Document:

<PAGE>
                                                                   Exhibit 10.23

                                OPTION AGREEMENT

                        (WITH ASSET PURCHASE SUPPLEMENT)

                                     BETWEEN

                      DIRECT GENERAL INSURANCE AGENCY, INC.

                                       AND

                              LR3 ENTERPRISES, INC.

                                       AND

                          MAITLAND UNDERWRITERS, INC.,

                                 AUGUST 16, 1999

<PAGE>
                                    CONTENTS

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

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

     2.       Purchase Price.....................................................3

     3.       Exercise Date......................................................3

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

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

     6.       Conduct of Cash Register...........................................4

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

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

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

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

     11.      Non-Compete During Option Period...................................7

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

     13.      Miscellaneous Provision............................................8

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

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

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

         d.   Governing Law.....................................................10

         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 Agencies

              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>

                                       i
<PAGE>
                                OPTION AGREEMENT

         THIS OPTION AGREEMENT, including all schedules, supplements, and
exhibits (referred to herein collectively as this "Agreement") is dated as of
August 16, 1999 between Direct General Insurance Agency, Inc. ("Purchase"), a
Tennessee corporation; and LR3 Enterprises, Inc., a Florida corporation ("LR3"),
Maitland Underwriters, Inc, a Florida corporation ("Maitland"), and each of the
Cash Register Auto Insurance Agencies, Friendly Auto Insurance Agencies, and
Insurance Options Agencies that are identified on Schedule A to this Agreement,
each a Florida corporation (referred to herein collectively as the "Agencies");
(LR3, Maitland, and the Agencies are sometimes referred to herein collectively
as the "Sellers"). For the purposes of this Agreement, the "Agencies" shall
include any and all additional insurance agencies that the Sellers may establish
or acquire prior to the consummation of this Agreement, as though such view
agencies had been listed on Schedule A.

                                   WITNESSETH:

         WHEREAS, Direct General Insurance Company, a Tennessee-domiciled
property and casualty insurer, also authorized in the State of Florida ("DOIC")
and Maitland Underwriters, Inc an affiliated Florida-licensed managing general
agent have entered into a managing general agent agreement of even date herewith
(the "MGA Agreement"), pursuant to which Maitland, through the Agencies, will
sell automobile insurance policies and perform certain other MGA functions on
behalf of DGIC in accordance with the terms of the MGA Agreement; and

                                       1

<PAGE>

         WHEREAS, Direct General Financial Services, Inc. ("DGFS") a
Tennessee-domiciled premium finance company, also authorized in the State of
Florida and LR3 and Maitland have entered into a premium finance agreement of
even date herewith (the "Premium Finance Agreement") pursuant to which the
business generated under the MGA Agreement will be financed with DGFS to the
extent customers desire premium financing; and

         WHEREAS, in connection with said MGA Agreement and Premium Finance
Agreement, Sellers desire to grant to Purchaser an exclusive option to purchase
the agency related assets of the Sellers, including, all business on the books
of the Agencies 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;

         NOW THEREFORE, in partial consideration for the commission rate and
other terms of the MGA Agreement and the Premium Finance Agreement, and in
further consideration for 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

                                       2
<PAGE>

         automobile insurance and ancillary products sales and service business
         throughout the State of Florida, 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 LR3) for the Transferred Assets shall
         be an amount of cash equal to twelve and one-half percent (12.5%) of
         the aggregate net written premium (less any liabilities assumed by
         Purchaser) written by the Agencies on behalf of DOIC and any
         third-party insurers, including the net written premium for all
         ancillary products, during the twelve (12) months immediately preceding
         the Closing Date of the asset purchase.

3.       Exercise Date. The Option shall become exercisable on the third
         anniversary of the Operational Date as defined in the MGA Agreement
         (the "Exercise Date"). Purchaser may exercise the Option by delivering
         written notice to LR3 (the "Notice") at any time on or before ninety
         (90) days prior to 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 the Asset Purchase Supplement (the "Supplement") attached
         hereto, and incorporated by reference herein and made an integral part
         of this Agreement.

                                       3
<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 Cash Register. 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 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 any shares of the capital
                  stock of the Agencies or a merger or consolidation of LR3 or
                  Maitland 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

                                       4
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                  agreement for a term greater than three (3) years. During the
                  third year of this Agreement, Sellers will not enter into or
                  renew any form of advertising contract, or any 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 agencies under such agreement,

         d.       Control of Cash Register. 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, the responsibility
                  for conducting the business affairs of the Agencies 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, LR3 shall provide on a confidential basis
                  financial, premium volume and such other information about the
                  Agencies, the Business (as defined in the Supplement), and the
                  Transferred Assets, as Purchaser may reasonably request. LR3
                  will promptly advise Purchaser of, and provide detailed
                  information with respect to, any formal audit or examination
                  of, and any administrative action taken against, any of the
                  Sellers, by the

                                       5
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                  Florida 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.

         b.       Within thirty (30) days from the Effective Date of this
                  Agreement, LR3 shall provide to Purchaser the following
                  Schedules required by the Supplement, completed as of the
                  Effective Date: Schedules 1.1(a); 1.1(b); 1.1(f); 1.1(g);
                  3.11; and 3.14. Thereafter, during the term of this Agreement,
                  LR3 shall update such Schedules to be complete and accurate as
                  of each December 31st and deliver to Purchaser by the
                  following February 1st. If Purchaser delivers the Notice, then
                  LR3 shall update such Schedules to be complete and accurate as
                  of the Closing Date and deliver the revised Schedules to
                  Purchaser no fewer than five (5) business dates prior to the
                  Closing Date. Any changes to the original Schedules shall be
                  clearly indicated on the revised Schedules.

9.       Termination. This Agreement may be terminated by Purchaser at any time
         before Purchaser delivers the Notice. This Agreement shall terminate
         and the Option shall expire at 11:59 p.m., Nashville time, on the
         Exercise Date, unless prior to such date and time Purchaser has
         delivered the Notice to LR3. Termination of this Agreement shall have
         no effect on the MGA Agreement or Premium Finance Agreement, the
         terminations of which shall be governed by their own terms; provided,
         however, that this Agreement shall terminate automatically and the
         Option shall simultaneously expire if Maitland or Direct General
         Insurance Company terminates the MGA Agreement in accordance with the
         terms of the MGA Agreement; provided further that if the duration of
         the MGA Agreement is

                                       6
<PAGE>

         extended under Section 12.04 thereof, then the duration of this
         Agreement and the Option shall be likewise extended.

10.      Schedule A. LR3 represents that Schedule A to this Agreement is a list
         of the names and addresses of all of the entities through which Sellers
         conduct their automobile insurance and ancillary products sales and
         service business throughout the State of Florida. All voting capital
         stock of each entity identified on Schedule A is wholly owned by LR3,
         unless otherwise indicated. All of the Transferred Assets are owned,
         leased, or otherwise under the control of LR3, Maitland or one or more
         of the Agencies identified on Schedule A.

11.      Non-Compete During Option Period. Until the Option is exercised,
         expires or is terminated: (i) Purchaser shall not open or acquire,
         directly or indirectly, any nonstandard automobile insurance agency
         within a radius often (10) miles of any Agency; and (ii) LR3 or
         Maitland shall not open or acquire, directly or indirectly, any
         nonstandard automobile insurance agency within a radius of one (1) mile
         of any existing Agency or agency office of Purchaser.

12.      Board Approvals.

         a.       On or prior to the execution of this Agreement, Purchaser
                  shall have delivered to LR3 a certified copy of resolutions of
                  the board of directors of Purchaser granting final
                  authorization for Purchaser to enter into this Agreement
                  (including the Supplement hereto) and to consummate the
                  transactions contemplated by this Agreement and said

                                       7
<PAGE>

                  Supplement, subject only to the conditions set forth herein
                  and therein and to any additional conditions, acceptable to
                  LR3, expressly set forth in such resolutions.

         b.       On or prior to the execution of this Agreement, LR3 shall have
                  delivered to Purchaser certified copies of resolutions of the
                  board of directors of each Seller, and to the extent the
                  Transferred Assets will represent all or substantially all of
                  the assets of any Seller, certified copies of resolution of
                  the shareholder(s) of any such Seller(s), granting final
                  authorization for the Sellers to enter into this Agreement
                  (including the Supplement hereto) and to consummate the
                  transaction contemplated by 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 Provision.

         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:

                                       8
<PAGE>

                  (1)      If to Purchaser, to:

                           Direct General Insurance Agency, Inc.

                           1281 Murfreesboro Road, Suite 5-01

                           Nashville, TN 37217

                           FAX: (615) 366-3722

                           ATTENTION: President

                  (2)      If to LR3, Maitland or the Agencies to:

                           LR3 Enterprises, Inc.

