Atlas Financial Holdings, Inc. (Form: 10-K, Received: 03/26/2012 10:29:20)

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:		COMMISSION FILE NUMBER:
December 31, 2011

ATLAS FINANCIAL HOLDINGS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




CAYMAN ISLANDS		27-5466079
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

150 NW POINT BOULEVARD		60007
Elk Grove Village, IL		(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (847) 472-6700

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



TITLE OF EACH CLASS:				NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common, $0.001 par value per share				TSX Venture Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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

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

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ 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. þ

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

Large Accelerated Filer ¨ Accelerated Filer ¨

Non-Accelerated Filer ¨ Smaller Reporting Company þ

(do not check if a smaller reporting company)

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

There were 18,433,153 shares of the Registrant's common stock outstanding as of March 1, 2012 of which 4,628,292 shares of the Registrant’s ordinary voting common stock outstanding as of March 1, 2012 were held by non-affiliates of the Registrant. The aggregate market value of the common stock held by non-affiliates of the Registrant, computed by reference to the closing price as of the last business day of the registrant's most recently completed second fiscal quarter, June 30, 2011, was approximately $5.5 million.

For purposes of the foregoing calculation only, which is required by Form 10-K, the Registrant has included in the shares owned by affiliates those shares owned by directors and officers of the Registrant, and such inclusion shall not be construed as an admission that any such person is an affiliate for any purpose.

* * *

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Definitive Proxy Statement for its 2012 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.



PART I
Item 1.	Business	3
	Strategic Focus	5
	Competition	5
	Geographic Markets	6
	Regulation	6
	Employees	7
	Available Information	7
	Seasonality	7
	Outlook	8
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	21
Item 4.	Mine Safety Disclosures	21
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities	21
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 8.	Financial Statements and Supplementary Data	43
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	71
Item 9B.	Other Information	71
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	71
Item 11.	Executive Compensation	72
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	72
Item 13.	Certain Relationships and Related Transactions, and Director Independence	72
Item 14.	Principal Accounting Fees and Services	72
PART IV
Item 15.	Exhibits and Financial Statement Schedules	72
	Signatures	74
	Financial Statement Schedules	76

Table of Contents

Part I

Item 1. Business

Atlas Financial Holdings, Inc. (“Atlas” or the "Company” or “We”) is a financial services holding company incorporated under the laws of the Cayman Islands. The core business of Atlas, which is carried out through its insurance subsidiaries, American Country Insurance Company (“American Country”) and American Service Insurance Company, Inc. (“American Service” together with American Country, the “insurance subsidiaries”), is the underwriting of commercial automobile insurance policies, focusing on the “light” commercial automobile sector. This sector includes taxi cabs, non-emergency para-transit, limousine, livery and business auto. The insurance subsidiaries distribute their products through a network of independent retail agents. American Country commenced operations in 1979. With roots dating back to 1925 selling insurance for taxi cabs, American Country is one of the oldest insurers of U.S. taxi and livery business. In 1983, American Service began as a non-standard personal and commercial auto insurer writing business in the Chicago, Illinois area. Since then, the insurance subsidiaries have expanded their expertise. Together, American Country and American Service are licensed to write property and casualty ("P&C") insurance in 47 states in the United States. The management of American Country and American Service is fully integrated with a single operating infrastructure supporting the insurance subsidiaries.

The address of Atlas’ registered office is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The operating headquarters of Atlas and its subsidiaries is located at 150 Northwest Point Boulevard, Elk Grove Village, Illinois 60007, USA.

Atlas was formed on December 31, 2010 in a reverse merger transaction amongst:


(a)	JJR VI Acquisition Corporation (“JJR VI”), a Canadian capital pool company sponsored by JJR Capital, a Toronto based merchant bank,


(b)	American Insurance Acquisition Inc., (“American Acquisition”), a corporation formed under the laws of Delaware by Kingsway America Inc. (“KAI”), a subsidiary of Kingsway Financial Services Inc. (“KFSI”), a Canadian public company formed under the laws of Ontario and whose shares are traded on the Toronto and New York Stock Exchanges, and


(c)	Atlas Acquisition Corp, a Delaware corporation formed by JJR VI.

Prior to the transaction, KAI transferred 100% of the capital stock of American Service and American Country , to American Acquisition in exchange for common and preferred shares of American Acquisition and promissory notes aggregating C$60.8 million. In addition, American Acquisition raised C$8.0 million through a private placement offering of subscription receipts to qualified investors at a price of C$2.00 per subscription receipt.

KAI received 13,804,861 restricted voting common shares of Atlas valued at $27.8 million, along with 18,000,000 non-voting preferred shares of Atlas valued at $18.0 million and C$8.0 million cash in exchange for 100% of the outstanding shares of American Acquisition and full payment of the promissory notes. Investors in the American Acquisition subscription receipts received 3,983,502 ordinary voting common shares of Atlas plus warrants to purchase one ordinary voting common share of Atlas for each subscription receipt at C$2.00 at any time until December 31, 2013. JJR VI common shares held by former shareholders of JJR VI were consolidated on the basis of one post-consolidation JJR VI common share for every 10 pre-consolidation JJR VI common shares. The post-consolidation JJR VI common shares were then exchanged on a one-for-one basis for ordinary voting common shares of Atlas.

Atlas' consolidated financial statements are those of Atlas and subsidiaries and have been prepared in accordance with Accounting Standard Codification ("ASC") 805 Business Combinations . Financial statements prepared following the reverse merger are presented in the name of the legal parent acquirer, Atlas, but are a continuation of the financial statements of the accounting acquirer, American Acquisition, with an adjustment for the capital structure (that is, the number and type of equity interests, including equity instruments issued to effect the merger) of Atlas, as the legal parent acquirer and accounting acquiree. Accordingly, and as a result of the December 31, 2010 merger date, shareholders’ equity at December 31, 2010 reflects the ordinary voting common shares outstanding at the date of the merger together with the restricted voting common shares and non-voting preferred shares that were issued to effect the merger, and also reflect the historical retained earnings (retained deficit) balances of American Acquisition, as the accounting acquirer.

On February 25, 2010, while under KAI ownership, Southern United Fire Insurance Company ("Southern United") merged into American Service. The transaction was accounted for as a merger of companies under common control with the Southern United assets and liabilities included at their carrying values and its results of operations included in the financial statements from the date of the merger.

Under Section 12(b) of the U.S. Securities Exchange Act of 1934, non-US companies must test to see if they qualify for domestic issuer status as of the last day of the second quarter of each fiscal year, and, if so, will be considered “domestic issuers” in the United States effective the beginning of the next fiscal year and report its financial statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and on U.S. domestic forms. Atlas has determined that, as of June 30, 2011, it qualified to become a U.S. domestic issuer effective January 1, 2012 and, as such, has adopted U.S. GAAP for its annual financial statements beginning December 31, 2011.

In this annual report on Form 10-K, we occasionally refer to statutory financial information. All domestic United States insurance companies are required to prepare statutory-basis financial statements. As a result, industry data is available that enables comparisons between insurance companies, including competitors who are not subject to the requirement to prepare financial statements in conformity with U.S. GAAP. We frequently use industry publications containing statutory financial information to assess our competitive position.

Strategic Focus

Vision

To be the preferred specialty commercial transportation insurer in any geographic areas where our value proposition delivers benefit to all stakeholders.

Mission

To develop and deliver superior specialty insurance products that are correctly priced to meet our customers' needs and generate consistent underwriting profit for the insurance companies we own. These products will be distributed to the insured through independent retail agents utilizing Atlas' efficient operating platform.

We will achieve our Vision and Mission through the design, sophisticated pricing and efficient delivery of specialty transportation insurance products. Through constant interaction with our retail producers, we will strive to thoroughly understand each of the markets we serve. This knowledge will assist us in ensuring we deliver strategically priced products to the right market at the right time. Analysis of the substantial data available through our operating companies will drive product and pricing decisions. We will focus on our key strengths and expand our geographic footprint and products only to the extent that these activities support our Vision and Mission. We will target niche markets that support adequate pricing and will be best able to adapt to changing market needs ahead of our competitors through our strategic commitment and increasing scale.

Competition

The insurance industry is price competitive in all markets in which the insurance subsidiaries operate. Atlas strives to employ disciplined underwriting practices with the objective of rejecting under‑priced risks. Based on the current size of the commercial automobile insurance industry, Atlas requires only 1% market share to achieve its business plan.

Atlas competes on a number of factors such as distribution strength, pricing, agency relationships, policy support, claim service, and market reputation. In Atlas’ core commercial automobile lines, the primary offerings are policies at the minimum prescribed limits in each state, as established by statutory, municipal and other regulations. Atlas differentiates itself from many larger companies competing for this specialty business by exclusively focusing on these lines of insurance.

In the specialty insurance market, American Country and American Service compete against, among others, American Transit Insurance Company (New York only), Canal Insurance Company, CNA Financial Corporation, Carolina Casualty Insurance Company, Empire Fire & Marine Insurance Company (subsidiary of Zurich Financial Services Ltd.), Gateway Insurance Company, Global Liberty Insurance Company of New York, Grenada Insurance Company, Hereford Holding Company, Inc., Hartford Financial Services Group, Lancer Financial Group, MAPFRE USA, Maya Assurance Company, Mercury General Corporation, National Indemnity Company (subsidiary of Berkshire Hathaway, Inc.), National Interstate Corporation, Northland Insurance Company (subsidiary of Travelers Companies, Inc.), Safeco Corporation (subsidiary of Liberty Mutual), Scottsdale Insurance Company (National Casualty Company) and ULLICO, Inc.

To compete successfully in the specialty commercial insurance industry, Atlas relies on its ability to: identify markets that are most likely to produce an underwriting profit; operate with a disciplined underwriting approach; offer diversified products and geographic platforms; practice prudent claims management; reserve appropriately for unpaid claims; strive for cost containment through economies of scale where deemed appropriate; and provide services and competitive commissions to its independent agents and brokers.

Geographic Markets

Currently, Atlas distributes insurance only in the United States. Through our insurance subsidiaries, we are licensed to write P&C insurance in 47 states in the United States. The following table reflects, in percentages, the principal geographic distribution of premiums written for the year ended December 31, 2011. No other jurisdiction accounted for more than 5%.

Table 1(a). Selected Geographic Data

Illinois	60.4	%
Michigan	9.1	%
Indiana	6.4	%
Minnesota	6.1	%

The below diagram outlines the states where Atlas is actively writing insurance as of December 31, 2011 and where Atlas plans to become active in 2012.

Regulation

Atlas is subject to extensive regulation, particularly at the state level. The method, extent and substance of such regulation varies by state but generally has its source in statutes which establish standards and requirements for conducting the business of insurance and that delegate regulatory authority to a state regulatory agency. In general, such regulation is intended for the protection of

those who purchase or use insurance products issued by our insurance subsidiaries, not the holders of securities issued by Atlas. These rules have a significant impact on our business and relate to a wide variety of matters including accounting methods, agent and company licensure, claims procedures, corporate governance, examination, investing practices, policy forms, pricing, trade practices, reserve adequacy and underwriting standards.

In recent years, the state insurance regulatory framework has come under increased federal oversight. Legislation which would provide for increased federal chartering of insurance companies has been proposed. Moreover, in its effort to strengthen the regulation of the financial services market overall, the federal government has proposed a set of regulatory reforms, including the establishment of an Office of National Insurance within the Department of the Treasury. In addition, state legislators and insurance regulators continue to examine the appropriate nature and scope of state insurance regulation.

Nearly all states have insurance laws dictating the protocol for P&C insurers to file or maintain price schedules, policy or coverage forms, and other information subject to that state’s regulatory authority. In many cases, such price schedules, policy forms, or both, must be approved prior to use. While these vary from state to state, the objectives of the pricing regulations are generally the same: a price cannot be excessive, inadequate or unfairly discriminatory.

As a result, the speed with which an insurer can change prices in response to competition or increased costs depends, in part, on whether the pricing regulations are (i) prior approval, (ii) file-and-use, or (iii) use-and-file. In states having prior approval laws (of which there are 18), the regulator must approve a price before an insurer may use it. In file-and-use states, the insurer does not have to wait for the regulator’s approval to use a price, but the price must be filed before being used. When a state significantly restricts both underwriting and pricing, it can become more difficult for an insurer to make adjustments quickly in response to changes which could affect profitability.

It is difficult to predict what specific measures at the state or federal level will be adopted or what effect any such measures would have on Atlas.

A primary metric used by insurance regulators is the National Association of Insurance Commissioners’ (“NAIC”) risk based capital (“RBC”) ratio which is computed at the end of each year based on annual information. The insurance subsidiaries are required to maintain certain minimum RBC ratios as provided for by insurance statutes in the states in which they write business. The insurance subsidiaries were above the 200% minimum RBC ratio threshold as measured at December 31, 2011. Based on the 2011 annual statutory financial statements, December 31, 2011 RBC ratios were 592.5% and 803.4% for American Country and American Service, respectively. The insurance subsidiaries had approximately $36.4 million of capital in excess of the 200% minimum RBC described above.

Employees

As of December 31, 2011, Atlas had 89 full-time employees, most of whom work at the corporate offices in Elk Grove Village, Illinois.

Available Information

We maintain an Internet website at www.atlas-fin.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q (as well as those previously filed on the SEDAR system in Canada), current reports on Form 8-K, and any amendments to said reports are available through this website, free of charge, as soon as reasonably practicable after they are electronically filed or furnished to the Securities and Exchange Commission (the "SEC"). The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC available at www.sec.gov.

In addition, our code of business conduct and ethics and Audit Committee charter are available on our website.

Seasonality

The P&C insurance business is seasonal in nature. While Atlas’ net premiums earned generally follow a stable trend from quarter to quarter, Atlas’ gross premiums written follow certain common renewal dates for the light commercial risks that represent its core lines of business. For example, January 1 and March 1 are common taxi cab renewal dates in Illinois and New York, respectively. Net underwriting income is driven mainly by the timing and nature of claims, which can vary widely. Atlas’ ability to generate written premium is also impacted by the timing of policy periods in the states in which Atlas operates.

Outlook

Over the past two years, through dispositions and by placing certain lines of business into run-off, the insurance subsidiaries have streamlined operations to focus on the lines of business they believe will produce favorable underwriting results. Significant progress has also been made in aligning the cost base to the company's expected revenue base going forward. The core functions of the insurance subsidiaries were integrated into a common operating platform. Management believes that both insurance subsidiaries are well positioned in 2012 to begin returning to the volume of premium they wrote in the recent past with better than industry level profitability. The insurance subsidiaries have a long heritage with respect to their continuing lines of business and will benefit from the efficient operating infrastructure honed in 2011. American Country and American Service will actively write business in more states during 2012 than in any prior year, utilizing its well developed underwriting and claim methodology.

Management believes that the most significant opportunities going forward are: (i) continued re-energizing of distribution channels with the objective of recapturing business generated prior to 2009, (ii) building business in previously untapped geographic markets where our insurance subsidiaries are licensed, but not recently active, and (iii) opportunistically acquiring books of business provided market conditions support this activity. Primary potential risks related to these activities include: (i) insurance market conditions remaining “soft” for a sustained period of time, (ii) not being able to achieve the expected support from distribution partners, and (iii) the insurance subsidiaries not successfully maintaining their recently improved ratings from A.M. Best.

Atlas’ sole focus going forward is the underwriting of commercial automobile insurance in the U.S. Atlas will seek to deploy its capital to maximize the return for its shareholders, either by investing in growing the operations or other capital initiatives, depending upon insurance and capital market conditions. Atlas will use historic and current data to analyze and assess future business opportunities.

Item 1A. Risk Factors

This document contains "forward-looking statements" that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. We assume no obligation to update any forward-looking statements as a result of new information or future events or developments.

These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "seeks," "expects," "will," "should," "anticipates," "estimates," "intends," "believes," "likely," "targets" and other words with similar meanings. These statements may address, among other things, our strategy for growth, catastrophe exposure management, product development, investment results, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those communicated in these forward-looking statements.

In addition to the normal risks of business, we are subject to significant risks and uncertainties, including those listed below, which apply to us as an insurer and a provider of other financial services. These risks constitute our cautionary statements under the

Private Securities Litigation Reform Act of 1995 and readers should carefully review such cautionary statements as they identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and historical trends. These cautionary statements are not exclusive and are in addition to other factors discussed elsewhere in this document, in our filings with the SEC or via SEDAR or in materials incorporated therein by reference.

Operational Risk

Operational risk is the risk that the Company is unable to deliver its products or services to customers or perform vital functions required to conduct its business in an efficient and cost effective manner. This risk includes the potential for loss from such events as the breakdown or ineffectiveness of processes, human errors, technology and infrastructure failures, etc.

The insurance subsidiaries’ provisions for unpaid claims may be inadequate, which would result in a reduction in the Company’s net income and might adversely affect its financial condition.

Establishing an appropriate level of reserves is an inherently uncertain process. The Company’s provisions for unpaid claims do not represent an exact calculation of actual liability, but are estimates involving actuarial and statistical projections at a given point in time of what they expect to be the cost of the ultimate settlement and administration of known and unknown claims. The process for establishing the provision for unpaid claims reflects the uncertainties and significant judgmental factors inherent in estimating future results of both known and unknown claims and as such, the process is inherently complex and imprecise. These estimates are based upon various factors, including:


•	actuarial projections of the cost of settlement and administration of claims reflecting facts and circumstances then known;


•	estimates of future trends in claims severity and frequency;


•	judicial theories of liability;


•	variability in claims handling procedures;


•	economic factors such as inflation;


•	judicial and legislative trends, and actions such as class action lawsuits and judicial interpretation of coverages or policy exclusions; and


•	the level of insurance fraud.

Most or all of these factors are not directly quantifiable, particularly on a prospective basis, and the effects of these and unforeseen factors could negatively impact the Company’s ability to accurately assess the risks of the policies that it writes. In addition, there may be significant reporting lags between the occurrence of the insured event and the time it is actually reported to the insurer and additional lags between the time of reporting and final settlement of claims. Unfavorable development in any of these factors could cause the level of reserves to be inadequate. The following factors may have a substantial impact on future claims incurred:


•	the amounts of claims payments;


•	the expenses that the insurance subsidiaries incur in resolving claims;


•	legislative and judicial developments; and


•	changes in economic conditions, including inflation.

As time passes and more information about the claims becomes known, the estimates are appropriately adjusted upward or downward to reflect this additional information. Because of the elements of uncertainty encompassed in this estimation process, and the extended time it can take to settle many of the more substantial claims, several years of experience may be required before a meaningful comparison can be made between actual losses and the original provision for unpaid claims. The development of the provision for unpaid claims is shown by the difference between estimates of claims as of the initial year end and the re-estimated liability at each subsequent year end. Favorable development (reserve redundancy) means that the original claims estimates were higher than subsequently determined or re-estimated. Unfavorable development (reserve deficiency) means that the original claims estimates were lower than subsequently determined or re-estimated. The Company cannot guarantee that it will not have additional unfavorable reserve development in the future. In addition, it may in the future, acquire other insurance companies. The Company cannot guarantee that the provisions for unpaid claims of the companies that it acquires are or will be adequate.

Actual claims and claim adjustment expenses incurred under insurance policies may deviate, perhaps substantially, from the amounts of provisions reflected in the financial statements of the Company.

To the extent that actual claims incurred exceed expectations and the provision for unpaid claims reflected on financial statements, the Company will be required to reflect those changes by increasing reserves for unpaid claims. In addition, government regulators could require that it increase reserves if they determine that provisions for unpaid claims are understated. Increases to the provision for unpaid claims causes a reduction in the insurance subsidiaries’ surplus which could cause a downgrading of the insurance subsidiaries’ ratings. Any such downgrade could, in turn, adversely affect their ability to sell insurance policies.

The insurance subsidiaries will rely on independent agents or producers and will be exposed to risks.

The insurance subsidiaries will market and distribute automobile insurance products through a network of independent agents or producers in the United States. As a result, the Company relies heavily on these agents or producers to attract new business. These agents typically represent more than one insurance company, which may expose the insurance subsidiaries to competition within the agencies and, therefore, cannot rely on their sole commitment to the Company’s insurance products. Independent agents generally have the ability to bind insurance policies, actions over which the Company has a limited ability to exercise preventative control. In the event that an independent agent exceeds their authority by binding the Company on a risk that does not comply with its underwriting guidelines, the Company may be at risk for that policy until it effects a cancellation. Any improper use of such authority may result in losses that could have a material adverse effect on the Company's business, results of operations and financial condition.

In accordance with industry practice, customers often pay the premiums for their policies to agents for payment to the Company. These premiums may be considered paid when received by the agent and thereafter the customer is no longer liable to the Company for those amounts, whether or not the Company has actually received these premium payments from the agent. Consequently, the Company assumes a degree of risk associated with its reliance on independent agents in connection with the settlement of insurance premium balances.

The majority of gross premiums written will be derived from the commercial automobile markets. If the demand for insurance in these markets declines, results of operations could decline significantly.

The size of the commercial automobile insurance market can be affected significantly by many factors outside of the Company’s control, such as the underwriting capacity and underwriting criteria of automobile insurance carriers, and it may be specifically affected by these factors. Additionally, an economic downturn in one or more of its principal markets could result in fewer automobile sales or public transportation operators, resulting in less demand for these insurance products. To the extent that these insurance markets are affected adversely for any reason, gross premiums written will be disproportionately affected due to its substantial reliance on these insurance markets.

The insurance subsidiaries may not be successful in reducing their risk and increasing their underwriting capacity through reinsurance arrangements, which could adversely affect their business, financial condition and results of operations. If reinsurance rates rise significantly or reinsurance becomes unavailable or reinsurers are unable to pay its claims, the Company may be adversely affected.

In order to reduce underwriting risk and increase underwriting capacity, the Company transfers portions of its insurance risk to other insurers through reinsurance contracts. The availability, cost and structure of reinsurance protection are subject to prevailing market conditions that are outside of the Company’s control and which may affect its level of business and profitability. The Company purchases reinsurance from third parties in order to reduce its liability on individual risks. Reinsurance does not relieve

the Company of its primary liability to its insureds. A third party reinsurer’s insolvency or inability or unwillingness to make payments under the terms of a reinsurance treaty could have a material adverse effect on the Company's financial condition or results of operations. The amount and cost of reinsurance available to the Company are subject, in large part, to prevailing market conditions beyond the Company’s control. Its ability to provide insurance at competitive premium rates and coverage limits on a continuing basis depends in part upon the extent to which the Company can obtain adequate reinsurance in amounts and at rates that will not adversely affect its competitive position. There are no assurances that the Company will be able to maintain its current reinsurance facilities, which generally are subject to annual renewal. If it is unable to renew any of these facilities upon their expiration or to obtain other reinsurance facilities in adequate amounts and at favorable rates, the Company may need to modify its underwriting practices or reduce its underwriting commitments.

The insurance subsidiaries are subject to credit risk with respect to the obligations of reinsurers and certain of their insureds. The inability of their risk sharing partners to meet their obligations could adversely affect their profitability.

Although the reinsurers are liable to the Company to the extent of risk ceded to them, the Company remains ultimately liable to policyholders on all risks, even those reinsured. As a result, ceded reinsurance arrangements do not limit the Company’s ultimate obligations to policyholders to pay claims. The Company is subject to credit risks with respect to the financial strength of its reinsurers. The Company is also subject to the risk that their reinsurers may dispute their obligations to pay its claims. As a result, the Company may not recover sufficient amounts for claims that it submits to reinsurers, if at all. As of December 31, 2011, the Company had an aggregate of $ 8.0 million of unsecured reinsurance recoverables. In addition, its reinsurance agreements are subject to specified limits and the Company would not have reinsurance coverage to the extent that it exceeds those limits. With respect to insurance programs, the insurance subsidiaries are subject to credit risk with respect to the payment of claims and on the portion of risk exposure either ceded to captives established by their clients or deductibles retained by their clients. The credit worthiness of prospective risk sharing partners is a factor considered when entering into or renewing these alternative risk transfer programs. The Company typically collateralizes balances due through funds withheld, letters of credit or trust agreements. No assurance can be given regarding the future ability of these entities to meet their obligations. The inability of the Company's risk sharing partners to meet their obligations could adversely affect profitability.

Financial Risk

Atlas is a holding company and the insurance subsidiaries are subject to dividend restrictions and are required to maintain certain capital adequacy levels.

Atlas is a holding company with no significant operations of its own and as a legal entity separate and distinct from its insurance subsidiaries. As a result, its only sources of income are dividends and other distributions from its insurance subsidiaries. Atlas will be limited by the earnings of those subsidiaries, and the distribution or other payment of such earnings to it in the form of dividends, loans, advances or the reimbursement of expenses. The payment of dividends, the making of loans and advances or the reimbursement of expenses by its insurance subsidiaries is contingent upon the earnings of those subsidiaries and is subject to various business considerations. In addition, payments of dividends by the insurance subsidiaries are subject to various statutory and regulatory restrictions imposed by the insurance laws of the domiciliary jurisdiction of such subsidiaries, which limit the aggregate amount of dividends or other distributions that they can declare or pay within any 12-month period. In most jurisdictions, payment of dividends is subject to regulatory approval, and insurance regulators have broad powers to prevent reduction of statutory capital and surplus to inadequate levels and could refuse to permit the payment of dividends calculated under any applicable formula. As a result, Atlas may not be able to receive dividends from its insurance subsidiaries at times and in amounts necessary to meet its operating needs, to pay dividends to shareholders or to pay corporate expenses. The inability of its insurance subsidiaries to pay dividends could have a material adverse effect on Atlas’ business and financial condition.

Market fluctuations, changes in interest rates or a need to generate liquidity could have significant and negative effects on the Company’s investment portfolio. The Company may not be able to realize its investment objectives, which could significantly reduce its net income.

The Company depends on income from its securities portfolio for a substantial portion of its earnings. Investment returns are an important part of overall profitability. A significant decline in investment yields in the securities portfolio or an impairment of securities owned could have a material adverse effect on the Company’s business, results of operations and financial condition. The Company currently maintains and intends to continue to maintain a securities portfolio comprised primarily of fixed income securities. As of December 31, 2011, the majority of the investment portfolio was invested in fixed income securities. The Company cannot predict which industry sectors in which it maintains investments may suffer losses as a result of potential declines in commercial and economic activity, or how any such decline might impact the ability of companies within the affected industry sectors to pay interest or principal on their securities and cannot predict how or to what extent the value of any underlying collateral might be affected. Accordingly, adverse fluctuations in the fixed income or equity markets could adversely impact profitability, financial condition or cash flows.

The Company’s ability to achieve its investment objectives is affected by general economic conditions that are beyond its control. General economic conditions can adversely affect the markets for interest rate sensitive securities, including the extent and timing of investor participation in such markets, the level and volatility of interest rates and, consequently, the value of fixed maturity securities. U.S. and global markets have been experiencing volatility since mid-2007. Initiatives taken by the U.S. and foreign governments have helped to stabilize the financial markets and restore liquidity to the banking system and credit markets. However, the financial system has not completely stabilized and market volatility could continue in the future if there is a prolonged recession or a worsening in key economic indicators. If market conditions deteriorate, the Company’s investment portfolio could be adversely impacted.

Difficult conditions in the economy generally may materially adversely affect the Company’s business, results of operations, and statement of financial position and these conditions may not improve in the near future.

Current market conditions and the instability in the global financial markets present additional risks and uncertainties for the Company’s business. In particular, deterioration in the public debt markets could lead to additional investment losses and an erosion of capital as a result of a reduction in the fair value of investment securities. The severe downturn in the public debt and equity markets, reflecting uncertainties associated with the mortgage crisis, worsening economic conditions, widening of credit spreads, bankruptcies and government intervention in large financial institutions, created significant unrealized losses in the securities portfolio at certain stages in 2009. Depending on market conditions going forward, the Company could again incur substantial realized and additional unrealized losses in future periods, which could have an adverse impact on the results of operations and financial condition. The Company could also experience a reduction in capital in the insurance subsidiaries below levels required by the regulators in the jurisdictions in which they operate. Certain trust accounts for the benefit of related companies and third parties have been established with collateral on deposit under the terms and conditions of the relevant trust agreements. The value of collateral could fall below the levels required under these agreements putting the subsidiary or subsidiaries in breach of the agreement.

The current market volatility may also make it more difficult to value the Company’s securities if trading becomes less frequent.

Disruptions, uncertainty and volatility in the global credit markets may also impact the Company’s ability to obtain financing for future acquisitions. If financing is available, it may only be available at an unattractive cost of capital, which would decrease profitability. There can be no assurance that current market conditions will improve in the near future. In addition, the Company may not have coverage by security analysts, the trading price of the Company’s ordinary voting common shares and restricted voting common shares may be lower and it may be more difficult for its shareholders to dispose of their Company’s shares due to the lower trading volume. The lack of a significant presence in the market could serve to limit the distribution of news and limit investor interest in the Company’s shares. One or more of these factors could result in price volatility and serve to depress the liquidity and market price of the Company’s shares.

The Company may not have access to capital in the future due to an economic downturn.

The Company may need new or additional financing in the future to conduct its operations, or expand its business. Any sustained weakness in the general economic conditions and/or financial markets in Canada, the United States or globally could adversely affect its ability to raise capital on favorable terms, or at all. From time-to-time, the Company may rely on access to financial markets as a source of liquidity for operations, acquisitions and general corporate purposes.

Liquidity Risk

The limited public float and trading volume for the Company’s shares may have an adverse impact on the share price or make it difficult to liquidate.

The Company’s securities are held by a relatively small number of shareholders. KAI holds all of the restricted voting common shares. Also, the Company has ordinary voting shares which are not widely held. Future sales of substantial amounts of the Company’s shares in the public market, or the perception that these sales could occur, may adversely impact the market price of the Company’s shares and the Company’s shares could be difficult to liquidate.

Compliance Risk

Compliance risk includes the risk arising from violations of, or non-conformance with, laws, regulations or prescribed practices. Compliance risk also arises in situations where the laws or rules governing certain products or activities may be ambiguous or untested. Compliance risk exposes the organization to negative publicity, a potential drop in stock price, fines, criminal and civil monetary penalties, payment of damages and the voiding of contracts. Compliance risks are also sometimes referred to as legal/regulatory, tax or documentation risks.

If the Company fails to comply with applicable insurance and securities laws or regulatory requirements, its business, results of operations and financial condition could be adversely affected.

As a publicly traded holding company listed on a stock exchange which owns insurance companies domiciled in the United States, Atlas and its insurance subsidiaries are subject to numerous laws and regulations. These laws and regulations delegate regulatory, supervisory and administrative powers to federal, provincial or state regulators. Insurance regulations are generally designed to protect policyholders rather than shareholders, and are related to matters including:


•	rate setting;


•	RBC and solvency standards;


•	restrictions on the amount, type, nature, quality and quantity of securities in which insurers may invest;


•	the maintenance of adequate reserves for unearned premiums and unpaid claims;


•	restrictions on the types of terms that can be included in insurance policies;


•	standards for accounting;


•	marketing practices;


•	claims settlement practices;


•	the examination of insurance companies by regulatory authorities, including periodic financial and market conduct examinations;


•	the licensing of insurers and their agents;


•	limitations on dividends and transactions with affiliates;


•	approval of certain reinsurance transactions; and


•	insolvency proceedings.

Such rules and regulations are expected to increase the Company’s legal and financial compliance costs and to make some activities more time-consuming and costly. A significant amount of resources has been committed to monitor and address any internal control issues, and failure to do so could adversely impact operating results. Any failure to comply with applicable laws or regulations could result in the imposition of fines or significant restrictions on its ability to do business, which could adversely affect the Company’s results of operations or financial condition. In addition, any changes in laws or regulations, including the adoption of consumer initiatives regarding rates charged for automobile or other insurance coverage or claims handling procedures, could materially adversely affect its business, results of operations and financial condition. It is not possible to predict the future impact of changing federal, state and provincial regulation on the Company’s operations, and there can be no assurance that laws and regulations enacted in the future will not be more restrictive than existing laws and regulations. New or more restrictive regulations, including changes in current tax or other regulatory interpretations affecting an alternative risk transfer insurance model, could make it more expensive for the Company to conduct its businesses, restrict the premiums its subsidiaries able to charge or otherwise change the way it does business. In addition, economic and financial market turmoil may result in some type of U.S. federal oversight of the insurance industry in general.

The insurance subsidiaries are subject to comprehensive regulation and their ability to earn profits may be restricted by the regulations.

The insurance subsidiaries are subject to comprehensive regulation by government agencies in the United States. Failure to meet regulatory requirements could subject them to regulatory action. The regulations and associated examinations may have the effect of limiting the insurance subsidiaries’ liquidity and may adversely affect results of operations. The insurance subsidiaries must comply with statutes and regulations relating to, among other things:


•	statutory capital and surplus and reserve requirements;


•	standards of solvency that must be met and maintained;


•	payment of dividends;


•	changes of control of insurance companies;


•	transactions between an insurance company and any of its affiliates;


•	licensing of insurers and their agents;


•	types of insurance that may be written;


•	market conduct, including underwriting and claims practices;


•	provisions for unearned premiums, losses and other obligations;


•	ability to enter and exit certain insurance markets; and


•	nature of and limitations on investments, premium rates, or restrictions on the size of risks that may be insured under a single policy.

In addition, state insurance department examiners perform periodic financial, market conduct and other examinations of insurance companies. Compliance with applicable laws and regulations is time consuming and personnel-intensive. In addition to financial examinations, the insurance subsidiaries may be subject to market conduct examinations of claims and underwriting practices. Any adverse findings could result in significant fines and penalties, negatively affecting profitability.

The Company’s business is subject to risks related to litigation and regulatory actions.

The Company may from time-to-time be subject to a variety of legal and regulatory actions relating to its current and past business operations, including, but not limited to:


•	disputes over coverage or claims adjudication;


•	disputes regarding sales practices, disclosure, premium refunds, licensing, regulatory compliance and compensation arrangements;


•	disputes with its agents, producers or network providers over compensation and termination of contracts and related

claims;


•	disputes with taxing authorities regarding tax liabilities; and


•	disputes relating to certain businesses acquired or disposed of by it.

As insurance industry practices and regulatory, judicial and industry conditions change, unexpected and unintended issues related to pricing, claims, coverage and business practices may emerge. Plaintiffs often target P&C insurers in purported class action litigation relating to claims handling and insurance sales practices. The resolution and implications of new underwriting, claims and coverage issues could have a negative effect on the Company’s business by extending coverage beyond the Company’s underwriting intent, increasing the size of claims or otherwise requiring them to change their practices. The effects of unforeseen emerging claim and coverage issues could negatively impact revenues, results of operations and reputation.

Current and future court decisions and legislative activity may increase the Company’s exposure to these types of claims. Multi-party or class action claims may present additional exposure to substantial economic, non-economic or punitive damage awards. The loss of even one of these claims, if it resulted in a significant damage award or a judicial ruling that was otherwise detrimental, could create a precedent in the industry that could have a material adverse effect on its results of operations and financial condition. This risk of potential liability may make reasonable settlements of claims more difficult to obtain. The Company cannot determine with any certainty what new theories of recovery may evolve or what their impact may be on its business.

The Company may be subject to governmental or administrative investigations and proceedings in the context of its highly regulated sectors of activity. It cannot predict the outcome of these investigations, proceedings and reviews, and cannot guarantee that such investigations, proceedings or reviews or related litigation or changes in operating policies and practices would not materially adversely affect its results of operations and financial condition. In addition, if it were to experience difficulties with its relationship with a regulatory body in a given jurisdiction, it could have a material adverse effect on its ability to do business in that jurisdiction.

The Company’s business could be adversely affected as a result of changing political, regulatory, economic or other influences.

The insurance industry is subject to changing political, economic and regulatory influences. These factors affect the practices and operation of insurance and reinsurance organizations. Legislatures in the United States and other jurisdictions have periodically considered programs to reform or amend their respective insurance and reinsurance systems. Recently, the insurance and reinsurance regulatory framework has been subject to increased scrutiny in many jurisdictions. Changes in current insurance regulation may include increased governmental involvement in the insurance industry and initiatives aimed at premium controls, or may otherwise change the business and economic environment in which insurance industry participants operate. Historically, the automobile insurance industry has been under pressure from time-to-time from regulators, legislators or special interest groups to reduce, freeze or set rates at levels that are not necessarily related to underlying costs or risks, including initiatives to roll back automobile and other personal line rates. These changes may limit the ability of the insurance subsidiaries to price automobile insurance adequately and could require the Company to discontinue unprofitable product lines, make unplanned modifications of its products and services, or result in delays or cancellations of sales of its products and services.

Strategic Risk

Strategic risk arises from adverse effects of high-level business decisions or the improper implementation of those decisions. Strategic risk also incorporates how management analyzes external factors that impact the strategic direction of the business. Strategic risk further encompasses reputation risk which is the impact to earnings, capital or the ability to do business arising from negative public opinion from whatever cause.

The Company will derive the majority of premiums from a few geographic areas, which may cause its business to be affected by catastrophic losses or business conditions in these areas.

Some jurisdictions including Illinois, Michigan, Minnesota, New York and Louisiana generate a significant percentage of total premiums. Results of operations may, therefore, be adversely affected by any catastrophic losses or material loss trends in these

areas, to the extent covered by policies underwritten by the insurance subsidiaries. Catastrophic losses can be caused by a wide variety of events, including earthquakes, hurricanes, tropical storms, tornadoes, wind, ice storms, hail, fires, terrorism, riots and explosions, and their incidence and severity are inherently unpredictable. Catastrophic losses are characterized by low frequency but high severity due to aggregation of losses, and could result in adverse effects on its results of operations or financial condition. Results of operations may also be adversely affected by general economic conditions, competition, regulatory actions or other business conditions that affect losses or business conditions in the specific areas in which it does most of its business.

The Company may experience difficulty in managing historic and future growth, which could adversely affect its results of operations and financial condition.

The Company intends to grow by expanding geographically and underwriting more market share via the Company’s distribution network. Continued growth could impose significant demands on management, including the need to identify, recruit, maintain and integrate additional employees. Growth may also place a strain on management systems and operational and financial resources, and such systems, procedures and internal controls may not be adequate to support operations as they expand.

The successful integration and management of books of business, acquired businesses and other business involve numerous risks that could adversely affect the Company’s profitability, and are contingent on many factors, including:

• expanding its financial, operational and management information systems;

• managing its relationships with independent agents, brokers, and legacy program managers including maintaining adequate controls;

• expanding its executive management and the infrastructure required to effectively control its growth;

• maintaining ratings for certain of its insurance subsidiaries;

• increasing the statutory capital of its insurance subsidiaries to support growth in written premiums;

• accurately setting claims provisions for new business where historical underwriting experience may not be available;

• obtaining regulatory approval for appropriate premium rates; and

• obtaining the required regulatory approvals to offer additional insurance products or to expand into additional states or other jurisdictions.

Failure by the Company to manage its growth effectively could have a material adverse effect on its business, financial condition or results of operations.

Engaging in acquisitions involves risks and, if the Company is unable to effectively manage these risks its business may be materially harmed.

From time-to-time the Company may engage in discussions concerning acquisition opportunities and, as a result of such discussions, may enter into acquisition transactions. Upon the announcement of an acquisition, the Company’s share price may fall depending on the size of the acquisition, the purchase price and the potential dilution to existing shareholders. It is also possible that an acquisition could dilute earnings per share.

Acquisitions entail numerous risks, including the following:


•	difficulties in the integration of the acquired business;


•	assumption of unknown material liabilities, including deficient provisions for unpaid claims;


•	diversion of management's attention from other business concerns;


•	failure to achieve financial or operating objectives; and


•	potential loss of policyholders or key employees of acquired companies.

The Company may not be able to integrate or operate successfully any business, operations, personnel, services or products that

it may acquire in the future, which may result in its inability to realize expected revenue increases, cost savings, increases in geographic or product presence, and other projected benefits from the acquisition. Integration may result in the loss of key employees, disruption to the existing businesses or the business of the acquired company, or otherwise harm the Company’s ability to retain customers and employees or achieve the anticipated benefits of the acquisition. Time and resources spent on integration may also impair its ability to grow its existing businesses. Also, the negative effect of any financial commitments required by regulatory authorities or rating agencies in acquisitions or business combinations may be greater than expected.

Various factors may inhibit potential acquisition bids that could be beneficial to shareholders.

Regulatory provisions may delay, defer or prevent a takeover attempt that shareholders may consider in their best interest. For example, under the terms of applicable U.S. state statutes, any person or entity desiring to purchase more than a specified percentage (commonly 10% but can be as low as 5%) of the Company’s outstanding voting securities is required to obtain regulatory approval prior to the purchase of such shares. These requirements would require a potential bidder to obtain prior approval from the insurance departments of the states in which the insurance subsidiaries are domiciled and may require pre-acquisition notification in states that have adopted pre-acquisition notification provisions. Obtaining these approvals could result in material delays or deter any such transaction.

Regulatory requirements could make a potential acquisition of the Company more difficult and may prevent shareholders from receiving the benefit from any premium over the market price of its shares offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of its shares if they are viewed as discouraging takeover attempts in the future.

Provisions in the Company’s organizational documents, corporate laws and the insurance laws of Illinois could impede an attempt to replace or remove their management or directors or prevent or delay a merger or sale, which could diminish the value of the Company’s shares.

The Company’s Amended and Restated Articles of Incorporation and Code of Regulations and the corporate laws and the insurance laws of various states contain, or are anticipated to contain, provisions that could impede an attempt to replace or remove management or directors or prevent the sale of the insurance subsidiaries that shareholders might consider to be in their best interests. These provisions may include, among others:


•	classified insurance subsidiary boards of directors consisting of no less than five, and no more than ten directors;


•	requiring a vote of holders of 20% of the common shares to call a special meeting of shareholders;


•	requiring a two-thirds vote to amend the Articles of Incorporation;


•	requiring the affirmative vote of a majority of the voting power of shares represented at a special meeting of shareholders; and


•	statutory requirements prohibiting a merger, consolidation, combination or majority share acquisition between the insurance subsidiaries and an interested shareholder or an affiliate of an interested shareholder without regulatory approval.

These provisions may prevent shareholders from receiving the benefit of any premium over the market price of the Company’s shares offered by a bidder in a potential takeover. In addition, the existence of these provisions may adversely affect the prevailing market price of the Company’s shares if they are viewed as discouraging takeover attempts.

The insurance laws of most states require prior notice or regulatory approval of changes in control of an insurance company or its holding company. The insurance laws of the State of Illinois, where the insurance subsidiaries are domiciled, provide that no corporation or other person may acquire control of a domestic insurance or reinsurance company unless it has given notice to such insurance or reinsurance company and obtained prior written approval of the relevant insurance regulatory authorities. Any purchaser of 10% or more of the Company’s aggregate outstanding voting power could become subject to these regulations and could be required to file notices and reports with the applicable regulatory authorities prior to such acquisition. In addition, the

existence of these provisions may adversely affect the prevailing market price of the Company’s shares if they are viewed as discouraging takeover attempts.

Market and Competition Risk

Because the insurance subsidiaries are commercial automobile insurers, conditions in that industry could adversely affect their business.

The majority of the gross premiums written by the Company's insurance subsidiaries will be generated from commercial automobile insurance policies. Adverse developments in the market for commercial automobile insurance, including those which could result from potential declines in commercial and economic activity, could cause our results of operations to suffer. The commercial automobile insurance industry is cyclical. Historically, the industry has been characterized by periods of price competition and excess capacity followed by periods of higher premium rates and shortages of underwriting capacity. These fluctuations in the business cycle have negatively impacted and could continue to negatively impact the revenues of the Company. The results of the insurance subsidiaries, and in turn, the Company, may also be affected by risks, to the extent they are covered by the insurance policies we issue, that impact the commercial automobile industry related to severe weather conditions, floods, hurricanes, tornadoes, earthquakes and tsunamis, as well as explosions, terrorist attacks and riots. The insurance subsidiaries’ commercial automobile insurance business may also be affected by cost trends that negatively impact profitability, such as a continuing economic downturn, inflation in vehicle repair costs, vehicle replacement parts costs, used vehicle prices, fuel costs and medical care costs. Increased costs related to the handling and litigation of claims may also negatively impact profitability. Legacy business previously written by the Company also includes private passenger auto, surety and other P&C insurance business. Adverse developments relative to previously written business could have a negative impact on the Company’s results.

The insurance and related businesses in which the Company operates may be subject to periodic negative publicity which may negatively impact its financial results.

The products and services of the insurance subsidiaries are ultimately distributed to individual and business customers. From time-to-time, consumer advocacy groups or the media may focus attention on insurance products and services, thereby subjecting the industry to periodic negative publicity. The Company also may be negatively impacted if participants in one or more of its markets engage in practices resulting in increased public attention to its business. Negative publicity may also result in increased regulation and legislative scrutiny of practices in the P&C insurance industry as well as increased litigation. These factors may further increase its costs of doing business and adversely affect its profitability by impeding its ability to market its products and services, requiring it to change its products or services or by increasing the regulatory burdens under which it operates.

The highly competitive environment in which the Company operates could have an adverse effect on its business, results of operations and financial condition.

The commercial automobile insurance business is highly competitive and, except for regulatory considerations, there are relatively few barriers to entry. Many of the Company’s competitors are substantially larger and may enjoy better name recognition, substantially greater financial resources, higher ratings by rating agencies, broader and more diversified product lines and more widespread agency relationships than the Company.

The Company’s underwriting profits could be adversely impacted if new entrants or existing competitors try to compete with the Company’s products, services and programs or offer similar or better products at or below the Company’s prices. Insurers in its markets generally compete on the basis of price, consumer recognition, coverages offered, claims handling, financial stability, customer service and geographic coverage. Although pricing is influenced to some degree by that of its competitors, it is not in the Company’s best interest to compete solely on price, and may from time-to-time experience a loss of market share during periods of intense price competition. Its business could be adversely impacted by the loss of business to competitors offering competitive insurance products at lower prices. This competition could affect its ability to attract and retain profitable business.

Pricing sophistication and related underwriting and marketing programs use a number of risk evaluation factors. For auto insurance, these factors can include but are not limited to vehicle make, model and year; driver age; territory; years licensed; loss history; years insured with prior carrier; prior liability limits; prior lapse in coverage; and insurance scoring based on credit report information. Atlas believes its pricing model will generate future underwriting profits.

If the Company is not able to attract and retain independent agents and brokers, its revenues could be negatively affected.

The Company competes with other insurance carriers to attract and retain business from independent agents and brokers. Some of its competitors offer a larger variety of products, lower prices for insurance coverage or higher commissions than the Company. The Company’s top ten independent agents accounted for an aggregate of 63% of its commercial auto gross premium written during the year ended December 31, 2011. While Atlas maintains rigorous standards for both new and existing agents, it is seeking to expand its agent network in many areas around the country. If the insurance subsidiaries are unable to attract and retain independent agents/brokers to sell their products, their ability to compete and attract new customers and their revenues would suffer.

If the Company is unable to maintain its claims-paying ratings, its ability to write insurance and to compete with other insurance companies may be adversely impacted. A decline in rating could adversely affect its position in the insurance market, make it more difficult to market its insurance products and cause its premiums and earnings to decrease.

Financial ratings are an important factor influencing the competitive position of insurance companies. Third party rating agencies assess and rate the claims-paying ability of insurers and reinsurers based upon criteria that they have established. Periodically these rating agencies evaluate the business to confirm that it continues to meet the criteria of the ratings previously assigned. Financial strength ratings are an important factor in establishing the competitive position of insurance companies and may be expected to have an effect on an insurance company’s premiums.

The insurance subsidiaries are rated by A.M. Best, which issues independent opinions of an insurer’s financial strength and its ability to meet policyholder obligations. A.M. Best ratings range from “A++” (Superior) to “F” (In Liquidation), with a total of 16 separate rating categories. The objective of A.M. Best’s rating system is to provide potential policyholders and other interested parties an opinion of an insurer’s financial strength and ability to meet ongoing obligations, including paying claims. On January 30, 2012, A.M. Best Co. affirmed the financial strength rating of American Country and American Service as “B” and the outlook assigned to all ratings is “Stable.”

The Company cannot provide assurance that A.M. Best will maintain these ratings in the future. If the insurance subsidiaries’ ratings are reduced by A.M. Best, their competitive position in the insurance industry could suffer and it could be more difficult to market their insurance products. A downgrade could result in a significant reduction in the number of insurance contracts written by the subsidiaries and in a substantial loss of business to other competitors with higher ratings, causing premiums and earnings to decrease. Rating agencies evaluate insurance companies based on financial strength and the ability to pay claims, factors that may be more relevant to policyholders than to investors. Financial strength ratings by rating agencies are not ratings of securities or recommendations to buy, hold or sell any security and should not be relied upon as such.

Human Resources Risk

Human resources risk is the risk that the Company is unable to maximize available human resources in the achievement of its business objectives. This includes people, their experience, knowledge, skills and work environment.

The Company’s business depends upon key employees, and if it is unable to retain the services of these key employees or to attract and retain additional qualified personnel, its business may suffer.

The Company’s success depends, to a great extent, upon the ability of executive management and other key employees to implement its business strategy and its ability to attract and retain additional qualified personnel in the future. The loss of the services of any

of its key employees, or the inability to identify, hire and retain other highly qualified personnel in the future, could adversely affect the quality and profitability of the Company's business operations. In addition, the Company must forecast volume and other factors in changing business environments with reasonable accuracy and adjust its hiring and employment levels accordingly. Its failure to recognize the need for such adjustments, or its failure or inability to react appropriately on a timely basis, could lead the Company either to over-staffing (which could adversely affect its costs structure) or under-staffing (which could impair its ability to service current products lines and new lines of business). In either event, the Company's financial results and customer relationships could be adversely affected.

U.S. Tax Risks

If the Company were not to be treated as a U.S. Corporation for U.S. federal income tax purposes, certain tax inefficiencies would result and certain adverse tax rules would apply.

Pursuant to certain “expatriation” provisions of the U.S. Internal Revenue Code of 1986, as amended, the reverse merger agreement provides that the parties intend to treat the Company as a U.S. corporation for U.S. federal income tax purposes. The expatriation provisions are complex, are largely unsettled and subject to differing interpretations, and are subject to change, perhaps retroactively. If the Company were not to be treated as a U.S. corporation for U.S. federal income tax purposes, certain tax inefficiencies and adverse tax consequences and reporting requirements would result for both the Company and the recipients and holders of stock in the Company, including that dividend distributions from its insurance subsidiaries to Atlas would be subject to 30% U.S. withholding tax, with no available reduction and that members of the consolidated group may not be permitted to file a consolidated U.S. tax return resulting in the acceleration of cash tax outflow and potential permanent loss of tax benefits associated net operating loss carry-forwards that could have otherwise been utilized.

The Company’s use of losses may be subject to limitations and the tax liability of the Company may be increased.

Generally, a change of more than 50% in the ownership of a corporation’s stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes. An ownership change generally limits a U.S. corporation’s ability to use its net operating loss carry-forwards attributable to the period prior to the change. Both the insurance subsidiaries experienced ownership changes in connection with the private placement and reverse merger transaction completed in the last quarter of 2010, such that the use of their net operating loss carry-forwards will be subject to limitation. In addition, the amounts of any pre-transaction net operating losses of the insurance subsidiaries and tax basis that may be available for use by the insurance subsidiaries following the reverse merger transaction are limited and dependent on tax elections to be taken on a tax return of the insurance subsidiaries’ former parent. The Company’s former parent controls the determination of which elections are made and the extent to which the elections will impact the net operating losses and tax attributes of the insurance subsidiaries for net operating losses and tax attributes generated in periods through December 31, 2010. The Company will not be compensated to the extent the net operating losses and tax attributes are reduced or otherwise unfavorably adjusted due to changes and elections in the former parent’s 2010 and prior tax filings.

Further limitations on the utilization of losses may apply because of the “dual consolidated loss” rules, which will also require the Company to recapture into income the amount of any such utilized losses in certain circumstances. As a result of the application of these rules, the future tax liability of the Company and its insurance subsidiaries could be significantly increased. In addition, taxable income may also be recognized by the Company or its insurance subsidiaries in connection with the 2010 reverse merger transaction.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Atlas' corporate headquarters is located in Elk Grove Village, Illinois. It consists of one office building totaling 176,844 net rentable square feet of office space on 7.2 acres. Atlas occupies one floor of the building and rents some of the remaining space. This building and property is currently held for sale.

We also own approximately 50 acres of vacant land in Alabama which was transferred to Atlas from Southern United. It is also currently held for sale.

Item 3. Legal Proceedings

In connection with its operations, the Company and its insurance subsidiaries are, from time to time, named as defendants in actions for damages and costs allegedly sustained by the plaintiffs. While it is not possible to estimate the outcome of the various proceedings at this time, such actions have generally been resolved with minimal damages or expense in excess of amounts provided and the Company does not believe that it will incur any significant additional loss or expense in connection with such actions.

Item 4. Mine Safety Disclosure

Not applicable.

Part II

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

As of March 19, 2012, there were 100 shareholders of record of Atlas ordinary voting common shares, of which 4,628,292 were issued and outstanding. Atlas ordinary voting common shares have been exclusively listed on the TSX Venture Exchange (“TSXV”) under the symbol “AFH” since January 6, 2011.

Set forth below are the high and low listing prices of the ordinary common shares during 2011 per the TSXV (in Canadian dollars):

Table 1(c) Summary of Share Prices

	High	Low
First Quarter	$2.00	$1.60
Second Quarter	$2.00	$1.48
Third Quarter	$1.90	$1.25
Fourth Quarter	$2.03	$1.10

During 2011, Atlas did not repurchase any of its equity securities. Atlas also did not pay any dividends during 2011 and has no current plans to pay dividends to its common shareholders. The cumulative amount of dividends to which the preferred shareholders are entitled upon liquidation (or sooner, if Atlas declares dividends), is $810,000 as at December 31, 2011.

Item 7. Management’s Discussion and Analysis ("MD&A") of Financial Condition and Results of Operations



Section	Description	Page
I.	Consolidated Performance	24
II.	Application of Critical Accounting Estimates	25
III.	Operating Results	26
IV.	Financial Condition	31

Overview

This MD&A contains “forward-looking information” which may include, but is not limited to, statements with respect to estimates of future expenses, revenue and profitability; trends affecting financial condition and results of operations; the availability and terms of additional capital; dependence on key suppliers, and other strategic partners; industry trends and the competitive and regulatory environment; the impact of losing one or more senior executives or failing to attract additional key personnel; and other factors referenced in this MD&A.

Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Atlas to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political, regulatory and social uncertainties.

Although Atlas has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this MD&A and Atlas disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty in them.

( All amounts in thousands of US dollars, except for amounts preceded by “C” as Canadian dollars, share and per share amounts)

I. CONSOLIDATED PERFORMANCE

Full year 2011 Highlights


•	Core commercial auto lines gross premium written for 2011 increased 36.9% over 2010 reflecting Atlas’ strong focus on re-energizing this line of business.


•	Net loss for the year ended December 31, 2011 was $ (2,470) .


•	After taking the impact of the liquidation preference of the preferred shares into consideration, the basic and diluted loss per common share in 2011 was $ (0.18) .

•

2011 non-operating expenses totaled $4,971 ($3,357 net of tax) which includes a one-time $2,544 ($1,755 net of tax) non-cash charge upon settlement of the American Country Pension Plan , a $1,800 ($1,188 net of tax) fourth quarter reserve strengthening charge related to pre-Atlas periods, and non-recurring expenses incurred in Q1 2011 of $627 ($414 net of tax) related to transaction costs and restructuring.


•	The above non-operating expenses had an unfavorable impact of ( $0.18 ) on basic and diluted earnings per share in 2011.


•	Total investment income (including realized capital gains) in 2011 was $7,481 , an increase of 35.9% as compared to 2010.


•	Underwriting losses improved by $ 12,746 for the year ended December 31, 2011 as compared to 2010.


•	Atlas' distribution channel was able to write business in a total of 25 states at the end of 2011.


•	Book value per common share diluted at December 31, 2011 was $ 2.03 .


•	Atlas carries a valuation allowance, in the amount of $0.67 per common share diluted at December 31, 2011, against its deferred tax asset.

The following financial data is derived from Atlas’ consolidated financial statements for the years ended December 31, 2011 and 2010:

Table 1 Selected financial information

For the year ended December 31,	2011			2010
Gross premium written	$	42,031		$	46,679
Net premium earned	35,747			53,603
Losses on claims	28,994			48,074
Acquisition costs	7,294			11,115
Other underwriting expenses	10,697			18,398
Net underwriting loss	(11,238		)	(23,984		)
Net investment and other income	7,605			4,747
Net loss before tax	(3,633		)	(19,237		)
Income tax (benefit) expense	(1,163		)	2,575
Net loss	$	(2,470	)	$	(21,812	)

Key Financial Ratios:
Loss ratio	81.1		%	89.7		%
Acquisition cost ratio	20.4		%	20.7		%
Other underwriting expense ratio	29.9		%	34.3		%
Combined ratio (see Table 6)	131.4		%	144.7		%
Return on equity	(4.2		)%	(38.7		)%
Loss per common share, basic and diluted	$	(0.18	)	$	(1.19	)
Book value per common share, basic and diluted	$	2.03		$	2.30

Atlas’ full year combined ratio for 2011 was 131.4% , compared to 144.7% for the full year of 2010. The $4,971 in 2011 non-operating expenses added 13.9% to the combined ratio in 2011.

As planned, core commercial automobile lines became a more significant component of Atlas’ gross premium written as a result of the strategic focus on these core lines of business coupled with positive response from new and existing agents. Gross premium written related to these core commercial lines increased by 36.9% for 2011 as compared to 2010. As a result, the overall loss ratio for 2011 was 81.1% compared to 89.7% in 2010. The $1,800 reserve strengthening charge in the fourth quarter of 2011 related to pre-Atlas periods added 5.0% to the loss ratio in 2011.

Investment performance and other income generated $ 7,605 of income for 2011, of which $4,201 is realized gains. This resulted in a 4.7% yield for the full year 2011. Cash and invested assets were $ 127,881 as of December 31, 2011 and were $ 45,167 lower than December 31, 2010, resulting primarily from the payment of claim settlements. This reduction in cash and invested assets is in line with expectations as Atlas rebuilds its book of business.

Overall, Atlas generated a net loss of $ (2,470) . After taking the impact of the liquidation preference of the preferred shares into consideration, the basic and diluted loss per common share in 2011 was $ (0.18) . This compares to a net loss of $ (21,812) or $ (1.19) per common share diluted in 2010.

Book value per common share diluted as of December 31, 2011 was $ 2.03 .

Atlas has a valuation allowance in the amount of $0.67 per common share diluted as of December 31, 2011. Tax loss carry-forwards were assumed through the acquisition of the insurance subsidiaries. These deferred tax assets could be realized in the future dependent upon profitability during the next twenty year period.

II. APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements. The most critical estimates include those used in determining:

• Fair value and impairment of financial assets

• Deferred policy acquisition costs amortization

• Reserve for property-liability insurance claims and claims expense estimation

• Deferred tax asset valuation

In making these determinations, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our businesses and operations. It is reasonably likely that changes in these estimates could occur from period to period and result in a material impact on our consolidated financial statements.

A brief summary of each of these critical accounting estimates follows. For a more detailed discussion of the effect of these estimates on our consolidated financial statements, and the judgments and assumptions related to these estimates, see the referenced sections of this document. For a complete summary of our significant accounting policies, see the notes to the consolidated financial statements.

Fair values of financial instruments - Atlas has used the following methods and assumptions in estimating its fair value disclosures:

Fair values for bonds are based on quoted market prices, when available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments or values obtained from independent pricing services through a bank trustee.

Impairment of financial assets - Atlas assesses, on a quarterly basis, whether there is objective evidence that a financial asset or group of financial assets is impaired. An investment is considered impaired when the fair value of the investment is less than its cost or amortized cost. When an investment is impaired, the Company must make a determination as to whether the impairment is other-than-temporary.

Under ASC guidance, with respect to an investment in an impaired debt security, other-than temporary impairment (OTTI) occurs if (a) there is intent to sell the debt security, (b) it is more likely than not it will be required to sell the debt security before its anticipated recovery, or (c) it is probable that all amounts due will be unable to be collected such that the entire cost basis of the security will not be recovered. If Atlas intends to sell the debt security, or will more likely than not be required to sell the debt security before the anticipated recovery, a loss in the entire amount of the impairment is reflected in net realized gains (losses) on investments in the consolidated statements of income. If Atlas determines that it is probable it will be unable to collect all amounts and Atlas has no intent to sell the debt security, a credit loss is recognized in net realized gains (losses) on investments in the consolidated statements of income to the extent that the present value of expected cash flows is less than the amortized cost basis; any difference between fair value and the new amortized cost basis (net of the credit loss) is reflected in other comprehensive income (losses), net of applicable income taxes.

Deferred policy acquisition costs - Atlas defers brokers’ commissions, premium taxes and other underwriting and marketing costs directly relating to the acquisition of premiums written to the extent they are considered recoverable. These costs are then expensed as the related premiums are earned. The method followed in determining the deferred policy acquisition costs limits the deferral to its realizable value by giving consideration to estimated future claims and expenses to be incurred as premiums are earned. Changes in estimates, if any, are recorded in the accounting period in which they are determined. Anticipated investment income is included in determining the realizable value of the deferred policy acquisition costs. Atlas’ deferred policy acquisition costs are reported net of ceding commissions.

Valuation of deferred tax assets - Deferred taxes are recognized using the asset and liability method of accounting. Under this method the future tax consequences attributable to temporary differences in the tax basis of assets, liabilities and items recognized directly in equity and the financial reporting basis of such items are recognized in the financial statements by recording deferred tax liabilities or deferred tax assets.

Deferred tax assets related to the carry-forward of unused tax losses and credits and those arising from temporary differences are recognized only to the extent that it is probable that future taxable income will be available against which they can be utilized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

Claims liabilities - The provision for unpaid claims represent the estimated liabilities for reported claims, plus those incurred but not yet reported and the related estimated loss adjustment expenses. Unpaid claims expenses are determined using case-basis evaluations and statistical analyses, including insurance industry loss data, and represent estimates of the ultimate cost of all claims incurred. Although considerable variability is inherent in such estimates, management believes that the liability for unpaid claims is adequate. The estimates are continually reviewed and adjusted as necessary; such adjustments are included in current operations and are accounted for as changes in estimates.

III. OPERATING RESULTS

Gross Premium Written

Table 2 Gross premium written by line of business

Year Ended December 31,	2011		2010		% Change
Commercial automobile	$	18,790	$	13,729	36.9	%
Non-standard automobile	17,412		22,986		(24.2	)%
Other	5,829		9,964		(41.5	)%
	$	42,031	$	46,679	(10.0	)%

Table 2 above summarizes gross premium written by line of business. For the year ended December 31, 2011, gross premium written was $ 42,031 compared to $ 46,679 in 2010, representing a 10.0% decrease primarily due to the reduction of non-core lines of business.

Commercial Automobile

The commercial automobile policies we underwrite provide coverage for light weight, individual unit or small fleet commercial vehicles typically with the minimum limits prescribed by statute, municipal or other regulatory requirements. In the year ended December 31, 2011, gross premium written from commercial automobile was $18,790 , representing a 36.9% increase relative to 2010. Atlas’ continued focus on these core lines of business coupled with a positive response from both new and existing agents and policyholders to Atlas’ value proposition drove the improvement. As a percentage of the insurance subsidiaries’ overall book of business, commercial auto gross premium written represented 44.7% of gross premium written in 2011 compared to 29.4% in 2010.

Commercial automobile insurance has outperformed the overall P&C industry in each of the past ten years based on data compiled by the NAIC. Each of the specialty business lines on which Atlas’ strategy is focused is a subset of this historically profitable industry segment.

Because there are a limited number of competitors specializing in these lines of business, management believes a strong value proposition is very important and can result in desirable retention levels as policies renew on an annual basis. There are also a relatively limited number of agents who specialize in these lines of business. As a result, strategic agent relationships are important to ensure efficient distribution.

