<PAGE>
                                                                   Exhibit 10.25



                                OPTION AGREEMENT

                        (WITH ASSET PURCHASE SUPPLEMENT)

                                     BETWEEN

                     DIRECT GENERAL INSURANCE AGENCY, INC.,
                               A TEXAS CORPORATION
                       (REFERRED TO HEREIN AS "PURCHASER")

                                       AND

                        ALL AMERICAN GENERAL AGENCY, INC.
                              A TEXAS CORPORATION,

                        GUARANTEED INSURANCE AGENCY, INC.
                               A TEXAS CORPORATION

                 (COLLECTIVELY REFERRED TO HEREIN AS "SELLERS")

                                AMCO RETAIL, LLC,
                             A FLORIDA CORPORATION,

                           AMCORP GENERAL AGENCY, INC.
                              A TEXAS CORPORATION,

                             PC GENERAL AGENCY, INC.
                             A GEORGIA CORPORATION,

                           ALEX J. CAMPOS, INDIVIDUAL
                               A GEORGIA RESIDENT,

                             KEITH MAHAR, INDIVIDUAL
                                A TEXAS RESIDENT,

                            MICHAEL YORK, INDIVIDUAL
                               A GEORGIA RESIDENT,

                (COLLECTIVELY REFERRED TO HEREIN AS "GUARANTORS")

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

                                 JANUARY 1, 2003





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<PAGE>
                                    CONTENTS

<TABLE>
<CAPTION>
  SECTION                      SECTION HEADINGS                        PAGE NO.
  -------                      ----------------                        --------
<S>           <C>                                                      <C>
              Recitals.....................................................1

     1.       Purchase Option..............................................2

     2.       Purchase Price...............................................2

     3.       Purchase Date and Exercise Date..............................3

     4.       Transferred Assets...........................................3

     5.       Obligation to Sell Transferred Assets........................4

     6.       Conduct of Sellers...........................................4

     7.       Prohibited Transactions......................................4

     8.       Access to Financial and Other Information....................5

     9.       Termination..................................................6

     10.      Schedule A...................................................7

     11.      Non-Compete..................................................7

     12.      Board Approvals..............................................7

     13.      Miscellaneous Provisions.....................................8

         a.   Modification.................................................8

         b.   Notices......................................................8

         c.   Assignment...................................................9

         d.   Governing Law................................................9

         e.   Severability................................................10

         f.   Counterparts................................................10

         g.   Headings....................................................10

         h.   Entire Agreement............................................10

         i.   Confidentiality.............................................10

              Signatures..................................................13

              Schedule A:      List of Names and Addresses of the Stores

              Supplement:      Asset Purchase Supplement, providing additional
                               terms and provisions and will govern the
                               consummation of the purchase and sale of assets
                               upon Purchaser's exercise of the Option (the
                               Supplement contains its own Contents page.)
</TABLE>



                                       ii
<PAGE>
                                OPTION AGREEMENT

         THIS OPTION AGREEMENT, including all schedules, supplements, and
exhibits (referred to herein collectively as this "Agreement") is dated as of
January 1, 2003 between Direct General Insurance Agency, Inc. ("Purchaser"), a
Texas domiciled Managing General Agent; and All American General Agency, Inc., a
Texas corporation; Guaranteed Insurance Agency, Inc., a Texas corporation
(referred to herein collectively as the "Sellers"); and AMCO Retail, LLC, a
Florida corporation; AMCORP General Agency, Inc., a Texas corporation; PC
General Agency, Inc., a Georgia corporation; Alex J. Campos, Individual, a
Georgia Resident; Keith Mahar, Individual, a Texas Resident; Michael York,
Individual, a Georgia Resident (referred to herein collectively as the
"Guarantors").

                                   WITNESSETH:

         WHEREAS, Purchaser has entered into a Managing General Agency
Agreement, Number Direct 03-001 dated January 1, 2003, between Purchaser and Old
American County Mutual Fire Insurance Company, for the purpose of offering a
non-standard personal automobile insurance program in the state of Texas,
hereinafter referred to as the "Program"; and,

         WHEREAS, Purchaser and All American General Agency, Inc., a Texas
corporation, (referred to herein as "Agent") have entered into a Sub-producer
agreement of even date herewith (the "Sub-producer Agreement"), pursuant to
which Agent, will sell automobile insurance policies and perform certain other
Sub-producer functions on behalf of Purchaser in accordance with the terms of
the Sub-producer Agreement under the Program; and,



