QUESTIONS AND ANSWERS

      The following are some questions that you, as a shareholder of United National Group or Penn-America, may have regarding the merger and the other matters being considered at the shareholders’ meetings and the answers to those questions. These questions and answers may not address all the questions that may be important to you as a holder of United National Group common shares or Penn-America common stock. United National Group and Penn-America urge you to read carefully the remainder of this joint proxy statement/ prospectus because information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the shareholders’ meetings. Additional important information is contained in the remainder of this joint proxy statement/ prospectus, the annexes to this joint proxy statement/ prospectus and the documents referred to or incorporated by reference in this joint proxy statement/ prospectus.

SUMMARY

      This summary highlights information contained in this joint proxy statement/ prospectus and may not contain all the information that is important to you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should carefully read this entire joint proxy statement/ prospectus, including the attached annexes, and the other documents to which we have referred you. See the section entitled “Where You Can Find More Information” on page 247. We have included page references to direct you to a more complete description of the topics presented in this summary.

The Companies

      United National Group is a holding company formed on August 26, 2003 under the laws of the Cayman Islands to acquire the insurance and related operations conducted by American Insurance Service, Inc. and its subsidiaries, including American Insurance Adjustment Agency, Inc., Diamond State Insurance Company, J.H. Ferguson & Associates, LLC, United National Casualty Insurance Company, United National Insurance Company and United National Specialty Insurance Company.

      Through its U.S. operations, United National Group is a leading specialty property and casualty insurer with a 44-year operating history in the specialty insurance markets. Its U.S. insurance subsidiaries, led by United National Insurance Company, are either licensed or eligible to write on a surplus lines basis in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Its non-U.S. operations, which consist of Barbados- and Bermuda-based insurance companies, began offering insurance products to third parties and reinsurance to its U.S. operations in 2004. The non-U.S. operations may offer reinsurance products to third parties in the near future.

      United National Group writes specialty insurance products that are designed to meet the specific needs of targeted niche insurance markets. These niche markets are typically well-defined, homogeneous groups of insureds to which, due to some particular risk exposure, standard market insurers do not offer insurance coverage. Examples of products that United National Group writes for these markets include property and casualty insurance for social service agencies, insurance for equine mortality risks and insurance for vacant property risks.

      Penn-America is a specialty property and casualty insurance holding company. Penn-America, through its insurance subsidiaries, Penn-America Insurance Company and Penn-Star Insurance Company, markets and underwrites general liability, commercial property and multi-peril insurance for small businesses located primarily in small towns and suburban and rural areas. Penn-America writes business in all 50 states and the District of Columbia.

      Penn-America’s insureds are primarily small businesses, including restaurants, apartments, retail stores and service contractors, who pay average annual premiums of about $2,000. In addition, Penn-America has developed customized products and coverages for other small commercial insureds such as day care facilities, fitness centers and special events. The small businesses that Penn-America insures often cannot obtain insurance because of their rural locations, small premium size or non-standard risk characteristics. As a result, these small businesses must turn to companies like Penn-America, which operate in a small business niche of the secondary or residual market called the “excess and surplus lines” or “E&S” market. Penn-America believes the benefits of operating in the excess and surplus lines marketplace include:

      Penn-America’s distribution strategy is to maintain strong relationships with a select group of high-quality general agents. Penn-America carefully selects a limited number of general agents based on their experience and reputation and strives to preserve each agent’s franchise value within its marketing territory. Penn-America seeks to increase its written premiums with these general agents and to develop strong, longstanding relationships by providing a high level of service and support, through responses to quotes within 24 hours and access to Internet and website technology. Penn-America believes these activities create goodwill with the general agents and strengthen its relationship with them.

The United National Group Extraordinary General Meeting and the Penn-America Special Meeting

      The extraordinary general meeting of United National Group shareholders will be held at Burnaby Building, 16 Burnaby Street, Hamilton, Bermuda at 4:00 p.m., local time, on January 24, 2005. At the United National Group extraordinary general meeting, shareholders will be asked to:

      A copy of the merger agreement and the form of the Amended and Restated Memorandum & Articles of Association of United America Indemnity, Ltd. are attached to this joint proxy statement/ prospectus as Annex A and Annex E, respectively, and United National Group shareholders are urged to read the information contained therein carefully before casting their vote at the extraordinary general meeting of shareholders.

