Document:

Letter Agreement

 Exhibit 10.37 
 CREDIT SUISSE 
 Eleven Madison Avenue 
 New York, NY 10010 
 CONFIDENTIAL 
 March 27, 2009 
 Affirmative Insurance Holdings, Inc. 
 4450 Sojourn Drive, Suite 500, 
 Addison, TX 75001 
 The Frost National Bank 
 2727 North Harwood 
 10th Floor 
 Dallas, Texas 75201-1570 
 JPMorgan Chase Bank, N.A. 
 131 S. Dearborn, IL 1-0364 
 Chicago, IL 60603 
 Affirmative Insurance Holdings, Inc.

 Third Amendment to Credit Agreement 
 Ladies and Gentlemen: 
 Reference is made to that certain Third Amendment to Credit Agreement (the “Third
Amendment”), attached hereto as Exhibit A, to be entered into among Affirmative Insurance Holdings, Inc. (“Borrower”), the lenders listed on the signature pages thereto, Credit Suisse, Cayman Islands Branch, as
administrative agent (the “Administrative Agent”) and as collateral agent, The Frost National Bank, as issuing bank and swingline lender and the other Loan Parties listed therein. Capitalized terms used but not defined in
this letter agreement are used with the meaning given to them in the Third Amendment. 
 This letter will confirm the following: 

(i) In addition to the conditions to effectiveness of the Third Amendment set forth in Section 3 thereof, the consent thereto by
each of The Frost National Bank and JPMorgan Chase Bank, N.A. shall not be released by the Administrative Agent (and the Third Amendment shall not be effective) until the Administrative Agent has received an irrevocable and unconditional notice,
substantially in the form attached hereto as Exhibit B, which notice is duly executed by the Borrower and whereby the Borrower permanently reduces the Revolving Credit Commitments by an aggregate principal amount of $10,000,000 in accordance with
Section 2.09(b) of the Credit Agreement (the “Commitment Reduction Notice”); and 

 (ii) In no event shall the Administrative Agent declare the Third Amendment Effective
Date to have occurred prior to the receipt by the Administrative Agent of (a) a duly executed Commitment Reduction Notice and (b) counterparts hereof executed by each of The Frost National Bank, JPMorgan Chase Bank, N.A., the
Administrative Agent and the Borrower. 
 This letter may not be amended or any provision hereof waived or modified except by an instrument
in writing signed by each of the parties hereto. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This letter may be executed in any number of counterparts, each of which shall be an
original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this letter by facsimile transmission shall be effective as delivery of a manually executed counterpart of
this letter. 

			
	Very truly yours,
	
	CREDIT SUISSE, CAYMAN ISLANDS BRANCH
		
	By	 	/s/ John D. Toronto
		 	Name: John D. Toronto
		 	Title: Director
		
	By	 	/s/ Christopher Reo Day
		 	Name: Christopher Reo Day
		 	Title: Associate

 Signature Page to Letter Agreement 

 Accepted and agreed to as of 
 the date first above written: 
  

			
	THE FROST NATIONAL BANK
		
	By	 	/s/ J. Carey Womble
		 	Name: J. Carey Womble
		 	Title: Senior Vice President
	
	JP MORGAN CHASE BANK, N.A.
		
	By	 	 
		 	Name:
		 	Title:

 Signature Page to Letter Agreement 

 Accepted and agreed to as of 
 the date first above written: 
  

			
	THE FROST NATIONAL BANK
		
	By	 	 
		 	Name:
		 	Title:
	
	JP MORGAN CHASE BANK, N.A.
		
	By	 	/s/ Thomas A. Kiepura
		 	Name: Thomas A. Kiepura
		 	Title: Vice President

 Signature Page to Letter Agreement 

 Accepted and agreed to as of 
 the date first above writtten: 
  

			
	AFFIRMATIVE INSURANCE HOLDINGS, INC.
		
	By	 	/s/ Michael J. McClure
		 	Name: Michael J. McClure
		 	Title: Executive V.P. & Chief Financial Officer

