<PAGE>
                                                                   Exhibit 10.20





                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE 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>
                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                     PAGE
-------                                                                     ----
<S>             <C>                                                         <C>
                Preamble......................................................3
   1            Business Reinsured............................................3
   2            Cover.........................................................4
   3            Loss Limit....................................................4
   4            Loss Corridor.................................................5
   5            Commencement and Termination..................................5
   6            Territory.....................................................6
   7            Exclusions....................................................6
   8            Reinsurance Premium...........................................8
   9            Premium Cap...................................................8
   10           Provisional Ceding Commission.................................9
   11           Adjustment of Ceding Commission..............................10
   12           Accounts and Remittances.....................................10
   13           Interlock....................................................11
   14           Definitions..................................................12
   15           Extra Contractual Obligations................................14
   16           Excess of Policy Limits......................................15
   17           Original Conditions..........................................15
   18           Special Provisions...........................................15
   19           Loss and Loss Adjustment Expense.............................16
   20           Offset.......................................................16
   21           Currency.....................................................16
   22           Loss Reserve Funding.........................................17
   23           Taxes........................................................19
   24           Federal Excise Tax...........................................19
   25           Inspection...................................................19
   26           Delay, Omission or Error.....................................20
   27           Insolvency...................................................20
   28           Arbitration..................................................21
   29           Service of Suit..............................................21
   30           Entire Contract..............................................22
   31           Severability.................................................23
   32           Intermediary.................................................23
   33           Mode of Execution............................................23
                Company Signature............................................24
</TABLE>


                                    1 of 31
<PAGE>


                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ATTACHMENTS                                                                   PAGE
-----------                                                                   ----
<S>           <C>                                                             <C>
              Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance
              - U.S.A...........................................................25

              Nuclear Incident Exclusion Clause - Liability - Reinsurance
              - U.S.A...........................................................27
</TABLE>





















                                    2 of 31
<PAGE>


                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE 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

                  (individually and 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 share with the Reinsurer the interests and liabilities of
the Company's Loss on its Net Retained Liability under all Policies,
endorsements, and/or other evidences of liability for Private Passenger
Automobile Physical Damage and Liability business written or renewed by or on
behalf of the Company in the States of Arkansas, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee during the
Contract Year (hereinafter referred to as "Policy(ies)"), subject to the terms
and conditions herein contained.



                                     3 of 31
<PAGE>

                                   ARTICLE 2

COVER

A.       Subject to the limits hereof, the Company will cede, and the Reinsurer
         will accept as reinsurance, a 25% share of the Company's Loss arising
         from its Net Retained Liability for all business reinsured hereunder as
         respects Policies with new or renewal Policy periods effective during
         the Contract Year.

B.       In addition, an amount not to exceed a combined total of $900,000
         (being 90% of $1,000,000) any one Loss for Extra Contractual
         Obligations and Losses in Excess of Policy Limits, as specified in the
         Extra Contractual Obligations and Excess of Policy Limits Articles,
         will be subject to this Contract.

C.       Notwithstanding the above, the Reinsurer's liability under this
         Contract and the Companion Contract for Loss classified by the Company
         as "Property Loss" will be limited to $1,000,000 per Loss Occurrence
         (i.e., the maximum property reinsurance recovery from this Contract is
         $1,000,000 per Loss Occurrence). Any reduction in coverage under this
         Contract under the terms of this paragraph will be in the same
         proportion that the Loss under this Contract for the Loss Occurrence
         bears to the total Loss under this Contract and the Companion Contract
         for the Loss Occurrence.

D.       The Company is permitted to carry an Excess Cessions reinsurance
         contract that inures to the benefit of this Contract, as well as other
         Quota Share and Excess Catastrophe reinsurance, recoveries under which
         shall inure solely to the benefit of the Company.

                                   ARTICLE 3

LOSS LIMIT

For purposes of determining the liability of the Reinsurer, the limits of
liability of the Company for Loss with respect to any one Policy shall be deemed
not to exceed the greater of the minimum statutory limits in the applicable
state in which the Company is licensed, or the following:

<TABLE>
<S>                                              <C>
         Automobile Bodily Injury Liability      $10,000 per person/$20,000 per occurrence
         Property Damage Liability               $5,000 per occurrence
         Uninsured/Underinsured Motorists
            Bodily Injury Liability              $10,000 per person/$20,000 per occurrence
         Uninsured/Underinsured Motorists
            Property Damage Liability            $5,000 per occurrence
            Personal Injury Protection           Statutory Coverages
            Medical Payments                     $10,000 per person
</TABLE>



                                     4 of 31
<PAGE>

These limits of liability are further subject to the following maximum limits:

         Automobile Physical Damage          $75,000 each vehicle, or so deemed.

                                   ARTICLE 4

LOSS CORRIDOR

As respects Policies with effective or renewal dates during the Contract Year,
the Company shall retain, under this Contract and the Companion Contract, 100%
of Losses Incurred above a Loss Ratio of 73.0%. The Company will remain liable
for such Losses Incurred unless the Losses Incurred exceeds a Loss Ratio of
84.0%, at which point the Reinsurer's liability will resume (based on its pro
rata share) for any Losses Incurred in excess of an 84.0% Loss Ratio. Said
additional retention is called the "Loss Corridor." The Loss Corridor is not
subject to any effect from a deficit carryforward from prior Contract Years.

