WACO

                                     CONSENT

                                       and

                                     WAIVER

                                       and

                                    AMENDMENT

                          Dated as of January 31, 2000

                                      under

                                CREDIT AGREEMENT

                           Dated as of March 12, 1997

     PENNCORP FINANCIAL GROUP, INC., a Delaware corporation (the "Company"), the
lenders  signatory  to the Credit  Agreement  referred to below that are parties
hereto,  the Managing  Agents and the Co-Agents named therein (the "Agents") and
THE BANK OF NEW YORK, as administrative agent for the Banks (the "Administrative
Agent"),  hereby agree as follows  (with certain terms used herein being defined
in, or incorporated by reference pursuant to, Section 2 hereof):

     1. CREDIT AGREEMENT.  (a) Reference is hereby made to the Credit Agreement,
dated as of March 12,  1997,  among the Company,  the Banks,  the Agents and the
Administrative  Agent (as amended,  modified or waived prior to the date hereof,
the "Credit Agreement").

     2.  DEFINITIONS.  (a) All terms  defined in the Credit  Agreement  are used
herein with the meanings therein ascribed to them.

     (b) For purposes of this Consent:

     "AMERICAN-AMICABLE"   means  American-Amicable   Holdings  Corporation,   a
Delaware corporation.

     "AMERICAN-AMICABLE    BALANCE   SHEET"   means   the   balance   sheet   of
American-Amicable attached hereto as Exhibit A.

     "CHAPTER 11 CASE" has the meaning assigned to it in Section 4(c).

     "EXECUTIVE  EMPLOYMENT  AGREEMENT" shall mean the (i) Employment  Agreement
dated  January 28, 2000  between  the  Company and Keith Maib,  (ii)  Employment
Agreement  dated January 28, 2000 between the Company and Scott  Silverman,  and
(iii) Employment

                                       1

<PAGE>

Agreement  dated  January 28, 2000 between the Company and James  McDermott,  in
each case, as amended and as in effect on the Waco Consent Effective Date.

     "PIONEER  LIFE" means Pioneer  Security  Life  Insurance  Company,  a Texas
insurance company.

     "PIONEER  LIFE  BALANCE  SHEET"  means the  balance  sheet of Pioneer  Life
attached hereto as Exhibit B.

     "SPECIFIED  TRANSACTION"  shall mean the  Transactions  numbered 1 and 4 on
Schedule 1 hereto.

     "SWISS RE SALE CONTRACT" means the Stock Purchase Agreement,  dated January
7, 2000, between Reassure America Life Insurance Company,  an Illinois insurance
company,  and the Company,  as such form may be AMENDED OR MODIFIED FROM TIME TO
TIME  AFTER  THE  SWISS  RE  CONSENT  EFFECTIVE  DATE,  PROVIDED,  that any such
amendment or modification was, in the sound business judgment of the Company and
its Board of Directors,  in the BEST  INTERESTS OF THE COMPANY,  AND,  PROVIDED,
FURTHER,  that any such amendment or modification of Section 2.1 of the Swiss Re
Sale Contract, which reduces the total consideration payable to the Company, was
consented  to in writing  by the  Majority  Bank  except  for any  amendment  or
modification to allow for the assumption of transaction bonuses in an amount not
greater than $1,400,000.

     "TRANSACTION" means a transaction listed on Schedule 1.

     "TRANSFER" means a transfer, as a repayment of Indebtedness, a dividend, or
a capital CONTRIBUTION,  OF PROPERTY UNDER A TRANSACTION.  "TRANSFER", when used
as a verb, has a correlative meaning.

     "TRANSFEROR" means a Person that Transfers any Property in a Transaction.

     "WACO CASH PROCEEDS" has the meaning assigned to it in Section 7(a).

     "WACO  CONSENT  EFFECTIVE  DATE"  means  the  date  on  which  each  of the
conditions specified in Section 8 hereof shall have been fulfilled.