 Signature Page to Letter Agreement 

 Exhibit A 

 THIRD AMENDMENT TO 
 CREDIT AGREEMENT 
 This THIRD AMENDMENT TO CREDIT AGREEMENT (this
“Amendment”) is dated as of March             , 2009, and entered into by and among AFFIRMATIVE INSURANCE HOLDINGS, INC., a Delaware corporation
(“Borrower”), the lenders listed on the signature pages hereto, CREDIT SUISSE, CAYMAN ISLANDS BRANCH (“CS”), as Administrative Agent (in such capacity, “Administrative Agent”) and as Collateral
Agent (in such capacity, the “Collateral Agent”), THE FROST NATIONAL BANK (“Frost”), as Issuing Bank and Swingline Lender, and for purposes of Section 6 hereof, the other Loan Parties listed on the signature
pages hereto. Capitalized terms used but not defined herein having the meaning given them in the Credit Agreement, hereinafter defined. 
 Recitals 
 Whereas, Borrower, the Lenders from time to time party thereto, the Agents and the other parties thereto
have entered into that certain Credit Agreement dated as of January 31, 2007 (as amended, amended and restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”); 
 Whereas, the Borrower has requested certain amendments to the Credit Agreement, pursuant to and in accordance with Section 9.08(b) of the
Credit Agreement; and 
 Whereas, the Required Lenders, the Agents and for purposes of Sections 1.12 and 1.13 hereof, the Required
Revolving Credit Lenders, are willing to agree to the amendments requested by the Borrower, on the terms and conditions set forth in this Amendment; 
 Now Therefore, in consideration of the premises and the mutual agreements set forth herein, the Borrower, Required Lenders, the Agents and for purposes of Sections 1.12 and 1.13 hereof, the Required
Revolving Credit Lenders, agree as follows: 
 1. AMENDMENTS TO CREDIT AGREEMENT. Subject to the conditions and upon the terms set
forth in this Amendment and in reliance on the representations and warranties of the Borrower set forth in this Amendment, the Credit Agreement is hereby amended as follows: 
 1.1. Amendment to Section 1.01. Section 1.01 of the Credit Agreement shall be amended as follows:

 (a) The following definitions shall be added to Section 1.01 of the Credit Agreement in the appropriate
alphabetical order: 
 ““Adjusted Cash Flow” shall mean, for any relevant 12 month fiscal period, Cash
Flow for such period, excluding the sum of (i) all state and federal income tax expenses incurred by the Regulated Insurance Subsidiaries for the relevant period and (ii) the 

 
greater of (a) combined statutory earnings for all Regulated Insurance Subsidiaries for the December 31st calendar period most recently ended prior
to the relevant period, and (b) the sum of 10% of surplus of all Regulated Insurance Subsidiaries as of the last day of the December 31st calendar period most recently ended prior to the relevant period.” 
 ““Consolidated Cash Interest Expense” shall mean, for any period, Consolidated Interest Expense with respect to
senior secured Indebtedness and Subordinated Debt for such period, excluding (i) any amount not payable in cash, and (ii) any fees, costs or expenses incurred in connection with the Third Amendment.” 
 ““Consolidated Tangible Net Worth” shall mean, for any period, Consolidated Net Worth for such period (i) minus
the net book amount of all goodwill assets of the Borrower and its Subsidiaries (after deducting any reserves applicable thereto) included therein and (ii) plus an amount equal to the outstanding Subordinated Debt, in each case as shown
on a consolidated balance sheet of the Borrower and its Subsidiaries as of such time prepared in accordance with GAAP.” 
 ““Distribution” shall mean (a) any payment of a distribution, interest or dividend in respect of any Equity Interest, (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other
acquisition or retirement of any Equity Interest or any other payment or distribution made in respect thereof, either directly or indirectly or (c) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire any Equity Interest.” 
 ““Electronic Data
Processing Equipment and Software Sale and Leaseback Transaction” shall mean the sale of electronic data processing equipment and software recorded on the balance sheet of Affirmative Insurance Company and the simultaneous or subsequent
entering into an agreement to lease those same electronic data processing equipment and software assets back. 
 ““Third Amendment” shall mean that certain Third Amendment to Credit Agreement, dated as of March             , 2009, by and among the Borrower, the
Required Lenders, the Required Revolving Credit Lenders, Credit Suisse, Cayman Islands Branch, as administrative agent and collateral agent, The Frost National Bank, as Issuing Bank and Swingline Lender, and the other Loan Parties listed
therein.” 
 ““Third Amendment Effective Date” shall have the meaning set forth in Section 4
of the Third Amendment.” 
 ““Value” shall mean, with respect to a sale and leaseback transaction,
an amount equal to the net present value of the lease payments with respect to the term of the lease remaining on the date as of which the amount is being determined, without regard to any renewal or extension options contained in the lease,
discounted at the weighted average interest rate on the Loans which are outstanding on the effective date of such sale and leaseback transaction.” 
  

