<PAGE>
                                                                   Exhibit 10.11



                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT

                                    issued to

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP






<PAGE>


                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                          PAGE
-------                                                                          ----
<S>         <C>                                                                  <C>
            Preamble...............................................................2
    1       Business Reinsured.....................................................2
    2       Cover..................................................................2
    3       Term...................................................................3
    4       Territory..............................................................4
    5       Exclusions.............................................................4
    6       Premium................................................................6
    7       Reinstatement..........................................................7
    8       Reports................................................................7
    9       Definitions............................................................8
   10       Net Retained Lines....................................................10
   11       Original Conditions...................................................10
   12       Notice of Loss and Loss Settlements...................................10
   13       Offset................................................................11
   14       Currency..............................................................11
   15       Loss Funding..........................................................11
   16       Taxes.................................................................13
   17       Federal Excise Tax....................................................13
   18       Inspection............................................................14
   19       Delay, Omission or Error..............................................14
   20       Insolvency............................................................14
   21       Arbitration...........................................................15
   22       Service of Suit.......................................................16
   23       Agency of Agreement...................................................17
   24       Entire Contract.......................................................17
   25       Intermediary..........................................................17
   26       Mode of Execution.....................................................17
            Company Signature.....................................................18

ATTACHMENTS

            Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance
            - U.S.A...............................................................19
</TABLE>


                                    1 of 20

<PAGE>


                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                                    issued to

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP
                          (collectively the "Company")

                                       by

                 THE SUBSCRIBING REINSURER(S) IDENTIFIED IN THE
                     INTERESTS AND LIABILITIES AGREEMENT(S)
                  ATTACHED TO AND FORMING PART OF THIS CONTRACT
                                (the "Reinsurer")


                                   ARTICLE 1

BUSINESS REINSURED

This Contract is to indemnify the Company in respect of the net excess liability
as a result of any loss or losses which occur during the term of this Contract
under any Policy covering Private Passenger Automobile Physical Damage business
in force, written or renewed by or on behalf of the Company, subject to the
terms and conditions herein contained.

                                   ARTICLE 2

COVER

A.      The Reinsurer shall be liable in respect of each Loss Occurrence for
        100% of the Ultimate Net Loss over and above the initial Ultimate Net
        Loss retention(s) as set forth in the schedule below for each Loss
        Occurrence, subject to a limit of liability to the Reinsurer, as set
        forth in the schedule below for each Loss Occurrence.



                                    2 of 20
<PAGE>

B.      The Reinsurer's liability for all Loss Occurrences occurring during the
        term of this Contract shall not exceed the amount(s) set forth in the
        Reinstatement Article.

--------------------------------------------------------------------------------
                          RETENTION AND LIMIT SCHEDULE
--------------------------------------------------------------------------------
  LAYER            COMPANY'S RETENTION           REINSURER'S LIMIT OF LIABILITY
--------------------------------------------------------------------------------
               ULTIMATE NET LOSS IN RESPECT       ULTIMATE NET LOSS IN RESPECT
                  OF EACH LOSS OCCURRENCE            OF EACH LOSS OCCURRENCE
--------------------------------------------------------------------------------
FIRST LAYER             $2,000,000                          $3,000,000
--------------------------------------------------------------------------------
SECOND LAYER            $5,000,000                          $5,000,000
--------------------------------------------------------------------------------

C.      The maximum value of any one vehicle covered hereunder shall be $75,000,
        or so deemed.

D.      As respects each excess layer hereunder, the Company shall retain, net
        and unreinsured elsewhere, at least a 2.5% part of a 100% share in the
        interests and liabilities of the Reinsurer hereunder.

E.      The Company may maintain in effect a quota share on private passenger
        automobile business recoveries from which shall be disregarded when
        establishing Ultimate Net Loss for purposes of this Article. The Company
        may also maintain a quota share participation on private passenger
        automobile business produced by Direct Insurance Company and Direct
        General Insurance Agency on behalf of various front companies.

F.      The Company shall be permitted to carry additional reinsurance on its
        retention hereunder, which shall inure solely to the benefit of the
        Company, and recoveries under which shall be disregarded in arriving at
        the Ultimate Net Loss for the purposes of this Contract.

                                   ARTICLE 3

TERM

A.      This Contract shall become effective at 12:01 a.m., Central Standard
        Time, January 1, 2003, and shall remain in full force and effect for one
        year, expiring 12:01 a.m., Central Standard Time, January 1, 2004.

B.      Should this Contract expire while a loss covered hereunder is in
        progress, the Reinsurer shall be responsible for the loss in progress in
        the same manner and to the same extent it would have been responsible
        had the Contract expired the day following the conclusion of the loss in
        progress.



                                    3 of 20
<PAGE>

                                   ARTICLE 4

TERRITORY

This Contract applies to losses arising out of Policies written in the United
States of America, its territories and possessions, and Puerto Rico, wherever
occurring.

                                   ARTICLE 5

EXCLUSIONS

A.      This Contract does not cover:

        1.      As regards interests which at time of loss or damage are on
                shore, no liability shall attach hereto in respect of any loss
                or damage which is occasioned by war, invasion, hostilities,
                acts of foreign enemies, civil war, rebellion, insurrection,
                military or usurped power, or martial law or confiscation by
                order of any government or public authority. This War Exclusion
                Clause shall not, however, apply to interests which at time of
                loss or damage are within the territorial limits of the United
                States of America (comprising the fifty States of the Union, the
                District of Columbia, and including bridges between the U.S.A.
                and Mexico provided they are under United States ownership),
                Canada, St. Pierre and Miquelon, provided such interests are
                insured under Policies, endorsements or binders containing a
                standard war or hostilities or warlike operations exclusion
                clause.

        2.      Business excluded by the attached Nuclear Incident Exclusion
                Clause - Physical Damage - Reinsurance - U.S.A.

        3.      Pools, Associations and Syndicates, except losses from Assigned
                Risk Plans or similar plans are not excluded.

        4.      Excess of loss reinsurance.

        5.      Mortgage Impairment Insurance or other similar covers, however
                styled.

        6.      Liability of the Company arising by contract, operation of law
                or otherwise from its participation or membership, whether
                voluntary or involuntary, in any insolvency fund. "Insolvency
                fund" includes any guarantee fund (other than recoupment fees),
                insolvency fund, plan, pool, association, fund or other
                arrangement, howsoever denominated, established or governed,
                which provides for any assessment of or payment or assumption by
                the Company of part or all of any claim, debt, charge, fee or
                other obligation of an insurer or its successors or assigns
                which has been declared by any competent authority to be
                insolvent or which is otherwise deemed unable to meet any claim,
                debt, charge, fee or other obligation in whole or in part.


