PATRICK J. MITCHELL
                              EMPLOYMENT AGREEMENT

     This Agreement (this "Agreement"),  dated as of September 16, 2001, is made
by and  among  Ascent  Assurance,  Inc.,  a  Delaware  corporation,  having  its
principal offices at 110 West Seventh Street, Suite 300, Fort Worth, Texas 76102
("AAI"), Ascent Management,  Inc., a Delaware corporation,  having its principal
offices at 110 West  Seventh  Street,  Suite 300,  Fort Worth,  Texas 76102 (the
"Corporation"), and Mr. Patrick J. Mitchell (the "Executive"),  residing at 2713
Heritage Hills Drive, Fort Worth, Texas 76109.

                                    RECITALS

     1. The  Corporation  and AAI each  desire  to  retain  the  Executive  as a
director  of the  Corporation  and AAI and to employ him as the  Chairman of the
Board, President and Chief Executive Officer of AAI and the Corporation,  and to
enter into an agreement  embodying the terms of those  relationships  which upon
proper execution shall supercede all prior written employment agreements between
the parties.

     2.  The  Executive  is  willing  to  serve as the  Chairman  of the  Board,
President and Chief  Executive  Officer of AAI and the  Corporation on the terms
set forth herein.

                                    AGREEMENT

     NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and other good and valuable consideration,  the Corporation, AAI, and
the Executive hereby agree as follows:

     1. Definitions.

     1.1 "Affiliate"  means any person or entity  controlling,  controlled by or
under common control with AAI or the Corporation.

     1.2 "Annual  Compensation"  means the  Executive's  highest Base Salary and
Annual Bonus during the Term of Employment.

     1.3 "Board" means the Board of Directors of AAI.

     1.4 "Cause" means (a) Executive's  material breach of any term or condition
of this Agreement;  (b) Executive's (i) personal dishonesty,  willful misconduct
or  intentional  breach of  fiduciary  duty,  in each case  involving  AAI,  the
Corporation or any Affiliate's  property,  personnel or business operations,  in
each case materially  detrimental to the goodwill of AAI, the  Corporation's  or
any  Affiliate's  relationships  with  its  respective  customers,   clients  or
employees; or (ii) intentional failure to perform the current material duties of
his employment or his material obligations  hereunder,  or any other intentional
act by Executive which in either case is materially  detrimental to the goodwill
of AAI, the Corporation,  or any Affiliate, or materially damaging to AAI's, the
Corporation's or any Affiliate's  relationships  with its customers,  clients or
employees; (c) Executive's conviction or entry of a no-contest plea with respect
to a felony; (d) Executive's  material  misappropriation  (or attempted material
misappropriation)  of AAI's,  the  Corporation's  or any  Affiliate's,  funds or
property or of a business  opportunity of AAI, the  Corporation or any Affiliate
(including  attempting  to secure or securing any personal  profit in connection
with any  transaction  entered  into on behalf of AAI,  the  Corporation  or any
Affiliate)  materially  detrimental to the goodwill of AAI, the Corporation,  or
any  Affiliate,  or  materially  damaging  to AAI's,  the  Corporation's  or any
Affiliate's relationships with its respective customers,  clients, or employees;
or (e)  Executive's  gross  negligence in  connection  with the  performance  of
Executive's  obligations  hereunder  which  is  materially  detrimental  to  the
goodwill of AAI and the Corporation or any Affiliate,  or materially damaging to
AAI's, the  Corporation's or any Affiliate's  relationships  with its customers,
clients or employees.

     1.5 "Date of Termination"  means (a) in the case of a termination for which
a Notice of Termination  is required,  the date of actual receipt of such Notice
of Termination or, if later, the date specified  therein (in no event,  however,
shall such date be later than seven (7) days after the date of actual receipt of
such notice), as the case may be, and (b) in all other cases, the actual date on
which the Executive's employment terminates during the Term of Employment.

     1.6  "Disability"  means  mental  or  physical   impairment  or  incapacity
rendering  the Executive  substantially  unable to perform his duties under this
Agreement  for at least than 180 days out of any 360 day period  during the Term
of Employment.

     1.7 "Good Reason" means and shall be deemed to exist if,  without the prior
express  written  consent of the  Executive,  (a) the  Executive is assigned any
duties or  responsibilities  inconsistent in any material respect with the scope
of the duties or  responsibilities  associated  with the  Executive's  titles or
positions,  as set forth and described in Section 4 of this  Agreement;  (b) the
Executive  suffers  a  reduction  in  the  duties,   responsibilities,   titles,
positions,  or effective authority associated with such titles and positions, as
set forth and described in Section 4 of this Agreement; (c) the Executive is not
appointed  to, or is removed  from,  the offices or  positions  provided  for in
Section 4 of this Agreement; (d) the Executive's Base Salary is decreased by AAI
or the Corporation, or the Executive's benefits under employee benefit or health
or welfare plans or programs of AAI or the Corporation are decreased,  except as
provided  in Section  5.1 hereof as a result of a good faith  change in benefits
applicable to all employees of AAI and the  Corporation,  or the Executive fails
to timely receive his Base Salary,  2001 Annual Bonus,  2002 Annual Bonus,  LTIP
Award, expense reimbursement, or any other benefit to which he is entitled under
this  Agreement;  (e) AAI and the Corporation  fail to maintain,  or cause to be
maintained, adequate directors and officers liability insurance coverage for the
Executive or fail to comply with Section 4.3 of this Agreement;  (f) AAI and the
Corporation  purport to terminate the Executive's  employment for Cause and such
purported  termination  of  employment  is not effected in  accordance  with the
requirements of this Agreement; or (g) there occurs a Change in Control.

     1.8 "Term of Employment" has the meaning ascribed to it in Section 3.

