Document:

<PAGE>
                                                                   Exhibit 10.21

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

                                    issued to

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       and

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

<PAGE>
                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

                                TABLE OF CONTENTS

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

ATTACHMENTS

           Nuclear Incident Exclusion Clause - Physical Damage -
           Reinsurance - U.S.A................................................23
           Nuclear Incident Exclusion Clause - Liability -
           Reinsurance - U.S.A................................................25
</TABLE>

                                    1 of 29

<PAGE>

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

                                (the "Contract")

                                    issued to

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       and

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

                  (individually and collectively the "Company")

                                       by

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

                                (the "Reinsurer")

                                   ARTICLE 1

BUSINESS REINSURED

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

                                     2 of 29
<PAGE>

                                   ARTICLE 2

COVER

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

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

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

                                   ARTICLE 3

LOSS LIMIT

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

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

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

<TABLE>
<S>                                                  <C>
         Automobile Physical Damage                  $75,000 each vehicle, or so deemed.
</TABLE>

                                     3 of 29
<PAGE>

                                   ARTICLE 4

LOSS CORRIDOR

As respects Policies with effective or renewal dates during the Contract Year,
the Company shall retain, under this Contract and the Companion Contract, 100%
of Losses Incurred above a Loss Ratio of 71.5%. The Company will remain liable
for such Losses Incurred unless the Losses Incurred exceeds a Loss Ratio of
93.0%, at which point the Reinsurer's liability will resume (based on its pro
rata share) for any Losses Incurred in excess of an 93.0% Loss Ratio. Said
additional retention is called the "Loss Corridor." The Loss Corridor is not
subject to any effect from a deficit carryforward from prior Contract Years.

                                   ARTICLE 5

LOSS RATIO CAP

The Reinsurers' liability for further Losses under Policies written or renewed
during the Contract Year will cease in the event the Loss Ratio for the Contract
Year exceeds 106.5%. That is, the Reinsurers' aggregate limit of liability under
this Contract and under the Companion Contract, after application of the Loss
Corridor, shall be an amount equal to 85.0% of the Ceded Gross Net Earned
Premium of the Company under this Contract and the Companion Contract, after
application of the Cessions Contracts, effective at 12:01 a.m., Central Standard
Time, January 1, 2002, as respects policies written or renewed during the
Contract Year. Should this occur on the Contract Year, the Company will retain,
under this Contract and the Companion Contract, all liability for further Losses
beyond the 106.5% Loss Ratio Cap.

                                   ARTICLE 6

COMMENCEMENT AND TERMINATION

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

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

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

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

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<PAGE>

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

D.       It is understood and agreed that should the Company enter any
         arrangement either by way of shareholding or management or otherwise,
         under which effective legal or presumptive control of 50% or more is
         assumed by any other individual or organization than that which
         pertained at the time this Contract became effective, the Company shall
         forthwith notify the Reinsurer.

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

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

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

                                   ARTICLE 7

TERRITORY

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

                                   ARTICLE 8

EXCLUSIONS

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

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

         2.       Business excluded by the following attached Nuclear Incident
                  Exclusion Clauses:

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

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

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

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

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

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

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

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

                  (a)      As a public or livery conveyance;

                  (b)      Emergency vehicles;

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<PAGE>

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

                  (d)      Automobiles used in speed contests and races;

                  (e)      Motorcycles.

         9.       Commercial Automobile Physical Damage and Liability business.

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

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

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

         13.      Extra contractual obligations and excess policy limits awards.

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

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

                                   ARTICLE 9

REINSURANCE PREMIUM

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

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<PAGE>

                                   ARTICLE 10

PREMIUM CAP

A.       As respects the Contract Year beginning January 1, 2002, the Company's
         Gross Net Written Premium for Policies subject to this Contract and for
         Policies subject to the Companion Contract shall not exceed the
         following Premium Caps:

<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------
                               LOCATION                      GROSS NET WRITTEN PREMIUM

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

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

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

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

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

                                   ARTICLE 11

PROVISIONAL CEDING COMMISSION

A.       The Reinsurer shall allow the Company a provisional ceding commission
         of 25.0% of the ceded Gross Net Written Premium remitted to the
         Reinsurer as per subparagraph A.2. of the Accounts and Remittances
         Article. Return commission shall be allowed on return premiums at the
         same rate.

                                     8 of 29
<PAGE>

B.       It is expressly agreed that the ceding commission includes provision
         for all acquisition costs administrative fees, and for all other
         expenses (other than the flat 60% charge and up to an additional 2.5%
         charge for outside legal expense relating to Loss Adjustment Expense)
         of whatever nature.

                                   ARTICLE 12

ADJUSTMENT OF CEDING COMMISSION

A.       As respects Policies written or renewed during the Contract year, the
         provisional ceding commission will be adjusted upwards in the event the
         Adjusted Loss Ratio for the Contract Year is below 71.5%. For each 1%
         point decrease in the Adjusted Loss Ratio, from a starting Adjusted
         Loss Ratio of 71.5%, the ceding commission will be increased by 1%
         point. The maximum ceding commission for the Contract Year is 35.0%
         (corresponding to an Adjusted Loss Ratio of 61.5% or better).

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

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

                                   ARTICLE 13

ACCOUNTS AND REMITTANCES

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

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

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

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

                                     9 of 29
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         4.       Subrogation, salvage, or other recoveries on Losses under
                  Policies written or renewed during Contract Year.

         The Company's "Cumulative Retention under the Loss Corridor and Loss
         Ratio Cap" for the Contract Year shall mean at any time the sum of:

         (a)      the lesser of:

                  (i)      21.5% of the inception-to-date accumulated ceded
                           Gross Net Earned Premium from Policies with effective
                           or renewal dates during the Contract Year; and

                  (ii)     the amount, if any, by which the inception-to-date
                           accumulated paid Losses Incurred exceed 71.5% of
                           inception-to-date ceded Gross Net Earned Premium from
                           Policies with effective or renewal dates during the
                           Contract Year;

         (b)      the amount, if any, by which inception-to-date accumulated
                  paid Losses Incurred exceed 106.5% of inception-to-date
                  accumulated Ceded Gross Net Earned Premium from Policies with
                  effective or renewal dates during the Contract Year prior to
                  application of the Loss Corridor; and

         (c)      the quota share retention under this Contract.

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

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

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

                                   ARTICLE 14

INTERLOCK

For purposes of calculations under the following Articles and provisions:

                                    10 of 29
<PAGE>

         1.       Premium Cap Article;

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

         3.       Loss and Loss Adjustment Expense Article;

         4.       Loss Corridor Article;

         5.       Adjustment of Ceding Commission Article;

         6.       Accounts and Remittances Article; and

         7.       Loss Ratio Cap;

experience (including but not limited to Loss, Loss Adjustment Expense and Gross
Net Written Premium, as applicable) under this Contract and under the Companion
Contract shall be combined. Any reduction in coverage will be applied to each
reinsurance contract on a pro rata basis, based on the proportion of combined
Loss, Loss Adjustment Expense or Gross Net Written Premium experience, as
applicable.

                                   ARTICLE 15

DEFINITIONS

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

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

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

D.       "Companion Contract" shall mean the Non-Traditional Private Passenger
         Automobile Quota Share Reinsurance Contract, effective at 12:01 a.m.,
         Central Standard Time, January 1, 2002, issued to Mutual Service
         Casualty Insurance Company (Intermediary Reference Number
         0481-10-0009-00).

E.       "Gross Net Written Premium" shall mean the gross written premium income
         on subject business, less returns and cancellations and less written
         premium income paid for reinsurances, recoveries under which would
         inure to the benefit of this Contract. Gross Net Written Premium income
         shall not include premium finance income, billing fees and Policy

                                    11 of 29
<PAGE>

         fees, collected by the Company in connection with business covered
         hereunder, regardless of whether these fees are taxed as premium by the
         jurisdiction in question.

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

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

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

I.       "Losses Incurred" shall mean paid Loss and Loss Adjustment Expense,
         plus outstanding reserves under this Contract and the Companion
         Contract combined.

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

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

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

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

                                    12 of 29
<PAGE>

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

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

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

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

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

                                   ARTICLE 16

ORIGINAL CONDITIONS

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

                                    13 of 29
<PAGE>

                                   ARTICLE 17

SPECIAL PROVISIONS

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

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

                                   ARTICLE 18

LOSS AND LOSS ADJUSTMENT EXPENSE

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

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

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

                                   ARTICLE 19

OFFSET

The Company and the Reinsurer shall have the right to Offset any balance or
balances (whether on account of premiums or Losses) due from one party to the
other under the terms of this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer which is classified
by the Company as part of the Company's Private Passenger Automobile program.
However, in the event of the insolvency of any party hereto, offsets shall

                                    14 of 29
<PAGE>

be allowed in accordance with the statutes and/or regulations of the state
having jurisdiction over the Solvency.