                                    4 of 20
<PAGE>

        7.      Loss arising out of the ownership, maintenance or use of any
                vehicle, the principal use of which is:

                (a)     As a public or livery conveyance;

                (b)     Emergency vehicles;

                (c)     Drive yourself motor vehicles available for leasing
                        periods of less than six months;

                (d)     Automobiles used in speed contests and races;

                (e)     Motorcycles.

        8.      Commercial Automobile Physical Damage and Liability business.

        9.      Private Passenger Automobile Liability business.

        10.     Excess of Policy limits and extra contractual obligations.

        11.     Loss or damage or costs or expenses arising from seepage and/or
                pollution and/or contamination, other than contamination from
                smoke damage. Nevertheless, this exclusion does not preclude any
                payment of the cost of the removal of debris of property damaged
                by a loss otherwise covered hereunder, but subject always to a
                limit of 25% of the Company's Property Business loss under the
                original Policy.

        12.     Loss, damage, cost, or expense directly or indirectly caused by,
                contributed to by, resulting from, or arising out of or in
                connection with any Act of Terrorism, as defined herein,
                regardless of any other cause or event contributing concurrently
                or in any other sequence to the loss.

                An "Act of Terrorism" includes any act, or preparation in
                respect of action, or threat of action designed to influence the
                government de jure or de facto of any nation or any political
                division thereof, or in pursuit of political, religious,
                ideological, or similar purposes to intimidate the public or a
                section of the public of any nation by any person or group(s) of
                persons whether acting alone or on behalf of or in connection
                with any organization(s) or government(s) de jure or de facto,
                and which:

                (a)     involves violence against one or more persons; or

                (b)     involves damage to property; or

                (c)     endangers life other than that of the person committing
                        the action; or

                (d)     creates a risk to health or safety of the public or a
                        section of the public; or

                (e)     is designed to interfere with or to disrupt an
                        electronic system.


                                    5 of 20
<PAGE>

                This Contract also excludes loss, damage, cost, or expense
                directly or indirectly caused by, contributed to by, resulting
                from, or arising out of or in connection with any action in
                controlling, preventing, suppressing, retaliating against, or
                responding to any Act of Terrorism.

                Notwithstanding the above and subject otherwise to the terms,
                conditions, and limitations of this Contract, in respect only of
                personal lines this Contract shall pay actual loss or damage
                (but not related cost or expense) caused by any Act of Terrorism
                provided such act is not directly or indirectly caused by,
                contributed to by, resulting from, or arising out of or in
                connection with biological, chemical, or nuclear pollution or
                contamination.

B.      Business which is beyond the terms, conditions or limitations of this
        Contract may be submitted to the Reinsurer for special acceptance
        hereunder and such business, if accepted by the Reinsurer, shall be
        subject to all of the terms, conditions and limitations of this Contract
        except as modified by the special acceptance.

                                   ARTICLE 6

PREMIUM

A.      As respects each excess layer hereunder, the premium to be paid to the
        Reinsurer shall be calculated at the rates set out below multiplied by
        the Company's Gross Net Written Premium Income with respect to the
        business covered hereunder, subject to the minimum and deposit premiums
        stated hereunder:

        ------------------------------------------------------------------------
                                    PREMIUM SCHEDULE
        ------------------------------------------------------------------------
                                   PREMIUM          DEPOSIT             MINIMUM
             LAYER                  RATE            PREMIUM             PREMIUM
        ------------------------------------------------------------------------
          FIRST LAYER              2.4864%         $540,000            $480,000
        ------------------------------------------------------------------------
          SECOND LAYER             1.5540%          337,500            $300,000
        ------------------------------------------------------------------------

        The deposit premiums shall be payable to the Reinsurer by the Company in
        installments as follows:

<TABLE>
<CAPTION>
        ---------------------------------------------------------------------------------
                              DEPOSIT INSTALLMENT SCHEDULE
        ---------------------------------------------------------------------------------
             LAYER        JANUARY 1, 2003   APRIL 1, 2003  JULY 1, 2003   OCTOBER 1, 2003
        ---------------------------------------------------------------------------------
<S>                       <C>               <C>            <C>            <C>
          FIRST LAYER        $135,000         $135,000       $135,000        $135,000
        ---------------------------------------------------------------------------------
          SECOND LAYER       $ 84,375         $ 84,375       $ 84,375        $ 84,375
        ---------------------------------------------------------------------------------
</TABLE>

B.      Within 60 days after the expiration of this Contract, the Company shall
        provide a report to the Reinsurer setting forth the premium due
        hereunder for each excess layer, computed in accordance with paragraph A
        above. If the premium due the Reinsurer is greater than the deposit
        premium paid, an additional premium shall be due and payable for the
        amount in excess of the deposit. If the premium due the Reinsurer is
        less than the deposit premium


                                    6 of 20
<PAGE>

        paid, the Reinsurer shall refund the excess premium paid, subject to the
        minimum premium specified in paragraph A above.

C.      The use of written premium as subject matter premium in this Contract is
        for the convenience of the parties. For all purposes premium paid to the
        Reinsurer shall be considered earned premium unless otherwise
        specifically provided to the contrary.

                                   ARTICLE 7

REINSTATEMENT

A.      As respects each Excess Layer, loss payments under this Contract shall
        reduce the limit of coverage afforded by the amounts paid, but the limit
        of coverage shall be reinstated from the time of the occurrence of the
        loss, and for each amount so reinstated, the Company agrees to pay an
        additional premium calculated at pro rata of 100% of the Reinsurer's
        premium for the applicable layer for the term of this Contract, being
        pro rata only as to the fraction of the Reinsurer's limit of liability
        hereunder (i.e., the fraction of the Reinsurer's limit of liability for
        each Loss Occurrence as set forth in the Retention and Limit Article) so
        reinstated. Nevertheless, the Reinsurer's liability under the applicable
        layer shall not exceed such limit in respect of any one Loss Occurrence,
        and shall not exceed the applicable limit set forth below in respect of
        all Loss Occurrences during the term of this Contract.

