derived from net operating profit and net realized capital gains. The law further provides calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authority and the amount of dividends or distributions that would require prior approval of the insurance regulatory authority. Statutory risk-based capital requirements may further restrict UPC’s ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum risk-based capital requirements.

Florida law limits an insurer’s investment in equity instruments and also restricts investments in medium to low quality debt instruments. We were in compliance with all investment restrictions at December 31, 2011, and 2010.

Governmental agencies or certain quasi-governmental entities can levy assessments upon us in the states in which we write policies. See Note 2(j) for a description of how we recover assessments imposed upon us.

The table below summarizes the activity related to assessments levied upon UPC:

	2011		2010		2009
Expected recoveries of assessments, January 1	413		1,525		2,235
Assessments expensed	—		—		1,045
Assessments recovered	(403	)	(1,103	)	(1,688	)
Assessments not recoverable	—		(9	)	(67	)
Expected recoveries of assessments, December 31	10		413		1,525

We expense an assessment when the particular governmental agency or quasi-governmental entity levies it upon us; therefore, expected recoveries in the table above are not assets and we will record the amounts as income when collected from policyholders.

Governmental agencies or certain quasi-governmental entities can also levy assessments upon policyholders, and we collect the amount of the assessments from policyholders as surcharges for the benefit of the assessing agency. We currently collect assessments levied upon policyholders on behalf of Citizens in the amount of 1.0%, and on behalf of FHCF in the amount of 1.3%. We multiply the premium written on each policy, except our flood policies, by these assessment percentages to determine the additional amount that we will collect from the policyholder and remit to the assessing agencies.

59

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

The note payable to the SBA is considered a surplus note pursuant to statutory accounting principles. As a result, UPC is subject to the authority of the Insurance Commissioner of the State of Florida with regard to its ability to repay principal and interest on the surplus note. Any payment of principal or interest requires permission from the insurance regulatory authority.

We have reported our insurance subsidiary’s assets, liabilities and results of operations in accordance with GAAP, which varies from statutory accounting principles prescribed or permitted by state laws and regulations, as well as by general industry practices. The following items are principal differences between statutory accounting and GAAP:

• Statutory accounting requires that we exclude certain assets, called non-admitted assets, from the balance sheet.

• Statutory accounting requires us to expense policy acquisition costs when incurred, while GAAP allows us to defer and amortize policy acquisition costs over the estimated life of the policies.

• Statutory accounting requires that we calculate deferred income taxes differently than we would under GAAP.

• Statutory accounting requires that we record certain investments at cost or amortized cost, while we record other investments at fair value; however, GAAP requires that we record all investments at fair value.

• Statutory accounting requires that surplus notes, also known as surplus debentures, be recorded in statutory surplus, while GAAP requires us to record surplus notes as a liability.

Our insurance subsidiary must file with the various insurance regulatory authorities an “Annual Statement” which reports, among other items, net income (loss) and surplus as regards policyholders, which is called stockholder’s equity under GAAP.

The table below reconciles our consolidated GAAP net income to the statutory net loss of UPC:

	Year Ended December 31,
	2011		2010		2009
Consolidated GAAP net income (loss)	8,088		(925	)	4,057
Increase (decrease) due to:
Commissions	56		(11	)	(225	)
Deferred income taxes	(1,278	)	247		667
Deferred policy acquisition costs	(98	)	(310	)	652
Allowance for doubtful accounts	16		(309	)	64
Assessments	(453	)	(1,110	)	(884	)
Prepaid expenses	187		(275	)	3
Premium deficiency reserve	302		—		—
Operations of non-statutory subsidiaries	(11,452	)	(3,489	)	(12,383	)
Statutory net loss of UPC	(4,632	)	(6,182	)	(8,049	)

60

UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

The table below reconciles our consolidated GAAP stockholders’ equity to the surplus as regards policyholders of UPC:

	December 31,
	2011		2010
Consolidated GAAP stockholders’ equity	54,989		45,293
Increase (decrease) due to:
Deferred policy acquisition costs	(3,452	)	(3,354	)
Deferred income taxes	(295	)	(471	)
Investments	(2,145	)	165
Non-admitted assets	(397	)	(109	)
Surplus debentures	17,059		18,235
Provision for reinsurance	(105	)	(696	)
Equity of non-statutory subsidiaries	(19,681	)	(12,978	)
Commissions	1,924		1,868
Allowance for doubtful accounts	396		380
Assessments	10		463
Prepaid expenses	(177	)	(364	)
Other, net	62		63
Statutory surplus as regards policyholders of UPC	48,188		48,495

11)    COMMITMENTS AND CONTINGENCIES

We are involved in claims-related legal actions arising in the ordinary course of business. We accrue amounts resulting from claims-related legal actions in unpaid losses and loss adjustment expenses during the period that we determine an unfavorable outcome becomes probable and we can estimate the amounts. Management makes revisions to our estimates based on its analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages, and (iv) trends in general economic conditions, including the effects of inflation.

On August 5, 2010, Synovus Bank (Synovus), a Georgia banking corporation filed a lawsuit in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida against several defendants, including UIHC and UIH.  With respect to UIHC and UIH, the complaint: (1) sought to foreclose on a security interest in membership units of UIH owned by a UIH shareholder named as a defendant, including the proceeds thereof (the United Collateral), (2) sought a declaratory judgment requiring UIHC and UIH to deliver proceeds of the United Collateral to Synovus (including shares of UIHC and warrants to purchase shares of UIHC or the equivalent value thereof in cash, and a cash distribution), (3) alleged tortious interference with a contract between the UIH shareholder named as a defendant and Synovus relating to the United Collateral, (4) sought conversion of the United Collateral, and (5) alleged negligence in connection with the delivery of the United Collateral.  Synovus sought unspecified damages and other relief in connection with the foregoing.

On January 3, 2011, Synovus Bank voluntarily dismissed its case without prejudice against UIH and UIHC. We did not establish any reserves regarding this action because we were not able to predict the probable outcome of the action. 

See Note 8 for information regarding commitments related to long-term debt, and Note 10 for commitments related to regulatory actions.

12)    LEASES

We lease office space and office equipment under operating leases. In June 2008, we entered into a six-year operating lease agreement for office space for our corporate headquarters. The lease provides us with an option for two renewal periods of five years each. The office equipment leases have various expiration dates. Lease expense amounted to $508, $433, and $433 for the years ended December 31, 2011, 2010 and 2009, respectively.

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UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

At December 31, 2011, our minimum future lease payments under non-cancellable operating leases are:

	Amount
2012	$	447
2013	463
2014	332
2015	15
2016	5

13)    RELATED PARTY TRANSACTIONS

In 2003, we entered into an investment-management agreement, in effect until terminated by either party, with Synovus Trust. For the years ended December 31, 2011, 2010 and 2009, our subsidiaries incurred combined fees under the agreement of $85, $101 and $109, respectively. Synovus Financial Corporation (Synovus) owns Synovus Trust, which provides investment-management services for the investment accounts of our subsidiaries. On September 28, 2011, Synovus, which owned 14.9% of our common stock outstanding, sold all shares of our common stock that it owned.

In February 2010, we paid the remaining principal balance of $4,327 to Columbus Bank & Trust, a bank owned by Synovus. Under the loan agreement, we incurred interest of $19 and $147 for the years ended December 31, 2010 and 2009, respectively. CB&T charged us standard industry interest rates.

On September 29, 2008, we issued notes payable to two of our former stockholders as well as a note payable to United Noteholders, LLC, which is owned in part by one of our directors and is managed by two of our other directors. All three notes are part of the note agreement we entered into on August 15, 2008, with various accredited investors. For the years ended December 31, 2010 and 2009, total interest incurred related to these notes was $308 and $892, respectively, and total discount amortized related to these notes was $70 and $185, respectively. We paid these 11% merger-related notes in full on May 5, 2010, recognizing a loss on extinguishment of $726.

Our Chairman of the Board also serves as a director of Prime Holdings Insurance Services, Inc. On May 4, 2010 we received the final payment of $402 on the note receivable from Prime.

Effective March 30, 2011, UPC purchased $2,250 of up to $3,000 aggregate principal amount of promissory notes offered by Hamilton Risk Management Co., a Florida corporation engaged in the business of providing automobile insurance in Florida through its wholly-owned subsidiaries.  The HRM notes bear interest at the rate of two percent per annum.  All outstanding principal of and interest on the HRM notes is due on March 30, 2014.  In consideration for its purchase of the HRM notes, UPC received a Class A limited partnership interest in Acadia Acquisition Partners, L.P., the parent company of Hamilton Risk Management.  Our director, James R. Zuhlke, is acting as Executive Chairman of Hamilton Risk Management on an interim basis. Another of our directors, Larry G. Swets, serves as one of two managers of the limited liability company that serves as general partner of Acadia Acquisition Partners.  We bifurcated the cash consideration of $2,250 by allocating $1,948 to the note receivable based on its fair value (using a discounted cash flow model) and allocating the residual amount of $302 to our limited partnership interest. During the year ended December 31, 2011, we recorded interest income of $34 and we recorded $70 of amortization of the note discount using the effective interest method. During the second quarter of 2011, we reduced the carrying amount of the limited partnership interest to zero by recording a $302 charge to other expenses because our share of Acadia's losses for the quarter exceeded the carrying amount of the partnership interest. We report the note receivable as part of other assets on the Consolidated Balance Sheets.

Effective August 29, 2011, we entered into a Management Services Agreement (MSA) with 1347 Advisors, LLC, a wholly-owned subsidiary of Kingsway Financial Services, Inc., a property and casualty insurance company. One of our directors, Larry Swets, serves as the President and Chief Executive Officer of Kingsway, as well as a Managing Director of 1347 Advisors. The MSA, which is effective for a six-month period with automatic three-month extensions unless otherwise terminated, stipulates that 1347 Advisors shall provide us with the services of an interim CFO, in addition to actuarial and other services. Hassan Baqar serves as our interim CFO under the MSA. Mr. Baqar also serves as a Managing Director of 1347 Advisors and a Vice President of Kingsway America, Inc., a wholly-owned subsidiary of Kingsway Financial Services, Inc. In exchange for the services, we will pay 1347 Advisors a monthly consulting fee of $60 plus any reasonable expenses. For the year ended December 31, 2011, we incurred $240 under the MSA.

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UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

14)    EMPLOYEE BENEFIT PLAN

We provide a 401(k) plan for substantially all of our employees. We match 100% of the first 5% of employees’ contributions to the plan. For the years ended December 31, 2011, 2010 and 2009, our contributions to the plan on behalf of the participating employees were $97, $87, and $81, respectively.

15)    ACCUMULATED OTHER COMPREHENSIVE INCOME

We report changes in other comprehensive income items within comprehensive income on the Consolidated Statements of Income, and we include accumulated other comprehensive income as a component of stockholders' equity on the Consolidated Balance Sheets.

The table below details the components of accumulated other comprehensive income (loss) at year end:

	Pre-Tax Amount			Tax (Expense)Benefit			Net-of-Tax Amount
December 31, 2008	(2,389		)	899			(1,490		)
Changes in net unrealized gain (loss) on investments	4,152			(1,580		)	2,572
Reclassification adjustment for realized gains	(1,837		)	699			(1,138		)
Reclassification adjustment for recognized other-than-temporary impairments	1,878			(714		)	1,164
December 31, 2009	1,804			(696		)	1,108
Changes in net unrealized gain (loss) on investments	2,093			(807		)	1,286
Reclassification adjustment for realized gains	(4,346		)	1,676			(2,670		)
Reclassification adjustment for recognized other-than-temporary impairments	97			(37		)	60
December 31, 2010	$	(352	)	$	136		$	(216	)
Changes in net unrealized gain (loss) on investments	4,291			(1,656		)	2,635
Reclassification adjustment for realized losses	(158		)	61			(97		)
Reclassification adjustment for recognized other-than-temporary impairments	$	31		$	(12	)	$	19
December 31, 2011	$	3,812		$	(1,471	)	$	2,341

16)    STOCKHOLDERS' EQUITY

Our Articles of Incorporation authorize us to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as the Board of Directors may determine from time to time. As of December 31, 2011, we had not issued any shares of preferred stock.

We are a legal entity separate and distinct from our subsidiaries. As a holding company, we rely on cash received in the form of distributions, dividends and other permitted payments from our subsidiaries to meet our obligations. While there are no restrictions on distributions from UIHC, dividends from UPC have certain restrictions (see Note 10).

On March 25, 2009, the Compensation Committee of our Board voted to award 12,500 shares of our common stock each to our CEO and our then CFO as a bonus for services performed. We valued the 25,000 total shares at $3.00 per share, which was the closing price of UIHC common stock on March 25, 2009, when the shares were authorized. As a result, we recorded $75 of compensation expense during the year ended December 31, 2009. We do not have a formal stock compensation program as of December 31, 2011.

On May 6, 2009, our Board declared a $0.05 per share dividend. We paid the $528 dividend on June 15, 2009 to shareholders of record on May 31, 2009.

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UNITED INSURANCE HOLDINGS CORP.

Notes to Consolidated Financial Statements

December 31, 2011

On August 13, 2009, our Board declared a $0.05 per share dividend. We paid the $529 dividend on September 15, 2009 to shareholders of record on August 31, 2009.

On November 11, 2009, our Board declared a $0.05 per share dividend. We paid the $529 dividend on December 15, 2009 to shareholders of record on November 30, 2009.

On March 25, 2010, our Board declared a $0.05 per share dividend. We paid the $529 dividend on April 15, 2010 to shareholders of record on March 31, 2010.

On May 19, 2011, we purchased a total of 212,083 shares of our common stock at a per-share price of $2.00. Inclusive of fees and commissions, we paid a total of $431, or $2.03 per share.

On October 4, 2011, all outstanding warrants to purchase shares of our common stock expired.

On November 9, 2011, our Board declared a $0.05 per share dividend. We paid the $518 dividend on December 15, 2011 to shareholders of record on November 30, 2011.

17)    SUBSEQUENT EVENTS

We evaluate all subsequent events and transactions for potential recognition or disclosure in our financial statements.

On March 14, 2012, our Board declared a $0.05 per share dividend. We will pay the $518 dividend on April 5, 2012 to shareholders of record on March 26, 2011. Other than the aforementioned dividend declaration, we have not identified any other issues requiring disclosure.

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UNITED INSURANCE HOLDINGS CORP.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that the information we must disclose in reports we file or submit under the Securities Exchange Act of 1934, as amended (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. We designed our disclosure controls with the objective of ensuring we accumulate and communicate this information to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under Exchange Act, as of the end of the period covered by this report. Based on our evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Internal control over financial reporting includes those policies and procedures that: (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principals, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, our management used the criteria set forth in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the criteria set forth in the Internal Control-Integrated Framework, our management believes that as of December 31, 2011, our internal control over our financial reporting is effective.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended December 31, 2011, we made no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Because of the inherent limitations of internal controls, we do not expect our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that our

objectives will be met. Further, no evaluation of controls can provide absolute assurance that we will prevent all misstatements due to error or fraud or that we will detect all control issues and instances of fraud, if any, within our company.

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UNITED INSURANCE HOLDINGS CORP.

Item 9B. Other Information

None

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UNITED INSURANCE HOLDINGS CORP.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance

Other than the information regarding our Code of Conduct and Ethics set forth below, all information required by this Item is incorporated herein by reference to our definitive Proxy Statement for the 2012 Annual Meeting of our Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2011.

CODE OF CONDUCT AND ETHICS

We have adopted a code of ethics (our Code of Conduct and Ethics) that applies to our officers, directors and employees, including our principal executive officer and our principal financial and accounting officer, in accordance with applicable federal securities laws. We have filed a copy of our Code of Conduct and Ethics with the SEC (it is listed as Exhibit 14 to the Form S-1, Registration No. 333-143466, filed June 4, 2007). This document may be reviewed by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of our Code of Conduct and Ethics will be provided without charge upon written request submitted to us via regular mail or via electronic mail to investorrelations@upcic.com. We intend to disclose any amendments to or waivers of provisions of our Code of Conduct and Ethics in a Current Report on Form 8-K.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to our definitive Proxy Statement for the 2012 Annual Meeting of our Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2011.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information regarding our equity compensation plans is incorporated herein by reference to Item 5 of Part II of this Form 10-K. All other information required by this Item is incorporated herein by reference to our definitive Proxy Statement for the 2012 Annual Meeting of our Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2011.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference to our definitive Proxy Statement for the 2012 Annual Meeting of our Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2011.

Item 14. Principal Accounting Fees and Services

The information required by this Item is incorporated herein by reference to our definitive Proxy Statement for the 2012 Annual Meeting of our Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2011.

PART IV

Item 15. Exhibits, Financial Statement Schedules

The following documents are filed as part of this Report:

(1) Consolidated Financial Statements. In Part II, Item 8, we have included our consolidated financial statements, the notes thereto and the report of the Independent Registered Public Accounting Firm.

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UNITED INSURANCE HOLDINGS CORP.

(2) Financial Statement Schedules. Schedule I – Summary of Investments, Schedule IV – Reinsurance, and Schedule V – Valuation and Qualifying Accounts are filed as a part hereof along with the related report of the Independent Registered Public Accounting Firm included in Part II, Item 8. All other schedules have been omitted because the information required to be set forth therein is not applicable or is included in the consolidated financial statements or notes thereto.

(3) Exhibits. We hereby file as part of this Annual Report on Form 10-K the Exhibits listed on the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.

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UNITED INSURANCE HOLDINGS CORP.

SCHEDULE I. SUMMARY OF INVESTMENTS

	December 31, 2011
	Cost or Amortized Cost		Fair Value		Amount Shown in Consolidated Balance Sheet
Bonds:
U.S. government, government agencies and authorities	$	48,011	$	48,119	$	48,119
States, municipalities and political subdivisions	17,159		18,366		18,366
Public utilities	7,407		7,703		7,703
All other corporate bonds	43,728		45,653		45,653
Redeemable preferred stocks	558		537		537
Total fixed maturities	116,863		120,378		120,378
Common stocks:
Public Utilities	209		254		254
Industrial, miscellaneous and all other	2,598		2,869		2,869
Nonredeemable preferred stocks	477		458		458
Total equity securities	3,284		3,581		3,581
Other long-term investments	300		300		300
Total investments	$	120,447	$	124,259	$	124,259

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UNITED INSURANCE HOLDINGS CORP.

SCHEDULE IV. REINSURANCE

	Property and Casualty Insurance
	Direct Premium Written		Premiums Ceded to Other Companies	Premiums Assumed from Other Companies	Net Premiums Written		Percentage of Premiums Assumed to Net
Years Ended December 31,
2011	$	199,606	93,418	4,200	$	110,388	3.8	%
2010	155,875		86,475	2,762	72,162		3.8	%
2009	154,339		91,979	1,501	63,861		2.4	%

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UNITED INSURANCE HOLDINGS CORP.

SCHEDULE V. VALUATION AND QUALIFYING ACCOUNTS

	Uncollectible Premium Liability
	Balance at Beginning of Period		Charged to Costs and Expenses	Deductions			Balance at End of Period
Years Ended December 31,
2011	$	61	16	$	—		$	77
2010	370		42	(351		)	61
2009	305		83	(18		)	370

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UNITED INSURANCE HOLDINGS CORP.

EXHIBIT INDEX

Exhibit	Description
3.1	Second Amended and Restated Certificate of Incorporation (included as exhibit 3.1 to the Form 10-Q, filed November 14, 2008, and incorporated herein by reference).
3.2	Bylaws (included as exhibit 3.3 to the Form S-1 (Registration No. 333-143466), filed June 4, 2007, and incorporated herein by reference).
4.1	Specimen Common Stock Certificate (included as exhibit 4.2 to the Form S-1/A (Registration No. 333-143466), filed July 12, 2007, and incorporated herein by reference).
4.2	Registration Rights Agreement, dated October 4, 2007, by and among FMG Acquisition Corp. and the investors named therein (included as exhibit 10.4 to the Form 8K, filed October 12, 2007, and incorporated herein by reference).
10.1	Investment Management Agreement between United Property & Casualty Insurance Company and Synovus Trust Company, dated October 8, 2003 (included as exhibit 10.18 to the Form S-4/A (Registration No. 333-150327), filed June 13, 2008, and incorporated herein by reference).
10.2	Insurance Capital Build-up Incentive Program Surplus Note between United Property & Casualty Insurance Company and the State Board of Administration of Florida dated September 22, 2006 (included as exhibit 10.31 to the Form S-4/A (Registration No. 333-150327), filed June 13, 2008, and incorporated herein by reference).
10.3	Master Business Process Outsourcing Services Agreement between United Insurance Management, LLC and Computer Sciences Corporation, dated March 11, 2008 (included as exhibit 10.24 to the Form S-4/A (Registration No. 333-150327), filed June 13, 2008, and incorporated herein by reference).
10.4	Master Business Process Outsourcing Services Agreement between United Insurance Management, LLC and Computer Sciences Corporation, dated March 11, 2008 (included as exhibit 10.24 to the Form S-4/A (Registration No. 333-150327), filed June 13, 2008, and incorporated herein by reference).
10.5	Addendum Number One to Insurance Capital Build-Up Incentive Program Surplus Note, dated November 7, 2008 and effective July 1, 2008, between the State Board of Administration of Florida and United Property & Casualty Insurance Company (included as exhibit 10.1 to the Form 8-K, filed November 12, 2008, and incorporated herein by reference).
10.6	Federal Income Tax Allocation Agreement between United Insurance Holdings Corp., United Insurance Holdings, L.C., United Insurance Management, L.C., Skyway Claims Services, LLC, and United Property & Casualty Insurance Company, dated October 1, 2008 (included as exhibit 10.32 to the Form 10-K/A, filed March 31, 2009, and incorporated herein by reference).
10.7	Promissory Note dated March 30, 2011 issued by HRM Acquisition Corp. to United Property and Casualty Insurance Company (included as exhibit 10.1 to the Form 10-Q, filed May 11, 2011, and incorporated herein by reference).
10.8	Note Purchase Agreement dated March 30, 2011 between HRM Acquisition Corp. and United Property and Casualty Insurance Company (included as exhibit 10.2 to the Form 10-Q, filed May 11, 2011, and incorporated herein by reference).
10.9	Agreement of Limited Partnership dated March 30, 2011 between Acadia GP, LLC (in its capacity as a general partner of Acadia Acquisition Partners, L.P.) and limited partners (including United Property and Casualty Insurance Company) (included as exhibit 10.3 to the Form 10-Q, filed May 11, 2011, and incorporated herein by reference).
10.10	PR-M Non-Bonus Assumption Agreement dated March 3, 2011 between Citizens Property Insurance Corporation and United Property and Casualty Insurance Company (included as exhibit 10.4 to the Form 10-Q, filed May 11, 2011, and incorporated herein by reference).
10.11	Property Catastrophe Excess of Loss Reinsurance Agreement between United Property & Casualty Insurance Company and Various Reinsurance Companies, effective June 1, 2011 and including Addendum No. 1.

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UNITED INSURANCE HOLDINGS CORP.

Exhibit	Description
10.12	Florida Hurricane Catastrophe Fund Reimbursement Contract between United Property & Casualty Insurance Company and the State Board of Administration of Florida, effective June 1, 2011 and including Addenda 1, 2 and 4.
10.13	Multi-Line Per Risk Excess of Loss Reinsurance Agreement between United Property & Casualty Insurance Company and Various Reinsurance Companies, effective June 1, 2011.
10.14	Reinstatement Premium Protection Reinsurance Agreement between United Property & Casualty Insurance Company and Various Reinsurance Companies, effective June 1, 2011.
10.15	Property Catastrophe Excess of Loss Reinsurance Agreement between United Property & Casualty Insurance Company and UPC Re, effective June 1, 2011.
10.16	Reinstatement Premium Protection Reinsurance Agreement between United Property & Casualty Insurance Company and UPC Re, effective June 1, 2011.
10.17	Assumption Agreement between Sunshine State Insurance Company and United Property & Casualty Insurance Company, effective July 1, 2010 (included as exhibit 10.7 to the Form 10-Q, filed August 9, 2010, and incorporated herein by reference).
10.18	Management Services Agreement between United Insurance Management, L.C. and 1347 Advisors, LLC, effective August 29, 2011 (included as exhibit 10.1 to the Form 10-Q, filed November 9, 2011, and incorporated herein by reference).
10.19	Continuing Employment and Senior Advisor Agreement between United Insurance Holdings Corp. and Don Cronin effective November 1, 2011.
14.1	Code of Conduct and Ethics (included as exhibit 14 to the Form S-1 (Registration No. 333-143466), filed June 4, 2007, and incorporated herein by reference).
21.1	Subsidiaries of United Insurance Holdings Corp.
23.1	Consent of McGladrey & Pullen LLP.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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UNITED INSURANCE HOLDINGS CORP.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, we have duly caused this report to be signed on our behalf by the undersigned, thereunto duly authorized.

			UNITED INSURANCE HOLDINGS CORP.
Date:	March 14, 2012	By:	/s/ Melvin A. Russell
		Name:	Melvin A. Russell
		Title:	Senior Vice President and Chief Underwriting Officer
			(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on our behalf and in the capacities and on the dates indicated.

/s/ Melvin A. Russell Melvin A. Russell	Senior Vice President and Chief Underwriting Officer (principal executive officer)	March 14, 2012
/s/ Hassan R. Baqar Hassan R. Baqar	Interim Chief Financial Officer (principal financial and accounting officer)	March 14, 2012
/s/ Gregory C. Branch Gregory C. Branch	Chairman of the Board	March 14, 2012
/s/ Gordon G. Pratt Gordon G. Pratt	Vice Chairman of the Board	March 14, 2012
/s/ Alec L. Poitevint, II Alec L. Poitevint, II	Director	March 14, 2012
/s/ Larry G. Swets, Jr. Larry G. Swets, Jr.	Director	March 14, 2012
/s/ Kent G. Whittemore Kent G. Whittemore	Director	March 14, 2012
/s/ James R. Zuhlke James R. Zuhlke	Director	March 14, 2012

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EX-10.11

Exhibit 10.11

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

EFFECTIVE:June 1, 2011

EXPIRATION:June 1, 2012

PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT

ARTICLE	DESCRIPTION	PAGE
1	BUSINESS COVERED	1
2	RETENTION AND LIMIT	1
3	TERM	2
4	TERRITORY	3
5	EXCLUSIONS	3
6	DEFINITIONS	4
7	NET RETAINED LINES	7
8	OTHER REINSURANCE	7
9	PREMIUM	7
10	REINSTATEMENT	9
11	NOTICE OF LOSS AND LOSS SETTLEMENTS	9
12	LATE PAYMENTS	9
13	SALVAGE AND SUBROGATION	11
14	OFFSET	11
15	UNAUTHORIZED REINSURANCE	11
16	TAXES	13
17	CURRENCY	13
18	DELAY, OMISSION OR ERROR	13
19	ACCESS TO RECORDS	14
20	ARBITRATION	14
21	SERVICE OF SUIT	15
22	INSOLVENCY	15
23	THIRD PARTY RIGHTS	16
24	SEVERABILITY	16
25	CONFIDENTIALITY	16
26	ENTIRE AGREEMENT	17
27	CHOICE OF LAW AND JURISDICTION	17
28	INTERMEDIARY	17
29	NOTICES AND MODE OF EXECUTION	17
Attachments: Schedule A - First Property Catastrophe Excess of Loss Reinsurance Schedule B - Second Property Catastrophe Excess of Loss Reinsurance Schedule C - Third Property Catastrophe Excess of Loss Reinsurance Schedule D - Fourth Property Catastrophe Excess of Loss Reinsurance Nuclear Incident Exclusion Clause ‑ Physical Damage ‑ Reinsurance - USA Terrorism Exclusion Clause (NMA2930c) Trust Agreement Requirements Clause

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

(hereinafter referred to as the “Agreement”)

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(hereinafter referred to collectively as the "Company")

and

the Subscribing Reinsurer(s) identified in the

Interests and Liabilities Contract(s)

attached to and forming part of this Agreement

(hereinafter referred to as the "Reinsurer")

ARTICLE 1 - BUSINESS COVERED

This Agreement is to indemnify the Company in respect of its net excess liability which may accrue to the Company under any policies, contracts or binders of insurance or reinsurance (hereinafter called “Policies”) in force at the effective time and date hereof or issued or renewed at or after that time and date with effective dates during the term of this Agreement, by or on behalf of the Company, and classified by the Company as Property Business, including but not limited to Homeowners and Condominium Owners, including Earthquake on those policies issued in South Carolina, subject to the terms and conditions herein contained. 

ARTICLE 2- RETENTION AND LIMIT

The Reinsurer will be liable in respect of each and every Loss Occurrence, for the Ultimate Net Loss over and above an initial Ultimate Net Loss for that excess layer as shown in the Schedules attached hereto, each and every Loss Occurrence, subject to a limit for that excess layer shown in the Schedules attached hereto, each and every Loss Occurrence.

The Florida Hurricane Catastrophe Fund (“FHCF”) limit provided pursuant to Section 215.555 (4)(c)(1)., Florida Statutes (commonly referred to as the “Mandatory Layer,” which is currently estimated to be $271,411,828 (at 90%) excess of $117,546,480, and the FHCF limit provided pursuant to Section 215.555 (17), Florida Statutes (and defined therein as the “Temporary Increase in Coverage Limit Option,” which is currently estimated to be $63,861,163 (at 90%) excess of $147,703,350), shall be deemed to inure to the benefit of this Agreement whether collectible or not and shall be deemed to be paid to the Company in accordance with the FHCF reimbursement contract at the Projected Payout Multiple set forth therein as of the date hereof (calculated based on a claims paying capacity of the FHCF of $18,500,000,000 and will be deemed not to be reduced by any subsequent recalculation of the Projected Payout Multiple or the final Payout Multiple due to any reduction or exhaustion of the FHCF's claims-paying capacity as respects either the Mandatory Layer or the Temporary Increase in Coverage Limit Option.

ARTICLE 3 - TERM

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2011, with respect to losses arising out of Loss Occurrences commencing at or after that time and date, and shall remain in full force and effect until 12:01 a.m., Eastern Standard Time, June 1, 2012.

The Company may terminate or reduce a subscribing reinsurer's percentage share in this Agreement at any time by giving prior written notice to the subscribing reinsurer by certified mail in the event of any of the following:

1) The subscribing reinsurer's policyholders' surplus falls by 20% or more from the inception of this Agreement; or

2) A State Insurance Department or other legal authority orders the subscribing reinsurer to cease writing business; or

3) The subscribing reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there has been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operation; or

4) The subscribing reinsurer has become merged with, acquired or controlled by any company, corporation, or individual(s) not controlling the subscribing reinsurer's operations previously; or

1) The subscribing reinsurer ceases assuming new and renewal property treaty reinsurance business; or

6) The subscribing reinsurer's A.M. Best or Standard and Poor's rating is downgraded below A-.

In the event the Company terminates or reduces a subscribing reinsurer's percentage share in accordance with this paragraph, the termination or reduction will be effective for losses arising out of Loss Occurrences commencing on or after the date of the written notice to the subscribing reinsurer, and the premium due to the subscribing reinsurer for any reduced percentage share for the Agreement Year will be reduced on a pro rata basis for the portion of the Agreement Year which is unexpired as of that date. Any return premium owed by the subscribing reinsurer in accordance with such a termination or reduction shall be payable as promptly as possible, but no later than 30 days following the effective date of reduction or termination. If a loss has been paid under this Agreement or a subscribing reinsurer's share is terminated after November 30, 2011, then no such return premium shall be made.

Should this Agreement expire while a loss covered hereunder is in progress, the Reinsurer shall be responsible for the loss in progress in the same manner and to the same extent it would have been responsible had the Agreement expired the day following the conclusion of the loss in progress.

ARTICLE 4 - TERRITORY

This Agreement shall follow the territorial limits of the Company's original Policies.

ARTICLE 5 - EXCLUSIONS

This Agreement does not apply to and specifically excludes the following:

A. Reinsurance assumed, except as respects the following: Reinsurance assumed as a result of the depopulation of the Citizens Property and Casualty Insurance Company and any successor organisation of this entity and/or any reinsurance assumed from Private Carriers as a result of depopulations.

B. Financial guarantee and/or insolvency.

C. Third party liability and medicalpayments business.

D. Liability as a member, subscriber or reinsurer of any Pool, Syndicate or Association; and any combination of insurers or reinsurers formed for the purpose of covering specific perils, specific classes of business or for the purpose of insuring risks located in specific geographical areas and any assessments from Citizens Property and Casualty Insurance Company and any successor organisation of this entity.

E. All liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meetany claim, debt, charge, fee or other obligation in whole or in part.

F. Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the Florida Hurricane Catastrophe Fund.

G. All Accident and Health, Fidelity, Surety, Boiler and Machinery, Workers' Compensation and Credit business.

H. AllOcean Marine business.

I. Flood and/or earthquake when written as such, except for earthquake business issued in South Carolina.

J. Difference in Conditions insurances and similar kinds of insurances, however styled, insofar as they may provide coverage for losses from the following causes:

1) Flood, surface water, waves, tidal water or tidal waves, overflow of streams or other bodies of water or spray from any of the foregoing, all whether wind‑driven or not, except when covering property in transit; or

2) Earthquake, landslide, subsidence or other earth movement or volcanic eruption, except when covering property in transit.

K. Mortgage Impairment insurances and similar kinds of insurances, however styled.

L. All Automobile Business.

M. Loss or damage directly or indirectly occasioned by, happening through or in consequences of war, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, military or usurped power, or confiscation or nationalisation or requisition or destruction of or damage to property by or under the order of any government or public or local authority.

N. Loss and/or Damage and/or Costs and/or Expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude any payment of the cost of removal of debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25% of the Company's property loss under the applicable original Policy.

O. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause ‑ Physical Damage Reinsurance" attached to and forming part of this Agreement.

P. All liability arising out of mold, spores and/or fungus but this exclusion shall not apply to those losses which follow as a direct result of a loss caused by a peril otherwise covered hereunder.

Q. Terrorism, in accordance with NMA2930c, attached hereto.

The Reinsurer shall not be required to provide cover or pay any claim or provide any benefit hereunder that would cause the Reinsurer to be in violation of any applicable trade or economic sanctions, laws or regulations.

ARTICLE 6 - DEFINITIONS

A. The term “Loss Occurrence” shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one Loss Occurrence shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event except that the term Loss Occurrence shall be further defined as follows:

(i) As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto.

(ii) As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an insured's premises by strikers, provided such occupation commenced during the aforesaid period.

(iii) As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the opening paragraph of this Article) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's Loss Occurrence.

(iv) As regards freeze, only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may be included in the Company's Loss Occurrence.

For all Loss Occurrences, other than (ii) above, the Company may choose the date and time when any such period of consecutive hours commences provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any “Loss Occurrence” referred to in sub-paragraph (i) above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event.

As respects those Loss Occurrences referred to in (ii) above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more Loss Occurrences provided no two periods overlap and no individual loss is included in more than one such period and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

No individual losses occasioned by an event that would be covered by the 72 hours clause, may be included in any loss occurrence claimed under the 96 hours clause, nor may individual losses occasioned by an event that would be covered by either the 72 or 96 hours clauses, be included in any “Loss Occurrence” claimed under the 168 hours provision.

Losses directly or indirectly occasioned by:

(i) loss of, alteration of, or damage to

or

(ii) a reduction in the functionality, availability or operation of

a computer system, hardware, programme, software, data, information repository, microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the policyholder of the Company or not, do not in and of themselves constitute an event unless arising out of one or more of the following perils:

fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow.

Any date change, including leap year calculations, shall not in and of itself be regarded as a loss occurrence for the purposes of this Agreement.

B. The term “Ultimate Net Loss” as used herein is defined as the sum or sums (including 90% of any Extra Contractual Obligations and/or 90% of any Loss In Excess of Policy Limits, and any Loss Adjustment Expenses as hereinafter defined, provided there is an indemnity loss hereunder, and any Loss Adjustment Expense/fair rental value unrecoverable from the FHCF) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Agreement are not recoverable until the Company's Ultimate Net Loss has been ascertained.

C. The terms “Loss In Excess of Policy Limits” and “Extra Contractual Obligations” as used herein shall be defined as follows:

1. “Loss In Excess of Policy Limits” shall mean any amount paid or payable by the Company in excess of its Policy limits, but otherwise within the terms of its Policy, as a result of an action against it by its insured or its insured's assignee to recover damages the insured is legally obligated to pay because of the Company's alleged or actual negligence or bad faith in rejecting a settlement within Policy limits, or in discharging its duty to defend or prepare the defense in the trial of an action against its insured, or in discharging its duty to prepare or prosecute an appeal consequent upon such an action.

2. “Extra Contractual Obligations” shall mean any punitive, exemplary, compensatory or consequential damages, other than Loss In Excess of Policy Limits, paid or payable by the Company as a result of an action against it by its insured or its insured's assignee, which action alleges negligence or bad faith on the part of the Company in handling a claim under a policy subject to this Agreement.

An Extra Contractual Obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the Policy and shall constitute part of the original loss.

Notwithstanding anything stated herein, this Agreement shall not apply to any Loss In Excess of Policy Limits or any Extra Contractual Obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense, settlement of any claim covered hereunder.

Savings Clause (Applicable only if the Reinsurer is domiciled in the State of New York): In no event shall coverage be provided to the extent that such coverage is not permitted under New York law.

D. The term “Loss Adjustment Expense” as used herein shall mean expenses allocable to the investigation, appraisal, adjustment, settlement, litigation, defense and/or appeal of specific claims reinsured hereunder, regardless of how such expenses are classified for statutory reporting purposes. Loss Adjustment Expense shall include, but not be limited to, Loss Adjustment Expense not recoverable from the FHCF, interest on judgments, expenses of outside adjusters, and a pro rata share of the salaries and expenses of the Company's field employees according to the time occupied adjusting such losses, but excluding salaries of the Company's officials and any normal overhead charges, and excluding Declaratory Judgment Expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto.

E. The term “Declaratory Judgment Expense” as used herein shall mean the Company's own costs and legal expense incurred in direct connection with declaratory judgment actions brought to determine the Company's defense and/or indemnification obligations that are assignable to specific claims arising out of policies reinsured by this Agreement, regardless of whether the declaratory judgment action is considered successful or unsuccessful. Any Declaratory Judgment Expense will be deemed to have been incurred by the Company on the date of the original loss, if any, giving rise to the declaratory judgment action.

F. The term “Agreement Year” as used herein shall be defined as the period from 12:01 a.m., Eastern Standard Time, June 1, 2011, until 12:01 a.m., Eastern Standard Time, June 1, 2012. However, if this Agreement is terminated, Agreement Year as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, June 1, 2011 through the effective date of termination.

ARTICLE 7 - NET RETAINED LINES

This Agreement applies only to that portion of any insurances or reinsurances covered by this Agreement which the Company retains net for its own account (prior to deduction of any underlying reinsurance), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Agreement attaches, only loss or losses in respect of that portion of any insurances or reinsurances which the Company retains net for its own account shall be included.

It is understood and agreed that the amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurers, whether specific or general, any amounts which may have become due from them, whether such inability arises from the insolvency of such other reinsurers or otherwise.

ARTICLE 8 - OTHER REINSURANCE

The Company shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Company and shall be entirely disregarded in applying all of the provisions of this Agreement.

ARTICLE 9 - PREMIUM

A. As premium for each excess layer of reinsurance coverage provided by this Agreement, the Company shall pay the Reinsurer the greater of the following:

1. The amount, shown as “Minimum Premium” for that excess layer in the Schedules attached hereto; or

2. The percentage, shown as “provisional rate” for that excess layer in the Schedules attached hereto to the Company's Total Insurance Values (“TIV”) in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium Business as at September 30, 2011.

B. The Company shall pay the Reinsurer a deposit premium for each excess layer of the amount, shown as “Deposit Premium” for that excess layer in the Schedules attached hereto, which is payable in three installments. The three installments shall be amounts equal to 33.33% of “Deposit Premium” for that excess layer due at July 1, 2011, 33.33% due at October 1, 2011, and 33.34% due at January 1, 2012. However, in the event this Agreement is terminated, there shall be no deposit premium installments due after the effective date of termination.

C.“Adjusted deposit premium” as used herein shall mean:

1. The premium due hereunder for each excess layer, computed in accordance with paragraph A above; less

2. The first, second and third installments paid for each excess layer in accordance with paragraph B above.

D. No later than April 1, 2012 (or the date of termination in the event this Agreement is terminated prior to April 1, 2012), the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for each excess layer, computed in accordance with paragraph A above, and the adjusted deposit premium for each excess layer, computed in accordance with paragraph C above. In the event this Agreement is terminated prior to April 1, 2012, any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as at September 30, 2011 increase 10% or less than 10% of $39,986,886,759, there will be no additional premium due the Reinsurer. Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as at September 30, 2011 increase more than 10% of $39,986,886,759, the Company shall pay additional premium as determined by the provisional rate for each excess layer applied to the amount of TIV in excess of 10% of $39,986,886,759.

Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as at September 30, 2011 decrease less than 5% of $39,986,886,759, the Reinsurer shall not return any premium as determined by the provisional rate for each excess layer applied to the amount of TIV. Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as of September 30, 2011 decrease by 5% or more of $39,986,886,759, the Reinsurer shall return 100% of the premium as determined by the provisional rate for each excess layer applied to the amount of TIV as of September 30, 2011, subject to the minimum premium in accordance with paragraph A. 1. above.

ARTICLE 10 - REINSTATEMENT

Loss payments under this Agreement will reduce the limit of coverage afforded by the amounts paid, but the limit of coverage will be reinstated in accordance with the provisions set forth in the Schedules attached hereto.

Nevertheless, the Reinsurer's liability for each excess layer shall not exceed the amount shown in the Schedules attached hereto.

ARTICLE 11 - NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company shall notify the Reinsurer promptly of all claims which, in the opinion of the Company, may involve the Reinsurer, and of all subsequent developments regarding these claims which may materially affect the position of the Reinsurer. The notification shall be made in the form of a report that details losses paid and the expected Ultimate Net Losses for each claim related to a Loss Occurrence subject to this Agreement.

