Document:

<PAGE>

                                                                   EXHIBIT 10.11

                                 SIXTH AMENDMENT
                                       TO
                   EIGHTH AMENDED AND RESTATED LOAN AGREEMENT

      THIS SIXTH AMENDMENT TO EIGHTH AMENDED AND RESTATED LOAN AGREEMENT (the
"Amendment") made and entered into as of the 30th day of June, 2004, by and
among DIRECT GENERAL FINANCIAL SERVICES, INC., a Tennessee corporation whose
address is 1281 Murfreesboro Road, Nashville, Tennessee 37217 (f/k/a Direct
Financial Services, Inc.) ("DGFS"), DIRECT GENERAL PREMIUM FINANCE COMPANY, a
Tennessee corporation whose address is 1281 Murfreesboro Road, Nashville,
Tennessee 37217 ("DGPFC"; DGFS and DGPFC may be referred to hereinafter either
individually or collectively as "Borrower"), DIRECT GENERAL CORPORATION, a
Tennessee corporation (formerly known as Direct Corporation) ("DGC"), DIRECT
GENERAL INSURANCE AGENCY, INC., a Tennessee corporation, DIRECT GENERAL
INSURANCE AGENCY, INC., an Arkansas corporation, DIRECT GENERAL INSURANCE
AGENCY, INC., a Mississippi corporation, DIRECT GENERAL INSURANCE AGENCY OF
LOUISIANA, INC., a Louisiana corporation, DIRECT GENERAL AGENCY OF KENTUCKY,
INC., a Kentucky corporation, DIRECT ADJUSTING COMPANY, INC., a Tennessee
corporation, DIRECT ADMINISTRATION, INC., a Tennessee corporation, DIRECT
GENERAL INSURANCE AGENCY, INC., a Texas corporation, DIRECT GENERAL CONSUMER
PRODUCTS, INC., a Tennessee corporation, FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under the
statutes of the United States of America, with offices at 165 Madison Avenue,
Memphis, Tennessee 38103 (in its agency capacity being herein referred to as
"Agent," and in its individual capacity as "FTBNA"), for itself and as agent for
the other Banks hereinafter named, HIBERNIA NATIONAL BANK, a national banking
association organized and existing under the laws of the United States of
America, with offices at 440 Third Street, Baton Rouge, Louisiana 70801
("Hibernia"), U.S. BANK NATIONAL ASSOCIATION, a national banking association
(f/k/a U.S. Bank, N. A., which was f/k/a Mercantile Bank National Association)
with offices located at 150 4th Avenue N., Nashville, Tennessee 37219 ("U.S.
Bank"), CAROLINA FIRST BANK, a state bank formed under the laws of the State of
South Carolina with offices located at 104 S. Main, Greenville, South Carolina
29601 ("Carolina First"), BANK ONE, NA (MAIN OFFICE - CHICAGO, ILLINOIS) a
national banking association with offices located at 451 Florida Street, Mail
Code LA2-2714, Baton Rouge, Louisiana 70801 ("Bank One"), REGIONS BANK, an
Alabama state banking association with offices located at 417 N. 20th Street,
Birmingham, Alabama 35203 ("Regions"), NATIONAL CITY BANK OF KENTUCKY, a
national banking association with offices located at 101 S. Fifth Street, 37th
Floor, Louisville, Kentucky 40202 ("National City Bank"), and FIFTH THIRD BANK,
N.A. (TENNESSEE), a national banking association organized and existing under
the laws of the United States of America, with offices located at 810 Crescent
Centre Drive, Suite 160, Franklin, Tennessee 37067 ("Fifth Third") (FTBNA,
Hibernia, U.S. Bank, Carolina First, Bank One, and Regions collectively, the
"Original Banks") (the Original Banks, National City Bank, and Fifth Third
collectively the "Banks," and each individually, a "Bank");

                                Recitals of Fact

      Pursuant to that certain Eighth Amended and Restated Loan Agreement dated
as of October 31, 2002 (the "Original Loan Agreement") among the Original Banks,
DGFS and the other parties named therein, the Original Banks agreed to make
loans and advances to DGFS on a revolving credit basis in an aggregate amount
not to exceed One Hundred Fifteen Million Dollars ($115,000,000.00), evidenced
by individual revolving credit notes to each Bank for the respective Facility
Commitments set out in the Original Loan Agreement, each with a termination date
of June 30, 2004 (collectively, the "October 2002 Notes").

      Pursuant to that certain First Amendment to Eighth Amended and Restated
Loan Agreement dated as of March 31, 2003 (the "First Amendment") among the
Original Banks, DGFS and the other parties named therein, the Facility
Commitment for Regions was increased to a maximum principal amount of
Twenty-Five Million Dollars ($25,000,000.00), and the total Commitment of the
Original Banks was increased to a maximum aggregate principal amount of One
Hundred Twenty-Five Million Dollars ($125,000,000.00).

      Pursuant to that certain Second Amendment to Eighth Amended and Restated
Loan Agreement dated as of May 28, 2003 (the "Second Amendment") among the
Original Banks, National City Bank, DGFS and the other parties named therein,
the Facility Commitment for Carolina First was increased to a maximum principal
amount of Fifteen Million Dollars ($15,000,000.00); the Facility Commitment for
Bank One was increased to a maximum principal amount of Thirty-Five Million
Dollars ($35,000,000.00); National City Bank was added as a Bank with a Facility
Commitment of a maximum principal amount of Fifteen Million Dollars
($15,000,000.00); and the total Commitment of the Banks was increased to a
maximum aggregate principal amount of One Hundred Sixty Million Dollars
($160,000,000.00).

      Pursuant to that certain Third Amendment to Eighth Amended and Restated
Loan Agreement dated as of June 30, 2003 (the "Third Amendment"") among the
Banks, DGFS and the other parties named therein, the Facility Commitment for
Hibernia was increased to a maximum principal amount of Twenty Million Dollars
($20,000,000.00); the Facility Commitment for U.S. Bank was

<PAGE>

increased to a maximum principal amount of Thirty Million Dollars
($30,000,000.00); Fifth Third was added as a Bank with a Facility Commitment of
a maximum principal amount of Ten Million Dollars ($10,000,000.00); and the
total Commitment of the Banks was increased to a maximum aggregate principal
amount of One Hundred Eighty Million Dollars ($180,000,000.00).

      Pursuant to that certain Fourth Amendment to Eighth Amended and Restated
Loan Agreement, dated on or about July 17, 2003 (the "Fourth Amendment") among
the Banks, DGFS and the other parties named therein, the Loan Agreement was
modified to allow DGC to pay dividends after the closing of its initial public
offering of stock.

      Pursuant to that certain Fifth Amendment to Eighth Amended and Restated
Loan Agreement, dated as of November 26, 2003 (the "Fifth Amendment"; the
Original Loan Agreement, as amended hereby, the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, and the Fifth Amendment
referred to hereinafter as the "Loan Agreement"), among the Banks, DGFS and the
other parties named therein, the Facility Commitment for FTBNA was increased to
a maximum principal amount of Forty Million Dollars ($40,000,000.00), the total
Commitment of the Banks was increased to a maximum aggregate principal amount of
One Hundred Ninety Million Dollars ($190,000,000.00), and other modifications
were made to the Loan Agreement.

      DGFS has now requested that the Banks add DGPFC as a Borrower under their
respective Facility Commitments and add DGPFC as a party to the Loan Agreement,
the Security Agreement as defined therein, and to other documents evidencing or
securing the Loan, and that the Banks extend the maturity date of the Loan as
hereinafter provided to June 30, 2007, and make other modifications to the Loan
Agreement, the Seventh Amended and Restated Security Agreement defined therein,
and any other security agreement or other loan or security document (the Loan
Agreement and all such security documents collectively herein referred to as the
"Security Documents"), and the Banks have agreed to this request. In connection
therewith, the Borrowers have contemporaneously herewith executed restated
individual revolving credit notes to each of the Banks in the amount of current
Facility Commitments (collectively, the "New Notes").

