Exhibit 99.1

FOR FURTHER INFORMATION:

AT FIRST MERCURY FINANCIAL CORPORATION:
Edward A. LaFramboise
Vice President — Finance
(248) 213-0406
elaframboise@firstmercury.com

FOR IMMEDIATE RELEASE
THURSDAY, OCTOBER 28, 2010

FIRST MERCURY FINANCIAL CORPORATION ANNOUNCES
THIRD QUARTER 2010 FINANCIAL RESULTS

SOUTHFIELD, MI — October 28, 2010 — First Mercury Financial Corporation (NYSE: FMR) (“First Mercury” or the “Company”) today announced results for the third quarter ended September 30, 2010.

Highlights for the third quarter 2010 include:

	•		Book value per share of $16.99
	•		Net loss of $2.0 million, or $(0.11) per diluted share
	•		Operating net loss of $6.9 million, or $(0.39) per diluted share
	•		Net investment income increase of 10.7 percent

Written and Earned Premium

For the three months ended September 30, 2010, gross written premiums were $83.8 million, a 2.5 percent increase from the gross written premiums during the same period in 2009. For the nine months ended September 30, 2010, gross written premiums were $251.7 million, a 3.9 percent increase from the gross written premiums during the same period in 2009.

Net earned premiums during the three months ended September 30, 2010 were $49.2 million, a 4.4 percent decrease from the same period of 2009. Net earned premiums during the nine months ended September 30, 2010 were $152.4 million, a 2.0 percent decrease from the same period of 2009.

There were no gross written or net earned premiums from assumed retroactive reinsurance transactions during the three months ended September 30, 2010. There were $3.3 million of gross written and net earned premiums from assumed retroactive reinsurance transactions during the nine months ended September 30, 2010.

Commissions and Fees

Commissions and fees during the three months ended September 30, 2010 were $0.1 million, a 99.5 percent decrease from the same period of 2009. Commissions and fees during the nine months ended September 30, 2010 were $15.7 million, a 34.4 percent decrease from the same period of 2009. During the three and nine months ended September 30, 2010, the Company recorded a net reduction in accrued profit sharing commissions of $5.9 million, of which $6.9 million was a decrease to commissions and fees revenue with an offsetting $1.0 million decrease in underwriting, agency and other expenses, due to the unfavorable development in prior years’ net loss and loss adjustment expense reserves recorded during the three months ended September 30, 2010 discussed below.

Investments

Cash and investments were $785.4 million at September 30, 2010. The Company recorded $12.7 million of pretax net unrealized gains on its available for sale investment portfolio during the three months ended September 30, 2010. For the nine months ended September 30, 2010, pretax net unrealized gains on its available for sale investment portfolio were $24.8 million. The investment portfolio’s taxable equivalent net total returns for the three and nine months ended September 30, 2010 were 3.5 and 8.0 percent, respectively. The annualized taxable equivalent yield on total investments (net of investment expenses) was 5.1 percent and 5.5 percent at September 30, 2010 and 2009, respectively.

Losses and Loss Adjustment Expenses

During the three and nine months ended September 30, 2010, there was $11.4 million of unfavorable development of prior years’ net loss and loss adjustment expense reserves due to adverse claims development principally in the Company’s primary general liability and professional liability lines of business. For the three and nine months ended September 30, 2009, there were $1.3 million and $5.7 million, respectively, of favorable development of prior years’ net loss and loss adjustment expense reserves.

Underwriting, Agency and Other Expenses

During the three months ended September 30, 2010, the Company’s GAAP underwriting expense ratio was 50.8 percent compared to 33.6 percent for the same period of 2009. During the nine months ended September 30, 2010, the Company’s GAAP underwriting expense ratio was 43.0 percent compared to 31.6 percent for the same period of 2009. For the three and nine months ended September 30, 2010, the impact on the GAAP underwriting expense ratio related to the reductions in accrued profit sharing commissions recorded during the third quarter of 2010 noted above was 11.9 and 3.9 percentage points, respectively. In addition, the GAAP underwriting expense ratio for the nine months ended September 30, 2010 includes 3.3 percentage points related to a restructuring charge recorded during the first quarter of 2010.

