Moody's lowers Affirmative Insurance

Moody's Investors Service said that it lowered the insurance financial strength ratings of Affirmative Insurance Co. and Insura Property and Casualty Insurance Co., both subsidiaries of Affirmative Insurance Holdings, Inc., to B1 from Ba3.

In the same action, Moody's lowered the corporate family rating of Affirmative to Caa2 from Caa1 and the senior secured credit rating of its bank credit facility to Caa2 from Caa1.

The outlook was changed to negative from stable.

Moody's said the downgrades reflect the company's strained financial condition, limited cash flows available for debt service, elevated potential to breach covenants in its bank credit facility and concerns regarding execution risks related to insurance operations.

The company's regulated insurance operations have poor profitability, are in a negative unassigned surplus position and are not permitted to dividend funds to the parent without regulatory approval, the agency said.

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