All loss settlements made by the Company, provided they are within the terms of the Company's original Policies and of this Agreement, shall be binding upon Reinsurer, and amounts falling to the share of Reinsurer shall be payable without delay upon reasonable evidence of the amount being given by the Company.

ARTICLE 12 - LATE PAYMENTS

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Agreement.

B. In the event any premium, loss or other payment due either party is not received by the Intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the LIBOR monthly on the first business day of the month for which the calculation is made; times

3.The amount past due, including accrued interest.

C. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

D. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 business days, interest will accrue on the payment or amount overdue in accordance with paragraph B of this Article, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked.

E. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

F. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense or control of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Agreement. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

ARTICLE 13 - SALVAGE AND SUBROGATION (BRMA 47E)

The Reinsurer shall be credited with salvage or subrogation recoveries (i.e., reimbursement obtained or recovery made by the Company, less loss adjustment expense incurred in obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder. Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights.

ARTICLE 14 - OFFSET (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any balance or amounts due from one party to the other under the terms of the Agreement. The party asserting the right of offset may exercise such right any time whether the balances due are on account of premiums or losses or otherwise.

ARTICLE 15 - UNAUTHORIZED REINSURANCE

A. This Article applies only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company's reserves.

B. The Company agrees, in respect of its Policies or bonds falling within the scope of this Agreement, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law, it shall forward to the Reinsurer a statement showing the proportion of such liabilities applicable to the Reinsurer. The "Reinsurer's Obligations" shall be defined as follows:

1.Unearned premium (if applicable);

2. Known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. Losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. Losses incurred but not reported from known Loss Occurrences and Loss Adjustment Expenses relating thereto;

5. All other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

C. The Reinsurer's Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves.

D. When funding by a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto. When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the provisions of this Agreement may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, for the following purposes, unless otherwise provided for in a separate Trust Agreement:

1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Agreement and that has not been otherwise paid;

2. To make refund of any sum that is in excess of the actual amount required to pay the Reinsurer's Obligations under this Agreement (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement);

3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets in the account that are in excess of the Reinsurer's Obligations (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement). If the assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer.

4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Agreement.

F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3), or in the case of E(4), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn, All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer.

G. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company.

H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:

1. If the statement shows that the Reinsurer's Obligations exceed the balance of the LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the statement, secure delivery to the Company of an amendment to the LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference.

2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of the LOC (or that 102% of the Reinsurer's Obligations are less than the trust account, balance if funding is provided by a Trust Agreement), as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess.

ARTICLE 16 - TAXES

The Company will be liable for taxes (except Federal Excise Tax) on premiums reported to the Reinsurer hereunder.

Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at Lloyd's London and other Reinsurers exempt from the Federal Excise Tax, who are domiciled outside the United States of America.

The Reinsurer has agreed to allow for the purposes of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 17 - CURRENCY

The currency to be used for all purposes of this Agreement shall be United States of America currency.

ARTICLE 18 - DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified immediately upon discovery.

ARTICLE 19 - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the Policy, accounting or claim files ("Records") relating to business reinsured under this Agreement during regular business hours after giving five working days' prior notice. This right shall be exercisable during the term of this Agreement or after the expiration of this Agreement. Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company and the Company shall have no right to reimbursement under this Agreement if it fails or refuses to provide the access required by this Article other than by reason of the Reinsurer's failure to pay such undisputed amounts.

ARTICLE 20 - ARBITRATION (BRMA 6J)

As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Agreement, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Agreement as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Agreement from several to joint.

Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Agreement, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

ARTICLE 21 - SERVICE OF SUIT

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities).

It is agreed that in the event the Reinsurer fails to perform its obligations hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of any court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Contract, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Agreement.

ARTICLE 22 - INSOLVENCY

A. If more than one reinsured company is referenced within the definition of "Company" in the Preamble to this Agreement, this Article shall apply severally to each such company. Further, this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state's laws shall prevail.

B. In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

C. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this reinsurance Agreement as though such expense had been incurred by the Company.

D. As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, (except as provided by Section 4118 (a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New York law applies) or except (1) where the Agreement specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. Then, and in that event only, the Company, with the prior approval of the certificate of assumption on New York risks by the Superintendent of Insurance of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 23 - THIRD PARTY RIGHTS (BRMA 52C)

This Agreement is solely between the Company and the Reinsurer, and in no instance shall any other party have any rights under this Agreement, except as expressly provided otherwise in the INSOLVENCY ARTICLE.

ARTICLE 24 - SEVERABILITY

If any provision of this Agreement shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Agreement or the enforceability of such provision in any other jurisdiction.

ARTICLE 25 - CONFIDENTIALITY

For a period of three years following the termination or expiration of this Agreement, the contracting parties undertake to regard the terms of this Agreement (and any confidential, proprietary information relating thereto provided in writing to such other party) as confidential, with the parties to effect the same prudence and care afforded by such party to its own confidential, proprietary information. Each party further agrees that it shall not disclose any of such information to any third party without the prior written consent of the other party or except as may be required by applicable law or regulation, or by legal process (including without limitation as may be required by United States Federal tax law or regulation), or to the auditors, professional advisors, accountants, retrocessionaires, related managing general agents, directors or officers of such party with a reasonable need to know such information. Except as expressly set forth above, the parties agree and acknowledge that this Article is not intended to restrict or limit the conduct of the other party's current or proposed business.

ARTICLE 26 - ENTIRE AGREEMENT (BRMA 74B)

This Agreement constitutes the entire agreement between the parties. In no event shall this Agreement provide any guarantee of profit, directly or indirectly, from the Reinsurer to the Company or from the Company to the Reinsurer. This Agreement may be clarified, amended or modified only by written agreement signed by both parties. Such written agreement shall become part of this Agreement.

ARTICLE 27 - CHOICE OF LAW AND JURISDICTION

This Agreement shall be governed as to performance, administration and interpretation by the laws of the State of Florida exclusive of conflict of law rules. However, with respect to credit for reinsurance, the rules of all applicable states shall apply.

ARTICLE 28 - INTERMEDIARY

BMS Intermediaries Inc., is hereby recognized as the intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through BMS Intermediaries Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed only to constitute payment to the Company to the extent that such payments are actually received by the Company.

ARTICLE 29 - NOTICES AND MODE OF EXECUTION

Whenever a notice, statement, report or any other written communication is required by this Agreement, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable.

The use of any of the following shall constitute a valid execution of this Agreement or any amendments thereto:

A. Paper documents with an original ink signature;

B. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

C. Electronic records with an electronic signature made via an electronic agent. For the purposes of this Agreement, the terms “electronic record,” “electronic signature” and “electronic agent” shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

This Agreement may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Signed in St. Petersburg, Florida, this 9th day of June, 2011.

For and on behalf of the Company:

/s/ Donald J. Cronin

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

SCHEDULE A

First Property Catastrophe Excess of Loss Reinsurance

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

This Schedule is attached to and forms a part of the Property Catastrophe Excess of Loss Reinsurance Agreement and sets out specific terms, conditions and participating Reinsurers for the Company's First Property Catastrophe Excess of Loss Reinsurance.

Retention and Limit

The Reinsurer will be liable in respect of each and every Loss Occurrence for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $25,000,000 each and every Loss Occurrence, subject to a limit of liability to the Reinsurer of $20,156,870 each and every Loss Occurrence.

Premium

The Company shall pay the Reinsurer a Deposit Premium of $8,667,454 in accordance with the PREMIUM ARTICLE of this Agreement. The Deposit Premium shall be adjusted in accordance with the PREMIUM ARTICLE of this Agreement, by a rate of 0.0217% applied to the Company's Total Insurance Values in-force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium Business (“TIV”) as at September 30, 2011 subject to a minimum premium of $6,933,963. (Minimum premium to be 80% of the developed Deposit Premiums which are in turn based on TIV at September 30, 2011 of $39,986,886,759.)

Reinstatement

Loss payments under this Agreement will reduce the limit of coverage afforded by the amount paid, but such amount shall be immediately reinstated from the time of occurrence of the loss in consideration of the payment by the Company of an additional premium calculated by applying to the reinsurance premium for the term of this Agreement (exclusive of reinstatement premium), the percentage of the face amount of this Agreement so reinstated. Whenever the Company requests payment by the Reinsurer of any loss under this excess layer, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer for the excess layer. If the reinsurance premium for the term of this Agreement has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the annual deposit premium and shall be readjusted when the final reinsurance premium for the term of this Agreement has been finally determined. Any reinstatement premium shown to be due the Reinsurer as reflected by such statement (less prior payments, if any, for this excess layer) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss for this excess layer. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. Nevertheless, the Reinsurer's liability hereunder shall never exceed $20,156,870 for any one Loss Occurrence and $40,313,740 for all Loss Occurrences during the term of this Agreement.

SCHEDULE B

Second Property Catastrophe Excess of Loss Reinsurance

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

This Schedule is attached to and forms a part of the Property Catastrophe Excess of Loss Reinsurance Agreement and sets out specific terms, conditions and participating Reinsurers for the Company's Second Property Catastrophe Excess of Loss Reinsurance.

Retention and Limit

The Reinsurer will be liable in respect of each and every Loss Occurrence for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $45,156,870 each and every Loss Occurrence, subject to a limit of liability to the Reinsurer of $72,389,610 each and every Loss Occurrence.

Premium

The Company shall pay the Reinsurer a Deposit Premium of $24,793,441 in accordance with the PREMIUIM ARTICLE of this Agreement. The Deposit Premium shall be adjusted in accordance with the PREMIUM ARTICLE of this Agreement, by a rate of 0.0620% applied to the Company's Total Insurance Values in-force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium Business (“TIV”) as at September 30, 2011 subject to a minimum premium of $19,834,752.80. (Minimum premium to be 80% of the developed Deposit Premiums which are in turn based on TIV at September 30, 2011 of $39,986,886,759.)

Reinstatement

Loss payments under this Agreement will reduce the limit of coverage afforded by the amount paid, but such amount shall be immediately reinstated from the time of occurrence of the loss in consideration of the payment by the Company of an additional premium calculated by applying to the reinsurance premium for the term of this Agreement (exclusive of reinstatement premium), the percentage of the face amount of this Agreement so reinstated. Whenever the Company requests payment by the Reinsurer of any loss under this excess layer, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer for the excess layer. If the reinsurance premium for the term of this Agreement has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the annual deposit premium and shall be readjusted when the final reinsurance premium for the term of this Agreement has been finally determined. Any reinstatement premium shown to be due the Reinsurer as reflected by such statement (less prior payments, if any, for this excess layer) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss for this excess layer. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. Nevertheless, the Reinsurer's liability hereunder shall never exceed $72,389,610 for any one Loss Occurrence and $144,779,220 for all Loss Occurrences during the term of this Agreement.

SCHEDULE C

Third Property Catastrophe Excess of Loss Reinsurance

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

This Schedule is attached to and forms a part of the Property Catastrophe Excess of Loss Reinsurance Agreement and sets out specific terms, conditions and participating Reinsurers for the Company's Third Property Catastrophe Excess of Loss Reinsurance.

Retention and Limit

The Reinsurer will be liable in respect of each and every Loss Occurrence for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $117,546,480 each and every Loss Occurrence, subject to a limit of liability to the Reinsurer of $30,156,870 each and every Loss Occurrence.

In the event the limit and retention provided by the FHCF is adjusted in accordance with the provisions of the reimbursement contract between the Company and the State Board of Administration of the State of Florida, the Company's additional retention, if any, will be included in the limit of liability of the Reinsurer. In no event shall the limit of liability to the Reinsurer exceed $30,156,870 each and every Loss Occurrence.

In the event the coverage provided by FHCF is depleted, exhausted or otherwise unavailable, the Reinsurer will be liable in respect of each and every Loss Occurrence for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $117,546,480 each and every Loss Occurrence, subject to a limit of liability to the Reinsurer of $30,156,870.

Premium

The Company shall pay the Reinsurer a Deposit Premium of $6,332,943 in accordance with the PREMIUM ARTICLE of this Agreement. The Deposit Premium shall be adjusted in accordance with the PREMIUM ARTICLE of this Agreement, by a rate of 0.0158% applied to the Company's Total Insurance Values in-force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium Business (“TIV”) as at September 30, 2011 subject to a minimum premium of $5,066,354,40. (Minimum premium to be 80% of the developed Deposit Premiums which are in turn based on TIV at September 30, 2011 of $39,986,886,759.)

Reinstatement

Loss payments under this Agreement will reduce the limit of coverage afforded by the amount paid, but such amount shall be immediately reinstated from the time of occurrence of the loss in consideration of the payment by the Company of an additional premium calculated by applying to the reinsurance premium for the term of this Agreement (exclusive of reinstatement premium), the percentage of the face amount of this Agreement so reinstated. Whenever the Company requests payment by the Reinsurer of any loss under this excess layer, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer for the excess layer. If the reinsurance premium for the term of this Agreement has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the annual deposit premium and shall be readjusted when the final reinsurance premium for the term of this Agreement has been finally determined. Any reinstatement premium shown to be due the Reinsurer as reflected by such statement (less prior payments, if any, for this excess layer) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss for this excess layer. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. Nevertheless, the Reinsurer's liability hereunder shall never exceed $30,156,870 for any one Loss Occurrence and $60,313,740 for all Loss Occurrences during the term of this Agreement.

SCHEDULE D

Fourth Property Catastrophe Excess of Loss Reinsurance

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

This Schedule is attached to and forms a part of the Property Catastrophe Excess of Loss Reinsurance Agreement and sets out specific terms, conditions and participating Reinsurers for the Company's Fourth Property Catastrophe Excess of Loss Reinsurance.

Retention and Limit

The Reinsurer will be liable in respect of each and every Loss Occurrence for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $147,703,350 each and every Loss Occurrence, subject to a limit of liability to the Reinsurer of $6,288,482 each and every Loss Occurrence.

In the event the limit and retention provided by the FHCF and/or the limit and retention provided by the Temporary Increase in Coverage Limits (“TICL”) are adjusted in accordance with the provisions of the reimbursement contract between the Company and the State Board of Administration of the State of Florida, the Company's additional retention, if any, will be included in the limit of liability of the Reinsurer. In no event shall the limit of liability to the Reinsurer exceed $6,288,482 each and every Loss Occurrence.

In the event the coverage provided by the TICL and/or the coverage provided by the FHCF is depleted, exhausted or otherwise unavailable, the Reinsurer will be liable in respect of each and every Loss Occurrence for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $147,703,350 each and every Loss Occurrence, subject to a limit of liability to the Reinsurer of $6,288,482.

Premium

The Company shall pay the Reinsurer a Deposit Premium of $786,060 in accordance with the PREMIUM ARTICLE of this Agreement. The Deposit Premium shall be adjusted in accordance with the PREMIUM ARTICLE of this Agreement, by a rate of 0.0020% applied to the Company's Total Insurance Values in-force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium Business (“TIV”) as at September 30, 2011 subject to a minimum premium of $628,848. (Minimum premium to be 80% of the developed Deposit Premiums which are in turn based on TIV at September 30, 2011 of $39,986,886,759.)

Reinstatement

Loss payments under this Agreement will reduce the limit of coverage afforded by the amount paid, but such amount shall be immediately reinstated from the time of occurrence of the loss in consideration of the payment by the Company of an additional premium calculated by applying to the reinsurance premium for the term of this Agreement (exclusive of reinstatement premium), the percentage of the face amount of this Agreement so reinstated. Whenever the Company requests payment by the Reinsurer of any loss under this excess layer, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer for the excess layer. If the reinsurance premium for the term of this Agreement has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the annual deposit premium and shall be readjusted when the final reinsurance premium for the term of this Agreement has been finally determined. Any reinstatement premium shown to be due the Reinsurer as reflected by such statement (less prior payments, if any, for this excess layer) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss for this excess layer. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. Nevertheless, the Reinsurer's liability hereunder shall never exceed $6,288,482 for any one Loss Occurrence and $12,576,964 for all Loss Occurrences during the term of this Agreement

NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL-DAMAGE - REINSURANCE - U.S.A.

1. This Agreement does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Agreement does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I.Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor, installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operation of paragraphs (1) and (2) hereof, this Agreement does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate.

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where the said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However, on and after 1st January, 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operation of paragraphs (1), (2) and (3) hereof, this Agreement does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7.Reassured to be sole judge of what constitutes:

(a)substantial quantities, and

(b)the extent of installation, plant or site.

Note - Without in any way restricting the operation of paragraph (I) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

In accordance with NMA 1119 (12/12/57)

TERRORISM EXCLUSION

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this reinsurance agreement or any endorsement thereto, it is agreed that this reinsurance agreement excludes loss, damage, cost, or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence thegovernment de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or government(s) de jure or de facto, and which:

(i)involves violence against one or more persons; or

(ii)involves damage to property; or

(iii)endangers life other than that of the person committing the action; or

(iv)creates a risk to health or safety of the public or a section of the public; or

(v)is designed to interfere with or to disrupt an electronic system.

This reinsurance agreement also excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against, or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this reinsurance agreement, in respect only of personal lines this reinsurance agreement will pay actual loss or damage (but not related cost or expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with biological, chemical, radioactive, or nuclear pollution or contamination or explosion.

NMA2930c

22/11/02

Form approved by Lloyd's Market Association [Non-Marine]

TRUST AGREEMENT REQUIREMENTS CLAUSE

A. Except as provided in paragraph B. of this Clause, if the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

2. Stipulates that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the types permitted by the regulatory authorities having jurisdiction over the Company's reserves, or any combination of the three, provided that the investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Reinsurer or the Company;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the Company, or the trustee upon the direction of the Company, may whenever necessary negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the Company or the Reinsurer.

B. If a ceding insurer is domiciled in California and the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Provides that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States financial institution as defined in California Insurance Code Section 922.7(a) and payable in United States dollars, and investments permitted by the California Insurance Code, or any combination of the above;

2. Provides that investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

C.If there are multiple ceding insurers that collectively comprise the Company, "regulatory authorities" as referenced in subparagraph A(2) above, shall mean the individual ceding insurer's domestic regulator. If such ceding insurer is subject to the commercial domicile laws or regulations of another state, such laws or regulations shall apply to the extent not in conflict with those of such ceding insurer's domicile.

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

ALTERRA BERMUDA LIMITED

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 2.50%

SCHEDULE B - 2.50%

SCHEDULE C - 0.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 23rd day of June, 2011.

/s/ Alterra Bermuda Limited

ALTERRA BERMUDA LIMITED

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

ARCH REINSURANCE LTD (BERMUDA)

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 9.00%

SCHEDULE B - 5.00%

SCHEDULE C - 0.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

In lieu of the provisions of paragraph A of ARTICLE 15 -UNAUTHORIZED REINSURANCE the following shall apply to the Subscribing Reinsurer's share hereunder:

"A.    As respects a subscribing reinsurer who does not qualify for full credit with any insurance regulatory authority having jurisdiction over the Company's reserves, it is understood that any funding required of such subscribing reinsurer as set forth below shall not be great than the amount of funding required by the insurance regulatory authorities having jurisdiction over the Company's reserves."

It is understood, should the Company go into liquidation or should a receiver be appointed, all amounts due, or that would become due (including all deposits and reinstatements, net of adjustments, if any) either the Company or Reinsurer, whether by reason of premium, losses, or otherwise under this Agreement, shall be subject to the right of offset at any time and from time to time, and upon the exercise of the same, only the net balance shall be due.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 13th day of June, 2011.

/s/ Arch Reinsurance Ltd (Bermuda)

ARCH REINSURANCE LTD (BERMUDA)

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

ARGO RE LTD.

Pembroke, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 0.00%

SCHEDULE B - 0.00%

SCHEDULE C - 5.00%

SCHEDULE D - 5.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Pembroke, Bermuda, this 8th day of June, 2011.

/s/ Argo Re Ltd.

ARGO RE LTD.

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

DAVINCI REINSURANCE LTD

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 16.00%

SCHEDULE B - 16.00%

SCHEDULE C - 0.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 21st day of June, 2011.

/s/ DaVinci Reinsurance Ltd

DAVINCI REINSURANCE LTD

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

EVEREST REINSURANCE COMPANY

a Delaware Corporation

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 19.00%

SCHEDULE B - 7.50%

SCHEDULE C - 0.00%

SCHEDULE D - 0.00%

The following shall apply to the Subscribing Reinsurer's share hereunder:

"Whenever the word 'Company' is used in this Agreement, such term shall be held to include any or all of the affiliated companies which are or may hereafter be under common control, provided that notice be given to the Reinsurer of any such newly affiliated companies which may hereafter come under common control as soon as practicable with full particulars as to how such affiliation is likely to affect this Agreement. In the event of either party maintaining that such affiliation calls for alteration in existing terms, and an agreement for alteration not being arrived at, then the business of such newly affiliated company is covered at existing terms for a period of up to forty-five (45) days after notice by either party that it does not wish to cover such business."

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Liberty Corner, New Jersey, this 27rd day of July, 2011.

/s/ Everest Reinsurance Company

EVEREST REINSURANCE COMPANY

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

FLAGSTONE REASSURANCE SUISSE SA - BERMUDA BRANCH

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 3.00%

SCHEDULE B - 5.00%

SCHEDULE C - 5.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 8th day of June, 2011.

/s/ Flagstone Reassurance Suisse SA - Bermuda Branch

FLAGSTONE REASSURANCE SUISSE SA - BERMUDA BRANCH

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

HISCOX INSURNACE COMPANY (BERMUDA) LTD

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 1.00%

SCHEDULE B - 1.00%

SCHEDULE C - 0.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 13th day of June, 2011.

/s/ Hiscox Insurance Company (Bermuda) Ltd

HISCOX INSURANCE COMPANY (BERMUDA) LTD

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

MUNICH REINSURANCE AMERICA, INC

A Delaware Corporation

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 0.00%

SCHEDULE B - 0.00%

SCHEDULE C - 7.25%

SCHEDULE D - 7.25%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

When used in this Agreement, the term "Company" shall include any or all affiliated or acquired companies which are or may come under common control, provided that notice be given to the Subscribing Reinsurer of any such newly acquired or affiliated company which may come under common control within 15 days of such acquisition or affiliation providing full particulars as to how such acquisition or affiliation is likely to affect this Agreement. If the business of the newly acquired or affiliated company calls for alterations to the existing terms of this Agreement, and is not acceptable by either party, then the business of this newly acquired or affiliated company is covered per the existing terms only for a period of 45 days from the date when the notice was first received by the Subscribing reinsurer.

It is understood that treaty data and information will be entered in the Subscribing Reinsurer's group-wide IT system, subject to the other conditions of the Contract's Confidentiality Article. Anyone accessing confidential treaty information in the Subscribing Reinsurer's group-wide IT systems will need to have legal access and as such is contractually and/or legally bound and/or required by internal policy to hold all information available through these systems in strict confidence.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Princeton, New Jersey, this 17th day of June, 2011.

/s/ Munich Reinsurance America, Inc

MUNICH REINSURANCE AMERICA, INC

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

ODYSSEY REINURANCE COMPANY

Stamford, Connecticut

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 0.00%

SCHEDULE B - 2.00%

SCHEDULE C - 5.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Stamford, Connecticut, this 10th day of June, 2011.

/s/ Odyssey Reinsurance Company

ODYSSEY REINSURANCE COMPANY

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

PARTNER REINSURANCE COMPANY LTD

Pembroke, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 0.00%

SCHEDULE B - 0.00%

SCHEDULE C - 4.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Pembroke, Bermuda, this 13th day of June, 2011.

/s/ Partner Reinsurance Company Ltd

PARTNER REINSURANCE COMPANY LTD

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

RENAISSANCE REINSURANCE LTD

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 24.00%

SCHEDULE B - 24.00%

SCHEDULE C - 0.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 21st day of June, 2011.

/s/ Renaissance Reinsurance Ltd

RENAISSANCE REINSURANCE LTD

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

TOKIO MILLENNIUM RE LTD

Pembroke, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 0.00%

SCHEDULE B - 2.00%

SCHEDULE C - 5.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 16th day of June, 2011.

/s/ Tokio Millennium Re Ltd

TOKIO MILLENNIUM RE LTD

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

TORUS INSURANCE (BERMUDA) LIMITED

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 0.00%

SCHEDULE B - 2.50%

SCHEDULE C - 2.50%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 18th day of July, 2011.

/s/ Torus Insurance (Bermuda) Limited

TORUS INSURANCE (BERMUDA) LIMITED

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

TRANSATLANTIC REINSURANCE COMPANY

New York, New York

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011, no. 4) of ARTICLE 3 - TERM is herby deleted and replaced with the following:

4)    The subscribing reinsurer has become merged with, acquired or controlled by any company, corporation, or individual(s) not controlling the subscribing reinsurer's operations previously, and the surviving entity has A.M. Best's insurer financial strength rating below A-.

It is further hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 0.00%

SCHEDULE B - 0.00%

SCHEDULE C - 15.00%

SCHEDULE D - 0.00%

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in New York, New York, this 7th day of July, 2011.

/s/ Transatlantic Reinsurance Company

TRANSATLANTIC REINSURANCE COMPANY

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

VARIOUS UNDERWRITERS AT LLOYD'S, LONDON

(as per the schedule attached)

(hereinafter referred to collectively as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 11.50%

SCHEDULE B - 23.25%

SCHEDULE C - 48.75%

SCHEDULE D - 39.50%

It is further agreed that service of process in a suit brought in accordance with ARTICLE 21 - SERVICE OF SUIT shall be made upon Messrs Mendes and Mount, 750 Seventh Avenue, New York, New York 10019-6829.

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in London, England, this ______ day of _____, 2011.

/s/ Lloyd's Policy Signing Office

VARIOUS UNDERWRITERS AT LLOYD'S, LONDON

Now Know Ye that we the Underwriters, Members of the Syndicates whose definitive numbers in the after-mentioned List of Underwriting Members of Lloyd's are set out in the attached Table, hereby bind ourselves each for his own part and not one for another, our Executors and Administrators, and in respect of his due proportion only, to pay or make good to the Assured or to the Assured's Executors or Administrators or to indemnify him or them against all such loss, damage or liability as herein provided, such payment to be made after such loss, damage or liability is proved and the due proportion for which each of us, the Underwriters, is liable shall be ascertained by reference to his share, as shown in the said List, of the Amount, Percentage or Proportion of the total sum insured hereunder which is the Table set opposite the definitive number of the Syndicate of which such Underwriter is a Member AND FURHTER THAT the List of Underwriting Members of Lloyd's referred to above shows their respective Syndicates and Shares therein, is deemed to be incorporated in and to form part of this policy, bears the number specified in the attached Table and is available for inspection at Lloyd's Policy Signing Office by the Assured or his or their representatives and a true copy of the material parts of the said List certified by the General Manager of Lloyd's Policy Signing Office will be furnished to the Assured on application.

In Witness whereof the General Manager of Lloyd's Policy Signing Office has subscribed his name on behalf of each of us.

LLOYD'S POLICY SIGNING OFFICE,

/s/ Lloyd's Policy Signing Office

General manager

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the original document is stored on the Insurer's Market Repository to which your broker has access.

(NM)

Definite Numbers of Syndicates and Amount, Percentage or Proportion of the Total Sum insured hereunder shared between the Members of those Syndicates.

Schedule A            61032 30/06/2011            BROKER NUMBER     1836

BUREAU REFERENCE PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
1.75	2791	X1111WG00519
0.75	2791	X1111LX03006
6.00	2001	CAC0226411HL
3.00	1400	LPRX2374111A
TOTAL LINE	No. OF SYNDICATES
11.50	4

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2011

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUN 2011

RISK CODE: XA

Schedule B            61033 30/06/2011            BROKER NUMBER     1836

BUREAU REFERENCE PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
1.75	2791	X111TG02192
0.75	2791	X111MX03007
4.00	2001	CAC2647211TA
3.00	1400	LPRX2374111B
2.50	510	UAXR11EHCRQJ
2.50	1880	UAXQ11EHCRQJ
2.75	958	FVXAXOEN5003
2.00	2987	FC377N11A000
2.00	33	Y15BE110AKWE
1.00	2010	N11B6190A001
1.00	727	5N920X4271MV
TOTAL LINE	No. OF SYNDICATES
23.25	11

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2011

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUN 2011

RISK CODE: XA

Schedule C            61034 30/06/2011            BROKER NUMBER     1836

BUREAU REFERENCE PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
5.2500	2001	CAC1836811PJ
15.5000	435	TA648Q11A000
2.7930	2791	X1111DG04566
1.1970	2791	X1111EX04567
3.4550	510	UAXR11EHCTAK
3.4450	1880	UAXQ11EHCTQJ
5.1000	2010	N11B6190C001
2.5000	1400	LPRX2374111C
2.2500	2987	FC377N11B000
1.8225	2623	T9184J11APCS
0.4275	623	T9184J11APCS
2.2500	727	5N920X5579MV
2.5000	1458	D00283032011
0.2500	1084	60554H11AA
TOTAL LINE	No. OF SYNDICATES
48.7500	14

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2011

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUN 2011

RISK CODE: XA

Schedule D            61035 30/06/2011            BROKER NUMBER     1836

BUREAU REFERENCE PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
4.00	2001	CAC2703311DG
17.50	435	TA649C11A000
7.50	1,084	86160J11AA
4.00	2,010	N11B6190D001
1.62	2,623	T9186F11APCS
0.38	623	T9186F11APCS
2.00	2,987	FC377N11C000
2.50	1,458	D00283042011
TOTAL LINE	No. OF SYNDICATES
39.50	8

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2011

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUN 2011

RISK CODE: XA

INTERESTS AND LIABILITIES CONTRACT

In respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

MARKEL INTERNATIONAL INSURANCE COMPANY

London, England

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the Interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT as set forth below:

SCHEDULE A - 2.50%

SCHEDULE B - 0.00%

SCHEDULE C - 0.00%

SCHEDULE D - 0.00%

It is further agreed that service of process in a suite brought in accordance with ARTICLE 21 - SERVICE OF SUIT shall be made upon Messrs Mendes and Mount, 750 Seventh Avenue, New York, New York 10019-6829.

The share(s) of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

It is further understood and agreed effective 12:01 a.m., Standard Time, at the location of the risk, June 1, 2011, the following amendment shall apply:

ARTICLE 28 - INTERMEDIARY is hereby deleted and replaced with the following:

BMS Intermediaries, Inc., are hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, reports, premiums, return premium taxes, losses, Loss Adjustment Expenses, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through BMS Intermediaries, Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed only to constitute payment to the Company to the extent that such payments are actually received by the Company.

The following shall apply in the event that the Subscribing Reinsurer is an Xchanging Company market:

A. Payments by the Subscribing Reinsurer to the Intermediary shall be processed through the BMS Group Ltd bank account, and receipt of such payments in the BMS Group Ltd bank account will be deemed to constitute payment to the Intermediary.

B. Payments by the Intermediary to the Subscribing Reinsurer will be deposited by the Intermediary into the BMS

Group Ltd bank account prior to the automatic transfer to the subscribing reinsurer through the London Irrevocable Processing and Settlement Scheme (LIPS). Payment by the Intermediary to the Subscribing Reinsurer will only be deemed to have been made when tis transfer takes place.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in London, England, this ____day of ___________, 2011.

MARKETL INTERNATINOAL INSURANCE COMPNAY

Companies Treaty Attestation Clause

We, the Reinsurers, hereby severally agree to reinsurer the Reinsured in the manner and proportions set forth in this reinsurance contract.

The subscribing Reinsurer's obligations under this contract are several and not joint and are limited solely to the extent of their individual signed subscriptions. the subscribing Reinsurers are not responsible for the subscriptions of any co-subscribing Reinsurer who for any reason does not satisfy all or part of its obligations.

In witness whereof the mane of a Director of Ins-sure Services Limited is subscribed on behalf of each of the Reinsurers in accordance with the provisions of the Services Agreement that each of the Insurers has with London Processing Centre Limited (a wholly owned subsidiary of Ins-sure Services Limited).

In the event of this attestation clause being attached to a reinsurance contract the terms Insurers and Insured are deemed to be amended to Reinsurers and Reinsured.

/s/ Ins-sure Services LimitedDirector

This wording is not valid unless it bears the signature of a Director of Ins-sure Services Limited.

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the original document is stored on the Insurer's Market Repository to which your broker has access.

BUREAU REFERENCE PROPORTION %	CODE	MEMBER COMPANY AND REFERENCE
2.5000	T3902	MARKETL INTERNATIONAL INSURANCE COMPANY LIMITED (011R014717AR)

EX-10.12

Exhibit 10.12

REIMBURSEMENT CONTRACT

Effective: June 1, 2011

(Contract)

between

UNITED PROPERTY AND CASUALTY INSURANCE OMPANY

St. Petersburg, FL

(Company)

NAIC # 10969

and

THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA)

WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF)

PREAMBLE

The Legislature of the State of Florida has enacted Section 215.555, Florida Statutes Statute, which directs the SBA to administer the FHCF. This Contract, consisting of the principal document entitled Reimbursement Contract, addressing the mandatory FHCF coverage, and Addenda, is subject to the Statute and to any administrative rule adopted pursuant thereto, and is not intended to be in conflict therewith. All provisions in the principle document are equally applicable to each Addenda unless specifically superseded by one of the Addenda.

In consideration of the promises set forth in this Contract, the parties agree as follows:

ARTICLE I - SCOPE OF AGREEMENT

As a condition precedent to the SBA's obligations under this Contract, the Company, an Authorized Insurer or an entity writing Covered Policies under Section 627.351, Florida Statutes, in the State of Florida, shall report to the SBA in a specified format the business it writes which is described in this Contract as Covered Policies.

The terms of this Contract shall determine the rights and obligations of the parties. This Contract provides reimbursement to the Company under certain circumstances, as described herein, and does not provide or extend insurance or reinsurance coverage to any person, firm, corporation or other entity. The SBA shall reimburse the Company for its Ultimate Net Loss on Covered Policies, which were in force and in effect at the time of the loss, in excess of the Company's Retention as a result of each Loss

FHCF-2011K

Rule 19-8.010 F.A.C.

1

Occurrence commencing during the Contract Year, to the extent funds are available, all as hereinafter defined.

ARTICLE II - PARTIES TO THE CONTRACT

This Contract is solely between the Company and the SBA which administers the FHCF. In no instance shall any insured of the Company or any claimant against an insured of the Company, or any other third party, have any rights under this Contract, except as provided in Article XIV. The SBA will only disburse funds to the Company, except as provided for in Article XIV of this Contract. The Company shall not, without the prior approval of the Office of Insurance Regulation, sell, assign, or transfer to any third party, in return for a fee or other consideration any sums the FHCF pays under this Contract or the right to receive such sums.

ARTICLE III - TERM

This Contract shall apply to Loss Occurrences which commence during the period from 12:00:01 a.m., Eastern Time, June 1, 2011, to 12:00 midnight, Eastern Time, May 31, 2012 (Contract Year).

The Company must designate a coverage level, make the required selections, and return this fully executed Contract (two originals) to the FHCF Administrator so that the Contract is received by the FHCF Administrator no later than 5 p.m., Central Time, March 1, 2011. Failure to do so may result in a referral to the Office of Insurance Regulation within the Department of Financial Services for administrative action. Furthermore, the Company's coverage level under this Contract will be deemed as follows:

(1) For Companies that are a member of a National Association of Insurance Commissioners (NAIC) group, the same coverage level selected by the other Companies of the same NAIC group shall be deemed. If executed Contracts for none of the members of an NAIC group have been received by the FHCF Administrator, the coverage level from the prior Contract Year shall be deemed.

(2) For Companies that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the coverage level from the prior Contract Year shall be deemed.

(3) For New Participants, as that term is defined in Article V(21), that are a member of an NAIC group, the same coverage level selected by the other Companies of the same NAIC group shall be deemed.

(4) For New Participants that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the 45%, 75% or 90% coverage levels may be selected providing that the FHCF Administrator receives executed Contracts within 30 calendar days of the effective date of the first Covered Policy, otherwise, the 45% coverage level shall be deemed.

Pursuant to the terms of this Contract, the SBA shall not be liable for Loss Occurrences which commence after the effective time and date of expiration or termination. Should this Contract expire or terminate while a Loss Occurrence covered hereunder is in progress, the SBA shall be responsible for such Loss Occurrence in progress in the same manner and to the same extent it would have been responsible had the Contract expired the day following the conclusion of the Loss Occurrence in progress.

ARTICLE IV - LIABILITY OF THE FHCF

(1) The SBA shall reimburse the Company, with respect to each Loss Occurrence commencing during the Contract Year for the Reimbursement Percentage elected, this percentage times the amount of Ultimate Net Loss paid by the Company in excess of the Company's Retention, as adjusted pursuant to Article V(28), plus 5% of the reimbursed losses for Loss Adjustment Expense Reimbursement.

(2) The Reimbursement Percentage will be 45% or 75% or 90%, at the Company's option as elected under Article XVIII.

FHCF-2011K

Rule 19-8.010 F.A.C.

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(3) The aggregate liability of the FHCF with respect to all Reimbursement Contracts covering this Contract Year shall not exceed the limit set forth under Section 215.555(4)(c)1., Florida Statutes. For specifics regarding loss reimbursement calculations, see section (3)(c) of Article X herein.

(4) Upon the occurrence of a Covered Event, the SBA shall evaluate the potential losses to the FHCF and the FHCF's capacity at the time of the event. The initial Projected Payout Multiple used to reimburse the Company for its losses shall not exceed the Projected Payout Multiple as calculated based on the capacity needed to provide the FHCF's mandatory coverage and the Additional Coverage Option (up to $10 million) pursuant to Section 215.555(4)(b)4., Florida Statutes, as provided under Addendum No. 1. to this Contract. The SBA shall make adjustments to the Projected Payout Multiple in order to reimburse the optional Temporary Increase in Coverage Limit (TICL) Options coverage based on the SBA's ongoing evaluation of potential losses and capacity. If it appears that the Estimated Claims-Paying Capacity may be exceeded, the SBA shall reduce the projected payout factors or multiples for determining each participating insurer's projected payout uniformly among all insurers to reflect the Estimated Claims-Paying Capacity.

(5) Reimbursement amounts shall not be reduced by reinsurance paid or payable to the Company from other sources.

(6) After the end of the calendar year, the SBA shall notify insurers of the estimated Borrowing Capacity and the Balance of the Fund as of December 31. In May and October of each year, the SBA shall publish in the Florida Administrative Weekly a statement of the FHCF's estimated Borrowing Capacity, Estimated Claims-Paying Capacity, and the projected Balance of the Fund as of December 31.

(7) The obligation of the SBA with respect to all Contracts covering a particular Contract Year shall not exceed the Balance of the Fund as of December 31 of that Contract Year, together with the maximum amount the SBA is able to raise through the issuance of revenue bonds or through other means available to the SBA under Section 215.555, Florida Statutes, up to the limit in accordance with Section 215.555(4)(c)1., Florida Statutes. The obligations and the liability of the SBA are more fully described in Rule 19-8.013, Florida Administrative Code (F.A.C.).

ARTICLE V - DEFINITIONS

(1) Actual Claims-Paying Capacity of the FHCF

This term means the sum of the Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF, plus the amount the SBA is able to raise through the issuance of revenue bonds, or through other means available by law to the SBA, up to the limit in accordance with Section 215.555(4)(c)1. and (6), Florida Statutes.

(2) Actuarially Indicated

This term means, with respect to Premiums paid by Companies for reimbursement provided by the FHCF, an amount determined in accordance with the definition provided in Section 215.555(2)(a), Florida Statutes.

(3) Additional Living Expense (ALE)

ALE losses covered by the FHCF are not to exceed 40 percent of the insured value of a Residential Structure or its contents based on the coverage provided in the policy. Fair rental value, loss of rents, or business interruption losses are not covered by the FHCF.

(4) Administrator

This term means the entity with which the SBA contracts to perform administrative tasks associated with the operations of the FHCF. The Administrator is Paragon Strategic Solutions Inc., 8200 Tower, 5600 West 83rd Street, Suite 1100, Minneapolis, Minnesota 55437. The telephone number is (800) 689-3863, and the facsimile number is (800) 264-0492.

(5) Authorized Insurer

This term is defined in Section 624.09(1), Florida Statutes.

(6) Borrowing Capacity

FHCF-2011K

Rule 19-8.010 F.A.C.

3

This term means the amount of funds which are able to be raised by the issuance of revenue bonds or through other financing mechanisms, less bond issuance expenses and reserves.

(7) Citizens Property Insurance Corporation (Citizens)

This term means the entity formed under Section 627.351(6), Florida Statutes, and refers to both Citizens Property Insurance Corporation High Risk Account and Citizens Property Insurance Corporation Personal Lines and Commercial Lines Accounts.

(8) Contract

This term means this Reimbursement Contract for the current Contract Year.

(9) Covered Event

This term means any one storm declared to be a hurricane by the National Hurricane Center which causes insured losses in Florida. A Covered Event begins when a hurricane causes damage in Florida while it is a hurricane and continues throughout any subsequent downgrades in storm status by the National Hurricane Center regardless of whether the hurricane makes landfall. Any storm, including a tropical storm, which does not become a hurricane is not a Covered Event.

(10) Covered Policy or Covered Policies

(a) Covered Policy, as defined in Section 215.555(2)(c), Florida Statutes, is further clarified to mean only that portion of a binder, policy or contract of insurance that insures real or personal property located in the State of Florida to the extent such policy insures a Residential Structure, as defined in definition (27) herein, or the contents of a Residential Structure, located in the State of Florida.

(b) Due to the specialized nature of the definition of Covered Policies, Covered Policies are not limited to only one line of business in the Company's annual statement required to be filed by Section 624.424, Florida Statutes. Instead, Covered Policies are found in several lines of business on the Company's annual statement. Covered Policies will at a minimum be reported in the Company's statutory annual statement as:

1.Fire

2.Allied Lines

3.Farmowners Multiple Peril

4.Homeowners Multiple Peril

5.Commercial Multiple Peril (non liability portion, covering condominiums and apartments)

6.Inland Marine

Note that where particular insurance exposures, e.g., mobile homes, are reported on an annual statement is not dispositive of whether or not the exposure is a Covered Policy.