      The Borrower and the Banks now desire to modify certain terms of the Loan
as hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises as set forth in the
Recitals of Fact, the mutual covenants and agreements hereinafter set out, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is agreed by the parties as follows:

                                   Agreements

      1.    All capitalized terms used and not defined herein shall have the
meaning ascribed to them in the Loan Agreement.

      2.    To induce the Banks to enter into this Amendment, the Borrower does
hereby absolutely and unconditionally, certify, represent and warrant to the
Banks, and covenant and agree with the Banks, that:

      (a)   All representations and warranties made by the Borrower in the Loan
            Agreement, as amended hereby; in the Seventh Amended and Restated
            Security Agreement dated as of October 31, 2002, as thereafter
            amended from time to time, between the Borrower and Agent (the
            "Security Agreement"); and in all other loan documents (all of which
            are herein sometimes called the "Loan Documents"), are true, correct
            and complete in all material respects as of the date of this
            Amendment.

      (b)   As of the date hereof and with the execution of this Amendment,
            there are no existing events, circumstances or conditions which
            constitute, or would, with the giving of notice, lapse of time, or
            both, constitute Events of Default.

      (c)   There are no existing offsets, defenses or counterclaims to the
            obligations of the Borrowers as set forth in the New Notes, the
            Security Agreement, the Loan Agreement, or in any other Loan
            Document executed by the Borrower, in connection with the Loan.

      (d)   Neither Borrower has any existing claim for damages against the
            Banks arising out of or related to the Loan; and, if and to the
            extent (if any) that the Borrowers or any of them have or may have
            any such existing claim (whether known or unknown), the Borrower do
            each hereby forever release and discharge, in all respects, the
            Banks with respect to such claim.

      (e)   The Loan Documents, as amended by this Amendment, are valid,
            genuine, enforceable in accordance with their respective terms, and
            in full force and effect.

<PAGE>

      3.    The following definitions shall be added to Section 1.1 of the Loan
Agreement and shall be inserted where appropriate in correct alphabetical order:

            "Borrower" shall mean, collectively, Direct General Financial
      Services, Inc., a Tennessee corporation, and Direct General Premium
      Finance Company, a Tennessee corporation.

            "DGPFC" means Direct General Premium Finance Company, a Tennessee
      corporation.

            "Loan Termination Date" shall mean the earlier of (a) June 30, 2007,
      or in the event that the Banks and Borrower shall hereafter mutually agree
      in writing that the Loan and the Banks' commitments hereunder shall be
      extended to another date, and the Notes shall be modified or amended to
      reflect such extension, such other date mutually agreed upon between the
      Agent, the Banks and Borrower to which the Banks' commitments shall have
      been extended, or (b) the date as of which Borrower shall have terminated
      the Banks' commitment under the provisions of Section 2.5 hereof.

      4.    The definition of "Effective Date" shall be deleted in its entirety
and the following inserted in lieu thereof:

      "Effective Date" shall mean June 30, 2004.

      5.    The definition of "Allowable Investments," in Section 1.1 of the
Loan Agreement, as set forth in the Original Loan Agreement, is hereby deleted
in its entirety and the following is inserted in lieu thereof:

            "Allowable Investments" shall mean, as to Affiliated Insurers, (a)
      any investment in Borrower, another Affiliated Insurer, or in any Agency
      Subsidiary, subject to any required prior approval or consent of the
      applicable insurance regulatory authorities; (b) real estate owned and
      occupied by Affiliated Insurers or Related Persons; (c) investments in
      real estate owned by DGC; and (d) any investments expressly permitted by
      the insurance department regulations and/or statutes of any state where
      any Affiliated Insurer is domiciled.

      6.    The definition of "Twelfth Amended and Restated Guaranty Agreement,"
in Section 1.1 of the Loan Agreement, as set forth in the Fifth Amendment, is
hereby deleted in its entirety and the following is inserted in lieu thereof:

            "Thirteenth Amended and Restated Guaranty Agreement" shall mean the
      guaranty agreement executed by each of the Guarantors, dated as of June
      30, 2004, guaranteeing the payment of indebtednesses of the Borrower to
      the Banks not to exceed One Hundred Ninety Million Dollars
      ($190,000,000.00), plus interest and costs of collection.

All references in the Loan Agreement to any prior Amended and Restated Guaranty
Agreement shall, except as the context may otherwise require, be deemed to
constitute references to the Thirteenth Amended and Restated Guaranty Agreement.

      7.    The definition of "Seventh Amended and Restated Pledge and Security
Agreement," in Section 1.1 of the Loan Agreement, as set forth in the Fifth
Amendment, is hereby deleted in its entirety and the following is inserted in
lieu thereof:

            "Seventh Amended and Restated Pledge and Security Agreement" means
      the Seventh Amended and Restated Pledge and Security Agreement dated
      October 31, 2002, as amended by that First Amendment to Seventh Amended
      and Restated Pledge and Security Agreement dated as of March 31, 2003, as
      amended by that Second Amendment to Seventh Amended and Restated Pledge
      and Security Agreement dated as of May 28, 2003, as amended by that Third
      Amendment to Seventh Amended and Restated Pledge and Security Agreement
      dated as of June 30, 2003, as amended by that Fourth Amendment to Seventh
      Amended and Restated Pledge and Security Agreement dated as of November
      26, 2003, as amended by that Fifth Amendment to Seventh Amended and
      Restated Pledge and Security Agreement dated as of June 30, 2004, and as
      the same may be further modified or amended, pursuant to which DGC has
      granted to Agent for the benefit of the Banks a second lien security
      interest in all of the stock in the Agency Subsidiaries and Affiliated
      Insurers, as security for its obligations under the Thirteenth Amended and
      Restated Guaranty Agreement.

      8.    The definition of "Seventh Amended and Restated Security Agreement,"
in Section 1.1 of the Loan Agreement, as set forth in the Fifth Amendment, is
hereby deleted in its entirety and the following is inserted in lieu thereof:

            "Seventh Amended and Restated Security Agreement" means the Seventh
      Amended and Restated Security Agreement dated October 31, 2002, as amended
      by that First Amendment to Seventh Amended and Restated Security Agreement
      dated as of March 31, 2003, as amended by that Second Amendment to Seventh
      Amended and Restated Security Agreement dated as of May 28, 2003, as
      amended by that Third Amendment to Seventh Amended and

<PAGE>

      Restated Security Agreement dated as of June 30, 2003, as amended by that
      Fourth Amendment to Seventh Amended and Restated Security Agreement, dated
      as of November 26, 2003, as amended by that Fifth Amendment to Seventh
      Amended and Restated Security agreement, dated as of June 30, 2004, and as
      the same may be further modified or amended, pursuant to which the
      Borrower has assigned and pledged Receivables and other contractual rights
      to the Agent for the benefit of the Banks.

        9. Section 2.4(b) of the Loan Agreement, as set forth in the Original
Loan Agreement, is hereby deleted in its entirety and the following is inserted
in lieu thereof:

            (b) On the Effective Date, the Borrower agrees to pay to the Agent a
      commitment fee in the amount of Seven Hundred Twelve Thousand Five Hundred
      Dollars ($712,500.00) [three hundred seventy-five-thousandth percent
      (0.375%) of total Facility Commitments (the "Commitment Fee")], in
      consideration of the Banks' agreement to make funds available to Borrower
      under the terms and provisions hereof from the Effective Date until the
      Loan Termination Date specified in Section 1.1 hereof. Borrower agrees
      that the Commitment Fee is fair and reasonable considering the condition
      of the money market, the creditworthiness of the Borrower, the interest
      rate to be paid, and the nature of the security for the Loan. In the event
      that Borrower and Banks shall hereafter mutually agree to extend the term
      of the Banks' commitments hereunder, they may also agree at that time as
      to an additional commitment fee to be paid for such further commitment by
      the Banks, but not to exceed the maximum permitted by applicable law.