Capital Management

The Company paid a cash dividend of $0.025 per share on September 30, 2010. This represents the Company’s sixth consecutive quarterly dividend of $0.025 per share. As previously disclosed, the Company paid a $2.00 per share special cash dividend on March 31, 2010. This special dividend when

combined with our share repurchases in 2008 and 2009 and our regular dividends resulted in $56.9 million of capital returned to shareholders since August of 2008.

About First Mercury Financial Corporation

First Mercury Financial Corporation provides insurance products and services primarily to the specialty commercial insurance markets, focusing on niche and underserved segments where we believe that we have underwriting expertise and other competitive advantages. During the Company’s 37 years of underwriting risks, First Mercury has developed the underwriting expertise and cost-efficient infrastructure which has enabled us to effectively underwrite such risks. Our risk-taking subsidiaries offer insurance products through our distribution subsidiaries: CoverX^®, FM Emerald and AMC, which are recognized brands among insurance producers.

Non-GAAP Financial Measures

Operating net income (loss) and operating net income (loss) per share are non-GAAP financial measures, and management believes that investors’ understanding of core operating performance is enhanced by First Mercury’s disclosure of these financial measures. Operating net income (loss) consists of net income (loss) adjusted to exclude the impact of net realized gains (losses) on investments, other-than-temporary impairment losses on investments, the change in fair value of derivative instruments, restructuring charges, acquisition-related transaction costs, and taxes related to these adjustments. Definitions of these items may not be comparable to the definitions used by other companies. Net income (loss) and net income (loss) per share are the GAAP financial measures that are most directly comparable to operating net income (loss) and operating net income (loss) per share.

Safe Harbor Statement

This release contains forward-looking statements that relate to future periods and includes statements regarding our anticipated performance. Generally, the words “anticipates,” “believes,” “expects,” “intends,” “estimates,” “projects,” “plans” and similar expressions identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other important factors include, among others: recent and future events and circumstances impacting financial, stock, and capital markets, and the responses to such events by governments and the financial communities; the impact of catastrophic events and the occurrence of significant severe weather conditions on our operating results; our ability to maintain or the lowering or loss of one of our financial or claims-paying ratings; our actual incurred losses exceeding our loss and loss adjustment expense reserves; the failure of reinsurers to meet their obligations; our estimates for accrued profit sharing commissions are based on loss ratio performance and could be adversely impacted if the underlying loss ratios deteriorate; our inability to obtain reinsurance coverage at reasonable prices; the failure of any loss limitations or exclusions or changes in claims or coverage; our ability to successfully integrate acquisitions that we make; our ability to realize anticipated benefits from acquisitions; our lack of long-term operating history in certain specialty classes of insurance; our ability to acquire and retain additional underwriting expertise and capacity; the concentration of our insurance business in relatively few specialty classes; the increasingly competitive property and casualty marketplace; fluctuations and uncertainty within the excess and surplus lines insurance industry; the extensive regulations to which our business is subject and our failure to comply with these regulations; our ability to maintain our risk-based capital at levels required by regulatory authorities; our inability to realize our investment objectives; an economic downturn or other economic

conditions adversely affecting our financial position; and the risks identified in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K. Given these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. We assume no obligation to update or revise them or provide reasons why actual results may differ.

The Company uses the Investor Relations page of its website at www.firstmercury.com to make information available to its investors and the public.

Financial Tables Follow...

