FIRST AMENDMENT TO CREDIT AGREEMENT AND GUARANTEE AND COLLATERAL AGREEMENT

EXHIBIT 10.33

Execution Copy

FIRST AMENDMENT TO
CREDIT AGREEMENT AND GUARANTEE AND COLLATERAL AGREEMENT

     This FIRST AMENDMENT TO CREDIT AGREEMENT AND GUARANTEE AND COLLATERAL AGREEMENT (this “ Amendment ”) is dated as of March 8, 2007, and entered into by and among AFFIRMATIVE INSURANCE HOLDINGS, INC., a Delaware corporation (“ Borrower ”), the lenders party thereto that are party hereto (the “ Required Lenders ”), CREDIT SUISSE, CAYMAN ISLANDS BRANCH (“ CS ”), as Administrative Agent (in such capacity, “ Administrative Agent ”), as Collateral Agent (in such capacity, the “ Collateral Agent ”), as Outgoing Issuing Bank (as hereinafter defined) and as Outgoing Swingline Lender (as hereinafter defined and together with the Administrative Agent, Collateral Agent and Outgoing Issuing Bank, the “ Agents ”) and THE FROST NATIONAL BANK (“ Frost ”), as Incoming Issuing Bank (as hereinafter defined) and Incoming Swingline Lender (as hereinafter defined) (Incoming Swingline Lender, together with Incoming Issuing Bank, the “Incoming Bank ”). Capitalized terms used but not defined herein having the meaning given them in Section 1 of the Credit Agreement, hereinafter defined.

Recitals

      Whereas , (i) Borrower, the Required Lenders, the Agents and the other parties thereto have entered into that certain Credit Agreement dated as of January 31, 2007 (as amended, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) and (ii) Borrower, certain Subsidiaries of Borrower, the Agents and the other parties thereto have entered into that certain Guarantee and Collateral Agreement dated as of January 31, 2007 (as amended, amended and restated, extended, supplemented or otherwise modified from time to time, the “ Guarantee and Collateral Agreement ” and together with the Credit Agreement, the “ Agreements ”);

      Whereas , the Borrower desires to replace CS with Frost both as Issuing Bank (CS in such capacity, the “ Outgoing Issuing Bank ” and Frost in such capacity, the “Incoming Issuing Bank ”) and as Swingline Lender (CS in such capacity, the “Outgoing Swingline Lender ” and Frost in such capacity, the “ Incoming Swingline Lender ”);

      Whereas , the Borrower has requested certain amendments to the Agreements;

      Whereas , the Outgoing Issuing Bank and the Outgoing Swingline Lender are willing to resign as Issuing Bank and Swingline Lender, respectively, and the Incoming Issuing Bank and the Incoming Swingline Lender are willing to accept the appointment as Issuing Bank and Swingline Lender, respectively; and

      Whereas , the Required Lenders and the Agents are willing to agree to the amendments requested by the Borrower, on the terms and conditions set forth in this Amendment;

      Now Therefore, in consideration of the premises and the mutual agreements set forth herein, the Borrower, Required Lenders and the Agents agree as follows:

     1.  AMENDMENTS TO CREDIT AGREEMENT. Subject to the conditions and upon the terms set forth in this Amendment and in reliance on the representations and warranties of the Borrower set forth in this Amendment, the Credit Agreement is hereby amended as follows:

          1.1. Amendments to Section 1.01. Section 1.01 of the Credit Agreement shall be amended as follows:

          (a) The following definitions shall be added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order:

          ““ First Amendment ” shall mean the First Amendment to Credit Agreement and Guarantee and Collateral Agreement, dated March 8, 2007, by and among the Borrower, the Required Lenders, the Agents and The Frost National Bank.”

          ““ First Amendment Effective Date ” shall have the meaning set forth in Section 6 of the First Amendment.”

          ““ Frost ” shall mean The Frost National Bank.”

          ““ Zero Balance Period Commencement Date ” shall have the meaning set forth in Section 2.13(a)(ii).”

          (b) The reference to “CS” in clause (a) of the first sentence of the definition of “ Issuing Bank ” in Section 1.01 of the Credit Agreement shall be amended by deleting the reference to “CS” and replacing such reference with the following: “Frost.”

          (c) The reference to “Credit Suisse” in the definition of “ Swingline Lender ” in Section 1.01 of the Credit Agreement shall be amended by deleting the reference to “Credit Suisse” and replacing such reference with the following: “Frost.”

          1.2. Amendments to Section 2.01. Section 2.01 of the Credit Agreement shall be amended by inserting the following proviso at the end of the penultimate sentence of such Section, as follows:

          “, provided that no Revolving Credit Borrowings shall be requested or made during each sixty (60) day period commencing on each Zero Balance Period Commencement Date.”