(c) This definition applies only to the first-party property section of a policy pertaining strictly to the structure, its contents, appurtenant structures, or ALE coverage.

(d) Covered Policy also includes any collateral protection insurance policy covering personal residences which protects both the borrower's and the lender's financial interest, in an amount at least equal to the coverage for the dwelling in place under the lapsed homeowner's policy, if such policy can be accurately reported as required in Section 215.555(5), Florida Statutes. A Company will be deemed to be able to accurately report data if the required data, as specified in the Premium Formula adopted in Section 215.555(5), Florida Statutes, is available.

(e) See Article VI of this Contract for specific exclusions.

(11) Deductible Buy-Back Policies

This term means a specific policy that provides coverage to a policyholder for some portion of the policyholder's deductible under a policy issued by another insurer.

FHCF-2011K

Rule 19-8.010 F.A.C.

4

(12) Estimated Claims-Paying Capacity of the FHCF

This term means the sum of the projected Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF, plus the most recent estimate of the Borrowing Capacity of the FHCF, determined pursuant to Section 215.555(4)(c), Florida Statutes.

(13) Excess Policies

This term, for the purposes of this Contract, means a policy that provides insurance protection for large commercial property risks that provides a layer of coverage above a primary layer (which is insured by a different insurer) that acts much the same as a very large deductible.

(14) Florida Department of Financial Services (Department)

This term means the Florida regulatory agency, created pursuant to Section 20.121, Florida Statutes, which is charged with regulating the Florida insurance market and administering the Florida Insurance Code.

(15) Florida Insurance Code

This term means those chapters identified in Section 624.01, Florida Statutes, which are designated as the Florida Insurance Code.

(16) Formula or the Premium Formula

This term means the Formula approved by the SBA for the purpose of determining the Actuarially Indicated Premium to be paid to the FHCF. The Premium Formula is defined as an approach or methodology which leads to the creation of premium rates. The resulting rates are therefore incorporated as part of the Premium Formula. The Formula, shall, pursuant to Section 215.555(5)(b), Florida Statutes, include a cash build-up factor in the amount specified therein.

(17) Fund Balance or Balance of the Fund as of December 31

These terms mean the amount of assets available to pay claims, not including any bonding proceeds, resulting from Covered Events which occurred during the Contract Year.

(18) Insurer Group

For purposes of the coverage option election in Section 215.555(4)(b), Florida Statutes, Insurer Group means the group designation assigned by the National Association of Insurance Commissioners (NAIC) for purposes of filing consolidated financial statements. A Company is a member of a group as designated by the NAIC until such Company is assigned another group designation or is no longer a member of a group recognized by the NAIC.

(19) Loss Occurrence

This term means the sum of individual insured losses incurred under Covered Policies resulting from the same Covered Event. Losses means direct incurred losses under Covered Policies and excludes Loss Adjustment Expenses.

(20) Loss Adjustment Expense Reimbursement

(a) Loss Adjustment Expense Reimbursement shall be 5% of the reimbursed losses under this Contract as provided in Article IV, pursuant to Section 215.555(4)(b)1., Florida Statutes.

(b) To the extent that loss reimbursements are limited to the Payout Multiple applied to each Company, the 5% Loss Adjustment Expense is included in the total Payout Multiple applied to each Company.

(21) New Participant(s)

This term means all Companies which begin writing Covered Policies on or after the beginning of the Contract Year. A Company that removes exposure from either Citizens entity, as that term is defined in (7) above, pursuant to an assumption agreement effective on or after June 1 and had written no other Covered Policies before June 1 is also considered a New Participant.

(22) Office of Insurance Regulation

This term means that office within the Department of Financial Services and which was created in Section 20.121(3), Florida Statutes.

FHCF-2011K

Rule 19-8.010 F.A.C.

5

(23) Payout Multiple

This term means the multiple as calculated in accordance with Section 215.555(4)(c), Florida Statutes, which is derived by dividing the single season Claims-Paying Capacity of the FHCF by the total aggregate industry Reimbursement Premium for the FHCF for the Contract Year billed as of December 31 of the Contract Year. The final Payout Multiple is determined once Reimbursement Premiums have been billed as of December 31 and the amount of bond proceeds has been determined.

(24) Premium

This term means the same as Reimbursement Premium.

(25) Projected Payout Multiple

The Projected Payout Multiple is used to calculate a Company’s projected payout pursuant to Section 215.555(4)(d)2., Florida Statutes. The Projected Payout Multiple is derived by dividing the estimated single season Claims-Paying Capacity of the FHCF by the estimated total aggregate industry Reimbursement Premium for the FHCF for the Contract Year. The Company’s Reimbursement Premium as paid to the SBA for the Contract Year is multiplied by the Projected Payout Multiple to estimate the Company’s coverage from the FHCF for the Contract Year.

(26) Reimbursement Premium

This term means the Premium determined by multiplying each $1,000 of insured value reported by the Company in accordance with Section 215.555(5)(b), Florida Statutes, by the rate as derived from the Premium Formula, as described in Rule 19-8.028, F.A.C.

(27) Residential Structures

This term means dwelling units, including the primary structure and appurtenant structures insured under the same policy and any other structures covered under endorsements associated with a policy covering a residential structure. Covered Residential Structures do not include any structures listed under Article VI herein or structures used solely for non-residential purposes.

(28) Retention

The Company’s Retention means the amount of hurricane losses under Covered Policies which must be incurred by the Company before it is eligible for reimbursement from the FHCF.

(a) When the Company experiences covered losses from one or two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of the Covered Events.

(b) When the Company experiences covered losses from more than two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of the two Covered Events causing the largest covered losses for the Company. For each other Covered Event resulting in covered losses, the Company’s Retention shall be reduced to one-third of its full Retention and applied to all other Covered Events.

1. All reimbursement of covered losses for each Covered Event shall be based on the Company’s full Retention until December 31 of the Contract Year. Adjustments to reflect a reduction to one-third of the full Retention shall be made on or after December 31 of the Contract Year provided the Company reports its losses as specified in this Contract.

2. Adjustments to the Company’s Retention shall be based upon its paid and outstanding losses as reported on the Company’s Proof of Loss Reports but shall not include incurred but not reported losses. The Company’s Proof of Loss Reports shall be used to determine which Covered Events constitute the Company’s two largest Covered Events, and the reduction to one-third of the full Retention shall be applied to all other Covered Events for the Contract Year. After this initial determination, any subsequent adjustments shall be made by the SBA only if the quarterly loss reports reveal that loss development patterns have resulted in a change in the order of Covered Events entitled to the reduction to one-third of the full Retention.

(c) The Company’s full Retention is established in accordance with the provisions of Section 215.555(2)(e), Florida Statutes, and shall be determined by multiplying the Retention Multiple by the Company’s Reimbursement Premium for the Contract Year.

FHCF-2011K

Rule 19-8.010 F.A.C.

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(d) Once the Company's limit of coverage has been exhausted, the Company will not be entitled to further reimbursements.

(29) Retention Multiple

(a) The Retention Multiple is applied to the Company's Reimbursement Premium to determine the Company's Retention. The Retention Multiple for the 2011/2012 Contract Year shall be equal to $4.5 billion, adjusted based upon the reported exposure for the 2009/2010 Contract Year to reflect the percentage growth in exposure to the FHCF since 2004, divided by the estimated total industry Reimbursement Premium at the 90% reimbursement percentage level for the Contract Year as determined by the SBA.

(b) The Retention Multiple as determined under (29)(a) above shall be adjusted to reflect the

reimbursement percentage elected by the Company under this Contract as follows:

1. If the Company elects a 90% reimbursement percentage, the adjusted Retention Multiple is 100% of the amount determined under (29)(a) above;

2. If the Company elects a 75% reimbursement percentage, the adjusted Retention Multiple is 120% of the amount determined under (29)(a) above; or

3. If the Company elects a 45% reimbursement percentage, the adjusted Retention Multiple is 200% of the amount determined under (29)(a) above.

(30) Ultimate Net Loss

(a) This term means all direct incurred losses of the Company under Covered Policies in force at the time of a Covered Event, as defined under (9) above, prior to the application of the Company's FHCF Retention, as defined under (28) above, and reimbursement percentage, and excluding loss adjustment expense and any exclusions under Article VI herein, arising from each Loss Occurrence during the Contract Year, provided, however, that the Company's loss shall be determined in accordance with the deductible level written under the policy sustaining the loss.

(b) Salvages and all other recoveries, excluding reinsurance recoveries, shall be first deducted from such loss to arrive at the amount of liability attaching hereunder.

(c) All salvages, recoveries or payments recovered or received subsequent to a loss settlement under this Contract shall be applied as if recovered or received prior to the aforesaid settlement and all necessary adjustments shall be made by the parties hereto.

(d) Nothing in this clause shall be construed to mean that losses under this Contract are not recoverable until the Company's Ultimate Net Loss has been ascertained.

(e) The SBA shall be subrogated to the rights of the Company to the extent of its reimbursement of the Company. The Company agrees to assist and cooperate with the SBA in all respects as regards such subrogation. The Company further agrees to undertake such actions as may be necessary to enforce its rights of salvage and subrogation, and its rights, if any, against other insurers as respects any claim, loss, or payment arising out of a Covered Event.

ARTICLE VI - EXCLUSIONS

This Contract does not provide reimbursement for:

(1) Any losses not defined as being within the scope of a Covered Policy.

(2) Any policy which excludes wind or hurricane coverage.

(3) Any Excess Policy or Deductible Buy-Back Policy that requires individual ratemaking.

(4) Any policy for Residential Structures, as defined in Article V(27) herein, that provides a layer of coverage underneath an Excess Policy, as defined in Article V(13) herein, issued by a different insurer.

(5) Any liability of the Company attributable to losses for fair rental value, loss of rent or rental income, or business interruption.

(6) Any collateral protection policy that does not meet the definition of Covered Policy as defined in Article V(10)(d) herein.

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(7) Any reinsurance assumed by the Company.

(8) Any exposure for hotels, motels, timeshares, shelters, camps, retreats, and any other rental property used solely for commercial purposes.

(9) Any exposure for homeowner associations if no habitational structures are insured under the policy.

(10) Any exposure for homes and condominium structures or units that are non-owner occupied and rented for six (6) or more rental periods by different parties during the course of a twelve (12) month period.

(11) Commercial healthcare facilities and nursing homes; however, a nursing home which is an integral part of a retirement community consisting primarily of habitational structures that are not nursing homes will not be subject to this exclusion.

(12) Any exposure under commercial policies covering only appurtenant structures or structures that do not function as a habitational structure (e.g., a policy covering only the pool of an apartment complex).

(13) Personal contents in a commercial storage facility (including jewelry in an off-premises vault) covered under a policy that covers only those personal contents.

(14) Policies covering only Additional Living Expense.

(15) Any exposure for barns or barns with apartments.

(16) Any exposure for builders risk coverage or new Residential Structures still under construction.

(17) Any exposure for recreational vehicles, golf carts, or boats (including boat related equipment) requiring licensing and written on a separate policy or endorsement.

(18) Any liability of the Company for extra contractual obligations or liabilities in excess of original policy limits.

(19) Any losses paid in excess of a policy's hurricane limit in force at the time of each Covered Event, including individual coverage limits (i.e., building, appurtenant structures, contents, and additional living expense). This exclusion includes overpayments of a specific individual coverage limit even if total payments under the policy are within the aggregate policy limit.

(20) Any losses paid under a policy for Additional Living Expense, written as a time element coverage, in excess of the Additional Living Expense exposure reported for that policy under the Data Call for the applicable Contract Year (unless policy limits have changed effective after June 30 of the Contract Year).

(21) Any losses for which the Company's claims files do not adequately support. Claim file support shall be deemed adequate if in compliance with the Records Retention Requirements outlined on the Form FHCF-L1B (Proof of Loss Report) applicable to the Contract Year.

(22) Any exposure for, or losses attributable to, loss assessment coverage.

(23) Losses in excess of the sum of the Balance of the Fund as of December 31 of the Contract Year and the amount the SBA is able to raise through the issuance of revenue bonds or by the use of other financing mechanisms, up to the limit pursuant to Section 215.555(4)(c), Florida Statutes.

(24) Any liability assumed by the Company from Pools, Associations, and Syndicates. Exception: Covered Policies assumed from Citizens under the terms and conditions of an executed assumption agreement between the Authorized Insurer and Citizens are covered by this Contract.

(25) All liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. Insolvency fund includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, howsoever denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee, or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

(26) Any liability of the Company for loss or damage caused by or resulting from nuclear reaction, nuclear radiation, or radioactive contamination from any cause, whether direct or indirect, proximate

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or remote, and regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

(27) The FHCF does not provide coverage for water damage which is generally excluded under property insurance contracts and has been defined to mean flood, surface water, waves, tidal water, overflow of a body of water, storm surge, or spray from any of these, whether or not driven by wind.

(28) Specialized Fine Arts Risks as defined in Rule 19-8.028(4)(d), F.A.C.

ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES

The Company shall investigate and settle or defend all claims and losses. All payments of claims or losses by the Company within the terms and limits of the appropriate coverage parts of Covered Policies shall be binding on the SBA, subject to the terms of this Contract, including the provisions in Article XIII relating to inspection of records and examinations.

ARTICLE VIII - LOSS REIMBURSEMENT ADJUSTMENTS

(1) Offsets

The SBA reserves the right to offset amounts payable to the SBA from the Company, including amounts payable under previous Contract Years and the Company's full Premium for the current Contract Year (regardless of installment due dates), against any reimbursement or advance amounts, or amounts agreed to in a commutation agreement, which are due and payable to the Company from the SBA as a result of the liability of the SBA.

(2) Reimbursement Adjustments

Section 215.555(4)(d) and (e), Florida Statutes, provides the SBA with the right to seek the return of excess loss reimbursements which have been paid to the Company along with interest thereon. Excess loss reimbursements are those payments made to the Company by the SBA that are in excess of the Company's coverage under the Contract Year. Excess loss reimbursements may result from adjustments to the Projected Payout Multiple or the Payout Multiple, incorrect exposure (Data Call) submissions or resubmissions, incorrect calculations of Reimbursement Premiums or Retentions, incorrect Proof of Loss Reports, incorrect calculation of reinsurance recoveries, or subsequent readjustment of policyholder claims, including subrogation and salvage, or any combination of the foregoing. The Company will be sent an invoice showing the due date for adjustments along with the interest due thereon through the due date. The applicable interest rate for interest credits, and for interest charges for adjustments beyond the Company's control, will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges on excess loss reimbursements due to adjustments resulting from incorrect exposure submissions or Proof of Loss Reports will accrue at this rate plus 5%. All interest will continue to accrue if not paid by the due date.

ARTICLE IX - REIMBURSEMENT PREMIUM

(1) The Company shall, in a timely manner, pay the SBA its Reimbursement Premium for the Contract Year. The Reimbursement Premium for the Contract Year shall be calculated in accordance with Section 215.555, Florida Statutes, with any rules promulgated thereunder, and with Article X(2).

(2) Since the calculation of the Actuarially Indicated Premium assumes that the Companies will pay their Reimbursement Premiums timely, interest charges will accrue under the following circumstances. A Company may choose to estimate its own Premium installments. However, if the Company's estimation is less than the provisional Premium billed, an interest charge will accrue on the difference between the estimated Premium and the final Premium. If a Company estimates its first installment, the Administrator shall bill that estimated Premium as the second installment as well, which will be considered as an estimate by the Company. No interest will accrue regarding any provisional Premium if paid as billed by the FHCF's Administrator, except in the case of an estimated second installment as set forth in this Article.

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Also, if a Company makes an estimation that is higher than the provisional Premium billed but is less than the final Premium, interest will not accrue. If the Premium payment is not received from a Company when it is due, an interest charge will accrue on a daily basis until the payment is received. Interest will also accrue on Premiums resulting from submissions or resubmissions finalized after December 1 of the Contract Year. An interest credit will be applied for any Premium which is overpaid as either an estimate or as a provisional Premium. Interest shall not be credited past December 1 of the Contract Year. The applicable interest rate for interest credits will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges will accrue at this rate plus 5%.

ARTICLE X - REPORTS AND REMITTANCES

(1) Exposures

(a) If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall report to the SBA, unless otherwise provided in Rule 19-8.029, F.A.C., no later than the statutorily required date of September 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of June 30 of the Contract Year as outlined in the annual reporting of insured values form, FHCF-D1A (Data Call) adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA.

(b) If the Company first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year, the Company shall report to the SBA, no later than March 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of December 31 of the Contract Year as outlined in the Supplemental Instructions for New Participants section of the Data Call adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA.

(c) If the Company first begins writing Covered Policies on December 1 through and including May 31 of the Contract Year, the Company shall not report its exposure data for the Contract Year to the SBA.

(d) The requirement that a report is due on a certain date means that the report shall be in the physical possession of the FHCF's Administrator in Minneapolis no later than 5 p.m. Central Time on the due date. If the applicable due date is a Saturday, Sunday or legal holiday, then the actual due date will be the day immediately following the applicable due date which is not a Saturday, Sunday or legal holiday. For purposes of the timeliness of the submission, neither the United States Postal Service postmark nor a postage meter date is in any way determinative. Reports sent to the SBA in Tallahassee, Florida, will be returned to the sender. Reports not in the physical possession of the FHCF's Administrator by 5 p.m., Central Time, on the applicable due date are late.

(e) Pursuant to the provisions of Section 215.557, Florida Statutes, the reports of insured values under Covered Policies by ZIP Code submitted to the SBA pursuant to Section 215.555, Florida Statutes, are confidential and exempt from the provisions of Section 119.07(1), Florida Statutes, and Section 24(a), Art. I of the State Constitution.

(2) Reimbursement Premium

(a) If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall pay the FHCF its Reimbursement Premium in installments due on or before August 1, October 1, and December 1 of the Contract Year in amounts to be determined by the FHCF. However, if the Company's Reimbursement Premium for the prior Contract Year was less than $5,000, the Company's full provisional Reimbursement Premium, in an amount equal to the Reimbursement Premium paid in the prior year, shall be due in full on or before August 1 of the Contract Year.

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The Company will be invoiced for amounts due, if any, beyond the provisional Reimbursement Premium payment, on or before December 1 of the Contract Year. In addition, if control of the Company has been transferred through any legal or regulatory proceeding to a state regulator or court appointed receiver or rehabilitator (referred to in the aggregate as State action), the full annual provisional Reimbursement Premium as billed and any outstanding balances will be due and payable on August 1, or the date that such State action occurs after August 1 of the Contract Year. Such acceleration will not apply when the receiver or rehabilitator provides a letter of assurance to the FHCF that the Company will have the resources to pay the premium in installments in accordance with the contractual provisions.

(b) A New Participant that first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year shall pay the FHCF a provisional Reimbursement Premium of $1,000 upon execution of this Contract. The Administrator shall calculate the Company's actual Reimbursement Premium for the period based on its actual exposure as of December 31 of the Contract Year, as reported on or before March 1 of the Contract Year. To recognize that New Participants have limited exposure during this period, the actual Premium as determined by processing the Company's exposure data shall then be divided in half, the provisional Premium shall be credited, and the resulting amount shall be the total Premium due for the Company for the remainder of the Contract Year. However, if that amount is less than $1,000, then the Company shall pay $1,000. The Premium payment is due no later than May 1 of the Contract Year. The Company's Retention and coverage will be determined based on the total Premium due as calculated above.

(c) A New Participant that first begins writing Covered Policies on or after December 1 through and including May 31 of the Contract Year shall pay the FHCF a Reimbursement Premium of $1,000 upon execution of this Contract.

(d) The requirement that the Reimbursement Premium is due on a certain date means that the Premium shall be in the physical possession of the FHCF no later than 2 p.m., Eastern Time, on the due date applicable to the particular installment. If remitted by check to the FHCF's Post Office Box, the check shall be physically in the Post Office Box 100822, Atlanta, GA 30384-0822, as set out on the invoice sent to the Company. If remitted by check by hand delivery, the check shall be physically on the premises of the FHCF's bank in College Park, Georgia, as set out on the invoice sent to the Company. If remitted electronically, the wire transfer shall have been completed to the FHCF's account at its bank in Atlanta, Georgia, as set out on the invoice sent to the Company. If the applicable due date is a Saturday, Sunday or legal holiday, then the actual due date will be the day immediately following the applicable due date which is not a Saturday, Sunday or legal holiday. For purposes of the timeliness of the remittance, neither the United States Postal Service postmark nor a postage meter date is in any way determinative. Premium checks sent to the SBA in Tallahassee, Florida, or to the FHCF's Administrator in Minneapolis, Minnesota, will be returned to the sender. Reimbursement Premiums not in the physical possession of the FHCF by 2 p.m., Eastern Time, on the applicable due date are late.

(e) Except as required by Section 215.555(7)(c), Florida Statutes, or as described in the following sentence, Reimbursement Premiums, together with earnings thereon, received in a given Contract Year will be used only to pay for losses attributable to Covered Events occurring in that Contract Year or for losses attributable to Covered Events in subsequent Contract Years and will not be used to pay for past losses or for debt service on revenue bonds. Pursuant to Section 215.555(6)(a)1., Florida Statutes, Reimbursement Premiums and earnings thereon may be used for payments relating to revenue bonds in the event emergency assessments are insufficient. If Reimbursement Premiums or earnings thereon are used for debt service on revenue bonds, then the amount of the Reimbursement Premiums or earnings thereon so used shall be returned, without interest, to the Fund when emergency assessments or other legally available funds remain available after making payment relating to the revenue bonds and any other purposes for which emergency assessments were levied.

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(3) Claims and Losses

(a) In General

1. Claims and losses resulting from Loss Occurrences commencing during the Contract Year shall be reported by the Company and reimbursed by the FHCF as provided herein and in accordance with the Statute, this Contract, and any rules adopted pursuant to the Statute. For a Company participating in a quota share primary insurance agreement(s) with Citizens Property Insurance Corporation High Risk Account, Citizens and the Company shall report only their respective portion of losses under the quota share primary insurance agreement(s). Pursuant to Section 215.555(4)(c), Florida Statutes, the SBA is obligated to pay for losses not to exceed the Actual Claims-Paying Capacity of the FHCF, up to the limit in accordance with Section 215.555(4)(c)1., Florida Statutes, for any one Contract Year.

2. If the Company is in non-compliance with Section 215.555, Florida Statutes for any Contract Year, including deadlines for sending in Contracts, addenda or attachments to Contracts, Data Call submissions or resubmissions, loss reports, or in responding to SBA exam requirements, the SBA reserves the right to withhold reimbursements or advances until such time the Company becomes compliant.

(b) Loss Reports

1. At the direction of the SBA, the Company shall report its projected Ultimate Net Loss from each Loss Occurrence to provide information to the SBA in determining any potential liability for possible reimbursable losses under the Contract on the Interim Loss Report, Form FHCF-L1A, adopted for the Contract Year under Rule 19-8.029, F.A.C. Interim Loss Reports (including subsequent Interim Loss Reports if required by the SBA) will be due in no less than fourteen days from the date of the notice from the SBA that such a report is required.

2. FHCF loss reimbursements will be issued based on Ultimate Net Loss information reported by the Company on the Proof of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C.

a. To qualify for reimbursement, the Proof of Loss Report must have the original signatures of two executive officers authorized by the Company to sign the report.

b. The Company must also submit a detailed claims listing (as outlined on the Proof of Loss Report) at the same time it submits its first Proof of Loss Report for a specific Covered Event that qualifies the Company for reimbursement under that Covered Event, and should be prepared to supply a detailed claims listing for any subsequent Proof of Loss Report upon request.

c. While a Company may submit a Proof of Loss Report requesting reimbursement at any time following a Loss Occurrence, all Companies shall submit a mandatory Proof of Loss Report for each Loss Occurrence no earlier than December 1 and no later than December 31 of the Contract Year during which the Covered Event(s) occurs using the most current data available, regardless of the amount of Ultimate Net Loss or the amount of loss reimbursements or advances already received. Reports may be faxed only if the Company does not qualify for a reimbursement.

d. For the Proof of Loss Reports due by December 31 of the Contract Year, and the required subsequent quarterly and annual reports required under subparagraphs 3. and 4. below, the Company shall submit its Proof of Loss Reports by each quarter-end or year-end using the most current data available. However, the date of such data shall not be more than sixty days prior to the applicable quarter-end or year-end date.

3. Updated Proof of Loss Reports for each Loss Occurrence are due quarterly thereafter until all claims and losses resulting from a Loss Occurrence are fully discharged including any adjustments to such losses due to salvage or other recoveries, or the Company has received its full coverage under the Contract Year in which the Loss Occurrence(s) occurred. Guidelines follow:

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a. Quarterly Proof of Loss Reports are due by March 31 from an insurer whose losses exceed, or are expected to exceed, 50% of its FHCF Retention for a specific Loss Occurrence(s).

b. Quarterly Proof of Loss Reports are due by June 30 from an insurer whose losses exceed, or are expected to exceed, 75% of its FHCF Retention for a specific Loss Occurrence(s).

c. Quarterly Proof of Loss Reports are due by September 30 and quarterly thereafter from an insurer whose losses exceed, or are expected to exceed, its FHCF Retention for a specific Loss Occurrence(s).

If the Company's Retention must be recalculated as the result of an exposure resubmission, and if the recalculated Retention changes the FHCF's reimbursement obligations, then the Company shall submit additional Proof of Loss Reports for recalculation of the FHCF's obligations.

4. Annually after December 31 of the Contract Year, all Companies shall submit a mandatory year-end Proof of Loss Report for each Loss Occurrence, as applicable, using the most current data available. This Proof of Loss Report shall be filed no earlier than December 1 and no later than December 31 of each year and shall continue until the earlier of the commutation process described in (3)(d) below or until all claims and losses resulting from the Loss Occurrence are fully discharged including any adjustments to such losses due to salvage or other recoveries.

5. The SBA, except as noted below, will determine and pay, within 30 days or as soon as practicable after receiving Proof of Loss Reports, the reimbursement amount due based on losses paid by the Company to date and adjustments to this amount based on subsequent quarterly information. The adjustments to reimbursement amounts shall require the SBA to pay, or the Company to return, amounts reflecting the most recent determination of losses.

a. The SBA shall have the right to consult with all relevant regulatory agencies to seek all relevant information, and shall consider any other factors deemed relevant, prior to the issuance of reimbursements.

b. The SBA shall require commercial self-insurance funds established under Section 624.462, Florida Statutes, to submit contractor receipts to support paid losses reported on a Proof of Loss Report, and the SBA may hire an independent consultant to confirm losses, prior to the issuance of reimbursements.

c. The SBA shall have the right to conduct a claims examination prior to the issuance of any advances or reimbursements submitted by Companies that have been placed under regulatory supervision by a State or where control has been transferred through any legal or regulatory proceeding to a state regulator or court appointed receiver or rehabilitator.

6. All Proof of Loss Reports received will be compared with the FHCF's exposure data to establish the facial reasonableness of the reports. The SBA may also review the results of current and prior Contract Year exposure and loss examinations to determine the reasonableness of the reported losses. Except as noted in paragraph 4. above, Companies meeting these tests for reasonableness will be scheduled for reimbursement. Companies not meeting these tests for reasonableness will be handled on a case-by-case basis and will be contacted to provide specific information regarding their individual book of business. The discovery of errors in a Company's reported exposure under the Data Call may require a resubmission of the current Contract Year Data Call which, as the Data Call impacts the Company's Premium, Retention, and coverage for the Contract Year, will be required before the Company's request for reimbursement or an advance will be fully processed by the Administrator.

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(c) Loss Reimbursement Calculations

1. In general, the Company's paid Ultimate Net Losses must exceed its full FHCF Retention for a specific Covered Event before any reimbursement is payable from the FHCF for that Covered Event. As described in Article V(28)(b), Retention adjustments will be made on or after December 31 of the Contract Year. No interest is payable on additional payments to the Company due to this type of Retention adjustment. Each Company sustaining reimbursable losses will receive the amount of reimbursement due under the Contract up to the amount of the Company's payout. If more than one Covered Event occurs in any one Contract Year, any reimbursements due from the FHCF shall take into account the Company's Retention for each Covered Event. However, the Company's reimbursements from the FHCF for all Covered Events occurring during the Contract Year shall not exceed, in aggregate, the Projected Payout Multiple or Payout Multiple, as applicable, times the individual Company's Reimbursement Premium for the Contract Year.

2. In determining reimbursements under this Contract, the SBA shall reimburse each of the Companies, including entities created pursuant to Section 627.351(6), Florida Statutes, for the amount (if any) of reimbursement due under the individual Company's Contract, but not to exceed for all Loss Occurrences, an amount equal to the Projected Payout Multiple or the Payout Multiple, as applicable, times the individual Company's Reimbursement Premium for the Contract Year.

3. Reserve established. When a Covered Event occurs in a subsequent Contract Year when reimbursable losses are still being paid for a Covered Event in a previous Contract Year, the SBA will establish a reserve for the outstanding reimbursable losses for the previous Contract Year, based on the length of time the losses have been outstanding, the amount of losses already paid, the percentage of incurred losses still unpaid, and any other factors specific to the loss development of the Covered Events involved.

(d) Commutation

1. Not less than 36 months or more than 60 months after the end of the Contract Year, the Company shall file a final Proof of Loss Report(s), with the exception of Companies having no reportable losses as described in paragraph (3)(d)1.a. below. Otherwise, the final Proof of Loss Report(s) is required as specified in paragraph (3)(d)1.b. below. The Company and SBA may mutually agree to initiate commutation after 36 months and prior to 60 months after the end of the Contract Year. The commutation negotiations shall begin at the later of 60 months after the end of the Contract Year or upon completion of the FHCF loss examination for the Company and the resolution of all outstanding examination issues.

a. If the Company's most recently submitted Proof of Loss Report(s) indicate that it has no losses resulting from a Loss Occurrence(s) during the Contract Year, the SBA shall after 36 months request that the Company execute a final commutation agreement. The final commutation agreement shall constitute a complete and final release of all obligations of the SBA with respect to all claims and losses. If the Company chooses not to execute a final commutation agreement, the SBA shall be released from all obligations 60 months following the end of the Contract Year if no Proof of Loss Report(s) indicating reimbursable losses have been filed and the commutation shall be deemed concluded. However during this time, if the Company determines that it does have losses to report for FHCF reimbursement, the Company must submit an updated Proof of Loss Report(s) prior to the end of 60 months after the Contract Year and the Company shall be required to follow the commutation provisions and time frames otherwise specified in this section.

b.If the Company has submitted a Proof of Loss Report(s) indicating that it does have losses resulting from a Loss Occurrence(s) during the Contract Year, the SBA may require the Company to submit within 30 days an updated, current Proof of Loss Report(s) for each Loss Occurrence during the Contract Year. The Proof of Loss Report(s) must include all paid losses as well as all outstanding losses and incurred but

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not reported losses, which are not finally settled and which may be reimbursable losses under this Contract, and must be accompanied by supporting documentation (at a minimum an adjuster's summary report or equivalent details) and a copy of a written opinion on the present value of the outstanding losses and incurred but not reported losses by the Company's certifying actuary. Failure of the Company to provide an updated current Proof of Loss Report(s), supporting documentation, and an opinion by the date requested by the SBA may result in referral to the Office of Insurance Regulation for a violation of the Contract. Increases in reported paid, outstanding, or incurred but not reported losses on original or corrected Proof of Loss Report filings received later than 60 months after the end of the Contract Year shall not be eligible for reimbursement or commutation.

2. Determining the present value of outstanding claims and losses.

a. If the Company exceeds or expects to exceed its Retention, the Company and the SBA or their respective representatives shall attempt, by mutual agreement, to agree upon the present value of all outstanding claims and losses, both reported and incurred but not reported, resulting from Loss Occurrences during the Contract Year. Payment by the SBA of its portion of any amount or amounts so mutually agreed and certified by the Company's certifying actuary shall constitute a complete and final release of the SBA in respect of all claims and losses, both reported and unreported, under this Contract.

b. If agreement on present value cannot be reached within 90 days of the FHCF's receipt of the final Proof of Loss Report(s) and supporting documentation, the Company and the SBA may mutually appoint an actuary, adjuster, or appraiser to investigate and determine such claims or losses. If both parties then agree, the SBA shall pay its portion of the amount so determined to be the present value of such claims or losses.

c. If the parties fail to agree, then any difference shall be settled by a panel of three actuaries, one to be chosen by each party and the third by the two so chosen. If either party does not appoint an actuary within 30 days, the other party may appoint two actuaries. If the two actuaries fail to agree on the selection of an independent third actuary within 30 days of their appointment, each of them shall name two, of whom the other shall decline one and the decision shall be made by drawing lots. All the actuaries shall be regularly engaged in the valuation of property claims and losses and shall be members of the Casualty Actuarial Society and of the American Academy of Actuaries. None of the actuaries shall be under the control of either party to this Contract. Each party shall submit its case to its actuary within 30 days of the appointment of the third actuary. The decision in writing of any two actuaries, when filed with the parties hereto, shall be final and binding on both parties.

d. The reasonable and customary expense of the actuaries and of the commutation (as a result of b. and c. above) shall be equally divided between the two parties. Said commutation shall take place in Tallahassee, Florida, unless some other place is mutually agreed upon by the Company and the SBA.

(4) Advances

(a) In accordance with Section 215.555(4)(e), Florida Statutes, the SBA may make advances for loss reimbursements as defined herein, at market interest rates, to the Company in accordance with Section 215.555(4)(e), Florida Statutes. An advance is an early reimbursement which allows the Company to continue to pay claims in a timely manner. Advances will be made based on the Company's paid and reported outstanding losses for Covered Policies (excluding all incurred but not reported [IBNR] losses) as reported on a Proof of Loss Report, and shall include Loss Adjustment Expense Reimbursement as calculated by the FHCF. In order to be eligible for an advance, the Company must submit its exposure data for the Contract Year as required under paragraph (1) of this Article. Except as noted below, advances, if approved, will be made as soon as practicable after the SBA receives a written request, signed by two officers

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of the Company, for an advance of a specific amount and any other information required for the specific type of advance under subparagraphs (c) and (e) below. All reimbursements due to a Company shall be offset against any amount of outstanding advances plus the interest due thereon.

(b) For advances or excess advances, which are advances that are in excess of the amount to which the Company is entitled, the market interest rate shall be the prime rate as published in the Wall Street Journal on the first business day of the Contract Year. This rate will be adjusted annually on the first business day of each subsequent Contract Year, regardless of whether the Company executes subsequent Contracts. In addition to the prime rate, an additional 5% interest charge will apply on excess advances. All interest charged will commence on the date the SBA issues a check for an advance and will cease on the date upon which the FHCF has received the Company's Proof of Loss Report(s) for the Covered Event(s) for which the Company qualifies for reimbursement(s). If such reimbursement(s) are less than the amount of outstanding advance(s) issued to the Company, interest will continue to accrue on the outstanding balance of the advance(s) until subsequent Proof of Loss Reports qualify the Company for reimbursement under any Covered Event equal to or exceeding the amount of any outstanding advance(s). Interest shall be billed on a periodic basis. If it is determined that the Company received funds in excess of those to which it was entitled, the interest as to those sums will not cease on the date of the receipt of the Proof of Loss Report but will continue until the Company reimburses the FHCF for the overpayment.

(c) If the Company has an outstanding advance balance as of December 31 of this or any other Contract Year, the Company is required to have an actuary certify outstanding and incurred but not reported losses as reported on the applicable December Proof of Loss Report.

(d) The specific type of advances enumerated in Section 215.555, Florida Statutes, follow.

1. Advances to Companies to prevent insolvency, as defined under Article XIV of this Contract.

a. Section 215.555(4)(e)1., Florida Statutes, provides that the SBA shall advance to the Company amounts necessary to maintain the solvency of the Company, up to 50 percent of the SBA's estimate of the reimbursement due to the Company.

b. In addition to the requirements outlined in subparagraph (4)(a) above, the requirements for an advance to a Company to prevent insolvency are that the Company demonstrates it is likely to qualify for reimbursement and that the immediate receipt of moneys from the SBA is likely to prevent the Company from becoming insolvent, and the Company provides the following information:

i.Current assets;

ii.Current liabilities other than liabilities due to the Covered Event;

iii.Current surplus as to policyholders;

iv.Estimate of other expected liabilities not due to the Covered Event; and

v.Amount of reinsurance available to pay claims for the Covered Event under other reinsurance treaties.

c. The SBA's final decision regarding an application for an advance to prevent insolvency shall be based on whether or not, considering the totality of the circumstances, including the SBA's obligations to provide reimbursement for all Covered Events occurring during the Contract Year, granting an advance is essential to allowing the entity to continue to pay additional claims for a Covered Event in a timely manner.

2. Advances to entities created pursuant to Section 627.351(6), Florida Statutes.

a. Section 215.555(4)(e)2., Florida Statutes, provides that the SBA may advance to an entity created pursuant to Section 627.351(6), Florida Statutes, up to 90% of the lesser of the SBA's estimate of the reimbursement due or the entity's share of the actual aggregate Reimbursement Premium for that Contract Year, multiplied by the current available liquid assets of the FHCF.

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b. In addition to the requirements outlined in subparagraph (4)(a) above, the requirements for an advance to entities created pursuant to Section 627.351(6), Florida Statutes, are that the entity must demonstrate to the SBA that the advance is essential to allow the entity to pay claims for a Covered Event.

3. Advances to limited apportionment companies.

Section 215.555(4)(e)3., Florida Statutes, provides that the SBA may advance the amount of estimated reimbursement payable to limited apportionment companies.

(e) In determining whether or not to grant an advance and the amount of an advance, the SBA:

1. Shall determine whether its assets available for the payment of obligations are sufficient and sufficiently liquid to fulfill its obligations to other Companies prior to granting an advance;

2. Shall review and consider all the information submitted by such Companies;

3. Shall review such Companies' compliance with all requirements of Section 215.555, Florida Statutes;

4. Shall consult with all relevant regulatory agencies to seek all relevant information;

5. Shall review the damage caused by the Covered Event and when that Covered Event occurred;

6. Shall consider whether the Company has substantially exhausted amounts previously advanced;

7. Shall consider any other factors deemed relevant; and

8. Shall require commercial self-insurance funds established under section 624.462, Florida Statutes, to submit a copy of written estimates of expenses in support of the amount of advance requested.

(f) Any amount advanced by the SBA shall be used by the Company only to pay claims of its policyholders for the Covered Event or Covered Events which have precipitated the immediate need to continue to pay additional claims as they become due.

(5) Delinquent Payments

Failure to submit a payment when due is a violation of the terms of this Contract and Section 215.555, Florida Statutes. Interest on late payments shall be due as set forth in Article VIII(2) and Article IX(2) of this Contract.

(6) Inadequate Data Submissions

If exposure data or other information required to be reported by the Company under the terms of this Contract is not received by the FHCF in the format specified by the FHCF or is inadequate to the extent that the FHCF requires resubmission of data, the Company will be required to pay the FHCF a resubmission fee of $1,000 for resubmissions that are not a result of an examination by the SBA. If a resubmission is necessary as a result of an examination report issued by the SBA, the first resubmission fee will be $2,000. If the Company's examination-required resubmission is inadequate and the SBA requires an additional resubmission(s), the resubmission fee for each subsequent resubmission shall be $2,000. A resubmission of exposure data may delay the processing of the Company's request for reimbursement or an advance.

(7) Delinquent Submissions

Failure to submit an exposure submission, resubmission, loss report, or commutation documentation when due is a violation of the terms of this Contract and Section 215.555, Florida Statutes.

ARTICLE XI - TAXES

In consideration of the terms under which this Contract is issued, the Company agrees to make no deduction in respect of the Premium herein when making premium tax returns to the appropriate authorities. Should any taxes be levied on the Company in respect of the Premium herein, the Company agrees to make no claim upon the SBA for reimbursement in respect of such taxes.

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ARTICLE XII - ERRORS AND OMISSIONS

Any inadvertent delay, omission, or error on the part of the SBA shall not be held to relieve the Company from any liability which would attach to it hereunder if such delay, omission, or error had not been made.

ARTICLE XIII - INSPECTION OF RECORDS

The Company shall allow the SBA to inspect, examine, and verify, at reasonable times, all records of the Company relating to the Covered Policies under this Contract, including Company files concerning claims, losses, or legal proceedings regarding subrogation or claims recoveries which involve this Contract, including premium, loss records and reports involving exposure data or losses under Covered Policies. This right by the SBA to inspect, examine, and verify shall survive the completion and closure of an exposure examination or loss examination file and the termination of the Contract. The Company shall have no right to re-open an exposure or loss reimbursement examination once closed and the findings have been accepted by the Company; any re-opening shall be at the sole discretion of the SBA. If the FHCF Finance Corporation has issued revenue bonds and relied upon the exposure and loss data submitted and certified by the Company as accurate to determine the amount of bonding needed, the SBA may choose not to require, or accept, a resubmission if the resubmission will result in additional reimbursements to the Company. The SBA may require any discovered errors, inadvertent omissions, and typographical errors associated with the data reporting of insured values, discovered prior to the closing of the file and acceptance of the examination findings by the Company, to be corrected to reflect the proper values. The Company shall retain its records in accordance with the requirements for records retention regarding exposure reports and claims reports outlined herein, and in any administrative rules adopted pursuant to Section 215.555, Florida Statutes. Companies writing covered collateral protection policies, as defined in definition (10)(d) of Article V herein, must be able to provide documentation that the policy covers personal residences, protects both the borrower's and lender's interest, and that the coverage is in an amount at least equal to the coverage for the dwelling in place under the lapsed homeowner's policy.