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         WHEREAS, in connection with said Sub-producer Agreement Sellers desire
to grant to Purchaser an exclusive irrevocable option to purchase all of the
insurance agency related assets of the Sellers, including, all business on the
books of the Agent at the time of consummation of such purchase; and

         WHEREAS, Sellers and Purchaser desire to set forth in this Agreement
the terms of said option, including detailed provisions that will govern the
transfer of such assets upon the consummation of Purchaser's exercise of the
option granted under this Agreement; and

         WHEREAS, the Guarantors are willing to guarantee the performance of the
Sellers under this Agreement and the related Asset Purchase Supplement;

         NOW THEREFORE, in partial consideration of the commission rate and
other terms of the Sub-producer Agreement, and in further consideration of the
mutual promises set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties,
Purchaser and Sellers, intending to be legally bound, hereby agree as follows:

1.       Purchase Option. Sellers irrevocably grant to Purchaser the exclusive
         right to purchase (the "Option") the Transferred Assets (defined
         below), which Sellers use to conduct their automobile insurance sales
         and service business throughout the State of Texas, under the Program
         for the Purchase Price (defined below), said Option being exercisable
         by Purchaser in accordance with this Agreement.

2.       Purchase Price. If Purchaser elects to exercise the Option granted
         hereunder, the aggregate purchase price payable to Sellers (allocation
         among Sellers to be determined by Sellers) for




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         the Transferred Assets shall be an amount of cash equal to: 1) twelve
         percent (12%) of the aggregate net collected private passenger
         automobile written premium (net of cancellations) produced by Sellers
         under the Program, and 2) four percent (4%) of net collected
         non-standard private passenger automobile written premium (net of
         cancellations) produced by Sellers for other Texas programs. Net
         collected premium shall include one-half (1/2) of the collected policy
         fee, up to $15. Any policy fee above $15 shall be included in net
         collected premium in full. For the purpose of the Purchase Price
         calculation, the net collected non-standard automobile insurance
         premium shall be calculated by multiplying the net collected.
         non-standard private passenger automobile written premium (net of
         cancellations) from July 1, 2004 to December 31, 2004 by two (2).
         Additionally, for the purpose of the Purchase Price calculation, net
         collected non-standard automobile insurance premiums written under the
         Program and for other programs will only include premium produced by
         the Sellers.

3.       Purchase Date and Exercise Date. If the Option granted by this
         Agreement is exercised as provided hereunder, then the purchase of the
         Transferred Assets shall be effected on December 31, 2004 (the
         "Purchase Date"). Purchaser may exercise the Option by delivering
         written notice to Sellers (the "Notice") at any time on or before sixty
         (60) days prior to the Purchase Date (the "Exercise Date"), in
         accordance with the notice provision of this Agreement.

4.       Transferred Assets. The assets that Purchaser may acquire by exercising
         the Option shall consist of the "Transferred Assets" as such term is
         defined in Section 1.1 of the Asset Purchase Supplement (the
         "Supplement") attached hereto, and incorporated by reference herein and
         made an integral part of this Agreement.



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<PAGE>

5.       Obligation to Sell Transferred Assets. The parties expressly intend
         that the obligation of Sellers to sell the Transferred Assets to
         Purchaser becomes final and enforceable upon the execution and delivery
         of this Agreement, subject only to (i) the exercise of the Option by
         Purchaser, (ii) the termination of this Agreement as provided herein,
         and (iii) such conditions or contingencies that are expressly provided
         in this Agreement or the Supplement.

6.       Conduct of Sellers. Before the expiration of the Option, except as
         permitted by the prior written consent of Purchaser, but without
         creating any liability, commitment, or obligation of Purchaser, Sellers
         shall comply with Section 5.2 "Conduct Before Closing Date" of the
         Supplement.

7.       Prohibited Transactions.

         a.       Exclusivity. Before the expiration of the Option, except as
                  permitted by the prior written consent of Purchaser, but
                  without creating any liability, commitment, or obligation of
                  Purchaser, Sellers shall not directly or indirectly, in any
                  way, contact, initiate, enter into, or conduct any discussions
                  or negotiations, or enter into any agreements, whether written
                  or oral, with any person or entity with respect to the sale of
                  any of the Transferred Assets or the capital stock of Sellers
                  or a merger or consolidation of Sellers with any other entity.
                  This paragraph shall not limit the Sellers' ability to sell
                  immaterial amounts of assets in the ordinary course of
                  business.

         b.       Long-Term Contracts. During the term of this Agreement,
                  without the written consent of Purchaser, Sellers will not
                  enter into or renew any facility or equipment lease agreement
                  for a term greater than two (2) years. During the second year
                  of this Agreement, Sellers will not enter into or renew any
                  form of advertising contract, or any