      The special meeting of Penn-America shareholders will be held at 420 S. York Road, Hatboro, Pennsylvania 19040 at 10:00 a.m., local time, on January 24, 2005. At the Penn-America special meeting, shareholders will be asked to:

      A copy of the merger agreement is attached to this joint proxy statement/ prospectus as Annex A, and Penn-America shareholders are urged to read the information contained therein carefully before casting their vote at the special meeting of shareholders.

      Only United National Group shareholders of record at the close of business on December 15, 2004, the record date for the extraordinary general meeting, will be entitled to notice of, and to vote at, the extraordinary general meeting and any adjournment or postponement of the extraordinary general meeting.

      On the record date, there were 15,584,090 United National Group Class A common shares and 12,687,500 United National Group Class B common shares entitled to vote at the United National Group extraordinary general meeting. Shareholders will have one vote for each United National Group Class A common share and 10 votes for each United National Group Class B common share that they owned on the United National Group record date, exercisable in person or by properly executed and delivered proxy, at the extraordinary general meeting. The required quorum for the transaction of business at the extraordinary general meeting consists of one or more holders of United National Group common shares present in person or by proxy and entitled to vote that hold in the aggregate at least a majority of the votes entitled to be cast at such meeting.

      Only Penn-America shareholders of record at the close of business on December 15, 2004, the record date for the Penn-America special meeting, will be entitled to notice of, and to vote at, the Penn-America special meeting or any adjournments or postponements of the Penn-America special meeting.

      On the record date, there were a total of 15,190,752 shares of Penn-America common stock outstanding and entitled to vote at the Penn-America special meeting. Penn-America shareholders will have one vote for each share of Penn-America common stock that they owned on the Penn-America record date, exercisable in person or by properly executed and delivered proxy, at the Penn-America special meeting. The presence of the holders of at least a majority of Penn-America common stock outstanding on the record date, whether present in person or by properly executed and delivered proxy, will constitute a quorum for the transaction of business at the Penn-America special meeting.

      If proxies are returned without indication as to how to vote, the United National Group common shares represented by each such proxy will be considered to be voted in favor of all matters for consideration at the United National Group extraordinary general meeting, and in favor of any proposal to adjourn or postpone the extraordinary general meeting, if necessary, to permit further solicitation of proxies on the proposal to approve the issuance of United National Group Class A common shares in the merger and/or the other United National Group extraordinary general meeting matters.

      Pursuant to a voting agreement entered into between Penn-America and affiliates of Fox Paine & Company, LLC, holders of approximately 90.2% of United National Group’s voting power have agreed to vote for the issuance of United National Group Class A common shares in the merger. This means that no additional vote of United National Group’s shareholders is required to approve the issuance of United National Group Class A common shares in the merger.

      The affirmative vote of at least a majority of the votes cast at the Penn-America special meeting by shareholders entitled to vote is required to adopt the merger agreement and approve the proposal to adjourn or postpone the special meeting, if necessary, for the purpose of soliciting additional proxies. If proxies are returned without indication as to how to vote, the Penn-America common stock represented by each such proxy will be considered to be voted in favor of all matters for consideration at the Penn-America special meeting, and in favor of any proposal to adjourn or postpone the special meeting, if necessary, to permit further solicitation of proxies on the proposal to adopt the merger agreement.