        ------------------------------------------------------------------------
                   LAYER              REINSURER'S LIMITS OF LIABILITY IN RESPECT
                                       OF ALL LOSS OCCURRENCES DURING THE TERM
        ------------------------------------------------------------------------
               FIRST EXCESS                                $ 6,000,000
        ------------------------------------------------------------------------
               SECOND EXCESS                               $10,000,000
        ------------------------------------------------------------------------


B.      If at the time of a loss settlement hereon the reinsurance premium, as
        calculated in accordance with the Premium Article, is unknown, the above
        calculation of reinstatement premium shall be based upon the deposit
        premium, subject to adjustment when the reinsurance premium is finally
        established.

                                   ARTICLE 8

REPORTS

Within 60 days following the expiration of this Contract, the Company shall
furnish the Reinsurer with:

        1.      Net Written Premium Income of the Company for the term of this
                Contract.

        2.      Any other information which the Reinsurer may require to prepare
                its Annual Statement which is reasonably available to the
                Company.



                                    7 of 20
<PAGE>

                                   ARTICLE 9

DEFINITIONS

A.      The term "Private Passenger Automobile Physical Damage Business" as used
        in this Contract shall mean all insurances and reinsurances written by
        the Company and assumed from various front companies and classified as
        private passenger automobile physical damage (comprehensive only).

B.      The term "Ultimate Net Loss" as used in this Contract shall mean the
        actual loss paid by the Company or for which the Company becomes liable
        to pay, such loss to include expenses of litigation and interest,
        Declaratory Judgment Expenses, and all other loss expense of the Company
        including subrogation, salvage, and recovery expenses (office expenses
        and salaries of officials and employees not classified as loss adjusters
        are not chargeable as expenses for purposes of this paragraph), but
        salvages and all recoveries, shall be first deducted from such loss to
        arrive at the amount of liability attaching hereunder.

        All salvages, recoveries or payments recovered or received subsequent to
        loss settlement hereunder shall be applied as if recovered or received
        prior to the aforesaid settlement, and all necessary adjustments shall
        be made by the parties hereto.

        For purposes of this definition, the phrase "becomes liable to pay"
        shall mean the existence of a judgment which the Company does not intend
        to appeal, or a release has been obtained by the Company, or the Company
        has accepted a proof of loss.

        The term "Declaratory Judgment Expenses," as used in this Contract shall
        mean all expenses incurred by the Company in connection with declaratory
        judgment actions brought to determine the Company's defense and/or
        indemnification obligations that are allocable to specific Policies and
        claims subject to this Contract. Declaratory Judgment Expenses shall be
        deemed to have been incurred by the Company on the date of the original
        loss (if any) giving rise to the declaratory judgment action.

        Nothing in this clause shall be construed to mean that losses are not
        recoverable hereunder until the Company's Ultimate Net Loss has been
        ascertained.

C.      The term "Loss Occurrence" shall mean the sum of all individual losses
        directly occasioned by any one disaster, accident or loss or series of
        disasters, accidents or losses arising out of one event which occurs
        within the area of one state of the United States or province of Canada
        and states or provinces contiguous thereto and to one another. However,
        the duration and extent of any one "Loss Occurrence" shall be limited to
        all individual losses sustained by the Company occurring during any
        period of 168 consecutive hours arising out of and directly occasioned
        by the same event, except that the term "Loss Occurrence" shall be
        further defined as follows:



                                    8 of 20
<PAGE>

        1.      As regards windstorms, hail, tornado, hurricane, cyclone,
                including ensuing collapse and water damage, all individual
                losses sustained by the Company occurring during any period of
                72 consecutive hours arising out of and directly occasioned by
                the same event. However, the event need not be limited to one
                state or province or states or provinces contiguous thereto.

        2.      As regards riot, riot attending a strike, civil commotion,
                vandalism and malicious mischief, all individual losses
                sustained by the Company occurring during any period of 72
                consecutive hours within the area of one municipality or county
                and the municipalities or counties contiguous thereto arising
                out of and directly occasioned by the same event. The maximum
                duration of 72 consecutive hours may be extended in respect of
                individual losses which occur beyond such 72 consecutive hours
                during the continued occupation of an insured's premises by
                strikers, provided such occupation commenced during the
                aforementioned period.

        3.      As regards earthquake (the epicenter of which need not
                necessarily be within the territorial confines referred to in
                the opening paragraph of this Article) and fire following
                directly occasioned by the earthquake, only those individual
                fire losses which commence during the period of 168 consecutive
                hours may be included in the Company's "Loss Occurrence."

        4.      As regards "freeze," only individual losses directly occasioned
                by collapse, breakage of glass and water damage (caused by
                bursting of frozen pipes and tanks) may be included in the
                Company's "Loss Occurrence."

        For all "Loss Occurrences" the Company may choose the date and time when
        any such period of consecutive hours commences, provided that it is not
        earlier than the date and time of the occurrence of the first recorded
        individual loss sustained by the Company arising out of that disaster,
        accident or loss and provided that only one such period of 168
        consecutive hours shall apply with respect to one event, except for
        those "Loss Occurrences" referred to in subparagraphs 1 and 2 above
        where only one such period of 72 consecutive hours shall apply with
        respect to one event, regardless of the duration of the event.

        No individual losses occasioned by an event that would be covered by 72
        hours clauses may be included in any "Loss Occurrence" claimed under the
        168 hours provision.

D.      The term "Net Written Premium Income" as used in this Contract shall
        mean the gross written premium income on business the subject of this
        Contract (meaning comprehensive premium only) less returns and
        cancellations and less written premium income paid for pro rata
        reinsurances, recoveries under which would inure to the benefit of this
        Contract.

E.      The term "Policy" as used in this Contract shall mean any binder,
        policy, or contract of insurance or reinsurance issued, accepted or held
        covered provisionally or otherwise, by or on behalf of the Company.



                                    9 of 20
<PAGE>

                                   ARTICLE 10

NET RETAINED LINES

A.      This Contract applies only to that portion of any Policy which the
        Company retains net for its own account, and in calculating the amount
        of any loss hereunder and also in computing the amount or amounts in
        excess of which this Contract attaches, only loss or losses in respect
        of that portion of any Policy which the Company retains net for its own
        account shall be included.

B.      The amount of the Reinsurer's liability hereunder in respect of any loss
        or losses shall not be increased by reason of the inability of the
        Company to collect from any other reinsurer(s), whether specific or
        general, any amounts which may have become due from such reinsurer(s),
        whether such inability arises from the insolvency of such other
        reinsurer(s) or otherwise.

C.      Nothing herein shall in any manner create any obligations or establish
        any rights against the Reinsurer in favor of any third party or any
        persons not parties to this Contract.