(1) Examination Requirements for Exposure Verification

The Company shall retain complete and accurate records, in policy level detail, of all exposure data submitted to the SBA in any Contract Year until the SBA has completed its examination of the Company's exposure submissions. The Company shall also retain complete and accurate records of any completed exposure examination for any Contract Year in which the Company incurred losses until the completion of the loss reimbursement examination for that Contract Year. The records to be retained shall include the exam file which supports the exposure reported to the SBA and any other information which would allow for a complete examination of the Company's reported exposure data. The exam file shall be prepared according to the SBA Exam File Specifications outlined in the Data Call. The Company must also have available, at the time of the examination, a copy of its underwriting manual, a copy of its rating manual, and staff to respond to the questions of the SBA or its agents. The Company is also required to retain declarations pages and policy applications to support reported exposure. To meet the requirement that the application must be retained, the Company may retain either the actual application or may retain the actual application in an electronic format. A complete list of records to be retained is set forth in Form FHCF-EAP1, adopted for the Contract Year under Rule 19-8.030, F.A.C.

(2) Examination Requirements for Loss Reports

The Company shall retain complete and accurate records of all reported losses and/or advances submitted to the SBA until the SBA has completed its examination of the Company's reimbursable losses and commutation for the Contract Year (if applicable) has been concluded. The records to be retained are set forth as part of the Proof of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C., and Form FHCF-LAP1, adopted for the Contract Year under Rule 19-8.030, F.A.C. The Company must also retain the required exposure exam file for the

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Contract Year in which the loss occurred, and must have available any other information which would allow for a complete examination of the Company's losses.

(3) Examination Procedures

(a) The FHCF will send an examination notice to the Company providing the commencement date of the examination, the site of the examination, any accommodation requirements of the examiner, and the reports and data which must be assembled by the Company and forwarded to the FHCF upon request. The Company shall be prepared to choose one location in which to be examined, unless otherwise specified by the SBA.

(b) The reports and data are required to be forwarded to the FHCF as set forth in an examination notice letter. The information is then forwarded to the examiner. If the FHCF receives accurate and complete records as requested, the examiner will contact the Company to inform the Company as to what policies or other documentation will be required once the examiner is on site. Any records not required to be provided to the examiner in advance shall be made available at the time the examiner arrives on site. Any records to support reported losses which are provided after the examiner has left the work-site will, at the SBA's discretion, result in an additional examination of exposure and/or loss records or an extension or expansion of the examination already in progress. All costs associated with such additional examination or with the extension or expansion of the original examination shall be borne by the Company.

(c) At the conclusion of the examiner's work and the management review of the examiner's report, findings, recommendations, and work papers, the FHCF will forward a preliminary draft of the examination report to the Company and require a response from the Company by a date certain as to the examination findings and recommendations.

(d) If the Company accepts the examination findings and recommendations, and there is no recommendation for additional information, the examination report will be finalized and the exam file closed.

(e) If the Company disputes the examiner's findings, the areas in dispute will be resolved by a meeting or a conference call between the Company and FHCF management.

(f) 1. If the recommendation of the examiner is to resubmit the Company's exposure data for the Contract Year in question, then the FHCF will send the Company a letter outlining the process for resubmission and including a deadline to resubmit. The resubmission will include a data file to be submitted to the FHCF's Administrator and an exam file to be submitted to the offices of the SBA. The resubmission is also required to be accompanied by a detailed written description of the specific changes made to the resubmitted data. Once the resubmission is received by the FHCF's Administrator, the FHCF's Administrator calculates a revised Reimbursement Premium for the Contract Year which has been examined. The SBA shall then review the resubmission with respect to the examiner's findings, and accept the resubmission or contact the Company with any questions regarding the resubmission. Once the SBA has accepted the resubmission as a sufficient response to the examiner's findings, the FHCF's Administrator will send the Company an invoice for any Reimbursement Premium and interest due or to refund Reimbursement Premium, as the case may be. Once the resubmission has been approved, the exam file is closed.

2. If the recommendation of the examiner is either to resubmit the Company's exposure data for the Contract Year in question or giving the option to pay the estimated Premium difference, then the FHCF will send the Company a letter outlining the process for resubmission or for paying the estimated Premium difference and including a deadline for the resubmission or the payment to be received by the FHCF's Administrator. If the Company chooses to resubmit, the same procedures outlined in Article XIII(3)(f)1. apply.

(g) If the recommendation of the examiner is to update the Company's Proof of Loss Report(s) for the Contract Year under review, the FHCF will send the Company a letter outlining the process for submitting the Proof of Loss Report(s) and including a deadline to file.

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The updated Proof of Loss Report(s) will be submitted to the FHCF's Administrator with a copy of the Proof of Loss Report(s) and a supporting detailed claims listing to be submitted to the offices of the SBA. The report is required to be accompanied by a detailed written description of the specific changes made. Once the Proof of Loss Report(s) is received by the FHCF Administrator, the FHCF's Administrator will calculate a revised reimbursement. The SBA shall then review the submitted Proof of Loss Report(s) with respect to the examiner's findings, and accept the Proof of Loss Report(s) as filed or contact the Company with any questions. Once the SBA has accepted the corrected Proof of Loss Report(s) as a sufficient response to the examiner's findings, the FHCF's Administrator will send the Company an invoice for any overpayments and interest due. Once the Proof of Loss Report(s) is approved, the exam file is closed.

(h) If the Company continues to dispute the examiner's findings and/or recommendations and no resolution of the disputed matters is obtained through discussions between the Company and FHCF management, then the process within the SBA is at an end and further administrative remedies may be pursued under Chapter 120, Florida Statutes.

(i) The examiner's list of errors is made available in the examination report sent to the Company. Given that the examination was based on a sample of the Company's policies or claims rather than the whole universe of the Company's Covered Policies or reported claims, the error list is not intended to provide a complete list of errors but is intended to indicate what information needs to be reviewed and corrected throughout the Company's book of Covered Policy business or claims information to ensure more complete and accurate reporting to the FHCF.

(4) Costs of the Examinations

The costs of the examinations shall be borne by the SBA. However, in order to remove any incentive for a Company to delay preparations for an examination, the SBA shall be reimbursed by the Company for any examination expenses incurred in addition to the usual and customary costs, which additional expenses were incurred as a result of the Company's failure, despite proper notice, to be prepared for the examination or as a result of a Company's failure to provide requested information. All requested information must be complete and accurate. The Company shall be notified of any administrative remedies which may be obtained under Chapter 120, Florida Statutes.

ARTICLE XIV - INSOLVENCY OF THE COMPANY

Company shall notify the FHCF immediately upon becoming insolvent. Except as otherwise provided below, no covered loss reimbursements will be made until the FHCF has completed and closed its examination of the insolvent Company's losses, unless an agreement is entered into by the court appointed receiver specifying that all data and computer systems required for FHCF exposure and loss examinations will be maintained until completion of the Company's exposure and loss examinations. Except as otherwise provided below, in order to account for potential erroneous reporting, the SBA shall hold back 25% of requested loss reimbursements until the exposure and loss examinations for the Company are completed. Only those losses supported by the examination will be reimbursed. Pursuant to Section 215.555(4)(g), Florida Statutes, the FHCF is required to pay the net amount of all reimbursement moneys due an insolvent insurer to the Florida Insurance Guaranty Association (FIGA) for the benefit of Florida policyholders. For the purpose of this Contract, a Company is insolvent when an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction. In light of the need for an immediate infusion of funds to enable policyholders of insolvent companies to be paid for their claims, the SBA may enter into agreements with FIGA allowing exposure and loss examinations to take place immediately without the usual notice and response time limitations and allowing the FHCF to make loss reimbursements (net of any amounts payable to the SBA from the Company or FIGA) to FIGA before the examinations are completed and before the response time expires for claims filing by reinsurers and financial institutions, which have a priority interest in those funds pursuant to Section 215.555(4)(g), Florida Statutes. Such agreements must ensure the availability of the

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necessary records and adequate security must be provided so that if the FHCF determines that it overpaid FIGA on behalf of the Company, or if claims are filed by reinsurers or financial institutions having a priority interest in these funds, that the funds will be repaid to the FHCF by FIGA within a reasonable time.

ARTICLE XV - TERMINATION

The FHCF and the obligations of both parties under this Contract can be terminated only as may be provided by law or applicable rules.

ARTICLE XVI - VIOLATIONS

Pursuant to the provisions of Section 215.555(10), Florida Statutes, any violation of the terms of this Contract by the Company constitutes a violation of the Insurance Code of the State of Florida. Pursuant to the provisions of Section 215.555(11), Florida Statutes, the SBA is authorized to take any action necessary to enforce any administrative rules adopted pursuant to Section 215.555, Florida Statutes, and the provisions and requirements of this Contract.

ARTICLE XVII - APPLICABLE LAW

(1) Applicable Law: This Contract shall be governed by and construed according to the laws of the State of Florida in respect of any matter relating to or arising out of this Contract.

(2) Notice of Rights: Pursuant to Chapter 120, Florida Statutes, and the Uniform Rules of Procedure, codified as Chapters 28-101 through 28-111, F.A.C., a person whose substantial interests are affected by a decision of the SBA regarding the FHCF may request a hearing within 21 days shall have waived his or her right to a hearing. The hearing may be a formal hearing or an informal hearing pursuant to the provisions of Sections 120.569 and 120.57, Florida Statutes. The petition must be filed (received) in the office of the Agency Clerk, General Counsel's Office, State Board of Administration of Florida, P.O. Box 13300, Tallahassee, FL 32317-3300 or 1801 Hermitage Blvd., Suite 100, Tallahassee, FL 32308, within the 21 day period.

ARTICLE XVIII - REIMBURSEMENT CONTRACT ELECTIONS

Reimbursement Percentage

For purposes of determining reimbursement (if any) due the Company under this Contract and in accordance with the Statute, the Company has the option to elect a 45% or 75% or 90% reimbursement percentage under this Contract. If the Company is a member of an NAIC group, all members must elect the same reimbursement percentage, and the individual executing this Contract on behalf of the Company, by placing his or her initials in the box under (a) below, affirms that the Company has elected the same reimbursement percentage as all members of its NAIC group. If the Company is an entity created pursuant to Section 627.351, Florida Statutes, the Company must elect the 90% reimbursement percentage. The Company shall not be permitted to change its reimbursement percentage during the Contract Year. The Company shall be permitted to change its reimbursement percentage at the beginning of a new Contract Year, but may not reduce its reimbursement percentage if a Covered Event required the issuance of revenue bonds, until the bonds have been fully repaid.

IMPORTANT NOTE: The FHCF has issued revenue bonds as a result of its liabilities for Covered Events under the Contract Year effective June 1, 2005. As those bonds have not been fully repaid, the Company may not select a Reimbursement Percentage that is less than its selection under the prior Contract Year effective June 1, 2010.

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The Reimbursement Percentage elected by the Company for the prior Contract Year effective June 1, 2010 was as follows: «Legal_Name» - «M_2010_Coverage_Option»

(a) NAIC Group Affirmation: Initial the following box if the Company is part of an NAIC Group:

(b) Reimbursement Percentage Election: The Company hereby elects the following Reimbursement Percentage for the Contract Year from 12:00:01 a.m., Eastern Time, June 1, 2011, to 12:00 a.m., Eastern Time, May 31, 2012, (the individual executing this Contract on behalf of the Company shall place his or her initials in the box to the left of the percentage elected for the Company):

45% OR 75% OR X 90 %

Reporting Exposure for a Single Structure, with a Mix of Commercial Habitational and Commercial Non-Habitational Exposure, Written on a Commercial Policy

This section is applicable to all Companies which either have exposure for single structures with a mix of commercial habitational and commercial non-habitational exposure written under a Commercial Policy, or have the authority to write such policies. If the Company does not have the authority to write this type of exposure, this section does not apply; initial the N/A box on the next page, which completes this ARTICLE. If the Company does write, or has the authority to write, this type of exposure, please read and complete the remainder of this ARTICLE.

Commercial-Residential Class Code

If a single structure is used for both habitational and non-habitational purposes and the structure has a commercial-residential class code (based on a classification plan on file with and reviewed by the Administrator), the entire exposure for the structure should be reported to the FHCF under the Data Call, and the FHCF will reimburse losses for the entire structure as well.

Commercial Non-Residential/Business Class Code

If a single structure is used for both habitational and non-habitational purposes and the structure has a commercial non-residential or business class code (based on a classification plan on file with and reviewed by the Administrator), the habitational portion of that structure should be identified and reported to the FHCF under the Data Call.

However, in recognition of the unusual nature of commercial structures with incidental habitational exposure and the hardship some companies may face in having to carve out such incidental habitational exposure, as well as the losses to such structures, the FHCF will accommodate these companies by allowing them to exclude the entire exposure for the single structure from their Data Call submission, providing the following two conditions are met:

(1) The decision to not carve out and report the incidental habitational exposure shall apply to all such structures insured by the Company; and

(2) If the incidental habitational exposure is not reported to the FHCF, the Company agrees it shall not report losses to the structure and the FHCF shall not reimburse any losses to the structure.

Initial the CARVING box below if the Company is able to carve out and report its incidental habitational exposure, OR, if this requirement presents a hardship, the Company must communicate its decision to not

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carve out and to not report the incidental exposure by having the individual executing this Contract on behalf of the Company placing his or her initials in the NOT CARVING box below. If the Company does not currently write such policies, but has the authority to write such policies after the start date of this Contract, the decision to carve or not carve out the incidental habitational exposure must be indicated below.

	OR		OR	X
CARVING		NOT CARVING		NA

By initialing the CARVING or NOT CARVING box above, the Company is making an irrevocable decision for the corresponding Contract Year Data Call submission and any subsequent resubmissions.

Important Note: Since this election will impact your Data Call submission, please share this decision with the individual(s) responsible for compiling your Data Call submission.

Additional Living Expense (ALE) Written as Time Element Coverage

If your Company writes Covered Policies that provide ALE coverage on a time element basis (i.e., coverage is based on a specific period of time as opposed to a stated dollar limit), you must initial the 'Yes - Time Element ALE' box below. If your Company does not write time element ALE coverage, initial 'No - Time Element ALE' box below.

	OR	X
Yes - Time		No - Time
Element ALE		Element ALE

ARTICLE XIX - SIGNATURES

Approved by:

Florida Hurricane Catastrophe Fund

By: State Board of Administration of the State of Florida

By: /s/ Ashbel C. Williams Date: 7/8/11

Ashbel C. Williams

Executive Director & CIO

Approved as to legality:

By: /s/ E. Lamar Taylor Date: _____

E. Lamar Taylor

Deputy General Counsel

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Donald J. Cronin, CEO

Typed/Printed Name and Title

By: /s/ Donald J. Cronin Date: 2/17/11

Signature                         

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ADDENDUM NO. 1

to

REIMBURSEMENT CONTRACT

Effective: June 1, 2011

(Contract)

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

(Company)

NAIC # 10969

and

THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF)

It is Hereby Agreed, effective at 12:00:01 a.m., Eastern Time, June 1, 2011, that this Contract shall be amended as follows:

ADDITIONAL COVERAGE OPTION (up to $10 million) PURSUANT TO SECTION 215.555(4)(b)4., FLORIDA STATUTES.

Pursuant to Section 215.555(4)(b)4., Florida Statutes, certain Companies may select additional FHCF reimbursement coverage of up to $10 million dollars. The additional premium to be charged for this additional reimbursement coverage shall be 50 percent of the additional reimbursement coverage provided, which shall include one prepaid full reinstatement. The additional premium shall be due and payable in three equal installments on August 1, 2011, on October 1, 2011, and on December 1, 2011.

The minimum retention level that must be retained associated with this additional coverage layer is 30 percent of the insurer's surplus as of December 31, 2010, for each Covered Event. For an insurer which began writing property insurance in 2011 and did not have a surplus as of December 31, 2010, surplus shall be deemed to be the surplus reported to the Office of Insurance Regulation at the time the insurer received its Certificate of Authority. This coverage is designed

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to apply a retention that triggers coverage prior to the insurer reaching its retention under the mandatory coverage level. The SBA will determine and pay, within 30 days or as soon as practicable after receiving Proof of Loss Reports, the reimbursement amount due under this optional coverage based on losses paid by the Company.

The reimbursement percentage applicable to this additional coverage shall be 100 percent, which includes reimbursement for loss adjustment expense as provided under the Reimbursement Contract. Once the limit of coverage under this option is exhausted, the insurer's retention under the mandatory coverage will apply.

This additional reimbursement coverage shall be in addition to all other coverage provided by the SBA under the Company's Reimbursement Contract and shall be in addition to the claims-paying capacity of the FHCF as defined in Section 215.555(4)(c)1., Florida Statutes, but only with respect to those insurers that select the additional coverage option. Coverage provided in this additional coverage option shall otherwise be consistent with terms and conditions as relates to the Reimbursement Contract including, but not limited to, definitions, coverage for Covered Policies as defined, exclusions, loss reporting, and examination procedures.

While this additional coverage shall not reduce, overlap, or duplicate coverage otherwise provided for in the Reimbursement Contract or offset any co-payments, the amount of coverage selected herein is irrevocable. Any amount of additional coverage selected herein that would in effect overlap FHCF coverage otherwise provided for in the Reimbursement Contract, or any other Addenda to the Reimbursement Contract, shall be deemed by the FHCF to shift above the highest level of coverage otherwise provided by the FHCF.

The claims-paying capacity with respect to all other participating insurers, including eligible Companies that do not select the additional coverage option, shall be limited to their reimbursement premium's proportionate share of the actual claims-paying capacity as defined in Section 215.555(4)(c)1., Florida Statutes, and as provided for under the terms of the Reimbursement Contract, plus any coverage provided under any other Addenda to the Reimbursement Contract.

The optional coverage provided in this Addendum expires on May 31, 2012. To be eligible for this optional coverage, the Company must return a fully executed Addendum No. 1 (two originals) no later than 5 p.m., Central Time, March 1, 2011. A Company failing to meet the applicable deadline shall not be eligible for optional coverage under Addendum No. 1 for the 2011 Contract Year. Furthermore, there shall be no coverage under this Addendum for any Loss Occurrence, as defined in Article V of the Contract and under which the Company would be eligible for reimbursements under the Contract, that occurs prior to the FHCF receiving the fully executed Addendum No. 1 (original copies).

New Participants, as defined in Article V of the Contract, must return a fully executed Addendum No. 1 (two originals) within thirty days of writing its first Covered Policy and prior to a Loss Occurrence under which the company would be eligible for reimbursements under the Contract. A Company failing to meet the applicable deadline shall not be eligible for optional coverage under Addendum No. 1 for the 2011 Contract Year.

ALL COMPANIES EXECUTING A REIMBURSEMENT CONTRACT AND ELIGIBLE FOR THIS ADDITIONAL COVERAGE MUST INDICATE BELOW THE AMOUNT OF ADDITIONAL COVERAGE SELECTED, IF ANY.

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If your Company does not wish to purchase the additional coverage under this Addendum, print "No Coverage" on the line below and initial the box.

________________________________

If your Company is eligible for the coverage under this Addendum and elects to purchase this coverage, indicate the amount of additional coverage up to $10 million (there is no additional coverage available in excess of $10 million) on the line below:

$10 million

IF THIS ADDENDUM NO. 1 IS RETURNED WITHOUT THE BLANK SPACE IMMEDIATELY ABOVE FILLED IN WITH A DOLLAR AMOUNT, IT SHALL BE DEEMED BY THE STATE BOARD OF ADMINISTRATION TO BE A CHOICE TO REJECT THE ADDITIONAL COVERAGE.

/s/ Donald J. Cronin             

United Property and Casualty Insurance Company

By: Donald J. Cronin, CEO                 Date: 2/17/11

Name/Title Date

Approved by:

Florida Hurricane Catastrophe Fund

By: State Board of Administration of the State of Florida

By: /s/ Ashbel C. Williams                 Date: 7/8/11

Ashbel C. Williams

Executive Director & CIO

Approved as to legality:

By: /s/ E. Lamar Taylor                     Date:

E. Lamar Taylor

Deputy General Counsel

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ADDENDUM NO. 2

to

REIMBURSEMENT CONTRACT

Effective: June 1, 2011

(Contract)

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

(Company)

NAIC # 10969

and

THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF)

It is Hereby Agreed, effective at 12:00:01 a.m., Eastern Time, June 1, 2011, that this Contract shall be amended as follows:

TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS FOR ADDITIONAL COVERAGE PURSUANT TO SECTION 215.555(17), FLORIDA STATUTES.

Pursuant to Section 215.555(17), Florida Statutes, the Temporary Increase in Coverage Limit (TICL) Options provision allows the Company to select additional FHCF reimbursement coverage above its mandatory FHCF coverage layer under the Reimbursement Contract. The optional coverage selections provided in this Addendum No. 2 expires on May 31, 2012. Coverage provided under TICL shall otherwise be consistent with terms and conditions as relates to the Reimbursement Contract including, but not limited to, definitions, coverage for Covered Policies as defined, exclusions, loss reporting, and examination procedures.

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To be eligible for this optional coverage, the Company must return a fully executed Addendum No. 2 (two originals) no later than 5 p.m., Central Time, March 1, 2011. New Participants, as defined in Article V of the Contract, must return a fully executed Addendum No. 2 (two originals) within thirty days of writing its first Covered Policy and prior to a Loss Occurrence, as both terms are defined in Article V of the Contract, under which the Company would be eligible for reimbursements under the Contract.

Any Company failing to meet the applicable deadline shall not be eligible for optional coverage under Addendum No. 2.

I. TICL Coverage

The Company may purchase one of six optional coverages above its mandatory FHCF coverage provided for in the FHCF Reimbursement Contract. The TICL options allow the Company to purchase its mandatory FHCF premium share of one of the six optional layers of coverage. The optional layers of coverage above the mandatory FHCF coverage are $6 billion, $5 billion, $4 billion, $3 billion, $2 billion, or $1 billion.

The purchase of a TICL option increases the Company's coverage under the Reimbursement Contract as calculated pursuant to Section 215.555(4)(d)2., Florida Statutes. The Company's increased coverage shall be the FHCF reimbursement premium multiplied by the TICL multiple. Each TICL coverage multiple shall be calculated by dividing $6 billion, $5 billion, $4 billion, $3 billion, $2 billion, or $1 billion by the aggregate mandatory FHCF premium under the Reimbursement Contract paid by all Companies.

In order to determine the Company's total limit of coverage, the Company's TICL coverage multiple is added to its regular Payout Multiple under the Reimbursement Contract. The total of these two multiples shall represent a number that, when multiplied by an Company's mandatory FHCF reimbursement premium under the Reimbursement Contract, defines the Company's total limit of FHCF reimbursement coverage for the Contract Year under the Reimbursement Contract and Addendum No. 2. The SBA shall reimburse the Company for 45 percent, 75 percent, or 90 percent of its losses from each Covered Event in excess of the Company's FHCF Retention under the Reimbursement Contract, plus 5 percent of the reimbursed losses to cover loss adjustment expense, not to exceed the Company's total limit of coverage as defined above. The percentage shall be the same as the coverage level selected by the Company under its Reimbursement Contract.

II. TICL Premium

The Company's TICL premium shall be determined as specified in Sections 215.555(5) and (17), Florida Statutes, and shall be due and payable in three installments on August 1, 2011, October 1, 2011, and December 1, 2011.

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III. Liability of the FHCF

Pursuant to Section 215.555(17)(g), Florida Statutes, the liability of the FHCF with respect to all TICL addenda shall not exceed $6 billion and shall depend on the number of insurers that select the TICL optional coverage and the TICL coverage options selected. In no circumstance shall the liability of the FHCF exceed its actual claims-paying capacity as defined in Section 215.555(2)(m), Florida Statutes.

The additional TICL capacity shall apply only to the additional coverage provided under the TICL options and shall not otherwise affect any insurer's reimbursement from the FHCF if the insurer chooses not to select a TICL option to increase its limit of FHCF coverage.

IV. Coordination of Coverage

Reimbursement amounts under TICL shall not be reduced by reinsurance paid or payable to the Company from sources other than the FHCF.

The TICL coverage shall be in addition to all other coverage provided by the FHCF under the Company's Reimbursement Contract or other Addenda to the Reimbursement Contract, and shall be in addition to the claims-paying capacity of the FHCF as defined in Section 215.555(4)(c)1., Florida Statutes, but only with respect to those insurers that select the TICL coverage.

The TICL coverage selected is irrevocable and shall not overlap or duplicate coverage otherwise provided for in the Reimbursement Contract, or any Addenda to the Reimbursement Contract, or offset any co-payments or retention amounts.

V. Addendum No. 2 TICL Coverage Election

ALL COMPANIES EXECUTING A REIMBURSEMENT CONTRACT MUST INDICATE BELOW THE LEVEL OF OPTIONAL TICL COVERAGE SELECTED, IF ANY. IF THE COMPANY FAILS TO MEET THE MARCH 1, 2011 DEADLINE OR MEETS THIS DEADLINE BUT FAILS TO SELECT AN OPTIONAL COVERAGE UNDER THIS ADDENDUM, IT SHALL BE DEEMED BY THE STATE BOARD OF ADMINISTRATION TO BE A CHOICE TO REJECT TICL COVERAGE.

If your Company does not want to purchase any TICL coverage, print "No Coverage" on the line below and initial the box.

________________________________

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Rule 19-8.010, F.A.C.

3

By selecting an option below (initial the applicable box), the Company is selecting its proportionate share based on its mandatory FHCF reimbursement premium to the total mandatory FHCF reimbursement premiums paid by all Companies of the layer of optional coverage.

Company	OR	Company	OR	Company	OR	Company
selects		selects		selects		selects
$1 billion		$2 billion		$3 billion		$4 billion
TICL Coverage		TICL Coverage		TICL Coverage		TICL Coverage
Option		Option		Option		Option
		X
Company	OR	Company
selects		selects
$5 billion		$6 billion
TICL Coverage		TICL Coverage
Option		Option

VI. Signatures

/s/ Donald J. Cronin             

United Property and Casualty Insurance Company

By: Donald J. Cronin, CEO                 Date: 2/17/11

Name/Title Date

Approved by:

Florida Hurricane Catastrophe Fund

By: State Board of Administration of the State of Florida

By: /s/ Ashbel C. Williams                 Date: 7/8/11

Ashbel C. Williams

Executive Director & CIO

Approved as to legality:

By: /s/ E. Lamar Taylor                     Date:

E. Lamar Taylor

Deputy General Counsel

FHCF-2011K-2

Rule 19-8.010, F.A.C.

4

ADDENDUM NO. 4

to

REIMBURSEMENT CONTRACT

Effective: June 1, 2011

(Contract)

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

(Company)

NAIC # 10969

and

THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF)

PREAMBLE

It is Herby Agreed, effective at 12:00:01 a.m., Eastern Time, June 1, 2011 that this Contract shall be amended as follows:

ARTICLE V - DEFINITIONS

(19)    Loss occurrence

This Term means the sum of individual insured Losses incurred under Covered Policies resulting from the same Covered Event. "losses" means all incurred losses under Covered Policies, including Additional living Expenses not to exceed 40 percent of the insured value of a Residential Structure or its contents and amounts paid as fees on behalf of or incurring to the benefit of a policyholder, and excludes allocated or unallocated Loss Adjustment Expenses.

(30)    Ultimate Net Loss

(a) This term means all Losses of the Company under Covered Policies in force at the time of a Covered Event, as defined under (9) above, prior to the application of the Company's FHCF retention, as defined under (28) above, and reimbursement percentage, and excluding loss adjustment expense and any exclusions under Article VI herein, arising from each Loss Occurrence during the Contract Year, provided, however, that the Company's Ultimate Net Loss shall be determined in accordance with the deductible level written under the policy sustaining the loss.

FHCF-2011K-4

Rule 19-8.010, F.A.C.

1

Article VI(18), (19), (22), (26), and (29) shall be amended as follows:

ARTICLE VI - EXCLUSIONS

(18)    Any liability of the Company for extra contractual obligations or liabilities in excess of original policy limits. This exclusion includes, but is not limited to, amounts paid as bad faith awards, punitive damage awards, or other court- imposed fines, sanctions, or penalties; or other amounts in excess of the coverage limits under the Covered Policy.

(19)    Any losses paid in excess of a pa policy's hurricane limit in force at the time of each Covered Event, including individual coverage limits (i.e., building, appurtenant structures, contents, and additional living expense), or other amounts paid as the result of a voluntary expansion of coverage by the insurer, including, but not limited to, a waiver of an applicable deductible. this exclusion includes overpayments of a specific individual coverage limit even if total payments under the policy are within the aggregate policy limit.

(22)    Amounts paid to reimburse a policyholder for condominium association loss assessments or under similar coverages for contractual liabilities.

(26)    Property losses that are proximately caused by any peril other than a Covered Event, including but not limited to, fire, theft, flood or rising water, or windstorm that does not constitute a Covered Event, or any liability of the Company for loss or damage caused by or resulting from nuclear reaction, nuclear radiation, or radioactive contamination from any cause, whether direct or indirect, proximate or remote, and regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

(29)    Any losses under liability coverages.

Approved by:

Florida Hurricane Catastrophe Fund

By: State Board of Administration of the State of Florida

By: /s/ Ashbel C. Williams                 Date: 8/16/11

Ashbel C. Williams

Executive Director & CIO

Approved as to legality:

By: /s/ E. Lamar Taylor                     Date:

E. Lamar Taylor

Deputy General Counsel

United Property and Casualty Insurance Company

Joe Peiso, Chief Financial Officer     

Type/Printed name and Title

By: /s/ Joe Peiso                    Date: 7/28/11

FHCF-2011K-4

Rule 19-8.010, F.A.C.

2

OPTIONAL AMENDMENT TO CHANGE PRIOR ELECTIONS MADE IN THE REIMBURSEMENT CONTRACT OR THE ADDENDA TO THE REIMBURSEMENT CONTRACT

Effective: June 1, 2011

(Contract)

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

(Company)

NAIC # 10969

and

THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF)

WHEREAS, pursuant to Section 215.555, F.S., as amended by CS/SB 1460 (Chapter 2010-10, Laws of Florida), the FHCF Reimbursement Contract, including any Addenda, was required to be executed by march 1, 2011, and,

WHEREAS, in the FHCF reimbursement Contract, including Addenda, certain options were required to be made by the company, and,

WHEREAS, there is some benefit to the Company to have the option to change some or all of the Contract elections made in the FHCF 2011/2012 Reimbursement Contract, including any Addenda, if such changes are made prior to the commencement of hurricane season on June 1, 2011, and,

WHEREAS, the Board, finds that the operation and administration of the FHCF will not be harmed by allowing changes to these options prior to June 1, 2011, and,

NOW THEREFORE, in consideration of mutual promises hereinafter set forth, the parties agree as follows:

1.    This Optional Amendment To Change Prior Elections Made In The Reimbursement Contract Or The Addenda To The Reimbursement Contract ("Optional Amendment") shall not take effect if the Company fails to complete all of the elections herein. If the Company makes a change to any option elected in the 2011/2012 reimbursement Contract or Addenda thereto, then all the options in the Contract and all Addenda must be reselected in this Optional Amendment.

FHCF-2011K-0

Rule 19-8.010 F.A.C.

1

The Company is not required to make changes to the options as originally selected, but if the Company chooses to enter into this optional Amendment to change any options, all options must be redesignated. Failure to re-select any option in this Optional Amendment shall result in the Company being deemed to have chosen the same selections as it chose in the Reimbursement Contract or, if the Company failed to make an option selection in the Reimbursement Contract, the option which the Company was deemed to have selected in the Reimbursement Contract.

2.    This Optional Amendment shall not take effect if the Company fails to fully execute this Optional Amendment or fails to ensure receipt of this Optional Amendment by the FHCF Administrator, Paragon Strategic solutions Inc., 8200 Tower, 5600 West 83rd Street, Suite 1100, Minneapolis Minnesota 55437, on or before June 1, 2011;

3.    If the requirements of paragraph 1. and 2. above are met, this Optional Amendment shall take effect at 12:00:01 a.m., Eastern Time, June 1, 2011 and terminate on 12:00 midnight Eastern Time, may 31, 2012.

4.    Option Selection: All of the options below must be addressed:

A. Reimbursement Percentage

For purposes of determining reimbursement (if any) due the Company under this Contract and in accordance with the Statute, the Company has the option to elect a 45% or 75% or 90% reimbursement percentage under this Contract. If the Company is a member of the NAIC group, all members must elect the same reimbursement percentage, and the individual executing this Contract on behalf of the Company, by placing his or her initials in the box under (a) below, affirms that the Company has elected the same reimbursement percentage as all members of its NAIC group. If the Company is an entity created pursuant to Section 627.351, Florida Statutes, the Company must elect the 90% reimbursement percentage. The Company shall not be permitted to change its reimbursement percentage during the Contract Year. Th Company shall be permitted to change its reimbursement percentage at the beginning of the new Contract Year, but may not reduce it's reimbursement percentage if a Covered Event required the issuance of revenue bonds, until the bonds have been fully repaid.

IMPROTANT NOTE: The FHCF has issued revenue bonds as a result of its liabilities for Covered Events under the Contract Year effective June 1, 2005. As those bonds have not been fully repaid, the Company may not select a Reimbursement Percentage that is less than its selection under the prior Contract Year effective June 1, 2010.

The Reimbursement Percentage elected by the Company for the prior Contract year effective June 1, 2010 was as follows: United Property and Casualty Insurance Company - 90%

(a) NAIC Group Affirmation: Initial the following box if the Company is part of an NAIC group:

FHCF-2011K-0

Rule 19-8.010 F.A.C.

2

(b) Reimbursement Percentage Election: The Company hereby elects the following Reimbursement Percentage for the Contract t Year from 12:00:01 a.m., eastern Time, June 1, 2011, to 12:00 a.m., Eastern Time, May 31, 2012, (the individual executing this Contract on behalf of the Company shall place his or her initials in the box to the left of the percentage elected for the Company):

45% OR 75% OR X 90%

B. Commercial Non-residential/Business class Code

if a single structure is used for both habitational and non-habitational purposes and the structure has a commercial non-residential or business class code (based on a classification plan on file with and reviewed by the Administrator), the habitational portion of that structure should be identified and reported to the FHCF under the Data Call.

However, in recognition of the unusual nature of the commercial structures with incidental habitational exposure and the hardship some companies may face in having to carve out such incidental habitational exposure, as well as the losses to such structures, the FHCF will accommodate these companies by allowing them to exclude the entire exposure for the single structure from their Data Call submission, providing the following two conditions are met:

(1) The decision to not carve out and report the incidental habitational exposure shall apply to all such structures insured by the Company; and

(2) If the incidental habitational exposure is not reported to the FHCF, the Company agrees it shall not report losses to the structure and the FHCF shall not reimburse any losses to the structure

Initial the CARVING box below if the Company is able to carve out and report its incidental habitational exposure, OR, if this requirement presents a hardship, the Company must communicate its decision to not carve out and to not report the incidental exposure by having the individual executing this Contract ton behalf of the Company placing his or her initials in the NOT CARVING box below. If the Company does not currently write such policies, but has the authority to write such policies after the start date of this Contract, the decision to carve or not carve out the incidental habitational exposure must be indicated below.

	OR		OR	X
CARVING		NOT CARVING		NA

By initialing the CARVING or NOT CARVING box above, the Company is making an irrevocable decision of the corresponding Contract Year Data Call submission and any subsequent resubmissions.

Important Note: Since this election will impact your Data Call submission, please share this decision with the individual(s) responsible for compiling your Data call submission.

FHCF-2011K-0

Rule 19-8.010 F.A.C.

3

B. Additional Living Expense (ALE) Written as Time Element Coverage

If your Company writes Covered Policies that provide ALE coverage on a time element basis (i.e., coverage is based on a specific period of time as opposed to a stated dollar limit), you must initial the 'Yes - Time Element ALE' box below. If your Company does not write time element ALE coverage, intimal 'No- Time Element ALE' box below.

		X
Yes - Time Element ALE	OR	No - Time Element ALE

C. ADDITIONAL COVERAGE OPTOIN (up to $10 million) PURSUANT TO SECTION 215.555(4)(B)4., FLORIDA STATUTES.

If your Company is eligible but does not wish to purchase the additional coverage under this Optional Amendment, print "No Coverage" on the line below and initial the box.

If your Company is eligible for the coverage under this Optional Amendment and elects to purchase this coverage, indicate the amount of additional coverage up to $10 million (there is no additional coverage available in excess of $10 million) on the line below:

$ 10 million

IF THIS OPTIONAL AMENDMENT IS RETURNED WITHOUT THE BLANK SPACE IMMEDIATELY ABOVE FILLED IN WITH A DOLLAR AMOUNT, IT SHALL BE DEEMED BY THE STATE BOARD OF ADMINISTRATION TO BE A CHOICE TO REJECT THE ADDITIONAL COVERAGE.

D. TEMPORARY INCREASE IN COVERAGE (TICL) LIMIT OPTIONS FOR ADDITIONAL COVERAGE PURUANT TO SECTION 215.555(17), FLORIDA STATUTES.

If your company does not want to purchase any TICL coverage, print "No Coverage" on the line below and initial the box.

FHCF-2011K-0

Rule 19-8.010 F.A.C.

4

By selecting an optional below (initial the applicable box), the Company is selecting its proportionate share based on its mandatory FHCF Reimbursement Premium to the total mandatory FHCF Reimbursement premiums paid by all Companies of the layer of optional coverage.

						X
Company selects	OR	Company selects	OR	Company selects	OR	Company selects
$1 billion		$2 billion		$3 billion		$billion
TICL Coverage		TICL Coverage		TICL Coverage		TICL Coverage
Option		Option		Option		Option
Company selects	OR	Company selects
$5 billion		$6 billion
TICL Coverage		TICL Coverage
Option		Option

5. All provisions of the FHCF reimbursement Contract and the Addenda thereto remain in full force and effect except as to the option changes allowed in paragraph 4., of this Optional Amendment.

This Optional Amendment To Change Prior Elections Made In The Reimbursement Contract Or The Addenda To The Reimbursement Contract ("Optional Amendment") shall not take effect if Company fails to complete all of the elections herein.

Approved by:

Florida Hurricane Catastrophe Fund

By: State Board of Administration of the State of Florida

By: /s/ Ashbel C. Williams                 Date: 7/8/11

Ashbel C. Williams

Executive Director & CIO

Approved as to legality:

By: /s/ E. Lamar Taylor                     Date:

E. Lamar Taylor

Deputy General Counsel

United Property and Casualty Insurance Company

Joe Peiso, Chief Financial Officer     

Type/Printed name and Title

By: /s/ Joe Peiso                    Date: 5/27/11

FHCF-2011K-0

Rule 19-8.010 F.A.C.

5

EX-10.13

Exhibit 10.13

MULTIPLE LINE PER RISK

EXCESS OF LOSS REINSURANCE AGREEMENT

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or hereafter become affiliated therewith

EFFECTIVE:June 1, 2011

EXPIRATION:June 1, 2012

MULTIPLE LINE PER RISK EXCESS OF LOSS REINSURANCE AGREEMENT

ARTICLE	DESCRIPTION	PAGE
1	BUSINESS COVERED	1
2	RETENTION AND LIMIT	1
3	TERM	2
4	TERRITORY	3
5	EXCLUSIONS	3
6	DEFINITIONS	4
7	NET RETAINED LINES	7
8	PREMIUM	7
9	REINSTATEMENT	8
10	NOTICE OF LOSS AND LOSS SETTLEMENTS	8
11	LATE PAYMENTS	9
12	SPECIAL ACCEPTANCES	10
13	SALVAGE AND SUBROGATION	10
14	OFFSET	10
15	UNAUTHORIZED REINSURANCE	11
16	TAXES	13
17	CURRENCY	13
18	DELAY, OMISSION OR ERROR	13
19	ACCESS TO RECORDS	13
20	ARBITRATION	14
21	SERVICE OF SUIT	14
22	INSOLVENCY	15
23	THIRD PARTY RIGHTS	16
24	SEVERABILITY	16
25	CONFIDENTIALITY	16
26	ENTIRE AGREEMENT	16
27	CHOICE OF LAW AND JURISDICTION	17
28	INTERMEDIARY	17
29	NOTICES AND MODE OF EXECUTION	17
Attachments: Nuclear Incident Exclusion Clause ‑ Physical Damage ‑ Reinsurance - USA Terrorism Exclusion Clause (NMA2930C) Trust Agreement Requirements Clause

B1CFHB013_5683969

5.31.11Page 17 of 17

MULTIPLE LINE PER RISK

EXCESS OF LOSS REINSURANCE AGREEMENT

(hereinafter referred to as the “Agreement”)

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or hereafter become affiliated therewith

(hereinafter referred to collectively as the "Company")

and

the Subscribing Reinsurer(s) identified in the

Interests and Liabilities Contract(s)

attached to and forming part of this Agreement

(hereinafter referred to collectively as the "Reinsurer")

ARTICLE 1 - BUSINESS COVERED

This Agreement is to indemnify the Company in respect of its net excess liability which may accrue to the Company under any policies, contracts or binders of insurance or reinsurance (hereinafter called “Policies”) in force at the effective time and date hereof or issued or renewed at or after that time and date with effective dates during the term of this Agreement by or on behalf of the Company, and classified by the Company as Property and Casualty Business, including but not limited to Homeowners and Condominium Owners, including Earthquake on those policies issued in South Carolina, subject to the terms and conditions herein contained.

ARTICLE 2 - RETENTION AND LIMIT

SECTION A: PROPERTY

As respects a loss arising out of Property Business, the Reinsurer will be liable in respect of each and every loss, each and every risk, for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $1,000,000 each and every loss, each and every risk, subject to a limit of liability to the Reinsurer of $1,700,000 each and every loss, each and every risk and further subject to a limit of liability to the Reinsurer of $1,700,000 each Loss Occurrence.

SECTION B: PROPERTY AND CASUALTY COMBINED

As respects a loss arising out of a combination of Property Business and Casualty Business, the Reinsurer will be liable in respect of each and every Loss Occurrence, irrespective of the number and kinds of insureds or Policies in respect of Casualty Business, and each and every risk, in respect of Property Business, for the Ultimate Net Loss over and above an initial Ultimate Net loss of $1,000,000 each and every Loss Occurrence, subject to a limit of liability to the Reinsurer of $2,200,000 each and every Loss Occurrence.