      10.   Section 2.4(c) of the Loan Agreement, as set forth in the Original
Loan Agreement, is hereby deleted in its entirety and the following is inserted
in lieu thereof:

            (c) On the Effective Date, the Borrower agrees to pay to the Agent
      an Agent's Fee for its services in obtaining the commitment from the other
      Banks and servicing, administering and verifying the Loan and the
      collateral in accordance with a separate fee letter between the Borrower
      and the Agent.

      11.   Section 6.11 of the Loan Agreement, as set forth in the Original
Loan Agreement, as amended, is hereby deleted in its entirety and the following
is inserted in lieu thereof:

            6.11 MINIMUM CONSOLIDATED NET INCOME. Maintain, beginning September
      30, 2004, as to DGC on a consolidated basis, on a rolling four (4) quarter
      basis, as of the end of each fiscal quarter net income after taxes (GAAP
      basis) of at least Thirty Million Dollars ($30,000,000.00).

      12.   Section 6.13 of the Loan Agreement, as set forth in the Original
Loan Agreement, as amended, is hereby deleted in its entirety and the following
is inserted in lieu thereof:

            6.13 MINIMUM TANGIBLE NET WORTH. Maintain at all times beginning on
      the Effective Date a Tangible Net Worth (as defined in Section 1) of not
      less than (a) as to Borrower, Nine Million Five Hundred Thousand Dollars
      ($9,500,000.00); and (b) as to DGC, One Hundred Sixty Million Dollars
      ($160,000,000.00), and commencing with the fiscal year beginning January
      1, 2005, increased by twenty-five percent (25%) of all future net income
      after taxes, measured at the end of each fiscal quarter.

      13.   Section 7.4 of the Loan Agreement, as set forth in the Original Loan
Agreement, is hereby deleted in its entirety and the following is inserted in
lieu thereof:

            7.4 SALE OF ASSETS. Sell, lease, transfer or dispose of all or a
      substantial part of its assets, or permit any Affiliated Insurer to sell,
      lease, transfer or dispose of all or a substantial part of its assets,
      except for sales in the ordinary course of business and sales or leases of
      DIC-owned real estate, computers or other fixed assets, and except for the
      sale of the Direct Life Insurance Company shell subsidiary.

      14.   Section 7.7 of the Loan Agreement, as set forth in the Original Loan
Agreement, is hereby deleted in its entirety and the following is inserted in
lieu thereof:

            7.7 NEW BUSINESS. Directly or indirectly whether in its own name or
      through one or more subsidiaries (a) expand, acquire or enter into any
      business other than (i) the business of DGC and its subsidiaries providing
      or administering any type of insurance, related financial products, or
      related business (such as auto club) and (ii) the Agency Subsidiaries
      providing or offering products and services not related to the insurance
      business (such as payday loans, consumer loans, other consumer finance
      products, personal communication equipment, tax filing

<PAGE>

      services, money transfer services) provided that Borrower, DGC and the
      Agency Subsidiary will not, in the aggregate, invest more than Twenty
      Million Dollars ($20,000,000.00), either directly or as joint venturers,
      in such activities; or (b) enter into any management contract whereby the
      effective management or control of DGC or any of its subsidiaries is
      delegated to third parties, without the prior written consent of the
      Required Banks.

      15.   Section 8.6 to the Loan Agreement, as set forth in the Fifth
Amendment, is hereby deleted in its entirety and the following is inserted in
lieu thereof:

            8.6 MINIMUM CAPITAL SURPLUS OF AFFILIATED INSURERS. If the
      Affiliated Insurers shall, at any time, have a minimum capital surplus
      (including surplus notes) of less than One Hundred Twenty-Five Million
      Dollars ($125,000,000.00) on a combined GAAP basis.

      16.   Exhibit "C" to the Loan Agreement, as set forth in the Original Loan
Agreement, is hereby deleted in its entirety, and the schedule attached hereto
marked REVISED EXHIBIT "C" shall be inserted in lieu thereof.

      17.   Exhibit "E" to the Loan Agreement, as set forth in the Original Loan
Agreement, as amended, is hereby deleted in its entirety, and the schedule
attached hereto marked REVISED EXHIBIT "E" shall be inserted in lieu thereof.

      18.   Exhibit "H" to the Loan Agreement, as set forth in the Original Loan
Agreement, as amended, is hereby deleted in its entirety, and the schedule
attached hereto marked REVISED EXHIBIT "H" shall be inserted in lieu thereof.

      19.   All terms and provisions of the Loan Agreement, as heretofore
amended, which are inconsistent with the provisions of this Amendment are hereby
modified and amended to conform hereto; and, as so modified and amended, the
Loan Agreement is hereby ratified, approved and confirmed. Except as otherwise
may be expressly provided herein, this Amendment shall become effective as of
the date set forth in the initial paragraph hereof.

      20.   All references in all Loan Documents (including, but not limited to,
the New Notes, the Security Agreement, and the Loan Agreement) to the "Loan
Agreement" shall, except as the context may otherwise require, be deemed to
constitute references to the Loan Agreement as amended hereby. All references in
the Loan Documents (including, but not limited to, the Security Agreement and
the Loan Agreement) to the "Notes" shall, except as the context may otherwise
require, be deemed to constitute references to the New Notes of even date
herewith.

                        [SEPARATE SIGNATURE PAGES FOLLOW]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
          SIXTH AMENDMENT TO EIGHTH AMENDED AND RESTATED LOAN AGREEMENT

      IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Banks and the Agent
have caused this Agreement to be executed by their duly authorized officers, all
as of the day and year first above written.

                            BORROWERS:

                            DIRECT GENERAL FINANCIAL SERVICES, INC., a Tennessee
                            corporation

                            By: /s/ Brian G. Moore
                                ------------------------------------------------
                            Name: Brian G. Moore
                            Title: President

                            DIRECT GENERAL PREMIUM FINANCE COMPANY, a Tennessee
                            corporation

                            By: /s/ Brian G. Moore
                                ------------------------------------------------
                            Name: Brian G. Moore
                            Title: President

                            GUARANTORS:

                            DIRECT GENERAL CORPORATION, a Tennessee corporation

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

                            DIRECT GENERAL INSURANCE AGENCY, INC., a Tennessee
                            corporation

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

                            DIRECT GENERAL INSURANCE AGENCY, INC., an Arkansas
                            corporation

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

                           [SIGNATURE PAGE CONTINUED]

<PAGE>

                            DIRECT GENERAL INSURANCE AGENCY, INC., a Mississippi
                            corporation

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

                            DIRECT GENERAL INSURANCE AGENCY OF LOUISIANA, INC.,
                            a Louisiana corporation

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

                            DIRECT GENERAL AGENCY OF KENTUCKY, INC., a Kentucky
                            corporation

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

                            DIRECT ADJUSTING COMPANY, INC., a Tennessee
                            corporation

                            By: /s/ J. Todd Hagely
                                ------------------------------------------------
                            Name: J. Todd Hagely
                            Title: Treasurer

                            DIRECT ADMINISTRATION, INC., a Tennessee corporation

                            By: /s/ J. Todd Hagely
                               -------------------------------------------------
                            Name: J. Todd Hagely
                            Title: Treasurer

                            DIRECT GENERAL INSURANCE AGENCY, INC., a Texas
                            corporation

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

                            DIRECT GENERAL CONSUMER PRODUCTS, INC., a Tennessee
                            corporation

                            By: /s/ J. Todd Hagely
                               -------------------------------------------------
                            Name: J. Todd Hagely
                            Title: Treasurer

                           [SIGNATURE PAGE CONTINUED]