                                   ARTICLE 11

ORIGINAL CONDITIONS

All reinsurance under this Contract shall be subject to the same rates, terms,
conditions, waivers and interpretations, and to the same modifications and
alterations as the respective Policies of the Company. However, in no event
shall this be construed in any way to provide coverage outside the terms and
conditions set forth in this Contract.

                                   ARTICLE 12

NOTICE OF LOSS AND LOSS SETTLEMENTS

A.      The Company shall advise the Reinsurer promptly of all claims which in
        the opinion of the Company may involve the Reinsurer and of all
        subsequent developments on these claims which may materially affect the
        position of the Reinsurer.

B.      The Reinsurer agrees to abide by the loss settlements of the Company,
        provided that retroactive extension of Policy terms or coverages made
        voluntarily by the Company and not in response to court decisions
        (whether such court decision is against the Company or other companies
        affording the same or similar coverages) shall not be covered under this
        Contract.

C.      When so requested the Company shall afford the Reinsurer an opportunity
        to be associated with the Company, at the expense of the Reinsurer, in
        the defense of any claim or suit or



                                    10 of 20
<PAGE>

        proceeding involving this reinsurance and the Company shall cooperate in
        every respect in the defense of such claim, suit or proceeding.

D.      The Reinsurer shall pay its share of loss settlements immediately upon
        receipt of proof of loss from the Company.

                                   ARTICLE 13

OFFSET

The Company and the Reinsurer shall have the right to offset any balance or
balances (whether on account of premiums or losses) due from one party to the
other under the terms of this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. However, in the event of the insolvency of
any party hereto, offsets shall be allowed in accordance with the statutes
and/or regulations of the state having jurisdiction over the insolvency.

                                   ARTICLE 14

CURRENCY

The currency to be used for all purposes of this Contract shall be United States
of America currency.

                                   ARTICLE 15

LOSS FUNDING

A.      This Article applies only to a Reinsurer who does not qualify for full
        credit with any insurance regulatory authority having jurisdiction over
        the Company's reserves.

B.      The Company agrees, in respect of its Policies or bonds falling within
        the scope of this Contract, that when it files with its insurance
        regulatory authority, or sets up on its books liabilities as required by
        law, it will forward to the Reinsurer a statement showing the proportion
        of such liabilities applicable to the Reinsurer. The "Reinsurer's
        Obligations" shall be defined as follows:

        1.      Unearned premium (if applicable);

        2.      Known outstanding losses that have been reported to the
                Reinsurer and Loss Adjustment Expense relating thereto;

        3.      Losses and Loss Adjustment Expense paid by the Company but not
                recovered from the Reinsurer;


                                    11 of 20
<PAGE>

        4.      Losses incurred but not reported and Loss Adjustment Expense
                relating thereto.

C.      The Reinsurer's Obligations shall be funded by funds withheld, cash
        advances, trust agreement or a Letter of Credit (LOC). The Reinsurer
        shall have the option of determining the method of funding provided it
        is acceptable to the insurance regulatory authorities having
        jurisdiction over the Company's reserves.

D.      When funding by an LOC, the Reinsurer agrees to apply for and secure
        timely delivery to the Company of a clean, irrevocable and unconditional
        LOC issued by a bank and containing provisions acceptable to the
        insurance regulatory authorities having jurisdiction over the Company's
        reserves in an amount equal to the Reinsurer's Obligations. Such LOC
        shall be issued for a period of not less than one year, and shall be
        automatically extended for one year from its date of expiration or any
        future expiration date unless 30 days (or such other time period as may
        be required by insurance regulatory authorities), prior to any
        expiration date the issuing bank shall notify the Company by certified
        or registered mail that the issuing bank elects not to consider the LOC
        extended for any additional period.

E.      The Reinsurer and Company agree that any funding provided by the
        Reinsurer pursuant to the provisions of this Contract may be drawn upon
        at any time, notwithstanding any other provision of this Contract, and
        be utilized by the Company or any successor, by operation of law, of the
        Company including, without limitation, any liquidator, rehabilitator,
        receiver or conservator of the Company, for the following purposes,
        unless otherwise provided for in a separate trust agreement:

        1.      To reimburse the Company for the Reinsurer's Obligations, the
                payment of which is due under the terms of this Contract and
                that has not been otherwise paid;

        2.      To make refund of any sum that is in excess of the actual amount
                required to pay the Reinsurer's Obligations under this Contract
                (or in excess of 102% of Reinsurer's Obligations, if funding is
                provided by a trust agreement);

        3.      To fund an account with the Company for the Reinsurer's
                Obligations. Such cash deposit shall be held in an interest
                bearing account separate from the Company's other assets, and
                interest thereon not in excess of the prime rate shall accrue to
                the benefit of the Reinsurer. Any taxes payable on accrued
                interest shall be paid out of the assets in the account that are
                in excess of the Reinsurer's Obligations (or in excess of 102%
                of Reinsurer's Obligations, if funding is provided by a trust
                agreement). If the assets are inadequate to pay taxes, any taxes
                due shall be paid by the Reinsurer;

        4.      To pay the Reinsurer's share of any other amounts the Company
                claims are due under this Contract.

F.      If the amount drawn by the Company is in excess of the actual amount
        required for 1. or 3., or in the case of 4., the actual amount
        determined to be due, the Company shall promptly



                                    12 of 20
<PAGE>

        return to the Reinsurer the excess amount so drawn. All of the foregoing
        shall be applied without diminution because of insolvency on the part of
        the Company or the Reinsurer.

G.      The issuing bank shall have no responsibility whatsoever in connection
        with the propriety of withdrawals made by the Company or the disposition
        of funds withdrawn, except to ensure that withdrawals are made only upon
        the order of properly authorized representatives of the Company.

H.      Fifty days prior to the end of each calendar quarter, the Company shall
        prepare a specific statement of the Reinsurer's Obligations for the sole
        purpose of amending the LOC or other method of funding, in the following
        manner:

        1.      If the statement shows that the Reinsurer' s Obligations exceed
                the balance of the LOC as of the statement date, the Reinsurer
                shall, within 30 days after receipt of the statement, secure
                delivery to the Company of an amendment to the LOC increasing
                the amount of credit by the amount of such difference. Should
                another method of funding be used, the Reinsurer shall, within
                the time period outlined above, increase such funding by the
                amount of such difference.

