Document:

EXHIBIT 10.66

                                                                  EXECUTION COPY

                           MBIA INSURANCE CORPORATION,
                                   as Insurer

                     FIRST INVESTORS SERVICING CORPORATION,
                                   as Servicer

                    FIRST INVESTORS FINANCIAL SERVICES, INC.
                         as Seller and as Administrator

                     FIRST INVESTORS AUTO INVESTMENT CORP.,
                                  as Depositor

                    FIRST INVESTORS AUTO OWNER TRUST 2000-A,
                                    as Issuer

                            BANKERS TRUST (DELAWARE),
                                as Owner Trustee

                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
                    as Back-up Servicer and Indenture Trustee

                               INSURANCE AGREEMENT

                     First Investors Auto Owner Trust 2000-A
                     $167,969,000 7.174% Asset-Backed Notes

                           Dated as of January 1, 2000
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                               TABLE OF CONTENTS

                                                                           Page
                                   ARTICLE I

DEFINITIONS..............................................................    1

                                   ARTICLE II
                   REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01. Representations and Warranties of the Servicer, the
              Seller and the Depositor ..................................    6
Section 2.02. Affirmative Covenants of the Servicer, the Seller
              and the Depositor .........................................   10
Section 2.03. Negative Covenants of the Servicer, the Seller and
              the Depositor .............................................   17
Section 2.04. Representations and Warranties of the Issuer ..............   18
Section 2.05. Affirmative Covenants of the Issuer .......................   21
Section 2.06. Negative Covenants of the Issuer ..........................   24
Section 2.07. Representations, Warranties and Covenants of Indenture
              Trustee and Back-up Servicer ..............................   25
Section 2.08. Representations, Warranties and Covenants of Owner Trustee    27
Section 2.09. Negative Covenant of the Administrator.....................   28

                                  ARTICLE III
                           THE POLICY; REIMBURSEMENT

Section 3.01. Issuance of the Policy.....................................   28
Section 3.02. Payment of Fees and Insurance Premium .....................   30
Section 3.03. Reimbursement and Additional Payment Obligation ...........   31
Section 3.04. Indemnification; Limitation of Liability ..................   32
Section 3.05. Payment Procedure .........................................   35

                                   ARTICLE IV
                               FURTHER AGREEMENTS

Section 4.01.  Effective Date; Term of the Insurance Agreement ..........   35
Section 4.02. Further Assurances and Corrective Instruments .............   35
Section 4.03. Obligations Absolute ......................................   36
Section 4.04. Assignments; Reinsurance; Third-Party Rights ..............   37
Section 4.05. Liability of the Insurer ..................................   38
Section 4.06. Parties Will Not Institute Insolvency Proceedings .........   39
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Section 4.07. Indenture Trustee, Depositor, Back-up Servicer, Seller
              and Servicer To Join in Enforcement Action.................   39
Section 4.08. Subrogation ...............................................   39

                                   ARTICLE V
                               DEFAULTS; REMEDIES

Section 5.01. Defaults ..................................................   39
Section 5.02. Remedies; No Remedy Exclusive .............................   41
Section 5.03. Waivers ...................................................   42

                                   ARTICLE VI
                                 MISCELLANEOUS

Section 6.01. Amendments, Etc ...........................................   42
Section 6.02. Notices ...................................................   42
Section 6.03. Severability ..............................................   44
Section 6.04. Governing Law .............................................   45
Section 6.05. Consent to Jurisdiction ...................................   45
Section 6.06. Consent of the Insurer.....................................   45
Section 6.07. Counterparts ..............................................   46
Section 6.08. Headings ..................................................   46
Section 6.09. Trial by Jury Waived ......................................   46
Section 6.10. Limited Liability .........................................   46
Section 6.11. Entire Agreement ..........................................   46
Section 6.12. Limitation of Liability ...................................   46

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                               INSURANCE AGREEMENT

      This INSURANCE AGREEMENT (this "Insurance Agreement"), dated as of January
1, 2000 by and among FIRST INVESTORS FINANCIAL SERVICES, INC. as seller
(together with its permitted successors and assigns, the "Seller") and as
Administrator, FIRST INVESTORS SERVICING CORPORATION, as Servicer (together with
its permitted successors and assigns, the "Servicer"), FIRST INVESTORS AUTO
INVESTMENT CORP., as Depositor (the "Depositor"), FIRST INVESTORS AUTO OWNER
TRUST 2000-A, as Issuer (the "Issuer"), BANKERS TRUST (DELAWARE), as Owner
Trustee (the "Owner Trustee") MBIA INSURANCE CORPORATION, as Insurer (the
"Insurer"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Back-up Servicer
(the "Back-up Servicer") and as Indenture Trustee (the "Indenture Trustee").

      WHEREAS, the Indenture dated as of January 1, 2000 relating to the First
Investors Auto Owner Trust 2000-A $167,969,000 7.174% Asset-Backed Notes (the
"Obligations"), between the Issuer and the Indenture Trustee (the "Indenture")
provides for, among other things, the issuance of asset backed notes and the
Insurer has issued its note guaranty insurance policy (the "Policy") that
guarantees certain payments on the Obligations;

      WHEREAS, the Insurer shall be paid an insurance premium pursuant to the
Indenture, and the details of such premium are set forth herein; and

      WHEREAS, the Servicer, the Seller, the Depositor and the Issuer have
undertaken certain obligations in consideration for the Insurer's issuance of
the Policy;

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

      The terms defined in this Article I shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate. Unless the
context clearly requires otherwise, all capitalized terms used herein and not
otherwise defined in this Article I shall have the meanings assigned to them in
the Indenture. All words used herein shall be construed to be of such gender or
number as the circumstances require. This "Insurance Agreement" shall mean this
Insurance Agreement as a whole and as the same may, from time to time hereafter,
be amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer to
this Insurance Agreement as a whole and not to any particular paragraph, clause
or other subdivision hereof, unless otherwise specifically noted.

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      "ADMINISTRATION AGREEMENT" means the Administration Agreement dated as of
January 1, 2000, between the Administrator, the Issuer and the Indenture Trustee
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.

      "ADMINISTRATOR" means First Investors Financial Services, Inc. or any
successor Administrator under the Administration Agreement.

      "ADVERSE SELECTION PROCEDURE" means any method of selecting or identifying
a Contract eligible to be included in the Trust Estate, other than in accordance
with the Transaction Documents, that materially and adversely affects the
representative nature of the sample of Contracts so selected.

      "BUSINESS DAY" means any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in New York City or in the city in which the
corporate trust office of the Indenture Trustee under the Indenture is located
are authorized or obligated by law or executive order to close.

      "CHANGE IN CONTROL" shall mean the occurrence of any of the following (a)
any Person shall, at any time following the Closing Date, acquire 51% or more of
the total outstanding shares of FIFSG; (b) any Person shall, at any time
following the Closing Date, acquire directly or indirectly 51% or more of the
voting control with respect to the total outstanding shares of FIFSG; (c) FIFSG
shall cease to own, directly or indirectly, 51% or more of the total outstanding
shares of the Seller or the Servicer; or (d) FIFSG shall not have directly or
indirectly 51% or more of the voting control with respect to the total
outstanding shares of the Seller or the Servicer.

      "CODE" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.

      "COMMISSION" means the Securities and Exchange Commission.

      "DATE OF ISSUANCE" means the date on which the Policy is issued as
specified therein.

      "DEFAULT" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.

      "DOCUMENTS" shall have the meaning set forth in section 2.01(k) hereof.

      "EVENT OF DEFAULT" means any event of default specified in Section 5.01
hereof.

      "FIFSG" means First Investors Financial Services Group, Inc.

      "FINANCIAL STATEMENTS" means, with respect to FIFSG, the balance sheets
and the statements of income, retained earnings and cash flows and the notes
thereto which have been provided to the Insurer.

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<PAGE>
      "FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant to the
terms of the Policy.

      "GUARANTY" means the Guaranty entered into as of January 1, 2000, by First
Investors Financial Services, Inc., as Guarantor, the Depositor, the Issuer, the
Servicer, the Back-up Servicer and the Indenture Trustee.

      "INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated as
of January 12, 2000, among the Insurer, the Seller and the Initial Purchaser.

      "INDENTURE" means the Indenture dated as of January 1, 2000 between the
Issuer, the Seller and the Indenture Trustee as the same may be amended or
supplemented from time to time in accordance with the terms thereof.

      "INDENTURE TRUSTEE" means Norwest Bank Minnesota, National Association, a
national banking association, as Indenture Trustee under the Indenture, and any
successor Indenture Trustee under the Indenture.

      "INITIAL PURCHASER" means Banc of America Securities LLC.

      "INSURANCE PREMIUM" means the premium payable in accordance with Section
3.02 hereof.

      "INSURER DEFAULT" means the occurrence and continuance of any failure of
the Insurer to make payments under the Policy in accordance with its terms.

      "INSURER INSOLVENCY" means (i) the entry of a decree or order of a court
or agency having jurisdiction in respect of the Insurer in an involuntary case
under any present or future Federal or state bankruptcy, insolvency or similar
law or appointing a conservator or receiver or liquidator or rehabilitator or
other similar official of the Insurer or of any substantial part of its
property, or the entering of an order for the winding up or liquidation of the
affairs of the Insurer and the continuance of any such decree or order
undischarged or unstayed and in force for a period of 90 consecutive days; (ii)
the Insurer shall consent to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of debt,
marshaling of assets and liabilities, rehabilitation or similar proceedings of
or relating to the Insurer or of or relating to all or substantially all of its
property; or (iii) the Insurer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of or
otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.

      "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.

      "LATE PAYMENT RATE" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime

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rate (any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 3%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under any applicable law limiting interest rates.

      "LIABILITIES" shall have the meaning ascribed to such term in Section
3.04(a) hereof.

      "LOSSES" means (i) any actual out-of-pocket loss paid by the Insurer or
its respective parents, subsidiaries and affiliates or any shareholder,
director, officer, employee, agent or any "controlling person" (as such term is
used in the Securities Act) of any of the foregoing, and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).

      "MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.

      "MOODY'S" means Moody's Investors Service, Inc., a Delaware corporation,
and any successor thereto, and, if such corporation shall for any reason no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized rating agency designated by
the Insurer.

      "OBLIGATIONS" shall have the meaning as defined in the Policy.

      "OBLIGOR" means the original obligor under each Contract, including any
guarantor of such obligor and their respective successors.

      "OFFERING DOCUMENT" means the offering memorandum dated January 12, 2000
of the Issuer in respect of the Obligations (and any amendment or supplement
thereto) and any other offering document in respect of the Obligations prepared
by the Servicer, the Seller, Depositor or the Issuer that makes reference to the
Policy.

      "OPINION FACTS AND ASSUMPTIONS" means the facts and assumptions contained
in the insolvency opinion dated January 24, 2000 by Thompson & Knight under the
heading "Facts and Assumptions" insofar as they relate to the Seller, the Issuer
and the Depositor.

      "OWNERS" means registered holders of Obligations.

      "OWNER TRUSTEE" means Bankers Trust (Delaware), not in its individual
capacity, but solely as Owner Trustee of the Issuer.

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<PAGE>
      "PERSON" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, limited
liability company, partnership or other organization or entity (whether
governmental or private).

      "PREMIUM PERCENTAGE" shall have the meaning ascribed to such term in
Section 3.02 hereof.

      "PREMIUM SIDE LETTER AGREEMENT" means that certain Premium Letter dated as
of January 21, 2000 between the Seller and the Insurer specifying the up-front
Insurance Premium payable on the Closing Date and the monthly Insurance Premium
payable to the Insurer pursuant to the Indenture.

      "PURCHASE AGREEMENT" means the Purchase Agreement between the Initial
Purchaser and the Depositor with respect to the offer and sale of the
Obligations, as the same may be amended from time to time.

      "SALE AND ALLOCATION AGREEMENT" means the Sale and Allocation Agreement
dated as of January 1, 2000, among the Servicer, the Indenture Trustee and the
Issuer and the Seller as the same may be amended or supplemented from time to
time in accordance with the terms thereof.

      "SECURITIES ACT" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.

      "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.

      "SERVICING AGREEMENT" means the Servicing Agreement dated as of January 1,
2000 between the Servicer, the Back-up Servicer, and the Issuer.

      "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.

      "TERM OF THE INSURANCE AGREEMENT" shall be determined as provided in
Section 4.01 hereof.

      "TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.

      "TRANSACTION DOCUMENTS" means this Insurance Agreement, the
Indemnification Agreement, the Premium Side Letter Agreement, the Indenture, the
Offering Document, the Guaranty, the Trust Agreement, the Certificate of Trust,
the Sale and Allocation Agreement, the Servicing Agreement, the Administration
Agreement, the Purchase Agreement, and the Obligations.

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<PAGE>
      "TRUST" means the trust created pursuant to the Indenture.

      "TRUST AGREEMENT" means the Amended and Restated Trust Agreement dated as
of January 24, 2000 among the Depositor and the Owner Trustee as the same may be
amended or supplemented from time to time in accordance with the terms thereof.

      "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.

                                   ARTICLE II

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

      SECTION 2.01. REPRESENTATIONS AND WARRANTIES OF THE SERVICER, THE SELLER
AND THE DEPOSITOR. The Servicer, the Seller and the Depositor represent, warrant
and covenant as of the Date of Issuance, each as to those matters relating to
itself, as follows:

            (a) DUE ORGANIZATION AND QUALIFICATION. The Servicer, the Seller and
      the Depositor are each a corporation, duly organized, validly existing and
      in good standing under the laws of its respective jurisdiction of
      incorporation. Each of the Servicer, the Seller and the Depositor is duly
      qualified to do business, is in good standing and has obtained all
      licenses, permits, charters, registrations and approvals (together,
      "approvals") necessary for the conduct of its business as currently
      conducted and as described in the Offering Document and the performance of
      its obligations under the Transaction Documents, in each jurisdiction in
      which the failure to be so qualified or to obtain such approvals would
      render any Transaction Document unenforceable in any respect or would have
      a material adverse effect upon the Transaction, the Owners or the Insurer.

            (b) POWER AND AUTHORITY. Each of the Servicer, the Seller and the
      Depositor has all necessary corporate power and authority to conduct its
      business as currently conducted and, as described in the Offering
      Document, to execute, deliver and perform its obligations under the
      Transaction Documents and to consummate the Transaction.

            (c) DUE AUTHORIZATION. The execution, delivery and performance of
      the Transaction Documents by the Servicer, the Seller and the Depositor
      have been duly authorized by all necessary corporate action and do not
      require any additional approvals or consents of, or other action by or any
      notice to or filing with any Person, including, without limitation, any
      governmental entity or the Servicer's, the Seller's or the Depositor's
      stockholders, which have not previously been obtained or given by the
      Servicer, the Seller or the Depositor.

            (d) NONCONTRAVENTION. None of the execution and delivery of the
      Transaction Documents by the Servicer, the Seller or the Depositor, the
      consummation of the Transaction contemplated thereby or the satisfaction
      of the terms and conditions of the Transaction Documents:

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<PAGE>
                  (i) conflicts with or results in any breach or violation of
            any provision of the certificate of incorporation or bylaws of the
            Servicer, the Seller or the Depositor or any law, rule, regulation,
            order, writ, judgment, injunction, decree, determination or award
            currently in effect having applicability to the Servicer, the Seller
            or the Depositor or any of their material properties, including
            regulations issued by an administrative agency or other governmental
            authority having supervisory powers over the Servicer, the Seller or
            the Depositor;

                  (ii) constitutes a default by the Servicer, the Seller or the
            Depositor under or a breach of any provision of any loan agreement,
            mortgage, indenture or other agreement or instrument to which the
            Servicer, the Seller or the Depositor is a party or by which any of
            its or their respective properties, which are individually or in the
            aggregate material to the Servicer, the Seller or the Depositor, is
            or may be bound or affected; or

                  (iii) results in or requires the creation of any lien upon or
            in respect of any assets of the Servicer, the Seller or the
            Depositor, except as contemplated by the Transaction Documents.

            (e) LEGAL PROCEEDINGS. There is no action, proceeding or
      investigation by or before any court, governmental or administrative
      agency or arbitrator against or affecting the Servicer, the Seller, the
      Depositor or any of its or their subsidiaries, or any properties or rights
      of the Servicer, the Seller, the Depositor or any of its or their
      subsidiaries, pending or, to the Servicer's, the Seller's or the
      Depositor's knowledge after reasonable inquiry, threatened, which, in any
      case, could reasonably be expected to result in a Material Adverse Change
      with respect to the Servicer, the Seller or Depositor.

            (f) VALID AND BINDING OBLIGATIONS. The Obligations, when executed,
      authenticated and issued in accordance with the Indenture, and the
      Transaction Documents (other than the Obligations), when executed and
      delivered by the Servicer, the Seller and the Depositor, will constitute
      the legal, valid and binding obligations of the Servicer, the Seller, the
      Depositor and the Trust, as applicable, enforceable in accordance with
      their respective terms, except as such enforceability may be limited by
      bankruptcy, insolvency, reorganization, moratorium or other similar laws
      affecting creditors' rights generally and general equitable principles and
      public policy considerations as to rights of indemnification for
      violations of federal securities laws. None of the Servicer, the Seller or
      the Depositor will at any time in the future deny that the Transaction
      Documents constitute the legal, valid and binding obligations of the
      Servicer, the Seller, the Depositor or the Trust, as applicable.