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                  other agreement that could materially affect the Transferred
                  Assets (other than facility or equipment leases), if such
                  contract or agreement has a term greater than one year.

         c.       Third Party Producer Agreements. During the term of this
                  Agreement, without the written consent of Purchaser, Sellers
                  will not enter into or renew any sales, producer, or agent
                  agreement with any agency, managing general agent, insurer,
                  broker, or other entity, pursuant to which Sellers would not
                  obtain exclusive rights to all renewals and the exclusive
                  control of renewal solicitations for all business written by
                  or through such Stores under such agreement, other than as
                  required by Texas statute.

         d.       Control of Sellers. Notwithstanding anything in this Agreement
                  to the contrary, the parties acknowledge that until Purchaser
                  exercises the Option and the closing for the asset purchase
                  transaction has been consummated on the Purchase Date, the
                  responsibility for conducting the business affairs of the
                  Sellers shall remain exclusively with the current management
                  of Sellers.

8.       Access to Financial and Other Information.

         a.       So long as the Option has not expired and this Agreement has
                  not been terminated, Sellers shall provide on a confidential
                  basis financial, premium volume and such other information
                  about the Stores, the Business (as defined in the Supplement),
                  and the Transferred Assets, as Purchaser may reasonably
                  request. Sellers will promptly advise Purchaser of and provide
                  detailed information with respect to, any formal or informal
                  audit or examination of and any administrative action taken
                  against, any of the Sellers, by the Texas Department of
                  Insurance or any other regulatory agency. Purchaser shall
                  maintain any such information in confidence and shall use it
                  only for the purposes contemplated within this Agreement.



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         b.       Within thirty (30) days from the Effective Date of this
                  Agreement, Sellers shall provide, or cause to be provided, to
                  Purchaser the following Schedules required by the Supplement,
                  completed as of the Effective Date: Schedules 1.1(a); 1.1(b);
                  1.1(e); 1.1(f); 1.1(g); 3.11; and 3.14. Thereafter, during the
                  term of this Agreement, Sellers shall update, or cause to be
                  updated, such Schedules to be complete and accurate as of
                  each December 31st and deliver to Purchaser by the following
                  February 1st. If Purchaser exercises the Option by delivering
                  the Notice, then Sellers shall update, or cause to be updated,
                  such Schedules to be complete and accurate as of the Purchase
                  Date and deliver the revised Schedules to Purchaser no fewer
                  than five (5) business days prior to the Purchase Date. Any
                  changes to the original Schedules shall be clearly indicated
                  on the revised Schedules.

9.       Termination. Purchaser may terminate this Agreement at any time and for
         any reason before Purchaser delivers the Notice. This Agreement shall
         terminate and the Option shall expire at 11:59 p.m., Nashville,
         Tennessee time, on the Exercise Date, unless prior to such date and
         time Purchaser has exercised the Option by delivering the Notice to
         Alex Campos with copy to Burnie Burner on behalf of Sellers.
         Termination of this Agreement shall have no effect on the Sub-producer
         Agreement, the termination of which shall be governed by its own terms;
         provided, however, that this Agreement shall terminate automatically
         and the Option shall simultaneously expire if Direct General Insurance
         Agency, Inc. terminates the Sub-producer Agreement in accordance with
         the terms of the Sub-producer Agreement; provided further that if the
         duration of the Sub-producer Agreement is extended thereunder, then the
         duration of this Agreement and the Option shall be likewise extended.



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<PAGE>

10.      Schedule A. Sellers and Guarantors represent that Schedule A to this
         Agreement is a list of the names and addresses of all of the Stores
         through which Sellers conduct their automobile insurance sales and
         service business throughout the State of Texas. Sellers and Guarantors
         represent that the Company Stores identified on Schedule A are wholly
         owned by Guaranteed Insurance Agency, Inc., and that all of the
         Transferred Assets as defined in the Supplement are owned, leased, or
         otherwise under the control of Sellers.

11.      Non-Compete. If the Option is exercised, no Sellers or Guarantors shall
         open or acquire, directly or indirectly, any non-standard automobile
         insurance agency in the State of Texas for a period of eighteen (18)
         months after such Option is exercised in accordance with the
         Supplement.