        2.      If, however, the statement shows that the Reinsurer's
                Obligations are less than the balance of the LOC (or less than
                102% of Reinsurer' s Obligations if funding is provided by a
                trust agreement), as of the statement date, the Company shall,
                within 30 days after receipt of written request from the
                Reinsurer, release such excess credit by agreeing to secure an
                amendment to the LOC reducing the amount of credit available by
                the amount of such excess credit. Should another method of
                funding be used, the Company shall, within the time period
                outlined above, decrease such funding by the amount of such
                excess.

                                   ARTICLE 16

TAXES

In consideration of the terms under which this Contract is issued, the Company
undertakes not to claim any deduction of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or to the District of Columbia.

                                   ARTICLE 17

FEDERAL EXCISE TAX

A.      The Company will be liable for taxes (except Federal Excise Tax) on
        premiums reported to the Reinsurer hereunder.



                                    13 of 20
<PAGE>

B.      Federal Excise Tax applies only to those Reinsurers, excepting
        Underwriters at Lloyd's, London and other Reinsurers exempt from the
        Federal Excise Tax, who are domiciled outside the United States of
        America.

C.      The Reinsurer has agreed to allow for the purpose of paying the Federal
        Excise Tax 1% of the premium payable hereon to the extent such premium
        is subject to Federal Excise Tax.

D.      In the event of any return of premium becoming due hereunder, the
        Reinsurer will deduct 1% from the amount of the return, and the Company
        or its agent should take steps to recover the Tax from the U.S.
        Government.

                                   ARTICLE 18

INSPECTION

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through its authorized
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith.

                                   ARTICLE 19

DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.

                                   ARTICLE 20

INSOLVENCY

A.      In the event of the insolvency of the Company, reinsurance under this
        Contract shall be payable by the Reinsurer on the basis of the liability
        of the Company under Policy or Policies reinsured without diminution
        because of the insolvency of the Company, to the Company or to its
        liquidator, receiver, or statutory successor except as provided by
        Section 4118(a) of the New York Insurance Law or except when the
        Contract specifically provides another payee of such reinsurance in the
        event of the insolvency of the Company or when the Reinsurer with the
        consent of the direct insured or insureds has assumed such Policy
        obligations of the Company as direct obligations of the Reinsurer to the
        payees under such Policies and in substitution for the obligations of
        the Company to such payees.


                                    14 of 20
<PAGE>

B.      It is agreed, however, that the liquidator or receiver or statutory
        successor of the insolvent Company shall give written notice to the
        Reinsurer of the pendency of a claim against the insolvent Company on
        the Policy or Policies reinsured within a reasonable time after such
        claim is filed in the insolvency proceeding and that during the pendency
        of such claim, the Reinsurer may investigate such claim and interpose,
        at its own expense, in the proceeding when such claim is to be
        adjudicated, any defense or defenses which it may deem available to the
        Company or its liquidator or receiver or statutory successor. The
        expense thus incurred by the Reinsurer shall be chargeable, subject to
        court approval, against the insolvent Company as part of the expense of
        liquidation to the extent of a proportionate share of the benefit which
        may accrue to the Company solely as a result of the defense undertaken
        by the Reinsurer.

C.      When two or more reinsurers are involved in the same claim and a
        majority in interest elect to interpose defense to such claim, the
        expense shall be apportioned in accordance with the terms of this
        Contract as though such expense had been incurred by the insolvent
        Company.

D.      In the event of the insolvency of any company or companies included in
        the designation of "Company," this clause will apply only to the
        insolvent company or companies.

                                   ARTICLE 21

ARBITRATION

A.      As a condition precedent to any right of action hereunder, any
        irreconcilable dispute between the parties to this Contract will be
        submitted for decision to a board of arbitration composed of two
        arbitrators and an umpire meeting at a site in Nashville, Tennessee.

B.      Arbitration shall be initiated by the delivery of a written notice of
        demand for arbitration by one party to the other within a reasonable
        time after the dispute has arisen.

C.      The members of the board of arbitration shall be active or retired
        disinterested officials of insurance or reinsurance companies, or
        Underwriters at Lloyd's, London, not under the control or management of
        either party to this Contract. Each party shall appoint its arbitrator
        and the two arbitrators shall choose an umpire before instituting the
        hearing. If the respondent fails to appoint its arbitrator within four
        weeks after being requested to do so by the claimant, the latter shall
        also appoint the second arbitrator. If the two arbitrators fail to agree
        upon the appointment of an umpire within four weeks after their
        nominations, each of them shall name three, of whom the other shall
        decline two, and the decision shall be made by drawing lots.

D.      The claimant shall submit its initial brief within 45 days from
        appointment of the umpire. The respondent shall submit its brief within
        45 days thereafter and the claimant may submit a reply brief within 30
        days after filing of the respondent's brief.


                                    15 of 20
<PAGE>

E.      The board shall make its decision with regard to the custom and usage of
        the insurance and reinsurance business. The board shall issue its
        decision in writing based upon a hearing in which evidence may be
        introduced without following strict rules of evidence but in which
        cross-examination and rebuttal shall be allowed. The board shall make
        its decision within 60 days following the termination of the hearings
        unless the parties consent to an extension. The majority decision of the
        board shall be final and binding upon all parties to the proceeding.
        Judgment may be entered upon the award of the board in any court having
        jurisdiction.

F.      Each party shall bear the expense of its own arbitrator and shall
        jointly and equally bear with the other party the expense of the umpire
        and of the arbitration.

                                   ARTICLE 22

SERVICE OF SUIT

A.      This Article applies if the reinsurer is not domiciled in the United
        States of America and/or is not authorized in any State, Territory or
        District of the United States where authorization is required by
        insurance regulatory authorities.

B.      It is agreed that in the event of the failure of the Reinsurer hereon to
        pay any amount claimed to be due hereunder, the Reinsurer hereon, at the
        request of the Company, will submit to the jurisdiction of a court of
        competent jurisdiction within the United States. Nothing in this Clause
        constitutes or should be understood to constitute a waiver of the
        Reinsurer's right to commence an action in any court of competent
        jurisdiction in the United States, to remove an action to a United
        States district court or to seek a transfer of a case to another court
        as permitted by the laws of the United States or of any state in the
        United States.

C.      It is further agreed that service of process in such suit may be made
        upon Messrs. Mendes & Mount, 750 Seventh Avenue, New York, New York
        10019-6829 and that in any suit instituted against the Reinsurer upon
        this Contract, the Reinsurer will abide by the final decision of such
        court or of any appellate court in the event of an appeal.

D.      The above-named are authorized and directed to accept service of process
        on behalf of the Reinsurer in any such suit and/or upon the request of
        the Company to give a written undertaking to the Company that they will
        enter a general appearance upon the Reinsurer's behalf in the event such
        a suit shall be instituted.