            (g) FINANCIAL STATEMENTS. The Financial Statements of FIFSG, copies
      of which have been furnished to the Insurer, (i) are, as of the dates and
      for the periods referred to therein, complete and correct in all material
      respects, (ii) present fairly the financial condition and results of
      operations of the companies reported therein as of the dates and for the
      periods indicated and (iii) have been prepared in accordance with
      generally

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<PAGE>
      accepted accounting principles consistently applied, except as noted
      therein (subject as to interim statements to normal year-end adjustments).
      Since the date of the most recent Financial Statements, there has been no
      Material Adverse Change in respect of the Servicer or the Seller. Except
      as disclosed in the Financial Statements, the Servicer and the Seller are
      not subject to any contingent liabilities or commitments that,
      individually or in the aggregate, have a material possibility of causing a
      Material Adverse Change in respect of the Servicer or the Seller.

            (h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
      employed, or proposed to be employed, by the Servicer, the Seller or the
      Depositor in the conduct of its business violates any law, regulation,
      judgment, agreement, order or decree applicable to any of them that, if
      enforced, could reasonably be expected to result in a Material Adverse
      Change with respect to the Servicer, the Seller or the Depositor. The
      Servicer, the Seller and the Depositor are not in breach of or in default
      under any applicable law or administrative regulation of its respective
      jurisdiction of incorporation, or any department, division, agency or
      instrumentality thereof or of the United States or any applicable judgment
      or decree or any loan agreement, note, resolution, certificate, agreement
      or other instrument to which the Servicer, the Seller or the Depositor is
      a party or is otherwise subject which, if enforced, would have a material
      adverse effect on the ability of the Servicer, the Seller or the
      Depositor, as the case may be, to perform its respective obligations under
      the Transaction Documents.

            (i) TAXES. The Servicer, the Seller and the Depositor and the
      Servicer's, the Seller's and the Depositor's parent company or companies
      have filed prior to the date hereof all federal and state tax returns that
      are required to be filed and paid all taxes, including any assessments
      received by them that are not being contested in good faith, to the extent
      that such taxes have become due, except for any failures to file or pay
      that, individually or in the aggregate, would not result in a Material
      Adverse Change with respect to the Servicer, the Seller or the Depositor.

            (j) ACCURACY OF INFORMATION. Neither the Transaction Documents, nor
      other information relating to the Contracts, the operations of the
      Servicer, the Seller or the Depositor (including servicing or origination
      of loans) or the financial condition of the Servicer, the Seller or the
      Depositor (collectively, the "Documents"), as amended, supplemented or
      superseded, furnished to the Insurer by the Servicer, the Seller or the
      Depositor contains any statement of a material fact by the Servicer, the
      Seller or Depositor which was untrue or misleading in any material adverse
      respect when made. None of the Servicer, the Seller or the Depositor has
      any knowledge of circumstances that could reasonably be expected to cause
      a Material Adverse Change with respect to the Servicer, the Seller or the
      Depositor. Since the furnishing of the Documents, there has been no change
      or any development or event involving a prospective change known to the
      Servicer, the Seller or the Depositor that would render any of the
      Documents untrue or misleading in any material respect.

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<PAGE>
            (k) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the
      Obligations comply in all material respects with all requirements of law,
      including all registration requirements of applicable securities laws.
      Without limitation of the foregoing, the Offering Document does not
      contain any untrue statement of a material fact and does not omit to state
      a material fact necessary to make the statements made therein, in light of
      the circumstances under which they were made, not misleading; provided,
      however, that no representation is made with respect to the information in
      the Offering Document set forth under the heading "Description of the
      Insurer and the Insurance Policy" or the consolidated financial statements
      of the Insurer incorporated by reference in the Offering Document. Neither
      the offer nor the sale of the Obligations has been or will be in violation
      of the Securities Act or any other federal or state securities laws. The
      Issuer is not required to be registered as an "investment company" under
      the Investment Company Act.

            (l) TRANSACTION DOCUMENTS. Each of the representations and
      warranties of the Servicer, the Seller and the Depositor contained in the
      Transaction Documents is true and correct in all material respects, and
      the Servicer, the Seller and the Depositor hereby make each such
      representation and warranty to, and for the benefit of, the Insurer as if
      the same were set forth in full herein.

            (m) SOLVENCY, FRAUDULENT CONVEYANCE. The Servicer, the Seller and
      the Depositor are solvent and will not be rendered insolvent by the
      Transaction and, after giving effect to the Transaction, none of the
      Servicer, the Seller or the Depositor will be left with an unreasonably
      small amount of capital with which to engage in its business, nor does the
      Servicer, the Seller or the Depositor intend to incur, or believe that it
      has incurred, debts beyond its ability to pay as they mature. None of the
      Servicer, the Seller or the Depositor contemplates the commencement of
      insolvency, bankruptcy, liquidation or consolidation proceedings or the
      appointment of a receiver, liquidator, conservator, trustee or similar
      official in respect of the Servicer, the Seller or the Depositor or any of
      their assets. The amount of consideration being received by the Issuer
      upon the sale of the Obligations to the Initial Purchaser constitutes
      reasonably equivalent value and fair consideration for the interest in the
      Contracts evidenced by the Obligations. The Seller is not transferring the
      Contracts to the Issuer and the Issuer is not selling the Obligations to
      any Initial Purchaser, as provided in the Transaction Documents, with any
      intent to hinder, delay or defraud any of the Seller's or the Depositor's
      creditors.

            (n) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
      the Servicer is located in Atlanta, Georgia, the principal place of
      business of the Seller is located in Houston, Texas, and the principal
      place of business of the Depositor is located in Houston, Texas.

            (o) OPINION FACTS AND ASSUMPTIONS. The Opinion Facts and Assumptions
      insofar as they relate to the Seller and the Depositor are true and
      correct as of the Date of Issuance.

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            (p) REQUIREMENTS FOR RECEIVABLES. The Seller and the Depositor
      represent and warrant with respect to each Contract that: (a) the related
      Obligor has no right of recission or cancellation, claims or defenses,
      set-offs or counterclaims of any kind whatsoever as to or against each
      Contract; (b) the obligation created by the contract evidencing each
      Contract is a bonafide sale in the ordinary course of the Originator's
      business; (c) the contract evidencing such Contract complies with all
      state and federal laws and regulations; (d) the contract evidencing each
      Contract, including, but not limited to, description of the motor vehicle
      and/or services contained therein, is in all respects complete, accurate
      and represents the entire agreement between the Originator and the Obligor
      and complies with Federal Consumer Credit Protection Act and all other
      applicable state and federal laws and regulations.

      SECTION 2.02. AFFIRMATIVE COVENANTS OF THE SERVICER, THE SELLER AND THE
DEPOSITOR. The Servicer, the Seller and the Depositor hereby agree that during
the Term of the Insurance Agreement, unless the Insurer shall otherwise
expressly consent in writing:

            (a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Servicer,
      the Seller and the Depositor shall not be in default under the Transaction
      Documents and shall comply with all material requirements of any law, rule
      or regulation applicable to it. So long as no Insurer Default or Insurer
      Insolvency exists, unless the Insurer shall otherwise consent, none of the
      Servicer, the Seller or the Depositor shall agree to any amendment to or
      modification of the terms of any Transaction Documents unless the Insurer
      shall have given its prior written consent.

            (b) CORPORATE EXISTENCE. The Servicer, its successors and assigns,
      the Seller, its successors and assigns, and the Depositor, its successors
      and assigns, shall maintain their corporate existence and shall at all
      times continue to be duly organized under the laws of their respective
      jurisdictions of incorporation and duly qualified and duly authorized (as
      described in sections 2.01(a), (b) and (c) hereof) and shall conduct its
      business in accordance with the terms of its certificate or articles of
      incorporation and bylaws. The Seller, the Depositor and the Servicer shall
      notify the Insurer within sixty (60) days prior to any change in its name,
      identify or corporate structure. The Seller, the Servicer and the
      Depositor shall notify the Insurer within sixty (60) days prior to any
      relocation of its principal office.

            (c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
      The Servicer, the Seller and the Depositor shall keep or cause to be kept
      in reasonable detail books and records of account of their assets and
      business, including, but not limited to, books and records relating to the
      Transaction. The Servicer and the Seller shall furnish or cause to be
      furnished to the Insurer:

                  (i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
            any event within 120 days after the close of each fiscal year of
            FIFSG, the audited consolidated balance sheets of FIFSG and its
            subsidiaries as of the end of such fiscal year and the related
            audited consolidated statements of income, changes in

                                       10
<PAGE>
            shareholders' equity and cash flows for such fiscal year, all in
            reasonable detail and stating in comparative form the respective
            figures for the corresponding date and period in the preceding
            fiscal year, prepared in accordance with generally accepted
            accounting principles, consistently applied, and accompanied by the
            audit opinion of FIFSG's independent accountants (which shall be a
            nationally recognized independent public accounting firm) and by the
            certificate specified in Section 2.02(e) hereof.

                  (ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
            in any event within 90 days after each of the first three fiscal
            quarters of each fiscal year of FIFSG, the unaudited consolidated
            balance sheets of FIFSG and its subsidiaries as of the end of such
            fiscal quarter and the related unaudited consolidated statements of
            income, changes in shareholders' equity and cash flows for such
            fiscal quarter, all in reasonable detail and stating in comparative
            form the respective figures for the corresponding date and period in
            the preceding fiscal year, prepared in accordance with generally
            accepted accounting principles, consistently applied, and
            accompanied by the certificate specified in Section 2.02(e) hereof.

                  (iii) INITIAL AND CONTINUING REPORTS. On or before the Closing
            Date, the Servicer will provide the Insurer a copy of the magnetic
            tape to be delivered to the Indenture Trustee on the Closing Date
            setting forth as to each Contract, the information required under
            the definition of "Contract Schedule" in Section 1.1 of the Sale and
            Allocation Agreement. Thereafter, the Servicer shall deliver to the
            Insurer not later than 12:00 noon, New York City time, on each
            Determination Date the report required by Section 3.7 of the Sale
            and Allocation Agreement.

                  (iv) COMPUTER DISKETTE. Beginning in February 2000, the
            Servicer will deliver to the Insurer on a monthly basis, a computer
            diskette or other electronic file in a format acceptable to the
            Insurer, containing the information provided to the Insurer pursuant
            to clause (iii) of this subsection 2.02(c) and also containing
            information similar to the information provided in the Contract
            Schedule delivered to the Indenture Trustee pursuant to the Sale and
            Allocation Agreement and described in Schedule 1 of the Sale and
            Allocation Agreement.

                  (v) CERTAIN INFORMATION. Upon the reasonable request of the
            Insurer, the Servicer and the Seller shall promptly provide copies
            of any requested proxy statements, financial statements, reports and
            registration statements which the Servicer or the Seller files with,
            or delivers to, the Commission or any national securities exchange.

                  (vi) OTHER INFORMATION. Promptly upon receipt thereof, copies
            of all schedules, list of contracts, financial statements or other
            similar reports delivered to or by the Servicer, the Seller or the
            Depositor pursuant to the terms of the Transaction Documents and,
            promptly upon request, such other data as the Insurer

                                       11
<PAGE>
            may reasonably request. The Seller agrees, in the event of any
            merger, consolidation or asset transfer of the Seller as described
            in Section 4.3 of the Sale and Allocation Agreement, to deliver the
            certificates and opinions described therein to the Insurer.

            The Insurer agrees that it and its agents, accountants and attorneys
      shall keep confidential all financial statements, reports and other
      information delivered by the Servicer, the Seller or the Depositor
      pursuant to this Section 2.02(c) to the extent provided in Section 2.02(f)
      hereof.

            (d) THE DEPOSITOR SHAREHOLDER MEETINGS. The Depositor shall have
      annual shareholder meetings and at least annual board of director meetings
      and shall prepare income and franchise tax returns as appropriate. The
      Depositor shall deliver to the Insurer copies of the minutes of such
      meetings no later than April 30 of each year and such tax returns promptly
      upon filing but in no event later than August 31 of each year, beginning
      in 2000.

            (e) COMPLIANCE CERTIFICATE. The Servicer and the Seller shall
      deliver to the Insurer, concurrently with the delivery of the financial
      statements required pursuant to Sections 2.02(c)(i) and (ii) hereof, one
      or more certificates signed by an officer of the Servicer and an officer
      of the Seller authorized to execute such certificates on behalf of the
      Servicer and the Seller stating that:

                  (i) a review of the Servicer's performance under the
            Transaction Documents during such period has been made under such
            officer's supervision;

                  (ii) to the best of such individual's knowledge following
            reasonable inquiry, no Default or Event of Default has occurred, or
            if a Default or Event of Default has occurred, specifying the nature
            thereof and, if the Servicer has a right to cure pursuant to Section
            5.1 of the Indenture, stating in reasonable detail (including, if
            applicable, any supporting calculations) the steps, if any, being
            taken by the Servicer to cure such Default or Event of Default or to
            otherwise comply with the terms of the agreement to which such
            Default or Event of Default relates;

                  (iii) the attached financial statements submitted in
            accordance with Sections 2.02(c)(i) or (ii) hereof, as the case may
            be, are complete and correct in all material respects and present
            fairly the financial condition and results of operations of FIFSG as
            of the dates and for the periods indicated, in accordance with
            generally accepted accounting principles consistently applied; and

                  (iv) the Servicer has in full force and effect a blanket
            fidelity bond (or direct insurer bond) and an errors and omissions
            insurance policy in accordance with the terms and requirements of
            Section 2.25 of the Servicing Agreement.

                                       12
<PAGE>
            (f) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
      an annual basis, or upon the occurrence of a Material Adverse Change, the
      Servicer and the Seller shall, upon the reasonable request of the Insurer,
      permit the Insurer or its authorized agents:

                  (i) to inspect, audit and make copies of abstracts from, the
            books and records of the Servicer and of the Seller as they may
            relate to the Obligations, the Contracts, the obligations of the
            Servicer or of the Seller under the Transaction Documents, and the
            Transaction;

                  (ii) to discuss the affairs, finances and accounts of the
            Servicer or of the Seller with the chief operating officer and the
            chief financial officer of the Servicer or of the Seller, as the
            case may be; and

                  (iii) with the Servicer's or the Seller's consent, as
            applicable, which consent shall not be unreasonably withheld, to
            discuss the affairs, finances and accounts of the Servicer or the
            Seller with the Servicer's or the Seller's independent accountants,
            provided that an officer of the Servicer or the Seller shall have
            the right to be present during such discussions.

            Such inspections and discussions shall be conducted during normal
      business hours and shall not unreasonably disrupt the business of the
      Servicer or the Seller. The books and records of the Servicer shall be
      maintained at the address of the Servicer designated herein for receipt of
      notices, unless the Servicer shall otherwise advise the parties hereto in
      writing, and the books and records of the Seller shall be maintained at
      the address of the Seller designated herein for receipt of notices, unless
      the Seller shall otherwise advise the parties hereto in writing.

            The Insurer agrees that it and its shareholders, directors, agents,
      accountants and attorneys shall keep confidential any matter of which it
      becomes aware through such inspections or discussions (unless readily
      available from public sources), except as may be otherwise required by
      regulation, law or court order or requested by appropriate governmental
      authorities or as necessary to preserve its rights or security under or to
      enforce the Transaction Documents, provided that the foregoing shall not
      limit the right of the Insurer to make such information available to its
      regulators, securities rating agencies, reinsurers, credit and liquidity
      providers, counsel and accountants.

