10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-50795

(Exact name of registrant as specified in its charter)

Delaware	75-2770432
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4450 Sojourn Drive, Suite 500 Addison, Texas	75001
(Address of principal executive offices)	(Zip Code)

(972) 728-6300

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares outstanding of the registrant’s common stock, $.01 par value, as of November 12, 2012: 15,408,358

Explanatory Note

The purpose of this amendment on Form 10-Q/A for Affirmative Insurance Holdings, Inc. for the quarterly period ended September 30, 2012, is to furnish the interactive data as Exhibit 101. The Company previously filed its Form 10-Q for the quarterly period ended September 30, 2012, with the Securities and Exchange Commission on November 20, 2012. Pursuant to Rule 13(b) of Regulation S-7, the Company has requested a filing date adjustment for the Securities and Exchange Commission based upon its good faith attempt to file its Form 10-Q on November 19, 2012, which was delayed due to technical difficulties beyond the Company’s control. This Form 10-Q/A speaks of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way the disclosures made in the initial filing, except as described above.

PART II – OTHER INFORMATION

Item 6. Exhibits

10.32* Sixth Amendment to Credit Agreement dated as of September 20, 2012, among Affirmative Insurance Holdings, Inc., as borrower, the lenders party thereto, Credit Suisse, AG, Cayman Islands Branch, as administrative agent and collateral agent.

10.33* Seventh Amendment to Credit Agreement dated as of November 19, 2012, among Affirmative Insurance Holdings, Inc., as borrower the lenders party thereto, Credit Suisse, AG, Cayman Islands Branch, as administrative agent and collateral agent.

31.1 Certification of Gary Y. Kusumi, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Michael J. McClure, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Gary Y. Kusumi, Chairman of the Board and Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of Michael J. McClure, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 The following materials from Affirmative Insurance Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Operations, (3) the Consolidated Statements of Comprehensive Income (Loss), (4) the Consolidated Statements of Stockholders’ Equity (Deficit), (5) the Consolidated Statements of Cash Flows, and (6) Notes to Consolidated Financial Statements, including detailed tagging of footnotes and schedules.

* Filed with original Form 10-Q.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Affirmative Insurance Holdings, Inc.
Date: November 20, 2012	By:	/s/ Michael J. McClure
		Michael J. McClure
		Executive Vice President and Chief Financial Officer (and in his capacity as Principal Financial Officer)

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gary Y. Kusumi, Chief Executive Officer of Affirmative Insurance Holdings, Inc., certify that:

1. I have reviewed this amendment to the Quarterly Report on Form 10-Q/A of Affirmative Insurance Holdings, Inc.:

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 20, 2012

/s/ Gary Y. Kusumi

Gary Y. Kusumi

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Michael J. McClure, Executive Vice President and Chief Financial Officer of Affirmative Insurance Holdings, Inc., certify that:

1. I have reviewed this amendment to the Quarterly Report on Form 10-Q/A of Affirmative Insurance Holdings, Inc.:

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 20, 2012

/s/ Michael J. McClure

Michael J. McClure

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

I, Gary Y. Kusumi, Chairman of the Board and Chief Executive Officer of Affirmative Insurance Holdings, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 to the best of my knowledge, that:

(1) the Amendment to the Quarterly Report on Form 10-Q/A of the Company for the quarter ended September 30, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certificate is being furnished solely for purposes of Section 906.

Date: November 20, 2012

/s/ Gary Y. Kusumi

Gary Y. Kusumi

Chairman of the Board and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the U.S. Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

I, Michael J. McClure, Executive Vice President and Chief Financial Officer of Affirmative Insurance Holdings, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 to the best of my knowledge, that:

(1) the Amendment to the Quarterly Report on Form 10-Q/A of the Company for the quarter ended September 30, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certificate is being furnished solely for purposes of Section 906.

Date: November 20, 2012

/s/ Michael J. McClure

Michael J. McClure

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the U.S. Securities and Exchange Commission or its staff upon request.

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Available-for-Sale Investment Securities (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months Esimated Fair Value	$ 2,122	$ 18,133
Twelve Months or Greater Estimated Fair Value	1,484	5,078
Total Estimated Fair Value	3,606	23,211
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Less Than Twelve Months Gross Unrealized Losses	(25)	(175)
Twelve Months or Greater Gross Unrealized Losses	(32)	(123)
Gross Unrealized Losses	(57)	(298)
U.S. Treasury and government agencies [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months Esimated Fair Value		505
Twelve Months or Greater Estimated Fair Value
Total Estimated Fair Value		505
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Less Than Twelve Months Gross Unrealized Losses		(1)
Twelve Months or Greater Gross Unrealized Losses
Gross Unrealized Losses		(1)
Mortgage-backed securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months Esimated Fair Value	1,450	2,688
Twelve Months or Greater Estimated Fair Value	792	3,312
Total Estimated Fair Value	2,242	6,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Less Than Twelve Months Gross Unrealized Losses	(24)	(36)
Twelve Months or Greater Gross Unrealized Losses	(26)	(99)
Gross Unrealized Losses	(50)	(135)
States and political subdivisions [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months Esimated Fair Value
Twelve Months or Greater Estimated Fair Value		74
Total Estimated Fair Value	72	74
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Less Than Twelve Months Gross Unrealized Losses
Twelve Months or Greater Gross Unrealized Losses	(2)	(1)
Gross Unrealized Losses	(2)	(1)
Corporate debt securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months Esimated Fair Value	672	13,982
Twelve Months or Greater Estimated Fair Value	620	1,344
Total Estimated Fair Value	1,292	15,326
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Less Than Twelve Months Gross Unrealized Losses	(1)	(137)
Twelve Months or Greater Gross Unrealized Losses	(4)	(21)
Gross Unrealized Losses	(5)	(158)
FDIC-insured certificates of deposit [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Less Than Twelve Months Esimated Fair Value		958
Twelve Months or Greater Estimated Fair Value		348
Total Estimated Fair Value		1,306
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Less Than Twelve Months Gross Unrealized Losses		(1)
Twelve Months or Greater Gross Unrealized Losses		(2)
Gross Unrealized Losses		$ (3)

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Capital Lease Obligation (Details Textual) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Capital Lease Obligation (Textual) [Abstract]
Cash proceeds received from financing	$ 28.2
Purchase of FDIC-insured certificates of deposit	28.2
Lease term	60 months
Total rental monthly payments	$ 0.6

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Deferred Policy Acquisition Costs (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Deferred policy acquisition costs, Gross [Member]
Summary of policy acquisition costs
Beginning balance	$ 4,961	$ 5,104	$ 3,668	$ 9,432
Additions	5,051	3,793	13,741	13,048
Amortization	(4,286)	(4,323)	(11,683)	(17,906)
Ending balance	5,726	4,574	5,726	4,574
Deferred policy acquisition costs, Ceded [Member]
Summary of policy acquisition costs
Beginning balance	(6,398)	(5,330)	(10,132)	(8,972)
Additions	(6,014)	(4,191)	(13,176)	(13,169)
Amortization	5,484	4,663	16,380	17,283
Ending balance	(6,928)	(4,858)	(6,928)	(4,858)
Deferred policy acquisition costs, Net [Member]
Summary of policy acquisition costs
Beginning balance	(1,437)	(226)	(6,464)	460
Additions	(963)	(398)	565	(121)
Amortization	1,198	340	4,697	(623)
Ending balance	$ (1,202)	$ (284)	$ (1,202)	$ (284)

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Provision for income taxes
Current tax expense (benefit)	$ 127	$ (88)	$ 127	$ 137
Deferred tax expense	84	319	252	956
Net income tax expense	$ 211	$ 231	$ 379	$ 1,093

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Premium Finance Receivables, Net (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of premium finance receivables
Premium finance contracts	$ 44,324	$ 40,472
Unearned finance charges	(2,304)	(1,911)
Allowance for credit losses	(530)	(479)
Total	$ 41,490	$ 38,082

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Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Consolidated Balance Sheets
Stockholders' deficit	$ (124,967)	$ (80,977)	$ 64,225
Previously Reported [Member]
Consolidated Balance Sheets
Deferred acquisition costs, net		3,206
Stockholders' deficit		(71,307)
As Adjusted [Member]
Consolidated Balance Sheets
Deferred acquisition costs, net		(6,464)
Stockholders' deficit		$ (80,977)

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Income Taxes (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Income Taxes (Textual) [Abstract]
Effective tax rate from statutory rate	35.00%	35.00%
Gross deferred tax assets, valuation allowance of prior to recognition	$ 101.4	$ 101.4	$ 92.7
Valuation allowance of prior to recognition	$ 98.8	$ 98.8	$ 88.9

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Reinsurance (Tables)

9 Months Ended

Sep. 30, 2012

Reinsurance [Abstract]

Effect of reinsurance on premiums written and earned

	Three Months Ended September 30,
	2012									2011
	Written Premium			Earned Premium			Loss and Loss Adjustment Expenses			Written Premium			Earned Premium			Loss and Loss Adjustment Expenses
Direct	$	50,667		$	44,665		$	28,837		$	46,296		$	50,672		$	88,983
Reinsurance assumed		9,095			9,997			7,538			8,224			9,127			9,299
Reinsurance ceded		(21,252	)		(19,401	)		(10,978	)		(15,918	)		(17,757	)		(66,720	)
Total	$	38,510		$	35,261		$	25,397		$	38,602		$	42,042		$	31,562
	Nine Months Ended September 30,
	2012									2011
	Written Premium			Earned Premium			Loss and Loss Adjustment Expenses			Written Premium			Earned Premium			Loss and Loss Adjustment Expenses
Direct	$	143,313		$	135,688		$	93,234		$	154,363		$	173,983		$	184,557
Reinsurance assumed		29,115			26,925			21,559			27,536			33,185			18,569
Reinsurance ceded		(45,889	)		(58,236	)		(37,007	)		(52,084	)		(67,904	)		(101,750	)
Total	$	126,539		$	104,377		$	77,786		$	129,815		$	139,264		$	101,376

Selling, general and administrative expenses

	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2012			2011			2012			2011
Selling, general and administrative expenses	$	(7,059	)	$	(5,119	)	$	(19,430	)	$	(18,604	)

Summary of loss reserves and unearned premium

	September 30, 2012		December 31, 2011
Losses and loss adjustment expense reserves	$	72,482	$	78,510
Unearned premium reserve		24,326		36,674
Total	$	96,808	$	115,184

Amount of receivables due from reinsurers

	September 30, 2012		December 31, 2011
Quota-share reinsurer for agreement effective September 1, 2011	$	49,206	$	22,102
Michigan Catastrophic Claims Association		42,066		44,049
Vesta Insurance Group		9,839		10,068
Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 2011		9,264		46,103
Excess of loss reinsurers		4,983		5,458
Other		3,129		3,667
Total reinsurance receivable	$	118,487	$	131,447

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Debt (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of Company's long-term debt instruments and balances outstanding
Notes payable	$ 76,845	$ 76,857
Senior secured credit facility, net of discount	92,276	91,683
Total long-term debt	169,121	168,540
Notes payable due 2035 [Member]
Summary of Company's long-term debt instruments and balances outstanding
Notes payable	30,928	30,928
Notes payable due 2035 [Member]
Summary of Company's long-term debt instruments and balances outstanding
Notes payable	25,774	25,774
Notes payable due 2035 [Member]
Summary of Company's long-term debt instruments and balances outstanding
Notes payable	$ 20,143	$ 20,155

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Reinsurance (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Selling, general and administrative expenses
Selling, general and administrative expenses	$ (7,059)	$ (5,119)	$ (19,430)	$ (18,604)