<PAGE>

                                     BANKS:

                            FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                            By: /s/  Sam  Jenkins
                                ------------------------------------------------
                            Title: SVP

                            HIBERNIA NATIONAL BANK

                            By: /s/ Janet Olson Rack
                                ------------------------------------------------
                            Title: Senior Vice President

                            U.S. BANK NATIONAL ASSOCIATION

                            By: /s/ Russell S. Rogers
                               -------------------------------------------------
                            Title: Vice President

                            CAROLINA FIRST BANK

                            By:  /s/ Charles Chamberlain
                            Title: Executive Vice President

                            BANK ONE, NA

                            (Main Office - Chicago, Illinois)

                            By: /s/ Robert D. Bond
                               -------------------------------------------------
                            Title: First Vice President

                            REGIONS BANK

                            By: /s/ Sam Prudhomme
                               -------------------------------------------------
                            Title: Assistant Vice President

                            NATIONAL CITY BANK OF KENTUCKY

                            By: /s/ Kevin C. Anderson
                               -------------------------------------------------
                            Title: SVP

                            FIFTH THIRD BANK, N.A. (TENNESSEE)

                            By: /s/ David Hicks
                               -------------------------------------------------
                            Title: VP

                           [SIGNATURE PAGE CONTINUED]

<PAGE>

                            AGENT:

                            FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                            By: /s/ Sam Jenkins
                               -------------------------------------------------
                            Title: SVP

<PAGE>

                               REVISED EXHIBIT "C"

                            FORM OF PROMISSORY NOTES

                                 [See Attached]

<PAGE>

                               REVISED EXHIBIT "E"

                           BORROWING BASE CERTIFICATE

                    AS OF ____ DAY OF _______________, 20___

<TABLE>
<S>                                                                       <C>
TOTAL RECEIVABLES FROM POLICYHOLDERS FOR PRIOR REPORT                     $_______________
ADD:

        New Contracts                                                     $_______________
LESS:

        Cash Payments                                                    ($_______________)
                                                                         -----------------
                      TOTAL RECEIVABLES

                             FROM POLICYHOLDERS FOR THIS REPORT:          $_______________

LESS INELIGIBLE RECEIVABLES:
        Amounts Insured with Insurance Companies with an A.M. Best
        Rating not in compliance with Section 8.13 of the Loan
        Agreement                                                        ($_______________)
        Past Due Receivables (See clause (a)(iv) of definition of
        Eligible Receivables.)                                           ($_______________)
        Receivables in Ineligible States                                 ($_______________)
        Unearned Interest, Finance Charges or Service Charges            ($_______________)
PLUS RECEIVABLES FROM INSURERS QUALIFYING UNDER CLAUSE (b) OF
DEFINITION OF "ELIGIBLE RECEIVABLES"                                      $_______________
                                                                         -----------------
                  SUBTOTAL: Eligible Receivables (See Section 1.1)        $_______________
TIMES ADVANCE RATE                                                              x 85%
                                                                         -----------------
                                    TOTAL AVAILABILITY                    $_______________
LESS LOAN OUTSTANDING  (not to exceed $190,000,000.00)                   ($_______________)
                                                                         =================

                                    NET LOAN AVAILABILITY                 $_______________
</TABLE>

      The undersigned each certifies and warrants that the foregoing Borrowing
Base Certificate is true and accurate, based upon the definitions set out in
Sections 1.1 and 1.2 of the Loan Agreement.

      DATED this ____ day of ___________________, 20__.

                                    DIRECT GENERAL FINANCIAL SERVICES INC.

                                    By: _______________________________________
                                    Title: ____________________________________

                                    DIRECT GENERAL PREMIUM FINANCE COMPANY

                                    By: _______________________________________
                                    Title: ____________________________________

<PAGE>

                               REVISED EXHIBIT "H"

                             COMPLIANCE CERTIFICATE

      The undersigned, the duly authorized officers of DIRECT GENERAL FINANCIAL
SERVICES INC., a Tennessee corporation, and DIRECT GENERAL CORPORATION, a
Tennessee corporation [referred to respectively as "Borrower" and "DGC"), in
that certain Eighth Amended and Restated Loan Agreement dated as of September
30, 2002, as subsequently amended (the "Loan Agreement"), among Borrower,
various guarantors therein named, First Tennessee Bank National Association,
Memphis, Tennessee, as agent and as bank ("Agent"), and the Banks named therein
("Banks"), certifies to said Agent and Banks, in accordance with the terms and
provisions of said Loan Agreement, as follows:

      1.    All of the representations and warranties set forth in Section 5 of
the Loan Agreement are and remain true and correct on and as of the date of this
Certificate with the same effect as though such representations and warranties
had been made on and as of this date.

      2.    As of the date hereof, the Borrower and DGC are in full compliance
with all of the terms and provisions set forth in the Loan Agreement and all of
the instruments and documents executed in connection therewith, and no Event of
Default, as specified in Section 8 of the Loan Agreement, nor any event which,
upon notice, lapse of time or both, would constitute an Event of Default, has
occurred or is continuing.

      3.    As used herein, the term "Affiliated Insurers" shall have the
meaning ascribed thereto in the Loan Agreement.

      4.    As of _________________, 20__ (the date of the most recent financial
statement furnished by Borrower and Affiliated Insurers to Agent), the ratios
listed in the Loan Agreement are as follows:

<TABLE>
<CAPTION>
                                                                   ACTUAL           COVENANT
                                                                ------------  ---------------------
<S>                  <C>                                        <C>           <C>
AFFIRMATIVE COVENANTS (AS TO BORROWER):
Section 6.13         Tangible Net Worth                         ____________  > or = $9,500,000
Section 6.14         Ratio of Eligible Receivables to Debt      ____________  > or = 1.05:1.00
Section 6.15         Ratio of Unearned Premiums to Loan Amount  ____________  > or = 1.1:1.0

AFFIRMATIVE COVENANTS (AS TO DGC):
Section 6.12         Loan Amount to Net Worth                   ____________  <1.75:1.00
Section 6.13         Tangible Net Worth                         ____________  > or = $160,000,000**
Section 6.16         Debt Service Coverage                      ____________  > or = 1.50:1.00
</TABLE>

<PAGE>

EVENTS OF DEFAULT AS MEASURED ON AFFILIATED INSURERS:
<TABLE>
<S>                  <C>                            <C>           <C>
Section 8.4          Capital Adequacy Ratio         ____________  Event of Default if
                                                                  > or = 4.00 to 1.00
Section 8.5          Liquidity Ratio                ____________  Event of Default if
                                                                  <1.0:1.0
Section 8.6          Minimum Capital Surplus        ____________  Event of Default if
                                                                  <$125,000,000.00
Section 8.8          Risk Based Capital*            ____________  Event of Default if
                                                                  <250%
</TABLE>

FUNDED DEBT / EBITDA CALCULATION:
-  Funded Debt / EBITDA Ratio: (Choose one)
_______        Greater than 2.0 to 1.0    (Actual Ratio:_________________)
_______        Less than 2.0 to 1.0       (Actual Ratio:_________________)

* Measured Annually

** Adjusted as provided in Section 6.13.

      The undersigned certify and warrant that the foregoing ratios have been
computed from the figures contained in Borrower's, DGC's and Affiliated
Insurers' financial statement of the date hereinabove indicated, based upon the
definitions set out in Sections 1.1, 1.2 and 1.3 of the Loan Agreement.

      DATED this ____ day of ______________________, 20__.

                                    DIRECT GENERAL FINANCIAL SERVICES INC.