            (g) NOTICE OF MATERIAL EVENTS. The Servicer, the Seller and the
      Depositor shall be obligated (which obligation shall be satisfied as to
      each if performed by the Servicer, the Seller or the Depositor) promptly
      to inform the Insurer in writing of the occurrence of any of the following
      to the extent any of the following relate to it:

                  (i) the submission of any claim or the initiation or threat of
            any legal process, litigation or administrative or judicial
            investigation, or rule making or disciplinary proceeding by or
            against the Servicer, the Seller or the Depositor that

                                       13
<PAGE>
            (A) could be required to be disclosed to the Commission or to the
            Servicer's, the Seller's or the Depositor's shareholders or (B)
            could result in a Material Adverse Change with respect to the
            Servicer, the Seller or the Depositor, or the promulgation of any
            proceeding or any proposed or final rule which would result in a
            Material Adverse Change with respect to the Servicer, the Seller or
            the Depositor;

                  (ii) the submission of any claim or the initiation or threat
            of any legal process, litigation or administrative or judicial
            investigation in any federal, state or local court or before any
            arbitration board, or any such proceeding threatened by any
            government agency, which, if adversely determined, would have a
            material adverse effect on the Issuer, the Owners or the Insurer;

                  (iii) any change in the location of the Servicer's, the
            Seller's or the Depositor's principal office, any change in the
            location of the Servicer's, the Seller's or the Depositor's books
            and records, or any change in the location of the Corporate Trust
            Office (as defined in the Sale and Allocation Agreement), or any
            change in the account number or location of the Collection Account,
            the Note Payment Account, the Certificate Payment Account or the
            Reserve Account;

                  (iv) the occurrence of any Event of Servicing Termination,
            Default or Event of Default or of any Material Adverse Change;

                  (v) the commencement of any proceedings by or against the
            Servicer, the Seller or the Depositor under any applicable
            bankruptcy, reorganization, liquidation, rehabilitation, insolvency
            or other similar law now or hereafter in effect or of any proceeding
            in which a receiver, liquidator, conservator, trustee or similar
            official shall have been, or may be, appointed or requested for the
            Servicer, the Seller or the Depositor or any of its or their assets;
            or

                  (vi) the receipt of notice that (A) the Servicer, the Seller
            or the Depositor is being placed under regulatory supervision, (B)
            any license, permit, charter, registration or approval necessary for
            the conduct of the Servicer's, the Seller's or the Depositor's
            business is to be, or may be suspended or revoked, or (C) the
            Servicer, the Seller or the Depositor is to cease and desist any
            practice, procedure or policy employed by the Servicer, the Seller
            or the Depositor in the conduct of its business, and such cessation
            may result in a Material Adverse Change with respect to the
            Servicer, the Seller or the Depositor.

                  (vii) The occurrence of any merger, consolidation or asset
            transfer of the Seller as described in Section 4.3 of the Sale and
            Allocation Agreement.

            (h) FINANCING STATEMENTS AND FURTHER ASSURANCES. The Seller shall
      cause the Depositor to file all necessary financing statements or other
      instruments, and any amendments or continuation statements relating
      thereto, necessary to be kept and filed in

                                       14
<PAGE>
      such manner and in such places as may be required by law to preserve and
      protect fully the interest of the Indenture Trustee in the Trust. The
      Servicer, the Seller and the Depositor shall, upon the request of the
      Insurer, from time to time, execute, acknowledge and deliver, or cause to
      be executed, acknowledged and delivered, within ten days of such request,
      such amendments hereto and such further instruments and take such further
      action as may be reasonably necessary to effectuate the intention,
      performance and provisions of the Transaction Documents. In addition, each
      of the Servicer, the Seller and the Depositor agrees to cooperate with S&P
      and Moody's in connection with any review of the Transaction that may be
      undertaken by S&P and Moody's after the date hereof and to provide all
      information reasonably requested by S&P or Moody's.

            (i) MAINTENANCE OF LICENSES. The Servicer, the Seller and the
      Depositor, respectively, or any successors thereof shall maintain or cause
      to be maintained all licenses, permits, charters and registrations which
      are material to the conduct of its business.

            (j) REDEMPTION OF OBLIGATIONS. The Servicer, the Seller and the
      Depositor shall instruct the Indenture Trustee, upon redemption or payment
      of all of the Obligations pursuant to the Indenture or otherwise, to
      furnish to the Insurer a notice of such redemption and, upon a redemption
      or payment of all of the Obligations, to surrender the Policy to the
      Insurer for cancellation.

            (k) DISCLOSURE DOCUMENT. Each Offering Document delivered with
      respect to the Obligations shall clearly disclose that the Policy is not
      covered by the property/casualty insurance security fund specified in
      Article 76 of the New York Insurance Law.

            (l) SERVICING OF CONTRACTS. The Servicer shall perform such actions
      with respect to the Contracts as are required by or provided for in the
      Servicing Agreement. The Servicer will provide the Insurer with written
      notice of any change or amendment to any Transaction Document as currently
      in effect.

            (m) MAINTENANCE OF TRUST. On or before each March 31, beginning in
      2001, so long as any of the Obligations are outstanding, and promptly
      after the execution and delivery of each amendment to any financing
      statement, the Servicer shall furnish to the Insurer and the Indenture
      Trustee an officers' certificate and an opinion of counsel as described in
      Section 3.6(b) of the Indenture, either stating that such action has been
      taken with respect to the recording, filing, rerecording and refiling of
      any financing statements and continuation statements as is necessary to
      maintain the interest of the Indenture Trustee created by the Indenture
      with respect to the Trust and reciting the details of such action or
      stating that no such action is necessary to maintain such interests. Such
      officers' certificate shall also describe the recording, filing,
      rerecording and refiling of any financing statements and continuation
      statements that will be required to maintain the interest of the Indenture
      Trustee in the Trust until the date such next officers' certificate is
      due. The Servicer will use its best efforts to cause any necessary
      recordings or filings to be made with respect to the Trust.

                                       15
<PAGE>
            (n) SELLER'S INDEMNITY. Notwithstanding anything in subsection 3.03
      hereof, the Seller shall pay to the Insurer an amount equal to any amount
      paid by the Insurer because of the Servicer's failure to deposit into the
      Collection Account any amount required to be so deposited by it pursuant
      to the Servicing Agreement or the Sale and Allocation Agreement, together
      with interest on any and all amounts remaining unreimbursed (to the extent
      permitted by law, if in respect to any unreimbursed amounts representing
      interest) from the date such amounts became due until paid in full (after
      as well as before judgment) at a rate of interest equal to the Late
      Payment Rate.

            (o) CLOSING DOCUMENTS. The Servicer, the Seller and the Depositor
      shall provide or cause to be provided to the Insurer a bound volume or
      volumes of the Transaction Documents and an executed original copy of each
      document executed in connection with the Transaction within 60 days after
      the date of closing. Upon the request of the Insurer, the Servicer, the
      Seller and the Depositor shall provide or cause to be provided to the
      Insurer a copy of each of the Transaction Documents on computer diskette,
      in a format acceptable to the Insurer.

            (p) PREFERENCE PAYMENTS. With respect to any Preference Amount (as
      defined in the Policy), the Servicer shall provide to the Insurer upon the
      request of the Insurer:

                  (i) a certified copy of the final nonappealable order of a
            court having competent jurisdiction ordering the recovery by a
            trustee in bankruptcy as voidable preference amounts included in
            previous distributions under Section 3.3 of the Sale and Allocation
            Agreement to any Owner pursuant to the United States Bankruptcy
            Code, 11 U.S.C. ss.ss. 101 et seq., as amended (the "Bankruptcy
            Code");

                  (ii) an opinion of counsel satisfactory to the Insurer, and
            upon which the Insurer shall be entitled to rely, stating that such
            order is final and is not subject to appeal;

                  (iii) an assignment in such form as reasonably required by the
            Insurer, irrevocably assigning to the Insurer all rights and claims
            of the Servicer, the Indenture Trustee and any Owner relating to or
            arising under the Contracts against the debtor which made such
            preference payment or otherwise with respect to such preference
            amount; and

                  (iv) appropriate instruments to effect (when executed by the
            affected party) the appointment of the Insurer as agent for the
            Indenture Trustee and any Owner in any legal proceeding relating to
            such preference payment being in a form satisfactory to the Insurer.

            (q) SELLER TO HOLD COMMON STOCK OF DEPOSITOR. The Seller shall hold,
      either directly or indirectly, all of the common stock of the Depositor
      during the Term of the Insurance Agreement. The Seller shall not sell,
      pledge or otherwise transfer such stock without the prior written consent
      of the Insurer.

                                       16
<PAGE>
            (r) YEAR 2000 PROGRAM. The Servicer has taken steps necessary and
      appropriate to prevent any problems in its computer and information
      systems arising from or in connection with the information processing
      challenges associated with the Year 2000, and will provide to the Insurer
      such information and reports as the Insurer may reasonably request from
      time to time with respect to such steps as have or will be taken with
      respect thereto.

            (s) PURCHASE OPTION. In the event the Depositor exercises its
      purchase option pursuant to Section 9.3 of the Trust Agreement, the
      Depositor shall promptly deliver to the Insurer the documents described in
      Section 9.3(b) of the Trust Agreement.

      SECTION 2.03. NEGATIVE COVENANTS OF THE SERVICER, THE SELLER AND THE
DEPOSITOR. The Servicer, the Seller and the Depositor hereby agree that during
the Term of the Insurance Agreement, unless the Insurer shall otherwise
expressly consent in writing:

            (a) IMPAIRMENT OF RIGHTS. None of the Servicer, the Seller or the
      Depositor shall take any action, or fail to take any action, if reasonably
      requested by the Insurer at a time when no Insurer Default or Insurer
      Insolvency exists or if such action or failure to take action may result
      in a material adverse change as described in clause (ii) of the definition
      of Material Adverse Change with respect to the Servicer, the Seller or the
      Depositor, or may interfere with the enforcement of any rights of the
      Insurer under or with respect to the Transaction Documents. The Servicer,
      the Seller or the Depositor shall give the Insurer written notice of any
      such action or failure to act on the earlier of: (i) the date upon which
      any publicly available filing or release is made with respect to such
      action or failure to act or (ii) promptly prior to the date of
      consummation of such action or failure to act. The Servicer, the Seller
      and the Depositor shall furnish to the Insurer all information requested
      by it that is reasonably necessary to determine compliance with this
      Section (a).

            (b) ADVERSE SELECTION PROCEDURE. The Servicer, the Seller and the
      Depositor will not use any Adverse Selection Procedure in selecting
      Contracts to be transferred to the Indenture Trustee from the outstanding
      contracts that qualify under the Sale and Allocation Agreement for
      inclusion in the Trust.

            (c) WAIVER, AMENDMENTS, ASSIGNMENTS, ETC. None of the Servicer, the
      Seller or the Depositor shall waive, modify or amend, or consent to any
      waiver, modification or amendment of, any of the terms, provisions or
      conditions of any of the Transaction Documents without the prior written
      consent of the Insurer; and (if no Insurer Default or Insurer Insolvency
      exists) none of the Servicer, the Seller or the Depositor shall assign any
      of the Transaction Documents to which it is a party without the prior
      written consent of the Insurer.

            (d) CONTRACTS; CHARGE-OFF POLICY. Except as otherwise permitted in
      the Sale and Allocation Agreement or the Servicing Agreement, the
      Servicer, the Seller and the Depositor shall not alter or amend any
      Contract, their respective collection policies or

                                       17
<PAGE>
      their respective charge-off policies in a manner that materially adversely
      affects the Insurer unless the Insurer shall have previously given its
      consent, which consent shall not be withheld unreasonably.

      SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. As of the Date
of Issuance, the Issuer represents, warrants and covenants as follows:

            (a) DUE ORGANIZATION AND QUALIFICATION. The Issuer is a business
      trust and is duly organized, validly existing and in good standing under
      the laws of the State of Delaware. The Issuer is duly qualified to do
      business, is in good standing and has obtained all licenses, permits,
      charters, registrations and approvals (together, "approvals") necessary
      for the conduct of its business as currently conducted and as described in
      the Offering Document and the performance of its obligations under the
      Transaction Documents to which it is a party, in each jurisdiction in
      which the failure to be so qualified or to obtain such approvals would
      render any Transaction Document to which it is a party unenforceable in
      any respect or would have a material adverse effect upon the Transaction,
      the Owner or the Insurer.

            (b) POWER AND AUTHORITY. The Issuer has all necessary power and
      authority to conduct its business as currently conducted and, as described
      in the Offering Document, to execute, deliver and perform its obligations
      under the Transaction Documents to which it is a party and to consummate
      the Transaction.

            (c) DUE AUTHORIZATION. The execution, delivery and performance of
      the Transaction Documents by the Issuer have been duly authorized by all
      necessary corporate action and do not require any additional approvals or
      consents, or other action by or any notice to or filing with any Person,
      including, without limitation, any governmental entity or the Issuer's
      stockholders, which have not previously been obtained or given by the
      Issuer.

            (d) NONCONTRAVENTION. Neither the execution and delivery of the
      Transaction Documents by the Issuer, the consummation of the Transaction
      contemplated thereby nor the satisfaction of the terms and conditions of
      the Transaction Documents:

                  (i) conflicts with or results in any breach or violation of
            any provision of the Trust Agreement or any law, rule, regulation,
            order, writ, judgment, injunction, decree, determination or award
            currently in effect having applicability to the Issuer or any of its
            material properties, including regulations issued by an
            administrative agency or other governmental authority having
            supervisory powers over the Issuer;

                  (ii) constitutes a default by the Issuer under or a breach of
            any provision of any loan agreement, mortgage, indenture or other
            agreement or instrument to which the Issuer is a party or by which
            any of its properties, which

                                       18
<PAGE>
            are individually or in the aggregate material to the Issuer, is or
            may be bound or affected; or

                  (iii) results in or requires the creation of any lien upon or
            in respect of any assets of the Issuer except as contemplated by the
            Transaction Documents.

            (e) LEGAL PROCEEDINGS. There is no action, proceeding or
      investigation by or before any court, governmental or administrative
      agency or arbitrator against or affecting the Issuer or any properties or
      rights of the Issuer pending or, to the Issuer's knowledge after
      reasonable inquiry, threatened, which, in any case, could reasonably be
      expected to result in a Material Adverse Change with respect to the
      Issuer.

            (f) VALID AND BINDING OBLIGATIONS. The Obligations, when executed,
      authenticated and issued in accordance with the Indenture and the
      Transaction Documents (other than the Obligations), when executed and
      delivered by the Issuer, will constitute the legal, valid and binding
      obligations of the Issuer enforceable in accordance with their respective
      terms, except as such enforceability may be limited by bankruptcy,
      insolvency, reorganization, moratorium or other similar laws affecting
      creditors' rights generally and general equitable principles and public
      policy considerations as to rights of indemnification for violations of
      federal securities laws. The Issuer will not at any time in the future
      deny that the Transaction Documents constitute the legal, valid and
      binding obligations of the Issuer.

            (g) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
      employed, or proposed to be employed, by the Issuer in the conduct of its
      business violates any law, regulation, judgment, agreement, order or
      decree applicable to it that, if enforced, could reasonably be expected to
      result in a Material Adverse Change with respect to the Issuer. The Issuer
      is not in breach of or default under any applicable law or administrative
      regulation of its respective jurisdiction or incorporation, or any
      department, division, agency or instrumentality thereof or of the United
      States or any applicable judgment or decree or any loan agreement, note,
      resolution, certificate, agreement or other instrument to which the Issuer
      is a party or is otherwise subject which, if enforced, would have a
      material adverse effect on the ability of the Issuer, to perform its
      obligations under the Transaction Documents.

            (h) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the
      Obligations comply in all material respects with all requirements of law,
      including all registration requirements of applicable securities laws.
      Without limitation of the foregoing, the Offering Document does not
      contain any untrue statement of a material fact and does not omit to state
      a material fact necessary to make the statements made therein, in light of
      the circumstances under which they were made, not misleading; provided,
      however, that no representation is made with respect to the information in
      the Offering Document set forth under the heading "Description of the
      Insurer and the Insurance Policy" or the consolidated financial statements
      of the Insurer incorporated by reference in the Offering

                                       19
<PAGE>
      Document. Neither the offer nor the sale of the Obligations has been or
      will be in violation of the Securities Act or any other federal or state
      securities laws.

            (i) TAXES. The Issuer has filed prior to the date hereof all federal
      and state tax returns that are required to be filed and paid all taxes,
      including any assessments received by them that are not being contested in
      good faith, to the extent that such taxes have become due, except for any
      failures to file or pay that, individually or in the aggregate, would not
      result in a Material Adverse Change with respect to the Issuer.

            (j) TRANSACTION DOCUMENTS. Each of the representations and
      warranties of the Issuer contained in the Transaction Documents is true
      and correct in all material respects, and the Issuer hereby makes each
      such representation and warranty to, and for the benefit of, the Insurer
      as if the same were set forth in full herein; provided that the remedy for
      any breach of this paragraph shall be limited to the remedies specified in
      the related Transaction Document or in this Insurance Agreement.

            (k) SOLVENCY. The Issuer is solvent and will not be rendered
      insolvent by the Transaction and, after giving effect to the Transaction,
      the Issuer will not be left with an unreasonably small amount of capital
      with which to engage in its respective business, nor does the Issuer
      intend to incur, or believe that it has incurred, debts beyond its ability
      to pay as they mature. The Issuer does not contemplate the commencement of
      insolvency, bankruptcy, liquidation or consolidation proceedings or the
      appointment of a receiver, liquidator, conservator, trustee or similar
      official in respect of the Issuer or any of its assets.

            (l) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
      the Issuer is located in Houston, Texas.

            (m) INVESTMENT COMPANY ACT. The Issuer is not an "investment
      company," or an "affiliated person" of, or "promoter" or "principal
      underwriter" for, an "investment company," as such terms are defined in
      the Investment Company Act. The Issuer is not required to be registered as
      an "investment company" under the Investment Company Act.

            (n) NO CONSENTS. No authorization or approval or other action by,
      and no notice to or filing with, any Person, including, without
      limitation, any governmental entity or regulatory body, is required for
      the due execution, delivery and performance by the Issuer of the
      Transaction Documents or any other material document or instrument to be
      delivered thereunder, except (in each case) such as have been obtained or
      the failure of which to be obtained would not be reasonably likely to have
      a material adverse effect on the Transaction.