                                   ARTICLE 20

CURRENCY

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

                                   ARTICLE 21

LOSS RESERVE FUNDING

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

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

         1.       unearned premium (if applicable);

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

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

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

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

D.       When funding by an LOC, the Reinsurer agrees to apply for and secure
         timely delivery to the Company of a clean, irrevocable and
         unconditional LOC issued by a bank and containing provisions acceptable
         to the insurance regulatory authorities having jurisdiction over the
         Company's reserves in an amount equal to the Reinsurer's Obligations.
         Such

                                    15 of 29
<PAGE>

         LOC shall be issued for a period of not less than one year, and shall
         be automatically extended for one year from its date of expiration or
         any future expiration date unless 30 days (or such other time period as
         may be required by insurance regulatory authorities), prior to any
         expiration date the issuing bank shall notify the Company by certified
         or registered mail that the issuing bank elects not to consider the LOC
         extended for any additional period.

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

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

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

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

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

F.       If the amount drawn by the Company is in excess of the actual amount
         required for 1. or 3., or in the case of 4., the actual amount
         determined to be due, the Company shall promptly return to the
         Reinsurer the excess amount so drawn. All of the foregoing shall be
         applied without diminution because of insolvency on the part of the
         Company or the Reinsurer.

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

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

                                    16 of 29
<PAGE>

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

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

                                   ARTICLE 22

TAXES

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

                                   ARTICLE 23

FEDERAL EXCISE TAX

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

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

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

                                    17 of 29
<PAGE>

                                   ARTICLE 24

INSPECTION

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

                                   ARTICLE 25

DELAY, OMISSION OR ERROR

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

                                   ARTICLE 26

INSOLVENCY

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

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

                                    18 of 29
<PAGE>

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

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

                                   ARTICLE 27

ARBITRATION

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

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

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

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

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

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

                                    19 of 29
<PAGE>

                                   ARTICLE 28

SERVICE OF SUIT

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

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

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

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

         Further, pursuant to any statute of any state, territory or district of
         the United States of America that makes provision therefor, the
         Reinsurer hereby designates the Superintendent, Commissioner or
         Director of Insurance or other officer specified for that purpose in
         the statute, or his successor or successors in office, as its true and
         lawful attorney upon whom may be served any lawful process in any
         action, suit or proceeding instituted by or on behalf of the Company or
         any beneficiary hereunder arising out of this Contract and hereby
         designates the agent for service of process as the firm to whom the
         said officer is authorized to mail such process or a true copy thereof.

                                    20 of 29

<PAGE>

                                   ARTICLE 29

ENTIRE CONTRACT

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

                                   ARTICLE 30

SEVERABILITY

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

                                   ARTICLE 31

INTERMEDIARY

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

                                   ARTICLE 32

MODE OF EXECUTION

A.       This Contract may be executed by:

         1.       An original written ink signature of paper documents.

                                    21 of 29
<PAGE>

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

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

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

IN WITNESS WHEREOF, THE COMPANY HAS CAUSED THIS CONTRACT TO BE EXECUTED BY ITS
DULY AUTHORIZED REPRESENTATIVE(S) THIS 27TH DAY OF SEPTEMBER, 2002.

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       AND

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

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

                                    22 of 29
<PAGE>

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

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

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

         (i)      Nuclear reactor power plants including all auxiliary property
                  on the site, or

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

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

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

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

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

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

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

                                    23 of 29
<PAGE>

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

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

7.       Reassured to be sole judge of what constitutes:

         (a)      substantial quantities, and

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

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

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

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

12/12/57
NMA 1119

--------------------------------------------------------------------------------
NOTES:   Wherever used herein the terms:

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

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

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

                                    24 of 29
<PAGE>

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

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

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

         LIMITED EXCLUSION PROVISION.*

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

                      injury, sickness, disease, death or destruction

                      bodily injury or property damage

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

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

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

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

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

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

                                    25 of 29
<PAGE>

                  Limited Exclusion Provision by the Governmental Authority
                  having jurisdiction thereof.

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

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

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

         BROAD EXCLUSION PROVISION.*

         It is agreed that the policy does not apply:

         I.       Under any Liability Coverage, to

                  injury, sickness, disease, death or destruction

                  bodily injury or property damage

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

                  (b)      resulting from the hazardous properties of nuclear
                           material and with respect to which (1) any person or
                           organization is required to maintain financial
                           protection pursuant to the Atomic Energy Act of 1954,
                           or any law amendatory thereof, or (2) the insured is,
                           or had this policy not been issued would be, entitled
                           to indemnity from the United States of America, or
                           any agency thereof, under any agreement entered into
                           by the United States of America, or any agency
                           thereof, with any person or organization.

                                    26 of 29
<PAGE>

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

                      immediate medical or surgical relief

                      first aid,

                  to expenses incurred with respect to

                      bodily injury, sickness, disease or death

                      bodily injury

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

         III.     Under any Liability Coverage, to

                      injury, sickness, disease, death or destruction

                      bodily injury or property damage

                  resulting from the hazardous properties of nuclear material,
                  if

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

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

                  (c)      the

                               injury, sickness, disease, death or destruction

                               bodily injury or property damage

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

                      injury to or destruction of property at such nuclear
                      facility.

                      property damage to such nuclear facility and any property
                      thereat.

                                    27 of 29
<PAGE>

         IV.      As used in this endorsement:

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

                  (a)      any nuclear reactor,

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

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

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

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

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

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

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

                                    28 of 29
<PAGE>

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

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

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

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

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

NOTES:   Wherever used herein the terms:

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

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

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

21/9/67
NMA 1590 (amended).

                                    29 of 29
<PAGE>
                       INTERESTS AND LIABILITIES AGREEMENT
                                (the "Agreement")

                                     of the

                    AXA CORPORATE SOLUTIONS REASSURANCE PARIS

                          (the "Subscribing Reinsurer")

                                 as respects the

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       and

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP
                  (individually and collectively the "Company")

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

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

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

                                     1 of 2
<PAGE>

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

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

                    AXA CORPORATE SOLUTIONS REASSURANCE PARIS

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

AXA CS Reassurance Paris will not waive the Premium Cap, notwithstanding the
provisions of Article 10.

Market Reference Number: o/Ref.: 212650

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       AND

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

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

                                     of the

                           DORINCO REINSURANCE COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       and

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP
                          (collectively the "Company")

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

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

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

                                     1 of 2
<PAGE>

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

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

                           DORINCO REINSURANCE COMPANY

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

Market Reference Number: TA 33587

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       AND

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

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

                                     of the

                        FOLKSAMERICA REINSURANCE COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       and

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP
                          (collectively the "Company")

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

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

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

                                     1 of 2
<PAGE>

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

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

                        FOLKSAMERICA REINSURANCE COMPANY

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

Market Reference Number:

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       AND

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

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

                                     of the

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

                                 as respects the

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       and

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP
                  (individually and collectively the "Company")

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

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

                                     1 of 3

<PAGE>

The following shall apply to the Subscribing Reinsurer's share in the attached
Contract in lieu of paragraph B of Article 10 - Premium Cap - of the Contract:

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

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

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

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

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

                                     2 of 3
<PAGE>

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

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

                     OVERSEAS PARTNER US REINSURANCE COMPANY

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

Market Reference Number:

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       AND

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

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

                                     of the

                            SCOR REINSURANCE COMPANY
                          (the "Subscribing Reinsurer")

                                 as respects the

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT
                                (the "Contract")

                            issued to and executed by

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       and

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP
                          (collectively the "Company")

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

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

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

                                     1 of 2
<PAGE>

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

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

                            SCOR REINSURANCE COMPANY

                             /s/ Marushka Stefanova
--------------------------------------------------------------------------------

Market Reference Number: TOO 9143

                            THE DIRECT GENERAL GROUP
                         NASHVILLE, TENNESSEE, INCLUDING

                            DIRECT INSURANCE COMPANY

                        DIRECT GENERAL INSURANCE COMPANY

                  DIRECT GENERAL INSURANCE COMPANY OF LOUISIANA

                                       AND

                 DIRECT GENERAL INSURANCE COMPANY OF MISSISSIPPI

   AND/OR ANY OTHER COMPANIES THAT ARE NOW OR MAY HEREAFTER BECOME MEMBERS OF

                            THE DIRECT GENERAL GROUP

                  NON-TRADITIONAL PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE CONTRACT

                                     2 of 2<PAGE>
                                                                   Exhibit 10.22