                                    By: ________________________________________
                                    Title: _____________________________________

                                    DIRECT GENERAL PREMIUM FINANCE COMPANY

                                    By: ________________________________________
                                    Title: _____________________________________

                                    DIRECT GENERAL CORPORATION

                                    By: ________________________________________
                                    Title: _____________________________________

<PAGE>

                                SEVENTH AMENDMENT
                                       TO
                   EIGHTH AMENDED AND RESTATED LOAN AGREEMENT

      THIS SEVENTH AMENDMENT TO EIGHTH AMENDED AND RESTATED LOAN AGREEMENT (the
"Amendment") made and entered into as of the 3rd day of December, 2004, by and
among DIRECT GENERAL FINANCIAL SERVICES, INC., a Tennessee corporation whose
address is 1281 Murfreesboro Road, Nashville, Tennessee 37217 (f/k/a Direct
Financial Services, Inc.) ("DGFS"), DIRECT GENERAL PREMIUM FINANCE COMPANY, a
Tennessee corporation whose address is 1281 Murfreesboro Road, Nashville,
Tennessee 37217 ("DGPFC"; DGFS and DGPFC may be referred to hereinafter either
individually or collectively as "Borrower"), DIRECT GENERAL CORPORATION, a
Tennessee corporation (formerly known as Direct Corporation) ("DGC"), DIRECT
GENERAL INSURANCE AGENCY, INC., a Tennessee corporation, DIRECT GENERAL
INSURANCE AGENCY, INC., an Arkansas corporation, DIRECT GENERAL INSURANCE
AGENCY, INC., a Mississippi corporation, DIRECT GENERAL INSURANCE AGENCY OF
LOUISIANA, INC., a Louisiana corporation, DIRECT GENERAL AGENCY OF KENTUCKY,
INC., a Kentucky corporation, DIRECT ADJUSTING COMPANY, INC., a Tennessee
corporation, DIRECT ADMINISTRATION, INC., a Tennessee corporation, DIRECT
GENERAL INSURANCE AGENCY, INC., a Texas corporation, DIRECT GENERAL CONSUMER
PRODUCTS, INC., a Tennessee corporation, FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under the
statutes of the United States of America, with offices at 165 Madison Avenue,
Memphis, Tennessee 38103 (in its agency capacity being herein referred to as
"Agent," and in its individual capacity as "FTBNA"), for itself and as agent for
the other Banks hereinafter named, HIBERNIA NATIONAL BANK, a national banking
association organized and existing under the laws of the United States of
America, with offices at 440 Third Street, Baton Rouge, Louisiana 70801
("Hibernia"), U.S. BANK NATIONAL ASSOCIATION, a national banking association
(f/k/a U.S. Bank, N. A., which was f/k/a Mercantile Bank National Association)
with offices located at 150 4th Avenue N., Nashville, Tennessee 37219 ("U.S.
Bank"), CAROLINA FIRST BANK, a state bank formed under the laws of the State of
South Carolina with offices located at 104 S. Main, Greenville, South Carolina
29601 ("Carolina First"), JPMORGAN CHASE BANK, N.A. (successor by merger to Bank
One, NA (Main Office Chicago) a national banking association with offices
located at 451 Florida Street, Mail Code LA2-2714, Baton Rouge, Louisiana 70801
("JPMorgan"), REGIONS BANK, an Alabama state banking association with offices
located at 417 N. 20th Street, Birmingham, Alabama 35203 ("Regions"), NATIONAL
CITY BANK OF KENTUCKY, a national banking association with offices located at
101 S. Fifth Street, 37th Floor, Louisville, Kentucky 40202 ("National City
Bank"), and FIFTH THIRD BANK, N.A. (TENNESSEE), a national banking association
organized and existing under the laws of the United States of America, with
offices located at 810 Crescent Centre Drive, Suite 160, Franklin, Tennessee
37067 ("Fifth Third") (FTBNA, Hibernia, U.S. Bank, Carolina First, JPMorgan, and
Regions collectively, the "Original Banks") (the Original Banks, National City
Bank, and Fifth Third collectively the "Banks," and each individually, a
"Bank");

                                Recitals of Fact

      Pursuant to that certain Eighth Amended and Restated Loan Agreement dated
as of October 31, 2002 (the "Original Loan Agreement") among the Original Banks,
DGFS and the other parties named therein, the Original Banks agreed to make
loans and advances to DGFS on a revolving credit basis in an aggregate amount
not to exceed One Hundred Fifteen Million Dollars ($115,000,000.00), evidenced
by individual revolving credit notes to each Bank for the respective Facility
Commitments set out in the Original Loan Agreement, each with a termination date
of June 30, 2004 (collectively, the "October 2002 Notes").

      Pursuant to that certain First Amendment to Eighth Amended and Restated
Loan Agreement dated as of March 31, 2003 (the "First Amendment") among the
Original Banks, DGFS and the other parties named therein, the Facility
Commitment for Regions was increased to a maximum principal amount of
Twenty-Five Million Dollars ($25,000,000.00), and the total Commitment of the
Original Banks was increased to a maximum aggregate principal amount of One
Hundred Twenty-Five Million Dollars ($125,000,000.00).

      Pursuant to that certain Second Amendment to Eighth Amended and Restated
Loan Agreement dated as of May 28, 2003 (the "Second Amendment") among the
Original Banks, National City Bank, DGFS and the other parties named therein,
the Facility Commitment for Carolina First was increased to a maximum principal
amount of Fifteen Million Dollars ($15,000,000.00); the Facility Commitment for
Bank One was increased to a maximum principal amount of Thirty-Five Million
Dollars ($35,000,000.00); National City Bank was added as a Bank with a Facility
Commitment of a maximum principal amount of Fifteen Million Dollars
($15,000,000.00); and the total Commitment of the Banks was increased to a
maximum aggregate principal amount of One Hundred Sixty Million Dollars
($160,000,000.00).

      Pursuant to that certain Third Amendment to Eighth Amended and Restated
Loan Agreement dated as of June 30, 2003 (the "Third Amendment"") among the
Banks, DGFS and the other parties named therein, the Facility Commitment for
Hibernia was

<PAGE>

increased to a maximum principal amount of Twenty Million Dollars
($20,000,000.00); the Facility Commitment for U.S. Bank was increased to a
maximum principal amount of Thirty Million Dollars ($30,000,000.00); Fifth Third
was added as a Bank with a Facility Commitment of a maximum principal amount of
Ten Million Dollars ($10,000,000.00); and the total Commitment of the Banks was
increased to a maximum aggregate principal amount of One Hundred Eighty Million
Dollars ($180,000,000.00).

      Pursuant to that certain Fourth Amendment to Eighth Amended and Restated
Loan Agreement, dated on or about July 17, 2003 (the "Fourth Amendment") among
the Banks, DGFS and the other parties named therein, the Loan Agreement was
modified to allow DGC to pay dividends after the closing of its initial public
offering of stock.

      Pursuant to that certain Fifth Amendment to Eighth Amended and Restated
Loan Agreement, dated as of November 26, 2003 (the "Fifth Amendment") among the
Banks, DGFS and the other parties named therein, the Facility Commitment for
FTBNA was increased to a maximum principal amount of Forty Million Dollars
($40,000,000.00), the total Commitment of the Banks was increased to a maximum
aggregate principal amount of One Hundred Ninety Million Dollars
($190,000,000.00), and other modifications were made to the Loan Agreement.

      Pursuant to that certain Sixth Amendment to Eighth Amended and Restated
Loan Agreement, dated as of June 30, 2004 (the "Sixth Amendment"; the Original
Loan Agreement, as amended hereby, and by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, and
the Sixth Amendment, referred to hereinafter as the "Loan Agreement"), among the
Banks, DGFS, DGPFC and other parties named therein, DGPFC was added as a
Borrower under the Banks' respective Facility Commitments, DGPFC was added as a
party to the Loan Agreement, the Seventh Amended and Restated Security Agreement
as defined therein, and to other documents evidencing or securing the Loan (the
Loan Agreement and all security documents collectively referred to as the
"Security Documents"), the Banks extended the maturity date of the Loan to June
30, 2007, and other modifications were made to the Loan Agreement, the Seventh
Amended and Restated Security Agreement defined therein and certain other loan
and security documents.