                                   ARTICLE 5

COMMENCEMENT AND TERMINATION

A.       This Contract shall become effective at 12:01 a.m., Central Standard
         Time, January 1, 2002, and shall remain in full force and effect until
         terminated as provided in the following paragraph.

B.       This Contract may be terminated by either party at 12:01 a.m., Central
         Standard Time, on January 1, 2003, or any January 1 thereafter by
         giving to the other party not less than 90 days' notice by certified or
         registered mail, return receipt requested.

C.       Either party to this Contract shall also have the right to cancel this
         Contract immediately by giving written notice to the other party by
         certified or registered mail in the event that one party:

         1.       has its financial condition impaired by a reduction of surplus
                  as regards policyholders of 25% or more in any 12-month period
                  from the inception date of this Contract.

         2.       is declared insolvent or put in liquidation by any competent
                  regulatory authority or court of competent jurisdiction.

D.       It is understood and agreed that should the Company enter any
         arrangement either by way of shareholding or management or otherwise,
         under which effective legal or presumptive control of 50% or more is
         assumed by any other individual or organization than that which




                                     5 of 31
<PAGE>

         pertained at the time this Contract became effective, the Company shall
         forthwith notify the Reinsurer.

         Acting upon such actual notice, or upon constructive notice thereof by
         any other means, the Company shall have the right to terminate this
         Contract by giving not less than 90 days' notice from the closing date
         of the arrangement, by registered letter stating therein the date of
         termination.

E.       The Reinsurer will remain liable for 12 months run-off, plus six months
         of odd time, for all Policies in force on the date of termination,
         unless the Company elects to terminate coverage on a cut-off basis,
         such election to be made by the Company in writing within 30 days of
         the date of termination.

F.       Notwithstanding the foregoing, in the event the Company is required by
         statute, regulation or by order of any court or regulatory authority to
         (i) continue a Policy or Policies subject hereto in force, (ii) renew
         the coverage under a Policy or Policies through the issuance of a
         renewal Policy or Policies, or (iii) accept new insurance business,
         after termination the Reinsurer agrees to extend reinsurance coverage
         hereunder with respect to such Policy or Policies until the Company may
         legally cancel, nonrenew or otherwise eliminate its liability under
         such Policy or Policies, such extended coverage will not exceed 24
         months after the termination of the Contract.

                                   ARTICLE 6

TERRITORY

This Contract shall cover wherever the Company's original Policies cover but is
limited to Losses occurring on Policies issued to insureds located in the United
States of America and its territories and possessions.

                                   ARTICLE 7

EXCLUSIONS

This Contract shall not apply to and specifically excludes the following perils,
risks and classes of business:

         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 marital 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




                                     6 of 31
<PAGE>

                  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 following attached Nuclear Incident
                  Exclusion Clauses:

                  (a)      Nuclear Incident Exclusion Claus - Physical Damage -
                           Reinsurance - U.S.A.

                  (b)      Nuclear Incident Exclusion Clause - Liability -
                           Reinsurance - U.S.A.

         3.       Pools, Associations and Syndicates, except Losses from
                  Assigned Risk Plans or similar plans are not excluded. It is
                  further agreed that business ceded to the North Carolina
                  Reinsurance Facility is excluded hereunder.

         4.       Reinsurance except for Agency and Intra Group Company
                  Reinsurance.

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

         6.       All 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 guaranty fund (other than
                  recoupment fees), insolvency fund, plan, pool, association,
                  fund or other arrangement, however 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.

         7.       Products Liability, Professional Malpractice Liability,
                  Directors' & Officers' Liability, Securities and Exchange
                  Commission Liability, Workers' Compensation and Employers'
                  Liability.

         8.       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.



                                       7 of 31
<PAGE>

         9.       Commercial Automobile Physical Damage and Liability business.

         10.      Accidental Death, Towing and Rental Reimbursement, and Life
                  Insurance when written as such.

         11.      Coverages written in conjunction with Motor Club memberships,
                  Accident Hospital Indemnity, Vehicle Protection Plans or
                  Travel Protection Plans.

         12.      Losses arising from seepage and pollution, provided, however,
                  that this exclusion will not apply, if and when a court
                  invalidates the Company's pollution liability exclusion
                  notwithstanding that such liability was intended to be
                  excluded from coverage.

In the event the Company becomes bound on an excluded risk without its
knowledge, either as a result of an existing insured extending its operations or
through an inadvertent error by an agent, the exclusions hereunder, other than
exclusions 1, 2, 4, 6 and 12, shall be suspended with respect to such insured
risk until 30 days after an underwriting supervisor of the Company acquires
knowledge thereof and until the Company can legally cancel or terminate its
coverage of such risk.

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 8

REINSURANCE PREMIUM

Company shall pay the Reinsurer its quota share percentage of the Gross Net
Written Premium.