            (o) NO MATERIAL EVENT OF DEFAULT. There is no material event of
      default on the part of the Issuer under any agreement involving financial
      obligations which would materially adversely impact the financial
      conditions or operations of the Trust or its obligations under any
      document associated with this Transaction.

                                       20
<PAGE>
            (p) OPINION FACTS AND ASSUMPTIONS. The opinion Facts and Assumptions
      insofar as they relate to the Issuer are true and correct as of the Date
      of Issuance.

      SECTION 2.05. AFFIRMATIVE COVENANTS OF THE ISSUER. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:

            (a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Issuer shall
      not be in default under the Transaction Documents and shall comply with
      all material requirements of any law, rule or regulation applicable to it.
      The Issuer shall not agree to any material amendment to or modification of
      the terms of any Transaction Documents unless the Insurer shall have given
      its prior written consent.

            (b) MAINTAIN EXISTENCE. The Issuer and its successors and assigns
      shall maintain their existence and shall at all times continue to be duly
      organized under the laws of its respective jurisdiction and duly qualified
      and duly authorized and shall conduct its business in accordance with the
      terms of its organizational documents.

            (c) NOTICE OF MATERIAL EVENTS. The Issuer shall be obligated
      promptly to inform the Insurer in writing of the occurrence of any of the
      following to the extent any of the following relate to it and to the
      extent that it receives actual notice of the occurrence of any of the
      following events:

                  (i) the submission of any claim or the initiation or threat of
            any legal process, litigation or administrative or judicial
            investigation, or rule making or disciplinary proceeding by or
            against the Issuer that (A) could be required to be disclosed to the
            Commission or to the Issuer's owners or (B) could result in a
            Material Adverse Change with respect to the Issuer or the
            promulgation of any proceeding or any proposed or final rule which
            would result in a Material Adverse Change with respect to the
            Issuer;

                  (ii) any change in the location of the Issuer's or the Owner
            Trustee's principal place of business or any change in the location
            of the Issuer's books and records;

                  (iii) the occurrence of any Default or Event of Default or of
            any Material Adverse Change;

                  (iv) the commencement of any proceedings by or against the
            Issuer under any applicable bankruptcy, reorganization, liquidation,
            rehabilitation, insolvency or other similar law now or hereafter in
            effect or of any proceeding in which a receiver, liquidator,
            conservator, trustee or similar official shall have been, or may be,
            appointed or requested for the Issuer or any of its assets; or

                  (v) the receipt of notice that (A) the Issuer is being placed
            under regulatory supervision, (B) any license, permit, charter,
            registration or approval

                                       20
<PAGE>
            necessary for the conduct of the Issuer's business is to be, or may
            be suspended or revoked, or (C) the Issuer is to cease and desist
            any practice, procedure or policy employed by the Issuer in the
            conduct of its business, and such cessation may result in a Material
            Adverse Change with respect to the Issuer.

            (d) FINANCING STATEMENTS AND FURTHER ASSURANCES. To the extent
      provided in the Indenture, the Issuer will cause to be filed all necessary
      financing statements or other instruments, and any amendments or
      continuation statements relating thereto, necessary to be kept and filed
      in such manner and in such places as may be required by law to preserve
      and protect fully the interest of the Indenture Trustee. The Issuer shall,
      upon the request of the Insurer, from time to time, execute, acknowledge
      and deliver, or cause to be executed, acknowledged and delivered, within
      ten days of such request, such amendments hereto and such further
      instruments and take such further action as may be reasonably necessary to
      effectuate the intention, performance and provisions of the Transaction
      Documents to which it is a party. In addition, the Issuer agrees to
      cooperate with S&P and Moody's in connection with any review of the
      Transaction that may be undertaken by S&P and Moody's after the date
      hereof.

            (e) MAINTENANCE OF LICENSES. The Issuer, or any successors thereof,
      shall maintain all licenses, permits, charters and registrations which are
      material to the conduct of its business.

            (f) THIRD-PARTY BENEFICIARY. The Issuer agrees that the Insurer
      shall have all rights of a third-party beneficiary in respect of each
      Transaction Document and hereby incorporates and restates its
      representations, warranties and covenants as set forth therein for the
      benefit of the Insurer.

            (g) TAX MATTERS. The Issuer will take all actions necessary to
      ensure that the Issuer is treated as a "non-entity" for federal and state
      income tax purposes and not as an association (or publicly traded
      partnership), taxable as a corporation.

            (h) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
      The Issuer shall keep or cause to be kept in reasonable detail books and
      records of account of its assets and business, including, but not limited
      to, books and records relating to the Transaction. The Issuer shall
      furnish or cause to be furnished to the Insurer promptly upon receipt
      thereof, copies of all schedules, opinions of counsel or accountants,
      officer's certificates, financial statements or other similar reports
      delivered to or by the Issuer pursuant to the terms of the Transaction
      Documents and, promptly upon request, such other data as the Insurer may
      reasonably request.

            (i) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
      an annual basis, or upon the occurrence of a Material Adverse Change, the
      Issuer shall, upon the reasonable request of the Insurer, at its expense,
      permit the Insurer or its authorized agents:

                                       22
<PAGE>
                  (i) to inspect the books and records of the Issuer as they may
            relate to the Obligations, the obligations of the Issuer under the
            Transaction Documents, and the Transaction;

                  (ii) to discuss the affairs, finances and accounts of the
            Issuer; and

                  (iii) with the Issuer's consent, as the case may be, which
            consent shall not be unreasonably withheld, to discuss the affairs,
            finances and accounts of the Issuer with the Issuer's independent
            accountants, provided that a representative of the Seller or the
            Issuer shall have the right to be present during such discussions.

            Such inspections and discussions shall be conducted during normal
      business hours and shall not unreasonably disrupt the business of the
      Issuer. The books and records of the Issuer will be maintained at the
      address of the Issuer designated herein for receipt of notices, unless the
      Issuer shall otherwise advise the parties hereto in writing.

            The Insurer agrees that it and its shareholders, directors, agents,
      accountants and attorneys shall keep confidential any matter of which it
      becomes aware through such inspections or discussions (unless readily
      available from public sources), except as may be otherwise required by
      regulation, law or court order or requested by appropriate governmental
      authorities or as necessary to preserve its rights or security under or to
      enforce the Transaction Documents, provided that the foregoing shall not
      limit the right of the Insurer to make such information available to its
      regulators, securities rating agencies, reinsurers, credit and liquidity
      providers, counsel and accountants.

      SECTION 2.06. NEGATIVE COVENANTS OF THE ISSUER. The Issuer hereby agrees
that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:

            (a) IMPAIRMENT OF RIGHTS. The Issuer shall not take any action, or
      fail to take any action, if such action or failure to take action may
      result in a material adverse change as described in clause (ii) of the
      definition of Material Adverse Change with respect to the Issuer, or may
      interfere with the enforcement of any rights of the Insurer under or with
      respect to the Transaction Documents. The Issuer shall give the Insurer
      written notice of any such action or failure to act on the earlier of: (i)
      the date upon which any publicly available filing or release is made with
      respect to such action or failure to act or (ii) promptly prior to the
      date of consummation of such action or failure to act. The Issuer shall
      furnish to the Insurer all information requested by it that is reasonably
      necessary to determine compliance with this paragraph.

            (b) WAIVER, AMENDMENTS, ETC. Except in accordance with the
      Transaction Documents, the Issuer shall not waive, modify or amend, or
      consent to any waiver, modification or amendment of, any of the material
      terms, provisions or conditions of the Transaction Documents without the
      consent of the Insurer which consent shall not unreasonably be withheld.
      Except upon the prior written consent of the Insurer which

                                       23
<PAGE>
      consent shall not unreasonably be withheld, the Issuer shall not allow the
      transfer, modification or amendment, nor consent to any transfer,
      modification or amendment of the Certificate of Trust unless such
      amendment is required under the Delaware Business Trust Act.

            (c) RESTRICTIONS ON LIENS. The Issuer shall not, except as
      contemplated by the Transaction Documents, (i) create, incur or suffer to
      exist, or agree to create, incur or suffer to exist, or consent to cause
      or permit in the future (upon the happening of a contingency or otherwise)
      the creation, incurrence or existence of any lien of the Contracts or (ii)
      sign or file under the Uniform Commercial Code of any jurisdiction any
      financing statement which names the Issuer as a debtor, or sign any
      security agreement authorizing any secured party thereunder to file such
      financing statement, with respect to the Contracts.

            (d) SUCCESSORS. The Issuer shall not remove or replace, or cause to
      be removed or replaced, the Servicer, the Indenture Trustee or the Owner
      Trustee without the prior written approval of the Insurer.

            (e) SUBSIDIARIES. The Issuer shall not form, or cause to be formed,
      any subsidiaries.

            (f) NO MERGERS. The Issuer shall not consolidate with or merge into
      any Person or transfer all or any material amount of its assets to any
      Person, liquidate or dissolve except as permitted by the Trust Agreement
      and as contemplated by the Transaction Documents.

            (g) OTHER ACTIVITIES. The Issuer shall not (i) sell, pledge,
      transfer exchange or otherwise dispose of any of its assets except as
      permitted under the Transaction Documents; or (ii) engage in any business
      or activity except as contemplated by the Transaction Documents and as
      permitted by the Trust Agreement.

            (h) TRUST AGREEMENT. The Issuer shall not amend the Trust Agreement
      without the prior written consent of the Insurer.

      SECTION 2.07. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INDENTURE
TRUSTEE AND BACK-UP SERVICER. The Indenture Trustee and the Back-up Servicer
represents and warrants to, as of the Date of Issuance, and covenants with the
other parties hereto as follows:

            (a) DUE ORGANIZATION AND QUALIFICATION. The Indenture Trustee and
      the Back-up Servicer are each a national banking association or
      corporation, duly organized, validly existing and in good standing under
      the laws of its respective jurisdiction of incorporation. Each of the
      Indenture Trustee and the Back-up Servicer is duly qualified to do
      business, is in good standing and has obtained all licenses, permits,
      charters, registrations and approvals (together, "approvals") necessary
      for the conduct of its business as currently conducted and as described in
      the Offering Document and the

                                       24
<PAGE>
      performance of its obligations under the Transaction Documents, in each
      jurisdiction in which the failure to be so qualified or to obtain such
      approvals would render any Transaction Document unenforceable in any
      respect or would have a material adverse effect upon the Transaction, the
      Owners or the Insurer.

            (b) DUE AUTHORIZATION. The execution, delivery and performance of
      the Transaction Documents by the Indenture Trustee and the Back-up
      Servicer have been duly authorized by all necessary corporate action and
      do not require any additional approvals or consents of, or other action by
      or any notice to or filing with any Person, including, without limitation,
      any governmental entity or the Indenture Trustee's or the Back-up
      Servicer's stockholders, which have not previously been obtained or given
      by the Indenture Trustee or the Back-up Servicer, as applicable.

            (c) NONCONTRAVENTION. None of the execution and delivery of the
      Transaction Documents by the Indenture Trustee or the Back-up Servicer,
      the consummation of the Transaction contemplated thereby or the
      satisfaction of the terms and conditions of the Transaction Documents:

                  (i) conflicts with or results in any breach or violation of
            any provision of the certificate or articles of incorporation or
            bylaws of the Indenture Trustee or the Back-up Servicer or any law,
            rule, regulation, order, writ, judgment, injunction, decree,
            determination or award currently in effect having applicability to
            the Indenture Trustee or the Back-up Servicer or any of their
            material properties, including regulations issued by an
            administrative agency or other governmental authority having
            supervisory powers over the Indenture Trustee or the Back-up
            Servicer;

                  (ii) constitutes a default by the Indenture Trustee or the
            Back-up Servicer under or a breach of any provision of any loan
            agreement, mortgage, indenture or other agreement or instrument to
            which the Indenture Trustee or the Back-up Servicer is a party or by
            which any of their respective properties, which are individually or
            in the aggregate material to the Indenture Trustee or the Back-up
            Servicer, is or may be bound or affected; or

                  (iii) results in or requires the creation of any lien upon or
            in respect of any assets of the Indenture Trustee or the Back-up
            Servicer, except as contemplated by the Transaction Documents.

            (d) LEGAL PROCEEDINGS. There is no action, proceeding or
      investigation by or before any court, governmental or administrative
      agency or arbitrator against or affecting the Indenture Trustee, the
      Back-up Servicer, or any of their subsidiaries, or any properties or
      rights of the Indenture Trustee, the Back-up Servicer or any of their
      subsidiaries, pending or, to the Indenture Trustee's or the Back-up
      Servicer's knowledge after reasonable inquiry, threatened, which, in any
      case, could reasonably be expected to result

                                       25
<PAGE>
      in a Material Adverse Change with respect to the Indenture Trustee or the
      Back-up Servicer.

            (e) VALID AND BINDING OBLIGATIONS AND AGREEMENTS. The Obligations,
      when executed, authenticated and issued in accordance with the Indenture,
      and the Transaction Documents (other than the Obligations), to which they
      are parties when executed and delivered by the Indenture Trustee and the
      Back-up Servicer, will constitute the legal, valid and binding obligations
      of the Indenture Trustee and the Back-up Servicer, as applicable,
      enforceable in accordance with their respective terms, except as such
      enforceability may be limited by bankruptcy, insolvency, reorganization,
      moratorium or other similar laws affecting creditors' rights generally and
      general equitable principles. Neither the Indenture Trustee nor the
      Back-up Servicer will at any time in the future deny that the Transaction
      Documents constitute the legal, valid and binding obligations of the
      Indenture Trustee and the Back-up Servicer, as applicable.

            (f) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
      employed, or proposed to be employed, by the Indenture Trustee or the
      Back-up Servicer in the conduct of their business violates any law,
      regulation, judgment, agreement, order or decree applicable to any the
      Indenture Trustee or the Back-up Servicer that, if enforced, could
      reasonably be expected to result in a Material Adverse Change with respect
      to the Indenture Trustee or the Back-up Servicer. Neither the Indenture
      Trustee nor the Back-up Servicer is in breach of or in default under any
      applicable law or administrative regulation of its respective jurisdiction
      of organization, or any department, division, agency or instrumentality
      thereof or of the United States or any applicable judgment or decree or
      any loan agreement, note, resolution, certificate, agreement or other
      instrument to which the Indenture Trustee or the Back-up Servicer is a
      party or is otherwise subject which, if enforced, would have a material
      adverse effect on the ability of the Indenture Trustee or the Back-up
      Servicer, as the case may be, to perform their respective obligations
      under the Transaction Documents.

            (g) TRANSACTION DOCUMENTS. Each of the representations and
      warranties of the Indenture Trustee and the Back-up Servicer contained in
      the Transaction Documents is true and correct in all material respects,
      and the Indenture Trustee and the Back-up Servicer hereby makes each such
      representation and warranty to, and for the benefit of, the Insurer as if
      the same were set forth in full herein.

            (h) COMPLIANCE AND AMENDMENTS. The Indenture Trustee and the Back-up
      Servicer shall comply in all material respects with the terms and
      conditions of the Transaction Documents to which it is a party and the
      Indenture Trustee and the Back-up Servicer shall not agree to any
      amendment to or modification of the terms of any of the Transaction
      Documents to which it is a party unless the Insurer shall otherwise give
      its prior written consent.

                                       26
<PAGE>
            (i) NOTICES. The Indenture Trustee shall promptly notify the Insurer
      of any merger, consolidation or asset transfer with respect to it as
      described in Section 6.9 of the Indenture.

      SECTION 2.08. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby represents and warrants as follows:

            (a) REPRESENTATIONS AND WARRANTIES. As of the Date of Issuance, each
      of the representations and warranties of the Owner Trustee set forth in
      the Transaction Documents is true and correct in all material respects and
      the Owner Trustee makes each such representation and warranty to, and for
      the benefit of, the Insurer as if the same were set forth in full herein.

            (b) COMPLIANCE AND AMENDMENTS. The Owner Trustee shall comply in all
      material respects with the terms and conditions of the Transaction
      Documents to which it is a party and the Owner Trustee shall not agree to
      any amendment to or modification of the terms of any of the Transaction
      Documents to which it is a party unless the Insurer shall otherwise give
      its prior written consent.

            (c) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
      the Owner Trustee is located in Wilmington, Delaware.

            (d) FURNISHING OF DOCUMENTS; NOTICES. The Owner Trustee hereby
      agrees to furnish to the Insurer the documents described in Section 7.2 of
      the Trust Agreement to the same extent as required with respect to the
      Depositor. The Owner Trustee shall provide the Insurer with prior written
      notice of any merger, consolidation or asset transfer with respect to it
      as described in Section 10.4 of the Trust Agreement.

      SECTION 2.09. NEGATIVE COVENANT OF THE ADMINISTRATOR. The Administrator
shall not remove the Owner Trustee pursuant to Section 10.2 of the Trust
Agreement unless it has obtained the prior written consent of the Insurer if no
Insurer Default or Insurer Insolvency exists.