                           1535 N. Maitland Avenue

                           Maitland, FL 32751

                           FAX: (407)260-2207

                           ATTENTION: Jon Register

         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 Seller under this Agreement.
                  (For this paragraph, Sellers are deemed to be one "party.")

                                       9
<PAGE>

         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 Florida, without
                  reference to the conflict of laws principles thereof.

         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 MGA Agreement, the Premium
                  Finance Agreement, 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,

                                       10
<PAGE>

                  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 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 that 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.

                  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;

                                       11
<PAGE>

                  (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 LR3 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).

                                       12
<PAGE>

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

                                              DIRECT GENERAL INSURANCE
                                              AGENCY, INC.

                                    By:       /s/ Kurt G. Schreiber
                                              ----------------------------------
                                    Name:     Kurt G. Schreiber
                                    Title:    Vice Chairman
Attest:

/s/ Constance A. Collins
-------------------------------
Name: Constance A. Collins

                                              LR3 ENTERPRISES, INC. on behalf of
                                              itself and each of the Agencies,
                                              as defined in this Agreement.

                                    By:       /s/ Lloyd E. Register, III
                                              ----------------------------------
                                    Name:     Lloyd E. Register, III
                                    Title:    President
Attest:

/s/ Ronald F. Wilson
-------------------------------
Name: Ronald F. Wilson

                                              MAITLAND UNDERWRITERS, INC.

                                    By:       /s/ Lloyd E. Register, III
                                              ----------------------------------
                                    Name:     Lloyd E. Register, III
                                    Title:    President
Attest:

/s/ Ronald F. Wilson
-------------------------------
Name: Ronald F. Wilson

                                       13
<PAGE>

                                    LLOYD E. REGISTER, III
                                    [Solely for the purpose of the non-
                                    competition (Section 8.8) and
                                    indemnification (Section 9.1) provision
                                    in the Supplement hereto]

                                    /s/ Lloyd E. Register, III
                                    --------------------------------------------
                                    Lloyd E. Register, III

Witness:

/s/ Ronald F. Wilson
-------------------------------
Name: Ronald F. Wilson

                                    LLOYD E. ("JON") REGISTER, IV
                                    [Solely for the purpose of the non-
                                    competition (Section 8.8) provision in the
                                    Supplement hereto]

                                    /s/ Lloyd E. Register, IV
                                    --------------------------------------------
                                    Lloyd E. Register, IV

Witness:

/s/ Ronald F. Wilson
-------------------------------
Name: Ronald F. Wilson

                                       14
<PAGE>
                        DIRECT GENERAL INSURANCE COMPANY
                              Nashville, Tennessee

                                 January 9, 2001

VIA FACSIMILE AND U.S. MAIL
---------------------------
Maitland Underwriters, Inc.
LR3 Enterprises, Inc.
1535 North Maitland Avenue
Maitland, Florida 32751

Attention:   Jon Register
Facsimile:   (407) 260-2207

Dear Jon:

         This letter reflects recent conversations between Lloyd Register,
William Adair, Barry Elkins, and yourself regarding certain proposed
modifications to our arrangement. Our agreement expressed in this letter is
intended to modify the Florida Managing General Agency Agreement effective
August 16, 1999, by and between Direct General Insurance Company and Maitland
Underwriters, Inc. (the "MGA Agreement") and the Option Agreement dated as of
August 16, 1999, between Direct General Insurance Agency, Inc. and LR3
Enterprises, Inc., Maitland Underwriters, Inc. (the "Option Agreement") and each
of the Agencies identified on Schedule A to the Option Agreement. Capitalized
terms used in this letter agreement have the same definitions ascribed to them
in the MGA Agreement and Option Agreement, respectively.

         MGA Agreement

         Section 12.01. Term. The Term of the MGA Agreement, as defined in
Section 12.01 thereof, shall be extended by the number of days necessary for the
MGA to produce net written premiums on behalf of the Company equal to
$8,100,000, less net written premiums produced on behalf of the Company for the
three-month period October 1, 2000 through December 31, 2000, as determined by
the records of the Company established in its normal course of business.
Provided, however, that in no event shall the Term of the MGA Agreement be
extended beyond January 31, 2003.

         Option Agreement

         Section 3. Exercise Date. The Exercise Date, as defined in Section 3 of
the Option Agreement, shall be extended through the date on which the Term of
the MGA Agreement is extended under the preceding paragraph. In addition, the
second sentence of Section 3 is replaced with the following: "Purchaser may
exercise the Option by delivering written notice to LR3 (the "Notice") at any
time on or before October 1, 2002, in accordance with the notice provision of
this Agreement." Furthermore the Closing Date, as defined in Section 2.1 of the
Asset Purchase Supplement to the Option Agreement, is the same date as the
Exercise Date, as defined in the

<PAGE>

Option Agreement. Thus, our extension of the Exercise Date under the Option
Agreement automatically extends the Closing Date.

         Section 2. Purchase Price. Because of our agreed upon extension of the
Exercise Date ads described above, the Exercise Date will likely occur during
the middle of a month. Therefore, we have agreed that as used in the last
sentence of Section 2, the phrase "during the twelve (12) months immediately
preceding the Closing Date" shall be interpreted a follows: the "twelve (12)
months" shall be the twelve (12) calendar months preceding the Closing Date that
end on the last day of the calendar month that immediately precedes the Closing
Date. For example, the Closing Date turns out to be December 12, 2002, then the
"twelve (12) months" used to calculate the purchase price under the Option
Agreement would be the twelve (12) calendar months that end on November 30,
2002.

         Section 9. Termination. Because of our agreed upon extension of the
Exercise Date as described above, we noted that the automatic termination of the
Option Agreement and expiration of the Option that are provided in Section 9,
shall likewise be extended in conformity with the extended Exercise Date.

         Furthermore, the intent of the parties as expressed in this letter
shall, if necessary, be applied to other provisions of the MGA agreement and
Option Agreement (including the Asset Purchase Supplement) that are affected by
the terms of this letter, even if such provisions have not been specifically
referenced in this letter. All other provisions of the MGA Agreement and Option
Agreement that are not affected by the terms of this letter shall remain in full
force and effect.

         If the foregoing accurately reflects our understanding, please sign in
the space provided below and return a fully executed copy of this letter
agreement to my attention. Thank you.

                                DIRECT GENERAL INSURANCE COMPANY

                                By:  /s/ Barry D. Elkins
                                     ------------------------------------------
                                     Barry D. Elkins
                                     Vice President and Chief Financial Officer

                                DIRECT GENERAL INSURANCE AGENCY, INC.

                                By:  /s/ Barry D. Elkins
                                     ------------------------------------------
                                     Barry D. Elkins
                                     Vice President and Chief Financial Officer

<PAGE>

ACKNOWLEDGED AND AGREED TO as
of the date of this letter:

LR3 ENTERPRISES, INC. (including the Agencies as defined in the Option
Agreement)

By:  /s/ Lloyd E. Register, IV
     ------------------------------------
     Name:  Lloyd E. Register, IV
     Title: Vice President

     MAITLAND UNDERWRITERS, INC.

By:  /s/ Lloyd E. Register, IV
     ------------------------------------
     Name:  Lloyd E. Register, IV
     Title: Vice President

cc: Jed Berman, Esq.
(fax only: 407-644-4128)

<PAGE>
                        DIRECT GENERAL INSURANCE COMPANY
                              Nashville, Tennessee

                                February 20, 2002

VIA FACSIMILE AND U.S. MAIL
---------------------------
Maitland Underwriters, Inc.
LR3 Enterprises, Inc.
153 5 North Maitland Avenue
Maitland, Florida 32751

Attention: Jon Register
Facsimile: (407) 260-2207

Dear Jon:

         This letter agreement reflects recent conversations between you and
William Adair and me regarding certain proposed modifications to our arrangement
in Florida. Our agreement expressed in this letter is intended to modify each of
the following:

         (i) Florida Managing General Agency Agreement effective August 16,
1999, by and between Direct General Insurance Company ("DGIC") and Maitland
Underwriters, Inc. (the "MGA Agreement");

         (ii) Option Agreement dated as of August 16, 1999, between Direct
General Insurance Agency, Inc. ("DGIA") and LR3 Enterprises, Inc., Maitland
Underwriters, Inc. (the "Option Agreement", including the Asset Purchase
Supplement attached thereto) and each of the Agencies identified on Schedule A
to the Option Agreement; and

         (iii) Premium Finance Services Agreement effective August 16, 1999, by
and between Direct General Financial Services, Inc., and LR3 Enterprises, Inc.,
Maitland Underwriters, Inc., (the "Premium Finance Agreement") and each of the
Florida-based insurance agencies whose name is listed on Schedule A to the
Premium Finance Agreement.