 2 

 (b) The definition of “Adjusted LIBO Rate” is amended by adding the following
proviso to the end thereof: 
 “; provided, however, that notwithstanding the foregoing, the Adjusted LIBO Rate
shall at no time be less than 3.00% per annum.” 
 (c) The definition of “Applicable Margin” is amended by
(i) deleting the words “3.50% per annum” in clause (y) thereof and replacing it with the following: 
 “to the extent the Leverage Ratio is (A) greater than 2.00:1.00, 6.25%; (B) greater than 1.50:1.00, but less than or equal to 2.00:1.00, 6.00% and (C) less than or equal to 1:50:1.00, 5.75%”; and 
 (ii) deleting the number words “2.50% per annum” in clause (z) thereof and replacing it with the following: 
 . “to the extent the Leverage Ratio is (A) greater than 2.00:1.00, 5.25%; (B) greater than 1.50:1.00, but less than or
equal to 2.00:1.00, 5.00% and (C) less than or equal to 1:50:1.00, 4.75%. 
 Each change in the Applicable Margin resulting from a change
in the Leverage Ratio shall be effective with respect to all Loans and Letters of Credit outstanding on and after the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.04(a) or
(b) and Section 5.04 (d), respectively, indicating such change until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change. Notwithstanding the foregoing,
(a) at any time during which the Borrower has failed to deliver the financial statements and certificates required by Section 5.04(a) or (b) and Section 5.04(d), respectively, or (b) at any time after the occurrence and
during the continuance of an Event of Default, the Leverage Ratio shall be deemed to be greater than 2.00:1.00 for purposes of determining the Applicable Margin. 
 In the event that any financial statement or compliance certificate delivered pursuant to Section 5.04 is inaccurate (regardless of
whether this Agreement or the Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “Applicable
Period”) than the Applicable Margin applied for such Applicable Period, then (i) the Borrower shall immediately deliver to the Administrative Agent a corrected financial statement and a corrected compliance certificate for such
Applicable Period, (ii) the Applicable Margin shall be determined based on the corrected compliance certificate for such Applicable Period, and (iii) the Borrower shall immediately pay to the Administrative Agent (for the account of the
Lenders during the Applicable Period or their successors and assigns) the accrued additional interest owing as a result of such increased Applicable Margin for such Applicable Period. This paragraph shall not limit the rights of the Administrative
Agent or the Lenders with respect to Sections 2.07 and Article VII hereof, and shall survive the termination of this Agreement.” 
  

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 (d) The definition of “Capital Expenditure” is amended by adding to the
following proviso at the end thereof: 
 “; provided, that any expenditure or Capital Lease Obligations arising in
connection with the Electronic Data Processing Equipment and Software Sale and Leaseback Transaction shall not constitute a Capital Expenditure.” 
 (e) The definition of “Excess Cash Flow” is amended by deleting the reference to “Cash Flow” in the second line thereof and replacing it with “Adjusted Cash Flow”. 
 (f) The definition of “Fixed Charges” is amended by deleting the reference to “Consolidated Interest Expense” and
replacing it with “Consolidated Cash Interest Expense”. 
 (g) The definition of “Interest Coverage Ratio”
is amended by deleting the reference to “Consolidated Interest Expense” in clause (b) thereof and replacing it with the words “Consolidated Cash Interest Expense”. 
 (h) The definition of “Leverage Ratio” is amended by adding the following parenthetical after the words “Total Debt”
in clause (a) thereof: 
 “(other than Subordinated Debt and any unsecured Indebtedness)”. 
 (i) The definition of “Required Prepayment Percentage” is amended by deleting clause (d) thereof and replacing it with the
following: 
 “(d) in the case of any Excess Cash Flow, 50%;” 
 1.2. Amendment to Section 1.02. Section 1.02 of the Credit Agreement shall be amended by adding the
following sentence at the end thereof: 
 “Notwithstanding anything to the contrary contained herein, any interest
expense or Indebtedness incurred in connection with the Electronic Data Processing Equipment and Software Sale and Leaseback Transaction shall be excluded for purposes of calculating the financial covenants set forth in Sections 6.11, 6.12 and
6.15.” 
 1.3. Amendment to Section 2.13(e). Section 2.13(e) of the Credit Agreement shall
be amended by deleting the words “less (b)” thereof and replacing it with the following: 
 “plus (b) 75%
of any Distribution made by any Regulated Insurance Subsidiary to the Borrower or any Subsidiary (other than a Regulated Insurance Subsidiary) during the fiscal year then ended, less (c)” 
 1.4. Amendment to Section 3.06. Section 3.06 of the Credit Agreement shall be amended by deleting the
reference to “December 31, 2005” and replacing it with “December 31, 2007”. 
  

 4 

 1.5. Amendment to Section 6.01(d). Section 6.01(d) of the
Credit Agreement shall be amended and restated in its entirety as follows: 
 “Capital Lease Obligations and Synthetic
Lease Obligations of (i) Borrower or any Subsidiary Guarantor in an aggregate principal amount not exceeding $5,000,000 at any time outstanding and (ii) Borrower or any Subsidiary in connection with the Electronic Data Processing Equipment
and Software Sale and Leaseback Transaction;” 
 1.6. Amendment to Section 6.02.
Section 6.02 of the Credit Agreement shall be amended by (i) deleting the “and” at the end of clause (p) thereof; (ii) deleting the “.” at the end of clause (q) and replacing it with “;
and” and (iii) adding the following at the end thereof: 
 “(r) Liens incurred pursuant to the Electronic Data
Processing Equipment and Software Sale and Leaseback Transaction.” 
 1.7. Amendment to
Section 6.05(b). Section 6.05(b) of the Credit Agreement shall be amended by: 
 (i) deleting
“or” immediately preceding clause (y) thereof and inserting in lieu thereof a “,”; 
 (ii) deleting
the “.” at the end of clause (y) thereof and replacing it with a “,”; and 
 (ii) adding the
following new clause (z) to the end thereof: 
 “or (z)(i) such Asset Sale is in connection with the Electronic Data
Processing Equipment and Software Sale and Leaseback Transaction and is for consideration at least 80% of which is cash (and no portion of the remaining consideration shall be in the form of Indebtedness issued by the Borrower or any Subsidiary),
(ii) such consideration is at least equal to the fair market value of the assets being sold, transferred, leased or disposed of and (iii) the Value of the assets sold, transferred or disposed of pursuant to this paragraph (b)(z) shall not
exceed $30,000,000 in the aggregate. Notwithstanding anything to the contrary contained herein, the Borrower or any Subsidiary may engage in any Asset Sale otherwise permitted under paragraph (a) above in which the non-cash portion of the
consideration for such Asset Sale is in the form of Indebtedness of the applicable purchaser made in favor of the Borrower or any Subsidiary and exceeds 20% of the total consideration for such Asset Sale solely to the extent such non-cash portion
does not exceed (1) $5,000,000 with respect to any single Asset Sale or series of related Asset Sales and (2) $10,000,000 (in the aggregate with respect to all Asset Sales).” 
 1.8. Amendment to Section 6.06(a)(iii). Section 6.06(a)(iii) of the Credit Agreement shall be amended and
restated in its entirety as follows: 
 “(iii) so long as (A) no Default or Event of Default shall have occurred or
be continuing or would result therefrom and (B) the Leverage Ratio is less than or equal to 1.5 to 1.0 before and after giving effect to such dividend or customary distribution, the Borrower may declare and pay dividends or make other customary
distributions ratably to its equity holders consistent with past practice,”. 
  