     1.9  "Change in Control"  means:
          (a)  the acquisition, during the Term of Employment, by an individual,
               entity or group  (within  the  meaning  of  Section  13(d)(3)  or
               14(d)(2) of the Securities  Exchange Act of 1934, as amended (the
               "Exchange Act")) of beneficial  ownership  (within the meaning of
               Rule 13d-3  promulgated under the Exchange Act) of 34% or more of
               (A) the  outstanding  shares of common  stock of AAI (the "Common
               Stock"),   or  (B)  the  combined  voting  power  of  the  voting
               securities  of AAI entitled to vote  generally in the election of
               directors  (the  "Voting  Securities");  provided,  however,  the
               following  acquisitions shall not constitute a Change in Control:
               (x) any  acquisition  by any  employee  benefit  plan (or related
               trust)  sponsored  or  maintained  by the  Corporation  or AAI or
               Affiliate,   or  (y)  any  acquisition  by  any  corporation  if,
               immediately following such acquisition, more than 66% of the then
               outstanding  shares of common stock of such  corporation  and the
               combined voting power of the then outstanding  voting  securities
               of such  corporation  (entitled to vote generally in the election
               of directors) is beneficially owned,  directly or indirectly,  by
               all or  substantially  all of the  individuals  and entities who,
               immediately prior to such acquisition, were the beneficial owners
               of the Common Stock and the Voting  Securities  in  substantially
               the  same   proportions,   respectively,   as  their   ownership,
               immediately  prior to such  acquisition,  of the Common Stock and
               Voting Securities; or

          (b)  circumstances occurring,  during the Term of Employment,  whereby
               individuals  who(constitute  the Board  (the  "Incumbent  Board")
               cease for any reason to  constitute  at least a  majority  of the
               Board; provided, however, that any individual becoming a director
               subsequent  to the  date of this  Agreement  whose  election,  or
               nomination for election by AAI's shareholders,  was approved by a
               vote of at least a majority  of the  directors  then  serving and
               comprising the Incumbent Board shall be considered as though such
               individual were a member of the Incumbent  Board,  but excluding,
               for this purpose, any such individual whose initial assumption of
               office  occurs as a result  of  either  an  actual or  threatened
               election  contest  (as  such  terms  are used in Rule  14a-11  of
               Regulation  14A  promulgated  under  the  Exchange  Act) or other
               actual or threatened  solicitation of proxies or consents; or

          (c)  approval,  during the Term of Employment,  by the shareholders of
               AAI of a plan of reorganization,  merger or consolidation,  other
               than a reorganization,  merger, or consolidation  with respect to
               which all or  substantially  all of the  individuals and entities
               who were the  beneficial  owners of the  Common  Stock and Voting
               Securities  immediately prior to such  reorganization,  merger or
               consolidation  who continue to beneficially own immediately after
               such  reorganization,  merger or consolidation,  more than 66% of
               the then outstanding common stock and voting securities (entitled
               to  vote   generally  in  the  election  of   directors)  of  the
               corporation   resulting  from  such  reorganization,   merger  or
               consolidation  in  substantially  the same  proportions  as their
               respective  ownership,  immediately prior to such reorganization,
               merger  or   consolidation,   of  the  Common  Stock  and  Voting
               Securities, or

          (d)  approval,  during the Term of Employment,  by the shareholders of
               AAI of (i) a complete  liquidation or dissolution of AAI, or (ii)
               the sale or other  disposition of all or substantially all of the
               assets of AAI,  other than to a direct or  indirect  wholly-owned
               subsidiary  of AAI.  For purposes of this  Agreement  and without
               limiting the  generality of the preceding  sentence,  the sale or
               other  disposition of AAI of more than 50% of the common stock or
               the Voting Securities (entitled to vote generally in the election
               of  directors)  of AAI shall be deemed  to  constitute  a sale or
               other disposition of substantially all the assets of AAI.

     2.  Employment.  Subject  to the  terms  and  provisions  set forth in this
Agreement,  AAI hereby  agrees that the Executive  shall be the highest  ranking
officer  of AAI and the  Corporation  with the title of  Chairman  of the Board,
President and Chief Executive Officer, during the Term of Employment and each of
AAI and the  Corporation  agrees  during  the Term of  Employment  to employ the
Executive  as  President  and  Chief  Executive  Officer  of each of AAI and the
Corporation, and the Executive hereby accepts such employment .

     3. Term of Employment.  The term of employment  under this Agreement  shall
commence on September 16, 2001,  (the  "Commencement  Date") and shall  continue
until the earlier to occur of March 15, 2003(the  "Expiration Date") or the date
on which the  Executive is  terminated  or resigns  pursuant to Section 6 hereof
(the "Term of Employment").

     4. Positions, Responsibilities and Duties.

     4.1 Positions.  During the Term of  Employment,  the Executive (i) shall be
employed and serve as President and Chief  Executive  Officer of each of AAI and
the  Corporation,  as well as President  and Chief  Executive  Officer or higher
position and title of each of the subsidiaries of AAI; (ii) shall be elected and
serve  as a  director  of  the  Corporation;  and  (iii)  if  elected  by  AAI's
shareholders,  shall  be a  director  of  AAI.  Notwithstanding  the  foregoing,
Executive  shall  serve from time to time as a "loaned  employee"  or  "borrowed
employee" of National Foundation Life Insurance Company,  Freedom Life Insurance
Company of America,  American  Insurance Company of Texas and National Financial
Insurance  Company in  accordance  with the  administrative  services  agreement
executed by such insurance companies and the Corporation. In such positions with
AAI,  the  Executive  shall  have the  duties,  responsibilities  and  authority
normally  associated  with the  office  and  position  of  president  and  chief
executive officer of a publicly-traded  corporation.  The Executive shall report
solely and directly to the Board. All officers and other senior employees of the
Corporation  and AAI shall report  solely and  directly to the  Executive or the
Executive's   designees.   The   Executive   shall   perform   his   duties  and
responsibilities  hereunder  at his current  office  address of 110 West Seventh
Street, Suite 1100, Fort Worth, Texas 76102, or at such other home office of AAI
and the  Corporation  situated  in or  reasonably  near the City of Fort  Worth,
Texas. Notwithstanding the above, the Executive shall not be required to perform
any  duties  and  responsibilities   which  would  be  likely  to  result  in  a
non-compliance with or violation of any applicable law or regulation.