                              FLORIDA MGA AGREEMENT

                                     BETWEEN

                     DIRECT GENERAL INSURANCE COMPANY, INC.
                          A TENNESSEE DOMICILED INSURER
                   (HEREINAFTER REFERRED TO AS THE "COMPANY")

                                     AND THE

                           MAITLAND UNDERWRITERS, INC.
                         A FLORIDA DOMICILED CORPORATION
            (HEREINAFTER REFERRED TO AS THE "MANAGING GENERAL AGENT")

                                    EFFECTIVE

                                 AUGUST 16, 1999

<PAGE>
                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                PAGE
                                                                                ----
<S>            <C>                                                              <C>
               Recitals                                                            1
ARTICLE 1.     APPOINTMENT/AUTHORITY                                               1
               1.01     Authority                                                  1
               1.02     General Duties                                             1
               1.03     Commencement Operational Date; Trial Period                2
               1.04     Independent Contractor                                     2
ARTICLE 2.     REINSURANCE                                                         3
               2.01     Acceptable Reinsurance Treaty                              3
               2.02     Retrocessions; No Authority                                3
ARTICLE 3.     COMPENSATION PAYABLE TO MGA; COMMISSION STATEMENTS                  3
               3.01     Commission Entitlement                                     3
               3.02     Commission Structure                                       3
               3.03     Commission Statement                                       4
               3.04     Advanced Commissions                                       4
               3.05     Acceleration                                               4
               3.06     Equitable Relief                                           4
               3.07     Ancillary Products Commissions                             5
               3.08     Full Compensation                                          5
ARTICLE 4.     LIMITATIONS OF AUTHORITY                                            5
               4.01     Maximum Premium Volume                                     5
               4.02     Underwriting Guidelines and Forms                          5
               4.03     Maximum Limits                                             5
               4.04     Company's Right to Cancel/Nonrenew Insurance Policies      6
               4.05     Company's Right to Suspend Binding Authority               6
               4.06     Prohibited Expenses                                        6
               4.07     Managing General Agent's Right to Offset                   6
               4.08     No Claims Settlement Authority                             6
ARTICLE 5.     PREMIUM COLLECTION AND REMITTANCES                                  6
               5.01     Premium Financing                                          6
               5.02     Payment of Premium; Responsibility For                     6
               5.03     Premium Trust Account                                      7
ARTICLE 6.     [RESERVED]                                                          7
ARTICLE 7.     REPORTS                                                             7
               7.01     Financial Information                                      7
               7.02     Reporting Requirements                                     7
ARTICLE 8.     RECORDS                                                             7
               8.01     Records Retention                                          7
               8.02     Document Production                                        8
ARTICLE 9.     GENERAL OBLIGATIONS OF MGA                                          8
               9.01     Licensing                                                  8
               9.02     Supervision of Agents/Producers                            8
               9.03     Compliance with Laws                                       8
</TABLE>

                                       i
<PAGE>
<TABLE>
<CAPTION>
<S>            <C>                                                              <C>
               9.04     Complaint Procedure                                        8
               9.05     No Authority to Delegate                                   9
               9.06     Managing General Agency Expense Responsibility             9
               9.07     Use of Company Logo, etc                                   9
               9.08     Ownership of Supplies                                      9
               9.09     [Reserved]                                                 9
               9.10     MIS System and Computer Access                            10
               9.11     Confidentiality                                           10
               9.12     Claims Reporting                                          10
ARTICLE 10.    GENERAL OBLIGATIONS OF COMPANY                                     10
               10.01    Insurance Department Complaints                           10
               10.02    Use of Managing General Agent's Logo, etc                 10
               10.03    Company's Right to Offset                                 10
ARTICLE 11.    INSURANCE AND INDEMNITY                                            10
               11.01    Insurance                                                 10
               11.02    Indemnification by Managing General Agent                 11
               11.03    Indemnification by Company                                11
               11.04    Notice of Indemnifiable Claim                             12
ARTICLE 12.    TERM OF AGREEMENT                                                  12
               12.01    Term                                                      12
ARTICLE 13.    TERMINATION OF THIS AGREEMENT                                      13
               13.01    Termination by Company; Generally                         13
               13.02    Termination by Company for Cause                          13
               13.03    Termination by Managing General Agent                     14
               13.04    Ownership of Business                                     15
               13.05    Continued Servicing                                       15
               13.06    Immediate Suspension                                      16
ARTICLE 14.    SOLICITATION AND RECRUITMENT                                       16
               14.01    Non-Solicitation                                          16
               14.02    Non-Recruitment                                           17
               14.03    Injunctive Relief                                         17
ARTICLE 15.    GENERAL PROVISIONS                                                 17
               15.01    Notice                                                    17
               15.02    Integration, Waiver, and Amendment                        17
               15.03    Remedies Not Exclusive                                    18
               15.04    Severability                                              18
               15.05    Applicable Law                                            18
               15.06    Conformance to Law                                        18
               15.07    Arbitration                                               18
               15.08    Other Companies                                           19
               15.09    Non-Assignability/Non-Delegation                          20
               15.10    Counterparts                                              20
ARTICLE 16.    CONDITION PRECEDENT                                                20
               Signatures                                                         21
</TABLE>

                                       ii

<PAGE>
Schedules
---------
A  List of Cash Register Automobile Insurance Agencies                     22
B  Private Passenger Automobile Business -- Authority                      23
C  Commission Schedule                                                     24

                                      iii
<PAGE>
                    FLORIDA MANAGING GENERAL AGENCY AGREEMENT

         This Managing General Agency Agreement (this "Agreement") is effective
this the 16th day of August, 1999 ("Effective Date"), by and between Direct
General Insurance Company, a Tennessee domiciled insurer (the "Company") and
Maitland Underwriters, Inc. (the "Managing General Agent" or "MGA")

         WHEREAS, Company is a duly licensed insurance company in various states
of the United States; and

         WHEREAS, Managing General Agent has substantial expertise in
soliciting, developing marketing, underwriting, and issuing contracts of
insurance for certain coverages as described herein which uniquely meet the
insurance needs of certain persons and entities; and

         WHEREAS, Company desires to appoint Managing General Agent as its
managing general agent for the solicitation, underwriting, binding, and issuing
of such insurance coverages in the State of Florida through its duly licensed
affiliated producing agencies listed on Schedule A hereto (the "Agencies"). (For
the purposes of this Agreement, the "Agencies" shall include any and all
additional insurance agencies that LR3 Enterprises, Inc. ("LR3") may establish
or acquire during the term of this Agreement as though such new agencies had
been listed on Schedule A hereto.)

         NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1. APPOINTMENT/AUTHORITY

1.01     Authority. Subject to the limitations described in this Agreement,
         Company hereby authorizes and appoints Managing General Agent as its
         managing general agent for the purpose of producing, issuing and
         delivering policies or contracts of insurance and endorsements thereto
         as described in Schedule B, attached hereto and incorporated by this
         reference, within the Territory defined in Schedule B, and in
         accordance with Company's written underwriting guidelines, procedures,
         instructions, and authority limits established by Company, and any
         memoranda provided to Managing General Agent from time to time,
         (individually an "Insurance Policy" or collectively, the "Insurance
         Policies"). SCHEDULE B may be modified by Company from time to time
         without the need to amend this Agreement and shall be effective upon
         thirty (30) days written notice to Managing General Agent or such
         earlier time as the parties may agree. Managing General Agent agrees to
         comply with and be bound by such modifications without the need for
         amendment of this Agreement.

1.02     General Duties. Subject to the limitations described in this Agreement
         Managing General Agent shall perform all acts necessary for the proper
         solicitation, placement, acceptance, and servicing of the Insurance
         Policies. Managing General Agent, in its sole discretion, may delegate
         and apportion its general duties under this paragraph, and

                                       1
<PAGE>

         any other of its duties and obligations under this Agreement, among the
         Agencies, LR3, and any affiliated entity under the common control of
         LR3; provided, however, that any such delegation or appointment shall
         not relieve the Managing General Agent of the ultimate responsibility
         for the performance of its duties and obligations hereunder. The
         general duties of the Managing General Agent under this paragraph shall
         include, but not limited to, the following:

         1.02.a.  To solicit, prepare, accept, and submit applications for
                  Insurance Policies or contracts of insurance and endorsements
                  as described herein;

         1.02.b.  To collect, receive, and forward premiums, policy fees and/or
                  applicable surplus lines tax(es);

         1.02.c.  to appoint agents on behalf of the Company; and

         1.02.d.  To bind insurance contracts on behalf of the Company so that
                  if applications are sent to the Company or its authorized
                  designee every other day via U.S. Express Mail, coverage will
                  become effective as of the applicant's signature date and
                  time. However, if the completed application is not sent in
                  accordance with such procedure, then, at the election of the
                  Company, any and all Insurance Policies will be effective on
                  the date received; unless Florida statute or regulation would
                  require an earlier effective date.