 5 

 1.9. Amendment to Section 6.11. Section 6.11 of the Credit
Agreement shall be amended by deleting the chart appearing in that section and replacing such chart with the following: 
  

			
	 Four Fiscal Quarters Ended
	  	Ratio
	 March 31, 2007
	  	3.00:1.00
	 June 30, 2007
	  	3.00:1.00
	 September 30, 2007
	  	3.00:1.00
	 December 31, 2007
	  	3.00:1.00
	 March 31, 2008
	  	3.25:1.00
	 June 30, 2008
	  	3.25:1.00
	 September 30, 2008
	  	3.50:1.00
	 December 31, 2008
	  	3.50:1.00
	 March 31, 2009
	  	2.75:1.00
	 June 30, 2009
	  	2.75:1.00
	 September 30, 2009
	  	2.75:1.00
	 December 31, 2009
	  	2.70:1.00
	 March 31, 2010
	  	2.70:1.00
	 June 30, 2010
	  	2.70:1.00
	 September 30, 2010
	  	2.80:1.00
	 December 31, 2010
	  	2.90:1.00
	 March 31, 2011
	  	3.00:1.00
	 June 30, 2011
	  	3.00:1.00
	 September 30, 2011
	  	3.00:1.00
	 December 31, 2011
	  	3.00:1.00
	 March 31, 2012
	  	3.00:1.00
	 June 30, 2012
	  	3.00:1.00
	 September 30, 2012
	  	3.00:1.00
	 December 31, 2012
	  	3.00:1.00
	 March 31, 2013
	  	3.00:1.00
	 June 30, 2013
	  	3.00:1.00
	 September 30, 2013
	  	3.00:1.00
	 December 31, 2013
	  	3.00:1.00

  

 6 

 1.10. Amendment to Section 6.12. Section 6.12 of the
Credit Agreement shall be amended by deleting the chart appearing in that section and replacing such chart with the following: 
  

			
	 Four Fiscal Quarters Ended
	  	Ratio
	 March 31, 2007
	  	4.25:1.00
	 June 30, 2007
	  	4.25:1.00
	 September 30, 2007
	  	4.00:1.00
	 December 31, 2007
	  	4.00:1.00
	 March 31, 2008
	  	3.50:1.00
	 June 30, 2008
	  	3.25:1.00
	 September 30, 2008
	  	3.25:1.00
	 December 31, 2008
	  	3.25:1.00
	 March 31, 2009
	  	2.80:1.00
	 June 30, 2009
	  	2.65:1.00
	 September 30, 2009
	  	2.65:1.00
	 December 31, 2009
	  	2.65:1.00
	 March 31, 2010
	  	2.45:1.00
	 June 30, 2010
	  	2.45:1.00
	 September 30, 2010
	  	2.45:1.00
	 December 31, 2010
	  	2.45:1.00
	 March 31, 2011
	  	2.25:1.00
	 June 30, 2011
	  	2.25:1.00
	 September 30, 2011
	  	2.25:1.00
	 December 31, 2011
	  	2.25:1.00
	 March 31, 2012
	  	2.25:1.00
	 June 30, 2012
	  	2.25:1.00
	 September 30, 2012
	  	2.25:1.00
	 December 31, 2012
	  	2.25:1.00
	 March 31, 2013
	  	2.25:1.00
	 June 30, 2013
	  	2.25:1.00
	 September 30, 2013
	  	2.25:1.00
	 December 31, 2013
	  	2.25:1.00

 1.11. Amendment to Section 6.14. Section 6.14 of
the Credit Agreement shall be amended and restated in its entirety as follows: 
 “SECTION 6.14. Loss Ratio.
Borrower shall not permit the Loss Ratio of the Regulated Insurance Subsidiaries, on a consolidated basis, to be greater than 80% at any time.” 
 1.12. Amendment to Section 6.15. Section 6.15 of the Credit Agreement shall be amended by deleting such Section in its entirety and replacing it with the following: 
 “SECTION 6.15. Fixed Charge Coverage Ratio. Borrower shall not permit the Fixed Charge Coverage Ratio during any period set
forth below to be less than the ratio set forth opposite such period below. 
  