12.      Board Approvals.

         a.       Within 30 days of execution of this Agreement, Purchaser shall
                  have delivered to Sellers a certified copy of resolutions of
                  the board of directors of Purchaser confirming authorization
                  for Purchaser to enter into this Agreement (including the
                  Supplement hereto) and to consummate the transactions
                  contemplated by this Agreement and said Supplement, subject
                  only to the conditions set forth herein and therein and to any
                  additional conditions, acceptable to Sellers, expressly set
                  forth in such resolutions.

         b.       Within 30 days of execution of this Agreement, Sellers shall
                  have delivered to Purchaser certified copies of resolutions of
                  the board of directors of each Seller individually, and to the
                  extent the Transferred Assets will represent all or
                  substantially all of the assets of any Seller, certified
                  copies of resolutions of the shareholder(s) of any such
                  Sellers, granting final authorization for the Sellers to enter
                  into this Agreement (including the Supplement hereto) and to
                  consummate the transactions contemplated by




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                  this Agreement and said Supplement, subject only to the
                  conditions set forth herein and therein and to any additional
                  conditions, acceptable to Purchaser, expressly set forth in
                  such resolutions.

13.      Miscellaneous Provisions.

         a.       Modification. This Agreement may not be amended or modified in
                  any way except by a written document signed by the parties who
                  are affected by such amendment or modification.

         b.       Notices. The Notice and all other notices, requests, demands,
                  and other communications required or permitted hereunder shall
                  be in writing and shall be deemed to have been given (i) when
                  sent by facsimile with confirmation; (ii) when received from
                  an overnight courier or by other method of hand delivery; or
                  (iii) on the third business day after being mailed certified
                  or registered U.S. mail with postage prepaid as follows:

                  (1)  If to Purchaser to:

                       Direct General Insurance Agency, Inc. (Texas)
                       Executive Offices
                       2813 Business Park Drive, Building I
                       Memphis, TN 38118

                       ATTENTION: Jacqueline C. Adair, President

                       Direct General Insurance Agency, Inc. (Texas)
                       Regional Administrative Office
                       1281 Murfreesboro Road, Suite 5-01
                       Nashville, TN 37217
                       FAX: (615)366-3722

                       ATTENTION: Ronald F. Wilson, Secretary



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<PAGE>

                  (2) If to Sellers, to:

                      All American General Agency, Inc.
                      3039 Premiere Parkway, Suite 100
                      Duluth, GA 30097

                      ATTENTION: Alex J. Campos, President

                      Long, Burner, Parks & DeLargy, P.C.
                      515 Congress, Suite 1500
                      Austin, TX 78701

                      ATTENTION: Burnie Burner
                      ----------------------------------------------------------

         c.       Assignment. This Agreement shall be binding upon and inure to
                  the benefit of the parties hereto and their respective
                  successors, and permitted assigns, but neither this Agreement
                  nor any of the rights, interest, or obligations hereunder
                  shall be assigned by either of the parties hereto without the
                  prior written consent of the other party; provided, however,
                  that Purchaser may assign all or a portion of its rights,
                  interest, or obligations hereunder to any affiliate that now
                  or hereafter controls, is controlled by, or under common
                  control with, Direct General Corporation; provided, however,
                  that any such assignment by Purchaser shall not relieve
                  Purchaser of its liabilities to Sellers under this Agreement.
                  (For this paragraph, Sellers are deemed to be one "party.")

         d.       Governing Law. This Agreement and the legal relations between
                  the parties hereto shall be governed by, and construed in
                  accordance with, the laws of the State of Texas, without
                  reference to the conflict of laws principles thereof.



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         e.       Severability. In the event any part(s) of this Agreement
                  should be adjudged invalid or unenforceable, such adjudication
                  shall in no manner affect the other parts, which shall remain
                  in full force and effect as if the part(s) so declared or
                  adjudged invalid were not originally a part hereof.

         f.       Counterparts. This Agreement may be executed simultaneously in
                  two or more counterparts, each of which shall be deemed an
                  original, but all of which together shall constitute one and
                  the same instrument. This Agreement will be deemed binding and
                  in effect if counterparts are signed by the parties and
                  delivered by facsimile, provided that the parties exchange
                  originally signed counterparts by U.S. Mail or overnight
                  courier.

         g.       Headings. The headings contained in this Agreement are
                  inserted for convenience only and shall not constitute a part
                  hereof.

         h.       Entire Agreement. This Agreement, including any schedules,
                  supplements, exhibits and other documents referred to herein,
                  including, without limitation, the Sub-producer Agreement,
                  the, and the Supplement, embodies the entire agreement and
                  understanding of the parties hereto with respect to the
                  subject matter contained herein and supersedes all prior
                  agreements and understandings between the parties with respect
                  to such subject matter, including, by way of illustration and
                  not by limitation, any term sheet or letter of intent
                  previously agreed to by the parties.