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Available-for-Sale Investment Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amortized cost and estimated fair values of fixed-income securities
Amortized Cost	$ 69,458	$ 121,610
Estimated Fair Value	70,142	122,922
Fixed-income securities [Member]
Amortized cost and estimated fair values of fixed-income securities
Due in one year or less, Amortized Cost	41,140
Due after one year through five years, Amortized Cost	24,251
Due after five years through ten years, Amortized Cost	380
Due in one year or less, Estimated Fair Value	41,334
Due after one year through five years, Estimated Fair Value	24,734
Due after five years through ten years, Estimated Fair Value	417
Mortgage-backed securities [Member]
Amortized cost and estimated fair values of fixed-income securities
Amortized Cost	3,687	10,803
Estimated Fair Value	$ 3,657	$ 10,951

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Capital Lease Obligation (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Property under capital lease
Computer software, software licenses and hardware	$ 28,189	$ 28,189
Accumulated depreciation	(12,321)	(8,821)
Computer software, software licenses and hardware, net	$ 15,868	$ 19,368

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Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2010
Related Party Transactions (Textual) [Abstract]
Investment in hedge fund	$ 2.5	$ 2.5
Related liquidity-focused product	3.7	10.0
Fair value of hedge fund	3.3
Fair value of liquidity-focused product	$ 3.7

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Premium Finance Receivables, Net (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Premium Finance Receivables, Net (Textual) [Abstract]
Past due amount of finance receivables	30 days		30 days
Losses due to non-realization of premium finance receivables	$ 0.2	$ 0.2	$ 0.4	$ 0.5
Percentage of premiums financed	0.40%	0.50%	0.40%	0.40%

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Available-for-Sale Investment Securities

9 Months Ended

Sep. 30, 2012

Available-for-Sale Investment Securities [Abstract]

Available-for-Sale Investment Securities

2. Available-for-Sale Investment Securities

The Company’s available-for-sale investment securities are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity (deficit). No income tax effect of unrealized gains and losses is reflected in other comprehensive income (loss) due to the Company carrying a full deferred tax valuation allowance. Gains and losses realized on the disposition of investment securities are determined on the specific-identification basis and credited or charged to income at the time of disposal.

The amortized cost, gross unrealized gains (losses), and estimated fair value of the Company’s available-for-sale securities at September 30, 2012 and December 31, 2011, were as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair  Value
September 30, 2012
U.S. Treasury and government agencies	$	11,503	$	139	$	—		$	11,642
Mortgage-backed securities		3,687		20		(50	)		3,657
States and political subdivisions		4,083		117		(2	)		4,198
Corporate debt securities		29,684		379		(5	)		30,058
FDIC-insured certificates of deposit		20,501		86		—			20,587
Total	$	69,458	$	741	$	(57	)	$	70,142
December 31, 2011
U.S. Treasury and government agencies	$	11,804	$	172	$	(1	)	$	11,975
Mortgage-backed securities		10,803		283		(135	)		10,951
States and political subdivisions		16,841		338		(1	)		17,178
Corporate debt securities		61,031		764		(158	)		61,637
FDIC-insured certificates of deposit		21,131		53		(3	)		21,181
Total	$	121,610	$	1,610	$	(298	)	$	122,922

Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. The Company’s amortized cost and estimated fair values of fixed-income securities at September 30, 2012 by contractual maturity were as follows (in thousands):

	Amortized Cost		Estimated Fair  Value
Due in one year or less	$	41,140	$	41,334
Due after one year through five years		24,251		24,734
Due after five years through ten years		380		417
Mortgage-backed securities		3,687		3,657
Total	$	69,458	$	70,142

Gross realized gains and losses on available-for-sale investments for the nine months ended September 30 were as follows (in thousands):

	2012			2011
Gross gains	$	921		$	237
Gross losses		(121	)		(166	)
Total	$	800		$	71

The following table summarizes the Company’s available-for-sale securities in an unrealized loss position at September 30, 2012 and December 31, 2011, the estimated fair value and amount of gross unrealized losses, aggregated by investment category and length of time those securities have been continuously in an unrealized loss position (in thousands):

	September 30, 2012
	Less Than Twelve Months					Twelve Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
Mortgage-backed securities		1,450		(24	)		792		(26	)		2,242		(50	)
States and political subdivisions		—		—			72		(2	)		72		(2	)
Corporate debt securities		672		(1	)		620		(4	)		1,292		(5	)
Total	$	2,122	$	(25	)	$	1,484	$	(32	)	$	3,606	$	(57	)
	December 31, 2011
	Less Than Twelve Months					Twelve Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury and government agencies	$	505	$	(1	)	$	—	$	—		$	505	$	(1	)
Mortgage-backed securities		2,688		(36	)		3,312		(99	)		6,000		(135	)
States and political subdivisions		—		—			74		(1	)		74		(1	)
Corporate debt securities		13,982		(137	)		1,344		(21	)		15,326		(158	)
FDIC-insured certificates of deposit		958		(1	)		348		(2	)		1,306		(3	)
Total	$	18,133	$	(175	)	$	5,078	$	(123	)	$	23,211	$	(298	)

The Company’s portfolio contained approximately 20 and 34 individual investment securities that were in an unrealized loss position as of September 30, 2012 and December 31, 2011, respectively.

The unrealized losses at September 30, 2012 were primarily attributable to changes in market interest rates since the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. On a quarterly basis, the Company considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, duration and extent to which the fair value is less than cost. If the fair value of a debt security is less than its amortized cost basis, an other-than-temporary impairment may be triggered in circumstances where (1) an entity has an intent to sell the security, (2) it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, or (3) the entity does not expect to recover the entire amortized cost basis of the security (that is, a credit loss exists). Other-than-temporary impairments are separated into amounts representing credit losses which are recognized in earnings and amounts related to all other factors which are recognized in other comprehensive income. The Company also considers potential adverse conditions related to the financial health of the issuer based on rating agency actions. At September 30, 2012, management performed its quarterly analysis of all securities with an unrealized loss and concluded no individual securities were other-than-temporarily impaired.

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Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial assets measured at fair value on a recurring basis
Total investment securities	$ 70,142	$ 122,922
Other invested assets	3,309	2,898
Quoted Prices in Active Markets (Level 1) [Member]
Financial assets measured at fair value on a recurring basis
Total assets	24,981	31,037
Significant Other Observable Inputs (Level 2) [Member]
Financial assets measured at fair value on a recurring basis
Total assets
Significant Unobservable Inputs (Level 3) [Member]
Financial assets measured at fair value on a recurring basis
Total assets
Fair Value, Measurements, Recurring [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	70,142	122,922
Other invested assets	3,309	2,898
Total assets	73,451	125,820
Fair Value, Measurements, Recurring [Member] | U.S. Treasury and government agencies [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	11,642	11,975
Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	3,657	10,951
Fair Value, Measurements, Recurring [Member] | States and political subdivisions [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	4,198	17,178
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	30,058	61,637
Fair Value, Measurements, Recurring [Member] | FDIC-insured certificates of deposit [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	20,587	21,181
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	11,642	11,975
Other invested assets
Total assets	11,642	11,975
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member] | U.S. Treasury and government agencies [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	11,642	11,975
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Mortgage-backed securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member] | States and political subdivisions [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Corporate debt securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member] | FDIC-insured certificates of deposit [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	58,500	110,947
Other invested assets
Total assets	58,500	110,947
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury and government agencies [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-backed securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	3,657	10,951
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | States and political subdivisions [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	4,198	17,178
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate debt securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	30,058	61,637
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | FDIC-insured certificates of deposit [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities	20,587	21,181
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Other invested assets	3,309	2,898
Total assets	3,309	2,898
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury and government agencies [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mortgage-backed securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | States and political subdivisions [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate debt securities [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | FDIC-insured certificates of deposit [Member]
Financial assets measured at fair value on a recurring basis
Total investment securities

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Reinsurance (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of loss reserves and unearned premium
Losses and loss adjustment expense reserves	$ 72,482	$ 78,510
Unearned premium reserve	24,326	36,674
Total	$ 96,808	$ 115,184

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Capital Lease Obligation (Tables)

9 Months Ended

Sep. 30, 2012

Capital Lease Obligation [Abstract]

Property under capital lease

	September 30, 2012			December 31, 2011
Computer software, software licenses and hardware	$	28,189		$	28,189
Accumulated depreciation		(12,321	)		(8,821	)
Computer software, software licenses and hardware, net	$	15,868		$	19,368

Estimated future lease payments

2012	$	1,684
2013		6,736
2014		6,736
2015		2,807
Total estimated future lease payments		17,963
Less: Amount representing interest		1,672
Present value of future lease payments	$	16,291

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Debt (Tables)

9 Months Ended

Sep. 30, 2012

Debt [Abstract]

Summary of Company's long-term debt instruments and balances outstanding

	September 30, 2012		December 31, 2011
Notes payable due 2035	$	30,928	$	30,928
Notes payable due 2035		25,774		25,774
Notes payable due 2035		20,143		20,155
Total notes payable		76,845		76,857
Senior secured credit facility, net of discount		92,276		91,683
Total long-term debt	$	169,121	$	168,540

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Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Summary of effective tax rate differed from the statutory rate
Loss before income taxes	$ (29,247)	$ (7,407)	$ (43,254)	$ (16,336)
Tax provision computed at the federal statutory income tax rate	(10,237)	(2,593)	(15,139)	(5,718)
Increases (reductions) in tax resulting from:
Tax-exempt interest	(10)	(32)	(61)	(106)
State income taxes	40	(427)	335	(457)
IRS audit settlement			(118)
Goodwill impairment (non-deductible)	5,623		5,623
Valuation allowance	4,809	3,415	9,770	7,433
Other	(14)	(132)	(31)	(59)
Income tax expense	$ 211	$ 231	$ 379	$ 1,093
Effective tax rate	(0.70%)	(3.10%)	(0.90%)	(6.70%)

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Reinsurance (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amount of receivables due from reinsurers
Total reinsurance receivable	$ 118,487	$ 131,447
Quota-share reinsurer for agreement effective September 1, 2011 [Member]
Amount of receivables due from reinsurers
Total reinsurance receivable	49,206	22,102
Michigan Catastrophic Claims Association [Member]
Amount of receivables due from reinsurers
Total reinsurance receivable	42,066	44,049
Vesta Insurance Group [Member]
Amount of receivables due from reinsurers
Total reinsurance receivable	9,839	10,068
Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 2011 [Member]
Amount of receivables due from reinsurers
Total reinsurance receivable	9,264	46,103
Excess of loss reinsurers [Member]
Amount of receivables due from reinsurers
Total reinsurance receivable	4,983	5,458
Other [Member]
Amount of receivables due from reinsurers
Total reinsurance receivable	$ 3,129	$ 3,667

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Provision for income taxes

	Three Months  Ended September 30,					Nine Months  Ended September 30,
	2012		2011			2012		2011
Current tax expense (benefit)	$	127	$	(88	)	$	127	$	137
Deferred tax expense		84		319			252		956
Net income tax expense	$	211	$	231		$	379	$	1,093

Summary of effective tax rate differed from the statutory rate

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Loss before income taxes	$	(29,247	)	$	(7,407	)	$	(43,254	)	$	(16,336	)
Tax provision computed at the federal statutory income tax rate		(10,237	)		(2,593	)		(15,139	)		(5,718	)
Increases (reductions) in tax resulting from:
Tax-exempt interest		(10	)		(32	)		(61	)		(106	)
State income taxes		40			(427	)		335			(457	)
IRS audit settlement		—			—			(118	)		—
Goodwill impairment (non-deductible)		5,623			—			5,623			—
Valuation allowance		4,809			3,415			9,770			7,433
Other		(14	)		(132	)		(31	)		(59	)
Income tax expense	$	211		$	231		$	379		$	1,093
Effective tax rate		(0.7	)%		(3.1	)%		(0.9	)%		(6.7	)%

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Net Loss Per Common Share (Tables)

9 Months Ended

Sep. 30, 2012

Net Loss Per Common Share [Abstract]

Summary of reconciliation of numerators and denominators for the basic and diluted earnings per share

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Numerator:
Loss from continuing operations	$	(29,458	)	$	(7,638	)	$	(43,633	)	$	(17,429	)
Denominator:
Weighted average common shares outstanding		15,408			15,408			15,408			15,408
Weighted average diluted shares outstanding		15,408			15,408			15,408			15,408
Basic loss per common share from continuing operations:	$	(1.91	)	$	(0.50	)	$	(2.83	)	$	(1.13	)
Diluted loss per common share from continuing operations:	$	(1.91	)	$	(0.50	)	$	(2.83	)	$	(1.13	)

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements of the Company. In the opinion of management, all adjustments necessary for a fair presentation have been included and are of a normal recurring nature. Interim results are not necessarily indicative of the results that may be expected for the year. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K. The results of operations for interim periods should not be considered indicative of results to be expected for the full year.