			
	 Fiscal Year Ended
	  	Ratio
	 December 31, 2009
	  	1.05:1.00
	 December 31, 2010
	  	1.10:1.00
	 December 31, 2011
	  	1.15:1.00
	 December 31, 2012
	  	1.20:1.00
	 December 31, 2012
	  	1.20:1.00

  

 7 

 For the avoidance of doubt, the covenant set forth in this Section 6.15 may be waived, amended or modified by
the Required Revolving Credit Lenders in accordance with the final “provided further” clause contained in Section 9.08(b) hereof.” 
 1.13. Amendment to Section 6.16. Section 6.16 of the Credit Agreement shall be amended by deleting such
Section in its entirety and replacing it with the following: 
 “SECTION 6.16. Consolidated Tangible Net Worth.
From and after any Increased Amount Date in respect of which any Primary New Revolving Loan Commitments have become effective in accordance with Section 2.24 hereof, Borrower shall not permit the Consolidated Tangible Net Worth to be less than
$110,000,000 at any time. For the avoidance of doubt, the covenant set forth in this Section 6.16 may be waived, amended or modified by the Required Revolving Credit Lenders in accordance with the final “provided
further” clause contained in Section 9.08(b) hereof.” 
 2. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. In
order to induce the Required Lenders, the Required Revolving Credit Lenders and the Agents to enter into this Amendment, the Borrower represents and warrants to each Lender and the Agents that the following statements are true, correct and complete:

 2.1. Power and Authority. Each of the Loan Parties has all requisite corporate or limited liability company
power and authority to enter into this Amendment and to carry out the transactions contemplated by, and to perform its obligations under or in respect of, the Credit Agreement. 
 2.2. Corporate Action. The execution and delivery of this Amendment and the performance of the obligations of each of the
Loan Parties under or in respect of the Credit Agreement as amended hereby have been duly authorized by all necessary corporate or limited liability company action on the part of each of the Loan Parties. 
 2.3. No Conflict or Violation or Required Consent or Approval. The execution and delivery of this Amendment and the
performance of the obligations of each of the Loan Parties under or in respect of the Credit Agreement as amended hereby do not and will not conflict with or violate (a) any provision of the certificate or articles of incorporation or other
constitutive documents or by-laws of any Loan Party or any of its Subsidiaries, (b) any provision of any law or any governmental rule or regulation applicable to any Loan Party or any of its Subsidiaries, (c) any order of any Governmental
Authority or arbitrator binding on any Loan Party or any of its Subsidiaries, or (d) any indenture, agreement or instrument to which any Loan Party or any of its Subsidiaries is a party or by which any Loan Party or any of its Subsidiaries, or
any property of any of them, is bound (except where such violation could not reasonably be expected to have a Material Adverse Effect), and do not and will not require any consent or approval of any Person (other than any approval or consent
obtained and is in full force and effect or approvals or consents the failure to obtain could not reasonably be expected to have a Material Adverse Effect or which are not material to the consummation of the transaction contemplated hereby.

  

 8 

 2.4. Execution, Delivery and Enforceability. This Amendment has been duly
executed and delivered by each Loan Party which is a party thereto and are the legal, valid and binding obligations of such Loan Party, enforceable in accordance with their terms, except as enforceability may be affected by applicable bankruptcy,
insolvency, and similar proceedings affecting the rights of creditors generally, and general principles of equity. The Agents’ Liens in all Collateral continue to be valid, binding and enforceable Liens which secure the Borrower Obligations to
the extent valid, binding and enforceable on the Closing Date, except as enforceability may be affected by applicable bankruptcy, insolvency and similar proceedings affecting the rights of creditors generally, and general principles of equity.

 2.5. No Default or Event of Default. After giving effect to this Amendment, no event has occurred and is
continuing or will result from the execution and delivery of this Amendment that would constitute a Default or an Event of Default. 
 2.6. No Material Adverse Effect. No event, change or condition has occurred since December 31, 2007 that has caused, or could reasonably be expected to cause, a Material Adverse Effect. 
 2.7. Representations and Warranties. Each of the representations and warranties contained in the Loan Documents is and will
be true and correct in all material respects on and as of the date hereof and as of the effective date of this Amendment, except to the extent that such representations and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects as of such earlier date. 
 3. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This
Amendment, and the consents and approvals contained herein, shall be effective only if and when signed by, and when counterparts hereof shall have been delivered to the Agents (by hand delivery, mail, telecopy or other electronic transmission) by
each Loan Party, each Required Lender, the Issuing Bank and the Swingline Lender and for purposes of Sections 1.12 and 1.13 hereof, each Required Revolving Credit Lender, and only if and when each of the following conditions is satisfied or waived:

 3.1. No Default or Event of Default; Accuracy of Representations and Warranties. At the time of and
immediately after giving effect to this Amendment, no Default or Event of Default shall exist and each of the representations and warranties made by the Loan Parties herein and in or pursuant to the Credit Documents shall be true and correct in all
material respects as if made on and as of the date on which this Amendment becomes effective (except that any such representation or warranty that is expressly stated as being made only as of a specified earlier date shall be true and correct in all
material respects as of such earlier date). 
 3.2. Delivery of Documents. The Agents shall have received
such additional documents as the Agents may reasonably request in connection with this Amendment. 
  