E.      Further, pursuant to any statute of any state, territory or district of
        the United States which makes provision therefor, the Reinsurer hereon
        hereby designates the superintendent, commissioner or director of
        insurance or other officer specified for that purpose in the statute or
        his successor or successors in office as its true and lawful attorney
        upon whom may be served any lawful process in any action, suit or
        proceeding instituted by or on behalf of the Company or any beneficiary
        hereunder arising out of this Contract, and



                                    16 of 20
<PAGE>

        hereby designates the above-named as the person to whom the said officer
        is authorized to mail such process or a true copy thereof.

                                   ARTICLE 23

AGENCY AGREEMENT

If more than one reinsured Company is named as a party to this Contract, the
first named Company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.

                                   ARTICLE 24

ENTIRE CONTRACT

This Contract embodies the entire agreement and understanding between the
Company and the Reinsurer relating to the subject matter hereof during the term
of this Contract. Unless otherwise specifically provided herein, this Contract
may be amended, modified or waived only by an instrument in writing signed by
the Company and each subscribing reinsurer that is affected by such amendment,
modification or waiver.

                                   ARTICLE 25

INTERMEDIARY

Guy Carpenter & Company, Inc., is hereby recognized as the Intermediary
negotiating this Contract for all business hereunder. All communications
(including notices, statements, premiums, return premiums, commissions, taxes,
losses, loss expense, salvages, and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Guy Carpenter & Company,
Inc., 3600 Minnesota Drive, Suite 400, Edina, Minnesota 55435. Payments by the
Company to the Intermediary shall be deemed payment to the Reinsurer. Payments
by the Reinsurer to the Intermediary shall be deemed payment to the Company only
to the extent that such payments are actually received by the Company.

                                   ARTICLE 26

MODE OF EXECUTION

A.      This Contract may be executed by:

        1.      An original written ink signature of paper documents.



                                    17 of 20
<PAGE>

        2.      An exchange of facsimile copies showing the original written ink
                signature of paper documents.

        3.      Electronic signature technology employing computer software and
                a digital signature or digitizer pen pad to capture a person's
                handwritten signature in such a manner that the signature is
                unique to the person signing, is under the sole control of the
                person signing, is capable of verification to authenticate the
                signature and is linked to the document signed in such a manner
                that if the data is changed, such signature is invalidated.

B.      The use of any one or a combination of these methods of execution shall
        constitute a legally binding and valid signing of this Contract. This
        Contract may be executed in one or more counterparts, each of which,
        when duly executed, shall be deemed an original.

IN WITNESS WHEREOF, THE COMPANY HAS CAUSED THIS CONTRACT TO BE EXECUTED BY ITS
DULY AUTHORIZED REPRESENTATIVE(S) THIS 24TH DAY OF MARCH, 2003.

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP

                               /s/ J. Todd Hagely
--------------------------------------------------------------------------------
                      Vice President - Finance & Treasurer





                                    18 of 20
<PAGE>


   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.

1.      This Reinsurance does not cover any loss or liability accruing to the
        Reassured, directly or indirectly, and whether as Insurer or Reinsurer,
        from any Pool of Insurers or Reinsurers formed for the purpose of
        covering Atomic or Nuclear Energy risks.

2.      Without in any way restricting the operation of paragraph (1) of this
        clause, this Reinsurance does not cover any loss or liability accruing
        to the Reassured, directly or indirectly and whether as Insurer or
        Reinsurer, from any insurance against Physical Damage (including
        business interruption or consequential loss arising out of such Physical
        Damage) to:

        I.      Nuclear reactor power plants including all auxiliary property on
                the site, or

        II.     Any other nuclear reactor installation, including laboratories
                handling radioactive materials in connection with reactor
                installations, and "critical facilities" as such, or

        III.    Installations for fabricating complete fuel elements or for
                processing substantial quantities of "special nuclear material",
                and for reprocessing, salvaging, chemically separating, storing
                or disposing of "spent" nuclear fuel or waste materials, or

        IV.     Installations other than those listed in paragraph (2) III above
                using substantial quantities of radioactive isotopes or other
                products of nuclear fission.

3.      Without in any way restricting the operations of paragraphs (1) and (2)
        hereof, this Reinsurance does not cover any loss or liability by
        radioactive contamination accruing to the Reassured, directly or
        indirectly, and whether as Insurer or Reinsurer, from any insurance on
        property which is on the same site as a nuclear reactor power plant or
        other nuclear installation and which normally would be insured therewith
        except that this paragraph (3) shall not operate

        (a)     where Reassured does not have knowledge of such nuclear reactor
                power plant or nuclear installation, or

        (b)     where said insurance contains a provision excluding coverage for
                damage to property caused by or resulting from radioactive
                contamination, however caused. However on and after 1st January
                1960 this sub-paragraph (b) shall only apply provided the said
                radioactive contamination exclusion provision has been approved
                by the Governmental Authority having jurisdiction thereof.

4.      Without in any way restricting the operations of paragraphs (1), (2) and
        (3) hereof, this Reinsurance does not cover any loss or liability by
        radioactive contamination accruing to the Reassured, directly or
        indirectly, and whether as Insurer or Reinsurer, when such radioactive
        contamination is a named hazard specifically insured against.



                                    19 of 20
<PAGE>

5.      It is understood and agreed that this clause shall not extend to risks
        using radioactive isotopes in any form where the nuclear exposure is not
        considered by the Reassured to be the primary hazard.

6.      The term "special nuclear material" shall have the meaning given it in
        the Atomic Energy Act of 1954 or by any law amendatory thereof.

7.      Reassured to be sole judge of what constitutes:

        (a)     substantial quantities, and

        (b)     the extent of installation, plant or site.

Note: Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

        (a)     all policies issued by the Reassured on or before 31st December
                1957 shall be free from the application of the other provisions
                of this Clause until expiry date or 31st December 1960 whichever
                first occurs whereupon all the provisions of this Clause shall
                apply.

        (b)     with respect to any risk located in Canada policies issued by
                the Reassured on or before 31st December 1958 shall be free from
                the application of the other provisions of this Clause until
                expiry date or 31st December 1960 whichever first occurs
                whereupon all the provisions of this Clause shall apply.

12/12/57
NMA1119

--------------------------------------------------------------------------------

NOTES:  Wherever used herein the terms:

        "Reassured" shall be understood to mean "Company", "Reinsured",
                    "Reassured" or whatever other term is used in the attached
                    reinsurance document to designate the reinsured company or
                    companies.