In the event of a combined Property and Casualty Loss under Section B., for purposes of this Agreement, Casualty losses will be included as Ultimate Net Loss but only within the Company's retention and will not be recoverable hereunder.

For purposes of this Agreement that the maximum Policy limit as respects Casualty Business is $500,000. Any amounts greater than this maximum limit will be reinsured elsewhere or so deemed.

The Company shall be the sole judge as to what constitutes one risk.

ARTICLE 3- TERM

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2011, and shall apply to losses arising out of Loss Occurrences commencing at or after that time and date, and shall remain in full force and effect until 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2012.

In the event that this Agreement is not renewed, and at the Company's option, run-off coverage shall be provided for all Policies in force at the date of non-renewal until their natural expiry date. Should the Company elect to purchase such run-off coverage, the premium for this run-off period shall be calculated in accordance with the PREMIUM ARTICLE.

Furthermore, with effect from 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2011, the Company may terminate or reduce a Subscribing Reinsurer's percentage share in this Agreement at any time by giving prior written notice to the Subscribing Reinsurer by certified mail in the event of any of the following:

1) The Subscribing Reinsurer's policyholders' surplus falls by 20% or more from the inception of this Agreement; or

2) A State Insurance Department or other legal authority orders the Subscribing Reinsurer to ceases writing business; or

3) The Subscribing Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there has been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operation; or

4) The Subscribing Reinsurer has become merged with, acquired or controlled by any company, corporation, or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

5) The Subscribing Reinsurer's A.M. Best or Standard and Poor's rating is downgraded below A- or by two grades at one time, namely A++ to A or A+ to A-; or

6) The Subscribing Reinsurer ceases assuming new and renewal property treaty reinsurance business.

In the event the Company terminates or reduces a Subscribing Reinsurer's percentage share in accordance with this paragraph, the termination or reduction will be effective for losses arising out of Loss Occurrences commencing on or after the date of the written notice to the Subscribing Reinsurer, and the premium due to the Subscribing Reinsurer for any reduced percentage share for the Agreement Year will be reduced on a pro rata basis for the portion of the Agreement Year which is unexpired as of that date. Any return premium owed by the Subscribing Reinsurer in accordance with such a termination or reduction shall be payable as promptly as possible but no later than 30 days following the effective date of reduction or termination. If a loss has been paid under this Agreement or a Subscribing Reinsurer's share is terminated after November 30, 2011, then no such return premium shall be made.

Should this Agreement expire while a loss covered hereunder is in progress, the Reinsurer shall be responsible for the loss in progress in the same manner and to the same extent it would have been responsible had the Agreement expired the day following the conclusion of the loss in progress.

ARTICLE 4 - TERRITORY

This Agreement shall follow the territorial limits of the Company's Policies.

ARTICLE 5 - EXCLUSIONS

This Agreement does not apply to and specifically excludes the following:

A.All excess of loss reinsurance assumed by the Company.

B. Reinsurance assumed by the Company under obligatory reinsurance agreements, except as respectsthe following:

1. Agency reinsurance where the Policies involved are to be re-underwritten in accordance with the underwriting standards of the Company and reissued as Company policies at the next anniversary or expiration date;

2. Reinsurance assumed as a result of the depopulation of the Citizens Property and Casualty Insurance Company and any successor organization of this entity and/or any reinsurance assumed from private carriers as aresult of depopulations;

3. A book of business which is assumed 100% by the Company.

C.Financial guarantee and/or insolvency business.

D. Third party liability and medicalpayments business, unless written as part of a Homeowners/Condominium Policy.

E. All liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meetany claim, debt, charge, fee or other obligation in whole or in part.

F. All Accident and Health, Fidelity, Surety, Boiler and Machinery, Workers' Compensation and Credit business.

G. AllOcean Marine business.

H. Flood and/or earthquake when written as such, except for earthquake business issued in South Carolina.

I. Difference in Conditions insurances and similar kinds of insurances, however styled, insofar as they may provide coverage for losses from the following causes:

1. Flood, surface water, waves, tidal water or tidal waves, overflow of streams or other bodies of water or spray from any of the foregoing, all whether wind‑driven or not, except when covering property in transit; or

2. Earthquake, landslide, subsidence or other earth movement or volcanic eruption, except when covering property in transit.

J. Mortgage Impairment insurances and similar kinds of insurances, however styled.

K. All Automobile Business.

L. War Risks in accordance with the War exclusion clause of the Policies.

M. Loss and/or Damage and/or Costs and/or Expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude any payment of the cost of removal of debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25% of the Company's property loss under the applicable Policy.

N. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause ‑ Physical Damage Reinsurance" attached to and forming part of this Agreement.

O. All liability arising out of mold, spores and/or fungus, but this exclusion shall not apply to those losses which follow as a direct result of a loss caused by a peril otherwise covered hereunder.

PTerrorism, in accordance with NMA2930b, attached hereto.

Q.Any loss, costs or expense arising directly or indirectly related to lead based paint.

ARTICLE 6 - DEFINITIONS

A. The term “Ultimate Net Loss” as used herein is defined as the sum or sums (including 90% of any Extra Contractual Obligations, 90% of any Loss In Excess of Policy Limits, and any Loss Adjustment Expenses as hereinafter defined) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Agreement are not recoverable until the Company's Ultimate Net Loss has been ascertained.

B. With respect to Property Business, the term “Loss Occurrence” shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one Loss Occurrence shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event except that the term Loss Occurrence shall be further defined as follows:

(i) As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto.

(ii) As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an insured's premises by strikers, provided such occupation commenced during the aforesaid period.

(iii) As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the opening paragraph of this Article) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's Loss Occurrence.

(iv) As regards freeze, only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may be included in the Company's Loss Occurrence.

For all Loss Occurrences, other than (ii) above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any Loss Occurrence referred to in sub-paragraph (i) above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event.

As respects those Loss Occurrences referred to in (ii) above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more Loss Occurrences provided no two periods overlap and no individual loss is included in more than one such period and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

No individual losses occasioned by an event that would be covered by 96 hours clauses may be included in any Loss Occurrence claimed under the 168 hours provision.

Losses directly or indirectly occasioned by:

(i) loss of, alteration of, or damage to

or

(ii) a reduction in the functionality, availability or operation of

a computer system, hardware, program, software, data, information repository, microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the policyholder of the Company or not, do not in and of themselves constitute an event unless arising out of one or more of the following perils:

fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow.

C. With respect to Casualty Business, the term “Loss Occurrence” as used in this Agreement shall mean each accident, casualty, disaster or loss, or series of accidents, casualties, disasters or losses, arising out of or caused by one event.

D. The terms “Loss In Excess of Policy Limits” and “Extra Contractual Obligations” as used herein shall be defined as follows:

1. “Loss In Excess of Policy Limits” shall mean any amount paid or payable by the Company in excess of its Policy limits, but otherwise within the terms of its Policy, as a result of an action against it by its insured or its insured's assignee to recover damages the insured is legally obligated to pay because of the Company's alleged or actual negligence or bad faith in rejecting a settlement within Policy limits, or in discharging its duty to defend or prepare the defense in the trial of an action against its insured, or in discharging its duty to prepare or prosecute an appeal consequent upon such an action.

2. “Extra Contractual Obligations” shall mean any punitive, exemplary, compensatory or consequential damages, other than Loss In Excess of Policy Limits, paid or payable by the Company as a result of an action against it by its insured or its insured's assignee, which action alleges negligence or bad faith on the part of the Company in handling a claim under a policy subject to this Agreement.

An Extra Contractual Obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the Policy.

Notwithstanding anything stated herein, this Agreement shall not apply to any Loss In Excess of Policy Limits or any Extra Contractual Obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense, settlement of any claim covered hereunder.

In no event shall coverage be provided to the extent that such coverage is not permitted by law.

E. The term “Loss Adjustment Expense” as used herein shall mean expenses assignable to the investigation, appraisal, adjustment, settlement, litigation, defense and/or appeal of specific claims, regardless of how such expenses are classified for statutory reporting purposes. Loss Adjustment Expense shall include, but not be limited to, interest on judgments, expenses of outside adjusters, and a pro rata share of the salaries and expenses of the Company's field employees according to the time occupied adjusting such losses and expenses of the Company's officials incurred in connection with the losses, but excluding salaries of the Company's officials and any normal overhead charges, and excluding Declaratory Judgment Expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto.

F. The term “Declaratory Judgment Expense” as used herein shall mean the Company's own costs and legal expense incurred in direct connection with declaratory judgment actions brought to determine the Company's defense and/or indemnification obligations that are assignable to specific claims arising out of policies reinsured by this Agreement, regardless of whether the declaratory judgment action is considered successful or unsuccessful. Any Declaratory Judgment Expense will be deemed to have been incurred by the Company on the date of the original loss, if any, giving rise to the declaratory judgment action.

G. The term “Gross Net Earned Premium Income” as used herein shall mean gross premiums earned during the period less cancellations and return premiums and less premiums paid for reinsurance, recoveries under which shall inure to the benefit of Reinsurers hereon.

H. The term “Agreement Year” as used herein shall be defined as the period from 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2011, until 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2012. However, if this Agreement is terminated, Agreement Year as used herein shall mean the period from 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2011 through the effective date of termination.

ARTICLE 7- NET RETAINED LINES

This Agreement applies only to that portion of any insurances or reinsurances covered by this Agreement which the Company retains net for its own account (prior to deduction of any underlying reinsurance), and in calculating the amount of any loss hereunder and also in computing the amount in excess of which this Agreement attaches, only loss or losses in respect of that portion of any insurances or reinsurances which the Company retains net for its own account shall be included.

It is understood and agreed that the amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurers, whether specific or general, any amounts which may have become due from them, whether such inability arises from the insolvency of such other reinsurers or otherwise.

ARTICLE 8 - PREMIUM

An annual deposit premium of $870,000 shall be payable to Reinsurer in four equal quarterly installments of $217,500 at July 1, and October 1, 2011, and January 1, and April 1, 2012.

As soon as practicable following the expiration of this Agreement, the Company will calculate a premium at a rate of 0.447% of the Gross Net Earned Premium Income for the Agreement Year.

Should the premium so calculated exceed the deposit premium paid in accordance with the paragraphs above, the Company will immediately pay the Reinsurer the difference. Should the calculated premium be less than the deposit premium, the Reinsurer shall immediately return the difference, subject to a minimum premium of $696,000.

Should the Company elect to purchase run-off coverage in accordance with the TERM ARTICLE for business in force at the date of expiration or termination of this Agreement, it shall remit premium monthly at the rate above applied to its Gross Net Earned Premium Income for the month within 30 days following each month.

ARTICLE 9 - REINSTATEMENT

(Applicable only to SECTION A: PROPERTY of the RETENTION AND LIMIT ARTICLE.)

In the event all or any portion of the reinsurance hereunder is exhausted by loss, the amount so exhausted shall be reinstated immediately from the time the Loss Occurrence commences. For each amount of limit reinstated, the Company agrees to pay the Reinsurer an additional premium calculated at pro rata of 50% of the Reinsurer's premium, being pro rata only as to the fraction of the face value of this Agreement (i.e., the fraction of $1,700,000) so reinstated. Nevertheless, the Reinsurer's liability for losses hereunder shall never exceed $1,700,000 in respect of each and every loss, each and every risk, and shall be further limited to $3,400,000 in all during the term of this Agreement.

If the total premium earned hereon is unknown at the time of the calculation of the reinstatement premium, it will be provisionally calculated based upon the annual deposit premium and will be finalized once the total ceded earned premium hereon - exclusive of reinstatement premium - is determined.

ARTICLE 10 - NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company shall notify the Reinsurer promptly of all claims which, in the opinion of the Company, may involve the Reinsurer, and of all subsequent developments regarding these claims which may materially affect the position of the Reinsurer. The notification shall be made in the form of a report, submitted no less frequently than on a quarterly basis, that details losses paid and the expected Ultimate Net Losses for each claim related to a Loss Occurrence subject to this Agreement.

All loss settlements made by the Company, provided they are within the terms of the Company's Policies (with allowance for Extra Contractual Obligations and Loss in Excess of Policy Limits) and of this Agreement, shall be binding upon Reinsurer, and amounts falling to the share of Reinsurer shall be payable without delay upon reasonable evidence of the amount being given by the Company.

The liability of the Reinsurer shall follow that of the Company in every case, and be subject in all respects to all the general and special stipulations, clauses, waivers, interpretations and modifications of the Company's Policies, and any endorsements thereon.

ARTICLE 11 - LATE PAYMENTS

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Agreement.

B. In the event any premium, loss or other payment due either party is not received by the Intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the LIBOR monthly on the first business day of the month for which the calculation is made; times

3.The amount past due, including accrued interest.

C. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

D. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 business days, interest will accrue on the payment or amount overdue in accordance with paragraph B of this Article, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked.

E. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

F. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense or control of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Agreement. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

ARTICLE 12 - SPECIAL ACCEPTANCES

A. Business which is beyond the terms, conditions or limitations of this Agreement may be submitted to the Reinsurer for special acceptance hereunder and such business, if accepted by the Reinsurer, shall be subject to all the terms, conditions and limitations of this Agreement except as may be modified by the Reinsurer when negotiating the special acceptance. Such special acceptance shall be deemed a part of this Agreement.

B. Any special acceptance agreed to for a predecessor agreement to this Agreement shall automatically be covered hereunder and be deemed a part of this Agreement. Further, should a Subscribing Reinsurer become a party to this Agreement subsequent to the acceptance of any business not normally covered hereunder it shall automatically accept the same as being a part of this Agreement.

ARTICLE 13 - SALVAGE AND SUBROGATION (BRMA 47E)

The Reinsurer shall be credited with salvage or subrogation recoveries (i.e., reimbursement obtained or recovery made by the Company, less loss adjustment expense incurred in obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder. Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights

ARTICLE 14 - OFFSET (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any balance or amounts due from one party to the other under the terms of the Agreement. The party asserting the right of offset may exercise such right any time whether the balances due are on account of premiums or losses or otherwise.

ARTICLE 15 - UNAUTHORIZED REINSURANCE

A. This Article applies only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company's reserves.

B. The Company agrees, in respect of its Policies or bonds falling within the scope of this Agreement, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law, it shall forward to the Reinsurer a statement showing the proportion of such liabilities applicable to the Reinsurer. The "Reinsurer's Obligations" shall be defined as follows:

1.Unearned premium (if applicable);

2. Known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. Losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4.Losses incurred but not reported and Loss Adjustment Expenses relating thereto;

5. All other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

C. The Reinsurer's Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves.

D. When funding by a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto. When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the provisions of this Agreement may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, for the following purposes, unless otherwise provided for in a separate Trust Agreement:

1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Agreement and that has not been otherwise paid;

2. To make refund of any sum that is in excess of the actual amount required to pay the Reinsurer's Obligations under this Agreement (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement);

3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets in the account that are in excess of the Reinsurer's Obligations (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement). If the assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer;

4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Agreement.

F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3), or in the case of E(4), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn, All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer.

G. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company.

H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:

1. If the statement shows that the Reinsurer's Obligations exceed the balance of the LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the statement, secure delivery to the Company of an amendment to the LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference.

2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of the LOC (or that 102% of the Reinsurer's Obligations are less than the trust account, balance if funding is provided by a Trust Agreement), as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess.

ARTICLE 16 - TAXES

The Company will be liable for taxes (except Federal Excise Tax) on premiums reported to the Reinsurer hereunder.

Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at Lloyd's London and other Reinsurers exempt from the Federal Excise Tax, who are domiciled outside the United States of America.

The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

In the event of any return of premium becoming due hereunder, the Reinsurer will deduct the applicable percentage from the return premium payable hereon, and the Company or its agent should take steps to recover the Tax from the United States Government.

ARTICLE 17 - CURRENCY

The currency to be used for all purposes of this Agreement shall be United States of America currency.

ARTICLE 18 - DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error in complying with the terms and conditions of this Agreement shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified immediately upon discovery.

ARTICLE 19 - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the Policy, accounting or claim files ("Records") relating to business reinsured under this Agreement during regular business hours after giving five working days' prior notice. This right shall be exercisable during the term of this Agreement or after the expiration of this Agreement. Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company and the Company shall have no right to reimbursement under this Agreement if it fails or refuses to provide the access required by this Article other than by reason of the Reinsurer's failure to pay.

ARTICLE 20 - ARBITRATION (BRMA 6J)

As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Agreement, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

Each party shall present its case to the Arbiters within thirty (30) days following the date of appointment of the Umpire. The Arbiters shall consider this Agreement as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Agreement from several to joint.

Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Agreement, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

ARTICLE 21 - SERVICE OF SUIT

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities).

It is agreed that in the event the Reinsurer fails to perform its obligations hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of any court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Contract, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Agreement.

ARTICLE 22 - INSOLVENCY

A. If more than one reinsured company is referenced within the definition of "Company" in the Preamble to this Agreement, this Article shall apply severally to each such company. Further, this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state's laws shall prevail.

B. In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

C. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this reinsurance Agreement as though such expense had been incurred by the Company.

D. As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, (except as provided by Section 4118 (a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New York law applies) or except (1) where the Agreement specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. Then, and in that event only, the Company, with the prior approval of the certificate of assumption on New York risks by the Superintendent of Insurance of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 23 - THIRD PARTY RIGHTS (BRMA 52C)

This Agreement is solely between the Company and the Reinsurer, and in no instance shall any other party have any rights under this Agreement, except as expressly provided otherwise in the INSOLVENCY ARTICLE.

ARTICLE 24 - SEVERABILITY

If any provision of this Agreement shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Agreement or the enforceability of such provision in any other jurisdiction.

ARTICLE 25 - CONFIDENTIALITY

The contracting parties undertake to regard the terms of this Agreement (and any confidential, proprietary information relating thereto provided in writing to such other party) as confidential, with the parties to effect the same prudence and care afforded by such party to its own confidential, proprietary information. Each party further agrees that it shall not disclose any of such information to any third party without the prior written consent of the other party or except as may be required by applicable law or regulation, or by legal process (including without limitation as may be required by United States Federal tax law or regulation), or to the auditors, professional advisors, accountants, retrocessionaires, related managing general agents, directors or officers of such party with a reasonable need to know such information. Except as expressly set forth above, the parties agree and acknowledge that this Article is not intended to restrict or limit the conduct of the other party's current or proposed business.

ARTICLE 26 - ENTIRE AGREEMENT (BRMA 74B)

This Agreement constitutes the entire agreement between the parties. In no event shall this Agreement provide any guarantee of profit, directly or indirectly, from the Reinsurer to the Company or from the Company to the Reinsurer. This Agreement may be clarified, amended or modified only by written agreement signed by both parties. Such written agreement shall become part of this Agreement.

ARTICLE 27 - CHOICE OF LAW AND JURISDICTION

This Agreement shall be governed as to performance, administration and interpretation by the laws of the State of Florida, exclusive of conflict of law rules. However, with respect to credit for reinsurance, the rules of all applicable states shall apply.

ARTICLE 28 - INTERMEDIARY

BMS Intermediaries Inc., is hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through BMS Intermediaries Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed only to constitute payment to the Company to the extent that such payments are actually received by the Company.

ARTICLE 29 - NOTICES AND MODE OF EXECUTION

Whenever a notice, statement, report or any other written communication is required by this Agreement, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable.

The use of any of the following shall constitute a valid execution of this Agreement or any amendments thereto:

A. Paper documents with an original ink signature;

B. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

C. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Agreement, the terms “electronic record,” “electronic signature” and “electronic agent” shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

This Agreement may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Signed in St. Petersburg, Florida, this 2nd day of June, 2011.

For and on behalf of the Company

/s/ Donald J. Cronin     

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL-DAMAGE - REINSURANCE - U.S.A.

1. This Agreement does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Agreement does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I.Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor, installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operation of paragraphs (1) and (2) hereof, this Agreement does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate.

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where the said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However, on and after 1st January, 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operation of paragraphs (1), (2) and (3) hereof, this Agreement does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7.Reassured to be sole judge of what constitutes:

(a)substantial quantities, and

(b)the extent of installation, plant or site.

Note - Without in any way restricting the operation of paragraph (I) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

In accordance with NMA 1119 (12/12/57)

TERRORISM EXCLUSION

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this reinsurance agreement or any endorsement thereto, it is agreed that this reinsurance agreement excludes loss, damage, cost, or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence thegovernment de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or government(s) de jure or de facto, and which:

(i)involves violence against one or more persons; or

(ii)involves damage to property; or

(iii)endangers life other than that of the person committing the action; or

(iv)creates a risk to health or safety of the public or a section of the public; or

(v)is designed to interfere with or to disrupt an electronic system.

This reinsurance agreement also excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against, or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this reinsurance agreement, in respect only of personal lines this reinsurance agreement will pay actual loss or damage (but not related cost or expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with biological, chemical, radioactive, or nuclear pollution or contamination or explosion.

NMA2930c

22/11/02

Form approved by Lloyd's Market Association [Non-Marine]

TRUST AGREEMENT REQUIREMENTS CLAUSE

A. Except as provided in paragraph B. of this Clause, if the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

2. Stipulates that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the types permitted by the regulatory authorities having jurisdiction over the Company's reserves, or any combination of the three, provided that the investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Reinsurer or the Company;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the Company, or the trustee upon the direction of the Company, may whenever necessary negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the Company or the Reinsurer.

B. If a ceding insurer is domiciled in California and the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Provides that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States financial institution as defined in California Insurance Code Section 922.7(a) and payable in United States dollars, and investments permitted by the California Insurance Code, or any combination of the above;

2. Provides that investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

C. If there are multiple ceding insurers that collectively comprise the Company, "regulatory authorities" as referenced in subparagraph A(2) above, shall mean the individual ceding insurer's domestic regulator. If such ceding insurer is subject to the commercial domicile laws or regulations of another state, such laws or regulations shall apply to the extent not in conflict with those of such ceding insurer's domicile.

INTERESTS AND LIABILITIES AGREEMENT

in respect of the

MULTIPLE LINE PER RISK

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(hereinafter referred to collectively as the "Company")

and

SCOR REINSURANCE COMPANY

New York, New York

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2011, the Subscribing Reinsurer subscribes a 50% share of the interests and liabilities of the Reinsurer as set forth in the MULTIPLE LINE PER RISK EXCESS OF LOSS REINSURANCE AGREEMENT.

The share(s) of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect of the said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to the said Agreement, and the interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

The provision for service of process set forth in the Service of Suit Article shall apply to the Subscribing Reinsurer, except that service of process shall be made upon General Counsel, SCOR Reinsurance Company, 199 Water Street, New York, NY 10038, and, where required by law, shall additionally be made upon the Superintendent, Commissioner, or Director of Insurance in the state of the Company's domicile. The provisions of this Service of Suit Article shall only aid, and not conflict with or override, the arbitration provisions in the Arbitration article.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interest and Liabilities Agreement to be executed by its duly authorized representative:

Signed in Itasca, Illinois, this 3rd day ofJune, 2011.

/s/ SCOR Reinsurance Company

SCOR REINSURANCE COMPANY

INTERESTS AND LIABILITIES AGREEMENT

in respect of the

MULTIPLE LINE PER RISK

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(hereinafter referred to collectively as the "Company")

and

AXIS REINSURANCE COMPANY

New York, New York

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2011, the Subscribing Reinsurer subscribes a 25% share of the Interests and Liabilities of the Reinsurer as set forth in the MULTIPLE LINE PER RISK EXCESS OF LOSS REINSURANCE AGREEMENT.

The share(s) of the Subscribing Reinsurer in the Interests and Liabilities of the Reinsurer in respect of the said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to the said Agreement, and the Interests and Liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the Interests and Liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interest and Liabilities Agreement to be executed by its duly authorized representative:

Signed in New York, New York, this 29th day ofJune, 2011.

/s/ Axis Reinsurance Company

AXIS REINSURANCE COMPANY

INTERESTS AND LIABILITIES AGREEMENT

in respect of the

MULTIPLE LINE PER RISK

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(hereinafter referred to collectively as the "Company")

and

HANNOVER RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT

Hannover, Germany

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective 12:01 a.m., Local Standard Time at the location of the risk, June 1, 2011, the Subscribing Reinsurer subscribes a 25% share of the Interests and Liabilities of the Reinsurer as set forth in the MULTIPLE LINE PER RISK EXCESS OF LOSS REINSURANCE AGREEMENT.

The share(s) of the Subscribing Reinsurer in the Interests and Liabilities of the Reinsurer in respect of the said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to the said Agreement, and the Interests and Liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the Interests and Liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interest and Liabilities Agreement to be executed by its duly authorized representative:

Signed in Hannover, Germany, this 9th day of June, 2011.

/s/ Hannover Ruckversicherungs-Aktiengesellschaft

HANNOVER RUCKVERSICHERUNGS-AKTIENGESELLSCHAFT

EX-10.14

Exhibit 10.14

REINSTATEMENT PREMIUM PROTECTION

REINSURANCE AGREEMENT

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

EFFECTIVE:June 1, 2011

EXPIRATION:June 1, 2012

REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT

ARTICLE	DESCRIPTION	PAGE
1	BUSINESS COVERED	1
2	TERM	1
3	CONCURRENCY OF CONDITIONS	2
4	PREMIUM	2
5	NOTICE OF LOSS AND LOSS SETTLEMENTS	3
6	LATE PAYMENTS	4
7	SALVAGE AND SUBROGATION	5
8	OFFSET	5
9	UNAUTHORIZED REINSURANCE	6
10	TAXES	8
11	CURRENCY	8
12	DELAY, OMISSION OR ERROR	8
13	ACCESS TO RECORDS	8
14	ARBITRATION	9
15	SERVICE OF SUIT	9
16	INSOLVENCY	10
17	THIRD PARTY RIGHTS	11
18	SEVERABILITY	11
19	CONFIDENTIALITY	11
20	ENTIRE AGREEMENT	11
21	CHOICE OF LAW AND JURISDICTION	12
22	INTERMEDIARY	12
23	NOTICES AND MODE OF EXECUTION	12

Attachments:

Schedule A - First and Second Reinstatement Premium Protection

Trust Agreement Requirements Clause

REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT

(hereinafter referred to as the “Agreement”)

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(hereinafter referred to collectively as the "Company")

and

the Subscribing Reinsurer(s) identified in the

Interests and Liabilities Contract(s)

attached to and forming part of this Agreement

(hereinafter referred to as the "Reinsurer")

ARTICLE 1 - BUSINESS COVERED

By this Agreement the Reinsurer agrees to indemnify the Company for 100% of any net reinstatement premium which the Company pays or becomes liable to pay as a result of loss occurrences commencing during the term of this Agreement under the provisions of, and as defined under, the First and Second Excess Layer of the Company's Property Catastrophe Excess of Loss Reinsurance Agreement (BMS Agreement No. B1CFHB008, Schedules A and B), effective June 1, 2011, including any amendments thereto(hereinafter referred to as the “Original Agreement”), subject to the terms, conditions and limitations hereinafter set forth.

ARTICLE 2 - TERM

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2011, with respect to reinstatement premium payable by the Company under the provisions of the Original Agreement as a result of losses arising out of loss occurrences commencing at or after that time and date, and shall remain in full force and effect until 12:01 a.m., Eastern Standard Time, June 1, 2012.

The Company may terminate or reduce a subscribing reinsurer's percentage share in this Agreement at any time by giving prior written notice to the subscribing reinsurer by certified mail in the event of any of the following:

1) The subscribing reinsurer's policyholders' surplus falls by 20% or more from the inception of this Agreement; or

2) A state insurance department or other legal authority orders the subscribing reinsurer to cease writing business; or

3) The Subscribing Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there has been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operation; or

4) The subscribing reinsurer has become merged with, acquired or controlled by any company, corporation, or individual(s) not controlling the subscribing reinsurer's operations previously; or

1) The subscribing reinsurer ceases assuming new and renewal property treaty reinsurance business; or

6) The subscribing reinsurer's A.M. Best or Standard and Poor's rating is downgraded below A-.

In the event the Company terminates or reduces a subscribing reinsurer's percentage share in accordance with this paragraph, the termination or reduction will be effective for losses arising out of loss occurrences commencing on or after the date of the written notice to the subscribing reinsurer, and the premium due to the Subscribing Reinsurer for any reduced percentage share for the Agreement Year will be reduced on a pro rata basis for the portion of the Agreement Year which is unexpired as of that date. Any return premium owed by the subscribing reinsurer in accordance with such a termination or reduction shall be payable as promptly as possible, but no later than 30 days following the effective date of reduction or termination. If a loss has been paid under this Agreement or a subscribing reinsurer's share is terminated after November 30, 2011, then no such return premium shall be made.

Should this Agreement expire while a loss covered hereunder is in progress, the Reinsurer shall be responsible for the loss in progress in the same manner and to the same extent it would have been responsible had the Agreement expired the day following the conclusion of the loss in progress.

ARTICLE 3 - CONCURRENCY OF CONDITIONS

It is agreed that this Agreement will follow the terms, conditions, exclusions, definitions, warranties and settlement of the Company under the Original Agreement, which are not inconsistent with the provisions of this Agreement.

The Company shall advise the Reinsurer of any material changes in the Original Agreement which may affect the liability of the Reinsurer under this Agreement.

ARTICLE 4 - PREMIUM

A. As premium for the reinsurance provided hereunder for the first and second excess layers in the Original Agreement for the term of this Agreement, the Company shall pay the Reinsurer the product of the following:

1. The factor, shown as “Reinstatement Factor” for that excess layer in Schedule A attached hereto;

2. The final adjusted rate on line for the corresponding excess layer under the Original Agreement times;

3. The final adjusted premium paid by the Company, if any, for the corresponding excess layer under the Original Agreement (subject to the minimum premium provisions set forth within the Original Agreement).

“Final adjusted rate on line” as used herein shall mean the final adjusted premium paid by the Company for the corresponding excess layer under the Original Agreement divided by the amount, shown as “Original Agreement Reinsurer's Per Occurrence Limit” for that excess layer in Schedule A attached hereto.

B. For each excess layer in Schedule A attached hereto, the Company shall pay the Reinsurer a deposit premium of the amount shown as “Deposit Premium” for that excess layer in Schedule A attached hereto. Such deposit premium is payable:

1. As respects “Excess Layer 1”, in one installment on July 1, 2011; and

2. As respects “Excess Layer 2”, in three installments in amounts equal to 33.33% of the deposit premium due at July 1, 2011, 33.33% due at October 1, 2011, and 33.34% due at January 1, 2012.

The final premium shall equal the adjusted deposit premium for that excess layer computed in accordance with paragraph C below, and is due as promptly as possible after the reinsurance premium for that excess layer under the Original Agreement has been finally determined. However, in the event this Agreement is terminated, there shall be no deposit premium installments due after the effective date of termination.

C.“Adjusted Deposit Premium” as used herein shall mean:

1. The premium due hereunder, computed in accordance with the paragraph A above; less

2. The first, second and third installments paid in accordance with paragraph B above.

D. As promptly as possible after the reinsurance premium under the Original Agreement has been finally determined, the Company shall provide a report to the Reinsurer setting forth the premium due, computed in accordance with the paragraph A above, and the adjusted deposit premium, computed in accordance with paragraph C above. In the event this Agreement is terminated prior to April 1, 2012, any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

E. At the beginning of each Agreement Quarter, the Company shall furnish the Reinsurer with such information as the Reinsurer may require to complete its Annual Convention Statement.

F. “Agreement Quarter” as used herein shall mean each of the following periods: June 1 through August 31 of 2011; September 1 through November 30 of 2011; December 1, 2011 through February 28, 2012; and March 1 through May 31 of 2012.

ARTICLE 5 - NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company shall notify the Reinsurer of all reinstatement premium settlements made by the Company under the Original Agreement. The Company will advise the Reinsurer of all subsequent developments relating to such claims that, in the opinion of the Company, may materially affect the position of the Reinsurer.

All reinstatement premium settlements made by the Company under the Original Agreement, provided they are within the terms of the Original Agreement and within the terms of this Agreement, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable as promptly as possible upon receipt of reasonable evidence of the amount paid (or scheduled to be paid) by the Company.

ARTICLE 6 - LATE PAYMENTS

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Agreement.

B. In the event any premium, loss or other payment due either party is not received by the Intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the LIBOR monthly on the first business day of the month for which the calculation is made; times

3.The amount past due, including accrued interest.

C. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

D. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 business days, interest will accrue on the payment or amount overdue in accordance with paragraph B of this Article, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked.

E. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

F. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense or control of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Agreement. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

ARTICLE 7 - SALVAGE AND SUBROGATION (BRMA 47E)

The Reinsurer shall be credited with salvage or subrogation recoveries (i.e., reimbursement obtained or recovery made by the Company, less loss adjustment expense incurred in obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder. Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights.

ARTICLE 8 - OFFSET (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any balance or amounts due from one party to the other under the terms of the Agreement. The party asserting the right of offset may exercise such right any time whether the balances due are on account of premiums or losses or otherwise.

ARTICLE 9 - UNAUTHORIZED REINSURANCE

A. This Article applies only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company's reserves.

B. The Company agrees, in respect of its Policies or bonds falling within the scope of this Agreement, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law, it shall forward to the Reinsurer a statement showing the proportion of such liabilities applicable to the Reinsurer. The "Reinsurer's Obligations" shall be defined as follows:

1.Unearned premium (if applicable);

2. Known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. Losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. Losses incurred but not reported from known Loss Occurrences and Loss Adjustment Expenses relating thereto;

5. All other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

C. The Reinsurer's Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves.

D. When funding by a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto. When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the provisions of this Agreement may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, for the following purposes, unless otherwise provided for in a separate Trust Agreement:

1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Agreement and that has not been otherwise paid;

2. To make refund of any sum that is in excess of the actual amount required to pay the Reinsurer's Obligations under this Agreement (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement);

3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets in the account that are in excess of the Reinsurer's Obligations (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement). If the assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer.

4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Agreement.

F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3), or in the case of E(4), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn, All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer.

G. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company.

H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:

1. If the statement shows that the Reinsurer's Obligations exceed the balance of the LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the statement, secure delivery to the Company of an amendment to the LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference.

2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of the LOC (or that 102% of the Reinsurer's Obligations are less than the trust account, balance if funding is provided by a Trust Agreement), as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess.

ARTICLE 10 - TAXES

The Company will be liable for taxes (except Federal Excise Tax) on premiums reported to the Reinsurer hereunder.

Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at Lloyd's London and other Reinsurers exempt from the Federal Excise Tax, who are domiciled outside the United States of America.

The Reinsurer has agreed to allow for the purposes of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium hereon, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 11 - CURRENCY

The currency to be used for all purposes of this Agreement shall be United States of America currency.

ARTICLE 12 - DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error in complying with the terms and conditions of this Agreement shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified immediately upon discovery.

ARTICLE 13 - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the Policy, accounting or claim files ("Records") relating to business reinsured under this Agreement during regular business hours after giving five working days' prior notice. This right shall be exercisable during the term of this Agreement or after the expiration of this Agreement. Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company, and the Company shall have no right to reimbursement under this Agreement if it fails or refuses to provide the access required by this Article other than by reason of the Reinsurer's failure to pay.

ARTICLE 14 - ARBITRATION (BRMA 6J)

As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Agreement, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Agreement as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Agreement from several to joint.

Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Agreement, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

ARTICLE 15 - SERVICE OF SUIT

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities).

It is agreed that in the event the Reinsurer fails to perform its obligations hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of any court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Contract, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Agreement.

ARTICLE 16 - INSOLVENCY

A. If more than one reinsured company is referenced within the definition of "Company" in the Preamble to this Agreement, this Article shall apply severally to each such company. Further, this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state's laws shall prevail.

B. In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

C. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this reinsurance Agreement as though such expense had been incurred by the Company.

D. As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, (except as provided by Section 4118 (a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New York law applies) or except (1) where the Agreement specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. Then, and in that event only, the Company, with the prior approval of the certificate of assumption on New York risks by the Superintendent of Insurance of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 17 - THIRD PARTY RIGHTS (BRMA 52C)

This Agreement is solely between the Company and the Reinsurer, and in no instance shall any other party have any rights under this Agreement, except as expressly provided otherwise in the INSOLVENCY ARTICLE.

ARTICLE 18 - SEVERABILITY

If any provision of this Agreement shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Agreement or the enforceability of such provision in any other jurisdiction.

ARTICLE 19 - CONFIDENTIALITY

For a period of three years following the termination or expiration of this Agreement, the contracting parties undertake to regard the terms of this Agreement (and any confidential, proprietary information relating thereto provided in writing to such other party) as confidential, with the parties to effect the same prudence and care afforded by such party to its own confidential, proprietary information. Each party further agrees that it shall not disclose any of such information to any third party without the prior written consent of the other party or except as may be required by applicable law or regulation, or by legal process (including without limitation as may be required by United States Federal tax law or regulation), or to the auditors, professional advisors, accountants, retrocessionaires, related managing general agents, directors or officers of such party with a reasonable need to know such information. Except as expressly set forth above, the parties agree and acknowledge that this Article is not intended to restrict or limit the conduct of the other party's current or proposed business.

ARTICLE 20 - ENTIRE AGREEMENT (BRMA 74B)

This Agreement constitutes the entire agreement between the parties. In no event shall this Agreement provide any guarantee of profit, directly or indirectly, from the Reinsurer to the Company or from the Company to the Reinsurer. This Agreement may be clarified, amended or modified only by written agreement signed by both parties. Such written agreement shall become part of this Agreement.

ARTICLE 21 - CHOICE OF LAW AND JURISDICTION

This Agreement shall be governed as to performance, administration and interpretation by the laws of the State of Florida exclusive of conflict of law rules. However, with respect to credit for reinsurance, the rules of all applicable states shall apply.

ARTICLE 22 - INTERMEDIARY

BMS Intermediaries Inc., is hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through BMS Intermediaries Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed only to constitute payment to the Company to the extent that such payments are actually received by the Company.

ARTICLE 23 - NOTICES AND MODE OF EXECUTION

Whenever a notice, statement, report or any other written communication is required by this Agreement, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable.

The use of any of the following shall constitute a valid execution of this Agreement or any amendments thereto:

A. Paper documents with an original ink signature;

B. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

C. Electronic records with an electronic signature made via an electronic agent. For the purposes of this Agreement, the terms “electronic record,” “electronic signature” and “electronic agent” shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

This Agreement may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Signed in St. Petersburg, Florida, this 9th day of June, 2011.

For and on behalf of the Company:

/s/ Donald J. Cronin

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

SCHEDULE A

REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT

Effective: June 1, 2011

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

ORIGINAL AGREEMENT	Excess Layer 1	Excess Layer 2
Original Agreement Retention	$25,000,000	$45,156,870
Original Agreement Reinsurer's Per Occurrence Limit	$20,156,870	$72,389,610
Original Agreement Reinsurer's Agreement Limit	$40,313,740	$144,779,220
Original Agreement Minimum Premium	$6,933,963.20	$19,834,752.80
Original Agreement Deposit Premium	$8,667,454	$24,793,441
Original Agreement Exposure Rate	0.0217%	0.062%
REINSTATEMENT PREMIUM PROTECTION
RPP Agreement Reinsurer's Limit	$8,667,454	$24,793,441
RPP Provisional Rate on Line*	51.17%	40.76%
RPP Reinstatement Factor	1.19	1.19
RPP Deposit Premium	$4,435,136	$10,105,807

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer in the percentage share for that excess layer expressed in its Interests and Liabilities Contract attached hereto.

*The Provisional Rate on Line is used only to calculate the deposit premium and shall be disregarded when calculating the reinsurance premium due in accordance with the provisions of the Premium Article.

TRUST AGREEMENT REQUIREMENTS CLAUSE

A. Except as provided in paragraph B. of this Clause, if the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

2. Stipulates that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the types permitted by the regulatory authorities having jurisdiction over the Company's reserves, or any combination of the three, provided that the investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Reinsurer or the Company;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the Company, or the trustee upon the direction of the Company, may whenever necessary negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the Company or the Reinsurer.

B. If a ceding insurer is domiciled in California and the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Provides that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States financial institution as defined in California Insurance Code Section 922.7(a) and payable in United States dollars, and investments permitted by the California Insurance Code, or any combination of the above;

2. Provides that investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

C. If there are multiple ceding insurers that collectively comprise the Company, "regulatory authorities" as referenced in subparagraph A(2) above, shall mean the individual ceding insurer's domestic regulator. If such ceding insurer is subject to the commercial domicile laws or regulations of another state, such laws or regulations shall apply to the extent not in conflict with those of such ceding insurer's domicile.

INTERESTS AND LIABILITIES CONTRACT

In respect of the

REINSATATEMENT PREMIUM PROTECTION

REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

RENAISSANCE REINSURANCE LTD.

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the Interests and liabilities of the Reinsurer as set forth in the REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT as set forth below:

FIRST LAYER REINSTATEMENT PREMIUM PROTECTION - 59.40%

SECOND LAYER REINSTATEMENT PREMIUM PROTECTION - 38.40%

The share of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 21st day of June, 2011.

/s/ Renaissance Reinsurance Ltd.

RENAISSANCE REINSURANCE LTD.

INTERESTS AND LIABILITIES CONTRACT

In respect of the

REINSATATEMENT PREMIUM PROTECTION

REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

DAVINCI REINSURANCE LTD.

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the Interests and liabilities of the Reinsurer as set forth in the REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT as set forth below:

FIRST LAYER REINSTATEMENT PREMIUM PROTECTION - 39.60%

SECOND LAYER REINSTATEMENT PREMIUM PROTECTION - 25.60%

The share of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 21st day of June, 2011.

/s/ DaVinci Reinsurance Ltd.

DAVINCI REINSURANCE LTD.