In addition, all parties intend for this letter agreement to supercede and
replace in its entirety that certain letter agreement dated January 9, 200 1
between our two organizations (the "Prior Letter Agreement"). Unless otherwise
defined in this letter agreement, capitalized terms used in this letter have the
same definitions ascribed to them in the MGA Agreement and Option Agreement,
respectively.

         PRIOR LETTER AGREEMENT

         The Prior Letter Agreement shall be terminated effective as of November
1, 2001 and shall no longer be enforceable or have any effect.

<PAGE>

         MGA AGREEMENT

         Schedule C. commission Schedule. For policies effective as of November
1, 2001, the Operational Commission Rate shall be reduced from 22.5% to 19.5%
for each of Private Passenger Automobile Liability and Physical Damage. If DGIA
decides not to exercise the Option or if the Option Agreement is otherwise
terminated in accordance with the Option Agreement, then DGIC may withhold
commissions payable to MGA from the date of Notice of such decision or
termination of the Option Agreement through the termination date of the MGA
Agreement until the aggregate amount withheld is equal to the aggregate amount
of the Purchase Price Deposit paid by DGIA under the Option Agreement, as
provided in the amendment to the Option Agreement set forth below. If for any
reason there are insufficient commissions payable to MGA to equal the aggregate
amount of DGIA's Purchase Price Deposit, then upon the termination date of the
MGA Agreement, LR3 or MGA shall pay to DGIC any such shortfall amount in full as
soon as possible, but in no event more than fifteen (15) business days after
such termination date. All such funds withheld by, or paid to, DGIC for the
purpose of refunding DGIA's Purchase Price Deposit shall be remitted by DGIC to
DOIA.

         Section 12.01. Term. The first sentence of this Section shall be
revised to read as follows (modification is in italics):

         "The initial term of this Agreement shall commence on the Effective
         Date, and, including the Trial Period, terminate on the fourth
         anniversary of the Operational Date, unless terminated earlier as set
         forth in Article 13 below."

Because the Operational Date was November 1, 1999, the effect of this revision
to Section 12.01 is that the term of the MGA Agreement shall terminate on
November 1, 2003.

         OPTION AGREEMENT

         Section 3. Exercise Date. The first sentence of this Section shall be
revised to read as follows (modification is in italics):

         "The Option shall become exercisable on the fourth anniversary of the
         Operational Date as defined in the MGA Agreement (the "Exercise
         Date")."

The effect of this revision to Section 3 is that the Exercise Date under the
Option Agreement becomes November 1, 2003. Furthermore, the Closing Date, as
defined in Section 2.1 of the Asset Purchase Supplement to the Option Agreement,
is the same date as the Exercise Date, as defined in the Option Agreement. Thus,
our extension of the Exercise Date under the Option Agreement automatically
extends the Closing Date to November 1, 2003.

         Section 2. Purchase Price. The following new paragraph shall be added
to Section 2:

                  "Effective as of November 1, 2001, DGIA shall pay a refundable
         "Purchase Price Deposit" to LR3 on behalf of LR3 and the other Sellers
         under the Option Agreement. The Purchase Price Deposit shall be paid on
         a monthly basis

<PAGE>

        and shall be calculated in an amount equal to three percent (3%) of the
        net written premiums of the automobile insurance business written by the
        Agencies on behalf of DGIC in Florida during the period beginning
        November 1, 2001 (i.e., policies with an effective date of November 1,
        2001) and ending on the Closing Date. The amount of the purchase price
        calculated in accordance with the formula described above shall be
        reduced by an amount equal to the aggregate Purchase Price Deposit paid
        by DGIA to LR3 or Maitland as of the Closing Date. The parties
        acknowledge that in the event the Option expires or is terminated for
        any reason, the aggregate amount of the Purchase Price Deposit paid by
        DGIA shall be refunded in the manner set forth on amended Schedule C of
        the MGA Agreement."

         Section 9. Termination. Because of our agreed upon extension of the
Exercise Date to November 1, 2003 as described above, the automatic termination
of the Option Agreement and expiration of the Option that are provided in
Section 9 of the Option Agreement, shall likewise be extended to November 1,
2003 in conformity with the extended Exercise Date.

         Section 1.5 of the Asset Purchase Supplement to the Option Agreement.
Proceeds at Closing. In clause (ii) of this Section 1.5, the word "third" shall
replace the word "second" to reflect the intent of the parties with respect to
identifying the twelve-month period of cancellations that will be used to
calculate the estimated amount of unearned commissions to be used in calculating
the amount of the proceeds to be paid by Purchaser at the Closing, as provided
in this Section 1.5.

         PREMIUM FINANCE AGREEMENT

         Section 3. Term. The first sentence of this Section shall be revised to
read as follows (modification is in italics):

         "The initial term of this Agreement shall commence on the Effective
         Date, and, including the Trial Period (as defined in the MGA
         Agreement), terminate on the fourth anniversary of the Operational Date
         (as defined in the MGA Agreement), unless terminated earlier as set
         forth in Section 12 below."

The effect of this revision to Section 3 is that the term of the Premium Finance
Agreement shall terminate on November 1, 2003 in conformity with the above
described modifications to the MGA Agreement and Option Agreement.

         Furthermore, the intent of the parties to modify their relationship as
expressed in this letter agreement shall, if necessary, be applied to conform
other provisions of the MGA Agreement, Option Agreement (including the Asset
Purchase Supplement) and the Premium Finance Agreement that are affected by the
terms of this letter, even if such provisions have not been specifically
referenced in this letter. All other provisions of the MGA Agreement, Option
Agreement (including the Asset Purchase Supplement) and the Premium Finance
Agreement that are not affected by the terms of this letter agreement shall
remain in full force and effect.

<PAGE>

         If the foregoing accurately reflects our understanding, please sign in
the space provided below and return a fully executed copy of this letter
agreement to my attention. Upon your execution and return of this letter
agreement, its terms shall be deemed effective as of November 1, 2001.

                         DIRECT GENERAL INSURANCE COMPANY

                         By:  /s/ Barry D. Elkins
                              -------------------------------------------------
                              Barry D. Elkins
                              Senior Vice President and Chief Financial Officer

                         DIRECT, GENERAL INSURANCE AGENCY, INC.

                         By:  /s/ Barry D. Elkins
                              -------------------------------------------------
                              Barry D. Elkins
                              Senior Vice President and Chief Financial Officer

                         DIRECT GENERAL FINANCIAL SERVICES, INC.

                         By:  /s/ Barry D. Elkins
                              -------------------------------------------------
                              Barry D. Elkins
                              Senior Vice President and Chief Financial Officer

ACKNOWLEDGED AND AGREED TO as of the date of this letter,
the terms of which are effective as of November 1 , 2001:

LR3 ENTERPRISES, INC. (including the Agencies as defined under the Option
Agreement and the Premium Finance Agreement)

By:  /s/ Lloyd E. Register, IV
     -----------------------------------
     Name:  Lloyd E. Register, IV
     Title: V.P.............

MAITLAND UNDERWRITERS, INC.

By:  /s/ Lloyd E. Register, IV
     -----------------------------------
     Name:  Lloyd E. Register, IV
     Title: V.P.............

cc:  Jed Berman, Esq.
     (fax only: 407-644-4128)<PAGE>
                                                                   Exhibit 10.24

                        MANAGING GENERAL AGENCY AGREEMENT
                              NUMBER DIRECT-03-001

                                TABLE OF CONTENTS

    Article 1         Appointment
    Article 2         Authority of the Managing General Agent
    Article 3         Compensation
    Article 4         Accounting and Records
    Article 5         Reports and Remittances
    Article 6         Expenses
    Article 7         Premium Escrow Accounts
    Article 8         Control of Expirations
    Article 9         Independent Contractor Relationship
    Article 10        Advertising
    Article 11        Agents Licensing
    Article 12        Agency Sale or Transfer
    Article 13        Hold Harmless
    Article 14        Arbitration
    Article 15        Termination
    Article 16        Claims Handling
    Article 17        Reinsurance
    Article 18        Privacy
    Article 19        General Obligations of Managing General Agent
    Article 20        General Obligations of Company
    Article 21        Miscellaneous

                                       1
<PAGE>

                        MANAGING GENERAL AGENCY AGREEMENT
                                  DIRECT-03-001

This Agreement is made and entered into by and between OLD AMERICAN COUNTY
MUTUAL FIRE INSURANCE COMPANY a Texas Corporation (Company) and DIRECT GENERAL
INSURANCE AGENCY, INC., a Texas Corporation with administrative offices in
Nashville, TN, (Managing General Agent).

          THE COMPANY AND THE MANAGING GENERAL AGENT AGREE AS FOLLOWS:

ARTICLE 1 - APPOINTMENT

1.1 The Company appoints the Managing General Agent to act as its Managing
General Agent as that term is defined in Article 21.07-3 of the Texas Insurance
Code and the Texas Administrative Code. This appointment is continuous in nature
and shall remain in effect until terminated in accordance with Article 15.

