Moody's lowers Affirmative Insurance

Moody's Investors Service said it lowered Affirmative Insurance Holdings, Inc.'s long-term issuer rating and senior secured bank credit facility to B3 from B1.

This concludes a review that began on Oct. 23, and the outlook is negative.

The agency said the downgrade reflects the company's constrained financial flexibility, diminished cash flows available for debt service and the heightened potential to breach covenants within its bank credit agreement.

Moody's expects that the company's business profile as a producer and writer of non-standard automobile business marketed to low-income customers will continue to be adversely impacted by recessionary economic conditions, negatively impacting earnings and cash flows of the company's insurance operations. In addition, the company's regulated insurance operations are in a negative unassigned surplus position and are not able to dividend funds to the parent without regulatory approval, the agency said.

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