                                   ARTICLE 9

PREMIUM CAP

A.       As respects the Contract Year beginning January 1, 2002, the Company's
         Gross Net Written Premium for Policies subject to this Contract and for
         Policies subject to the



                                     8 of 31
<PAGE>

         Companion Contract shall not exceed the following Premium Caps:

<TABLE>
<CAPTION>
        -------------------------------------------------------------------------------
                               LOCATION                       GROSS NET WRITTEN PREMIUM
        -------------------------------------------------------------------------------
<S>                                                           <C>
        Florida                                                      $150,000,000
        -------------------------------------------------------------------------------
        Louisiana                                                    $ 15,000,000
        -------------------------------------------------------------------------------
        Arkansas, Georgia, Kentucky, Mississippi, North
        Carolina, South Carolina and Tennessee combined              $135,000,000
        -------------------------------------------------------------------------------
        TOTAL FOR ALL STATES                                         $300,000,000
        -------------------------------------------------------------------------------
</TABLE>

B.       If any Premium Cap is exceeded, or is projected by the Company to be
         exceeded, during the Contract Year, the Reinsurer shall have the right
         to waive the Premium Cap, or to invoke either of the following options
         within 30 days of the date the Premium Cap is exceeded or projected to
         be exceeded:

         1.       Reduce the quota share percentage under this Contract and the
                  Companion Contract, as respects the business for which the
                  Premium Cap is exceeded, to the proportion that 25% of the
                  Premium Cap bears to the total Gross Net Written Premium under
                  this Contract and the Companion Contract in the state(s) to
                  which the Premium Cap applies; or

         2.       As respects Policies issued in the state(s) in which the
                  Premium Cap is exceeded, exclude from cession under this
                  Contract and the Companion Contract all such Policies issued
                  after the Premium Cap is reached (as estimated after returns
                  and cancellations).

         Failure to invoke an option within 30 days will constitute waiver of
the Premium Cap.

                                   ARTICLE 10

PROVISIONAL CEDING COMMISSION

A.       The Reinsurer shall allow the Company a provisional ceding commission
         of 21.0% of the ceded Gross Net Written Premium remitted to the
         Reinsurer as per subparagraph A.2. of the Accounts and Remittances
         Article. Return commission shall be allowed on return premiums at the
         same rate.

B.       It is expressly agreed that the ceding commission includes provision
         for all acquisition costs, administrative fees, and for all other
         expenses (other than the flat 6.0% charge and up to an additional 2.5%
         charge for outside legal expense relating to Loss Adjustment Expense)
         of whatever nature.



                                     9 of 31
<PAGE>

                                   ARTICLE 11

ADJUSTMENT OF CEDING COMMISSION

A.       As respects Policies written or renewed during the Contract year, the
         provisional ceding commission will be adjusted upwards in the event the
         Adjusted Loss Ratio for the Contract Year is below 74.0%. For each 1%
         point decrease in the Adjusted Loss Ratio, from a starting Adjusted
         Loss Ratio of 74.0%, the ceding commission will be increased by 1%
         point. The maximum ceding commission for the Contract Year is 31.0%
         (corresponding to an Adjusted Loss Ratio of 64.0% or better).

B.       The first adjustment of the provisional ceding commission will take
         place 12 months after the close of the Contract Year. The Company will
         provide the Reinsurer with a detailed report showing its adjustment
         calculation and indicating any amounts due. In the event funds are due
         the Reinsurer, the Company will remit said funds with the report. In
         the event funds are due the Company, the Reinsurer will remit said
         funds to the Company within 30 days of receipt of the report.

C.       Adjustments will continue to be made each January 1st thereafter until
         all Losses and Loss Adjustment Expense for the Contract Year have been
         closed, at which time a final adjustment will be made.

                                   ARTICLE 12

ACCOUNTS AND REMITTANCES

A.       Within 30 days following the end of each month, the Company shall
         render a net account to the Reinsurer, segregated by Contract Year.
         Such account shall contain the following information, summarized by
         line of business:

         1.       Ceded Gross Net Earned Premium during the month; less,

         2.       The provisional ceding commission rate (applied to ceded Gross
                  Net Earned Premium remitted), and the allowance for Loss
                  Adjustment Expense, as provided for in this Contract; less,

         3.       Loss and outside legal expense paid on Losses under Policies
                  written or renewed during the Contract Year (net of the
                  Company's Cumulative Retention under the Loss Corridor for the
                  Contract Year, if any); plus,

         4.       Subrogation, salvage, or other recoveries on Losses under
                  Policies written or renewed during Contract Year.

         The Company's "Cumulative Retention under the Loss Corridor" for the
         Contract Year shall mean the lesser of (a) 11% of the inception-to-date
         accumulated ceded Gross Net




                                    10 of 31
<PAGE>

         Earned Premium from Policies with effective or renewal dates during the
         Contract Year and b) the amount, if any, by which the inception-to-date
         accumulated paid Losses Incurred exceed 73% of inception-to-date ceded
         Gross Net Earned Premium from Policies with effective or renewal dates
         during the Contract Year.

         Any balances (as calculated in subparagraphs A.1. through A.4. above)
         due to the Reinsurer shall be paid by the Company within 30 days
         following the end of the month. Any balances due to the Company shall
         be paid by the Reinsurer as soon as is reasonably practicable after
         receiving the monthly report, but not to exceed 30 days following
         receipt of the monthly report.

B.       This account will also bear a notation advising of the Gross Net
         Written Premium, outstanding Loss, Extra Contractual Obligations,
         Losses in Excess of Policy Limits and Loss Adjustment Expense reserve,
         summarized by line of business, and the unearned premium reserve at the
         end of the period, summarized by line of business, segregated by
         Contract Year. Should Loss, Extra Contractual Obligations, Losses in
         Excess of Policy Limits and Loss Adjustment Expense attributable to an
         ISO catastrophe(s) be involved, the account should bear a notation
         showing the ISO number(s) and the paid and outstanding amounts
         applicable.