                                  ARTICLE III

                            THE POLICY; REIMBURSEMENT

      SECTION 3.01. ISSUANCE OF THE POLICY. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:

            (a) PAYMENT OF INITIAL INSURANCE PREMIUM AND EXPENSES. The Insurer
      shall have been paid by the Servicer that portion of a nonrefundable
      Insurance Premium payable on the Date of Issuance and the Servicer shall
      agree to reimburse or pay directly other fees and expenses identified in
      Section 3.02 hereof as payable.

            (b) TRANSACTION DOCUMENTS. The Insurer shall have received a fully
      executed copy of the Premium Side Letter Agreement and a copy of each of
      the Transaction

                                       27
<PAGE>
      Documents, in form and substance satisfactory to the Insurer, duly
      authorized, executed and delivered by each party thereto.

            (c) CERTIFIED DOCUMENTS AND RESOLUTIONS. The Insurer shall have
      received a copy of (i) the certificate or articles of incorporation and
      bylaws of the Servicer, the Seller and the Depositor and (ii) the
      resolutions of the Seller's Board of Directors authorizing the sale of the
      Contracts and (iii) the execution, delivery and performance by the
      Servicer, the Seller and the Depositor of the Transaction Documents and
      the Transaction contemplated thereby, certified by the Secretary or an
      Assistant Secretary of the Servicer, the Seller and the Depositor (which
      certificate shall state that such certificate or articles of
      incorporation, bylaws and resolutions are in full force and effect without
      modification on the Date of Issuance).

            (d) INCUMBENCY CERTIFICATE. The Insurer shall have received a
      certificate of the Secretary or an Assistant Secretary of the Servicer,
      the Seller and the Depositor certifying the names and signatures of the
      officers of the Servicer, the Seller and the Depositor authorized to
      execute and deliver the Transaction Documents and that shareholder consent
      to the execution and delivery of such documents is not necessary.

            (e) REPRESENTATIONS AND WARRANTIES; CERTIFICATE. The representations
      and warranties of the Servicer, the Seller and the Depositor set forth or
      incorporated by reference in this Insurance Agreement shall be true and
      correct as of the Date of Issuance as if made on the Date of Issuance and
      the Insurer shall have received a certificate of appropriate officers of
      the Servicer, the Seller and the Depositor to that effect.

            (f) OPINIONS OF COUNSEL.

                  (i) The law firm of Thompson & Knight LLP shall have issued
            its favorable opinion, in form and substance acceptable to the
            Insurer and its counsel, regarding and the validity and
            enforceability of the Transaction Documents against the Depositor,
            the Servicer, the Issuer and the Seller.

                  (ii) The law firm of Thompson & Knight LLP shall have issued
            its favorable opinions, in form and substance acceptable to the
            Insurer and its counsel, regarding the sale of the Contracts from
            the Seller to the Issuer, and consolidation of the Depositor and the
            Issuer and the Depositor and the Seller in the event of the
            Depositor's bankruptcy.

                  (iii) The law firm of Thompson & Knight LLP shall have issued
            its favorable opinions, in form and substance acceptable to the
            Insurer and its counsel, regarding the perfection of the Indenture
            Trustee's interest in the Trust Estate, including in the Reserve
            Account Property.

                                       28
<PAGE>
                  (iv) The Insurer shall have received such other opinions of
            counsel, in form and substance acceptable to the Insurer and its
            counsel, including tax opinions, addressing such other matters as
            the Insurer may reasonably request.

            (g) APPROVALS, ETC. The Insurer shall have received true and correct
      copies of all approvals, licenses and consents, if any, including, without
      limitation, any required approval of the shareholders of the Servicer, the
      Seller and the Depositor, required in connection with the Transaction.

            (h) NO LITIGATION, ETC. No suit, action or other proceeding,
      investigation or injunction, or final judgment relating thereto, shall be
      pending or threatened before any court or governmental agency in which it
      is sought to restrain or prohibit or to obtain damages or other relief in
      connection with the Transaction Documents or the consummation of the
      Transaction.

            (i) LEGALITY. No statute, rule, regulation or order shall have been
      enacted, entered or deemed applicable by any government or governmental or
      administrative agency or court that would make the Transaction
      contemplated by any of the Transaction Documents illegal or otherwise
      prevent the consummation thereof.

            (j) ISSUANCE OF RATINGS. The Insurer shall have received
      confirmation that the risk secured by the Policy constitutes at least an
      investment grade risk by S&P and Moody's, and that the Obligations, when
      issued, will be rated "AAA" by S&P and "Aaa" by Moody's.

            (k) NO DEFAULT. No Default or Event of Default shall have occurred.

            (l) ADDITIONAL ITEMS. The Insurer shall have received such other
      documents, instruments, approvals or opinions requested by the Insurer or
      its counsel as may be reasonably necessary to effect the Transaction,
      including, but not limited to, evidence satisfactory to the Insurer and
      its counsel that the conditions precedent, if any, in the Transaction
      Documents have been satisfied.

            (m) CONFORM TO DOCUMENTS. The Insurer and its counsel shall have
      determined that all documents, certificates and opinions to be delivered
      in connection with the Obligations conform to the terms of the Transaction
      Documents.

            (n) SATISFACTION OF CONDITIONS OF THE PURCHASE AGREEMENT. All
      conditions in the Purchase Agreement relating to the Initial Purchaser's
      obligation to purchase the Obligations shall have been satisfied.

            (o) PURCHASE AGREEMENT. The Insurer shall have received copies of
      each of the documents, and shall be entitled to rely on each of the
      documents, required to be delivered to the Initial Purchaser pursuant to
      the Purchase Agreement.

                                       29
<PAGE>
            (p) GUARANTY. The Guaranty shall be executed by all parties thereto
      and delivered to the Indenture Trustee.

      SECTION 3.02. PAYMENT OF FEES AND INSURANCE PREMIUM.

            (a) LEGAL AND ACCOUNTING FEES. The Servicer shall pay or cause to be
      paid, on the Date of Issuance, legal fees and disbursements incurred by
      the Insurer in connection with the issuance of the Policy and any fees of
      the Insurer's auditors. Any fees of the Insurer's auditors payable in
      respect of any amendment or supplement to the Offering Document or any
      other Offering Document incurred after the Date of Issuance shall be paid
      by the Servicer on demand.

            (b) INSURANCE PREMIUM. In consideration of the issuance by the
      Insurer of the Policy, the Insurer shall be entitled to receive the
      Insurance Premium, so long as no Insurer Default or Insurer Insolvency has
      occurred, as and when due in accordance with the terms of the Premium Side
      Letter Agreement (i) in the case of Insurance Premium due on or before the
      Date of Issuance, directly from the Servicer and (ii) in the case of
      Insurance Premium due after the Date of Issuance, FIRST, pursuant to the
      Sale and Allocation Agreement, and SECOND, to the extent the amounts in
      subclause FIRST are not sufficient, directly from the Servicer. For
      purposes of the Sale and Allocation Agreement, the term "Premium
      Percentage" shall have the meaning set forth in the Premium Side Letter
      Agreement. The Insurance Premium shall be calculated according to the
      Premium Side Letter Agreement for the amount due on or before the Date of
      Issuance and for the amount due on each Payment Date. The Insurance
      Premium paid hereunder or under the Sale and Allocation Agreement shall be
      nonrefundable without regard to whether the Insurer makes any payment
      under the Policy or any other circumstances relating to the Obligations or
      provision being made for payment of the Obligations prior to maturity. All
      payments of Insurance Premium to be made to the Insurer shall be made by
      wire transfer to an account designated from time to time by the Insurer by
      written notice to the Servicer and the Indenture Trustee.

      SECTION 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION.

            (a) In accordance with the priorities established in Section 2.8 of
      the Indenture and 3.5 of the Sale and Allocation Agreement, the Insurer
      shall be entitled to reimbursement for any payment made by the Insurer
      under the Policy, which reimbursement shall be due and payable on the date
      that any amount is to be paid pursuant to a Notice (as defined in the
      Policy), in an amount equal to the amount to be so paid and all amounts
      previously paid that remain unreimbursed, together with interest on any
      and all amounts remaining unreimbursed (to the extent permitted by law, if
      in respect of any unreimbursed amounts representing interest) from the
      date such amounts became due until paid in full (after as well as before
      judgment), at a rate of interest equal to the Late Payment Rate.

                                       30
<PAGE>
            (b) Notwithstanding anything in Section 3.03(a) to the contrary, the
      Servicer and the Seller agree to reimburse the Insurer as follows: (i)
      from the Seller, for payments made under the Policy arising as a result of
      the Seller's failure to repurchase any Contract required to be repurchased
      pursuant to Section 2.3 of the Sale and Allocation Agreement, together
      with interest on any and all amounts remaining unreimbursed (to the extent
      permitted by law, if in respect of any unreimbursed amounts representing
      interest) from the date such amounts became due until paid in full (after
      as well as before judgment), at a rate of interest equal to the Late
      Payment Rate, and (ii) from the Servicer, for payments made under the
      Policy, arising as a result of (A) the Servicer's failure to deposit into
      the Collection Account any amount required to be so deposited pursuant to
      the Sale and Allocation Agreement or the Servicing Agreement or (B) the
      Servicer's failure to repurchase any contract to be repurchased under
      Section 2.28 of the Servicing Agreement, together with interest on any and
      all amounts remaining unreimbursed (to the extent permitted by law, if in
      respect to any unreimbursed amounts representing interest) from the date
      such amounts became due until paid in full (after as well as before
      judgment), at a rate of interest equal to the Late Payment Rate.

            (c) The Servicer and the Seller agree to pay to the Insurer as
      follows: any and all charges, fees, costs and expenses that the Insurer
      may reasonably pay or incur, including, but not limited to, attorneys' and
      accountants' fees and expenses, in connection with (i) any accounts
      established to facilitate payments under the Policy to the extent the
      Insurer has not been immediately reimbursed on the date that any amount is
      paid by the Insurer under the Policy, (ii) the enforcement, defense or
      preservation of any rights in respect of any of the Transaction Documents,
      including defending, monitoring or participating in any litigation or
      proceeding (including any insolvency or bankruptcy proceeding in respect
      of any Transaction participant or any affiliate thereof) relating to any
      of the Transaction Documents, any party to any of the Transaction
      Documents, in its capacity as such a party, or the Transaction, (iii) any
      amendment, transfer of servicing, reliening, consent, waiver or other
      action with respect to, or related to, any Transaction Document, whether
      or not executed or completed, or (iv) preparation of bound volumes of the
      Transaction Documents; costs and expenses shall include a reasonable
      allocation of compensation and overhead attributable to the time of
      employees of the Insurer spent in connection with the actions described in
      clause (ii) above, and the Insurer reserves the right to charge a
      reasonable fee as a condition to executing any waiver or consent proposed
      in respect of any of the Transaction Documents.

            (d) The Servicer, the Seller and the Depositor agree to pay to the
      Insurer as follows: interest on any and all amounts described in
      subsections (b), (c), (e) and (f) of this Section 3.03 from the date
      payable or paid by such party until payment thereof in full, and interest
      on any and all amounts described in Section 3.02 hereof from the date due
      until payment thereof in full, in each case, payable to the Insurer at the
      Late Payment Rate per annum.

            (e) The Servicer, the Seller and the Depositor agree to pay to the
      Insurer as follows: any payments made by the Insurer on behalf of, or
      advanced to, the Servicer, the

                                       31
<PAGE>
      Seller or the Depositor, respectively, including, without limitation, any
      amounts payable by the Servicer, the Seller or the Depositor pursuant to
      the Obligations or any other Transaction Documents.

            (f) Following termination of the Indenture pursuant to Section 10.1
      thereof, the Servicer agrees to reimburse the Insurer for any Insured
      Payments (including, without limitation, any Insured Payments relating to
      Preference Amounts as defined in the Policy) required to be made pursuant
      to the Policy subsequent to the date of such termination.

      All such amounts are to be immediately due and payable without demand.

      SECTION 3.04. INDEMNIFICATION; LIMITATION OF LIABILITY.

            (a) In addition to any and all rights of indemnification or any
      other rights of the Insurer pursuant hereto or under law or equity, the
      Seller, the Servicer and any successors thereto agree to pay, and to
      protect, indemnify and save harmless, the Insurer and its officers,
      directors, shareholders, employees, agents, and each person, if any, who
      controls the Insurer within the meaning of either Section 15 of the
      Securities Act or Section 20 of the Securities Exchange Act from and
      against any and all claims, Losses, liabilities (including penalties),
      actions, suits, judgments, demands, damages, costs or reasonable expenses
      (including, without limitation, reasonable fees and expenses of attorneys,
      consultants and auditors and reasonable costs of investigations) or
      obligations whatsoever paid by the Insurer (herein collectively referred
      to as "Liabilities") of any nature arising out of or relating to the
      Transaction contemplated by the Transaction Documents by reason of:

                  (i) any untrue statement or alleged untrue statement of a
            material fact contained in the Offering Document or in any amendment
            or supplement thereto or in any preliminary offering document, or
            arising out of or based upon any omission or alleged omission to
            state therein a material fact required to be stated therein or
            necessary to make the statements therein not misleading, except
            insofar as such Liabilities arise out of or are based upon any such
            untrue statement or omission or allegation thereof based upon
            information set forth in the Offering Document under the caption
            "Description of the Insurer and the Insurance Policy" or in the
            financial statements of the Insurer, including any information in
            any amendment or supplement to the Offering Document furnished by
            the Insurer in writing expressly for use therein that amends or
            supplements such information (all such information being referred to
            herein as "Insurer Information");

                  (ii) to the extent not covered by clause (i) above, any act or
            omission of the Seller, the Depositor, the Servicer, or the
            allegation thereof, in connection with the offering, issuance, sale
            or delivery of the Obligations other than by reason of false or
            misleading information provided by the Insurer in writing for
            inclusion in the Offering Document as specified in clause (i) above;

                                       32
<PAGE>
                  (iii) the misfeasance or malfeasance of, or negligence or
            theft committed by, any director, officer, employee or agent of the
            Servicer, the Seller or the Depositor;

                  (iv) the violation by the Depositor, the Seller or the
            Servicer of any federal or state securities, banking or antitrust
            laws, rules or regulations in connection with the issuance, offer
            and sale of the Obligations or the Transaction contemplated by the
            Transaction Documents;

                  (v) the violation by the Depositor, the Seller or the Servicer
            of any federal or state laws, rules or regulations relating to the
            Transaction, including without limitation the maximum amount of
            interest permitted to be received on account of any loan of money or
            with respect to the Contracts;

                  (vi) the breach by the Depositor, the Seller or the Servicer
            of any of its obligations under this Insurance Agreement or any of
            the other Transaction Documents; and

                  (vii) the breach by the Servicer, the Seller or the Depositor
            of any representation or warranty on the part of the Servicer, the
            Seller or the Depositor contained in the Transaction Documents or in
            any certificate or report furnished or delivered to the Insurer
            thereunder.

            This indemnity provision shall survive the termination of this
      Insurance Agreement and shall survive until the statute of limitations has
      run on any causes of action which arise from one of these reasons and
      until all suits filed as a result thereof have been finally concluded.

            (b) The Seller agrees to indemnify the Trust and the Insurer for any
      and all Liabilities incurred by the Trust and the Insurer due to any
      claim, counterclaim, rescission, setoff or defense asserted by an Obligor
      under any Contract subject to the Federal Trade Commission regulations
      provided in 16 C.F.R. Part 433.

            (c) Any party which proposes to assert the right to be indemnified
      under this Section 3.04 will, promptly after receipt of notice of
      commencement of any action, suit or proceeding against such party in
      respect of which a claim is to be made against the Servicer, the Seller or
      the Depositor under this Section 3.04, notify the Servicer, the Seller or
      the Depositor of the commencement of such action, suit or proceeding,
      enclosing a copy of all papers served. In case any action, suit or
      proceeding shall be brought against any indemnified party and it shall
      notify the Servicer, the Seller or the Depositor of the commencement
      thereof, the Servicer, the Seller or the Depositor shall be entitled to
      participate in, and, to the extent that it shall wish, to assume the
      defense thereof, with counsel satisfactory to such indemnified

                                       33
<PAGE>
      party, and after notice from the Servicer, the Seller or the Depositor to
      such indemnified party of its election so to assume the defense thereof,
      the Servicer, the Seller or the Depositor shall not be liable to such
      indemnified party for any legal or other expenses other than reasonable
      costs of investigation subsequently incurred by such indemnified party in
      connection with the defense thereof. The indemnified party shall have the
      right to employ its counsel in any such action the defense of which is
      assumed by the Servicer, the Seller or the Depositor in accordance with
      the terms of this subsection (c), but the fees and expenses of such
      counsel shall be at the expense of such indemnified party unless the
      employment of counsel by such indemnified party has been authorized by the
      Servicer, the Seller or the Depositor. The Servicer, the Seller or the
      Depositor shall not be liable for any settlement of any action or claim
      effected without its consent.