There is a positive correlation between the economy and commercial automobile insurance in general. However, operators of commercial automobiles may be less likely than other business segments within the commercial auto line to take vehicles out of service as their businesses and business reputations rely heavily on availability. With respect to certain business lines such as the taxi line, there are also other factors such as the cost and limited supply of medallions which may discourage a policy holder from taking vehicles out of service in the face of reduced demand for the use of the vehicle.

Maintaining continuous insurance on all vehicles under dispatch is an important aspect of Atlas’ target policyholders’ businesses.

Non-Standard Automobile

Non-standard automobile insurance is principally provided to individuals who do not qualify for standard automobile insurance coverage because of their payment history, driving record, place of residence, age, vehicle type or other factors. Such drivers typically represent higher than normal risks and pay higher insurance rates for comparable coverage.

Consistent with Atlas’ focus on commercial automobile insurance, Atlas continues to transition away from the non-standard auto

line. Atlas’ has ceased renewals of policies of this type in 2011, allowing surplus and additional resources to be devoted to the expected growth of the commercial automobile business. These lines comprised 41.4% of our gross written premium in 2011 versus 49.2% in 2010. In 2012, gross written premium related to non-standard auto will be negligible.

Other

This line of business is primarily comprised of Atlas’ surety business, which is 100% reinsured.

Geographic Concentration

Table 3 Gross premium written by state

Year Ended December 31,	2011				2010
Illinois	$	25,398	60.4	%	$	28,230		60.5	%
Indiana	2,687		6.4	%	4,782			10.2	%
Michigan	3,828		9.1	%	2,032			4.4	%
New York	1,865		4.4	%	2,830			6.1	%
Minnesota	2,555		6.1	%	1,524			3.3	%
Louisiana	1,530		3.6	%	(147		)	(0.3	)%
Wisconsin	758		1.8	%	371			0.8	%
Other	3,410		8.2	%	7,057			15.1	%
Total	$	42,031	100.0	%	$	46,679		100.0	%

As illustrated by the data in Table 3 above, 60.4% of Atlas’ 2011 gross premium written came from the state of Illinois and 76.0% came from the three states currently producing the most year-to-date premium volume (Illinois, Indiana and Michigan), as compared to 75.1% in 2010. Atlas is committed to diversifying geographically by expanding in new areas of the country, leveraging experience, historical data and research. In 2011, Atlas began actively writing insurance in 10 new states, 5 of which were added in the fourth quarter.

The decline of written premium for the year ended December 31, 2011 versus the year ended December 31, 2010 in Illinois and Indiana is primarily attributable to Atlas’ de-emphasis of non-standard automobile insurance. The majority of the 2010 non-standard automobile written premium came from those two states.

Ceded Premium Written

Ceded premium written is equal to premium ceded under the terms of Atlas’ in force reinsurance treaties. Ceded premium written decreased 56.5% to $6,173 for the year ended December 31, 2011 compared with $14,201 for the year ended December 31, 2010. This decrease is attributed to the reduction of Atlas’ surety gross premium written.

Net Premium Written

Net premium written is equal to gross premium written less the ceded premium written under the terms of Atlas’ in force reinsurance treaties. Net premium written increased 10.4% to $35,858 for 2011 compared with $32,478 for 2010. These changes are attributed to the combined effects of the issues cited in the ‘Gross Premium Written’ and ‘Ceded Premium Written’ sections above.

Net Premium Earned

Premiums are earned ratably over the term of the underlying policy. Net premium earned was $ 35,747 in 2011, a 33.3% decrease compared with $ 53,603 in 2010. The decrease in net premiums earned is attributable to the written premium decline experienced by the Company’s insurance subsidiaries prior to Atlas’ formation, coupled with the transition away from private passenger automobile insurance and other non-core lines of business. Policy periods in Atlas’ core lines of business are typically twelve months.

Claims Incurred

The loss ratio relating to the claims incurred in 2011 was 81.1% compared to 89.7% in 2010. The $1,800 reserve strengthening adjustment made in the fourth quarter 2011 unfavorably impacted the loss ratio by 5% in 2011. The change in loss ratios from 2010 to 2011 is attributable to the increased composition of commercial auto as a percentage of the total written premium. Atlas has extensive experience and expertise with respect to underwriting and claims management in this specialty area of insurance and expects the loss ratio to trend back towards levels seen in the second quarter 2011. The company is committed to retain this claim handling expertise as a core competency as the volume of business increases.

Acquisition Costs

Acquisition costs represent commissions and taxes incurred on net premium earned. Acquisition costs were $ 7,294 in 2011 or 20.4% of net premium earned, as compared to 20.7% in 2010. This ratio has declined slightly due to the shift away from private passenger automobile insurance which carry higher commission rates and are anticipated to continue decreasing as Atlas transitions entirely away from these non-standard automobile lines.

Other Underwriting Expenses

The other underwriting expense ratio was 29.9% in 2011 compared to 34.3% in 2010. Atlas incurred additional expenses of approximately $627 in 2011 that are deemed non-recurring. These items are highlighted in the table below:

Table 4 Non-recurring Expenses

Expense Item	Description	Non-recurring Expense
Licenses, taxes and assessments	Amounts paid in Q1 2011	$	198
Professional fees	Legal and Accounting fees	121
Salary and benefits	Q1 staff reduction impacts	174
EDP expense	Decommissioning software expenses previously capitalized	84
Occupancy/Miscellaneous expense	Straight-line lease adjustment	50
Total non-recurring expenses		$	627

The combination of the settlement of the American Country Pension Plan in the fourth quarter of 2011 and the above expenses unfavorably impacted the other underwriting expense ratio by 8.8% . The favorable change in other areas of underwriting expense can be attributed to operating efficiencies realized after the reverse merger at the end of 2010 as well as the absence of significant agent receivable write-offs.

Net Investment Income

Table 5 Investment Results

Year Ended December 31,	2011			2010
Average securities at cost (including cash)	$	159,555		$	193,686
Interest income after expenses	3,280			4,616
Percent earned on average investments	2.1		%	2.4		%
Net realized gains	$	4,201		$	888
Total investment income	7,481			5,504
Total realized yield (annualized)	4.7		%	2.8		%

Investment income (excluding net realized gains) decreased by 28.9% to $ 3,280 in 2011, compared to $ 4,616 in 2010. These amounts are primarily comprised of interest income. This decrease is primarily due to the lower average investment balance during 2011. However, the average yield on invested assets (including net realized gains of $ 4,201 ) in 2011 increased to 4.7% as compared with 2.8% in 2010.

Net Realized Investment Gains (Losses)

Net realized investment gains in 2011 were $4,201 compared to $888 in 2010. These gains were the result of management's decision to sell certain securities during favorable market conditions in 2011.

Miscellaneous Income (Loss)

Atlas recorded miscellaneous income in 2011 of $ 124 compared to expense of $ 757 for 2010. Miscellaneous income in 2011 is primarily comprised of rental income from the corporate headquarters in Elk Grove Village, Illinois.

Combined Ratio

Atlas’ combined ratio are summarized in the table below. The underwriting loss is attributable to the factors described in the ‘Claims Incurred’, ‘Acquisition Costs’, and ‘Other Underwriting Expenses’ sections above.

Table 6 Combined Ratios

Year Ended December 31,	2011			2010
Net premium earned	$	35,747		$	53,603
Underwriting expenses *	46,985			77,587
Combined ratio	131.4		%	144.7		%

*Underwriting expense is the combination of losses on claims, acquisition costs, and other underwriting expenses

2011 non-operating expenses totaled $4,971 ($3,357 net of tax) which includes a one-time $2,544 ($1,755 net of tax) non cash charge upon settlement of the American Country Pension Plan, a $1,800 ($1,188 net of tax) fourth quarter reserve strengthening charge related to pre-Atlas periods, and non-recurring expenses incurred in Q1 2011 of $627 ($414 net of tax) related to the reverse merger transaction costs and restructuring. These non-operating expenses had an unfavorable impact of 13.9% on the Company's combined ratio in 2011.

Loss before Income Taxes

Atlas generated loss before tax of $ 3,633 in 2011 as compared to a loss before income taxes of $ 19,237 in 2010.

Income Tax Benefit

Atlas recognized an income tax benefit in 2011 of $ 1,163 , consistent with operating results for the year. No further valuation allowance was recorded on net operating losses generated in 2011. This compares to a tax expense of $ 2,575 in 2010. The following table reconciles tax benefit from applying the statutory U.S. Federal tax rate of 34.0% to the actual percentage of pre-tax losses provided for the years ended December 31, 2011 and 2010.

Table 7 Income tax benefit reconciliation

Year ended December 31,	2011					2010
	Amount			%		Amount			%
Expected income tax benefit at statutory rate	$	(1,235	)	(34.0	)%	$	(6,541	)	(34.0	)%
Valuation allowance	—			—	%	(9,476		)	(49.3	)%
Nondeductible expenses	5			0.1	%	183			1.0	%
Tax implications of qualifying transaction	75			2.1	%	18,412			95.7	%
Other	(8		)	(0.2	)%	(3		)	—	%
Total	$	(1,163	)	(32.0	)%	$	2,575		13.4	%

Upon formation of Atlas on December 31, 2010, a yearly limitation as required by U.S. tax law Section 382 that applies to changes in ownership on the future utilization of Atlas’ net operating loss carry-forwards was calculated. The insurance subsidiaries’ prior parent retained those tax assets previously attributed to the insurance subsidiaries which could not be utilized by Atlas as a result of this limitation. As a result, Atlas’ ability to recognize future tax benefits associated with a portion of its deferred tax assets generated during prior years and the current year have been permanently limited to the amount determined under U.S. tax law Section 382. The result is a maximum expected net deferred tax asset which Atlas has available after the merger which is believed more-likely-than-not to be utilized in the future.

Net Loss and Loss per Share

Atlas lost $ 2,470 during 2011 compared to net losses of $ 21,812 in 2010. After taking the impact of the liquidation preference of the preferred shares into consideration, the basic and diluted loss per common share in 2011 was $ (0.18) versus a loss per common share of $1.19 in 2010 computed under continuation accounting rules.

The combination of the one-time $2,544 ($1,755 net of tax) non-cash charge upon settlement of the American Country Pension Plan, the $1,800 ($1,188 net of tax) fourth quarter reserve strengthening, and other non-recurring expenses incurred in Q1 2011 of $627, had an unfavorable impact of ( $0.18 ) on earnings per common share in 2011.

There were 18,373,624 weighted average common shares outstanding at the end of 2011. In 2010, 18,358,363 common shares were used to compute both basic and dilutive earnings per common share, the number of voting common shares at the merger date as required by continuation accounting rules.

Book Value per Common Share

Book value per common share was $ 2.03 at December 31, 2011 as compared to $2.30 at December 31, 2010. The settlement of the American Country Pension Plan had no significant impact on book value per share.

IV. FINANCIAL CONDITION

Table 8 Consolidated Statement of Financial Position

	December 31,
	2011			2010
Assets
Investments
Fixed income securities, at fair value (Amortized cost $101,473 and $148,531)	$	103,491		$	154,011
Equity securities, at fair value (cost $994 and $0)	1,141			—
Total Investments	104,632			154,011
Cash and cash equivalents	23,249			19,037
Accrued investment income	586			1,293
Accounts receivable and other assets (Net of allowance of $4,254 and $4,212)	9,579			13,340
Reinsurance recoverables, net	8,044			4,277
Prepaid reinsurance premiums	2,214			6,999
Deferred policy acquisition costs	3,020			3,804
Deferred tax asset, net	6,775			6,399
Software and office equipment, net	440			1,274
Assets held for sale	13,634			15,004
Total Assets	$	172,173		$	225,438
Liabilities
Claims liabilities	$	91,643		$	132,579
Unearned premiums	15,691			17,061
Due to reinsurers and other insurers	5,701			9,614
Other liabilities and accrued expenses	2,884			6,015
Total Liabilities	$	115,919		$	165,269
Shareholders’ Equity
Preferred shares, par value per share $0.001, 100,000,000 shares authorized, 18,000,000 shares issued and outstanding at December 31, 2011 and December 31, 2010. Liquidation value $1.00 per share	$	18,000		$	18,000
Ordinary voting common shares, par value per share $0.001, 800,000,000 shares authorized, 4,625,526 shares issued and outstanding at December 31, 2011 and 4,553,502 at December 31, 2010	4			4
Restricted voting common shares, par value per share $0.001, 100,000,000 shares authorized, 13,804,861 shares issued and outstanding at December 31, 2011 and December 31, 2010	14			14
Additional paid-in capital	152,652			152,466
Retained deficit	(115,841		)	(113,371		)
Accumulated other comprehensive income, net of tax	1,425			3,056
Total Shareholders’ Equity	$	56,254		$	60,169
Total Liabilities and Shareholders’ Equity	$	172,173		$	225,438
See accompanying Notes to Consolidated Financial Statements.

Investments

Investments Overview and Strategy

Atlas manages its securities portfolio to support the liabilities of the insurance subsidiaries, to preserve capital and to generate investment returns. Atlas invests predominantly in corporate and government bonds with relatively short durations that correlate with the payout patterns of Atlas’ claims liabilities. A third-party investment management firm manages Atlas’ investment portfolio pursuant to the Company’s investment policies and guidelines as approved by its Board of Directors. Atlas monitors the third-party investment manager’s performance and its compliance with both its mandate and Atlas’ investment policies and guidelines.

Atlas’ investment guidelines stress the preservation of capital, market liquidity to support payment of liabilities and the diversification of risk. With respect to fixed income securities, Atlas generally purchases securities with the expectation of holding them to their maturities; however, the securities are available for sale if liquidity needs arise.

Portfolio Composition

At December 31, 2011, Atlas held securities with a fair value of $104,632 which was comprised primarily of fixed income securities. The insurance subsidiaries’ securities must comply with applicable regulations that prescribe the type, quality and concentration of securities. These regulations in the various jurisdictions in which the insurance subsidiaries are domiciled permit investments in government, state, municipal and corporate bonds, preferred and common equities, and other high quality investments, within specified limits and subject to certain qualifications.

The following table summarizes the fair value of the securities portfolio, including cash and cash equivalents, as at the dates indicated.

Table 9 Fair value of securities portfolio

As at December 31, 2011		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Term Deposits		$	—	$	—	$	—	$	—
Fixed Income:
U.S.	- Government	44,835		911		—		45,746
	- Corporate	35,572		825		24		36,373
	- Commercial mortgage backed	17,493		208		—		17,701
	- Other asset backed	3,573		99		1		3,671
Total Fixed Income		$	101,473	$	2,043	$	25	$	103,491
Equities		994		147		—		1,141
Totals		$	102,467	$	2,190	$	25	$	104,632



As at December 31, 2010		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Term Deposits		$	7,898	$	3	$	—	$	7,901
Fixed Income:
U.S.	- Government	67,388		2,117		—		69,505
	- Corporate	62,429		3,011		—		65,440
	- Commercial mortgage backed	8,445		270		—		8,715
	- Other asset backed	2,371		79		—		2,450
Total Fixed Income		$	148,531	$	5,480	$	—	$	154,011
Equities
Totals		$	148,531	$	5,480	$	—	$	154,011

Table 10 Net Change in unrealized gains/(losses) on available-for-sale securities

		2011			2010
Term Deposits		$	(3	)	$	3
Fixed Income:
U.S.	-Government	(1,206		)	852
	- Corporate	(2,210		)	386
	- Commercial mortgage backed	(62		)	33
	- Other asset backed	19			2,037
Equities		147
Totals		$	(3,315	)	$	3,311

For the year ended December 31, 2011, Atlas recognized $ 7,481 in total investment income, including $4,201 of realized gains.

Liquidity and Cash Flow Risk

The following table summarizes the fair value by contractual maturities of the fixed income securities portfolio excluding cash and cash equivalents at the dates indicated.

Table 11 Fair value of fixed income securities by contractual maturity date

As of December 31,	2011				2010
	Amount		%		Amount		%
Due in less than one year	$	29,407	28.4	%	$	21,555	14.0	%
Due in one through five years	27,317		26.4	%	88,564		57.5	%
Due after five through ten years	10,242		9.9	%	24,026		15.6	%
Due after ten years	36,525		35.3	%	19,866		12.9	%
Total	$	103,491	100.0	%	$	154,011	100.0	%

At December 31, 2011, 54.8% of the fixed income securities, including treasury bills, bankers’ acceptances, government bonds and corporate bonds had contractual maturities of five years or less. Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call or prepayment penalties. Atlas holds cash and high grade short-term assets which, along with fixed income security maturities, management believes are sufficient for the payment of claims on a timely basis. In the event that additional cash is required to meet obligations to policyholders, Atlas believes that high quality securities portfolio provides us with sufficient liquidity. With a weighted average duration of 2.35 years, changes in interest rates will have a modest market value impact on the Atlas portfolio relative to longer duration portfolios. Atlas can and typically does hold bonds to maturity by matching duration with the anticipated liquidity needs.

Market Risk

Market risk is the risk that Atlas will incur losses due to adverse changes in interest rates, currency exchange rates or equity prices. Having disposed of a majority of its asset backed securities, its primary market risk exposures in the fixed income securities portfolio are to changes in interest rates. Because Atlas’ securities portfolio is comprised of primarily fixed income securities that are usually held to maturity, periodic changes in interest rate levels generally impact its financial results to the extent that the securities in its available for sale portfolio are recorded at market value. During periods of rising interest rates, the market value of the existing fixed income securities will generally decrease and realized gains on fixed income securities will likely be reduced. The reverse is true during periods of declining interest rates.

Credit Risk

Credit risk is defined as the risk of financial loss due to failure of the other party to a financial instrument to discharge an obligation. Atlas is exposed to credit risk principally through its investments and balances receivable from policyholders and reinsurers. It monitors concentration and credit quality risk through policies to limit and monitor its exposure to individual issuers or related groups (with the exception of U.S. government bonds) as well as through ongoing review of the credit ratings of issuers in the securities portfolio. Credit exposure to any one individual policyholder is not material. The Company's policies, however, are distributed by agents who may manage cash collection on its behalf pursuant to the terms of their agency agreement. Atlas has policies to evaluate the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurers’ insolvency.

The following table summarizes the composition of the fair value of the fixed income securities portfolio, excluding cash and cash equivalents, as of the dates indicated, by ratings assigned by Fitch, S&P or Moody’s Investors Service. The fixed income securities portfolio consists of predominantly very high quality securities in corporate and government bonds with 95.3% rated ‘A’ or better as at December 31, 2011 compared to 97.4% as at December 31, 2010.

Table 12 Credit ratings of fixed income securities portfolio

As of December 31,	2011				2010
	Amount		% of Total		Amount		% of Total
AAA/Aaa	$	54,717	52.9	%	$	88,684	57.6	%
AA/Aa	21,567		20.8	%	26,388		17.1	%
A/A	22,380		21.6	%	35,027		22.7	%
BBB/Baa	4,827		4.7	%	3,851		2.5	%
CCC/Caa or lower or not rated	—		—	%	61		0.1	%
Total Securities	$	103,491	100.0	%	$	154,011	100.0	%

Other-than-temporary impairment

Atlas recognizes losses on securities for which a decline in market value was deemed to be other-than-temporary. Management performs a quarterly analysis of the securities holdings to determine if declines in market value are other-than-temporary. Atlas did not recognize charges for securities impairments that were considered other-than-temporary for the years ended December 31, 2011 and December 31, 2010.

The length of time securities may be held in an unrealized loss position may vary based on the opinion of the appointed investment manager and their respective analyses related to valuation and to the various credit risks that may prevent us from recapturing the principal investment. In cases of securities with a maturity date where the appointed investment manager determines that there is little or no risk of default prior to the maturity of a holding, Atlas would elect to hold the security in an unrealized loss position until the price recovers or the security matures. In situations where facts emerge that might increase the risk associated with recapture of principal, Atlas may elect to sell securities at a loss. As of December 31, 2011 and December 31, 2010, Atlas had no material gross unrealized losses in its portfolio.

Estimated impact of changes in interest rates and securities prices

For Atlas’ available-for-sale fixed income securities held as of December 31, 2011, a 100 basis point increase in interest rates on such held fixed income securities would have increased net investment income and income before taxes by approximately $271. Conversely, a 100 basis point decrease in interest rates on such held fixed income securities would decrease net investment income and income before taxes by $271.

A 100 basis point increase would have also decreased other comprehensive income by approximately $3,041 due to “mark-to-market” requirement; however, holding investments to maturity would mitigate this impact. Conversely, a 100 basis point decrease would increase other comprehensive income by the same amount. The impacts described here are approximately linear to the change in interest rates.

Due from Reinsurers and Other Insurers

Atlas purchases reinsurance from third parties in order to reduce its liability on individual risks and its exposure to large losses. Reinsurance is insurance purchased by one insurance company from another for part of the risk originally underwritten by the purchasing (ceding) insurance company. The practice of ceding insurance to reinsurers allows an insurance company to reduce its exposure to loss by size, geographic area, and type of risk or on a particular policy. An effect of ceding insurance is to permit an insurance company to write additional insurance for risks in greater number or in larger amounts than it would otherwise insure independently, having regard to its statutory capital, risk tolerance and other factors.

Atlas generally purchases reinsurance to limit net exposure to a maximum amount on any one loss of $500 with respect to commercial automobile liability claims. Atlas also purchases reinsurance to protect against awards in excess of its policy limits. In addition, in 2010 the insurance subsidiaries were part of a larger group of insurance companies that purchased catastrophe reinsurance providing coverage in the event of a series of claims arising out of a single occurrence, limiting exposure to $2,000

per occurrence with a maximum coverage of $38,000. This catastrophic coverage was deemed appropriate at the time based on the insurance subsidiaries being part of a larger group of companies. However, this exposure is now much more limited due to the insurance subsidiaries’ relatively low limits of first party physical damage coverage. Further, Atlas primarily operates in geographic regions believed to have less exposure to natural disasters; therefore management determined that catastrophe reinsurance was not required in 2011 and going forward. Atlas will continue to evaluate and adjust its reinsurance needs based on business volume, mix, and supply levels.

Reinsurance ceded does not relieve Atlas of its ultimate liability to its insured in the event that any reinsurer is unable to meet their obligations under its reinsurance contracts. Therefore, Atlas enters into reinsurance contracts with only those reinsurers deemed to have sufficient financial resources to provide the requested coverage. Reinsurance treaties are generally subject to cancellation by the reinsurers or Atlas on the anniversary date and are subject to renegotiation annually. Atlas regularly evaluates the financial condition of its reinsurers and monitors the concentrations of credit risk to minimize its exposure to significant losses as a result of the insolvency of a reinsurer. Atlas believes that the amounts it has recorded as reinsurance recoverables are appropriately established. Estimating amounts of reinsurance recoverables, however, is subject to various uncertainties and the amounts ultimately recoverable may vary from amounts currently recorded. As at December 31, 2011, Atlas had $ 8,044 recoverable from third party reinsurers (exclusive of amounts prepaid) and other insurers as compared to $ 4,277 as at December 31, 2010.

Estimating amounts of reinsurance recoverables is also impacted by the uncertainties involved in the establishment of provisions for unpaid claims. As underlying reserves potentially develop, the amounts ultimately recoverable may vary from amounts currently recorded. Atlas’ reinsurance recoverables are generally unsecured. Atlas regularly evaluates its reinsurers, and the respective amounts recoverable, and an allowance for uncollectible reinsurance is provided for, if needed.

Atlas’ largest reinsurance partners are Great American Insurance Company (“Great American”), a subsidiary of American Financial Group, Inc. and Gen Re, a subsidiary of Berkshire Hathaway, Inc. Great American has a financial strength rating of A+ from Standard & Poor’s, while Gen Re has a financial strength rating of Aa1 from Moody’s.

Deferred Tax Asset

Table 13 Components of Deferred Tax

As at year ended December 31,	2011			2010
Deferred tax assets:
Unpaid claims and unearned premiums	$	3,004		$	4,218
Loss carry-forwards	15,558			13,252
Pension expense	—			841
Bad debts	1,297			1,356
Other	1,338			1,394
Valuation Allowance	(12,361		)	(11,288		)
Total gross deferred tax assets	$	8,836		$	9,773

Deferred tax liabilities:
Investment securities	$	740		$	1,863
Deferred policy acquisition costs	1,027			1,293
Other	294			218
Total gross deferred tax liabilities	$	2,061		$	3,374
Net deferred tax assets	$	6,775		$	6,399

Atlas established a valuation allowance of approximately $ 12,361 and $ 11,288 for its gross future deferred tax assets at December 31, 2011 and December 31, 2010, respectively.

of its net operation losses in the U.S. which are subject to a yearly limitation. The uncertainty over the Company’s ability to utilize a portion of these losses over the short term has led to the recording of a valuation allowance.

Atlas has the following total net operating loss carry-forwards as of December 31, 2011:

Table 14 Net operating loss carry-forward by expiry

Year of Occurrence	Year of Expiration	Amount
2001	2021	$	14,750
2002	2022	4,317
2006	2026	7,825
2007	2027	5,131
2008	2028	1,949
2009	2029	1,949
2010	2030	1,949
2011	2031	7,762
Total		$	45,632

Assets Held for Sale

As at December 31, 2010, Atlas had five properties held for sale with an aggregate carrying value of $15,004, including its headquarters building in Elk Grove Village, Illinois. During 2011, two of the properties were sold for combined proceeds of $ 2,436 and Atlas re-classified leasehold improvements with a net book value of $926 from office equipment to assets held for sale. At December 31, 2011, Atlas had three properties remaining as held for sale with an aggregate carrying value of $ 13,634 .

All of the properties’ individual carrying values were less than their respective appraised values net of reasonably estimated selling costs at the time those appraisals were received and at the time properties were deemed to be held for sale. All properties were listed for sale through brokers at the appraised values and above carrying values as of December 31, 2011. Atlas expects to re-invest the proceeds from the sale of real estate in its investment portfolio.

The Elk Grove Village building and property were previously owned by KAI and were contributed to Atlas as a capital contribution in June 2010. The other three properties, all located in Alabama, were assets of Southern United Fire Insurance Company which was merged into American Service in February 2010.

On June 8, 2011, the Mobile, Alabama office building was sold for $2,100, which was the same as its carrying value as of December 31, 2010. On November 2, 2011, land in Saraland, Alabama held for sale as of December 31, 2010 was sold for $336. Its carrying value on the date of sale was $296.

In 2011, bank financing for commercial properties in the Chicago suburbs became more difficult to obtain due to high vacancy rates and tightened lending standards. This has made the sale of the property more difficult than originally envisioned in spite of a reasonable selling price relative to the appraised value. In response, Atlas began offering structured financing to prospective buyers in the fourth quarter, which Atlas believes will lead to a sale of the property in 2012.

Claims Liabilities

The table below shows the amounts of total case reserves and incurred but not reported (“IBNR”) claims provision as of December 31, 2011 and December 31, 2010. The provision for unpaid claims decreased by 30.9% to $ 91,643 at the end of 2011 compared to $132,579 at the end of 2010. During 2011, case reserves decreased by 26.2% compared to December 31, 2010, while IBNR reserves decreased by 39.8% generally due to the payment of claims related to prior accident years, consistent with management’s expectations.

Table 15 Provision for unpaid claims by type - gross

As at year ended December 31,	2011		2010		YTD% Change
Case reserves	64,276		87,119		(26.2	)%
IBNR	27,367		45,460		(39.8	)%
Total	$	91,643	$	132,579	(30.9	)%

Table 16 Provision for unpaid claims by line of business – gross

As at year ended December 31,	2011		2010		YTD % Change
Non-standard auto	$	18,175	$	28,897	(37.1	)%
Commercial auto	64,881		92,669		(30.0	)%
Other	8,587		11,013		(22.0	)%
Total	$	91,643	$	132,579	(30.9	)%

Table 17 Provision for unpaid claims by line of business - net of reinsurance recoverables

As at year ended December 31,	2011		2010		YTD % Change
Non-standard Auto	$	18,175	$	28,897	(37.1	)%
Commercial Auto	62,497		92,102		(32.1	)%
Other	3,146		5,103		(38.3	)%
Total	$	83,818	$	126,102	(33.5	)%

The reduction of the provision for unpaid claims is consistent with the change in written premium in prior years. However, because the establishment of reserves is an inherently uncertain process involving estimates, current provisions may not be sufficient. Adjustments to reserves, both positive and negative, are reflected quarterly in the statement of income as estimates are updated.

Table 18 Provision for unpaid claims, net of recoveries from reinsurers

	2011		2010			2009			2008				2007			2006			2005			2004			2003			2002			2001
Gross reserves for unpaid claims and claims expenses
	$	91,643	$	132,579		$	179,054		$	173,652			$	183,649		$	191,171		$	202,677		$	195,437		$	189,262		$	193,909		$	175,104
Less: Reinsurance recoverable on unpaid claims and claims expenses
	7,825		6,477			5,196			103,612				107,837			111,911			95,215			90,596			91,079			94,510			38,779
Reserve for unpaid claims and claims expenses, net
	83,818		126,102			173,858			70,040				75,812			79,260			107,462			104,841			98,183			99,399			136,325
Cumulative paid on originally established reserve as of:
One year later			$	58,562		$	76,835		$	(38,449	)	*	$	29,811		$	29,917		$	30,637		$	37,220		$	41,426		$	46,083		$	51,260
Two years later						125,455			13,573				2,812			49,804			52,182			56,126			66,428			75,709			84,175
Three years later									43,671				38,650			33,742			66,806			69,801			77,919			91,773			104,423
Four years later													59,370			57,853			60,877			78,028			85,576			97,764			114,623
Five years later																69,428			75,935			76,174			89,396			101,725			118,347
Six years later																			81,347			85,150			88,820			103,935			120,455
Seven years later																						88,755			93,142			104,484			121,990
Eight years later																									95,401			106,560			123,240
Nine years later																												107,625			123,965
Ten years later																															124,707

Unpaid claims as of:
One year later			$	69,230		$	102,173		$	114,284			$	46,338		$	50,772		$	76,344		$	62,895		$	57,873		$	61,668		$	65,338
Two years later						56,268			65,101				75,258			31,322			56,428			46,081			35,431			33,838			39,466
Three years later									35,500				43,336			46,116			43,015			34,082			25,491			20,460			21,682
Four years later													21,859			25,534			26,714			26,833			19,231			14,710			12,591
Five years later																11,061			15,329			14,797			16,245			12,300			9,269
Six years later																			6,712			9,359			8,674			10,780			9,515
Seven years later																						4,339			6,108			5,523			8,446
Eight years later																									3,300			4,105			3,624
Nine years later																												2,539			3,275
Ten years later																															2,102

Re-estimated liability as of:
One year later			$	127,792		$	179,008		$	75,835			$	76,149		$	80,689		$	106,981		$	100,115		$	99,299		$	107,751		$	116,598
Two years later						181,723			78,674				78,070			81,126			108,610			102,207			101,859			109,547			123,641
Three years later									79,171				81,986			79,858			109,821			103,883			103,410			112,233			126,105
Four years later													81,229			83,387			87,591			104,861			104,807			112,474			127,214
Five years later																80,489			91,264			90,971			105,641			114,025			127,616
Six years later																			88,059			94,509			97,494			114,715			129,970
Seven years later																						93,094			99,250			110,007			130,436
Eight years later																									98,701			110,665			126,864
Nine years later																												110,164			127,240
Ten years later																															126,809

As of December 31, 2011: Cumulative (redundancy) deficiency
			$	1,690		$	7,865		$	9,131			$	5,417		$	1,229		$	(19,403	)	$	(11,747	)	$	518		$	10,765		$	(9,516	)
Cumulative (redundancy) deficiency as a % of reserves originally established- net
			1.3		%	4.5		%	13.0		%		7.1		%	1.6		%	-18.1		%	-11.2		%	0.5		%	10.8		%	-7.0		%
Re-estimated liability- gross
			$	134,223		$	187,715		$	194,560			$	196,966		$	200,740		$	212,901		$	209,876		$	211,744		$	227,169		$	235,021
Less: Re-established reinsurance recoverable
			6,431			5,992			115,389				115,737			120,251			124,842			116,782			113,043			117,005			108,212
Re-estimated provision- net
			$	127,792		$	181,723		$	79,171			$	81,229		$	80,489		$	88,059		$	93,094		$	98,701		$	110,164		$	126,809
Cumulative deficiency– gross
			1,645			8,661			20,908				13,317			9,569			10,224			14,439			22,482			33,260			59,917

	* Results from the commutation of reinsured reserves by Kingsway Re

The financial statements are presented on a calendar year basis for all data. Claims payments and changes in reserves, however, may be made on accidents that occurred in prior years, not on business that is currently insured. Calendar year losses consist of payments and reserve changes that have been recorded in the financial statements during the applicable reporting period, without regard to the period in which the accident occurred. Calendar year results do not change after the end of the applicable reporting period, even as new claim information develops. Calendar year information is presented in Note 11 to the consolidated financial statements and shows the claims activity and impact on income for changes in estimates of unpaid claims. Accident year losses

consist of payments and reserve changes that are assigned to the period in which the accident occurred. Accident year results will change over time as the estimates of losses change due to payments and reserve changes for all accidents that occurred during that period.

Table 19 Net increase in prior years’ incurred claims estimates by line of business and accident year

Year Ended December 31, 2011



Accident year	Non- standard Auto			Commercial Auto			Other			Total
2006 & prior	$	(423	)	$	(2,420	)	$	(53	)	$	(2,896	)
2007	(100		)	2,259			(19		)	2,140
2008	365			993			(104		)	1,254
2009	(2,040		)	3,716			542			2,218
2010	1,004			(1,588		)	(440		)	(1,024		)
Total	$	(1,194	)	$	2,960		$	(74	)	$	1,692

Year Ended December 31, 2010



Accident year	Non- standard Auto			Commercial Auto			Other			Total
2005 & prior	$	(103	)	$	4,074		$	(297	)	$	3,674
2006	(415		)	421			(151		)	(145		)
2007	(1,164		)	1,686			(133		)	389
2008	(1,050		)	(123		)	95			(1,078		)
2009	1,031			1,534			(253		)	2,312
Total	$	(1,701	)	$	7,592		$	(739	)	$	5,152

Due to Reinsurers

The decrease in due to reinsurers is consistent with the payout patterns of the underlying claims liabilities.

Off-balance sheet arrangements

Atlas has no material off-balance sheet arrangements.

Shareholders’ Equity

The table below identifies changes in shareholders’ equity for the years ended December 31, 2011 and December 31, 2010.

Table 20 Changes in Shareholders' Equity

	Preferred Shares		Ordinary Voting Common Shares		Restricted Voting Common Shares		Additional Paid-in Capital			Retained Deficit			Accumulated Other Comprehensive Income (loss)			Total
Balance December 31, 2009	$	18,000	$	4	$	14	$	82,675		$	(47,714	)	$	(433	)	$	52,546
Net loss										(21,812		)				(21,812		)
Capital Contribution							26,994									26,994
Dividends Paid							(16,700		)							(16,700		)
Merger of Southern United							59,944			(43,845		)	331			16,430
Forgiveness of debt							(447		)							(447		)
Other comprehensive income													3,158			3,158
Balance December 31, 2010	$	18,000	$	4	$	14	$	152,466		$	(113,371	)	$	3,056		$	60,169
Net loss										(2,470		)				(2,470		)
Other Comprehensive Loss													(3,315		)	(3,315		)
Share-based compensation							113									113
Stock options exercised							73									73
Settlement of pension plan, net of tax													1,684			1,684
Balance December 31, 2011	$	18,000	$	4	$	14	$	152,652		$	(115,841	)	$	1,425		$	56,254

As of March 19, 2012, there are 4,628,292 ordinary voting common shares, 13,804,861 restricted voting common shares and 18,000,000 preferred shares issued and outstanding.

The restricted voting common shares are convertible into ordinary voting common shares at the option of the holder in the event that an offer is made to purchase all or substantially all of the restricted voting common shares.

The holders of restricted voting shares are entitled to vote at all meetings of shareholders, except at meetings of holders of a specific class that are entitled to vote separately as a class. The restricted voting common shares as a class shall not carry more than 30% of the aggregate votes eligible to be voted at a general meeting of common shareholders.

All of the issued and outstanding restricted voting common shares are beneficially owned or controlled by KFSI or its affiliated entities. In the event that such shares ceased to be beneficially owned or controlled by KFSI or its affiliated entities, the restricted voting common shares shall be converted into fully paid and non-assessable ordinary voting shares on a one-to-one basis.

Preferred shares are not entitled to vote. They accrue dividends on a cumulative basis whether or not declared by the Board of Directors at the rate of $0.045 per share per year (4.5%) and may be paid in cash or in additional preferred shares at the option of Atlas. Upon liquidation, dissolution or winding-up of Atlas, holders of preferred shares receive the greater of $1.00 per share plus all declared and unpaid dividends or the amount they would receive in liquidation if the preferred shares had been converted to restricted voting common shares or ordinary voting common shares immediately prior to liquidation. Preferred shares are convertible into ordinary voting common shares at the option of the holder at any date that is after December 31, 2015, the fifth year after issuance at the rate of 0.3808 ordinary voting common shares for each preferred share. The conversion rate is subject to change if the number of ordinary voting common shares or restricted voting common shares changes. The preferred shares are redeemable at the option of Atlas at a price of US$1.00 per share plus accrued and unpaid dividends commencing at the earlier of December 31, 2012, two years from issuance date, or the date at which KFSI’s beneficial interest is less than 10%.

The cumulative amount of dividends to which the preferred shareholders are entitled upon liquidation or sooner, if Atlas declares dividends, is $810 as at December 31, 2011.

Liquidity and Capital Resources

The purpose of liquidity management is to ensure there is sufficient cash to meet all financial commitments and obligations as they become due. The liquidity requirements of Atlas’ business have been met primarily by funds generated from operations, asset maturities and income and other returns received on securities. Cash provided from these sources is used primarily for payment of claims and operating expenses. The timing and amount of catastrophe claims are inherently unpredictable and may create increased liquidity requirements.

As a holding company, Atlas may derive cash from its subsidiaries generally in the form of dividends and in the future may charge management fees to the extent allowed by statute or other regulatory approval requirements to meet its obligations. The insurance subsidiaries fund their obligations primarily through premium and investment income and maturities in their securities portfolio. Refer also to the discussion “ Investments Overview and Strategy” on page 18. These insurance subsidiaries require regulatory approval for the return of capital and, in certain circumstances, payment of dividends. In the event that dividends and management fees available to the holding company are inadequate to service its obligations, the holding company would need to raise capital, sell assets or incur debt obligations. At December 31, 2011, Atlas did not have any outstanding debt, and therefore, no near term debt service obligations.

Atlas currently has no material commitments for capital expenditures.

In 2010 the insurance subsidiaries paid dividends of $16,700 to their parent, KAI, during that time period.

In 2010 the insurance subsidiaries incurred losses under their former owner, as did Atlas which at the time was a newly formed capital pool company known as JJR VI with no operations. The result of the losses by the insurance subsidiaries reduces Atlas’ capital flexibility by limiting their dividend paying capacity.

Capital Requirements

In the United States, a RBC formula is used by the NAIC to identify P&C insurance companies that may not be adequately capitalized. The NAIC requires capital and surplus not fall below 200% of the authorized control level. As of December 31, 2011, the insurance subsidiaries are well above the required risk based capital levels, with risk based capital ratios based on the unaudited statutory financial statements of 592.5% and 803.4% for American Country and American Service, respectively, and have estimated aggregate capital in excess of the 200% level of approximately $36,402.

Item 8. Financial Statements and Supplementary Data



	Page
Consolidated Statement of Comprehensive Income	44
Consolidated Statements of Financial Position	45
Consolidated Statements of Shareholders’ Equity	46
Consolidated Statements of Cash Flows	47
Notes to Consolidated Financial Statements	48
Reports of Independent Registered Public Accounting Firm	69

Table of Contents

ATLAS FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



($ in thousands, except per share data)
	Year ended December 31,
	2011			2010
Net premiums earned	$	35,747		$	53,603
Net claims incurred	28,994			48,074
Acquisition costs	7,294			11,115
Other underwriting expenses	10,697			18,398
Underwriting loss	(11,238		)	(23,984		)
Net investment income	3,280			4,616
Net investment gains	4,201			888
Other income (expense), net	124			(757		)
Loss from operations before income tax (benefit)/expense	(3,633		)	(19,237		)
Income tax (benefit)/expense	(1,163		)	2,575
Net loss attributable to Atlas	$	(2,470	)	$	(21,812	)

Other comprehensive loss
Available for sale securities:
Changes in net unrealized gains (losses)	$	154		$	3,514
Reclassification to income of net (gains) losses	(3,469		)	(203		)
Effect of income tax	—			—
Pension Liability
Settlement of pension plan	2,473			—
Minimum pension liability adjustment	—			(153		)
Effect of income tax	(789		)	—
Other comprehensive (loss)/income for the period	(1,631		)	3,158
Total comprehensive loss	(4,101		)	(18,654		)


Basic weighted average common shares outstanding	18,373,624			18,358,363
Loss per common share, basic	$	(0.18	)	$	(1.19	)
Diluted weighted average common shares outstanding	18,373,624			18,358,363
Loss per common share, diluted	$	(0.18	)	$	(1.19	)

See accompanying Notes to Consolidated Financial Statements

Table of Contents

ATLAS FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



($ in thousands)
	December 31,
	2011			2010
Assets
Investments, available for sale
Fixed income securities, at fair value (Amortized cost $101,473 and $148,531)	$	103,491		$	154,011
Equity securities, at fair value (cost $994 and $0)	1,141			—
Total Investments	104,632			154,011
Cash and cash equivalents	23,249			19,037
Accrued investment income	586			1,293
Accounts receivable and other assets (Net of allowance of $4,254 and $4,212)	9,579			13,340
Reinsurance recoverables, net	8,044			4,277
Prepaid reinsurance premiums	2,214			6,999
Deferred policy acquisition costs	3,020			3,804
Deferred tax asset, net	6,775			6,399
Software and office equipment, net	440			1,274
Assets held for sale	13,634			15,004
Total Assets	$	172,173		$	225,438

Liabilities
Claims liabilities	$	91,643		$	132,579
Unearned premiums	15,691			17,061
Due to reinsurers and other insurers	5,701			9,614
Other liabilities and accrued expenses	2,884			6,015
Total Liabilities	$	115,919		$	165,269

Shareholders’ Equity
Preferred shares, par value per share $0.001, 100,000,000 shares authorized, 18,000,000 shares issued and outstanding at December 31, 2011 and December 31, 2010. Liquidation value $1.00 per share	$	18,000		$	18,000
Ordinary voting common shares, par value per share $0.001, 800,000,000 shares authorized, 4,625,526 shares issued and outstanding at December 31, 2011 and 4,553,502 at December 31, 2010	4			4
Restricted voting common shares, par value per share $0.001, 100,000,000 shares authorized, 13,804,861 shares issued and outstanding at December31, 2011 and December 31, 2010	14			14
Additional paid-in capital	152,652			152,466
Retained deficit	(115,841		)	(113,371		)
Accumulated other comprehensive income, net of tax	1,425			3,056
Total Shareholders’ Equity	$	56,254		$	60,169
Total Liabilities and Shareholders’ Equity	$	172,173		$	225,438

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ATLAS FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY



($ in thousands)
	Preferred Shares		Ordinary Voting Common Shares		Restricted Voting Common Shares		Additional Paid-in Capital			Retained Deficit			Accumulated Other Comprehensive Income (loss)			Total
Balance December 31, 2009	$	18,000	$	4	$	14	$	82,675		$	(47,714	)	$	(433	)	$	52,546
Net loss										(21,812		)				(21,812		)
Capital Contribution							26,994									26,994
Dividends Paid							(16,700		)							(16,700		)
Merger of Southern United							59,944			(43,845		)	331			16,430
Forgiveness of debt							(447		)							(447		)
Other comprehensive income													3,158			3,158
Balance December 31, 2010	$	18,000	$	4	$	14	$	152,466		$	(113,371	)	$	3,056		$	60,169
Net loss										(2,470		)				(2,470		)
Other comprehensive loss													(3,315		)	(3,315		)
Share-based compensation							113									113
Stock options exercised							73									73
Settlement of pension plan, net of tax													1,684			1,684
Balance December 31, 2011	$	18,000	$	4	$	14	$	152,652		$	(115,841	)	$	1,425		$	56,254

See accompanying Notes to Consolidated Financial Statements.

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ATLAS FINANCIAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



($ in thousands)
	Year Ended December 31,
	2011			2010
Operating Activities
Net loss	$	(2,470	)	$	(21,812	)
Adjustments to reconcile net loss to net cash used by operating activities:
Forgiveness of mortgage loan	—			1,695
Amortization of fixed assets	218			3,370
Settlement of pension plan	2,544			—
Share-based compensation expense	113			—
(Gain)/loss on sale of fixed assets	(54		)	3
Deferred income taxes	(1,163		)	2,875
Net realized gains	(4,147		)	(891		)
Amortization of bond premiums and discounts	953			1,431
Net changes in operating assets and liabilities, net of effects of the merger of subsidiary:
Accounts receivable and other assets, net	3,762			13,074
Due from reinsurers and other insurers	1,018			(5,255		)
Deferred policy acquisition costs	784			5,750
Income taxes receivable	—			271
Other assets and accrued investment income	707			493
Unpaid claims	(40,936		)	(36,936		)
Unearned premium	(1,370		)	(16,789		)
Due to reinsurers and other insurers	(3,913		)	9,193
Accounts payable and accrued liabilities	(3,207		)	(1,472		)
Net change in other balances	—			(7,466		)
Net cash used by operating activities	$	(47,161	)	$	(52,466	)
Financing activities:
Capital contributions	$	—		$	—
Options exercised	73
Dividends paid	—			(16,700		)
Issuance of notes payable	—			—
Net cash provided/(used) by financing activities	$	73		$	(16,700	)
Investing activities:
Purchase of securities	$	(64,563	)	$	(25,826	)
Proceeds from sales and maturities of securities	113,823			106,684
Sale of assets held for sale	2,436			—
Cash acquired from merger of subsidiary	—			3,871
Net (purchases)/additions of software and other equipment	(396		)	(3,221		)
Net cash provided by investing activities	$	51,300		$	81,508
Net change in cash and cash equivalents	4,212			12,342
Cash and cash equivalents, beginning of year	19,037			6,695
Cash and cash equivalents, end of year	$	23,249		$	19,037
Supplementary disclosure of cash information:
Represented by:
Cash on hand and balances with banks	$	23,249		$	2,329
Investments with original maturities less than 30 days	—			16,708
Cash and cash equivalents, end of year	$	23,249		$	19,037
Cash paid for:
Interest	—			—
Income taxes	—			(227		)

See accompanying Notes to Consolidated Financial Statements.


1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

( All amounts in thousands of US dollars, except for amounts preceded by “C” as thousands of Canadian dollars, share and per share amounts)

Formation and Description of the Business

Atlas Financial Holdings, Inc. (“Atlas”, or "The Company") is a financial services holding company formed on December 31, 2010 in a transaction amongst:


(a)	JJR VI Acquisition Corporation (“JJR VI”), a Canadian Capital Pool Company sponsored by JJR Capital, a Toronto based merchant bank,


(b)	American Insurance Acquisition Inc., (“American Acquisition”), a corporation formed under the laws of Delaware by Kingsway America Inc. (“KAI”), a subsidiary of Kingsway Financial Services Inc. (“KFSI”), a Canadian public company formed under the laws of Ontario and whose shares are traded on the Toronto and New York Stock Exchanges, and


(c)	Atlas Acquisition Corp, a Delaware corporation formed by JJR VI.

Prior to the transaction, KAI transferred 100% of the capital stock of American Service Insurance Company (“American Service”) and American Country Insurance Company (“American Country,” together with American Service the “insurance subsidiaries”), to American Acquisition in exchange for common and preferred shares of American Acquisition and promissory notes aggregating C$60,780. In addition, American Acquisition raised C$7,967 through a private placement offering of subscription receipts to qualified investors at a price of C$2.00 per subscription receipt.

KAI received 13,804,861 restricted voting common shares valued at $27,760, along with 18,000,000 non-voting preferred shares valued at $18,000 and C$7,967 cash in exchange for 100% of the outstanding shares of American Acquisition and full payment of the promissory notes. Investors in the American Acquisition subscription receipts received 3,983,502 ordinary voting common shares plus warrants to purchase one ordinary voting common share for each subscription receipt at C$2.00 at any time until December 31, 2013. JJR VI common shares held by former shareholders of JJR VI were consolidated on the basis of one post-consolidation JJR VI common share for every 10 pre-consolidation JJR VI common shares. The post-consolidation JJR VI common shares were then exchanged on a one-for-one basis for ordinary voting common shares of Atlas.

Atlas commenced operations on December 31, 2010. Atlas ordinary voting common shares have been listed on the TSX Venture Exchange (“TSXV”) under the symbol “AFH” since January 6, 2011.

The primary business of Atlas is commercial automobile insurance in the United States, with a niche market orientation and focus on insurance for the “light” commercial automobile sector including taxi cabs, non-emergency paratransit, limousine, livery and business auto.

The business of the Company is carried on through its insurance subsidiaries. The insurance subsidiaries distribute their insurance products through a network of retail independent agents. Together, American Country and American Service are licensed to write property and casualty insurance in 47 states in the United States. The management and operating infrastructure of American Country is integrated with that of American Service.

On February 25, 2010, while under KAI ownership, Southern United Fire Insurance Company (Southern United) merged into American Service. The transaction was accounted for as a merger of companies under common control with the Southern United assets and liabilities included at their carrying values and its results of operations included in the financial statements from the date of the merger.

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Summary of Significant Accounting Policies

Basis of presentation - These statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All significant intercompany accounts and transactions have been eliminated. To conform to the current year presentation, certain amounts in the prior years’ consolidated financial statements and notes have been reclassified.

Classification of assets and liabilities - It is not customary in the insurance and financial services industries to classify assets and liabilities as current (settled in 1 year or less) and non-current (settled beyond 1 year). Assets and liabilities that could otherwise be classified as current include cash and cash equivalents, accrued investment income, accounts receivable and other assets, due from reinsurers and other insurers, income tax receivable, deferred policy acquisition costs, assets held for sale, accounts payable and accrued expenses, due to reinsurers and other insurers. Balances that would otherwise be classified as non-current include deferred tax assets and office equipment. All other assets and liabilities include balances that are both current and non-current.

Reverse acquisition continuation accounting - Atlas was formed through a reverse triangular merger and these consolidated financial statements are those of Atlas and subsidiaries and have been prepared in accordance with Accounting Standard Codification ("ASC") 805 Business Combinations . Financial statements prepared following the reverse merger are presented in the name of the legal parent acquirer, Atlas, but are a continuation of the financial statements of the accounting acquirer, American Acquisition, with an adjustment for the capital structure (that is the number and type of equity interests, including equity instruments issued to effect the merger) of Atlas, as the legal parent acquirer and accounting acquiree. Accordingly, and as a result of the December 31, 2010 merger date, shareholders’ equity at December 31, 2010 reflects the common shares outstanding at the date of the merger together with the ordinary voting common shares, restricted voting common shares and preferred shares that were issued to effect the merger, and also reflect the historical retained earnings (retained deficit) balances of American Acquisition, as the accounting acquirer.

Estimates and assumptions - The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and changes in estimates are recorded in the accounting period in which they are determined. The liability for unpaid loss and loss adjustment expenses and related amounts recoverable from reinsurers represents the most significant estimate in the accompanying financial statements. Significant estimates in the accompanying financial statements also include the fair values of investments in bonds, deferred tax asset valuation, premium receivable bad debt allowance and deferred policy acquisition cost recoverability.

Business combinations - The reverse merger was consummated and Atlas commenced operations on December 31, 2010. In accordance with ASC 805 Business Combinations , American Acquisition is considered the accounting acquirer and Atlas (formerly JJR VI), the legal acquirer, is considered to be the accounting acquiree. Accordingly, the consolidated financial statements for all periods presented herein are a continuation of the financial statements of American Acquisition adjusted for the legal capital of Atlas.

Principles of consolidation - The consolidated financial statements include the accounts of Atlas and the entities it controls, its subsidiaries. Subsidiaries are entities over which Atlas, directly or indirectly, has the power to govern the financial and operating policies in order to obtain the benefits from their activities, generally accompanying an equity shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to Atlas and would be de-consolidated from the date that control ceases. The operating results of subsidiaries acquired or disposed of during the year will be included in the consolidated statement of operations from the effective date of acquisition and up to the effective date of disposal, as appropriate. All significant intercompany transactions and balances are eliminated in consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by Atlas.

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The following are Atlas’ subsidiaries, all of which are 100% owned, either directly or indirectly, together with the jurisdiction of incorporation that are included in consolidated financial statements:

American Insurance Acquisition Inc. (Delaware)

American Country Insurance Company (Illinois)

American Service Insurance Company, Inc. (Illinois)

Financial Instruments - Financial instruments are recognized and derecognized using trade date accounting, since that is the date Atlas contractually commits to the purchase or sale with the counterparty.

Effective interest method - Atlas utilizes the effective interest method for calculating the amortized cost of a financial asset and to allocate interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts the estimated future cash flows through the expected life of the financial instrument. Interest income is reported net of amortization of premium and accretion of discount. Realized gains and losses on disposition of available-for-sale securities are based on the net proceeds and the adjusted cost of the securities sold, using the specific identification method.

Financial assets - Atlas classifies financial assets as described below. Management determines the classification at initial recognition based on the purpose of the financial asset.

Cash and cash equivalents - Cash and cash equivalents include cash and highly liquid securities with original maturities of 90 days or less.

Available-for-sale (“AFS”) - Investments in fixed income securities are classified as available-for-sale. Securities are classified as available-for-sale when Atlas may decide to sell those securities due to changes in market interest rates, liquidity needs, changes in yields or alternative investments, and for other reasons. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of income tax, included as a separate component of accumulated other comprehensive income (loss) in shareholder’s equity.

Accounts receivable and other assets - Receivables are financial assets with fixed or determinable payments that are not quoted in an active market. These assets are recognized initially at fair value, together with directly attributable transaction costs and subsequently measured at amortized cost. Accounts receivable include premium balances due and uncollected and installment premiums not yet due from agents and insureds.

Atlas evaluates the collectibility of accounts receivable based on a combination of factors. When aware of a specific customer's inability to meet its financial obligations, such as in the case of bankruptcy or deterioration in the customer's operating results or financial position, Atlas records a specific reserve for bad debt to reduce the related receivable to the amount Atlas reasonably believes is collectible. Atlas also records reserves for bad debt for all other customers based on a variety of factors, including the length of time the receivables are past due and historical collection experience. Accounts are reviewed for potential write-off on a case-by-case basis. Accounts deemed uncollectible are written off, net of expected recoveries. If circumstances related to specific customers change, the Company's estimates of the recoverability of receivables could be further adjusted.

Premiums receivable are shown net of bad debt allowance of $4,254 and $4,212 at December 31, 2011 and December 31, 2010, respectively. Atlas' allowance for bad debt primarily relates to a single agent.

Impairment of financial assets - Atlas assesses, on a quarterly basis, whether there is evidence that a financial asset or group of financial assets is impaired. An investment is considered impaired when the fair value of the investment is less than its cost or amortized cost. When an investment is impaired, the Company must make a determination as to whether the impairment is other-than-temporary.

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security will not be recovered. If Atlas intends to sell the debt security, or will more likely than not be required to sell the debt security before the anticipated recovery, a loss in the entire amount of the impairment is reflected in net realized gains (losses) on investments in the consolidated statements of income. If Atlas determines that it is probable it will be unable to collect all amounts and Atlas has no intent to sell the debt security, a credit loss is recognized in net realized gains (losses) on investments in the consolidated statements of income to the extent that the present value of expected cash flows is less than the amortized cost basis; any difference between fair value and the new amortized cost basis (net of the credit loss) is reflected in other comprehensive income (losses), net of applicable income taxes.

There were no other-than-temporary impairments recognized in 2011.

Fair values of financial instruments - Atlas has used the following methods and assumptions in estimating its fair value disclosures:

Deferred policy acquisition costs (DAC) - Atlas defers producers’ commissions, premium taxes and other underwriting and marketing costs directly relating to the acquisition of premiums written to the extent they are considered recoverable. These costs are then expensed as the related premiums are earned. The method followed in determining the deferred policy acquisition costs limits the deferral to its realizable value by giving consideration to estimated future claims and expenses to be incurred as premiums are earned. Changes in estimates, if any, are recorded in the accounting period in which they are determined. Anticipated investment income is included in determining the realizable value of the deferred policy acquisition costs. Atlas’ deferred policy acquisition costs are reported net of ceding commissions.

Deferred policy acquisition costs for the years ended December 31 follows:



	2011		2010
Balance, beginning of year	$	3,804	$	9,399
Acquisition costs deferred	6,510		5,520
Amortization charged to income	7,294		11,115
Balance, end of year	$	3,020	$	3,804

When anticipated losses, loss adjustment expenses, commissions and other acquisition costs exceed recorded unearned premium, and any future installment premiums on existing policies, a premium deficiency reserve is recognized by recording an additional liability for the deficiency, with a corresponding charge to operations. Atlas utilizes anticipated investment income as a factor in its premium deficiency calculation. In 2011 and 2010, Atlas concluded that no premium deficiency adjustments were necessary.

Income taxes - Income taxes expense (benefit) includes all taxes based on taxable income (loss) of Atlas and its subsidiaries and are recognized in the statement of operations except to the extent that they relate to items recognized directly in other comprehensive income, in which case the income tax effect is also recognized in other comprehensive income.

Deferred taxes are recognized using the asset and liability method of accounting. Under this method the future tax consequences attributable to temporary differences in the tax basis of assets, liabilities and items recognized directly in equity and the financial reporting basis of such items are recognized in the financial statements by recording deferred tax liabilities or deferred tax assets.

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When considering the extent of the valuation allowance on Atlas' deferred tax asset, the weight given by management to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. GAAP states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against deferred tax assets. However, the strength and trend of earnings, as well as other relevant factors are considered.

Office equipment and software – Office equipment is stated at historical cost less deprecation. Subsequent costs are included in the asset’s carrying amount or capitalized as a separate asset only when it is probable that future economic benefits will be realized. Repairs and maintenance are recognized as an expense during the period incurred. Depreciation on equipment is provided on a straight-line basis over the estimated useful lives which range from 5 years for vehicles, 7 years for furniture and the term of the lease for leased equipment.

Insurance contracts – Contracts under which Atlas’ insurance subsidiaries accept risk at the inception of the contract from another party (the insured holder of the policy) by agreeing to compensate the policyholder or other insured beneficiary if a specified future event (the insured event) adversely affects the holder of the policy are classified as insurance contracts. All policies are short-duration contracts.

Revenue Recognition - Premium income is recognized on a pro rata basis over the terms of the respective insurance contracts. Unearned premiums represent the portion of premiums written that are related to the unexpired terms of the policies in force.

Reinsurance - As part of Atlas’ insurance risk management policies, portions of its insurance risk is ceded to reinsurers. Reinsurance premiums and claims expenses are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums and claims ceded to other companies have been reported as a reduction of premium revenue and claims incurred expense. Commissions paid to Atlas by reinsurers on business ceded have been accounted for as a reduction of the related policy acquisition costs. Reinsurance receivables are recorded for that portion of paid and unpaid losses and loss adjustment expenses that are ceded to other companies. Prepaid reinsurance premiums are recorded for unearned premiums that have been ceded to other companies.

Share-based payments - Atlas has a stock-based compensation plan which is described fully in Note 10. Under ASC 718 Compensation-Stock Compensation (“ASC 718”), the fair-value method of accounting is used to determine and account for equity settled transactions and to determine stock-based compensation awards granted to employees and non-employees using the Black-Scholes option pricing model. Compensation expense is recognized over the period that the stock options vest, with a corresponding increase to additional paid in capital.

For option awards with graded vesting, ASC 718 provides two options: on a straight-line basis over the service period for each separately vesting portion of the award (as if the award were in effect multiple awards), or on a straight line basis over the service period for the entire award. Atlas has chosen the latter policy. Atlas recognized $113 in stock compensation expense in 2011 and none in 2010.

Post-employment benefits - Prior to December 31, 1997, substantially all salaried employees of American Country were covered by a defined benefit pension plan known as the American Country Pension Plan (the “pension plan”). The pension plan was dissolved in the fourth quarter 2011 and the plan assets were distributed. The dissolution resulted in the immediate recognition of $2,544 in prior service costs previously recorded in Accumulated Other Comprehensive Income, which are shown within Other Underwriting Expenses.

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Until its dissolution, periodic net pension expense was based on the cost of incremental benefits for employee service during the period, interest on projected benefit obligation, actual return on plan assets and amortization of actuarial gains and losses.

Operating segments - Atlas is in a single operating segment – property and casualty insurance.

Presentation of equity and cash flows : Ordinary and restricted voting common shares are reflected as par value amounts with any remaining consideration upon issuance recorded in additional paid in capital. In 2010, the Company reported the total consideration within the common share equity amounts in the consolidated statement of financial position. The Company has adjusted the prior period common share and additional paid in capital amounts to conform to the presentation in 2011.

In the consolidated statements of cash flows, adjustments to reconcile net income (loss) to cash used in operating activities includes a non cash expense for forgiveness of mortgage loan and net realized investment gains and losses. In 2010, the amount of the expense for forgiveness of mortgage loan was reported as an increase to the net loss amount rather than a reduction. The Company has adjusted the prior period cash flows for the immaterial error in presentation.

2. PENDING ACCOUNTING STANDARDS

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts - In October 2010, the Financial Accounting Standards Board ("FASB") issued guidance modifying the definition of the types of costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal insurance contracts. The guidance specifies that the costs must be directly related to the successful acquisition of insurance contracts. The guidance also specifies that advertising costs should be included as deferred acquisition costs only when the direct−response advertising accounting criteria are met. The new guidance is effective for reporting periods beginning after December 15, 2011. Atlas' current policy for accounting for acquisition costs is already materially consistent with this guidance. Therefore the adoption of this guidance will not have an impact of on our financial statements.

A mendments to Fair Value Measurement and Disclosure Requirements - In May 2011, the FASB issued guidance that clarifies the application of existing fair value measurement and disclosure requirements and amends certain fair value measurement principles, requirements and disclosures. Changes were made to improve consistency in global application. The guidance is to be applied prospectively for reporting periods beginning after December 15, 2011. Early adoption is not permitted. The impact of adoption is not expected to be material to the Company's results of operations or financial position.

Presentation of Comprehensive Income - In June and December 2011, the FASB issued guidance amending the presentation of comprehensive income and its components. Under the new guidance, a reporting entity has the option to present comprehensive income in a single continuous statement or in two separate but consecutive statements. The guidance is effective for reporting periods beginning after December 15, 2011 and is to be applied retrospectively. The new guidance affects presentation only and will have no material impact on the Company's results of operations or financial position.

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3. INVESTMENTS

The amortized cost, gross unrealized gains and losses and fair value for Atlas’ investments are as follows:



December 31, 2011		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Term Deposits		$	—	$	—	$	—	$	—
Bonds:
U.S.	- Government	44,835		911		—		45,746
	- Corporate	35,572		825		24		36,373
	- Commercial mortgage backed	17,493		208		—		17,701
	- Other asset backed	3,573		99		1		3,671
Total Fixed Income		$	101,473	$	2,043	$	25	$	103,491
Equities		994		147		—		1,141
Totals		$	102,467	$	2,190	$	25	$	104,632



December 31, 2010		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Term Deposits		$	7,898	$	3	$	—	$	7,901
Fixed Income:
U.S.	- Government	67,388		2,117		—		69,505
	- Corporate	62,429		3,011		—		65,440
	- Commercial mortgage backed	8,445		270		—		8,715
	- Other asset backed	2,371		79		—		2,450
Total Fixed Income		$	148,531	$	5,480	$	—	$	154,011
Equities		—		—		—		—
Totals		$	148,531	$	5,480	$	—	$	154,011

The following tables summarize carrying amounts of fixed income securities by contractual maturity. As certain securities and debentures have the right to call or prepay obligations, the actual settlement dates may differ from contractual maturity.