INTERESTS AND LIABILITIES CONTRACT

In respect of the

REINSATATEMENT PREMIUM PROTECTION

REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

HISCOX INSURANCE COMPANY (BERMUDA) LTD

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the Interests and liabilities of the Reinsurer as set forth in the REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT as set forth below:

FIRST LAYER REINSTATEMENT PREMIUM PROTECTION - 1.00%

SECOND LAYER REINSTATEMENT PREMIUM PROTECTION - 1.00%

The share of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 13th day of June, 2011.

/s/ Hiscox Insurance Company (Bermuda) Ltd

HISCOX INSURANCE COMPANY (BERMUDA) LTD

INTERESTS AND LIABILITIES CONTRACT

In respect of the

REINSATATEMENT PREMIUM PROTECTION

REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, FL

Including any and/or all companies that are or may hereafter become affiliated therewith

(hereafter referred to collectively as the "Company")

and

TORUS INSURANCE LIMITED

Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011 the Subscribing Reinsurer subscribes a share of the Interests and liabilities of the Reinsurer as set forth in the REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT as set forth below:

FIRST LAYER REINSTATEMENT PREMIUM PROTECTION - 0.00%

SECOND LAYER REINSTATEMENT PREMIUM PROTECTION - 5.00%

The share of the Subscribing Reinsurer in the Interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the Interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized officer:

Signed in Hamilton, Bermuda, this 18th day of June, 2011.

/s/ Torus Insurance Limited

TORUS INSURANCE LIMITED

EX-10.15

Exhibit 10.15

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

UNITED PROPERTY & CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

EFFECTIVE:June 1, 2011

EXPIRATION:June 1, 2012

PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT

ARTICLE	DESCRIPTION	PAGE
1	BUSINESS COVERED	1
2	RETENTION AND LIMIT	1
3	TERM	1
4	TERRITORY	2
5	EXCLUSIONS	2
6	DEFINITIONS	4
7	NET RETAINED LINES	7
8	OTHER REINSURANCE	8
9	PREMIUM	8
10	REINSTATEMENT	9
11	NOTICE OF LOSS AND LOSS SETTLEMENTS	9
12	SALVAGE AND SUBROGATION	9
13	OFFSET	10
14	UNAUTHORIZED REINSURANCE	10
15	TAXES	12
16	CURRENCY	12
17	DELAY, OMISSION OR ERROR	12
18	ACCESS TO RECORDS	12
19	ARBITRATION	13
20	SERVICE OF SUIT	13
21	INSOLVENCY	14
22	THIRD PARTY RIGHTS	15
23	SEVERABILITY	15
24	CONFIDENTIALITY	15
25	ENTIRE AGREEMENT	15
26	CHOICE OF LAW AND JURISDICTION	15
27	INTERMEDIARY	15
28	NOTICES AND MODE OF EXECUTION	16
Attachments: Schedule A -Property Catastrophe Excess of Loss Reinsurance Nuclear Incident Exclusion Clause ‑ Physical Damage ‑ Reinsurance - USA Terrorism Exclusion Clause (NMA2930c)

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

(hereinafter referred to as the “Agreement”)

between

UNITED PROPERTY & CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

(hereinafter referred to collectively as the "Company")

and

UPC Re

(hereinafter referred to as the "Reinsurer")

ARTICLE 1 - BUSINESS COVERED

This Agreement is to indemnify the Company in respect of its net excess liability which may accrue to the Company under any policies, contracts or binders of insurance or reinsurance (hereinafter called “Policies”) in force at the effective time and date hereof or issued or renewed at or after that time and date with effective dates during the term of this Agreement, by or on behalf of the Company, and classified by the Company as Property Business, including but not limited to Homeowners and Condominium Owners, including Earthquake on those policies issued in South Carolina, subject to the terms and conditions herein contained. 

ARTICLE 2- RETENTION AND LIMIT

The Reinsurer will be liable in respect of each and every Loss Occurrence, for the Ultimate Net Loss over and above an initial Ultimate Net Loss of $10,000,000 each and every Loss Occurrence, subject to a limit a liability to the Reinsurer of $5,000,000 each and every Loss Occurrence.

ARTICLE 3 - TERM

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2011, with respect to losses arising out of Loss Occurrences commencing at or after that time and date, and shall remain in full force and effect until 12:01 a.m., Eastern Standard Time, June 1, 2012.

The Company may terminate this Agreement at any time by giving prior written notice to the Reinsurer by certified mail.

In the event the Company terminates this agreement, the termination will be effective for losses occurring on or after the date of the written notice to the Reinsurer, and the premium due to the Reinsurer will be reduced on a pro rata basis for the portion of the Agreement Year which is unexpired as of that date. Any return premium owed by the Reinsurer in accordance with such a termination shall be payable as promptly as possible, but no later than 30 days following the effective date of termination. If a loss has been paid under this Agreement or the Reinsurer's share is terminated after November 30, 2011, then no such return premium shall be made.

Should this Agreement expire while a loss covered hereunder is in progress, the Reinsurer shall be responsible for the loss in progress in the same manner and to the same extent it would have been responsible had the Agreement expired the day following the conclusion of the loss in progress.

ARTICLE 4 - TERRITORY

This Agreement shall follow the territorial limits of the Company's original Policies.

ARTICLE 5 - EXCLUSIONS

This Agreement does not apply to and specifically excludes the following:

A. Reinsurance assumed, except as respects the following: Reinsurance assumed as a result of the depopulation of the Citizens Property and Casualty Insurance Company and any successor organisation of this entity and/or any reinsurance assumed from Private Carriers as a result of depopulations.

B. Financial guarantee and/or insolvency.

C. Third party liability and medicalpayments business.

D. Liability as a member, subscriber or reinsurer of any Pool, Syndicate or Association; and any combination of insurers or reinsurers formed for the purpose of covering specific perils, specific classes of business or for the purpose of insuring risks located in specific geographical areas and any assessments from Citizens Property and Casualty Insurance Company and any successor organisation of this entity.

E. All liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meetany claim, debt, charge, fee or other obligation in whole or in part.

F. Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the Florida Hurricane Catastrophe Fund.

G. All Accident and Health, Fidelity, Surety, Boiler and Machinery, Workers' Compensation and Credit business.

H. AllOcean Marine business.

I. Flood and/or earthquake when written as such, except for earthquake business issued in South Carolina.

J. Difference in Conditions insurances and similar kinds of insurances, however styled, insofar as they may provide coverage for losses from the following causes:

1) Flood, surface water, waves, tidal water or tidal waves, overflow of streams or other bodies of water or spray from any of the foregoing, all whether wind‑driven or not, except when covering property in transit; or

2) Earthquake, landslide, subsidence or other earth movement or volcanic eruption, except when covering property in transit.

K. Mortgage Impairment insurances and similar kinds of insurances, however styled.

L. All Automobile Business.

M. Loss or damage directly or indirectly occasioned by, happening through or in consequences of war, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, military or usurped power, or confiscation or nationalisation or requisition or destruction of or damage to property by or under the order of any government or public or local authority.

N. Loss and/or Damage and/or Costs and/or Expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude any payment of the cost of removal of debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25% of the Company's property loss under the applicable original Policy.

O. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause ‑ Physical Damage Reinsurance" attached to and forming part of this Agreement.

P. All liability arising out of mold, spores and/or fungus but this exclusion shall not apply to those losses which follow as a direct result of a loss caused by a peril otherwise covered hereunder.

Q. Terrorism, in accordance with NMA2930c, attached hereto.

ARTICLE 6 - DEFINITIONS

A. The term “Loss Occurrence” shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one Loss Occurrence shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event except that the term Loss Occurrence shall be further defined as follows:

(i) As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 96 consecutive hours arising out of and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto.

(ii) As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an insured's premises by strikers, provided such occupation commenced during the aforesaid period.

(iii) As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the opening paragraph of this Article) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's Loss Occurrence.

(iv) As regards freeze, only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may be included in the Company's Loss Occurrence.

For all Loss Occurrences, other than (ii) above, the Company may choose the date and time when any such period of consecutive hours commences provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any “Loss Occurrence” referred to in sub-paragraph (i) above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event.

As respects those Loss Occurrences referred to in (ii) above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more Loss Occurrences provided no two periods overlap and no individual loss is included in more than one such period and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

No individual losses occasioned by an event that would be covered by the 72 hours clause, may be included in any loss occurrence claimed under the 96 hours clause, nor may individual losses occasioned by an event that would be covered by either the 72 or 96 hours clauses, be included in any “Loss Occurrence” claimed under the 168 hours provision.

Losses directly or indirectly occasioned by:

(i) loss of, alteration of, or damage to, or

(ii) a reduction in the functionality, availability or operation of

a computer system, hardware, programme, software, data, information repository, microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the policyholder of the Company or not, do not in and of themselves constitute an event unless arising out of one or more of the following perils:

fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami, flood, freeze or weight of snow.

Any date change, including leap year calculations, shall not in and of itself be regarded as a loss occurrence for the purposes of this Agreement.

B. The term “Ultimate Net Loss” as used herein is defined as the sum or sums (including 90% of any Extra Contractual Obligations and/or 90% of any Loss In Excess of Policy Limits, and any Loss Adjustment Expenses as hereinafter defined, provided there is an indemnity loss hereunder, and any Loss Adjustment Expense/fair rental value unrecoverable from the FHCF) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Agreement are not recoverable until the Company's Ultimate Net Loss has been ascertained.

C. The terms “Loss In Excess of Policy Limits” and “Extra Contractual Obligations” as used herein shall be defined as follows:

1. “Loss In Excess of Policy Limits” shall mean any amount paid or payable by the Company in excess of its Policy limits, but otherwise within the terms of its Policy, as a result of an action against it by its insured or its insured's assignee to recover damages the insured is legally obligated to pay because of the Company's alleged or actual negligence or bad faith in rejecting a settlement within Policy limits, or in discharging its duty to defend or prepare the defense in the trial of an action against its insured, or in discharging its duty to prepare or prosecute an appeal consequent upon such an action.

2. “Extra Contractual Obligations” shall mean any punitive, exemplary, compensatory or consequential damages, other than Loss In Excess of Policy Limits, paid or payable by the Company as a result of an action against it by its insured or its insured's assignee, which action alleges negligence or bad faith on the part of the Company in handling a claim under a policy subject to this Agreement.

An Extra Contractual Obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the Policy and shall constitute part of the original loss.

Notwithstanding anything stated herein, this Agreement shall not apply to any Loss In Excess of Policy Limits or any Extra Contractual Obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense, settlement of any claim covered hereunder.

Savings Clause (Applicable only if the Reinsurer is domiciled in the State of New York): In no event shall coverage be provided to the extent that such coverage is not permitted under New York law.

D. The term “Loss Adjustment Expense” as used herein shall mean expenses allocable to the investigation, appraisal, adjustment, settlement, litigation, defense and/or appeal of specific claims reinsured hereunder, regardless of how such expenses are classified for statutory reporting purposes. Loss Adjustment Expense shall include, but not be limited to, Loss Adjustment Expense not recoverable from the FHCF, interest on judgments, expenses of outside adjusters, and a pro rata share of the salaries and expenses of the Company's field employees according to the time occupied adjusting such losses, but excluding salaries of the Company's officials and any normal overhead charges, and excluding Declaratory Judgment Expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto.

E. The term “Declaratory Judgment Expense” as used herein shall mean the Company's own costs and legal expense incurred in direct connection with declaratory judgment actions brought to determine the Company's defense and/or indemnification obligations that are assignable to specific claims arising out of policies reinsured by this Agreement, regardless of whether the declaratory judgment action is considered successful or unsuccessful. Any Declaratory Judgment Expense will be deemed to have been incurred by the Company on the date of the original loss, if any, giving rise to the declaratory judgment action.

F. The term “Agreement Year” as used herein shall be defined as the period from 12:01 a.m., Eastern Standard Time, June 1, 2011, until 12:01 a.m., Eastern Standard Time, June 1, 2012. However, if this Agreement is terminated, Agreement Year as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, June 1, 2011 through the effective date of termination.

ARTICLE 7 - NET RETAINED LINES

This Agreement applies only to that portion of any insurances or reinsurances covered by this Agreement which the Company retains net for its own account (prior to deduction of any underlying reinsurance), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Agreement attaches, only loss or losses in respect of that portion of any insurances or reinsurances which the Company retains net for its own account shall be included.

It is understood and agreed that the amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurers, whether specific or general, any amounts which may have become due from them, whether such inability arises from the insolvency of such other reinsurers or otherwise.

ARTICLE 8 - OTHER REINSURANCE

The Company shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Company and shall be entirely disregarded in applying all of the provisions of this Agreement.

ARTICLE 9 - PREMIUM

A. As premium for each excess layer of reinsurance coverage provided by this Agreement, the Company shall pay the Reinsurer the greater of the following:

1. The amount, shown as “Minimum Premium” for that excess layer in the Schedules attached hereto; or

2. The percentage, shown as “provisional rate” for that excess layer in the Schedules attached hereto to the Company's Total Insurance Values (“TIV”) in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium Business as at September 30, 2011.

B. The Company shall pay the Reinsurer a deposit premium for each excess layer of the amount, shown as “Deposit Premium” for that excess layer in the Schedules attached hereto, which is payable in three installments. The three installments shall be amounts equal to 33.33% of “Deposit Premium” for that excess layer due at July 1, 2011, 33.33% due at October 1, 2011, and 33.34% due at January 1, 2012. However, in the event this Agreement is terminated, there shall be no deposit premium installments due after the effective date of termination.

C.“Adjusted deposit premium” as used herein shall mean:

1. The premium due hereunder for each excess layer, computed in accordance with paragraph A above; less

2. The first, second and third installments paid for each excess layer in accordance with paragraph B above.

D. No later than April 1, 2012 (or the date of termination in the event this Agreement is terminated prior to April 1, 2012), the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for each excess layer, computed in accordance with paragraph A above, and the adjusted deposit premium for each excess layer, computed in accordance with paragraph C above. In the event this Agreement is terminated prior to April 1, 2012, any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as at September 30, 2011 increase 10% or less than 10% of $39,986,886,759, there will be no additional premium due the Reinsurer. Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as at September 30, 2011 increase more than 10% of $39,986,886,759, the Company shall pay additional premium as determined by the provisional rate for each excess layer applied to the amount of TIV in excess of 10% of $39,986,886,759.

Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as at September 30, 2011 decrease less than 5% of $39,986,886,759, the Reinsurer shall not return any premium as determined by the provisional rate for each excess layer applied to the amount of TIV. Should the TIV in force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium business as of September 30, 2011 decrease by 5% or more of $39,986,886,759, the Reinsurer shall return 100% of the premium as determined by the provisional rate for each excess layer applied to the amount of TIV as of September 30, 2011, subject to the minimum premium in accordance with paragraph A. 1. above.

ARTICLE 10 - REINSTATEMENT

Each claim hereon reduces the amount of indemnity under this Agreement from the time of occurrence of the loss, and such amounts are not reinstated. The Reinsurer's liability hereunder shall never exceed $5,000,000 for any one Loss Occurrence nor $5,000,000 for all Loss Occurrences during the term of this Agreement.

ARTICLE 11 - NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company shall notify the Reinsurer promptly of all claims which, in the opinion of the Company, may involve the Reinsurer, and of all subsequent developments regarding these claims which may materially affect the position of the Reinsurer. The notification shall be made in the form of a report, submitted no less frequently than on a quarterly basis, that details losses paid and the expected Ultimate Net Losses for each claim related to a Loss Occurrence subject to this Agreement.

All loss settlements made by the Company, provided they are within the terms of the Company's original Policies and of this Agreement, shall be binding upon Reinsurer, and amounts falling to the share of Reinsurer shall be payable without delay upon reasonable evidence of the amount being given by the Company.

ARTICLE 12 - SALVAGE AND SUBROGATION (BRMA 47E)

The Reinsurer shall be credited with salvage or subrogation recoveries (i.e., reimbursement obtained or recovery made by the Company, less loss adjustment expense incurred in obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder. Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights.

ARTICLE 13 - OFFSET (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any balance or amounts due from one party to the other under the terms of the Agreement. The party asserting the right of offset may exercise such right any time whether the balances due are on account of premiums or losses or otherwise.

ARTICLE 14 - UNAUTHORIZED REINSURANCE

A. This Article applies only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company's reserves.

B. The Company agrees, in respect of its Policies or bonds falling within the scope of this Agreement, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law, it shall forward to the Reinsurer a statement showing the proportion of such liabilities applicable to the Reinsurer. The "Reinsurer's Obligations" shall be defined as follows:

1.Unearned premium (if applicable);

2. Known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. Losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. Losses incurred but not reported from known Loss Occurrences and Loss Adjustment Expenses relating thereto;

5. All other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

C. The Reinsurer's Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves.

D. When funding by a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto. When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the provisions of this Agreement may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, for the following purposes, unless otherwise provided for in a separate Trust Agreement:

1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Agreement and that has not been otherwise paid;

2. To make refund of any sum that is in excess of the actual amount required to pay the Reinsurer's Obligations under this Agreement (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement);

3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets in the account that are in excess of the Reinsurer's Obligations (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement). If the assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer.

4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Agreement.

F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3), or in the case of E(4), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn, All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer.

G. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company.

H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:

1. If the statement shows that the Reinsurer's Obligations exceed the balance of the LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the statement, secure delivery to the Company of an amendment to the LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference.

2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of the LOC (or that 102% of the Reinsurer's Obligations are less than the trust account, balance if funding is provided by a Trust Agreement), as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess.

ARTICLE 15 - TAXES

The Company will be liable for taxes (except Federal Excise Tax) on premiums reported to the Reinsurer hereunder.

Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at Lloyd's London and other Reinsurers exempt from the Federal Excise Tax, who are domiciled outside the United States of America.

The Reinsurer has agreed to allow for the purposes of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 16 - CURRENCY

The currency to be used for all purposes of this Agreement shall be United States of America currency.

ARTICLE 17 - DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified immediately upon discovery.

ARTICLE 18 - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the Policy, accounting or claim files ("Records") relating to business reinsured under this Agreement during regular business hours after giving five working days' prior notice. This right shall be exercisable during the term of this Agreement or after the expiration of this Agreement. Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company and the Company shall have no right to reimbursement under this Agreement if it fails or refuses to provide the access required by this Article other than by reason of the Reinsurer's failure to pay such undisputed amounts.

ARTICLE 19 - ARBITRATION (BRMA 6J)

As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Agreement, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Agreement as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Agreement from several to joint.

Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Agreement, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

ARTICLE 20 - SERVICE OF SUIT

It is agreed that in the event of the failure of the Reinsurer to pay any amount claimed to be due hereunder, the Reinsurer hereon, at the request of the Company, will submit to the jurisdiction of any court of competent jurisdiction within the Cayman Islands. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the Cayman Islands. It is further agreed that service of process in such suit may be made upon Sagicor Insurance Managers, 1st Floor Harbour Place, 103 South Church Street, Georgetown, Grand Cayman, Cayman Islands.

ARTICLE 21 - INSOLVENCY

In the event of the insolvency of the Company, the reinsurance under this Agreement shall be payable by the Reinsurer to the Company or its liquidator, receiver or statutory successor on the basis of the liability of the Company under the original Policy or Policies reinsured, without diminution because of the insolvency of the Company.

If the Company should become insolvent, then the liquidator, receiver or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of any claim against the Company which is likely to produce a loss under this Agreement within a reasonable time after such claim is filed in the insolvency proceeding; during the pendency of such claim, the Reinsurer under this Agreement may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses which the Reinsurer may deem available to the Company or its liquidator or receiver or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to court approval, against the insolvent Company as part of the expense of liquidation to the extent of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

If those Reinsurers subscribing a majority participation in this Agreement elect to interpose defense to a claim, the expense shall be apportioned in accordance with the terms of this Agreement as though such expenses had been incurred by the Company.

Should the Company go into liquidation or should a receiver be appointed the Reinsurer shall be entitled to deduct from any sums which may be due or may become due to the Company under this Agreement, any sums which are due to the Reinsurer by the Company under this Agreement and which are due at a fixed or stated date, as well as any other sums due to the Reinsurer which are permitted to be offset under applicable law.

ARTICLE 22 - THIRD PARTY RIGHTS (BRMA 52C)

This Agreement is solely between the Company and the Reinsurer, and in no instance shall any other party have any rights under this Agreement, except as expressly provided otherwise in the INSOLVENCY ARTICLE.

ARTICLE 23 - SEVERABILITY

If any provision of this Agreement shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Agreement or the enforceability of such provision in any other jurisdiction.

ARTICLE 24 - CONFIDENTIALITY

For a period of three years following the termination or expiration of this Agreement, the contracting parties undertake to regard the terms of this Agreement (and any confidential, proprietary information relating thereto provided in writing to such other party) as confidential, with the parties to effect the same prudence and care afforded by such party to its own confidential, proprietary information. Each party further agrees that it shall not disclose any of such information to any third party without the prior written consent of the other party or except as may be required by applicable law or regulation, or by legal process (including without limitation as may be required by United States Federal tax law or regulation), or to the auditors, professional advisors, accountants, retrocessionaires, related managing general agents, directors or officers of such party with a reasonable need to know such information. Except as expressly set forth above, the parties agree and acknowledge that this Article is not intended to restrict or limit the conduct of the other party's current or proposed business.

ARTICLE 25 - ENTIRE AGREEMENT (BRMA 74B)

This Agreement constitutes the entire agreement between the parties. In no event shall this Agreement provide any guarantee of profit, directly or indirectly, from the Reinsurer to the Company or from the Company to the Reinsurer. This Agreement may be clarified, amended or modified only by written agreement signed by both parties. Such written agreement shall become part of this Agreement.

ARTICLE 26 - CHOICE OF LAW AND JURISDICTION

This Agreement shall be governed by the laws of the Cayman Islands and shall be subject to the jurisdiction of the courts of Grand Cayman (subject to the provisions of SERVICE OF SUIT ARTICLE).

ARTICLE 27 - INTERMEDIARY

United Insurance Managers, Inc., is hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through United Insurance Managers, Inc., 360 Central Avenue, Suite 900, St. Petersburg, FL 33701. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed only to constitute a payment to the Company to the extent that such payments are actually received by the Company.

ARTICLE 28 - NOTICES AND MODE OF EXECUTION

Whenever a notice, statement, report or any other written communication is required by this Agreement, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable.

The use of any of the following shall constitute a valid execution of this Agreement or any amendments thereto:

A. Paper documents with an original ink signature;

B. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

C. Electronic records with an electronic signature made via an electronic agent. For the purposes of this Agreement, the terms “electronic record,” “electronic signature” and “electronic agent” shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

This Agreement may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Signed in St. Petersburg, Florida, this 14th day of July, 2011.

For and on behalf of the Company:

/s/ Donald J. Cronin

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

SCHEDULE A

Property Catastrophe Excess of Loss Reinsurance

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

This Schedule is attached to and forms a part of the Property Catastrophe Excess of Loss Reinsurance Agreement and sets out specific terms, conditions and participating Reinsurers for the Company's First Property Catastrophe Excess of Loss Reinsurance.

Premium

The Company shall pay the Reinsurer a Deposit Premium of $3,500,000 in accordance with the PREMIUM ARTICLE of this Agreement. The Deposit Premium shall be adjusted in accordance with the PREMIUM ARTICLE of this Agreement, by a rate of 0.00875287% applied to the Company's Total Insurance Values in-force for Coverages A, B, C and D in respect of the Company's Florida and South Carolina Homeowners/Dwelling/Condominium Business (“TIV”) as at September 30, 2011 subject to a minimum premium of $2,800,000. (Minimum premium to be 80% of the developed Deposit Premiums which are in turn based on TIV at September 30, 2011 of $39,986,886,759.)

NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL-DAMAGE - REINSURANCE - U.S.A.

1. This Agreement does not cover any loss or liability accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Agreement does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I.Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor, installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operation of paragraphs (1) and (2) hereof, this Agreement does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate.

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where the said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However, on and after 1st January, 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operation of paragraphs (1), (2) and (3) hereof, this Agreement does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7.Reassured to be sole judge of what constitutes:

(a)substantial quantities, and

(b)the extent of installation, plant or site.

Note - Without in any way restricting the operation of paragraph (I) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

In accordance with NMA 1119 (12/12/57)

TERRORISM EXCLUSION

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this reinsurance agreement or any endorsement thereto, it is agreed that this reinsurance agreement excludes loss, damage, cost, or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence thegovernment de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or government(s) de jure or de facto, and which:

(i)involves violence against one or more persons; or

(ii)involves damage to property; or

(iii)endangers life other than that of the person committing the action; or

(iv)creates a risk to health or safety of the public or a section of the public; or

(v)is designed to interfere with or to disrupt an electronic system.

This reinsurance agreement also excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against, or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this reinsurance agreement, in respect only of personal lines this reinsurance agreement will pay actual loss or damage (but not related cost or expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from, or arising out of or in connection with biological, chemical, radioactive, or nuclear pollution or contamination or explosion.

NMA2930c

22/11/02

Form approved by Lloyd's Market Association [Non-Marine]

INTERESTS AND LIABILITIES CONTRACT

in respect of the

PROPERTY CATASTROPHE

EXCESS OF LOSS REINSURANCE AGREEMENT

Effective June 1, 2011

between

UNITED PROPERTY & CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

(hereinafter referred to collectively as the "Company")

and

UPC Re

Grand Cayman

(hereinafter referred to as the "Subscribing Reinsurer")

It is hereby agreed by and between the Company, of the one part, and the Subscribing Reinsurer, of the other part, that effective at 12:01 a.m., Eastern Standard Time, June 1, 2011, the Subscribing Reinsurer subscribes a share of the interests and liabilities of the Reinsurer as set forth in the PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect of said Agreement shall be separate and apart from the shares of the other reinsurers subscribing to said Agreement, and the interests and liabilities of the Subscribing Reinsurer shall not be joint with those of the other reinsurers, and the Subscribing Reinsurer in no event shall participate in the interests and liabilities of the other reinsurers subscribing hereon.

IN WITNESS WHEREOF, the Subscribing Reinsurer hereto has caused this Interests and Liabilities Contract to be executed by its duly authorized representative:

Signed in Grand Cayman, this 14th day of July, 2011.

/s/ Donald J. Cronin

UPC Re

EX-10.16

Exhibit 10.16

REINSTATEMENT PREMIUM PROTECTION

REINSURANCE AGREEMENT

UNITED PROPERTY & CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

EFFECTIVE:June 1, 2011

EXPIRATION:June 1, 2012

REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT

ARTICLE	DESCRIPTION	PAGE
1	BUSINESS COVERED	1
2	TERM	1
3	CONCURRENCY OF CONDITIONS	2
4	PREMIUM	2
5	NOTICE OF LOSS AND LOSS SETTLEMENTS	3
6	LATE PAYMENTS	4
7	SALVAGE AND SUBROGATION	5
8	OFFSET	5
9	UNAUTHORIZED REINSURANCE	6
10	TAXES	8
11	CURRENCY	8
12	DELAY, OMISSION OR ERROR	8
13	ACCESS TO RECORDS	8
14	ARBITRATION	9
15	SERVICE OF SUIT	9
16	INSOLVENCY	10
17	THIRD PARTY RIGHTS	11
18	SEVERABILITY	11
19	CONFIDENTIALITY	11
20	ENTIRE AGREEMENT	11
21	CHOICE OF LAW AND JURISDICTION	12
22	INTERMEDIARY	12
23	NOTICES AND MODE OF EXECUTION	12

Attachments:

Schedule A - Second Reinstatement Premium Protection

Trust Agreement Requirements Clause

REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT

(hereinafter referred to as the “Agreement”)

between

UNITED PROPERTY & CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(hereinafter referred to collectively as the "Company")

and

UPC Re

(hereinafter referred to as the "Reinsurer")

ARTICLE 1 - BUSINESS COVERED

By this Agreement the Reinsurer agrees to indemnify the Company for 30% of any net reinstatement premium which the Company pays or becomes liable to pay as a result of loss occurrences commencing during the term of this Agreement under the provisions of, and as defined under, the Second Excess Layer of the Company's Property Catastrophe Excess of Loss Reinsurance Agreement (BMS Agreement No. B1CFHB008, Schedule B), effective June 1, 2011, including any amendments thereto(hereinafter referred to as the “Original Agreement”), subject to the terms, conditions and limitations hereinafter set forth.

ARTICLE 2 - TERM

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2011, with respect to reinstatement premium payable by the Company under the provisions of the Original Agreement as a result of losses arising out of loss occurrences commencing at or after that time and date, and shall remain in full force and effect until 12:01 a.m., Eastern Standard Time, June 1, 2012.

The Company may terminate or reduce the reinsurer's percentage share in this Agreement at any time by giving prior written notice to the subscribing reinsurer by certified mail in the event of any of the following:

1) The Reinsurer's policyholders' surplus falls by 20% or more from the inception of this Agreement; or

2) A state insurance department or other legal authority orders the Reinsurer to cease writing business; or

3) The Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there has been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operation; or

4) The Reinsurer has become merged with, acquired or controlled by any company, corporation, or individual(s) not controlling the subscribing reinsurer's operations previously; or

5) The Reinsurer ceases assuming new and renewal property treaty reinsurance business; or

6) The subscribing reinsurer's A.M. Best or Standard and Poor's rating is downgraded below A-.

In the event the Company terminates or reduces the Reinsurer's percentage share in accordance with this paragraph, the termination or reduction will be effective for losses arising out of loss occurrences commencing on or after the date of the written notice to the subscribing reinsurer, and the premium due to the Reinsurer for any reduced percentage share for the Agreement Year will be reduced on a pro rata basis for the portion of the Agreement Year which is unexpired as of that date. Any return premium owed by the subscribing reinsurer in accordance with such a termination or reduction shall be payable as promptly as possible, but no later than 30 days following the effective date of reduction or termination. If a loss has been paid under this Agreement or a subscribing reinsurer's share is terminated after November 30, 2011, then no such return premium shall be made.

Should this Agreement expire while a loss covered hereunder is in progress, the Reinsurer shall be responsible for the loss in progress in the same manner and to the same extent it would have been responsible had the Agreement expired the day following the conclusion of the loss in progress.

ARTICLE 3 - CONCURRENCY OF CONDITIONS

It is agreed that this Agreement will follow the terms, conditions, exclusions, definitions, warranties and settlement of the Company under the Original Agreement, which are not inconsistent with the provisions of this Agreement.

The Company shall advise the Reinsurer of any material changes in the Original Agreement which may affect the liability of the Reinsurer under this Agreement.

ARTICLE 4 - PREMIUM

A. As premium for the reinsurance provided hereunder for the second excess layer in the Original Agreement for the term of this Agreement, the Company shall pay the Reinsurer the product of the following:

1. The factor, shown as “Reinstatement Factor” for that excess layer in Schedule A attached hereto;

2. The final adjusted rate on line for the corresponding excess layer under the Original Agreement times;

3. The final adjusted premium paid by the Company, if any, for the corresponding excess layer under the Original Agreement (subject to the minimum premium provisions set forth within the Original Agreement).

“Final adjusted rate on line” as used herein shall mean the final adjusted premium paid by the Company for the corresponding excess layer under the Original Agreement divided by the amount, shown as “Original Agreement Reinsurer's Per Occurrence Limit” for that excess layer in Schedule A attached hereto.

B. For each excess layer in Schedule A attached hereto, the Company shall pay the Reinsurer a deposit premium of the amount shown as “Deposit Premium” for that excess layer in Schedule A attached hereto. Such deposit premium is payable in three installments in amounts equal to 33.33% of the deposit premium due at July 1, 2011, 33.33% due at October 1, 2011, and 33.34% due at January 1, 2012.

C.“Adjusted Deposit Premium” as used herein shall mean:

1. The premium due hereunder, computed in accordance with the paragraph A above; less

2. The first, second and third installments paid in accordance with paragraph B above.

D. As promptly as possible after the reinsurance premium under the Original Agreement has been finally determined, the Company shall provide a report to the Reinsurer setting forth the premium due, computed in accordance with the paragraph A above, and the adjusted deposit premium, computed in accordance with paragraph C above. In the event this Agreement is terminated prior to April 1, 2012, any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

E. At the beginning of each Agreement Quarter, the Company shall furnish the Reinsurer with such information as the Reinsurer may require to complete its Annual Convention Statement.

F. “Agreement Quarter” as used herein shall mean each of the following periods: June 1 through August 31 of 2011; September 1 through November 30 of 2011; December 1, 2011 through February 28, 2012; and March 1 through May 31 of 2012.

ARTICLE 5 - NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company shall notify the Reinsurer of all reinstatement premium settlements made by the Company under the Original Agreement. The Company will advise the Reinsurer of all subsequent developments relating to such claims that, in the opinion of the Company, may materially affect the position of the Reinsurer.

All reinstatement premium settlements made by the Company under the Original Agreement, provided they are within the terms of the Original Agreement and within the terms of this Agreement, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable as promptly as possible upon receipt of reasonable evidence of the amount paid (or scheduled to be paid) by the Company.

ARTICLE 6 - LATE PAYMENTS

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Agreement.

B. In the event any premium, loss or other payment due either party is not received by the Intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the LIBOR monthly on the first business day of the month for which the calculation is made; times

3.The amount past due, including accrued interest.

C. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary.

D. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 10 business days, interest will accrue on the payment or amount overdue in accordance with paragraph B of this Article, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph, the due date shall be as provided for in the applicable section of this Agreement. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked.

E. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

F. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense or control of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Agreement. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

ARTICLE 7 - SALVAGE AND SUBROGATION (BRMA 47E)

The Reinsurer shall be credited with salvage or subrogation recoveries (i.e., reimbursement obtained or recovery made by the Company, less loss adjustment expense incurred in obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder. Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights.

ARTICLE 8 - OFFSET (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any balance or amounts due from one party to the other under the terms of the Agreement. The party asserting the right of offset may exercise such right any time whether the balances due are on account of premiums or losses or otherwise.

ARTICLE 9 - UNAUTHORIZED REINSURANCE

A. This Article applies only to the extent a Subscribing Reinsurer does not qualify for credit with any insurance regulatory authority having jurisdiction over the Company's reserves.

B. The Company agrees, in respect of its Policies or bonds falling within the scope of this Agreement, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law, it shall forward to the Reinsurer a statement showing the proportion of such liabilities applicable to the Reinsurer. The "Reinsurer's Obligations" shall be defined as follows:

1.Unearned premium (if applicable);

2. Known outstanding losses that have been reported to the Reinsurer and Loss Adjustment Expense relating thereto;

3. Losses and Loss Adjustment Expense paid by the Company but not recovered from the Reinsurer;

4. Losses incurred but not reported from known Loss Occurrences and Loss Adjustment Expenses relating thereto;

5. All other amounts for which the Company cannot take credit on its financial statements unless funding is provided by the Reinsurer.

C. The Reinsurer's Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves.

D. When funding by a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto. When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the LOC extended for any additional period.

E. The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to the provisions of this Agreement may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, for the following purposes, unless otherwise provided for in a separate Trust Agreement:

1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Agreement and that has not been otherwise paid;

2. To make refund of any sum that is in excess of the actual amount required to pay the Reinsurer's Obligations under this Agreement (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement);

3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets in the account that are in excess of the Reinsurer's Obligations (or in excess of 102% of the Reinsurer's Obligations, if funding is provided by a Trust Agreement). If the assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer.

4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Agreement.

F. If the amount drawn by the Company is in excess of the actual amount required for E(1) or E(3), or in the case of E(4), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn, All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer.

G. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company.

H. At annual intervals, or more frequently at the discretion of the Company, but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations for the sole purpose of amending the LOC or other method of funding, in the following manner:

1. If the statement shows that the Reinsurer's Obligations exceed the balance of the LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the statement, secure delivery to the Company of an amendment to the LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference.

2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of the LOC (or that 102% of the Reinsurer's Obligations are less than the trust account, balance if funding is provided by a Trust Agreement), as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess.

ARTICLE 10 - TAXES

The Company will be liable for taxes (except Federal Excise Tax) on premiums reported to the Reinsurer hereunder.

Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at Lloyd's London and other Reinsurers exempt from the Federal Excise Tax, who are domiciled outside the United States of America.

The Reinsurer has agreed to allow for the purposes of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium hereon, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 11 - CURRENCY

The currency to be used for all purposes of this Agreement shall be United States of America currency.

ARTICLE 12 - DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error in complying with the terms and conditions of this Agreement shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified immediately upon discovery.

ARTICLE 13 - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the Policy, accounting or claim files ("Records") relating to business reinsured under this Agreement during regular business hours after giving five working days' prior notice. This right shall be exercisable during the term of this Agreement or after the expiration of this Agreement. Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company, and the Company shall have no right to reimbursement under this Agreement if it fails or refuses to provide the access required by this Article other than by reason of the Reinsurer's failure to pay.

ARTICLE 14 - ARBITRATION (BRMA 6J)

As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Agreement, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Agreement as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Agreement from several to joint.

Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Agreement, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

ARTICLE 15 - SERVICE OF SUIT

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities).

It is agreed that in the event the Reinsurer fails to perform its obligations hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of any court of competent jurisdiction within the Cayman Islands. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the Cayman Islands.

ARTICLE 16 - INSOLVENCY

A. If more than one reinsured company is referenced within the definition of "Company" in the Preamble to this Agreement, this Article shall apply severally to each such company. Further, this Article and the laws of the domiciliary state shall apply in the event of the insolvency of any company covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that domiciliary state's laws shall prevail.

B. In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

C. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this reinsurance Agreement as though such expense had been incurred by the Company.

D. As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, (except as provided by Section 4118 (a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New York law applies) or except (1) where the Agreement specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. Then, and in that event only, the Company, with the prior approval of the certificate of assumption on New York risks by the Superintendent of Insurance of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 17 - THIRD PARTY RIGHTS (BRMA 52C)

This Agreement is solely between the Company and the Reinsurer, and in no instance shall any other party have any rights under this Agreement, except as expressly provided otherwise in the INSOLVENCY ARTICLE.

ARTICLE 18 - SEVERABILITY

If any provision of this Agreement shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Agreement or the enforceability of such provision in any other jurisdiction.

ARTICLE 19 - CONFIDENTIALITY

For a period of three years following the termination or expiration of this Agreement, the contracting parties undertake to regard the terms of this Agreement (and any confidential, proprietary information relating thereto provided in writing to such other party) as confidential, with the parties to effect the same prudence and care afforded by such party to its own confidential, proprietary information. Each party further agrees that it shall not disclose any of such information to any third party without the prior written consent of the other party or except as may be required by applicable law or regulation, or by legal process (including without limitation as may be required by United States Federal tax law or regulation), or to the auditors, professional advisors, accountants, retrocessionaires, related managing general agents, directors or officers of such party with a reasonable need to know such information. Except as expressly set forth above, the parties agree and acknowledge that this Article is not intended to restrict or limit the conduct of the other party's current or proposed business.

ARTICLE 20 - ENTIRE AGREEMENT (BRMA 74B)

This Agreement constitutes the entire agreement between the parties. In no event shall this Agreement provide any guarantee of profit, directly or indirectly, from the Reinsurer to the Company or from the Company to the Reinsurer. This Agreement may be clarified, amended or modified only by written agreement signed by both parties. Such written agreement shall become part of this Agreement.

ARTICLE 21 - CHOICE OF LAW AND JURISDICTION

This Agreement shall be governed as to performance, administration and interpretation by the laws of the Cayman Islands and shall be subject to the jurisdiction of the courts of Grand Cayman (subject to the provisions of the SERVICE OF SUIT SECTION).

ARTICLE 22 - INTERMEDIARY

United Insurance Managers, Inc., is hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through United Insurance Managers Inc., 360 Central Avenue, Suite 900, St. Petersburg, Florida 33702. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed only to constitute payment to the Company to the extent that such payments are actually received by the Company.

ARTICLE 23 - NOTICES AND MODE OF EXECUTION

Whenever a notice, statement, report or any other written communication is required by this Agreement, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable.

The use of any of the following shall constitute a valid execution of this Agreement or any amendments thereto:

A. Paper documents with an original ink signature;

B. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

C. Electronic records with an electronic signature made via an electronic agent. For the purposes of this Agreement, the terms “electronic record,” “electronic signature” and “electronic agent” shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

This Agreement may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Signed in St. Petersburg, Florida, this 22nd day of July, 2011.

For and on behalf of the Company:

/s/ Donald J. Cronin            

UNITED PROPERTY & CASUALTY INSURANCE COMPANY

For and on behalf of the Reinsurer:

/s/ Donald J. Cronin            

UPC RE

SCHEDULE A

REINSTATEMENT PREMIUM PROTECTION REINSURANCE AGREEMENT

Effective: June 1, 2011

UNITED PROPERTY & CASUALTY INSURANCE COMPANY

St. Petersburg, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

ORIGINAL AGREEMENT	Excess Layer 2
Original Agreement Retention	$45,156,870
Original Agreement Reinsurer's Per Occurrence Limit	$72,389,610
Original Agreement Reinsurer's Agreement Limit	$144,779,220
Original Agreement Minimum Premium	$19,834,752.80
Original Agreement Deposit Premium	$24,793,441
Original Agreement Exposure Rate	0.062%
REINSTATEMENT PREMIUM PROTECTION
RPP Agreement Reinsurer's Limit	$24,793,441
RPP Provisional Rate on Line*	40.76%
RPP Reinstatement Factor	1.19
RPP Deposit Premium	$10,105,807

*The Provisional Rate on Line is used only to calculate the deposit premium and shall be disregarded when calculating the reinsurance premium due in accordance with the provisions of the Premium Article.

TRUST AGREEMENT REQUIREMENTS CLAUSE

A. Except as provided in paragraph B. of this Clause, if the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Requires the Reinsurer to establish a trust account for the benefit of the Company, and specifies what the Trust Agreement is to cover;

2. Stipulates that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the types permitted by the regulatory authorities having jurisdiction over the Company's reserves, or any combination of the three, provided that the investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Reinsurer or the Company;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the Company, or the trustee upon the direction of the Company, may whenever necessary negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Requires that all settlements of account between the Company and the Reinsurer be made in cash or its equivalent; and

5. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the Company or the Reinsurer.