Adopted Accounting Standards

In October 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. ASU 2010-26 modified the definitions of the type of costs that can be capitalized in the successful acquisition of new and renewal insurance contracts. ASU 2010-26 requires incremental direct costs of successful contract acquisition as well as certain costs related to underwriting, policy issuance and processing, medical and inspection and sales force contract selling for successful contract acquisition to be capitalized. These incremental direct costs and other costs are those that are essential to the contract transaction and would not have been incurred had the contract transaction not occurred. The Company retrospectively adopted ASU 2010-26 on January 1, 2012. The cumulative effect of the adoption was a decrease of shareholders’ equity by $11.3 million, net of tax, as of January 1, 2011.

The following table illustrates the effect of adopting ASU 2010-26 in the consolidated balance sheets (in thousands):

	December 31, 2011
	Previously Reported			As Adjusted
Deferred acquisition costs, net	$	3,206		$	(6,464	)
Stockholders’ deficit		(71,307	)		(80,977	)

The following table illustrates the effect of adopting ASU 2010-26 in the consolidated statements of operations (in thousands, except per share amounts):

	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
	Previously Reported			As Adjusted			Previously Reported			As Adjusted
Selling, general and administrative expenses	$	27,919		$	27,099		$	89,894		$	88,403
Net loss		(8,458	)		(7,638	)		(18,920	)		(17,429	)
Net loss per share:
Basic		(0.55	)		(0.50	)		(1.23	)		(1.13	)
Diluted		(0.55	)		(0.50	)		(1.23	)		(1.13	)

ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment, permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. Additionally, if the carrying amount of a reporting unit is zero or negative, the second step of the impairment test shall be performed to measure the amount of the impairment loss, if any, when it is more likely than not that a goodwill impairment exists. In considering whether it is more likely than not that a goodwill impairment exists, a qualitative assessment will be performed. If an entity concludes it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it need not perform the two-step impairment test. This standard is effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this standard did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.

ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, requires companies to present the components of net income and comprehensive income in either one or two consecutive financial statements. Companies will no longer be permitted to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. This standard is effective for interim and annual periods beginning after December 15, 2011, and should be applied retrospectively. The adoption of this standard did not impact the Company’s consolidated financial position, results of operations or cash flows.

ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, provides identical guidance with concurrently issued International Financial Reporting Standard (IFRS) 13, Fair Value Measurements. Most of the changes in the new standard are clarifications of existing guidance, but it expands the disclosures about fair value measurements, and requires the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position, but for which the fair value is required to be disclosed, which would consist of the Company’s debt, cash and cash equivalents, and fiduciary and restricted cash. In addition, for fair value measurements categorized as Level 3 within the fair value hierarchy, the valuation processes and sensitivity of the fair value measurements to changes in unobservable inputs shall be disclosed. This standard is effective for interim and annual periods beginning after December 15, 2011, and should be applied prospectively. The adoption of this standard did not impact the Company’s consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Standards

In July 2012, the FASB issued ASU 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU gives entities testing indefinite-lived intangible assets for impairment the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, the entity is not required to take further action. However, if an entity concludes otherwise, a quantitative impairment test is required. This guidance is effective for annual and interim impairment tests beginning January 1, 2013, with early adoption permitted. Management does not believe the adoption of this standard will have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Financial assets measured at fair value on a recurring basis

	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Treasury and government agencies	$	11,642	$	11,642	$	—	$	—
Mortgage-backed securities		3,657		—		3,657		—
States and political subdivisions		4,198		—		4,198		—
Corporate debt securities		30,058		—		30,058		—
FDIC-insured certificates of deposit		20,587		—		20,587		—
Total investment securities		70,142		11,642		58,500		—
Other invested assets		3,309		—		—		3,309
Total assets	$	73,451	$	11,642	$	58,500	$	3,309

The following table provides information as of December 31, 2011 about the Company’s financial assets measured at fair value on a recurring basis (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Treasury and government agencies	$	11,975	$	11,975	$	—	$	—
Mortgage-backed securities		10,951		—		10,951		—
States and political subdivisions		17,178		—		17,178		—
Corporate debt securities		61,637		—		61,637		—
FDIC-insured certificates of deposit		21,181		—		21,181		—
Total investment securities		122,922		11,975		110,947		—
Other invested assets		2,898		—		—		2,898
Total assets	$	125,820	$	11,975	$	110,947	$	2,898

Fair value measurements for assets

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at July 1, 2012	$	3,098
Transfers into Level 3		—
Total gains included in earnings as net investment income		211
Settlements		—
Balance at September 30, 2012	$	3,309

Fair value measurements for assets in Level 3 for the three months ended September 30, 2011 were as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at July 1, 2011	$	2,840
Transfers into Level 3		—
Total losses included in earnings as net investment income		(31	)
Settlements		—
Balance at September 30, 2011	$	2,809

Fair value measurements for assets in Level 3 for the nine months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at January 1, 2012	$	2,898
Transfers into Level 3		—
Total gains included in earnings as net investment income		411
Settlements		—
Balance at September 30, 2012	$	3,309

Fair value measurements for assets in Level 3 for the nine months ended September 30, 2011 were as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at January 1, 2011	$	2,564
Transfers into Level 3		—
Total gains included in earnings as net investment income		245
Settlements		—
Balance at September 30, 2011	$	2,809

Fair value measurements for assets and liabilities

	Carrying Value		Estimated Fair  Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	24,413	$	24,413	$	24,413	$	—	$	—
Fiduciary and restricted cash		568		568		568		—		—
Total	$	24,981	$	24,981	$	24,981	$	—	$	—
Liabilities:
Notes payable	$	76,845	$	12,728	$	—	$	—	$	12,728
Senior secured credit facility		92,276		76,531		—		—		76,531
Total	$	169,121	$	89,259	$	—	$	—	$	89,259

The following table presents the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at December 31, 2011 and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis (in thousands):

	Carrying Value		Estimated Fair  Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	28,559	$	28,559	$	28,559	$	—	$	—
Fiduciary and restricted cash		2,478		2,478		2,478		—		—
Total	$	31,037	$	31,037	$	31,037	$	—	$	—
Liabilities:
Notes payable	$	76,857	$	17,433	$	—	$	—	$	17,433
Senior secured credit facility		91,683		79,554		—		—		79,554
Total	$	168,540	$	96,987	$	—	$	—	$	96,987

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Available-for-Sale Investment Securities (Details Textual)	Sep. 30, 2012 Investment_Securities	Dec. 31, 2011 Investment_Securities
Available-for-Sale Investment Securities (Textual) [Abstract]
Individual investment securities in an unrealized loss position	20	34

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Capital Lease Obligation (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
Estimated future lease payments
2012	$ 1,684
2013	6,736
2014	6,736
2015	2,807
Total estimated future lease payments	17,963
Less: Amount representing interest	1,672
Present value of future lease payments	$ 16,291

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Assets
Available-for-sale securities, at fair value	$ 70,142	$ 122,922
Other invested assets	3,309	2,898
Cash and cash equivalents	24,413	28,559
Fiduciary and restricted cash	568	2,478
Accrued investment income	644	1,058
Premiums and fees receivable, net	28,619	22,579
Premium finance receivable, net	41,490	38,082
Commissions receivable	1,698	1,786
Receivable from reinsurers	118,487	131,447
Income taxes receivable	16	739
Investment in real property, net	11,176	11,776
Property and equipment (net of accumulated depreciation of $57,990 for 2012 and $51,204 for 2011)	26,219	32,130
Goodwill		23,448
Other intangible assets (net of accumulated amortization of $7,665 for 2012 and 2011)	14,265	14,609
Prepaid expenses	6,971	5,147
Other assets (net of allowance for doubtful accounts of $7,213 for 2012 and 2011)	1,944	1,944
Total assets	349,961	441,602
Liabilities:
Reserves for losses and loss adjustment expenses	143,323	183,836
Unearned premium	67,671	58,242
Amounts due to reinsurers	30,245	38,224
Deferred revenue	5,967	4,816
Capital lease obligation	16,291	20,301
Senior secured credit facility	92,276	91,683
Notes payable	76,845	76,857
Deferred tax liability	3,180	2,928
Deferred acquisition costs, net	1,202	6,464
Other liabilities	37,928	39,228
Total liabilities	474,928	522,579
Stockholders' deficit:
Common stock, $0.01 par value; 75,000,000 shares authorized, 18,202,221 shares issued and 15,408,358 shares outstanding at September 30, 2012 and at December 31, 2011	182	182
Additional paid-in capital	166,613	166,342
Treasury stock, at cost (2,793,863 shares at September 30, 2012 and December 31, 2011)	(32,910)	(32,910)
Accumulated other comprehensive loss	(855)	(227)
Retained deficit	(257,997)	(214,364)
Total stockholders' deficit	(124,967)	(80,977)
Total liabilities and stockholders' deficit	$ 349,961	$ 441,602

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Reinsurance (Details Textual) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended					3 Months Ended	9 Months Ended	13 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Affirmative Insurance Company [Member]	Dec. 31, 2011 Affirmative Insurance Company [Member]	Sep. 30, 2012 Subsidiaries [Member]	Sep. 30, 2012 County mutual insurance company [Member]	Sep. 30, 2012 Quota-share reinsurer [Member]	Sep. 30, 2012 Quota-share reinsurer [Member]	Sep. 30, 2012 Quota-share reinsurer [Member]	Dec. 31, 2011 Quota-share reinsurer [Member]	Sep. 30, 2012 Vesta Insurance Group [Member]	Dec. 31, 2011 Vesta Insurance Group [Member]
Reinsurance Related Transaction [Line Items]
Total deposit														$ 16,800,000
Deposit after cumulative withdrawals														8,700,000
Treasury money market account														14,700,000
Corporate bond deposits														2,100,000
Receivable from reinsurers	118,487,000	131,447,000	118,487,000		131,447,000					9,264,000	9,264,000	9,264,000	46,103,000	9,839,000	10,068,000
Amount payable	30,245,000	38,224,000	30,245,000		38,224,000									2,900,000
Percentage of policies issued									100.00%
Company obligation under reinsurance contract						30,000,000	34,400,000
Reserves for losses and loss adjustment expenses	143,323,000	183,836,000	143,323,000		183,836,000			2,500,000
Funds in a money market cash equivalent account						20,700,000
Cumulative withdrawal by first party						400,000
Cumulative withdrawal by second party						1,700,000
Written premiums ceded	50,600,000									21,100,000	61,200,000	84,100,000
Reinsurance (Textual) [Abstract]
Ceded gross written premium					28.00%
Ceded unearned premium			9,429,000	(26,425,000)	11,800,000
Net deferred ceding commissions			4,300,000
Ceded percentage of business produced		10.00%
Conversion rate of quota share reinsurance contract			40.00%
Duration of loss reinsurance contract			1 year
Maximum coverage for individual losses	5,000,000		5,000,000
Minimum coverage for individual losses	$ 3,000,000		$ 3,000,000