C.       Within 60 days following the end of each annual accounting period, the
         Company shall furnish to the Reinsurer any other information which the
         Reinsurer may require for its Annual Convention Statement which may be
         reasonably available to the Company.

                                   ARTICLE 13

INTERLOCK

For purposes of calculations under the following Articles and provisions:

         1.       Premium Cap Article;

         2.       "Property Per Loss Occurrence Limit" provisions of paragraph C
                  of the Cover Article;

         3.       Loss and Loss Adjustment Expense Article;

         4.       Loss Corridor Article;

         5.       Adjustment of Ceding Commission Article; and

         6.       Accounts and Remittances Article;

experience (including but not limited to Loss, Loss Adjustment Expense, Extra
Contractual Obligations, Loss in Excess of Policy Limits and Gross Net Written
Premium, as applicable)




                                    11 of 31
<PAGE>

under this Contract and under the Companion Contract shall be combined. Any
reduction in coverage will be applied to each reinsurance contract on a pro rata
basis, based on the proportion of combined Loss, Loss Adjustment Expense, Extra
Contractual Obligations, Loss in Excess of Policy Limits or Gross Net Written
Premium experience, as applicable.

                                   ARTICLE 14

DEFINITIONS

A.       "Loss" shall mean amounts paid or payable by Company for indemnity
         under the Policies reinsured under this Contract.

B.       "Net Retained Liability" shall mean the Company's gross liability for
         Loss, Extra Contractual Obligations, Loss in Excess of Policy Limits
         and Loss Adjustment Expense under the Policies, after application of
         any reinsurance which inures to the benefit of this Contract.

C.       "Private Passenger Automobile Physical Damage and Liability Business"
         shall mean that business classified as private passenger automobile
         insurance, including liability, physical damage, uninsured/underinsured
         motorists and personal injury protection.

D.       "Companion Contract" shall mean the Traditional Private Passenger
         Automobile Quota Share Reinsurance Contract, effective at 12:01 a.m.,
         Central Standard Time, January 1, 2002, issued to Mutual Service
         Casualty Insurance Company (Intermediary Reference Number
         0481-10-0008-00).

E.       "Gross Net Written Premium" shall mean the gross written premium income
         on subject business, less returns and cancellations and less written
         premium income paid for reinsurances, recoveries under which would
         inure to the benefit of this Contract. Gross Net Written Premium income
         shall not include premium finance income, billing fees and Policy fees,
         collected by the Company in connection with business covered hereunder,
         regardless of whether these fees are taxed as premium by the
         jurisdiction in question.

F.       "Gross Net Earned Premium" shall mean the earned portion of the Gross
         Net Written Premium.

G.       "Loss Ratio" shall mean: (a) the Losses Incurred arising from Policies
         with effective or renewal dates during the Contract Year; divided by,
         (b) the Gross Net Earned Premium from Policies with effective or
         renewal dates during the Contract Year. The "Loss Ratio" will be
         calculated for the Contract Year using the combined experience of this
         Contract and the Companion Contract.

H.       "Adjusted Loss Ratio" shall mean the Loss Ratio after application of
         the Loss Corridor and IBNR.



                                    12 of 31
<PAGE>

I.       "Losses Incurred" shall mean paid Loss, Extra Contractual Obligations,
         Loss in Excess of Policy Limits, Loss Adjustment Expense, plus
         outstanding reserves under this Contract and the Companion Contract
         combined.

J.       "IBNR" shall mean the amount added to Losses Incurred for purposes of
         determining the Adjusted Loss Ratio for the adjustment of the ceding
         commission for each Contract Year. As respects each Contract Year, the
         IBNR factor for the first computation of adjusted commission for said
         Contract Year will be 6% of ceded Automobile Liability Gross Net
         Earned Premium (excluding property damage) under this Contract and the
         Companion Contract. For the second computation, the IBNR factor will be
         reduced to 3% of said premium. IBNR will be eliminated for subsequent
         computations of adjusted commission for said Contract Year.

K.       "Contract Year" shall mean the 12-month period beginning 12:01 a.m.,
         Central Standard Time, January 1, 2002, and each subsequent 12-month
         period that this Contract remains in force shall be a separate Contract
         Year.

L.       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:

         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




                                    13 of 31
<PAGE>

                  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 1
         68 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.

                                   ARTICLE 15

EXTRA CONTRACTUAL OBLIGATIONS

This Contract shall protect the Company, subject to the Reinsurer's limit of
liability appearing in the Cover Article of this Contract, where the Loss
includes any extra contractual obligations for 100% of such extra contractual
obligations. "Extra Contractual Obligations" are defined as those liabilities
not covered under any other provision of this Contract and which arise from
handling of any claim on business covered hereunder, such liabilities arising
because of but not limited to, the following: failure by the Company to settle
within the Policy limit, or by reason of alleged or actual negligence, fraud or
bad faith in rejecting an offer of settlement or in the preparation of the
defense or in the trial of any action against its insured or in the preparation
or prosecution of an appeal consequent upon such action.

The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss.