         1.02.e.  To carry out its duties to the best of its ability, knowledge,
                  skill and judgment.

1.03     Commencement Operational Date; Trial Period. This Agreement will
         commence on the Effective Date on a trial period basis, during which
         time all Agencies will become operational for the sale of automobile
         insurance policies issued by the Company. "Operational" means that the
         Agencies in existence at the time this Agreement commences have
         installed the required computer software and trained their personnel.
         Time is of the essence with respect to such Agencies becoming
         Operational, and the parties shall use their best efforts to promptly
         comply with Section 9.10 (MIS Systems and Computer Access) hereof and
         take all other actions necessary to achieve Operational status. By
         mutual consent, the Company and MGA shall confirm in writing to each
         other the date that Operational status has been achieved, which date
         shall be the first day of a calendar month as agreed between the
         parties (the "Operational Date"). The period of time between the
         Effective Date and the Operational Date shall be referred to herein as
         the "Trial Period."

1.04     Independent Contractor. Nothing contained herein shall create an
         employer/employee relationship between Company and Managing General
         Agent or between Managing General Agent and any affiliate of Company.
         Except as set forth herein, Company shall have no right of control over
         Managing General Agent as to the time, means, or manner of Managing
         General Agent's performance of its duties hereunder. Managing General
         Agent shall conduct itself and its business under the terms of this
         Agreement solely as an independent contractor.

                                       2
<PAGE>

ARTICLE 2. REINSURANCE

2.01     Acceptable Reinsurance Treaty. The Company's willingness to authorize
         Managing General Agent to act as a managing general agent pursuant to
         the terms of this Agreement is conditioned upon Company's ability to
         reinsure with reinsurers acceptable to it at least 80% (or such lower
         level as determined by Company) of its insurance liability with respect
         to the Insurance Policies produced by MGA under this Agreement. In this
         regard, the Company authorizes the Managing General Agent to arrange
         and negotiate for such reinsurance on behalf of the company, subject to
         the company's prior approval of the reinsurers and the terms of any
         reinsurance treaty. Managing General Agent shall have no authority to
         bind reinsurance on behalf of the Company.

2.02     Retrocessions; No Authority. Managing General Agent shall have no
         authority to bind retrocessions on behalf of Company, and shall have no
         authority to commit Company to participate in insurance or reinsurance
         syndicates. The Company shall notify Managing General Agent immediately
         upon receipt of any notice of cancellation or intent to cancel any such
         reinsurance.

ARTICLE 3. COMPENSATION PAYABLE TO MGA; COMMISSION STATEMENTS

3.01     Commission Entitlement. If all of the terms of this Agreement are
         adhered to by the Managing General Agent, the Managing General Agent
         shall be entitled to commissions, as described below and listed on
         Schedule C hereto, on Insurance Policies produced by the Managing
         General Agent and the Agencies and written by the Company. The
         commission so paid shall be accepted by the Managing General Agent in
         full satisfaction of all claims by the Managing General Agent for
         services rendered and expenses incurred on behalf of the Company.
         Notwithstanding Termination of this Agreement, in the event of
         cancellation or termination of any coverage or policy prior to
         expiration, regardless of whether such cancellation or termination was
         by policyholder, the Company, or a premium finance company, the
         Managing General Agent shall refund any unearned commissions to the
         Company at the same rate paid to the Managing General Agent.

3.02     Commission Structure.

         3.02.a.  TRIAL PERIOD COMMISSION. The parties anticipate that during
                  the Trial Period some Agencies will begin selling automobile
                  insurance policies issued by the Company. During the Trial
                  Period, Managing General Agent will receive a commission
                  (including applicable MGA fees) on the net written premiums of
                  the automobile insurance business written by the Agencies on
                  behalf of the Company in Florida. The rate of said commission
                  is listed on Schedule C, attached hereto and incorporated by
                  this reference; which Schedule C may be modified from time to
                  time by the mutual written consent of the Company and the
                  Managing General Agent.

                                       3
<PAGE>

         3.02.b.  OPERATIONAL COMMISSION. Effective on the Operational Date,
                  Managing General Agent will receive a commission (including
                  applicable MGA fees) on the net written premiums of the
                  automobile insurance business written by Agencies on behalf of
                  the Company in Florida. The rate of said commission is listed
                  on Schedule C hereto. Beginning on the thirty-first month
                  after the Operational Date under this Agreement, this
                  commission rate may be reduced or increased by an amount equal
                  to any reduction or increase in the Company's reinsurance
                  commission rate, as compared to the reinsurance rate in effect
                  as of the Operational Date with respect to the Agencies'
                  business.

         3.02.c.  COMMISSION AFTER TERMINATION. As of the effective date of
                  termination of this Agreement other than pursuant to Section
                  13.02 hereof, MGA shall be entitled to a commission on
                  renewals and endorsements of 15% or such other rate as may be
                  agreed by the parties. In the event this Agreement is
                  terminated by the Company pursuant to Section 13.02 hereof, no
                  commissions shall be payable on renewals or endorsements.

3.03     Commission Statement. Following the end of each month, the Company
         shall, by the 15th day of the next month, send to the Managing General
         Agent a statement of accounts setting forth, among other things, the
         premium written, commissions, and the net amount due to the Managing
         General Agent by the Company, together with payment of that amount. If
         such statement reflects an amount due to the Company from the Managing
         General Agent, the Managing General Agent will pay that amount within
         30 days of the date of said statement.

3.04     Advanced Commissions. For each of the first three months under this
         Agreement beginning on the Operational Date, the Company will advance
         to Managing General Agent an amount to facilitate the transition to
         "account current" settlements with the Company. The payment for the
         first month will be 22.5% of the average monthly net premiums produced
         by the Agencies for the prior twelve (12) months. For the second and
         third months, advances will be based on actual net premium production
         of the Company's business produced by the Agencies for the preceding
         month. For the fourth month, no advances will be paid, and commission
         payments for business produced during the fourth month will be made on
         an "account current" basis, beginning on the 15th day of the fifth
         month. At that time, commissions payable on the Company's business
         produced during such three-month period will be calculated on an
         account current basis and will be netted against advances that have
         been made.

3.05     Acceleration. Should Managing General Agent default in any payment of
         premiums or return of unearned commissions referred to herein, all
         unpaid premiums and unearned commissions on the Insurance Policies
         shall be due and payable immediately.

3.06     Equitable Relief. Notwithstanding Section 15.07 (Arbitration) of this
         Agreement, should Managing General Agent fail to pay Company any
         premiums, unearned commissions, or other monies when due, then Company
         shall be entitled to the issuance of an injunction to obtain such
         premiums or monies to prohibit Managing General Agent's use of such

                                       4
<PAGE>

         funds in violation of this Agreement, or to require Managing General
         Agent's deposit of such funds in accordance with this Agreement; and
         the cost and expense of the Company to obtain such injunction,
         including reasonable attorneys' fees, shall be borne by Managing
         General Agent. If the Company seeks, but is unsuccessful in obtaining
         such an injunction, then the cost and expense of the MGA to obtain a
         court order denying the injunction, including reasonable attorney's
         fees, shall be borne by the Company.

3.07     Ancillary Products Commissions. Agencies will continue offering the
         ancillary products currently being sold and any others MGA may deem
         worthy; provided, however, that an administrative fee equal to 10% of
         net written premiums on all ancillary products administered by any
         affiliate of the Company and financed by the Company's premium finance
         company affiliate shall be payable by the MGA; this administrative fee
         may be offset against any commissions payable to the MGA pursuant to
         this Article 3.

         The parties agree that in the event that the Company or an affiliate,
         directly or indirectly, would suffer a loss resulting solely from
         paying compensation to Managing General Agent or the Agencies relating
         to ancillary products on other than a pro rata basis, then an
         adjustment shall be made to reduce the amounts due under this Article
         so that such loss will not occur.

3.08     Full Compensation. The compensation to which Managing General Agent is
         entitled under this ARTICLE shall constitute full compensation for
         services to be performed by Managing General Agent under this
         Agreement.

ARTICLE 4. LIMITATIONS OF AUTHORITY

4.01     Maximum Premium Volume. Absent prior written approval, the maximum
         annual premium volume (direct written premium, net of cancellations and
         return premium) that the Managing General Agent is authorized to
         produce for the Company's account is $75 Million.