      DGFS and DGPFC have now requested that the Banks make available a Swing
Line Loan up to an amount of Thirty Million Dollars ($30,000,000.00), as part of
the credit facility hereunder, and the parties have agreed to make such advances
available.

      The Borrower and the Banks now desire to modify certain terms of the Loan
as hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises as set forth in the
Recitals of Fact, the mutual covenants and agreements hereinafter set out, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is agreed by the parties as follows:

                                   Agreements

      1.    All capitalized terms used and not defined herein shall have the
meaning ascribed to them in the Loan Agreement.

      2.    To induce the Banks to enter into this Amendment, the Borrower does
hereby absolutely and unconditionally, certify, represent and warrant to the
Banks, and covenant and agree with the Banks, that:

            (a) All representations and warranties made by the Borrower in the
      Loan Agreement, as amended hereby; in the Seventh Amended and Restated
      Security Agreement dated as of October 31, 2002, as thereafter amended
      from time to time, between the Borrower and Agent (the "Security
      Agreement"); and in all other loan documents (all of which are herein
      sometimes called the "Loan Documents"), are true, correct and complete in
      all material respects as of the date of this Amendment.

            (b) As of the date hereof and with the execution of this Amendment,
      there are no existing events, circumstances or conditions which
      constitute, or would, with the giving of notice, lapse of time, or both,
      constitute Events of Default.

            (c) There are no existing offsets, defenses or counterclaims to the
      obligations of the Borrowers as set forth in the New Notes, the Security
      Agreement, the Loan Agreement, or in any other Loan Document executed by
      the Borrower, in connection with the Loan.

            (d) Neither Borrower has any existing claim for damages against the
      Banks arising out of or related to the Loan; and, if and to the extent (if
      any) that the Borrowers or any of them have or may have any such existing
      claim (whether

<PAGE>

      known or unknown), the Borrower do each hereby forever release and
      discharge, in all respects, the Banks with respect to such claim.

            (e) The Loan Documents, as amended by this Amendment, are valid,
      genuine, enforceable in accordance with their respective terms, and in
      full force and effect.

      3.    The following definitions shall be added to Section 1.1 of the Loan
Agreement and shall be inserted where appropriate in correct alphabetical order:

            "Notice of Conversion/Continuation" has the meaning ascribed to it
      in Section 2.3(c).

            "Notice of Revolving Credit Advance" has the meaning ascribed to it
      in Section 2.2(a).

            "Notice of Swing Line Advance" has the meaning ascribed to it in
      Section 2.2(d)(ii).

            "Revolving Credit Advances" means of principal on the Revolving Loan
      by the Banks under the terms of this Loan Agreement to Borrower pursuant
      to Section 2.1.

            "Revolving Loan Commitment" means (a) as to any Bank, the commitment
      of such Bank to make Revolving Credit Advances as set forth on Exhibit B
      and (b) as to all Banks, the aggregate commitment of all Banks to make
      Revolving Credit Advances, which aggregate commitment shall be One Hundred
      Ninety Million Dollars ($190,000,000) on the Closing Date, as such amount
      may be adjusted, if at all, from time to time in accordance with this
      Agreement.

            "Revolving Loan" means aggregate of Revolving Credit Advances
      outstanding to the Borrower.

            "Swing Line Advance" has the meaning ascribed to it in Section
      2.2(d)(i).

            "Swing Line Availability" has the meaning ascribed to it in Section
      2.2(d)(i).

            "Swing Line Commitment" means, as to the Swing Line Lender, the
      commitment of the Swing Line Lender to make Swing Line Advances as set
      forth on EXHIBIT "B," which commitment constitutes a subfacility of the
      Facility Commitment of the Swing Line Lender.

            "Swing Line Lender" means First Tennessee Bank National Association,
      or a Bank which may succeed to its rights and obligations as Swing Line
      Lender pursuant to the terms of this Agreement.

            "Swing Line Loan" means, as the context may require, at any time,
      the aggregate amount of Swing Line Advances outstanding to Borrower
      pursuant to Section 2.2(d).

            "Swing Line Note" means the promissory note executed by the Borrower
      to Swing Line Lender which evidences Swing Line Commitment, substantially
      in the form attached hereto as EXHIBIT "C," as such note may be modified,
      renewed or extended from time to time; and any other note or notes
      executed at any time to evidence the indebtedness of Borrower to the Swing
      Line Lender under this Loan Agreement, in whole or in part, and any
      renewals, modifications and extensions thereof, in whole or in part.

      4.    The definition of "Effective Date," in Section 1.1 of the Loan
Agreement, as set forth in the Sixth Amendment, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

      "Effective Date" shall mean December 3rd, 2004.

      5.    The definition of "Affiliated Life Insurers," in Section 1.1 of the
Loan Agreement, as set forth in the Original Loan Agreement, is hereby deleted
and the following is inserted in lieu thereof:

            "Affiliated Life Insurers" means Direct Life Insurance Company, a
      Georgia corporation, and any other life insurance company currently or
      hereafter wholly owned, directly or indirectly, by DGC.

<PAGE>

      6.    The definition of "Affiliated P&C Insurers," in Section 1.1 of the
Loan Agreement, as set forth in the Original Loan Agreement, is hereby deleted
and the following is inserted in lieu thereof:

            "Affiliated P&C Insurers" means DIC, DGIC, Direct General Insurance
      Company of Mississippi, a Mississippi corporation, Direct General
      Insurance Company of Louisiana, a Louisiana corporation and any other
      property and casualty insurance company currently or hereafter wholly
      owned, directly or indirectly, by DGC.

      7.    The definition of "Agency Subsidiaries," in Section 1.1 of the Loan
Agreement, as set forth in the Original Loan Agreement, is hereby deleted and
the following is inserted in lieu thereof:

            "Agency Subsidiaries" means, collectively, Direct General Insurance
      Agency, Inc., a Tennessee corporation, Direct General Insurance Agency,
      Inc., an Arkansas corporation, Direct General Insurance Agency, Inc., a
      Mississippi corporation, Direct General Insurance Agency of Louisiana,
      Inc., a Louisiana corporation, Direct General Agency of Kentucky, Inc., a
      Kentucky corporation, Direct Adjusting Company, Inc., a Tennessee
      corporation, Direct Administration, Inc., a Tennessee corporation, Direct
      General Insurance Agency, Inc., a Texas corporation, and Direct General
      Consumer Products, Inc., a Tennessee corporation, or any other such
      non-insurance subsidiaries currently or hereafter wholly owned, directly
      or indirectly, by DGC

      8.    The definition of "Advances," in Section 1.1 of the Loan Agreement,
as set forth in the Original Loan Agreement, is hereby deleted and the following
is inserted in lieu thereof:

            "Advances" means any Revolving Credit Advance or Swing Line Advance,
      as the context may require.

      9.    The definition of "Banks," in Section 1.1 of the Loan Agreement, as
set forth in the Third Amendment, is hereby deleted in its entirety and the
following is inserted in lieu thereof:

            "Banks" means, collectively, FTBNA (acting for itself and not as
      Agent), Hibernia, U.S. Bank, Regions, Carolina First, National City Bank,
      Fifth Third, and JPMorgan, and any successor or assignee which at any time
      is a holder of a Note.

      10.   The definition of "Borrowing Base," in Section 1.1 of the Loan
Agreement, as set forth in the Original Loan Agreement, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            "Borrowing Base" is the limitation on the aggregate Loan
      indebtedness which may be outstanding at any time during the term of this
      Agreement, which shall be eighty-five percent (85%) of Eligible
      Receivables.

      11.   The definition of "DGC Banks," in Section 1.1 of the Loan Agreement,
as set forth in the Original Loan Agreement, is hereby deleted in its entirety
and the following is inserted in lieu thereof:

            "DGC Banks" means, collectively, FTBNA, National City Bank, and
      JPMorgan.