B. If a ceding insurer is domiciled in California and the Reinsurer satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Reinsurer shall ensure that the Trust Agreement:

1. Provides that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States financial institution as defined in California Insurance Code Section 922.7(a) and payable in United States dollars, and investments permitted by the California Insurance Code, or any combination of the above;

2. Provides that investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments;

3. Requires the Reinsurer, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Reinsurer or any other entity;

4. Provides that assets in the trust account shall be withdrawn only as permitted in this Agreement, without diminution because of the insolvency of the ceding insurer or the Reinsurer.

C. If there are multiple ceding insurers that collectively comprise the Company, "regulatory authorities" as referenced in subparagraph A(2) above, shall mean the individual ceding insurer's domestic regulator. If such ceding insurer is subject to the commercial domicile laws or regulations of another state, such laws or regulations shall apply to the extent not in conflict with those of such ceding insurer's domicile.

EX-10.19

Exhibit 10.19

CONTINUING EMPLOYMENT

AND SENIOR ADVISOR AGREEMENT

THIS AGREEMENT is made effective November 1, 2011, by and between Don Cronin ("Cronin") and United Insurance Holdings Corporation. ("United").

WHEREAS, Cronin has been valued employee of United and its predecessors for many years and now expresses a desire to retire from full time employment.

WHEREAS, Cronin has acquired during his employment certain knowledge, relationships, skills and abilities that may continue to be useful to United.

WHEREAS, Cronin has advised United of his willingness, ability and desire to provide advisory services to United as an independent contractor following his retirement from full time employment; and

WHEREAS, United is desirous of establishing the terms of Cronin's continued full-time employment and engaging Cronin to provide advisory services to United following his retirement from full-time employment.

NOW THEREFORE, in consideration of the foregoing recitals and the terms, conditions and covenants contained herein, it is hereby agreed as follows:

I.    CONTINUING EMPLOYMENT

A.    United will continue to employ Don Cronin as the Chief Executive Officer of United and

its subsidiaries until the earlier of May 1, 2012 or at such time as United determines, in its

sole discretion, that his services as the Chief Executive Officer are no longer needed

(the "Continuing Employment Period"). During the Continuing Employment Period, Don Cronin will be entitled to his current salary and benefits, including the eligibility for discretionary bonuses, if any, paid to senior management in exchange for continuing to perform his customary duties as Chief Executive Officer.

B.    Don Cronin agrees to maintain his primary residence in Sarasota, Florida or the Tampa Bay

area until no earlier than January 1, 2012. Thereafter and during the Continuing

Employment Period, Don Cronin may move his primary residence outside the State of

Florida during which time he will remain available as needed to the Company to perform his duties as the Chief Executive Officer. If Don Cronin moves his primary residence outside the State of Florida after January 1, 2012 and during the Continuing Employment Period, United will reimburse Don Cronin for reasonable travel expenses incurred by Cronin in performing duties requested by United.

II.    APPOINTMENT AS SENIOR ADVISOR

A.    At the conclusion of the Continuing Employment Period, United agrees to appoint Cronin

as a "Senior Advisor" for the sole purpose of performing services as described herein.

B.    The term of Cronin's position as Senior Advisor shall be for a period of twenty-four (24)

months.

C.    Cronin agrees that he shall be an independent contractor during his term as a Senior

Advisor and shall have no power to act on behalf or bind United.

D.    During his term as Senior Advisor, United agrees to continue to pay Cronin his current

salary and benefits, except that Cronin will not be eligible for any bonus paid to senior

management. Cronin shall be provided an automobile allowance to be determined by the

parties in lieu of reimbursement of automobile-related expenses. During his term as Senior

Advisor, Cronin will be eligible for health benefits and COBRA health coverage as

United's health insurance program and applicable law allow.

E.    In case of Cronin's death during the twenty-four (24) month period as a Senior Advisor,

and if Cronin is entitled to continuing compensation as a Senior Advisor under the terms

of this Agreement at the time of his death, the payment of Cronin's salary, but not benefits,

shall continue to be made to Cronin's surviving heir for the remainder of the twenty- four

(24) month period.

III.     SENIOR ADVISOR DUTIES

A.    Cronin's duties under this agreement as Senior Advisor are to provide, at the request of

United, services consisting of independent advisory and consulting services to United for

the purposes of assistance with improving the processes of United's property and casualty

insurance business as well as analyzing, and participating in, the expansion of that

business.

B.    Cronin shall service with objectivity and complete loyalty as to the interests of United and

shall render to United such information, counsel, and service as within the knowledge,

understanding, and opinion, in good faith of the Cronin, best serves United's needs and

interest.

C.    Services are limited to an advisory capacity only, and represent the opinion(s) and

suggestion(s) of Cronin. Notwithstanding the services being provided by Cronin, those

services shall not be construed, in any way, as decisions on the part, or on behalf,

of United.

D.    United hereby specifically states and agrees that all decisions related to United's

business, operations, personnel affairs and any and all of the matters discussed

between United and Cronin, are deemed to have been made and shall be made by

United in its sole and absolute discretion.

E.    United acknowledges and agrees that Cronin shall be permitted, during his engagement

as Senior Advisor, to engage in other professional and related activities provided such

activities are not prohibited under the terms of this Agreement.

IV.    TERMINATION OF AGREEMENT

A.    This agreement shall terminate upon the occurrence of one of the following events:

1.    The termination of the Agreement by Cronin, with or without cause, subject

to Cronin providing thirty (30) days advance notice to United of said

termination; or

2.    The termination of the Agreement by United for cause (as defined below),

subject to United providing thirty (30) days advance notice, and an

opportunity to cure within that time period, to Cronin of said termination and

the reason therefore; or

3.    The expiration of the twenty-four (24) month term during which Cronin will

act as a Senior Advisor.

For purposes of the Agreement, United shall have "Cause" to terminate this

Agreement: (i) if Cronin engages in conduct which has caused, or is reasonably

likely to cause, substantial and serious injury to United; (ii) if Cronin is convicted

of a felony, as evidenced by a binding and final judgment, order or decree of a court

of competent jurisdiction; (iii) use of illegal drugs or addiction to habit forming

drugs; (iv) insobriety by Cronin while performing Cronin's duties hereunder;

(v) any act of dishonesty by Cronin to United; (vi) Cronin's willful or reckless

misconduct that causes (or reasonably threatens to cause) material injury to United;

or (vii) Cronin's breach of this agreement.

B.    Upon the termination of this Agreement, all compensation to Cronin shall immediately

cease and Cronin shall not be entitled to any compensation which would have been paid

at a later date.

C.    Upon the termination of this Agreement, the provisions of Article V, VI and VII

shall survive said termination.

V.    NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE OF CONFIDENTIAL

INFORMATION

A.    In consideration of United's willingness to enter into this Agreement, which Cronin

agrees involves substantial and material compensation, Cronin agrees that during this term

of the Continuing Employment Period Cronin shall not provide services, whether for

compensation or otherwise, to any other person or entity engage in the business of writing

any lines of insurance then or now written by United or its subsidiaries or parents.

B.    In consideration of United's willingness to enter into this Agreement, which Cronin agrees

involves substantial and material compensation, it is agreed that if, after termination of

the Continuing Employment Period, but during his term as Senior Advisor, Cronin agrees

to provide, or provides, services as a full-time employee or officer, or as a director, for any

person or entity engaged in the business of writing any lines of insurance then written by

United or any of its subsidiaries or parents, any and all compensation payable to Cronin

under Section II. above will immediately cease and Cronin shall not be entitled to receive

any compensation in any form which would otherwise be paid or payable under Section II.

after the earlier of agreement to provide or providing the services described above in this

Section V.B.

C.    In consideration of United's willingness to enter into this Agreement, which Cronin agrees

involves substantial and material compensation, Cronin agrees that during his term as a

Senior Advisor and for twenty-four (24) months following the termination of this

Agreement, Cronin shall not solicit, either directly or indirectly, any employee, contractor,

consultant, insurance agent, or representative of United or its subsidiary entities to leave

the employment of, or adversely alter their business relationship with, United or its

subsidiary or parent entities for employment, or to do business with, Cronin or any other

person or entity which writes any line of insurance written by United or its subsidiaries or

parents, or provides services to any such person or entity, at the time of the solicitation.

D.    In consideration of United's willingness to enter into this Agreement, which Cronin agrees

involves substantial and material compensation, Cronin agrees that during the term of the

Continuing Employment Period, his term as a Senior Advisor and following the

termination of this Agreement, Cronin shall not disclose any Confidential Information

as described herein. The term "Confidential Information" means all information or

material which pertains to and/or is created for United's or its subsidiary or parent

entities' business methods, strategic plans, or operational techniques; United's or its

subsidiary or parent entities' agents and customers including but not limited to names,

locations, pricing, and commission structures, account volumes, claims experience,

renewal dates, terms of service; United's or its subsidiary or parents entities' intellectual

property including but not limited to its proprietary computer software, its design and

functionality, its inputs and outputs, ideas, techniques, works of authorship, inventions,

know how, process, apparatuses, algorithms, software programs, software source

documents, databases, applications, engine protocols, routines, models, displays, manuals,

and operating procedures, including without limitation the selection coordination and

arrangements of the contents hereof, and formulae related to current, future and proposed

products and services; trademarks and service marks: United's non-public financial

information, employee lists, business contractual relationships or, without limiting the

foregoing, any other information which gives competitive business advantage or the

opportunity of obtaining such advantage or the disclosure or which could be detrimental

to the interests of United or its subsidiary or parent entities.

E.    Cronin agrees that all Confidential Information shall remain the property of United and its

subsidiary or parent entities, as the case may be, and that United and its subsidiary and

parent entities may use such Confidential Information for any purpose without obligation

to Cronin. Nothing contained in this Agreement shall be construed as granting or implying

any transfer of rights to Cronin in the Confidential Information, or any patents or other

intellectual property protecting or relating to the Confidential Information.

VI.    INDEMNIFICATION

A.    United agrees to indemnify and hold harmless Cronin against any and all costs, losses,

liabilities, expenses (including reasonable attorney's fees), judgments, fines and amounts

paid in settlement actually and reasonably incurred in connection with third party claims

against Cronin which result from any act or omission constituting negligence, willful

misconduct or breach of fiduciary duty by an officer, director or employee of United in

connection with this Agreement.

B.    Cronin agrees to indemnify and hold harmless United, its directors, officers, employees

and agents against any and all costs, losses, liabilities, expenses (including reasonable

attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably

incurred in connection with third party claims against United which result from any act or

omission constituting gross negligence, willful misconduct, breach of this Agreement

or breach of fiduciary duty by Cronin in connection with this Agreement.

VII.    MISCELLANEOUS

A.    Representation of Authority. Each of the parties hereto warrants and represents that it has

authority, corporate and otherwise, to enter into this Agreement and perform in accordance

with the terms hereof.

B.    Survival of Rights and Obligations. This Agreement shall be binding upon, inure to the

benefit of, and be enforceable by United, its successors, and assigns. For purposes of

explanation and not of limitation, this Agreement shall be binding upon any and all

successors to United whether by sale, merger, change of control or otherwise.

C.    Equitable Relief. Cronin agrees and acknowledges that any breach of this Agreement

would cause United irreparable harm for which monetary damages would be inadequate.

Accordingly, United will be entitled to seek injunctive or other equitable relief to remedy

any threatened or actual breach of this Agreement by Cronin, as well as monetary damages

equal to the sum of all payments made hereunder.

D.    Notices. All notices under this Agreement shall be in writing and shall be deemed duly

given when delivered, if personally delivered, or three (3) days after the date mailed if

sent by registered or certified mail, return receipt requested and postage prepaid, and

addressed to the parties at the following addresses:

If to United to:	If to Cronin to:
United Insurance Holdings Corp.
Attn: Chairman of the Board of Directors
360 Central Avenue, Suite 900
St. Petersburg, FL 33701

unless a party receives written notice of any change.

E.    Assignment. Neither United nor Cronin may assign or transfer this Agreement or any

rights or benefits under this Agreement to any person or entity without the prior written

approval of the other party.

F.    Cumulative Rights. The rights and remedies provided in this Agreement are cumulative

and not exclusive and are in addition to any other rights and remedies the parties may have

at law or otherwise.

G.    Waiver. Neither party's waiver of the other's breach of any term, covenant or condition

contained in this Agreement shall be deemed to be a waiver of any subsequent breach of

the same or any other term, covenant or condition in this Agreement.

H.    Headings. The headings in this Agreement are inserted only as a matter of convenience

and in no way define, limit, construe or describe the scope or intent of any article or

section of this Agreement.

I.    Continuing Enforcement; Survival. The covenants contained in or liabilities accrued

under this Agreement which, by their terms, require their performance after the expiration

or termination of this Agreement shall be enforceable notwithstanding the expiration or

termination of this Agreement.

J.    Governing Law and Venue. This Agreement shall be governed by and construed in

accordance with the laws of the State of Florida. The parties agree that this Agreement

was entered into and intended to be performed in Pinellas County, Florida. The parties

further agree that any legal action arising out of this Agreement shall its venue in the state

or federal courts located in Hillsborough County, Tampa, Florida. The prevailing party in

any litigation or other action arising out of or relating to this Agreement shall be entitled to

recover its attorney's fees and costs from the non-prevailing party.

K.    Severability. If any provision of this Agreement shall be determined to be invalid or

unenforceable, the remaining provisions of this Agreement shall not be affected, and every

provision of this Agreement shall remain in full force and effect and enforceable to the

fullest extent permitted by law.

L.    Counterparts. This Agreement may be executed in one or more counterparts, each of

which shall be deemed an original, but all of which together shall constitute one and the

same agreement.

M.    Integrated Agreement; Amendments. This Agreement, and the materials incorporated

herein by reference, constitutes the entire agreement between the parties as to the subject

matter contained herein. There are no promises or other agreements, oral or written,

express or implied, between the parties as to the subject matter of this Agreement other

than as set forth herein. No change or modification of, or waiver under, this Agreement

shall be valid unless it is in the writing and signed by duly authorized representatives of

United and Cronin.

IN CONSIDERATION of the continuing employment of Cronin by United as described herein, as well as the benefits and opportunities gained by the parties under this Agreement, the parties have executed this

Agreement effective as of the date first written above.

United Insurance Holdings Corporation:	Donald J. Cronin
Signed: /s/ Greg C. Branch	Signed: /s/ Donald J. Cronin
Print Name: Greg C. Branch	Print Name: Donald J. Cronin
Title: Chairman	Title: CEO
Date: 11/14/11	Date: 11/14/11

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF UNITED INSURANCE HOLDINGS CORP.

United Insurance Management, L.C. (incorporated in Florida)

United Property and Casualty Insurance Company (incorporated in Florida)

Skyway Claims Services, LLC (incorporated in Florida)

UPC Re (incorporated in the Cayman Islands)

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement (No. 333-150327) on Form S-3 of United Insurance Holdings Corp. of our report dated March 14, 2012, relating to our audits of the consolidated financial statements and financial statement schedules as of December 31, 2011, and 2010, and for each of the three years in the period ended December 31, 2011, which appear in this Annual Report on Form 10-K of United Insurance Holdings Corp. for the year ended December 31, 2011.

/s/ McGladrey & Pullen, LLP

Kansas City, Missouri

March 14, 2012

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT

I, Melvin A. Russell, certify that:

1. I have reviewed this Form 10-K of United Insurance Holdings Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Melvin A. Russell

Melvin A. Russell

Senior Vice President and Chief Underwriting Officer

(principal executive officer)

March 14, 2012

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT

I, Hassan R. Baqar, certify that:

1. I have reviewed this Form 10-K of United Insurance Holdings Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Hassan R. Baqar

Hassan R. Baqar

Interim Chief Financial Officer

(principal financial officer and principal accounting officer)

March 14, 2012

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT

In connection with the Form 10-K of United Insurance Holdings Corp. for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (the Report), I, Melvin A. Russell, the Senior Vice President and Chief Underwriting Officer (principal executive officer) of United Insurance Holdings Corp. hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of United Insurance Holdings Corp.

By:	/s/ Melvin A. Russell
Melvin A. Russell Senior Vice President and Chief Underwriting Officer (principal executive officer)		March 14, 2012

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT

In connection with the Form 10-K of United Insurance Holdings Corp. for the year ended December 31, 2011, as filed with the Securities and Exchange Commission (the Report), I, Hassan R. Baqar, the Interim Chief Financial Officer (principal financial officer and principal accounting officer) of United Insurance Holdings Corp. hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of United Insurance Holdings Corp.

By:	/s/ Hassan R. Baqar
Hassan R. Baqar Interim Chief Financial Officer (principal financial officer and  principal accounting officer)		March 14, 2012

XML

Schedule IV. Reinsurance

12 Months Ended

Dec. 31, 2011

Reinsurance [Abstract]

Reinsurance

SCHEDULE IV. REINSURANCE

	Property and Casualty Insurance
	Direct Premium Written		Premiums Ceded to Other Companies	Premiums Assumed from Other Companies	Net Premiums Written		Percentage of Premiums Assumed to Net
Years Ended December 31,
2011	$	199,606	93,418	4,200	$	110,388	3.8	%
2010	155,875		86,475	2,762	72,162		3.8	%
2009	154,339		91,979	1,501	63,861		2.4	%

XML

Investments

12 Months Ended

Dec. 31, 2011

Investments [Abstract]

Investments in Debt and Marketable Equity Securities

INVESTMENTS

The following table details the difference between cost or adjusted/amortized cost and estimated fair value, by major investment category, at December 31, 2011, and 2010:

	Cost or Adjusted/Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2011
U.S. government and agency securities	$	48,011	$	219	$	111	$	48,119
States, municipalities and political subdivisions	17,159		1,207		—		18,366
Corporate securities	51,135		2,366		145		53,356
Redeemable preferred stocks	558		—		21		537
Total fixed maturities	116,863		3,792		277		120,378
Common stocks	2,807		359		43		3,123
Nonredeemable preferred stocks	477		—		19		458
Total equity securities	3,284		359		62		3,581
Other long-term investments	300		—		—		300
Total investments	$	120,447	$	4,151	$	339	$	124,259
December 31, 2010
U.S. government and agency securities	$	32,841	$	119	$	65	$	32,895
States, municipalities and political subdivisions	13,305		10		336		12,979
Corporate securities	4,029		18		—		4,047
Redeemable preferred stocks	809		—		47		762
Total fixed maturities	50,984		147		448		50,683
Common stocks	3,061		47		60		3,048
Nonredeemable preferred stocks	605		—		38		567
Total equity securities	3,666		47		98		3,615
Other long-term investments	300		—		—		300
Total investments	$	54,950	$	194	$	546	$	54,598

When we sell investments, we calculate the gain or loss realized on the sale by comparing the sales price (fair value) to the cost or adjusted/amortized cost of the security sold. We determine the cost or adjusted/amortized cost of the security sold using the specific-identification method. The following tables detail our realized gains (losses) by major investment category for the years ended December 31, 2011, 2010 and 2009:

	2011					2010					2009
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
Fixed maturities	$	231		$	21,803	$	4,278		$	105,637	$	1,545		$	40,418
Equity securities	10			65		149			2,731		1,165			4,977
Total realized gains	241			21,868		4,427			108,368		2,710			45,395
Fixed maturities	(58		)	3,191		(43		)	15,700		(51		)	1,574
Equity securities	(25		)	335		(38		)	1,310		(822		)	1,111
Total realized losses	(83		)	3,526		(81		)	17,010		(873		)	2,685
Net realized investment gains	$	158		$	25,394	$	4,346		$	125,378	$	1,837		$	48,080

Various states in which we operate or will be operating require us, by statute, to maintain deposits to secure the payment of claims. The table below summarizes our statutorily-required deposits at December 31, 2011.

	Type of Security Deposited	Cost/Amortized Cost		Fair Value
Florida	Certificate of Deposit	$	300	$	300
Amount reflected in other long-term investments		300		300
South Carolina	U.S. Treasury Note	1,001		1,003
Massachusetts	Municipal Bond	104		111
Amount reflected in fixed maturities		1,105		1,114
Securities deposited with insurance regulatory authorities		$	1,405	$	1,414

The CD we deposited with the Florida insurance regulatory authority is a twelve-month, automatically renewing CD. The par value of the securities we deposited with the South Carolina and Massachusetts insurance regulatory authorities are $1,000 and $100, respectively.

The table below summarizes our fixed maturities at year end by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturity of those obligations.

	December 31, 2011
	Cost or Amortized Cost		Percent of Total		Fair Value		Percent of Total
Due in one year or less	$	37,870	32.4	%	$	37,795	31.4	%
Due after one year through five years	31,252		26.8	%	31,662		26.3	%
Due after five years through ten years	30,761		26.3	%	32,809		27.3	%
Due after ten years	16,980		14.5	%	18,112		15.0	%
Total	$	116,863	100.0	%	$	120,378	100.0	%

The following table summarizes our net investment income by major investment category:

	Year Ended December 31,
	2011			2010			2009
Fixed maturities	$	2,628		$	3,639		$	4,274
Equity securities	142			203			293
Cash, cash equivalents and short-term investments	19			37			264
Other investments	$	34		$	—		$	—
Net investment income	$	2,823		$	3,879		$	4,831
Investment expenses	(140		)	(147		)	(164		)
Net investment income, less investment expenses	$	2,683		$	3,732		$	4,667

The following table presents an aging of our unrealized investment losses by investment class:

	Less Than Twelve Months					Twelve Months or More
	Number of Securities*	Gross Unrealized Losses		Fair Value		Number of Securities*	Gross Unrealized Losses		Fair Value
December 31, 2011
U.S. government and agency securities	2	$	90	$	16,915	1	$	21	$	1,627
Corporate securities	3	145		3,924		—	—		—
Redeemable preferred stocks	—	—		—		4	21		537
Total fixed maturities	5	235		20,839		5	42		2,164
Common stocks	12	40		740		1	3		9
Nonredeemable preferred stocks	—	—		—		3	19		458
Total equity securities	12	40		740		4	22		467
Total	17	$	275	$	21,579	9	$	64	$	2,631
December 31, 2010
U.S. government and agency securities	7	$	65	$	9,611	—	$	—	$	—
States, municipalities and political subdivisions	13	336		11,951		—	—		—
Redeemable preferred stocks	—	—		—		6	47		763
Total fixed maturities	20	401		21,562		6	47		763
Common stocks	19	17		810		4	43		423
Nonredeemable preferred stocks	—	—		—		4	38		567
Total equity securities	19	17		810		8	81		990
Total	39	$	418	$	22,372	14	$	128	$	1,753

* This amount represents the actual number of discrete securities, not the number of shares of those securities. The number is not presented in thousands.

During the years ended December 31, 2011, 2010 and 2009, we recorded other-than-temporary impairment charges of $31, $97, and $1,878, respectively. We have never recorded an OTTI charge on our debt-security investments.

During our quarterly evaluations of our securities for impairment, we determined that, other than the one security on which we recorded an other-than-temporary impairment charge, none of our investments in debt and equity securities that reflected an unrealized loss position were other-than-temporarily impaired. The issuers of our debt securities continue to make interest payments on a timely basis and have not suffered any credit rating reductions.  We do not intend to sell nor is it likely that we would be required to sell the debt securities before we recover our amortized cost basis. All the issuers of the equity securities we own had near-term prospects that indicated we could recover our cost basis, and we also have the ability and the intent to hold these securities until their value equals or exceeds their cost.

The following table presents the fair value measurements of our financial instruments by level at December 31, 2011 and December 31, 2010:

December 31, 2011	Total		Level 1		Level 2		Level 3
U.S. government and agency securities	$	48,119	$	24,176	$	23,943	$	—
States, municipalities and political subdivisions	18,366		—		18,366		—
Corporate securities	53,356		—		53,356		—
Redeemable preferred stocks	537		537		—		—
Total fixed maturities	120,378		24,713		95,665		—
Common stocks	3,123		3,123		—		—
Nonredeemable preferred stocks	458		458		—		—
Total equity securities	3,581		3,581		—		—
Other long-term investments	300		300		—		—
Total investments	$	124,259	$	28,594	$	95,665	$	—
December 31, 2010
U.S. government and agency securities	$	32,895	$	—	$	32,895	$	—
States, municipalities and political subdivisions	12,979		—		12,979		—
Corporate securities	4,047		—		4,047		—
Redeemable preferred stocks	762		762		—		—
Total fixed maturities	50,683		762		49,921		—
Common stocks	3,048		3,048		—		—
Nonredeemable preferred stocks	567		567		—		—
Total equity securities	3,615		3,615		—		—
Other long-term investments	300		300		—		—
Total investments	$	54,598	$	4,677	$	49,921	$	—

For our investments in U.S. government securities that do not have prices in active markets, agency securities, state and municipal governments, and corporate bonds, we obtain the fair values from Synovus Trust Company, NA, which uses a third-party valuation service. The valuation service calculates prices for our investments in the aforementioned security types on a month-end basis by using several matrix-pricing methodologies that incorporate inputs from various sources. The model the valuation service uses to price U.S. government securities and securities of states and municipalities incorporates inputs from active market makers and inter-dealer brokers. To price corporate bonds and agency securities, the valuation service calculates non-call yield spreads on all issuers, uses option-adjusted yield spreads to account for any early redemption features, then adds final spreads to the U.S. Treasury curve at 3 p.m. (ET) as of quarter end. Since the inputs the valuation service uses in their calculations are not quoted prices in active markets, but are observable inputs, they represent Level 2 inputs.

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Significant Accounting Policies [Abstract]

Significant Accounting Policies

SIGNIFICANT ACCOUNTING POLICIES

(a) Cash and Cash Equivalents

Our cash and cash equivalents include demand deposits with financial institutions and short-term, highly-liquid instruments with original maturities of three months or less when purchased.

(b) Investments

We currently classify all of our investments in fixed maturities and equity securities as available-for-sale, and report them at fair value. Subsequent to our acquisition of available-for-sale securities, we record changes in value through the date of disposition as unrealized holding gains and losses, net of tax effects, and include them as a component of accumulated other comprehensive income included in stockholders’ equity. We include realized gains and losses, which we calculate using the specific-identification method for determining the cost of securities sold, in net income. We amortize any premium or discount on fixed maturities over the remaining maturity period of the related securities using the effective interest method, and we report the amortization in net investment income. We recognize dividends and interest income when earned.

Quarterly, we perform an assessment of our investments to determine if any are other-than-temporarily impaired. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of our assessment process, we determine whether the impairment is temporary or other-than-temporary. We base our assessment on both quantitative criteria and qualitative information, considering a number of factors including, but not limited to: how long the security has been impaired; the amount of the impairment; whether, in the case of equity securities, we intend to hold, and have the ability to hold, the security for a period sufficient for us to recover our cost basis, or whether, in the case of debt securities, we intend to sell the security or it is more likely than not that we will have to sell the security before we recover the amortized cost; the financial condition and near-term prospects of the issuer; whether the issuer is current on contractually-obligated interest and principal payments; key corporate events pertaining to the issuer and whether the market decline was affected by macroeconomic conditions.

If we determine that an equity security has incurred an other-than-temporary impairment, we permanently reduce the cost of the security to fair value and recognize an impairment charge in our Consolidated Statements of Income. If a debt security is impaired and we either intend to sell the security or it is more likely than not that we will have to sell the security before we are able to recover the amortized cost, then we record the full amount of the impairment in our Consolidated Statements of Income. If we determine that an impairment of a debt security is other-than-temporary and we neither intend to sell the security nor it is more likely than not that we will have to sell the security before we are able to recover its cost or amortized cost, then we separate the impairment into (a) the amount of impairment related to credit loss and (b) the amount of impairment related to all other factors. We record the amount of the impairment related to the credit loss as an impairment charge in our Consolidated Statements of Income, and we record the amount of the impairment related to all other factors in accumulated other comprehensive income.

A large portion of our investment portfolio consists of fixed maturities, which may be adversely affected by changes in interest rates as a result of governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. A rise in interest rates would decrease the net unrealized holding gains of our investment portfolio, offset by our ability to earn higher rates of return on funds reinvested. Conversely, a decline in interest rates would increase the net unrealized holding gains of our investment portfolio, offset by lower rates of return on funds reinvested.

(c)Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price). When reporting the fair values of our financial instruments, we prioritize those fair value measurements into one of three levels based on the nature of the inputs, as follows:

• Level 1 – Valuations based on quoted prices in active markets for identical assets and liabilities;

• Level 2 – Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and quoted prices in active markets for similar, but not identical instruments; and

• Level 3 – Valuations based on unobservable inputs, which are based upon the best available information when external market data is limited or unavailable.

We estimate the fair value of our investments using the closing prices on the last business day of the reporting period, obtained from active markets such as the NYSE, NASDAQ, and AMEX. For securities for which quoted prices in active markets are unavailable, we use observable inputs such as quoted prices in inactive markets, quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes and other relevant inputs. We do not have any investments in our portfolio which require us to use unobservable inputs. Our estimates of fair value reflect the interest rate environment that existed as of the close of business on December 31, 2011, and 2010. Changes in interest rates subsequent to December 31, 2011, may affect the fair value of our investments.

The carrying amounts for the following financial instrument categories approximate their fair values at December 31, 2011 and 2010 because of their short-term nature: cash and cash equivalents, accrued investment income, premiums receivable, reinsurance recoverable, reinsurance payable, and accounts payable and accrued expenses. The carrying amounts of notes receivable and notes payable also approximate their fair values as the interest rate on the note payable is variable and the note receivable, which we recorded at fair value using a discounted cash flow methodology, is due in less than three years.

(d)Premiums

We record premiums as revenue, net of ceded amounts, on a daily pro rata basis over the contract period of the related policies that are in force. For any portion of premiums not earned at the end of the reporting period, we record an unearned premium liability.

Premiums receivable represents amounts due from our policyholders for billed premiums and related policy fees. We perform a policy-level evaluation to determine the extent to which the balance of premium receivable exceeds the balance of unearned premium. We then age any resulting exposure based on the last date the policy was billed to the policyholder, and we establish an allowance for credit losses for any amounts outstanding for more than 90 days. When we receive payments on amounts previously charged off, we credit bad debt expense in the period we receive the payment. The balances of our allowance for uncollectible premiums totaled $77 and $61 at December 31, 2011, and 2010, respectively.

When we receive premium payments from policyholders prior to the effective date of the related policy, we record an advance premiums liability. On the policy effective date, we reduce the advance premium liability and record the premiums as described above.

(e)Policy Acquisition Costs

We incur policy acquisition costs that vary with, and are directly related to, the production of new business. Policy acquisition costs consist primarily of the following three items: i) commissions paid to outside agents at the time of policy issuance and commissions paid to Citizens for policies assumed, net of commissions refunded for cancelled policies; ii) policy administration fees paid to a third-party administrator at the time of policy issuance; and iii) premium tax. We capitalize policy acquisition costs to the extent recoverable, then we amortize those costs over the contract period of the related policy, except for assumed commissions. We amortize our assumed commissions on a pro rata basis over the 12-month period from the date of assumption, and we amortize any subsequent changes in the amount of commission over the months remaining in the original 12-month period.

At each reporting date, we determine whether we have a premium deficiency. A premium deficiency would result if the sum of our expected losses, deferred policy acquisition costs, and policy maintenance costs (such as costs to store records and costs incurred to collect premiums and pay commissions) exceeded our related unearned premiums plus investment income.

Should we determine that a premium deficiency exists, we would write off the unrecoverable portion of deferred policy acquisition costs.

(f)Long-lived Assets

i)Property and Equipment

We classify our property and equipment, which we record at cost less accumulated depreciation and amortization, within other assets on our Consolidated Balance Sheets because the total net amount ($223 at December 31, 2011) is not material to our consolidated financial statements. We use the straight-line method of calculating depreciation over the estimated useful lives of the assets, which are three to five years. We also use the straight-line method to calculate amortization of leasehold improvements over the estimated useful lives of the assets or the term of the lease, whichever is shorter. We periodically review estimated useful lives and, where appropriate, we make changes prospectively. We charge maintenance and repair costs to expense as incurred.

ii)Capitalized Software

We capitalize certain direct development costs associated with internal-use software related to our policy administrator and, because the total amount ($872 at December 31, 2011) is not material to our consolidated financial statements, we classify it within other assets on our Consolidated Balance Sheets. We amortize capitalized software costs over the unexpired portion of the contract term. The contract term at the time we put the software into use, which is six years, is the minimum period of time we expect the software to be useful to us.

iii)Impairment of Long-lived Assets

We annually review our long-lived assets, including intangible assets, to determine if their carrying amounts are recoverable. If the non-discounted future cash flows expected to result from the use and eventual disposition of the assets are less than their carrying amounts, we reduce their carrying amounts to fair value and recognize an impairment loss.

(g)Unpaid Losses and Loss Adjustment Expenses

Our reserves for unpaid losses represent the estimated ultimate cost of settling all reported claims plus all claims we incurred related to insured events that have occurred as of the reporting date, but that policyholders have not yet reported to us (incurred but not reported, or IBNR, claims).

We estimate our reserves for unpaid losses using individual case-basis estimates for reported claims and actuarial estimates for IBNR claims, and we continually review and adjust our estimated losses as necessary based on our historical experience and as we obtain new information. If our unpaid loss reserves prove to be deficient or redundant, we increase or decrease the liability in the period in which we identify the difference, thereby impacting net income. Though our estimate of the ultimate cost of settling all reported and unreported claims may change at any point in the future, a reasonable possibility exists that our estimate may vary significantly in the near term from the estimated amounts included in our consolidated financial statements.

On our Consolidated Balance Sheets, we report our reserves for unpaid losses gross of the amounts related to unpaid losses recoverable from reinsurers. On our Consolidated Statements of Income, we report losses net of amounts ceded to reinsurers. We do not discount our loss reserves for financial statement purposes.

(h)Managing General Agent Fees and Policy Fees

Our policy fees consist of the managing general agent fee and a pay-plan fee. Florida law allows managing general agents to charge policyholders a $25.00 fee on each policy written; we defer such fees as unearned revenue and then include them in income on a pro rata basis over the term of the underlying policies. We record our pay-plan fees, which we charge to all policyholders that pay their premium in more than one installment, as income when collected. We report all policy-related fees in other revenue on our Consolidated Statements of Income.

(i)Reinsurance

Our reinsurance agreements are short-term, prospective contracts. We record an asset, prepaid reinsurance premiums, and a liability, reinsurance payable, for the entire contract amount upon commencement of our new reinsurance agreements. We amortize our prepaid reinsurance premiums over the 12-month contract period.

We record amounts recoverable from our reinsurers on paid losses plus an estimate of amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is a function of our liability for unpaid losses associated with the reinsured policies; therefore, the amount changes in conjunction with any changes to our estimate of unpaid losses. Though our estimate of amounts recoverable from reinsurers on unpaid losses may change at any point in the future because of its relation to our reserves for unpaid losses, a reasonable possibility exists that our estimate may change significantly in the near term from the amounts included in our consolidated financial statements.

We estimate uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. We recorded no bad debt expense related to reinsurance during the years ended December 31, 2011, 2010 or 2009.

(j)Assessments

We record guaranty fund and other insurance-related assessments imposed upon us as an expense in the period the regulatory agency imposes the assessment. To recover the assessment, we use a process, created by Florida statute, known as Use and File (neither South Carolina nor Massachusetts have imposed any assessments upon us). We calculate and begin collecting a policy surcharge that will allow us to collect the entire assessment over a 12-month period, based on our estimate of the number of policies we expect to write. We then submit a filing to the insurance regulatory authority requesting formal approval of the policy surcharge. The process may be repeated in successive 12-month periods until we collect the entire assessment. We record the recoveries as revenue in the period that we collect the cash. While current regulations allow us to recover from policyholders the amount of assessments imposed upon us, our payment of the assessments and our recoveries may not offset each other in the same fiscal period in our financial statements.

We collect assessments imposed upon policyholders as a policy surcharge and we record the amounts collected as a liability until we remit the amounts to the regulatory agency that imposed the assessment.

(k)Income Taxes

Under a tax sharing agreement we entered into with each of our subsidiaries, we file consolidated tax returns. We allocate taxes to each subsidiary in proportion to the amount of taxable income that each subsidiary contributes to the consolidated taxable income.

We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. Should a change in tax rates occur, we recognize the effect on deferred tax assets and liabilities in operations in the period that includes the enactment date. Realization of our deferred income tax assets depends upon our generation of sufficient future taxable income.

We record any income tax penalties and income-tax-related interest as income tax expense in the period incurred. We did not incur any material tax penalties or income-tax-related interest during the years ended December 31, 2011, 2010 or 2009.

(l)Advertising Costs

We expense all advertising costs when we incur those costs. For the years ended December 31, 2011, 2010 or 2009, we incurred advertising costs of $1,041, $783, and $712, respectively.

(m)Earnings Per Share

We report both basic earnings per share and diluted earnings per share. To calculate basic earnings per share, we divide net income by the weighted-average number of common stock shares outstanding during the period. We calculate diluted earnings per share by dividing net income by the weighted-average number of common stock shares and common stock equivalents outstanding during the period. Prior to the expiration of our warrants, we used the treasury stock method to calculate common stock equivalents.

(n)Concentrations of Risk

Our current operations subject us to the following concentrations of risk:

•a concentration of revenue because we write primarily homeowners policies

• a concentration in our distribution network because two agency groups provide approximately 55% of our direct premiums written

• a geographic concentration resulting from the fact that, though we now operate in three states, we still write approximately 95% of our premium in Florida

• a group concentration of credit risk with regard to our reinsurance recoverable, since all of our reinsurers engage in similar activities and have similar economic characteristics that could cause their ability to repay us to be similarly affected by changes in economic or other conditions

• a concentration of credit risk with regard to our cash, because we choose to deposit all our cash at two financial institutions

We mitigate our geographic and group concentrations of risk by entering into reinsurance contracts with financially-stable reinsurers, and by securing irrevocable letters of credit from reinsurers when necessary.

With regard to our cash, we had $3,299 and $55,443 in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits at December 31, 2011, and December 31, 2010, respectively. For calendar years 2011 and 2012, the FDIC expanded its insurance coverage to 100% of any amount in a non-interest-bearing deposit account. As a result, the only uninsured cash amount we had as of December 31, 2011 related to our interest-bearing money market account.

(o)Pending Accounting Pronouncements

In October 2010, the FASB issued ASU No. 2010-26, Financial Services—Insurance (Topic 944): Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. The amendments in ASU No. 2010-26 address diversity in practice regarding the interpretation of which costs relating to the acquisition of new or renewal insurance contracts qualify for deferral; they clarify which costs should be deferred and which costs should be expensed when incurred. The amendments in ASU No. 2010-26 become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. Since we already record deferred acquisition costs as specified by the amendments, we do not expect that our adoption of ASU No. 2010-26 will have a material effect on our consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments in ASU No. 2011-05 give entities the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments in ASU No. 2011-05 become effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. Since we already present the total of comprehensive income, the components of net income, and the components of other comprehensive income in a single continuous statement as specified by the amendments, our adoption of ASU No. 2011-05 did not have a material effect on our consolidated financial statements.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. The amendments in ASU No. 2011-12 delay the effective date of certain provisions in ASU No. 2011-05 that relate to reclassification items until such time as the Financial Accounting Standards Board has time to re-deliberate the presentation of those items. All other provisions of ASU No. 2011-05 take effect on the date originally noted in that ASU.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Investments available for sale, at fair value:
Fixed maturities (amortized cost of $116,863 and $50,984, respectively)	$ 120,378	$ 50,683
Equity securities (adjusted cost of $3,284 and $3,666, respectively)	3,581	3,615
Other long-term investments	300	300
Total investments	124,259	54,598
Cash and cash equivalents	41,639	71,644
Accrued investment income	986	414
Premiums receivable, net	11,205	7,825
Reinsurance recoverable on paid and unpaid losses	4,458	27,304
Prepaid reinsurance premiums	40,968	38,307
Deferred policy acquisition costs	12,324	9,342
Other assets	4,376	4,187
Total Assets	240,215	213,621
Liabilities:
Unpaid losses and loss adjustment expenses	33,600	47,414
Unearned premiums	100,130	77,161
Reinsurance payable	16,571	14,982
Other liabilities	17,866	10,536
Notes payable	17,059	18,235
Total Liabilities	185,226	168,328
Commitments and contingencies (Note 11)
Stockholders' Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding	0	0
Common stock, $0.0001 par value; 50,000,000 shares authorized; 10,573,932 issued; 10,361,849 and 10,573,932 outstanding, respectively	1	1
Additional paid-in capital	75	75
Treasury shares, at cost; 212,083 and zero shares, respectively	(431)	0
Accumulated other comprehensive income	2,341	(216)
Retained earnings	53,003	45,433
Total Stockholders' Equity	54,989	45,293
Total Liabilities and Stockholders' Equity	$ 240,215	$ 213,621

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
OPERATING ACTIVITIES
Net income (loss)	$ 8,088	$ (925)	$ 4,057
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,218	1,106	1,188
Net realized gains	(158)	(4,346)	(1,837)
Other-than-temporary impairments	31	97	1,878
Amortization of discount on notes payable	0	159	419
Loss on extinguishment of debt	0	726	0
Provision for uncollectible premiums	23	42	83
Deferred income taxes, net	(600)	352	1,255
Stock-based compensation	0	0	75
Changes in operating assets and liabilities:
Accrued investment income	(572)	705	273
Premiums receivable	(3,403)	(323)	2,589
Reinsurance recoverable on paid and unpaid losses	22,846	(1,827)	(2,873)
Prepaid reinsurance premiums	(2,660)	1,978	(13,767)
Deferred policy acquisition costs, net	(2,982)	(86)	958
Other assets	371	(398)	(3,047)
Unpaid losses and loss adjustment expenses	(13,814)	3,302	4,014
Unearned premiums	22,969	3,330	(553)
Reinsurance payable	1,589	(13,180)	11,468
Other liabilities	5,703	1,345	267
Net cash provided by (used in) operating activities	38,649	(7,943)	6,447
INVESTING ACTIVITIES
Proceeds from sales and maturities of investments available for sale	36,594	160,648	81,931
Purchases of investments available for sale	(102,464)	(80,343)	(85,124)
Purchase of note receivable	(2,250)	0	0
Cost of property and equipment acquired	(20)	(73)	(108)
Cost of capitalized software acquired	(15)	(311)	(206)
Net cash provided by (used in) investing activities	(68,155)	79,921	(3,507)
FINANCING ACTIVITIES
Repayments of borrowings	(1,176)	(24,078)	(294)
Repurchases of common stock	(431)	0	0
Dividends	(518)	(529)	(1,586)
Bank overdrafts	1,626	(2,813)	(3,468)
Net cash used in financing activities	(499)	(27,420)	(5,348)
Increase (decrease) in cash	(30,005)	44,558	(2,408)
Cash and cash equivalents at beginning of period	71,644	27,086	29,494
Cash and cash equivalents at end of period	41,639	71,644	27,086
Supplemental Cash Flows Information
Interest paid	553	2,298	2,592
Income taxes paid	$ 4,360	$ 0	$ 3,987

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Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity Note [Abstract]

Stockholders' Equity

EQUITY

Our Articles of Incorporation authorize us to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as the Board of Directors may determine from time to time. As of December 31, 2011, we had not issued any shares of preferred stock.