     "WACO SALE CONTRACT" means the (a) Stock Purchase Agreement,  dated January
8, 2000, between  Pioneer-Occidental  Holdings Company, a Delaware  corporation,
and  American-Amicable,  in the form attached  hereto as Exhibit C, as such form
may be amended or modified  from time to time after the Waco  Consent  Effective
Date,  PROVIDED,  that such amendment or modification was, in the sound business
judgment of the Company and its Board of DIRECTORS, IN THE BEST INTERESTS OF THE
COMPANY,  AND, PROVIDED,  FURTHER, that any amendment or modification of Section
2.2 of the Waco Sale Contract,  which reduces the total consideration to be paid
to  American-Amicable  and its Subsidiaries,  was consented to in writing by the
Majority  Banks,  except  for any  amendment  or  modification  to allow for the
assumption of transaction  bonuses in an amount not greater than  $400,000,  and
(b) Transactions related thereto.

                                       2
<PAGE>

     3. CONSENT.  (a) Upon the Waco Consent  Effective  Date, the Majority Banks
hereby  consent,  under the sections of the Credit  Agreement  and to the extent
specified in Section 3(b) hereof, to the consummation of the Transactions.

     (b) The consent under Section 3(a) is limited to Sections  8.06(b) and (c),
8.08(b),  8.15,  8.17,  8.18,  8.21(b),  8.22, 8.23, 8.24 and 8.29 of the Credit
Agreement,  and then only to the extent  necessary  to avoid a violation of such
Section or Sections as may be applicable to such Transfer.

     4. WAIVERS.  (a) The Majority  Banks hereby waive  compliance  with Section
8.06(c) of the Credit  Agreement to the extent that any  non-compliance  results
solely from the sale of Property  pursuant  to the Waco Sale  Contract,  and the
Security  Interest in such  Property  shall be deemed to have been released upon
the receipt by the Administrative Agent of the Waco Cash Proceeds (as defined in
Section 7(a) hereof).

     (b) The Majority  Banks hereby waive the  application  of and the Company's
obligation to comply with Section 2.04(b) of the Credit Agreement; provided that
the waiver granted in this Section 4(b) shall cease to be effective, and Section
2.04(b) shall  thereupon  again be  effective,  if the Swiss Re Sale Contract is
terminated pursuant to Section 9.2(b)(i) thereof; and

     (c) The Majority Banks hereby waive the Event of Default under Section 9(g)
of the Credit  Agreement  to the extent that such Event of Default  results from
and only from (a) the resolution by the Company's Board of Directors determining
to file a petition commencing a case (the "Chapter 11 Case") under Chapter 11 of
Title  11 of the  United  States  Code,  as  contemplated  by the  Swiss Re Sale
Contract,  and (b) the Company's actions (other than the actual filing of such a
petition) in  furtherance  of such a filing  (whether taken before or after such
resolution).  The  Majority  Banks  expressly  do not waive the Event of Default
under  Section 9(g) of the Credit  Agreement to the extent that such an Event of
Default  results  from the filing by the  Company of a petition  commencing  the
Chapter 11 Case.

     (d)  The  Majority   Banks  hereby  waive  until   February  11,  2000  any
non-compliance  by the Company with Sections 8.10,  8.11,  8.12 and 8.13, to the
extent that such  non-compliance  results from and solely from the  Transactions
and the sale of Property pursuant to the Waco Sale Contract.

     5. (a) AMENDMENTS TO THE CREDIT AGREEMENT.  Upon and after the Waco Consent
Effective Date, the Credit Agreement shall be amended as follows:

     (i) Section 1.01 is hereby amended (A) to add, in alphabetical  order,  the
following new definition:

     "FORBEARANCE AGREEMENT" means, when and if the same becomes effective,  the
Forbearance Agreement among American-Amicable Holdings Corporation, Southwestern
Financial  Corporation,  Southwestern  Financial Services Corporation,  PennCorp
Occidental Corp., KB Investment L.L.C., KB Management L.L.C., the Banks that are
signatories  thereto,  the Agents and the  Administrative  Agent and  Collateral
Agent in the form attached hereto as Exhibit D, with such changes thereto as may
have been approved in writing by the Majority Banks.