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Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) (USD $) In Thousands, except Share data	Total	Common stock	Additional paid-in capital	Treasury stock	Accumulated other comprehensive income (loss)	Retained Deficit
Beginning balance at Dec. 31, 2010		$ 178	$ 165,776	$ (32,906)	$ 445	$ (51,767)
Beginning balance, shares at Dec. 31, 2010		17,768,721		2,360,363
Issuance of restricted stock awards		4		(4)
Issuance of restricted stock awards, shares		433,500		433,500
Stock-based compensation			359
Unrealized loss on available-for-sale investment securities					(431)
Net loss	(17,429)					(17,429)
Ending balance at Sep. 30, 2011	64,225	182	166,135	(32,910)	14	(69,196)
Ending balance, shares at Sep. 30, 2011		18,202,221		2,793,863
Beginning balance at Dec. 31, 2011	(80,977)	182	166,342	(32,910)	(227)	(214,364)
Beginning balance, shares at Dec. 31, 2011	15,408,358	18,202,221		2,793,863
Issuance of restricted stock awards
Issuance of restricted stock awards, shares
Stock-based compensation			271
Unrealized loss on available-for-sale investment securities					(628)
Net loss	(43,633)					(43,633)
Ending balance at Sep. 30, 2012	$ (124,967)	$ 182	$ 166,613	$ (32,910)	$ (855)	$ (257,997)
Ending balance, shares at Sep. 30, 2012	15,408,358	18,202,221		2,793,863

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Net Loss Per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Numerator:
Loss from continuing operations	$ (29,458)	$ (7,638)	$ (43,633)	$ (17,429)
Denominator:
Weighted average common shares outstanding	15,408	15,408	15,408	15,408
Weighted average diluted shares outstanding	15,408	15,408	15,408	15,408
Basic loss per common share from continuing operations:	$ (1.91)	$ (0.50)	$ (2.83)	$ (1.13)
Diluted loss per common share from continuing operations:	$ (1.91)	$ (0.50)	$ (2.83)	$ (1.13)

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Summary of Significant Accounting Policies (Details Textual) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Jan. 31, 2011
Summary of Significant Accounting Policies (Textual) [Abstract]
Decrease of shareholders' equity	$ 11.3

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Subsequent Event (Details Textual) (USD $) In Millions, unless otherwise specified	Nov. 15, 2012	Oct. 17, 2012	Oct. 15, 2012
Subsequent Event (Textual) [Abstract]
Recovery of an amount equal to the casualty loss value of the leased property		$ 9.6
Disbursement of company's lease payment obligation			8.3
Alleged Liquidated Damages	$ 1.4

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements of the Company. In the opinion of management, all adjustments necessary for a fair presentation have been included and are of a normal recurring nature. Interim results are not necessarily indicative of the results that may be expected for the year. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K. The results of operations for interim periods should not be considered indicative of results to be expected for the full year.

Adopted Accounting Standards

Adopted Accounting Standards

In October 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. ASU 2010-26 modified the definitions of the type of costs that can be capitalized in the successful acquisition of new and renewal insurance contracts. ASU 2010-26 requires incremental direct costs of successful contract acquisition as well as certain costs related to underwriting, policy issuance and processing, medical and inspection and sales force contract selling for successful contract acquisition to be capitalized. These incremental direct costs and other costs are those that are essential to the contract transaction and would not have been incurred had the contract transaction not occurred. The Company retrospectively adopted ASU 2010-26 on January 1, 2012. The cumulative effect of the adoption was a decrease of shareholders’ equity by $11.3 million, net of tax, as of January 1, 2011.

The following table illustrates the effect of adopting ASU 2010-26 in the consolidated balance sheets (in thousands):

	December 31, 2011
	Previously Reported			As Adjusted
Deferred acquisition costs, net	$	3,206		$	(6,464	)
Stockholders’ deficit		(71,307	)		(80,977	)

The following table illustrates the effect of adopting ASU 2010-26 in the consolidated statements of operations (in thousands, except per share amounts):

	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
	Previously Reported			As Adjusted			Previously Reported			As Adjusted
Selling, general and administrative expenses	$	27,919		$	27,099		$	89,894		$	88,403
Net loss		(8,458	)		(7,638	)		(18,920	)		(17,429	)
Net loss per share:
Basic		(0.55	)		(0.50	)		(1.23	)		(1.13	)
Diluted		(0.55	)		(0.50	)		(1.23	)		(1.13	)

ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment, permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. Additionally, if the carrying amount of a reporting unit is zero or negative, the second step of the impairment test shall be performed to measure the amount of the impairment loss, if any, when it is more likely than not that a goodwill impairment exists. In considering whether it is more likely than not that a goodwill impairment exists, a qualitative assessment will be performed. If an entity concludes it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it need not perform the two-step impairment test. This standard is effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this standard did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.

ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, requires companies to present the components of net income and comprehensive income in either one or two consecutive financial statements. Companies will no longer be permitted to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. This standard is effective for interim and annual periods beginning after December 15, 2011, and should be applied retrospectively. The adoption of this standard did not impact the Company’s consolidated financial position, results of operations or cash flows.

ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, provides identical guidance with concurrently issued International Financial Reporting Standard (IFRS) 13, Fair Value Measurements. Most of the changes in the new standard are clarifications of existing guidance, but it expands the disclosures about fair value measurements, and requires the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position, but for which the fair value is required to be disclosed, which would consist of the Company’s debt, cash and cash equivalents, and fiduciary and restricted cash. In addition, for fair value measurements categorized as Level 3 within the fair value hierarchy, the valuation processes and sensitivity of the fair value measurements to changes in unobservable inputs shall be disclosed. This standard is effective for interim and annual periods beginning after December 15, 2011, and should be applied prospectively. The adoption of this standard did not impact the Company’s consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In July 2012, the FASB issued ASU 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU gives entities testing indefinite-lived intangible assets for impairment the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, the entity is not required to take further action. However, if an entity concludes otherwise, a quantitative impairment test is required. This guidance is effective for annual and interim impairment tests beginning January 1, 2013, with early adoption permitted. Management does not believe the adoption of this standard will have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

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Available-for-Sale Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Summary of available-for-sale securities
Amortized Cost	$ 69,458	$ 121,610
Gross Unrealized Gains	741	1,610
Gross Unrealized Losses	(57)	(298)
Estimated Fair Value	70,142	122,922
U.S. Treasury and government agencies [Member]
Summary of available-for-sale securities
Amortized Cost	11,503	11,804
Gross Unrealized Gains	139	172
Gross Unrealized Losses		(1)
Estimated Fair Value	11,642	11,975
Mortgage-backed securities [Member]
Summary of available-for-sale securities
Amortized Cost	3,687	10,803
Gross Unrealized Gains	20	283
Gross Unrealized Losses	(50)	(135)
Estimated Fair Value	3,657	10,951
States and political subdivisions [Member]
Summary of available-for-sale securities
Amortized Cost	4,083	16,841
Gross Unrealized Gains	117	338
Gross Unrealized Losses	(2)	(1)
Estimated Fair Value	4,198	17,178
Corporate debt securities [Member]
Summary of available-for-sale securities
Amortized Cost	29,684	61,031
Gross Unrealized Gains	379	764
Gross Unrealized Losses	(5)	(158)
Estimated Fair Value	30,058	61,637
FDIC-insured certificates of deposit [Member]
Summary of available-for-sale securities
Amortized Cost	20,501	21,131
Gross Unrealized Gains	86	53
Gross Unrealized Losses		(3)
Estimated Fair Value	$ 20,587	$ 21,181

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Available-for-Sale Investment Securities (Tables)

9 Months Ended

Sep. 30, 2012

Available-for-Sale Investment Securities [Abstract]

Summary of available-for-sale securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair  Value
September 30, 2012
U.S. Treasury and government agencies	$	11,503	$	139	$	—		$	11,642
Mortgage-backed securities		3,687		20		(50	)		3,657
States and political subdivisions		4,083		117		(2	)		4,198
Corporate debt securities		29,684		379		(5	)		30,058
FDIC-insured certificates of deposit		20,501		86		—			20,587
Total	$	69,458	$	741	$	(57	)	$	70,142
December 31, 2011
U.S. Treasury and government agencies	$	11,804	$	172	$	(1	)	$	11,975
Mortgage-backed securities		10,803		283		(135	)		10,951
States and political subdivisions		16,841		338		(1	)		17,178
Corporate debt securities		61,031		764		(158	)		61,637
FDIC-insured certificates of deposit		21,131		53		(3	)		21,181
Total	$	121,610	$	1,610	$	(298	)	$	122,922

Amortized cost and estimated fair values of fixed-income securities

	Amortized Cost		Estimated Fair  Value
Due in one year or less	$	41,140	$	41,334
Due after one year through five years		24,251		24,734
Due after five years through ten years		380		417
Mortgage-backed securities		3,687		3,657
Total	$	69,458	$	70,142

Gross realized gains and losses on available-for-sale investments

	2012			2011
Gross gains	$	921		$	237
Gross losses		(121	)		(166	)
Total	$	800		$	71

Summary of available-for-sale securities in an unrealized loss position

	September 30, 2012
	Less Than Twelve Months					Twelve Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
Mortgage-backed securities		1,450		(24	)		792		(26	)		2,242		(50	)
States and political subdivisions		—		—			72		(2	)		72		(2	)
Corporate debt securities		672		(1	)		620		(4	)		1,292		(5	)
Total	$	2,122	$	(25	)	$	1,484	$	(32	)	$	3,606	$	(57	)
	December 31, 2011
	Less Than Twelve Months					Twelve Months or Greater					Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury and government agencies	$	505	$	(1	)	$	—	$	—		$	505	$	(1	)
Mortgage-backed securities		2,688		(36	)		3,312		(99	)		6,000		(135	)
States and political subdivisions		—		—			74		(1	)		74		(1	)
Corporate debt securities		13,982		(137	)		1,344		(21	)		15,326		(158	)
FDIC-insured certificates of deposit		958		(1	)		348		(2	)		1,306		(3	)
Total	$	18,133	$	(175	)	$	5,078	$	(123	)	$	23,211	$	(298	)

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities
Net loss	$ (43,633)	$ (17,429)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	7,644	7,340
Stock-based compensation expense	254	316
Amortization of debt modification costs	280	310
Amortization of debt discount	2,930	3,428
Net realized gains from sales of available-for-sale securities	(800)	(71)
Fair value gain on investment in hedge fund	(411)	(245)
Gain on disposal of assets	(121)
Amortization of premiums on investments, net	1,271	2,306
Provision for doubtful premiums receivable	609	(180)
Loss on interest rate swaps		2
Proceeds from insurance recoveries		(212)
Paid-in-kind interest	2,681
Goodwill and other intangible assets impairment	23,692
Change in operating assets and liabilities:
Fiduciary and restricted cash	1,910	3,524
Premiums, fees and commissions receivable, net	(6,561)	15,764
Reserves for losses and loss adjustment expenses	(40,513)	10,413
Amounts due from reinsurers	4,981	(66,537)
Premium finance receivable, net (related to our insurance premiums)	(3,565)	3,794
Deferred revenue	1,151	(2,201)
Unearned premium	9,429	(26,425)
Deferred acquisition costs, net	(5,262)	744
Deferred taxes	252	956
Income taxes receivable	723	902
Other	(4,499)	(3,788)
Net cash used in operating activities	(47,558)	(67,289)
Cash flows from investing activities
Proceeds from sales of available-for-sale securities	33,730	56,277
Proceeds from maturities of available-for-sale securities	26,791	27,163
Purchases of available-for-sale securities	(8,839)	(18,431)
Premium finance receivable, net (related to third-party insurance premiums)	157	(2,660)
Purchases of property and equipment	(1,170)	(2,335)
Proceeds from insurance recoveries	30
Investment in real property, net		(550)
Net cash provided by investing activities	50,699	59,464
Cash flows from financing activities
Principal payments under capital lease obligations	(4,010)	(3,718)
Principal payments on senior secured credit facility	(3,277)	(5,388)
Debt modification costs paid		(769)
Repurchase of restricted stock		(4)
Net cash used in financing activities	(7,287)	(9,879)
Net decrease in cash and cash equivalents	(4,146)	(17,704)
Cash and cash equivalents at beginning of year	28,559	46,364
Cash and cash equivalents at end of period	24,413	28,660
Supplemental disclosure of cash flow information:
Cash paid for interest	7,666	10,911
Cash paid for income taxes	$ 335	$ 335