      12.   The definition of "DGC Loan Agreement," in Section 1.1 of the Loan
Agreement, as set forth in the First Amendment, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            "DGC Loan Agreement" means that certain Loan Agreement dated as of
      December 3rd, 2004, among the DGC Banks, DGC and the Borrower, as the same
      may be amended, modified, extended and/or restated from time to time.

      13.   The definition of "Facility Commitment," in Section 1.1 of the Loan
Agreement, as set forth in the Original Loan Agreement, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            "Facility Commitment" shall means " means (a) as to any Bank, the
      aggregate of such Bank's Revolving Loan Commitment (including without
      duplication the Swing Line Lender's Swing Line Commitment as a subset of
      its Revolving Loan Commitment) and (b) as to all Banks, the aggregate of
      all Bank's' Revolving Loan Commitments (including without duplication the
      Swing Line Lender's Swing Line Commitment as a subset of its Revolving
      Loan Commitment), which aggregate commitment shall be One Hundred Ninety
      Million Dollars ($190,000,000) on the Closing Date, as to each of clauses
      (a) and (b), as such Commitments may be reduced, amortized or adjusted
      from time to time in accordance with this Agreement.

<PAGE>

      14.   The definition of "Thirteenth Amended and Restated Guaranty
Agreement," in Section 1.1 of the Loan Agreement, as set forth in the Sixth
Amendment, is hereby deleted in its entirety and the following is inserted where
appropriate in correct alphabetical order in lieu thereof:

            "Fourteenth Amended and Restated Guaranty Agreement" shall mean the
      guaranty agreement executed by each of the Guarantors, dated as of the
      Effective Date, guaranteeing the payment of indebtednesses of Borrower to
      the Banks not to exceed One Hundred Ninety Million Dollars
      ($190,000,000.00), plus interest and the costs of collection.

All references in the Loan Agreement to any prior Amended and Restated Guaranty
Agreement shall, except as the context may otherwise require, be deemed to
constitute references to the Fourteenth Amended and Restated Guaranty Agreement.

      15.   The definition of "Loan," in Section 1.1 of the Loan Agreement, as
set forth in the Original Loan Agreement, is hereby deleted in its entirety and
the following is inserted in lieu thereof:

            "Loan" means the Revolving Loan and the Swing Line Loan and the
      Revolving Loan.

      16.   The definition of "Notes," in Section 1.1 of the Loan Agreement, as
set forth in he Third Amendment, is hereby deleted in its entirety and the
following is inserted in lieu thereof:

            "Notes" means the FTBNA Note, the Hibernia Note, the U.S. Bank Note,
      the Regions Note, the Carolina First Note, the National City Bank Note,
      the Fifth Third Note, the Bank One Note, and the Swing Line Note.

      17.   The definition of "Seventh Amended and Restated Pledge and Security
Agreement," in Section 1.1 of the Loan Agreement, as set forth in the Sixth
Amendment, is hereby deleted in its entirety and the following is inserted in
lieu thereof:

            "Seventh Amended and Restated Pledge and Security Agreement" means
      the Seventh Amended and Restated Pledge and Security Agreement dated
      October 31, 2002, as amended by that First Amendment to Seventh Amended
      and Restated Pledge and Security Agreement dated as of March 31, 2003, as
      amended by that Second Amendment to Seventh Amended and Restated Pledge
      and Security Agreement dated as of May 28, 2003, as amended by that Third
      Amendment to Seventh Amended and Restated Pledge and Security Agreement
      dated as of June 30, 2003, as amended by that Fourth Amendment to Seventh
      Amended and Restated Pledge and Security Agreement dated as of November
      26, 2003, as amended by that Fifth Amendment to Seventh Amended and
      Restated Pledge and Security Agreement dated as of June 30, 2004, as
      amended by that Sixth Amendment to Seventh Amended and Restated Pledge and
      Security Agreement dated as of December 3, 2004, and as the same may be
      further modified or amended, pursuant to which DGC has granted to Agent
      for the benefit of the Banks a second lien security interest in all of the
      stock in the Agency Subsidiaries and Affiliated Insurers, as security for
      its obligations under the Fourteenth Amended and Restated Guaranty
      Agreement.

      18.   The definition of "Seventh Amended and Restated Security Agreement,"
in Section 1.1 of the Loan Agreement, as set forth in the Sixth Amendment, is
hereby deleted in its entirety and the following is inserted in lieu thereof:

            "Seventh Amended and Restated Security Agreement" means the Seventh
      Amended and Restated Security Agreement dated October 31, 2002, as amended
      by that First Amendment to Seventh Amended and Restated Security Agreement
      dated as of March 31, 2003, as amended by that Second Amendment to Seventh
      Amended and Restated Security Agreement dated as of May 28, 2003, as
      amended by that Third Amendment to Seventh Amended and Restated Security
      Agreement dated as of June 30, 2003, as amended by that Fourth Amendment
      to Seventh Amended and Restated Security Agreement, dated as of November
      26, 2003, as amended by that Fifth Amendment to Seventh Amended and
      Restated Security agreement, dated as of June 30, 2004, as amended by that
      Sixth Amendment to Seventh Amended and Restated Security Agreement, dated
      as of December 3, 2004, and as the same may be further modified or
      amended, pursuant to which the Borrower has assigned and pledged
      Receivables and other contractual rights to the Agent for the benefit of
      the Banks.

      19.   Section 2.1 of the Loan Agreement, as set forth in the Fifth
Amendment, is hereby deleted in its entirety and the following is inserted in
lieu thereof:

            2.1 THE REVOLVING CREDIT FACILITY. Subject to the terms and
      conditions herein set out, the Banks severally agree and commit to make
      loan advances (reach, a "Revolving Credit Advance") to the Borrower from

<PAGE>

      time to time, from the Effective Date until the Loan Termination Date,
      ratably in proportion to their respective Facility Commitments and in such
      amount that, the aggregate principal amount of the Loan at any one time
      outstanding shall not exceed the lesser of (i) One Hundred Ninety Million
      Dollars ($190,000,000.00) or (ii) the Borrowing Base; provided, that after
      giving effect to any such Revolving Credit Advance, (i) the sum of the
      outstanding amount of such Bank's Revolving Credit Advances and its
      proportionate share of the outstanding Swing Line Loan shall not exceed
      its respective Facility Commitments and (ii) the aggregate outstanding
      amount of the Revolving Loan and the Swing Line Loan shall not exceed the
      aggregate of the Facility Commitments. On the Effective Date, the Banks
      will make adjustments among themselves so that the outstanding principal
      balances of the Loan indebtedness shall be held by them in proportion to
      their respective Facility Commitments.

            In the event that any Bank fails to fund its Facility Commitment,
      the remaining Banks are not obligated to fund any amount to make up the
      shortfall, nor shall the remaining Banks incur any liability to the
      Borrower as a result of any non-funding Bank's failure to fund.

      20.   Section 2.2 of the Loan Agreement, as set forth in the Original Loan
Agreement and as modified in the Fifth Amendment, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            2.2 FUNDING THE REVOLVING CREDIT LOAN.?

            (a) Each Revolving Credit Advance hereunder shall be made upon the
      written request of the Borrower to the Agent ("Notice of Revolving Credit
      Advance") by facsimile transmission or given in accordance with Section
      10.2 hereof, specifying the date and amount thereof, which request must be
      received by Agent prior to 10:30 a.m., Central Time (standard or daylight
      savings, as applicable) on (i) in the case of an Revolving Credit Advance
      bearing interest at the Base Rate, the day of the requested Revolving
      Credit Advance, and (ii) in the case of an Revolving Credit Advance
      bearing interest at the Adjusted LIBOR Rate, on the third Business Day
      preceding the date of requested Revolving Credit Advance. Each request for
      an Revolving Credit Advance bearing interest at the Adjusted LIBOR Rate
      shall also request the initial Interest Period for such Revolving Credit
      Advance. It is agreed that only three (3) Adjusted LIBOR Rates and three
      (3) Interest Periods shall be permitted to be in effect at any time during
      the term hereof. In the event the LIBOR Rate is not reported by the
      Bloomberg LLC, the Banks and Borrower agree to negotiate expeditiously and
      in good faith in an attempt to determine an alternative method of
      establishing the LIBOR Rate.