Notwithstanding anything stated herein, the Contract shall not apply to any
Extra Contractual Obligation incurred by the Company as a result of any final
legal adjudication of fraudulent and/or criminal act by any officer or director
of the Company acting individually, or collectively, or in collusion with any
individual or corporation, or any other organization, or party involved in the
presentation, or defense of settlement of any claim covered hereunder.



                                    14 of 31
<PAGE>

                                   ARTICLE 16

EXCESS OF POLICY LIMITS

In the event the Loss includes an amount in excess of the Company's Policy
limit, 100% of such amount in excess of the Company's Policy limit shall be
added to the amount of the Company's Policy limit, and the sum thereof shall be
covered hereunder, subject to the Reinsurer's limit of liability appearing in
the Cover Article of this Contract.

However, this Article shall not apply where the Loss has been incurred by the
Company as a result of any final legal adjudication of fraudulent and/or
criminal act by any officer or director of the Company acting individually, or
collectively, or in collusion with any individual or corporation, or any other
organization, or party involved in the presentation, or defense of settlement of
any claim covered hereunder.

For the purpose of this Article, the word "Loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.

                                   ARTICLE 17

ORIGINAL CONDITIONS

All insurances falling under this Contract shall be subject to the same terms,
rates, conditions and waivers, and to the same modifications, alterations and
cancellations as the respective Policies of the Company (except that in the
event of the insolvency of the Company the provisions of the Insolvency Article
of this Contract shall apply).

                                   ARTICLE 18

SPECIAL PROVISIONS

A.       The Company may not lower its rates or revise its underwriting
         guidelines without obtaining prior approval of the majority of the
         Subscribing Reinsurers, which shall not be unreasonably withheld.

B.       The Company shall file for rate changes per the Rate Change Summary
         dated October 19, 2001, unless otherwise mutually agreed to in
         quarterly meetings between the Company's management and the Reinsurer.



                                    15 of 31
<PAGE>

                                   ARTICLE 19

LOSS AND LOSS ADJUSTMENT EXPENSE

Subject to the terms and conditions of this Contract, any Loss settlement made
by the Company within the terms and conditions of the Policy shall be
unconditionally binding upon the Reinsurer in proportion to its participation,
and the Reinsurer shall benefit proportionally in all salvages and recoveries.

As an allowance for Loss Adjustment Expense (including Declaratory Judgment
Expenses), the Reinsurer shall be liable for an amount equal to 6% of the ceded
Gross Net Earned Premium hereunder. The Reinsurer shall also reimburse the
Company for a pro rata share of any outside legal expenses incurred, but the
Reinsurer's liability for such expenses under this Contract and the Companion
Contract combined shall not exceed 2.5% of ceded Gross Net Earned Premium under
both contracts.

"Declaratory Judgment Expenses" 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 arc 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.

                                   ARTICLE 20

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 which is classified
by the Company as part of the Company's Private Passenger Automobile program.
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 Solvency.

                                   ARTICLE 21

CURRENCY

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



                                    16 of 31
<PAGE>

                                   ARTICLE 22

LOSS RESERVE 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;

         4.       losses incurred but not reported and Loss Adjustment Expense
                  relating thereto, where the Company has submitted the
                  calculation for said amount to the Reinsurer and the
                  Reinsurer's agreement is not unreasonably withheld.

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




                                    17 of 31
<PAGE>

         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 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




                                    18 of 31
<PAGE>

                  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 23

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 24

FEDERAL EXCISE TAX

(This Article applies only to those reinsurers, domiciled outside the United
States of America, who are not exempt from the Federal Excise Tax.)

The Reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax the percentage specified by United States law of the premium payable hereon
to the extent such premium is subject to Federal Excise Tax.

In the event of any return of premium becoming due hereunder, the Reinsurer
shall deduct the percentage specified by United States law from the amount of
the return and the Company or its agent should take steps to recover the Tax
from the United States Government.

                                   ARTICLE 25

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.



                                    19 of 31
<PAGE>

                                   ARTICLE 26

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 27

INSOLVENCY

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.

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.

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.

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.



                                    20 of 31
<PAGE>

                                   ARTICLE 28

ARBITRATION

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.

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.

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 wham the other shall decline two,
and the decision shall be made by drawing lots.

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.

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.

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 29

SERVICE OF SUIT

A.       This Article applies only to those reinsurers not domiciled in the
         United States of America, and/or not authorized in any state, territory
         and/or district of the United States of America where authorization is
         required by insurance regulatory authorities.



                                    21 of 31
<PAGE>

B.       In the event of the failure of a Reinsurer to pay any amount claimed to
         be due under this Contract, the Reinsurer, at the request of the
         Company, shall submit to the jurisdiction of any court of competent
         jurisdiction within the United States of America and shall comply with
         all requirements necessary to give such court jurisdiction; and all
         matters arising hereunder shall be determined in accordance with the
         law and practice of such court. Nothing in this clause constitutes or
         should be understood to constitute a waiver of the Reinsurer's rights
         to commence an action in any court of competent jurisdiction in the
         United States of America, 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 of America or of any state
         in the United States of America.

C.       Service of process in such suit may be made upon Messrs. Mendes and
         Mount, 750 Seventh Avenue, New York, New York 10019-6829
         (hereinafter, "agent for service of process"), and in any suit
         instituted against the Reinsurer upon this Contract, the Reinsurer
         shall abide by the final decision of such court or of any appellate
         court in the event of an appeal.