1.2 The Managing General Agent acknowledges and agrees that the Company's
appointment of the Managing General Agent does not restrict in any manner the
Company's right to appoint agents writing any lines of insurance the Company
writes through any other agent, sub-agent or managing general agent either
direct to the Company or through other agents.

ARTICLE 2 - AUTHORITY

2.1 The Managing General Agent has the authority and duty to act on behalf of
the Company in all respects, insofar as necessary for the Managing General Agent
to perform the function of a Managing General Agent for the Company. The Company
may, from time-to-time, place reasonable written restrictions upon the Managing
General Agent. The Managing General Agent's authority includes, but is not
limited to, production, appointment and supervision of agents for the Company,
underwriting, accounting and claims handling. All acts of the Managing General
Agent, insofar as the Company's business is concerned, are subject to the
ultimate authority of the Company.

The authority granted to the Managing General Agent under this Agreement may be
performed in whole or in part by third parties, subject to the prior approval of
the Company, which shall not be unreasonably withheld, or, in the Managing
General Agent's sole discretion, by one or more affiliates of the Managing
General Agent; provided that (i) such affiliate shall be under ultimate common
control with the Managing General Agent; (ii) to the extent any affiliate of the
Managing General Agent provides services to the Company under this Agreement,
such affiliate shall be bound by the terms of this Agreement and (iii) the
performance of such services by any such affiliate shall not relieve the
Managing General Agent of its obligations to the Company hereunder. The parties
may establish mutually acceptable administrative and operational procedures to
facilitate delegation of performance under this Agreement on behalf of the
Managing General Agent.

                                       2
<PAGE>

2.2 The original source of all business produced under this Agreement shall be
property/casualty, general lines, or limited lines agents in the State of Texas
(Agent(s)).

2.3 The Managing General Agent has the authority to accept, on forms approved by
the Company, applications, binders, and/or Policies written by or through
Agents, for classes or lines of insurance as described in the attached Schedule
of Business, as may be amended from time to time, and in the Quota Share
Reinsurance Agreement Number DIRECT-02-001 between the Company and DIRECT
GENERAL INSURANCE COMPANY (the Reinsurer) effective January 1, 2003,
(Reinsurance Agreement), a copy of said Agreement is attached hereto and fully
incorporated herein.

2.4 The Managing General Agent acknowledges and agrees that the term(s) of any
Policy shall not exceed twelve (12) months. "Policy" is defined as any policy,
endorsement, binder, certificate, proposal for insurance or any other document
that binds the Company to insurance coverage.

2.5 The Managing General Agent has the authority to cancel Policies, at its
discretion, subject to the requirements imposed by law and in compliance with
the applicable provisions contained in this Agreement and the Policies.

2.6 The Managing General Agent has the authority to receive and receipt for
premiums and to retain commissions out of such collected premiums subject to the
terms and conditions of this Agreement.

2.7 The Managing General Agent or its designated claims handler shall have the
authority to set loss reserves and adjust and pay claims on behalf of the
Company.

2.8 The Company shall retain the authority to restrict the premium volume.

2.9 The Managing General Agent may not authorize policy issuance on behalf of
the Company to any broker, agent, managing general agent or any other entity
without the prior written consent of the Company, which consent shall not be
unreasonably withheld.

2.10 Any and all agreements with Agent(s) shall be made directly between the
Managing General Agent and such Agent(s). It is understood that the Agent shall
have no claim or cause of action against the Company and said Agent(s) shall
look solely to the Managing General Agent for any and all expenses, costs,
causes of action and damages, including, but not limited to, extra contractual
obligations, arising in any manner from actions or inactions by the Agent(s) or
the Managing General Agent.

2.11 The Managing General Agent shall bear sole responsibility to oversee the
proper licensing of any Agents(s). Should any fines be levied against the
Company as the result of the Managing General Agent accepting business from an
unlicensed Agent, the Managing General Agent shall hold the Company harmless and
reimburse the Company for any and all reasonable expenses so incurred including,
but not limited to, legal fees, fines and travel expenses.

                                       3
<PAGE>

ARTICLE 3 - COMPENSATION

3.1 The Managing General Agent's compensation shall be the commission and the
claims handling fee allowed under the Reinsurance Agreement less Fronting Fees
and premium taxes. As used in this Article, the term "Net Written Premium" is
defined as the total of all premium amounts on policies written by the Managing
General Agent between the Company and the Managing General Agent less return
premium and cancellations.

3.2 On the Net Written Premium and net policy fees (policy fees does not include
ATP fees) for each underwriting year, "Fronting Fees" shall be charged as
follows:

         2.5% on premium and policy fees up to $20 million
         2.0% on premium and policy fees from $20 million to $50 million
         1.75% on premium and policy fees over $50 million

The above formula for calculating Fronting Fees shall be reviewed by the parties
at least annually and may be amended from time to time.

3.3 The tax provision of one and three-quarters percent (1.75%) of Net Written
Premium and net policy fees charged includes premium tax and the Texas Overhead
Assessment (collectively "Premium Tax"). The Company retains the right to adjust
the Premium Tax of 1.75% to any new effective rate determined by the Texas
Department of Insurance or other such agency. The Company will be liable for
remitting state premium taxes based on Net Written Premium and net policy fees
charged.

3.4 Should service fees be charged on any policy covered by this Agreement, and
such fees are deemed taxable for premium tax purposes, then such service fees
are to be added to the Net Written Premium and net policy fees charged to
determine the amount subject to Fronting Fees.

3.5 The Managing General Agent shall be entitled to retain the policy fee less
premium taxes of one and three quarters percent (1.75%) and front fees as stated
in Article 3.2.

3.6 In the event there is no Agent to receive the designated commission on a
Policy, the Managing General Agent may retain the commission.

3.7 The commission may, from time to time, be amended upon mutual agreement of
the Company and the Managing General Agent without otherwise affecting the terms
and conditions of this Agreement.

3.8 The Company agrees to pass through to the Managing General Agent any
Contingent or Profit Commission allowed by the Reinsurer(s) that may be
referenced in the Reinsurance Agreement.

ARTICLE 4 - ACCOUNTING AND RECORDS

4.1 The Managing General Agent shall provide as reasonably requested and
maintain all necessary books, records, policies, claim files, dailies and
correspondence with policyholders to determine the amount of liability of the
Company and the amount of premiums there from.

                                       4
<PAGE>

4.2 The Managing General Agent shall prepare separate, itemized, monthly
statements for each Agent on the business placed by the Agent through the
Managing General Agent, and furnish the Agent with an IRS Form 1099 each year
when required.

4.3 All records shall be kept in such manner and form as is generally recognized
as acceptable in the insurance industry or as may be reasonably required by the
Company. The foregoing notwithstanding, the parties agree that all records may
be maintained in electronic data storage form accessible by computer, or
otherwise and if so stored in this fashion, no physical copy of such item need
be maintained unless otherwise required by law. Such records shall be maintained
for at least five (5) years or for any longer applicable retention period
required by the Texas Department of Insurance. All records must be located in
Texas, unless approved by the Texas Department of Insurance under Article 1.28
of the Texas Insurance Code, or as otherwise permitted by Texas law. The
foregoing notwithstanding, the Managing General Agent is permitted to maintain
records outside the state of Texas.

4.4 All records applicable to the Company's business shall be opened for
inspection and/or audit at all reasonable times by the Company, its reinsurers,
insurance department personnel or other governmental authorities.

4.5 Upon Company's reasonable request and pursuant to regulatory requirements,
the Managing General Agent shall forward as reasonably required to the Company
or the Company's designated accountant and/or statistical agent, exact, as
written, copies of all applications, binders, policies, daily reports, monthly
reporting forms and endorsements issued by or through licensed Agent(s),
including all other evidence of insurance written, modified or terminated.

4.6 The Managing General Agent shall be solely responsible for and shall keep
accurate records of all policies assigned to the Managing General Agent If
applicable, in the event canceled or terminated policies or binders are
unavailable, the Managing General Agent shall forward, or cause to be forwarded,
properly executed Lost Policy Receipts.

4.7 At renewal of any Policy issued by the Managing General Agent, the Managing
General Agent shall be responsible to the insured for the renewal or non-renewal
of the Policy and shall timely communicate any renewal quote or notice of
non-renewal to the insured to preclude the extension of coverage beyond the
expiration date of the current in-force policy.