     4.2 Duties. During the Term of Employment, the Executive shall use his best
efforts to perform  faithfully and efficiently  the duties and  responsibilities
contemplated by this Agreement, including, without limitation, establishing both
short and  long-range  strategic  growth  plans for AAI,  the  Corporation,  and
Affiliates  in an effort to achieve  AAI's  consolidated  financial  targets and
shall devote substantially all of his business time, skill and attention to such
services, including the service as a "loaned employee" or "borrowed employee" of
National  Foundation Life Insurance  Company,  Freedom Life Insurance Company of
America,  American Insurance Company of Texas and National  Financial  Insurance
Company;  provided,  however, that the Executive shall be allowed, to the extent
such activities do not substantially  interfere with the full performance by the
Executive  of his  duties  and  responsibilities  hereunder,  to (a)  manage the
Executive's   personal,   financial  and  legal   affairs,   which  may  include
non-competing,  passive business activities and (b) serve on civil or charitable
boards  or  committees.  The  Executive  shall at all times  comply  with and be
subject to AAI's and the Corporation's  policies,  procedures,  directives,  and
regulations as may be reasonably established by the Board from time to time.

     4.3 Working Conditions.  AAI and the Corporation will provide the Executive
with a private office,  secretarial  and  stenographic  services,  and any other
facilities  and services as are currently in place or otherwise  suitable to the
Executive's position or required for the performance of his duties.

     5. Compensation, Other Benefits and Deferred Payment of Certain Wages.

     5.1 Base Salary. During the Term of Employment, the Executive shall receive
a base salary of no less than  $400,000.00 per annum ("Base Salary")  payable in
equal semi-monthly installments. Such Base Salary shall be reviewed annually for
increase in the sole discretion of the Board or the Executive Committee thereof.
Any such salary  increase  shall then be the "Base  Salary" for purposes of this
Agreement.

     5.2 Short-Term  Incentive.  For fiscal year 2001 of AAI (in addition to the
Base Salary),  the  Executive  shall be eligible to receive an annual cash bonus
("2001 Annual Bonus") in an amount, if any,  reasonably  determined by the Board
or a committee thereof. Such 2001 Annual Bonus shall be payable to the Executive
in February 2002 or at such time as such bonuses or similar  bonuses are paid to
other officers or members of the Corporation's or AAI's senior  management.  For
fiscal year 2002 of AAI (in addition to Base  Salary),  the  Executive  shall be
eligible to receive an annual cash bonus ("2002  Annual  Bonus")  based upon AAI
achieving reasonable  consolidated financial targets consistent with the October
2001  Business Plan as more  specifically  provided and set forth in the summary
attached  hereto as Exhibit "A" and by this  reference is  incorporated  for all
purposes  herein.  Such 2002 Annual  Bonus shall be payable to the  Executive in
February  2003 or at such time as such  bonuses or similar  bonuses  are paid to
other members of the Corporation's or AAI's senior management.

     5.3 Retirement Plans. During the Term of Employment, the Executive shall be
entitled to participate in all incentive,  pension, retirement,  savings, 401(k)
and other employee  pension benefit plans and programs  maintained by AAI and/or
the Corporation  from time to time for the benefit of senior  executives  and/or
other employees.5.4  Welfare Benefit Plans.  During the Term of Employment,  the
Executive,  the Executive's  spouse, if any, and their eligible  dependents,  if
any,  shall be entitled to  participate  in and be covered under all the welfare
benefit  plans or programs  maintained by the  Corporation  and AAI from time to
time  including,  without  limitation,  all  medical  hospitalization,   dental,
disability,  life,  accidental  death  and  dismemberment  and  travel  accident
insurance plans and programs. Executive shall also earn and receive a minimum of
six (6) weeks  vacation each year with an unlimited  year-end  accrual of unused
vacation.

     5.4  Long-Term   Incentive   Plan.  The  Executive  shall  be  entitled  to
participate in any long-term  incentive plan or program adopted by the boards of
AAI and the  Corporation  ("LTIP Award") based on the  achievement of reasonable
corporate objectives determined in good faith by AAI or the Corporation. An LTIP
Award  may be in the  form  of  performance  shares,  performance  units,  stock
options,  restricted  stock, or other types of awards deemed  appropriate by the
Board, the Executive Committee or such other committees of the Board.

     5.5 Expense  Reimbursement.  During the Term of  Employment,  the Executive
shall be entitled to receive prompt  reimbursement  for all reasonable  expenses
incurred  by the  Executive  in  promoting  AAI  and/or  its  Affiliates  and in
otherwise performing his duties and responsibilities hereunder.