         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 the agent for service of process shall enter a general appearance
         on behalf of the Reinsurer in the event such a suit shall be
         instituted.

         Further, pursuant to any statute of any state, territory or district of
         the United States of America that makes provision therefor, the
         Reinsurer 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 hereby
         designates the agent for service of process as the firm to whom the
         said officer is authorized to mail such process or a true copy thereof.

                                   ARTICLE 30

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.



                                    22 of 31
<PAGE>

                                   ARTICLE 31

SEVERABILITY

If any law or regulation of the Federal, state or local government of the United
States of America or the rulings of officials having supervision over insurance
companies should render the undertaking of this Contract illegal within the
jurisdiction of such authority, the Company may upon written notice to the
Reinsurer suspend, abrogate or amend this Contract insofar as it relates to such
jurisdiction, to the extent necessary to comply with such law, regulation or
ruling. Such suspension, abrogation or amendment of a portion of this Contract
will in no way affect any other portion thereof.

                                   ARTICLE 32

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 Adjustment 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, Minneapolis,
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 33

MODE OF EXECUTION

A.       This Contract may be executed by:

         1.       An original written ink signature of paper documents.

         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.



                                    23 of 31
<PAGE>

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 27TH DAY OF SEPTEMBER, 2002.

                            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
--------------------------------------------------------------------------------
J. Todd Hagely
Vice President - Finance & Treasurer
Direct Insurance Company
Direct General Insurance Company
Direct General Insurance Company of Louisiana
Direct General Insurance Company of Mississippi




                                    24 of 31
<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.



                                    25 of 31
<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
NMA 1119

--------------------------------------------------------------------------------
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.




                                    26 of 31
<PAGE>


      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.

(1)      This reinsurance does not cover any loss or liability accruing to the
         Reassured as a member of; or subscriber to, any association of insurers
         or reinsurers formed for the purpose of covering nuclear energy risks
         or as a direct or indirect reinsurer of any such member, subscriber or
         association.

(2)      Without in any way restricting the operation of paragraph (1) of this
         Clause it is understood and agreed that for all purposes of this
         reinsurance all the original policies of the Reassured (new, renewal
         and replacement) of the classes specified in Clause II of this
         paragraph (2) from the time specified in Clause III in this paragraph
         (2) shall be deemed to include the following provision (specified as
         the Limited Exclusion Provision):

         LIMITED EXCLUSION PROVISION.*

         I.       It is agreed that the policy does not apply under any
                  liability coverage, to

                      injury, sickness, disease, death or destruction

                      bodily injury or property damage

                  with respect to which an insured under the policy is also an
                  insured under a nuclear energy liability policy issued by
                  Nuclear Energy Liability Insurance Association, Mutual Atomic
                  Energy Liability Underwriters or Nuclear Insurance Association
                  of Canada, or would be an insured under any such policy but
                  for its termination upon exhaustion of its limit of liability.

         II.      Family Automobile Policies (liability only), Special
                  Automobile Policies (private passenger automobiles, liability
                  only), Farmers Comprehensive Personal Liability Policies
                  (liability only), Comprehensive Personal Liability Policies
                  (liability only) or policies of a similar nature; and the
                  liability portion of combination forms related to the four
                  classes of policies stated above, such as the Comprehensive
                  Dwelling Policy and the applicable types of Homeowners
                  Policies.

         III.     The inception dates and thereafter of all original policies as
                  described in II above, whether new, renewal or replacement,
                  being policies which either:

                  (a)      become effective on or after 1st May, 1960, or

                  (b)      become effective before that date and contain the
                           Limited Exclusion Provision set out above;

                  provided this paragraph (2) shall not be applicable to Family
                  Automobile Policies, Special Automobile Policies, or policies
                  or combination policies of a similar nature, issued by the
                  Reassured on New York risks, until 90 days following approval
                  of the




                                    27 of 31
<PAGE>

                  Limited Exclusion Provision by the Governmental Authority
                  having jurisdiction thereof.

(3)      Except for those classes of policies specified in Clause II of
         paragraph (2) and without in any way restricting the operation of
         paragraph (1) of this Clause, it is understood and agreed that for all
         purposes of this reinsurance the original liability policies of the
         Reassured (new, renewal and replacement) affording the following
         coverages:

                  Owners, Landlords and Tenants Liability, Contractual
                  Liability, Elevator Liability, Owners or Contractors
                  (including railroad) Protective Liability, Manufacturers and
                  Contractors Liability, Product Liability, Professional and
                  Malpractice Liability, Storekeepers Liability, Garage
                  Liability, Automobile Liability (including Massachusetts Motor
                  Vehicle or Garage Liability)

         shall be deemed to include, with respect to such coverages, from the
         time specified in Clause V of this paragraph (3), the following
         provision (specified as the Broad Exclusion Provision):

         BROAD EXCLUSION PROVISION.*

         It is agreed that the policy does not apply:

         I.       Under any Liability Coverage, to

                  injury, sickness, disease, death or destruction

                  bodily injury or property damage

                  (a)      with respect to which an insured under the policy is
                           also an insured under a nuclear energy liability
                           policy issued by Nuclear Energy Liability Insurance
                           Association, Mutual Atomic Energy Liability
                           Underwriters or Nuclear Insurance Association of
                           Canada, or would be an insured under any such policy
                           but for its termination upon exhaustion of its limit
                           of liability; or

                  (b)      resulting from the hazardous properties of nuclear
                           material and with respect to which (1) any person or
                           organization is required to maintain financial
                           protection pursuant to the Atomic Energy Act of 1
                           954, or any law amendatory thereof, or (2) the
                           insured is, or had this policy not been issued would
                           be, entitled to indemnity from the United States of
                           America, or any agency thereof, under any agreement
                           entered into by the United States of America, or any
                           agency thereof, with any person or organization.