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Property and equipment, accumulated depreciation	$ 57,990	$ 51,204
Other intangible assets, accumulated amortization	7,665	7,665
Other assets, allowance for doubtful accounts	$ 7,213	$ 7,213
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	18,202,221	18,202,221
Common stock, shares outstanding	15,408,358	15,408,358
Treasury stock, shares	2,793,863	2,793,863

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Legal and Regulatory Proceedings

9 Months Ended

Sep. 30, 2012

Legal and Regulatory Proceedings [Abstract]

Legal and Regulatory Proceedings

10. Legal and Regulatory Proceedings

The Company and its subsidiaries are named from time to time as parties in various legal actions arising in the ordinary course of the Company’s business and arising out of or related to claims made in connection with the Company’s insurance policies and claims handling. There are no material changes with respect to legal proceedings previously disclosed in Note 15 to the consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2011. The Company believes that the resolution of these legal actions will not have a material adverse effect on the Company’s consolidated financial position or results of operations. However, the ultimate outcome of these matters is uncertain.

On February 3, 2012, the Chapter 7 Trustee for the Estate of Inga Nikokhosyan filed suit against Affirmative Insurance Company (AIC) and Platinum Claims Services, Inc. (Platinum) in the Superior Court for the State of California, County of Los Angeles. Platinum is a third-party claims administrator contracted by AIC to handle claims written through an unaffiliated program managed by Carnegie General Insurance Agency. The lawsuit alleges claims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress, and punitive damages arising out of Platinum’s handling of a claim. The parties are now engaged in discovery. The Company believes that these claims lack merit and intends to defend itself vigorously. No estimate of the range of potential loss can be made at this time.

On May 27, 2011, PropertyOne, Inc. filed suit against USAgencies, LLC and Affirmative Insurance Holdings, Inc. in the 19^th Judicial District Court, Parish of East Baton Rouge, Louisiana. PropertyOne’s petition asserts equitable claims for payment of broker commissions arising out of the December 2009 execution of a lease with a federal agency for the Company’s building located in Baton Rouge, Louisiana. The Company removed the lawsuit to the U.S. District Court for the Middle District of Louisiana. The parties are now engaged in discovery. The Company believes that these claims lack merit and intends to defend itself vigorously. No estimate of the range of potential loss can be made at this time.

The Illinois Insurance Code includes a reserve requirement that an insurer maintain an amount of qualifying investments, as defined, at least equal to the lesser of $250.0 million or 100% of its adjusted loss reserves and loss adjustment expenses reserves, as defined. As of December 31, 2011, Affirmative Insurance Company was deficient in meeting the qualifying investments requirement by $18.9 million. Management submitted a plan to cure the deficiency and the Illinois Department of Insurance approved management’s plan to cure the deficiency by September 30, 2012. Affirmative Insurance Company is currently in compliance with the reserve requirement.

Affirmative Insurance Company will need to enter into certain transactions, such as asset sales or other transactions, to be in compliance with the reserve requirement as of December 31, 2012. The Company cannot provide assurance that it will be in compliance with the reserve requirement at December 31, 2012. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. This assumes continuing operations and the realization of assets and liabilities in the normal course of business. If Affirmative Insurance Company is not in compliance with the reserve requirement as of December 31, 2012, it could have a material adverse effect on the Company’s operations and the interests of its creditors and stockholders. These conditions and events raise significant uncertainty about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or liabilities related to the going concern uncertainty.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 12, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	AFFIRMATIVE INSURANCE HOLDINGS INC
Entity Central Index Key	0001282543
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	true
Amendment Description	The purpose of this amendment on Form 10-Q/A for Affirmative Insurance Holdings, Inc. for the quarterly period ended September 30, 2012, previously filed with the Securities and Exchange Commission on November 19, 2012, is to furnish the interactive data as Exhibit 101. This Form 10-Q/A speaks of the original filing date of the Form 10-Q , does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way the disclosures made in the initial filing, except as described above.
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		15,408,358

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Net Loss Per Common Share

9 Months Ended

Sep. 30, 2012

Net Loss Per Common Share [Abstract]

Net Loss Per Common Share

11. Net Loss Per Common Share

Net loss per common share is based on the weighted average number of shares outstanding. Diluted weighted average shares is calculated by adjusting basic weighted average shares outstanding by all potentially dilutive stock options and restricted stock. Stock options outstanding of 906,999 for the three and nine months ended September 30, 2012 and stock options outstanding of 1,772,500 for the three and nine months ended 2011 were not included in the computation of diluted earnings per share because there is a loss from continuing operations in the respective periods.

The following table sets forth the reconciliation of numerators and denominators for the basic and diluted earnings per share computation for the three and nine months ended September 30, 2012 and 2011 (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Numerator:
Loss from continuing operations	$	(29,458	)	$	(7,638	)	$	(43,633	)	$	(17,429	)
Denominator:
Weighted average common shares outstanding		15,408			15,408			15,408			15,408
Weighted average diluted shares outstanding		15,408			15,408			15,408			15,408
Basic loss per common share from continuing operations:	$	(1.91	)	$	(0.50	)	$	(2.83	)	$	(1.13	)
Diluted loss per common share from continuing operations:	$	(1.91	)	$	(0.50	)	$	(2.83	)	$	(1.13	)

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues
Net premiums earned	$ 35,261	$ 42,042	$ 104,377	$ 139,264
Commission income and fees	14,879	16,265	45,991	53,593
Net investment income	819	1,078	2,572	3,891
Net realized gains (losses)	192	(45)	921	71
Other income	4	8	504	257
Total revenues	51,155	59,348	154,365	197,076
Expenses
Net losses and loss adjustment expenses	25,397	31,562	77,786	101,376
Selling, general and administrative expenses	24,097	27,099	74,529	88,403
Depreciation and amortization	2,414	2,533	7,044	7,340
Total expenses	51,908	61,194	159,359	197,119
Operating loss	(753)	(1,846)	(4,994)	(43)
Loss on interest rate swaps				(2)
Interest expense	4,802	5,561	14,568	16,291
Goodwill and other intangible assets impairment	23,692		23,692
Loss before income tax expense	(29,247)	(7,407)	(43,254)	(16,336)
Income tax expense	211	231	379	1,093
Net loss	$ (29,458)	$ (7,638)	$ (43,633)	$ (17,429)
Basic loss per common share:
Net loss	$ (1.91)	$ (0.50)	$ (2.83)	$ (1.13)
Diluted loss per common share:
Net loss	$ (1.91)	$ (0.50)	$ (2.83)	$ (1.13)
Weighted average common shares outstanding:
Basic	15,408	15,408	15,408	15,408
Diluted	15,408	15,408	15,408	15,408

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Deferred Policy Acquisition Costs

9 Months Ended

Sep. 30, 2012

Deferred Policy Acquisition Costs [Abstract]

Deferred Policy Acquisition Costs

5. Deferred Policy Acquisition Costs

Policy acquisition costs, consisting of primarily commissions and premium taxes, net of ceding commission income, are deferred and charged against income ratably over the terms of the related policies. The components of deferred policy acquisition costs and the related amortization expense were as follows for the three months ended September 30, 2012 and 2011 (in thousands):

	Gross			Ceded			Net
Balance at July 1, 2012	$	4,961		$	(6,398	)	$	(1,437	)
Additions		5,051			(6,014	)		(963	)
Amortization		(4,286	)		5,484			1,198
Ending balance at September 30, 2012	$	5,726		$	(6,928	)	$	(1,202	)
Balance at July 1, 2011, as adjusted	$	5,104		$	(5,330	)	$	(226	)
Additions		3,793			(4,191	)		(398	)
Amortization		(4,323	)		4,663			340
Ending balance at September 30, 2011, as adjusted	$	4,574		$	(4,858	)	$	(284	)

The components of deferred policy acquisition costs and the related amortization expense were as follows for the nine months ended September 30, 2012 and 2011 (in thousands):

	Gross			Ceded			Net
Balance at January 1, 2012	$	3,668		$	(10,132	)	$	(6,464	)
Additions		13,741			(13,176	)		565
Amortization		(11,683	)		16,380			4,697
Ending balance at September 30, 2012	$	5,726		$	(6,928	)	$	(1,202	)
Balance at January 1, 2011, as adjusted	$	9,432		$	(8,972	)	$	460
Additions		13,048			(13,169	)		(121	)
Amortization		(17,906	)		17,283			(623	)
Ending balance at September 30, 2011, as adjusted	$	4,574		$	(4,858	)	$	(284	)

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Premium Finance Receivables, Net

9 Months Ended

Sep. 30, 2012

Premium Finance Receivables, Net [Abstract]

Premium Finance Receivables, Net

4. Premium Finance Receivables, Net

Premium finance receivables (related to policies of both the Company and third-party carriers) were as follows at September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012			December 31, 2011
Premium finance contracts	$	44,324		$	40,472
Unearned finance charges		(2,304	)		(1,911	)
Allowance for credit losses		(530	)		(479	)
Total	$	41,490		$	38,082

Premium finance receivables are secured by the underlying unearned policy premiums for which the Company obtains assignment from the policyholder in the event of non-payment. When a payment becomes past due, the Company cancels the underlying policy with the insurance carrier and receives the unearned premium to clear unpaid principal and interest. The loan is closed by writing off any uncollected amounts or refunding any overpayment to the customer. An insignificant amount of finance receivables are past due in excess of thirty days. Losses due to non-realization of premium finance receivables were $0.2 million, or 0.4% of total premiums financed, for the three months ended September 30, 2012, and $0.2 million, or 0.5% of total premiums financed, for the three months ended September 30, 2011. Losses due to non-realization of premium finance receivables were $0.4 million, or 0.4% of total premiums financed, for the nine months ended September 30, 2012, and $0.5 million, or 0.4% of total premiums financed, for the nine months ended September 30, 2011.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Consolidated balance sheets

	December 31, 2011
	Previously Reported			As Adjusted
Deferred acquisition costs, net	$	3,206		$	(6,464	)
Stockholders’ deficit		(71,307	)		(80,977	)

Consolidated statements of operations

	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
	Previously Reported			As Adjusted			Previously Reported			As Adjusted
Selling, general and administrative expenses	$	27,919		$	27,099		$	89,894		$	88,403
Net loss		(8,458	)		(7,638	)		(18,920	)		(17,429	)
Net loss per share:
Basic		(0.55	)		(0.50	)		(1.23	)		(1.13	)
Diluted		(0.55	)		(0.50	)		(1.23	)		(1.13	)

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

12. Related Party Transactions

The Company has entered into certain transactions with a partnership that is affiliated with J. Christopher Flowers. Mr. Flowers is affiliated with New Affirmative LLC, the majority shareholder of the Company. In the fourth quarter of 2010, the Company committed to invest $2.5 million in Varadero, a hedge fund, and $10.0 million in a related liquidity-focused product. The investment manager of Varadero is Varadero Capital, L.P., of which Varadero GP, LLC is the general partner. Both the investment manager and general partner are partially-owned by an entity affiliated with Mr. Flowers. As of September 30, 2012, the Company had funded $2.5 million in the hedge fund and approximately $3.7 million in the related liquidity-focused product. At September 30, 2012, the fair value of the hedge fund was approximately $3.3 million, based on net asset value and recorded as other invested assets, and the fair value of the liquidity-focused product was approximately $3.7 million, included in available-for-sale securities in the consolidated balance sheets.