     5.6  Payment of Deferred  Wages.  As of  September  15,  2001,  AAI and the
Corporation owed Executive wages in the amount of $619,634.  However, a deferral
of the payment of such wages would  enhance the  financial  condition of AAI and
the  Corporation,  and AAI and the Corporation has requested,  and the Executive
has  agreed to the  deferral  of the  payment  of such  wages.  Accordingly,  in
consideration  of the  mutual  promises  and  covenants  contained  herein,  the
Executive agrees that he shall accept the following  described  deferred payment
from AAI and the Corporation,  and AAI and the Corporation agree that they shall
make such deferred payment to the Executive in the principal amount of $619,634,
together with interest on any unpaid portion thereof at the rate of 10% per year
of 360 days from  September 15, 2001 until the date paid, as deferred  wages and
not as severance  (the  "Deferred  Payment"),  in accordance  with the following
schedule without the necessity of any further  resolution or vote approving such
payment by either of their  respective  board of directors  once a resolution of
each such board or authorized  committee thereof approving the execution of this
Agreement has been made:

     The amount of such  Deferred  Payment  shall be paid in lump sum by AAI and
     the  Corporation to the Executive on the earlier of (a) September 15, 2002,
     (b) the date of the  Executive's  death  whether  or not during the Term of
     Employment,  (c) the date of the termination of the Executive's  employment
     hereunder due to Disability, (d) the date of the termination of Executive's
     employment  hereunder by AAI or the  Corporation  without Cause, or (e) the
     date  of  the  termination  of  Executive's  employment  hereunder  by  the
     Executive for Good Reason.

     6. Termination.

     6.1 Termination Due to Death or Disability.  A determination of whether the
Executive is Disabled shall be made by AAI, the  Corporation or any Affiliate in
its sole, but good faith,  discretion  upon its own initiative  after  obtaining
certification from a duly licensed physician or upon request of the Executive or
a person acting on his behalf.  The Executive shall cooperate with any necessary
medical examination in connection with a determination of Disability. Upon seven
(7) days prior written  notice to the  Executive,  AAI and the  Corporation  may
terminate the Executive's  employment hereunder due to Disability.  In the event
of the Executive's  death or a termination of the Executive's  employment by AAI
and the  Corporation due to Disability,  the Executive,  his estate or his legal
representative,  as the case may be,  shall be entitled to receive  from AAI and
the Corporation without duplication the following:

          (a)  a lump sum payment of the Base Salary continuation at the rate in
               effect (as provided for by Section 5.1 of this  Agreement) at the
               time of such termination through the Date of Termination;

          (b)  a lump sum payment of any Annual Bonus and LTIP Award awarded but
               not yet paid as of the Date of Termination;

          (c)  a lump sum  payment  on the  Date of  Termination  of the  unpaid
               portion of the Deferred Payment;

          (d)  a lump sum  payment of accrued  but unused  vacation  through the
               Date of Termination;

          (e)  reimbursement of all expenses incurred, but not yet paid prior to
               such death or Disability;

          (f)  in the  case of  death,  any  other  compensation  and  benefits,
               including life  insurance,  as may be provided in accordance with
               the terms and provisions of any applicable  plans and programs of
               AAI or the Corporation, except any other severance benefit of AAI
               or the Corporation; and

          (g)  in the case of Disability,  (i)  continuation  of the Executive's
               health and welfare  benefits (as described in Section 5.5 of this
               Agreement)  at the level in effect  (as  provided  for by Section
               5.5) on the Date of  Termination  through the end of the one year
               period  following the termination of the  Executive's  employment
               due to Disability  (or the  Corporation  and/or AAI shall provide
               the economic equivalent thereof), and (ii) any other compensation
               and benefits as may be provided in accordance  with the terms and
               provisions  of any  applicable  plans and programs of AAI and the
               Corporation,  except  any other  severance  benefit of AAI or the
               Corporation other than the Deferred Payment.

     6.2  Termination  by AAI  and  the  Corporation  for  Cause.  AAI  and  the
Corporation  may terminate  the  Executive's  employment  hereunder for Cause as
provided  in  this  Section  6.2.  If AAI  and  the  Corporation  terminate  the
Executive's  employment  hereunder for Cause, the Executive shall be entitled to
receive from AAI and the Corporation  without  duplication the following:

          (a)  a lump sum payment of the Base Salary continuation at the rate in
               effect (as provided for by Section 5.1 of this  Agreement) at the
               time of such termination through the Date of Termination;

          (b)  a lump sum payment of any Annual Bonus and LTIP Award awarded but
               not yet paid as of the Date of Termination;

          (c)  a lump sum payment of the Deferred  Payment payable in accordance
               with Section 5.7 on the earlier of September  15, 2002,  the date
               of the Executive's death after such  termination,  or the date on
               which the Executive  becomes  mentally or physically  impaired or
               incapacitated  to the extent  rendering him unable to perform the
               type of duties contemplated herein for any other employer for 180
               days of any 360 day period after the date of such termination;

          (d)  a lump sum  payment of accrued  but unused  vacation  through the
               Date of Termination;

          (e)  reimbursement for all expenses  incurred,  but not yet paid prior
               to such termination of employment; and

          (f)  any  other  compensation  and  benefits  as  may be  provided  in
               accordance with the terms and provisions of any applicable  plans
               and  programs  of AAI  and  the  Corporation,  except  any  other
               severance benefit of AAI or the Corporation.

     In any case  described in this Section  6.2, the  Executive  shall be given
written notice authorized by a vote of at least a majority of the members of the
Board  that  AAI  and  the  Corporation  intend  to  terminate  the  Executive's
employment  hereunder for Cause.  Such written notice,  given in accordance with
Section 6.7 of this  Agreement,  shall  specify the  particular  act or acts, or
failure to act,  which is or are the basis for the decision to so terminate  the
Executive's  employment for Cause.  Except with respect to the grounds set forth
in Section  1.4(c),  as to which the  following  shall not apply,  the Executive
shall be given the  opportunity  within  thirty  (30)  calendar  days  after the
receipt  of such  notice to meet with the Board to defend  such act or acts,  or
failure to act, and the Executive shall be given thirty (30) business days after
such  meeting  to  correct  such act or  failure  to act.  Upon  failure  of the
Executive,  as fairly and reasonably determined by the Board, within such latter
thirty  (30) day  period,  to  correct  such act or  failure  to act,  or if the
Executive fails to meet with the Board after being provided an opportunity to do
so, the Executive's employment by AAI and the Corporation shall be automatically
terminated  under this  Section  6.2 for Cause as of the date  determined  under
Section 1.5 of this Agreement.