            (d) In addition to any and all rights of indemnification or any
      other rights of the Insurer pursuant hereto or under law or equity, the
      Indenture Trustee agrees to pay, and to protect, indemnify and save
      harmless, the Insurer and its officers, directors, shareholders,
      employees, agents, including each person, if any, who controls the Insurer
      within the meaning of either Section 15 of the Securities Act of 1933, as
      amended, or Section 20 of the Securities and Exchange Act of 1934, as
      amended, from and against any and all claims, losses, liabilities
      (including penalties), actions, suits, judgments, demands, damages, costs
      or reasonable expenses (including, without limitation, reasonable fees and
      expenses of attorneys, consultants and auditors and reasonable costs of
      investigations) or obligations whatsoever of any nature arising out of the
      breach by the Indenture Trustee of any of its obligations under this
      Insurance Agreement or the Indenture. This indemnity provision shall
      survive the termination of this Insurance Agreement and shall survive
      until the statute of limitations has run on any causes of action which
      arise from one of these reasons and until all suits filed as a result
      thereof have been finally concluded.

            (e) In addition to any and all rights of indemnification or any
      other rights of the Insurer pursuant hereto or under law or equity, the
      Back-up Servicer agrees to pay, and to protect, indemnify and save
      harmless, the Insurer and its officers, directors, shareholders,
      employees, agents, including each person, if any, who controls the Insurer
      within the meaning of either Section 15 of the Securities Act of 1933, as
      amended, or Section 20 of the Securities and Exchange Act of 1934, as
      amended, from and against any and all claims, losses, liabilities
      (including penalties), actions, suits, judgments, demands, damages, costs
      or reasonable expenses (including, without limitation, reasonable fees and
      expenses of attorneys, consultants and auditors and reasonable costs of
      investigations) or obligations whatsoever of any nature arising out of the
      breach by the Back-up Servicer of any of its obligations under this
      Insurance Agreement or the Servicing Agreement. This indemnity provision
      shall survive the termination of this Insurance Agreement and shall
      survive until the statute of limitations has run on any causes of action
      which arise from one of these reasons and until all suits filed as a
      result thereof have been finally concluded.

      SECTION 3.05. PAYMENT PROCEDURE. In the event of any payment by the
Insurer, the Indenture Trustee, the Servicer, the Back-up Servicer, the Seller
and the Depositor agree to accept the voucher or other evidence of payment as
prima facie evidence of the propriety thereof and the liability therefor to the
Insurer. All payments to be made to the Insurer under this Insurance Agreement
shall be made to the Insurer in lawful currency of the United States of

                                       34
<PAGE>
America in immediately available funds at the notice address for the Insurer as
specified in Section 6.02 hereof on the date when due or as the Insurer shall
otherwise direct by written notice to the other parties hereto. In the event
that the date of any payment to the Insurer or the expiration of any time period
hereunder occurs on a day which is not a Business Day, then such payment or
expiration of time period shall be made or occur on the next succeeding Business
Day with the same force and effect as if such payment was made or time period
expired on the scheduled date of payment or expiration date. Payments to be made
to the Insurer under this Insurance Agreement shall bear interest at the Late
Payment Rate from the date when due to the date paid.

                                   ARTICLE IV

                               FURTHER AGREEMENTS

      SECTION 4.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Servicer, the Indenture Trustee, the Back-up Servicer, the Seller or the
Depositor or from any other source under the Transaction Documents and all
amounts payable under the Obligations have been paid in full; provided, however,
that the provisions of Sections 3.02, 3.03, 3.04 and 4.06 hereof shall survive
any termination of this Insurance Agreement.

      SECTION 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.

            (a) Excepting at such times as an Insurer Insolvency or an Insurer
      Default shall exist or shall have occurred and be continuing, none of the
      Servicer, the Indenture Trustee, the Back-up Servicer, the Seller, the
      Depositor, the Issuer, the Owner Trustee or the Indenture Trustee shall
      grant any waiver of rights under any of the Transaction Documents to which
      any of them is a party without the prior written consent of the Insurer,
      and any such waiver without the prior written consent of the Insurer shall
      be null and void and of no force or effect.

            (b) To the extent permitted by law, the Servicer, the Indenture
      Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner Trustee
      and the Depositor agree that they will, from time to time, execute,
      acknowledge and deliver, or cause to be executed, acknowledged and
      delivered, such supplements hereto and such further instruments as the
      Insurer may request and as may be required in the Insurer's judgment to
      effectuate the intention of or facilitate the performance of this
      Insurance Agreement.

      SECTION 4.03. OBLIGATIONS ABSOLUTE.

            (a) The obligations of the Servicer, the Indenture Trustee, the
      Back-up Servicer, the Seller, the Issuer, the Owner Trustee and the
      Depositor hereunder shall be

                                       35
<PAGE>
      absolute and unconditional and shall be paid or performed strictly in
      accordance with this Insurance Agreement under all circumstances
      irrespective of:

                  (i) any lack of validity or enforceability of, or any
            amendment or other modifications of, or waiver, with respect to any
            of the Transaction Documents, the Obligations or the Policy;

                  (ii) any exchange or release of any other obligations
            hereunder;

                  (iii) the existence of any claim, setoff, defense, reduction,
            abatement or other right that the Servicer, the Indenture Trustee,
            the Back-up Servicer, the Seller, the Issuer, the Owner Trustee or
            the Depositor may have at any time against the Insurer or any other
            Person;

                  (iv) any document presented in connection with the Policy
            proving to be forged, fraudulent, invalid or insufficient in any
            respect or any statement therein being untrue or inaccurate in any
            respect;

                  (v) any payment by the Insurer under the Policy against
            presentation of a certificate or other document that does not
            strictly comply with terms of the Policy;

                  (vi) any failure of the Servicer, the Indenture Trustee, the
            Back-up Servicer, the Seller, the Issuer or the Depositor to receive
            the proceeds from the sale of the Obligations; or

                  (vii) any breach by the Servicer, the Indenture Trustee, the
            Back-up Servicer, the Seller, the Issuer, the Owner Trustee or the
            Depositor of any representation, warranty or covenant contained in
            any of the Transaction Documents.

            (b) The Servicer, the Indenture Trustee, the Back-up Servicer, the
      Seller, the Depositor, the Issuer, the Owner Trustee and any and all
      others who are now or may become liable for all or part of the obligations
      of the Servicer, the Indenture Trustee, the Back-up Servicer, the Seller,
      the Issuer, the Owner Trustee or the Depositor under this Insurance
      Agreement agree to be bound by this Insurance Agreement and (i) to the
      extent permitted by law, waive and renounce any and all redemption and
      exemption rights and the benefit of all valuation and appraisement
      privileges against the indebtedness and obligations evidenced by any
      Transaction Document or by any extension or renewal thereof; (ii) waive
      presentment and demand for payment, notices of nonpayment and of dishonor,
      protest of dishonor and notice of protest; (iii) waive all notices in
      connection with the delivery and acceptance hereof and all other notices
      in connection with the performance, default or enforcement of any payment
      hereunder, except as required by the Transaction Documents; (iv) waive all
      rights of abatement, diminution, postponement or deduction, or any defense
      other than payment, or to any right of setoff or recoupment

                                       36
<PAGE>
      arising out of any breach under any of the Transaction Documents, by any
      party thereto or any beneficiary thereof, or out of any obligation at any
      time owing to the Servicer, the Indenture Trustee, the Back-up Servicer,
      the Seller, the Issuer, the Owner Trustee or the Depositor; (v) agree that
      its liabilities hereunder shall, except as otherwise expressly provided in
      this Section 4.03, be unconditional and without regard to any setoff,
      counterclaim or the liability of any other Person for the payment hereof;
      (vi) agree that any consent, waiver or forbearance hereunder with respect
      to an event shall operate only for such event and not for any subsequent
      event; (vii) consent to any and all extensions of time that may be granted
      by the Insurer with respect to any payment hereunder or other provisions
      hereof and to the release of any security at any time given for any
      payment hereunder, or any part thereof, with or without substitution, and
      to the release of any Person or entity liable for any such payment; and
      (viii) consent to the addition of any and all other makers, endorsers,
      guarantors and other obligors for any payment hereunder, and to the
      acceptance of any and all other security for any payment hereunder, and
      agree that the addition of any such obligors or security shall not affect
      the liability of the parties hereto for any payment hereunder.

            (c) Nothing herein shall be construed as prohibiting the Servicer,
      the Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the
      Owner Trustee or the Depositor from pursuing any rights or remedies it may
      have against any other Person in a separate legal proceeding.

      SECTION 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.

            (a) This Insurance Agreement shall be a continuing obligation of the
      parties hereto and shall be binding upon and inure to the benefit of the
      parties hereto and their respective successors and permitted assigns. None
      of the Servicer, the Indenture Trustee, the Back-up Servicer, the Seller,
      the Issuer, the Owner Trustee nor the Depositor may assign its rights
      under this Insurance Agreement, or delegate any of its duties hereunder,
      without the prior written consent of the Insurer. Any assignment made in
      violation of this Insurance Agreement shall be null and void.

            (b) The Insurer shall have the right to give participations in its
      rights under this Insurance Agreement and to enter into contracts of
      reinsurance with respect to the Policy upon such terms and conditions as
      the Insurer may in its discretion determine; provided, however, that no
      such participation or reinsurance agreement or arrangement shall relieve
      the Insurer of any of its obligations hereunder or under the Policy.

            (c) In addition, the Insurer shall be entitled to assign or pledge
      to any bank or other lender providing liquidity or credit with respect to
      the Transaction or the obligations of the Insurer in connection therewith
      any rights of the Insurer under the Transaction Documents or with respect
      to any real or personal property or other interests pledged to the
      Insurer, or in which the Insurer has a security interest, in connection
      with the Transaction.

                                       37
<PAGE>
            (d) Except as provided herein with respect to participants and
      reinsurers, nothing in this Insurance Agreement shall confer any right,
      remedy or claim, express or implied, upon any Person, including,
      particularly, any Owner, other than the Insurer against the Servicer, the
      Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner
      Trustee or the Depositor, and all the terms, covenants, conditions,
      promises and agreements contained herein shall be for the sole and
      exclusive benefit of the parties hereto and their successors and permitted
      assigns. Neither the Indenture Trustee nor any Owner shall have any right
      to payment from any Insurance Premiums paid or payable hereunder or under
      the Sale and Allocation Agreement or from any other amounts paid by the
      Servicer, the Indenture Trustee, the Back-up Servicer, the Seller or the
      Depositor pursuant to Section 3.02, 3.03 or 3.04 hereof.

            (e) The Servicer, the Seller, the Depositor , the Back-up Servicer,
      the Issuer, the Owner Trustee and the Indenture Trustee agree that the
      Insurer shall have all rights of a third-party beneficiary in respect of
      the Indenture and each other Transaction Document to which it is not a
      signing party and hereby incorporate and restate their representations,
      warranties and covenants as set forth therein for the benefit of the
      Insurer.

      SECTION 4.05. LIABILITY OF THE INSURER. Neither the Insurer nor any of its
officers, directors or employees shall be liable or responsible for: (a) the use
that may be made of the Policy by the Indenture Trustee or for any acts or
omissions of the Indenture Trustee in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to the Insurer (or
its Fiscal Agent) in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (unless
the Insurer shall have actual knowledge thereof). In furtherance and not in
limitation of the foregoing, the Insurer (or its Fiscal Agent) may accept
documents that appear on their face to be in order, without responsibility for
further investigation.

      SECTION 4.06. PARTIES WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS. So long
as this Agreement is in effect, and for one year following its termination, none
of the parties hereto will file any involuntary petition or otherwise institute
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy or similar
law against the Depositor or the Issuer.

      SECTION 4.07. INDENTURE TRUSTEE, DEPOSITOR, BACK-UP SERVICER, SELLER AND
SERVICER TO JOIN IN ENFORCEMENT ACTION. To the extent necessary to enforce any
right of the Insurer in or remedy of the Insurer under any Contract, the
Indenture Trustee, the Depositor, the Back-up Servicer, the Seller, the Issuer,
the Owner Trustee and the Servicer agree to join in any action initiated by the
Trust or the Insurer for the protection of such right or exercise of such
remedy.

      SECTION 4.08. SUBROGATION. To the extent of any payments under the Policy,
the Insurer shall be fully subrogated to any remedies against the Depositor, the
Seller or the Servicer or in respect of the Contracts available to the Indenture
Trustee under the Indenture or Sale and Allocation Agreement. The Indenture
Trustee acknowledges such subrogation and, further,

                                       38
<PAGE>
agrees to execute such instruments prepared by the Insurer and to take such
reasonable actions as, in the sole judgment of the Insurer, are necessary to
evidence such subrogation and to perfect the rights of the Insurer to receive
any moneys paid or payable under the Indenture or Sale and Allocation Agreement.

                                   ARTICLE V

                               DEFAULTS; REMEDIES

      SECTION 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:

            (a) Any representation or warranty made by the Servicer, the
      Indenture Trustee, the Back-up Servicer, the Seller or the Depositor
      hereunder or under the Transaction Documents, or in any certificate
      furnished hereunder or under the Transaction Documents, shall prove to be
      untrue or incomplete in any material respect;

            (b) (i) The Servicer, the Indenture Trustee, the Back-up Servicer,
      the Seller, the Issuer, the Owner Trustee or the Depositor shall fail to
      pay when due any amount payable by the Servicer, the Indenture Trustee,
      the Back-up Servicer, the Seller or the Depositor hereunder or (ii) a
      legislative body has enacted any law that declares or a court of competent
      jurisdiction shall find or rule that this Insurance Agreement or any of
      the Transaction Documents are not valid and binding on the Servicer, the
      Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner
      Trustee or the Depositor;

            (c) the occurrence and continuance of an "Event of Default" under
      the Indenture (as defined therein);

            (d) Any failure on the part of the Servicer, the Indenture Trustee,
      the Back-up Servicer, the Seller, the Issuer, the Owner Trustee or the
      Depositor duly to observe or perform in any material respect any other of
      the covenants or agreements on the part of the Servicer, the Indenture
      Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner Trustee
      or the Depositor contained in this Insurance Agreement or in any other
      Transaction Document which continues unremedied for a period of 30 days
      with respect to this Insurance Agreement, or, with respect to any other
      Transaction Document, beyond any cure period provided for therein, after
      the date on which written notice of such failure, requiring the same to be
      remedied, shall have been given to the Servicer, the Seller, the Issuer,
      the Owner Trustee or the Depositor, as applicable, by the Insurer (with a
      copy to the Indenture Trustee) or by the Indenture Trustee (with a copy to
      the Insurer);

            (e) A decree or order of a court or agency or supervisory authority
      having jurisdiction in the premises in an involuntary case under any
      present or future federal or state bankruptcy, insolvency or similar law
      or the appointment of a conservator or receiver or liquidator or other
      similar official in any insolvency, readjustment of debt, marshalling of
      assets and liabilities or similar proceedings, or for the winding-up or
      liquidation of its

                                       39
<PAGE>
      affairs, shall have been entered against the Servicer, the Seller, the
      Back-up Servicer, the Issuer, the Owner Trustee or the Depositor and such
      decree or order shall have remained in force undischarged or unstayed for
      a period of 90 consecutive days;

            (f) The Servicer, the Seller, the Back-up Servicer, the Issuer, the
      Owner Trustee or the Depositor shall consent to the appointment of a
      conservator or receiver or liquidator or other similar official in any
      insolvency, readjustment of debt, marshalling of assets and liabilities or
      similar proceedings of or relating to the Servicer, the Seller, the
      Back-up Servicer, the Issuer, the Owner Trustee or the Depositor or of or
      relating to all or substantially all of the property of either;

            (g) The Servicer, the Seller, the Back-up Servicer, the Issuer, the
      Owner Trustee or the Depositor shall admit in writing its inability to pay
      its debts generally as they become due, file a petition to take advantage
      of or otherwise voluntarily commence a case or proceeding under any
      applicable bankruptcy, insolvency, reorganization or other similar
      statute, make an assignment for the benefit of its creditors or
      voluntarily suspend payment of its obligations;

            (h) The occurrence and continuance of an "Event of Servicing
      Termination" under the Servicing Agreement as defined therein;

            (i) The failure of the Seller, the Issuer or the Depositor to comply
      with, or maintain the accuracy of, the Opinion Facts and Assumptions;

            (j) The occurrence of final rulings against the Seller or its
      affiliates by a court of competent jurisdiction assessing monetary damages
      in excess of $1,000,000 or settlements resulting in the payment by the
      Seller or its affiliates of amounts in excess of $1,000,000;

            (k) The departure of any two of the following executives from the
      Seller or its consolidated subsidiaries: Tommy Moore, Bennie Duck, and
      Joseph Pisano, if a replacement for such individuals(s) acceptable to the
      Insurer is not made within 90 days;

            (l) The Seller fails to maintain a minimum GAAP Equity as a
      percentage of on-balance sheet portfolio of 10%. Equity may include 50% of
      subordinated debt with a maturity equal to or greater than five years,
      subject to MBIA review of and satisfaction with the subordinated debt
      agreement;

            (m) The Seller fails to maintain either (i) a $10 million non-MBIA
      insured, non-asset backed financing facility or (ii) an issuance of $20
      million in subordinated debt with a maturity of five to seven years;

            (n) The Seller fails to maintain a minimum EBITDA Coverage of
      1.1:1.0. The test shall be measured quarterly (coinciding with FIFS
      quarterly fiscal reporting) on a rolling six months basis;

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<PAGE>
            (o) A Change in Control occurs; or

            (p) A material change occurs in the operations of the Servicer which
      materially adversely affects the ability of the Servicer to service the
      Contracts or to perform its obligations under the Servicing Agreement.