      United National Group entered into separate stock purchase agreements with each of Penn Independent Corporation, which we refer to as Penn Independent, Mr. Irvin Saltzman, and Mr. Jon S. Saltzman and Ms. Joanne Lynch Saltzman. In these agreements, each of Penn Independent, Messrs. Irvin Saltzman and Jon S. Saltzman and Ms. Joanne Lynch Saltzman has agreed to vote all of the shares of Penn-America common stock owned by him, her or it in favor of adoption of the merger agreement. As of the Penn-America record date, Penn Independent owned 4,631,250 shares of Penn-America common stock; Mr. Irvin Saltzman owned 145,800 shares of Penn-America common stock; Mr. Jon S. Saltzman and Ms. Saltzman owned 101,475 shares of Penn-America common stock, and Jon S. Saltzman owned 95,025 shares of Penn-America common stock, which were acquired by Mr. Saltzman upon the exercise of options to acquire Penn-America stock for an aggregate of 4,973,550 shares of Penn-America common stock, or 32.7% of the Penn-America common stock outstanding as of the record date. This means that unless at least approximately 74.3% of the shares of Penn-America’s common stock present at the meeting, but not subject to agreements to vote in favor of the merger, is voted “AGAINST” the adoption of the merger agreement, the adoption of the merger agreement will be approved (assuming all of the outstanding shares of Penn-America’s common stock are present and voted at the meeting).

      On December 15, 2004, directors and executive officers of United National Group and their affiliates owned and were entitled to vote 4,347,666 United National Group Class A common shares and 12,687,500 United National Group Class B common shares, or approximately 27.9% of the United National Group Class A common shares and 100% of the United National Group Class B common shares outstanding on that date and approximately 95.2% of the votes of United National Group common shares outstanding on that date. Except for the voting agreement between Penn-America and affiliates of Fox Paine & Company with respect to 1,622,725 United National Group Class A common shares and 12,687,500 Class B common shares, there are no voting agreements relating to United National Group Class A common shares or Class B

      On December 15, 2004, directors and executive officers of Penn-America and their affiliates owned and were entitled to vote 5,528,035 shares of Penn-America common stock, or approximately 36.4% of the shares of Penn-America common stock outstanding on that date. Except for voting provisions contained in the separate stock purchase agreements between United National Group and each of Penn Independent, Mr. Irvin Saltzman, and Mr. Jon S. Saltzman and Ms. Joanne Lynch Saltzman with respect to an aggregate of 4,973,550 shares of Penn-America common stock, there are no voting agreements in effect relating to shares of Penn-America common stock held by the directors and executive officers of Penn-America. A total of 4,973,550 of the 5,528,035 shares of Penn-America common stock held by the directors and executive officers of Penn-America and their affiliates are subject to these voting agreements.

      United National Group shareholders are requested to complete and sign the accompanying proxy and return it promptly to United National Group in the enclosed pre-addressed, postage prepaid envelope. When the accompanying proxy is returned properly executed, the United National Group Class A common shares and Class B common shares represented by it will be voted at the United National Group extraordinary general meeting in accordance with the instructions contained in the proxy.

      If you abstain from voting or do not vote (either in person or by proxy), it will have no effect (assuming a quorum is present at the United National Group extraordinary general meeting) in determining (1) whether the issuance of United National Group Class A common shares in the merger will be approved, (2) whether the change of United National Group’s name to United America Indemnity and the corresponding amendment to United National Group’s memorandum and articles of association will be approved, (3) whether the amendments to articles 135 and 136 of United National Group’s articles of association will be approved, (4) whether the amendments to the organizational documents of United National Group’s non-U.S. subsidiaries will be approved, or (5) whether the proposal to adjourn or postpone the United National Group extraordinary general meeting, if necessary, to solicit additional proxies will be approved.

      Brokers who hold United National Group Class A common shares and Class B common shares in street name for customers who are the beneficial owners of those shares may not give a proxy to vote those shares without specific instructions from their customers. All United National Group Class A common shares and Class B common shares represented at the extraordinary general meeting, but not voted, including abstentions and broker non-votes, will be treated as present for determining the presence or absence of a quorum for all matters for consideration at the extraordinary general meeting. If proxies are returned without indication as to how to vote, the United National Group Class A common shares and Class B common shares represented by each such proxy will be considered to be voted in favor of all matters for consideration at the United National Group extraordinary general meeting.