                                       3
<PAGE>

     (B) to amend the following existing definition to read as follows:

     "LOAN  DOCUMENTS" shall mean (i) this Agreement and the Notes and, from and
after the execution and delivery  thereof by each Securing  Party,  the Security
Agreements,  (ii) the  Forbearance  Agreement  and (iii)  all other  agreements,
documents  and  instruments  with,  for  the  benefit  of or  in  favor  of  the
Administrative  Agent  or any  Bank,  relating  to,  arising  out of,  delivered
pursuant  to or in any  way  connected  with  (A)  any  agreement,  document  or
instrument  referred  to in  clause  (i)  or  clause  (ii)  or  (B)  any  of the
transactions  contemplated by any agreement,  document or instrument referred to
in clause (i) or clause (ii).

     (B) AMENDMENTS TO THE SECURITY AGREEMENTS.  Upon and after the Waco Consent
Effective Date,  Section 4.01(c) of each of the Security  Agreements (as defined
in the Credit Agreement) shall be amended to read as follows:

     "(C) SALE OF  COLLATERAL.  Except  during  the  continuance  of an Event of
Default,  the Company may, solely to the extent permitted by the Loan Documents,
sell or otherwise dispose of the Collateral."

     6. REPRESENTATIONS AND WARRANTIES. In order to induce the Majority Banks to
grant the consents,  releases and waiver effected hereunder,  the Company hereby
represents and warrants as follows:

     (a) The  Company  has  the  power,  and  has  taken  all  necessary  action
(including, if a corporation, any necessary stockholder action) to authorize it,
to execute,  deliver and perform in accordance with its terms this Consent. This
Consent  has been duly  executed  and  delivered  by the Company and is a legal,
valid and binding obligation of the Company,  enforceable against the Company in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement  of  creditors'  rights  generally,  whether  at  law  or in  equity
(including principles of good faith and fair dealing).  The execution,  delivery
and performance in accordance  with its respective  terms by the Company of this
Consent  do not and  (absent  any  change in any  Applicable  Law or  applicable
Contract) will not (i) require any Governmental Approval or any other consent or
approval  (including any consent or approval of the stockholders of the Company)
to have been  obtained  by the  Company  or any of its  Affiliates,  other  than
Governmental Approvals and other consents and approvals that have been obtained,
are final and not subject to review on appeal or to  collateral  attack,  are in
full force and effect,  or (ii) violate,  conflict with,  result in a breach of,
constitute  a default  under,  or result in or require the  creation of any Lien
(other than the Security Interest) upon any assets of any such Person under, (A)
any  Contract to which any such Person is a party or by which any such Person or
any of its properties may be bound or (B) any Applicable Law.

     (b) (i) The copy of the Waco Sale Contract attached as Exhibit C hereto (i)
is in substantially the form approved by the Company's Board of Directors at the
meeting of the Board of Directors  of the Company held on January 6, 2000,  (ii)
is in the form executed by the parties  thereto,  and (iii) has not been

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<PAGE>


amended  or  modified   subsequent   to  its  having  been   furnished   to  the
Administrative  Agent and prior to the Waco Effective Date, except by amendments
and modifications of which the Administrative Agent have been furnished copies.

     (ii) The copies of the Executive  Employment  Agreements attached hereto in
the respective forms of Exhibits D-1, D-2 and D-3 are in the forms in which such
Contracts exist on the Waco Consent Effective Date.