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Capital Lease Obligation

9 Months Ended

Sep. 30, 2012

Capital Lease Obligation [Abstract]

Capital Lease Obligation

8. Capital Lease Obligation

In May 2010, the Company entered into a capital lease obligation related to certain computer software, software licenses, and hardware used in the Company’s insurance operations. The Company received cash proceeds from the financing in the amount of $28.2 million. As required by the lease agreements, the Company purchased $28.2 million of FDIC-insured certificates of deposit held in brokerage accounts and pledged such securities as collateral against all of the Company’s obligations under the lease. The dollar amount of collateral pledged is set to decline over the term of the lease as the Company makes the scheduled lease payments. The lease term is 60 months with monthly rental payments totaling approximately $0.6 million. At the end of the initial term, the Company will have the right to purchase the software for a nominal fee, after which all rights, title and interest would transfer to the Company.

Property under capital lease consisted of the following as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012			December 31, 2011
Computer software, software licenses and hardware	$	28,189		$	28,189
Accumulated depreciation		(12,321	)		(8,821	)
Computer software, software licenses and hardware, net	$	15,868		$	19,368

Estimated future lease payments for the years ending December 31 (in thousands):

2012	$	1,684
2013		6,736
2014		6,736
2015		2,807
Total estimated future lease payments		17,963
Less: Amount representing interest		1,672
Present value of future lease payments	$	16,291

See Note 14 for subsequent event related to the Company’s capital lease obligation.

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Net Loss Per Common Share (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net Loss Per Common Share (Textual) [Abstract]
Stock options outstanding	906,999	1,772,500	906,999	1,772,500

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

6. Goodwill and Other Intangible Assets

The Company completed its annual goodwill and indefinite lived intangible asset impairment analyses as of September 30, 2012. The Company reports under a single reporting segment and, as such, the goodwill analysis is measured under one reporting unit. Current trends and recent developments resulted in management concluding that it is more likely than not that a goodwill impairment exists at September 30, 2012. Specifically, operating income and cash flow was less than plan, and premium production was below forecast. Due to the Company’s negative equity position of $101.3 million as of September 30, 2012, prior to goodwill impairment, ASC 350-20-35-30 requires that the Company perform step two of the goodwill impairment test.

Consistent with prior assessments, the fair value of the Company was determined using an internally developed discounted cash flow method. Management made significant assumptions and estimates about the extent and timing of future cash flows, growth rates, and discount rates that represent unobservable inputs into the valuation methodologies used to calculate fair value. A discount rate of 19% was used at September 30, 2012, which the Company believes adequately reflects an appropriate risk-adjusted discount rate based on its overall cost of capital and company-specific risk factors related to cash flow, debt covenant compliance and regulatory risk, as discussed in Notes 10 and 14. The cash flows were estimated over a significant future period of time, which made those estimates and assumptions subject to a high degree of uncertainty. Based upon the results of the assessment, the Company concluded that the carrying value of goodwill was fully impaired as of September 30, 2012. In step two of the goodwill impairment analysis, the Company determined the fair values of the Company’s assets and liabilities (including any unrecognized intangible assets) as if the Company had been acquired in a business combination. Determining the implied fair value of goodwill was judgmental in nature and involved the use of significant estimates and assumptions. The resulting implied fair value of goodwill was compared to the carrying value of goodwill, resulting in the write-off of the remaining goodwill balance of $23.4 million.

Indefinite-lived intangible assets primarily consist of trade names. In measuring the fair value of these intangible assets, the Company utilizes the relief-from-royalty method. This method assumes that trade names have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires an estimate of future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital. This analysis indicated an impairment of indefinite-lived intangible assets of $0.2 million as of September 30, 2012.

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Debt

9 Months Ended

Sep. 30, 2012

Debt [Abstract]

Debt

7. Debt

The Company’s long-term debt instruments and balances outstanding at September 30, 2012 and December 31, 2011 were as follows (in thousands):

	September 30, 2012		December 31, 2011
Notes payable due 2035	$	30,928	$	30,928
Notes payable due 2035		25,774		25,774
Notes payable due 2035		20,143		20,155
Total notes payable		76,845		76,857
Senior secured credit facility, net of discount		92,276		91,683
Total long-term debt	$	169,121	$	168,540

The $30.9 million notes payable due 2035 are redeemable in whole or in part by the Company. The notes adjust quarterly to the three-month LIBOR rate plus 3.60%. The interest rate as of September 30, 2012 was 3.99%.

The $25.8 million notes payable due 2035 are redeemable in whole or in part by the Company. The notes adjust quarterly to the three-month LIBOR rate plus 3.55%. The interest rate as of September 30, 2012 was 3.94%.

On February 28, 2012, the Company exercised its right to defer interest payments on the two Notes Payable mentioned above beginning with the scheduled interest payment due in March 2012 and continuing for a period of up to five years. The affected notes are associated with obligations to the Company’s unconsolidated trusts. The outstanding balance of the affected notes was $56.7 million as of September 30, 2012. The Company will continue to accrue interest on the principal during the extension period and the unpaid deferred interest will also accrue interest. Deferred interest will be due and payable at the expiration of the extension period and totaled $1.7 million as of September 30, 2012.

The $20.1 million notes payable due 2035 are redeemable in whole or in part by the Company. The notes adjust quarterly to the three-month LIBOR rate plus 3.95%. The interest rate as of September 30, 2012 was 4.34%.

The pricing under the senior secured credit facility is currently subject to a LIBOR floor of 3.00% plus 6.25%, and is tiered based on the Company’s leverage ratio. The interest rate as of September 30, 2012 was 10.5%. As of September 30, 2012, the principal balance of the senior secured credit facility was $97.3 million. The facility expires in January 2014.

The Company breached its leverage ratio covenant under the senior secured credit facility as of September 30, 2012. However, the lenders for the facility waived all defaults and events of default arising in connection with the breach. The Company will need to enter into certain transactions, such as asset sales, to be in compliance with the leverage ratio covenant as of December 31, 2012. The Company cannot provide assurance that it will be in compliance with the leverage ratio covenant at December 31, 2012. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. This assumes continuing operations and the realization of assets and liabilities in the normal course of business. If the Company was not in compliance with the leverage ratio covenant and unable to negotiate a waiver with its lenders, it could have a material adverse effect on the Company’s operations and the interests of its stockholders. These conditions and events raise significant uncertainty about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or liabilities related to the going concern uncertainty.

In November 2012, a new class of loans under the senior secured credit facility was created allowing for an incremental term loan. The incremental term loan has the following characteristics:

• Face amount of $7.3 million with a funded amount of $5.0 million.

• Repayment will be on a first out basis, payable in full, on or prior to January 17, 2014, with priority over all other amounts outstanding under the senior secured credit facility.

• All additional proceeds not used to satisfy Affirmative Insurance Company’s reserve requirement as of September 30, 2012 as described in Note 11 are to be used solely for paying the incremental term loan lenders’ professional fees.

• $57,000 of principal payment is due as of March 31, 2013 and $38,000 is due each quarter end for the remainder of 2013. The remaining balance is due at maturity.

• A commitment fee of $500,000 is due for any asset sales of the Company’s non-regulated operations in excess of $10.0 million if such sale is consummated by December 31, 2012. If no such sale occurs by December 31, 2012, the commitment fee will be added to the principal amount of the incremental term loan.

• The incremental term loan lenders will receive an 8% prepayment premium of the principal amount if the incremental term loan is prepaid.

• The incremental term loan lenders have the right to retain a financial advisor to assess the financial, operational and regulatory condition of the Company.

• The Company will pay for the incremental lenders’ financial advisor and legal expenses.

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Income Taxes

9. Income Taxes

The provision for income taxes for the three and nine months ended September 30, 2012 and 2011 consisted of the following (in thousands):

	Three Months  Ended September 30,					Nine Months  Ended September 30,
	2012		2011			2012		2011
Current tax expense (benefit)	$	127	$	(88	)	$	127	$	137
Deferred tax expense		84		319			252		956
Net income tax expense	$	211	$	231		$	379	$	1,093

The Company’s effective tax rate differed from the statutory rate of 35% for the three and nine months ended September 30 as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Loss before income taxes	$	(29,247	)	$	(7,407	)	$	(43,254	)	$	(16,336	)
Tax provision computed at the federal statutory income tax rate		(10,237	)		(2,593	)		(15,139	)		(5,718	)
Increases (reductions) in tax resulting from:
Tax-exempt interest		(10	)		(32	)		(61	)		(106	)
State income taxes		40			(427	)		335			(457	)
IRS audit settlement		—			—			(118	)		—
Goodwill impairment (non-deductible)		5,623			—			5,623			—
Valuation allowance		4,809			3,415			9,770			7,433
Other		(14	)		(132	)		(31	)		(59	)
Income tax expense	$	211		$	231		$	379		$	1,093
Effective tax rate		(0.7	)%		(3.1	)%		(0.9	)%		(6.7	)%

Our gross deferred tax assets prior to recognition of valuation allowance were $101.4 million and $92.7 million at September 30, 2012 and December 31, 2011, respectively. In assessing the realizability of our deferred tax assets, we considered whether it was more likely than not that our deferred tax assets will be realized based upon all available evidence, including scheduled reversal of deferred tax liabilities, historical operating results, projected future operating results, tax carry-back availability, and limitations pursuant to Section 382 of the Internal Revenue Code, among others. Based on this assessment, we have recorded a valuation allowance of $98.8 million and $88.9 million at September 30, 2012 and December 31, 2011, respectively.

