1282543--3/16/2007--AFFIRMATIVE_INSURANCE_HOLDINGS

related topics

{loss, insurance, financial}

{capital, credit, financial}

{debt, indebtedness, cash}

{financial, litigation, operation}

{stock, price, share}

{condition, economic, financial}

{customer, product, revenue}

{loan, real, estate}

{operation, natural, condition}

{system, service, information}

{personnel, key, retain}

{cost, operation, labor}

{acquisition, growth, future}

{competitive, industry, competition}

{cost, contract, operation}

{control, financial, internal}

{operation, international, foreign}

{cost, regulation, environmental}

{regulation, change, law}

Future issuances or sales of our common stock, including under our equity incentive plan or in connection with future acquisition activities, may adversely affect our common stock price. Our inability to refinance our lines of credit or obtain additional financing could have an adverse effect on our premium finance revenue. Since we are a controlled company for purposes of The NASDAQ Global Select Market s corporate governance requirements, our stockholders will not have, and may never have, the protections that these corporate governance requirements are intended to provide. Because of our significant concentration in non-standard personal automobile insurance, our profitability may be adversely affected by negative developments and cyclical changes in the industry. Intense competition could adversely affect our profitability. Our success depends on our ability to price accurately the risks we underwrite. If our actual losses and loss adjustment expenses exceed our loss and loss adjustment expense reserves, we will incur additional charges to earnings. We may not be successful in reducing our risk and increasing our underwriting capacity through reinsurance arrangements, which could adversely affect our business, financial condition and results of operations. We may incur significant losses if VFIC, which currently has an A.M. Best financial strength rating of F (In Liquidation) or any of our other reinsurers, do not pay our claims in a timely manner. Because we have reduced our use of quota share reinsurance, we have retained more risk, which could result in losses. We are subject to comprehensive regulation that may restrict our ability to earn profits. Regulation may become more extensive in the future, which may adversely affect our business. New pricing, claim, coverage and financing issues and class action litigation are continually emerging in the automobile insurance industry, and these new issues could adversely impact our revenues or our methods of doing business. Our insurance companies are subject to minimum capital and surplus requirements, and our failure to meet these requirements could subject us to regulatory action. Our failure to pay claims accurately could adversely affect our business, financial results and capital requirements. If we are unable to retain and recruit qualified personnel, our ability to implement our business strategies could be hindered. We may encounter difficulties in implementing our strategies of expanding into new markets and acquiring agencies. Our financial results may be adversely affected by conditions in the states where our business is concentrated. Our underwriting operations are vulnerable to a reduction in the amount of business written by independent agencies. If we are unable to establish and maintain relationships with unaffiliated insurance companies to sell their non-standard personal automobile policies through our owned retail stores, our sales volume and profitability may suffer. Our largely fixed cost structure with respect to our owned retail stores would work to our disadvantage if our sales volume at our retail stores were to decline significantly. If our insurance companies, which currently have A.M. Best financial strength ratings of B , fail to maintain commercially acceptable financial strength ratings, our ability to implement our business strategies successfully could be significantly and negatively affected. We face litigation, which if decided adversely to us, could adversely impact our financial results. Adverse securities market conditions can have a significant and negative impact on our investment portfolio. We rely on our information technology and telecommunications systems, and the failure of these systems could disrupt our operations. Severe weather conditions and other catastrophes may result in an increase in the number and amount of claims filed against us. As a holding company, we are dependent on the results of operations of our operating subsidiaries to meet our obligations and pay future dividends.

Full 10-K form ▸

1282543--3/16/2007--AFFIRMATIVE_INSURANCE_HOLDINGS_INC