As at December 31, 2011	One year or less			One to five years			Five to ten years			More than ten years			Total
Fixed Income Securities	$	29,407		$	27,317		$	10,242		$	36,525		$	103,491
Percentage of total	28.4		%	26.4		%	9.9		%	35.3		%	100.0		%



As at December 31, 2010	One year or less			One to five years			Five to ten years			More than ten years			Total
Fixed Income Securities	$	21,556		$	88,564		$	24,026		$	19,865		$	154,011
Percentage of total	14.0		%	57.5		%	15.6		%	12.9		%	100.0		%

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The following table summarizes the change in unrealized gains and losses for the years ended December 31:



		2011			2010
Term Deposits		$	(3	)	$	3
Fixed Income:
U.S.	-Government	(1,206		)	852
	- Corporate	(2,210		)	386
	- Commercial mortgage backed	(62		)	33
	- Other asset backed	19			2,037
Equities		147
Totals		$	(3,315	)	$	3,311

The following table summarizes the components of net investment income for the years ended December 31:



		2011			2010
Total investment income
	Interest (from fixed income securities)	$	3,791		$	4,915
	Dividends	12			—
	Other	—			—
Investment expenses		(523		)	(299		)
Net investment income		$	3,280		$	4,616

The following table summarizes the components of net investment gains for the years ended December 31:



	2011		2010
Fixed income securities	$	4,149	$	888
Equities	—		—
Other	52		—
Net invesment gains (losses)	$	4,201	$	888

Management performs a quarterly analysis of Atlas’ investment holdings to determine if declines in fair value are other than temporary. The analysis includes some or all of the following procedures as deemed appropriate by management:


•	identifying all security holdings in unrealized loss positions that have existed for at least six months or other circumstances that management believes may impact the recoverability of the security;


•	obtaining a valuation analysis from third party investment managers regarding these holdings based on their knowledge, experience and other market based valuation techniques;


•	reviewing the trading range of certain securities over the preceding calendar period;


•	assessing if declines in market value are other than temporary for debt security holdings based on their investment grade credit ratings from third party security rating agencies;


•	assessing if declines in market value are other than temporary for any debt security holding with a non-investment grade credit rating based on the continuity of its debt service record; and


•	determining the necessary provision for declines in market value that are considered other than temporary based on the analyses performed.

The risks and uncertainties inherent in the assessment methodology utilized to determine declines in market value that are other than temporary include, but may not be limited to, the following:


•	the opinion of professional investment managers could be incorrect;


•	the past trading patterns of individual securities may not reflect future valuation trends;

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•	the credit ratings assigned by independent credit rating agencies may be incorrect due to unforeseen or unknown facts related to a company’s financial situation; and


•	the debt service pattern of non-investment grade securities may not reflect future debt service capabilities and may not reflect a company’s unknown underlying financial problems.

There were no impairments recorded in the years ended December 31, 2011 or December 31, 2010 as a result of the above analysis performed by management to determine declines in market value that may be other than temporary. All securities as of December 31, 2011 and 2010 in an unrealized loss position have been in said position for less than 12 months.

4. FINANCIAL AND CREDIT RISK MANAGEMENT

By virtue of the nature of Atlas’ business activities, financial instruments make up the majority of the balance sheet. The risks which arise from transacting financial instruments include credit risk, market risk, liquidity risk and cash flow risk. These risks may be caused by factors specific to an individual instrument or factors affecting all instruments traded in the market. Atlas has a risk management framework in place to monitor, evaluate and manage the risks assumed in conducting its business. Atlas’ risk management policies and practices are as follows:

Credit risk - Atlas is exposed to credit risk principally through its fixed income securities and balances receivable from policyholders and reinsurers. Atlas controls and monitors concentration and credit quality risk through policies to limit and monitor its exposure to individual issuers or related groups (with the exception of U.S. Government bonds) as well as through ongoing review of the credit ratings of issuers held in the securities portfolio. Atlas’ credit exposure to any one individual policyholder is not material. Atlas has policies requiring evaluation of the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvency.

The following table summarizes the credit exposure of Atlas from its investments in fixed income securities and term deposits by rating as assigned by Fitch, Standard & Poor’s or Moody’s Investor Services, using the higher of these ratings for any security where there is a split rating:



	2011				2010
	Amount		% of Total		Amount		% of Total
AAA/Aaa	$	54,717	52.9	%	$	88,684	57.6	%
AA/Aa	21,567		20.8	%	26,388		17.1	%
A/A	22,380		21.6	%	35,027		22.7	%
BBB/Baa	4,827		4.7	%	3,851		2.5	%
CCC/Caa or lower or not rated	—		—		61		0.1	%
Total Securities	$	103,491	100.0	%	$	154,011	100.0	%

Equity price risk - This is the risk of loss due to adverse movements in equity prices. Atlas' investment in equity securities comprises a small percentage of its total portfolio, and as a result, the exposure to this type of risk is minimal.

Foreign currency risk - Atlas is not currently exposed to material changes in the U.S. dollar currency exchange rates with any other foreign currency.

Liquidity and cash flow risk - Liquidity risk is the risk of having insufficient cash resources to meet current financial obligations without raising funds at unfavorable rates or selling assets on a forced basis. Liquidity risk arises from general business activities and in the course of managing the assets and liabilities of Atlas. There is the risk of loss to the extent that the sale of a security

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prior to its maturity is required to provide liquidity to satisfy policyholder and other cash outflows. Cash flow risk arises from risk that future inflation of policyholder cash flow exceeds returns on long-term investment securities. The purpose of liquidity and cash flow management is to ensure that there is sufficient cash to meet all financial commitments and obligations as they fall due. The liquidity and cash flow requirements of Atlas’ business have been met primarily by funds generated from operations, asset maturities and income and other returns received on securities. Cash provided from these sources is used primarily for claims and claim adjustment expense payments and operating expenses. The timing and amount of catastrophe claims are inherently unpredictable and may create increased liquidity requirements.

Fair value - Fair value amounts represent estimates of the consideration that would currently be agreed upon between knowledgeable, willing parties who are under no compulsion to act.

Fair value is best evidenced by quoted bid or ask price, as appropriate, in an active market. Where bid or ask prices are not available, such as in an illiquid or inactive market, the closing price of the most recent transaction of that instrument subject to appropriate adjustments as required is used. Where quoted market prices are not available, the quoted prices of similar financial instruments or valuation models with observable market based inputs are used to estimate the fair value. These valuation models may use multiple observable market inputs, including observable interest rates, foreign exchange rates, index levels, credit spreads, equity prices, counterparty credit quality, corresponding market volatility levels and option volatilities. Minimal management judgment is required for fair values calculated using quoted market prices or observable market inputs for models. The calculation of estimated fair value is based on market conditions at a specific point in time and may not be reflective of future fair values.

Atlas records the available for sale securities held in its securities portfolio at their fair value. Atlas primarily uses the services of external securities pricing vendors to obtain these values. The securities are valued using quoted market prices or prices established using observable market inputs. In volatile market conditions, these quoted market prices or observable market inputs can change rapidly causing a significant impact on fair value and financial results recorded.

Atlas employs a fair value hierarchy to categorize the inputs it uses in valuation techniques to measure the fair value. The hierarchy is comprised of quoted market prices (Level 1), third party models using observable market information (Level 2) and internal models without observable market information (Level 3). Atlas used Level 1 and Level 2 inputs to value 100% of its available for sale securities investments as of December 31, 2011 and December 31, 2010. There were no transfers in or out of Level 2 during either period.

Capital Management - The Company manages capital using both regulatory capital measures and internal metrics. The company’s capital is primarily derived from common shareholders’ equity, retained deficit and accumulated other comprehensive income (loss).

As a holding company, Atlas derives cash from its insurance subsidiaries generally in the form of dividends to meet its obligations, which will primarily consist of operating expense payments. Atlas’ insurance subsidiaries fund their obligations primarily through premium and investment income and maturities in the securities portfolio. The insurance subsidiaries require regulatory approval for the return of capital and, in certain circumstances, prior to the payment of dividends. In the event that dividends available to the holding company are inadequate to cover its operating expenses, the holding company would need to raise capital, sell assets or incur future debt.

The insurance subsidiaries must each maintain a minimum statutory capital and surplus of $1,500 under the provisions of the Illinois Insurance Code. Dividends may only be paid from statutory unassigned surplus, and payments may not be made if such surplus is less than a stipulated amount. The dividend restriction is the greater of statutory net income or 10% of total statutory capital and surplus.

Net loss computed under statutory-basis accounting for American Country and American Service were $(2,328) and $(497) respectively for the year ended December 31, 2011 (unaudited), versus $(1,451) and $(5,351) for the year ended December 31, 2010 (unaudited). Statutory capital and surplus of the insurance subsidiaries was $49,954 (unaudited) and $45,560 at December 31, 2011 and 2010, respectively.

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Atlas did not pay any dividends to its common shareholders during 2011 and has no current plans to pay dividends to its common shareholders.

A risk based capital formula is used by the National Association of Insurance Commissioners ("NAIC") to identify property and casualty insurance companies that may not be adequately capitalized. The NAIC requires that capital and surplus not fall below 200% of the authorized control level. As of December 31, 2011, based on the unaudited statutory basis financial statements, both the insurance subsidiaries are above the required risk based capital levels, with risk based capital ratio estimates for American Country and American Service of 592.5% and 803.4%. The insurance subsidiaries had approximately $36,402 of capital in excess of the 200% minimum described above. As of December 31, 2010, the comparable risk based capital ratio estimates for American Country and American Service were 322% and 536%, and estimated capital in excess of the 200% level was approximately $26,100.

5. INCOME TAXES

The effective tax rate was (32.0)% and 13.4% for the years ended December 30, 2011 and 2010, respectively, compared to the U.S. statutory income tax rate of 34% as shown below:



Year ended December 31,	2011					2010
	Amount			%		Amount			%
Expected income tax benefit at statutory rate	$	(1,235	)	(34.0	)%	$	(6,541	)	(34.0	)%
Valuation allowance	—			—	%	(9,476		)	(49.3	)%
Nondeductible expenses	5			0.1	%	183			1.0	%
Tax implications of qualifying transaction	75			2.1	%	18,412			95.7	%
Other	(8		)	(0.2	)%	(3		)	—	%
Total	$	(1,163	)	(32.0	)%	$	2,575		13.4	%

Income tax expense consists of the following for the years ended December 31:



	2011			2010
Current tax expense/(benefit)	$	—		$	(300	)
Deferred tax (benefit)/expense	(1,163		)	2,875
Total	$	(1,163	)	$	2,575

The components of deferred income tax assets and liabilities as of December 31 are as follows:

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	2011			2010
Deferred tax assets:
Unpaid claims and unearned premiums	$	3,004		$	4,218
Loss carry-forwards	15,558			13,252
Pension expense	—			841
Bad debts	1,297			1,356
Other	1,338			1,394
Valuation Allowance	(12,361		)	(11,288		)
Total gross deferred tax assets	$	8,836		$	9,773

Deferred tax liabilities:
Investment securities	740			1,863
Deferred policy acquisition costs	1,027			1,293
Other	294			218
Total gross deferred tax liabilities	$	2,061		$	3,374
Net deferred tax assets	$	6,775		$	6,399

Amounts and expiration dates of the operating loss carry forwards as of December 31, 2011 are as follows:



Year of Occurrence	Year of Expiration	Amount
2001	2021	$	14,750
2002	2022	4,317
2006	2026	7,825
2007	2027	5,131
2008	2028	1,949
2009	2029	1,949
2010	2030	1,949
2011	2031	7,762
Total		$	45,632

Atlas established a valuation allowance of approximately $ 12,361 and $ 11,288 for its gross deferred tax assets at December 31, 2011 and December 31, 2010 respectively.

Based on Atlas’ expectations of future taxable income, as well as the reversal of gross future deferred tax liabilities, management believes it is more likely than not that Atlas will fully realize the net future tax assets, with the exception of the aforementioned valuation allowance. Atlas has therefore established the valuation allowance as a result of the potential inability to utilize a portion of its net operation losses in the U.S. which are subject to a yearly limitation. The uncertainty over the Company’s ability to utilize a portion of these losses over the short term has led to the recording of a valuation allowance. GAAP states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against deferred tax assets. However, the trend and anticipated strength of earnings, as well as other relevant factors were considered.

Atlas accounts for uncertain tax positions in accordance with the income taxes accounting guidance. Atlas has analyzed filing positions in the federal and state jurisdiction where it is required to file tax returns, as well as the open tax years in these jurisdictions. Atlas believes that its federal and state income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain federal and state income tax positions have been recorded. Atlas would recognize interest and penalties related to unrecognized tax benefits as a component of the provision for federal income taxes. Atlas did not incur any federal income tax related interest income, interest expense or penalties for the years ended December 31, 2011 or 2010. Tax years 2006 through 2010 are subject to examination by the Internal Revenue Service.

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6. ASSETS HELD FOR SALE

As at December 31, 2011, Atlas had three properties held for sale with an aggregate carrying value of $ 13,634 , including its headquarters building in Elk Grove Village, Illinois. All of the properties’ individual carrying values were less than their respective appraised values net of reasonably estimated selling costs at the time those appraisals were received and at the time properties were deemed to be held for sale. All properties were listed for sale through brokers at the appraised values and above carrying values as of December 31, 2011. Atlas expects to re-invest the proceeds from the sale of real estate in its investment portfolio which will support strategic growth initiatives.

The Elk Grove Village building and property were previously owned by KAI and were contributed to Atlas as a capital contribution in June 2010. The other two properties, all located in Alabama, were assets of Southern United Fire Insurance Company which was merged into American Service in February 2010.

7. UNDERWRITING POLICY AND REINSURANCE CEDED

Underwriting Risk - Underwriting risk is the risk that the total cost of claims and acquisition expenses will exceed premiums received and can arise from numerous factors, including pricing risk, reserving risk, catastrophic loss risk, reinsurance coverage risk and that loss and loss adjustment expense reserves are not sufficient.

Reinsurance Ceded - As is customary in the insurance industry, Atlas reinsures portions of certain insurance policies it writes, thereby providing a greater diversification of risk and minimizing exposure on larger risks. Atlas remains contingently at risk with respect to any reinsurance ceded and would incur an additional loss if an assuming company were unable to meet its obligation under the reinsurance treaty.

Atlas monitors the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. Letters of credit are maintained for any unauthorized reinsurer to cover ceded unearned premium, ceded loss reserve balances and ceded paid losses. These policies mitigate the risk of credit quality or dispute from becoming a danger to financial strength. To date, the Company has not experienced any material difficulties in collecting reinsurance recoverables.

Gross premiums written and ceded premiums, losses and commissions as of and for the year ended December 31 are as follows:



	2011		2010
Gross premiums written	$	42,031	$	46,679
Ceded premiums written	6,173		14,201
Net premiums written	35,858		32,478

Ceded premiums earned	$	7,653	$	7,434
Ceded losses and loss adjustment expenses	2,767		3,628
Ceded unpaid losses and loss adjustment expenses	7,825		5,192
Ceded unearned premiums	2,214		3,694
Other amounts due from reinsurers	219		2,390
Ceded commissions	2,412		5,441

8. UNPAID CLAIMS

Claims liabilities - The changes in the provision for unpaid claims, net of amounts recoverable from reinsurers, for the year ended December 31, 2011 and 2010 were as follows:

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	2011		2010
Unpaid claims, beginning of period	$	132,579	$	169,520
Less: reinsurance recoverable	6,477		5,197
Net beginning unpaid claims reserves	126,102		164,323
Incurred related to:
Current year	27,303		42,739
Prior years	1,691		5,335
	28,994		48,074
Paid related to:
Current year	12,715		18,994
Prior years	58,563		76,835
	71,278		95,829

Net unpaid claims of subsidiary acquired	—		9,534
Net unpaid claims, end of period	$	83,818	$	126,102
Add: reinsurance recoverable	7,825		6,477
Unpaid claims, end of period	$	91,643	$	132,579

At the end of 2010, a detailed review of claim payment and reserving practices was performed, which led to significant changes in both practices, increasing ultimate loss estimates and accelerating claim payments. Reserves were adjusted at that time to account for these changes, primarily during the second and third quarters of 2010. This review continued into 2011 and Atlas recorded a $1,800 adjustment to further strengthen its reserves for claims related to policies issued while the insurance subsidiaries were under previous ownership in years preceding 2010. The establishment of the estimated provision for unpaid claims is based on known facts and interpretation of circumstances and is therefore a complex and dynamic process influenced by a large variety of factors. These factors include the Atlas’ experience with similar cases and historical trends involving claim payment patterns, loss payments, pending levels of unpaid claims, product mix or concentration, claims severity and claim frequency patterns.

Other factors include the continually evolving and changing regulatory and legal environment, actuarial studies, professional experience and expertise of the Atlas’ claims department personnel and independent adjusters retained to handle individual claims, the quality of the data used for projection purposes, existing claims management practices including claims handling and settlement practices, the effect of inflationary trends on future claims settlement costs, court decisions, economic conditions and public attitudes. In addition, time can be a critical part of the provision determination, since the longer the span between the incidence of a loss and the payment or settlement of the claims, the more variable the ultimate settlement amount can be. Accordingly, short tail claims such as property claims, tend to be more reasonably predictable than long tail claims, such as general liability and automobile accident benefit claims that are less predictable.

Consequently, the process of establishing the estimated provision for unpaid claims is complex and imprecise as it relies on the judgment and opinions of a large number of individuals, on historical precedent and trends, on prevailing legal, economic, social and regulatory trends and on expectations as to future developments. The process of determining the provision necessarily involves risks that the actual results will deviate, perhaps substantially, from the best estimates made.

As the processes of management and the independent appointed actuary are undertaken independently, the provision for unpaid claims recorded by management can differ from the independent appointed actuary’s central estimate.

Comparing management’s selected reserve estimate to the actuarial central estimate and range of reasonable reserves independently determined by the independent appointed actuary continues to be an important step in the reserving process of the Company, however; where differences exist and the Company believes the internally developed reserve estimate to be more accurate, management’s estimate will not change. We believe this to be consistent with industry practice for companies with a robust reserving process in place. As of December 31, 2011, the Company's carried reserves were within the range of reasonable reserves of its independent appointed actuary. As of December 31, 2011, the carrying value of unpaid claims was $ 91,643 . There is no active market for policy liabilities; hence market value is not determinable. The carrying value of unpaid claims does not take into consideration the time value of money or make explicit provisions for adverse deviation. Fair value of unpaid claims would include such considerations.

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9. STOCK OPTIONS AND WARRANTS

Stock options - Stock option activity for years ended December 31, 2011 and December 31, 2010 is as follows:



	2011			2010
	Number		Avg. Price	Number		Avg. Price
Outstanding, beginning of period	110,600		C$1.00	--		--
Granted	369,749		C$2.00	132,000		C$1.00
Exercised	(72,024	)	C$1.00	--		--
Expired	--		--	(21,400	)	C$1.00
Outstanding, end of period	408,325		C$1.90	110,600		C$1.00

Information about options outstanding at December 31, 2011 is as follows:



Grant Date	Expiration Date	Exercise Price	Remaining Contractual Life (Years)	Number Outstanding	Number Exercisable
January 18, 2011	January 18, 2021	C$2.00	9.1	369,749	92,437
March 18, 2010	March 31, 2012	C$1.00	0.3	6,476	6,476
March 18, 2010	March 18, 2020	C$1.00	8.2	32,100	32,100
Total			8.8 wtd. average	408,325	131,013

On March 18, 2010, JJR VI issued options to purchase 250,000 common shares to the agent that assisted JJR VI in raising capital (the “IPO agent”) and options to purchase 1,070,000 shares to directors. All of the options were vested at the date of grant. Options to purchase 214,000 shares held by directors expired before the merger as a result of a director resignation. All outstanding JJR VI options were exchanged for Atlas options without modification on the basis of 1 Atlas option for each 10 JJR VI options and the exercise price was changed from C$0.10 to C$1.00, which was on the same basis as the JJR VI exchange ratio for shares, and thus did not represent any additional value or related expense. This resulted in 25,000 and 85,600 Atlas options for the agent and former JJR VI directors, respectively, outstanding after the merger. In total, 72,024 of these options were exercised in 2011. The options granted on March 18, 2010 have an aggregate intrinsic value of $39, as of December 31, 2011.

On January 6, 2011, Atlas adopted a stock option plan in order to advance the interests of Atlas by providing incentives to eligible persons defined in the plan. The maximum number of ordinary voting common shares reserved for issuance under the plan together with all other security based plans is equal to 10% of issued and outstanding ordinary voting common shares at the date of grant. The exercise price of options granted under the plan cannot be less than the volume weighted average trading price of Atlas’ ordinary voting common shares for the five preceding trading days. Options generally vest over a three year period and expire ten years from grant date.

On January 18, 2011, Atlas granted options to purchase 369,749 ordinary shares of Atlas stock to officers and directors at an exercise price of C$2.00 per share. The options vest 25% at date of grant and 25% on each of the next three anniversary dates and expire on January 18, 2021. The weighted average grant date fair value of the options is $1.24 per share. As of December 31, 2011 the options had no aggregate intrinsic value.

The Black-Scholes option pricing model was used to estimate the fair value of compensation expense using the following assumptions – risk-free interest rate 2.27% to 3.13%; dividend yield 0.0%; expected volatility 100%; expected life of 6 to 9 years.

In accordance with ASC 718, Atlas has recognized stock compensation expense on a straight-line basis over the requisite service period of the last separately vesting portion of the award. In 2011, Atlas recognized $113 in expense, which is a component of

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other underwriting expenses on the income statement. Total unrecognized stock compensation expense associated with the January 18, 2011 grant is $337 as of December 31, 2011 which will be recognized ratably over the next three years.

The weighted average exercise price of all the shares exercisable at December 31, 2011 is $1.71 .

Warrants - On November 1, 2010, American Acquisition closed a private placement and issued 3,983,502 subscription receipts for ordinary voting common shares of Atlas and warrants to purchase 3,983,502 ordinary voting common shares of Atlas for C$2.00 per share in connection with the merger. The subscription receipts were converted to Atlas ordinary voting shares in connection with the merger. All the warrants were still outstanding at December 31, 2011 and expire on December 31, 2013.

Atlas ordinary voting common shares were trading on the TSXV for C$1.60 on December 30, 2011 (the last trading day of the 2011 calendar year).

10. OTHER EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

In January 2011, Atlas formed a defined contribution 401(k) plan covering all qualified employees of Atlas and its subsidiaries. Employees can choose to contribute up to 60% of their annual earnings but not more than $16,500 for 2011 to the plan. Qualifying employees age 50 and older can contribute an additional $5,500 in 2011. Atlas matches 50% of the employee contribution up to 5% of annual earnings for a total maximum expense of 2.5% of annual earnings per participant. Atlas contributions are discretionary. Employees are 100% vested in their own contributions and vest in Atlas contributions based on years of service with 100% vested after five years. Atlas’ contributions were $105 in 2011.

Prior to 2011, eligible employees participated in a defined contribution 401(k) plan maintained by KAI (“the Kingsway Plan”) with features identical to Atlas’ current plan (the “Atlas Plan”). Employer contributions to the Kingsway Plan attributable to the Atlas insurance subsidiaries were $144 in 2011 and $130 in 2010, and are included in Other Underwriting Expenses. Assets of the Kingsway Plan attributable to Atlas’ employees, were transferred to the Atlas Plan in March 2011.

Defined Benefit Plan – Prior to December 31, 1997, substantially all salaried employees of American Country were covered by a defined benefit pension plan known as the American Country Pension Plan (the “pension plan”). Benefits were based on the employee’s length of service and wages and benefits, as defined by the pension plan. The funding policy of the pension plan was generally to contribute amounts required to maintain minimum funding standards in accordance with the Employee Retirement Income Security Act. Effective December 31, 1997, upon resolution by the board of directors, the pension plan was frozen. During 2010, American Country made an application to the U.S. Internal Revenue Service to dissolve the pension plan and distribute the net plan assets to the beneficiaries. In the fourth quarter of 2011, the plan assets were fully distributed. As a result of the plan liquidation, the Company recognized a settlement charge of $2,544 within other underwriting expenses in the fourth quarter of 2011. The settlement impact was previously reflected as an unrecognized adjustment to other comprehensive income and therefore, has created a nil impact to shareholders' equity.

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			2011			2010
Change in Benefit Obligation
	Benefit Obligation, beginning of year		$	5,110		$	4,913
	Interest cost		228			263
	Actuarial losses		(28		)	192
	Benefits paid		(229		)	(258		)
	Settlement of obligation		(5,081		)	—
	Benefit Obligation, end of year		$	—		$	5,110

Change in Plan Assets
	Fair value of plan assets, beginning of year		$	3,993		$	3,869
	Actual return on plan assets		17			244
	Employer contributions		1,300			138
	Benefits Paid		(229		)	(258		)
	Settlement of obligation		(5,081		)	—
	Fair value of plan assets, end of year		$	—		$	3,993

Funded Status, end of year			$	—		$	1,117

Items unrecognized as component of net pension cost, end of year (pre-tax)			—			2,473
Deferred income tax			—			(789		)
Items unrecognized as component of net pension cost, end of year			—			1,684

Components of net pension cost
	Interest cost		$	229		$	263
	Expected return on plan assets		(177		)	(268		)
	Amortization of:
		Prior Service Cost	—			—
		Actuarial Losses	61			64
Subtotal			$	113		$	59
Expense resulting from settlement of plan			2,544			—
Net periodic pension cost			$	2,657		$	59

Weighted average assumptions used to determine net pension cost for the years ended December 31:



	2011	2010	2009
Weighted average discount rate	5.25%	5.5%	6.0%
Rate of increase in compensation	n/a	n/a	n/a
Expected long-term rate of return	5.0%	7.0%	7.0%
Weighted average discount rate used to determine end of year benefit obligation	n/a	5.25%	5.5%

Employee Stock Purchase Plan - In the second quarter of 2011, Atlas initiated the Atlas Employee Stock Purchase Plan (the “ESPP”) to encourage continued employee interest in the operation, growth and development of Atlas and to provide an additional investment opportunity to employees. Beginning in June 2011, full time and permanent part time employees working more than 30 hours per week are allowed to invest up to 5% of adjusted salary in Atlas ordinary voting common shares. Atlas matches 50% of the employee contribution up to 5% of annual earnings for a total maximum expense of 2.5% of annual earnings per participant.. Employees who signed up for the ESPP by May 30, 2011 each received an additional 100 ordinary voting common shares as an initial participation incentive. Atlas will also pay administrative costs related to this plan. In 2011, Atlas’ incurred total expenses of $38 related to the plan.

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11. COMMITMENTS AND CONTINGENCIES

Legal proceedings:

In connection with its operations, the Company and its subsidiaries are, from time to time, named as defendants in actions for damages and costs allegedly sustained by the plaintiffs. While it is not possible to estimate the outcome of the various proceedings at this time, such actions have generally been resolved with minimal damages or expense in excess of amounts provided and the Company does not believe that it will incur any significant additional loss or expense in connection with such actions.

Collateral pledged:

As of December 31, 2011, bonds and term deposits with an estimated fair value of $11,843 were on deposit with state and provincial regulatory authorities, versus $9,294 as of December 31, 2010. Also, from time to time, the Company pledges securities to third parties to collateralize liabilities incurred under its policies of insurance. At December 31, 2011, the amount of such pledged securities was $10,396 versus $1,629 at December 31, 2010. Collateral pledging transactions are conducted under terms that are common and customary to standard collateral pledging and are subject to the Company’s standard risk management controls. These assets and investment income related thereto remain the property of the Company while pledged.

Collateral held:

In the normal course of business, the Company receives collateral on certain business transactions to reduce its exposure to credit risk. As of December 31, 2011, the amount of such pledged securities was $240. The Company is normally permitted to sell or re-pledge the collateral it receives under terms that are common and customary to standard collateral holding and are subject to the Company’s standard risk management controls.

12. SHARE CAPITAL

The share capital for the common shares:



As at December 31,		2011			2010
	Shares Authorized	Shares Issued and Outstanding	Amount		Shares Issued and Outstanding		Amount
Ordinary	800,000,000	4,625,526	$	4	4,553,502	¹	$	4
Restricted	100,000,000	13,804,861	14		13,804,861		14
Total common shares	900,000,000	18,430,387	$	18	18,358,363		$	18

¹ Summation of 3,983,502 ordinary voting common shares (refer above) and 570,000 shares issued to former JJR VI shareholders (no cash paid).

The restricted voting common shares are convertible to ordinary voting common shares at the option of the holder in the event that an offer is made to purchase all or substantially all of the restricted voting common shares.

All of the issued and outstanding restricted voting common shares are beneficially owned or controlled by Kingsway. In the event that such shares are disposed of such that Kingsway’s beneficial interest is less than 10% of the issued and outstanding restricted voting common shares, the restricted voting common shares shall be converted into fully paid and non-assessable ordinary voting common shares.

The restricted voting common shares are entitled to vote at all meetings of shareholders, except at meetings of holders of a specific class that are entitled to vote separately as a class. The restricted voting common shares as a class shall not carry more than 30% of the aggregate votes eligible to be voted at a general meeting of common shareholders.

Preferred shares are not entitled to vote. Preferred shareholders are entitled to dividends on a cumulative basis whether or not declared by the Board of Directors at the rate of U.S. $0.045 per share per year (4.5%) and may be paid in cash or in additional preferred shares at the option of Atlas. In liquidation, dissolution or winding-up of Atlas, preferred shareholders receive the greater of US$1.00 per share plus all declared and unpaid dividends or the amount it would receive in liquidation if the preferred shares

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had been converted to restricted voting common shares or ordinary voting common shares immediately prior to liquidation. Preferred shares are convertible into ordinary voting shares at the option of the holder at any date after the fifth year of issuance at the rate of 0.3808 ordinary voting common shares for each preferred share. The conversion rate is subject to change if the number of ordinary voting common shares or restricted voting common shares changes. The preferred shares are redeemable at the option of Atlas at a price of US$1.00 per share plus accrued and unpaid dividends commencing at the earlier of two years from issuance date of the preferred shares or the date the preferred shares are transferred to a party other than Kingsway or its subsidiaries or entities in which KAI holds a 10% or greater interest.

The cumulative amount of dividends to which the preferred shareholders are entitled upon liquidation or sooner, if Atlas declares dividends, is $810 as at December 31, 2011.

13. EARNINGS PER SHARE

Earnings per ordinary and restricted voting common for the year ended December 31, 2011 and 2010 is as follows:



		2011			2010
Net loss attributable to Atlas		$	(2,470	)	$	(21,812	)
Less: Preferred share dividends		(810		)	—
Net loss attributable to common shareholders		(3,280		)	(21,812		)
Basic:
	Weighted average common shares outstanding	18,373,624			18,358,363
Basic loss per common share		$	(0.18	)	$	(1.19	)
Diluted:
	Weighted average common shares outstanding	18,373,624			18,358,363
	Dilutive potential ordinary shares	—			—
Dilutive average common shares outstanding		18,373,624			18,358,363
Dilutive loss per common share		$	(0.18	)	$	(1.19	)

For 2011 and 2010, basic loss per common share has been computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. As required by continuation accounting, Atlas assumed the same number of common shares outstanding for all of 2010.

Diluted loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding each period plus the incremental number of shares added as a result of converting dilutive potential ordinary shares, calculated using the treasury stock method. Atlas’ dilutive potential common shares consist of outstanding stock options and warrants to purchase ordinary voting common shares. The effects of options and warrants to issue ordinary voting common shares are excluded from the computation of diluted loss per share in periods in which the effect would be anti-dilutive. For the year ended December 31, 2011, potential ordinary voting common shares were anti-dilutive due to the net loss attributable to common shareholders.

14. RELATED PARTY TRANSACTIONS

The business of Atlas is carried on through its insurance subsidiaries. Atlas’ insurance subsidiaries have been a party to various transactions with affiliates in the past, although activity in this regard has diminished over time. Related party transactions, including services provided to or received by Atlas’ insurance subsidiaries, are carried out in the normal course of operations and are measured at the amount of consideration paid or received as established and agreed upon by the parties. Management believes that consideration paid for such services approximates fair value.

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At December 31, 2011 and December 31, 2010, Atlas reported net amounts receivable from (payable to) affiliates as follows which are included within other assets and accounts payable and accrued expenses on the balance sheets:



As at year ended December 31,	2011			2010
Kingsway America, Inc.	$	291		$	2,058
Universal Casualty Company	(500		)	—
Kingsway Amigo Insurance Company	(1		)	(13		)
Hamilton Risk Management Inc.	—			(1		)
Total	$	(210	)	$	2,044

In 2010, Atlas’ insurance subsidiaries remitted management fees monthly to KAI for managerial services. During the first six months of 2010, those management fees included rent for Atlas’ Elk Grove Village headquarters building. That building was contributed to Atlas on June 30, 2010 and rental payments ceased at that time. Management fees paid to KAI totaled approximately $0 and $2,643 for the year ended December 31, 2011 and 2010, respectively.

Atlas’ insurance subsidiaries received $158 in regularly scheduled monthly mortgage payments for the six months ended June 30, 2010 under mortgage loan agreements with KAI which were secured by the Elk Grove Village headquarters building. In June 2010, American Service forgave the $1,695 remaining balance of its mortgage loan from KAI and American Country was paid the $1,767 total remaining balance of its mortgage loan from KAI.

The amounts due to Universal Casualty Company relate primarily to claim handling services provided to Atlas.

For the year ended December 31, 2011 and 2010, Atlas incurred $2,279 and $4,463, respectively, in commissions to Avalon Risk Management, Inc. (“Avalon”). In the year ended December 31, 2011 and 2010, Atlas also incurred expenses of $137 and $125 respectively, for marketing services performed by Avalon. Avalon was a KFSI subsidiary through October 2009, and has certain investors and directors in common with Atlas.

During 2010, dividends of $16,700 were paid to KAI by the insurance subsidiaries of Atlas.

15. ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income is comprised of the following:



As at December 31,	2011							2010
	Pre-tax		Tax			Post-tax		Pre-tax			Tax			Post-tax
Available-for-sale securities	$	2,165	$	(740	)	$	1,425	$	5,478		$	(737	)	$	4,741
Pension liability	—		—			—		(2,474		)	789			(1,685		)
Total	$	2,165	$	(740	)	$	1,425	$	3,004		$	52		$	3,056

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16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)



	1st Quarter						2nd Quarter						3rd Quarter						4th Quarter
	2011			2010			2011			2010			2011			2010			2011			2010
Gross Premium Written	$	14,166		$	18,704		$	7,856		$	8,558		$	10,928		$	10,163		$	9,081		$	9,273
Net Premium Earned	8,809			19,301			9,062			12,515			8,797			10,192			9,079			11,595
Underwriting loss	(1,906		)	(4,061		)	(1,278		)	(12,805		)	(1,729		)	(2,393		)	(6,325		)	(4,723		)
Net (loss)/income attributable to Atlas	(705		)	(1,583		)	193			(8,135		)	1,066			(664		)	(3,024		)	(11,430		)
Net (loss)/income attributable to common shareholders	(905		)	(1,583		)	(9		)	(8,135		)	862			(664		)	(3,228		)	(11,430		)
Basic earnings (loss) per share	$	(0.05	)	$	(0.09	)	$	—		$	(0.44	)	$	0.05		$	(0.04	)	$	(0.18	)	$	(0.62	)
Diluted earnings (loss) per share	(0.05		)	(0.09		)	—			(0.44		)	0.05			(0.04		)	(0.18		)	(0.62		)

17. SUBSEQUENT EVENTS

As of March 26, 2012, there were no subsequent events which had a material impact on the 2011 consolidated financial statements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

Atlas Financial Holdings, Inc.:

We have audited the accompanying consolidated statement of financial position of Atlas Financial Holdings, Inc. and subsidiaries (the Company) as of December 31, 2010, and the related consolidated statements of comprehensive income, shareholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the auditing 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 audit provides 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 Atlas Financial Holdings, Inc. as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

April 15, 2011

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Atlas Financial Holdings, Inc.

We have audited the accompanying consolidated statement of financial position of Atlas Financial Holdings, Inc. ("the Company") as of December 31, 2011, and the related consolidated statements of comprehensive income, shareholders' equity, and cash flows for the period ended December 31, 2011. These consolidated financial statements and financial statement schedules listed on Item 15 of the Company's Form 10-K are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Atlas Financial Holdings, Inc as of December 31, 2011, and the results of its operations and its cash flows for the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/s/ Johnson Lambert & Co. LLP

Arlington Heights, Illinois

March 26, 2012

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

We have had no changes in or disagreements with our independent accountants since our Board of Directors’ June 2011 appointment, based upon the recommendation of our Audit Committee, of Johnson Lambert & Co. LLP as Atlas’ independent auditors for the year ended December 31, 2011, replacing KPMG LLP as our independent auditors.

Item 9B. Other Information

None.

Part III

ITEM 10. Directors, Executive Officers and Corporate Governance

Table 1(b). Executive Officers

Name	Age	Position
Scott D. Wollney	43	Chief Executive Officer
Paul A. Romano	50	Chief Financial Officer
Bruce W. Giles	52	Vice President, Underwriting
Joseph A. Shugrue	48	Vice President, Claims
Leslie A. DiMaggio	43	Vice President, Operations

Scott Wollney was President and Chief Executive Officer of KAI since July 2009, prior to which he was the President and Chief Executive Officer of Lincoln General Insurance Company (a subsidiary of KAI) from May 2008 to March 2009. From January 1998 to may 2008, he was President of Avalon Risk Management, Inc.

Paul Romano was previously Vice President and Chief Financial officer of American Country from 2002 to September 2008. He was also Vice President and Treasurer of KAI since March 2010, prior to which he was the Vice President Data Management of Lincoln General Insurance Company from October 2008 to March 2009.

Bruce Giles was previously Assistant Vice President of Commercial Underwriting for KAI, prior to which he held various positions with KAI from December 2003 to June 2010. From 2000 to 2003, he held various positions with Allstate Insurance Group.

Joseph Shugrue was the Vice President Claims of KAI since March 2004.

Leslie DiMaggio was previously the Vice President, Information Technology for KFSI from November 2008 to June 2010, prior to which she was the President, CEO and COO of Southern United Fire Insurance Company from April 2007 to November 2008. From 2000 until 2008, she held various other executive positions at KAI.

Information regarding directors of Atlas Financial Holdings, Inc standing for election at the 2012 annual shareholders’ meeting is incorporated in this Item 10 by reference to the descriptions in the 2012 proxy statement of the company to be filed with the SEC pursuant to Regulation 14A (the "Proxy Statement")under the captions “Management Proposals to be Voted On – Proposal 1. Election of Directors.”

Information regarding our audit committee is incorporated in this Item 10 by reference to the first paragraph of the discussion under the captions “Corporate Governance Practices and Code of Ethics – Audit Committee” in the Proxy Statement.

Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated in this item 10 by reference to “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.

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Information regarding executive officers of Atlas Financial Holdings, Inc. is incorporated in this item 10 by reference to Part I of this report under the caption “Executive Officers.”

We have adopted a code of ethics that applies to all our directors, officers and employees. This code is publicly available on our website at www.atlas-fin.com . Amendments to the code of ethics and any grant of a waiver from a provision of the code requiring disclosure under applicable SEC rules will be disclosed on our website.

ITEM 11. Executive Compensation

The information required by this Item will be included under the section entitled “Executive Compensation” in the Proxy Statement, which information is incorporated by reference to this Annual Report on Form 10-K.

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

Information regarding security ownership of certain beneficial owners and management is incorporated in this Item 12 by reference to the sections of the Proxy Statement with the following captions:


•	Security Ownership of Directors & Executive Officers


•	Security Ownership of Certain Beneficial Owners

The following table includes information as of December 31, 2011 with respect to Atlas' equity compensation plans:

Equity Compensation Plan Information

	Number of securities to be issued upon exercise of outstanding options, warrants & rights (a)	Weighted average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	4,391,827 ¹	C$1.99	1,434,714 ²

¹ Summation of 408,325 shares outstanding under the March 18, 2010 and January 18, 2011 equity compensation plans and 3,983,502 shares related to the outstanding warrants. ² Equal to the remainder allowable according to the 2011 Equity Incentive Plan (10% of issued and outstanding ordinary voting common shares)

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

Information required for Item 13 is incorporated by reference to the material in the Proxy Statement under the captions “Related Person Transactions” and “Corporate Governance Practices and Code of Ethics – Determinations of Independence of Nominees for Election.”

ITEM 14. Principal Accountant Fees and Services

Information required for Item 14 is incorporated by reference to the material in the Proxy Statement under the captions “Management Proposals to be Voted On – Proposal 2. Ratification of Appointment of Independent Registered Public Accountant.”

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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(a) (1) The following consolidated financial statements, notes thereto and related information of Atlas Financial Holdings, Inc, are included in Item 8.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Financial Position

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

(a) (2) The following additional financial statement schedules and independent auditors' report are furnished herewith pursuant to the requirements of Form 10-K:

Schedules required to be filed under the provisions of Regulation S-X Article 7:

Schedule II - Condensed Financial Information of Registrant

Schedule IV - Reinsurance

Schedule V - Valuation and qualifying accounts

Schedule VI - Supplemental P&C insurance operations

All other schedules pursuant to Article 7 of Regulation S-X are omitted because they are not applicable, or because the required information is included in the consolidated financial statements or in the notes thereto.

(a) (3) The following is a list of the exhibits filed as part of this Form 10-K. The exhibit numbers followed by an asterisk (*) indicate exhibits that are management contracts or compensatory plans or arrangements.

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Item 3 - Articles of Incorporation and By-laws
3.1a	Memorandum of Association of Atlas Financial Holdings, dated December 24, 2010.
3.1b	Restated Articles of Incorporation of American Country Insurance Company, Inc., as amended as of February 13, 2004
3.1c	Restated Articles of Incorporation of American Service Insurance, Inc., as amended as of June 15, 2009
3.1d	Restated Certificate of Incorporation of American Insurance Acquisition, Inc., as amended December 31, 2010
Item 4 - Instruments Defining the Rights of Security Holders, Including Indentures
4.1a	Memorandum of Association of Atlas Financial Holdings, dated December 24, 2010, included in item 3.1a
4.1b	By-laws of American Country Insurance Company, Inc., as amended September 14, 2005
4.1c	By-laws of American Service Insurance, Inc., as amended October 20, 2005
4.1d	By-laws of American Insurance Acquisition, Inc., as amended July 9, 2010
4.2	Specimen Common Stock Certificate
4.3	Specimen Warrant Agreement
Item 10 - Material Contracts
10.1 *	Atlas Financial Holdings, Inc. Stock Option Plan dated January 6, 2011
10.2 *	Form of Atlas Employment Agreement for Executive Management, updated January 1, 2012
10.3 *	Employee Share Purchase Plan Agreement, as adopted June 1, 2011
10.4 *	Defined Contribution Plan Document dated August 11, 2011
Item 14 - Code of Ethics
14	Atlas Financial Holdings, Inc. Code of Business Conduct and Ethics, dated January 1, 2011
Item 16- Letter re change in certifying accountant
16	Letter from KPMG LLP regarding its concurrence with the statements made by Atlas in the current report concerning the dismissal as the registrant's principal accountant.
Item 21 - Subsidiaries of the Registrant
21	List of Subsidiaries
Item 23 - Consent of Independent Registered Public Accounting Firm
23	Consent of Johnson Lambert & Co. LLP
Item 31 – Rule 13a-14(a)/15d-14(a) Certifications
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Item 32 – Section 1350 Certifications
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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



		ATLAS FINANCIAL HOLDINGS, INC (Registrant)
		/s/ Paul A. Romano By: Paul A. Romano (Vice President and Chief Financial Officer)
		March 26, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

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persons on behalf of the registrant and in the capacities and on the dates indicated.




Signature	Title	Date

/s/ Scott D. Wollney Scott D. Wollney	President, Chief Executive Officer and Director	March 26, 2012
/s/ Paul A. Romano Paul A. Romano	Vice President, Chief Financial Officer and Principal Accounting Officer	March 26, 2012
/s/ Gordon G. Pratt Gordon G. Pratt	Director, Chairman of the Board	March 26, 2012
/s/ Jordan M. Kupinsky Jordan M. Kupinsky	Director	March 26, 2012
/s/ Larry G. Swets, Jr. Larry G. Swets, Jr.	Director	March 26, 2012

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Schedule II – Condensed Financial Information of Registrant

Statements of Comprehensive Income



($ in thousands)	Year ended December 31,
	2011			2010
Other underwriting expenses	$	(55	)	$	—
Underwriting income	55			—
Income before income tax benefit	55			—
Income tax benefit	(1,137		)	(20,628		)
Income before equity in net income of subsidiaries	$	1,192		$	20,628
Equity in net loss of subsidiaries	(3,662		)	(42,440		)
Net loss	$	(2,470	)	$	(21,812	)

See accompanying Notes to Condensed Financial Information of Registrant

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Schedule II – Condensed Financial Information of Registrant (continued)

Statements of Financial Position



($ in thousands)	December 31,
	2011			2010
Assets
Investments
Cash and cash equivalents	$	15		$	2
Securities	—			—
Total Investments	15			2
Other Assets	52			—
Deferred tax asset	64			—
Investment in subsidiaries	56,123			60,338
Total Assets	$	56,254		$	60,340

Liabilities
Accounts payable and accrued liabilities	$	—		$	171
Total Liabilities	$	—		$	171

Shareholders’ Equity
Preferred shares, par value per share $0.001, 100,000,000 shares authorized, 18,000,000 shares issued and outstanding at December 31, 2011 and December 31, 2010. Liquidation value $1.00 per share	$	18,000		$	18,000
Ordinary voting common shares, par value per share $0.001, 800,000,000 shares authorized, 4,625,526 shares issued and outstanding at December 31, 2011 and 4,553,502 at December 31, 2010	4			4
Restricted voting common shares, par value per share $0.001, 100,000,000 shares authorized, 13,804,861 shares issued and outstanding at December31, 2011 and December 31, 2010	14			14
Additional paid-in capital	152,652			152,466
Retained deficit	(115,841		)	(113,371		)
Accumulated other comprehensive income, net of tax	1,425			3,056
Total Shareholders’ Equity	$	56,254		$	60,169
Total Liabilities and Shareholders’ Equity	$	56,254		$	60,340

See accompanying Notes to Condensed Financial Information of Registrant

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Schedule II – Condensed Financial Information of Registrant (continued)

Statements of Cash Flow



	Year Ended December 31,
	2011			2010
Operating Activities
Net income (loss)	$	(2,470	)	$	(21,812	)
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries	3,662			42,440
Share-based compensation expense	113			—
Deferred income taxes	(1,137		)	(20,628		)
Net changes in operating assets and liabilities:
Other assets	52
Accounts payable and accrued liabilities	(207		)
	13			—
Financing activities:
Proceeds from sale of preferred stock	—			18,000
Proceeds from sale of common stock	—			42,340
Net cash provided by financing activities	—			60,340

Investing activities:
Purchase of operating subsidiaries	—			(60,338		)
Net cash used in investing activities	—			(60,338		)

Net change in cash and cash equivalents	13			2
Cash and cash equivalents, beginning of year	2			—
Cash and cash equivalents, end of year	$	15		$	2
Supplementary disclosure of cash information:
Represented by:
Cash on hand and balances with banks	$	15		$	2
Investments with maturities less than 30 days	—			—
Cash and cash equivalents, end of year	$	15		$	2
Cash paid for:
Interest	—			—
Income taxes	—			—

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Schedule II – Condensed Financial Information of Registrant (continued)

Notes to Condensed Financial Information

Atlas commenced operations on December 31, 2010. Therefore, a statement of operations and statement of cash flow from the year ended December 31, 2009 has not been included.

The financial statements of the Registrant should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Item 8.

Atlas has no material contingencies, long-term debt obligations or guarantees.

Atlas has not received cash dividends from its subsidiaries since its inception on December 31, 2010.

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Schedule IV – Reinsurance



	Gross Amount		Ceded to Other Companies			Assumed from Other Companies		Net Amount		% of Amount Assumed to Net
December 31, 2011
Premiums earned	$	43,253	$	(7,653	)	$	147	$	35,747	0.4	%

December 31, 2010
Premiums earned	$	60,873	$	(7,434	)	$	164	$	53,603	0.3	%

Schedule V – Valuation and qualifying accounts



	Balance at Beginning of Period		Charged to Expenses		Other additions	Deductions			Balance at End of Period
December 31, 2011
Allowance for uncollectible receivables	$	4,212	$	413		$	(371	)	$	4,254
Valuation allowance for deferred tax assets	11,288				1,073				12,361

December 31, 2010
Allowance for uncollectible receivables	$	1,827	$	2,780		$	(395	)	$	4,212
Valuation allowance for deferred tax assets	14,748		6,016			(9,476		)	11,288

Schedule VI - Supplemental information concerning property-casualty insurance operations



		Year Ended December 31,
		2011	2010
Deferred policy acquisition costs		3,020	3,804
Reserves for insurance claims and claims expense		91,643	132,579
Unearned premiums		15,691	17,061
Earned Premiums		35,747	53,603
Net investment income		3,280	4,616
Claims and claims adjustment expense incurred
	Current Year	27,303	42,739
	Prior Year	1,691	5,335
Amortization of deferred policy acquisition costs		7,294	11,115
Paid claims and claim adjustment expense		71,278	95,829
Gross premium written		42,031	46,679

EXHIBIT 3.1d

CERTIFICATE OF MERGER OF

ATLAS ACQUISITION CORP. (a Delaware corporation)

INTO AMERICAN INSURANCE ACQUISITION INC.

(a Delaware corporation)

Pursuant to Section 251 of the Delaware General Corporation Law, for the purposes of merging (the "Merger") Atlas Acquisition Corp . , a Delaware corporation ("Atlas"), into American Insurance Acquisition Inc., a Delaware corporation which is the surviving corporation in such Merger (the "Surviving Corporation''), the undersigned Corporation hereby certifies the following:

1. An Agreement and Plan of Merger (the "Merger Agreement") dated as of December 14, 2010 by and among the Surviving Corporation, JJR VI Acquisition Corp . , Atlas and Kingsway Financial Services Inc. has been approved, adopted, executed and acknowledged by each of Atlas Acquisition Corp. and American Insurance Acquisition Inc.

2 . The name of the surviving corporation is American Insurance Acquisition Inc.

(the "Surviving Corporation'').

3 . The Certificate of Incorporation of the Surviving Corporation, as in effect immediately prior to the effective time of the Merger, shall be amended and restated as set forth in the Second Amended and Restated Certificate of Incorporation attached hereto as Exhibit A, which shall be the Certificate of Incorporation of the Surviving Corporation at the effective time of the Merger .

4. The executed Agreement and Plan of Merger is on file at the principal place of business of the Surviving Corporation . The address of the principal place of business of the Surviving Corporation is 150 Northwest Point Boulevard, Elk Grove, Illinois 60007.

5. A copy of the agreement and Plan of Merger will be furnished by the surviving corporation upon request without cost to any stockholder of the constituent corporations.

6. The effective date and time of the Merger shall be 11:59pm on December 31, 2010.

[signature page follows)

In witness whereof, American Insurance Acquisition Inc. has caused its duly authorized officer to execute and deliver this Certificate of Merger as of December 31, 2010.

AMERICAN INSURANCE ACQUISITION INC.

By: / s/ Scott D. Wollney

Name: Scott D. Wollney

Title: President

EXHIBIT A

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

AMERICAN INSURANCE ACQUISITION INC.

FIRST: The name of the Corporation is American Insurance Acquisition Inc.

SECOND: The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, in the city of Wilmington, County of New Castle. The name of the registered agent at such address is the Corporation Trust Company.

THIRD: The purposes of the Corporation are to engage in any lawful act or activities for which Corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is 3,000 shares with a par value of $0.01 per share, all of which shall be common stock.

FIFTH: The board of directors of the Corporation shall consist of a minimum of one (1) director and a maximum of twelve (12) directors, as determined from time to time by the board of directors.

SIXTH: In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to adopt, amend or repeal the by-laws of the Corporation.

SEVENTH: Election of directors need not be by written ballot unless the by-laws of the Corporation shall so provide.

EIGHTH: Shares of stock of the Corporation may not be transferred without the prior written consent of the board of directors of the Corporation.

NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

TENTH: To the fullest extent permitted by Section 145 of the General Corporation Law, or any comparable successor law, as the same may be amended and supplemented from time to time, the Corporation (i) may indemnify any persons whom it shall have power to indemnify thereunder from and against any and all of the expenses, liabilities or other matters referred to in or covered thereby, (ii) shall indemnify each such person if he or she is or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or because he or she was serving the Corporation or any other legal entity in any Corporation and (iii) shall pay the expenses of such a current or former director, officer, employee or agent incurred in connection with any such action, suit or proceeding in advance of the final disposition of such action, suit or proceeding. The indemnification and advancement of expenses provided for herein shall not be deemed exclusive of any other rights to which those entitled to indemnification or advancement of expenses may be entitled under any by-law, agreement, contract, or vote of stockholders or disinterested directors or pursuant to the direction (however embodied) of any court of competent jurisdiction or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

ELEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iv) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law is amended to further eliminate or limit the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended. Any repeal or modification of this Article by the stockholders of the Corporation shall be by the affirmative vote of the holders of not less than eighty percent (80%) of the outstanding shares of stock of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article ELEVENTH as one class, shall be prospective only and shall not adversely affect any right or protection of any director of the Corporation existing at the time of such repeal or modification.

EXHIBIT 3.1a

APPENDIX I

THE COMPANIES LAW (2010 REVISION)

COMPANY LIMITED BY SHARES

MEMORANDUM OF ASSOCIATION

ATLAS FINANCIAL HOLDINGS, INC.

I. The name of the Company is Atlas Financial Holdings, Inc. (the "Company").


2.	The registered office of the Company will be situated at the offices of Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KYI-1111, Cayman Islands, or at such other location as the Directors may from time to time determine.

The objects for which the Company is established are unrestricted and, except as prohibited or limited by the laws of the Cayman Islands (the "Law"), the Company shall have full power and authority to carry out any object and shall have and be capable of from time to time and at all times exercising any and all of the powers of a natural person or body corporate in any part of the world whether principal, agent, contractor or otherwise.

The Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this section shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. The Company will not have any substantial business activities in the Cayman Islands.


5.	The liability of the members of the Company is limited to the amount, if any, unpaid on the shares respectively held by them.

The capital of the Company is US$!,000,000 divided into 800,000,000 ordinary shares of par value US$0.001 each, 100,000,000 preferred shares of par value US$0.001 each, and 100,000,000 restricted voting common shares of par value US$0.00 I each provided always that subject to the Law and the Articles of Association the Company shall have power to redeem or purchase any of its shares and to sub divide or consolidate the said shares or any of them and to issue all or any part of its capital whether original, increased or reduced with or without any preference, priority, special privilege or other rights or subject to any postponement of rights or to any conditions or restrictions whatsoever and so that unless the conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or otherwise shall be subject to the powers on the part of the Company herein before provided.


7.	The Company may exercise the power contained in Section 206 of the Law to deregister in the Cayman Islands and be registered by way of continuation in some other jurisdiction.

APPENDIX II

THE COMPANIES LAW (2010 REVISION) COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION OF

ATLAS FINANCIAL HOLDINGS, INC.

TABLE A

The Regulations contained or incorporated in Table 'A' in the First Schedule of the Law shall not apply to Atlas Financial Holdings, Inc. (the "Company") and the following Articles shall comprise the Articles of Association of the Company.

INTERPRETATION


I.	In these Articles the following defined terms will have the meanings ascribed to them, if not inconsistent with the subject or context:

"Aggregate Votes" means the aggregate of the votes eligible to be voted at a general meeting of the

Company;

"Articles" means these articles of association of the Company, as amended or substituted from time to time and any reference to a numbered Article shall be to such article as so numbered in these Articles;

"Auditors" means the auditors of the Company appointed from time to time by Ordinary Resolution in accordance with these Articles;

"business day" means any day other than a Saturday, Sunday or statutory holiday in the State of Delaware and City of Toronto or such other day as the Directors may determine from time to time;

"Cdn$" means a dollar in the lawful currency of Canada;

"Class" or "Classes" means any class or classes of Shares as may from time to time be issued by the

Company;

"Directors" means the directors of the Company for the time being, or as the case may be, the directors assembled as a board or as a committee thereof;

"Law" means the Companies Law of the Cayman Islands (as amended);

"Memorandum of Association" means the memorandum of association of the company, as amended or substituted from time to time;

“Office” means the registered office of the Company as required by the Law;

" Ordinary Resolution ” means a resolution :


(a)	passed by a simple majority of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or


(b)	approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed;

"Ordinary Share" means an ordinary share of a par value of US$0.001 in the capital of the Company and having the rights provided for in these Articles;

"paid up" means paid up as to the par value in respect of the issue of any Shares and includes credited as paid up;

“Person” means any natural person, firm, company, joint venture, partnership, corporation, association or other entity (whether or not having a separate legal personality) or any of them as the context so requires;

"Preferred Share" means a redeemable preferred share of a par value of US$0.001 in the capital of the

Company and having the rights provided for in these Articles;

"Register" means the register of Members of the Company required to be kept pursuant to the Law;

"Restricted Voting Common Share" means a restricted voting common share of a par value of US$0.001

in the capital of the Company and having the rights provided for in these Articles;

"Seal" means the common seal of the Company (if adopted) including any facsimile thereof;

"Secretary" means any Person appointed by the Directors to perform any of the duties of the secretary of the Company;

"Share" means any share in the capital of the Company including an Ordinary Share, a Preferred Share or a Restricted Voting Common Share. All references to "Shares" herein shall be deemed to be Shares of any or all Classes as the context may require;

"Shareholder" or "Member" means a Person who is registered as the holder of Shares in the Register and includes each subscriber to the Memorandum of Association pending the issue to such subscriber of the subscriber Share or Shares;

"Share Premium Account" means the share premium account established in accordance with these Articles and the Law;

“Signed” means bearing a signature or representation of a signature affixed by mechanical means.

"Special Resolution" means a special resolution of the Company passed in accordance with the Law, being a resolution :

(a)

passed by a majority of not less than two-thirds of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given and where a poll is taken regard shall be had in computing a majority to the number of votes to which each Shareholder is entitled; or


(b)	approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one is executed.

"Transfer Agent" means the transfer agent and registrar of the Shares; and

"Voting Shares" means Ordinary Shares and Restricted Voting Common Shares.

2. In these Articles, save where the context requires otherwise:


(a)	Words importing the singular number shall include the plural number and vice versa;


(b)	Words importing the masculine gender only shall include the feminine gender and any Person as the context may require;


(c)	The word “may” shall be construed as permissive and the word “shall” shall be construed as imperative;


(d)	Reference to a dollar or dollars (or $) and to a cent or cents is reference to dollars and cents of the United States of America.


(e)	Reference to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force;


(f)	Reference to any determination by the Directors shall be construed as a determination by the Directors in their absolute discretion and shall be applicable either generally or in any particular case.; and


(g)	Reference to “in writing” shall be construed as written or represented by any means reproducible in writing, including any form of print, lithograph, email, facsimile, photograph or telex or represented by any other substitute or format for storage or transmission for writing or partly one and partly another.


3.	Subject to the two preceding Articles, any words defined in the Law shall, if not inconsistent with the subject or context bear the same meaning in these Articles.

PRELIMINARY

4. The business of the Company may be commenced at any time after incorporation.


5.	The Office shall be at such address in the Cayman Islands as the Directors may from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine.


6.	The preliminary expenses incurred in the formation of the Company and in connection with the issue of Shares shall be paid by the Company. Such expenses may be amortised over such period as the Directors may determine and the amount so paid shall be charged against income and/or capital in the accounts of the Company as the Directors shall determine.


7.	The Directors shall keep, or cause to be kept, the Register at such place as the Directors may from time to time determine and, in the absence of any such determination, the Register shall be kept at the Office.


8.	Subject to these Articles, all Shares for the time being unissued shall be under the control of the Directors who may:

(a) issue, allot and dispose of the same to such Persons, in such manner, on such terms and having such rights and being subject to such restrictions as they may from time to time determine; and


(b)	grant options with respect to such Shares and issue warrants or similar instruments with respect thereto;

and, for such purposes, the Directors may reserve an appropriate number of Shares for the time being

unissued.

The Directors may, from time to time, create and constitute (or re-designate, as the case may be) such further class or classes of Shares (and designate series within any class of Shares) with such name or names, and with such preferred, deferred, or other rights, powers, preferences, qualifications, limitations or such restrictions, whether in regard to dividends, voting or return of capital or otherwise, as the Directors may determine.

SHARE RIGHTS


10.	Share Rights. The Preferred Shares, Ordinary Shares and Restricted Voting Common Shares of the Company shall have the following rights, preferences, privileges and be subject to the following restrictions:

10.1

Dividend Rights. Dividends on Preferred Shares shall begin to accrue on a daily basis at the prorated annual rate of US$0.045 per share of Preferred Shares (as such dollar amount is adjusted for stock splits, combinations, reclassifications and the like) from the date on which the Company issues its first Preferred Share and shall be cumulative. The holders of Preferred Shares shall be entitled to receive annual dividends or distributions, when and as declared by the Board of Directors of the Company, out of any assets of the Company legally available therefor. Notwithstanding the foregoing, the Company may elect to pay dividends on the Preferred Shares to each holder of Preferred Shares pro rata in additional Preferred Shares with a value equal to the amount of the dividends, provided to the extent the Company does not pay a dividend on the Preferred Shares in cash or in additional shares, the dividend shall accrue and accumulate compounded yearly whether or not such dividend was declared. No dividends shall be paid on any Ordinary Shares or Restricted Voting Common Shares during any fiscal year of the Company until dividends in the amount as specified herein on the Preferred Shares shall have been paid or declared and set apart during that fiscal year and any prior year in which dividends accumulated but remain unpaid. The holders of the Preferred Shares will be entitled to the greater of the dividend on the Ordinary Shares and the Preferred Shares in that fiscal year. The Restricted Voting Common Shares shall rank equally with the Ordinary Shares as to dividends on a share-for-share basis and all dividends shall be declared in equal or equivalent amounts per share on all Ordinary Shares and Restricted Voting Common Shares without preference or distinction.

10.2 Liquidation Rights.

(a)

Liquidation Preference. Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (collectively, a " Liquidation" ), before any distribution or payment shall be made to any of the holders of the Restricted Voting Common Shares or the Ordinary Shares, the holders of the Preferred Shares shall be entitled to receive out of the assets of the Company, whether such assets are capital, surplus or earnings, an amount in cash or kind for each Preferred Share held by them (the " Liquidation Amount" ) equal to the greater of: (i) US$1.00 per Preferred Share (as such amount shall be appropriately adjusted to take into account stock splits, stock dividends and similar events) plus all declared and unpaid dividends thereon and (ii) the amount payable to the holder thereof upon a Liquidation if the Preferred Share had been converted to Restricted Voting Common Shares or Ordinary Shares, as applicable in accordance with the terms hereof immediately

prior to the Liquidation.

(b)

Pro Rata Distribution . If, upon any Liquidation, the assets of the Company shall be insufficient to pay the Liquidation Amount, including without limitation all declared and unpaid dividends on Preferred Shares, in full to all holders of Preferred Shares, then the net assets of the Company shall be distributed among the holders of the Preferred Shares ratably in proportion to the full amounts to which they would otherwise be respectively entitled and such distributions may be made in cash or in property taken at its fair value (as determined in good faith by the Board of Directors), or both, at the election of the Board of Directors.

(c)

Distributions in Excess of Liquidation Amount . After payment in full of the Liquidation Amount, including without limitation all declared and unpaid dividends on the Preferred Shares, the assets of the Company legally available for distribution, if any, shall be distributed ratably to the holders of the Ordinary Shares and the Restricted Voting Common Shares. The holders of the Restricted Voting Common Shares and the Ordinary Shares shall rank pari passu.

