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                                                                   Exhibit 10.16

                              MANAGEMENT AGREEMENT


          This Agreement is effective as of the 1st day of January 1996, by
Mercury Insurance Company of Georgia (formerly known as Georgia Automobile
Insurance Company) (hereinafter referred to as Insurer) and Mercury General
Corporation, hereinafter referred to as Manager.

          In consideration of the promises, conditions and covenants herein
contained, the parties agreed as follows:

          1.  The Manager promises to manage the Insurer, and to conduct on its'
behalf any and all duties of management as shall be necessary for the complete
operation of the Insurer.

          2.  That Insurer promises and hereby delegates to the Manager all of
the duties of management which they are allowed to so delegate by the laws of
the State of Georgia, including but not limited to the following duties: to
issue and underwrite insurance policies, which the Insurer may be so authorized
to do by law, in accordance with the rules and regulations as delineated in the
underwriting manuals of the Insurer, settle and adjust any and all losses and
claims, defend lawsuits, establish premium rates, establish and choose sales
agents and brokers, determine agents' and brokers' commissions, prepare the
records necessary for the conduct of the insurance business, furnish all forms,
supplies and agents' manuals necessary for the conduct of the insurance
business.

          3.  That Manager promises to perform all of the operating functions on
behalf of the Insurer including but not be limited to the following:

              A. To acquire, license and appoint sales agents and brokers for
              the production of the insurance business of and for the Insurer,
              provided that the Insurer shall retain the right to refuse the
              appointment of any agent or broker and the right to terminate any
              agent or broker.

              B. To issue and underwrite policies on behalf of the Insurer and
              to choose and obtain the necessary application and policy forms.
 
              C. To furnish for Insurer all of the operating forms, printing
              supplies, agents' manuals and any other related items which may
              become necessary for the operation of the insurance business.

              D. To pay on behalf of the Insurer all of their operating
              expenses, including but not limited to rent, supplies, salaries of
              all personnel, telephone, advertising costs, costs of settling and
              adjusting all insurance claims, legal defense costs, court costs,
              costs of loss analysis, accounting costs (other than auditing),
              premium collection costs; provided, however, Insurer shall pay,
              and be responsible for, the costs of management fees, premium
              taxes, losses, reserves for unpaid losses, reserves for unpaid
              loss adjustment expense, audit fees, assigned risk or similar
              assessments, bureau fees, Fair Plan or similar assessments,
              directors' fees, agents' commissions, reinsurance premiums,
              investment counsel fees, assessments by the applicable Insurance
              Guarantee Association, membership fees in insurance trade
              association of insurance companies, premiums paid for insurance
              policies in which the Insurer is the beneficiary and owner, such
              as fidelity bonds, taxes of all types and costs which may be
              levied on insurance companies by the governmental authorities
              having jurisdiction over the same and agents' bonuses (contingency
              commissions).


          4.  Manager shall be reimbursed monthly for all expenses incurred on
behalf of the Insurers.

          5.  Manager shall receive as the sole compensation for its services
hereunder a management fee from the Insurer in an amount equal to one percent
(1%) of the gross premiums written by the Insurer.  Such fee shall be payable
quarterly within 45 days of the end of each calendar quarter.

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          6.  The ownership and legal title to the insurance policies,
insurance policy records, data processing tapes, disks, programs and
documentation, and account records of the Insurer, compiled on behalf of the
Insurer by manager, shall remain in and with Insurer, however, Manager shall
have joint custody with Insurer of said records.

          7.  The manager shall, within 90 days after expiration of each
calendar year, furnish the insurer's board of directors a written statement of
amounts received under or on account of the contract and amounts expended under
or on account of the contract during the calendar year, including the emoluments
received therefrom by the respective directors, officers, and other principal
management personnel of the manager or producer, with such classification of
items and further detail as the insurer's board of directors may reasonably
require.

          8.  The term of this agreement shall commence January 1, 1996 and
shall terminate December 31, 1999.

          IN WITNESS WHEREOF, we have set our hands and seals this 1st day of
January, 1996.

MERCURY INSURANCE COMPANY        MERCURY GENERAL CORPORATION
   OF GEORGIA



______________________________   _____________________________________
By: Cooper Blanton, President           By: Michael Curtius, President




______________________________   _____________________________________
By: Judy Walters, Secretary             By: Judy Walters, Secretary

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