      SECTION 5.02. REMEDIES; NO REMEDY EXCLUSIVE.

            (a) Upon the occurrence of an Event of Default, the Insurer may
      exercise any one or more of the rights and remedies set forth below:

                  (i) exercise any rights and remedies under the Transaction
            Documents in accordance with the terms of the Transaction Documents
            or direct the Indenture Trustee to exercise such remedies in
            accordance with the terms of the Transaction Documents; or

                  (ii) take whatever action at law or in equity as may appear
            necessary or desirable in its judgment to collect the amounts then
            due under the Transaction Documents or to enforce performance and
            observance of any obligation, agreement or covenant of the Servicer,
            the Indenture Trustee, the Back-up Servicer, the Seller, the Issuer,
            the Owner Trustee or the Depositor under the Transaction Documents.

            (b) Unless otherwise expressly provided, no remedy herein conferred
      upon or reserved is intended to be exclusive of any other available
      remedy, but each remedy shall be cumulative and shall be in addition to
      other remedies given under the Transaction Documents or existing at law or
      in equity. No delay or omission to exercise any right or power accruing
      under the Transaction Documents upon the happening of any event set forth
      in Section 5.01 hereof shall impair any such right or power or shall be
      construed to be a waiver thereof, but any such right and power may be
      exercised from time to time and as often as may be deemed expedient. In
      order to entitle the Insurer to exercise any remedy reserved to the
      Insurer in this Article, it shall not be necessary to give any notice,
      other than such notice as may be required in this Article V.

      SECTION 5.03. WAIVERS.

            (a) No failure by the Insurer to exercise, and no delay by the
      Insurer in exercising, any right hereunder shall operate as a waiver
      thereof. The exercise by the Insurer of any right hereunder shall not
      preclude the exercise of any other right, and the remedies provided herein
      to the Insurer are declared in every case to be cumulative and not
      exclusive of any remedies provided by law or equity.

            (b) The Insurer shall have the right, to be exercised in its
      complete discretion, to waive any Event of Default hereunder, by a writing
      setting forth the terms, conditions and extent of such waiver signed by
      the Insurer and delivered to the Servicer, the Indenture Trustee, the
      Back-up Servicer, the Seller, the Issuer and the Depositor. Unless

                                       41
<PAGE>
      such writing expressly provides to the contrary, any waiver so granted
      shall extend only to the specific event or occurrence which gave rise to
      the Event of Default so waived and not to any other similar event or
      occurrence which occurs subsequent to the date of such waiver.

                                   ARTICLE VI

                                  MISCELLANEOUS

      SECTION 6.01. AMENDMENTS, ETC. This Insurance Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. The Servicer agrees to promptly provide a copy of any
amendment to this Insurance Agreement to the Indenture Trustee, S&P and Moody's.
No act or course of dealing shall be deemed to constitute an amendment,
modification or termination hereof.

      SECTION 6.02. NOTICES. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered or
telecopied to the recipient as follows:

            (a)   To the Insurer:

                  MBIA Insurance Corporation
                  113 King Street
                  Armonk, NY  10504
                  Attention: Insured Portfolio Management-Structured Finance
                             (IPM-SF)(First Investors Auto Owner Trust 2000-A)
                  Telecopy No.:  (914) 765-3810
                  Confirmation:  (914) 273-4545

                  (in each case in which notice or other communication to the
                  Insurer refers to an Event of Default, a claim on the Policy
                  or with respect to which failure on the part of the Insurer to
                  respond shall be deemed to constitute consent or acceptance,
                  then a copy of such notice or other communication should also
                  be sent to the attention of each of the general counsel and
                  the Insurer and shall be marked to indicate "URGENT MATERIAL
                  ENCLOSED.")

            (b)   To the Seller and Administrator:

                                       42
<PAGE>
                  First Investors Financial Services, Inc.
                  Suite 710
                  675 Bering Drive
                  Houston, TX  77057
                  Attention:  Tommy A. Moore, Jr.
                  Telecopy No.:  (713) 977-0657
                  Confirmation:  (713) 977-2600

            (c)   To the Servicer:

                  First Investors Servicing Corporation
                  675 Bering Drive
                  Houston, TX  77057
                  Attention: Tommy A. Moore, Jr.
                  Telecopy No.:  (713) 977-0657
                  Confirmation:  (713) 977-2600

            (d)   To the Indenture Trustee:

                  Norwest Bank Minnesota, National Association
                  Sixth & Marquette
                  Minneapolis, MN  55479-0070
                  Attention: Asset-Backed Trust Administration

            (e)   To the Depositor:

                  First Investors Auto Investment Corp.
                  675 Bering Drive
                  Houston, TX  77057
                  Attention: Tommy A. Moore, Jr.
                  Telecopy No.:  (713) 977-0657
                  Confirmation:  (713) 977-2600

            (f)   To the Issuer:

                  First Investors Auto Owner Trust 2000-A
                  c/o Bankers Trust (Delaware)
                  1011 Centre Road
                  Suite 200
                  Wilmington, DE  19805-1266
                  Attention: Corporate Trust

            (g)   To the Owner Trustee:

                                       43
<PAGE>
                  Bankers Trust (Delaware)
                  1011 Centre Road
                  Suite 200
                  Wilmington, DE  19805-1266
                  Attention: Corporate Trust

                  with a copy to:

                  Bankers Trust Company
                  4 Albany Street, 10th Floor
                  New York, NY 10006
                  Attention: Structured Finance Group
            (h)   To the Back-up Servicer:
                  Norwest Bank Minnesota, National Association
                  Sixth and Marquette Streets
                  Minneapolis, MN 55479-0070
                  Attention: Asset-Backed Trust Administration

      A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.

      SECTION 6.03. SEVERABILITY. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.

      SECTION 6.04. GOVERNING LAW. This Insurance Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

      SECTION 6.05. CONSENT TO JURISDICTION.

            (a) The parties hereto hereby irrevocably submit to the jurisdiction
      of the United States District Court for the Southern District of New York
      and any court in the State of New York located in the City and County of
      New York, and any appellate court from any thereof, in any action, suit or
      proceeding brought against it and to or in connection with any of the
      Transaction Documents or the Transaction contemplated thereunder or for
      recognition or enforcement of any judgment, and the parties hereto hereby
      irrevocably and unconditionally agree that all claims in respect of any
      such action or proceeding may be heard or determined in such New York
      state court or, to the extent permitted by law, in such federal court. The
      parties hereto agree that a final judgment in any such action, suit or
      proceeding shall be conclusive and may be enforced in other

                                       44
<PAGE>
      jurisdictions by suit on the judgment or in any other manner provided by
      law. To the extent permitted by applicable law, the parties hereto hereby
      waive and agree not to assert by way of motion, as a defense or otherwise
      in any such suit, action or proceeding, any claim that it is not
      personally subject to the jurisdiction of such courts, that the suit,
      action or proceeding is brought in an inconvenient forum, that the venue
      of the suit, action or proceeding is improper or that the related
      documents or the subject matter thereof may not be litigated in or by such
      courts.

            (b) To the extent permitted by applicable law, the parties hereto
      shall not seek and hereby waive the right to any review of the judgment of
      any such court by any court of any other nation or jurisdiction which may
      be called upon to grant an enforcement of such judgment.

            (c) Except as provided in Section 4.06 herein, nothing contained in
      this Insurance Agreement shall limit or affect the Insurer's right to
      serve process in any other manner permitted by law or to start legal
      proceedings relating to any of the Transaction Documents any party hereto
      or its or their property in the courts of any jurisdiction.

      SECTION 6.06. CONSENT OF THE INSURER. In the event that the consent of the
Insurer is required under any of the Transaction Documents, the determination
whether to grant or withhold such consent shall be made by the Insurer in its
sole discretion without any implied duty towards any other Person.

      SECTION 6.07. COUNTERPARTS. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.

      SECTION 6.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.

      SECTION 6.09. TRIAL BY JURY WAIVED. Each party hereto hereby waives, to
the fullest extent permitted by law, any right to a trial by jury in respect of
any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the Transaction contemplated
thereunder. Each party hereto (A) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(B) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.

      SECTION 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction

                                       45
<PAGE>
Documents, the Obligations or the Policy, it being expressly agreed and
understood that each Transaction Document is solely a corporate obligation of
each party hereto, and that any and all personal liability, either at common law
or in equity, or by statute or constitution, of every such officer, employee,
director, affiliate or shareholder for breaches by any party hereto of any
obligations under any Transaction Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Insurance Agreement.

      SECTION 6.11. ENTIRE AGREEMENT. The Transaction Documents and the Policy
set forth the entire agreement between the parties with respect to the subject
matter thereof, and this Insurance Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.

      SECTION 6.12. LIMITATION OF LIABILITY. Notwithstanding any other provision
herein or elsewhere, this Insurance Agreement has been executed and delivered by
Bankers Trust (Delaware), not in its individual capacity, but solely in its
capacity as Owner Trustee of the Issuer, in no event shall Bankers Trust
(Delaware) or the Owner Trustee have any liability in respect of the
representation, warranties or obligations of the Issuer hereunder or under any
other documents, as to all of which recourse shall be solely to the assets of
the Issuer, and for all purposes of this Insurance Agreement and each other
document, the Owner Trustee and Bankers Trust (Delaware) shall be entitled to
the benefits of the Trust Agreement.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK;
                             SIGNATURE PAGE FOLLOWS]

                                       46
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.

                                    MBIA INSURANCE CORPORATION

                                    By ______________________________________
                                        Assistant Secretary

                                    FIRST INVESTORS SERVICING
                                    CORPORATION,  as Servicer

                                    By ______________________________________
                                    Title ___________________________________

                                    FIRST INVESTORS FINANCIAL SERVICES, INC., as
                                    Seller and as Administrator

                                    By ______________________________________
                                    Title ___________________________________

                                    FIRST INVESTORS AUTO INVESTMENT CORP., as
                                    Depositor

                                    By ______________________________________
                                    Title ___________________________________

                                    NORWEST BANK MINNESOTA, NATIONAL
                                    ASSOCIATION, as Back-up Servicer and
                                    Indenture Trustee

                                    By ______________________________________
                                    Title ___________________________________

<PAGE>
                                    FIRST INVESTORS AUTO OWNER TRUST 2000-A, as
                                    Issuer,

                                    By: BANKERS TRUST (DELAWARE), not in its
                                    individual capacity, but solely as Owner
                                    Trustee

                                    By ______________________________________
                                    Title ___________________________________

                                    BANKERS TRUST (DELAWARE), not in its
                                    individual capacity, but solely as Owner
                                    Trustee

                                    By ______________________________________
                                    Title ___________________________________EXHIBIT 10.67

                                                                  EXECUTION COPY

================================================================================

                           MBIA INSURANCE CORPORATION,
                                   as Insurer

                    FIRST INVESTORS FINANCIAL SERVICES, INC.,
                                    as Seller

                                       and

                         BANC OF AMERICA SECURITIES LLC,
                              as Initial Purchaser

                            INDEMNIFICATION AGREEMENT

                     First Investors Auto Owner Trust 2000-A
                                  $167,969,000
                            7.174% Asset-Backed Notes

                          Dated as of January 12, 2000

================================================================================
<PAGE>
                                TABLE OF CONTENTS

        Section 1.    Definitions.............................................1

        Section 2.    Representations and Warranties of the Insurer...........2

        Section 3.    Agreements, Representations and Warranties of
                        the Initial Purchaser.................................3

        Section 4.    Agreements, Representations and Warranties of
                        the Seller............................................4

        Section 5.    Indemnification.........................................5

        Section 6.    Notice To Be Given......................................5

        Section 7.    Contribution............................................7

        Section 8.    Notices.................................................9

        Section 9.    Governing Law, Etc......................................9

        Section 10.   Insurance Agreement; Purchase Agreement; Sale
                        and Allocation Agreement..............................9

        Section 11.   Limitations.............................................9

        Section 12.   Counterparts...........................................10

        Section 13.   Nonpetition............................................10

        TESTIMONIUM

        SIGNATURES AND SEALS
<PAGE>
                            INDEMNIFICATION AGREEMENT

        This Agreement, dated as of January 12, 2000, is by and among MBIA
Insurance Corporation (the "Insurer"), as the Insurer under the Note Guaranty
Insurance Policy (the "Policy") issued in connection with the Notes described
below, First Investors Financial Services, Inc. (the "Seller") and Banc of
America Securities LLC (the "Initial Purchaser").

        Section 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings stated herein, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate.
Capitalized terms used in this Agreement but not otherwise defined herein will
have the meanings ascribed to such terms in the Indenture (as described below).

        "ACT" means the Securities Act of 1933, as amended, together with all
related rules and regulations.

        "AGREEMENT" means this Indemnification Agreement by and among the
Insurer, the Seller and the Initial Purchaser.

        "INDEMNIFIED PARTY" means any party entitled to any indemnification
pursuant to Section 5 below, as the context requires.

        "INDEMNIFYING PARTY" means any party required to provide indemnification
pursuant to Section 5 below, as the context requires.

        "INDENTURE" means the Indenture dated January 1, 2000 between the
Issuer, the Seller and the Indenture Trustee as the same may be amended or
supplemented from time to time in accordance with the terms thereof.

        "INITIAL PURCHASER PARTY" means the Initial Purchaser and its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Act) of any of the
foregoing.

        "INSURANCE AGREEMENT" means the Insurance Agreement, dated as of January
1, 2000, by and among the Insurer, the Servicer, the Seller, as Seller and as
Administrator, First Investors Auto Investment Corp., as Depositor, First
Investors Auto Owner Trust 2000-A, as Issuer, Bankers Trust (Delaware), as Owner
Trustee and Norwest Bank Minnesota, National Association, as Back-up Servicer
and Indenture Trustee (the "Indenture Trustee").
<PAGE>
        "INSURER PARTY" means the Insurer and its respective parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.

        "LOSSES" means (i) any actual out-of-pocket loss paid by the party
entitled to indemnification or contribution hereunder and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).

        "NOTES" means the First Investors Auto Owner Trust 2000-A $167,969,000
7.174% Asset-Backed Notes issued pursuant to the Indenture.

        "OFFERING MEMORANDUM" means the offering memorandum dated January 12,
2000 in respect of the Notes (and any amendment or supplement thereto.)

        "PERSON" means any individual, partnership, joint venture, corporation,
trust or unincorporated organization or any government or agency or political
subdivision thereof.

        "PURCHASE AGREEMENT" means the Purchase Agreement by and between the
Initial Purchaser and the Depositor, dated January 12, 2000.

        "SALE AND ALLOCATION AGREEMENT" means the Sale and Allocation Agreement,
dated as of January 1, 2000, by and among the Seller, the Servicer, the
Depositor, the Indenture Trustee and the Issuer.

        "SELLER PARTY" means the Seller, each of its parents, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or any
"controlling person" (as such term is used in the Act) of any of the foregoing.

        "SERVICER" means First Investors Servicing Corporation, as Servicer.

        Section 2. REPRESENTATIONS AND WARRANTIES OF THE INSURER. The Insurer
represents and warrants to the Initial Purchaser and the Seller as follows:

                (a) ORGANIZATION AND LICENSING. The Insurer is a duly
        incorporated and existing New York stock insurance company licensed to
        do business in the State of New York and is in good standing under the
        laws of such state.

                (b) CORPORATE POWER. The Insurer has the corporate power and
        authority to issue the Policy and execute and deliver this Agreement and
        the Insurance Agreement and to perform all of its obligations hereunder
        and thereunder.

                                       2
<PAGE>
                (c) AUTHORIZATION; APPROVALS. The issuance of the Policy and the
        execution, delivery and performance of this Agreement and the Insurance
        Agreement have been duly authorized by all necessary corporate
        proceedings. No further approvals or filings of any kind, including,
        without limitation, any further approvals of or further filings with any
        governmental agency or other governmental authority, or any approval of
        the Insurer's board of directors or stockholders, are necessary for the
        Policy, this Agreement and the Insurance Agreement to constitute the
        legal, valid and binding obligations of the Insurer.

                (d) ENFORCEABILITY. The Policy, when issued, and this Agreement
        and the Insurance Agreement will each constitute legal, valid and
        binding obligations of the Insurer, enforceable in accordance with their
        terms, subject to applicable laws affecting the enforceability of
        creditors' rights generally.