     (c) (i) Either (A) each Transferor  will,  under its Transfer,  receive not
less than the reasonable  equivalent Value of the assets being Transferred by it
thereunder,  or (B) both before and after giving effect to each  Transaction (1)
both the Fair Value and the Present Fair Saleable Value of the remaining  assets
of the Transferor  transferring assets thereunder will be greater than the total
amount of such  Transferor's  Debts,  (2) the Present Fair Saleable Value of the
remaining assets of such Transferor will exceed the amount that will be required
to pay the probable  liability of such  Transferor's on its Debts as they become
absolute  and mature and (3) such  Transferor  (aa) will be able to realize upon
its assets and pay its Debts as they  mature in the normal  course of  business,
and (bb) will not be  engaged in a business  or a  transaction,  nor be about to
engage  in a  business  or a  transaction,  (I) for  which  its  property  would
constitute  unreasonably  small  capital or (II) in relation to which its assets
would be unreasonably small;

     (ii) Each Transferor  transferring assets under a Transaction,  at the time
of such  transfer,  (A) will not intend to or believe  that it will incur  Debts
that will be beyond its  ability  to pay as such  Debts  mature and (B) will not
intend,  in consummating such  Transaction,  to hinder,  delay or defraud either
present or future  creditors or any other Person to which any of its Debts is or
will become owing.

     (iii) As used herein,  "Value"  means (A) "value" as defined  under Section
548(d)(2)(A) of the Bankruptcy Code; (B) "fair consideration" within the meaning
of Section 3 of the Uniform FRAUDULENT CONVEYANCE ACT AND (C) "VALUE" WITHIN THE
MEANING OF THE UNIFORM FRAUDULENT  TRANSFER ACT; "DEBT" means any Liability that
constitutes  "debt" or "Debt" under Section  101(11) of the  Bankruptcy  Code or
under the Uniform FRAUDULENT CONVEYANCE ACT, THE UNIFORM FRAUDULENT TRANSFER ACT
OR ANY ANALOGOUS  APPLICABLE LAW; "FAIR VALUE" means, with respect to any asset,
the amount that an independent  willing buyer would pay an  independent  willing
seller for such asset on a going concern basis, each having reasonable knowledge
of the relevant  facts and neither  being under any  compulsion to act, but with
the  transaction to be  consummated  within one year; and "PRESENT FAIR SALEABLE
VALUE" means, with respect to any asset, the amount that an independent  willing
buyer would pay an independent  willing seller for such asset on a going concern
basis, each having reasonable  knowledge of the relevant facts and neither being
under any compulsion to act, but with the  transaction to be consummated  within
six months.

     (d)  Each of the  American-Amicable  Balance  Sheet  and the  Pioneer  Life
Balance Sheet presents  fairly,  in all material  respects,  in accordance  with
GAAP, the respective financial positions of  American-Amicable  and Pioneer Life
at their  respective  dates,  and  except  as  disclosed  or  reflected  in such
financial statements, as at the Waco Consent Effective Date, neither such Person
had any  Liability,  contingent or otherwise,  or any  unrealized or anticipated
loss, that, singly or in the aggregate, has had or might have a Material Adverse
Effect on such Person.

                                       5
<PAGE>

     (e) Each of the foregoing  representations  and warranties shall constitute
representations  and warranties  subject to Section 9(d) of the Credit Agreement
and shall be made at and as of the Waco Consent  Effective Date and, in the case
of the  representations  and warranties made pursuant to Section 6(c), at and as
of the time of each Transaction.

     7. EVENTS OF DEFAULT.  Each of the following shall, for all purposes of the
Credit  Agreement  and Security  Agreements  constitute  an Event of Default (in
addition to any Event of Default  set forth in such  agreements),  whatever  the
reason  for such event and  whether it shall be  voluntary  or  involuntary,  or
within or without the control of the Company,  any  Subsidiary or any other Loan
Party,  or be effected by  operation of law or pursuant to any judgment or order
of  any  court  or  any  order,  rule  or  regulation  of  any  governmental  or
nongovernmental body:

     (a) contemporaneously with the Closing (as that term is defined in the Waco
Sale  Contract)  American-Amicable  shall  not have  paid to the  Administrative
Agent,  by wire transfer to a specified  account with The Bank of New York (such
account to be specified to American-Amicable no later than two (2) Business Days
prior to the  Closing),  the net cash  proceeds  due  pursuant  to the Waco Sale
Contract,  minus the  deductions  identified  in  Schedule 2 hereto,  in a total
amount of not less than $95,000,000  (the "Waco Cash Proceeds"),  such amount to
be  applied  first to  interest  which is then due and  payable  and then to the
payment of principal  amount of the Loans;  PROVIDED that it is understood  that
Transaction  number  2 on  Schedule  1  hereto  is not a part of the  Waco  Cash
Proceeds from the Waco Sale Contract;

     (b) any  representation  and warranty  made under Section 5 hereof shall at
any time prove to have been  incorrect or misleading in any material  respect at
any time when such representation and warranty was made;

     (c) any Property that is (i) the subject of a Specified  Transaction,  (ii)
Collateral  under a Security  Agreement  under which the Person  receiving  such
Property  is the  Pledgor,  and  (iii)  of a type  with  respect  to  which  the
applicable  Security  Interests may be perfected by  possession,  shall not have
been delivered to the applicable  Secured Party within four Business Days of its
receipt,  endorsed in blank if such Property is an instrument, or accompanied by
appropriate  blank stock or bond  powers,  if such  Property  is a  certificated
security,  in each case after the completion of the Specified Transaction to the
extent the same is not disposed of pursuant to the Waco Sale Contract; or

     (d) The Waco Sale  Contract  shall be  terminated  by the  Company  for any
reason other than in  connection  with the  Company's  acceptance  of a Superior
Proposal (as defined in the Waco Sale Contract) to which the Majority Banks have
consented.

     8. CONDITIONS TO  EFFECTIVENESS.  This Consent shall be effective as of the
date first written above,  but shall not become  effective as of such date until
the time as:

     (a) this  Consent has been  executed  and  delivered  by the  Company,  the
Majority Banks and the Administrative Agent;

     (b) all amounts payable  pursuant to Section 11.03 of the Credit  Agreement
for which  invoices have been delivered to the Company on or prior to such date,
have been paid in full; and

                                       6
<PAGE>

     (c) the  Administrative  Agent shall have  received a copy of the no action
letters of the Texas  Department  of  Insurance  with respect to the transfer of
$20,400,000 in the aggregate, to the Company.

     9.  TERMINATION OF COMMITMENTS;  ACCELERATION  OF LOAN. (a)  Simultaneously
with the payment to the  Administrative  Agent contemplated by Section 7(a), the
Commitments  shall be terminated in full,  and this Section 9(a) shall be deemed
to be a notice of termination that complies with the provisions of Sections 2.04
and 4.05 of the Credit Agreement.

     (b)   Simultaneously   with  the  payment  to  the   Administrative   Agent
contemplated  by Section 7(a),  the Loans (a) shall be deemed to have become due
in the amount of such  payment,  and this  Section  9(b) shall be deemed to be a
notice of prepayment, that complies with Sections 3.03(a) and 4.05 of the Credit
Agreement.

     10.  GOVERNING  LAW.  This Consent  shall be governed by, and  construed in
accordance with, the law of the State of New York.

     11.   COUNTERPARTS.   This  Consent  may  be  executed  in  any  number  of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument and any of the parties hereto may execute this Consent by signing any
such counterpart.


                 [REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK)

                                       7
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Waco Consent to
be duly executed as of the day and year first above written.

                                   PENNCORP FINANCIAL GROUP, INC.


                                   By: /s/Scott D. Silverman
                                        --------------------------------------
                                        Name:     Scott D. Silverman
                                        Title:    Executive Vice President

                                   THE BANK OF NEW YORK, as
                                   Administrative Agent, Collateral Agent and
                                   as a Bank


                                   By: /s/Peter W. Helt
                                        --------------------------------------
                                        Name:     Peter W. Helt
                                        Title:    Vice President

                                   THE CHASE MANHATTAN BANK, as a Managing
                                   Agent and as a Bank

                                   By: /s/Glenn R. Meyer
                                        --------------------------------------
                                        Name:     Glenn R. Meyer
                                        Title:    M.D.