     6.3 Termination  without Cause or Termination  for Good Reason.  Upon seven
(7) days prior written  notice to the  Executive,  AAI and the  Corporation  may
terminate the Executive's  employment  hereunder  without Cause, and upon thirty
(30) days notice to AAI and the  Corporation,  the  Executive  may terminate his
employment  hereunder for Good Reason. If AAI and the Corporation  terminate the
Executive's  employment  hereunder  without  Cause,  other  than due to death or
Disability,  or if the Executive  terminates his employment for Good Reason, the
Executive  shall be entitled  to receive  from AAI and the  Corporation  without
duplication the following:

          (a)  a lump sum payment  equal in amount to 117% of the sum of (i) the
               Executive's  Base Salary (as  provided for by Section 5.1 of this
               Agreement), and (ii) the highest of either the 2001 Annual Bonus,
               2002 Annual Bonus, or any other annual or incentive bonus awarded
               to the  Executive  within  five  (5)  years  prior to the Date of
               Termination;

          (b)  a lump sum payment of any Base Salary  accrued or any 2001 Annual
               Bonus, 2002 Annual Bonus, and LTIP Award awarded but not yet paid
               as of the Date of Termination;

          (b)  a lump sum  payment on the Date of  Termination  of the  Deferred
               Payment;

          (c)  a lump sum  payment of accrued  but unused  vacation  through the
               Date of Termination;

          (d)  reimbursement of all expenses incurred, but not yet paid prior to
               such termination of employment; and

          (e)  any  other  compensation  and  benefits  as  may be  provided  in
               accordance with the terms and provisions of any applicable  plans
               or  programs  of  the  Corporation  and  AAI,  except  any  other
               severance benefit of AAI or the Corporation.

     In the case of  termination  by Executive for Good Reason  pursuant to this
Section  6.3, AAI and the  Corporation  shall be given  written  notice that the
Executive  intends to terminate his employment  hereunder for Good Reason.  Such
written notice,  given in accordance  with Section 6.7 of this Agreement,  shall
specify the particular act or acts, or failure to act, which is or are the basis
for the decision to so terminate  the  Executive's  employment  for Good Reason.
Upon failure of AAI and the Corporation,  as fairly and reasonably determined by
the Executive,  within the thirty (30) day notice period  referred to above,  to
correct such act or failure to act, or if AAI and the  Corporation  fail to meet
with the Executive after being provided an opportunity to do so, the Executive's
employment by AAI and the Corporation  shall be  automatically  terminated under
this Section 6.3 for Good Reason as of the date determined  under Section 1.5 of
this Agreement.

     6.4 Voluntary  Termination.  The Executive may effect,  upon seven (7) days
prior written notice to AAI and the Corporation,  a Voluntary Termination of his
employment  hereunder.  A "Voluntary  Termination"  shall mean a termination  of
employment by the Executive on his own  initiative  other than (a) a termination
due to death or Disability,  or (b) a termination  for Good Reason.  A Voluntary
Termination  shall  not be a  breach  of  this  Agreement.  If  the  Executive's
employment  hereunder  is so  terminated,  the  Executive  shall be  entitled to
receive from AAI and the Corporation the following:

          (a)  a lump sum  payment of any  accrued but unpaid Base Salary at the
               rate in effect (as provided for by Section 5.1 of this Agreement)
               at the time of such termination through the Date of Termination;

          (b)  a lump sum payment on September 15, 2002 of the Deferred Payment,
               together  with a lump sum payment on the Date of  Termination  of
               any 2001 Annual Bonus,  2002 Annual Bonus,  or LTIP Award awarded
               but not yet paid as of the Date of Termination;

          (c)  a lump sum  payment of accrued  but unused  vacation  through the
               Termination Date;

          (d)  reimbursement  for expenses  incurred,  but not yet paid prior to
               the Date of Termination; and

          (e)  any  other  compensation  and  benefits  as  may be  provided  in
               accordance  with  the  terms  and  provisions  of any  applicable
               employee  benefit  plans or  programs  maintained  by AAI and the
               Corporation,  except  any other  severance  benefit of AAI or the
               Corporation.

     6.5  Termination  of Agreement by  Expiration.  If this  Agreement  expires
pursuant to Section 3 hereof,  the Executive shall be entitled to receive on the
Expiration Date from AAI and the Corporation the following:

          (a)  a lump sum  payment of any  accrued but unpaid Base Salary at the
               rate in effect (as provided for by Section 5.1 of this Agreement)
               through the Expiration Date;

          (b)  a lump sum payment of any 2001 Annual  Bonus,  2002 Annual Bonus,
               and LTIP  Award  awarded  but not yet  paid as of the  Expiration
               Date;

          (c)  a lump sum  payment of accrued  but unused  vacation  through the
               Expiration Date;

          (d)  reimbursement of all expenses incurred, but not yet paid prior to
               such termination of employment;

          (e)  any  other  compensation  and  benefits  as  may be  provided  in
               accordance with the terms and provisions of any applicable  plans
               or  programs  of  the  Corporation  and  AAI,  except  any  other
               severance benefit of AAI or the Corporation.

     6.6 No Mitigation; No Offset. In the event of any termination of employment
under this Section 6, the  Executive  shall be under no obligation to seek other
employment  and there shall be no offset  against any amounts due the  Executive
under  this  Agreement  on  account  of  any  remuneration  attributable  to any
subsequent  employment that the Executive may obtain. Any amounts due under this
Section 6, with the  exception  of the  Deferred  Payment,  are in the nature of
severance  payments,  or liquidated damages, or both, and in no event are either
such  severance  payments,  liquidated  damages or the  Deferred  Payment in the
nature of a penalty.