                                    28 of 31
<PAGE>

         II.      Under any Medical Payments Coverage, or under any
                  Supplementary Payments Provision relating to

                      immediate medical or surgical relief

                      first aid,

                  to expenses incurred with respect to

                      bodily injury, sickness, disease or death

                      bodily injury

                  resulting from the hazardous properties of nuclear material
                  and arising out of the operation of a nuclear facility by any
                  person or organization.

         III.     Under any Liability Coverage, to

                      injury, sickness, disease, death or destruction

                      bodily injury or property damage

                  resulting from the hazardous properties of nuclear material,
                  if

                  (a)      the nuclear material (1) is at any nuclear facility
                           owned by, or operated by or on behalf of, an insured
                           or (2) has been discharged or dispersed therefrom;

                  (b)      the nuclear material is contained in spent fuel or
                           waste at any time possessed, handled, used,
                           processed, stored, transported or disposed of by or
                           on behalf of an insured; or

                  (c)      the

                              injury, sickness, disease, death or destruction

                              bodily injury or property damage

                  arises out of the furnishing by an insured of services,
                  materials, parts or equipment in connection with the planning,
                  construction, maintenance, operation or use of any nuclear
                  facility, but if such facility is located within the United
                  States of America, its territories or possessions or Canada,
                  this exclusion (c) applies only to

                      injury to or destruction of property at such nuclear
                      facility.

                      property damage to such nuclear facility and any property
                      thereat.



                                    29 of 31
<PAGE>

         IV.      As used in this endorsement:

                  "HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
                  properties; "NUCLEAR MATERIAL" means source material, special
                  nuclear material or byproduct material; "SOURCE MATERIAL",
                  "SPECIAL NUCLEAR MATERIAL", and "BYPRODUCT MATERIAL" have the
                  meanings given them in the Atomic Energy Act of 1 954 or in
                  any law amendatory thereof; "SPENT FUEL" means any fuel
                  element or fuel component, solid or liquid, which has been
                  used or exposed to radiation in a nuclear reactor; "WASTE"
                  means any waste material (1) containing byproduct material
                  other than the tailings or wastes produced by the extraction
                  or concentration of uranium or thorium from any ore processed
                  primarily for its source material content and (2) resulting
                  from the operation by any person or organization of any
                  nuclear facility included under the first two paragraphs of
                  the definition of nuclear facility; "NUCLEAR FACILITY" means

                  (a)      any nuclear reactor,

                  (b)      any equipment or device designed or used for (1)
                           separating the isotopes of uranium or plutonium, (2)
                           processing or utilizing spent fuel, or (3) handling,
                           processing or packaging waste,

                  (c)      any equipment or device used for the processing,
                           fabricating or alloying of special nuclear material
                           if at any time the total amount of such material in
                           the custody of the insured at the premises where such
                           equipment or device is located consists of or
                           contains more than 25 grams of plutonium or uranium
                           233 or any combination thereof, or more than 250
                           grams of uranium 235,

                  (d)      any structure, basin, excavation, premises or place
                           prepared or used for the storage or disposal of
                           waste,

                  and includes the site on which any of the foregoing is
                  located, all operations conducted on such site and all
                  premises used for such operations; "nuclear reactor" means any
                  apparatus designed or used to sustain nuclear fission in a
                  self-supporting chain reaction or to contain a critical mass
                  of fissionable material;

                  With respect to injury to or destruction of property, the word
                  "injury" or "destruction" includes all forms of radioactive
                  contamination of property, "property damage" includes all
                  forms of radioactive contamination of property.

         V.       The inception dates and thereafter of all original policies
                  affording coverages specified in this paragraph (3), whether
                  new, renewal or replacement, being policies which become
                  effective on or after 1st May, 1960, provided this paragraph
                  (3) shall not be applicable to:

                  (i)      Garage and Automobile Policies issued by the
                           Reassured on New York risks, or



                                    30 of 31
<PAGE>

                  (ii)     statutory liability insurance required under Chapter
                           90, General Laws of Massachusetts,

                  until 90 days following approval of the Broad Exclusion
                  Provision by the Governmental Authority having jurisdiction
                  thereof.

(4)      Without in any way restricting the operation of paragraph (1) of this
         Clause, it is understood and agreed that paragraphs (2) and (3) above
         are not applicable to original liability policies of the Reassured in
         Canada and that with respect to such policies this Clause shall be
         deemed to include the Nuclear Energy Liability Exclusion Provisions
         adopted by the Canadian Underwriters' Association or the Independent
         Insurance Conference of Canada.