10.3

Voting Rights. Except as otherwise required under the Law, the holders of the Preferred Shares shall not be entitled to receive notice of, attend and vote at any general meeting of the Company, but (for the avoidance of doubt) may vote at a separate class meeting convened in accordance with these Articles. The holders of the Ordinary Shares shall have the right to receive notice of, attend at and vote at any general meeting of the Company. The holders of the Restricted Voting Common Shares have the right to receive notice of, attend at and vote as a Shareholder at any general meeting of the Company, PROVIDED THAT if the number of outstanding Restricted Voting Common Shares exceeds 30% of the total number of all issued and outstanding Voting Shares of the Company, the votes attached to each Restricted Voting Common Share will decrease automatically without further act or formality to equal the maximum permitted vote per Restricted Voting Common Share such that the Restricted Voting Common Shares as a class shall not carry more than 30% of the Aggregate Votes.

10.4 Redemption Rights.

(a)

Optional Redemption . The Company may redeem all or any of the outstanding Preferred Shares at any time or times at a redemption price equal to US$1.00 per share, payable in cash plus all accrued and unpaid dividends calculated to the redemption date, whether or not such dividends have been declared, commencing on the earlier of (i) two years after their date of issuance and (ii) the date the Preferred Share is transferred to a party such that the Preferred Share ceases to be beneficially owned or controlled directly or indirectly by Kingsway Financial Services Inc. or Kingsway America Inc. (and, for this purpose, such Preferred Share is also not held directly or indirectly by a partnership, corporation or other entity in which Kingsway Financial Services Inc. or Kingsway America Inc. holds, directly or indirectly, ten percent (10%) or more of the capital, profits, value or voting interests). The Company shall give at least sixty (60) days prior written notice to each holder whose Preferred Shares are to be so redeemed. In the event that less than all of the outstanding Preferred Shares are to be redeemed, unless otherwise agreed to by the holders of I 00% of the then outstanding Preferred Shares in writing, the Company shall select those shares to be redeemed from each holder of Preferred Shares pro rata, in proportion to the number of Preferred Shares held by such holders.


(b)	Status of Reacquired Stock . Preferred Shares that have been issued and purchased or redeemed in any manner shall (upon compliance with any applicable provisions of the laws of the Cayman Islands) have the status of authorized and unissued Preferred Shares undesignated as to series and, subject to the other provisions of these Articles, may be redesignated and reissued.

10.5 Conversion Rights. The holders of Shares shall have conversion rights as follows:

(a) Each Preferred Share shall be convertible, at the option of the holder thereof, at any time or from time to time after the date that is the fifth (5th) anniversary of the first issuance date of any Preferred Share, at the office of the Company or the Transfer Agent, into such number of fully paid and non-assessable Restricted Voting Common Shares as is determined by multiplying the number of the Preferred Shares by the "Conversion Factor" at the time in effect for such share. The initial Conversion Factor per share for Preferred Shares shall be equal to 0.3808; provided, however, that such Conversion Factor shall be subject to adjustment as provided herein. Notwithstanding the foregoing, upon the disposition of a Preferred Share such that the Preferred Share ceases to be beneficially owned or controlled directly or indirectly by Kingsway Financial Services Inc. or Kingsway America Inc. (and, for this purpose, such Preferred Share is also not held directly or indirectly by a partnership, corporation or other entity in which Kingsway Financial Services Inc. or Kingsway America Inc. holds, directly or indirectly, ten percent (I 0%) or more of the capital, profits, value or voting interests) such Preferred Share shall be convertible into Ordinary Shares rather than Restricted Voting Common Shares pursuant to the terms of this Article I 0.5.

(b) Adjustments . The Conversion Factor of the Preferred Shares as described in Article

10.5(a) above shall be adjusted from time to time as follows:

(i) In the event of (i) the issuance of Ordinary Shares or Restricted Voting Common Shares as a dividend or distribution on the Ordinary Shares or Restricted Voting Common Shares; (ii) the subdivision or combination of the Ordinary Shares or Restricted Voting Common Shares; (iii) the issuance to holders of Ordinary Shares or Restricted Voting Common Shares of rights or warrants entitling them to subscribe for or purchase Ordinary Shares or Restricted Voting Common Shares; or (iv) the distribution to holders of Ordinary Shares or Restricted Voting Common Shares of Shares (other than Ordinary Shares or Restricted Voting Common Shares, respectively), evidences of indebtedness of the Company or assets or rights or warrants to subscribe for or purchase any of its securities, then, as a condition of such dividend, distribution, subdivision, combination or issuance, the Conversion Factor shall be equitably adjusted to provide for the issuance (upon subsequent conversion) of an equal amount of additional Ordinary Shares or Restricted Voting Common Shares or other assets, rights, warrants or other securities as if the Preferred Shares had been converted at that time.

(ii) Subject to Article 10.5(b)(i) above, if any capital reorganization or reclassification of the capital stock of the Company or any Sale or Merger (as hereinafter defined) of the Company shall be effected in such a way that holders of Ordinary Shares or Restricted Voting Common Shares shall be entitled to receive capital stock, securities or assets with respect to or in exchange for Ordinary Shares or Restricted Voting Common Shares, then, as a condition of such reorganization, reclassification, Sale or Merger, lawful and adequate provisions shall be made whereby each holder of a share or Preferred Shares shall thereafter, upon conversion, have the right to receive such shares of capital stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding Ordinary Shares or Restricted Voting Common Shares, as applicable into which the Preferred Shares held at the time of such capital reorganization, reclassification, Sale or Merger is convertible.

For purposes hereof, a " Sale or Merger " of the Company shall mean (i) the sale, lease or other disposition of all or substantially all of the Company's assets or (ii) the acquisition of the Company by another entity by way of merger or consolidation resulting in the exchange of the outstanding shares of the Company for securities or other consideration issued, or caused to be issued, by the acquiring corporation or its parent or subsidiary. Subject to Article 10.5(b)(i) above, in the event of any such reorganization, reclassification, Sale or Merger, appropriate adjustment shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Preferred Shares, to the end that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares, other securities, or property thereafter receivable upon conversion of the Preferred Shares. An adjustment made pursuant to this subparagraph (ii) shall become effective at the time at which such reclassification, recapitalization, Sale or Merger becomes effective.

(iii) In the event the Company shall declare a distribution payable in securities of other entities or persons, evidences of indebtedness issued by the Company or other entities or persons, assets (excluding cash dividends) or options or rights not referred to in Article 10.5(b)(i) or (ii) above, the holders of the Preferred Shares shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of Ordinary Shares or Restricted Voting Common Shares into which their Preferred Shares are convertible as of the record date fixed for the determination of the holders of Ordinary Shares or Restricted Voting Common Shares entitled to receive such distribution or if no such record date is fixed, as of the date such distribution is made.

(iv)

Certificate as to Adjustments . Upon the occurrence of each adjustment or readjustment of the Conversion Factor pursuant to this Article 10.5, the Company at its expense shall promptly compute such adjustment or readjustment of the Conversion Factor in accordance with the terms hereof and furnish to each holder of Preferred Shares a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.

(i) In order to exercise conversion rights pursuant to Article 10.5(a) above, the holder of the Preferred Shares to be converted shall deliver an irrevocable written notice of such exercise to the Company, at the office of the Transfer Agent. The holder of any Preferred Shares shall, upon any conversion of such Preferred Shares in accordance with this Article 10.5, surrender certificates representing the Preferred Shares to the Company, at the office of the Transfer Agent, and specify the name or names in which such holder wishes the certificate or certificates for shares of Ordinary Shares or Restricted Voting Common Shares to be issued. As promptly as practicable, the Company shall deliver or cause to be delivered certificates representing the number of validly issued, fully paid and non-assessable Ordinary Shares or Restricted Voting Common Shares to which the holder of the Preferred Shares so converted shall be entitled. Such conversion, to the extent permitted by law, shall be deemed to have been effected as of the date of receipt by the Company of any notice of conversion pursuant to this Article I 0.5(c) (the "Conversion Date"). Conversion of the Preferred Shares into Ordinary Shares shall be effected by the redemption of the Preferred Shares on the Conversion Date for the appropriate number of Ordinary Shares or Restricted Voting Common Shares (through the application of the redemption proceeds of the Preferred Shares and the capitalization of an appropriate amount of share premium account), and the Company is hereby authorised to apply, on behalf of the relevant Member, the proceeds of redemption

of any such Preferred Shares in paying for the Ordinary Shares or Restricted Voting Common Shares to be issued thereby. The Ordinary Shares or Restricted Voting Common Shares resulting from the conversion shall, as from the Conversion Date, rank pari passu in all respects with the remaining Ordinary Shares or Restricted Voting Common Shares, as applicable and the Preferred Shares so converted shall be available for reissue and until reissue shall form part of the authorised but unissued share capital of the Company.

(ii) In connection with the conversion of any Preferred Shares, no fractions of shares of Ordinary Shares or Restricted Voting Common Shares shall be issued, but the Company shall pay cash in lieu of such fractional interest in an amount equal to the product of the Conversion Factor and such fractional interest.

(iii) The Company shall at all times reserve and keep available out of its authorized but unissued Ordinary Shares or Restricted Voting Common Shares the full number of Ordinary Shares or Restricted Voting Common Shares of the Company issuable upon the conversion of all outstanding Preferred Shares.

(d) Notices of Record Date . In the event that the Company shall propose at any time: (A) to declare any dividend or distribution upon any class or series of capital stock, whether in cash, property, stock or other securities; (B) to effect any reorganization or reclassification of its Shares outstanding involving a change in the Ordinary Shares or Restricted Voting Common Shares; or (C) to merge or consolidate with or into any other corporation, or to sell, lease or convey all or substantially all of its property or business, or to liquidate, dissolve or wind up; then, in connection with each such event, subject to receipt of a waiver in writing by the holders of the Preferred Shares, the Company shall mail to each holder of Preferred Shares:

(i) at least twenty (20) days' prior written notice of the date on which a record shall be taken for such dividend or distribution (and specifying the date on which the holders of the affected class or series of capital stock shall be entitled thereto) or for determining the rights to vote, if any, in respect of the matters referred to in clauses (b) and (c) in Article 10.5(d) above; and

(ii) in the case of the matters referred to in Article I 0.5(d) (B) and (C) above, written notice of such impending transaction not later than twenty (20) days prior to the shareholders' meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier. The notice shall describe the material terms and conditions of the impending transaction (and specify the date on which the holders of shares of Ordinary Shares or Restricted Voting Common Shares shall be entitled to exchange their Ordinary Shares or Restricted Voting Common Shares for securities or other property deliverable upon the occurrence of such event) and the Company shall thereafter give such holders prompt notice of any material changes. Subject to receipt of a waiver in writing by the holders of the Preferred Shares, the transaction shall in no event take place sooner than twenty (20) days after the Company has given the notice provided for herein or sooner than ten ( 10) days after the Company has given notice of any material changes provided for herein.

(e) Conversion Rights of Ordinary Shares . In the event that an offer is made to purchase the Restricted Voting Common Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Restricted Voting Common Shares are then listed, to be made to all or substantially all of the holders of the Restricted Voting Common Shares, each Ordinary Share shall become convertible at the option of the holder into one Restricted Voting Common Share, at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Ordinary Shares for the purpose of depositing the resulting Restricted Voting Common Shares pursuant to the offer and for no other reason, including with respect to voting rights attached thereto, which are deemed to remain subject to the provisions concerning the voting rights for Ordinary Shares notwithstanding their conversion. The Transfer Agent shall deposit the resulting Restricted Voting Common Shares on behalf of the holder.

To exercise such conversion right, the holder or his attorney duly authorized in writing shall:

(i) give written notice to the Transfer Agent of the exercise of such right and of the number of Ordinary Shares, in respect of which the right is being exercised;

(ii) deliver to the Transfer Agent the share certificate or certificates, if any, representing the Ordinary Shares, in respect of which the right is being exercised.

(iii) pay any applicable stamp tax or similar duty on or in respect of such conversion.

No share certificates representing the Restricted Voting Common Shares, resulting from the conversion of the Ordinary Shares will be delivered to the holders on whose behalf such deposit is being made.

If Restricted Voting Common Shares, resulting from the conversion and deposited pursuant to the offer are withdrawn by the holder or are not taken up by the offeror, or the offer is abandoned or withdrawn by the offeror or the offer otherwise expires without such Restricted Voting Common Shares being taken up and paid for, the Restricted Voting Common Shares resulting from the conversion will be re-converted into Ordinary Shares, without further act on the part of the Company, and the share certificate representing the Ordinary Shares, if any, will be sent to the holder by the Transfer Agent.

In the event that the offeror takes up and pays for the Restricted Voting Common Shares, resulting from conversion, the Transfer Agent shall deliver to the holders thereof the consideration paid for such shares by the offeror.

There will be no right to convert the Ordinary Shares into Restricted Voting Common

Shares under this Article 10.5(e), in the following cases:

(i) the offer to purchase Restricted Voting Common Shares is not required under applicable securities legislation to be made to all or substantially all of the holders of Restricted Voting Common Shares, that is, the offer is an "exempt take-over bid" within the meaning of the applicable securities legislation; or

(ii) an offer to purchase Ordinary Shares is made concurrently with the offer to purchase Restricted Voting Common Shares, and the two offers are identical in respect of price per share, percentage of outstanding Shares for which the offer is made, and in all other material respects, including in respect of the conditions attaching thereto. The offer to purchase the Ordinary Shares must be unconditional, subject to the exception that the offer for the Ordinary Shares may contain a condition to the effect that the offeror is not required to take up and pay for Ordinary Shares deposited to the offer if no Shares are purchased pursuant to the contemporaneous offer for the Restricted Voting Common Shares.

(f) Conversion Rights of Restricted Voting Common Shares upon Disposition. Upon the disposition of any Restricted Voting Common Share such that the Restricted Voting Common Shares ceases to be beneficially owned or controlled directly or indirectly by Kingsway Financial Services Inc. or Kingsway America Inc. (and, for this purpose, such Restricted Voting Common Share is also not held directly or indirectly by a partnership, corporation or other entity in which Kingsway Financial Services Inc. or Kingsway America Inc. holds, directly or indirectly, ten percent (I 0%) or more of the capital, profits, value or voting interests), such Restricted Voting Common Shares shall be mandatorily converted into fully paid and non-assessable Ordinary Shares with each Restricted Voting Common Share converting into one Ordinary Share, subject to adjustment in accordance with the terms hereof. The holder of

such Restricted Voting Common Shares shall, upon any disposition of such Restricted Voting Common Shares in accordance with this Article I 0.5(f), surrender certificates representing the Restricted Voting Common Shares to the Company, at the office of the Transfer Agent, and specify the name or names in which such holder wishes the certificate or certificates for shares of Ordinary Shares to be issued. Conversion of the Restricted Voting Common Shares into Ordinary Shares shall be deemed to have been effected as of the date of receipt by the Company of written notice of such disposition pursuant to this Article I 0.5(f) (the "Date of Conversion"). Conversion of the Restricted Voting Common Shares into Ordinary Shares shall be effected by the redemption of the Restricted Voting Common Shares on the Date of Conversion at their nominal value (through the application of share capital), the issue of the appropriate number of Ordinary Shares at their nominal value (through the application of the redemption proceeds of the Restricted Voting Common Shares and the capitalisation of an appropriate amount of the share premium account), and the Company is hereby authorised to apply, on behalf of the relevant holder, the proceeds of redemption of any such Restricted Voting Common Shares in paying for the Ordinary Shares to be issued thereby. The Ordinary Shares resulting from the conversion shall, as from the Date of Conversion, rank pari passu in all respects with the remaining Ordinary Shares and the Restricted Voting Common Shares so converted shall be available for reissue and until reissue shall form part of the authorised but unissued share capital of the Company. The Company shall at all times reserve and keep available out of its authorized but unissued share capital Ordinary Shares of the Company issuable upon the conversion of the Restricted Voting Common Shares.

(g) Conversion Rights of Restricted Voting Common Shares upon Offer . In the event that an offer is made to purchase Ordinary Shares and the offer is one which is required, pursuant to applicable securities legislation or the rules of a stock exchange on which the Ordinary Shares are then listed, to be made to all or substantially all of the holders of Ordinary Shares, each Restricted Voting Common Share shall become convertible at the option of the holder into one Ordinary Share at any time while the offer is in effect until one day after the time prescribed by applicable securities legislation for the offeror to take up and pay for such shares as are to be acquired pursuant to the offer. The conversion right may only be exercised in respect of Restricted Voting Common Shares for the purpose of depositing the resulting Ordinary Shares pursuant to the offer and for no other reason, including notably with respect to voting rights attached thereto, which are deemed to remain subject to the provisions concerning the voting rights for Restricted Voting Common Shares notwithstanding their conversion. The Transfer Agent shall deposit the resulting Ordinary Shares on behalf of the holder.

To exercise such conversion right, the holder or his attorney duly authorized in writing shall:

(i) give written notice to the Transfer Agent of the exercise of such right and of the number of Restricted Voting Common Shares in respect of which the right is being exercised;

(ii) deliver to the Transfer Agent the share certificate or certificates, if any, representing the Restricted Voting Common Shares in respect of which the right is being exercised; and

(iii) pay any applicable stamp tax or similar duty on or in respect of such conversion.

No share certificates representing the Ordinary Shares resulting from the conversion of the Restricted Voting Common Shares shall be delivered to the holders on whose behalf such deposit is being made.

If Ordinary Shares resulting from the conversion and deposited pursuant to the offer are withdrawn by the holder or are not taken up by the offeror; or the offer is abandoned or withdrawn by the offeror or the offer otherwise expires without such Ordinary Shares being taken up and paid for, the Ordinary Shares resulting from the conversion will be re converted into Restricted Voting Common Shares without further act on the part of the Company and the share certificate representing the Restricted Voting Common Shares, if any, will be sent to the holder by the Transfer Agent.

In the event that the offeror takes up and pays for the Ordinary Shares resulting from conversion, the Transfer Agent shall deliver to the holders thereof the consideration paid for such shares by the offeror.

There will be no right to convert the Restricted Voting Common Shares into Ordinary

Shares under this Article 10.5(g) in the following cases:

(i)

the offer to purchase Ordinary Shares is not required under applicable securities legislation or the rules of a stock exchange on which the Ordinary Shares are then listed to be made to all or substantially all of the holders of Ordinary Shares in a province of Canada to which the requirement applies, that is, the offer is an "exempt take-over bid" within the meaning of the applicable securities legislation; or

(ii) an offer to purchase Restricted Voting Common Shares is made concurrently with the offer to purchase Ordinary Shares and the two offers are identical in respect of price per share, percentage of outstanding Shares for which the offer is made, and in all other material respects, including in respect of the conditions attaching thereto. The offer to purchase the Restricted Voting Common Shares must be unconditional, subject to the exception that the offer for the Restricted Voting Common Shares may contain a condition to the effect that the offeror is not required to take up and pay for Restricted Voting Common Shares deposited to the offer if no shares are purchased pursuant to the contemporaneous offer for the Ordinary Shares.

(h) Subdivision or Consolidation . No subdivision or consolidation of the Ordinary Shares or Restricted Voting Common Shares shall occur unless, simultaneously, the Ordinary Shares and the Restricted Voting Common Shares are subdivided or consolidated in the same manner, so as to maintain and preserve the respective rights of the holders of the shares of each of the said classes.

11.

The Company may insofar as may be permitted by law, pay a commission to any Person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commissions may be satisfied by the payment of cash or the lodgement of fully paid-up Shares or partly in one way and partly in the other. The Company may also on any issue of Shares pay such brokerage as may be lawful.


12.	The Directors may refuse to accept any application for Shares, and may accept any application in whole or in part, for any reason or for no reason.

13.

For the purposes of enabling directors, officers, employees of, and consultants to, the Company and its affiliates to participate in the growth of the Company and of providing effective incentives to such directors, officers, employees and consultants, the Board may establish such plans (including stock option plans and stock purchase plans) and make such rules and regulations with respect thereto, and such changes in such plans, rules and regulations, as the Board may deem advisable from time to time. From time to time the Board may designate the directors, officers, employees and consultants entitled to participate in any such plan. For the purposes of any such plan, the Company may provide such financial assistance by means of loan, guarantee or otherwise to directors, officers, employees and consultants as is permitted by the Law or by any other applicable laws.

MODIFICATION OF RIGHTS

14.

Whenever the capital of the Company is divided into different Classes the rights attached to any such Class may (unless otherwise provided by the terms of issue of the Shares of that Class) only be materially adversely varied or abrogated with the consent of the holders of that Class by Special Resolution but not otherwise. To every such separate meeting all the provisions of these Articles relating to general meetings of the Company or to the proceedings thereat shall, mutatis mutandis, apply, except that the necessary quorum shall be one or more Shareholders of the relevant Class present in person or by proxy representing not less than 5% of the outstanding Shares of that Class and that, subject to the terms of issue of the Shares of that Class, every Shareholder of the Class shall on a poll have one vote for each Share of the Class held by him. For the purposes of convening and holding a meeting pursuant to this Article the Directors may treat all the Classes or any two or more Classes as forming one Class if they consider that all such Classes would be affected in the same way by the proposals under consideration but in any other case shall treat them as separate Classes.

15.

The rights conferred upon the holders of the Shares of any Class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that Class, be deemed to be materially adversely varied or abrogated by, inter alia, the creation, allotment or issue of further Shares ranking in any respect pari passu with or prior to them, or the redemption or purchase of Shares of any Class by the Company.

CERTIFICATES

16. No Person shall be entitled to a certificate for any or all of his Shares.

17. Share certificates, if any, shall be in such form as the Board by resolution shall approve from time to time.


18.	The Secretary or any other officer of the Company may prescribe either generally or in a particular case reasonable conditions (including the provision of an indemnity in favour of the Company) upon which a new share certificate may be issued in place of any share certificate which is claimed to have been lost, destroyed or wrongfully taken, or which has become defaced.

CONSIDERATION

19.

A Share shall not be issued until the consideration for the Share is fully paid in money or in property or in past services that are not less in value than the fair equivalent of the money that the Company would have received if the Share had been issued for money. The Directors of the Company who vote for or consent to a resolution authorizing the issue of a Share for a consideration other than money are jointly and severally, or solidarily, liable to the Company to make good any amount by which the consideration received is less

than the fair equivalent of money that the Company would have received if the Share had been issued for money on the date of the resolution. A Director who proves that the Director did not know or could not have reasonably known that the Share was issued for a consideration less than the fair equivalent of the money that the Company would have received if the Share had been issued for money is not liable under this Article. A Director is not liable under this Article if the Director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on: (a) financial statements of the Company represented to the Director by an officer of the Company or in a written report of the auditor of the Company fairly to reflect the financial condition of the Company; or (b) a report of a person whose profession lends credibility to a statement made by the professional person. An action to enforce a liability imposed by this Article may not be commenced after two years from the date of the resolution authorizing the action complained of.

TRANSFER OF SHARES

20.

No transfer of Shares need be recorded in the Register (and any register of transfers of the Company) except upon presentation of the original certificate representing such Shares, if any, executed by the Company (or an indemnity in favour of the Company in such form as the Secretary or any other officer of the Company may reasonably determine in the event of any share certificate which is claimed to have been lost, destroyed or wrongfully taken, or which has become defaced). The transferor shall be deemed to remain a Shareholder until the name of the transferee is entered in the Register in respect of the relevant Shares.

TRANSMISSION OF SHARES

21.

The legal personal representative of a deceased sole holder of a Share shall be the only Person recognised by the Company as having any title to the Share. In the case of a Share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased survivor, shall be the only Person recognised by the Company as having any title to the Share.

22.

Any Person becoming entitled to a Share in consequence of the death or bankruptcy of a Shareholder shall upon such evidence being produced as may from time to time be required by the Directors, have the right either to be registered as a Shareholder in respect of the Share or, instead of being registered himself, to make such transfer of the Share as the deceased or bankrupt Person could have made; but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt Person before the death or bankruptcy.

23.

A Person becoming entitled to a Share by reason of the death or bankruptcy of a Shareholder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered Shareholder, except that he shall not, before being registered as a Shareholder in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company.

ALTERATION OF SHARE CAPITAL

24. The Company may by Special Resolution:

(a) consolidate and divide all or any of its share capital into Shares of a larger amount than its existing

Shares;

(b) subdivide its existing Shares, or any of them, into Shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in case of the Share from which the reduced Share is derived;

(d) increase the share capital by such sum, to be divided into Shares of such Classes and amount, as the resolution shall prescribe.


25.	The Company may by Ordinary Resolution cancel any Shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the Shares so cancelled.


26.	The holders of a Class or a series of Shares are entitled to vote separately as a Class or series (provided the series is affected by the amendment in a manner different from the other Shares of the same Class) on a proposal to amend the Company's Memorandum and Articles to:


(a)	add, change or remove the rights, privileges, restrictions or conditions attached to the Shares of such Class and, without limiting the generality of the foregoing,


(i)	remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,

(ii) add, remove or change prejudicially redemption rights,

(iii) reduce or remove a dividend preference or a liquidation preference, or

(iv) add, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of a corporation, or sinking fund provisions;


(b)	increase the rights or privileges of any Class of Shares having rights or privileges equal or superior to the Shares of such Class;


(c)	make any Class of Shares having rights or privileges inferior to the Shares of such Class equal or superior to the Shares of such Class;


(d)	effect an exchange or create a right of exchange of all or part of the Shares of another Class into the Shares of such Class; or

(e) constrain the issue, transfer or ownership of the Shares of such Class or change or remove such

constraint.

REDEMPTION AND PURCHASE OF SHARES

27. Subject to the Law and to the provisions of Article 10.4, the Company may:

(a) issue Shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company or the Shareholder on such terms and in such manner as the Directors may, before the issue of such Shares, determine;


(b)	purchase for cancellation its own Shares (including any redeemable Shares) on such terms and in such manner as the Directors may determine and agree with the Shareholder; and


(c)	make a payment in respect of the redemption or purchase of its own Shares in any manner authorised by the Law, including out of its capital, profits or the proceeds of a fresh issue of Shares.


28.	Any Share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption.


29.	The redemption or purchase of any Share shall not be deemed to give rise to the redemption or purchase of any other Share.


30.	The Directors may when making payments in respect of redemption or purchase of Shares, if authorised by the terms of issue of the Shares being redeemed or purchased or with the agreement of the holder of such Shares, make such payment either in cash or in specie.

GENERAL MEETINGS

31.

The Directors may, whenever they think fit, convene a general meeting of the Company provided that the Company shall within one year of its incorporation or continuance and in each year of its existence thereafter hold a general meeting as its annual general meeting and shall specify the meeting as such in notices calling it. The annual general meeting shall be held at such time and place as the Directors shall appoint.

32.

General meetings shall also be convened on the requisition in writing of any Shareholder or Shareholders entitled to attend and vote at general meetings of the Company holding at least five percent of the Aggregate Votes deposited at the Office specifying the objects of the meeting for a date no later than 120 days from the date of deposit of the requisition signed by the requisitionists, and if the Directors do not call such meeting within 2 I days from the date of such deposit, the requisitionists themselves may convene the general meeting in the same manner, as nearly as possible, as that in which general meetings may be convened by the Directors, and all reasonable expenses incurred by the requisitionists as a result of the failure of the Directors to convene the general meeting shall be reimbursed to them by the Company.

NOTICE OF GENERAL MEETINGS

33.

At least 21 days' notice in writing counting from the date service is deemed to take place as provided in these Articles specifying the place, the day and the hour of the meeting and, in case of special business, the general nature of that business, shall be given in the manner hereinafter provided or in such other manner (if any) as may be prescribed by the Company by Ordinary Resolution to such Persons as are, under these Articles, entitled to receive such notices from the Company, but with the consent of all the Shareholders entitled to receive notice of some particular meeting and attend and vote thereat, that meeting may be convened by such shorter notice or without notice and in such manner as those Shareholders may think fit.

34. The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any

Shareholder shall not invalidate the proceedings at any meeting.

PROCEEDINGS AT GENERAL MEETINGS

35.

All business carried out at a general meeting shall be deemed special with the exception of the consideration of the accounts, balance sheets and any report of the Directors or of the Auditors thereon, the appointment and removal of Directors, the appointment of the Auditors and the fixing of the remuneration of the Auditors. No special business shall be transacted at any general meeting without the consent of all Shareholders entitled to receive notice of that meeting unless notice of such special business has been given in the notice convening that meeting.


36.	No business shall be transacted at any general meeting unless a "quorum" of Shareholders is present at the time when the meeting proceeds to business. Save as otherwise provided by these Articles, two or more Shareholders holding at least five percent of the Aggregate Votes present in person or by proxy and entitled to vote at that meeting, shall form a quorum.

37.

If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Shareholders, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place, or if such a day is not a business day, the next business day and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the Shareholder or Shareholders present and entitled to vote shall form a quorum.

38.

If the Directors wish to make this facility available to Shareholders for a specific general meeting or all general meetings of the Company, a Shareholder may participate in any general meeting of the Company, by means of a telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting.

39.

The chairman, if any, of the Directors (or such other person being an officer or Director of the Company designated by the Board) shall preside as chairman at every general meeting of the Company. The Secretary or Assistant Secretary (if any) or any other officer in attendance and so nominated, shall act as secretary of the meeting and if no such persons are present or willing to act, the chairman shall appoint another person, who need not be a Shareholder, to act as secretary of the meeting. One or more scrutineers, who need not be Shareholders, may be appointed by the chairman or by an Ordinary Resolution.


40.	If there is no such chairman, or if at any general meeting he is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman, the Shareholders present shall choose one of their number to be chairman of that meeting.

41.

The chairman may with the consent of any general meeting at which a quorum is present (and shall if so directed by the meeting) adjourn a meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting, or adjourned meeting, is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.


42.	The Directors may cancel or postpone any duly convened general meeting, except for general meetings requisitioned by the Shareholders in accordance with these Articles, for any reason or for no reason upon notice in writing to Shareholders. A postponement may be for a stated period of any length or indefinitely as the Directors may determine.

43.

At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman or one or more Shareholders present in person or by proxy entitled to vote, and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company, shall be prima facie evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution .


44.	If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.


45.	In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote.


46.	A poll demanded on the election of a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs.

VOTES OF SHAREHOLDERS

47.

Subject to any rights and restrictions described in Article 10.3 or for the time being attached to any Share, on a show of hands every Shareholder present in person and every Person representing a Shareholder by proxy shall, at a general meeting of the Company, each have one vote and on a poll every Shareholder and every Person representing a Shareholder by proxy shall have one vote for each Share of which he or the Person represented by proxy is the holder.


48.	In the case of joint holders, where two or more persons hold Shares jointly, one of those holders present at a meeting of Shareholders may in the absence of the others vote the Shares, but if two or more of those persons are present, in person or by proxy, they shall vote as one on the Shares jointly held by them.


49.	A Shareholder of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, or other Person in the nature of a committee appointed by that court, and any such committee or other Person, may vote by proxy.

50. On a poll votes may be given either personally or by proxy.


51.	The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. A proxy need not be a Shareholder.


52.	An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. The chairman of the general meeting shall determine the authenticity of all signatures.

53.

The chairman of any meeting of shareholders may also in his or her discretion, unless otherwise determined by resolution of the Board, accept (i) instruments of proxy which have been transmitted by facsimile, telegraphed, telexed, cabled or otherwise electronically transmitted to the Company or such agent as the Board may from time to time determine prior to such meeting and (ii) facsimile, telegraphic, telex, cable or electronic communication as to the authority of anyone claiming to vote on b.ehalf of or to represent a shareholder, in each case whether or not an instrument of proxy conferring such authority has been lodged with the Company, and any votes cast in accordance with such facsimile, telegraphic, telex, cable or electronic proxy or communication accepted by the chairman shall be valid and any votes cast in accordance therewith shall be counted.


54.	A proxy may be signed and delivered in blank and filled in afterwards by the chairman of the Board, the Secretary or any Assistant Secretary.

55. It shall not be necessary to insert in the proxy the number of shares owned by the appointor.


56.	The Board may, at the Company's expense, send out forms of proxy in which certain directors or officers are named, which may be accompanied by stamped envelopes for the return of the forms, even if the Directors so named vote the proxies in favour of their own election as Directors.

57.

A proxy shall be acted upon only if it shall have been deposited with the Company or an agent thereof specified in the notice calling the meeting of shareholders prior to the time specified in the notice or such later time before the time of voting as the chairman of the meeting may determine, or, where no such time is specified in such notice, if it has been received by the Company or an agent thereof or the chairman of the meeting or any adjournment thereof before the time of voting.

58. A proxy is valid only at the meeting in respect of which it is give or any adjournment thereof.


59.	The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.


60.	A resolution in writing signed by all the Shareholders for the time being entitled to receive notice of and to attend and vote at general meetings of the Company (or being corporations by their duly authorised representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held.

CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS

61.

Any corporation which is a Shareholder may by resolution of its directors or other governing body authorise such Person as it thinks fit to act as its representative at any meeting of the Company or at any meeting of holders of a Class and the Person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Shareholder.

AUDITORS

62. The Auditors may only be appointed by Ordinary Resolution, whether or not recommended by the

directors.

DIRECTORS


63.	The name(s) of the first Director(s) shall either be determined in writing by a majority (or in the case of a sole subscriber that subscriber) of, or elected at a meeting of, the subscribers of the Memorandum of Association.

64. The Company may by Ordinary Resolution appoint any natural person (not a corporation) to be a Director.

65.

Subject to these Articles, a Director shall hold office until the next occurring annual general meeting of the Company. Each of the Directors may submit himself for re-election at the next occurring annual general meeting of the Company at which the Members shall by a majority of the votes cast either re-elect or replace him. Upon re-election or replacement, as appropriate, each Director or his replacement shall serve as a Director until the next occurring annual general meeting of the Company at which time he may offer himself for re-election. If a Director resigns prior to such annual general meeting, the remaining Directors may appoint a replacement to serve until such annual general meeting.


66.	The Company may by Ordinary Resolution from time to time fix the maximum and minimum number of Directors to be appointed, but unless such numbers are fixed as aforesaid the minimum number of Directors shall be three and the maximum number of Directors shall be fifteen.


67.	The remuneration of the Directors and their entitlement to out of pocket expenses incurred in performing their duties, may be determined by the Directors.


68.	There shall be no shareholding qualification for Directors unless determined otherwise by Ordinary Resolution.


69.	The Directors shall have power at any time and from time to time to appoint a natural person (not a corporation) as a Director, either as a result of a casual vacancy or as an additional Director, subject to the maximum number (if any) imposed by Ordinary Resolution.

POWERS AND DUTIES OF DIRECTORS

70.

Subject to the Law, these Articles and to any resolutions passed in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. The Directors will have the power to commence in the name of the Company a winding up or any other insolvency proceedings in accordance with the Law. No resolution passed by the Company in general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been passed.

71.

The Directors may from time to time appoint any Person, whether or not a Director, to hold such office in the Company as the Directors may think necessary for the administration of the Company, including but not limited to, the office of president, one or more vice-presidents, treasurer, assistant treasurer, manager or controller, and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. Any Person so appointed by the Directors may be removed by the Directors. The Directors may also appoint one or more of their number to the office of managing director upon like terms, but any such appointment shall ipso facto determine if any managing director ceases from any cause to be a Director.


72.	The Directors may appoint a Secretary (and if need be an assistant Secretary or assistant Secretaries) who shall hold office for such term, at such remuneration and upon such conditions and with such powers as they think fit. Any Secretary or assistant Secretary so appointed by the Directors may be removed by the Directors.


73.	The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors.

74.

The Directors may from time to time and at any time by power of attorney (whether under Seal or under hand) or otherwise appoint any company, firm or Person or body of Persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys or authorised signatory (any such person being an "Attorney" or "Authorised Signatory", respectively) of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing with any such Attorney or Authorised Signatory as the Directors may think fit, and may also authorise any such Attorney or Authorised Signatory to delegate all or any of the powers, authorities and discretion vested in him.


75.	The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next following Articles shall not limit the general powers conferred by this Article.


76.	The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any Persons to be members of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any such Persons.

77.

The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to fill any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any Person so appointed and may annul or vary any such delegation, but no Person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.


78.	Any such delegates as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities, and discretion for the time being vested in them.

BORROWING POWERS OF DIRECTORS


79.	The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.

THE SEAL

80. The Company may, if the Directors so determine, have a Seal.

81.

The Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose and every Person as aforesaid shall sign every instrument to which the Seal is so affixed in their presence.

82.

The Company may maintain a facsimile of the Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such Person or Persons as the Directors shall for this purpose appoint and such Person or Persons as aforesaid shall sign every instrument to which the facsimile Seal is so affixed in their presence and such affixing of the facsimile Seal and signing as aforesaid shall have the same meaning and effect as if the Seal had been' affixed in the presence of and the instrument signed by a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose.


83.	Notwithstanding the foregoing, a Secretary or any assistant Secretary shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company.

DISQUALIFICATION OF DIRECTORS

84. The office of Director shall be vacated, if the Director:

(a) becomes bankrupt or makes any arrangement or composition with his creditors; (b) dies or is found to be or becomes of unsound mind;

(d) is removed from office by Ordinary Resolution.

PROCEEDINGS OF DIRECTORS

85.

The Directors may meet together (either within or without the Cayman Islands) for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings in such manner as the chairman or any two Directors or any other officer designated by the Board may determine. Notice of the time and place or manner of participation for every Board meeting shall be sent to each Director not less than 48 hours before the time of the meeting. A director may at his discretion waive notice of any such meeting. Questions arising at any meeting shall be decided by a majority of votes. Where there are at least three Directors present and there is an equality of votes, the chairman shall be entitled to a second or casting vote. A Director may, and a Secretary or assistant Secretary on the requisition of a Director shall, at any time summon a meeting of the Directors.


86.	A Director may participate in any meeting of the Directors, or of any committee appointed by the Directors of which such Director is a member, by means of telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting.


87.	The quorum necessary for the transaction of the business of the Directors at a meeting of the Board shall be fifty percent of the number of Directors so fixed or determined at that time (or, if that is a fraction, the next largest whole number of Directors).

88.

A Director who is a party, or who, in any way, whether directly or indirectly has an interest in a party to a material contract or proposed material contract with the Company shall declare the nature of his interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he is a member of any specified company or firm and is to be regarded as interested in any contract which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may not vote, but may be counted in the quorum, in respect of any contract or proposed contract or arrangement in which he may be interested.

89.

A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established.


90.	Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; provided that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company.


91.	The Directors shall cause minutes to be made in books or loose-leaf folders provided for the purpose of recording:

(a) all appointments of officers made by the Directors;


(b)	the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and


(c)	all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors.


92.	When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings.


93.	A resolution signed by all the Directors entitled to receive notice of a meeting of Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted. When signed a resolution may consist of several documents each signed by one or more of the Directors.


94.	The continuing Directors may act notwithstanding any vacancy in their body but if and for so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose.


95.	The Directors may elect a chairman of their meetings and determine the period for which he is to hold office but if no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting.


96.	Subject to any regulations imposed on it by the Directors, a committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the meeting, the committee members present may choose one of their number to be chairman of the meeting.


97.	A committee appointed by the Directors may meet and adjourn as it thinks proper. Subject to any regulations imposed on it by the Directors, questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall not have a second or casting vote.


98.	All acts done by any meeting of the Directors or of a committee of Directors shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director, or that they or any of them were disqualified, be as valid as if every such Person had been duly appointed and was qualified to be a Director.

DIVIDENDS


99.	Subject always to Article 10.1 and any rights and restrictions for the time being attached to any Shares and the Law, the Directors (and only the Directors) may from time to time declare dividends (including interim dividends) and other distributions on Shares in issue and authorise payment of the same out of the funds of the Company lawfully available therefor.

100. The Directors may, before declaring any dividend or distribution, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, in the absolute discretion of the Directors be applicable for meeting contingencies, or for equalising dividends or distribution or for any other purpose to which those funds may be properly applied and pending such application may in the absolute discretion of the Directors, either be employed in the business of the Company or be invested in such investments as the Directors may from time to time think fit.

101 . Any dividend or distribution may be paid in any manner as the Directors may determine (including in the form of cash or non cash assets of the Company, or shares in the capital of the Company). If paid by cheque it will be sent through the post to the registered address of the Shareholder or Person entitled thereto, or in the case of joint holders, to any one of such joint holders at his registered address or to such Person and such address as the Shareholder or Person entitled, or such joint holders as the case may be, may direct. Every such cheque shall be made payable to the order of the Person to whom it is sent or to the order of such other Person as the Shareholder or Person entitled, or such joint holders as the case may be, may direct.


102.	The Directors when paying dividends or distributions to the Shareholders in accordance with the foregoing provisions of these Articles may make such payment either in cash or in specie.

103. Subject to any rights and restrictions for the time being attached to any Shares, all dividends or distributions shall be declared and paid according to the amounts paid up on the Shares.

104. If several Persons are registered as joint holders of any Share, any of them may give effectual receipts for any dividend, distributions, or other moneys payable on or in respect of the Share.


105.	No dividend or distribution shall bear interest against the Company. Any dividend or distribution unclaimed after a period of six years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Company.

ACCOUNTS, AUDIT AND ANNUAL RETURN AND DECLARATION


106.	The books of account relating to the Company's affairs shall be kept in such manner as may be determined from time to time by the Directors.

107. The books of account shall be kept at the Office, or at such other place or places as the Directors think fit, and shall always be open to the inspection of the Directors.

108. The Directors shall from time to time .determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorised by the Directors.

109.

The Company shall prepare and maintain, at its registered office or at any other place designated by the directors, records containing a securities register. Shareholders and their personal representatives may examine the securities register during the usual business hours of the Company, and may take extracts from the records, free of charge. A Shareholder who wishes to examine the securities register must first make a request to the Company or its agent, accompanied by an affidavit stating: (a) the name and address of the applicant; (b) the name and address for service of the corporation, if the applicant is a corporation; and (c) that the basic list and any supplemental lists (as defined in Article 110) obtained or the information contained in the securities register obtained as the case may be, will not be used except as permitted hereunder. On receipt of the affidavit, the Company or its agent shall allow the applicant access to the securities register during the Company's usual business hours, and, on payment of a reasonable fee, provide the applicant with an extract from the securities register.

110. Shareholders of the Company and their personal representatives, on payment of a reasonable fee and on sending to the Company or its agent the affidavit referred to Article I 09 above, may on application require the Company or its agent to furnish within ten days after the receipt of the affidavit a list (herein referred to as the "basic list") made up to a date not more than ten days before the date of receipt of the affidavit setting out the names of the Shareholders of the Company, the number of Shares owned by each Shareholder and the address of each Shareholder as shown on the records of the Company. The person requiring the Company to furnish a basic list may, by stating in the affidavit that they require supplemental lists, require the Company or its agent on payment of a reasonable fee to furnish a supplemental list setting out any changes from the basic list in the names or addresses of the Shareholders and the number of Shares owned by each Shareholder for each business day following the date the basic list is made up to (herein referred to as the "supplemental list"). The Company or its agent shall furnish the supplemental list: (a) on the date the basic list is furnished, where the information relates to changes that took place prior to that date; and (b) on the business day following the day to which the supplemental list relates, where the information relates to changes that take place on or after the date the basic list is furnished.


Ill.	A list of Shareholders or information from a securities register obtained under Article I 09 or II 0 shall not be used by any person except in connection with: (a) an effort to influence the voting of Shareholders of the Company; (b) an offer to acquire securities of the Company; or (c) any other matter relating to the affairs of the Company.

112. The accounts relating to the Company's affairs for a completed financial year shall be audited.


113.	The Directors in each year shall prepare, or cause to be prepared, an annual return and declaration setting forth the particulars required by the Law and deliver a copy thereof to the Registrar of Companies in the Cayman Islands.

CAPITALISATION OF RESERVES

114. Subject to the Law, the Directors may, with the authority of an Ordinary Resolution:


(a)	resolve to capitalise an amount standing to the credit of reserves (including a Share Premium Account, capital redemption reserve and profit and loss account), whether or not available for distribution;

(b)

appropriate the sum resolved to be capitalised to the Shareholders in proportion to the nominal amount of Shares held by them respectively and apply that sum on their behalf in or towards paying up in full unissued Shares or debentures of a nominal amount equal to that sum, and allot the Shares or debentures, credited as fully paid, to the Shareholders (or as they may direct) in those proportions, or partly in one way and partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Shareholders credited as fully paid;


(c)	make any arrangements they think fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, without limitation, where Shares or debentures become distributable in fractions the Directors may deal with the fractions as they think fit, without the issue of any fractional Shares;

(d) authorise a Person to enter (on behalf of all the Shareholders concerned) into an agreement with the Company providing for the allotment to the Shareholders respectively, credited as fully paid, of Shares or debentures to which they may be entitled on the capitalisation, and any such agreement made under this authority being effective and binding on all those Shareholders; and

(e) generally do all acts and things required to give effect to the resolution.

SHARE PREMIUM ACCOUNT


115.	The Directors shall in accordance with the Law establish a Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share.


116.	There shall be debited from any Share Premium Account on the redemption or purchase of a Share the difference between the nominal value of such Share and the redemption or purchase price provided always that at the discretion of the Directors such sum may be paid out of the profits of the Company or, if permitted by the Law, out of capital.

INVESTMENT ACCOUNTS


117.	The Directors may establish separate accounts on the books and records of the Company (each an "Investment Account") for each Class or series, or for more than one Class or series of Shares, as the case may be, and the following provision shall apply to each Investment Account:


(a)	the proceeds from the allotment and issue of Shares of any Class or series may be applied in the books of the Company to the Investment Account established for the Shares of such Class or series;


(b)	the assets and liabilities and income and expenditures attributable to the Shares of any Class or series may be applied or allocated for accounting purposes to the relevant Investment Account established for such Shares subject to these Articles;

(c)

where any asset is derived from another asset (whether cash or otherwise), such derivative asset may be applied in the books of the Company to the Investment Account from which the related asset was derived and on each revaluation of an investment the increase or diminution in the value thereof (or the relevant portion of such increase or diminution in value) may be applied to the relevant Investment Account;


(d)	in the case of any asset of the Company which the Directors do not consider is attributable to a particular Investment Account, the Directors shall have the discretion to determine the basis upon which any such asset shall be allocated among Investment Accounts and the Directors shall have power at any time and from time to time to vary such allocation;


(e)	where the assets of the Company not attributable to any Investment Accounts give rise to any net profits, the Directors may allocate the assets representing such net profits to the Investment Accounts as they may determine;

(f)

the Directors may determine the basis upon which any liability including expenses shall be allocated among Investment Accounts (including conditions as to subsequent reallocation thereof if circumstances so permit or require) and shall have power at any time and from time to time to vary such basis and charge expenses of the Company against either revenue or the capital of the Investment Accounts; and


(g)	the Directors may in the books of the Company transfer any assets to and from Investment Accounts if, as a result of a creditor proceeding against certain of the assets of the Company or otherwise, a liability would be borne in a different manner from that in which it would have been borne under paragraph (f) above, or in any similar circumstances.


118.	Subject to any applicable law and except as otherwise provided in these Articles the assets held in each Investment Account shall be applied solely in respect of Shares of the Class or series to which such Investment Account relates and no holder of Shares of a Class or series shall have any claim or right to any asset allocated to any other Class or series.

NOTICES

119.

Any notice or document may be served by the Company or by the Person entitled to give notice to any Shareholder either personally, or by posting it by ordinary mail or courier service in a prepaid letter addressed to such Shareholder at his address as appearing in the Register, or by electronic mail to any electronic mail address such Shareholder may have specified in writing for the purpose of such service of notices, or by cable, telex or facsimile should the Directors deem it appropriate. In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders.


120.	Any Shareholder present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened.

121. Any notice or other document, if served by:


(a)	post, shall be deemed to have been served five days after the time when the letter containing the same is posted;


(b)	facsimile, shall be deemed to have been served upon production by the transmitting facsimile machine of a report confirming transmission of the facsimile in full to the facsimile number of the recipient;

(d) electronic mail, shall be deemed to have been served immediately upon the time of the transmission by electronic mail. In proving service by post or courier service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier service.

122.

Any notice or document delivered or sent by post to or left at the registered address of any Shareholder in accordance with the terms of these Articles shall notwithstanding that such Shareholder be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any Share registered in the name of such Shareholder as sole or joint holder, unless his name shall at the time of the service of the notice or document, have been removed from the Register as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all Persons interested (whether jointly with or as claiming through or under him) in the Share.


123.	Notice of every general meeting of the Company shall be given to all Shareholders holding Shares with the right to receive notice and who have supplied to the Company an address for the giving of notices to them. No other Person shall be entitled to receive notices of general meetings.

INDEMNITY

124.

Every Director, Secretary, assistant Secretary, or other officer for the time being and from time to time of the Company (but not including the Auditors) and the personal representatives of the same (each an "Indemnified Person") shall be indemnified and secured harmless out of the assets and funds of the Company against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such Indemnified Person, other than by reason of such Indemnified Person's own dishonesty, willful default, fraud, breach of trust or breach of duty, in or about the conduct of the Company's business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere.

125. No Indemnified Person shall be liable:

(a) for the acts, receipts, neglects, defaults or omissions of any other Director or officer or agent of the

Company; or

(b) for any loss on account of defect of title to any property of the Company; or

be invested; or

(d) for any loss incurred through any bank, broker or other similar Person; or

(e) for any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties, powers, authorities, or discretions of such Indemnified Person's office or in relation thereto; unless the same shall happen through such Indemnified Person's own dishonesty, willful default fraud, breach of duty or breach of trust.


126.	To the fullest extent permitted by law, the Company shall be entitled to advance moneys to every director, officer and other individual for the costs, charges and expenses of a proceeding referred to in Article 125, however, the individual shall repay the moneys if the individual is not entitled to the indemnity as aforesaid as determined by the court or other competent authority.

127.

From time to time the Board may determine that Indemnified Persons shall also include the employees of the Company who are not directors or officers of the Company or any particular one or more or class of such employees, either generally or in respect of a particular occurrence or class of occurrences. From time to time thereafter the Board may also revoke, limit or vary such application of this Article.


128.	The provisions of Articles 124 to 127 inclusive, shall be in addition to and not in substitution for or operate by way of limitation of, any rights, immunities and protections to which a person is otherwise entitled.

NON-RECOGNITION OF TRUSTS

129.

Subject to the proviso hereto, no Person shall be recognised by the Company as holding any Share upon any trust and the Company shall not, unless required by law, be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or (except only as otherwise provided by these Articles or as the Law requires) any other right in respect of any Share except an absolute right to the entirety thereof in each Shareholder registered in the Register, provided that, notwithstanding the foregoing, the Company shall be entitled to recognise any such interests as shall be determined by the Directors in their absolute discretion.

WINDING-UP

130.

If the Company shall be wound up, the liquidator may, with the sanction of an Ordinary Resolution divide amongst the Shareholders in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different Classes subject always to Article I 0.2 above. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Shareholders as the liquidator, with the like sanction shall think fit, but so that no Shareholder shall be compelled to accept any asset whereon there is any liability.

AMENDMENT OF ARTICLES OF ASSOCIATION


131.	Subject to the Law and the rights attaching to the various Classes, the Company may at any time and from time to time by Special Resolution alter or amend these Articles in whole or in part.

CLOSING OF REGISTER OR FIXING RECORD DATE

132.

For the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at any meeting of Shareholders or any adjournment thereof, or those Shareholders that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Shareholder for any other purpose, the Directors may provide that the Register shall be closed for transfers for a stated period which shall not exceed in any case 60 days. If the Register shall be so closed for the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders the Register shall be so closed for at least ten days immediately preceding such meeting and the record date for such determination shall be the date of the closure of the Register.

133.

In lieu of or apart from closing the Register, the Directors may fix in advance a date as the record date for any such determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of the Shareholders and for the purpose of determining those Shareholders that are entitled to receive payment of any dividend the Directors may, at or within 90 days prior to the date of declaration of such dividend, fix a subsequent date as the record date for such determination.

134.

If the Register is not so closed and no record date is fixed for the determination of those Shareholders entitled to receive notice of, attend or vote at a meeting of Shareholders or those Shareholders that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such

determination of Shareholders. When a determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders has been made as provided in this Article, such determination shall apply to any adjournment thereof.

REGISTRATION BY WAY OF CONTINUATION

135.

The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company.

DISCLOSURE


136.	The Directors, or any authorised service providers (including the officers, the Secretary and the registered office agent of the Company) shall be entitled to disclose to any regulatory or judicial authority any information regarding the affairs of the Company including without limitation information contained in the Register and books of the Company.

RIGHTS OF DISSENT

137. A holder of Shares of any class of the Company may dissent if the Company resolves to:


(a)	amend its Memorandum and Articles to add, change or remove any provisions restricting or constraining the issue, transfer or ownership of shares of that class;


(b)	amend its Memorandum and Articles to add, change or remove any restriction on the business or businesses that the Company may carry on;

Law;

(d) be continued into another jurisdiction;

(e) sell, lease or exchange all or substantially all its property; or

(f) carry out going private scheme or contract being the subject of Section 88 of the Companies Law.


138.	In addition, a Member holding Shares of any Class or series of Shares entitled to vote may dissent if the Company resolves to amend its Memorandum and Articles as contemplated by Article 26. The right to dissent applies even if there is only one Class of Shares.

139.

In addition to any other right the Member may have, but subject to limitations in Article !51, a Member who complies with the Articles on dissent is entitled, when the action approved by the resolution from which the Member dissents becomes effective, to be paid by the Company the fair value of the Shares in respect of which the Member dissents, determined as of the close of business on the day before the resolution was adopted or the order was made.

140.

A dissenting Member may only claim a right of dissent with respect to all the Shares of a Class held on behalf of any one beneficial owner and registered in the name of the dissenting Member. The dissenting Member shall send to the Company, at or before any meeting of Members at which a resolution referred to in Articles 137 or 138 is to be voted on, a written objection to the resolution, unless the Company did not give notice to the Member of the purpose of the meeting and of their right to dissent.


141.	The Company shall, within ten days after the Members adopt the resolution, send to each Member who has filed the objection referred to in Article 140, notice that the resolution has been adopted, but such notice is not required to be sent to any Member who voted for the resolution or who has withdrawn their objection.

142.

A dissenting Member shall, within twenty days after receiving a notice under Article 141 or, if the Member does not receive such notice, within twenty days after learning that the resolution has been adopted, send to the Company a written notice containing the Member's name and address; the number and class of shares in respect of which the Member dissents; and a demand for payment of the fair value of such shares.

143.

A dissenting Member shall, within thirty days after sending a notice under Article 142 send the certificates representing the Shares in respect of which the Member dissents, if any, to the Company or the Transfer Agent. A dissenting Member who fails to comply has no right to make a claim under these Articles on dissent. The Company or the Transfer Agent shall endorse on any share certificate received, a notice that the holder is a dissenting Member under these Articles on dissent and shall forthwith return the share certificates to the dissenting Member.

144.

On sending a notice under Article 142, a dissenting Member ceases to have any rights as a Member other than to be paid the fair value of their shares as determined under these Articles on dissent except where the Member withdraws that notice before the Company makes an offer under Article 145, the Company fails to make an offer in accordance with Article 145 and the Member withdraws the notice, or the Directors revoke a resolution to amend the Memorandum and Articles, terminate an amalgamation agreement or an application for continuance, or abandon a sale, lease or exchange, in which case the Member's rights are reinstated as of the date the notice was sent.

145.

The Company shall, not later than seven days after the later of the day on which the action approved by the resolution is effective or the day the Company received the notice referred to in Article 142, send to each dissenting Member who has sent such notice a written offer to pay for their Shares in an amount considered by the Directors of the Company to be the fair value, accompanied by a statement showing how the fair value was determined; or if a limitations under Article 151 applies, a notification that it is unable lawfully to pay dissenting Member for their Shares. Every offer made for Shares of the same class or series shall be on the same terms.


146.	Subject to limitations under Article 151 the Company shall pay for the shares of a dissenting Member within ten days after an offer made under Article 145 has been accepted, but any such offer lapses if the Company does not receive an acceptance thereof within thirty days after the offer has been made.

147.

Where the Company fails to make an offer under Article 145 or if a dissenting Member fails to accept an offer, the Company may, within fifty days after the action approved by the resolution is effective or within such further period as a court may allow, apply to a court to fix a fair value for the shares of any dissenting Member. If the Company fails to apply to a court, a dissenting Member may apply to a court for the same purpose within a further period of twenty days or within such further period as a court may allow. An application of the company or the dissenting Member must be made to a court having jurisdiction in the place where the Company has its registered office. A dissenting Member is not required to give security for costs in an application made.

148.

On an application to a court under Article 147 all dissenting Member whose shares have not been purchased by the Company shall be joined as parties and are bound by the decision of the court; and the Company shall notify each affected dissenting Member of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel. The court may determine whether any other person is a dissenting Member who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting Member.


149.	The final order of a court shall be rendered against the Company in favour of each dissenting Member and for the amount of the shares as fixed by the court.

150. A court may in its discretion allow a reasonable rate of interest on the amount payable to each dissenting Member from the date the action approved by the resolution is effective until the date of payment.

151.

The Company shall not make a payment to a dissenting Member if there are reasonable grounds for believing that the Company is or would after the payment be unable to pay its liabilities as they become due; or the realizable value of the Company's assets would thereby be less than the aggregate of its liabilities. If this provision applies, the Company shall, within ten days after the pronouncement of a final order under Article 149 notify each dissenting Member that it is unable lawfully to pay dissenting Members for their shares. If this provision applies, a dissenting Member, by written notice delivered to the Company within thirty days after receiving such a notice may withdraw their notice of dissent, in which case the Company is deemed to consent to the withdrawal and the Member is reinstated to their full rights as a shareholder; or retain a status as a claimant against the Company, to be paid as soon as the Company is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the Company but in priority to its Members.

EXHIBIT 3.1c

EIGHTH AMENDED AND RESTATED ARTICLES OF INCORPORATION OF AMERICAN SERVICE INSURANCE COMPANY, INC.

ARTICLE ONE

The name of the Company shall be AMERICAN SERVICE INSURANCE COMPANY, INC.

ARTICLE TWO

The principal offices of the Company shall be located in Cook County, Illinois.

ARTICLE THREE

The duration of the company shall be perpetual.

ARTICLE FOUR

The Company shall engage in the writing of insurance policies under Article I, Section 4, Classes 2(b), 2(c), led), 2(e), 2(f), 2(g), 2(h), 2(1), 20), 2(k) and 3(a), 3(b), 3(c), 3(d), 3(e), 3(f), 3(g) and 3(h) of the Illinois Insurance Code, as follows:

Class 2 - Casualty, Fidelity, Surety

2(b) Vehicle . Insurance against any loss or liability resulting from or incident to the ownership, maintenance or use of any vehicle (motor or otherwise), draft animal or aircraft. Any policy insuring against any loss or liability on account of the bodily injury or death of any person may contain a provision for payment of disability benefits to injured persons and death benefits to dependents, beneficiaries or personal representatives of persons who are killed, including the named insured, irrespective of legal liability of the insured, if the injury or death for which benefits are provided is caused by accident and sustained while in or upon or while entering into or alighting from or through being struck by a vehicle (motor or otherwise), draft animal or aircraft, and such provision shall not be deemed to be accident insurance.

2(c) Liability . Insurance against the liability of the insured for the death, injury or disability of an employee or other person, and insurance against the liability of the insured for damage to or destruction of another person's property.

2(d) Workers' compensation. Insurance of the obligations accepted by or imposed upon employers under laws for workers' compensation.

2(e) Burglary and forgery . Insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud or otherwise, including all householders' personal property floater risks.

2(f) Glass . Insurance against loss or damage to glass including lettering, ornamentation and fittings from any cause.

2(g) Fidelity and surety . Become surety or guarantor for any person, copartnership or corporation in any position or place of trust or as custodian of money or property, public or private; or, becoming a surety or guarantor for the performance of any person, copartnership or corporation of any lawful obligation, undertaking, agreement or contract of any kind, except contracts or policies of insurance; and underwriting blanket bonds. Such obligations shall be known and treated as suretyship obligations and such business shall be known as surety business.

2(h) Miscellaneous . Insurance against loss or damage to property and any liability of the insured caused by accidents to boilers, pipes, pressure containers, machinery and apparatus of any kind and any apparatus connected thereto, or used for creating, transmitting or applying power, light, heat, steam or refrigeration, making inspection of and issuing certificates of inspection upon elevators, boilers, machinery and apparatus of any kind and all mechanical apparatus and appliances appertaining thereto, insurance against loss or damage by water entering through leaks or openings in buildings, or from the breakage or leakage of a sprinkler, pumps, water pipes, plumbing and all tanks, apparatus, conduits and containers designed to bring water into buildings or for its storage or utilization therein, or caused by the falling of a tank, tank platform or supports, or against loss or damage from any cause (other than causes specifically enumerated under Class 3 of this section) to such sprinkler, pumps, water pipes, plumbing, tanks, apparatus, conduits or containers; insurance

against loss or damage which may result from the failure of debtors to pay their obligations to the insured; and insurance of the payment of money for personal services under contracts of hiring.

2(i) Other casualty risks . Insurance against any other casualty risk not otherwise specified under Classes 1 or 3, which may lawfully be the subject of insurance and may properly be classified under Class 2.

2(j) Contingent losses. Contingent, consequential and indirect coverages wherein the proximate cause of the loss is attributable to anyone of the causes enumerated under Class 2. Such coverages shall, for the purpose of classification, be included in the specific grouping of the kinds of insurance wherein such cause is specified.

2(k) Livestock and domestic animals . Insurance against mortality, accident and health of livestock and domestic animals.

Class 3 - Fire and Marine, etc .

3(a) Fire . Insurance against loss or damage by fire, smoke and smudge, lightning or other electrical disturbances.

3(b) Elements . Insurance against loss or damage by earthquake, windstorms, cyclone, tornado, tempests, hail, frost, snow, ice, sleet, flood, rain, drought or other weather or climatic conditions including excess or deficiency of moisture, rising of the waters of the ocean or its tributaries.

3(c) War, riot and explosion . Insurance against loss or damage by bombardment, invasion, insurrection, riot, strikes, civil war or commotion, military or usurped power, or explosion (other than explosion of steam boilers and the breaking of fly wheels on premises owned, controlled, managed, or maintained by the insured.)

3(d) Marine and transportation . Insurance against loss or damage to vessels, craft, aircraft, vehicles of every kind, (excluding vehicles operating under their own power or while in storage not incidental to transportation) as well as all gods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, chooses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any or all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same or during any delays, storage, transshipment, or reshipment incident thereto, including marine builder's risks and all personal property floater risks; and for loss or damage to persons or property in connection with or appertaining to marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either arising out of or in connection with the construction, repair, operation, maintenance, or use of the subject matter of such insurance, (but not including life insurance or surety bonds); but, except as herein specified, shall not mean insurances against loss by reason of bodily injury to the person; and insurance against loss or damage to precious stones, jewels, jewelry, gold, silver and other precious metals whether used in business or trade or otherwise and whether the same be in course of transportation or otherwise, which shall include jewelers block insurance; and insurance against loss or damage to bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion are the only hazards to be covered; and to piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion; and to other aids to navigation and transportation, including dry docks and marine railways, against all risk.

3(e) Vehicle . Insurance against loss or liability resulting from or incident to the ownership, maintenance or use of any vehicle (motor or otherwise), draft animal or aircraft, excluding the liability of the insured for the death, injury or disability of another person.

3(f) Property damage, sprinkler leakage and crop . Insurance against the liability of the insured for loss or damage to another person's property or property interests from any cause enumerated in this class; insurance against loss or damage by water entering through leaks or openings in buildings, or from the breakage or leakage of a sprinkler, pumps, water pipes, plumbing and all tanks, apparatus, conduits and containers designed to bring water into buildings or for its storage or utilization therein, or caused by the falling of a tank, tank platform or supports or against loss or damage from any cause to such sprinklers, pumps, water pipes, plumbing,

tanks, apparatus, conduits or containers; insurance against loss or damage from insects, diseases or other caused to trees, crops or other products of the soil.