4.8 The Company shall conduct or cause to be conducted four (4) examinations of
the Managing General Agent The examinations will take place at the Managing
General Agent's business offices or premises where necessary records are
maintained, and the Managing General Agent will bear the total cost of $750 per
audit plus reasonable out of pocket expenses actually and reasonably incurred by
the Company to conduct each examination, which out of pocket expenses shall not
exceed $2500. Such examination must remain on file with the Company for three
(3) years, be available to the Commissioner of Insurance for review, and
contain, at a minimum, the following information:

        a. claims control procedures;
        b. timeliness of claims payments;
        c. timeliness of premium reporting and collection;
        d. compliance with underwriting guidelines; and
        e. reconciliation of policy inventory.

                                       5
<PAGE>

If within any thirty (30) day period, the Company's aggregate premium volume
increases by thirty percent (30%) or more, the Company shall conduct, within
ninety (90) days of said period, an examination of the Managing General Agent if
the Managing General Agent:

        a. writes greater than twenty percent (20%) of the Company's aggregate
        premium volume; and
        b. has experienced an increase of twenty percent (20%) or more of
        premium volume during the thirty (30) day period.

Any such examination shall contain the information required pursuant to this
Article 4.8.

ARTICLE 5 - MANAGING GENERAL AGENT'S REPORTS AND REMITTANCES

5.1 Except as otherwise indicated below, the Managing General Agent shall submit
a report to the Company, within thirty (30) days after the close of business
each calendar month, summarizing the business transacted under this Agreement
during the prior month. Such report shall include the following items:

        a. gross premiums written and collected less returns and cancellations;
        b. MGA's commission;
        c. losses paid less recoveries and salvage;
        d. loss adjustment expenses paid;
        e. outstanding loss reserves;
        f. outstanding loss expense reserves;
        g. losses incurred but not reported - this information shall be reported
        on a quarterly basis only, and shall be forwarded no later than the 30th
        day of the month following the quarter being accounted for;
        h. unearned premium reserve; and
        i. earned premium.

5.2 The Managing General Agent shall remit all amounts collected and paid, which
are due, directly to the Company within forty-five (45) days after the close of
the calendar month for which the account is rendered.

5.3 In addition to the return of premium, the Managing General Agent shall
refund commissions on policy cancellations, reductions in premiums or any other
return premiums at the same rate at which such commissions were originally
retained.

5.4 The Company may, at its sole option, reasonably alter the frequency and/or
content of the Managing General Agent's report; provided, however, such report
is made no less frequently than monthly.

5.5 The omission of any item(s) from a monthly statement shall not affect the
responsibility of either party to account for and pay all amounts due the other
party, nor shall it prejudice the rights of either party to collect all such
amounts due from the other party.

5.6 The Managing General Agent shall annually furnish to the Company the
following summary information in such form as to enable the Company to record
such information in its annual statement:

                                       6
<PAGE>

        a. summaries, with data segregated by major classes, of net premium
        written, gross loss paid, net salvage, subrogation and adjusting
        expenses paid during the year; and

        b. details of in-force and unearned premium running twelve (12) months
        or less from the policy inception date.

5.7 The Managing General Agent agrees to furnish the Company with any additional
reports necessary to provide the Company's monthly, quarterly and/or annual
statements to regulatory authorities including, but not limited to, TICO
statistical reporting.

5.8 The Managing General Agent shall annually furnish the Company current
financial statements of the Managing General Agent These financial statements
shall include, but not be limited to, Profit and Lass, Balance Sheet and Cash
Flow Statements.

ARTICLE 6 - EXPENSES

6.1 The Managing General Agent is responsible for and shall promptly pay all
expenses attributable to the producing and servicing of business under this
Agreement, except as specified in Article 6.2. This responsibility shall not be
altered whether the expense is billed to the Managing General Agent or the
Company. These expenses include but are not limited to:

        a. salaries and all other benefits of all employees of the Managing
        General Agent;
        b. transportation, lodging, and meals of employees of the Managing
        General Agent;
        c. postage and other delivery charges;
        d. advertising;
        e. printing of all policies, forms and endorsements;
        f. EDP hardware, software, and programming;
        g. commissions;
        h. license and appointment fees for agents, brokers, and solicitors;
        i. adjustment expenses arising from claims on insurance written under
        this Agreement, except for expenses incurred at the direction of the
        Company;
        j. provision of office space, equipment and other facilities necessary
        for the operation of Managing General Agent; and
        k. legal, audit and other expenses relating to any rate filing,
        regulation, or rules affecting the business of the Managing General
        Agent pursuant to this Agreement.

With respect to expenses for which Managing General Agent is obligated to pay,
the Company agrees it will immediately but in no event more than 15 business
days following receipt forward to Managing General Agent any assessment,
invoice, report or record from any regulatory agency related to such expenses.
Company further agrees that it will not undertake to remit payment of any such
expense, including but not limited to agent appointment fees, without first
verifying such expense with Managing General Agent. Managing General Agent shall
not be obligated to reimburse Company for any expense paid without first
obtaining such verification.

6.2 The Company is responsible for and shall promptly pay all expenses
attributable to the actions of the Company as a result of business produced
under this Agreement. This responsibility shall not be altered whether the
expense is billed to the Company or the Managing General Agent These expenses
include but are not limited to:

                                       7
<PAGE>

        a. salaries and all other benefits of all employees of the Company;
        b. transportation, lodging, and meals of employees of the Company;
        c. State or Guaranty Fund Assessments;
        d. losses and loss adjustment expenses incurred at the direction of the
           Company;
        e. cost of reinsurance; and
        f. legal and auditing expense incurred at the direction of the Company
           (other than as provided for in Article 4.8).

ARTICLE 7 - PREMIUM ESCROW ACCOUNTS

7.1 The Managing General Agent shall accept in a fiduciary capacity all premiums
collected and other funds relating to the business written under this Agreement.
It is expressly agreed and understood that all premiums collected by the
Managing General Agent are collected on behalf of the Company; that such
premiums are the property of the Company and the Reinsurer as their respective
interests may appear pursuant to the Reinsurance Agreement, less such
commissions and fees as are due the Managing General Agent. The privilege of
retaining commissions shall not be construed as changing the fiduciary capacity.

7.2 The Managing General Agent assumes responsibility for and shall promptly
pay, the Net Written Premium currently due the Company, whether collected or
not, on Policies issued by the Managing General Agent, or the Company on behalf
of the Managing General Agent, subject to any deductions provided herein.

7.3 The Managing General Agent shall establish and maintain a "Premium Escrow
Account" entitled "DIRECT/OLD AMERICAN PREMIUM ESCROW ACCOUNT". The Premium
Escrow Account shall be in a bank, which is a member of the Federal Reserve
System and is mutually agreeable to the Managing General Agent and the Company.
All premiums collected by the Managing General Agent on business produced under
this Agreement shall be deposited promptly into said account.

7.4 The Managing General Agent shall not commingle any premium or escrow funds
with its personal accounts or other agency funds or funds held by the Managing
General Agent in any other capacity. The foregoing shall not apply to funds
collected on behalf of the Managing General Agent's premium finance company
affiliate.

7.5 The Managing General Agent and an officer of the Company shall maintain
signature authority on said Premium Escrow Account.

7.6 The Managing General Agent shall act as trustee for the Company on the
Premium Escrow Account.

7.7 Interest income and the cost of maintaining Escrow Accounts shall belong to
the Managing General Agent.

7.8 Escrow Accounts may consist of:

        a. checking, savings, or money market accounts;
        b. certificates of deposit; or
        c. United States Treasury bills, notes or bonds.

                                       8
<PAGE>

7.9 The Managing General Agent may use any and all premium and other funds
collected by the Managing General Agent for and on behalf of the Company under
this Agreement solely for the payment of:

        a. premium balances due minus deductions allowed in accordance with this
           Agreement;
        b. the return of unearned premiums arising due to cancellation or
           endorsement;
        c. the Managing General Agent's and Agent(s) commission;
        d. losses and loss adjustment expenses; or
        e. such other items as mutually agreed upon in writing by the Managing
           General Agent and the Company.

7.10 The Company shall not be liable for any loss which occurs by reason of the
default or failure of the bank in which an account is carried and such loss
shall not affect the Managing General Agent's obligations under this Agreement.

ARTICLE 8 - CONTROL OF EXPIRATIONS

8.1 The Managing General Agent's records and the use and control of expirations
of the business produced by the Agents appointed by the Managing General Agent
or by the Company at the Managing General Agent's request shall remain the
property of the Managing General Agent and be left in the Managing General
Agent's undisputed possession, provided the Managing General Agent is not in
material default and accounts for and pays over all premium and other sums for
which the Managing General Agent may be liable to the Company.

8.2 Ownership of the records, use and control of expirations and the goodwill
relating thereto shall be vested in the Managing General Agent, provided,
however in the event the Managing General Agent is in material default
hereunder, and does not remedy such default within a reasonable time and does
not account for and pay all premiums or other sums for which it may be liable to
the company within a reasonable time following the due date, such records, use
and control of expirations and the good will relating thereto shall become the
property of Company.