     6.7 Notice of  Termination.  Any termination by AAI and the Corporation for
Cause or by the Executive for Good Reason shall be  communicated  by a notice of
termination  to the other party hereto given in accordance  with Section 13.3 of
this Agreement (the "Notice of Termination"). The Notice of Termination shall be
given, in the case of a termination for Cause,  within ninety (90) business days
after a director of the  Corporation  (excluding the  Executive)  knew or should
have known of the events giving rise to such purported  termination,  and in the
case of a termination by the Executive for Good Reason,  within ninety (90) days
of the  Executive  having  actual  knowledge  of the events  giving rise to such
termination,  except in the case of termination for Good Reason resulting from a
Change in Control  then within one hundred  eighty  (180) days of the  effective
date of such Change in Control.  Such notice  shall (a)  indicate  the  specific
termination provision in this Agreement relied upon, (b) set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the  Executive's  employment  under the provision so  indicated,  and (c) if the
termination  date is other than the date of receipt of such notice,  specify the
date on which the Executive's  employment is to be terminated  (which date shall
not be earlier than the date on which such notice is actually given).

     6.8 Certain Other Payments.  Notwithstanding  any other  provisions of this
Agreement,  in the event that any payment or benefit  received or to be received
by the Executive in connection  with a Change in Control or the  termination  of
the Executive's  employment,  whether pursuant to the terms of this Agreement or
any other plan,  arrangement or agreement with AAI and the Corporation or any of
their  Affiliates (all such payments and benefits being  hereinafter  called the
"Total  Payments")  would  subject the Executive to the excise tax imposed under
Section  4999 of the Internal  Revenue Code of 1986,  as amended (the "Code") or
any  successor  section  thereto (the "Excise  Tax"),  and if, and only if, such
Total  Payments less the Excise Tax is less than the maximum amount of the Total
Payments  which could be payable to the Executive  without the imposition of the
Excise Tax,  then and only then,  and only to the extent  necessary to eliminate
the imposition of the Excise Tax (and after taking into account any reduction in
the Total  Payments  provided by reason of Section  280G of the Code in any such
other plan,  arrangement or agreement),  (A) any cash payments  hereunder  shall
first be reduced (if necessary,  to zero),  and (B) all other non-cash  payments
hereunder shall next be reduced.  For purposes of this limitation (i) no portion
of the Total Payments the receipt or enjoyment of which the Executive shall have
effectively  waived in writing prior to the Date of  Termination  shall be taken
into account,  (ii) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by AAI's  independent  auditors and
reasonably acceptable to the Executive does not constitute a "parachute payment"
within the meaning of Section  280G(b)(2)  of the Code,  including  by reason of
Section  280G(b)(4)(A)  of the Code, (iii) all payments shall be reduced only to
the extent necessary so that the Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety  constitute  reasonable  compensation for
services  actually  rendered within the meaning of Section  280G(b)(4)(B) of the
Code or are  otherwise  not subject to  disallowance  as  deductions  under Code
Section 280G, in the opinion of the tax counsel  referred to in clause (ii); and
(iv) the value of any  non-cash  benefit  or any  deferred  payment  or  benefit
included in the Total Payments shall be determined by AAI's independent auditors
in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

     6.9 Payment.  Except as otherwise provided in this Agreement,  any payments
to which the  Executive  shall be entitled to under this  Section 6,  including,
without  limitation,  any  economic  equivalent  of any  benefit,  shall be made
immediately on the Date of Termination.  If the amount of any payment due to the
Executive cannot be finally determined within thirty (30) days after the Date of
Termination, such amount shall be estimated on a good faith basis by AAI and the
estimated amount shall be paid no later than thirty (30) days after such Date of
Termination.  As soon as practicable thereafter,  the final determination of the
amount due shall be made and any  adjustment  requiring a payment to or from the
Executive shall be made as promptly as practicable.

     7.  Non-Exclusivity  of Rights.  Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit,  bonus,
incentive  or other plan or program  provided  or  maintained  by AAI and/or the
Corporation for which the Executive may qualify, nor shall anything herein limit
or otherwise  prejudice  such rights as the  Executive  may have under any other
existing or future agreements with the Corporation, AAI, and/or any Affiliate of
either,  including,  without  limitation,  any stock option agreements or plans.
Amounts which are vested  benefits or which the Executive is otherwise  entitled
to  receive  under any plans or  programs  of the  Corporation,  AAI  and/or any
Affiliate of either at or subsequent to the Date of Termination shall be payable
in  accordance  with such  plans or  programs.  Notwithstanding  the  foregoing,
payments to the  Executive  under  Section 6 hereof,  with the  exception of the
Deferred Payment by AAI and the Corporation,  shall be in lieu of payments under
any severance plan or program.