 9 

 3.3. Amendment Fees. The Administrative Agent shall have received, on
behalf of each of the Required Lenders and the Required Revolving Credit Lenders which executed this Amendment and submits to the Administrative Agent a signature page hereto on or prior to 12:00 p.m. (New York City time) on March 25, 2009, an
amendment fee equal to 0.50% of the outstanding principal amount of Loans or Commitments held by it as of such date. 
 4. EFFECTIVE
DATE. This Amendment shall become effective (the “Third Amendment Effective Date”) on the date of the satisfaction or waiver of the conditions set forth in Section 3 of this Amendment. 
 5. EFFECT OF AMENDMENT; RATIFICATION. This Amendment is a Loan Document. From and after the date on which this Amendment becomes effective, all
references in the Loan Documents to the Credit Agreement and other Loan Documents shall mean the Credit Agreement as amended hereby. Except as expressly amended hereby or waived herein, the Credit Agreement and the other Loan Documents, including
the Liens granted thereunder, shall remain in full force and effect, and all terms and provisions thereof are hereby ratified and confirmed. 
 6. MISCELLANEOUS. Each of the Loan Parties confirms that as amended hereby, each of the Loan Documents is in full force and effect, and that as of the date hereof, none of the Loan Parties has any defenses, setoffs or counterclaims
to its Obligations. 
 7. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 
 8. NO
WAIVER. The execution, delivery and effectiveness of this Amendment does not constitute a waiver of any Default or Event of Default, amend or modify any provision of any Loan Document except as expressly set forth herein or constitute a course
of dealing or any other basis for altering the Obligations of any Loan Party. 
 9. COMPLETE AGREEMENT. This Amendment sets forth the
complete agreement of the parties in respect of any amendment to any of the provisions of any Loan Document or any waiver thereof. 
 10.
CAPTIONS; COUNTERPARTS. The catchlines and captions herein are intended solely for convenience of reference and shall not be used to interpret or construe the provisions hereof. This Amendment may be executed by one or more of the parties to
this Amendment on any number of separate counterparts (including by telecopy or other electronic transmission), all of which taken together shall constitute but one and the same instrument. 
 [signatures follow; remainder of page intentionally left blank] 
  

 10 

 IN WITNESS WHEREOF, each of the undersigned has duly executed this Third Amendment to Credit
Agreement as of the date set forth above. 
  

			
	AFFIRMATIVE INSURANCE
HOLDINGS, INC., as Borrower
		
	By:	 	 
		 	Name:
		 	Title:

 LOAN PARTIES: 
 AFFIRMATIVE INSURANCE HOLDINGS, INC. 
 AFFIRMATIVE MANAGEMENT SERVICES, INC. 
 AFFIRMATIVE PROPERTY HOLDINGS, INC. 
 AFFIRMATIVE SERVICES, INC. 
 AFFIRMATIVE INSURANCE GROUP, INC. 
 AFFIRMATIVE UNDERWRITING SERVICES, INC. 
 A-AFFORDABLE MANAGING GENERAL AGENCY, INC. 
 AFFIRMATIVE INSURANCE SERVICES, INC. (f/k/a AFFIRMATIVE
INSURANCE SERVICES OF TEXAS, INC.) 
 AFFIRMATIVE INSURANCE SERVICES OF PENNSYLVANIA, INC. 
 A-AFFORDABLE INSURANCE AGENCY, INC. 
 DRIVER’S CHOICE INSURANCE SERVICES, LLC 
 FED USA RETAIL, INC. 
 INSUREONE INDEPENDENT INSURANCE AGENCY, LLC 
 YELLOW KEY INSURANCE AGENCY, INC. 
 AFFIRMATIVE FRANCHISING GROUP, INC. 
 FED USA FRANCHISING, INC. 
 FED USA FRANCHISING GROUP, INC. 
 AFFIRMATIVE ALTERNATIVE DISTRIBUTION, INC. 
 USAGENCIES, L.L.C. 
 LIFCO, L.L.C. 
 USAGENCIES MANAGEMENT SERVICES, INC. 
 AFFIRMATIVE RETAIL, INC. 
 AFFIRMATIVE INSURANCE HOLDINGS STATUTORY TRUST I 
 AFFIRMATIVE INSURANCE HOLDINGS STATUTORY TRUST II 
 AFFIRMATIVE PREMIUM FINANCE HOLDINGS, INC. 
 AFFIRMATIVE PREMIUM FINANCE, INC.USAGENCIES MANAGEMENT SERVICES, INC. 
  