8.3 The Managing General Agent assigns to the Company as security for, but not
in payment of the obligations of the Managing General Agent under this
Agreement, all sums due or to become due to the Managing General Agent from any
insured(s) for whom the Managing General Agent or Agent(s) provided a Policy on
behalf of the Company. In the event of material default which remains uncured,
the Company shall have full authority to demand and collect such sums and the
Managing General Agent or Agent(s) shall not be entitled to any commissions
and/or policy fees on any premium so collected by the Company. The Company may
also assign any rights it acquires to the Reinsurer.

8.4 The Managing General Agent pledges and/or grants to the Company, so as to
further secure payment of any and all sums due the Company under this Agreement,
any and all of the Managing General Agent's records of expirations of Policies,
including but not limited to, the ownership and exclusive use of said
expirations. In the event Managing General Agent fails to render timely accounts
and payments within (10) days after such failure is brought to the Managing
General Agent's attention by way of written notification to the address provided
herein, the Company shall have the rights of the holder of a security interest
granted by law, including but not limited to the rights of foreclosure to
effectuate such security interest, arid the Managing General Agent hereby agrees
to peaceably surrender possession of such records to the Company upon demand.

                                       9
<PAGE>

ARTICLE 9 - INDEPENDENT CONTRACTOR RELATIONSHIP

9.1 Nothing contained in this Agreement shall be construed to create the
relationship of employer and employee, or joint venture or partnership, between
the Company and the Managing General Agent, or between the Company and any
employees, representatives or Agents of the Managing General Agent.

ARTICLE 10 - ADVERTISING

10.1 Any advertising is the responsibility of, and shall be in the name of the
Managing General Agent The Managing General Agent is prohibited from using the
Company's name or logo without prior written consent of the Company.

10.2 In the event an advertisement containing the Company's name or logo is used
by the Managing General Agent or Agent(s), the Managing General Agent shall send
a copy of the advertisement to the Company and maintain a copy and full details
concerning where, when, and how it was used, and comply with all legal
requirements regarding content, review and approval of advertising and
maintenance of records.

ARTICLE 11 - AGENTS LICENSING

11.1 The Managing General Agent shall maintain current license(s) or
certificate(s) of authority as required by law for the conduct of business
pursuant to this Agreement.

11.2 The Managing General Agent shall assure that all Agents maintain
appropriate license(s), certificate(s) of authority and appointments as required
by law for conduct of business under this Agreement.

11.3 If applicable, the Managing General Agent shall maintain in force an Agency
or Producer Agreement, in a form satisfactory to the Company, with all Agents;
provided, however, Managing General Agent shall not be required to maintain any
form of agreement with its employee agents or its affiliates.

11.4 Any termination by the Managing General Agent of an Agent shall comply with
the Texas Insurance Code and any other applicable law or regulation.

ARTICLE 12 - AGENCY SALE OR TRANSFER

12.1 In the event a controlling interest (10% or more of outstanding shares) of
the Managing General Agent is to be sold or transferred or the Managing General
Agent is to merge or be consolidated with another firm (not affiliated with
current ownership), the Managing General Agent shall give thirty (30) days
advance written notice to the Company. Under any of these circumstances, the
Company may:

        a. consent to the assignment of this Agreement to the successor;
        b. enter into a new Managing General Agency Agreement with the
        successor; or
        c. terminate this Agreement pursuant to Article 15.

                                       10
<PAGE>

The Company shall notify the Managing General Agent of its decision within
thirty (30) days of the receipt of the notice.

12.2 The Managing General Agent shall also give notice to the Company if there
is a material change in the management of Managing General Agent within 30 days
of the occurrence of such change.

ARTICLE 13 - HOLD HARMLESS

13.1 The Managing General Agent shall indemnify and hold the Company harmless
from any and all claims, demands, causes of action, damages, judgments and
expenses (including, but not limited to, reasonable attorney's fees and costs of
court) which may be made against the Company and which arise, either directly or
indirectly, out of any action or inaction of the Managing General Agent or the
Managing General Agent's employees or representatives in connection with any
rights or obligations of the Managing General Agent incurred in connection with
this Agreement or with asserting rights hereunder including, but not limited to,
any action or inaction of the Managing General Agent concerning the termination
of Agent(s) pursuant to the Texas Insurance Code or any other applicable law or
regulation.

13.2 The Company shall indemnify and hold the Managing General Agent harmless
from any and all claims, demands, causes of action, damages, judgments and
expenses (including, but riot limited to, reasonable attorney's fees and costs
of court) which may be made against the Managing General Agent and which arise,
either directly or indirectly, out of any action or inaction of the Company
including, but not limited to, any such acts of negligence by the Company in
connection with any rights or obligations of the Company incurred in connection
with this Agreement or with asserting rights hereunder.

13.3 The Reinsurer is hereby named as a third party beneficiary to all promises,
duties and obligations of indemnification made by the Managing General Agent to
the Company to the extent of all damages, fines, penalties and/or loss incurred
by the Reinsurer as a direct result of indemnifying and holding the Company
harmless for the actions and/or inactions of the Managing General Agent. Upon
indemnification by the Reinsurer, the Company shall assign its rights of
recourse against the Managing General Agent to the Reinsurer, provided always
that any benefit or right of recourse extended to the Reinsurer shall be
subordinate to that of the Company.

ARTICLE 14 - ARBITRATION

14.1 Unless both parties mutually agree to waive arbitration with respect to a
particular dispute, the parties to this Agreement hereby agree that binding
arbitration shall be the sole remedy for any and all dispute(s) arising between
them with reference to any transactions, terms or conditions under this
Agreement including its formation and validity. Arbitration proceedings brought
hereunder shall be referred for final determination to the majority decision of
a panel of three disinterested arbitrators (the "Panel"). Notice of demand for
arbitration (the "Notice") shall be made by the petitioning party (the
"Petitioner") in writing and shall be served via certified or registered mail,
return receipt requested, on the responding party to the Arbitration (the
"Respondent") at the Respondent's current address. The notice requesting
arbitration shall identify the Agreement(s) involved in the dispute, the issues
to be resolved in the view of the Petitioner, and the arbitrator selected by the
Petitioner. The term "days" as used herein shall mean calendar days.

                                       11
<PAGE>

14.2 The Respondent shall appoint an arbitrator within 30 days of receiving the
Notice. At the same time as the appointment, the Respondent shall identify in
writing any issues which in its view must be resolved in the arbitration
proceeding and which were not identified by the Petitioner. If the Respondent
fails to appoint its arbitrator within 30 days of being requested to do so, in
writing, by the Petitioner, the Petitioner shall have the right to appoint the
second arbitrator. Within 30 days after their appointment, the two arbitrators
so chosen shall select a third arbitrator to act as umpire. If the two
arbitrators do not agree as to the selection of a third arbitrator within 60
days after their appointment, the third arbitrator shall be selected from a list
of six individuals (three named by each arbitrator) by a judge of the federal
district court or state court in Dallas County, Texas.

14.3 Each arbitrator shall be a disinterested, active or retired official or
officer of an insurance, or reinsurance company, or managing general agent who
has knowledge and experience with insurer and managing general agent
relationships and who is not under the control or management of either party to
this Agreement, and shall have experience in the class and type of business
subject to this dispute.

14.4 Within 30 days after notice of appointment of all arbitrators, the
Petitioner and the Respondent shall each submit a statement of position to the
Panel.

14.5 Within 60 days after notice of appointment of all arbitrators, each party
shall provide the other with its relevant books, records, and/or other papers
not protected from disclosure by either the work-product or attorney client
privilege. Other than the exchange of relevant documents, both parties shall
refrain from engaging in any type of discovery including, but riot limited to,
depositions and interrogatories.

14.6 Within 30 days following the exchange of documents, the Petitioner and the
Respondent shall submit hearing briefs to the Panel.

14.7 Unless some other location is mutually agreeable to the parties,
arbitration proceedings shall take place within Dallas County, Texas.
Arbitration shall commence as soon as practicable but in no event longer than
120 days after selection of the third arbitrator with notice thereof to the
parties. The specific time and site of arbitration shall be promptly agreed to
by the parties, or if no Consent is reached, then determined by the Panel.

14.8 The Panel shall be relieved from applying the strict rules of evidence
and/or procedure and shall make its decision based on the custom and practice of
the insurance and reinsurance business with a view toward effecting this
Agreement in a reasonable manner. Should either party fail to appear at the
arbitration and/or fail to furnish the Panel with any subpoenaed papers or
information, the Panel is empowered to proceed ex parte. The Panel shall make
its award within 60 days following the close of the hearing. The majority
decision of the Panel shall be final and binding upon the parties and shall be
reduced to a written award, which may include factual findings, and shall be
signed by any two of the three arbitrators, dated and delivered overnight to the
parties. The Panel may award pre-judgment and post-judgment interest, but in no
case shall the authority of the Panel extend to awarding punitive or exemplary
damages. Judgment may be entered upon the award by any court having
jurisdiction.