        "Agreement" shall be understood to mean "Agreement", "Contract",
                    "Policy" or whatever other term is used to designate the
                    attached reinsurance document.

        "Reinsurers" shall be understood to mean "Reinsurers", "Underwriters" or
                     whatever other term is used in the attached reinsurance
                     document to designate the reinsurer or reinsurers.





                                    20 of 20
<PAGE>


                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                          CONTINENTAL CASUALTY COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP
                          (collectively, the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurer" as set forth in the Contract attached hereto shall be for:

                        12.50% of the First Excess Layer
                        12.50% of the Second Excess Layer

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurer in respect of each Layer of said Contract shall be separate and apart
from the shares of such other subscribing reinsurers, if any, in respect of each
Layer of said Contract. The interests and liabilities of the Subscribing
Reinsurer shall not be joint with those of such other subscribing reinsurers,
and in no event shall the Subscribing Reinsurer participate in the interests and
liabilities of such other subscribing reinsurers.


                                     1 of 2
<PAGE>

This Agreement shall be effective for the period commencing 12:01 a.m., Central
Standard Time, January 1, 2003, and shall remain in full force and effect for
one year, expiring 12:01 a.m., Central Standard Time, January 1, 2004.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:

on this ___________ day of __________________________, in the year of _________.



                          CONTINENTAL CASUALTY COMPANY



--------------------------------------------------------------------------------



Market Reference Number for First Excess Layer:

Market Reference Number for Second Excess Layer:



                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT


<PAGE>



                                         Page:                 6 of 12
                                         File #:               8958-00-0001-00
                                         Effective Date:       01/01/2003





ACCEPTED:

LAYER ONE:  $3,000,000 EXCESS OF $2,000,000

REINSURER:                              Continental Casualty Company
                           -----------------------------------------------------



REFERENCE #:                                      10857
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                        /s/ Carl Bergh
                           -----------------------------------------------------



DATE:                                            1/23/03
                           -----------------------------------------------------



LINE:  12.5%      WHICH EQUALS:  $375,000


<PAGE>


                                         Page:                 7 of 12
                                         File #:               8958-00-0001-00
                                         Effective Date:       01/01/2003





ACCEPTED:

LAYER TWO:  $5,000,000 EXCESS OF $5,000,000

REINSURER:                             Continental Casualty Company
                           -----------------------------------------------------



REFERENCE #:                                     10858
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                       /s/ Carl Bergh
                           -----------------------------------------------------



DATE:                                           1/23/03
                           -----------------------------------------------------



LINE:  12.5%      WHICH EQUALS:  $625,000


<PAGE>


                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                      ENDURANCE SPECIALTY INSURANCE LIMITED
                          (the "Subscribing Reinsurer")

                                 as respects the

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP
                          (collectively, the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurer" as set forth in the Contract attached hereto shall be for:

                        25.00% of the First Excess Layer
                        25.00% of the Second Excess Layer

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurer in respect of each Layer of said Contract shall be separate and apart
from the shares of such other subscribing reinsurers, if any, in respect of each
Layer of said Contract. The interests and liabilities of the Subscribing
Reinsurer shall not be joint with those of such other subscribing reinsurers,
and in no event shall the Subscribing Reinsurer participate in the interests and
liabilities of such other subscribing reinsurers.



                                     1 of 2
<PAGE>

This Agreement shall be effective for the period commencing 12:01 a.m., Central
Standard Time, January 1, 2003, and shall remain in full force and effect for
one year, expiring 12:01 a.m., Central Standard Time, January 1, 2004.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:

on this ____________ day of __________________________, in the year of ________.



                      ENDURANCE SPECIALTY INSURANCE LIMITED



--------------------------------------------------------------------------------



Market Reference Number for First Excess Layer:

Market Reference Number for Second Excess Layer:



                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT





                                     2 of 2
<PAGE>
                                         Page:                 6 of 12
                                         File #:               8958-00-0001-00
                                         Effective Date:       01/01/2003





ACCEPTED:

LAYER ONE:  $3,000,000 EXCESS OF $2,000,000

REINSURER:                           Endurance Specialty Insurance Ltd.
                           -----------------------------------------------------



REFERENCE #:                                    005828 002
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                     /s/ Glenn N. B. Clinton
                           -----------------------------------------------------



DATE:                                       February 5, 2003
                           -----------------------------------------------------



LINE:  25.0%      WHICH EQUALS:  $750,000


<PAGE>


                                         Page:                 7 of 12
                                         File #:               8958-00-0001-00
                                         Effective Date:       01/01/2003





ACCEPTED:

LAYER TWO:  $5,000,000 EXCESS OF $5,000,000

REINSURER:                          Endurance Specialty Insurance Ltd.
                           -----------------------------------------------------



REFERENCE #:                                  007913 001
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                   /s/ Glenn N. B. Clinton
                           -----------------------------------------------------



DATE:                                      February 5, 2003
                           -----------------------------------------------------



LINE:  25.0%      WHICH EQUALS:  $1,250,000


<PAGE>
                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                           QBE REINSURANCE CORPORATION
                          (the "Subscribing Reinsurer")

                                 as respects the

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP
                          (collectively, the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurer" as set forth in the Contract attached hereto shall be for:

                        25.00% of the First Excess Layer
                        15.00% of the Second Excess Layer

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurer in respect of each Layer of said Contract shall be separate and apart
from the shares of such other subscribing reinsurers, if any, in respect of each
Layer of said Contract. The interests and liabilities of the Subscribing
Reinsurer shall not be joint with those of such other subscribing reinsurers,
and in no event shall the Subscribing Reinsurer participate in the interests and
liabilities of such other subscribing reinsurers.



                                     1 of 2
<PAGE>

This Agreement shall be effective for the period commencing 12:01 a.m., Central
Standard Time, January 1, 2003, and shall remain in full force and effect for
one year, expiring 12:01 a.m., Central Standard Time, January 1, 2004.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:

on this ____________ day of __________________________, in the year of ________.



