1282543--4/11/2006--AFFIRMATIVE_INSURANCE_HOLDINGS

related topics

{loss, insurance, financial}

{capital, credit, financial}

{condition, economic, financial}

{stock, price, share}

{regulation, change, law}

{loan, real, estate}

{product, market, service}

{financial, litigation, operation}

{operation, natural, condition}

{personnel, key, retain}

{cost, operation, labor}

{acquisition, growth, future}

{competitive, industry, competition}

{cost, contract, operation}

{control, financial, internal}

{operation, international, foreign}

{cost, regulation, environmental}

Future sales of our common stock, or the perception that future sales could occur, may adversely affect our common stock price. Since we are a controlled company for purposes of The Nasdaq National 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 that 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 incur significant losses if Vesta Fire, which currently has an A.M.Best financial strength rating of C (Marginal) 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. 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 in to 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 under writing agencies and retail stores, our sales volume and profitability may suffer. Our largely fixed cost structure with respect to our 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.

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1282543--4/11/2006--AFFIRMATIVE_INSURANCE_HOLDINGS_INC