			
		
	By:	 	 
	Name:	 	
	Title:	 	

 Signature Page to Third Amendment to Credit Agreement 

			
	CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent and as Collateral Agent
		
	By:	 	 
		 	Name:
		 	Title:
		
	By:	 	 
		 	Name:
		 	Title:

 Signature Page to Third Amendment to Credit Agreement 

			
	THE FROST NATIONAL BANK, as Issuing Bank and Swingline Lender
		
	By:	 	 
		 	Name:
		 	Title:

 Signature Page to Third Amendment to Credit Agreement 

 The Lender acknowledges and agrees that this signature page shall be fully valid and binding upon the Lender upon its
execution and delivery by the Lender to the Administrative Agent and may not thereafter be revoked, terminated or cancelled by the Lender. 
  

			
	 
		
	By:	 	 
		 	Name:
		 	Title:

 Signature Page to Third Amendment to Credit Agreement 

 Exhibit B 

 [Affirmative Insurance Holdings, Inc. Letterhead] 
 Credit Suisse 
 Eleven Madison Avenue 
 New York, NY 10010 
 Attention: Agency Group 
 March 27, 2009 
 Dear Sir/Madam: 
 Reference is made to that certain Credit Agreement dated as of January 31, 2007 as amended by that certain First Amendment to Credit Agreement and
Guarantee and Collateral Agreement dated March 8, 2007 and as further amended by that certain Second Amendment to Credit Agreement dated as of February 1, 2008 (as so amended, and as may be further amended, supplemented or otherwise
modified to the date hereof, the “Credit Agreement”), among Affirmative Insurance Holdings, Inc., a Delaware corporation (the “Borrower”), the lenders from time to time party thereto and Credit Suisse,
Cayman Islands Branch, as administrative agent and collateral agent. Capitalized terms used but not defined herein are used with the meaning given to them in the Credit Agreement. 
 Pursuant to Section 2.09(b) of the Credit Agreement, the Borrower hereby irrevocably, unconditionally and permanently reduces the Revolving Credit
Commitments by an aggregate principal amount of $10,000,000. 
 This instrument shall be construed in accordance with and governed by the
laws of the State of New York. 
  

			
	Very truly yours,
	
	AFFIRMATIVE INSURANCE HOLDINGS, INC.
		
	By:	 	 
		 	Name:
		 	Title:409A Amendment to the Salary Continuation Agreement and Split Dollar Agreement

 EXHIBIT 10.46 
 409A Amendment to the 
 First California Bank 
 Salary Continuation Agreement and Split 
 Dollar Agreement for 
 Chong Guk Kum 
 First California Bank
(“Bank”) and Chong Guk Kum (“Executive”) originally entered into the First California Bank Salary Continuation Agreement (“Agreement”) and the First California Bank Split Dollar Agreement (“SDA”), each on
March 27, 2003. Pursuant to Article 7 of the Agreement, the Bank and the Executive hereby adopt this 409A Amendment to the Agreement and the SDA, effective January 1, 2005. 
 This 409A Amendment is intended to bring the Agreement and the SDA into full compliance with the requirements of Internal Revenue Code Section 409A.
Therefore, the following changes shall be made: 
  

	1.	Article 1.1 of the Agreement shall be amended to read in its entirety as follows: 

 “Change of Control” means, a Change in Ownership, a Change in the Effective Control, a Change in Assets or a termination of the
Plan and distribution of compensation deferred hereunder within twelve (12) months after any of the foregoing events. For purposes of this Section, “Company” shall include (i) the company for which a Participant is performing
services at the time of the Change in Control, (ii) the company liable for the payment of the deferred compensation (or all companies liable if more than one company is liable), or a company that is a majority shareholder of a company
identified in (i) or (ii), or any company in a chain of companies in which each company is a majority shareholder of another company in the chain, ending in a company identified in (i) or (ii). The events described in this section will not
be considered to occur, with respect to an employee of a participating entity, if a participating entity is sold and the employee of the participating entity continues employment with the Employer subsequent to the sale. The events described in this
section have the following meanings: 
 (a) “Change in Ownership” means the acquisition of stock by any one person
or persons acting in concert (a “group”) of the Company, that when added to the stock of the person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. The acquisition of
additional stock by any person or group who are already considered to own more than 50% of the stock of the Company shall not constitute a change in ownership of the Company. An increase in the percentage of stock owned by any person or group, as
result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section. 
 (b) “Change in the Effective Control” means the occurrence of any of the following events, despite the fact that the Company has
not undergone a Change in Ownership as described above: 
 (i) The acquisition by any person or group (or acquisition during
the 12-month period ending on the date of the most recent acquisition by such person or persons) of ownership of stock of the Company possessing 35% or more of the total voting power of the stock, except if such acquisition is the result of a change
in “record ownership” and not a change in “beneficial ownership;” 
 (ii) The replacement of a majority
of the Company’s board of directors during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors prior to the date of the appointment or election; or

 (iii) A transaction between the Company and another company resulting in a Change of Control. 
  