First Mercury Financial Corporation
Condensed Consolidated Statements of Income
(Unaudited)

		Three Months Ended												Nine Months Ended
		September 30,								%				September 30,								%
		2010				2009				Change				2010				2009				Change
						(Dollars in thousands, except share and per share data)
Operating Revenue
Net earned premiums		$	49,236			$	51,512				-4.4	%		$	152,413			$	155,539				-2.0	%
Commissions and fees			40				7,445				-99.5	%			15,699				23,916				-34.4	%
Net investment income			8,349				7,540				10.7	%			25,434				21,105				20.5	%
Net realized gains on investments			7,671				13,766				-44.3	%			10,354				25,204				-58.9	%
Other-than-temporary impairment losses on investments:
Total losses			(61	)			(761	)			-92.0	%			(1,339	)			(1,631	)			-17.9	%
Portion of losses recognized in accumulated other comprehensive income			(50	)			469				-110.7	%			684				1,205				-43.2	%
Net impairment losses recognized in earnings			(111	)			(292	)			-62.0	%			(655	)			(426	)			53.8	%
Total Operating Revenues			65,185				79,971				-18.5	%			203,245				225,338				-9.8	%
Operating Expenses
Losses and loss adjustment expenses, net			42,531				30,345				40.2	%			108,114				96,301				12.3	%
Amortization of deferred acquisition expenses			13,269				13,960				-4.9	%			40,024				40,889				-2.1	%
Underwriting, agency and other expenses			11,215				10,169				10.3	%			35,071				28,919				21.3	%
Amortization of intangible assets			482				559				-13.8	%			1,515				1,709				-11.4	%
Restructuring			—				—				—				5,018				—				100.0	%
Total Operating Expenses			67,497				55,033				22.6	%			189,742				167,818				13.1	%
Operating Income (Loss)			(2,312	)			24,938				-109.3	%			13,503				57,520				-76.5	%
Interest Expense			1,554				1,446				7.5	%			4,483				4,278				4.8	%
Change in Fair Value of Derivative Instruments			—				(171	)			100.0	%			—				(401	)			100.0	%
Income (Loss) Before Income Taxes			(3,866	)			23,663				-116.3	%			9,020				53,643				-83.2	%
Income Taxes			(1,835	)			8,018				-122.9	%			1,694				17,707				-90.4	%
Net Income (Loss)		$	(2,031	)		$	15,645				-113.0	%		$	7,326			$	35,936				-79.6	%
Net Income (Loss) Per Share:
Basic		$	(0.11	)		$	0.90							$	0.42			$	2.03
Diluted		$	(0.11	)		$	0.89							$	0.41			$	1.99
Weighted Average Shares Outstanding:
Basic			17,469,803				17,144,077								17,343,255				17,537,754
Diluted			17,469,803				17,486,020								17,435,544				17,877,126
GAAP Underwriting Ratios:
Loss ratio			86.4	%			58.9	%		27.5		Pts.			70.9	%			61.9	%		9.0		Pts.
Expense ratio			50.8	%			33.6	%		17.2		Pts.			43.0	%			31.6	%		11.4		Pts.
Combined ratio			137.2	%			92.5	%		44.7		Pts.			113.9	%			93.5	%		20.4		Pts.

First Mercury Financial Corporation
Condensed Consolidated Balance Sheets
(Unaudited)

		September 30,				December 31,
		2010				2009
		(Dollars in thousands,
		except share and per share data)
ASSETS
Investments
Debt securities		$	688,556			$	648,522
Equity securities and other			42,328				38,752
Short-term			40,710				12,216
Total Investments			771,594				699,490
Cash and cash equivalents			13,771				14,275
Premiums and reinsurance balances receivable			48,576				78,544
Accrued investment income			6,220				6,248
Accrued profit sharing commissions			8,903				14,661
Reinsurance recoverable on paid and unpaid losses			216,003				172,711
Prepaid reinsurance premiums			63,072				57,374
Deferred acquisition costs			24,197				25,654
Intangible assets, net of accumulated amortization			35,590				37,104
Goodwill			25,483				25,483
Other assets			44,421				26,049
Total Assets		$	1,257,830			$	1,157,593
LIABILITIES AND STOCKHOLDERS’ EQUITY
Loss and loss adjustment expense reserves		$	566,886			$	488,444
Unearned premium reserves			149,491				146,773
Long-term debt			67,013				67,013
Line of credit			30,000				4,000
Funds held under reinsurance treaties			80,409				71,661
Premiums payable to insurance companies			29,767				31,167
Reinsurance payable on paid losses			1,221				958
Deferred federal income taxes			17,821				13,844
Accounts payable, accrued expenses, and other liabilities			13,523				17,649
Total Liabilities			956,131				841,509
Stockholders’ Equity
Common stock, $0.01 par value; authorized 100,000,000 shares; issued and outstanding 17,752,360 and 17,181,106 shares			178				172
Paid-in-capital			157,535				154,417
Accumulated other comprehensive income			28,020				16,256
Retained earnings			117,814				147,087
Treasury stock; 134,500 shares			(1,848	)			(1,848	)
Total Stockholders’ Equity			301,699				316,084
Total Liabilities and Stockholders’ Equity		$	1,257,830			$	1,157,593
Book Value Per Share		$	16.99			$	18.40
Tangible Book Value Per Share		$	14.24			$	15.49