     8. Settlement.  AAI's and the Corporation's obligation to make the payments
provided  for in  this  Agreement  and  otherwise  to  perform  its  obligations
hereunder  shall  not be  affected  by  any  circumstances,  including,  without
limitation,  any set-off (except set-off for a fixed and liquidated obligation),
counterclaim,   recoupment,   defense  or  other  right  which  AAI  and/or  the
Corporation  and/or any  Affiliates  may have  against the  Executive or others.
Notwithstanding  anything  contained herein to the contrary,  the obligations of
AAI and the Corporation hereunder for the payment of severance under Section 6.3
(a) shall be subject to Executive having executed and delivered an instrument to
AAI and the  Corporation  on the date of the receipt of such  severance  payment
irrevocably waiving and releasing AAI, the Corporation,  and each Affiliate from
any and all  obligations  or  liabilities to Executive and his heirs and assigns
(i) for the  specific  severance  payments  called for in Section 6.3 (a),  (ii)
arising  from or in  connection  with  Executive's  employment  with AAI and the
Corporation or (iii) the  termination of such  employment and any and all claims
Executive  may have  under  federal,  state or local  statutes,  regulations  or
ordinances  or under any  common law  principles  or breach of  contract  or the
covenant  of good  faith  and  fair  dealing,  defamation,  wrongful  discharge,
intentional  infliction of emotional distress or promissory estoppel;  provided,
however, such instrument of waiver and release to be executed by Executive shall
not be applicable to, reduce or otherwise  diminish or release either AAI or the
Corporation  from  their  obligation  to make  the  Deferred  Payment.  Further,
notwithstanding  anything  contained herein to the contrary,  the obligations of
AAI and the  Corporation  for the  timely and  proper  payment  of the  Deferred
Payment  shall  be  subject  to  Executive  having  executed  and  delivered  an
instrument  to AAI and  the  Corporation  on the  date  of the  receipt  of such
Deferred Payment  irrevocably  waiving and releasing AAI, the  Corporation,  and
each Affiliate from any and all  obligations or liabilities to Executive and his
heirs and assigns for such Deferred Payment.

     9. Legal Fees and Other Expenses.  In the event that a claim for payment or
benefits under this Agreement is disputed, the Executive shall be reimbursed for
all attorney fees and expenses incurred by the Executive in pursuing such claim,
provided  that the  Executive is  successful as to at least part of the disputed
claim by reason of  litigation,  arbitration  or  settlement.  In addition,  the
Executive  shall be paid or reimbursed for all legal fees and expenses  incurred
by the Executive in connection  with the review,  preparation and negotiation of
this  Agreement  and/or any other  agreements or plans  referenced  herein.  The
Executive shall also be entitled to recover pre-judgment interest at the rate of
10% per annum on the amount of any past due payment  obligations  under Sections
5.1,  5.2, 6.1 (a),  (b),  (d),  (e), 6.2 (a), (b), (d), (e), 6.3 (a), (b), (d),
(e), 6.4 (a),  (b),  (c), (d) and 6.5 (a),  (b), (c), (d) from the date any such
payment  was due  until  the  earlier  of the  date of  payment  in full of such
obligation  or the date of entry of a final  judgment  against  AAI  and/or  the
Corporation.

     10. Confidential Information and Nonsolicitation

     10.1 Confidential Information.  The Executive shall not, during the Term of
Employment  and  thereafter,  without the prior express  written  consent of AAI
and/or the Corporation, disclose any confidential information, knowledge or data
relating  to  AAI,  the  Corporation,  or any  Affiliate  of  either  and  their
respective businesses,  which (a) was obtained by the Executive in the course of
the Executive's  employment with AAI and the  Corporation,  and (b) which is not
information,  knowledge or data  otherwise in the public  domain  (other than by
reason of a breach of this provision by the Executive), unless required to do so
by a court of law or equity or by any governmental agency or other authority.

     10.2 No  Solicitation.  The Executive hereby agrees that, if his employment
hereunder is terminated by AAI and the Corporation for Cause or by the Executive
under Section 6.4 of this Agreement,  he shall not, for twelve (12) months after
the Date of Termination,  directly or indirectly,  divert,  solicit or take away
the  patronage  of (a) any  customers or agents of the  Corporation,  AAI or any
Affiliate  of  either  as of the  relevant  Date  of  Termination,  or  (b)  any
prospective  customers or agents of the Corporation,  AAI or any Affiliate whose
business the Corporation and/or AAI was actively soliciting on the relevant Date
of Termination, and with which the Executive had business contact while employed
by the Corporation and AAI. The Executive agrees that,  under the  circumstances
and  conditions  described  above and for the same period of time, the Executive
shall not, directly or indirectly,  induce or solicit any employees or agents of
the  Corporation,  AAI or any  Affiliate of either to leave or  terminate  their
employment or agency  relationship  with the Corporation or AAI. The Corporation
and AAI agrees that (i) any  announcement  made by the  Executive,  at any press
conference or in any press release or through individual notices,  shall not, in
and of itself,  constitute an attempt directly or indirectly to induce,  divert,
solicit or take away customers or employees,  (ii) any such announcement creates
no presumption with respect to any such inducement,  diversion,  solicitation or
taking, and (iii) in all cases both the burden of production of evidence and the
ultimate  burden of persuasion  with respect to any  allegations  or claims that
this Section 10.2 has been breached or violated by the Executive  shall be borne
by  AAI  and  the  Corporation.  Executive  agrees  that  all  restrictions  and
agreements  contained in this Section 10, including  without  limitation,  those
relating to duration and restricted territory,  are necessary and fundamental to
the protection of the business of AAI, the Corporation or any Affiliate, and are
reasonable  and valid,  and all  defenses to the strict  enforcement  thereof by
Executive are hereby  waived.  Executive  agrees that the remedy at law for such
breach of this  Agreement  will be  inadequate,  and that the damages  from such
breach  are not  readily  susceptible  to  being  measured  in  monetary  terms.
Accordingly,  Executive  agrees  that upon breach of this  Section 10, AAI,  the
Corporation or any Affiliate  shall be entitled to immediate  injunctive  relief
and may obtain a temporary  order  restraining  any threatened  further  breach.
Nothing in this Agreement shall be deemed to limit AAI's,  the  Corporation's or
any Affiliate's  remedies at law or in equity for any breach by Executive or any
of the  provisions of this  Agreement  that may be pursued or availed of by AAI,
the Corporation or any Affiliate.