3(g) Other fire and marine risks . Insurance against any other property risk not otherwise specified under Classes 1 or 2, which may lawfully be the subject of insurance and may properly be classified under Class 3.

3(h) Contingent losses . Contingent, consequential and indirect coverages wherein the proximate cause of the loss is attributable to any of the causes enumerated under Class 3. Such coverages shall, for the purpose of classification, be included in the specific grouping of the kinds of insurance wherein such cause is specified.

ARTICLE FIVE

(1) The corporate powers of the Company shall be exercised by, and its business and affairs shall be under the control of a Board of Directors composed of not less than three (3) nor more than twenty-one (21) natural persons. At least three (3) of such Directors shall be residents and citizens of the State of Illinois.

(2) The first Board of Directors shall be elected at the first meeting of Shareholders and all Directors shall be elected annually thereafter at the annual meeting of the Shareholders.

(3) In all elections for Directors, every Shareholder has the right to vote, in person or by proxy, for the number of shares owned by him for as many persons as there are Directors to be elected, and the Directors so elected shall hold office until the next annual meeting of the Shareholders or until their successors have been elected and qualified.

(4) The Board of Directors shall have the sale power to make, alter, amend or repeal the By-Laws for the government and regulation of the Company's affairs.

ARTICLE SIX

(1) The amount of the authorized capital of the company shall be $13,650,000 ($3,650,000 for common stock and $10,000,000 for preferred stock); the aggregate number of shares which the Company shall have authority to issue shall be 1,000,000 shares of common stock and 100,000 shares of preferred stock. The number of common shares issued and sold as paid-up capital shall be 273,973, and the par value of each common share shall be $3.65. The number of shares of preferred stock issued and sold as paid-Up capital shall be 20,000 and the par value of each such share of preferred stock shall be $100.

(2) The Board of Directors shall have the power, by appropriate resolution, to authorize the issuance or sale at any time or from time to time of the whole or any part of said 100,000 shares authorized but unissued $100 par value preferred stock as additions to paid-up capital and to authorize the issuance or sale at any time or from time to time of the whole or any part of said 1,000,000 authorized but unissued common shares as additions to paid-up capital pursuant to one or more permits issued at any time or from time to time by the Director of Insurance of the State of Illinois. Subject to any necessary prior approval required by the Director of Insurance of the State of Illinois, the Board of Directors may, at any time or from time to time:

(a) Divide any or all of the preferred stock into classes;

(b) Determine for any class established by the Board, its designation, number of shares, and relative rights, preferences, and limitations;

(c) Increase the number of shares of any class established by the Board, as long as the number together with the number of shares of all classes of preferred stock, does not exceed the number of those shares authorized pursuant to these Articles of Incorporation;

(d) Decrease the number of shares of any class established by the Board to a number not less than the number of shares of that class then outstanding;

(e) Change the designation, number of shares, relative rights, preferences, or limitations of the shares of any class established by the Board, no shares of which have been issued;

(f) Cause to be executed and filed without further approval of the shareholders of this Company, any amendment or amendments to these Articles of Incorporation as may be required to accomplish any of these amendments.

ARTICLE SEVEN

(1) The 20,000 shares of preferred stock issued and sold shall be designated as "Class A $7 Non-Voting Cumulative Convertible Preferred Stock" and are hereinafter referred to as "Class A Preferred Stock".

(2) The holders of the Class A Preferred Stock shall be entitled to receive, and the Company shall pay on those shares, fixed cumulative cash dividends at an annual rate of $7 for each share and no more. This right to receive and obligation to pay shall arise as, if, and when declared by the Board of Directors from the funds of the Company properly available for the payment of dividends in any fiscal year. Unless otherwise provided by the Board of Directors, these dividends shall be payable quarterly on the first business day in the months of January, April, July, and October. Dividends on the Class A Preferred Stock shall be cumulative from the original issue of each share of the Class A Preferred Stock to the extent not paid, whether earned or not earned. No dividends or other distributions shall be declared or paid on, nor shall there be a redemption of, the common shares or any shares of the Company that rank lower in priority to the Class A Preferred Stock with respect to payment of dividends unless and until all accrued and unpaid dividends on the Class A Preferred Stock shall have been paid or have been declared and funds set aside for the payment of them.

(3) In the event of the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of shares of the Class A Preferred Stock shall be entitled to be paid the amount of $100 for each share, together with all accrued and unpaid dividends on the shares, and no more, before any distribution to the holders of the common shares or any other shares of the Company ranking lower in priority to the Class A Preferred Stock with respect to distribution on liquidation.

(4) The Company shall have the right, at its option and on notice as provided in this Paragraph 4, to redeem at any time all or any portion of the Class A Preferred Stock at a price of $100 for each share, together with all accrued and unpaid dividends on those shares. In all cases of redemption of the Class A Preferred Stock, thirty days' advance written notice of the redemption shall be given by the Company through registered mail addressed to the shareholders whose shares are to be redeemed at their respective addresses appearing on the books of the Company. If notice is given and if on or before the date set for redemption that Company shall have set aside all funds necessary for the redemption, then on and after the dates set for redemption all of these shares shall no longer be outstanding, all dividends on these shares shall cease to accrue, and all rights of the holders of these shares shall terminate, except the right to receive the amount payable on redemption of the shares, without interest, on due surrender of the certificate representing the shares. Funds necessary for redemption shall be considered to be set aside only if they are held separate and apart from other corporate funds in trust for the benefit of the holders of the shares with respect to which the notice of redemption is given. If only a portion of the Class A Preferred Stock is redeemed, the shares to be redeemed shall be selected by lot.

(5) Except as otherwise required by law, the holders of the shares of the Class A Preferred Stock shall not be entitled to vote.

(6) No sooner than one year after issuance, shares of the Class A Preferred Stock may, at the option of the holder, be converted into fully paid and nonassessable common shares of the Company, calculated to the nearest 1/100th of a share, at the rate of 2.7778 common shares for each share of the Class A Preferred Stock. If the shares are called for redemption and if payment of the redemption price has been duly provided for by the date fixed for redemption, then the holder may exercise this conversion option until and including the close of business on the date fixed for redemption but not after that date. Exercise of a conversion option shall be subject to the procedure set forth below.

(7) The holder of each share of the Class A Preferred stock may exercise the conversion privilege by delivering to the Company the share to be converted accompanied by written notice that the holder elects to convert the share. Conversion shall be deemed to have been effected immediately before the close of business on the date when delivery is made, which is the conversion date. On the conversion date, or as soon as practicable after that date, the Company shall issue and deliver to the holder of shares of the Class A Preferred Stock surrendered for conversion a certificate for the number of common shares issuable on the conversion of the shares of the Class A Preferred Stock. The person in whose name the stock certificate is to be issued shall be deemed to have become a holder of record of the common shares represented in the certificate on the conversion date. No adjustment shall be made for any dividends on the converted shares of the Class A Preferred Stock or for dividends on the common shares issued on conversion.

(8) The number of common shares and the number of shares of any other classes of the Company's shares into which each share of the Class A Preferred Stock is convertible shall be subject to adjustment from time to time only as follows:

(a) If the Company declares a dividend payable in common shares and subsequently pays that dividend, subdivides or splits the outstanding common shares, combines the outstanding common shares into a smaller number of shares, or issues or permits to be issued by reclassification of common shares of any shares of the Company, then each holder of a share of the Class A Preferred Stock shall be entitled on the conversion of each of these shares to receive for each share the number and kind of shares that he or she would have been entitled to receive if he or she had exercised the conversion rights immediately before any of these corporate actions. The adjustment shall become effective immediately at the opening of business on the day nest following the record date for purposes of paying a dividend or on the day on which the subdivision, split, combination or reclassification shall become effective.

(b) If the Company at any time or times shall distribute to the holders of common shares evidences of indebtedness, stock or other securities, or assets, or shall issue rights or warrants to subscribe to any common shares, the number of common shares onto which each share of the Class A Preferred Stock shall subsequently be convertible shall be determined by multiplying the number of common shares into which the share of the Class A Preferred Stock was previously convertible by a fraction. The numerator of this fraction shall be the current market price for each common share, ad defined in Subparagraph (d) below, at the record date. The denominator of the fraction shall be the current market price for each common share less the fair market value of that portion of the evidence of indebtedness, stock or other securities, or assets distributed or subscription rights or warrants issues that is applicable to one common share. The fair market value shall be determined by the Board of Directors and the determination shall be conclusive. This Subparagraph (b) shall not apply to cash dividends payable from earnings or earned surplus, the distribution specified in Subparagraph (a) above, except for those related to combinations, and shall not apply to the rights or warrants referred to in Subparagraph (c) below. This adjustment shall be made whenever the distribution is made or the rights or warrants are issued. On distribution or issuance this adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the distribution or the rights or warrants. For purposes of this Subparagraph (b), earnings or earned surplus shall be computed by adding to it all charges against earned surplus on account of dividends paid in common shares in respect of which an adjustment has been made pursuant to Subparagraph (a) above. This computation shall be determined by the independent public accountants then regularly auditing the accounts of the Company and the determination shall be conclusive.

(c) If the Company at any time shall issue rights or warrants to all holders of common shares entitling them to subscribe for or purchase common shares for a period expiring within sixty days after the record date for determining the shareholders entitled to receive the rights or warrants and at a price for each share that is less than the current market price for each common share; as defined in Subparagraph (d) below, at the record date, the number of common shares into which each share of the Class A Preferred Stock shall subsequently be convertible shall be determined by multiplying the number of common shares into which each share of the Class A Preferred Stock was previously convertible by a fraction. The numerator of this fraction shall be the number of common shares outstanding on the record date for issuance of the rights or warrants plus the number of additional common shares offered for subscription or purchase. The denominator of this fraction shall be the number of common shares outstanding on the record date for issuance of the rights or warrants plus the number of common shares that the aggregate offering price of the total number of shares offered would purchase at the current market price. This adjustment shall be made whenever the rights or warrants are issued, and on issuance it shall become effective immediately after the record date for the determination of shareholders entitled to receive the rights or warrants.

(d) For the purpose of any computation under Subparagraph (b) or (c) above, the current market price for each common share at any date shall be the amount determined on that date by an independent appraiser selected by the Company. If the Company contemplates an event requiring an adjustment of the conversion rate based on the current market price of the common shares, the Company shall retain an independent appraiser who shall render his or her report on the current market price on or as soon as practicable after the event requiring the adjustment. All conversions of shares of the Class A Preferred Stock that occur after the date on which an adjustment under this Paragraph is to occur but before any required appraisal is completed shall be at the rate prior to the adjustment, but any additional shares that would have been issued if the appraisal had

been completed shall be issued after the appraisal is completed.

(e) No adjustment in the number of common shares into which each share of the Class A Preferred Stock is convertible shall be required unless the adjustment would require an increase or decrease of at least 1/1000th of a share in the number of common shares into which the share of the Class A Preferred Stock is then convertible. However, any adjustments that by reason of this subparagraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(f) Whenever any adjustment is required in the shares into which each share of the Class A Preferred Stock is convertible, the Company shall keep available at its principal office a statement describing in reasonable detail the adjustment and the method of calculation used.

(g) The Company shall not be required to issue fractional common shares on conversion of shares of the Class A Preferred Stock. If more than one share of the Class A Preferred Stock shall be surrendered for conversion at one time by the same holder; the number of full common shares issuable on conversion shall be computed on the basis of the aggregate number of shares surrendered. If any fractional interests in a common share would be deliverable on the conversion of any shares of the Class A Preferred Stock, the Company shall, instead of delivering the fractional share for it, make an adjustment for it in the cash at its redemption value.

(9) The Company shall at all times reserve and keep available out of the authorized but unissued common shares or common shares held in the treasury of the Company, the outstanding number of common shares into which the shares of the Class A Preferred Stock are convertible. If an adjustment requires an appraisal that is not completed at the time the adjustment is to be effective, the Company shall reserve and keep available out of the authorized but unissued common shares or common shares held in the treasury of the Company, the full number of common shares into which the shares of the Class A Preferred Stock then outstanding are convertible plus the full number of additional shares into which those shares would be convertible on the basis of the estimated market value of these shares determined in good faith by the Board of Directors. After the appraisal is completed, the number of shares to be reserved and kept available by the Company shall be the number determined pursuant to the first sentence of this Paragraph.

(10) The provisions of this Article Seven shall be subject to any necessary prior approval required by the Director of Insurance of the State of Illinois.

CERTIFICATE OF CORPORATE SECRETARY

I, Mary Ann Callaghan, Secretary of American Service Insurance Company Inc., an Illinois corporation, do hereby certify that the attached is a true, correct and complete copy of the Eighth Amended and Restated Articles of Incorporation of American Service Insurance Company, Inc., adopted by unanimous written consent of the Board of Directors on June 1, 2009, and that the same is in full force and effect and has not been rescinded, canceled or amended.

IN WITNESS WHEREOF, I have hereunto subscribed my name this fifteenth day of June, 2009.

/s/ Mary Ann Callaghan

Mary Ann Callaghan

Secretary

EXHIBIT 3.1b

RESTATED AND AMENDED ARTICLES OF INCORPORATION

The undersigned corporation, for the purpose of amending and restating its Articles of Incorporation and pursuant to the provisions of 215 ILCS 5/29 of the Illinois Insurance Code, hereby executes the following Articles of Amendment:

ARTICLE ONE

The name of the Company shall be AMERICAN COUNTRY INSURANCE COMPANY.

ARTICLE TWO

The principal offices of the Company shall be located in Cook County, Illinois.

ARTICLE THREE

The duration of the Company shall be perpetual.

ARTICLE FOUR

The Company shall engage in the writing of insurance policies and reinsurance business as defined in Class 2 and Class 3 of Section 4 of the Illinois Insurance Code, as follows:

Class 2. Casualty, Fidelity and Surety.

(a) Accident and Health . Insurance against bodily injury, disablement or death by accident and against disablement resulting from sickness or old age and every insurance appertaining thereto.

(b) Vehicle . Insurance against any loss or liability resulting from or incident to the ownership, maintenance or use of any vehicle (motor or otherwise), draft animal or aircraft. Any policy insuring against any loss or liability on account of the bodily injury or death of any person may contain a provision for payment of disability benefits to injured persons and death benefits to dependents, beneficiaries or personal representatives of persons who are killed, including the named insured, irrespective of legal liability of the insured, if the injury or death for which benefits are provided is caused by accident and sustained while in or upon or while entering or alighting from or through being struck by a vehicle (motor or otherwise), draft animal or aircraft, and such provision shall not be deemed to be accident insurance.

(c) Liability. Insurance against the liability of the insured for the death, injury or disability of an employee or other person, and insurance against the liability of the insured for damage to or destruction of another person's property.

(d) Workmen's Compensation . Insurance of the obligations accepted by or imposed upon employers under laws for workmen's compensation.

(e) Burglary and Forgery . Insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud or otherwise; including all householders' personal property floater risks.

(f) Glass . Insurance against loss or damage to glass, including lettering, ornamentation and fittings from any cause.

(g) Fidelity and Surety . Become surety or guarantor for any person. co-partnership or corporation in any position or place of trust or as custodian of money or property, public or private; or, becoming a surety or guarantor for the performance of any person, co-partnership or corporation of any lawful obligation, undertaking, agreement or contract of any kind, except contracts or policies of insurance; and underwriting blanket bonds. Such obligations shall be known and treated as suretyship obligations and such business shall be known as surety business.

(h) Miscellaneous . Insurance against loss or damage 1:0 property and any liability of the insured caused by accidents to boilers, pipes, pressure containers, machinery and apparatus of any kind and any apparatus connected thereto, or used for creating, transmitting or applying power, light, heat, steam or refrigeration. making inspection of and issuing certificates of inspection upon elevators, boilers, machinery and apparatus

of any kind and all mechanical apparatus and appliances appertaining thereto; insurance against loss or damage by water entering through leaks or openings in buildings, or from the breakage or leakage of a sprinkler, pumps, water pipes) plumbing and all tanks, apparatus, conduits and containers designed to bring water into buildings or tor its storage or utilization therein. or caused by the falling of a tank, tank platform or supports; or against loss or damage from any cause (other than causes specifically enumerated under Class 3 of this section) to such sprinkler, pumps, water pipes, plumbing, tanks, apparatus, conduits or containers; insurance against loss or damage which may result from the failure of debtors to' pay their obligations to the insured; and insurance of the payment of money for personal services under contracts of hiring.

(i) Other Casualty Risks. Insurance against any other casualty risk not otherwise specified under Classes 1 or 3, which may lawfully be the subject of insurance and may properly he classified under Class 2. Such coverages shall, for the purpose of classification, be included in the specific grouping of the kinds of insurance wherein such cause is specified.

(j) Contingent Losses . Contingent, consequential and indirect coverages wherein the proximate cause of the loss is attributable to anyone of the causes enumerated under Class 2. Such coverages shall, for the purpose of classification, be included in the specific grouping of the kinds of insurance wherein such cause is specified.

(k) Livestock and Domestic Animals . Insurance against mortality, accident and health of livestock and domestic animals.

Class 3. Fire and Marine, etc.

(a) Fire. Insurance against loss or damage by fire, smoke and smudge, lightning or other electrical disturbances.

(b) Elements . Insurance against loss or damage by earthquake, windstorms, cyclone, tornado, tempests, hail, frost, snow, ice, sleet, flood, rain, drought or other weather or climatic conditions including excess or deficiency of moisture, rising of the waters of the ocean or its tributaries.

(c) War, Riot and Explosion . Insurance against loss or damage by bombardment, invasion, insurrection, riot, strikes, civil war or commotion, military or usurped power, or explosion (other than explosion of steam boilers and the breaking of wheels on premises owned, controlled, managed, or maintained by the insured).

(d) Marine and Transportation. Insurance against loss or damage to vessels, craft, aircraft, vehicles of every kind (excluding vehicles operating under their own power or while in storage not incidental to transportation), as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any or all risks or perils of navigation, transit, or transportation, including war risks. on or under any seas or other waters, on land or in the air. or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same, or during any delays, storage, transshipment, or reshipment, incident thereto, including marine builder's risks and all personal property floater risks; and for loss or damage to persons or property in connection with or appertaining to marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either arising out of or in connection with the construction, repair, operation, maintenance. or use of the subject matter of such insurance, (but not including life insurance or surety bonds); but, except as herein specified, shall not mean insurance against loss by reason of bodily injury to the person; and insurance against loss or damage to precious stones, jewels, jewelry, gold, silver and other precious metals whether used in business or trade or otherwise and whether the same be in course of transportation or otherwise. which shall include jewelers block insurance; and insurance against loss or damage to bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion are the only hazards to be covered; and to piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion; and to other aids to navigation and transportation, including dry docks and marine railways, against all risk.

(e) Vehicle . Insurance against loss or liability resulting from or incident to the ownership, maintenance or use of any vehicle (motor or otherwise), draft animal or aircraft, excluding the liability of the insured for the death, injury or disability of another person.

(f) Property Damage, Sprinkler Leakage and Crop . Insurance against the liability of the insured for loss or damage to another person's property or property interests from any cause enumerated in this class; insurance against loss or damage by water entering through leaks or openings in buildings, or from the breakage or leakage of a sprinkler, pumps, water pipes, plumbing and all tanks, apparatus, conduits and containers designed to bring water, into buildings or for its storage Or utilization therein, or caused by the falling of a tank, tank platform or supports or against loss or damage from any cause to such sprinklers, pumps, water pipes, plumbing, tanks, apparatus, conduits or containers; insurance against loss or damage from insects, diseases or other causes to trees, crops or other products of the soil.

(g) Other Fire and Marine Risks . Insurance against any other property risk not otherwise specified under Classes 1 or 2, which may lawfully be the subject of insurance and may properly be classified under Class 3.

(h) Contingent Losses . Contingent, consequential and indirect coverages wherein the proximate cause of the loss is attributable to any of the causes enumerated under Class 3. Such coverages shall, for the purpose of classification, be included in the specific grouping of the kinds of insurance wherein such cause is specified.

ARTICLE FIVE

1. The corporate powers of the Company shall be exercised by, and its business and affairs shall be under the control of a Board of Directors composed of not less than three nor more than twenty-one (21) natural persons and who are at least twenty-one (21) years of age and at least three of whom are residents and citizens of this State.

2. The first Board of Directors shall be elected at the first meeting of shareholders and all Directors shall be elected annually thereafter at the annual meeting of shareholders.

3. In all elections for Directors every shareholder has the right to vote, in person or by proxy, for the number of shares owned by him for as many persons as there are Directors to be elected, or to accumulate his shares, and give one candidate as many votes as the number of Directors multiplied by the number of his shares equals, or to distribute them on the same principle among as many candidates as he thinks fair, and the Directors so elected shall hold office until the next annual meeting of the shareholders or until their successors shall have been elected and qualified. The stockholders at any regular or special meeting may fill any vacancy in the board of directors for the unexpired term.

ARTICLE SIX

1. The amount of the authorized capital of the corporation shall be $5,000,000; the aggregate number of common shares which the company shall have authority to issue shall be 5,000,000; and the par value of each common share shall be $1.00. The minimum paid in surplus shall be $1,000,000.

2. The corporate powers of the corporation shall be vested in the board of directors who shall have power to do any and all acts the corporation may do under the law and not otherwise to be performed by the shareholders, and shall have power to adopt by-laws not inconsistent with law for the government and regulation of the business. The company may issue both participating and nonparticipating policies. The board of directors shall have power to determine the amount and manner of payment of dividends to the holders of participating policies. Such dividends shall be in accordance with such rates and rules and applicable to such kind or kinds of insurance as may be determined by the board of directors, which shall have power to adopt any by-laws pertaining to such declaration and payment which in the Judgment of the said board of directors seem necessary or desirable.

3. The common shares issued and outstanding may be increased from time to time within the limits of the capital authorized by this Article, in accordance with the provisions of the Illinois insurance Code which relate thereto.

4. The Board of Directors shall have the power, by appropriate resolution, to authorize the issuance or sale at any time or from time to time of the whole or any part of said 5,000,000 authorized but unissued common shares as additions to paid up capital pursuant to one or more permits issued at any time or from time to time by the Director of Insurance of the State of Illinois.

ARTICLE SEVENTH

1. The designation of the general officers shall be a President, a Vice-President, a Treasurer and a Secretary and such other officers as may be designated by the board of Directors.

2. The fiscal year shall commence on the first day of January and terminate on the 31st of December of each year.

IN WITNESS WHEREOF, we the President and Secretary, respectively, of American Country Insurance Company, have set our hands and seals this 13th day of February, 2004.

By: /s/ Roger T. Beck

ROGER T. BECK, PRESIDENT

Attest: /s/ Ronald Jay Gold

RONALD JAY GOLD, SECRETARY

EXHIBIT 4.2 SPECIMEN COMMON STOCK CERTIFICATE

EXHIBIT 4.3

WARRANT CERTIFICATE

THESE SECURITIES AND THE SECURITIES DELIVERABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE WARRANTS MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR PERSON IN THE UNITED STATES UNLESS THE WARRANTS AND THE COMMON SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE U.S. SECUR.'TIES ACT AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATIONS UNDER THE U.S. SECURITIES ACT.

THE WARRANTS REPRESENTED HEREBY WILL BE VOID AND OF NO VALUE UNLESS EXERCISED WITHIN THE TIME LIMITS HEREIN PROVIDED.

ATLAS FINANCIAL HOLDINGS, INC.

(A corporation governed by the laws of the Cayman Islands)



Dated: December 31, 2010
			Warrant Certificate No: ________________

THIS IS TO CERTIFY THAT, for value received,
Mr. and Mrs. SAMPLE

(The "Holder") is the registered holder of _____ common share purchase warrants (the "Warrants") of Atlas Financial Holdings, Inc. (the "Company"). Each Warrant entitles the Holder to subscribe for and purchase, subject to the terms hereof including, without limitation, certain adjustment provisions as detailed below in this Warrant Certificate, one fully paid ordinary share ("Ordinary Share") in the capital of the Company at a price of TWO DOLLARS (C$2.00) per Ordinary Share in lawful money of Canada, (the price at which one Ordinary Share may be purchased hereunder from time to time being hereinafter referred to as the "Exercise Price") at any time after the date hereof and until 5:00 p.m. (Toronto time) on the first Business Day that is three (3) years after the date hereof (the "Expiry Time"), after which time the Warrants represented hereby shall expire and be of no value or effect.

The right to acquire Ordinary Shares under the Warrants may only be exercised by the Holder at any time and from time to time up to and including but not after the Expiry Time by surrendering this Warrant Certificate along with (i) the duly completed and executed Exercise Form attached hereto as Appendix A, and (ii) a certified cheque or bank draft payable to or to the order of the Company in an amount equal to the Exercise Price multiplied by the number of Ordinary Shares to be acquired, subject to adjustment in accordance with the terms hereof, to the Company at the address shown on the Exercise Form or such other office as may be specified by the Company, in a written notice to the Holder, from time to time.

This Warrant Certificate shall effectively be surrendered only upon personal delivery to the Company or, if sent by mail or other means of transmission, upon actual receipt thereof by the Company at its offices shown on the Exercise Form or such other address as the Company may notify the Holder of in writing.

Upon the exercise of the Warrants in the manner described above, the Holder shall be deemed for all purposes to be the holder or holders of record of such Ordinary Shares and the Company covenants that it will cause certificates representing such Ordinary Shares to be delivered or mailed to the Holder at the address or addresses specified in the Exercise Form within three (3) Business Days of the surrender of this Warrant Certificate.

The Holder of this Warrant Certificate may acquire any lesser number of Ordinary Shares than the aggregate number of all Ordinary Shares which may be acquired as a consequence of exercising the Warrants. In such event, the Holder shall be entitled to receive a new Warrant Certificate exercisable to acquire up to the balance of the Ordinary Shares which may be acquired. No fractional Ordinary Shares shall be issuable on exercise of the Warrants.

The Holder of this Warrant Certificate may, at any time prior to the Expiry Time, upon surrender of this Warrant Certificate to the Company, exchange this Warrant Certificate for other Warrant Certificates in such amounts as the Holder may request entitling the Holder to acquire, in the aggregate, the same number of Ordinary Shares as may be acquired under this Warrant Certificate.

The ownership of the Warrants in and of itself shall not constitute the Holder hereof a shareholder of the Company or entitle the Holder to any right or interest as a shareholder in respect thereof except as expressly provided for herein.

From and after the date hereof, the Exercise Price and the number of Ordinary Shares deliverable upon the exercise of the Warrants will be subject to adjustment in the events and in the following manner:

(a)

In case of any reclassification of the Ordinary Shares or change of the Ordinary Shares into other shares, or in case of the consolidation, merger, reorganization or amalgamation of the Company with or into any other corporation or entity which results in any reclassification of the outstanding Ordinary Shares or a change of the Ordinary Shares into other securities, or in case of any transfer of the undertaking or assets of the Company as an entirety or substantially as an entirety to another person (any such event being hereinafter referred to as a "Reclassification of Ordinary Shares"), at any time prior to the Expiry Time, the Holder shall, after the effective date of such Reclassification of Ordinary Shares and upon exercise of the right to purchase Ordinary Shares hereunder, be entitled to receive, and shall accept, in lieu of the number of Ordinary Shares to which the Holder was theretofore entitled upon such exercise, the kind and amount of shares and other securities or property which the Holder would have been entitled to receive as a result of such Reclassification of Ordinary Shares if, on the effective date thereof, the Holder had been the registered holder of the number of Ordinary Shares to which the Holder was theretofore entitled to acquire upon such exercise. No such reclassification of Ordinary Shares will be carried out unless, in the opinion of the Board of Directors of the Company, all appropriate adjustments shall be made in the application of the provisions set forth in this section with respect to the rights and interests thereafter of the Holder of this Warrant Certificate to the end that the provisions set forth in this section shall thereafter correspondingly be made applicable as nearly as may be reasonable in relation to any shares or other securities or property thereafter deliverable upon the exercise of the Warrants. Any such adjustment must be made by and set forth in an amendment to this Warrant Certificate.

(b) If and whenever at any time prior the Expiry Time the Company shall:


(i)	subdivide, redivide or change its then outstanding Ordinary Shares into a greater nun1ber of shares;


(ii)	reduce, combine or consolidate its then outstanding Ordinary Shares into a lesser number of shares; or


(iii)	issue Ordinary Shares, Participating Shares or Convertible Securities (both such terms as defined below in paragraph (g)) to all or substantially all of the holders of Ordinary Shares by way of distribution on the Ordinary Shares payable in Ordinary Shares, Participating Shares or Convertible Securities;

(any such event being hereinafter referred to as "Capital Reorganization") and any such event results in an adjustment or readjustment in the Exercise Price pursuant to paragraph (c), the number of

Ordinary Shares purchasable pursuant to the Warrants shall be adjusted or readjusted contemporaneously with the adjustment or readjustment of the Exercise Price by multiplying the number of Ordinary Shares purchasable on the exercise of the Warrants immediately prior to such adjustment by a fraction, the numerator of which shall be the Exercise Price in effect immediately prior to such adjustment or readjustment, and the denominator of which shall be the Exercise Price resulting from such adjustment or readjustment.

(c)

If and whenever any time prior to the Expiry Time, the Company shall engage in a Capital Reorganization, the Exercise Price shall, effective immediately after the effective date, in the case of a subdivision or consolidation, or effective immediately after the record date, in the case of a distribution, be adjusted by multiplying the Exercise Price in effect immediately prior to such effective date or record date by a fraction: (A) the numerator of which shall be the number of Ordinary Shares and Participating Shares outstanding on such effective date or record date before giving effect to such Capital Reorganization; and (B) the denominator of which shall be the number of Ordinary Shares and Participating Shares outstanding immediately after giving effect to such Capital Reorganization. The number of Ordinary Shares and Participating Shares outstanding shall include the deemed conversion into or exchange for Ordinary Shares or Participating Shares of any Convertible Securities distributed pursuant to such Capital Reorganization. Such adjustment shall be made successively whenever any event referred to in this paragraph shall occur.


(d)	Any issue of Ordinary Shares, Participating Shares or Convertible Securities pursuant to the Capital Reorganization shall be deemed to have been made on the record date thereof for the purpose of calculating the number of outstanding Ordinary Shares under paragraphs (e) and (f).

(e)

If and whenever at any time prior to the Expiry Time, the Company shall fix a record date for the issuance of rights, options or warrants (other than the Warrants evidenced hereby) to all or substantially all the holders of Ordinary Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Ordinary Shares, Participating Shares or Convertible Securities at a price per share (or in the case of a Convertible Security the conversion or exchange price per share plus the issue price of such Convertible Security) that is less than 95% of the Current Value (as defined below) of an Ordinary Share on such record date (any such event being hereinafter referred to as a "Rights Offering"), the Exercise Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction:

(i)

the numerator of which shall be the aggregate of: (A) the number of Ordinary Shares outstanding on such record date; and (B) a number determined by dividing whichever of the following is applicable by the Current Value (as hereinafter defined) of the Ordinary Shares on the record date: ( 1 ) the amount obtained by multiplying the number of Ordinary Shares or Participating Shares which the holders of Ordinary Shares are entitled to subscribe for or purchase by the subscription or purchase price; or (2) the amount obtained by multiplying the maximum number of Ordinary Shares or Participating Shares which the holders of Ordinary Shares are entitled to receive on the conversion or exchange of the Convertible Securities by the conversion or exchange price per share; and

(ii)

the denominator of which shall be the aggregate of: (A) the number of Ordinary Shares outstanding on such record date; and (B) whichever of the following is applicable: (1) the total number of Ordinary Shares or Participating Shares which the holders of Ordinary Shares are entitled to subscribe for or purchase; or (2) the total number of Ordinary Shares or Participating Shares which the holders of Ordinary Shares are entitled to receive on the conversion or exchange of the Convertible Securities.

If by terms of the rights, options or warrants referred to in this paragraph (e), there is more than one purchase, conversion or exchange price per Ordinary Share, the aggregate price of the total number of additional Ordinary Shares offered for subscription or purchase, or the aggregate conversion or exchange price of the convertible or exchangeable securities so offered, will be calculated for purposes of the adjustment on the basis of the lowest purchase, conversion or exchange price per Ordinary Share, as the case may be.

Any Ordinary Shares owned by or held for the account of the Company or subsidiary of the Company shall be deemed not to be outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed.

To the extent that such Rights Offering is not so made or any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or to the Exercise Price which would then be in effect based if such expired rights, options or warrants had not been included in the original calculation.


(f)	If and whenever at any time prior to the Expiry Time, the Company shall fix a record date for the·distribution to all or substantially all the holders of Ordinary Shares of:

(i) shares of any class, whether of the Company or any other corporation;

(ii) rights, options or warrants;

(iii) evidences of indebtedness; or

(iv) other assets or property;

and if such distribution does not constitute a Capital Reorganization or a Rights Offering or does not consist of rights, options or warrants entitling the holders of Ordinary Shares to subscribe for or purchase Ordinary Shares, Participating Shares or Convertible Securities for a period expiring not more than 45 days after such record date and at a price per share (or having a conversion or exchange price per share) of at least 95% of the Current Value of the Ordinary Shares on such record date (any such non-excluded event being hereinafter referred to as a "Special Distribution") the Exercise Price shall be adjusted effective immediately after such record date so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction: (I) the numerator of which shall be the amount by which (A) the amount obtained by multiplying the number of Ordinary Shares outstanding on such record date by the Current Value of the Ordinary Shares on such record date, exceeds (B) the fair market value (as determined by the external auditors of the Company, which determination shall be conclusive) to the holders of such Ordinary Shares of such Special Distribution; and (II) the denominator of which shall be the total number of Ordinary Shares outstanding on such record date multiplied by such Current Value of the Ordinary Shares on such record date.

To the extent that such Special Distribution is not so made or any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or if such expired rights, options or warrants had not been issued for the purposes of determining the fair market value as referred to in subparagraph (f)(B) above.


(g)	For the purpose of this Warrant Certificate: (i) "Participating Share" means a share (other than an Ordinary Share) that carries the right to participate in earnings to an unlimited degree; and (ii) "Convertible Security" means a security convertible into or exchangeable for an Ordinary Share or a Participating Share or both.

(h)

On any adjustment of the Exercise Price pursuant to paragraph (e) or (f), the number of Ordinary Shares purchasable on the exercise of the Warrants will be adjusted contemporaneously with the adjustment of the Exercise Price by multiplying the number of Ordinary Shares theretofore purchasable immediately before the adjustment by a fraction which is the reciprocal of the fraction used in the adjustment of the Exercise Price.

(i)

In any case in which this Warrant Certificate shall require that an adjustment shall become effecti ve immediately after a record date for an event referred to herein, the Company may defer, until the occurrence of such event, issuing to the Holder, upon the exercise of the Warrants after such record date and before the occurrence of such event, the additional Ordinary Shares issuable upon such exercise by reason of the adjustment required by such event; provided, however, that the Company shall deliver to the Holder an appropriate instrument evidencing the Holder's right to receive such additional Ordinary Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Ordinary Shares on and after such exercise.

(j)

The adjustments provided for in this Warrant Certificate are cumulative, shall, in the case of adjustments to the Exercise Price, be computed to the nearest one-tenth of one cent and shall apply (without duplication) to successive Reclassifications of Ordinary Shares, Capital Reorganizations, Rights Offerings and Special Distributions; provided that, notwithstanding any other provision of this section, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least I% of the Exercise Price then in effect (except upon a consolidation of the outstanding Ordinary Shares) (provided, however, that any adjustments which by reason of this paragraph are not required to be made shall be carried forward and taken into account n any subsequent adjustment).

(k)

No adjustment in the number of Ordinary Shares which may be purchased upon exercise of the Warrants or in the Exercise Price shall be made pursuant to this Warrant Certificate if the Holder is entitled to participate in such event (other than the events referred to in paragraph (b)(i) or (b)(ii)) on the same terms mutatis mutandi as if the Holder had exercised the Warrants evidenced hereby for Ordinary Shares prior to the effective date or record date of such event.

(l)

Subject to the prior written consent of the TSXV, in the event of any question arising with respect to the adjustments provided in this Warrant Certificate, such question shall conclusively be determined (as between the Company, the Holder, all shareholders of the Company and any transfer agent of the Ordinary Shares) by a firm of chartered accountants appointed by the Company and acceptable to the Holder (who may be the Company's auditors). Such accountants shall have access to all necessary records of the Company and such determination shall be binding upon the Company, the Holder, the shareholders of the Company and any transfer agent of the Ordinary Shares.

(m)

As a condition precedent to the taking of any action which would require an adjustment in the subscription rights pursuant to this Warrant Certificate, including the Exercise Price and the number of such classes of shares or other securities or property which are to be received upon the exercise of the Warrants, the Company shall take all corporate action which may, in the opinion of external counsel, be necessary in order that the Company has reserved and there will remain unissued a sufficient number of Ordinary Shares for issuance upon the exercise of the Warrants, and that the Company may validly and legally issue as fully paid and non-assessable all the shares of such classes or other securities or may validly and legally distribute the property which the Holder is entitled to receive on the full exercise thereof in accordance with the provisions hereof.

(n)

In the case of an event which requires an adjustment in the subscription rights pursuant to this Warrant Certificate, including the Exercise Price and the number and classes of shares or other securities or property which are to be received upon the exercise thereof, the Company shall give notice to the Holder of the particulars of such event and the required adjustment and the computation of such adjustment as soon as reasonably practicable and, in any event, within 30 days of making any adjustment.


(o)	This Warrant Certificate and all the rights hereunder (including the Warrants) shall enure to the benefit of the Holder and its successors and permitted assigns and shall be binding upon the Company and its successors.


(p)	The Warrants represented by this Warrant Certificate may not be transferred, sold, assigned or pledged, in whole or in part, to any person by the Holder.


(q)	The Holder acknowledges and agrees that any transfer, sale, assignment or pledging by it of the Warrants represented by this Warrant Certificate, in whole or in part, shall comply with the provisions of Securities Laws or such other regulatory authority having jurisdiction.

For the purpose of any computation under this Warrant Certificate, the "Current Value" of the Ordinary Shares at any date shall be determined as the volume weighted average trading price per Ordinary Share of the Ordinary Shares (the "VWAP") on the TSXV calculated by dividing the total value by the total volume of Ordinary Shares traded for the twenty trading days ending three trading days prior to that date and if the Ordinary Shares are not so listed on the TSXV, the Current Value shall be the VWAP on such exchange on which the Ordinary Shares are listed, and if the Ordinary Shares are not listed on any exchange, the VW AP will be such value as is determined by the directors of the Company acting in good faith. If the Ordinary Shares are listed on more than one stock exchange the VWAP on the stock exchange on which the largest volume of the Ordinary Shares has traded in the preceding six (6) months shall be used.

In case the Company after the date of issuance of the Warrants takes any action affecting the Ordinary Shares, other than any action described above, which in the opinion of the board of directors of the Company would materially affect the rights of the Holder, the Exercise Price will be adjusted in such manner, if any, and at such time, by action by the directors of the Company but subject in all cases to the prior written consent of the stock exchange on which the Ordinary shares are then listed, where required and any necessary regulatory approval.

The Company shall not enter into any transaction whereby all or substantially a ll of its undertaking, property and assets would become the property of any other corporation (herein called a "successor corporation") whether by way of reorganization, reconstruction, consolidation, amalgamation, merger, transfer, sale, disposition or otherwise, unless prior to or contemporaneously with the consummation of such transaction, the Company and the successor corporation shall have executed such instruments and done such things as are necessary or advisable to establish that upon the consummation of such transaction:

(i) the successor corporation will have assumed all the covenants and obligations of the

Company under this Warrant Certificate, and


(ii)	the Warrant Certificate will be a valid and binding obligation of the successor corporation entitling the Holder, as against the successor corporation, to all the rights of the Holder under this Warrant Certificate.

If any one or more of the provisions contained in this Warrant Certificate should be invalid, illegal or unenforceable in any respect under the laws of any jurisdiction, the validity, legality and enforceability of such provision shall not in any way be affected or impaired thereby under the laws of any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

This Warrant Certificate shall be governed and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

Time shall be of the essence hereof.

All dollar amounts shall be Canadian dollars.

[Remainder of this page intentionally left blank]

•

IN WITNESS WHEREOF the Company has caused this Warrant Certificate to be executed by its duly authorized officer this 31 day of December 2010.

SIGNED for and on behalf of

ATLAS FINANCIAL HOLDINGS, INC.

Per: _________________________________

•

Exhibit 4.1b

AMENDED BY-LAWS OF AMERICAN COUNTRY INSURANCE COMPANY

ARTICLE I - OFFICES

The principal office of the company in the State of Illinois shall be located in Cook County, Illinois. The company may have such other offices, either within or without the State of Illinois, as the business of the company may require from time to time.

ARTICLE II -SHAREHOLDERS

Section 1 - First Meeting . The first meeting of shareholders shall be held within one hundred twenty (120) days after the issuance of a Certificate of Authority to the Company by the Director of Insurance of the State of Illinois.

Section 2· Annual Meeting . The Annual Meeting of the shareholders shall be held either within or without the State of Illinois at a place and time to be determined by the Directors. An annual meeting shall be convened within 18 months of the previous meeting. In the event that such annual meeting is omitted by oversight or otherwise on the date herein above provided, the Directors shall cause a meeting .in lieu thereof to be held as soon thereafter as may be convenient, and any business transacted or elections held at such meeting shall be valid as if transacted or held at the annual meeting.

Section 3 - Special meetings . Special meetings of the shareholders may be called by the president, by the board of directors or by the holders of not less than one-fifth of all the outstanding shares of the company.

Section 4 - Place of Meeting . The board of directors may designate any place, within the State of Illinois, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. A waiver of notice signed by all shareholders may designate any place within the State of Illinois, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the registered office of the corporation in the State of Illinois except as otherwise provided in Section 6 of this article.

Section 5 - Notice of Meetings . Written or printed notice stating the place, day and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than forty days before the date of the meeting to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the records of the corporation, with postage thereon prepaid.

Section 6 - Meeting of All Shareholders. If all of the shareholders shall meet at any time and place, either within or without the State of Illinois, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any corporate action may be taken.

Section 7 - Closing of Transfer Books Of Fixing of Record Date . For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, forty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days, or in the case of a merger or consolidation at least twenty days, immediately preceding such meeting. In lieu of closing the stock transfer books, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than forty days a.id, for a meeting of shareholders, not less than ten days, or in the case of a merger or consolidation not less than twen ty days , immediately preceding such meeting. If the stock transfer books are not closed and no record date is fixed for the determination or .shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to-receive payment of a dividend, the date on which notice, of the meeting is mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders

entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof.

Section 8 - Voting Lists . The officer or agent having charge of the transfer books for shares of the: company shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting. arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting, shalt be kept on file at the registered office of the company and shall be kept on file at the registered office of the company and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share ledger or transfer book, or a duplicate thereof kept in this State shall be prima facie evidence as to who are the shareholders entitled to examine such list or share ledger or transfer book or to vote at any meeting of shareholders.

Section 9 - Quorum . A majority of the outstanding shares of the company, represented in person or by proxy shall constitute a quorum at any meeting of shareholders; provided, that if less than a majority of the outstanding shares are represented at said meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Illinois Insurance Code, the articles of incorporation or these by-laws.

Section 10 - Proxies . At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the secretary of the company before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.

Section 11 - Voting of Shares . Subject to the provisions of Section 13 of this article, each outstanding share, regardless of class, shall be entitled to one vote upon each matter submitted to vote at a meeting of shareholders.

Section 12 - Voting of Shares by Certain Holders. Shares standing in the name of another corporation, domestic or foreign may be voted by such officer, agent, or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine.

A. Shares standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by his administrator; executor, court appointed guardian or conservator, either in person or by proxy without a transfer of such shares into the name of such administrator, executor, court appointed guardian or conservator. Shares standing in the name of a trustee may be voted by him, either in person or by proxy.

B. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed.

C. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

D. Shares of its own stock-belonging to this company shall not be voted, directly or indirectly at any meeting and shall not be counted in determining the total number of outstanding shares at any given time, but shares of its own stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares at any given time:

Section 13 - Cumulative Voting . In all elections for directors every shareholder shall have the right to vote, in person or by proxy, the number of shares owned by him, for as many persons as there are directors to be elected, or to cumulate said shares, and give one candidate as many votes as the number of directors multiplied. by the number of his shares shall equal, or to distribute them on the same principle among as many candidates as he shall see fit, and directors shall not be elected in any other manner.

Section 14 - Informal Action by Shareholder . Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if

a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders .entitled to vote with respect to the subject matter thereof.

Section 15 - Voting by Ballot . Voting on any question or in any election may be viva voce unless the presiding officer shall order or any shareholder shall demand that voting be by ballot.

Section 16 -Inspectors . At any meeting of shareholders, the chairman of the meeting may, or upon the request of any shareholder shall, appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain and report the number of shares represented at the meeting, based upon their determination of the validity and effect of proxies; count all votes and report the results; and do such other acts as are proper to conduct the election and voting with impartiality and fairness to all the shareholders.

Each report of an inspector shall be in writing and signed by him or by a majority of them if there be more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

ARTICLE III - DIRECTORS

Section I - General Powers. The business and affairs of the company shall be managed by its board of directors.

A. After the date of incorporation and until the rust meeting of shareholders, the incorporators shall have the powers and perform the duties ordinarily possessed and exercised by the Board of Directors.

B. Upon the issuance of a Certificate of Authority to the Company, and after the first meeting of the shareholders, the corporate powers shall be exercised by and the business and affairs shall be under the control of a Board of Directors.

C. At the first meeting of the Board of Directors after the annual meeting of shareholders the Board shall elect its Chairman, a President, one or more Vice-Presidents, a Treasurer and one or more Secretaries, and may elect an Executive Committee. The Board of Directors at any time may appoint a General Manager and such other officers and Committees as it may deem advisable, and determine the powers and duties of such officers and employees. Officers and members of the Committee of the Board shall serve at the pleasure of the Board, except that with respect to officers of the Company the Board shall be empowered to enter into any contract with any such officer with respect to the term or condition of services as the Board may authorize. One person may hold two or more of such offices except that the offices of President and Secretary shall not be held by the same person.

D. The Chairman of the Board shall be the principal presiding officer, presiding at all meetings of the Board of Directors, and shall conduct and supervise the Board of Directors' meetings. He shall also preside at all meetings of the shareholders, and he may sign, together with the Secretary or any other proper officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of the corporation, deeds, mortgages, bonds, contracts or other instruments which the Board may authorize, and, in general, he shall assume the burden of helping the Board shape and determine policy and do the necessary work in connection with investigating industry trends, market conditions and otherwise serve as the basic source of information in helping the Board determine policy for the corporation, and such other duties as may be prescribed for him from time to time by the Board of Directors.

Section 2 - Number, Tenure, and Qualifications . The Board of Directors shall consist of between five (5) and ten (10) natural persons, who are at least twenty-one (21) years of age, who shall be chosen annually by the Shareholders, at least three (3) of whom are residents and citizens of the State of Illinois. This number may be increased or decreased from time to time by amendment to the By-Laws, but in no event shall be less than three (3) nor more than twenty-one (21).

Section 3 - Regular Meetings . A regular meeting of the board of directors shall be held without other notice than this by-law, immediately after, and at the same place as, the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place, either within or without the State of Illinois, for the holding of additional regular meetings without other notice than such resolution.

Section 4 - Special Meetings. Special meetings of the board of directors may be called by or at the request of the president or any two directors. The person or persons authorized to call special meetings of the board of directors may fix any place, either within or without the State of Illinois, as the place for holding any special meeting of the board of directors called by them.

Section 5 - Notice . Notice of any special meeting shall be given at least 7 days previous thereto by written notice delivered personally or mailed to each director at his business address, or by telegram. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver or notice of such meeting unless expressly otherwise provided by the laws of the State of Illinois.

Section 6 - Quorum . A majority of the number of directors fixed by these by-laws shall constitute a quorum for transaction of business at any meeting of the board of directors, provided, that if less than a majority of such number of directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice.

Section 7 - Manner of Acting . The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors.

Section 8 - Vacancies . Any vacancy occurring in the board of directors and any directorship to be filled by reason of an increase in the number of directors, may be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose.

Section 9 - Informal Action by Directors . Unless specifically prohibited by the articles of incorporation Of by-laws, any action required to be taken at a meeting of the board of directors, or the executive committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all the directors entitled to vote with respect to the subject matter thereof, or by all the members of such committee, as the case may be. Any such consent signed by all the directors or all the members of the executive committee shall have the same effect as a unanimous vote, and may be stated as such in any document filed with the Department of Insurance. All action without a meeting of the Board shall be limited to those situations where time is of the essence and not in lieu of a regularly scheduled meeting.

Section 10 - Compensation . The board of directors, by the affirmative vote of a majority of directors then in office, and irrespective of any personal interest of any of its, members, shall have authority to establish reasonable compensation of all directors for services to, the company as directors, officers or otherwise. By resolution of the board of directors the directors may be paid their expenses, if any, of attendance at each meeting of the board.

Section 11 - Presumption of Assent . A director of the company who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 12 - Participation by Conference Telephone . Members of the board of directors or any committee of the board of directors may participate in and act at any meeting of such board or committee through' the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating.

Section 13 - Nomination of Directors . All nominations for the office of Director shall be filed in writing with the Secretary of the Company at least sixty (60) days prior to the meeting at which the Directors are to be

elected. The nomination must be signed by at least two (2) shareholders of the Company. The written nomination shall be marked by the Secretary with the day of its filing and entered of record in the books of the Company. Any such nomination may nominate one or more shareholders for the office of Director. No such nomination shall be valid, except for the next annual meeting of shareholders immediately following or at any adjourned session thereof. No person shall be voted upon or elected a Director unless nominated as provided in Sections 12 and 13 herein.

Section 14 - Nominating Committee . Thirty (30) days prior to each meeting at which Directors are to be elected, the President shall appoint a Nominating Committee which shall consist of three (3) shareholders of the Company. The Nominating Committee shall nominate one Director for each position to which a Director is to be elected. The Nominating Committee shall make its report in writing to the President three (3) days prior to the said meeting and shall present its nominations in writing to the shareholders at said meeting.

Section 15 - Committee on Proxies . It shall be the duty of the President to appoint a Committee on Proxies which Committee shall meet prior to the time of election, examine all proxies which have been duly filed in accordance with these By-Laws, and report to the Chairman of the meeting the number of valid proxies entitled to vote, the names of the persons presently designated as proxy thereon, and the number of proxy votes which may be voted by' such persons respectively. The said Committee shall approve the form of ballot and no person nominated for election as a Director shall be listed on said ballot, unless the said Committee shall find that the nominee is a shareholder of the Company on the date of election.

ARTICLE IV - OFFICERS

Section 1 - Number . The officers of the company shall be a president, one or more vice- presidents (the number thereof to be determined by the board of directors), a treasurer; and a secretary, and such assistant treasurers, assistant secretaries or other officers as may be elected or appointed by the board of directors or appointed by the President. Any two or more offices may be held by the same person, except the office of president and secretary.

Section 2 - Election And Term of Office . The officers of the corporation shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of shareholders. Vacancies may be filled or new offices filled at any meeting of the board of directors. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Election or appointment of an officer or agent shall not of itself create contract rights.

Section 3 - Removal . Any officer or agent elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interest of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

Section 4 - Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term.

Section 5 - President . The president shall be the principal executive officer of the company and shall in general supervise and control all of the business and affairs of the corporation. He shall preside at all meetings of the shareholders and of the board of directors, He may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the board of directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the board of directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the board of directors or by these by-laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the board of directors from time to time.

Section 6. - The Vice-President . In the absence of the president or in the event of his inability or refusal to act, the vice-president, (or in the event there be more than one vice-president, the vice-presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. Any vice-president may sign, with the secretary or an assistant secretary, certificates for shares: of the corporation; and shall perform such other duties as from time to time may be assigned to him by the

president or by the board of directors.

Section 7 - The Treasurer. If required by the board of directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureti es as t he board of directors shall determine. He shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Article V of these by-laws; (b) in general perform all the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the board of directors.

Section 8 - The Secretary . The secretary shall: (a) keep the minutes of the shareholders and of the board of directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the company under its seal is duly authorized in accordance with the provisions of these by-laws; (d) keep a register of the post office address of each shareholder which shall be furnished to the secretary by such shareholder; (e) sign with the president, or a Vice-president, certificates for shares of the corporation, the issue of which shall have been authorized by resolution of the board of directors; (f) have general charge of the stock transfer books of the corporation; (g) in general perform all duties as from time to time may be assigned to him by the president or by the board of directors.

Section 9 - Assistant Treasurers and Assistant Secretarie s. The assistant treasurers shall respectively, if required by the board of directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the board of directors shall determine, The assistant secretaries, as thereunto authorized by the board of directors may sign with the president or a vice-president certificates for shares of the corporation, the issue of which shall have been authorized by a resolution of the board of directors. The assistant treasurers and assistant secretaries in general, shall perform such duties as shall be assigned to them by: the treasurer or the secretary, respectively, or by the president or the board of directors.

Section 10 - Salaries . The salaries of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation.

Section 11 - Executive Committee . An Executive Committee may be chosen by the Board from among its number consisting of three regular members and one or more alternate members. An alternate member shall serve on the Executive Committee at any time during the absence or disability of any regular member. It shall be the duty of the Executive Committee, subject to any limitations imposed by the Board of Directors, to perform any functions of the Board of Directors when the Board is not in session. The Executive Committee shall keep minutes of the committee meetings and said minutes shall be subject to review by the Board of Directors at the next regular or special meeting of the Board. The Executive Committee shall have charge of the financial affairs of the Company, and the making of loans and investments of the funds of the Company, and may take any action with respect to the liquidation, sale, or exchange of, or the exercise of any right pertaining to, any security or asset belonging to the Company. The Executive Committee shall have the power to adopt resolutions governing the deposit of funds of the Company and the or distribution of such funds, and to authorize the leasing of safe deposit boxes and to provide rules and regulations for access to any safe deposit box, including the right to repeal or amend any resolution with respect to banking accounts or safe deposit boxes previously adopted by the Board of Directors, except where such resolution of the Board of Directors shall have specifically reserved to the Board the exclusive privileges to amend or repeal such resolution.

Section 12 - Bonds . The Company shall procure and maintain in force surety bonds on employees, officers or positions in amounts, and in the manner and covering the perils provided in the Rules and Regulations of the Illinois Insurance Department.

ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 1 - Contracts . The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

Section 2 - Loans. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances.

Section 3 - Checks, Drafts, etc . All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the company shall be signed by such officer or officers, agent or agents of the company and in such manner as shall from time to time be determined by resolution of the board of directors, pursuant to Rules and Regulations of the Illinois Insurance Department.

Section 4 - Deposits . All funds of the company shall be deposited from time to time to the credit of the company in such banks, trust companies or other depositaries as the board of directors may select pursuant to the requirements of the Illinois Insurance Code.

ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER

Section 1 - Certificates for Shares . Certificates representing shares of the company shall be in such form as may be determined by the board of directors. Such certificates shall be signed by the president or a vice-president and by the secretary or an assistant secretary and shall be sealed with the seal of the corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the board of directors may prescribe.

Section 2 -Transfers of Shares . Transfers of shares of the company shall be made only on the books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly execute and filed with the secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation.

Section 3 - Lost, Stolen, Destroyed, or Mutilated Certificates . No certificate for shares of stock in the company shall be issued in place of any certificate alleged to have been lost, destroyed, or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the corporation, if the Board of Directors shall so require of a bond or indemnity in such amount (not exceeding twice the value of the shares represented by such certificate), upon such terms and secured by such surety as the Board of Directors may in its discretion require.

ARTICLE VII - FISCAL YEAR

The fiscal year of the corporation shall begin on the first day of January in each year and end on the last day of December in each year.

ARTICLE VIII - DIVIDENDS

The board of directors may from time to time, declare, and the company may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by the Illinois Insurance Code and its Articles of Incorporation.

ARTICLE IX - SEAL

The board of directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the company and the words, "Corporate Seal, Illinois."

ARTICLE X - WAIVER OF NOTICE

Whenever any notice whatever is required to be given under the provisions of these by-laws or under the provisions of the articles of incorporation or under the provisions of the Illinois Insurance Code, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE XI - AMENDMENTS

A. These by-laws may be altered, amended or repealed and new by-laws may be adopted at any meeting of

the board of directors of the company by a majority vote of the directors present at the meeting and thereafter submitted to the Department of Insurance for approval and filing.

B. Amendments to the Articles of Incorporation after the Certificate of Authority has been issued to the Company shall be by resolution of the Board of Directors setting forth the proposed amendment and directing that the proposed amendment be submitted to a vote of shareholders at either an annual or a special meeting.

C. Written or printed notice setting forth the proposed amendment or a summary of the changes to be effected thereb y and stating the time and place of the meeting at which the same will be considered shall be mailed, postage prepaid and properly addressed, to each shareholder at least ten (10) days before the time fixed for such meeting. A written waiver of notice signed by the shareholders whether before or after the date of the meeting mentioned therein, shall be deemed equivalent notice.

D. At such meeting a vote of the shareholders shall be taken on the proposed amendment The proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares.

E. Amendments to the Articles of Incorporation prior to the issuance of a Certificate of Authority to the Company shall be made by the submission of the proposed amendment by the incorporators to the vote of the subscribers in the same manner as provided above. The proposed amendment in such case shall be adopted by the written consent of all the incorporators.

ARTICLE XlI - POLICIES OF INSURANCE

Section 1 : The form, term and conditions of all policies or contracts of insurance issued by the Company shall be determined by the President with the advice and approval of the Board of Directors and the form or forms so determined shall be employed by the Company.

Section 2. No condition or provision of any insurance policy of the Company shall be waived DT altered, except by endorsement attached thereto, signed by the President, a Vice-President, Secretary or other duly authorized officer representative of the Company, acting under written authority not shall notice to or knowledge of any person be held to effect a waiver of or change in any provision of such policy.

ARTICLE XIII - INTERESTED DIRECTORS AND OFFICERS

Section 1 : No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation; partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or a committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if:

(a) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors even though the disinterested directors be less than a quorum; or

(b) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or

(c) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the shareholders, Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction.

ARTICLE XIV - INDEMNIFICATION OF DIRECTORS AND OFFICERS

(a) The corporation shall indemnify each director and each officer who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation

as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of th e corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his c onduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contenders or its equivalent, shall not, of itself create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding had reasonable cause to believe that his conduct was unlawful.

(b) The corporation shall indemnify each director and each officer who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by o r in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such director or officer shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite that adjudication of liability but in view of all the circumstances of the case, such director or officer is fairly and reasonably entitled 10 indemnity for such expenses which such court shall deem proper.

(c) The corporation shall indemnify each director and each officer or employee who is held to be a fiduciary under any employee pension, profit sharing or welfare plan or trust of the corporation or any of its di visions and who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was such a fiduciary and was serving as such at the request of the corporation, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding for any breach of any of the responsibilities. obligations or duties imposed upon fiduciaries by the Employee Retirement Income Security Act of 1974 and any amendments thereto, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of such plan or trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction; or upon a plea of nolo contenders or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of such plan or trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The provisions of all the following paragraphs of this Article relating to directors, officers, employees or agents shall apply also to directors, officers or employees held to be fiduciaries under this paragraph (c), specifically including the power of the corporation (under paragraph (g)) to purchase and maintain insurance on behalf of such fiduciaries.

(d) To the extent that a person who is or was a director, officer, employee or agent of the corporation, or of any other corporation, partnership, joint venture, trust or other enterprise with which he is or was serving in such capacity at the request of the corporation, has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b) of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.

(e) Any indemnification under paragraphs (a) and (b) of this Article (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) and (b). Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable but a quorum of disinterested directors so directs; by independent legal counsel in a written opinion, or (3) by the shareholders.

(f) The indemnification provided by this Article shall not be deemed exclusive of any other rights to which a director or officer seeking indemnification may be entitled under any statute, provision in the corporation's articles of incorporation, by-law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer and shall, inure to the benefit of the heirs, executors and administrators of such a person.

(g) The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee Of agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his Status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article.

(h) For purposes of this Article, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers; and employees or agents, so that any person who is or was a director, officer, employee of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

(i) The invalidity or unenforceability of any provision in this Article shall not affect the validity or enforceability of the remaining provisions of this Article.

ARTICLE XV - COMPLIANCE WITH RULES AND REGULATIONS

All acts of the Officers and Directors of the Company shall be done in accordance with Rule 904 of the Rules and Regulations of the Department of Insurance of the State of Illinois. These Amended By-Laws have been approved and presented for filing to the State of Illinois Department of Insurance

CERTIFICATE

The undersigned, being the duly elected Secretary of American Country Insurance Company, and Illinois domiciled property and casualty company, hereby certifies that the attached is a true and complete copy of the Amended By-Laws of American Country Insurance Company in effect as of the date hereof.

Executed in Chicago, Illinois, this 22 day of August 2005

AMERICAN COUNTRY INSURANCE COMPANY

BY: /s/ Ronald Jay Gold

Ronald Jay Gold

Secretary

Exhibit 4.1c

FOURTH AMENDED AND RESTATED BYLAWS OF AMERICAN SERVICE INSURANCE COMPANY, INC.

ARTICLE I OFFICES

The principal office of the Company shall be located in the County of Cook, State of Illinois.

ARTICLE II SHAREHOLDERS

SECTION 1. ANNUAL MEETINGS.

The Annual Meeting of the shareholders shall be held either within or without the State of Illinois at a place and time to be determined by the Directors. An annual meeting shall be convened within 18 months of the previous meeting. In the event that such annual meeting is omitted by oversight or otherwise on the date hereinabove provided, the Directors shall cause a meeting in lieu thereof to be held as soon thereafter as may be convenient, and any business transacted or elections held at such meeting shall be valid as if transacted or held at the annual meeting.

SECTION 2 SPECIAL MEETINGS.

Special meetings of the shareholders may be called by the Chairman of the Board, Chief Executive Officer, Chief Operating Officer, President, by the Board of Directors, or by the holders of not less than one-fifth of all the outstanding shares of the company.

SECTION 3. PLACE OF MEETING.

The Board of Directors may designate any place, within the State of Illinois, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors.

SECTION 4. NOTICE OF MEETINGS.

Written or printed notice stating the place, day and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than forty days before the date of the meeting to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the records of the corporation, with postage thereon prepaid.

SECTION 5. MEETING OF ALL SHAREHOLDERS.

If all of the shareholders shall meet at any time and place, either within or without the State of Illinois, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any corporate action may be taken.

SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.

For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for a stated period, but not to exceed, in any case, forty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days, or in the case of a merger or consolidation, at least twenty days, immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than forty days and, for a meeting of shareholders, not less than ten days, or in the case of a merger or consolidation not less than twenty days, immediately preceding such meeting. If the stock transfer books are not closed and no record date is fixed for the determination or shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors

declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders.

SECTION 7. VOTING LISTS.

The officer or agent having charge of the transfer books for shares of the company shall make, at least ten days before each meeting of shareholder, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting, shall be kept on file at the registered office of the company and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share ledger or transfer book or a duplicate thereof kept in this State, shall be prima facie evidence as to who are the shareholders entitled to examine such list or share ledger or transfer book or to vote at any meeting of shareholders.

SECTION 8 QUORUM.

A majority of the outstanding shares of the company, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders; provided, that if less than a majority of the outstanding shares are represented at said meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Illinois Insurance Code, the articles of incorporation or these By-Laws.

SECTION 9. PROXIES.

At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the company before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy.

SECTION 10. VOTING OF SHARES.

Each Shareholder may vote at any meeting of the Shareholders either in person or by proxy filed with the Secretary at or before such meeting. Each Shareholder shall be entitled to one vote for each share of stock outstanding in his name on the records of the Company, thirty days preceding the election, exclusive of the day of such election. All questions, unless otherwise provided by law, shall be decided by a majority of the votes thus cast.

SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS.

Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the By-Laws of such corporation, may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine.