4.02     Underwriting Guidelines and Forms. The rules and rates to be utilized
         by the Managing General Agent in underwriting the insurance are those
         which have been approved for use by the Company and by the insurance
         department of the State of Florida. A copy of the rules and rates shall
         be maintained on file at the offices of the Managing General Agent.
         These rules and rates cannot be changed or deviated from without the
         prior written consent of the Company. Further, insurance coverage shall
         be evidenced pursuant to the policy form(s) which have been approved
         for use by the Company and which shall be maintained on tile at the
         offices of the Managing General Agent.

4.03     Maximum Limits. The maximum insurance coverage that may be provided
         under any policy issued by the Agents is set forth in SCHEDULE B. No
         coverage may be issued for a policy period in excess of twelve months.

                                       5
<PAGE>

4.04     Company's Right to Cancel/Nonrenew Insurance Policies. The Company
         reserves the right to cancel or non-renew any Insurance Policy, subject
         to requirements imposed by law and any policy provision without
         specifying the reason therefore and without liability to the Managing
         General Agent or the producing agents.

4.05     Company's Right to Suspend Binding Authority. Upon sixty (60) days
         notice to Managing General Agent, the Company may suspend the binding
         authority of the Managing General Agent or of any of the Agencies
         during the pendency of any dispute regarding cause for termination
         under Section 13.02 hereof. Such sixty (60) days notice period shall
         begin when the Company gives the Managing General Agent notice of
         termination of this Agreement pursuant to Section 13.02.

4.06     Prohibited Expenses. Managing General Agent shall not charge or commit
         Company to any expense, agreement, payment, debt, settlement, or
         obligation other than as expressly provided for herein.

4.07     Managing General Agent's Right to Offset. Managing General Agent may
         combine or offset any balances or funds owed by Company to MGA against
         any balances or funds owed to Company by MGA under this Agreement or
         any other agreement between the parties; provided, however, that
         Managing General Agent may not offset any balance due from Company to
         Managing General Agent against any amounts of fiduciary funds (i.e.,
         funds held by MGA on behalf of insureds or other third parties) due
         from Managing General Agent to Company under this Agreement, or under
         any other contract with Company or any of Company's affiliates.

4.08     No Claims Settlement Authority. Managing General Agent has no authority
         to adjust or settle any claims arising out of or in connection with the
         Insurance Policies. Managing General Agent shall not collect payment
         from any reinsurer or commit Company to a claim settlement with a
         reinsurer.

ARTICLE 5. PREMIUM COLLECTION AND REMITTANCES

5.01     Premium Financing. With respect to business produced by Managing
         General Agent for the Company and for certain carriers providing
         specific ancillary products as identified under the Premium Finance
         Agreement as defined below, Managing General Agent agrees that it will
         offer premium financing exclusively through Direct General Financial
         Services, Inc. ("DGFS") in accordance with this Agreement and that
         certain Premium Finance Services Agreement dated of even date herewith
         between DGFS and MGA and certain affiliates of MGA (the "Premium
         Finance Agreement"). Except as otherwise described herein or in the
         Premium Finance Agreement, Managing General Agent agrees that it will
         not offer financing through DGFS on business produced for insurers
         other than the Company or any ancillary products not identified under
         the Premium Finance Agreement.

5.02     Payment of Premium; Responsibility For. All applications and, where
         applicable, premium payments for new Insurance Policies submitted by
         the Managing General

                                       6
<PAGE>

         Agent will be forwarded to the Company in the manner prescribed in the
         Company's Underwriting Guidelines or as otherwise may be instructed by
         the Company from time to time. The Managing General Agent may not
         collect premiums on any Insurance Policies that have been cancelled,
         expired or terminated.

5.03     Premium Trust Account. All premiums and other funds collected by
         Managing General Agent for the Company's account are the property of
         Company and shall be held in trust on behalf of Company in fiduciary
         capacity ("Premium Trust Funds") and shall be deposited and maintained
         in an account separate and segregated from Managing General Agent's own
         funds or funds held by Managing General Agent on behalf of any other
         company or person (the "Premium Trust Account"). The Premium Trust
         Accounts shall be maintained in an amount at least equal to the
         premiums (unpaid to Company), and return premiums (unpaid to
         policyholders or insureds) received by Managing General Agent.

ARTICLE 6. [RESERVED]

ARTICLE 7. REPORTS

7.01     Financial Information. Managing General Agent agrees to furnish Company
         with financial statements each year, which accurately reflect the
         financial condition of the Managing General Agent and the Agencies and
         other affiliates of Managing General Agent through which Managing
         General Agent performs its duties and obligations under this Agreement,
         and which financial statements will include an auditors statement and
         report if Managing General Agent obtains audited statements. If
         Managing General Agent does not obtain audited statements, the
         financial information furnished may be unaudited, unless the law of any
         state having jurisdiction over this Agreement requires submission of an
         audited statement. Such financial information shall be furnished to
         Company within ninety (90) days (or sixty 60 days if unaudited)
         following the close of the fiscal year of the Managing General Agent.

7.02     Reporting Requirements. With regard to the Insurance Policies written,
         Managing General Agent shall provide, at its expense and within a
         reasonable time after written request from the Company, sufficient
         information to satisfy reasonable reporting requirements imposed on
         Company by boards, bureaus, and associations, and to enable Company and
         reinsurers to file required financial statements and reports with
         insurance departments and regulatory bodies. Company shall provide
         Managing General Agent with such written reporting requirements.

ARTICLE 8. RECORDS

8.01     Records Retention. Managing General Agent shall keep true and complete
         records of all transactions and correspondence with policyholders,
         agents, brokers, insurance departments, and Company. The Company shall
         have access to, and the right to copy, all accounts and records related
         to such insurance, in a form usable by the Company, at any time during
         the Managing General Agent's business hours. All records and

                                       7
<PAGE>

         documents required to be maintained by Managing General Agent
         including, but not limited to, policyholder information and financial
         documents, shall be maintained during the Term, as defined in Section
         12.01 and thereafter while providing any continuing services hereunder,
         in a manner and form as mutually agreed upon or as required by Company
         to be compatible with Company's internal systems and in accordance with
         generally acceptable accounting principles and insurance regulatory
         practices.

8.02     Document Production. On request, Managing General Agent will forward to
         Company, no later than five (5) days from such request (or such longer
         period as may be reasonably necessary to produce such information),
         exact copies of all Insurance Policies or other appropriate evidences
         of insurance written pursuant to this Agreement financial documents or
         other reports; policyholder data, or any other information in Managing
         General Agent's possession requested by Company and not otherwise
         readily available to Company relating to the Insurance Policies.

ARTICLE 9. GENERAL OBLIGATIONS OF MGA

9.01     Licensing. Managing General Agent warrants that it is, and will
         continue to be during the Term 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
         provide copies of any renewal of such license to Company within 15 days
         of receipt of the renewed license from the Florida Department of
         Insurance.

9.02     Supervision of Agents/Producers. Managing General Agent shall maintain
         a listing and current copies of the insurance licenses of any agent or
         broker from which Managing General Agent accepts a submission. Managing
         General Agent shall supervise all agents and brokers who place business
         through Managing General Agent. Further, Managing General Agent shall
         be responsible to Company for such agents and brokers and for all funds
         collected for business solicited by such agents and brokers. At
         Company's request, Managing General Agent shall provide to Company
         copies of the listing of and of any agreements with such agents and
         brokers.

9.03     Compliance with Laws. Managing General Agent shall be responsible for
         full 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 provided to Managing General
         Agent from time to time by Company.

9.04     Complaint Procedure. Managing General Agent and Company shall notify
         the other within five (5) days of notice or receipt (or such shorter
         period as necessary to adequately respond) of any complaint with any
         insurance department or other regulatory authority relating to the
         Insurance Policies, whether against Company, any affiliate of

                                       8
<PAGE>

         the Company, Managing General Agent, its agents, or brokers. Managing
         General Agent shall provide Company with a proposed written response to
         a complaint including, but not limited to, a written summary of all
         facts relevant to such complaint. Company will then respond, or
         authorize Managing General Agent to respond, to such complaint in such
         form as Company determines, in Company's sole discretion, is necessary.
         The parties will work together to promptly and adequately respond to
         any such complaint.

9.05     No Authority to Delegate. Except as specifically provided herein,
         Managing General Agent shall not have the authority to delegate any
         authority contained herein to any other person or entity without prior
         written authorization from Company.