         i.       Confidentiality. In connection with this Agreement, and until
                  the Option expires or is exercised hereunder, each party has
                  provided, and intends to provide to the other, information
                  about their respective business affairs, financial condition,
                  computer information systems, corporate and management
                  structure, and other confidential and proprietary information
                  ("Information"). The term "Information" shall include any



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                  form of communication between the parties, including without
                  limitation, written documents, software programs,
                  electronically stored data, and oral presentations and
                  discussions. The term "Information" includes this Agreement,
                  its contents, and the fact tat this Agreement has been entered
                  into between the parties.

                  Each party will keep the Information provided by the other
                  party in confidence and will not use such Information for any
                  purpose other than as contemplated by this Agreement. Each
                  party will not copy the Information provided by the other
                  party, or disclose or allow disclosure of such Information to
                  any other person, except that each party may disclose such
                  Information to its officers, directors, employees, independent
                  contractors, affiliates, or independent auditors
                  ("Representatives") and applicable regulatory authorities
                  (upon the request of such authorities), who have a need to
                  know the Information for the purpose of implementing this
                  Agreement or auditing or regulating the affected party.
                  Furthermore, Purchaser, or any affiliate of Purchaser, may
                  disclose in any prospectus or offering memorandum the
                  existence of this Agreement and its material terms in the
                  context of any offering of securities by Purchaser or its
                  affiliate, if Purchaser is advised by legal counsel that such
                  disclosure is required or prudent in connection with such
                  offering.

                  The term "Information" shall not include any information:

                  (i)      which at the time disclosed to or obtained by either
                           party is available generally to the public;

                  (ii)     which becomes available generally to the public
                           through no act or omission by either party in
                           violation of this provision;



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                  (iii)    which either party demonstrates was received by it
                           from a third party, who had no confidentiality
                           obligations to the other party with respect thereto;

                  (iv)     which is required, under advice of counsel, to be
                           disclosed by law or court order, or in connection
                           with litigation or arbitration brought by either
                           party to enforce this Agreement; or

                  (v)      following the lapse of one year from the Exercise
                           Date or from the date this Agreement is terminated as
                           provided hereunder; provided that the prohibition
                           against disclosing the Purchase Price shall not
                           lapse.

                  Upon the execution of this Agreement, at the request of
                  Sellers or Purchaser, the parties may, individually or
                  jointly, issue a press release describing the Option and any
                  related transactions. The language of any such press
                  release(s) shall be mutually agreed between the parties. After
                  such initial press release(s), except as and to the extent
                  required by law or regulation, as advised by counsel, without
                  the prior written consent of the other party, neither
                  Purchaser, nor Sellers will, and they will direct their
                  Representatives not to make, directly or indirectly, any
                  public comment, statement or communication with respect to, or
                  otherwise to disclose or to permit the disclosure of the
                  existence of the Option or any of the terms, conditions or
                  other provisions of this Agreement; other than to repeat the
                  information disclosed in the foregoing initial press
                  release(s).




                          REMAINDER OF PAGE LEFT BLANK

                         SEPARATE SIGNATURE PAGE FOLLOWS




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         IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first above written.

                                               "PURCHASER"

                                               DIRECT GENERAL INSURANCE
                                               AGENCY, INC., a Texas corporation


                                        By:    /s/ Barry D. Elkins
                                               ---------------------------------

                                        Name:  Barry D. Elkins
                                               ---------------------------------

                                        Title: SVP & CFO
                                               ---------------------------------


"SELLERS":

All American General Agency, Inc.

By: /s/ Alex J. Campos
-------------------------------
Name: Alex J. Campos
Title: Vice President


Guaranteed Insurance Agency, Inc.

By: /s/ Keith A. Maher
-------------------------------
Name: Keith A. Maher
Title: President


"GUARANTORS":

AMCO Retail, LLC

By: /s/ Keith A. Maher
-------------------------------
Name: Keith A. Maher
Title: Director




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<PAGE>

AMCORP General Agency, Inc.

By: /s/ Alex J. Campos
-------------------------------
Name: Alex J. Campos
Title: Vice President




PC General Agency, Inc.

By: /s/ Alex J. Campos
-------------------------------
Name: Alex J. Campos
Title: President


/s/ Alex J. Campos
-------------------------------
Alex J. Campos, Individually


/s/ Keith Maher
-------------------------------
Keith Maher, Individually


/s/ Michael York
-------------------------------
Michael York, Individually


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