A. Shares standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by his administrator, executor, court appointed guardian or conservator, either in person or by proxy without a transfer of such shares into the name of such administrator, executor, court appointed guardian or conservator. Shares standing in the name of a trustee may be voted by him either in person or by proxy.

D. Shares of its own stock belonging to this company shall not be voted, directly or indirectly, at any meeting

and shall not be counted in determining the total number of outstanding shares at any given time, but shares of its own stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares at any given time.

SECTION 12. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the actions so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.

SECTION 13. VOTING BY BALLOT. Voting on any question or in any election may be viva voce unless the presiding officer shall order or any shareholder shall demand that voting be by ballot.

ARTICLE III DIRECTORS

SECTION 1. GENERAL POWERS.

The business and affairs of the company shall be managed by its Board of Directors.

A. After the date of incorporation and until the first meeting of shareholders, the incorporators shall have the powers and perform the duties ordinarily possessed and exercised by the Board of Directors.

C. At the first meeting of the Board of Directors after the annual meeting of members the Board shall elect its Chairman, a President, one or more Vice-Presidents, a Treasurer and one or more Secretaries. The Board of Directors at any time may appoint a General Manager and such other officers and Committees as it may deem advisable, and determine the powers and duties of such officers and employees. Officers and members of the committee of the Board shall serve at the pleasure of the Board, except that with respect to officers of the Company the Board shall be empowered to enter into any contract with any such officer with respect to the term or condition of services as the Board may authorize. One person may hold two or more of such offices except that the offices of Chairman of the Board, Chief Executive Officer or President and Secretary shall not be held by the same person.

D. The Chairman of the Board shall be the principal presiding officer, presiding at all meetings of the Board of Directors, and shall conduct and supervise the Board of Directors' meetings.

SECTION 2. DUTIES.

(a) The business of the Company shall be managed and controlled by a Board of Directors consisting of between five (5) and ten (10) natural persons who shall be chosen annually by the Shareholders, and three (3) of whom shall be residents and citizens of the State of Illinois. This number may be increased or decreased from time to time by amendment to the By-Laws, but in no event shall be less than three (3) nor more than twenty-one (21).

(b) Not less than one-third of the Directors shall be persons who are not officers or employees of the Company or of any entity controlling, controlled by, or under common control with the Company and who are not beneficial owners of a controlling interest in the voting stock of the Company or any such entity. At least one such person shall be included in any quorum for the transaction of business at any meeting of the Board of Directors or any committee thereof. This sub-section (b) shall not apply if (i) any entity controlling the Company, whether directly or through an intermediate subsidiary, has a Board of Directors composed in accordance with this provision, (ii) the ultimate controlling party of the Company is a corporation whose equity securities or equivalent instruments are listed on the New York Stock Exchange, or (iii) it is otherwise not required under the Illinois Insurance Code.

SECTION 3. REGULAR MEETINGS.

A regular meeting of the Board of Directors shall be held without other notice than this By-Law, immediately

after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Illinois, for the holding of additional regular meetings without other notice than such resolution.

SECTION 4. SPECIAL MEETINGS.

Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, Chief Executive Officer, Chief Operating Officer, President or any two Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Illinois, as the place for holding any special meeting of the Board of Directors called by them.

SECTION 5. NOTICE.

Notice of any special meeting shall be given at least 5 days previous thereto by written notice delivered personally or mailed to each Director at his business address, or by telegram. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice shall be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any Director may waive notice of any meeting. The attendance of a Director at any meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver or notice of such meeting.

SECTION 6. QUORUM.

A majority of the number of Directors fixed by these By-Laws shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided, that if less than a majority of such number of Directors are present may adjourn the meeting form time to time without further notice.

SECTION 7. MANNER OF ACTING.

The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

SECTION 8. VACANCIES.

Any vacancy occurring in the Board of Directors and any Directorship to be filed by reason of an increase in the number of Directors, may be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose.

SECTION 9. INFORMAL ACTION BY DIRECTORS.

Unless specifically prohibited by the articles of incorporation or ByLaws, any action required to be taken at a meeting of the Board of Directors, or the executive committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all the Directors entitled to vote with respect to the subject matter thereof, or by all the members of such committee, as the case may be. Any such consent signed by all the Directors or all the members of the executive committee shall have the same effect as a unanimous vote, and may be stated as such in any document filed with the Department of Insurance.

SECTION 10. TELEPHONE MEETINGS.

The Board of Directors or any committee of the Board of Directors may participate in and act at any meeting of the Board of Directors or committee thereof through the use of a conference telephone or other communication equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating.

SECTION 11. COMPENSATION.

The Board of Directors, by the affirmative vote of a majority of Directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all Directors for services to the Company as Directors, officers or otherwise. By resolution of the Board of Directors the Directors may be paid their expenses, if any, of attendance at each meeting of the Board.

SECTION 12. PRESUMPTION OF ASSENT.

A Director of the company who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.

SECTION 13. COMMITTEES.

The Board of Directors shall have the authority to form committees for the furtherance of its work and regulatory compliance. It shall have the power to appoint by resolution of a majority of the whole Board of Directors, standing committees consisting of three (3) or more members: an Audit Committee, Investment Committee and a Reinsurance Committee who shall have and exercise during the interim between the meeting of the Board of Directors all of the authority of the Board of Directors in the management of the Company, except such authority denied any such committee by the Articles of Incorporation, any statute or any ByLaw.

SECTION 14. RESIGNATION AND REMOVAL OF DIRECTORS.

A Director may resign at any time upon written notice to the Board of Directors. A Director may be removed with or without cause, by a majority of shareholders if the notice of the meeting names the Director or Directors to be removed at said meeting.

ARTICLE IV OFFICERS

SECTION 1. NUMBER.

The officers of the corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents (the number thereof to be determined by the Board of Directors), a Treasurer, and a Secretary, and such Assistant Treasurers, Assistant Secretaries or other officers as may be elected or appointed by the Board of Directors.

SECTION 2. ELECTION AND TERM OF OFFICE.

The officers of the corporation shall be elected by the Board of Directors and shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Vacancies may be filled or new offices filled at any meeting of the Board of Directors.

SECTION 3. REMOVAL.

Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interest of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

SECTION 4. VACANCIES.

A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term.

SECTION 5. CHAIRMAN OF THE BOARD.

The Chairman of the Board shall, when present, preside at all meetings of the shareholders and the Board of Directors. Subject to the direction and control of the Board of Directors, he/she shall generally oversee the business and affairs of the Corporation. He/she shall concurrently with the President, see that the resolutions and directive of the Board of Directors are carried into effect except in those instances in which that responsibility is specifically assigned to some other person by the Board of Directors; and, in general, he/she shall perform all duties incident to the office of Chairman of the Board and such other duties as may be prescribed by the Board of Directors from time to time.

SECTION 6. CHIEF EXECUTIVE OFFICER.

The Chief Executive Officer shall be the principal executive officer of the corporation. Subject to the direction and control of the Board of Directors, he/she shall generally oversee and provide supervision over all business and affairs of the Corporation, including, but not limited to, the general oversight of the operations of the Corporation and the functioning of all other officers, agents and employees of the Corporation. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation or a different mode of execution is expressly prescribed by the Board of Directors or these By-Laws, the Chief Executive Officer may execute, on behalf of and in the name of the corporation certificates for its shares, and any contracts, deeds, mortgages, bonds, or other instruments which the Board of Directors has authorized to be executed, and may accomplish such execution either under or without the seal of the corporation and either individually or with the Secretary, any Assistant Secretary, or any other officer thereunto authorized by the Board of Directors, according to the requirements of the form of the instrument. The Chief Executive Officer may vote all securities which the corporation is entitled to vote except to the extent such authority shall be vested in a different officer or agent of the corporation by the Board of Directors. He/she shall concurrently with the President, see that the resolutions and directive of the Board of Directors are carried into effect except in those instances in which that responsibility is specifically assigned to some other person by the Board of Directors; and, in general, he/she shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time.

SECTION 7. PRESIDENT.

The President shall be the principal operating officer of the Corporation. Subject to the direction and control of the Board of Directors and the Chief Executive Officer, he/she shall have general charge and direction of the day to day business of the corporation. He/she shall from time to time, as requested, report his/her actions to the Chief Executive Officer and shall keep the Chief Executive Officer and the Board of Directors fully informed as to all matters in his/her charge. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation or a different mode of execution is expressly prescribed by the Board of Directors or these ByLaws, the President may execute, on behalf of and in the name of the corporation certificates for its shares, and any contracts, deeds, mortgages, bonds, or other instruments which the Board of Directors has authorized to be executed, and may accomplish such execution either under or without the seal of the corporation and either individually or with the Secretary, any Assistant Secretary, or any other officer thereunto authorized by the Board of Directors, according to the requirements of the form of the instrument. He/she shall, concurrently with the Chief Executive Officer see that the resolutions and directives of the Board of Directors are carried into effect except in those instances in which that responsibility is assigned to some other person by the Board of Directors; and, in general, he/she shall discharge all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. In the absence of the Chairman of the Board, the President shall, when present, preside at all meetings of the shareholders and the Board of Directors.

SECTION 8. THE VICE PRESIDENT.

In the absence of the Chairman, or the President or in the event of his inability or refusal to act, the Vice President, (or in the event there be more than one Vice President, the Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform duties ofthe President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him by the Chairman of the Board, Chief Executive Officer, the President or by the Board of Directors.

SECTION 9. THE TREASURER.

If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. He shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Article V of these ByLaws; (b) in general perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Chairman of the Board, Chief Executive Officer, President or by the Board of Directors.

SECTION 10. THE SECRETARY. The Secretary shall: (a) keep the minutes of the shareholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these ByLaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the company under its seal is duly authorized in accordance with the provisions of these ByLaws; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the Chief Executive Officer, the President, or a Vice President, certificates for shares of the corporation, the issue of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; (g) in general perform all duties as from time to time may be assigned to him by the Chairman of the Board, Chief Executive Officer, President or by the Board of Directors.

SECTION 11. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries as thereunto authorized by the Board of Directors may sign with the Chief Executive Officer, President or a Vice President certificates for shares of the corporation, the issue of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers and Assistant Secretaries, in general, shall perform such duties as shall be assigned to them by the Treasurer or the Secretary, respectively, or by the Chief Executive Officer, President or the Board of Directors.

SECTION 12. SALARIES. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the corporation.

ARTICLE V CONTRACTS, LOANS, CHECKS AND DEPOSITS

SECTION 1. CONTRACTS.

The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

SECTION 2. LOANS.

No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances.

SECTION 3. CHECKS, DRAFTS, ETC.

All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the company, shall be signed by such officer or officers, agent or agents of the company and in such manner as shall from time to time be determined by resolution of the Board of Directors.

SECTION 4. DEPOSITS.

All funds of the company shall be deposited from time to time to the credit of the company in such banks,

trust companies or other depositaries as the Board of Directors may select.

ARTICLE VI CERTIFICATES FOR SHARES AND THEIR TRANSFER

SECTION 1. CERTIFICATES FOR SHARES.

Certificates representing shares of the company shall be in such form as may be determined by the Board of Directors. Such certificates shall be signed by the Chief Executive Officer, the President or a Vice President and by the Secretary or an Assistant Secretary and shall e sealed with the seal of the corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issue until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the Board of Directors may prescribe.

SECTION 2. TRANSFERS OF SHARES.

Transfers of shares of the company shall be made only on the books of the corporation by the holder of record thereof or by his legal representative who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly execute and filed with the Secretary of the corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall e deemed the owner thereof for all purposes as regards the corporation.

SECTION 3. LOST, STOLEN, DESTROYED, OR MUTILATED CERTIFICATES.

No certificate for shares of stock in the company shall be issued in place of any certificate alleged to have been lost, destroyed, or stolen, except on production of such evidence of such loss, destruction or theft and on deli very to the corporation, if the Board of Directors shall so require, of a bond or indemnity in such amount (not exceeding twice the value of the shares represented by such certificate), upon such terms and secured by such surety as the Board of Directors may in its discretion require.

ARTICLE VII FISCAL YEAR

The fiscal year of the corporation shall begin on the first day of January in each year and end on the last day of December in each year.

ARTICLE VIII DIVIDENDS

The Board of Directors may from time to time, declare, and the company may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by the Illinois Insurance Code.

ARTICLE IX SEAL

The Board of Directors shall provide a corporate seal which shall be in form of a circle and shall have inscribed thereon the name of the company and the words, "Corporate Seal, Illinois."

ARTICLE X WAIVER OF NOTICE

Whenever any notice whatever is required to be given under the provisions of these Bylaws or under the provisions of the articles of incorporation or under the provisions of the Illinois Insurance Code, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE XI AMENDMENTS

A. These ByLaws may be altered, amended or repealed and new ByLaws may be adopted at any meeting of the Board of Directors of the company by a majority vote of the Directors present at the meeting and thereafter submitted to the Department of Insurance for approval and filing.

C. Written or printed notice setting forth the proposed amendment or a summary of the changes to be effected thereby and stating the time and place of the meeting at which the same will be considered, shall be mailed, postage prepaid and properly addressed to each shareholder at least ten (10) days before the time fixed for such meeting. A written waiver of notice signed by the shareholders, whether before or after the date of the meeting mentioned therein, shall be deemed equivalent notice.

D. At such meeting a vote of the shareholders shall e taken on the proposed amendment. The proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares.

E. Amendments to the Articles of Incorporation prior to the issuance of a Certificate of Authority to the Company, shall be made by the submission of the proposed amendment by the incorporators to the vote of the subscribers in the same manner as provided above. The proposed amendment in such case shall be adopted by the written consent of all the incorporators.

ARTICLE XII POLICIES

SECTION 1. The form, term and conditions of all policies or contracts of insurance issued by the Company shall be determined by the President with the advice and approval of the Board of Directors and the form or forms so determined shall be employed by the Company.

SECTION 2. No condition or provisions of any insurance policy of the Company shall be waived or altered, except by endorsement attached thereto, signed by the Chief Executive Officer, the President, a Vice President, Secretary or other duly authorized officer representative of the Company, acting under written authority nor shall notice to or knowledge of any person be held to effect a waiver of or change in any provision of such policy.

ARTICLE XIII INDEMNIFICATION OF OFFICERS AND DIRECTORS

Each Director and officer of the Company shall be indemnified by the Company against all costs and expenses actually and necessarily incurred by him in connection with the defense of any action, suit or proceeding in which he is made a party by reason of his being or having been a Director of officer at the time of incurring such cost or expense. Such indemnification shall be made pursuant to the terms of a separate agreement by and between the Company, its officers and Directors which conforms to applicable statutes.

ARTICLE XIV COMPLIANCE WITH RULES AND REGULATIONS

All acts of the Officers and Directors of the Company shall be done in accordance with applicable statutes and regulations and the Rules and Regulations of the Department of Insurance of the State of Illinois.

CERTIFICATE OF CORPORATE SECRETARY

I, Mary Ann Callaghan, Secretary of American Service Insurance Company, Inc., an Illinois corporation, do hereby certify that the attached is a true, correct and complete copy of the Fourth Amended and Restated Bylaws of American Service Insurance Company, Inc., adopted by unanimous consent of the Board of Directors on October 20, 2005, and that the same is in full force and effect and has not been rescinded, cancelled or amended.

IN WITNESS THEREOF, I have hereunto subscribed my name this 20th day of October, 2005

/s/ Mary Ann Callaghan

Mary Ann Callaghan, Secretary

EXHIBIT 4.1D

BY-LAWS OF

AMERICAN INSURANCE ACQUISITION INC.

ARTICLE I OFFICES

Section 1.1 REGISTERED OFFICE AND AGENT. The registered office of the Corporation shall be at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, in the County of New Castle, in the State of Delaware. The Corporation Trust Company is the registered agent of the Corporation.

Section 1.2 OTHER OFFICES. The Corporation may also have offices at such other place or places both within and without the State of Delaware as the Board of Directors may from time to time determine.

ARTICLE II MEETINGS OF STOCKHOLDERS

Section 2.1 PLACE OF MEETINGS. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2.2 ANNUAL MEETINGS. The Annual Meeting of the stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote a Board of Directors and transact such other business as may properly be brought before the meeting. The first annual meeting shall be held on a date within thirteen (13) months after the organization of the Corporation, and each successive annual meeting shall be held on a date within thirteen (13) months after the date of the preceding annual meeting. Written notice of the Annual Meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (1 0) nor more than sixty (60) days before the date of the meeting.

Section 2.3 SPECIAL MEETINGS. Unless otherwise prescribed by law or by the Certificate of Incorporation, special meetings of the stockholders for any proper purpose or purposes may be called at any time by the Board of Directors, the Chairman of the Board, the President, or any Vice President, to be held on the date, at the time and place within or without the State

of Delaware as the Board of Directors, the Chairman of the Board, the President or Vice President, whichever has called the meeting, shall direct. A special meeting of the stockholders shall be called by the Chairman of the Board, the President, any Vice President or the Secretary whenever stockholders owning not less than 30% of the outstanding shares of Common Stock of the Corporation then issued and outstanding and entitled to vote on all of the matters to be submitted to stockholders of the Corporation at such special meeting shall make written application to the Chairman of the Board, the President, any Vice President or the Secretary. Any such written request shall state a proper purpose or purposes of the meeting and shall be delivered to the Chairman of the Board, the President, any Vice President or the Secretary.

Section 2.4. NOTICE OF MEETING. Notice, signed by the Chairman of the Board, the President, any Vice President, the Secretary or an Assistant Secretary, of every annual or special meeting of stockholders stating the purpose or purposes for which the meeting is called, and the date and time when, and the place where it is to be held, shall be prepared in writing and personally delivered or mailed, postage prepaid, to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the meeting, except as otherwise provided by statute. If mailed, such notice shall be directed to a stockholder at his address as it shall appear on the stock record book of the Corporation, unless the stockholder shall have filed with the Secretary a written request that notices intended for him or her be mailed to some other address, in which case it shall be mailed to the address designated in such request. Notice shall be deemed given when personally delivered or deposited to the United States mail, as the case may be; provided, however, that such notice may also be given by telegram, cablegram, or radiogram and in such case shall be deemed given when ordered or, if a delayed delivery is ordered, as of such delayed delivery time.

Section 2.5. LIST OF STOCKHOLDERS. A complete list of the stockholders entitled to vote at each meeting of stockholders, arranged in alphabetical order and showing the address of each such stockholder and the number of shares registered in the name of each such stockholder, shall be open to the examination of any stockholder, for any purpose germane to such meeting, during ordinary business hours, for a period of at least ten (1 0) days prior to the meeting, either at a place within the city where the meeting is to be held which place shall be specified in the notice of such meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting and during the whole time thereof, and may be inspected by any stockholder who is present.

Section 2.6 QUORUM. The presence at any meeting, in person or by proxy, of the holders of record of a majority of the shares then issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of business, except where otherwise provided by statute.

Section 2.7 ADJOURNMENTS. In the absence of a quorum, stockholders representing a majority of the shares then issued and outstanding and entitled to vote, present in person or

by proxy, or, if no stockholder entitled to vote is present in person or by proxy, any officer entitled to preside at or act as secretary of such meeting, may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 2.8. VOTING. Each share of stock shall entitle the holders thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by the provisions of the Certificate of Incorporation and these By-laws. In the election of directors, and for any other action, voting need not be by ballot.

Section 2.9. PROXIES. Any stockholder entitled to vote may vote by proxy, provided that the instrument authorizing such proxy to act shall have been executed in writing (which shall include telegraphing, cabling, or other means of electronically transmitted written copy) by the stockholder himself or herself or by his or her duly authorized attorney-in-fact. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.

Section 2.10. JUDGES OF ELECTION. The Board of Directors may appoint judges of election to serve at any election of directors and at balloting on any other matter that may properly come before a meeting of stockholders. If no such appointment shall be made, or if any of the judges so appointed shall fail to attend, or refuse or be unable to serve, then such appointment may be made by the presiding officer of the meeting at the meeting.

Section 2.11. WRITTEN CONSENT. Any action which may be taken at any annual or special meeting of stockholders may be taken without a meeting and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Whenever any such action is taken without a meeting by less than unanimous consent, all stockholders who have not consented in writing must be promptly informed in writing of such action.

Section 2.12. STOCK LEDGER. Except as otherwise provided by law, the stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.5 of this Article II or the books of the Corporation, or to vote in person or by proxy at the meeting of stockholders.

Section 2.13. CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the Corporation, or in his or her absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the chairman of the meeting shall appoint a secretary of the meeting.

Section 2.14 PRESENCE AT MEETINGS BY MEANS OF COMMUNICATIONS EQUIPMENT. Subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communications: (a) participate in a meeting of stockholders; and (b) be deemed present in person and vote at a meeting of stockholders, provided that: (1) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder; (2) the corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (3) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.

ARTICLE III BOARD OF DIRECTORS

Section 3 .1. NUMBER. The Board of Directors shall consist of not less than one (1) nor more than ten (10) directors. The number of directors which shall constitute the whole Board of Directors shall be fixed from time to time by action of the Board of Directors or stockholders at the annual meeting or any special meeting called for that purpose. The Board of Directors shall consist initially of three (3) directors.

Section 3.2. NOMINATION, ELECTION AND TERM OF OFFICE. Directors shall be nominated each year by the then existing Board of Directors and shall be elected by a plurality of the shares of Common Stock voting at the annual meeting of the stockholders, except as provided in Section 3.3 of this Article. Each Director (whether elected at an annual meeting or to fill a vacancy or otherwise) shall continue in office for a term of one year until the next annual meeting or until his or her death, resignation or removal in the manner hereinafter provided, whichever shall first occur.

Section 3.3 VACANCIES AND ADDITIONAL DIRECTORSHIPS. If any vacancy shall occur among the directors by reason of death, resignation, or removal, or as the result of an increase in the number of directorships, the directors then in office shall continue to act and may fill any such vacancy by a vote of the majority of directors then in office, though less

than a quorum, and each director so chosen shall hold office until the next annual election of directors and until his or her successor shall be duly elected and shall qualify, or until his or her earlier death, resignation or removal.

Section 3.4. POWERS. The business of the Corporation shall be managed by its Board of

Directors, which may exercise all powers of the Corporation and do all lawful acts and things as are not by law or by the Certificate of Incorporation or these By-Laws reserved to the stockholders.

Section 3.5. RESIGNATION OF DIRECTORS. Any director may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President, any Vice President or the Secretary. Any such resignation shall take effect at the time specified therein or, if no time be specified, upon receipt thereof by the Board of Directors or one of the above named officers; and, unless specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 3.6. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General Corporation Law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.

Section 3.7. COMPENSATION OF DIRECTORS. Directors shall receive such reasonable compensation for their services, whether in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefore.

SECTION IV

MEETINGS OF THE BOARD OF DIRECTORS

Section 4.1. PLACE. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 4.2. REGULAR MEETINGS. The Board of Directors by resolution may provide for the holding of regular meetings and may fix the times and places at which such meetings shall be held. Notice of regular meetings shall not be required to be given, provide that whenever the time or place of regular meetings shall be fixed or changed, notice of such action shall be mailed promptly to each Director who shall not have been present at the meeting at which such action was taken, addressed to him or her at his or her residence or usual place of business, unless he or she shall have filed with the Secretary a written request that notices intended for him or her be mailed to some other address, in which case it shall be mailed to the address designated in such request.

Section 4.3. SPECIAL MEETINGS. Special meetings of the Board of Directors may be

called by the Chairman of the Board or the President, and shall be called by the President or Secretary at the written request of any two directors. Except as otherwise required by statute, notice of each special meeting shall be given to each director, if by mail, when addressed to him or her at his or her residence or usual place of business, unless he or she shall have filed with the Secretary a written request that notices intended for him or her be mailed to some other address, in which case it shall be mailed to the address designated in such request, on ten (10) days' notice, or shall be sent to him or her at such place by telegram, radiogram or cablegram, or telephone or other electronic means, or delivered to him or her personally, not later than three (3) days before the day on which the meeting is to be held. Such notice shall state the time and place of such meeting, but need not state the purposes thereof, unless otherwise required by law, the Certificate of Incorporation of the Corporation or these By Laws.

Section 4.4 QUORUM. At any meeting of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business, and the act of the majority of those present at any meeting at which a quorum is present shall be sufficient for the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation.

Section 4.5. ADJOURNED MEETINGS. If a quorum shall not be present at a meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, until a quorum shall be present. Three (3) days' notice of any such adjournment shall be given personally to each director who was not present at the meeting at which such adjournment was taken and, unless announced at the meeting, to the other directors; provided, that ten (10) days' notice shall be given if notice is given by mail.

Section 4.6. WRITTEN CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all of the members of the Board consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board of Directors.

Section 4.7. COMMUNICATIONS EQUIPMENT. Any one or more members of the Board of Directors may participate in any meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall be deemed to constitute presence in person at such meeting.

Section 4.8. WAIVER OF NOTICE. Notice of any meeting need not be given to any director who shall attend such meeting in person or shall waive notice thereof, before or after such meeting, in writing or by telegram, radiogram or cablegram or other means of electronically transmitted written copy.

Section 4.9. CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the Vice Chairman of the Board, if any and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside.

ARTICLE V COMMITTEES OF THE BOARD

Section 5.1. DESIGNATION, POWER, ALTERNATE MEMBERS AND TERM OF OFFICE. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one (1) or more committees. Each such committee shall consist of one (1) or more of the directors of the Corporation. Any such committee, to the extent provided in such resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. The Board of Directors may designate one (1) or more directors as alternate members of any committee who, in the order specified by the Board of Directors, may replace any absent or disqualified member at any meeting of the committee. If at a meeting of any committee one (1) or more of the members thereof should be absent or disqualified, and if either the Board of Directors has not so designated any alternate member or members, or the number of absent or disqualified members exceeds the number of alternate members who are present at such meeting, then the member or members of such committee (including alternates) present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another Director to act at the meeting in the place of any such absent or disqualified member. The term of office of the members of each committee shall be as fixed from time to time by the Board, subject to the term of office of the directors and these By Laws; provided , however, that any committee member who ceases to be a member of the Board of Directors shall ipso facto cease to be a committee member. Each committee shall appoint a secretary, who may be the Secretary or an Assistant Secretary of the Corporation.

Section 5.2. MEETINGS, NOTICES AND RECORDS. Each committee may provide for the holding of regular meetings, with or without notice, and a majority of the members of any such committee may fix the time, place and procedure for any such meeting. Special meetings of each committee shall be held upon call by or at the direction of its chairman, or, if there be no chairman, by or at the direction of any two (2) of its members, at the time and place specified in the respective notices or waivers of notice thereof.

Section 5.3. QUORUM AND MANNER OF ACTING. At each meeting of any committee the presence of a majority of its members then in office shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which a quorum is present shall be the act of such committee; in the absence of a quorum, a majority of the members present at the time and place of any meeting may adjourn the meeting from time to time until a quorum shall be present. Subject to the foregoing and other provisions of these By-Laws and except as otherwise determined by the Board of Directors, each committee may make rules for the conduct of its business.

Section 5.4. RESIGNATIONS. Any member of a committee may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President, any Vice President or the Secretary of the Corporation. Unless

otherwise specified in such notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer.

Section 5.5. REMOVAL. Any member of any committee may be removed at any time by the affirmative vote of a majority of the whole Board of Directors with or without cause.

Section 5.6. VACANCIES. If any vacancy shall occur in any committee by reason of death, resignation, disqualification, removal or otherwise, the remaining members of such committee, though less than a quorum, shall continue to act until such vacancy is filled by the Board of Directors.

Section 5.7. COMPENSATION. Committee members shall receive such reasonable compensation for their services, whether in the form of salary or a fixed fee for attendance at meetings, with reasonable expenses, if any, as the Board of Directors may from time to time determine. Nothing herein contained shall be construed to preclude any committee member from serving the Corporation in any other capacity and receiving compensation therefore.

ARTICLE VI OFFICERS

Section 6.1. OFFICERS. The Corporation shall have such officers as the Board of Directors shall determine from time to time, but in any event will have a President and Chief Executive Officer, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also choose a Chairman of the Board of Directors (the "Chairman") (who must be a director), Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. If there be a President, he or she shall have the duties described in Section 6.7 below or, to the extent not so provided, as provided by resolution of the Board of Directors. In the absence of a President, one or more Vice Presidents shall have such duties. The officers chosen by the Board of Directors shall hold office until his or her successor is duly chosen and qualified or until his or her resignation or removal. Any number of offices may be held by the same person; provided, that a Chairman, President, or Vice President may not hold the additional office of Secretary, Assistant Secretary, Treasurer or Assistant Treasurer unless another person holds such an office, with such title and duties, as may be necessary to enable the Corporation to sign instruments and stock certificates which comply with Sections

103(a)(2) and 158, respectively, of the General Corporation law of the State of Delaware.

Section 6.2. DUTIES. All officers, as between themselves and the Corporation, shall have such authority and perform such duties in the management of the Corporation as may be provided in these By-Laws, or, to the extent not so provided, as may be provided by resolution of the Board of Directors or, as to all other officers except the Chairman, by the President.

Section 6.3. RESIGNATIONS. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman, the President, a Vice President or the Secretary. Unless otherwise specified in such written notice, such resignation shall

take effect upon receipt thereof by the Board of Directors or any such officer.

Section 6.4. REMOVAL. Any officer may be removed at any time, either with or without cause, by the vote of a majority of all the directors then in office. Such power of removal from office shall not be abridged by any employment contract or other agreement.

Section 6.5. VACANCIES. A vacancy in any office by reason of death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed by these By-Laws for regular election or appointment to such office.

Section 6.6. CHAIRMAN. The Chairman, if there be one, shall perform such duties as from time to time may be assigned to him by the Board of Directors.

Section 6.7. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President shall be the chief executive officer of the Corporation. Subject to the direction of the Board of Directors, he or she shall supervise and direct the daily management of the business, affairs and property of the Corporation. In the absence or disability of the Chairman of the Board, or if there be none, the President shall preside at all meetings of the stockholders. The Chairman of the Board, if any, and the President shall each be charged with overseeing that all orders and resolutions of the Board of Directors are carried into effect. The President may sign, with any other officer thereunto duly authorized, certificates of stock of the Corporation the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature), and may sign and execute in the name of the Corporation, deeds, mortgages, bonds, contracts, agreements, and other instruments duly authorized by the Board of Directors. From time to time, the President shall report to the Board of Directors all matters within his or her knowledge which the interests of the Corporation may require to be brought to its attention. The President shall also perform such other duties as are assigned by these By-Laws or as from time to time may be assigned to him or her by the Board of Directors.

Section 6.8. VICE PRESIDENT. In the absence or disability of the President, the Vice President, or if there be more than one, the Vice Presidents in the order or priority determined by the Board of Directors, shall perform all duties of the President and, when so acting, shall have all the powers of and be subject to all restrictions upon the President. Any Vice President may also sign, with any other officer thereunto duly authorized, certificates of stock of the Corporation the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature), and may sign and execute in the name of the Corporation deeds, mortgages, bonds and other instruments duly authorized by the Board of Directors, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent. Each Vice President shall perform such other duties as are assigned by these By-Laws or as from time to time may be assigned by the Board of Directors, the Chairman of the Board or the President.

Section 6.9. SECRETARY. The Secretary shall: (i) record all the proceedings of the

meetings of the stockholders, the Board of Directors, and all committees of the Board of Directors in a book or books to be kept for that purpose; (ii) cause all notices to be duly given in accordance with the provisions of these By-Laws or as required by law; (iii) whenever any committee shall be appointed in pursuance of a resolution of the Board of Directors, furnish the chairman of such committee with a copy of such resolution; (iv) be custodian of the records and of the seal of the Corporation, and cause such seal to be affixed to all certificates representing capital stock of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized; (v) see that the lists, books, reports, statements, certificates and other documents and records required by statute are properly kept and filed; (vi) have charge of the stock record and stock transfer books of the Corporation, and exhibit such books at all reasonable time to such persons as are entitled by law and by these By-Laws to have access thereto; (vii) sign (unless the Treasurer or an Assistant Secretary or an Assistant Treasurer shall sign) certificates representing capital stock of the Corporation the issuance of which shall have been duly authorized (the signature of which may be a facsimile signature); and (viii) in general, perform all duties incident to the office of Secretary and such other duties as are given to him or her by these By-Laws or as from time to time may be assigned to him or her by the Board of Directors, the Chairman of the Board or the President.

Section 6.10. ASSISTANT SECRETARIES. At the request of the Secretary or in his or her absence or disability, the Assistant Secretary designated by him or her (or in the absence of such designation, the Assistant Secretary designated by the Board of Directors or the President) shall perform all the duties of the Secretary, and, when so acting, shall have all the powers of and be subject to all restrictions upon the Secretary. The Assistant Secretary shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors, the Chairman of the Board, the President or the Secretary.

Section 6.11. TREASURER. The Treasurer shall: (i) have charge of and supervision over and be responsible for the funds, securities, receipts and disbursements of the Corporation; (ii) cause the monies and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected in accordance with Section 8.2 of these By-Laws or to be otherwise dealt with in such manner as the Board of Directors may direct; (iii) cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation, and cause to be taken and preserved proper vouchers for all monies disbursed; (iv) render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all of his or her transactions as Treasurer; (v) cause to be kept at the Corporation's principal office correct books of account of all its business and transactions, and such duplicate books of account, as he or she shall determine and upon application cause such books, or duplicates thereof, to be exhibited to any Director; (vi) be empowered to require from the officers or agents of the Corporation reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation; (vii) sign (unless the Secretary or an Assistant Secretary or Assistant Treasurer shall sign) certificates representing stock of the Corporation

the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature); and (viii) in general, perform all duties as are given to him or her by these By-Laws or as from time to time may be assigned to him or her by the Board of Directors, the Chairman of the Board or the President.

Section 6.12. ASSISTANT TREASURERS. At the request of the Treasurer or in his or her absence or disability, the Assistant Treasurer designated by him or her (or in the absence of such designation, the Assistant Treasurer designated by the Board of Directors or the President) shall perform all the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all restrictions upon the Treasurer. The Assistant Treasurer shall perform such other duties as from time to time may be assigned by the Board of Directors, the Chairman of the Board, the President or the Treasurer.

Section 6.13. SALARIES. The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors. No officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the Corporation.

ARTICLE VII CERTIFICATES OF STOCK

Section 7.1. STOCK CERTIFICATES. Every holder of capital stock ofthe Corporation shall be entitled to have a certificate or certificates in such form as shall be approve by the Board of Directors, certifying the number of shares of capital stock of the Corporation owned by him or her. The certificates representing shares of capital stock shall be signed in the name of the Corporation by the Chairman of the Board or the President, and by the Secretary, as Assistant Secretary, the Treasurer or an Assistant Treasurer (which signatures may be facsimiles) and sealed with the seal of the Corporation (which seal may be a facsimile). In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer, transfer agent or registrar before such certificates are issued, they may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent, or registrar were still such at the date of their issue.

Section 7.2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. The books and records of the Corporation may be kept at such places, within or without the State of Delaware, as the Board of Directors may from time to time determine. The stock record books and the blank stock certificate books shall be kept by the Secretary or by any other officer or by the transfer agent or registrar, if any designated by the Board of Directors. There shall be entered on the stock books of the Corporation the number of each certificate issued, the number of shares represented thereby, the name of the person to whom such certificate was issued and the date of issuance thereof.

Section 7.3. TRANSFERS OF SHARES. Transfers of shares of capital stock of the Corporation shall be made on the stock records of the Corporation only upon authorization by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with the transfer agent, and on surrender of the

certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon, if any. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the record of stockholders as the owner of such share or shares for all purposes, including, without limitation, the rights to receive dividends or other distributions, and to vote as such owner, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person whether or not the Corporation shall have express or other notice thereof.

Section 7.4. REGULATIONS. The Board of Directors may make such additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation.

It may appoint, or authorize any officer or officers to appoint, one or more transfer agents or one or more registrars and may further provide that no stock certificate shall be valid until countersigned by one of such transfer agents and registered by one of such registrars. Nothing herein shall be construed to prohibit the Corporation from acting as its own transfer agent or registrar.

Section 7.5. LOST, STOLEN OR DESTROYED CERTIFICATES. The holder of any certificate or certificates representing any share or shares of the capital stock of the Corporation shall immediately notify the Corporation of any loss, theft, or destruction of such certificate or certificates. The Board of Directors may direct that a new certificate or certificates by issued in the place of any certificate or certificates theretofore issued by it which the owner thereof shall allege to have been lost, stolen or destroyed upon the furnishing to the Corporation of an affidavit to that effect by the person claiming that the certificate or certificates has been lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion, require such owner or his or her legal representatives to give to the Corporation and its transfer agent(s) and registrar(s) a bond in such sum, limited or unlimited, and in such form and with such surety or sureties as the Board of Directors in its absolute discretion shall determine, sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or certificates, or the issuance of a new certificate or certificates.

Section 7.6. STOCKHOLDER'S RIGHT OF INSPECTION. Any stockholder of record of the Corporation, in person or by attorney or other agent, shall upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation's stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right of inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its

principal place of business.

ARTICLE VIII

DEPOSIT OF CORPORATE FUNDS

Section 8.1. BORROWING. No loans or advances shall be obtained or contracted for, by or on behalf of the Corporation and no negotiable paper shall be issued in its name, unless and except as authorized by the Board of Directors. Such authorization may be general or confined to specific instances.

Section 8.2. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositaries as the Board of Directors may select, or as may be selected by any officer or officers or agent or agents authorized to do so by the Board of Directors.

Section 8.3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, and all negotiable and non-negotiable notes or other negotiable or non-negotiable evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers or agent or agents of the Corporation, and in such manner, as from time to time shall be determined by the Board of Directors.

ARTICLE IX INDEMNIFICATION

Section 9.1. INDEMNIFICATION. The personal liability of the directors and officers of the corporation is hereby eliminated to the fullest extent permitted by the General Corporation Law of the State of Delaware, as the same may be amended and supplemented.

The corporation shall, to the fullest extent permitted by the General Corporation law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify including those who were or are a party or are threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she or his or her testator or intestate is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation (or any such constituent or predecessor corporation) as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.

ARTICLE X RECORD DATES

Section 10.1. RECORD DATES. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any evident or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (1 0) days before the date of such meeting, nor more than sixty (60) days prior to any other action. Only those stockholders of record on the date so fixed shall be entitled to any of the foregoing rights, notwithstanding the transfer of any such stock on the books of the Corporation after any such record date fixed by the Board of Directors.

ARTICLE XI DIVIDENDS

Section 11.1 DIVIDENDS. Subject to any agreement to which the Corporation is a party or by which it is bound, the Board of Directors may declare to be payable, in cash, in other property or in shares of the Corporation's capital stock, such dividends in respect of outstanding stock of the Corporation of any class or series as the Board of Directors may at any time deem to be advisable. Before declaring any such dividend, the Board of Directors may cause to be set aside any funds or other property or assets of the Corporation legally available for the payment of dividends.

ARTICLE XII FISCAL YEAR

Section 12.1. FISCAL YEAR. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.

ARTICLE XIII CORPORATE SEAL

Section 13.1. CORPORATE SEAL. The Corporate Seal shall be circular in form and shall be the name of the Corporation and the words and figures denoting its organization under the laws of the State of Delaware and the year thereof and otherwise shall be in such form as shall be approved from time to time by the Board of Directors.

ARTICLE XIV

AMENDMENTS

Section 14.1. AMENDMENTS. Subject to the provisions of the Certificate of Incorporation and the provisions of the General Corporation Law, the power to amend, alter, or repeal these By-laws and to adopt new By-laws may be exercised by the Board of Directors or by the stockholders.

Section 14.2. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the Corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the Certificate of Incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the Certificate of Incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the Certificate of Incorporation, except as any provision of law may otherwise require.

EXHIBIT 10.1

Final Version

ATLAS F1NANCIAL HOLDINGS, INC.

STOCK OPTION PLAN

ARTICLE I PURPOSE

1.1 Purpose

The purpose of this stock option plan (as amended from time to time, the "Plan") is to advance the interests of the Corporation by: (i) providing Eligible Persons with financial incentives; (ii) encouraging stock ownership by Eligible Persons; (iii) increasing the proprietary interest of Eligible Persons in the success of the Corporation; (iv) encouraging Eligible Persons to remain with the Corporation or its Affiliates; and (v) attracting new Employees, Officers, Directors and Consultants to the Corporation or its Affiliates.

ARTICLE II INTERPRETATION

2.1 Definitions

When used herein, the following terms have the following meanings, respectively:


(a)	" Act " means the Securities Act (Ontario);

(b) " Affiliate " means any corporation that is an affiliate of the Corporation as defined in the Act;

(c) " Blackout Period " means a period of time when, pursuant to any policies of the Corporation, securities of the Corporation may not be traded by certain persons as designated by the Corporation, including an Optionee;

(d) " Board " means the board of directors of the Corporation;


(e)	" Change of Control " means the occurrence of any one or more of the following events:

(i) a consolidation, merger, amalgamation, arrangement or other reorganization, takeover bid or acquisition involving the Corporation or any of its Affiliates and another corporation or other entity, as a result of which the holders of Shares immediately prior to the completion of the transaction hold less than 50% of the outstanding rights to vote in respect of the shares of the successor corporation after completion of the transaction;

(ii) the sale, lease, exchange or other disposition, in a single transaction or a series of related transactions, of assets, rights or properties of the Corporation and/or any of its Subsidiaries which have an aggregate book value greater than 50% of the book value of the assets, rights and properties of the Corporation and its Subsidiaries on a consolidated basis to any other person or entity, other than a disposition to an Affiliate of the assets, rights and properties of the Corporation in the course of a reorganization of the assets of the Corporation and its Affiliates;

(iii) a resolution is adopted to wind-up, dissolve or liquidate the Corporation; or

(iv) the Board adopts a resolution to the effect that a Change of Control as defined herein has occurred or is imminent.


(f)	"Commitment Form" means the notice of grant of an Option delivered by the Corporation hereunder to an Optionee in the form of Schedule "A" attached hereto, or in such other form as the Compensation Committee may approve for any one or more Optionees or for a group of Optionees, as same may be amended from time to time;

(g) "Compensation Committee" means the compensation committee of the Board;

(h) "Consultant" means any individual or Consulting Company, other than an Employee or Director:

(i) is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Corporation or to an Affiliate, other than services provided in relation to a Distribution (as such term is defined in the Act);

(ii) provides the services under a written contract between the Corporation or the Affiliate and the individual or the Consultant Company;

(iii) in the reasonable opinion of the Corporation, spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or an Affiliate; and

(iv) has a relationship with the Corporation or an Affiliate that enables the individual to be knowledgeable about the business and affairs of the Corporation.

(i) "Consulting Company" means a company or partnership providing consulting services to the Corporation or an Affiliate and, if applicable, for whom an individual consultant providing consulting services to the Corporation or an Affiliate may be an employee, shareholder or partner;

(j) "Control" means:

(i) when applied the relationship between a person and a corporation, the beneficial ownership by the person, at the relevant time, of shares of the corporation carrying either (A) more than 50% of the voting rights ordinarily exercisable at meetings of shareholders of the corporation or (B) the percentage of voting rights ordinarily exercisable at meetings of shareholders of the corporation sufficient in fact to elect a majority of the directors of the corporation; and

(ii) when applied to the relationship between a person and a partnership or joint venture, the beneficial ownership by the person, at the relevant time, of more than 50% of the ownership interests of the partnership or joint venture in circumstances where it can reasonably be expected that the person directs the affairs of the partnership or joint venture;

(k) " Corporation " means Atlas Financial Holdings, Inc., and includes any successor corporation thereto;

(I) " Director " means a director of the Corporation or of an Affiliate;

(m) " Effective Date " for an Option means the date on which the Option is granted;


(n)	" Eligible Person " means, subject to the administrative guidelines and other rules and regulations relating to the Plan and to all applicable law, any Employee, Officer, Director, or Consultant who is approved for participation in the Plan by the Compensation Committee;

(o) " Employee " means:

(i) an individual who would be considered an employee of the Corporation or its Subsidiary under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and Canada Pension Plan deductions must be made at source);


(ii)	an individual who works full-time for the Corporation or its Subsidiary providing services normally provided by an employee and who is subject to the same control and direction by the Corporation over the details and methods of work as an employee of the Corporation, but for whom income tax deductions are not made at source; or


(iii)	an individual who works for the Corporation or its Subsidiary on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Corporation over the details and methods of work as an employee of the Corporation, but for whom income tax deductions are not made at source;


(p)	" Exchange " means the TSX Venture Exchange Inc. or any other stock exchange on which the Shares are then listed for trading;


(q)	" Exercise Form " means the notice of exercise of option in the form of Schedule "B" attached hereto;


(r)	" Exercise Period " means the period of time during which an Option granted under the Plan may be exercised (provided, however, that the Exercise Period may not exceed ten (10) years from the relevant Effective Date unless permitted under Section 4.4(b));

(s) " Exercise Price " has the meaning ascribed thereto in Section 4.2;

(t)

" Incapacity " of an Optionee means his total or substantially total mental, physical, natural or legal inability to perform regularly his day-to-day functions for a period of six (6) months, the whole as evidenced and determined by an independent medical expert chosen by the Compensation Committee or as determined by a final and definitive judgment rendered by a court of competent jurisdiction thereto;

(u) " Insider " has the meaning given to such term in the Act;


(v)	" Merger and Acquisition Transaction " means (i) any merger; (ii) any acquisition; (iii) any amalgamation; (iv) any offer for Shares which if successful would entitle the offeror to acquire more than 50% of all Shares; (v) any arrangement or other scheme of reorganization; or (vi) any consolidation, that results in a Change of Control;

(w) " Officer" means an officer of the Corporation or of an Affiliate;

(x) " Option " means the right to purchase Shares granted to an Eligible Person in accordance with the terms of the Plan;

(y) " Optioned Shares " means Shares subject to an Option;

(z) " Optionee " means an Eligible Person to whom an Option is granted by the Corporation under the Plan, whether a Director, Officer, Employee, or Consultant (including, for greater certainty, an individual or a Consulting Company);

(aa)

" person " or '' persons " means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;

(bb) " Plan " has the meaning ascribed thereto in Section 1.1;


(cc)	" Regulatory Approval " means the approval of any securities or other applicable regulatory agency (including the Exchange) which may have jurisdiction in the circumstances;

(dd) " Share s" means the ordinary shares in the capital of the Corporation;


(ee)	" Subsidiary " means a corporation which is a subsidiary of the Corporation as defined in the Act;

(ff) " Termination Date " means:


(i)	in the case of an Optionee whose employment or term of office with the Corporation or an Affiliate terminates in the circumstances set out in Section 4.10(b) or 4.10(c)(i), the date that is designated by the Corporation or the Affiliate, as the case may be, as the last day of such person's employment or term of office with the Corporation or the Affiliate, as the case maybe;


(ii)	in the case of an Optionee whose employment or term of office with the Corporation or an Affiliate terminates in the circumstances set out in Section 4.10(c)(ii), _the date of the notice of termination of employment or term of office given by the Corporation or the Affiliate, as the case may be;


(iii)	in the case of an Optionee whose employment or term of office with the Corporation or an Affiliate terminates in the circumstances set out in Section 4.10(c)(iii), the date of retirement;

(iv)

in the case of an Optionee whose consulting arrangements (or, if applicable, those of its Consulting Company if the Optionee is an individual) are terminated by the Corporation or an Affiliate in the circumstances set out in Section 4.10(d), the date that is designated by the Corporation or the Affiliate, as the case may be, as the last day of the Optionee's consulting arrangements (or those of its Consulting Company) with the Corporation or the Affiliate, as the case may be;

(v)

in the case of an Optionee whose consulting arrangements (or, if applicable, those of its Consulting Company if the Optionee is an individual) are terminated in the circumstances set out in Section 4.10(e), the date of the notice of termination given to the Optionee (or, if applicable, those of its Consulting Company if the Optionee is an individual) or the expiry of the original term or any subsequent renewal term of the consulting arrangements,

as the case may be;

and in each such case, "Termination Date" specifically does not mean the date on which any period of reasonable notice that the Corporation or the Affiliate, as the case may be, may be required at law to provide to the Optionee would expire.

2.2 Interpretation

(a) A reference to a statute includes all regulations made thereunder, all amendments to the statute or regulations in force from time to time, and any statute or regulation that supplements or supersedes such statute or regulations.

(b) Words importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine.

ARTICLE 3 ADMINISTRATION

3.1 Administration of Plan


(a)	The Compensation Committee will, subject to any terms and conditions the Board may prescribe from time to time, in accordance with the Plan, be responsible for the general administration of the Plan and the proper execution of its provisions, the interpretation of the Plan and the determination of all questions arising hereunder.

(b)

Subject to the limitations of the Plan, the Compensation Committee has the authority to: (i) grant Options to purchase Shares to Eligible Persons; (ii) determine the terms, including the limitations, restrictions and conditions, if any, upon such .grants; (iii) interpret the Plan and to adopt, amend and rescind such administrative guidelines and other rules and regulations relating to the Plan as it may from time to time deem advisable, subject to required Regulatory Approval; and (iv) make all other determinations and to take all other actions in connection with the implementation and administration of the Plan as it may deem necessary or advisable.

(c)

Any decision, interpretation or other action made or taken in good faith by or at the direction of the Corporation, the Board or the Compensation Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Corporation and Optionees and their respective heirs, executors, administrators, successors and assigns and all other persons.


(d)	The day-to-day administration of the Plan may be delegated to such officers and employees of the Corporation or of an Affiliate as the Board or the Compensation Committee determines.

(e) The Corporation is responsible for all costs of administration of the Plan.

3.2 Eligibility

Eligible Persons are eligible to participate in the Plan, provided that eligibility to participate does not confer upon any Eligible Person any right to be granted Options pursuant to the Plan. The extent to which any Eligible Person is entitled to be granted Options pursuant to the Plan will be determined in the sole and absolute discretion of the Compensation Committee.

3.3 Shares Reserved Under the Plan

(a)

The maximum number of Shares reserved for issuance under tile Plan and all of the Corporation's other security based compensation arrangements at any given time is equal to 10% of the issued and outstanding Shares as at the date of grant of an Option under the Plan, subject to adjustment or increase of such number pursuant to Section 4.13. The Plan is an "evergreen" plan. Any Shares subject to an Option which has been granted under the Plan, and which has been canceled, expired or terminated in accordance with the terms of the Plan, without having been exercised, will again be available under the Plan. Any increase in the issued and outstanding Shares will result in an increase in the available number of Shares issuable under the Plan, and any exercises of Options will make new grants available under the Plan, effectively resulting in a re-loading of the number of Options available to grant under the Plan.

(b)

The aggregate number of Shares reserved for issuance pursuant to Options granted to any one person within any twelve-month period shall not exceed 5% of the issued and outstanding Shares at the time of the grant of the Option. The aggregate number of Shares issued to Insiders of the Corporation within any twelve-month month period, or issuable to Insiders of the Corporation at any time, under the Plan and any other security based compensation arrangements of the Corporation may not exceed 10% of the total number of issued and outstanding Shares at such time.


(c)	Notwithstanding the foregoing, (i) no more than 2% of the issued and outstanding Shares may be granted to any one Consultant in any 12 month period; and (ii) no more than an aggregate of 2% of the issued and outstanding Shares may be granted to all Employees conducting investor relations activities in any 12 month period.

3.4 Incorporation of Terms of Plan

Subject to specific variations approved by the Compensation Committee, all terms and conditions set out in the Plan will be deemed to be incorporated into and form part of each Option granted under the Plan.

ARTICLE IV GRANT OF OPTIONS

4.1 Grant of Options

The Compensation Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as the Board or Compensation Committee may prescribe, grant Options to any Eligible Person.

4.2 Exercise Price

The Compensation Committee will establish the exercise price of an Option (the "Exercise Price") at the time each Option is granted. The Exercise Price shall not be less than the market price of the Shares which will be equal to the volume weighted average trading price of the Shares on the Exchange for the five trading days immediately preceding the Effective Date.

4.3 Number of Shares Subject to Option

The number of Shares subject to each Option shall be determined by the Compensation Committee, and such number shall be set out in the Commitment Form evidencing the grant of such Option.

4.4 Expiration of Options


(a)	Subject to any accelerated termination as set forth in the Plan, all Options granted pursuant to the Plan will expire on the date (the "Expiry Date") as determined by the Compensation Committee at the date of grant provided that no Option may be exercised beyond ten (10) years from the Effective Date.

(b)

Notwithstanding the above, if the Expiry Date for any Option falls within a Blackout Period or within 10 business days from the expiration of a Blackout Period (such Options to be referred to as "Restricted Options"), the Expiry Date of such Restricted Options shall be automatically extended to the date that is the 10th business day following the end of the Blackout Period, such 10th Business Day to be considered the Expiry Date for such Restricted Options for all purposes under the Plan.

4.5 Non-Assignable and Non-Transferable

Options are non-assignable and non-transferable although they are assignable to and may be exercisable by an Optionee's legal heirs, personal representatives or guardians as provided in Section 4.9. Upon written notice from an Eligible Person under the Plan, any Option that might otherwise be granted to that Eligible Person will be granted, in whole or in part, to a registered retirement savings plan ("RRSP") or a holding company established by, and for the sole benefit of, the Eligible Person.

4.6 Vesting of Option Rights

(a)

Subject to Subsection (b) below, the Compensation Committee may determine when any Option will become exercisable and may determine that the Option will be exercisable in installments or pursuant to a vesting schedule. Such terms shall be set out in the Commitment Form evidencing the grant of such Option. Subject to the other provisions of the Plan, Options issued will be subject to a vesting schedule as provided for in the Commitment Form attached herewith as Schedule "A".


(b)	Options issued to Consultants performing investor relations activities must vest in stages over 12 months with no more than one-quarter of the Options vesting in any three month period.

4.7 Amendment of Option

The Compensation Committee may amend the terms of an Option in accordance with the Plan provided that any amendment that extends the term or reduces the Exercise Price of an Option held by an Insider at the time of the proposed amendment shall be subject to disinterested shareholder approval.

4.8 Acceleration of Vesting Period

Subject to the Board or the Compensation Committee determining otherwise, in the event of a Change of Control, all Options outstanding shall be immediately exercisable, notwithstanding any determination of the Board pursuant to Section 4.6, if applicable. Notwithstanding the vesting schedule for an Option, the Compensation Committee shall have the right with respect to any one or more Optionees in the Plan to accelerate the time at which an Option may be exercised.

4.9 Death or Incapacity of Optionee

In the event of the death or Incapacity of an Optionee:

(a)

the executor or administrator of the Optionee's estate or the Optionee, as the case may be, may exercise any Options of the Optionee to the extent that the Options were exercisable at the date of such death or Incapacity and the right to exercise the Options terminates on the earlier of: (i) the date that is twelve months from the date of the Optionee's death, if the Optionee has died, or 30 days after the six month period referred to in the definition of "Incapacity", in the event of Incapacity; and (ii) the date on which the Exercise Period of the particular Option expires. Any Options held by the Optionee that were not exercisable at the date of death or Incapacity immediately expire and are cancelled on such date; and


(b)	such Optionee's eligibility to receive further grants of Options under the Plan ceases as of the date of the Optionee's death or Incapacity, as the case may be.

4.10 Termination of Employment or Cease to Hold Office


(a)	In the event an Optionee's employment or consulting arrangements (or, if applicable, those of its Consulting Company if the Consultant who is an Optionee is an individual) or term of office with the Corporation or an Affiliate ceases by reason of the Optionee's death or Incapacity, then the provisions of Section 4.9 will apply.

(b) In the event an Optionee's employment or term of office with the Corporation or an Affiliate is terminated by the Corporation or an Affiliate for lawful cause, then any Options held by such Optionee, whether or not such Options are exercisable at the applicable Termination Date, immediately expire and are cancelled on the Termination Date at a time determined by the Compensation Committee, at its discretion.

(c) In the event an Optionee's employment or term of office terminates by reason of: (i) voluntary resignation by such Optionee; (ii) termination by the Corporation or an Affiliate without cause (whether such termination occurs with or without any or adequate reasonable notice or with or without any or adequate compensation in lieu of such reasonable notice); or (iii) the retirement of such Optionee in accordance with the then customary policies and practices of the Corporation in relation to retirement, then any Options held by such Optionee that are exercisable at the Termination Date continue to be exercisable by such Optionee until the earlier of (A) the date that is 90 days from the Termination Date; and (B) the date on which the Exercise Period of the particular Option expires. Any Options held by such Optionee that are not exercisable at the Termination Date immediately expire and are cancelled on the Termination Date.

(d)

In the event an Optionee's consulting arrangements (or, if applicable, those of its Consulting Company if the Optionee is an individual) with the Corporation or an Affiliate are terminated by the Corporation or an Affiliate for breach of agreement prior to the expiry of the original term or any subsequent renewal term of such arrangements, then any Options held by the Optionee (or, if applicable, those of its Consulting Company if the Optionee is an individual), whether or not such Options are exercisable at the applicable Termination Date, immediately expire and are cancelled on the Termination Date at a time determined by the Compensation Committee, at its discretion.

(e)

In the event an Optionee's consulting arrangements (or, if applicable, those of its Consulting Company, if the Optionee is an individual) with the Corporation or an Affiliate are terminated in circumstances other than those referred to in Section 4.10(d), any Options held by the Optionee that are exercisable at the Termination Date continue to be exercisable by the Optionee until the earlier of: (i) the date that is 90 days from the Termination Date; and (ii) the date on which the Exercise Period of the particular Option expires. Any Options held by the Optionee that are not exercisable at the Termination Date immediately expire and are cancelled upon the Termination Date.


(f)	An Optionee's eligibility to receive further grants of Options under the Plan ceases as of the applicable Termination Date.

4.11 Discretion to Permit Exercise

Notwithstanding the provisions of Sections 4.9 and 4.10, the Board may, in its discretion, at any time prior to or following the events contemplated in such sections and in any Commitment Form, permit the exercise of any or all Options held by the Optionee in the manner and on terms authorized by the Board, provided that, subject to an extension pursuant to Section 4.4(b), the Board will not, in any case, authorize the exercise of an Option pursuant to this section beyond the Expiry Date of the particular Option.

4.12 General

The existence of any Options does not affect in any way the right or power of the Corporation or its shareholders to make, authorize or determine any adjustment, recapitalization, reorganization or any other change in the Corporation's capital structure or its business, or any amalgamation, merger or consolidation involving the Corporation, to create or issue any bonds, debentures, shares or other securities of the Corporation or to determine the rights and conditions attaching thereto, to effect the dissolution or liquidation of the Corporation or any sale or transfer of all or any part of its assets or business, or to effect any other corporate act or proceeding, whether of a similar character or otherwise, whether or not any such action referred to in this section would have an adverse effect on the Plan or any Option granted hereunder, subject to Sections 4.13(a) and 4.13(b).

4.13 Adjustment

(a) In the event of a subdivision, consolidation or reclassification of Shares or any similar capital reorganization, or any other change to be made in the capitalization of the Corporation including an exchange of Shares for another security of the Corporation that, in the opinion of the Compensation Committee, acting reasonably and in good faith, would warrant the replacement or amendment of any existing Options in order to adjust:


(i)	the number of Shares or other securities that may be acquired on the exercise of any outstanding Options; or

(ii) the Exercise Price of any outstanding Options,

in order to preserve proportionately the rights and obligations of the Optionees, the Compensation Committee will authorize such steps, subject to Regulatory Approval, if required, to be taken as are equitable and appropriate to that end.


(b)	In the event of an amalgamation, combination, merger or other reorganization involving the Corporation, by exchange of shares, by sale or lease of assets, or otherwise, that, in the opinion of the Compensation Committee, acting reasonably and in good faith, warrants the replacement or amendment of any existing Options in order to adjust:


(i)	the number of Shares or other securities that may be acquired on the exercise of any outstanding Options; or

(ii) the Exercise Price of any outstanding Options,

(c)

Except as expressly provided in Sections 4.13(a) and 4.13(b), neither the issue by the Corporation of shares of any class or securities convertible into or exchangeable for shares of any class, nor the conversion or exchange of such shares or securities, affects, and no adjustment by reason thereof is to be made with respect to: (i) the number of Shares that may be acquired on the exercise of any outstanding Options; or (ii) the Exercise Price of any outstanding Options.


(d)	The Corporation will not be required to issue fractional Shares in satisfaction of its obligations hereunder and any fractional interest in a Share that would, except for the provisions of this Section

4.13(d), be deliverable upon the exercise of an Option will be canceled and not be deliverable by the Corporation.

4.14 Disputes

If any questions arise at any time with respect to the Exercise Price or number of Optioned Shares or other securities deliverable upon exercise of an Option in any of the events set out in Section 4.13(a) and 4.13(b), such questions will be conclusively determined by the Corporation's auditors, or, if they decline to so act, any other firm of chartered accountants that the Corporation may designate and who will have access to all appropriate records and such determination will be binding upon the Corporation and all Optionees.

4.15 Compliance with Law and Tax Withholding

(a)

The Corporation is not obligated to grant any Options, issue any Shares or other securities, make any payments or take any other action, if in the opinion of the Compensation Committee, in its sole discretion, such action would constitute a violation by an Optionee or the Corporation of any provision of any applicable law, including any statutory or regulatory enactment of any government or government agency. Optioned Shares shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such Optioned Shares shall comply with all relevant provisions of law, including, without limitation, any applicable provincial, state or federal securities laws, and the requirements of the Exchange, and such issuance shall be further subject to the approval of counsel for the Corporation with respect to such compliance. The inability of the Corporation to obtain from any regulatory body the authority deemed by the Corporation to be necessary for the lawful issuance and sale of any Optioned Shares under the Plan, or the inability of the Corporation to lawfully issue, sell, or deliver any Optioned Shares, shall relieve the Corporation of any liability with respect to the non-issuance, sale or delivery of such Optioned Shares.

(b)

Delivery of the Shares, upon exercise of Options, is subject to the satisfaction of all applicable federal, state, provincial, local and foreign tax obligations, including obligations to make withholdings or deductions in respect of the benefits arising hereunder. The Corporation will have the power and right to require the Optionee to remit to the Corporation an amount sufficient to satisfy any applicable tax or withholding obligations required by law. Further, the Corporation may require the Optionee to satisfy, in whole or in part, such tax or withholding obligations by instructing the Corporation to withhold Shares that would otherwise be received by the Optionee upon exercise, sell such Shares on behalf of the Optionee and remit the proceeds of such sale to the relevant taxing authority in satisfaction of the tax or withholding obligations.

4.16 Sale of Corporation, etc.

If the Board at any time by resolution declares it advisable to do so in connection with a Merger and Acquisition Transaction, the Board has the right to provide for the conversion, exchange, replacement or substitution of any outstanding Options into or for options, rights or other securities of similar value of, or the assumption of outstanding Options by any entity or affiliate participating in or resulting from a Merger and Acquisition Transaction. Any such conversion, exchange, replacement, substitution or assumption shall be on such terms as the Board in good faith may consider fair and appropriate in the circumstances. In addition, and notwithstanding this Section 4.16, the Board has the right to determine, at its sole discretion, that (i) any or all Options shall thereupon terminate; provided that only such outstanding Options that have vested shall remain exercisable until consummation of the Merger and Acquisition Transaction; or (ii) Options not exercisable may be exercisable in full.

ARTICLE V PROCEDURE

5.1 Option Commitment


(a)	Upon grant of an Option hereunder to an Optionee, a senior officer of the Corporation designated by the Compensation Committee will deliver to the Optionee a Commitment Form detailing the terms of the Option.

(b)

Upon the occurrence of an event to which Section 4.13(a) or 4.13(b) applies, a senior officer of the Corporation designated by the Compensation Committee may deliver to any Optionee with respect to any Option, a revised Commitment Form identified as such, with respect to Shares as to which the Option has not been exercised, reflecting the application of Section 4.13(a) or 4.13(b), as applicable, by reason of that event.