14.9 Each party shall bear the expense of its own arbitrator, but shall equally
share with the other the expense of the third arbitrator. In the event that the
two arbitrators are chosen by one party, as above provided, the expense of the
two arbitrators, the third arbitrator and the arbitration

                                       12
<PAGE>

shall be equally divided between the Petitioner and the Respondent. Unless
mutually agreed otherwise, a court reporter transcript shall be taken of the
hearing with costs to be divided equally between the parties. The Panel shall
allocate the remaining costs of arbitration.

14.10 The Arbitration proceeding brought hereunder, any or all provisions
contained herein, and arbitration awards entered pursuant to this Article are
specifically governed by, subject to and enforceable under the Federal
Arbitration Act (Title 9, United States Code, Sections 1-14, as amended).

14.11 Each party agrees that time is of the essence with respect to all terms
and conditions referenced in this Article. All deadlines contained in this
Article may be extended by mutual consent of the parties, and if the Panel has
been selected, the Panel's Consent must also be obtained.

14.12 Each party agrees that any arbitration award entered pursuant to and
governed by this Article shall not have any precedential or collateral estoppel
effect on future arbitrations, proceedings, or controversies, if any, between
the parties. Any claim of res judicata or claim preclusion shall itself be
subject to arbitration.

14.13 This Article shall survive the termination of this Agreement.

ARTICLE 15 - TERMINATION

15.1 This Agreement may be terminated at any December 31 by either party issuing
a written notice at least ninety (90) days prior to such date. Any draft
authority of the Managing General Agent shall terminate upon the date of said
notice of termination except as provided in Article 15.7 or provided otherwise
in writing by the Company.

15.2 This Agreement shall automatically terminate simultaneous with and upon the
cancellation or termination of the reinsurance agreement referred to in Articles
2.3 and 17, except as provided in Article 15.7.

15.3 The right to solicit and place new business, or renewal, or any
modification of existing business, shall be suspended as provided in Article
15.5 in the event of default by the Managing General Agent.

The term "default" means any material breach or material failure to comply with
the terms and conditions of this Agreement and includes, but is not limited to,
the following:

        a. failure to remit balances due as required by this Agreement and fails
        to cure such default within ten (10) days after written demand has been
        made for the same;
        b. failure to adjust all claims in a timely manner arising from all
        business written under this Agreement;
        c. failure to maintain Agent's license(s) or certificate(s) as required
        by any public authority; and
        d. failure to comply with any and all provisions of the Texas Insurance
        Code and/or Texas Administrative Code and such failure remains uncured
        after notice and a reasonable opportunity to cure.

                                       13
<PAGE>

15.4 In the event that the Company determines that the Managing General Agent is
in material default, the Company may, at its sole discretion, suspend the
authority of the Managing General Agent. Such suspension shall be effective
immediately. The Managing General Agent shall have thirty (30) days to cure the
default.

15.5 In the event of cancellation of this Agreement due to fraud or material
breach of this Agreement and Company has suspended or terminated Managing
General Agent's continuing service obligation as described herein below, any
indebtedness of the Managing General Agent to the Company and all premiums in
the possession of the Managing General Agent, or for the collection of which
the Managing General Agent is responsible, shall, notwithstanding any provisions
to the contrary, become immediately due the Company. In such circumstance, any
indebtedness of the Company to the Managing General Agent shall also become
immediately due and payable.

15.6 The failure of the Company or Managing General Agent to declare promptly a
default or breach of any of the terms and conditions of this Agreement shall not
be construed as a waiver of any of said terms and conditions, nor estop either
party from thereafter demanding a full and complete compliance herewith.

15.7 Managing General Agent agrees that in the event this Agreement is
terminated for any reason, Managing General Agent shall continue to perform all
customary and necessary services for all in-force Insurance policies in
accordance with the provisions of this Agreement until all such policies have
been completely cancelled, non-renewed, or otherwise terminated; provided,
however, that Company may, in the event of Managing General Agent's material
default hereunder, immediately suspend or terminate Managing General Agent's
continuing service obligation hereunder.

ARTICLE 16 - CLAIMS HANDLING

16.1 The Managing General Agent shall have authority to settle all claims
arising from business placed with the Company under this Agreement in accordance
with established Company procedures. At the sole option of the Company, the
Company may assume any or all of this responsibility at its own expense.

16.2 The authority of the Managing General Agent to settle claims shall not
exceed $30,000 per claim without notification to and consent of the Company. The
Company retains final authority over disputes concerning claims settlement and
setting of loss reserves, (required by TAC re MGA).

16.3 The Managing General Agent shall promptly report to the Company any and all
claims involving lawsuits, when the Company is named, as soon as the Managing
General Agent has been made aware of such lawsuits by any party, and shall
cooperate fully with the Company to facilitate reporting, investigation, and
adjustment of any claim, loss or lawsuit when and as requested by the Company.

16.4 The Managing General Agent may appoint (subject to the approval of the
Company, which shall not be unreasonably withheld) appropriate claims adjustment
firms to handle certain investigations and settlements relating to claims.

                                       14
<PAGE>

16.5 Payment of losses shall be made on checks or drafts in the name of the
Company. Any expense not directly connected with the settlement of losses or
recovery by way of salvage or subrogation shall be incurred solely by the
Managing General Agent except as from time to time specifically authorized by
the Company.

16.6 The Managing General Agent shall be responsible for the safekeeping of all
checks and/or drafts of the Company used for settling claims and shall perform
the following:

        a. the Managing General Agent shall immediately return all voided checks
        and/or drafts to the Company;
        b. the Managing General Agent shall immediately notify the Company of
        any material irregularities, theft, disappearance or destruction of
        checks and/or drafts; and
        c. the Managing General Agent shall see to it that all checks and/or
        drafts are sequentially numbered and issued in order, with all voided
        checks and/or drafts properly marked and accounted for.

16.7 The Managing General Agent shall notify the Company by sending a copy of a
form within thirty (30) days of the determination that the claim involves:

        a. a continuing coverage dispute requiring attorney review;
        b. a demand in excess of policy limits;
        c. allegations of bad faith; or
        d. alleged violations of the Texas Deceptive Trade Practices Act or
        Article 21.21 of the Texas Insurance Code.

The form should include the claimant's name, claim number, insureds name, policy
number and a description of the claim. This information can be faxed or sent via
e-mail to the Company.

ARTICLE 17 - REINSURANCE

17.1 The Managing General Agent may not bind reinsurance or retrocessions on
behalf of the Company, may not commit the Company to participate in insurance or
reinsurance syndicates and may not collect a premium from a reinsurer or commit
the Company to a claims settlement with a reinsurer without the prior written
approval of the Company. If the Company gives such prior approval, the Managing
General Agent must promptly forward a report to the Company.

17.2 The Managing General Agent is prohibited from ceding reinsurance on behalf
of the Company.

17.3 All business coming within the scope of this Agreement shall be reinsured
under the attached Reinsurance Agreement. Because of the nature of the
Reinsurance Agreement, the Reinsurer shall have the right to act on all such
matters coming within the scope of this Agreement as though the Reinsurer were
the Company, but by doing so or not doing so, shall not invalidate the right of
the Company to act hereunder.

17.4 Any violation of the terms and/or conditions of the Reinsurance Agreement
by the Reinsurer resulting in any diminution of the Reinsurer's liability to the
Company shall be the sole responsibility of the Managing General Agent and the
Managing General Agent shall indemnify and hold the Company harmless from any
such liability. Managing General Agent shall have no obligation to indemnify and
hold the Company harmless for any damage or liability that arises,

                                       15
<PAGE>

either directly or indirectly, out of any action or inaction of the Company
including, but not limited to, any acts of negligence by the Company in
connection with any rights or obligations of the Company incurred in connection
with the Reinsurance Agreement.

ARTICLE 18 - PRIVACY

18.1 Privacy Notice. The Managing General Agent shall provide to each new
policyholder, prior to or upon the issuance of any Policies written under this
Agreement, and in accordance with applicable state and federal laws, an initial
notice of the Company's privacy policies and practices. Not less than annually
thereafter, the Managing General Agent, upon the request of the Company, shall
distribute a copy of the Company's annual privacy notice, as may be amended from
time to time, to each existing policyholder. In addition, the Managing General
Agent shall, upon the request of the Company, distribute revised privacy notices
and opt-out notices as applicable to each policyholder to reflect any revisions
which may be made to the Company's privacy policies arid practices. In each
case, the Company shall be responsible for providing the Agency with a copy of
the form for its privacy policies and practices notice, which forms the Managing
General Agent shall use to create and deliver the notices described herein, at
the Agency's sole cost and expense with respect to initial and annual notices.
The cost and expense of creating and delivering revised notices at a time other
than delivering initial and annual notices shall be borne by the Company. These
notices shall be created and delivered in addition to any separate legal
obligation the Managing General Agent may have to create and deliver its own
such notices on behalf of itself or its affiliates.