 1 

 (iv) Provided that this section shall not apply to the acquisition of additional control
of the Company by any person or group, if that person or group is considered to effectively control the Company prior to the acquisition. 
 (c) “Change in Assets” means the acquisition by any person or group (or acquisition during the 12-month period ending on the date of the most recent acquisition by such person or persons) of assets from the
Company, that have a total gross fair market value equal to, or more than, 40% of the total gross fair market value of all the assets of the Company immediately prior to such acquisition or acquisitions. A transfer of assets by the Company will not
be treated as a Change in Assets if the assets are transferred to any of the following (determined immediately after the transfer): 
 (i) A shareholder of the Company (as determined, immediately before the asset transfer) in exchange for or with respect to its stock; 
 (ii) An entity, 50% or more of the total value or voting power of which is owned directly or indirectly by the Company; 
 (iii) A person or group that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or 
 (iv) An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in
(iii). 
 For purposes of this subsection (c), the gross fair market value of assets is the value of the assets of the Company
or the value of the assets being disposed of with regard to any liabilities associated with such assets. If assets are transferred to an entity that is controlled by the shareholders of the transferring company immediately after the transfer, there
is no Change of Control. 
  

	2.	Article 1.3 of the Agreement shall be amended to read in its entirety as follows: 

 “Disability” means the Executive’s (i) inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) receipt of income replacement benefits for a
period of not less than three (3) months under an accident and health plan covering employees of the Company, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months. 
  

	3.	Articles 1.10 and 1.11 of the Agreement shall be renumbered as Articles 1.11 and 1.12, respectively, and Article 1.7 of the SDA shall be renumbered as Article 1.8; the following
definition for “Separation from Service” shall be added to the Agreement and to the SDA, numbered as Article 1.10 and 1.7, respectively: 

 “Separation from Service” means that the Executive has experienced a Termination of Employment. In the event that an
Executive continues to provide services considered “significant’ ‘to the Bank, either as an employee or as an independent contractor, a Separation from Service will not be deemed to have occurred. “Significant” services, for
purposes of this Agreement, are those where (1) the Executive provides services in the capacity as an employee at an annual rate equal to at least 20 percent of the services rendered during the immediately preceding three full calendar years of
employment, and the annual remuneration for such services is equal to at least 20 percent of the average remuneration earned during the immediately preceding three full calendar years of employment (or, if the Executive was employed for less than
three years, such lesser period); or (2) the Executive continues to provide services to the Bank in a capacity other than as an employee, and if the Executive provide those services at an annual rate that is at least 50 percent or more of the
service rendered, on average, during the final three full calendar years of employment (or, if less, such lesser period) and the annual remuneration for such services is at least 50 percent or more of the average annual remuneration earned during
the immediately preceding three full calendar years of employment (or if less, such lesser period). This definition of Separation from Service shall at all times be construed to comply with the rules set forth in the 409A Proposed Regulations,
issued September 29, 2005, or any subsequent regulations. 
  

 2 

	4.	All references in the Agreement and the SDA to “Termination of Employment,” “terminates employment,” or other similar phrases shall be deleted and replaced with
the term “Separation from Service” or “Separates from Service,” as appropriate. Notwithstanding the previous sentence, the definition of “Termination of Employment’ ‘in Article 1.11 of the Agreement and Article 1.7
of the SDA shall not be deleted. 

  

	5.	A new Article 2.7 shall be added to the Agreement, to read in its entirety as follows: 

 Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, distributions to Executive
may not commence earlier than six (6) months after the date of a Separation from Service if, pursuant to Section 409A of the Code and regulations and guidance promulgated thereunder, Executive is considered a “specified employee”
under Section 416(i) of the Code. In the event a distribution is delayed pursuant to this Section 2.5, the originally scheduled payments shall be delayed for 6 months, aggregated, and paid in a lump sum on the first day of the seventh
month. All other scheduled payments shall be made on the regular schedule, starting with the seventh payment in the seventh month. If the payment is to be made in a lump sum, the entire lump sum shall be delayed for six months and paid in the
seventh month. 
  

	6.	Article 2.3.2 of the Agreement shall be deleted in its entirety and replaced with the following Article 2.3.2: 

 Payment of Benefit. The Company shall pay the benefit determined under Section 2.3.1 to the Executive in 12 equal monthly
installments commencing with the month following Termination of Employment, paying the annual benefit to the Executive for a period of 17 years. 
  

	7.	Article 2.5.2 of the Agreement shall be deleted in its entirety and replaced with the following Article 2.5.2: 

 Payment of Benefit. The Company shall pay the benefit determined under Section 2.5.1 to the Executive in 12 equal monthly
installments commencing with the month following the Change of Control, paying the annual benefit to the Executive for a period of 17 years. 
  

	8.	The second sentence of Article 2.2 of the SDA shall be amended in it entirety to read as follows: “The Executive shall also have the right to elect and change settlement
options that may be permitted under the Policy.” 

 IN WITNESS WHEREOF, the parties have signed this Amendment on December
    , 2008, effective as of the date above written. 
 FIRST CALIFORNIA BANK 

							
	 By
	 	  
	  		 	  

	 Its
	 	  
	  		 	Chong Guk Kum

  

 3

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