5.2 Manner of Exercise

(a) Subject to the provisions of the Plan and the provisions of the Commitment Form issued to an Optionee, Options which are exercisable may be exercised by means of a fully completed Exercise Form delivered to the Corporation. The Exercise Form must be accompanied by the payment in full of the Exercise Price for the Shares to be purchased. The Exercise Price must be fully paid in cash, by wire transfer or by certified cheque or bank draft payable to the Corporation or by such other means as might be specified from time to time by the Compensation Committee. No Shares will be issued until full payment therefor has been received by the Corporation. As soon as practicable after receipt of any Exercise Form and full payment, the Corporation will forthwith cause the transfer agent and registrar of the Shares to deliver to the Optionee a certificate or certificates or a statement of account, representing in the aggregate the acquired Shares.

(b) Notwithstanding any other provision of the Plan, the Corporation will not be obligated to issue Optioned Shares on the exercise of an Option granted under the Plan until the Corporation has received the deliveries specified in Section 5.2(a).

5.3 Use of an Administrative Agent and Trustee

(a) The Compensation Committee may in its sole discretion appoint from time to time one or more entities to act as administrative agent to administer the Options granted under the Plan and to act as trustee to hold and administer the assets that may be held in respect of Options granted under the Plan, the whole in accordance with the terms and conditions determined by the Compensation Committee in its sole discretion. In such case, the Corporation and the administrative agent will maintain records showing the number of Options granted to each Optionee under the Plan.

ARTICLE VI GENERAL

6.1 Optionee has no Rights as a Shareholder

An Optionee has no rights whatsoever as a shareholder in respect of any of the Optioned Shares (including, without limitation, any right to receive dividends or other distributions therefrom or thereon) other than in respect of Optioned Shares purchased by and fully paid for and issued to the Optionee on exercise of the Option.

6.2 Accounts and Statements

The Corporation will maintain, or cause to be maintained, records indicating the number of Options granted to each Optionee and the number of Optioned Shares issued under the Plan.

6.3 Employment and Services

Nothing contained in the Plan will confer upon any Optionee (or his Consulting Company) any right with respect to employment, term of office or consulting with the Corporation or an Affiliate, or interfere in any way with the right of the Corporation to terminate the Optionee's employment, term of office or consulting arrangements (or those of his Consulting Company) at any time. If an Optionee's employment, term of office or consulting arrangements (or those of his Consulting Company) with the Corporation or an Affiliate is terminated for any reason, no value will be ascribed to any unvested Options for the purposes of any severance entitlement. Participation in the Plan by an Optionee will be voluntary.

6.4 Notice

Each notice, demand or communication required or permitted to be given under the Plan (each, a "Notice") will be in writing and shall be given by personal delivery or by registered mail, postage prepaid, if to the Corporation, at the Corporation's address set out in the Commitment Form, to the attention of the Corporate Secretary, or at such other address as the Corporation may advise an Optionee of, in writing, as being the address for delivery of a Notice to the Corporation, and if to an Optionee, at the most recent residential address for the Optionee shown in the records of the Corporation. All such Notices given as aforesaid shall be deemed to have been received by the recipient when delivered or, if mailed, five days after 12:01 a.m. on the day following the day of the mailing thereof. If any Notice shall have been mailed and if regular mail service shall be interrupted by strikes or other irregularities, such Notice shall be deemed to have been received ten days after 12:01 a.m. on the day following the resumption of normal mail service, provided that during the period that regular mail service shall be interrupted all Notices shall be given by personal delivery.

6.5 Amendment or Termination of Plan

(a) The Board reserves the right, in its absolute discretion, to amend, suspend or terminate the Plan, or any portion thereof, at any time without obtaining the approval of shareholders of the Corporation, subject to those provisions of applicable law and regulatory requirements (including the rules, regulations and policies of the Exchange), if any, that require the approval of shareholders. Such amendments may include, without limitation:


(i)	minor changes of a ''house-keeping nature", including, without limitation, any amendment for the purpose of curing any ambiguity, error or omission in the Plan, or to correct or supplement any provision of the Plan that is inconsistent with any other provision of the Plan;

(ii)

amending Options under the Plan, including with respect to the Exercise Period (provided, however, that the Exercise Period may not exceed ten (10) years from the relevant Effective Date unless permitted under Section 4.4(b)), vesting period, exercise method and frequency, exercise price and method of determining the Exercise Price, assignability and the effect of termination of an Optionee's employment or consulting arrangements (or, if applicable, those of its Consulting Company if the Optionee is an individual), or cessation of an Optionee's directorship, as applicable; provided that such amendment does not adversely alter or impair any Option previously granted to an Optionee without the consent of such Optionee;


(iii)	advancing the date on which any Option may be exercised or extending the Expiry Date of any Option (provided, however, that the Exercise Period may not exceed ten (10) years from the relevant Effective Date unless permitted under Section 4.4(b));


(iv)	adding or changing the terms and conditions of any financial assistance which may be

provided by the Corporation to Optionees to facilitate the purchase of Shares under the Plan;


(v)	amendments necessary to comply with the provisions of applicable law or the applicable rules of the Exchange, including with respect to the treatment of Options granted under the Plan;

(vi) amendments respecting the administration of the Plan;

(vii) amendments necessary to suspend or terminate the Plan;

(viii) a change relating to the eligibility of any Optionee or Eligible Person in the Plan; and


(ix)	any other amendment, fundamental or otherwise, not requiring shareholder approval under applicable laws or the applicable rules of the Exchange.

(b) Notwithstanding the foregoing, the Corporation will be required to obtain the approval of the shareholders of the Corporation, and where required by the Exchange, approval of the disinterested shareholders of the Corporation, for any amendment related to:

(i) amending the provisions relating to the transferability of an Option, other than for transfers by will or the law of succession or to corporations controlled by the individual or family trusts;

(ii) reducing the Exercise Price of an Option held by an Insider;

(iii) extending the term of an Option held by an Insider;

(iv) amending to remove or exceed the limits on participation in the Plan under Section 3.3(b);

(v) increasing the maximum number of Shares which may be issued under the Plan; and


(vi)	granting additional powers to the Board to amend the Plan without shareholder approval.

(d) The Board may terminate the Plan at any time in its absolute discretion. If the Plan is so terminated, no further Options shall be granted, but the Options then outstanding shall continue in full force and effect in accordance with the provisions of the Plan.

6.6 Governing Law

The Plan will be governed and construed in accordance with the laws of the Province of Ontario.

6.7 Effective Date

The Plan shall be effective on January 3, 2011.

6.8 Subject to Approval


(a)	To the extent a provision of the Plan requires regulatory approval which is not received, such

provision shall be severed from the remainder of the Plan until the approval is received and the remainder of the Plan shall remain in full force and effect.

(b) The Plan must be approved periodically pursuant to the requirements of the Exchange.

EXHIBIT 10.2

ATLAS FINANCIAL HOLDINGS, INC.

This Agreement (the “Agreement”) constitutes the terms of employment between [NAME] (the “ Executive ”) and Atlas Financial Holdings, Inc. and/or one of its subsidiaries (“Company”). This Agreement applies to the period of employment from January 1, 2011 through December 31, 2012 (the “Initial Period”) and to the period commencing on January 1, 2013 (the “Subsequent Period”).

EMPLOYMENT

Duties

As assigned by the [CEO/BOARD OF DIRECTORS] from time to time, and commensurate with such duties as might be assigned to any officer or exempt employee of Company. Executive’s performance objectives “Goals” for the current year will be set forth on or before February 15 ^th of such year. Beginning in 2012, the level at which Executive achieved the Goals set forth for the prior fiscal year “Goal Achievement Ratio” will be determined by the CEO, and confirmed by the Board of Directors, as a percentage of the Goals established for the prior year. For clarity, if by the end of 2001, Executive accomplished 95% of the Goals established for 2011, Executives Goal Achievement Ratio would be 95%.


Reporting	Executive will report directly to the [CEO/BOARD OF DIRECTORS].


Commencement Date	The first date of the Initial Period.

Term

There is no specified term associated with the Executive’s employment with Company, and the parties hereto understand that the Executive’s employment is “at-will.” The Executive’s employment may be terminated by either party at any time, and, other than the severance and post-termination obligations described herein, this Agreement shall terminate along with the Executive’s employment.

This Agreement shall terminate (i) immediately and automatically upon the Executive’s death or (ii) thirty (30) days after the Board of Directors’ good faith determination that the Executive has become disabled to such an extent that the Board believes he no longer can carry out his duties; in either case, no severance, COBRA, or other payments are due under this Agreement.

COMPENSATION AND

BENEFITS


Annual Base Salary	$[X] (the “Base Salary”).


Initial Period	Fiscal years 2011 and 2012 constitute the “Year 1” and “Year 2”, respectively, of the “Initial Bonus Period”. During each of these first two fiscal years, provided that after taking the expense related to all executive

bonuses into consideration Company generates a positive GAAP pre-tax profit, the Executive shall be eligible for an annual bonus equal to 50% “Bonus Factor” multiplied by the sum of ([Executive’s Base Salary for the year under review] multiplied by [Executive’s Goal Achievement Ratio for the year under review]). If during the year under review, after taking the expense related to all executive bonuses into consideration Company’s GAAP pre-tax profit exceeds by more than 15% the target set forth on page 19 of the final Offering Memorandum as provided to the TSX in connection with Company’s Q4 2010 Filing Statement, the Bonus Factor for that year will be increased to 75%. If Company does not generate a positive GAAP pre-tax profit in a given year, any bonus for that year would be at the sole discretion of the Company Board of Directors.

As soon as practicable after the 2012 budget has been set (but in any case before January 31, 2012), Company will set forth a bonus plan for 2012 that will depend on two criteria: (a) actual performance compared to performance objectives for the Executive and (b) growth in book value or achieved return on average shareholders’ equity.

Annual

Subsequent Periods

For fiscal years beginning after December 31, 2012 “Annual Subsequent Periods”, Company will (a) complete a budget before the beginning of such fiscal year, (b) establish performance objectives for the executive, (c) evaluate growth in book value or achieved returns on average equity financial goals for appropriateness, and (d) set an Annual Bonus plan for such fiscal year based on these criteria.

Bonus Determination

and Payment

The final determination of the Executive’s bonus for any fiscal year will be made by the Board of Directors based on the criteria set forth herein and taking into account the recommendations of Company’s Chief Executive Officer and of its Compensation Committee, and will consider all aspects of the Executive’s and Company’s performance. Such bonus shall be paid in cash not later than 30 days following the filing of Company’s public GAAP financial statements for the calendar year for which the Executive is eligible for a Bonus.

Stock-Based

Compensation

Company believes that companies of the size and nature of Company should consider instituting Stock-Based Compensation for senior executives. During the Subsequent Term, the Board of Directors shall consider, at least once each fiscal year, if a Stock-Based Compensation plan should be implemented (or if such a plan exists, if it should be modified). There is no assurance, however, that Company will institute a Stock-Based Compensation plan nor any assurance that an award will be made to the Executive.


Employee Benefits	The Executive shall be entitled to participate in such employee benefit plans as the Company Board of Directors shall approve. Such plans may include defined-contribution retirement plans, paid vacation and sick days/paid time off, short-term disability plans, or such other plans as may be offered from time to time.

Expenses and


Indemnification	Company will reimburse the Executive for out-of-pocket expenses incurred in the furtherance of Company’s business according to Company’s established employee business expense policies and practices.

Company will maintain directors and officers’ liability insurance in amounts as determined by the Board of Directors, and the Executive shall be covered under such insurance to the same extent as any Company Director or other Company senior executive.


Severance	Subject to the last paragraph in this Section, in the event the Executive is terminated by Company without Cause, the Executive shall be entitled to the following severance payments:

During Year 1 of the Initial Period: First, a continuation of Base Salary for 24 months, paid according to Company’s then-current practices for periodic payment of its other employees’ salaries,

Second, an amount equal to 100% of annual Base Salary, paid as a lump-sum, such amount hereby acknowledged by the Executive to be “bonus amounts”, and

Third, a continuation of employee health benefits that are covered under COBRA (“COBRA Benefits”) for the duration of the period during which Executive receives continued Base Salary (or the maximum period of time allowed by law, whichever is shorter), with the cost of such continuation of COBRA Benefits paid 100% by Company.

During Year 2 of the Initial Period: First, a continuation of Base Salary for 24 months, paid according to Company’s then-current practices for periodic payment of its other employees’ salaries,

Second, an amount equal to 50% of annual Base Salary, paid as a lump-sum, such amount hereby acknowledged by the Executive to be “bonus amounts”, and

During the Subsequent Term: First, a continuation of Base Salary for 12 months, paid according to Company’s then-current practices for periodic payment of its other employees’ salaries,

Second, an amount equal to the Executive’s most recently awarded

Bonus, paid as a lump-sum, such amount hereby acknowledged by the Executive to be “bonus amounts”, and

During either the Initial or Subsequent Periods after a Change of Control: Should (i) Company undergo a Change of Control as defined below and (ii) the Executive continue in employment with Company (or its successor) for at least 180 calendar days, the Executive may terminate his employment at will and will be entitled to the severance benefits that would be in effect had Company terminated the Executive without Cause.

“Change of Control” means (i) the acquisition by any individual, entity, or group of beneficial ownership of more than 50% of the combined voting power of the then outstanding common stock of Company or (ii) the closing of a sale or other conveyance of all or substantially all of the assets of Company, or (iii) the effective time of any merger, consolidation, or other business combination of Company which has the effect of that a person or group (who are not persons who immediately prior to such transaction held Company’s voting common stock) obtain, directly or indirectly, voting power or beneficial ownership of more than 50% of the combined voting power of Company’s common stock.

In all instances, the foregoing continuation of Base Salary and COBRA benefits shall cease on the first of the month immediately following the date on which the Executive becomes employed (including as a consultant performing substantially the same duties as an employee) at a new annual rate of pay of (or greater than) the Executive’s Base Salary at the time of termination, or, if the new annual rate of pay is less, the Base Salary benefit shall be reduced such that the Base Salary continuation benefit equals (on an annual basis) the difference between the new annual rate of pay and the Executive’s Base Salary.

Definition of Cause

For purposes of this Agreement, “Cause” shall mean (1) the Executive’s continued failure, neglect or refusal to perform his duties and responsibilities as established by the CEO after having received notice of such failure, neglect or refusal by Company; (ii) any act of the Executive that has the intended effect of injuring the reputation or business of Company or its affiliates in any material respect; (iii) the Executive is indicted for, pleads nolo contendere to, or is convicted of a felony, or other crime involving theft,

fraud, dishonesty or moral turpitude, (iv) the Executive commits any material breach of Company’s code of ethics or other rule, policy or regulation; or (v) the Executive breaches any other material term of this Agreement which breach has not been cured by the Executive within 20 days following written notice delivered by Company.

RESTRICTIVE

COVENANTS

Confidentiality

During the period of the Executive’s employment with Company and at all times thereafter, the Executive agrees that he will not divulge to anyone (other than Company or its affiliates or any persons employed or designated by Company or its affiliates or to the extent applicable, the Executive’s financial or legal advisors) any confidential information, knowledge, information and materials that constitute trade secrets or other intellectual property or proprietary material of Company or any of its affiliates, as well as any information of a confidential nature obtained from customers, clients or other third parties, including, without limitation, all types of trade secrets and confidential commercial information (the “Confidential Information”). Upon his termination, the Executive further agrees not to disclose, publish or make use of any Confidential Information without the prior written consent of Company; provided, however, that the Executive may disclose any such information if required by a court order or other similar request. Nothing herein shall preclude the Executive from consulting with tax advisors or disclosing the tax treatment or tax structure of this Agreement to the extent necessary or as required by the Internal Revenue Service or its agents. Confidential Information does not include any information that becomes public by any means other than a breach by the Executive of this Agreement or is rightfully disclosed to the Executive by a third party without restriction and not in violation of any duty of confidentiality owed to Company or any affiliate.

Non-Solicitation

By and in consideration of the substantial compensation and benefits to be provided by Company hereunder and further in consideration of the Executive’s exposure to the proprietary and confidential information of Company and its affiliates, the Executive agrees, (a) in the event he is terminated by Company without Cause and receives the severance benefits described in this Agreement, for two years after such termination; or (b) in the event (i) he terminates his service or (ii) he is terminated by Company for Cause, for one year after such termination, that he shall not without the express prior written approval of Company (i) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any director, officer, employee, agent, customer or policyholder that has a business relationship with Company (or had a business relationship with Company within the six-month period preceding the date of the Executive’s termination) to discontinue, reduce or modify such employment, agency or business relationship with Company, or (ii) employ or seek to employ, or cause any other person to employ or seek to employ, any person or agent who is then (or was at any time within the six-month period prior to the date of

Executive’s termination) employed or retained by Company, provided that employing or seeking to employ a director, officer, or employee of Company who has been terminated by Company shall not constitute a violation of this Non-Solicitation provision.

If a court of competent jurisdiction finds this provision concerning Nonsolicitation, or any of its restrictions, to be ambiguous, unenforceable and/or invalid, the Executive and Company agree that such court shall (i) in the case of ambiguity, read such provision as a whole and interpret the restriction(s) at issue to be enforceable and valid to the maximum extent allowed by law for the protection of Company’s business interests; and (ii) in the case of unenforceability or invalidity, eliminate such enforceable or invalid provisions from this Agreement to the extent necessary to permit the remaining provisions to be enforced to the maximum extent permitted for the protection of Company’s business interests.

The Executive acknowledges that it may be impossible to assess the monetary damages incurred by his violation of the Nonsolicitation provision, or any of its terms, and that any threatened or actual violation or breach of the Nonsolicitation provision, or any of its terms, will constitute immediate and irreparable injury to Company. The Executive expressly agrees that in addition to any and all other damages and remedies available to Company as a result of the Executive’s breach of the Non-solicitation provision, Company shall be entitled to seek an injunction restraining the Executive from violating or breaching this Nonsolicitation provision or any of its terms.

OTHER

PROVISIONS

Complete Agreement

This Agreement shall be effective from and after January 1, 2010 and sets forth the entire and final agreement and understanding of Company and the Executive and contains all of the agreements made between them with respect to the subject matter hereof. As of January 1, 2010, this Agreement shall constitute the entire agreement with respect to the Executive’s employment, superseding all prior oral or written understandings, negotiations, representations or agreements relating thereto. No change or modification of this Agreement shall be valid unless in writing and executed by Company and the Executive.

Governing Law and


Venue	This Agreement shall at all times be governed by and construed,

interpreted and enforced in accordance with the laws of the State of Illinois without giving effect to its choice of law rules. The parties agree that the courts of the State of Illinois shall have jurisdiction over all disputes that arise under this Agreement or otherwise relate to the employment or termination of employment of the Executive by Company.


Survival	Upon any termination of the Executive’s employment, this Agreement shall likewise terminate, however, the relevant provisions of this Agreement shall

survive to the extent necessary to give effect to such provisions.

IN WITNESS WHEREOF, the parties have signed this Agreement effective as of the date first set forth above.

ATLAS FINANCIAL HOLDINGS, INC.

By:

EXECUTIVE

EXHIBIT 10.3

EMPLOYEE SHARE PURCHASE PLAN

ATLAS FINANCIAL HOLDINGS, INC.

1. PURPOSE

1.1 The Atlas Employee Share Purchase Plan has been established to enable eligible employees of the Company to acquire Common Shares in Atlas Financial Holdings, Inc. in a convenient and systematic manner, so as to encourage continued employee interest in the operation, growth and development of the Company, as well as to prov i de an additional investment opportunity to employees .

2. DEFINITIONS AND INTERPRETATION

2 . 1 "Account" means the account maintained by the Administrator in respect of each Participant as described in Section 7 . 1.

2 . 2 " Adjusted Salary" means the regular salary or wages of a Participant received o r to be received from the Company for the Participant's service with respect to a particular Fiscal Year , excluding any overtime, bonuses or other compensation with respect to such Fiscal Year and, in the case of a Participant who receives commission payments, the regular salary or wages of a Participant received or to be received from the Company for the Participant 's service with respect to the Fiscal Year , and any commission payments payable or paid to such Participant in respect of the immediately preceding Fiscal Year , and does not include any Company Contributions or other benefits received by the Participant under this Plan .

2 . 3 " Admin is tration Agreement " means the agreement referred to in section 10 . 1.

2.4 " Administrator" means the person , company or firm which has been appointed by the Company under Section 10 . 1 to maintain account and to hold share s as Administrator for participants, and with whom the Company enters into a Services Agreement with respect thereto.

2.5 "Board" means the Board of Directors of Atlas.

2 . 6 " Company" means Atlas Financial Holdings , Inc. and each of its Subsidiaries (unless such Subsidiary has been designated by the Board as ineligible to participate in the Plan) and their respective successors and assigns, so long as they remain Subsid i aries on a consolidated basis, or each of them, as appl i cable .

2.7 " Company Contribution" means the amount of money paid by the Company under the Plan in respect of a Participant as described in Section 5 .

2 . 8 "Contribution" means Company Contributions and Participant Contributions.

2.9 "Employee'' means a full-time employee of the Company and a permanent part time employee of the Company working more than 30 hours per week, but for greater certainty, does not include employees who have received notice of termination of employment , contract, part-time, or retired employees of the Company, employees receiving long-term disability payments and employees on unpaid leaves of absence.

2.10 "Fiscal Year" means the fi sca l year of the employer of the Participant .

2.11 " Atlas " means Atlas Financial Holdings, Inc .

2.12 " Non-Active Participant " means a Participant who ceases to contribute to the Plan , but who maintains an account balance within the Plan .

2.13 Participant" means an Employee who has applied and agreed to participate in the Plan on such terms as the Company may specify and whose application has been accepted by the Company.

2.14 " Participant Contribution " means the amount of money contributed by a Participant to the Plan as described in Section 4 .

2.15 "Plan" means this Atlas Employee Share Purchase Plan described herein and includes all amendment s thereto.

2.16 "Release" means a release of certificates representing Shares under the Plan as described in Sections 8 and 9.

2.17 " Share s" means the Common Shares in the capital of Atlas, and includes any s hare s of Atlas into which such s hare s may be converted, reclassified , redesignated, subdivided, consolidated, exchanged or otherwise changed pursuant to a reorganization.

2.18 "Subsidiary" means a subsidiary of Atlas as defined in the Canada Business Corporation s Act .

2.19 Unle ss the context require s otherwi se, reference s to the male gender include the female gender, words importing the singular number may be construed to extend to and include the plural number, and words importing the plural number may be construed to extend to and include the singular number .

2.20 This Plan is established under th e laws of the Province of Ontario and the rights of all partie s and the interpretation of each and every provision of the Plan s hall be governed and construed in accordance with the law s of Ontario and the laws of Canada applicable therein .

3. ELIGIBILITY AND PARTICIPATION

3.1 An Employee who has been employed by the Company for greater than one (1) month is eligible for participation in the Plan.

3 . 2 An Employee who is an employee of a corporation which has become a Subsidiary of Atlas is eligible for participation in the Plan provided that such Employee has been employed by such Subsidiary for not less than one (1) month.

3.3 To become a Participant, an eligible Employee must complete and sign an application in the form prescribed by the Company from time to time and file it with the Manager, Human Resources, or such other officer or employee of the Company designated by the Company from time to time, and authorize the Company in writing to deduct the Participant's Contribution from the Participant's Adjusted Salary. Upon acceptance of

such application by the Company, such Employee shall become a Participant under the Plan.

3.4 The Company will provide each Participant with the following :

(a) a written explanation of the pertinent provisions of the Plan (including amendments thereto applicable to the Participant, together with a written explanation of the rights and duties of a Participant; and

(b) any other information regarding the Plan required to be provided, and in a manner prescribed, under any applicable laws.

4. PARTICIPANT CONTRIBUTIONS

4 . 1 A Participant may elect to contribute as the Participant Contribution under the Plan an amount for each regular payroll period , representing on an annual basis no more than 5 . 0% of Adjusted Salary . Such election shall initially be made by the Participant by completing, signing and filing with the Company the application form in the form prescribed by the Company as contemplated by Section 3.4.

4.2 Subject to Section 4.1 , a Participant may increase, decrease, s uspend, or resume payroll deductions under the Plan at any time by completing, signing and filing an authorization in the form prescribed by the Company from time to time. Such a change may be made only twice in each Fiscal Year.

4 . 3 Subject to the foregoing, the effective date of any initial election, change, suspension or resumption of Participant Contributions under thi s Section 4 shall be governed by regular payroll input deadlines of the Company .

4.4 All Participant Contributions shall be deducted by the Company out of each regular payroll payment and shall be paid to the Administrator and applied in accordance with Section 6.1 .

4.5 A Participant may elect, as authorized and approved by the Board, to transfer into the Plan New Issue and Secondary Offering Shares. Such Shares shall be delivered to the Plan Administrator with all required documentation by the Board approved deadline. Such transfers into the Plan shall not affect a Participant's maximum contribution level for that year.

5. COMPANY CONTRIBUTIONS

5.1 Company Contributions as described herein shall be made on the date of each Participant Contribution only in respect of those Participants who have made a Participant Contribution in respect of such date. Company Contributions vest on the date made by the Company. Company Contributions shall not be made on New Issue and Secondary Offering Shares transferred into the Plan by Participants.

5.2 The amount of Company Contribution in respect of each Participant shall be equal to fifty percent (50%) of the Participant Contribution provided, however, that Company Contributions in respect of any particular Fiscal Year shall not exceed 2.5% of such Participant ' s Adjusted Salary for such Fiscal Year. Company Contributions shall commence following the completion of six (6) months of full time service .

5.3 Company Contributions in respect of a Participant shall be paid by the Company of which the Participant is the Employee on behalf of the Participant to the Administrator at the time of the payments made pursuant to Section 4 . 6 and applied in accordance with Section 6 . 1.

5.4 Company Contributions shall be additional remuneration to the Participant which the Participant directs to be paid to the Administrator and applied in accordance with Section 6.1. By participating in the Plan, the Participant acknowledges that the full amount of Company Contribution shall be paid and applied on behalf of the Participant in accordance with the Plan and that any income tax or other statutory or other payroll deductions in respect of Company Contributions shall be deducted from regular payroll payments to the Participant.

5.5 The Company shall also pay administrative costs related to the Plan, but shall not pay brokerage or related fees or expenses related to the sale of the Shares by the Participant. There shall be deducted from any remittances otherwise due to a Participant all brokerage fees and other expenses related to the sale of the shares by the Participant.

6. PURCHASE AND ALLOCATION OF SHARES

6.1 Participant and Company Contributions shall be paid in full on behalf of the Participants to purchase, on the date of such Contributions, or as soon as practicable thereafter, such number of Shares of Atlas as are required to give effect to the terms of the Plan. The purchase price for such Shares shall be the market price on the TSX Venture Exchange at the time of acquisition .

6.2 Such Shares will be acquired by the Administrator on behalf of the Participants as fully paid and nonassessable Shares of Atlas through the services of a duly registered stockbroker.

6 . 3 The shares purchased by Participant Contributions and Company Contributions respectively in accordance with Section 6.1 shall, in each case, be allocated to the Participants in accordance with the respective Contributions made by, or by the Company in respect of, each such Participant. Such allocation shall be expressed in terms of whole numbers and fractional parts of Shares.

6.4 In the event that dividends paid on shares of Shares held in the participant's account will be credited to the participant's Account. Dividend funds , if applicable, will be reinvested and used to purchase additional Shares as soon as is reasonable practical after receipt of the funds. The purchase price for such shares shall be the prevailing market price at the time of such purchase.

7. ACCOUNTING

7 . 1 The Administrator shall maintain an account for each Participant i n such a way that the interests of each Participant in the Plan in respect of Participant and Company Contributions may be ascertained. Such individual accounts shall be posted periodically . The Account will reflect Shares purchased by Participant and Company Contributions which have been allocated to such account as well as any New Issue and Secondary Offering Shares transferred into the Plan .

8. RELEASE OF CERTIFICATES

8.1 A Participant may, s ubj ec t to this Section and s ection 12.5, elect to receive certificates representing Shares in the Participant's Account (a "Relea se" ). Such Relea se shall require prior written notice to the Administrator of at least fourteen (14) days . Except as se t out in Section 9 or unless otherwise determined by the Company, a Participant may not make such election more than once in any four month period.

8.2 Subject to Section 8.1, a Participant who ha s notified the Admini s trator that the Participant wishes to withdraw the whole or a part of the Shares in the Participant's Account s hall be entitled to receive such Shares (provided the Relea se is in respect of at least 10 Shares), computed to the date the notice is received by the Administrator . A share certificate representing the appropriate number of Shares, regi ste red in the name of such Participant or to an account for which the Participant is the beneficial holder, will be provided to the Participant. If such Participant is withdrawing the entire Account and is entitled to a fraction of a Share upon such Release, an amount equal to the value of such fraction shall be paid to the Participant. At the Participant's option, the Administrator:

(a) may sell Share s in the Participant's Account , in which case a Release will be comprised of the proceeds of such sale le ss all applicable taxes and the expenses which are chargeable to the Participant pursuant to Section 11.1; or

(b) may transfer Shares to a brokerage account in the Participant's name .

8 . 3 The Company shall arrange to provide statements to Participant s describing the particulars of each Release.

9. DISTRIBUTION ON TERMINATION OF EMPLOYMENT

9 . 1 Upon the termination of employment of any Participant with the Company by reason of death, retirement or long-term disability, a Release shall be made in re s pect of all Share s held in the Participant ' s Account .

9.2 Upon the terminat i on of employment of any Part i cipant with the Company for any rea s on other than those specified in Section 9.1and e x cept a s may be determined by the Company, in its discretion, as contemplated by Section 9.4, a Release shall be made in respect of all Shares held in the Participant's Account at that time.

9 . 3 A certificate for such Sha r e s , registered in the name of such Participant , or in s uch name as the Participant may direct , shall be mailed to the Participant . If the Participant shall be entitled to a fraction of a Share upon such termination , an amount equal to the value of such fraction shall be pa i d to such Participant .

9 . 4 Upon the termination of employment of any Participant with the Company for any rea s on , the Releas e of the Sh a res held in the Par t icipant' s Account shall be made in such manner as the Company determine s , unle ss the Participant make s an election in accordance with Section 8.2 within 30 days of the date of determination.

10. THE ADMINISTRATOR

10.1 The Company shall appoint a person , firm or company to serve a s the admini s trator under the Pl a n . The Company and the Admini s trator shall enter into an agreement (the Admini s tration A g reement"), which s hall provide for the application of amounts received to purchase Shares . The Admini s tration Agreem e nt shall

provide that the Admini s trator hold s such Shares as agent for the Participants in accordance with the Plan . The Administration Agreement s hall contain such other term s and provisions, not inconsistent with the Plan , as the Company s hall approve. The Company shall have the right, at any time and from time to time, to remove from office the Administrator under the Plan and to appoint another Admini s trator in its stead in accordance with the term s of the Administration A g reement .

11. ADMINISTRATION

11.1 The Plan shall be administered by the Company in accordance with it s provi s ion s. All costs and expense s of administering the Plan, except as otherwi s e set out in the Plan, will b e p a id by th e Company . Commi ss ions , i f any , on the purchase of Share s s hall be paid by the Plan. All brokerage fee s and other e x pen s e s related to the sale of a Participant's Shares shall be charged by the Company to such Participant. The Company may, from time to time, establish administrative rules and regulations relating to the operation of the Plan as it may deem necessary to further the purpose of the Plan and amend or repeal such rules and regulations. The Company, in its discretion, may appoint a committee for the purpose of interpreting, administering, and implementing the Plan . The Company may also delegate to any director, officer or employee of the Company such administrative duties and powers as it may see fit .

12. GENERAL PROVISIONS

12.1 The Company shall arrange for the distribution to each Participant of a statement of the Participant's account balances in the Participant's Account quarterly during each Fiscal Year or such other periodic basis as the Company decides from time to time.

12.2 The interest of any Participant in the Plan shall not be assignable, either by voluntary assignment or by operation of law, except upon death or upon mental incompetency, or as otherwise specifically permitted herein.

12.3 Participation in the Plan shall be entirely voluntary and any decision not to participate shall not affect any Employee's employment with the Company. No Employee, Participant or other person shall have any claim or right to participate under the Plan. Participation in this Plan shall not affect the right of the Company to terminate the employment of a Participant. Neither any period of notice, if any, nor any payment in lieu thereof, or combination thereof, upon termination of employment shall be considered as extending the period of employment for the purposes of the Plan .

12.4 The Plan and the implementation thereof is subject to such governmental and stock exchange approvals or consents that now or in the future are applicable. As a condition of participating in the Plan, each Participant agrees to comply with all laws, rules and regulations which may apply in connection with the Plan and agrees to furnish to the Company all information and undertakings as may be required to permit compliance with such laws, rules and regulations .

12.5 The Company may adopt and apply rules that, in its opinion, will ensure that the Company will be able to comply with applicable provisions of any federal, provincial, state or local law relating to withholding of tax, including on the amount, if any, includable in income of a Participant . The Company shall have the right in its discretion to satisfy withholding tax liability by retaining or purchasing Shares acquired by a Participant under the Plan.

13. VOTING OF SHARES IN THE PLAN

13.1 The Company shall furnish each Participant with a copy of a notice of each meeting of shareholders of Atlas and other material sent to holders of Shares.

13.2 A Participant may provide instruction as to the voting of Shares at any meeting at which the holders of Shares are entitled to vote in respect of the number of whole s hares standing to the Participant ' s credit in the Participant's Account. Such instruction must be given on a proxy form provided by the Administrator or the Company.

14. AMENDMENT OR TERMINATION OF THE PLAN

14.1 The Company reserves the right at any time to terminate the Plan. The Company may amend or suspend, in whole or in part, the Plan, including such amendment s to the Plan as may be necessary or desirable, in the opinion of the Company, to comply with the rules or regulations of any governmental authority or stock exchange that apply to the Plan, provided, however, that:

(a) any approvals required under any applicable law are obtained; and

(b) no such amendment or suspension, unless required by law, shall be made at any time which has the effect of adversely affecting the existing rights of a Participant in respect of Contributions which have been made, or Shares which have been acquired under the Plan, prior to the date of such amendment or suspension.

Exhibit 10.4

ADOPTION AGREEMENT

PROFIT SHARING/401(K) PLAN

ARTICLE 1

1 PLAN INFORMATION

(a) Name of Plan :

This is the ATLAS Financial Holdings, Inc. 401{k) Plan (the "Plan")

(b) Type of Plan :

(1) þ 401(k) Only

(2) o 401(k) and Profit Sharing

(3) o Profit Sharing Only

(d) Plan Year End (month/day) : 12/31

(e) Three Digit Plan Number : 001

(f) Limitation Year

(1) o Calendar Year

(2) þ Plan Year

(3) o Other:

(g) Plan Status (check appropriate box(es)):

(1) Adoption Agreement Effective Date: 07/11/2011

Note: The effective date specified above must be after the last day of the 2001 Plan Year.

(2) The Adoption Agreement Effective Date is :

(A) o A new Plan Effective Date

(B) þ An amendment Effective Date (check one):

(i) þ an amendment and restatement of this Basic Plan Document No. 14 and its Adoption Agreement previously executed by the Employer;

(ii) o a conversion from Fidelity Basic Plan Document No. 10 and its Adoption Agreement to Basic Plan Document No. 14 and its Adoption Agreement; or

(iii) o a conversion to Basic Plan Document No. 14 and its Adoption Agreement.

(3) o Special Effective Dates . Certain provisions of the Plan shall be effective as of a date other than the date specified in Subsection 1.01(g)(1) above. Please complete the Special Effective Dates Addendum to the Adoption Agreement indicating the affected provisions and their effective dates.

(4) o Plan Merger Effective Dates . Certain plan(s) were merged into the Plan on or after the date specified in

Subsection 1.01(g)(l) above. The merged plans are listed in the Plan Mergers Addendum. Please complete the appropriate subsection(s) of the Plan Mergers Addendum to the Adoption Agreement indicating the planes) that have merged into the Plan and the effective date(s) of such merger(s).

(5) o Frozen Plan . The Plan is currently frozen. Unless the Plan is amended in the future to provide otherwise, no further contributions shall be made to the Plan. Plan assets will continue to be held on behalf of Participants and their Beneficiaries until distributed in accordance with the Plan terms. (If this provision is selected, it will override any conflicting provision selected in the Adoption Agreement.)

Note: While the Plan is frozen, no further contributions, including Deferral Contributions, Employee Contributions, and Rollover Contributions, may be made to the Plan and no employee who is not already a Participant in the Plan may become a Participant.

1.02 EMPLOYER

(a) Employer Name : American Service Insurance Company, Inc. dba Atlas Financial Holdings, Inc.

(1) Employer's Tax Identification Number: 36-3223936

(2) Employer's fiscal year end: 12/31

(b) The term "Employer" includes the following participating employers (choose one):

(1) þ No other employers participate in the Plan.

(2) o Certain other employers participate in the Plan. Please complete the Participating Employers Addendum.

1.03 TRUSTEE

(a) Trustee Name : Fidelity Management Trust Company. Address: 82 Devonshire Street, Boston, MA 02109

1.04 COVERAGE

All Employees who meet the conditions specified below shall be eligible to participate in the Plan:

(a) Age Requirement (check one):

(1) þ no age requirement.

(2) o must have attained age: __ (not to exceed 21).

b) Eligibility Service Requirement(s) - There shall be no eligibility service requirements for contributions to the Plan unless selected below (check one):

(1) o __ (not to exceed 365) days of Eligibility Service requirement (no minimum Hours of Service can be required)

(2) o __ (not to exceed 12) months of Eligibility Service requirement (no minimum Hours of Service can be required)

(3) o one year of Eligibility Service requirement (at least __ (not to exceed 1,000) Hours of Service are required during the Eligibility Computation Period

(4) o two years of Eligibility Service requirement (at least __ (not to exceed 1,000) Hours of Service are required during each Eligibility Computation Period) (If Option 1.07(a) is elected, only one year of Eligibility Service is required for Deferral Contributions.)

Note: If the Employer selects the two year Eligibility Service requirement, then contributions subject to such Eligibility Service requirement must be 100% vested when made.

(5) þ see Additional Provisions Addendum.

(6) o Hours of Service Crediting . Hours of Service will be credited in accordance with the equivalency selected in the Hours of Service Equivalencies Addendum rather than in accordance with the equivalency described in Subsection 2.01(dd) of the Basic Plan Document. Please complete the Hours of Service Equivalencies Addendum.

(c) Eligibility Computation Period - The Eligibility Computation Period is the 12-consecutive-month period beginning on an Employee's Employment Commencement Date and each 12-consecutive-month period beginning on an anniversary of his Employment Commencement Date.

(d ) Eligible Class of Employees:

(1) Generally, the Employees eligible to participate in the Plan are (choose one):

(A) þ all Employees of the Employer.

(B) o only Employees of the Employer who are covered by (choose one):

(i) o any collective bargaining agreement with the Employer, provided that the agreement requires the employees to be included under the Plan.

(ii) o the following collective bargaining agreement(s) with the Employer: _____

(2) þ Notwithstanding the selection in Subsection 1.04(d)(I) above, certain Employees of the Employer are excluded from participation in the Plan (check the appropriate box(es)):

Note: Certain employees (e.g., residents of Puerto Rico) are excluded automatically pursuant to Subsection 2.01(s) of the Basic Plan Document, regardless of the Employer's selection under this Subsection 1.04( d)(2).

(A) þ employees covered by a collective bargaining agreement, unless the agreement requires the employees to be included under the Plan. (Do not choose if Option 1.04(d)(I)(B) is selected above.)

(B) o Highly Compensated Employees as defined in Subsection 2.01(cc) of the Basic Plan Document.

(D) þ nonresident aliens who do not receive any earned income from the Employer which constitutes United States source income.

(E) o other: ____

Note: The eligible group defined above must be a definitely determinable group and cannot be subject to the discretion of the Employer. In addition, the design of the classifications cannot be such that the only Non-Highly Compensated Employees benefiting under the Plan are those with the lowest compensation and/or the shortest periods of service and who may represent the minimum number of such employees necessary to satisfy coverage under Code Section 41 O(b).

(i) o Notwithstanding this exclusion, any Employee who is excluded from participation because of an exclusion that directly or indirectly imposes an age and/or service requirement for participation (for example by excluding part-time or temporary employees) shall become an Eligible Employee eligible to participate in the Plan on the Entry Date coinciding with or immediately following the date on which he first satisfies the following requirements: (I) he attains age 21 and (II) he completes at least 1,000 Hours of Service during an Eligibility Computation Period.

Note: The Employer should exercise caution when excluding employees from participation in the Plan. Exclusion of employees may adversely affect the Plan's satisfaction of the minimum coverage requirements, as provided in Code Section 41 O(b).

(e) Entry Date(s) - The Entry Date(s) shall be (check one):

(1) o the first day of each Plan Year and the first day of the seventh month of each Plan Year

(2) o the first day of each Plan Year and the first day of the fourth, seventh, and tenth months of each Plan Year

(3) þ the first day of each month

(4) o immediate upon meeting the eligibility requirements specified in Subsections 1.04(a) and l.04(b)

(5) o the first day of each Plan Year (Do not select if there is an Eligibility Service requirement of more than six months in Subsection 1.04(b) for the type(s) of contribution or if there is an age requirement of more than 20112 in Subsection 1.04(a) for the type(s) of contribution.)

Note: If another plan is merged into the Plan, the Plan may provide on the Plan Mergers Addendum that the effective date of the merger is also an Entry Date with respect to certain Employees.

(f) Date of Initial Participation - An Employee shall become a Participant unless excluded by Subsection 1.04(d) above on the Entry Date coinciding with or immediately following the date the Employee completes the service and age requirement(s) in Subsections 1.04(a) and (b), if any, except (check one):

(1) o no exceptions.

(2) o Employees employed on (insert date) shall become Participants on that date

(3) þ Employees who meet the age and service requirement(s) of Subsections 1.04(a) and (b) on 03/01/2011 (insert date) shall become Participants on that date.

1.05 COMPENSATION

Compensation for purposes of determining contributions shall be as defined in Subsection 2.01 (k) of the Basic Plan Document, modified as provided below.

(a) Compensation Exclusions - Compensation shall exclude the item(s) selected below.

(1) þ No exclusions.

(2) o Overtime pay.

(3) o Bonuses.

(4) o Commissions.

(5) o The value of restricted stock or of a qualified or a non-qualified stock option granted to an Employee by the Employer to the extent such value is includable in the Employee's taxable income.

(6) o Severance pay received prior to termination of employment. ( Severance pay received following termination of employment is always excluded for purposes of contributions .)

Note : If the Employer selects an option, other than (1) above, with respect to Nonelective Employer Contributions, Compensation must be tested to show that it meets the requirements of Code Section 414(s) or the allocations must be tested to show that they meet the general test under regulations issued under Code Section 401(a)(4). These exclusions shall not apply for purposes of the "Top Heavy" requirements in Section 15.03, for allocating safe harbor Matching Employer Contributions if Subsection 1.11(a)(3) is selected, for allocating safe harbor Nonelective Employer Contributions if Subsection 1.12(a)(3) is selected, or for allocating non-safe harbor Nonelective Employer Contributions if the Integrated Formula is elected in Subsection l.l2(b)(2).

(b) Compensation for the First Year of Participation - Contributions for the Plan Year in which an Employee first becomes a Participant shall be determined based on the Employee's Compensation as provided below. (Complete by checking the appropriate box.)

(1) o Compensation for the entire Plan Year.

(2) þ Only Compensation for the portion of the Plan Year in which the Employee is eligible to participate in the Plan.

1.06 TESTING RULES

(a) ADP/ACP Present Testing Method - The testing method for purposes of applying the "ADP" and "ACP" tests described in Sections 6.03 and 6.06 of the Basic Plan Document shall be the (check one):

(1) þ Current Year Testing Method - The "ADP" or "ACP" of Highly Compensated Employees for the Plan Year

shall be compared to the "ADP" or "ACP" of Non-Highly Compensated Employees for the same Plan Year. (Must choose if Option 1.11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, or Option 1.12(a)(3), 401(k) Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.)

(2) o Prior Year Testing Method - The "ADP" or "ACP" of Highly Compensated Employees for the Plan Year shall be compared to the "ADP" or "ACP" of Non-Highly Compensated Employees for the immediately preceding Plan Year. (Do not choose if Option 1.10(a)(1), alternative allocation formula for Qualified Nonelective Con tributions.)

(3 ) o Not applicable. (Only if Option 1.01(b)(3), Profit Sharing Only, is checked or Option 1.04(d)(2)(B), excluding all Highly Compensated Employees from the eligible class of Employees, is checked.)

Note: Restrictions apply on elections to change testing methods.

(b) First Year Testing Method - If the first Plan Year that the Plan, other than a successor plan, permits Deferral Contributions or provides for Matching Employer Contributions, occurs on or after the Effective Date specified in Subsection 1.01(g), the "ADP" and/or "ACP" test for such first Plan Year shall be applied using the actual "ADP" and/or "ACP" of Non-Highly Compensated Employees for such first Plan Year, unless otherwise provided below.

(1) o The "ADP" and/or "ACP" test for the first Plan Year that the Plan permits Deferral Contributions or provides for Matching Employer Contributions shall be applied assuming a 3% "ADP" and/or "ACP" for Non-Highly Compensated Employees. (Do not choose unless Plan uses prior year testing method described in Subsection 1.06(a)(2).)

(c) HCE Determinations : Look Back Year - The look back year for purposes of determining which Employees are Highly Compensated Employees shall be the l2-consecutive-month period preceding the Plan Year unless otherwise provided below.

(1) o Calendar Year Determination - The look back year shall be the calendar year beginning within the preceding Plan Year. (Do not choose if the Plan Year is the calendar year.)

(d ) RCE Determinations: Top Paid Group Election - All Employees with Compensation exceeding the dollar amount specified in Code Section 414(q)(l)(B)(i) adjusted pursuant to Code Section 415(d) (e.g., $95,000 for "determination years" beginning in 2005 and "look-back years" beginning in 2004) shall be considered Highly Compensated Employees, unless Top Paid Group Election below is checked.

(1) o Top Paid Group Election - Employees with Compensation exceeding the dollar amount specified in Code Section 414(q)(l)(B)(i) adjusted pursuant to Code Section 415(d) (e.g., $95,000 for "determination years" beginning in 2005 and "look-back years" beginning in 2004 shall be considered Highly Compensated Employees only if they are in the top paid group (the top 20% of Employees ranked by Compensation).

Note: Plan provisions for Sections 1.06(c) and L06(d) must apply consistently to all retirement plans of the Employer for determination years that begin with or within the same calendar year (except that Option 1.06(c)(1), Calendar Year Determination, shall not apply to calendar year plans).

1.07 DEFERRAL CONTRIBUTIONS

(a) þ Deferral Contributions - Participants may elect to have a portion of their Compensation contributed to the Plan on a before-tax basis pursuant to Code Section 401(k). Pursuant to Subsection 5.03(a) of the Basic Plan Document, if Catch-Up Contributions are selected below, the Plan's deferral limit is 75%, unless the Employer elects an alternative deferral limit in Subsection 1.07(a)(l)(A) below. If Catch-Up Contributions are selected below, and the Employer has specified a percentage in Subsection 1.07(a)(l)(A) that is less than 75%, a Participant eligible to make Catch-Up Contributions shall (subject to the statutory limits in Treasury Regulation Section lA14-1(b)(l)(i» in any event be permitted to contribute in excess of the specified deferral limit up to 100% of the Participant's "effectively available Compensation" (i.e., Compensation available after other withholding), as required by Treasury Regulation Section 1.414(v)-1(e)(1)(ii)(B).

(1) Regular Contributions - The Employer shall make a Deferral Contribution in accordance with Section 5.03 of the Basic Plan Document on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the payroll period in question. Such Deferral Contribution shall not exceed the deferral limit specified in Subsection 5.03(a) of the Basic Plan Document or in Subsection 1.07(aXl)(A) below, as applicable. Check and complete the appropriate box(es), if any.

(A) þ The deferral limit is 60 % (must be a whole number multiple of one percent) of Compensation. (Unless a different deferral limit is specified, the deferral limit shall be 75%. If Option 1.07(a)(4), Catch-Up Contributions, is selected

below, complete only if deferral limit is other than 75%.)

(B) o Instead of specifying a percentage of Compensation, a Participant's salary reduction agreement may specify a dollar amount to be contributed each payroll period, provided such dollar amount does not exceed the maximum percentage of Compensation specified in Subsection 5.03(a) of the Basic Plan Document or in Subsection 1.07(a)(1)(A) above, as applicable.

(C) A Participant may increase or decrease, on a prospective basis, his salary reduction agreement percentage or, if Roth 401(k) Contributions are selected in Subsection 1.07(aX5) below, the portion of his Deferral Contributions designated as Roth 401(k) Contributions (check one):

(i) þ as of the beginning of each payroll period.

(ii) o as of the first day of each month.

(iii) o as of each Entry Date. (Do not select if immediate entry is elected with respect to Deferral Contributions in Subsection 1.04(e).)

Note: Notwithstanding the Employer's election hereunder, if Option 1.l1(a)(3), 401(k) Safe Harbor Matching Employer Contributions, or Option 1.12(a)(3), 401(k) Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked, the Plan provides that an Active Participant may change his salary reduction agreement percentage for the Plan Year within a reasonable period (not fewer than 30 days) of receiving the notice described in Section 6.09 of the Basic Plan Document.

(D) A Participant may revoke, on a prospective basis, a salary reduction agreement at any time upon proper notice to the Administrator but in such case may not file a new

(i) o the beginning of the next payroll period.

(ii) o the first day of the next month

(iii) þ the next Entry Date. (Do not select if immediate entry is elected with respect to Deferral Contributions in Subsection 1.04(e).)

(2) o Additional Deferral Contributions - The Employer shall allow a Participant upon proper notice and approval to enter into a special salary reduction agreement to make additional Deferral Contributions in an amount up to 100% of their effectively available Compensation for the payroll period(s) designated by the Employer.

(3) þ Bonus Contributions - The Employer shall allow a Participant upon proper notice and approval to enter into a special salary reduction agreement to make Deferral Contributions in an amount up to 100% of any Employer paid cash bonuses designated by the Employer on a uniform and nondiscriminatory basis that are made for such Participants during the Plan Year. The Compensation definition elected by the Employer in Subsection l.05(a) must include bonuses if bonus contributions are permitted. Unless a Participant has entered into a special salary reduction agreement with respect to bonuses, the percentage deferred from any Employer paid cash bonus shall be (check (A) or (B) below):

(A) o Zero.

(B) þ The same percentage elected by the Participant for his regular contributions in accordance with Subsection 1.07(a)(I) above or deemed to have been elected by the Participant in accordance with Option 1.07(a)(6) below.

Note: A Participant's contributions under Subsection 1.07(aX2) and/or (3) may not cause the Participant to exceed the percentage limit specified by the Employer in Subsection l.07(a)(1)(A) for the full Plan Year. If the Administrator anticipates that the Plan will not satisfy the "ADP" and/or "ACP" test for the year, the Administrator may reduce the rate of Deferral Contributions of Participants who are Highly Compensated Employees to an amount objectively determined by the Administrator to be necessary to satisfy the "ADP" and/or "ACP" test.

(4) Catch-Up Contributions - The following Participants who have attained or are expected to attain age 50 before the close of the calendar year will be permitted to make Catch-Up Contributions to the Plan, as described in Subsection 5.03(a) of the Basic Plan Document:

(A) þ All such Participants.

(B) o All such Participants except those covered by a collective-bargaining agreement under which retirement benefits were a subject of good faith bargaining unless the bargaining agreement specifically provides for Catch-Up Contributions to be made on behalf of such Participants.

Note: The Employer must not select Option 1.07(a)(4) above unless all "applicable plans" (except any plan that is qualified under Puerto Rican law or that covers only employees who are covered by a collective bargaining agreement under which retirement benefits were a subject of good faith bargaining) maintained by the Employer and by any other employer that is treated as a single employer with the Employer under Code Section 414(b), (c), (m), or (0) also permit Catch-Up Contributions in the same dollar amount. An "applicable plan" is any 401(k) plan or any SIMPLE IRA plan, SEP, plan or contract that meets the requirements of Code Section 403(b), or Code Section 457 eligible governmental plan that provides for elective deferrals.

(5) o Roth 401(k) Contributions. Participants shall be permitted to irrevocably designate pursuant to Subsection 5.03(b) of the Basic Plan Document that a portion or all of the Deferral Contributions made under this Subsection 1.07(a) are Roth 401(k) Contributions that are includable in the Participant's gross income at the time deferred.

(6) þ Automatic Enrollment Contributions . Beginning on the effective date of this paragraph (6) (the "Automatic Enrollment Effective Date") and subject to the remainder of this paragraph unless an Eligible Employee affirmatively elects otherwise, his Compensation will be reduced by .3.% (the "Automatic Enrollment Rate"), such percentage to be increased in accordance with Option 1.07(b) (if applicable), for each payroll period in which he is an Active Participant, beginning as indicated in Subsection 1.07(a)(6)(A) below, and the Employer will make a pre-tax Deferral Contribution in such amount on the Participant's behalf in accordance with the provisions of Subsection S.03(c) of the Basic Plan Document (an "Automatic Enrollment Contribution").

(A) With respect to an affected Participant, Automatic Enrollment Contributions will begin as soon as administratively feasible on or after ( check one):

(i) þ The Participant's Entry Date.

(ii) o __ (minimum of 30) days following the Participant's date of hire, but no sooner than the Participant's Entry Date.

Within a reasonable period ending no later than the day prior to the date Compensation subject to the reduction would otherwise become available to the Participant, an Eligible Employee may make an affirmative election not to have Automatic Enrollment Contributions made on his behalf. If an Eligible Employee makes no such affirmative election, his Compensation shall be reduced and Automatic Enrollment Contributions will be made on his behalf in accordance with the provisions of this paragraph (6), and Option 1.07(b) if applicable, until such Active Participant elects to change or revoke such Deferral Contributions as provided in Subsection 1.07(a)(J)(C) or (D). Automatic Enrollment Contributions shall be made only on behalf of Active Participants who are first hired by the Employer on or after the Automatic Enrollment Effective Date and do not have a Reemployment Commencement Date, unless otherwise provided below.

(B) þ Additionally, unless such affected Participant affirmatively elects otherwise within the reasonable period established by the Plan Administrator, Automatic Enrollment Contributions will be made with respect to the Employees described below. (Check all that apply.)

(i) o Inclusion of Previously Hired Employees . On the later of the date specified in Subsection 1.07(a)(6)(A) with regard to such Eligible Employee or as soon as administratively feasible on or after the 30th day following the Notification Date specified in Subsection 1.07(a)(6)(B)(i)(I) below, Automatic Enrollment Contributions will begin for the following Eligible Employees who were hired before the Automatic Enrollment Effective Date and have not had a Reemployment Commencement Date. (Complete (I), check (II) or (Ill), and complete (IV), if applicable.)

(I) Notification Date : ____. (Date must be on or after the Automatic Enrollment Effective Date.)

(II) o Unless otherwise elected in Subsection 1.07(a)(6)(B)(i)(IV) below, all such Employees who have never had a Deferral Contribution election in place.

(III) o Unless otherwise elected in Subsection 1.07(a)(6)(B)(i)(IV) below, all such Employees who have never had a Deferral Contribution election in place and were hired by the Employer before the Automatic Enrollment Effective Date, but on or after the following date: __ .

(IV) o In addition to the group of Employees elected in Subsection 1.07(a)(6)(B)(i)(II) or (Ill) above, any Employee described in Subsection 1.07(a)(6)(B)(i)(II) or (III) above, as applicable, even if he has had a Deferral

Contribution election in place previously, provided he is not suspended from making Deferral Contributions pursuant to the Plan and has a deferral rate of zero on the Notification Date.

(ii) þ Inclusion of Rehired Employees . Unless otherwise stated herein, each Eligible Employee having a Reemployment Commencement Date on the date indicated in Subsection l.07(a)(6)(A) above. If Subsection 1.07(a)(6)(B)(i)(III) is selected, only such Employees with a Reemployment Commencement on or after the date specified in Subsection 1.07(a)(6)(B)(i)(III) will be automatically enrolled. If Subsection 1.07(a)(6)(B)(i) is not selected, only such Employees with a Reemployment Commencement on or after the Automatic Enrollment Effective Date will be automatically enrolled. If Subsection l.07(a)(6)(A)(ii) has been elected above, for purposes of Subsection 1.07(a)(6)(A) only, such Employee's Reemployment Commencement Date will be treated as his date of hire.

(b) Automatic Deferral Increase: (Choose only if Automatic Enrollment Contributions are selected in Option J.07(a)(6) above ) - Unless an Eligible Employee affirmatively elects otherwise after receiving appropriate notice, Deferral Contributions for each Active Participant having Automatic Enrollment Contributions made on his behalf shall be increased annually by the whole percentage of Compensation stated in Subsection l.07(b)(1) below until the deferral percentage stated in Subsection 1.07(a)(1) is reached (except that the increase will be limited to only the percentage needed to reach the limit stated in Subsection 1.07(a)(1), if applying the percentage in Subsection 1.07(bXl) would exceed the limit stated in Subsection 1.07(a)(I», unless the Employer has elected a lower percentage limit in Subsection 1.07(b)(2) below.

(1) Increase by __ % (not to exceed 10%) of Compensation. Such increased Deferral Contributions shall be pre-tax Deferral Contributions.

(2) o Limited to % of Compensation (not to exceed the percentage indicated in Subsection 1.07(a)(I».

(3) Notwithstanding the above, the automatic deferral increase shall not apply to a Participant within the first six months following the date upon which Automatic Enrollment Contributions begin for such Participant.

1.08 EMPLOYEE CONTRIBUTIONS (AFTER TAX CONTRIBUTIONS)

(a) o Frozen Employee Contributions - Participants may not currently make after-tax Employee Contributions to the Plan, but the Employer does maintain frozen Employee Contributions Accounts.

1.09 ROLLOVER CONTRIBUTIONS

(a) þ Rollover Contributions - Employees may roll over eligible amounts from other qualified plans to the Plan subject to the additional following requirements:

(1) o The Plan will not accept rollovers of after-tax employee contributions.

(2) þ The Plan will not accept rollovers of designated Roth contributions. (Must be selected if Roth 401(k) Contributions are not elected in Subsection 1.07(a)(5).)

1.10 QUALIFIED NONELECTIVE EMPLOYER CONTRIBUTIONS

(a) Qualified Nonelective Employer Contributions - If any of the following Options is checked: 1.07(a), Deferral Contributions, or 1.11(a), Matching Employer Contributions, the Employer may contribute an amount which it designates as a Qualified Nonelective Employer Contribution to be included in the "ADP" or "ACP" test. Unless otherwise provided below, Qualified Nonelective Employer Contributions shall be allocated to all Participants who were eligible to participate in the Plan at any time during the Plan Year and are Non-Highly Compensated Employees in the ratio which each such Participant's "testing compensation", as defined in Subsection 6.01(r) of the Basic Plan Document, for the Plan Year bears to the total of all such Participants' "testing compensation" for the Plan Year.

(1) o Qualified Nonelective Employer Contributions shall be allocated only among those Participants who are Non-Highly Compensated Employees and are designated by the Employer as eligible to receive a Qualified Nonelective Employer Contribution for the Plan Year. The amount of the Qualified Nonelective Employer Contribution allocated to each such Participant shall be as designated by the Employer, but not in excess of the "regulatory maximum." The "regulatory maximum" means 5% (10% for Qualified Nonelective Contributions made in connection with the Employer's obligation to pay prevailing wages under the Davis-Bacon Act) of the "testing compensation" for such Participant for the Plan Year. The "regulatory maximum" shall apply separately with respect to Qualified Nonelective Contributions to be included in the "ADP" test and Qualified Nonelective Contributions to be included in the "ACP" test. (Cannot be selected if the Employer has elected prior year testing in Subsection 1.06(a)(2).)

1.11 MATCHING EMPLOYER CONTRIBUTIONS

(a) þ Matching Employer Contributions - The Employer shall make Matching Employer Contributions on behalf of each of its "eligible" Participants as provided in this Section 1.11. For purposes of this Section 1.11, an "eligible" Participant means any Participant who is an Active Participant during the Contribution Period and who satisfies the requirements of Subsection 1.11 ( e) or Section 1.13. (Check one):

(1 ) þ Non-Discretionary Matching Employer Contributions - The Employer shall make a Matching Employer Contribution on behalf of each "eligible" Participant in an amount equal to the following percentage of the eligible contributions made by the "eligible" Participant during the Contribution Period (complete all that apply):

(A) þ Flat Percentage Match:

(i) 50% to all "eligible" Participants

(B) o Tiered Match: __ % of the first % of the "eligible" Participant's Compensation contributed to the Plan,

__ % of the next % of the "eligible" Participant's Compensation contributed to the Plan,

__ % of the next % of the "eligible" Participant's Compensation contributed to the Plan.

Note: The group of "eligible" Participants benefiting under each match rate must satisfy the nondiscriminatory coverage requirements of Code Section 410(b).

(i) þ Contributions in excess of 5% of the "eligible" Participant's Compensation for the Contribution Period shall not be considered for non-discretionary Matching Employer Contributions.

Note: If the Employer elected a percentage limit in (i) above and requested the Trustee to account separately for matched and unmatched Deferral and/or Employee Contributions made to the Plan, the non-discretionary Matching Employer Contributions allocated to each "eligible" Participant must be computed, and the percentage limit applied, based upon each payroll period.

(ii) o Matching Employer Contributions for each "eligible" Participant for each Plan Year shall be limited to $__ .

(2) o Discretionary Matching Employer Contributions - The Employer may make a discretionary Matching Employer Contribution on behalf of each "eligible" Participant in accordance with Section 5.08 of the Basic Plan Document in an amount equal to a percentage of the eligible contributions made by each "eligible" Participant during the Contribution Period. Discretionary Matching Employer Contributions may be limited to match only contributions up to a specified percentage of Compensation or limit the amount of the match to a specified dollar amount.

Note: If the Matching Employer Contribution made in accordance with this Subsection 1.11(a)(2) matches different percentages of contributions for different groups of "eligible" Participants, it may need to be tested to show that it meets the requirements of Code Section 401 (a)(4), nondiscrimination in benefits, rights, and features.

(A) o 4% Limitation on Discretionary Matching Employer Contributions for Deemed Satisfaction of "ACP" Test - In no event may the dollar amount of the discretionary Matching Employer Contribution made on an "eligible" Participant's behalf for the Plan Year exceed 4% of the "eligible" Participant's Compensation for the Plan Year. (Only if Option 1.12(a)(3), 401(k) Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.)

(3) o 401(k) Safe Harbor Matching Employer Contributions - If the Employer elects one of the safe harbor formula Options provided in the 401(k) Safe Harbor Matching Employer Contributions Addendum to the Adoption Agreement and provides written notice each Plan Year to all Active Participants of their rights and obligations under the Plan, the Plan shall be deemed to satisfy the "ADP" test and, under certain circumstances, the "ACP" test. (Only if Option 1.07(a), Deferral Contributions is checked.)

(b) o Additional Matching Employer Contributions - The Employer may at Plan Year end make an additional Matching Employer Contribution on behalf of each "eligible" Participant in an amount equal to a percentage of the eligible contributions made by each "eligible" Participant during the Plan Year. (Only if Option 1.11(a)(1) or (3) is checked.) The additional Matching Employer Contribution may be limited to match only contributions up to a specified percentage of Compensation or limit the

amount of the match to a specified dollar amount.

Note: If the additional Matching Employer Contribution made in accordance with this Subsection 1.11(b) matches different percentages of contributions for different groups of "eligible" Participants, it may need to be tested to show that it meets the requirements of Code Section 401(a)(4), nondiscrimination in benefits, rights, and features.

(1)

o 4% Limitation on additional Matching Employer Contributions for Deemed Satisfaction of "ACP" Test - In no event may the dollar amount of the additional Matching Employer Contribution made on an "eligible" Participant's behalf for the Plan Year exceed 4% of the "eligible" Participant's Compensation for the Plan Year. (Only if Option 1.11(a)(3), 401(k) Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked.)

