Affirmative Insurance Holdings Completes Acquisition of USAgencies

Affirmative Insurance Holdings, Inc. (Nasdaq:AFFM), a producer and provider of personal non-standard automobile insurance, today announced it completed its acquisition of USAgencies LLC in a fully-financed all cash transaction valued at approximately $200 million.

USAgencies is a non-standard automobile insurance provider headquartered in Baton Rouge, Louisiana. It has 92 sales offices in Louisiana, Illinois and Alabama selling its products directly to consumers through its own retail stores, virtual call centers and internet site. In 2005, the company had gross written premium of approximately $157 million.

“USAgencies is a well-regarded brand with a significant customer base in Louisiana, the twelfth largest non-standard auto insurance market in the country,” said Kevin Callahan, CEO of Affirmative. “The company is a great fit with our strategy to build a significant presence in the largest non-standard auto insurance markets.”

About Affirmative Insurance Holdings

Affirmative Insurance Holdings, Inc. is a producer and provider of personal non-standard automobile insurance policies to individual consumers in highly targeted geographic markets. Affirmative currently offers products and services in 12 states, including Texas, Illinois, California and Florida.

Forward-Looking Statements Disclosure

Certain information in this news release and other statements or materials are not historical facts but are forward-looking statements relating to such matters as future results of Affirmative’s business, financial condition, liquidity, results of operations, plans, and objectives. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Affirmative provides the following cautionary remarks regarding important factors that, among others, could cause its actual results and experience to differ materially from the anticipated results or other expectations expressed in its forward-looking statements. The risks and uncertainties that may affect the operations, performance, results of its business, and the other matters referred to above include, but are not limited to: general volatility of the non-standard personal automobile and reinsurance markets; the market price of Affirmative’s common stock; changes in business strategy; severe weather conditions; availability, terms and deployment of capital; the degree and nature of competitor product and pricing activity; changes in the non-standard personal automobile insurance industry, interest rates or the general economy; identification and integration of potential acquisitions; claims experience; and availability of qualified personnel.