9.06     Managing General Agency Expense Responsibility. Since Managing General
         Agent, the Agencies, and their employees are independent contractors
         and not employees of Company, all expenses including, but not limited
         to, Managing General Agent's office rent, transportation; salaries;
         utilities; furniture; fixtures; equipment, telephone; attorney and/or
         legal fees; postage; promotional advertising and public relations
         expenses; printing costs, records and reports; inspection fees; credit
         reports and any other documents required to fulfill Managing General
         Agent's obligations hereunder; commissions, fees due to agents or
         brokers; and Managing General Agent's license fees and occupational
         taxes, whether billed to Managing General Agent or Company, shall be
         the sole liability of Managing General Agent, unless assumption of such
         expense by Company is agreed to in writing by Company. Managing General
         Agent will remit promptly to Company the amount of any such item billed
         to Company upon notice by Company to Managing General Agent of the
         charge therefor.

9.07     Use of Company Logo, etc. Managing General Agent may not use the name,
         logo, or service mark of Company or any of its affiliates in any
         advertising, promotional material, or in any material disseminated by
         Managing General Agent without the prior written consent of Company.
         Managing General Agent shall maintain copies and provide an original to
         Company of any advertisement or other materials approved by Company
         along with full details concerning where, when, and how it was used.
         Managing General Agent shall be liable for any liability of or cost
         incurred by Company as a result of any such materials.

9.08     Ownership of Supplies. All forms and supplies provided to Managing
         General Agent or authorized to be used by Managing General Agent by
         Company shall remain the property of Company and shall be returned
         immediately upon request. Upon termination of this Agreement or
         Managing General Agent's authority hereunder, at the request of Company
         Managing General Agent shall return to the Company or to its designated
         representative all property owned or leased by Company.

9.09     [Reserved]

                                       9
<PAGE>

9.10     MIS System and Computer Access. The Company and Managing General Agent
         will design and implement information processing systems to bridge
         their existing policy, premium finance and receipt systems and enable
         them to function properly.

9.11     Confidentiality. 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 9.11. This Section 9.11
         shall survive termination of this Agreement.

9.12     Claims Reporting. Managing General Agent shall ask policyholders to
         promptly report all claims, suits, or losses to Company or an assigned
         adjuster or claim representative who has been designated by Company.
         Managing General Agent shall cooperate with Company or the assigned
         adjuster or claim representative in the investigation, adjustment,
         settlement, and payment of claims arising out of the Insurance
         Policies. All records, files, correspondence, or other materials
         pertaining to claims shall be the sole property of Company. Retention
         of a commission under the terms of this Agreement shall constitute a
         representation by Managing General Agent that all known claims have
         been accurately, promptly, and completely reported to Company.

ARTICLE 10. GENERAL OBLIGATIONS OF COMPANY

10.01    Insurance Department Complaints. Notwithstanding Section 9.04 hereof,
         Company shall have the sole right to respond to any state insurance
         department complaint or inquiry, after consulting with Managing General
         Agent as provided herein.

10.02    Use of Managing General Agent's Logo, etc. Company agrees that it shall
         not use Managing General Agent's name, logo, or service mark in
         connection with any advertising without Managing General Agent's prior
         written approval.

10.03    Company's Right to Offset. Company may combine or offset any balances
         or funds owed by Managing General Agent to Company against any balances
         or funds owed to Managing General Agent by Company under this Agreement
         or any other agreement between the parties.

ARTICLE 11. INSURANCE AND INDEMNITY

11.01    Insurance. Through LR3 or otherwise, Managing General Agent and the
         Agencies are required to maintain in full force and effect the
         following existing insurance policies issued by an insurer rated no
         less than "A-" by A.M. Best Company during the Term of this Agreement
         and thereafter while Managing General Agent has any obligations
         hereunder covering MGA and the Agencies and their employees as follows:

                                       10
<PAGE>

         11.01.a. Errors and omissions coverage in the minimum amount of $1
                  million, with a deductible not to exceed $2,500 thousand;

         11.01.b. Commercial general liability insurance policy in the minimum
                  amount of $1 million each occurrence and $1 million general
                  aggregate, including:

                  i.   Personal injury liability of $1 million; and

                  ii.  Non-owned automobile liability of $1 million;

         11.01.c. Workers compensation insurance in the amount of Florida's
                  required minimum.

         Such insurance shall be maintained by Managing General Agent and/or the
         Agencies at their sole cost and expense, and shall be primary on
         contributing coverage over any other valid and collectible insurance
         available to Company. Managing General Agent shall request its insurers
         to provide thirty (30) days prior notification to Company, and Managing
         General Agent agrees to immediately notify Company when it receives
         notice of any lapse, increased deductibles, or upon receipt of a notice
         terminating coverage. Managing General Agent shall furnish proof of
         such insurance within fifteen (15) days of the Company's written
         request for the same. Managing General Agent further agrees to notify
         Company promptly of any claim brought under any such policy which
         arises out of or is connected with the Insurance Policies written
         hereunder.

11.02    Indemnification by Managing General Agent. At all times hereafter,
         Managing General Agent hereby agrees to defend, indemnify, and hold
         Company harmless from and against all claims, actions, causes of
         action, liability, or loss which result from any negligent or willful;
         acts, errors, or omissions of Managing General Agent, its employees,
         representatives, agents, or sub-agents in the performance or breach of
         duties under this Agreement. Managing General Agent further agrees that
         in the event Company is in violation of any state code, statute,
         regulation, or bulletin due to the negligent or willful acts, errors or
         omissions of Managing General Agent, its employees, representatives,
         agents, or sub-agents, then Managing General Agent shall assume the
         responsibility and liability for such act and shall indemnify and hold
         Company harmless for such liability and loss. Loss shall include, but
         not be limited to, all damages, costs, expenses, reasonable attorneys'
         fees, penalties, fines, direct damages, verdicts (including punitive
         damages to the extent permissible by law), and any other expense or
         expenditure incurred by Company. This Section shall survive termination
         of this Agreement.

11.03    Indemnification by Company. At all times hereafter, Company hereby
         agrees to defend, indemnify, and hold Managing General Agent harmless
         from and against all claims, actions, causes of actions, liability, or
         loss which result form any negligent or willful acts, errors, or
         omissions of Company, its employees, representatives, agents, or
         sub-agents in the performance or breach of duties under this Agreement.
         Company further agrees that in the event Managing General Agent is in
         violation of any state code, statute, regulation, or bulletin due to
         the negligent or willful acts, errors, or omissions of

                                       11
<PAGE>

         Company, its employees, representatives, agents, or sub-agents, then
         Company shall assume the responsibility and liability for such act and
         shall indemnify and hold Managing General Agent harmless for such
         liability and loss. Loss shall include, but not be limited to, all
         damages, costs, expenses, reasonable attorney's fees, penalties, fines,
         direct damages, verdicts (including punitive damages to the extent
         permissible by law), and any other expenses or expenditures incurred by
         Managing General Agent. This Section shall survive termination of this
         Agreement

11.04    Notice of Indemnifiable Claim. Upon receipt of a claim or demand for
         which a party is entitled to indemnification, the indemnified party
         shall as promptly as is reasonably possible:

         11.04.a. notify the indemnifying party in writing of the nature of the
                  indemnifiable claim, and the names and addresses of the
                  persons involved in or having an interest in such claim in the
                  manner provided in Section 15.01 of this Agreement; and

         11.04.b. furnish the indemnifying party with all documents and
                  information within the possession, custody or control of the
                  indemnified party and relating to such claim; and

         11.04.c. cooperate with the indemnifying party and its counsel,
                  including but not limited to, appearing as a witness as may be
                  reasonably required and responding to all reasonable request
                  for documents and answering interrogatories.

         Upon receipt of written notice of an indemnifiable claim and all other
         documents and instruments required by this Agreement to be furnished to
         the indemnifying party, the indemnifying party shall thereafter be
         given a reasonable opportunity to defend or settle such a claim at its
         own expense. Neither party shall settle any such claim that might have
         an adverse effect on the other party, without the prior written consent
         of the other party, which shall not be unreasonably withheld. Each
         party shall at all times have the full right to participate in any such
         defense at its own expense. If either party, within a reasonable time
         after receiving notice of a claim from the other party, fails to
         defend, such other party shall have the right, but not the obligation
         to undertake the defense, compromise, or settlement of such claim on
         behalf of, for the account of and at the risk of the party failing to
         defend.

ARTICLE 12. TERM OF AGREEMENT

12.01    Term. The initial term of this Agreement shall commence on the
         Effective Date, and, including the Trial Period, terminate on the third
         anniversary of the Operational Date, unless terminated earlier as set
         forth in Article 13 below. The initial term and any successive term
         agreed between the parties shall be referred to herein as the "Term".