                (e) FINANCIAL INFORMATION. The consolidated financial statements
        of the Insurer as of December 31, 1997 and December 31, 1998 and for the
        three years ended December 31, 1998 incorporated by reference in the
        Offering Memorandum (the "Insurer Audited Financial Statements"), fairly
        present in all material respects the financial condition of the Insurer
        as of such date and for the period covered by such statements in
        accordance with generally accepted accounting principles consistently
        applied. The consolidated financial statements of the Insurer and its
        subsidiaries as of September 30, 1999 incorporated by reference in the
        Offering Memorandum (the "Insurer Unaudited Financial Statements")
        present fairly in all material respects the financial condition of the
        Insurer as of such date and for the period covered by such statements in
        accordance with generally accepted accounting principles applied in a
        manner consistent with the accounting principles used in preparing the
        Insurer Audited Financial Statements, and, since September 30, 1999
        there has been no material change in such financial condition of the
        Insurer which would materially and adversely affect its ability to
        perform its obligations under the Policy.

                (f) INSURER INFORMATION. The information in the Offering
        Memorandum as of the date hereof under the caption "DESCRIPTION OF THE
        INSURER AND THE INSURANCE POLICY" (the "Insurer Information") is limited
        and does not purport to provide the scope of disclosure required to be
        included in a prospectus for a registrant under the Securities Act of
        1933, in connection with the public offer and sale of securities of such
        registrant. Within such limited scope of disclosure, the Insurer
        Information does not contain any untrue statement of a material fact or
        omit to state a material fact necessary to make the statements therein,
        in light of the circumstances under which they were made, not
        misleading.

                (g) NO LITIGATION. There are no actions, suits, proceedings or
        investigations pending or, to the best of the Insurer's knowledge,
        threatened against it at law or in equity or before or by any court,
        governmental agency, board or commission or any arbitrator

                                       3
<PAGE>
        which, if decided adversely, would materially and adversely affect its
        condition (financial or otherwise) or its operations or would materially
        and adversely affect its ability to perform its obligations under this
        Agreement, the Policy or the Insurance Agreement.

        Section 3. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE INITIAL
PURCHASER. The Initial Purchaser represents and warrants to and agrees with the
Seller and the Insurer that the statements in the Offering Memorandum made in
reliance upon and in conformity with written information relating to the Initial
Purchaser furnished to the Seller specifically for use in the preparation of the
Offering Memorandum, and acknowledged in writing (referred to herein as the
"Initial Purchaser Information"), are true and correct in all material respects.

        Section 4. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller represents, warrants to and agrees with the Insurer and the Initial
Purchaser as follows:

                (a) OFFERING MEMORANDUM. The information in the Offering
        Memorandum, other than the Insurer Information and the Initial Purchaser
        Information, is true and correct in all material respects and does not
        contain any untrue statement of a fact that is material or omit to state
        a material fact necessary to make the statements therein, in light of
        the circumstances under which they were made, not misleading.

                (b) ORGANIZATION. The Seller is duly incorporated and existing
        under the laws of the State of Texas and is in good standing as a
        foreign corporation in each jurisdiction in which the nature of its
        business, or the properties owned or leased by it, makes such
        qualification necessary.

                (c) CORPORATE POWER. The Seller has the corporate power and
        authority to execute and deliver this Agreement, the Indenture, the Sale
        and Allocation Agreement and the Insurance Agreement and to perform all
        of its obligations hereunder and thereunder in all material respects.

                (d) AUTHORIZATION; APPROVALS. The execution, delivery and
        performance of this Agreement, the Sale and Allocation Agreement, the
        Indenture and the Insurance Agreement by the Seller have been duly
        authorized by all necessary corporate proceedings. No further approvals
        or filings of any kind, including, without limitation, any further
        approvals of or further filing with any governmental agency or other
        governmental authority, or any approval of the Seller's board of
        directors or stockholders, are necessary for this Agreement, the Sale
        and Allocation Agreement, the Indenture and the Insurance Agreement to
        constitute the legal, valid and binding obligations of the Seller.

                (e) ENFORCEABILITY. This Agreement, the Sale and Allocation
        Agreement, the Indenture and the Insurance Agreement will each
        constitute legal, valid and binding obligations of the Seller,
        enforceable in accordance with their terms, subject, as to the
        enforcement of remedies, to bankruptcy, insolvency, reorganization,
        moratorium and other

                                       4
<PAGE>
        similar laws affecting the enforceability of creditors' rights generally
        applicable in the event of the bankruptcy, insolvency or reorganization
        of the Seller and to general principles of equity.

                (f) NO LITIGATION. There are no actions, suits, proceedings or
        investigations pending or, to the best of the Seller's knowledge,
        threatened against it at law or in equity or before any court,
        governmental agency, board or commission or any arbitrator which, if
        decided adversely, would materially and adversely affect its condition
        (financial or otherwise) or its operations or would materially and
        adversely affect its ability to perform its obligations under this
        Agreement, the Indenture, the Sale and Allocation Agreement or the
        Insurance Agreement.

        Section 5. INDEMNIFICATION.

                (a) The Insurer hereby agrees, upon the terms and subject to the
        conditions of this Agreement, to indemnify, defend and hold harmless
        each Seller Party and each Initial Purchaser Party against any and all
        Losses incurred by them with respect to the offer and sale of any of the
        Notes and resulting from the Insurer's breach of any of its
        representations and warranties set forth in Section 2 of this Agreement.

                (b) The Initial Purchaser Party hereby agrees, upon the terms
        and subject to the conditions of this Agreement, to indemnify, defend
        and hold harmless each Insurer Party against any and all Losses incurred
        by it with respect to the offer and sale of any of the Notes which
        results from the Initial Purchaser's breach of any of its
        representations and warranties set forth in Section 3 of this Agreement.

                (c) The Seller hereby agrees, upon the terms and subject to the
        conditions of this Agreement, to indemnify, defend and hold harmless
        each Insurer Party and Initial Purchaser Party against any and all
        Losses incurred by it with respect to the offer and sale of any of the
        Notes and resulting from the Seller's breach of any of its
        representations and warranties set forth in Section 4 of this Agreement.

                (d) Upon the incurrence of any Losses entitled to
        indemnification hereunder, the Indemnifying Party shall reimburse the
        Indemnified Party promptly upon establishment by the Indemnified Party
        to the Indemnifying Party of the Losses incurred.

        Section 6. NOTICE TO BE GIVEN.

                (a) Except as provided in Section 7 below with respect to
        contribution, the indemnification provided herein by the Indemnifying
        Party shall be the exclusive remedy of each Indemnified Party for the
        Losses resulting from the Indemnifying Party's breach of a
        representation, warranty or agreement hereunder; provided, however, that
        each Indemnified Party shall be entitled to pursue any other remedy at
        law or in equity for any

                                       5
<PAGE>
        such breach so long as the damages sought to be recovered shall not
        exceed the Losses incurred thereby resulting from such breach.

                (b) In the event that any action or regulatory proceeding shall
        be commenced or claim asserted which may entitle an Indemnified Party to
        be indemnified under this Agreement, such party shall give the
        Indemnifying Party written or facsimile notice of such action or claim
        reasonably promptly after receipt of written notice thereof.

                (c) Upon request of the Indemnified Party, the Indemnifying
        Party shall retain counsel reasonably satisfactory to the Indemnified
        Party to represent the Indemnified Party and any others the Indemnifying
        Party may designate in such proceeding and shall pay the fees and
        disbursements of such counsel related to such proceeding. The
        Indemnifying Party may, at its option, at any time upon written notice
        to the Indemnified Party, assume the defense of any proceeding and may
        designate counsel reasonably satisfactory to the Indemnified Party in
        connection therewith, provided that the counsel so designated would have
        no actual or potential conflict of interest in connection with such
        representation. Unless it shall assume the defense of any proceeding the
        Indemnifying Party shall not be liable for any settlement of any
        proceeding, effected without its written consent, but if settled with
        such consent or if there be a final judgment for the plaintiff, the
        Indemnifying Party agrees to indemnify the Indemnified Party from and
        against any loss or liability by reason of such settlement or judgment.
        The Indemnifying Party shall be entitled to participate in the defense
        of any such action or claim in reasonable cooperation with, and with the
        reasonable cooperation of, each Indemnified Party.

                (d) The Indemnified Party will have the right to employ its own
        counsel in any such action, but the fees and expenses of such counsel
        will be at the expense of such Indemnified Party unless (i) the
        employment of counsel by the Indemnified Party at the Indemnifying
        Party's expense has been authorized in writing by the Indemnifying
        Party, (ii) the Indemnifying Party has not in fact employed counsel to
        assume the defense of such action within a reasonable time after
        receiving notice of the commencement of the action or (iii) the named
        parties to any such action include the Indemnifying Party on the one
        hand and, on the other hand, the Indemnified Party, and representation
        of both parties by the same counsel would be inappropriate due to actual
        or potential differing interests between them (in which case if such
        Indemnified Party notifies the Indemnifying Party in writing that it
        elects to employ separate counsel at the expense of the Indemnifying
        Party, the Indemnifying Party shall not have the right to assume the
        defense of such action or proceeding on such Indemnified Party's
        behalf), in each of which cases the reasonable fees and expenses of
        counsel (including local counsel) will be at the expense of the
        Indemnifying Party, and all such fees and expenses will be reimbursed
        promptly as they are incurred. In the event that any expenses so paid by
        the Indemnifying Party are subsequently determined not to be required to
        be borne by the Indemnifying Party hereunder, the party which received
        such payment shall promptly refund to the

                                       6
<PAGE>
        Indemnifying Party the amount so paid by such Indemnifying Party.
        Notwithstanding the foregoing, in connection with any one action or
        separate but substantially similar or related actions in the same
        jurisdiction arising out of the same general allegations or
        circumstances, the Indemnifying Party shall not be liable for the fees
        and expenses of more than one counsel for all Seller Parties, more than
        one counsel for all Initial Purchaser Parties and more than one counsel
        for all Insurer Parties, as applicable.

                (e) The Indemnified Parties shall cooperate with the
        Indemnifying Parties in resolving any event which would give rise to an
        indemnity obligation pursuant to Section 5 hereof in the most efficient
        manner.

                (f) No settlement of any such claim or action shall be entered
        into without the consent of each Indemnified Party who is subject to
        such claim or action, on the one hand, and each Indemnifying Party who
        is subject to such claim or action, on the other hand; provided,
        however, that the consent of such Indemnified Party shall not be
        required if such settlement fully discharges, with prejudice against the
        plaintiff, the claim or action against such Indemnified Party.

                (g) Any failure by an Indemnified Party to comply with the
        provisions of this Section shall relieve the Indemnifying Party of
        liability only if such failure is materially prejudicial to any legal
        pleadings, grounds, defenses or remedies in respect thereof or the
        Indemnifying Party's financial liability hereunder, and then only to the
        extent of such prejudice.

        Section 7. CONTRIBUTION.

                (a) To provide for just and equitable contribution if the
        indemnification provided by the Insurer is determined to be unavailable
        for any Initial Purchaser Party (other than pursuant to Section 5 or 6
        of this Agreement), or if the indemnification provided by the Initial
        Purchaser is determined to be unavailable for any Insurer Party (other
        than pursuant to Section 5 or 6 of this Agreement), the Insurer and the
        Initial Purchaser shall contribute to the aggregate costs of liabilities
        arising from any breach of their respective representations and
        warranties set forth in this Agreement on the basis of the relative
        fault of all Insurer Parties and all Initial Purchaser Parties.

                (b) To provide for just and equitable contribution if the
        indemnification provided by the Insurer is determined to be unavailable
        for any Seller Party (other than pursuant to Section 5 or 6 of this
        Agreement), or if the indemnification provided by the Seller is
        determined to be unavailable for any Insurer Party (other than pursuant
        to Section 5 or 6 of this Agreement), the Insurer and the Seller shall
        contribute to the aggregate cost of liabilities arising from any breach
        of their respective representations and warranties set forth in this
        Agreement on the basis of the relative fault of all Insurer Parties and
        all Seller Parties.

                                       7
<PAGE>
                (c) To provide for just and equitable contribution if the
        indemnification provided by the Seller is determined to be unavailable
        for any Initial Purchaser Party (other than pursuant to Section 5 or 6
        of this Agreement), the Seller and the Initial Purchaser shall
        contribute to the aggregate cost of liabilities arising from any breach
        of their respective representations and warranties set forth in this
        Agreement on the basis of the relative fault of all Initial Purchaser
        Parties and all Seller Parties.

                (d) The relative fault of each Indemnifying Party, on the one
        hand, and of each Indemnified Party, on the other hand, shall be
        determined by reference to, among other things, whether the breach of,
        or alleged breach of, any of its representations and warranties set
        forth in Section 2, 3 or 4 of this Agreement relates to information
        supplied by, or action within the control of, the Indemnifying Party or
        the Indemnified Party and the Parties' relative intent, knowledge,
        access to information and opportunity to correct or prevent such breach.

                (e) The parties agree that the Insurer shall be solely
        responsible for the Insurer Information and for the Insurer Financial
        Statements, that the Initial Purchaser shall be solely responsible for
        the Initial Purchaser Information provided by the Initial Purchaser in
        writing for use in the Offering Memorandum and that the Seller shall be
        responsible for all other information in the Offering Memorandum.

                (f) No person guilty of fraudulent misrepresentation (within the
        meaning of Section 11(f) of the Act) shall be entitled to contribution
        from any person who was not guilty of such fraudulent misrepresentation.

                (g) The indemnity and contribution agreements contained in this
        Agreement shall remain operative and in full force and effect,
        regardless of (i) any investigation made by or on behalf of any Initial
        Purchaser Party, any Seller Party or any Insurer Party, (ii) the
        issuance of any Notes or the Policy or (iii) any termination of this
        Agreement.

                (h) Upon the incurrence of any Losses entitled to contribution
        hereunder, the contributor shall reimburse the party entitled to
        contribution promptly upon establishment by the party entitled to
        contribution to the contributor of the Losses incurred.

                (i) Notwithstanding anything in this Section 7 to the contrary,
        (i) the Insurer shall not be required to contribute an amount in excess
        of the amount by which the total of the insurance premiums that have
        been received by the Insurer under the Insurance Agreement exceeds the
        amount of any damages that the Insurer has otherwise been required to
        pay in respect of any breach by the Insurer of the representations and
        warranties contained in Section 2 hereof, and (ii) the Initial Purchaser
        shall not be required to contribute an amount in excess of the amount by
        which the total underwriting fees, discounts and commissions received by
        the Initial Purchaser in connection with the resale of the Notes exceeds
        the amount of any damages that the Initial Purchaser has otherwise

                                       8
<PAGE>
        been required to pay in respect of any breach by the Initial Purchaser
        of the representations and warranties contained in Section 3 hereof.

        Section 8. NOTICES. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.

     If to the Insurer:     MBIA Insurance Corporation
                            113 King Street
                            Armonk, NY  10504
                            Attention:  Insured Portfolio Management--Structured
                            Finance (IPM-SF)

     If to the Seller:      First Investors Financial Services, Inc.
                            675 Bering Drive, Suite 710
                            Houston, TX  77057
                            Attention:  Mr. Tommy Moore

     If to the Placement    Banc of America Securities LLC
     Agent:                 100 North Tryon Street
                            NC1-007-10-07
                            Charlotte, NC  28255
                            Attention:  Mr. Curt Sidden,
                            Global Asset-Backed Securitization

        Section 9. GOVERNING LAW, ETC. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws provisions. This Agreement may not be assigned by any
party without the express written consent of each other party. Amendments of
this Agreement shall be in writing signed by each party. This Agreement shall
not be effective until executed by each of the Insurer, the Seller and the
Initial Purchaser.

        Section 10. INSURANCE AGREEMENT; PURCHASE AGREEMENT; SALE AND ALLOCATION
AGREEMENT. This Agreement in no way limits or otherwise affects the
indemnification obligations of the Seller, if any, under (a) the Insurance
Agreement, (b) the Indenture, (c) the Purchase Agreement or (d) the Sale and
Allocation Agreement. To the extent that this Agreement conflicts with or does
not address the relative rights of the Initial Purchaser and Seller as between
themselves as set forth in the Purchase Agreement, the Purchase Agreement shall
govern.

        Section 11. LIMITATIONS. Nothing in this Agreement shall be construed as
a representation or undertaking by the Insurer concerning maintenance of the
rating currently assigned to its claims-paying ability by Moody's Investors
Service, Inc. ("Moody's") and/or

                                       9
<PAGE>
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P") or any other rating agency (collectively, the "Rating Agencies").

        Section 12. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall together constitute but one and the same
instrument.

        Section 13. NONPETITION. So long as the Insurance Agreement is in
effect, and for one year following its termination, none of the parties hereto
will file any involuntary petition or otherwise institute any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceeding under any federal or state bankruptcy or similar law against the
Issuer or the Depositor.

               [Remainder of this page intentionally left blank.]

                                       10
<PAGE>
        IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, all as of the date first above written.

                                          MBIA INSURANCE CORPORATION

                                          By ___________________________________
                                                    Assistant Secretary

                                          FIRST INVESTORS FINANCIAL SERVICES,
                                          INC.

                                          By ___________________________________
                                          Title ________________________________

                                          BANC OF AMERICA SECURITIES LLC

                                          By ___________________________________
                                          Title ________________________________

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