      You have the power to revoke your proxy at any time before your proxy is voted at the extraordinary general meeting. If you are a holder of record, your proxy can be revoked in one of three ways: (1) you can send a signed notice of revocation; (2) you can grant a new, valid proxy bearing a later date; or (3) you can attend the extraordinary general meeting and vote in person, which will automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given. If you choose either of the first two methods, you must submit your notice of revocation or your new proxy to the Chief Executive Officer of United National Group, c/o Walkers SPV Limited, Walker House, 87 Mary Street, P.O. Box 908GT, George Town, Grand Cayman, Cayman Islands, before the extraordinary general meeting.

      If your shares are held by a broker, bank or nominee (that is, in street name), you should contact your broker, bank or nominee to revoke your proxy.

      Penn-America shareholders of record are requested to complete and sign the accompanying proxy and return it promptly to Penn-America in the enclosed pre-addressed, postage prepaid envelope. When the accompanying proxy is returned properly executed, the shares of Penn-America common stock represented by it will be voted at the special meeting in accordance with the instructions contained in the proxy.

      If you abstain from voting or do not vote (either in person or by proxy), it will have no effect (assuming a quorum is present at the Penn-America special meeting) in determining (1) whether the merger agreement will be adopted or (2) whether the proposal to adjourn or postpone the Penn-America special meeting, if necessary, to solicit additional proxies will be approved.

      Brokers who hold shares of Penn-America common stock in street name for customers who are the beneficial owners of those shares may not give a proxy to vote those shares without specific instructions from their customers. All shares of Penn-America common stock represented at the special meeting, but not voted, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters for consideration at the special meeting. If proxies are returned without indication as to how to vote, the Penn-America common stock represented by each such proxy will be considered to be voted in favor of all matters for consideration at the Penn-America special meeting.

      You have the power to revoke your proxy at any time before your proxy is voted at the special meeting. If you are a holder of record, your proxy can be revoked in one of three ways: (1) you can send a signed notice of revocation; (2) you can grant a new, valid proxy bearing a later date; or (3) you can attend the special meeting and vote in person, which will automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given. If you choose either of the first two methods, you must submit your notice of revocation or your new proxy to Garland P. Pezzuolo, Secretary, Penn-America Group, Inc., 420 S. York Road, Hatboro, Pennsylvania 19040, before the beginning of the special meeting.

      If your shares are held by a broker, bank or nominee (that is, in street name), you should contact your broker, bank or nominee to revoke your proxy.

      A copy of the merger agreement is attached as Annex A to this joint proxy statement/ prospectus. We encourage you to read the entire merger agreement carefully because it is the principal legal document governing the merger.

      Subject to the terms and conditions of the merger agreement and in accordance with Pennsylvania law, at the effective time of the merger, Cheltenham Acquisition Corp., a newly formed, indirect, wholly owned subsidiary of United National Group, formed for the purposes of the merger, will be merged into Penn-America. Penn-America will survive the merger as an indirect, wholly owned subsidiary of United National Group.

      Each share of Penn-America common stock outstanding immediately prior to the effective time of the merger (other than shares held by United National Group, Penn Independent or any of their subsidiaries) will be converted into the right to receive (A) an amount of United National Group Class A common shares equal to the result obtained by dividing $13.875 by the volume weighted average sales price of a United National Group Class A common share, as reported on the Nasdaq Stock Market by The Wall Street Journal during the 20 consecutive trading days ending on and including the trading day immediately preceding the date of the effective time of the merger and (B) an amount in cash equal to $1.50, issuable and payable, without interest, upon surrender of the certificate that formerly evidenced such share of Penn-America common stock.

      Penn-America shareholders will receive cash for any fractional shares they would otherwise receive in the merger. The amount of cash for any fractional shares Penn-America shareholders will receive will be equal to the product of (A) the fractional share interest of a United National Group Class A common share to which such

      The obligations of Penn-America, United National Group, U.N. Holdings II and Cheltenham Acquisition Corp. to complete the merger are subject to the satisfaction or waiver of, among other things, the following conditions:

      See the section entitled “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 99 for a discussion of all of the conditions to the obligations of the parties to complete the merger.