                                       12
<PAGE>

ARTICLE 13. TERMINATION OF THIS AGREEMENT

13.01    Termination by Company; Generally. The Company may terminate this
         Agreement at any time with 60 days written notice to Managing General
         Agent. In the event of such termination (unless the termination is for
         cause, as described below) Managing General Agent and the Agencies
         shall retain all rights to the renewal of all of the Company's business
         written by Agencies under this Agreement. Thereafter, the Company will
         not solicit any of the customers of Agencies for renewal of Insurance
         Policies or ancillary products.

13.02    Termination by Company for Cause. The Company may immediately, unless
         otherwise indicated in this Section 13.02, upon written notice
         terminate this Agreement in whole or in part, for cause, which shall
         include, but is not limited to, the following:

         13.02.a. Insolvency. Managing General Agent, LR3, or any of the
                  Agencies becomes insolvent, institutes or acquiesces in the
                  institution of any bankruptcy, financial reorganization, or
                  liquidation proceeding or any such proceeding is instituted
                  against Managing General Agent, LR3 or any of the Agencies
                  that remains undismissed for thirty (30) days; provided,
                  however, that in the case of such proceeding regarding any of
                  the Agencies, the proceeding must have a material adverse
                  effect on Managing General Agent's ability to perform its
                  duties and obligations under this Agreement. (Managing General
                  Agent shall immediately notify Company of same); or

         13.02.b. Sale of Stock or Assets to a Third Party. Managing General
                  Agent, or the owner of a controlling interest in Managing
                  General Agent or the Agencies, sells, exchanges, transfers,
                  assigns, consolidates, pledges or causes to be sold,
                  exchanged, transferred, assigned, consolidated, or pledged,
                  all or substantially all of the stock of Managing General
                  Agent, or all or substantially all of the stock or assets of
                  the Agencies, to a third party without the prior written
                  consent of Company (Managing General Agent shall immediately
                  notify Company of same); or

         13.02.c. Inadequate Staff. Managing General Agent or Agencies fails to
                  maintain a staff qualified to service the Insurance Policies
                  or to maintain the quality of services and obligations
                  necessary to operate within this Agreement, if such failure
                  would have a material adverse effect on the level of the
                  quality of services provided by Managing General Agent under
                  this Agreement; or

         13.02.d. Remit Reports or Premiums. Managing General Agent fails to
                  provide, or cause to be provided, timely and proper reports or
                  premium accounting as required, or to remit premiums when due
                  after thirty (30) days written notice from Company; or

                                       13
<PAGE>

         13.02.e. Maintain Trust Funds. Managing General Agent fails to maintain
                  Premium Trust Funds in the amount and manner required in this
                  Agreement after ten (10) days notice from the Company that
                  such funds are not being maintained; or

         13.02.f. Claims. Managing General Agent or any Agency continues to make
                  claims payments in violation of this Agreement more than ten
                  (10) days after discovering or being notified by the Company
                  that such claims payments are being made; or

         13.02.g. Misconduct, etc. Managing General Agent or any Agency engages
                  in acts or omissions constituting abandonment, fraud,
                  misappropriation of funds, material misrepresentations, gross
                  and willful misconduct, or any other acts that are prohibited
                  by law or regulation of any applicable regulatory authority;
                  or

         13.02.h. MGA License. Managing General Agent's license or certificate
                  of authority is canceled, suspended, or is declined renewal by
                  any regulatory body within the State of Florida if after
                  ninety (90) days, Managing General Agent fails to remedy such
                  loss of license (Managing General Agent shall immediately
                  notify Company of same); or

         13.02.i. Breach. If Managing General Agent materially breaches any
                  provision of this Agreement other than this Section 13.02
                  after written notice of such breach has been given to Managing
                  General Agent and Managing General Agent has failed to cure
                  within a ten (10) day notice period; or

         13.02.j. Underwriting Guidelines; Policy Forms. Managing General Agent
                  or any Agency binds or underwrites risks (i) that are
                  unacceptable in accordance with the underwriting guidelines,
                  procedures, instructions, or memoranda provided for herein, or
                  (ii) with limits in excess of those specified in the
                  underwriting authority limits provided for herein, or (iii)
                  with rates or policy forms or filings in a jurisdiction where
                  Managing General Agent has knowledge that required regulatory
                  approvals have not been met; provided, however, that clauses
                  (i) and (ii) of this subparagraph shall not apply if any
                  unacceptable risk is bound or underwritten by an Agency as an
                  occasional and isolated event, and Managing General Agent or
                  LR3 takes immediate action to correct and avoid recurrence of
                  such event; or

         13.02.k. Access to Records. Managing General Agent or the Agencies fail
                  to permit Company to inspect or audit any records or files
                  relating to the Insurance Policies.

13.03    Termination by Managing General Agent. Managing General Agent may
         terminate this Agreements as follows: upon demonstration by Managing
         General Agent that the quoted insurance premiums for the Company's
         Insurance Policies are not competitive as

                                       14
<PAGE>

         hereafter described, Managing General Agent may give the Company 60
         days written notice to modify its rates or make any required rate
         filing with the Florida Department of insurance. Such notice shall
         include MGA's written demonstration of the Company's non-competitive
         rates based on the approach described below. If the Company fails to
         make such modification or filing within 60 days, Managing General Agent
         may terminate this Agreement. In determining whether the Company's
         rates are non-competitive, the following approach shall be followed:

         13.03.a. The Company's rates shall be deemed "competitive" if at least
                  80% of a sample of the Company's quotes are among the "Top 10"
                  of the non-standard auto issuers selected below, as ranked on
                  Quick Quote.

         13.03.b. The parties shall consider only the largest issuers of
                  non-standard automobile insurance in Florida, which together
                  represent 80% of the total non-standard net written premium in
                  Florida per the most recent A.M. Best A4 Report. For this
                  purpose, direct and captive agency writers and the companies
                  in the Progressive Insurance group, and their business shall
                  be excluded.

         13.03.c. The sample of the Company's quotes will be based on a sample
                  of policies agreed to by the parties that is reasonably
                  representative of the business written by Agencies.

         If Florida becomes a non use and file state, then compliance with this
         Agreement will become subject to Department of Insurance approval of
         the Company's revised rates. For any time over 30 days from the rate
         change request that the Department of Insurance delays the requested
         rate change, the duration of this Agreement will be likewise extended.

13.04    Ownership of Business. If this Agreement is terminated by the Managing
         General Agent pursuant to Section 13.03, or by the Company pursuant to
         Section 13.01, the records and the use and control of expirations for
         the insurance serviced under this Agreement shall remain the property
         of the Managing General Agent and be left in the Managing General
         Agent's exclusive possession, provided Managing General Agent has then
         rendered and continues to render timely accounts and payments of all
         moneys due the Company.

         However, if Managing Agent is in material default of this Agreement
         and/or if this Agreement is terminated by the Company for Cause as
         described in Section 13.02, or if 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, then the records
         and the use and control of expirations, shall be the property of the
         Company and Managing General Agent shall immediately thereafter forward
         all such records to the Company.

13.05    Continued Servicing. Managing General Agent agrees that in the event
         this Agreement is terminated for any reason, Managing General Agent and
         the Agencies shall continue

                                       15
<PAGE>

         to perform all customary and necessary services for all in-force
         Insurance Policies in accordance with the provisions of this Agreement
         until all such Insurance Policies have been completely cancelled,
         non-renewed, or otherwise terminated, provided, however, that Company
         may, in its sole discretion, immediately suspend or terminate Managing
         General Agent's continuing service obligation hereunder. Managing
         General Agent's continuing service obligations after termination of the
         Agreement shall include, but not be limited to:

         13.05.a. The issuance and countersignature of appropriate endorsements
                  to such in-force Insurance Policies when so authorized in
                  writing by Company, provided that such endorsements shall not
                  increase Company's liability or extend the term of any
                  Insurance Policy without prior written approval of Company;
                  and

         13.05.b. The collection and remittance of all premiums due, if any, and
                  premium finance note payments on such in-force insurance
                  Policies hereunder.

         If Managing General Agent fails in any respect to fulfill this
         continuing service obligation, then Managing General Agent shall
         reimburse Company any reasonable expense incurred by Company to service
         or arrange for the servicing of the Insurance Policies issued by or
         through Managing General Agent hereunder or such amounts may be offset
         by Company.

         Upon Company providing written notice of termination to Managing
         General Agent hereunder, Company is hereby authorized to deal directly
         with all other licensed persons and/or entities with respect to the
         Insurance Policies hereunder, including but not limited to, the right
         to collect from and return premiums directly to the Agencies and all
         producers, brokers, or insureds.

13.06    Immediate Suspension. Notwithstanding Section 4.05 above or anything
         else set forth herein to the contrary, if Company terminates this
         Agreement under Section 13.02(g) hereof ("Misconduct, etc."), then
         Company may immediately suspend some or all of the authority of
         Managing General Agent under this Agreement. Upon receipt of notice of
         such suspension, Managing General Agent shall thereupon cease to
         exercise such power or powers in accordance with such notice.