Note: If the Employer elected Option 1. 11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, above and wants to be deemed to have satisfied the "ADP" test, the additional Matching Employer Contribution must meet the requirements of Section 6.09 of the Basic Plan Document. In addition to the foregoing requirements, if the Employer elected Option 1.11(a)(3), 40l(k) Safe Harbor Matching Employer Contributions, or Option 1.12(a)(3), 401(k) Safe Harbor Formula, with respect to Nonelective Employer Contributions, and wants to be deemed to have satisfied the "ACP" test with respect to Matching Employer Contributions for the Plan Year, the eligible contributions matched may not exceed the limitations in Section 6.10 of the Basic Plan Document.

(1) Deferral Contributions - Deferral Contributions made to the Plan are matched at the rate specified in this Section 1.11. Catch-Up Contributions are not matched unless the Employer elects Option 1.11(c)(1)(A) below.

(A) o Catch-Up Contributions made to the Plan pursuant to Subsection l.07(a)(4) are matched at the rates specified in this Section 1.11.

Note: Notwithstanding the above, if the Employer elected Option 1.11(a)(3), 40l(k) Safe Harbor Matching Employer Contributions, Deferral Contributions shall be matched at the rate specified in the 40l(k) Safe Harbor Matching Employer Contributions Addendum to the Adoption Agreement without regard to whether they are Catch-Up Contributions.

(d) Contribution Period for Matching Employer Contributions - The Contribution Period for purposes of calculating the amount of Matching Employer Contributions is:

(1) o each calendar month.

(2) o each Plan Year quarter.

(3) o each Plan Year.

(4) þ each payroll period.

The Contribution Period for additional Matching Employer Contributions described in Subsection 1.11(b) is the Plan Year.

Note: If Matching Employer Contributions are made more frequently than for the Contribution Period selected above, the Employer must calculate the Matching Employer Contribution required with respect to the full Contribution Period, taking into account the "eligible" Participant's contributions and Compensation for the full Contribution Period, and contribute any additional Matching Employer Contributions necessary to "true up" the Matching Employer Contribution so that the full Matching Employer Contribution is made for the Contribution Period.

(e) Continuing Eligibility Requirement(s ) - A Participant who is an Active Participant during a Contribution Period and makes eligible contributions during the Contribution Period shall only be entitled to receive Matching Employer Contributions under Section 1.11 for that Contribution Period if the Participant satisfies the following requirement(s) (Check the appropriate box(es). Options (3) and (4) may not be elected together; Option (5) may not be elected with Option (2), (3), or (4); Options (2), (3), (4), (5), and (7) may not be elected with respect to Matching Employer Contributions if Option 1.11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, is checked or if Option 1.12(a)(3), 40l(k) Safe Harbor Formula, with respect to Nonelective Employer Contributions is checked and the Employer intends to satisfy the Code Section 401(m)(11) safe harbor with respect to Matching Employer Contributions):

(1) þ No requirements

(2) o Is employed by the Employer or a Related Employer on the last day of the Contribution Period

(3) o Earns at least 501 Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.)

4) o Earns at least (not to exceed 1,000) Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.)

(5) o Either earns at least 501 Hours of Service during the Plan Year or is employed by the Employer or a Related Employer on the last day of the Plan Year. (Only if the Contribution Period is the Plan Year.)

(6) o Is not a Highly Compensated Employee for the Plan Year.

(7) o Is not a partner or a member of the Employer, if the Employer is a partnership or an entity taxed as a partnership.

Note: If Option (2), (3), (4), or (5) is adopted during a Contribution Period, such Option shall not become effective until the first day of the next Contribution Period. Matching Employer Contributions attributable to the Contribution Period that are funded during the Contribution Period shall not be subject to the eligibility requirements of Option (2), (3), (4), or (5). If Option (2), (3), (4), (5), or (7) is elected with respect to any Matching Employer Contributions and if Option 1.12(a)(3), 401(k) Safe Harbor Formula, is also elected, the Plan will not be deemed to satisfy the "ACP" test in accordance with Section 6.10 of the Basic Plan Document and will have to pass the "ACP" test each year.

(f) o Qualified Matching Employer Contributions - Prior to making any Matching Employer Contribution hereunder (other than a 40l(k) Safe Harbor Matching Employer Contribution), the Employer may designate all or a portion of such Matching Employer Contribution as a Qualified Matching Employer Contribution that may be used to satisfy the "ADP" test on Deferral Contributions and excluded in applying the "ACP" test on Employee and Matching Employer Contributions. Unless the additional eligibility requirement is selected below, Qualified Matching Employer Contributions shall be allocated to all Participants who were Active Participants during the Contribution Period and who meet the continuing eligibility requirement(s) described in Subsection 1.11(e) above for the type of Matching Employer Contribution being characterized as a Qualified Matching Employer Contribution.

(1) o To receive an allocation of Qualified Matching Employer Contributions a Participant must also be a Non-Highly Compensated Employee for the Plan Year.

Note: Qualified Matching Employer Contributions may not be excluded in applying the "ACP" test for a Plan Year if the Employer elected Option 1.11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, or Option 1.12(a)(3), 401(k) Safe Harbor Formula, with respect to Nonelective Employer Contributions, and the "ADP" test is deemed satisfied under Section 6.09 of the Basic Plan Document for such Plan Year.

1.12 NONELECTIVE EMPLOYER CONTRIBUTIONS

If (a) or (b) is elected below, the Employer may make Nonelective Employer Contributions on behalf of each of its "eligible" Participants in accordance with the provisions of this Section l.12. For purposes of this Section 1.12, an "eligible" Participant means a Participant who is an Active Participant during the Contribution Period and who satisfies the requirements of Subsection 1.12(d) or Section 1.13.

Note: An Employer may elect both a fixed formula and a discretionary formula. If both are selected, the discretionary formula shall be treated as an additional Nonelective Employer Contribution and allocated separately in accordance with the allocation formula selected by the Employer.

(a) o Fixed Formula (check one or more):

(1) o Fixed Percentage Employer Contribution - For each Contribution Period, the Employer shall contribute for each "eligible" Participant a percentage of such "eligible" Participant's Compensation equal to):

(A) __ % (not to exceed 25%) to all "eligible" Participants.

Note: The allocation formula in Option 1.12(a)(1)(A) above generally satisfies a design-based safe harbor pursuant to the regulations under Code Section 401(a)(4).


(2)	o Fixed Flat Dollar Employer Contribution - The Employer shall contribute for each "eligible" Participant an

amount equal to:

(A) $__ to all "eligible" Participants. (Complete (i) below).

(i) The contribution amount is based on an "eligible" Participant's service for the following period (check one of the following):

(I) o Each paid hour.

(II) o Each Plan Year.

(III) o Other: (must be a period within the Plan Year that does not exceed one week and is uniform with respect to all "eligible" Participants).

Note: The allocation formula in Option 1.12(a)(2)(A) above generally satisfies a design-based safe harbor pursuant to the regulations under Code Section 401(a)(4).

(3)

o 401(k) Safe Harbor Formula - The Nonelective Employer Contribution specified in the 401(k) Safe Harbor Nonelective Employer Contributions Addendum is intended to satisfy the safe harbor contribution requirements under Sections 401(k) and 401(m) of the Code such that the "ADP" test (and, under certain circumstances, the "ACP" test) is deemed satisfied. Please complete the 401(k) Safe Harbor Nonelective Employer Contributions Addendum to the Adoption Agreement. (Choose only if Option 1.07(a), Deferral Contributions is checked.)


(a)	o Discretionary Formula - The Employer may decide each Contribution Period whether to make a discretionary Nonelective Employer Contribution on behalf of "eligible" Participants in accordance with Section 5.10 of the Basic Plan Document.


(1)	o Non-Integrated Allocation Formula - In the ratio that each "eligible" Participant's Compensation bears to the total Compensation paid to all "eligible" Participants for the Contribution Period.

(2)

o Integrated Allocation Formula - As (1) a percentage of each "eligible" Participant's Compensation plus (2) a percentage of each "eligible" Participant's Compensation in excess of the "integration level" as defined below. The percentage of Compensation in excess of the "integration level" shall be equal to the lesser of the percentage of the "eligible" Participant's Compensation allocated under (1) above or the "permitted disparity limit" as defined below.

Note: An Employer that has elected Option 1.12(a)(3), 401(k) Safe Harbor Formula, may not take Nonelective Employer Contributions made to satisfy the 401(k) safe harbor into account in applying the integrated allocation formula described above.

(A) "Integration level" means the Social Security taxable wage base for the Plan Year, unless the Employer elects a lesser amount in (i) or (ii) below.

(i) _% (not to exceed 100%) of the Social Security taxable wage base for the Plan Year, or

(ii) $_ (not to exceed the Social Security taxable wage base).

"Permitted disparity limit" means the percentage provided by the following table:



The “Integration Level” is ___% of the Taxable Wage Base	The “Permitted Disparity Limit” is:
20% or less	5.7%
More than 20% but not more than 80%	4.3%
More than 80%, but less than 100%	5.4%
100%	5.7%

Note: An Employer who maintains any other plan that provides for Social Security Integration (permitted disparity) may not elect Option 1.l2(b)(2).

(c) Contribution Period for Nonelective Employer Contributions - The Contribution Period for purposes of calculating the amount of Nonelective Employer Contributions is the Plan Year.

(d) Continuing Eligibility Requirements ) - A Participant shall only be entitled to receive Nonelective Employer Contributions for a Plan Year under this Section 1.12 if the Participant is an Active Participant during the Plan Year and satisfies the following requirement(s) (Check the appropriate box(es) - Options (3) and (4) may not be elected together; Option (5) may not be elected with Option (2), (3), or (4); Options (2), (3), (4), (5), and (7) may not be elected with respect to Nonelective Employer Contributions under the fixed formula if Option 1.12(a)(3), 401(k) Safe Harbor Formula, is checked):

(1) o No requirements.

(2) o Is employed by the Employer or a Related Employer on the last day of the Contribution Period.

(3) o Earns at least 501 Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.)

(4) o Earns at least (not to exceed 1,000) Hours of Service during the Plan Year. (Only if the Contribution Period is the Plan Year.)

(6) o Is not a Highly Compensated Employee for the Plan Year.

(7) o Is not a partner or a member of the Employer, if the Employer is a partnership or an entity taxed as a partnership.

Note: If Option (2) (3), (4), or (5) is adopted during a Contribution Period, such Option shall not become effective until the first day of the next Contribution Period. Nonelective Employer Contributions attributable to the Contribution Period that are funded during the Contribution Period shall not be subject to the eligibility requirements of Option (2), (3), (4), or (5).

1.13 EXCEPTIONS TO CONTINUING ELIGIBILITY REQUIREMENTS

Death, Disability, and Retirement Exceptions - All Participants who become disabled, as defined in Section 1.15, retire, as provided in Subsection 1.14(a), (b), or (c), or die are exempted from any last day or Hours of Service requirement.

1.14 RETIREMENT

(a) The Normal Retirement Age under the Plan is (check one);

(1) þ age 65

(2) o age __ (specify between 55 and 64).

(3) o later of age (not to exceed 65) or the (not to exceed 5th) anniversary of the Participant's Employment Commencement Date.

(b) þ The Early Retirement Age is the date the Participant attains age 55.0 (specify 55 or greater) and completes 0 years of Vesting Service.

Note: If this Option is elected, Participants who are employed by the Employer or a Related Employer on the date they reach Early Retirement Age shall be 100% vested in their Accounts under the Plan.

Note: If this Option is elected, Participants who are employed by the Employer or a Related Employer on the date they become disabled shall be 100% vested in their Accounts under the Plan. Pursuant to Section 11.03 of the Basic Plan Document, a Participant is not considered to be disabled until he terminates his employment with the Employer.

1.15 DEFINITION OF DISABLED

A Participant is disabled if he/she meets any of the requirements selected below (check the appropriate box(esj):


(a)	o The Participant satisfies the requirements for benefits under the Employer's long-term disability plan.


(b)	þ The Participant satisfies the requirements for Social Security disability benefits.

1.16 VESTING

A Participant's vested interest in Matching Employer Contributions and/or Nonelective Employer Contributions, other than 401(k) Safe Harbor Matching Employer and/or 401(k) Safe Harbor Nonelective Employer Contributions elected in Subsection 1.11(a)(3) or 1.12(a)(3), shall be based upon his years of Vesting Service and the schedule selected in Subsection 1.16(c) below, except as provided in Subsection 1.16(d) or (e) below and the Vesting Schedule Addendum to the Adoption Agreement or as provided in Subsection 1.22c.


(a)	o When years of Vesting Service are determined, the elapsed time method shall be used


(b)	þ Years of Vesting Service shall exclude service prior to the Plan's original Effective Date as listed in Subsection 1.01(g)(1) or Subsection 1.01(g)(2), as applicable.

(1) o Nonelective Employer Contributions (check one)

(A) þ N/A - No Nonelective Employer Contributions other than 401(k) Safe Harbor Nonelective Employer Contributions

(B) o 100% Vesting immediately

(D) o 6 year graduated

(E) o Other vesting (complete E1 below)

(2) Matching Employer Contributions (check one):

(A) o N/A - No Nonelective Employer Contributions other than 401(k) Safe Harbor Matching Employer Employer Contributions

(B) o 100% Vesting immediately

(D) o 6 year graduated (see D below)

(E) þ Other vesting (complete E2 below)



Years of Vesting Service	C	D	E1	E2
—	—%	—%	____%	—%
1	—%	—%	____%	20%
2	—%	20%	____%	40%
3	100%	40%	____%	60%
4	100%	60%	____%	80%
5	100%	80%	____%	100%
6	100%	100%	____%	100%

Note: A schedule elected under El or E2 above must be at least as favorable as one of the schedules in C or D above.

Note: If the vesting schedule is amended and a Participant's vested interest calculated using the amended vesting schedule is less in any year than the Participant's vested interest calculated under the Plan's vesting schedule in effect immediately before the amendment, the amended vesting schedule shall apply only to Employees hired on or after the effective date of the amendment. Please select paragraph (e) below and complete Section (b) of the Vesting Schedule Addendum to the Adoption Agreement describing the vesting schedule in effect for Employees hired before the effective date of the amendment.

Note: If the vesting schedule is amended, the amended vesting schedule shall apply only to Participants who are Active Participants on or after the effective date of the amendment not subject to the prior vesting schedule as provided in the preceding Note. Participants who are not Active Participants on or after that date shall be subject to the prior vesting schedule. Please select paragraph (e) below and complete Section (b) of the Vesting Schedule Addendum to the Adoption Agreement describing the prior vesting schedule.

(d) o A less favorable vesting schedule than the vesting schedule selected in 1.16(c)(2) above applies to Matching Employer Contributions made for Plan Years beginning before the EGTRRA effective date. Please complete Section (a) of the Vesting Schedule Addendum to the Adoption Agreement. A vesting schedule or schedules different from the vesting schedulers) selected above applies to certain Participants. Please complete Section (b) of the Vesting Schedule Addendum to the Adoption Agreement.

1.17 PREDECESSOR EMPLOYER SERVICE

(a) þ Service for purposes of eligibility in Subsection 1.04(b) and vesting in Subsection 1.16 of this Plan shall include service with the following predecessor employer(s):

Zephyr Insurance Company, Inc.

Traveler's Indemnity Co. (on behalf of Mendota Insurance)

American Service Investment

Walshire Insurance

Southern United

Hamilton Risk

UCC Corporation

Avalon Risk Management

ARM Insurance Agency of Mass.

American Country Holding

American Country Insurance Inc.

Universal Casualty Company

Auto Body Tech Inc.

American Service Insurance Co.

Consolidated Insurance Management Co.

Lincoln General Insurance Co.

Southern United Fire Insurance Company

RPC Insurance Agency, LLC

Assigned Risk Solutions, LID

Kingsway America, Inc.

1.18 PARTICIPANT LOANS

a) þ Participant loans are allowed in accordance with Article 9 and Joan procedures outlined in the Service Agreement

1.19 IN-SERVICE WITHDRAWALS

Participants may make withdrawals prior to termination of employment under the following circumstances (check the appropriate box(es)):

(a) þ Hardship Withdrawals - Hardship withdrawals shall be allowed in accordance with Section 10.05 of the Basic Plan Document, subject to a $500 minimum amount.

(1) Hardship withdrawals will be permitted from:

(A) þ A Participant's Deferral Contributions Account only.

(B) o The Accounts specified in the In-Service Withdrawals Addendum. Please complete Section (a) in In-Service Withdrawals Addendum.

(b) þ Age 59 1/2 - Participants shall be entitled to receive a distribution of all or any portion of the following Accounts upon attainment of age 59112 (check one):

(1) o Deferral Contributions Account.

(2) þ All vested Account balances.

(1) Employee Contributions may be withdrawn in accordance with Section 10.02 of the Basic Plan Document at any time.

(2) Rollover Contributions may be withdrawn in accordance with Section 10.03 of the Basic Plan Document at any time.

(d) o Protected In-Service Withdrawal Provisions - Check if the Plan was converted by plan amendment or received transfer contributions from another defined contribution plan, and benefits under the other defined contribution plan were payable as (check the appropriate box(es)):

(1) o an in-service withdrawal of vested amounts attributable to Employer Contributions maintained in a Participant's Account (check (A) and/or (B)):

(A) o for at least __ (24 or more) months.

(B) o after the Participant has at least 60 months of participation.

(2) o another in-service withdrawal option that is a "protected benefit" under Code Section 411(d)(6). Please complete the In-Service Withdrawals Addendum to the Adoption Agreement identifying the in-service withdrawal option(s).

1.20 FORM OF DISTRIBUTIONS

Subject to Section 13.01,13.02 and Article 14 of the Basic Plan Document, distributions under the Plan shall be paid as provided below. (Check the appropriate box(es).)

(a) Lump Sum Payments - Lump sum payments are always available under the Plan.

(b) þ Installment Payments - Participants may elect distribution under a systematic withdrawal plan (installments).


(1)	An annuity form of payment is available under the Plan for the following reason(s) (check (A) and/or (B), as applicable):

(A) o As a result of the Plan's receipt of a transfer of assets from another defined contribution plan or pursuant to the Plan terms prior to the Adoption Agreement Effective Date specified in Subsection 1.01(g)(1), benefits were previously payable in the form of an annuity that the Employer elects to continue to be offered as a form of payment under the Plan.

(B) o The Plan received a transfer of assets from a plan that was subject to the minimum funding requirements of Code Section 412 and therefore an annuity form of payment is a protected benefit under the Plan in accordance with Code Section 411(d)( 6).

(2) The normal form of payment under the Plan is (check (A) or (B):

(A) o A lump sum payment.

(i) Optional annuity forms of payment (check (I) and/or (II), as applicable). (Must check and complete (I) if a life annuity is one of the optional annuity forms of payment under the Plan.)

(I) o A married Participant who elects an annuity form of payment shall receive a qualified joint and __ % (at least 50% but not more than 100%) survivor annuity. An unmarried Participant shall receive a single life annuity.

The qualified preretirement survivor annuity provided to the spouse of a married Participant who elects an annuity form of payment is purchased with __ % (at least 50%) of the Participant's Account.

(II) o Other annuity form(s) of payment. Please complete Section (a) of the Forms of Payment Addendum describing the other annuity form(s) of payment available under the Plan.

(B) o A life annuity (complete (i) and (ii) and check (iii) if applicable.)

(i) The normal form for married Participants is a qualified joint and __ % (at least 50% but not more than 100%) survivor annuity. The normal form for unmarried Participants is a single life annuity.

(ii) The qualified preretirement survivor annuity provided to a Participant's spouse is purchased with __ % (at least 50%) of the Participant's Account.

(iii) o Other annuity form(s) of payment. Please complete Subsection (a) of the Forms of Payment Addendum describing the other annuity form(s) of payment available under the Plan.

(d) o Eliminated Forms of Payment Not Protected Under Code Section 4Il(d)(6). Check if benefits were payable in a form of payment that is no longer being offered after either the Adoption Agreement Effective Date specified in Subsection 1.01(g)(1) or, if forms of payment are being eliminated by a separate amendment, the amendment effective date indicated on the Amendment Execution Page.

Note: A life annuity option will continue to be an available form of payment for any Participant who elected such life annuity payment before the effective date of its elimination.

(e) Cash Outs and Implementation of Required Rollover Rate

1) þ If the vested Account balance payable to an individual is less than or equal to the cash out limit utilized for such individual under Section l3.02 of the Basic Plan Document, such Account will be distributed in accordance with the provisions of Section 13.02 or 18.04 of the Basic Plan Document. Unless otherwise elected below, the cash out limit is $1,000.

(A) þ The cash out limit utilized for Participants is the maximum cash out limit permitted under Code Section 411(a)(11)(A) ($5,000 as of January 1, 2005). Any distribution greater than $1,000 that is made to a Participant without the Participant's consent before the Participant's Normal Retirement Age (or age 62, if later) will be rolled over to an individual retirement plan designated by the Plan Administrator.

1.21 TIMING OF DISTRIBUTIONS

Except as provided in Subsection 1.21(a) or (b) distribution shall be made to an eligible Participant from his vested interest in his Account as soon as reasonably practicable following the Participant's request for distribution pursuant to Article 12 of the Basic Plan Document

(a) Distribution shall be made to an eligible Participant from his vested interest in his Account as soon as reasonably practicable following the date the Participant's application for distribution is received by the Administrator, but in no event later than his Required Beginning Date, as defined in Subsection 2.01(tt).

(b) Preservation of Same Desk Rule - Check if the Employer wants to continue application of the same desk rule described in Subsection 12.01(b) of the Basic Plan Document regarding distribution of Deferral Contributions, Qualified Nonelective Employer Contributions, Qualified Matching Employer Contributions, 401(k) Safe Harbor Matching Employer Contributions, and 401(k) Safe Harbor Nonelective Employer Contributions. (If any of the above-listed contribution types were previously distributable upon severance from employment, this Option may not be selected.)

1.22 TOP HEAVY STATUS

(a) The Plan shall be subject to the Top-Heavy Plan requirements of Article 15(check one):

(1) o for each Plan Year, whether or not the Plan is a "top-heavy plan" as defined in Subsection IS.OI(g) of the Basic Plan Document

(2) þ for each Plan Year, if any, for which the Plan is a "top-heavy plan" as defined in Subsection IS.Ol(g) of the Basic Plan Document.

(3) o Not applicable. (Choose only if (A) Plan covers only employees subject to a collective bargaining agreement, or (B) Option 1. 11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, or Option 1.12(0)(3), 401(k) Safe Harbor Formula, is selected, and the Plan does not provide for Employee Contributions or any other type of Employer ontributions.)

(b) If the Plan is or is treated as a "top-heavy plan" for a Plan Year, each non-key Employee shall receive an Employer Contribution of at least 3.0 (3 or 5)% of Compensation for the Plan Year in accordance with Section 15.03 of the Basic Plan Document The minimum Employer Contribution provided in this Subsection 1.22(b) shall be made under this Plan only if the Participant is not entitled to such contribution under another qualified plan of the Employer, unless the Employer elects otherwise below:

(1) o The minimum Employer Contribution shall be paid under this Plan in any event.

(2) o Another method of satisfying the requirements of Code Section 416. Please complete the 416 Contributions Addendum to the Adoption Agreement describing the way in which the minimum contribution requirements will be satisfied in the event the Plan is or is treated as a "top-heavy plan".

(3) o Not applicable. (Choose only if (A) Plan covers only employees subject to a collective bargaining agreement, or (B) Option 1. 11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, or Option 1.12(a)(3), 401(k) Safe Harbor Formula, is selected and the Plan does not provide for Employee Contributions or any other type of Employer Contributions.)

Note: The minimum Employer contribution may be less than the percentage indicated in Subsection 1.22(b) above to the extent provided in Section 15.03 of the Basic Plan Document.

(c) If the Plan is or is treated as a "top-heavy plan" for a Plan Year, the following vesting schedule shall apply instead of the schedulers) elected in Subsection 1.16(c) for such Plan Year and each Plan Year thereafter (check one):

(1) o Not applicable. (Choose only if one of the following applies: (A) Plan provides for Nonelective Employer Contributions and the schedule elected in Subsection 1.16(c)(l) is at least as favorable in all cases as the schedules available below, (B) Option 1.11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, or Option 1.12(a)(3), 401(k) Safe Harbor Formula, is selected, and the Plan does not provide for Employee Contributions or any other type of Employer Contributions, or (C) the Plan covers only employees subject to a collective bargaining agreement.)

(2) o 100% vested after __ (not in excess of 3) years of Vesting Service.

(3) þ Graded vesting:



Years of Vesting Service	Vesting Percentage	Must be at least
—	—%	—%
1	20%	—%
2	40%	20%
3	60%	40%
4	80%	60%
5	100%	80%
6	100%	100%

Note: If the Plan provides for Nonelective Employer Contributions and the schedule elected inSubsection 1.16(c)(1) is more favorable in all cases than the schedule elected in Subsection 1.22(c) above, then the schedule in Subsection 1.16(c)(1) shall continue to apply even in Plan Years in which the Plan is a "top-heavy plan".

1.23 CORRECTION TO MEET 415 REOUIREMENTS UNDER MULTIPLE DEFINED CONTRIBUTION PLANS

o Other Order for Limiting Annual Additions - If the Employer maintains other defined contribution plans, annual additions to a Participant's Account shall be limited as provided in Section 6.12 of the Basic Plan Document to meet the requirements of Code Section 415, unless the Employer elects this Option and completes the 415 Correction Addendum describing the order in which annual additions shall be limited among the plans.

1.24 INVESTMENT DIRECTION

Investment Directions - Subject to Section 8.03 of the Basic Plan Document, Participant Accounts shall be invested in accordance with the investment directions provided to the Trustee by each Participant for allocating his entire Account among the Options listed in the Service Agreement.

1.25 ADDITIONAL PROVISIONS

The Employer may elect Option (a) below and complete the Additional Provisions Addendum to describe provisions which cannot be shown by making the elections provided in this Adoption Agreement.


(a)	þ The Employer has completed Additional Provisions Addendum to show the provisions of the Plan which supplement and/or alter provisions of this Adoption Agreement.

1.26 SUPERSEDING PROVISIONS

The Employer may elect Option (a) below and complete the Superseding Provisions Addendum to describe overriding provisions which cannot be shown by making the elections provided in this Adoption Agreement.

(a) o The Employer has completed Superseding Provisions Addendum to show the provisions of the Plan which supersede provisions of this Adoption Agreement and/or the Basic Plan Document.

Note: If the Employer elects superseding provisions in Option (a) above, the Employer may not be permitted to rely on the Volume Submitter Sponsor's advisory letter for qualification of its Plan and may be required to apply for a determination letter as described in Section 1.27 below. In addition, such superseding provisions may in certain circumstances affect the Plan's status as a pre-approved volume submitter plan eligible for the 6-year remedial amendment cycle.

1 .27 RELIANCE ON ADVISORY LETTER

An adopting Employer may rely on an advisory letter issued by the Internal Revenue Service as evidence that this Plan is qualified under Code Section 401 only to the extent provided in Section 19.02 of Revenue Procedure 2005- 16. The Employer may not rely on the advisory letter in certain other circumstances or with respect to certain qualification requirements, which are specified in the advisory letter issued with respect to this Plan and in Section 19.03 of Revenue Procedure 2005-16. In order to have reliance in such circumstances or with respect to such qualification requirements, application for a determination letter must be made to Employee Plans Determinations of the Internal Revenue Service.

Failure to properly complete the Adoption Agreement and failure to operate the Plan in accordance with the terms of the Plan document may result in disqualification of the Plan.

This Adoption Agreement may be used only in conjunction with Fidelity Basic Plan Document No. 14. The Volume Submitter Sponsor shall inform the adopting Employer of any amendments made to the Plan or of the discontinuance or abandonment of the volume submitter plan document.

1.28 ELECTRONIC SIGNATURE AND RECORDS

This Adoption Agreement, and any amendment thereto, may be executed or affirmed by an electronic signature or electronic record permitted under applicable law or regulation, provided the type or method of electronic signature or electronic record is acceptable to the Trustee.

1.29 VOLUME SUBMITTER INFORMATION

Name of Volume Submitter Sponsor: Fidelity Management & Research Company

Address of Volume Submitter Sponsor: 82 Devonshire Street Boston, MA 02109

EXECUTION PAGE (Employer's Copy)

The Fidelity Basic Plan Document No. 14 and the accompanying Adoption Agreement together comprise the Volume Submitter Defined Contribution Plan. It is the responsibility of the adopting Employer to review this volume submitter plan document with its legal counsel to ensure that the volume submitter plan is suitable for the Employer and that Adoption Agreement has been properly completed prior to signing.

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this 7 ^th day of June 2011.

Employer: American Service Insurance Co; dba Atlas Financial Holdings, Inc

By: /s/ Zenovia Love

Zenovia Love

Title HR Manager

Note: Only one authorized signature is required to exe ute this Adoption Agreement unless the Employer's corporate policy mandates two authorized signatures.

Employer: American Service Insurance Co; dba Atlas Financial Holdings, Inc

By: /s/ Scott D. Wollney

Scott D. Wollney

Title: President

Accepted by: Fidelity Management Trust Company, as Trustee

ADDITIONAL PROVISIONS ADDENDUM

For Plan Name: ATLAS Financial Holdings. Inc. 401(k) Plan

(a) Additional Provision(s) - The following provisions supplement and/or, to the degree described herein, supersede other provisions of this Adoption Agreement in the following manner:

(1) The following replaces Subsection 1.04(b):

(b) Eligibility Service Requirements) - There shall be no eligibility service requirements for contributions to the Plan, except as indicated below.

(1) For Deferral Contributions, Employee Contributions, and Qualified Nonelective Employer Contributions, Employees must have:

1 (not to exceed 12) months of Eligibility Service requirement (no minimum Hours of Service can be required).

(2) For Matching Employer Contributions, Employees must have:

6 (not to exceed 24) months of Eligibility Service requirement (no minimum Hours of Service can be required).

Note: If the Employer selects an Eligibility Service requirement of more than 365 days or 12 months or the two year Eligibility Service requirement, then contributions subject to such Eligibility Service requirement must be 100% vested when made.

Note: If different eligibility requirements are selected for Deferral Contributions in Subsection 1.04(a) or 1.04(b) than for Employer Contributions and a more stringent eligibility requirement is elected in Subsection 1.04(a) or (b) either (1) with respect to Matching Employer Contributions and Option 1.11(a)(3), 401(k) Safe Harbor Matching Employer Contributions, is selected or (2) with respect to Nonelective Employer Contributions and Option 1.12(a)(3), 401(k) Safe Harbor Formula, is selected, then the Plan may be disaggregated for testing purposes as described in Section 6.09 of the Basic Plan Document. If a more stringent eligibility requirement is elected in Subsection 1.04(a) or (b) for Nonelective Employer Contributions than for Matching Employer Contributions and Option 1.12(a)(3), 401(k) Safe Harbor Formula, is selected for Nonelective Employer Contributions, then Matching Employer Contributions may be similarly disaggregated.

Note: If different eligibility requirements are selected for Deferral Contributions in Subsection 1.04(a) or 1.04(b) than for Employer Contributions and the Plan becomes a "top-heavy pian," the Employer may need to make a minimum Employer Contribution on behalf of non-key Employees who have satisfied the eligibility requirements for Deferral Contributions and are employed on the last day of the Plan Year, but have not satisfied the eligibility requirements for Employer Contributions.

ADDENDUM TO ADOPTION AGREEMENT

Fidelity Basic Plan Document No. 14

RE: Pension Protection Act of 2006,

The Heroes Earnings Assistance and Relief Act of2008,

The Worker, Retiree and Employee Recovery Act of2008

And Code Sections 401(k) and 401(m) 2009 Proposed Regulations

Plan Name: ATLAS Financial Holdings. Inc. 401(k) Plan

Fidelity 5-digit Plan Number: 27903

PREAMBLE

Adoption and Effective Date of Amendment . This amendment of the Plan is adopted to reflect certain provisions of the Pension Protection Act of 2006 (the "PPA"). This amendment is intended as good faith compliance with the PPA and is to be construed in accordance with applicable guidance. Except as otherwise provided below, this amendment shall be effective with respect to Fidelity's Volume Submitter plan for Plan Years beginning after December 31, 2006.

Supersession of Inconsistent Provisions . This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment. (Execution of this PPA Addendum is not required unless one of (a) through (h) is being selected below and no provision of this PPA Addendum will be interpreted to supersede the provisions of the Plan unless selected below.)

(a)

o In-service, Age 62 Distribution of Money Purchase Benefits. A Participant who has attained at least age 62 shall be eligible to elect to receive a distribution of benefit amounts accrued as a result of the Participant's participation in a money purchase pension plan (either due to a merger into this Plan of money purchase pension plan assets and liabilities or because this Plan is a money purchase pension plan), if any. This subsection (a) shall be effective to permit such distributions on and after the following effective date: ______ (can be no earlier than the first day of the first plan year beginning after December 31, 2006).


(b)	o Automatic Enrollment Contributions. (Choose only if selecting (d) or (e) below.)

(1) Adoption of Automatic Enrollment Contributions. Beginning on the effective date of this paragraph (1), as provided in paragraph (A) below (the "Automatic Enrollment Effective Date") and subject to the remainder of this Subsection (b), unless an Eligible Employee affirmatively elects otherwise, his Compensation will be reduced by __ % (except as such percentage may be modified for certain Eligible Employees through the Additional Provisions Addendum to the Adoption Agreement, the "Automatic Enrollment Rate"), such percentage to be increased in accordance with Subsection (c) (if applicable), for each payroll period in which he is an Active Participant, beginning as indicated in (2) below, and the Employer will make a pre-tax Deferral Contribution in such amount on the Participant's behalf in accordance with the provisions of Section 5.03 of the Basic Plan Document (an "Automatic Enrollment Contribution").

(A) Automatic Enrollment Effective Date: __________________

(B) If the Plan had an automatic contribution arrangement before the Automatic Enrollment Effective Date provided in (A) above (the "Pre-existing Arrangement"), the effective date of the Pre existing Arrangement was: ______

Please also check (i) and/or (ii) below if applicable:

(i) o The Pre-existing Arrangement was a Qualified Automatic Contribution Arrangement described in Code section 401(k)(13)(B).

(ii) o The Pre-existing Arrangement was an Eligible Automatic Contribution Arrangement described in Code section 414(w)(3).

(2) With respect to an affected Participant, Automatic Enrollment Contributions will begin as soon as administratively feasible on or after (check one):

(A) o The Participant's Entry Date.

(B) o ___ (minimum of 30) days following the Participant's date of hire, but no sooner than the Participant's Entry Date.

Within a reasonable period ending no later than the day prior to the date Compensation subject to the reduction would otherwise become available to the Participant, an Eligible Employee may make an affirmative election not to have Automatic Enrollment Contributions made on his behalf. If an Eligible Employee makes no such affirmative election, his Compensation shall be reduced and Automatic Enrollment Contributions will be made on his behalf in accordance with the provisions of this Subsection (b), and Subsection (c), if applicable, until such Active Participant elects to change or revoke such Deferral Contributions as provided in Subsection 1.07(a)(1). Automatic Enrollment Contributions shall be made only on behalf of Active Participants who are first hired by the Employer on or after the Automatic Enrollment Effective Date and do not have a Reemployment Commencement Date, unless otherwise provided below.

(3) o Additionally, subject to the Note below, unless such affected Participant affirmatively elects otherwise within the reasonable period established by the Plan Administrator, Automatic Enrollment Contributions will be made with respect to the Employees described below. (Check all that apply).

(A)

o Inclusion of Previously Hired Employees. On the later of the date specified in Subsection (b)(2) with regard to such Eligible Employee or as soon as administratively feasible on or after the 30th day following the Notification Date specified in (iii) below, Automatic Enrollment Contributions will begin for the following Eligible Employees who were hired before the Automatic Enrollment Effective Date and have not had a Reemployment Commencement Date. (Check (i) or (ii), complete (iii), and complete (iv), if applicable).

(i) o Unless otherwise elected in (iv) below, all such Employees who have never had a Deferral Contribution election in place. If the Employer has elected a QACA in Subsection (d) below, then for the effective date of this election, all Participants for whom contributions are being made pursuant to an automatic contribution arrangement at a percentage not at least equal to the rate specified above (or the limit of automatic increase(s) as specified in Subsection (c)(2) below, if greater) will be automatically enrolled on the 30lh day following the Notification Date at the rate given in Subsection (b)(l) above.

(ii) o Unless otherwise elected in (iv) below, all such Employees who have never had a Deferral Contribution election in place and were hired by the Employer before the Automatic Enrollment Effective Date, but after the following date:

(iii) Notification Date: _____

(iv) o In addition to the group of Employees elected in (i) or (ii) above, any Employee described in (i) or (ii) above, as applicable, even if he has had a Deferral Contribution election in place previously, provided he is not suspended from making Deferral Contributions pursuant to the Plan and has a deferral rate of zero on the Notification Date. If the Employer has elected a QACA in Subsection (d) below, then for the effective date of this election, all Participants not deferring a percentage at least equal to the rate specified above (or the limit of automatic increase(s) as specified in Subsection (c)(2) below, if greater) will be automatically enrolled on the 30th day following the Notification Date at the rate given in Subsection (b)(I) above.

(B)

o Inclus ion of Rehired Employees. Unless otherwise stated herein, each Eligible Employee having a Reemployment Commencement Date on the Automatic Enrollment Effective Date. If Subsection (b)(3)(A)(ii) is selected, only such Employees with a Reemployment Commencement on or after the date specified in Subsection (b)(3)(A)(ii) will be automatically enrolled. If Subsection (b)(3)(A) is not selected, only such Employees with a Reemployment Commencement on or after the Automatic Enrollment Effective Date will be automatically enrolled. If Subsection (b)(2)(B) has been elected above, for purposes of Subsection (b)(2) only, such Employee's

Reemployment Commencement Date will be treated as his date of hire.

(c)

o Automatic Deferral Increase (Choose only if Automatic Enrollment Contributions are elected in Subsection (b) above ) - Unless an Eligible Employee affirmatively elects otherwise after receiving appropriate notice, Deferral Contributions for each Active Participant having Automatic Enrollment Contributions made on his behalf shall be increased annually by the (whole number) percentage of Compensation stated in (I) below until the deferral percentage stated in Section 1.07(a)(1) is reached (except that the increase will be limited to only the percentage needed to reach the limit stated in Section 1.07(a)(1), if applying the percentage in (1) would exceed the limit stated in Section 1.07(a)( 1), unless the Employer has elected a lower percentage limit in Subsection (c)(2) below.

(1) Increase by ____% (except as such percentage may be modified for certain Eligible Employees through the Additional Provisions Addendum to the Adoption Agreement, but not to exceed 10%) of Compensation. Such increased Deferral Contributions shall be pre-tax Deferral Contributions regardless of any election made by the Participant to have any portion of his Deferral Contributions treated as a Roth 401(k) Contribution.

(2) o Limited to % of Compensation (not to exceed the percentage indicated in Subsection 1.07(a)(1)

(3) The Automatic Deferral Increase for each Participant still subject to it pursuant to Section 5.03(c) of the Basic Plan Document shall occur:

(A) o On each anniversary of such Participant's automatic enrollment date pursuant to (b)(2) or (b)(3) above, as applicable.

(B) o Except if selected below with regard to the first such annual increase, each year on the following date: _______

(i) o The automatic deferral increase shall not apply to a Participant within the first six months following the automatic enrollment date pursuant to (b)(2) or (b)(3) above, as applicable.

(d)

o Qualified Automatic Contribution Arrangement . The automatic contribution arrangement described in Sections (b) and (c) (if applicable) of this Addendum shall constitute a qualified automatic contribution arrangement described in Code Section 401(k)(13) ("QACA"), initially effective as of the following date: _________ (can be no earlier than the first day of the first plan year beginning after December 31, 2007).

(1) o QACA Matching Employer Contribution Formula. Matching Employer Contributions used to satisfy the QACA must vest at least as rapidly as 100% once the Participant is credited with two Years of Service.

(A) o 100% of the first 1% of the Active Participant's Compensation contributed to the Plan and 50% of the next 5% of the Active Participant's Compensation contributed to the Plan.

Note: If the Employer selects this formula and does not elect Subsection 1.11(b) (or Subsection 1.11(t) through the Additional Provisions Addendum, as appropriate), Additional Matching Employer Contributions, Matching Employer Contributions will automatically meet the safe harbor contribution requirements for deemed satisfaction of the "ACP" test. (Employee Contributions must still be tested for "ACP" test purposes.)

(B) (i) o Other Enhanced Match: _% of the first _% of the Active Participant's Compensation contributed to the Plan,

_% of the next _% of the Active Participant's Compensation contributed to the Plan,

_% of the next _% of the Active Participant's Compensation contributed to the Plan.

Note: To satisfy the safe harbor contribution requirement for the "ADP" test, the percentages specified above for Matching Employer Contributions may not increase as the percentage of Compensation contributed increases, and the aggregate amount of Matching employer contributions at such rates must at least equal the aggregate amount of Matching Employer Contributions that would be made under the percentages described in (d)(l)(A) of this Addendum.

(ii) o The formula in (i) of this paragraph (B) is also intended to satisfy the safe harbor contribution

requirement for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions. (Employee Contributions must still be tested for "ACP" test purposes.)

(2) o QACA Nonelective Employer Contribution. Nonelective Employer Contributions used to satisfy the QACA must vest at least as rapidly as 100% once the Participant is credited with two Years of Service.

(A) o For each Plan Year, the Employer shall contribute for each eligible Active Participant an amount equal to __ % (not less than 3% nor more than 25%) of such Active Participant's Compensation.

(B) o The Employer may decide each Plan Year whether to amend the Plan by electing and completing (i) below to provide for a contribution on behalf of each eligible Active Participant in an amount equal to at least 3% of such Active Participant's Compensation.

Note: An employer that has selected paragraph (B) above must amend the Plan by electing (i) below no later than 30 days prior to the end of each Plan Year for which the QACA Nonelective Employer Contributions are being made.

(i) o For the Plan Year beginning ~ the Employer shall contribute for each eligible Active Participant an amount equal to __ % (not less than 3% nor more than 25%) of such Active Participant's Compensation.

(D) o The employer has elected to make Matching Employer Contributions under Subsection 1.10 of the Adoption Agreement, if any, that are intended to meet the requirements for deemed satisfaction of the "ACP" test with respect to Matching Employer Contributions.

(3) o The Plan previously had a QACA, but the Plan was amended to remove the QACA effective: ______

(e)

o Eligible Automatic Contribution Arrangement. The automatic contribution arrangement described in Sections (b) and (c) (if applicable) of this Addendum shall constitute an eligible automatic enrollment arrangement described in Code Section 414(w) ("EACA"), effective as of the following date: _________ (can be no earlier than the first day of the first plan year beginning after December 31, 2007).


(1)	o Permissible Withdrawal. A Participant who has made an Automatic Enrollment Contribution pursuant to the EACA (an "EACA Participant") shall be eligible to elect to withdraw the amount attributable to such Automatic Enrollment Contribution pursuant to the following rules:

(A) The EACA Participant must make any such election within ninety days of his automatic enrollment date pursuant to (b)(2) or (b)(3) above, as applicable. Upon making such an election, the EACA Participant's Deferral Contribution election will be set to zero until such time as the EACA Participant's Deferral Contribution rate has changed pursuant to Section 1.07(a)(I) or this Addendum.

(B) The amount of such withdrawal shall be equal to the amount of the EACA Deferrals through the end of the fifteen day period beginning on the date the Participant makes the election described in (A) above, adjusted for allocable gains and losses to the date of such withdrawal.

(C) Any amounts attributable to Employer Matching Contributions allocated to the Account of an EACA Participant with respect to EACA Deferrals that have been withdrawn pursuant to this Section (e)(l) shall be forfeited. In the event that Employer Matching Contributions would otherwise be allocated to the EACA Participant's Account with respect to EACA Deferrals that have been so withdrawn, the Employer shall not contribute such Employer Matching Contributions to the Plan.


(2)	An Active Participant who is otherwise covered by the EACA but who makes an affirmative election regarding the amount of Deferral Contributions shall remain covered by the EACA solely for purposes of receiving any required notice from the Plan Administrator in connection with the EACA and for purposes of determining the

period applicable to the distribution of certain excess contributions pursuant to Sections 6.04 and 6.07 of the Basic Plan Document.


(3)	o The Plan previously allowed the Permissible Withdrawal described in (e)(1) above, but the Plan was amended to remove the Permissible Withdrawal effective for Participants automatically enrolled on or after the following date: _______.

(f)

o Coverage under the QACA and/or EACA. The QACA and/or EACA described in the previous sections of this PPA Addendum shall cover only those Active Participants eligible to affirmatively elect to make Deferral Contributions described below (Check all that apply. If Option (e)(l), Permissible Withdrawal, has been selected by the Employer, then all Employees subject to an automatic enrollment arrangement through the Plan must be covered by the EACA.):


(1)	o Those who are not employees of an unrelated employer listed in Section (c) of the Participating Employers Addendum and are not collectively bargained employees, as defined in Treasury Regulation section 1.41 O(b)-6( d)(2).


(2)	o Those who are not employees of an unrelated employer listed in Section (c) of the Participating Employers Addendum and are collectively bargained employees, as defined in Treasury Regulation section 1.41O(b)-6(d)(2), except for those covered under the following collective bargaining agreement (s): _________

(3) o Those who are employees of an unrelated employer listed in Section (c) of the Participating Employers Addendum, except as provided in (A) below if selected.

(A) o Employees of the following unrelated employer(s) listed in Section (c) of the Participating Employers Addendum shall not be covered by the QACA and/or EACA: ________

Note: In the event the Plan's automatic contribution arrangement is both an EACA and a QACA, the Employer's elections in this subsection (f) apply to both the EACA and the QACA.

(g)

o Qualified Reservist Distribution. A Participant called to active duty after September 11,2001 for a period that is either indefinite or to exceed 179 days and the Participant takes the distribution between the date of the call to active duty and the close of the active duty period. The distribution may be made only from amounts attributable to 401(k) deferrals and is exempt from the 10% income tax penalty that would otherwise apply if the Participant has not yet attained age 59-112. The PPA would further permit the Participant to repay the distribution to an IRA only (not to the plan) within two years after the end of the active duty period. This subsection (g) shall be effective to permit such distributions after the following date:__________________ (can be no earlier than September 11,2001).


(h)	o Change to Addendum Provisions. The Employer has amended the provisions of Subsection (a), (b), (c), (d), (e), (f) and/or (g) to be as indicated above.

Amendment Execution

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed this 7 ^th day of June 2011.

Employer: American Service Insurance Company, Inc., dba Atlas Financial Holdings, Inc.

By: /s/ Zenovia Love

Zenovia Love

HR Manager

By: /s/ Scott D. Wollney

Scott D. Wollney

President

EXHIBIT 14

Atlas Financial Holdings, Inc.

Code of Business Conduct & Ethics

1. INTRODUCTION

Our goal at Atlas Financial Holdings Inc. is to achieve the highest business and personal ethical standards as well as to comply with all laws and regulations that apply to our business. Adherence to the standards contained in this Code will help to ensure decisions that reflect care for all of our stakeholders. This Code of Business Conduct and Ethics (the "Code") is intended as an overview of the Company's guiding principles and not as a restatement of Company policies and procedures.

Ethical business behavior is the responsibility of every member of the Company’s team and is reflected not only in our relations with each other but also with our policyholders, other organizations, suppliers, competitors, government and the public. Whatever the area of activity and whatever the degree of responsibility, the Company expects each employee to act in a manner that will enhance its reputation for honesty, integrity and the faithful performance of its undertakings and obligations.

This Code cannot and is not intended to cover every applicable law or provide answers to all questions that might arise; for that we must ultimately rely on each person's good sense of what is right, including a sense of when it is proper to seek guidance from others on the appropriate course of conduct. Because our business depends upon the reputation of the Company and its directors, officers and employees for integrity and principled business conduct, in many instances this Code goes beyond the requirements of the law.

Employees should refer to policies contained in the HR Manual/Employee Handbook (hereinafter, the "Employee Manual"), for a description of the policies and required reporting procedures applicable to them. This Code is a statement of goals and expectations for individual and business conduct. It is not intended to and does not in any way constitute an employment contract or assurance of continued employment, and does not create any rights in any employee, client, supplier, competitor, shareholder or any other person or entity.

2. WHO IS COVERED

This Code applies to all officers and employees of Atlas Financial Holdings, Inc. This Code also applies to all outside directors with respect to their Atlas related activities. Any reference in this Code to “Atlas” refers to Atlas Financial Holdings, Inc. Any reference to “employees” refers to directors, officers and employees of Atlas Financial Holdings, Inc.

3. DIRECTOR, OFFICER AND EMPLOYEE OBLIGATIONS

It is the obligation of each and every director, officer and employee of Atlas to become familiar and comply with the policies and procedures of the Company and integrate

them into every aspect of our business. All employees are expected to observe all applicable laws and adhere to the highest ethical standards in all matters dealing with the Company.

4. CONFLICTS OF INTEREST

Directors, officers and employees of Atlas have a duty of loyalty to the Company, and must therefore avoid any actual, perceived or potential conflict of interest with the Company. A conflict situation can arise when a director, officer or employee takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest also arise when a director, officer or employee, or a member of his or her family i.e. spouse, common-law spouse, child, stepchild, sibling, parent, sister or brother-in-law, grandparent, grandchild, or any variation of such relationships, receives improper personal benefits as a result of his or her position in the Company.

In exercising our responsibilities, it is vital that we be guided by what is in the best interests of the Company and those clients with whom we have business relationships. All of our employees are required to conduct their personal and business affairs in such a way so as to avoid conflicts with the interests of the Company, its shareholders, brokers, policyholders and its customers.

It is each employee’s responsibility to ensure that his or her personal conduct complies with the following principles and to make appropriate disclosures when actual or potential conflicts may arise. Although the principles below are discussed in terms of the employees of the Company, each of us must also exercise care to avoid actual, perceived or potential conflicts of interest which might arise because of the activities of our family members or other members of our household.


1.	Employees may not use their affiliation with the Company for personal benefit.

Examples of such prohibited activities include:

Employees receiving remuneration, gifts, entertainment or other compensation of a material nature from any entity performing work or services for the Company or from any entity which is seeking to do business with the Company. Gifts or favors that are generally considered as common business or social courtesies are acceptable only as long as they are reasonable and customary in type, frequency and value such as a luncheon or dinner.

Employees having a financial interest in an entity that sells goods or services to the Company where the employee is able to influence the Company’s business transactions with that entity.

Employees using, for their own personal gain or for the benefit of others, any confidential or “inside” information obtained as a result of their employment with the Company.

Employees misappropriating to themselves or to others the benefit of any business venture or opportunity about which the employees learn or develop in the course of their employment and which is related to a current or prospective business of the Company.

2. Employees may not be employed by or affiliated with a competitor.

Serving as a director, officer, employee, partner, consultant, agent of, or having a significant ownership interest in, an organization, which competes with any function within the Company, violates your duty of loyalty to the Company and is prohibited.


3.	Directors, officers and employees have a responsibility to disclose actual, perceived or potential conflicts or any activity that appears to be in conflict with policy or procedure.

Determining whether you have a conflict and, if so, what to do about it can be difficult and no set of guidelines or statement of principles, however comprehensive and detailed, can hope to cover all situations or address every question of judgment. Employees are, therefore, required to disclose all actual, perceived or potential conflicts. If you have any doubt about your disclosure obligations in a particular situation, the best course is to consult with your Manager or Supervisor or the senior executive of the Company or subsidiary. The Chief Executive Officer and members of the Board of Directors must report any such circumstances to the Audit Committee.

5. USE OF INFORMATION

The insurance business, like other service industries, is based on the collection, organization, evaluation and preservation of information about individuals, organizations and the world at large. To provide the highest quality services to our policyholders and customers, we must be efficient in gathering and storing information, be thorough in our analysis of information collected, and be creative in generating new information. Our ability to remain competitive requires both our willingness and alertness to share information within our organization and our awareness that certain types of information must be protected from disclosure. It is especially important to maintain our reputation by safeguarding information entrusted to us by our policyholders, customers and fellow employees; it is also a legal requirement in many cases. Please refer to Atlas’s Privacy Policy.

As an employer, the Company maintains personnel records for every employee.

Access to this information is limited within the Company, and is generally released to those outside of the Company only if required by law. Preserving the confidentiality of such information is necessary for creation of a productive and comfortable work environment.

6. CONFIDENTIALITY OF INFORMATION

Our policyholders and customers provide us with confidential and/or personal information about themselves, their families and their business operations (where applicable). The Company will only collect and maintain information for legal and business reasons. This means that only those employees and outside governmental authorities and regulators with legitimate reasons to know should have access to such information.

Employees must adhere to applicable laws for maintaining, updating, disclosing and verifying such confidential information. Employees are also expected to comply with departmental policies and procedures relating to the retention and orderly destruction of records and documents (Refer to the Records Retention Section in this document).

All employees must be aware of the consequences of intentionally or inadvertently revealing such information and recognize that the use of confidential information obtained in the course of our employment for any personal benefit is strictly forbidden. Specific areas in which preventing disclosure or use of confidential information are especially important include personal medical records, financial data for a business entity, and claims investigative, litigation and settlement information.

7. CONFIDENTIALITY OF INTELLECTUAL PROPERTY

Confidential business information and practices can be defined as information used in trade or business which gives the owner a competitive advantage and which is not generally known to the public. If the owner fails to adequately protect the information or matter, it may lose its confidential status. Such business information and practices could include software code, customer lists or a new invention that is yet to be patented.

Sometimes you may encounter such business information and/or practices in the course of evaluating a service provided to, or a service or product received from a policyholder, customer or vendor. You may be responsible for the loss of such information and/or practice if you reveal it to others, even fellow Company employees, who do not need to know this proprietary information. Both the Company and the employee may be held liable for financial losses to the owner of the business information or practice.

At times you may develop confidential business information and/or practices in the course of your employment. This information is the property of the Company.

Confidential business information and practices of the Company must be identified as such when revealed to outside parties so the recipient is aware he or she should not pass them on further. Before the release of proprietary information to a third party the appropriate confidentiality and non-disclosure agreements should be in place.

If confidential business information and practices are revealed to you during the course of your employment with the Company, you must protect the information even after you stop working for the Company. The Company will take whatever steps it deems appropriate, including legal action, to protect such business information and practices from unauthorized disclosure or use by current or former employees.

8. CORPORATE OPPORTUNITIES

No director, officer or employee may: (a) take for himself or herself personally opportunities that are discovered through the use of Company property, information or position; (b) use Company property, information or position for personal gain; or (c) compete with the Company. Directors, officers and employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

9. USE OF INSIDE INFORMATION (INSIDER TRADING)

It is the Company's goal to protect shareholder investments through strict enforcement of the prohibition against insider trading set forth in provincial (OSC), state (NYSE) or federal (SEC) securities laws and regulations. No director, officer or employee may buy or sell securities of Atlas at a time when in possession of "material non-public information. Passing such information to someone who may buy or sell securities is also prohibited. The prohibition on insider trading applies to Atlas’s securities and to securities of other companies if the director, officer or employee learns of material non-public information about those other companies in the course of his or her duties for Atlas. This prohibition also extends to certain non-employees who may learn about the "material non-public information" about the Company such as spouses, relatives, and close friends of directors, officers or employees. Insider trading is both unethical and illegal and will be dealt with firmly. If you have any questions in connection with whether or not a trade in the company shares is permitted at any particular time, please contact the Audit

Committee.

10. FAIR DEALING

Each director, officer and employee shall endeavor to deal fairly and in good faith with Atlas customers, shareholders, employees, suppliers, regulators, business partners, competitors and others. No director, officer or employee shall take unfair advantage of anyone through manipulation, concealment, abuse of privileged or confidential information, misrepresentation, fraudulent behavior or any other unfair dealing practice.

11. ANTI-RETALIATION

Atlas prohibits any retaliation against an employee who makes a good-faith report of perceived violations of this Code or the law or anyone who assists in a Company investigation.

If you believe that you have been subjected to any form of retaliation you should report the matter through one of the channels described in this policy. However, any person making a report in bad faith will be subject to disciplinary action up to and including discharge.

12. PROTECTION AND USE OF COMPANY ASSETS

Company assets, such as information, materials, supplies, time, intellectual property, software, hardware, and facilities, among other property, are valuable resources owned, licensed, or otherwise belonging to the Company. Safeguarding Company assets is the responsibility of all directors, officers and employees. All Company assets should be used for legitimate business purposes. The personal use of Company assets without permission is prohibited.

Employees are expected to use Company equipment and materials (e.g. telephones, computers, software and photocopiers) for Company business only. All Company equipment and materials are dedicated for business use only and the Company reserves the right to monitor and investigate usage of Company equipment and materials at its discretion.

Employees should not use Company resources for personal benefit or to benefit persons or entities outside the Company. In certain circumstances, the Company may approve of the use of particular corporate resources for charitable or community purposes.

Employees must maintain accurate records and abide by corporate policies concerning reimbursable expenses, and eligibility for all Company benefits, including sick leave, education and disability payments.

13. OFFERING OF GIFTS

Employees may not make payments or give gifts (other than gifts of nominal value that are generally considered as common business or social courtesies such as lunches, dinners, attendance at sporting events) to government workers or outside suppliers in order to influence regulatory or business decisions. The Company has established internal control procedures to ensure that assets are protected and properly used, and that financial records and reports are accurate and reliable. Employees and supervisors share the responsibility for maintaining and complying

with required internal controls.

The Company’s success relies upon the integrity of all of its employees. The Company has instituted a comprehensive set of procedures, rules and controls to prevent fraud and dishonesty and it will take all action necessary and appropriate to enforce these policies and procedures.

14. ACCOUNTING PRACTICES

It is the policy of Atlas to fully and fairly disclose the financial condition of the Company in compliance with applicable accounting principles, laws, rules and regulations. All books and records of Atlas shall be administered in such a way, as to fully and fairly reflect all Company transactions.

15. RECORDS RETENTION

Officers and employees are expected to become familiar with the Company's policies regarding records retention applicable to them and to strictly adhere to those procedures. Records may not be destroyed except in accordance with the applicable records retention policy. If you have any questions in this regard, do not hesitate to contact your supervisor.

16. COMPLIANCE WITH LAWS, RULES & REGULATIONS

As an insurance provider, the Company is subject to a myriad of laws and regulations on how we must conduct our business. Many of these laws are designed to protect consumers in situations where it is perceived that a business because of size, resources or expertise is able to unfairly control or influence customer decisions. It is critically important that both the Company and its employees comply with the letter and spirit of the laws, which regulate the conduct of our business.

All aspects of Company business are impacted by compliance requirements for example, sales, underwriting, claims, human resources, actuarial, accounting and financial reporting, financial services, investments, and governmental relations. Employees must be aware of the applications of the laws that affect the performance of their jobs and must carry out their job responsibilities in a manner that ensures that the Company is in compliance with external statutory, regulatory and industry requirements.

Atlas takes a proactive stance on compliance with all applicable laws, rules, and regulations, including insider trading laws and applicable anti-trust laws. In addition, the Company requires that its directors, officers and employees comply with the policies set out from time to time in the Employee Manual.

17. COMMUNICATING WITH REGULATORS AND OTHERS

In the event that an inquiry from a regulator is received the employee must contact the Atlas Audit Committee. All requests from regulators should be responded to in a candid, accurate manner. Employees must not conceal, destroy or alter any documents or information. If an Atlas employee is served with a subpoena they must notify the Atlas Audit Committee immediately by telephone.

18. DUTY TO REPORT AND CONSEQUENCE

Every director, officer and employee has a duty to adhere to this Code of Business Conduct and Ethics and all existing Company policies and to report to the Company any suspected violations in accordance with applicable procedures.

Employees shall report suspected violations of Company policies by following the reporting procedures for that specific policy as identified in the Employee Manual. All other suspected violations of the Code must be reported to the designated Compliance or Privacy Officer. The Company will investigate any matter so reported and take appropriate disciplinary and corrective action, up to and including prosecution and termination of employment. The Company forbids retaliation against employees who report violations of this Code of Business Conduct and Ethics in good faith.

19. SCOPE

This Code does not supersede, change or alter the existing Company policies and procedures already in place as stated in the Employee Manual and communicated to Company employees. Certain policies referred to herein are contained in their entirety in the Employee Manual, and Company employees are instructed to refer to this manual for a copy of those policies and required reporting procedures.

No Company policy can provide definitive answers to all questions. If employees have questions regarding any of the goals, or standards discussed or policies referenced in this Code or are in doubt about the best course of action in a particular situation, the employee should refer to the reporting requirements for that particular goal or standard as stated in the Code, or the reporting requirements for policies as stated in the Employee Manual and contact the person or party designated.

Employees must promptly report any violation of the Code to their Manager or

Corporate Compliance/Privacy Officer.

20. CONTACT US

Requests for further information should be referred to the Atlas Audit Committee:

Jordan Kupinsky

Atlas Audit Committee Chairman c/o JJR Capital Corporation

5 Hazelton Avenue, Suite 300

Toronto, ON M5R 2E1

Telephone# (416) 972-6574

EXHIBIT 16

Ontario Securities Commission

British Columbia Securities Commission

Alberta Securities Commission

Dear Sirs and Mesdames:

RE: Atlas Financial Holdings, Inc. (the "Company")- Notice of Change of Auditor

We have read the Notice of Change of Auditor of the Company dated May 17, 2011 (the "Notice") and are in agreement with the statements contained in the Notice, except that we have no basis to agree or disagree with the statement regarding the Audit Committee approval of nomination of Johnson Lambert & Co. LLP as auditor of the company.

Yours very truly,

/s/KPMG LLP Chicago, Illinois

May 17, 2011

Exhibit 21

ATLAS FINANCIAL HOLDINGS, INC

LIST OF SUBSIDIARIES



Name	State of Jurisdiction/Organization
American Country Insurance Company, Inc.	Illinois
American Service Insurance, Inc.	Illinois
American Insurance Acquisition Inc.	Delaware

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the registration statements on Form 10 of Atlas Financial Holdings, Inc of our reports dated March 26, 2012 with respect to the consolidated financial statements and financial statement schedules listed on Item 15 of the Company's Form 10-K, of Atlas Financial Holdings, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2011.

/s/ Johnson Lambert & Co. LLP Arlington Heights, Illinois

March 26, 2012

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF THE

SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott D. Wollney, certify that:


1.	I have reviewed this annual report on Form 10-K of Atlas Financial Holdings Inc.;


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(s) 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 15d-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 (the registrant's fourth fiscal quarter in the case of an annual report) 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(s) 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.

Date: March 26, 2012

/s/ Scott D. Wollney

Scott D. Wollney
President, Chief Executive Officer and Director

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF THE

SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul A. Romano, certify that:


1.	I have reviewed this annual report on Form 10-K of Atlas Financial Holdings Inc.;


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 15d-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 (the registrant's fourth fiscal quarter in the case of an annual report) 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.

Date: March 26, 2012

/s/ Paul A. Romano

Paul A. Romano
Chief Financial Officer and Vice President

EXHIBIT 32.1

Certification of the Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Scott D. Wollney, Chief Executive Officer of Atlas Financial Holdings Inc. (the "Company"), certifies in his capacity as an officer of the Company that he has reviewed the Annual Report of the Company on Form

10-K for the year ended December 31, 2011 (the “Report”) and that to the best of his knowledge:

1. the Report fully complies with the requirements of Sections 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 the Company.

Date: March 26, 2012

/s/ Scott D. Wollney Scott D. Wollney

President, Chief Executive Officer and Director

The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United

States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EXHIBIT 32.2

Section 1350

Certification of the Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

Paul A. Romano, Chief Financial Officer and Vice President of Atlas Financial Holdings Inc. (the "Company"), certifies in his capacity as an officer of the Company that he has reviewed the Annual Report of the Company on Form 10-K for the year ended December 31, 2011 (the “Report”) and that to the best of his knowledge:

1. the Report fully complies with the requirements of Sections 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 the Company.

Date: March 26, 2012

/s/ Paul A. Romano Paul A. Romano

Chief Financial Officer and Vice

President

The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the

United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002