We are a legal entity separate and distinct from our subsidiaries. As a holding company, we rely on cash received in the form of distributions, dividends and other permitted payments from our subsidiaries to meet our obligations. While there are no restrictions on distributions from UIHC, dividends from UPC have certain restrictions (see Note 10).

On March 25, 2009, the Compensation Committee of our Board voted to award 12,500 shares of our common stock each to our CEO and our then CFO as a bonus for services performed. We valued the 25,000 total shares at $3.00 per share, which was the closing price of UIHC common stock on March 25, 2009, when the shares were authorized. As a result, we recorded $75 of compensation expense during the year ended December 31, 2009. We do not have a formal stock compensation program as of December 31, 2011.

On May 6, 2009, our Board declared a $0.05 per share dividend. We paid the $528 dividend on June 15, 2009 to shareholders of record on May 31, 2009.

On August 13, 2009, our Board declared a $0.05 per share dividend. We paid the $529 dividend on September 15, 2009 to shareholders of record on August 31, 2009.

On November 11, 2009, our Board declared a $0.05 per share dividend. We paid the $529 dividend on December 15, 2009 to shareholders of record on November 30, 2009.

On March 25, 2010, our Board declared a $0.05 per share dividend. We paid the $529 dividend on April 15, 2010 to shareholders of record on March 31, 2010.

On May 19, 2011, we purchased a total of 212,083 shares of our common stock at a per-share price of $2.00. Inclusive of fees and commissions, we paid a total of $431, or $2.03 per share.

On October 4, 2011, all outstanding warrants to purchase shares of our common stock expired.

On November 9, 2011, our Board declared a $0.05 per share dividend. We paid the $518 dividend on December 15, 2011 to shareholders of record on November 30, 2011.

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Schedule I. Summary of Investments, Other than Investments in Related Parties

12 Months Ended

Dec. 31, 2011

Summary of Investments [Abstract]

Summary of Investments, Other than Investments in Related Parties

SCHEDULE I. SUMMARY OF INVESTMENTS

	December 31, 2011
	Cost or Amortized Cost		Fair Value		Amount Shown in Consolidated Balance Sheet
Bonds:
U.S. government, government agencies and authorities	$	48,011	$	48,119	$	48,119
States, municipalities and political subdivisions	17,159		18,366		18,366
Public utilities	7,407		7,703		7,703
All other corporate bonds	43,728		45,653		45,653
Redeemable preferred stocks	558		537		537
Total fixed maturities	116,863		120,378		120,378
Common stocks:
Public Utilities	209		254		254
Industrial, miscellaneous and all other	2,598		2,869		2,869
Nonredeemable preferred stocks	477		458		458
Total equity securities	3,284		3,581		3,581
Other long-term investments	300		300		300
Total investments	$	120,447	$	124,259	$	124,259

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Organization, Consolidation and Presentation

12 Months Ended

Dec. 31, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements

ORGANIZATION, CONSOLIDATION AND PRESENTATION

(a)Business

We incorporated as a blank-check company in May 2007 under Delaware law, and became a publicly-traded company in October 2007. In September 2008, we acquired an insurance holding company and its subsidiaries, and changed our name to United Insurance Holdings Corp. (UIHC).

Through our wholly-owned subsidiaries, we write and service property and casualty insurance policies in Florida, South Carolina and Massachusetts. We incorporated three of our subsidiaries under Florida law, including United Property and Casualty Insurance Company (UPC), which writes insurance policies; United Insurance Management, L.C. (UIM), the managing general agent that manages substantially all aspects of UPC's business; and Skyway Claims Services, LLC (SCS), a claims adjusting company that provides services to UPC. In April 2011, we formed a fourth subsidiary, UPC Re. Operating as a reinsurer under the laws of the Cayman Islands, UPC Re provides reinsurance protection to UPC.

The insurance regulatory authorities in Florida, South Carolina and Massachusetts have authorized UPC to write homeowner and dwelling property and casualty lines, as well as flood coverage under the National Flood Insurance Program. In 2011, the insurance regulatory authority in Rhode Island authorized UPC to write in that state, and UPC has applied to insurance regulatory authorities in two additional states to write property and casualty lines. Though the insurance regulatory authority has authorized UPC to write a commercial line of business in Florida that includes auto and multi-peril coverage, we voluntarily discontinued writing that line as of May 31, 2009.

We operated exclusively in Florida until July 1, 2010, when we began writing our policies in South Carolina. We also assumed a book of business in South Carolina from Sunshine State Insurance Company as of July 1, 2010, representing $5,294 of in-force homeowner premium. On November 1, 2011, we began writing policies in Massachusetts. We expanded outside of Florida to reduce our geographic concentration of exposure to catastrophic losses and our geographic concentration of credit risk.

We write our policies utilizing our agency network, though we occasionally supplement those writings by assuming policies from Citizens Property Insurance Corporation (Citizens), an insurer supported by the State of Florida.

We conduct our operations under one business segment.

(b)Consolidation and Presentation

We prepare our financial statements in conformity with U.S. generally accepted accounting principles (GAAP). While preparing our financial statements, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require us to make extensive use of estimates include our reserves for unpaid losses and loss adjustment expenses, reinsurance recoverable, deferred policy acquisition costs, and investments. Except for the captions on our Consolidated Balance Sheets and Consolidated Statements of Income, we generally use the term loss(es) to collectively refer to both loss and loss adjustment expenses.

We include all of our subsidiaries in our consolidated financial statements, eliminating all significant intercompany balances and transactions during consolidation.

We reclassified certain amounts in the 2010 and 2009 financial statements to conform to the 2011 presentation. These reclassifications had no impact on our results of operations, cash flows or stockholders' equity as previously reported.

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Consolidated Balance Sheets Parenthetical (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Fixed maturities, cost	$ 116,863	$ 50,984
Equity securities, cost	$ 3,284	$ 3,666
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized shares	1,000,000	1,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized shares	50,000,000	50,000,000
Common stock, issued shares	10,573,932	10,573,932
Common stock, outstanding shares	10,361,849	10,573,932
Treasury stock	212,083	0

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

We are involved in claims-related legal actions arising in the ordinary course of business. We accrue amounts resulting from claims-related legal actions in unpaid losses and loss adjustment expenses during the period that we determine an unfavorable outcome becomes probable and we can estimate the amounts. Management makes revisions to our estimates based on its analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages, and (iv) trends in general economic conditions, including the effects of inflation.

On August 5, 2010, Synovus Bank (Synovus), a Georgia banking corporation filed a lawsuit in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida against several defendants, including UIHC and UIH.  With respect to UIHC and UIH, the complaint: (1) sought to foreclose on a security interest in membership units of UIH owned by a UIH shareholder named as a defendant, including the proceeds thereof (the United Collateral), (2) sought a declaratory judgment requiring UIHC and UIH to deliver proceeds of the United Collateral to Synovus (including shares of UIHC and warrants to purchase shares of UIHC or the equivalent value thereof in cash, and a cash distribution), (3) alleged tortious interference with a contract between the UIH shareholder named as a defendant and Synovus relating to the United Collateral, (4) sought conversion of the United Collateral, and (5) alleged negligence in connection with the delivery of the United Collateral.  Synovus sought unspecified damages and other relief in connection with the foregoing.

On January 3, 2011, Synovus Bank voluntarily dismissed its case without prejudice against UIH and UIHC. We did not establish any reserves regarding this action because we were not able to predict the probable outcome of the action. 

See Note 8 for information regarding commitments related to long-term debt, and Note 10 for commitments related to regulatory actions.

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Document and Entity Information (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Mar. 14, 2012	Jun. 30, 2011
Document and Entity Information
Document type	10-K
Amendment flag	false
Document Period End Date	Dec. 31, 2011
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2011
Trading Symbol	UIHC
Entity Registrant Name	United Insurance Holdings Corp.
Entity Central Index Key	0001401521
Well known seasoned issuer	No
Current reporting status	Yes
Voluntary filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Public float			$ 30,525
Entity Common Stock, Shares Outstanding		10,361,849

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Leases

12 Months Ended

Dec. 31, 2011

Leases [Abstract]

Leases

LEASES

We lease office space and office equipment under operating leases. In June 2008, we entered into a six-year operating lease agreement for office space for our corporate headquarters. The lease provides us with an option for two renewal periods of five years each. The office equipment leases have various expiration dates. Lease expense amounted to $508, $433, and $433 for the years ended December 31, 2011, 2010 and 2009, respectively.

At December 31, 2011, our minimum future lease payments under non-cancellable operating leases are:

	Amount
2012	$	447
2013	463
2014	332
2015	15
2016	5

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
REVENUE:
Gross premiums written	$ 203,806	$ 158,637	$ 155,840
Decrease (increase) in gross unearned premiums	(22,969)	(3,330)	553
Gross premiums earned	180,837	155,307	156,393
Ceded premiums earned	(90,757)	(88,452)	(78,212)
Net premiums earned	90,080	66,855	78,181
Net investment income	2,823	3,879	4,831
Net realized gains	158	4,346	1,837
Other-than-temporary impairments	(31)	(97)	(1,878)
Other revenue	3,388	5,008	5,498
Total revenue	96,418	79,991	88,469
EXPENSES:
Losses and loss adjustment expenses	38,861	42,533	40,755
Policy acquisition costs	29,054	24,899	25,960
Operating expenses	5,090	3,968	5,218
General and administrative expenses	9,674	7,506	7,032
Interest expense	548	1,767	3,177
Total expenses	83,227	80,673	82,142
Income (loss) before other expenses	13,191	(682)	6,327
Other expenses	175	726	0
Income (loss) before income taxes	13,016	(1,408)	6,327
Provision for (benefit from) income taxes	4,928	(483)	2,270
Net income (loss)	8,088	(925)	4,057
OTHER COMPREHENSIVE INCOME (LOSS):
Change in net unrealized gain on investments	4,291	2,093	4,152
Reclassification adjustmentfor net realized investment gains	(158)	(4,346)	(1,837)
Reclassification adjustment for other-than-temporary impairments	31	97	1,878
Income tax expense related to items of other comprehensive income	(1,607)	832	(1,595)
Total comprehensive income (loss)	$ 10,645	$ (2,249)	$ 6,655
Weighted average shares outstanding, basic	10,442,034	10,573,932	10,568,247
Weighted average shares outstanding, diluted	10,442,034	10,573,932	10,568,247
Earnings per share, basic	$ 0.77	$ (0.09)	$ 0.38
Earnings per share, diluted	$ 0.77	$ (0.09)	$ 0.38
Dividends declared per share	$ 0.05	$ 0.05	$ 0.15

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Reinsurance

12 Months Ended

Dec. 31, 2011

Reinsurance Disclosures [Abstract]

Reinsurance

REINSURANCE

We follow industry practice of reinsuring a portion of our risks. Reinsurance involves transferring, or “ceding”, all or a portion of the risk exposure on policies we write to another insurer, known as a reinsurer. To the extent that our reinsurers are unable to meet the obligations they assume under our reinsurance agreements, we remain liable for the entire insured loss.

Our catastrophe reinsurance agreements provide us coverage against severe weather events. We entered into excess-of-loss agreements with several private reinsurers and with the Florida Hurricane Catastrophe Fund. The private agreements provide coverage against severe weather events such as hurricanes, tropical storms and tornadoes. The agreement with the FHCF only provides coverage against storms that the National Hurricane Center designates as a hurricane at landfall.

For the policy year beginning June 1, 2011, we have a private catastrophe reinsurance agreement structured into layers. The coverage provided by one layer picks up, or “attaches”, at the point where coverage under the previous layer ends. Our agreement with the FHCF divides our coverage into three layers: the Limited-Apportionment Company layer, the Mandatory layer and the Temporary-Increase-in-Coverage-Limit layer.

For a single hurricane catastrophe, we have chosen to pay, or “retain”, the first $15,000 of catastrophe losses before our reinsurance contracts provide coverage. For a second catastrophe, we would also retain the first $15,000 of catastrophe losses. Our agreements will reimburse us as much as $520,000 for the first event.

For a single non-hurricane catastrophe, we would retain the first $25,000 of catastrophe losses. For a second non-hurricane catastrophe, we would also retain the first $25,000 of catastrophe losses. Our agreements will reimburse us as much as $129,000 for the first event.

With regard to all of our reinsurance agreements, we retain aggregate catastrophe losses, from all events, exceeding our reinsurance coverage.

Our agreement with the FHCF allows for one reinstatement of coverage provided by the LAC layer should losses resulting from one hurricane exhaust that coverage, while our agreement with the private reinsurers allows for one reinstatement of coverage on all the private layers should losses resulting from one or more severe weather events exhaust that coverage. The FHCF LAC layer provides for reinstatement of coverage at no additional premium; however, our private agreement requires us to pay 100% additional premium to reinstate the coverage it provides. To protect us in the event a reinstatement of coverage under our private agreement becomes necessary, we purchased a reinsurance premium protection policy. Our RPP policy reimburses us 100% of the amount of any reinstatement premium that we would have to pay to reinstate coverage on the first private layer and 70% on the second private layer. Our agreement with the FHCF does not provide for reinstatement of the coverage provided by the Mandatory or TICL layers.

Our non-catastrophe reinsurance agreement provides excess-of-loss coverage for losses arising out of property business up to $1,700 in excess of $1,000 per risk. Should a loss recovery, or series of loss recoveries, exhaust the coverage provided under the agreement for losses arising out of property business, one reinstatement of the $1,700 of coverage limit is included at 50% additional premium. The agreement, including reinstatements, provides aggregate coverage of $3,400 for losses arising out of property business, while any single occurrence is limited to $1,700. The agreement also provides coverage for losses arising out of a combination of property and casualty business up to $2,200 in excess of $1,000 per occurrence, subject to a maximum recovery on any one loss occurrence, regardless of the number of risks involved for property or the number or type of insureds for casualty, of $2,200.

For the Garage program that we discontinued as of May 31, 2009, we entered into quota share reinsurance agreements for policy years prior to the 2009-2010 policy year, but we did not enter into a new quota share agreement after July 31, 2009. We recognized commission revenue on our previous quota share agreements totaling $(48), $924 and $405 for the years ended December 31, 2011, 2010, and 2009, respectively.

We write flood insurance under an agreement with the National Flood Insurance Program. We cede 100% of the premiums written and the related risk of loss. We earn commissions for the issuance of flood policies based upon a fixed percentage of net written premiums and the processing of flood claims based upon a fixed percentage of incurred losses, and we can earn additional commissions by meeting certain growth targets for the number of in-force policies. We recognized commission revenue from our flood program of $377, $516, and $436, for the years ended December 31, 2011, 2010 and 2009, respectively.

We amortize our prepaid reinsurance premiums over the annual agreement period, and we record that amortization in ceded premiums earned on our unaudited Consolidated Statements of Income. The table below summarizes the amounts of our ceded premiums written under the various types of agreements, as well as the amortization of prepaid reinsurance premiums:

	2011			2010			2009
Excess-of-loss	$	(82,832	)	$	(77,202	)	$	(82,402	)
Quota share	(587		)	(140		)	(1,039		)
Flood	(9,999		)	(9,132		)	(8,538		)
Ceded premiums written	$	(93,418	)	$	(86,474	)	$	(91,979	)
Increase (decrease) in ceded unearned premiums	2,661			(1,978		)	13,767
Ceded premiums earned	$	(90,757	)	$	(88,452	)	$	(78,212	)

Effective June 1, 2011, we commuted our 2005 contract with the FHCF; any catastrophe losses we incur (in excess of amounts we reported to the FHCF as of June 1, 2011) on events that occurred during the 2005 contract year that would otherwise have been covered by the FHCF contract prior to commutation will not be reimbursed by the FHCF, though our contracts with our private reinsurers remain in effect with respect to such losses. We settled all outstanding claims with the FHCF related to Hurricane Wilma for $12,738, which we received during the third quarter of 2011. At the time we commuted the contract, our reinsurance recoverable included $13,630 of unpaid losses related to Hurricane Wilma. As a result of settling for less than what we had already recorded as ceded losses, our catastrophe losses incurred for prior accident years increased by $892 during the second quarter.

The following table depicts written premiums, earned premiums and losses, showing the effects that our reinsurance transactions have on these components of our Consolidated Statements of Income:

	Year ended December 31,
	2011			2010			2009
Premium written:
Direct	$	199,606		$	155,875		$	154,339
Assumed	4,200			2,762			1,501
Ceded	(93,418		)	(86,475		)	(91,979		)
Net premium written	$	110,388		$	72,162		$	63,861
Change in unearned premiums:
Direct	$	(23,666	)	$	(2,603	)	$	(3,699	)
Assumed	697			(727		)	4,252
Ceded	2,661			(1,977		)	13,767
Net decrease (increase)	$	(20,308	)	$	(5,307	)	$	14,320
Premiums earned:
Direct	$	175,940		$	153,272		$	150,641
Assumed	4,897			2,035			5,752
Ceded	(90,757		)	(88,452		)	(78,212		)
Net premiums earned	$	90,080		$	66,855		$	78,181
Losses and LAE incurred:
Direct	$	35,774		$	60,508		$	58,447
Assumed	2,554			1,436			4,423
Ceded	533			(19,411		)	(22,115		)
Net losses and LAE incurred	$	38,861		$	42,533		$	40,755

Ceded losses incurred decreased by $19,944 during the year ended December 31, 2011 compared to the year ended December 31, 2010 primarily for two reasons: i) favorable loss development on prior-year claims allowed us to reduce our estimate of ultimate losses, and ii) we commuted the 2005 FHCF contract during 2011 and the 2004 FHCF contract in 2010. Additionally, the statute of limitations related to insured events occurring during the 2005 and 2004 storm years expired, so policyholders cannot report new claims as they could in the prior year, nor are policyholders reopening as many previously-closed claims as in the prior year. The losses we incurred in 2011, 2010 or 2009 related to storms that occurred in those same years did not exceed our retained loss threshold.

The following table highlights the effects that our reinsurance transactions have on unpaid losses and loss adjustment expenses and unearned premiums in our Consolidated Balance Sheets:

	December 31,
	2011			2010
Unpaid losses and LAE, net:
Direct	$	30,501		$	43,999
Assumed	3,099			3,415
Ceded	(3,318		)	(23,814		)
Net unpaid losses and LAE	$	30,282		$	23,600
Unearned premiums, net:
Direct	$	100,042		$	76,376
Assumed	88			785
Ceded	(40,968		)	(38,307		)
Net unearned premiums	$	59,162		$	38,854

Reinsurance recoverable at the balance sheet dates consists of the following:

	December 31,
	2011		2010
Reinsurance recoverable on unpaid losses and LAE	$	3,318	$	23,814
Reinsurance recoverable on paid losses and LAE	1,140		3,490
Reinsurance recoverable	$	4,458	$	27,304

During the years ended December 31, 2011, 2010 and 2009, we recognized recoveries totaling $22,278, $17,447 and $18,938, respectively, under our reinsurance agreements.

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Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2011

Deferred Policy Acquisition Costs Disclosures [Abstract]

Deferred Policy Acquisition Costs

DEFERRED POLICY ACQUISITION COSTS

We anticipate that our deferred policy acquisition costs will be fully recoverable in the near term. The table below depicts the activity with regard to deferred policy acquisition costs:

	2011			2010
Balance at January 1	$	9,342		$	9,256
Policy acquisition costs deferred	29,744			23,407
Amortization	(26,762		)	(23,321		)
Balance at December 31	$	12,324		$	9,342

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Subsequent Events

12 Months Ended

Dec. 31, 2011

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

We evaluate all subsequent events and transactions for potential recognition or disclosure in our financial statements.

On March 14, 2012, our Board declared a $0.05 per share dividend. We will pay the $518 dividend on April 5, 2012 to shareholders of record on March 26, 2011. Other than the aforementioned dividend declaration, we have not identified any other issues requiring disclosure

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Related Party Transactions

12 Months Ended

Dec. 31, 2011

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

In 2003, we entered into an investment-management agreement, in effect until terminated by either party, with Synovus Trust. For the years ended December 31, 2011, 2010 and 2009, our subsidiaries incurred combined fees under the agreement of $85, $101 and $109, respectively. Synovus Financial Corporation (Synovus) owns Synovus Trust, which provides investment-management services for the investment accounts of our subsidiaries. On September 28, 2011, Synovus, which owned 14.9% of our common stock outstanding, sold all shares of our common stock that it owned.

In February 2010, we paid the remaining principal balance of $4,327 to Columbus Bank & Trust, a bank owned by Synovus. Under the loan agreement, we incurred interest of $19 and $147 for the years ended December 31, 2010 and 2009, respectively. CB&T charged us standard industry interest rates.

On September 29, 2008, we issued notes payable to two of our former stockholders as well as a note payable to United Noteholders, LLC, which is owned in part by one of our directors and is managed by two of our other directors. All three notes are part of the note agreement we entered into on August 15, 2008, with various accredited investors. For the years ended December 31, 2010 and 2009, total interest incurred related to these notes was $308 and $892, respectively, and total discount amortized related to these notes was $70 and $185, respectively. We paid these 11% merger-related notes in full on May 5, 2010, recognizing a loss on extinguishment of $726.

Our Chairman of the Board also serves as a director of Prime Holdings Insurance Services, Inc. On May 4, 2010 we received the final payment of $402 on the note receivable from Prime.

Effective March 30, 2011, UPC purchased $2,250 of up to $3,000 aggregate principal amount of promissory notes offered by Hamilton Risk Management Co., a Florida corporation engaged in the business of providing automobile insurance in Florida through its wholly-owned subsidiaries.  The HRM notes bear interest at the rate of two percent per annum.  All outstanding principal of and interest on the HRM notes is due on March 30, 2014.  In consideration for its purchase of the HRM notes, UPC received a Class A limited partnership interest in Acadia Acquisition Partners, L.P., the parent company of Hamilton Risk Management.  Our director, James R. Zuhlke, is acting as Executive Chairman of Hamilton Risk Management on an interim basis. Another of our directors, Larry G. Swets, serves as one of two managers of the limited liability company that serves as general partner of Acadia Acquisition Partners.  We bifurcated the cash consideration of $2,250 by allocating $1,948 to the note receivable based on its fair value (using a discounted cash flow model) and allocating the residual amount of $302 to our limited partnership interest. During the year ended December 31, 2011, we recorded interest income of $34 and we recorded $70 of amortization of the note discount using the effective interest method. During the second quarter of 2011, we reduced the carrying amount of the limited partnership interest to zero by recording a $302 charge to other expenses because our share of Acadia's losses for the quarter exceeded the carrying amount of the partnership interest. We report the note receivable as part of other assets on the Consolidated Balance Sheets.

Effective August 29, 2011, we entered into a Management Services Agreement (MSA) with 1347 Advisors, LLC, a wholly-owned subsidiary of Kingsway Financial Services, Inc., a property and casualty insurance company. One of our directors, Larry Swets, serves as the President and Chief Executive Officer of Kingsway, as well as a Managing Director of 1347 Advisors. The MSA, which is effective for a six-month period with automatic three-month extensions unless otherwise terminated, stipulates that 1347 Advisors shall provide us with the services of an interim CFO, in addition to actuarial and other services. Hassan Baqar serves as our interim CFO under the MSA. Mr. Baqar also serves as a Managing Director of 1347 Advisors and a Vice President of Kingsway America, Inc., a wholly-owned subsidiary of Kingsway Financial Services, Inc. In exchange for the services, we will pay 1347 Advisors a monthly consulting fee of $60 plus any reasonable expenses. For the year ended December 31, 2011, we incurred $240 under the MSA.

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Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table summarizes the provision for income taxes:

	Year Ended December 31,
	2011		2010		2009
Federal:
Current	4,864		(843	)	868
Deferred	(656	)	423		1,058
Provision for (benefit from) Federal income tax expense	4,208		(420	)	1,926
State:
Current	664		8		148
Deferred	56		(71	)	196
Provision for (benefit from) State income tax expense	720		(63	)	344
Provision for (benefit from) income taxes	4,928		(483	)	2,270

The actual income tax expense differs from the expected income tax expense computed by applying the combined applicable effective federal and state tax rates to income before the provision for income taxes as follows:

	Year Ended December 31,
	2011		2010		2009
Expected income tax expense (benefit) at federal rate	4,425		(479	)	2,151
State tax expense (benefit), net of federal deduction benefit	472		(71	)	287
Dividend received deduction	(38	)	(60	)	(83	)
Other, net	69		127		(85	)
Reported income tax expense (benefit)	4,928		(483	)	2,270

Deferred income taxes, which is included in other assets or other liabilities as appropriate, reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The table below summarizes the significant components of our net deferred tax asset:

	December 31,
	2011		2010
Deferred tax assets:
Unearned premiums	4,356		2,998
Assessments	4		179
Tax-related discount on loss reserve	726		499
Bad debt expense	30		23
Other-than-temporary impairment	105		140
Acquired deferred tax asset	172		172
Other	304		178
Total deferred tax assets	5,697		4,189
Deferred tax liabilities:
Unrealized gain	(1,470	)	136
Deferred acquisitions costs	(4,285	)	(3,264	)
Capitalized software	(297	)	(323	)
Other	(104	)	(192	)
Total deferred tax liabilities	(6,156	)	(3,643	)
Less: valuation allowance	(172	)	(172	)
Net deferred tax asset (liability)	(631	)	374

In assessing the net realizable value of deferred tax assets, we consider whether it is more likely than not that we will not realize some portion or all of the deferred tax assets. The ultimate realization of deferred tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

The statute of limitations related to our consolidated Federal income tax returns and our Florida income tax returns expired for all tax years up to and including 2007; therefore, only the 2008 through 2011 tax years remain subject to examination by taxing authorities. No taxing authorities are currently examining any of our federal or state income tax returns.

As of December 31, 2011, we have not taken any uncertain tax positions with regard to our tax returns.

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Reserve for Unpaid Losses and Loss Adjusting Expenses

12 Months Ended

Dec. 31, 2011

Reserve for Unpaid Losses and Loss Adjustment Expenses [Abstract]

Reserve for Unpaid Losses and Loss Adjusting Expenses

UNPAID LOSSES

We determine the reserve for unpaid losses on an individual-case basis for all incidents reported. The liability also includes amounts for IBNR claims as of the balance sheet date.

The table below summarizes the activity related to our reserve for unpaid losses:

	2011			2010		2009
Balance at January 1	$	47,414		$	44,112	$	40,098
Less: reinsurance recoverable on unpaid losses	23,814			23,447		20,906
Net balance at January 1	$	23,600		$	20,665	$	19,192
Incurred related to:
Current year	43,019			41,527		43,731
Prior years	(4,158		)	1,006		(2,976		)
Total incurred	$	38,861		$	42,533	$	40,755
Paid related to:
Current year	28,857			27,065		30,637
Prior years	3,322			12,533		8,645
Total paid	$	32,179		$	39,598	$	39,282
Net balance at December 31	$	30,282		$	23,600	$	20,665
Plus: reinsurance recoverable on unpaid losses	3,318			23,814		23,447
Balance at December 31	$	33,600		$	47,414	$	44,112

Based upon our internal analysis and our review of the statement of actuarial opinion provided by our actuarial consultants, we believe that the reserve for unpaid losses reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.

As reflected by our losses incurred related to prior years, we had a reserve redundancy in 2011 compared to a reserve deficiency in 2010. Since we place substantial reliance on loss-development-based actuarial models when determining our estimate of ultimate losses, the redundancy in 2011 resulted from reductions to our estimate of ultimate losses because of continued favorable loss development on claims incurred in prior years.

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Long-Term Debt

12 Months Ended

Dec. 31, 2011

Debt Disclosure [Abstract]

Long-term Debt

LONG-TERM DEBT

Our long-term debt at December 31, 2011 and 2010 consisted of a note payable to the Florida State Board of Administration. As of December 31, 2011 and 2010, we owed $17,059 and $18,235, respectively, on the note and the interest rate was 1.99% and 2.77%, respectively.

At December 31, 2011, the annual maturities of our long-term debt are as follows:

	Amount
2012	$	1,176
2013	1,176
2014	1,176
2015	1,176
2016	1,176
Thereafter	11,179
Total debt	17,059

We executed the 20-year, $20,000 note payable to the SBA under its Insurance Capital Build-Up Incentive Program, effective October 1, 2006. The stated rate for the SBA note is a rate equivalent to the 10-year U.S. Treasury Bond rate. We made quarterly interest-only payments for the first three years, then, as of October 1, 2009, we began making quarterly principal and interest payments.

We agreed to certain covenants, the violation of which could cause an event of default. Among others, these covenants include: 1) maintaining statutory surplus greater than or equal to $50,000 less repayments of principal on the note, catastrophic losses paid since the note incepted and any deferred acquisition costs related to Florida policies, calculated at December 31, 2011 as $41,966, 2) refraining from the payment of dividends when principal and/or interest payments related to the note are past due, and 3) maintaining a minimum writing ratio. The note permits us to meet either of the following ratios:

• a writing ratio based on net written premium to surplus of 2:1 ratio for the year beginning January 1, 2010 and thereafter for the remaining term of the note agreement, or

• a writing ratio based on gross written premium to surplus of 6:1 ratio for the year beginning January 1, 2010 and thereafter for the remaining term of the note agreement.

As part of the program, the SBA required that we contribute an equivalent amount of capital to UPC; therefore, UIM made a $20,000 capital contribution to UPC at the time we executed the note in 2006. For purposes of calculating the writing ratio on a quarterly basis, the amended note defines surplus as the sum of the $20,000 matching contribution of capital to UPC and the outstanding principal balance of the note. Should we fail to exceed either a net writing ratio of 1.5:1 or a gross writing ratio of 4.5:1, our interest rate will increase by 450 basis points above the stated rate of the note. Any other writing ratio deficiencies result in an interest rate penalty of 25 basis points above the stated rate of the note.

The SBA note states that if we fail to exceed either a net writing ratio of 1:1 or a gross writing ratio of 3:1 for three consecutive quarters, we will be obligated to repay a portion of the SBA note such that the appropriate minimum writing ratio will be obtained for the following quarter. Our SBA note further provides that the SBA may, among other things, declare its loan immediately due and payable for all defaults existing under the SBA note; however, the insurance regulatory authority in Florida would only authorize a payment to the SBA if such payment did not create a hazardous financial condition at UPC.

During 2011, and at December 31, 2011, we complied with all covenants as specified in the SBA note, though we paid some additional interest during the first quarter of 2011 as a result of violating the writing ratio covenant during the fourth quarter of 2010.

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Statutory Accounting and Regulation

12 Months Ended

Dec. 31, 2011

Statutory Accounting and Regulation [Abstract]

Statutory Accounting Practices

STATUTORY ACCOUNTING AND REGULATION

The insurance industry is heavily-regulated. State laws and regulations, as well as national regulatory agency requirements, govern the operations of all insurers such as UPC. The various laws and regulations require that insurers maintain minimum amounts of statutory surplus and risk-based capital, they restrict insurers' ability to pay dividends, they specify allowable investment types and investment mixes, and they subject insurers to assessments.

Our UPC subsidiary is domiciled in Florida, and the laws of that state require that UPC maintain capital and surplus equal to the greater of 10% of its total liabilities or $5,000. Our statutory capital surplus was $48,188 at December 31, 2011. State law also requires UPC to adhere to prescribed premium-to-capital surplus ratios, with which we were in compliance at December 31, 2011.

The National Association of Insurance Commissioners published risk-based capital guidelines for insurance companies that are designed to assess capital adequacy and to raise the level of protection that statutory surplus provides for policy holders. Most states, including Florida, have enacted the NAIC guidelines as statutory requirements, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. State insurance regulatory authorities could require an insurer to cease operations in the event the insurer fails to maintain the required statutory capital. At December 31, 2011, UPC exceeded the minimum risk-based capital requirements.

Florida law permits an insurer to pay dividends or make distributions out of that part of statutory surplus derived from net operating profit and net realized capital gains. The law further provides calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authority and the amount of dividends or distributions that would require prior approval of the insurance regulatory authority. Statutory risk-based capital requirements may further restrict UPC’s ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum risk-based capital requirements.

Florida law limits an insurer’s investment in equity instruments and also restricts investments in medium to low quality debt instruments. We were in compliance with all investment restrictions at December 31, 2011, and 2010.

Governmental agencies or certain quasi-governmental entities can levy assessments upon us in the states in which we write policies. See Note 2(j) for a description of how we recover assessments imposed upon us.

The table below summarizes the activity related to assessments levied upon UPC:

	2011		2010		2009
Expected recoveries of assessments, January 1	413		1,525		2,235
Assessments expensed	—		—		1,045
Assessments recovered	(403	)	(1,103	)	(1,688	)
Assessments not recoverable	—		(9	)	(67	)
Expected recoveries of assessments, December 31	10		413		1,525

We expense an assessment when the particular governmental agency or quasi-governmental entity levies it upon us; therefore, expected recoveries in the table above are not assets and we will record the amounts as income when collected from policyholders.

Governmental agencies or certain quasi-governmental entities can also levy assessments upon policyholders, and we collect the amount of the assessments from policyholders as surcharges for the benefit of the assessing agency. We currently collect assessments levied upon policyholders on behalf of Citizens in the amount of 1.0%, and on behalf of FHCF in the amount of 1.3%. We multiply the premium written on each policy, except our flood policies, by these assessment percentages to determine the additional amount that we will collect from the policyholder and remit to the assessing agencies.

The note payable to the SBA is considered a surplus note pursuant to statutory accounting principles. As a result, UPC is subject to the authority of the Insurance Commissioner of the State of Florida with regard to its ability to repay principal and interest on the surplus note. Any payment of principal or interest requires permission from the insurance regulatory authority.

We have reported our insurance subsidiary’s assets, liabilities and results of operations in accordance with GAAP, which varies from statutory accounting principles prescribed or permitted by state laws and regulations, as well as by general industry practices. The following items are principal differences between statutory accounting and GAAP:

• Statutory accounting requires that we exclude certain assets, called non-admitted assets, from the balance sheet.

• Statutory accounting requires us to expense policy acquisition costs when incurred, while GAAP allows us to defer and amortize policy acquisition costs over the estimated life of the policies.

• Statutory accounting requires that we calculate deferred income taxes differently than we would under GAAP.

• Statutory accounting requires that we record certain investments at cost or amortized cost, while we record other investments at fair value; however, GAAP requires that we record all investments at fair value.

• Statutory accounting requires that surplus notes, also known as surplus debentures, be recorded in statutory surplus, while GAAP requires us to record surplus notes as a liability.

Our insurance subsidiary must file with the various insurance regulatory authorities an “Annual Statement” which reports, among other items, net income (loss) and surplus as regards policyholders, which is called stockholder’s equity under GAAP.

The table below reconciles our consolidated GAAP net income to the statutory net loss of UPC:

	Year Ended December 31,
	2011		2010		2009
Consolidated GAAP net income (loss)	8,088		(925	)	4,057
Increase (decrease) due to:
Commissions	56		(11	)	(225	)
Deferred income taxes	(1,278	)	247		667
Deferred policy acquisition costs	(98	)	(310	)	652
Allowance for doubtful accounts	16		(309	)	64
Assessments	(453	)	(1,110	)	(884	)
Prepaid expenses	187		(275	)	3
Premium deficiency reserve	302		—		—
Operations of non-statutory subsidiaries	(11,452	)	(3,489	)	(12,383	)
Statutory net loss of UPC	(4,632	)	(6,182	)	(8,049	)

The table below reconciles our consolidated GAAP stockholders’ equity to the surplus as regards policyholders of UPC:

	December 31,
	2011		2010
Consolidated GAAP stockholders’ equity	54,989		45,293
Increase (decrease) due to:
Deferred policy acquisition costs	(3,452	)	(3,354	)
Deferred income taxes	(295	)	(471	)
Investments	(2,145	)	165
Non-admitted assets	(397	)	(109	)
Surplus debentures	17,059		18,235
Provision for reinsurance	(105	)	(696	)
Equity of non-statutory subsidiaries	(19,681	)	(12,978	)
Commissions	1,924		1,868
Allowance for doubtful accounts	396		380
Assessments	10		463
Prepaid expenses	(177	)	(364	)
Other, net	62		63
Statutory surplus as regards policyholders of UPC	48,188		48,495

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2011

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Comprehensive Income

ACCUMULATED OTHER COMPREHENSIVE INCOME

We report changes in other comprehensive income items within comprehensive income on the Consolidated Statements of Income, and we include accumulated other comprehensive income as a component of stockholders' equity on the Consolidated Balance Sheets.

The table below details the components of accumulated other comprehensive income (loss) at year end:

	Pre-Tax Amount			Tax (Expense)Benefit			Net-of-Tax Amount
December 31, 2008	(2,389		)	899			(1,490		)
Changes in net unrealized gain (loss) on investments	4,152			(1,580		)	2,572
Reclassification adjustment for realized gains	(1,837		)	699			(1,138		)
Reclassification adjustment for recognized other-than-temporary impairments	1,878			(714		)	1,164
December 31, 2009	1,804			(696		)	1,108
Changes in net unrealized gain (loss) on investments	2,093			(807		)	1,286
Reclassification adjustment for realized gains	(4,346		)	1,676			(2,670		)
Reclassification adjustment for recognized other-than-temporary impairments	97			(37		)	60
December 31, 2010	$	(352	)	$	136		$	(216	)
Changes in net unrealized gain (loss) on investments	4,291			(1,656		)	2,635
Reclassification adjustment for realized losses	(158		)	61			(97		)
Reclassification adjustment for recognized other-than-temporary impairments	$	31		$	(12	)	$	19
December 31, 2011	$	3,812		$	(1,471	)	$	2,341

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Schedule V. Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2011

Valuation and Qualifying Accounts [Abstract]

Valuation and Qualifying Accounts

SCHEDULE V. VALUATION AND QUALIFYING ACCOUNTS

	Uncollectible Premium Liability
	Balance at Beginning of Period		Charged to Costs and Expenses	Deductions			Balance at End of Period
Years Ended December 31,
2011	$	61	16	$	—		$	77
2010	370		42	(351		)	61
2009	305		83	(18		)	370

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Consolidated Statement of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Stockholders' equity at beginning of period at Dec. 31, 2008	$ 42,927	$ 1	$ 0	$ 0	$ (1,490)	$ 44,416
Common stock - shares outstanding at beginning of period at Dec. 31, 2008		10,548,932
Increase (Decrease) in Stockholders' Equity
Net income (loss)	4,057	0			0	4,057
Net unrealized change in investments, net of tax	2,598	0			2,598	0
Issuance of common stock to officers		25,000
Issuance of common stock to officers	75	0	75		0	0
Cash dividends on common stock	(1,586)	0			0	(1,586)
Stockholders' equity at end of period at Dec. 31, 2009	48,071	1	75	0	1,108	46,887
Common stock - shares outstanding at end of period at Dec. 31, 2009		10,573,932
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(925)	0			0	(925)
Net unrealized change in investments, net of tax	(1,324)	0			(1,324)	0
Cash dividends on common stock	(529)	0			0	(529)
Stockholders' equity at end of period at Dec. 31, 2010	45,293	1	75	0	(216)	45,433
Common stock - shares outstanding at end of period at Dec. 31, 2010	10,573,932	10,573,932
Increase (Decrease) in Stockholders' Equity
Net income (loss)	8,088	0			0	8,088
Net unrealized change in investments, net of tax	2,557	0			2,557	0
Acquisition of treasury stock		(212,083)
Acquisition of treasury stock	(431)	0		(431)	0	0
Cash dividends on common stock	(518)					(518)
Stockholders' equity at end of period at Dec. 31, 2011	$ 54,989	$ 1	$ 75	$ (431)	$ 2,341	$ 53,003
Common stock - shares outstanding at end of period at Dec. 31, 2011	10,361,849	10,361,849

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Earnings Per Share

12 Months Ended

Dec. 31, 2011

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

At December 31, 2010 and 2009, we had 7,077,375 warrants outstanding; each warrant could have been exercised for one share of common stock. On October 4, 2011, the warrants expired. For the years ended December 31, 2010 and 2009, the warrants were anti-dilutive.

At December 31, 2009, we had 350,000 unit purchase options outstanding; each unit consisted of a share of common stock and a warrant to purchase a share of common stock. On October 4, 2010, the unit purchase options expired. For the year ended December 31, 2009, the units were anti-dilutive.

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Employee Benefit Plan

12 Months Ended

Dec. 31, 2011

General Discussion of Pension and Other Postretirement Benefits [Abstract]

Pension and Other Postretirement Benefits Disclosure

EMPLOYEE BENEFIT PLAN

We provide a 401(k) plan for substantially all of our employees. We match 100% of the first 5% of employees’ contributions to the plan. For the years ended December 31, 2011, 2010 and 2009, our contributions to the plan on behalf of the participating employees were $97, $87, and $81, respectively.