First Mercury Financial Corporation
Summary Financial Data

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
		(Dollars in thousands, except per share data)
Gross Written Premiums:
Primary general liability		$	48,886			$	51,054			$	151,872			$	157,953
Excess/Umbrella casualty			11,845				8,414				33,961				25,568
Professional liability			11,646				11,631				29,535				27,303
Commercial property			9,197				8,498				25,807				24,846
Other			2,275				2,211				10,541				6,537
Gross written premiums		$	83,849			$	81,808			$	251,716			$	242,207
Net Written Premiums:
Primary general liability		$	32,897			$	34,648			$	103,884			$	107,295
Excess/Umbrella casualty			1,410				1,201				5,383				3,115
Professional liability			4,373				6,832				15,009				18,862
Commercial property			2,819				1,433				15,041				13,783
Other			2,275				2,211				10,541				6,537
Net written premiums		$	43,774			$	46,325			$	149,858			$	149,592
Commissions and Fees:
Insurance underwriting commissions and fees		$	(5,861	)		$	1,272			$	(3,072	)		$	3,989
Insurance services commissions and fees			5,901				6,173				18,771				19,927
Total commissions and fees		$	40			$	7,445			$	15,699			$	23,916
Cash and Cash Equivalents:
Net cash provided by operating activities		$	12,014			$	7,144			$	66,244			$	65,269
Net cash used in investing activities			(20,955	)			(11,119	)			(57,220	)			(71,175	)
Net cash used in financing activities			(476	)			(3,394	)			(9,528	)			(9,722	)
Net decrease in cash and cash equivalents		$	(9,417	)		$	(7,369	)		$	(504	)		$	(15,628	)
Return on Equity: (1)
Net income (loss)			-2.7	%			21.1	%			3.2	%			17.0	%
Operating net income (loss)			-9.2	%			9.1	%			2.4	%			9.2	%
Operating Net Income (Loss): (3)
Net income (loss)		$	(2,031	)		$	15,645			$	7,326			$	35,936
Adjust for Net realized gains on investments, net of tax			(4,987	)			(8,948	)			(6,730	)			(16,383	)
Adjust for Other-than-temporary impairment losses on investments, net of tax			72				190				426				277
Adjust for Change in fair value of derivative instruments, net of tax			—				(111	)			—				(261	)
Adjust for Restructuring, net of tax			—				—				3,262				—
Adjust for Acquisition-related transaction costs, net of tax			27				—				1,061				—
Operating net income (loss)		$	(6,919	)		$	6,776			$	5,345			$	19,569
Operating Net Income (Loss) Per Share: (3)
Diluted		$	(0.39	)		$	0.39			$	0.30			$	1.09
		September 30,				December 31,
		2010				2009
Tangible Stockholders’ Equity: (2)
Total stockholders’ equity		$	301,699			$	316,084
Intangible assets, net			(35,590	)			(37,104	)
Deferred tax liability — intangible assets, net			12,083				12,613
Goodwill			(25,483	)			(25,483	)
Tangible stockholders’ equity		$	252,709			$	266,110