      The merger agreement may be terminated at any time prior to the effective time of the merger by the mutual written consent of United National Group and Penn-America. In addition, the merger agreement may be terminated by either United National Group or Penn-America if the merger has not been consummated as of March 31, 2005, subject to certain limitations, and under other circumstances described in this joint proxy statement/ prospectus. See the section entitled “The Merger Agreement — Termination of the Merger Agreement” beginning on page 109 for a discussion of each of United National Group’s and Penn-America’s rights to terminate the merger agreement.

      After careful consideration, on October 11, 2004, the United National Group board of directors unanimously determined that the merger is advisable and in the best interests of United National Group and approved and adopted the merger agreement. The board of directors of United National Group unanimously recommends that United National Group shareholders vote “FOR” the proposal to issue United National Group Class A common shares in the merger. The United National Group board of directors also unanimously recommends that the United National Group shareholders vote “FOR” the other United National Group extraordinary general meeting matters. Further, the board of directors of United National Group recommends that United National Group shareholders vote “FOR” the proposal to adjourn or postpone the United National Group extraordinary general meeting, if necessary, for the purpose of soliciting additional proxies. For the factors considered by the United National Group board in reaching its decision relating to the merger, see the section entitled “The Merger — United National Group Reasons for the Merger” beginning on page 56.

      On October 14, 2004, a special committee of Penn-America’s board of directors comprised entirely of independent directors unanimously determined that the merger agreement and the transactions contemplated by the merger agreement (including the merger) are advisable and in the best interests of Penn-America and, based on that determination, unanimously recommended to the board of directors of Penn-America that the board (1) approve and adopt the merger agreement and (2) recommend that the holders of Penn-America common stock vote for the adoption of the merger agreement. Based on the unanimous recommendation of the special committee, the Penn-America board of directors subsequently determined on October 14, 2004, that the merger agreement and the transactions contemplated by the merger agreement (including the merger) are advisable and in the best interests of Penn-America and approved and adopted the merger agreement. The Penn-America board of directors recommends that Penn-America shareholders vote “FOR” the proposal to adopt the merger agreement. Further, the board of directors of Penn-America recommends that Penn-America shareholders vote “FOR” the proposal to adjourn or postpone the Penn-America special meeting, if necessary, for the purpose of soliciting additional proxies. For the factors considered by the special committee and the board in reaching their decisions, see the section entitled “The Merger — Penn-America Reasons for the Merger” beginning on page 67.

      The United National Group board of directors received a written opinion, dated October 14, 2004, from Merrill Lynch, Pierce, Fenner & Smith Incorporated, which we refer to as Merrill Lynch, United National Group’s financial advisor, to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the total consideration to be paid by United National Group in the transaction was fair, from a financial point of view, to United National Group. This written opinion is attached to this document as Annex C. We encourage you to read this opinion carefully in its entirety for a

      The special committee of the Penn-America board of directors received a written opinion, dated October 14, 2004, from Bear, Stearns & Co. Inc., which we refer to as Bear Stearns, the special committee’s financial advisor, to the effect that, as of the date of such opinion and based upon and subject to the matters stated in the opinion, the consideration to be received in the merger was fair, from a financial point of view, to holders of Penn-America common stock (excluding United National Group, U.N. Holdings II, Cheltenham Acquisition Corp., Penn Independent and their respective subsidiaries and affiliates). This written opinion is attached to this document as Annex D. We encourage you to read this opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the reviews undertaken. Bear Stearns’ opinion is addressed to the special committee of the Penn-America board of directors and does not constitute a recommendation to the special committee or any shareholder of Penn-America or United National Group as to how to vote or act with respect to any matters relating to the proposed merger. The opinion speaks only as of its date and Bear Stearns is under no obligation to confirm its opinion as of a later date.