<PAGE>



     11. Successors.

     11.1 The  Executive.  This  Agreement  is  personal to the  Executive  and,
without the prior express written consent of AAI and the Corporation,  shall not
be assignable by the Executive,  except that the  Executive's  rights to receive
any compensation or benefits under this Agreement may be transferred or disposed
of pursuant to testamentary  disposition,  intestate succession or pursuant to a
domestic  relations  order.  This Agreement shall inure to the benefit of and be
enforceable   by   the   Executive's   heirs,    beneficiaries    and/or   legal
representatives.

     11.2 AAI and the Corporation.  This Agreement shall inure to the benefit of
and be binding upon AAI, the Corporation,  and their  respective  successors and
assigns.  AAI shall  require any  successor to all or  substantially  all of the
Corporation's  and its  Affiliates'  business  and/or assets,  whether direct or
indirect,  by  purchase,  merger,   consolidation,   acquisition  of  stock,  or
otherwise,  by an agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform  this  Agreement in the same manner and
to the same extent as AAI and the Corporation would be required to perform if no
such succession had taken place.

     12. Indemnification. AAI and the Corporation agree that if the Executive is
made a  party  or is  threatened  to be  made a  party  to any  action,  suit or
proceeding,   whether  civil,  criminal,   administrative  or  investigative  (a
"Proceeding"),  by reason of the fact that he is or was a director or officer of
AAI, the Corporation, and/or any Affiliate of either or is or was serving at the
request of the  Corporation,  AAI and/or any  Affiliate as a director,  officer,
member,  employee or agent of another  corporation  or of a  partnership,  joint
venture, trust or other enterprise,  including, without limitation, service with
respect to employee  benefit plans,  whether or not the basis of such Proceeding
is alleged  action in an  official  capacity  as a  director,  officer,  member,
employee or agent  while  serving as a director,  officer,  member,  employee or
agent,  he shall be indemnified  and held harmless by AAI and the Corporation to
the  fullest  extent  authorized  by  applicable  law, as the same exists or may
hereafter be amended, against all Expenses incurred or suffered by the Executive
in  connection  therewith,  and such  indemnification  shall  continue as to the
Executive even if the Executive has ceased to be an officer,  director or agent,
or is no longer  employed  by AAI and the  Corporation  and  shall  inure to the
benefit of his heirs,  executors and  administrators;  provided,  however,  that
Executive  shall not be  indemnified  for any act or omission  that  constitutes
gross negligence or willful misconduct.


<PAGE>



     13. Miscellaneous.

     13.1  Applicable  Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, applied without reference to the
principles of conflict of laws.

     13.2  Amendments.  This Agreement may not be amended or modified  otherwise
than by a written  agreement  executed by the parties hereto or their respective
successors and legal representatives.

     13.3 Notices.  All notices and other  communications  hereunder shall be in
writing  and  shall  be  given  by  hand-delivery  to the  other  parties  or by
registered  or  certified  mail,  return  receipt  requested,  postage  prepaid,
addressed as follows:

         If to the Executive:    Mr. Patrick J. Mitchell
                                 2713 Heritage Hills Drive
                                 Fort Worth, Texas 76109

         If to the Corporation:  Ascent Management, Inc.
                                 110 West Seventh Street, Suite 300
                                 Fort Worth, Texas 76102
                                 Attention: General Counsel

         If to AAI:              Ascent Assurance, Inc.
                                 110 West Seventh Street, Suite 300
                                 Fort Worth, Texas 76102
                                 Attention: General Counsel

or to such other address as any party hereto shall have furnished to the others
in writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

     13.4  Withholding.  AAI and the  Corporation  may withhold from any amounts
payable under this Agreement such federal,  state or local income taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

     13.5 Severability.  The invalidity or  unenforceability of any provision of
this  Agreement  shall not affect the  validity or  enforceability  of any other
provision of this Agreement.

     13.6  Captions.  The  captions  of  this  Agreement  are  not  part  of the
provisions hereof and shall have no force or effect.

     13.7  Beneficiaries/References.  The Executive  shall be entitled to select
(and change) a  beneficiary  or  beneficiaries  to receive any  compensation  or
benefit payable hereunder  following the Executive's  death, and may change such
election,  in  either  case by  giving  AAI or the  Corporation  written  notice
thereof.  In the event of the Executive's  death or a judicial  determination of
his incompetence,  reference in this Agreement to the Executive shall be deemed,
where  appropriate,  to refer to his  beneficiary(ies),  estate  or other  legal
representative(s).

     13.8 Entire Agreement. This Agreement contains the entire agreement between
the  parties  concerning  the subject  matter  hereof and  supersedes  all prior
agreements, understandings,  discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.

     13.9 Representations.  AAI and the Corporation each represents and warrants
that it is fully  authorized  and  empowered to enter into this  Agreement.  The
Executive represents and warrants that the performance of the Executive's duties
under this  Agreement  will not violate any agreement  between the Executive and
any other person, firm, partnership, corporation, or organization.

     13.10  Survivorship.  The respective  rights and obligations of the parties
hereunder  shall survive any  termination of this  Agreement or the  Executive's
Term of  Employment  hereunder  for any  reason to the extent  necessary  to the
intended  provision  of  such  rights  and  the  intended  performance  of  such
obligations.

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and
AAI, as well as the  Corporation  have each caused this Agreement to be executed
in its name on its behalf, and attested to by their respective Secretaries,  all
as of the day and year first above written.

                             Ascent Management, Inc.


Attest:                      By:/s/ Patrick H. O'Neill
                             Patrick H. O'Neill
/s/ Patrick J. Mitchell      Title:  Secretary



                             Ascent Assurance, Inc.

Attest:                      By:/s/ Patrick H. O'Neill
                             Patrick H. O'Neill
/s/ Patrick J. Mitchell      Title:   Secretary



                             /s/ Patrick J. Mitchell
                             Patrick J. Mitchell