Item 1.01.  Entry Into a Material Definitive Agreement 

As described in more detail below, on July 31, 2005, Bristol West Holdings, Inc. (which we refer to as “Bristol West”) completed a refinancing of its existing senior credit facility (which we refer to as the “Terminated Credit Facility”) that consisted of: (1) a $35 million Term A Loan and (2) a $40 million Term B Loan, and (3) a $50 million Secured Revolving Credit Facility, which included up to $15 million of letters of credit.  

Senior Credit Facility

On July 31, 2005, Bristol West entered into a Credit Agreement (which we refer to as the “Senior Credit Facility”) with the following credit facility parties:

The Senior Credit Facility consists of: (1) a $100 million term loan and (2) a $25 million revolving credit facility, which includes up to $15 million of letters of credit.  The Senior Credit Facility is pre-payable at any time and is scheduled to expire on July 31, 2011.  Borrowings under the Senior Credit Facility bear interest based either upon (1) the London Interbank Offered Rate (“LIBOR”) plus an applicable margin (which we refer to as “LIBOR Loans”) or (2) the greater of (a) the applicable prime rate and (b) the Federal funds rate for Federal Reserve System overnight borrowing transactions plus 0.5%, plus an applicable margin (which we refer to as “ABR Loans”).  The applicable margin for determining the interest rate applicable to LIBOR Loans ranges from 0.750% to 1.750% based on the then existing ratio of our consolidated total debt to our consolidated total capitalization. The applicable margin for determining the interest rate applicable to ABR Loans ranges from 0.000% to 0.50% based on the then existing ratio of our consolidated total debt to our consolidated total capitalization.  The applicable percentage for determining the facility commitment fee ranges from 0.150% to 0.375% based on the then existing ratio of our consolidated total debt to our consolidated total capitalization.  At July 31, 2006, the applicable margin for determining the interest rate applicable to LIBOR Loans and the applicable margin for determining the interest rate applicable to ABR Loans were 1.0% and 0.0%, respectively. The facility commitment fee at July 31, 2006 was 0.20%.

The Senior Credit Facility is secured by guaranties by and a pledge of stock of certain Bristol West subsidiaries.

Bristol West used a portion of the proceeds of the term loan portion of the Senior Credit Facility to repay the outstanding principal balance under the Terminated Credit Facility of $67,975,000.  In addition, Bristol West plans to contribute $25 million to its insurance subsidiaries.  The remainder, approximately $7 million, will be available for general corporate purposes. At July 31, 2006, the interest rate on the term loan was 6.39%.

Bristol West made customary representations and covenants in the agreement documenting the Senior Credit Facility, including negative covenants regarding the maintenance of financial ratios, limitations on certain indebtedness and payments of indebtedness, limitations on certain liens, limitations on certain fundamental changes, including mergers, liquidations and dispositions, limitation on certain asset sales, limitations on certain investments, limitations on certain dividends, limitations on capital expenditures, and other matters.

Cautionary Statements

The representations, warranties and covenants made by the parties in the agreement documenting the Senior Credit Facility are qualified by information in disclosure schedules that the parties exchanged in connection with the execution of the agreement. Representations and warranties may be used as a tool to allocate risks between the parties, including where the parties do not have complete knowledge of all facts. Accordingly, investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Bristol West or any of Bristol West’s subsidiaries or affiliates.

2