          1.3. Amendments to Section 2.13(a). Section 2.13(a) of the Credit Agreement shall be amended by inserting “(i)” following “(a)” in the first sentence of such Section and inserting the following clauses (ii) and (iii) following the new clause (i):

          “, and (ii) on any single Business Day during each successive twelve (12) month period following the Closing Date and commencing with the twelve (12) month period starting on January 31, 2008 (each such date the “ Zero Balance Period Commencement Date ”), Borrower shall (A) pay all outstanding Revolving Credit Borrowings as of such date such that the outstanding principal amount of Revolving Credit Borrowings after such payment is zero and (B) concurrent with such payment, notify the Administrative Agent that such payment is being made to fulfill Borrower’s obligations under this Section 2.13(a)(ii), provided, however, that such payment and delivery of such notice must be made at least sixty (60) days prior to the end of each such twelve (12) month period.”

          1.4. Amendments to Sections 2.13(b), (c), (d), (e) and (f). Each of Sections 2.13(b), (c), (d), (e) and (f) of the Credit Agreement shall be amended by deleting the clause “prepay outstanding Term Loans in accordance with Section 2.13(g)” that appears therein and replacing it with the following: “prepay outstanding Term Loans (and, following the repayment of the Term Loans in full in cash, the Revolving Credit Loans) in accordance with Section 2.13(g).”

          1.5. Amendments to Section 2.13(g). Section 2.13(g) of the Credit Agreement shall be amended by inserting the following text after the clause “ third , to prepay Revolving Loans to the full extent thereof” in the first sentence thereof: “(with a corresponding permanent decrease in the Revolving Credit Commitments)”.

          1.6. Amendments to Section 2.24(b). Section 2.24(b) of the Credit Agreement shall be amended by deleting the “and” which follows clause (vii), deleting the “.” which follows clause (viii), inserting “; and” following clause (viii) and inserting the following clause (ix) following the existing clause (viii):

          “(ix) Borrower shall have received the consent of the Required Revolving Credit Lenders, if any (such consent not to be unreasonably withheld or delayed).”

          1.7. Other Amendments. In order to correct typographical errors, those Sections of the Credit Agreement set forth in Schedule A (Typographical Corrections — Credit Agreement) shall be amended as described therein.

     2.  AMENDMENTS TO GUARANTEE AND COLLATERAL AGREEMENT. Subject to the conditions and upon the terms set forth in this Amendment and in reliance on the representations and warranties of the Borrower set forth in this Amendment, the Guarantee and Collateral Agreement is hereby amended as follows:

          2.1. Amendments to Section 1.1. Section 1.1(b) of the Guarantee and Collateral Agreement shall be amended as follows:

          (a) The following definitions shall be inserted in the appropriate alphabetical order:

          ““ Cash Management Obligations ” shall mean all obligations and liabilities of the Grantors and/or any Subsidiaries thereof to any Agent, Lender or any Affiliate of any Agent or Lender with respect to treasury, depositary bank and/or cash management services evidenced by written agreements entered into by and among any one or more of any of the Grantors and/or any Subsidiary thereof, on the one hand, and any Agent, Lender or any Affiliate of any Agent or Lender, on the other.”

          ““ Qualified Deposit Bank ” shall mean, with respect to (a) any Specified Deposit Account Control Agreement, any deposit bank party thereto that, at the time such Specified Deposit Account Control Agreement was entered into, was a Lender, an Agent or an Affiliate of a Lender or an Agent and (b) any Cash Management Obligations, any deposit bank that, at the time such Cash Management Obligations originated, was a Lender, an Agent or an Affiliate of a Lender or an Agent.”

          ““ Specified Deposit Account Control Agreement ” shall mean any deposit account control agreement (a) entered into by (i) the Borrower or any of the Subsidiaries in accordance with Section 5.2(d) hereof and (ii) any Lender or any Affiliate thereof or any Agent or any Affiliate thereof, or any person that was a Lender or an Affiliate thereof or an Agent or Affiliate thereof when such deposit account control agreement was entered into and (b) which has been designated by such Lender or Agent and the Borrower, by notice to the Collateral Agent not later than 90 days after the execution and delivery thereof by the Borrower or such Subsidiary, as a Specified Deposit Account Control Agreement; provided that the designation of any deposit account control agreement as a Specified Deposit Account Control Agreement shall not create in favor of any Lender or Affiliate thereof or any Agent or any Affiliate thereof that is a party thereto any rights in connection with the management or release of any Pledged Collateral or of the obligations of any Guarantor under this Agreement.”

          (b) Lines 7, 8, 12, 18 and 22 of the definition of “Borrower Obligations” in Section 1.1(b) of the Guarantee and Collateral Agreement shall be amended as follows:

      Line 7 : Insert “(and, with respect to the Cash Management Obligations, any Subsidiary of any Grantor)” following “obligations and liabilities of the Grantors”.

      Line 8 : Insert “Specified Deposit Account Control Agreements, and Cash Management Obligations” following “Specified Hedge Agreements”.

      Line 12 : Insert “, any Specified Deposit Account Control Agreement, any Cash Management Obligations” following “Specified Hedge Agreement”.

      Line 18 : Insert “, any Specified Deposit Account Control Agreement or any Cash Management Obligations” following “Specified Hedge Agreement”.

      Line 22 : Insert “, any Specified Deposit Account Control Agreement or any Cash Management Obligations” following “Specified Hedge Agreements”.

          (c) The definition of “Borrower Obligations” in Section 1.1(b) of the Guarantee and Collateral Agreement shall be further amended by deleting the “and” which