      In considering the recommendations of the special committee of the Penn-America board of directors and the Penn-America board of directors with respect to the merger, you should be aware that executive officers of Penn-America and members of the Penn-America board of directors have interests in the transactions contemplated by the merger agreement that are different than, or in addition to, the interests of Penn-America shareholders generally. The special committee of the Penn-America board of directors and the Penn-America board of directors were aware of these interests and considered them among other matters in making its recommendation. See the section entitled “The Merger — Interests of Penn-America Directors and Executive Officers in the Merger” on page 80 for a more detailed discussion of these interests.

      In considering the recommendation of the United National Group board of directors with respect to the approval of the issuance of United National Group Class A common shares in the merger, United National Group shareholders should be aware that certain members of the board of directors of United National Group have interests in the transactions contemplated by the merger agreement that are different from, or in addition to, the interests of United National Group shareholders generally. The board of directors of United National Group was aware of these interests and considered them, among other matters, in making its determinations and recommendations.

      The merger is subject to review by the U.S. Department of Justice and the U.S. Federal Trade Commission to determine whether the merger complies with applicable antitrust laws. Under the provisions of the HSR Act, the merger may not be completed until after each of United National Group and Penn-America have furnished certain information and materials to the Antitrust Division of the Department of Justice and the Federal Trade Commission and a required waiting period has expired or been terminated. United National Group and Penn-America each filed the required notification and report forms with the Antitrust Division and the Federal Trade Commission on December 2, 2004.

      State insurance laws generally require that, prior to the acquisition of an insurance company, the acquiring party must obtain approval from the insurance commissioner of the target insurance company’s state of domicile. Accordingly, applications have been filed with the Pennsylvania

      United National Group prepares its financial statements in accordance with accounting principles generally accepted in the U.S., or GAAP. The merger will be accounted for using the “purchase” method of accounting with United National Group having acquired Penn-America. This means that United National Group will allocate the purchase price to the fair value of assets acquired and liabilities assumed from Penn-America at the acquisition date, with the excess purchase price being recorded as “goodwill.” Under the purchase method of accounting, goodwill is not amortized but is tested for impairment at least annually.

      In general, the merger should be a fully taxable transaction to Penn-America shareholders for United States federal income tax purposes. Tax matters, however, are very complicated and the tax consequences of the merger to each Penn-America shareholder will depend on the shareholder’s particular facts and circumstances. Each Penn-America shareholder is urged to consult with his or her tax advisor.

      Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses, whether or not the merger is completed, subject to the specific exceptions discussed in this joint proxy statement/ prospectus. Specifically, the merger agreement provides that, under specified circumstances, Penn-America may be required to pay to United National Group a termination fee equal to $7,673,000. See the section entitled “The Merger Agreement — Expenses and Termination Fees” beginning on page 110 for a more complete discussion of the circumstances under which expenses and termination fees will be required to be paid.

      Under Pennsylvania law, shareholders of a Pennsylvania corporation are not entitled to dissenters’ rights if, on the record date fixed for determining shareholders entitled to vote on a proposed action, the corporation’s shares are listed on a national securities exchange. Thus, Penn-America shareholders will not be entitled to dissenters’ rights in connection with the merger.

      Pursuant to a stock purchase agreement entered into by United National Group, United National Insurance Company, Penn Independent and the shareholders of Penn Independent, prior to the closing of the merger United National Insurance Company will purchase all of the common stock of Penn Independent from Penn Independent’s shareholders for approximately $95 million, subject to adjustment pursuant to the Penn Independent stock purchase agreement. Penn Independent is a U.S. wholesale broker of commercial insurance for small and middle market businesses, public entities and associations. Penn Independent also owns, indirectly through a wholly owned subsidiary, 4,631,250 shares of Penn-America common stock, which represents approximately 30.5% of the outstanding common stock of Penn-America as of December 15, 2004. Upon United National Insurance Company’s acquisition of Penn Independent, it will indirectly acquire Penn Independent’s shares of Penn-America common stock. Pursuant to the Penn Independent stock purchase agreement, Penn Independent has also agreed to vote its shares of Penn-America common stock in favor of the adoption of the merger agreement at the Penn-America special meeting. The closing of the sale of the Penn Independent common stock is not a condition to the closing of the merger and the closing of the merger is not a condition to the sale of the Penn Independent common stock.