                           QBE REINSURANCE CORPORATION



--------------------------------------------------------------------------------



Market Reference Number for First Excess Layer:

Market Reference Number for Second Excess Layer:



                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT






                                     2 of 2
<PAGE>
                                         Page:                 6 of 12
                                         File #:               8958-00-0001-00
                                         Effective Date:       01/01/2003





ACCEPTED:

LAYER ONE:  $3,000,000 EXCESS OF $2,000,000

REINSURER:                              QBE Reinsurance Corporation
                           -----------------------------------------------------



REFERENCE #:                                      TR 2546
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                      /s/ Thomas Renart
                           -----------------------------------------------------



DATE:                                             1/22/03
                           -----------------------------------------------------



LINE:  25.0%      WHICH EQUALS:  $750,000


<PAGE>


                                          Page:                 7 of 12
                                          File #:               8958-00-0001-00
                                          Effective Date:       01/01/2003





ACCEPTED:

LAYER TWO:  $5,000,000 EXCESS OF $5,000,000

REINSURER:                               QBE Reinsurance Corporation
                           -----------------------------------------------------



REFERENCE #:                                       TR 3125
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                       /s/ Thomas Renart
                            ----------------------------------------------------



DATE:                                             1/22/03
                           -----------------------------------------------------



LINE:  15.0%      WHICH EQUALS:  $750,000


<PAGE>


                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                                    XL RE LTD
                          (the "Subscribing Reinsurer")

                                 as respects the

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP
                          (collectively, the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurer" as set forth in the Contract attached hereto shall be for:

                        10.00% of the First Excess Layer
                        10.00% of the Second Excess Layer

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurer in respect of each Layer of said Contract shall be separate and apart
from the shares of such other subscribing reinsurers, if any, in respect of each
Layer of said Contract. The interests and liabilities of the Subscribing
Reinsurer shall not be joint with those of such other subscribing reinsurers,
and in no event shall the Subscribing Reinsurer participate in the interests and
liabilities of such other subscribing reinsurers.


                                     1 of 2
<PAGE>

This Agreement shall be effective for the period commencing 12:01 a.m., Central
Standard Time, January 1, 2003, and shall remain in full force and effect for
one year, expiring 12:01 a.m., Central Standard Time, January 1, 2004.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:

on this ____________ day of __________________________, in the year of ________.



                                    XL RE LTD



--------------------------------------------------------------------------------



Market Reference Number for First Excess Layer:

Market Reference Number for Second Excess Layer:



                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT





                                     2 of 2
<PAGE>
                                         Page:                 6 of 12
                                         File #:               8958-00-0001-00
                                         Effective Date:       01/01/2003





ACCEPTED:

LAYER ONE:  $3,000,000 EXCESS OF $2,000,000

REINSURER:                                    XL Re Ltd
                           -----------------------------------------------------



REFERENCE #:                                 6106-01-2003
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                 /s/ Gregory S. Hendrick
                           -----------------------------------------------------



DATE:                                     February 13, 2003
                           -----------------------------------------------------



LINE:  10.0%      WHICH EQUALS:  $300,000






<PAGE>


                                         Page:                 7 of 12
                                         File #:               8958-00-0001-00
                                         Effective Date:       01/01/2003





ACCEPTED:

LAYER TWO:  $5,000,000 EXCESS OF $5,000,000

REINSURER:                                    XL Re Ltd
                           -----------------------------------------------------



REFERENCE #:                                 6107-01-2003
                           -----------------------------------------------------



AUTHORIZED SIGNATURE:                     /s/ Gary S. Hill
                           -----------------------------------------------------



DATE:                                     February 13, 2003
                           -----------------------------------------------------



LINE:  10.0%      WHICH EQUALS:  $500,000


<PAGE>

                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

            CERTAIN UNDERWRITING MEMBERS OF LLOYD'S, LONDON, ON WHOSE
                     BEHALF THIS AGREEMENT HAS BEEN SIGNED
                        (AS PER SCHEDULE ATTACHED HERETO)
                          (the "Subscribing Reinsurer")

                                 as respects the

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP
                          (collectively, the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurer" as set forth in the Contract attached hereto shall be for:

                        25.00% of the First Excess Layer
                        35.00% of the Second Excess Layer

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurer in respect of each Layer of said Contract shall be separate and apart
from the shares of such other subscribing reinsurers, if any, in respect of each
Layer of said Contract. The interests and liabilities of the Subscribing
Reinsurer shall not be joint with those of such other subscribing reinsurers,
and in no event shall the Subscribing Reinsurer participate in the interests and
liabilities of such other subscribing reinsurers.



                                     1 of 2
<PAGE>

This Agreement shall be effective for the period commencing 12:01 a.m., Central
Standard Time, January 1, 2003, and shall remain in full force and effect for
one year, expiring 12:01 a.m., Central Standard Time, January 1, 2004.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be
executed by its duly authorized representative as follows:

on this ____________ day of __________________________, in the year of ________.



            CERTAIN UNDERWRITING MEMBERS OF LLOYD'S, LONDON, ON WHOSE
                     BEHALF THIS AGREEMENT HAS BEEN SIGNED
                        (AS PER SCHEDULE ATTACHED HERETO)



--------------------------------------------------------------------------------



Market Reference Number for First Excess Layer:

Market Reference Number for Second Excess Layer:



                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING
                            DIRECT INSURANCE COMPANY
                        DIRECT GENERAL INSURANCE COMPANY
                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA
                                       AND
                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI
   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF
                            THE DIRECT GENERAL GROUP

                       PROPERTY CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT




                                     2 of 2
<PAGE>



                                    MARSH LTD

                                    per
                                    Guy Carpenter & Company Ltd

<TABLE>
<CAPTION>
                                      Schedule of Reinsurers
                                      ----------------------
<S>                        <C>
             12.5000%      Lloyd's Underwriter Syndicate No. 2010 MMX, LONDON

             12.5000%      Lloyd's Underwriter Syndicate No. 2001 AML, LONDON
           ------------
             25.0000%
</TABLE>






FOR AND ON BEHALF OF
MARSH LTD


    /s/ Martin Verrills, Sr.
---------------------------------               --------------------------------
             AUTHORIZED SIGNATORY                           AUTHORIZED SIGNATORY


<PAGE>



                                    MARSH LTD

                                    per
                                    Guy Carpenter & Company Ltd

<TABLE>
<CAPTION>
                                      Schedule of Reinsurers
                                      ----------------------
<S>                        <C>
             15.0000%      Lloyd's Underwriter Syndicate No. 2010 MMX, LONDON

             20.0000%      Lloyd's Underwriter Syndicate No. 2001 AML, LONDON
           ------------
             35.0000%
</TABLE>






FOR AND ON BEHALF OF
MARSH LTD


    /s/ Martin Verrills, Sr.
---------------------------------               --------------------------------
             AUTHORIZED SIGNATORY                           AUTHORIZED SIGNATORY