ARTICLE 14. SOLICITATION AND RECRUITMENT

14.01    Non-Solicitation. During the Term of this Agreement, and for a period
         of one (1) year after, Managing General Agent and Agencies shall not
         solicit any customer of Company, or divert or attempt to divert from
         Company any customer of Company, for automobile insurance sales or
         services to be provided by any person or entity that competes with
         Company in the business of selling, quoting or servicing automobile
         insurance policies. For the purposes hereof a "customer of Company"
         shall mean any person or entity for whom or which Company has provided
         automobile or life insurance sales within two (2) years prior to the
         termination of this Agreement. This Section 14.01 shall not apply to
         solicitation of customers of the Company, following termination

                                       16
<PAGE>

         of this Agreement, provided Managing General Agent retains ownership of
         the business as described in Section 13.04.

14.02    Non-Recruitment. During the Term of this Agreement, and for a period of
         one (1) year after, Managing General Agent shall not, directly or
         indirectly, recruit, solicit or encourage, or facilitate the
         recruitment, solicitation, or encouragement of any employee of Company
         to terminate said employee's employment with Company or otherwise
         interfere in anyway with said employee's employment with Company.

14.03    Injunctive Relief. Notwithstanding Section 15.07 (Arbitration) of this
         Agreement, should Managing General Agent violate the terms of Section
         14.01 or 14.02, then the parties agree that Company would suffer
         irreparable harm and the Company shall be entitled to the issuance of
         an injunction to prohibit Managing General Agent from such
         solicitation, recruitment and/or interference with Company's employees.
         The cost and expense of the Company successfully obtaining said relief,
         including reasonable attorneys' fees, shall be borne by Managing
         General Agent. If the Company seeks, but is unsuccessful in obtaining
         such injunction, then the cost and expense of the MGA to obtain a court
         order denying the injunction including reasonable attorneys' fees,
         shall be borne by the Company.

ARTICLE 15. GENERAL PROVISIONS

15.01    Notice. Except as otherwise set forth herein, any notice required under
         this Agreement must be in writing and either sent by first class mail,
         facsimile, certified mall, or personally delivered. Notice shall be
         effective either upon receipt or five (5) days after mailing to the
         other party, whichever comes first. Unless changed by written notice to
         the other party, the addresses of the respective parties are:

                  MANAGING GENERAL AGENT:

                  Maitland Underwriters, Inc.
                  1535 N. Maitland Avenue
                  Maitland, FL 32751
                  Attn: Jon Register
                  Title: Vice President

                  COMPANY:

                  Direct General Insurance Company
                  1281 Murfreesboro Road
                  Nashville, Tennessee 37217
                  Attn: Jacqueline C. Adair, President

15.02    Integration, Waiver, and Amendment. This Agreement, together with its
         Schedules and the agreement referred to in Article 16 hereof constitute
         the entire agreement between Company and Managing General Agent and
         supersedes any and all other agreements,

                                       17
<PAGE>

         either oral or written, between Company and Managing General Agent with
         respect to the managing general agency relationship between the
         patties. No waiver by either party to enforce any provision of this
         Agreement will be effective unless made in writing and signed by an
         authorized officer of Company and Managing General Agent and shall be
         effective as to the specifically stated waiver. No amendment to this
         Agreement will be effective unless made in writing and signed by the
         parties hereto, and specifying the effective date of such amendment.

15.03    Remedies Not Exclusive. No right or remedy set forth in this Agreement
         is exclusive of any other right or remedy but shall be in addition to
         every other right and remedy given under this Agreement or existing now
         or hereafter at law or equity.

15.04    Severability. Wherever possible, each provision of this Agreement will
         be interpreted in such a manner and to such an extent as to be
         effective and valid under applicable law. If any provision is
         prohibited by or invalid under applicable law, such provision will be
         ineffective only to the extent of such prohibition or invalidity.

15.05    Applicable Law. This Agreement shall be governed by and construed in
         accordance with the laws of the State of Florida, without regard to its
         rules regarding conflict of laws.

15.06    Conformance to Law. This Agreement and the provisions relating to
         commissions shall, without prior notice, be automatically modified to
         conform to any law or governmental regulation having application to or
         jurisdiction over the subject matter of the parties hereto and the
         parties shall promptly amend the Agreement to comply with such
         modifications.

15.07    Arbitration. Except as provided in Section 6.04 (Equitable Relief) and
         Section 14.03 (Injunctive Relief), all unresolved differences of
         opinion or disputes between Company and Managing General Agent arising
         out of or in connection with this Agreement or any transaction
         hereunder shall be submitted to arbitration, in accordance with the
         rules relating to commercial arbitration of the American Arbitration
         Association except as modified herein.

         The Board of Arbitration ("Board") shall consist of one (1) arbitrator
         chosen by Company, one (1) arbitrator chosen by Managing General Agent,
         and an umpire chosen as promptly as possible by the two (2)
         arbitrators. The arbitrators and umpire shall be financially
         disinterested parties or former executives of property or casualty
         insurance or reinsurance companies.

         The party demanding arbitration shall communicate its demand therefor
         in writing, identifying the nature of the dispute and the name of its
         arbitrator, to the other. The other party shall then be bound to name,
         in writing, its arbitrator within thirty (30) days after receipt of
         such demand. Failure or refusal of the other to name its arbitrator
         within the thirty (30) day time period shall empower the demanding
         party to name the second arbitrator as well.

                                       18
<PAGE>

         If the two (2) arbitrators are unable to agree upon an umpire within
         thirty (30) days after the second arbitrator is named, either party may
         petition a court of competent jurisdiction to make the appointment of
         an umpire from candidates submitted by both parties in conformity with
         the qualifications set out in this Agreement.

         The applicant for arbitration shall submit its position in writing
         within thirty (30) days after selection of the umpire. The respondent
         shall submit its written position within thirty (30) days after receipt
         of the applicant's position. The Board may extend any of the time
         periods set forth above.

         The Board shall have the power to make and determine all procedural
         rules for the holding of the arbitration including discretionary power
         to make orders as to any matter which they may consider proper in the
         light of circumstances of the case with regard to pleadings,
         depositions, discovery, inspection of documents, examination of
         witnesses, and any other matter whatsoever relating to the conduct of
         the arbitration and may receive and act upon such evidence, whether
         oral or written, strictly admissible or not as the Board shall find
         fit. The Board shall make its decision based on the terms of this
         Agreement, the intent of the parties and the custom and usage of the
         non-standard automobile insurance industry.

         All rules, orders, acts, and decisions of the Board shall be effective
         if done by a majority of the Board. The final determination of the
         Board shall be made in writing within sixty (60) days of the conclusion
         of the arbitration. Any decision shall be final and binding on the
         parties, and shall not be subject to appeal. If either party fails to
         comply with the Board's decision, the other party may apply for its
         enforcement to a court of competent jurisdiction.

         Each party shall bear the cost of its own arbitrator and shall jointly
         and equally bear with the other party the expenses of the umpire. The
         Board shall allocate the remaining costs of the arbitration proceeding.

         The arbitration proceedings shall convene and be held within Orange
         County, Florida or such other location mutually agreed upon by the
         parties.

         Nothing contained in this Paragraph shall be construed as limiting the
         ability of Company to suspend the authority of Managing General Agent
         pursuant to this Agreement.

         This Section 15.07 shall survive termination of this Agreement.

15.08    Other Companies. Managing General Agent agrees to advise Company of
         existing and future agency agreements entered into with other insurance
         companies with respect to the classes of business covered by this
         Agreement.

                                       19
<PAGE>

15.09    Non-Assignability/Non-Delegation. Except as specifically provided
         herein, neither party may delegate its duties nor assign its rights
         under this Agreement unless otherwise agreed upon and authorized in
         writing by an officer of the other party.

15.10    Counterparts. This Agreement may be executed in two or more
         counterparts, each of which shall be deemed an original but which
         together shall constitute one and the same instrument.

ARTICLE 16. CONDITION PRECEDENT

16.01    The covenants and obligations of the Company and Managing General Agent
         hereunder are expressly conditioned on the execution and delivery by
         Direct General Financial Services, Inc. and Managing General Agent of
         that certain premium Finance Services Agreement of even date herewith.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

                                       20
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the Effective Date.

MAITLAND UNDERWRITERS, INC.

BY: /s/ Lloyd E. Register III
    ----------------------------
    Name: Lloyd E. Register III
    Title: President

DIRECT GENERAL INSURANCE COMPANY

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

                                       21

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