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Fair Value of Financial Instruments (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Level 1 [Member]
Assets:
Cash and cash equivalents	$ 24,413	$ 28,559
Fiduciary and restricted cash	568	2,478
Total assets	24,981	31,037
Liabilities:
Notes payable
Senior secured credit facility
Total liabilities
Level 2 [Member]
Assets:
Cash and cash equivalents
Fiduciary and restricted cash
Total assets
Liabilities:
Notes payable
Senior secured credit facility
Total liabilities
Level 3 [Member]
Assets:
Cash and cash equivalents
Fiduciary and restricted cash
Total assets
Liabilities:
Notes payable	12,728	17,433
Senior secured credit facility	76,531	79,554
Total liabilities	89,259	96,987
Carrying Value [Member]
Assets:
Cash and cash equivalents	24,413	28,559
Fiduciary and restricted cash	568	2,478
Total assets	24,981	31,037
Liabilities:
Notes payable	76,845	76,857
Senior secured credit facility	92,276	91,683
Total liabilities	169,121	168,540
Estimated Fair Value [Member]
Assets:
Cash and cash equivalents	24,413	28,559
Fiduciary and restricted cash	568	2,478
Total assets	73,451	125,820
Liabilities:
Notes payable	12,728	17,433
Senior secured credit facility	76,531	79,554
Total liabilities	89,259	96,987
Estimated Fair Value [Member] | Level 1 [Member]
Assets:
Total assets	11,642	11,975
Estimated Fair Value [Member] | Level 2 [Member]
Assets:
Total assets	58,500	110,947
Estimated Fair Value [Member] | Level 3 [Member]
Assets:
Total assets	$ 3,309	$ 2,898

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Fair Value of Financial Instruments (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Fair value measurements for assets
Beginning Balance	$ 3,098	$ 2,840	$ 2,898	$ 2,564
Transfers into Level 3
Total losses included in earnings as net investment income	211	(31)	411	245
Settlements
Ending Balance	$ 3,309	$ 2,809	$ 3,309	$ 2,809

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Summary of Significant Accounting Policies (Details 1) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated statements of operations
Selling, general and administrative expenses	$ 24,097	$ 27,099	$ 74,529	$ 88,403
Net loss	(29,458)	(7,638)	(43,633)	(17,429)
Net loss per share:
Basic loss per common share from continuing operations:	$ (1.91)	$ (0.50)	$ (2.83)	$ (1.13)
Diluted loss per common share from continuing operations:	$ (1.91)	$ (0.50)	$ (2.83)	$ (1.13)
Previously Reported [Member]
Consolidated statements of operations
Selling, general and administrative expenses		27,919		89,894
Net loss		(8,458)		(18,920)
Net loss per share:
Basic loss per common share from continuing operations:		$ (0.55)		$ (1.23)
Diluted loss per common share from continuing operations:		$ (0.55)		$ (1.23)
As Adjusted [Member]
Consolidated statements of operations
Selling, general and administrative expenses		27,099		88,403
Net loss		$ (7,638)		$ (17,429)
Net loss per share:
Basic loss per common share from continuing operations:		$ (0.50)		$ (1.13)
Diluted loss per common share from continuing operations:		$ (0.50)		$ (1.13)

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Debt (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Notes payable	$ 76,845,000	$ 76,857,000
Interest rate	10.50%
Interest rate adjusted	6.25%
Outstanding balance of notes	76,845,000	76,857,000
Debt instrument funded amount contributed by company	4,600,000
Debt (Textual) [Abstract]
Principal balance of the senior secured credit facility	97,300,000
Period of interest payments on selected notes payable	5 years
Total deferred interest payable at the expiration of extension period	1,700,000
Leverage ratio under condition one	3.00%
Facility Expiration Date	2014-01
Senior secured credit facility [Member]
Debt Instrument [Line Items]
Incremental term loan period	2012-11
Debt instrument face amount	8,000,000
Debt instrument funded amount	5,500,000
Debt instrument maturity period	Jan. 17, 2014
Principal Periodic Payment of first quater	60,000
Principal Periodic Payment of remainder of year value	40,000
Principal Periodic Payment of remainder of year	2013
Principal Periodic Payment date	Mar. 31, 2013
Commitment fee of any asset sales	550,000
Non-regulated operations in excess	10,000,000
Debt instrument prepayment premium percentage	8.00%
3.60% Notes payable due 2035 [Member]
Debt Instrument [Line Items]
Notes payable	30,928,000	30,928,000
Interest rate	3.99%
Interest rate adjusted	3.60%
Securities adjusted	Three-month LIBOR
Outstanding balance of notes	30,928,000	30,928,000
3.55% Notes payable due 2035 [Member]
Debt Instrument [Line Items]
Notes payable	25,774,000	25,774,000
Interest rate	3.94%
Interest rate adjusted	3.55%
Securities adjusted	Three-month LIBOR
Outstanding balance of notes	25,774,000	25,774,000
3.95% Notes payable due 2035 [Member]
Debt Instrument [Line Items]
Notes payable	20,143,000	20,155,000
Interest rate	4.34%
Interest rate adjusted	3.95%
Securities adjusted	Three-month LIBOR
Outstanding balance of notes	20,143,000	20,155,000
Notes Payable With Deferred Interest Right [Member]
Debt Instrument [Line Items]
Notes payable	56,700,000
Outstanding balance of notes	$ 56,700,000

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Subsequent Event

9 Months Ended

Sep. 30, 2012

Subsequent Event [Abstract]

Subsequent Event

14. Subsequent Event

Related to the capital lease obligation described in Note 8, on October 17, 2012, the Company received notice from one of the lessors (Lessor) that, based upon Lessor’s claim of an alleged default under the terms of the lease and security agreements, it elected to immediately seek recovery of an amount equal to the casualty loss value of the leased property, together with all other sums allegedly due to Lessor, which Lessor calculated as $9.6 million. Lessor informed the Company that it had directed the escrow agent to redeem the CDs securing the Company’s lease payment obligation and disburse to it the approximately $8.3 million in proceeds, which Lessor received on October 15, 2012. Lessor seeks payment from the Company of the remaining $1.4 million, alleged liquidated damages, to be paid no later than November 15, 2012. Lessor has stated that it will convey all rights and interest in the leased property back to the Company upon receipt of this payment.

Lessor alleges that the deficiency in the reserve requirement under the Illinois Insurance Code applicable to AIC, as described in Note 10, and the recent downgrades in Company’s rating by Moody’s Investor Services give rise to certain events of default under the lease and security agreements. The Company contests that any event of default has occurred and also disputes Lessor’s demand for payment of the casualty loss value of the leased property. The Company is reviewing all available options, including legal recourse, to appropriately challenge Lessor’s declaration of alleged default and attempt to seek liquidated damages, although there can be no assurance that any such actions, if taken, will be successful.

A second lessor holds the remaining capital lease obligations of the Company pursuant to a separate lease schedule. As of the date of this report, that lessor has not taken any action whatsoever to either assert an alleged default or to increase or accelerate the Company’s payment obligations under the lease and security agreements between the Company and that lessor, although there can be no assurance that it will not seek to do so.

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Premium Finance Receivables, Net (Tables)

9 Months Ended

Sep. 30, 2012

Premium Finance Receivables, Net [Abstract]

Summary of premium finance receivables

	September 30, 2012			December 31, 2011
Premium finance contracts	$	44,324		$	40,472
Unearned finance charges		(2,304	)		(1,911	)
Allowance for credit losses		(530	)		(479	)
Total	$	41,490		$	38,082

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Goodwill and Other Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Goodwill and Other Intangible Assets (Textual) [Abstract]
Company's negative equity position prior to goodwill impairment	$ 101.3
Appropraiate risk adjusted discount rate used	19.00%
Impairment of goodwill	23.4
Impairment of indefinite-lived intangible assets	$ 0.2

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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Effect of reinsurance on premiums written and earned
Written Premium, Direct	$ 50,667	$ 46,296	$ 143,313	$ 154,363
Written Premium, Reinsurance assumed	9,095	8,224	29,115	27,536
Written Premium, Reinsurance ceded	(21,252)	(15,918)	(45,889)	(52,084)
Written Premium, Total	38,510	38,602	126,539	129,815
Earned Premium, Direct	44,665	50,672	135,688	173,983
Earned Premium, Reinsurance assumed	9,997	9,127	26,925	33,185
Earned Premium, Reinsurance ceded	(19,401)	(17,757)	(58,236)	(67,904)
Earned Premium, Total	35,261	42,042	104,377	139,264
Loss and Loss Adjustment Expenses, Direct	28,837	88,983	93,234	184,557
Loss and Loss Adjustment Expenses, Reinsurance assumed	7,538	9,299	21,559	18,569
Loss and Loss Adjustment Expenses, Reinsurance ceded	(10,978)	(66,720)	(37,007)	(101,750)
Loss and Loss Adjustment Expenses, Total	$ 25,397	$ 31,562	$ 77,786	$ 101,376

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net loss	$ (29,458)	$ (7,638)	$ (43,633)	$ (17,429)
Other comprehensive loss:
Unrealized gains (losses) on available-for-sale investment securities arising during period	(15)	(472)	172	(360)
Reclassification adjustment for realized (gains) losses included in net income (loss)	(190)	45	(800)	(71)
Other comprehensive loss, net	(205)	(427)	(628)	(431)
Total comprehensive loss	$ (29,663)	$ (8,065)	$ (44,261)	$ (17,860)

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Reinsurance

9 Months Ended

Sep. 30, 2012

Reinsurance [Abstract]

Reinsurance

3. Reinsurance

In the ordinary course of business, the Company places reinsurance with other insurance companies in order to provide greater diversification of its business and limit the potential for losses arising from large risks. In addition, the Company assumes reinsurance from other insurance companies.

A quota-share reinsurance agreement was put in place effective January 1, 2011 ceding 28% of gross written premium in all states other than Michigan through December 31, 2011. This contract terminated on January 1, 2012 on a cut-off basis and resulted in the return of $11.8 million of ceded unearned premium, net of $4.3 million of deferred ceding commissions. Written premiums ceded under this agreement totaled $50.6 million.

In 2011, the Company entered into an additional quota-share agreement with a third-party reinsurance company under which the Company ceded 10% of business produced in Louisiana, Alabama, Texas and Illinois from September 1, 2011 through December 31, 2011. At December 31, 2011, this contract converted to a 40% quota-share reinsurance contract on the in-force business for the applicable states throughout 2012. Written premiums ceded under this agreement totaled $21.1 million and $61.2 million during the three and nine months ended September 30, 2012, respectively. Written premiums ceded under this agreement totaled $84.1 million since inception through September 30, 2012.

In June 2012, the Company entered into a reinsurance agreement with third-party reinsurers which provides $5.0 million in excess of the first $3.0 million of losses coverage for catastrophic events that may involve multiple insured losses.

The effect of reinsurance on premiums written and earned was as follows (in thousands):

	Three Months Ended September 30,
	2012									2011
	Written Premium			Earned Premium			Loss and Loss Adjustment Expenses			Written Premium			Earned Premium			Loss and Loss Adjustment Expenses
Direct	$	50,667		$	44,665		$	28,837		$	46,296		$	50,672		$	88,983
Reinsurance assumed		9,095			9,997			7,538			8,224			9,127			9,299
Reinsurance ceded		(21,252	)		(19,401	)		(10,978	)		(15,918	)		(17,757	)		(66,720	)
Total	$	38,510		$	35,261		$	25,397		$	38,602		$	42,042		$	31,562
	Nine Months Ended September 30,
	2012									2011
	Written Premium			Earned Premium			Loss and Loss Adjustment Expenses			Written Premium			Earned Premium			Loss and Loss Adjustment Expenses
Direct	$	143,313		$	135,688		$	93,234		$	154,363		$	173,983		$	184,557
Reinsurance assumed		29,115			26,925			21,559			27,536			33,185			18,569
Reinsurance ceded		(45,889	)		(58,236	)		(37,007	)		(52,084	)		(67,904	)		(101,750	)
Total	$	126,539		$	104,377		$	77,786		$	129,815		$	139,264		$	101,376

Under certain of the Company’s reinsurance transactions, the Company has received ceding commissions. The ceding commission rate varies based on loss experience. The estimates of loss experience are continually reviewed and adjusted, and the resulting adjustments to ceding commissions are reflected in current operations. Ceding commissions recognized, reflected as a reduction of selling, general and administrative expenses, were as follows (in thousands):

	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2012			2011			2012			2011
Selling, general and administrative expenses	$	(7,059	)	$	(5,119	)	$	(19,430	)	$	(18,604	)

The amount of loss reserves and unearned premium the Company would remain liable for in the event its reinsurers are unable to meet their obligations were as follows (in thousands):

	September 30, 2012		December 31, 2011
Losses and loss adjustment expense reserves	$	72,482	$	78,510
Unearned premium reserve		24,326		36,674
Total	$	96,808	$	115,184

The table below presents the total amount of receivables due from reinsurers as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012		December 31, 2011
Quota-share reinsurer for agreement effective September 1, 2011	$	49,206	$	22,102
Michigan Catastrophic Claims Association		42,066		44,049
Vesta Insurance Group		9,839		10,068
Quota-share reinsurer for agreements effective in fourth quarter of 2010 and January 2011		9,264		46,103
Excess of loss reinsurers		4,983		5,458
Other		3,129		3,667
Total reinsurance receivable	$	118,487	$	131,447

The quota-share reinsurers and the excess of loss reinsurers all have A ratings from A.M. Best. Accordingly, the Company believes there is minimal credit risk related to these reinsurance receivables. Under the reinsurance agreement with Vesta Insurance Group (VIG), including primarily Vesta Fire Insurance Corporation (VFIC), the Company’s wholly-owned subsidiaries, Affirmative Insurance Company (AIC) and Insura Property and Casualty Insurance Company (Insura), had the right, under certain circumstances, to require VFIC to provide a letter of credit or establish a trust account to collateralize gross amounts due from VFIC under the reinsurance agreement. Accordingly, AIC, Insura and VFIC entered into a Security Fund Agreement effective September 2004. In August 2005, AIC received a letter from VFIC’s President that irrevocably confirmed VFIC’s duty and obligation under the Security Fund Agreement to provide security sufficient to satisfy VFIC’s gross obligations under the reinsurance agreement (the VFIC Trust). At September 30, 2012, the VFIC Trust held $16.8 million (after cumulative withdrawals of $8.7 million through September 30, 2012), consisting of $14.7 million of a U.S. Treasury money market account and $2.1 million of corporate bonds rated BBB+ or higher, to collateralize the $9.8 million net recoverable (net of $2.9 million payable) from VFIC.