--------------------------------------------------------------------------------
*NOTE THE WORDS PRINTED IN ITALICS IN THE LIMITED EXCLUSION PROVISION AND IN THE
BROAD EXCLUSION PROVISION SHALL APPLY ONLY IN RELATION TO ORIGINAL LIABILITY
POLICIES WHICH INCLUDE A LIMITED EXCLUSION PROVISION OR A BROAD EXCLUSION
PROVISION CONTAINING THOSE WORDS.
--------------------------------------------------------------------------------





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

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.

21/9/67
NMA 1590 (amended).




                                    31 of 31

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

                                     of the

                    AXA CORPORATE SOLUTIONS REASSURANCE PARIS

                          (the "Subscribing Reinsurer")

                                 as respects the

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE 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
                  (individually and collectively the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
12.50%.

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect 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.

This Agreement shall be effective at 12:01 a.m., Central Standard Time, January
1, 2002, subject to the termination provisions of the Commencement and
Termination Article of the Contract.



                                     1 of 2
<PAGE>

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

on this 27th day of September, in the year of 2002.

                    AXA CORPORATE SOLUTIONS REASSURANCE PARIS

                            /s/ Tatiana Ponomarenko
--------------------------------------------------------------------------------


AXA CS Reassurance Paris will not waive the Premium Cap, notwithstanding the
provisions of Article 9.


Market Reference Number: dref: 210723





                            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

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT




                                     2 of 2
<PAGE>
                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                           DORINCO REINSURANCE COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE 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
                                 (the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
10.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect 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.

This Agreement shall be effective for the period commencing at 12:01 a.m.,
Central Standard Time, January 1, 2002, subject to the termination provisions of
the Commencement and Termination Article of the Contract.



                                     1 of 2
<PAGE>

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

on this 27th day of September, in the year of 2002.

                           DORINCO REINSURANCE COMPANY

                              /s/ Patrick O'Connor
--------------------------------------------------------------------------------





Market Reference Number: TA 33586





                            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

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT





                                     2 of 2
<PAGE>
                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                        FOLKSAMERICA REINSURANCE COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE 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
                                 (the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
10.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect 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.

This Agreement shall be effective for the period commencing at 12:01 a.m.,
Central Standard Time, January 1, 2002, subject to the termination provisions of
the Commencement and Termination Article of the Contract.



                                     1 of 2
<PAGE>

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

on this 27th day of September, in the year of 2002.

                        FOLKSAMERICA REINSURANCE COMPANY

                              /s/ Peter L. Hudson
--------------------------------------------------------------------------------





Market Reference Number: dref: 210723





                            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

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT




                                     2 of 2
<PAGE>
                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                     OVERSEAS PARTNER US REINSURANCE COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE 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

                  (individually and collectively the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
40.0%.

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect 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 3
<PAGE>

The following shall apply to the Subscribing Reinsurer's share in the attached
Contract in lieu of paragraph B of Article 9 - Premium Cap - of the Contract:

B.       If any Premium Cap is exceeded, or is projected by the Company to be
         exceeded, during the Contract Year, the Reinsurer shall have the right
         to waive the Premium Cap, or to invoke either of the following options
         within 60 days of the receipt by the Reinsurer of the monthly report
         indicating that a Premium Cap has been exceeded:

         1.       Reduce the quota share percentage under this Contract and the
                  Companion Contract, as respects the business for which the
                  Premium Cap is exceeded, to the proportion that 25% of the
                  Premium Cap bears to the total Gross Net Written Premium under
                  this Contract and the Companion Contract in the state(s) to
                  which the Premium Cap applies; or

         2.       As respects Policies issued in the state(s) in which the
                  Premium Cap is exceeded, exclude from cession under this
                  Contract and the Companion Contract all such Policies issued
                  after the Premium Cap is reached (as estimated after returns
                  and cancellations).

         Failure by the Reinsurer to make an election within 60 days as
         indicated above will constitute waiver of the specific Premium Cap upon
         which the Reinsurer has received notice.

This Agreement shall be effective at 12:01 a.m., Central Standard Time, January
1, 2002, subject to the termination provisions of the Commencement and
Termination Article of the Contract.









                                     2 of 3
<PAGE>


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

on this 27th day of September, in the year of 2002.

                     OVERSEAS PARTNER US REINSURANCE COMPANY

                             /s/ Michael J. Cascio
--------------------------------------------------------------------------------





Market Reference Number:





                            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


                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT







                                     3 of 3
<PAGE>
                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                            SCOR REINSURANCE COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE 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
                                 (the "Company")

The Subscribing Reinsurer agrees that its share in the interests and liabilities
of the "Reinsurers" as set forth in the Contract attached hereto shall be for
27.50%.

The share of the Subscribing Reinsurer in the interests and liabilities of the
Reinsurers in respect of said Contract shall be separate and apart from the
shares of such other subscribing reinsurers, if any, in respect 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.

This Agreement shall be effective for the period commencing at 12:01 a.m.,
Central Standard Time, January 1, 2002, subject to the termination provisions of
the Commencement and Termination Article of the Contract.



                                     1 of 2
<PAGE>

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

on this 27th day of September, in the year of 2002.

                            SCOR REINSURANCE COMPANY


                             /s/ Marushka Stefanova
--------------------------------------------------------------------------------
                              Assistant Secretary




Market Reference Number: TOO 7598





                            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

                    TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT





                                     2 of 2