COMPARATIVE PER SHARE INFORMATION

      The following tables show per share data regarding earnings from continuing operations (net income before extraordinary gain), book value and cash dividends for United National Group and Penn-America on a historical, pro forma combined and pro forma equivalent basis. The information presented below assumes that the merger is accounted for as a purchase. The pro forma book value and cash dividend information was computed as if the merger had been completed on September 30, 2004. The pro forma earnings from continuing operations (net income before extraordinary gain) information for the year ended December 31, 2003 and the nine months ended September 30, 2004 was computed as if the merger had been completed on January 1, 2003, and January 1, 2004, respectively. The Penn-America pro forma equivalent information was calculated by multiplying the corresponding pro forma combined data by the exchange ratio equal to 0.73 to 1.00, which was determined by dividing $13.875 by $19.00, the last quoted sales price of a United National Group Class A common share as quoted on the Nasdaq Stock Market on December 15, 2004. This information shows how each share of Penn-America common stock would have participated in United National Group’s earnings from continuing operations (net income before extraordinary gain), book value and cash dividends if the merger had been completed at these dates. These amounts do not necessarily reflect future per share levels of earnings from continuing operations (net income before extraordinary gain), book value or cash dividends of United National Group.

      The following unaudited comparative per share data are derived from the historical consolidated financial statements of United National Group and the historical consolidated financial statements of Penn-America. You should read the information below in conjunction with the financial statements and accompanying notes of United National Group, included herein, and of Penn-America, incorporated by reference in this joint proxy statement/ prospectus. You should also read the unaudited pro forma condensed combined financial statements and accompanying notes included in this joint proxy statement/ prospectus beginning on page 218.

COMPARATIVE STOCK PRICES AND DIVIDENDS (SEE PAGE 128)

      The table below presents the last quoted sale price of United National Group Class A common shares, as quoted on the Nasdaq Stock Market under the symbol “UNGL”, and the New York Stock Exchange closing price per share of Penn-America common stock, as reported on the NYSE Composite Transaction Tape under the symbol “PNG”, and the market value of a share of Penn-America common stock on an equivalent per share basis. These prices are presented on two dates:

      Since its initial public offering, United National Group has never paid a cash dividend on its common shares, retaining any earnings to fund the development and growth of its business. From time to time, the board of directors reviews United National Group’s alternatives with respect to its earnings and seeking to maximize value for its shareholders. In the future, United National Group may decide to commence a dividend program for the benefit of its shareholders. Any future determination to pay dividends will be at the discretion of its board of directors and will be limited by its position as a holding company that lacks direct operations, significant regulatory and contractual restrictions, the results of operations of its subsidiaries, financial condition, cash requirements, prospects and other factors that its board of directors deems relevant. Pursuant to the merger agreement, until the merger is completed or the merger agreement is terminated in accordance with its terms, United National Group has agreed not to declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock without the prior written consent of Penn-America, except for dividends with a record date after the effective time of the merger.

      The holders of Penn-America common stock receive dividends if and when declared by the Penn-America board of directors out of funds legally available therefor. Pursuant to the merger agreement, until the merger is completed or the merger agreement is terminated in accordance with its terms, Penn-America has agreed not to declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock without the prior written consent of United National Group.

SELECTED HISTORICAL FINANCIAL DATA OF UNITED NATIONAL GROUP

      The following table sets forth selected consolidated historical financial data for United National Group and, for periods prior to September 5, 2003, Wind River Investment Corporation, which is considered United National Group’s “Predecessor” for accounting purposes. This selected financial data are derived from the consolidated financial statements and accompanying notes of United National Group and Wind River Investment Corporation included elsewhere in this joint proxy statement/ prospectus. This selected historical financial data should be read together with the consolidated financial statements and accompanying notes of United National Group and Wind River Investment Corporation and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this joint proxy statement/ prospectus.