                                   BANK OF AMERICA,  N.A.,  formerly  known as
                                   Nations  Bank, N.A., as a Managing
                                   Agent and as a Bank

                                   By:  /s/William E. Livingstone IV
                                        --------------------------------------
                                        Name:     William E. Livingston IV
                                        Title:    Managing Director

                                       8
<PAGE>

                                   FLEET NATIONAL BANK, as a
                                   Co-Agent  and as a Bank

                                   By:  /s/Donald R. Nicholson
                                        --------------------------------------
                                        Name:     Donald R. Nicholson
                                        Title:    SVP

                                  MELLON BANK, N.A., as a Co-Agent
                                  and as a Bank

                                   By:  /s/Gary A. Saul
                                        --------------------------------------
                                        Name:     Gary A. Saul
                                        Title:    First Vice President

                                  BANK OF MONTREAL, as a Co-Agent
                                  and as a Bank

                                   By:  /s/Thomas E. McGraw
                                        --------------------------------------
                                        Name:     Thomas E. McGraw
                                        Title:    Director

                                   CIBC INC., as a Co-Agent and as a Bank


                                   By:  /s/ Gerald Girardi
                                        --------------------------------------
                                        Name:     Gerald Girardi
                                        Title:    Executive Director
                                                  CIBC World Markets Corp,
                                                  as Agent

                                   DRESDNER BANK AG, NEW YORK AND
                                   GRAND CAYMAN BRANCHES, as a Co-Agent
                                   and as a Bank

                                   By:  /s/Anthony C. Valencourt
                                        --------------------------------------
                                        Name:     Anthony C. Valencourt
                                        Title:    Senior Vice President

                                   By:  /s/George T. Ferguson, IV
                                        --------------------------------------
                                        Name:     George T. Ferguson, IV
                                        Title:    Assistant Vice President

                                   FIRST UNION NATIONAL BANK


                                   By:  /s/Thomas L. Stitchberry
                                        --------------------------------------
                                        Name:     Thomas L. Stitchberry
                                        Title:    Senior Vice President

                                       9
<PAGE>

                                    BEAR STEARNS & CO., INC.


                                    By: /s/Gregory A. Hanley
                                        --------------------------------------
                                        Name:     Gregory A. Hanley
                                        Title:    Senior Managing Director

                                    DK ACQUISITION PARTNERS, L.P.


                                   By:  /s/Michael J. Leffell
                                        --------------------------------------
                                        Name:     Michael J. Leffell
                                        Title:    General Partner

                                   ING (U.S.) CAPITAL CORPORATION


                                   By:  /s/Mary Forstner
                                        --------------------------------------
                                        Name:     Mary Forstner
                                        Title:    Senior Associate

                                       10

<PAGE>

                                                                     Schedule 1


                                  TRANSACTIONS

         1. The dividend and partial  payment of interest on its Surplus Note by
Pioneer Security Life Insurance Company ("Pioneer Life") to American-Amicable of
all of the issued and outstanding shares of the capital stock of Occidental Life
Insurance   Company   of  North   Carolina,   a  Texas   insurance   corporation
("Occidental").

         2.   The dividend by Pioneer Life to  American-Amicable of its capital
and surplus in excess of $1,200,000.

         3. The  purchase  by  American-Amicable  from  A-A  Texas  and  Pioneer
American Life Insurance Company ("Pioneer  American"),  of all of the issued and
outstanding shares of Preferred Stock of Southwestern Financial  Corporation,  a
Delaware  corporation  (the "SFC Stock")  owned by each of A-A Texas and Pioneer
American.

          4. The dividend by  American-Amicable of cash and the SFC Stock to the
Company.