18.2 Confidentiality of Customer Information. None of the Parties hereto shall
disclose or use any nonpublic personal financial information or nonpublic
personal health information related to any policyholder, or to any consumer or
customer (as such terms are defined under applicable state and federal privacy
laws), except as necessary to carry out its duties and obligations under this
Agreement or as otherwise permitted under applicable state or federal law.

18.3 Information Security Program. Each of the Parties hereto shall develop and
implement, in accordance with applicable state and federal laws, a comprehensive
information security program designed to (i) ensure the security and
confidentiality of nonpublic personal financial information and nonpublic
personal health information related to any policyholder, or to any consumer or
customer (as such terms are defined under applicable state and federal privacy
laws), (ii) protect against any anticipated threats or hazards to the security
or integrity of such information, and (iii) protect against unauthorized access
to or use of such information that could result in substantial harm or
inconvenience to any customer.

18.4 Confidentiality of Information Systems. If either party provides to the
other party access to information or networks through computer access, such
other party shall be responsible for maintaining the confidentiality, security
and integrity of such information and of the providing party's computer programs
and systems. Additionally, each party that obtains such information shall be
responsible to insure that its employees, agents, and representatives are aware
of the sensitive and proprietary nature of the information obtained, of the
importance of confidentiality, and of the conditions described in this Section
18.4. This Section 18.4 shall survive termination of this Agreement.

                                       16
<PAGE>

ARTICLE 19 - GENERAL OBLIGATIONS OF MANAGING GENERAL AGENT

19.1 Licensing. Managing General Agent warrants that it is, and will continue to
be during the term of this Agreement and thereafter while providing any
continuing services hereunder, authorized and licensed to perform all acts set
out in this Agreement. On or before the signing of this Agreement, Managing
General Agent shall provide Company with a copy of its current Managing General
Agent License, and thereafter shall, within 15 days of receiving written
request, provide copy of any renewal of such license to Company.

19.2 Compliance with Laws. Managing General Agent shall be responsible for
compliance with all applicable laws, regulations, rules and requirements
relating to the performance of its obligations hereunder and the general
standards, rules, and regulations of the insurance industry; and all written
instructions as may be provided to Managing General Agent from time to time by
Company.

ARTICLE 20 - GENERAL OBLIGATIONS OF COMPANY

20.1 Licensing. Company warrants that it is, and will continue to be during the
term of this Agreement and thereafter while providing any continuing services
hereunder, authorized and duly licensed to perform all acts set out in this
Agreement. On or before the signing of this Agreement, Company shall provide
Managing General Agent with a copy of its current Certificate of Authority, and
thereafter shall, within 15 days of receiving written request, provide copy of
any renewal of such license to Managing General Agent.

20.2 Compliance with Laws. Managing General Agent shall be responsible for
compliance with all applicable laws, regulations, rules and requirements
relating to the performance of its obligations hereunder and the general
standards, rules, and regulations of the insurance industry.

ARTICLE 21 - MISCELLANEOUS

21.1 Any obligations and undertakings of each of the parties to this Agreement
shall be performable in Dallas County, Texas. The Managing General Agent agrees
to pay to the Company all sums of money which may become payable to Company
under this Agreement.

21.2 Complaints by Insureds - All Texas Department of Insurance (TDI) complaints
are to be handled by the Managing General Agent as follows:

        a. the Managing General Agent is to notify the Company promptly of any
        TDI complaints received and forward a copy of the complaint to the
        Company;
        b. the Company will promptly notify the Managing General Agent of any
        complaints it receives on the business written pursuant to this
        Agreement;
        c. the Managing General Agent is to promptly research the circumstances
        of each complaint and provide the Company with a written reasonable
        explanation of the Managing General Agent's position and intention; and
        d. the Managing General Agent is to maintain complete records of each
        complaint and all supporting documentation.

                                       17
<PAGE>

21.3 As regards non-TDI complaints, the Managing General Agent is to maintain a
log and complete records of each complaint and all supporting documentation in a
form approved by the Company.

21.4 The underwriting guidelines of the Company, as may be promulgated from time
to time by the Managing General Agent, are incorporated herein by reference.

21.5 As regards the subject matter of this Agreement, this Agreement supersedes
all previous Managing General Agency Agreements, if any, whether written and
oral, between the Company and the Managing General Agent.

21.6 The Managing General Agent shall maintain errors and omissions insurance
with an insurer acceptable to the Company, covering its operations, including
the obligations of this Agreement, the limits of which shall not be less than
$1,000,000 per claim, with a permitted retention amount up to $1,000,000.

21.7 No amendments to or modifications of this Agreement shall be valid unless
made in writing and executed by the Company and the Managing General Agent in
the form of an Amendment to this Agreement.

21.8 The Managing General Agent shall not directly or indirectly assign its
rights and obligations under this Agreement in whole or in part to any
non-affiliated party without the prior written approval of the Company, which
shall not be unreasonably withheld.

21.9 Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural and any term
stated in either the masculine, the feminine or the neuter gender shall include
the masculine, the feminine and the neuter gender. All captions and section
headings are intended to be for purposes of reference only and do not affect the
substance of the articles to which they refer.

21.10 Each party hereto agrees to perform any further acts and execute and
deliver any further documents, which may be reasonably necessary to carry out
the provisions of this Agreement.

21.11 In the event that any of the provisions, or portions thereof, of this
Agreement are held to be illegal, invalid or unenforceable by any court of
competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected by the illegal, invalid
or unenforceable provisions or by its severance here from.

21.12 Any and all notices required or permitted to be given under this Agreement
shall be in writing and will be deemed given when deposited in the United States
Postal Service, Certified Mail, Return Receipt Requested, to the parties'
address as provided below; or when e-mailed, deemed given when there is proof of
receipt.

                                       18
<PAGE>

This Agreement shall be effective the 1st day of January 2003, or on such other
date as the parties hereto mutually agree.

THE COMPANY:                             THE MANAGING GENERAL AGENT:

OLD AMERICAN COUNTY MUTUAL               DIRECT GENERAL
FIRE INSURANCE COMPANY                   INSURANCE AGENCY, INC.

By:     /s/ Thomas A. McCall             By:       /s/ Barry D. Elkins
      -----------------------------            ---------------------------------

Name:       Thomas A. McCall             Name:         Barry D. Elkins
      -----------------------------            ---------------------------------

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

Date:       December 31, 2002            Date:        December 31, 2002
      -----------------------------            ---------------------------------

                                       19
<PAGE>

                              SCHEDULE OF BUSINESS

The Company, the Reinsurer and the Managing General Agent agree that the
Managing General Agent has the authority to accept, on forms approved by the
Company, any Policy, endorsement, binder, certificate, or proposal for
insurance. The Managing General Agent's authority is limited by this Schedule of
Business.

    Overall:
             Projected premium volume                 $40,000,000
             Territory                                Texas only
             Maximum policy term                      Twelve months

While business will be predominately minimum limits, the lines of business and
the maximum limits of liability are as follows:

                         COVERAGE                       MAXIMUM LIMITS

             Bodily Injury Liability                  $100,002 each person
                                                      $300,002 each accident
             Property Damage Liability                $ 50,002 each accident

             Uninsured/Underinsured Motorists
                  Bodily Injury                       $ 20,002 each person
                                                      $ 40,002 each accident
                  Property Damage                     $ 15,002 each accident

             Personal Injury Protection               $  2,502 each person

             Medical payments                         $    502 each person

             Physical Damage                          $ 35,002 each automobile

This Agreement does not apply to and specifically excludes the following:

        a. Any business not produced by DIRECT GENERAL INSURANCE AGENCY, INC, or
        b. Any business not classified as private passenger automobile liability
        or physical damage, or
        c. Exclusions specified within the Quota Share Reinsurance Agreement
        Number DIRECT-03-001.

THE COMPANY:                             THE MANAGING GENERAL AGENT:

OLD AMERICAN COUNTY MUTUAL               DIRECT GENERAL
FIRE INSURANCE COMPANY                   INSURANCE AGENCY, INC.

By:     /s/ Thomas A. McCall             By:       /s/ Barry D. Elkins
      -----------------------------            ---------------------------------

Name:       Thomas A. McCall             Name:         Barry D. Elkins
      -----------------------------            ---------------------------------

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

Date:       December 31, 2002            Date:        December 31, 2002
      -----------------------------            ---------------------------------

                                       20

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