The Company assumes reinsurance from a Texas county mutual insurance company (the county mutual) whereby the Company has assumed 100% of the policies issued by the county mutual for business produced by the Company’s owned general agents. The county mutual does not retain any of this business and there are no loss limits other than the underlying policy limits. AIC has established a trust to secure the Company’s obligation under this reinsurance contract with a balance of $30.0 million and $34.4 million as of September 30, 2012 and December 31, 2011, respectively.

At September 30, 2012, $2.5 million was included in reserves for losses and loss adjustment expenses that represented the amounts owed by AIC and Insura under a reinsurance agreement with a VIG affiliated company. Affirmative established a trust account to collateralize this payable, which currently holds $20.7 million in a money market cash equivalent account (the AIC Trust). The Special Deputy Receiver in Texas had cumulative withdrawals from the AIC Trust of $0.4 million through September 2012, and the Special Deputy Receiver in Hawaii had cumulative withdrawals from the AIC Trust of $1.7 million through September 2012.

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Legal and Regulatory Proceedings (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Legal and Regulatory Proceedings (Textual) [Abstract]
Estimated range of potential loss	$ 0
Qualifying investments required	250,000,000
Adjusted loss reserves percentage	100.00%
Qualifying investment reserve deficiency		$ 18,900,000

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Deferred Policy Acquisition Costs (Tables)

9 Months Ended

Sep. 30, 2012

Deferred Policy Acquisition Costs [Abstract]

Summary of deferred policy acquisition costs

	Gross			Ceded			Net
Balance at July 1, 2012	$	4,961		$	(6,398	)	$	(1,437	)
Additions		5,051			(6,014	)		(963	)
Amortization		(4,286	)		5,484			1,198
Ending balance at September 30, 2012	$	5,726		$	(6,928	)	$	(1,202	)
Balance at July 1, 2011, as adjusted	$	5,104		$	(5,330	)	$	(226	)
Additions		3,793			(4,191	)		(398	)
Amortization		(4,323	)		4,663			340
Ending balance at September 30, 2011, as adjusted	$	4,574		$	(4,858	)	$	(284	)

	Gross			Ceded			Net
Balance at January 1, 2012	$	3,668		$	(10,132	)	$	(6,464	)
Additions		13,741			(13,176	)		565
Amortization		(11,683	)		16,380			4,697
Ending balance at September 30, 2012	$	5,726		$	(6,928	)	$	(1,202	)
Balance at January 1, 2011, as adjusted	$	9,432		$	(8,972	)	$	460
Additions		13,048			(13,169	)		(121	)
Amortization		(17,906	)		17,283			(623	)
Ending balance at September 30, 2011, as adjusted	$	4,574		$	(4,858	)	$	(284	)

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Available-for-Sale Investment Securities (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Gross realized gains and losses on available-for-sale investments
Gross gains	$ 921	$ 237
Gross losses	(121)	(166)
Total	$ 800	$ 71

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

13. Fair Value of Financial Instruments

The Company utilizes a hierarchy of valuation techniques for the disclosure of fair value estimates based on whether the significant inputs into the valuation are observable. In determining the level of hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. The Company measures certain assets and liabilities at fair value on a recurring basis, including investment securities classified as available-for-sale, cash equivalents and other invested assets. Following is a brief description of the type of valuation information that qualifies as a financial asset or liability for each level:

Level 1 — Unadjusted quoted market prices for identical assets or liabilities in active markets which are accessible by the Company.

Level 2 — Observable prices in active markets for similar assets or liabilities. Prices for identical or similar assets or liabilities in markets that are not active. Directly observable market inputs for substantially the full term of the asset or liability, e.g., interest rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, default rates, and credit spreads. Market inputs that are not directly observable, but are derived from or corroborated by observable market data.

Level 3 — Unobservable inputs based on the Company’s own judgment as to assumptions a market participant would use, including inputs derived from extrapolation and interpolation that are not corroborated by observable market data.

The Company evaluates the various types of financial assets and liabilities to determine the appropriate fair value hierarchy based upon trading activity and the observability of market inputs. The Company employs control processes to validate the reasonableness of the fair value estimates of its assets and liabilities, including those estimates based on prices and quotes obtained from independent third-party sources. The Company’s procedures generally include, but are not limited to, initial and ongoing evaluation of methodologies used by independent third-parties and monthly analytical reviews of the prices against current pricing trends and statistics.

Where possible, the Company utilizes quoted market prices to measure fair value. For assets and liabilities that have quoted market prices in active markets, the Company uses the quoted market prices as fair value and includes these prices in the amounts disclosed in Level 1 of the hierarchy. When quoted market prices in active markets are unavailable, the Company determines fair values based on independent external valuation information obtained from independent pricing services, which utilize various models and valuation techniques based on a range of inputs including pricing models, quoted market prices of publicly traded securities with similar duration and yield, time value, yield curve, prepayment speeds, default rates and discounted cash flows. In most cases, these estimates are determined based on independent third-party valuation information, and the amounts are disclosed as Level 2 or Level 3 of the fair value hierarchy depending on the level of observable market inputs. Additional pricing services are used as a comparison to ensure that realistic fair values are used in pricing the investment portfolio.

Financial assets measured at fair value on a recurring basis

The following table provides information as of September 30, 2012 about the Company’s financial assets measured at fair value on a recurring basis (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Treasury and government agencies	$	11,642	$	11,642	$	—	$	—
Mortgage-backed securities		3,657		—		3,657		—
States and political subdivisions		4,198		—		4,198		—
Corporate debt securities		30,058		—		30,058		—
FDIC-insured certificates of deposit		20,587		—		20,587		—
Total investment securities		70,142		11,642		58,500		—
Other invested assets		3,309		—		—		3,309
Total assets	$	73,451	$	11,642	$	58,500	$	3,309

The following table provides information as of December 31, 2011 about the Company’s financial assets measured at fair value on a recurring basis (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Treasury and government agencies	$	11,975	$	11,975	$	—	$	—
Mortgage-backed securities		10,951		—		10,951		—
States and political subdivisions		17,178		—		17,178		—
Corporate debt securities		61,637		—		61,637		—
FDIC-insured certificates of deposit		21,181		—		21,181		—
Total investment securities		122,922		11,975		110,947		—
Other invested assets		2,898		—		—		2,898
Total assets	$	125,820	$	11,975	$	110,947	$	2,898

Level 1 Financial assets

Financial assets classified as Level 1 in the fair value hierarchy include U.S. Treasury and government agencies securities and cash and cash equivalents. These securities are actively traded and the Company estimates the fair value of these securities using unadjusted quoted market prices.

Level 2 Financial assets

Financial assets classified as Level 2 in the fair value hierarchy include mortgage-backed securities, tax-exempt securities, corporate bonds and FDIC-insured certificates of deposit. The fair value of these securities is determined based on observable market inputs provided by independent third-party pricing services. To date, the Company has not experienced a circumstance where it has determined that an adjustment is required to a quote or price received from independent third-party pricing sources. To the extent the Company determines that a price or quote is inconsistent with actual trading activity observed in that investment or similar investments, the Company would determine a fair value using this observable market information and disclose the occurrence of this circumstance. All of the fair values of securities disclosed in Level 2 are estimated based on independent third-party pricing services.

Level 3 Financial assets

At September 30, 2012, the Company’s Level 3 financial assets include an investment in a hedge fund, which is presented as other invested assets in the consolidated balance sheets. The Company elected the fair value option for its investment in the hedge fund and measures the fair value of the hedge fund on the basis of the net asset value of the fund as reported by the fund manager. The hedge fund is primarily invested in residential mortgage-backed securities and other asset-backed securities which are recorded at fair value as determined by the fund manager. Such fair value determination is based on quoted marked prices, bid prices, or the fund manager’s proprietary valuation models where quoted prices are unavailable or deemed to be inadequately representative of fair value. Significant decreases in the fair value of the underlying securities in the hedge fund would result in a significantly lower fair value measurement of other invested assets as reported in the consolidated balance sheets.

Fair value measurements for assets in Level 3 for the three months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at July 1, 2012	$	3,098
Transfers into Level 3		—
Total gains included in earnings as net investment income		211
Settlements		—
Balance at September 30, 2012	$	3,309

Fair value measurements for assets in Level 3 for the three months ended September 30, 2011 were as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at July 1, 2011	$	2,840
Transfers into Level 3		—
Total losses included in earnings as net investment income		(31	)
Settlements		—
Balance at September 30, 2011	$	2,809

Fair value measurements for assets in Level 3 for the nine months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at January 1, 2012	$	2,898
Transfers into Level 3		—
Total gains included in earnings as net investment income		411
Settlements		—
Balance at September 30, 2012	$	3,309

Fair value measurements for assets in Level 3 for the nine months ended September 30, 2011 were as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Other Invested Assets
Balance at January 1, 2011	$	2,564
Transfers into Level 3		—
Total gains included in earnings as net investment income		245
Settlements		—
Balance at September 30, 2011	$	2,809

The Company did not have any transfers between Levels 1 and 2 during the period ended September 30, 2012.

Financial Instruments Disclosed, But Not Carried, At Fair Value

Fair values represent the Company’s best estimates and may not be substantiated by comparisons to independent markets and, in many cases, could not be realized in immediate settlement of the instruments.

The following table presents the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at September 30, 2012 and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis (in thousands):

	Carrying Value		Estimated Fair  Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	24,413	$	24,413	$	24,413	$	—	$	—
Fiduciary and restricted cash		568		568		568		—		—
Total	$	24,981	$	24,981	$	24,981	$	—	$	—
Liabilities:
Notes payable	$	76,845	$	12,728	$	—	$	—	$	12,728
Senior secured credit facility		92,276		76,531		—		—		76,531
Total	$	169,121	$	89,259	$	—	$	—	$	89,259

The following table presents the carrying value and estimated fair value of the Company’s financial assets and liabilities disclosed, but not carried, at fair value at December 31, 2011 and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis (in thousands):

	Carrying Value		Estimated Fair  Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	28,559	$	28,559	$	28,559	$	—	$	—
Fiduciary and restricted cash		2,478		2,478		2,478		—		—
Total	$	31,037	$	31,037	$	31,037	$	—	$	—
Liabilities:
Notes payable	$	76,857	$	17,433	$	—	$	—	$	17,433
Senior secured credit facility		91,683		79,554		—		—		79,554
Total	$	168,540	$	96,987	$	—	$	—	$	96,987