            (b) Provided Agent shall have received Notice of Revolving Credit
      Advance") in the manner set forth in Section 2.2(a) hereof, the Agent will
      use its reasonable efforts to notify each Bank from which an Revolving
      Credit Advance is requested of such Revolving Credit Advance prior to
      12:00 noon, Central Time (standard or daylight savings, as applicable).

            (c) Each Bank shall, not later than 2:00 P.M., Memphis, Tennessee
      time (standard or daylight savings, as applicable) on the date specified
      in such notice, make available to Agent at its main office in Memphis,
      Tennessee, an amount in immediately available funds equal to such Bank's
      pro rata share of the requested Revolving Credit Advance. Proceeds
      received by Agent from the other Banks, and amounts advanced by FTBNA
      hereunder, shall promptly be made available to Borrower by depositing the
      same to Borrower's checking account.

            (d) Swing Line Facility.

                  (i) Subject to the terms and conditions hereof, the Swing Line
      Lender agrees to make available from time to time until the Loan
      Termination Date advances (each, a "Swing Line Advance"). The aggregate
      amount of Swing Line Advances outstanding shall not exceed at any time the
      lesser of (A) the Swing Line Commitment and (B) the aggregate Revolving
      Loan Commitment less the outstanding balance of the Revolving Loan at such
      time ("Swing Line Availability"). Until the Loan Termination Date,
      Borrower may from time to time borrow, repay and reborrow under this
      Section 2.2(d)(i). Unless the Swing Line Lender has received at least one
      Business Day's prior written notice from Required Banks instructing it not
      to make a Swing Line Advance by reason of the failure of any condition
      precedent set forth in Section 4, the Swing Line Lender may, regardless of
      whether the Swing Line Lender is aware of the failure of any condition
      precedent set forth in Section 4, fund that Swing Line Advance, and to
      have each Bank make Revolving Credit Advances in accordance with Section
      2.2(d)(iii) or purchase participating interests in accordance with Section
      2.2(d)(iv). Notwithstanding any other provision of this Agreement or the
      other Loan Documents, the Swing Line Loan shall constitute a Base Rate
      Loan. The entire unpaid balance of the Swing Line Loan shall be due and
      payable in full in immediately available funds on the Loan Termination
      Date.

<PAGE>

                  (ii) Each Swing Line Advance shall be made on notice by
      Borrower to Agent , (a "Notice of Swing Line Advance") Agent by facsimile
      transmission or given in accordance with Section 10.2, specifying the date
      and amount thereof, which request must be received by Agent prior to 10:30
      A.M. Central Time (standard or daylight savings, as applicable)on the date
      of the proposed Swing Line Advance. Agent shall notify the Swing Line
      Lender, promptly after receipt of a Notice of Swing Line Advance and in
      any event prior to 12::00 p.m. (Memphis, Tennessee time) on the date such
      Notice of Swing Line Advance is received. Swing Line Lender may, in its
      discretion, make the amount of such Swing Line Advance available to Agent
      in same day funds by wire transfer to Agent's account as set forth in
      Annex C not later than 2:00 p.m. (Memphis, Tennessee time) on the date
      such Notice of Swing Line Advance is received. After receipt of such wire
      transfer (or, in Agent's discretion, before receipt of such transfer),
      subject to the terms hereof, Agent shall make the requested Revolving
      Credit Advance to Borrower.

                  (iii) The Swing Line Lender shall, not less than weekly, on
      behalf of Borrower (and Borrower hereby irrevocably authorizes the Swing
      Line Lender to so act on its behalf) request each Bank (including the
      Swing Line Lender) to make a Revolving Credit Advance to Borrower (which
      shall be a Base Rate Loan) in an amount equal to that Bank's pro rata
      share of the principal amount of the Swing Line Loan (the "Refunded Swing
      Line Loan") outstanding on the date such notice is given. Unless any of
      the events described in Section 8.5 has occurred (in which event the
      procedures of Section 2.2(d)(iv) shall apply) and regardless of whether
      the conditions precedent set forth in this Agreement to the making of a
      Revolving Credit Advance are then satisfied, each Bank shall disburse
      directly to Agent its pro rata share of a Revolving Credit Advance on
      behalf of the Swing Line Lender prior to 2:00 p.m. (Memphis, Tennessee
      time) in immediately available funds on the Business Day next succeeding
      the date that notice is given. The proceeds of those Revolving Credit
      Advances shall be immediately paid to the Swing Line Lender and applied to
      repay the Refunded Swing Line Loan of Borrower.

                  (iv) If, prior to refunding a Swing Line Loan with a Revolving
      Credit Advance pursuant to Section 2.2(d), one of the events described in
      Section 8.5 has occurred, then, subject to the provisions of Section
      2.2(d)(v) below, each Bank shall, on the date such Revolving Credit
      Advance was to have been made for the benefit of Borrower, purchase from
      the Swing Line Lender an undivided participation interest in the Swing
      Line Loan in an amount equal to its pro rata of the Swing Line Loan. Upon
      request, each Bank shall promptly transfer to the Swing Line Lender, in
      immediately available funds, the amount of its participation interest.

                  (v) Each Bank's obligation to make Revolving Credit Advances
      in accordance with Section 2.2(d)(iii) and to purchase participation
      interests in accordance with Section 2.2(d)(iv) shall be absolute and
      unconditional and shall not be affected by any circumstance, including (A)
      any setoff, counterclaim, recoupment, defense or other right that such
      Bank may have against the Swing Line Lender, Borrower or any other Person
      for any reason whatsoever; (B) the occurrence or continuance of any Event
      of Default or the occurrence any event which with notice or the passage of
      time of both, if uncured or waived would become an Event of Default; (C)
      any inability of Borrower to satisfy the conditions precedent to borrowing
      set forth in this Agreement at any time; or (D) any other circumstance,
      happening or event whatsoever, whether or not similar to any of the
      foregoing. If any Bank does not make available to Agent or the Swing Line
      Lender, as applicable, the amount required pursuant to Sections 2.2
      (d)(iii) or 2.2(d)(iv), as the case may be, the Swing Line Lender shall be
      entitled to recover such amount on demand from such Bank, together with
      interest thereon for each day from the date of non-payment until such
      amount is paid in full at the Federal Funds Rate for the first two
      Business Days and at the Base Rate thereafter.

            (e) Reliance on Notices. Agent shall be entitled to rely upon, and
      shall be fully protected in relying upon, any Notice of Revolving Credit
      Advance, Notice of Swing Line Advance, Notice of Conversion/Continuation
      or similar notice believed by Agent to be genuine. Agent may assume that
      each Person executing and delivering any notice in accordance herewith was
      duly authorized, unless the responsible individual acting thereon for
      Agent has actual knowledge to the contrary.

      21.   Section 2.3 of the Loan Agreement, as set forth in the Fifth
Amendment, is hereby deleted in its entirety and the following is inserted in
lieu thereof:

            2.3 THE NOTES AND INTEREST.

            (a) The Loan shall be evidenced by the Notes. The Loan shall bear
      interest at the rate or rates set forth hereinafter. The entire principal
      amount of the Loan shall be due and payable on the Loan Termination Date.
      The unpaid principal balances of the Loan shall bear interest from the
      Effective Date on disbursed and unpaid principal

<PAGE>

      balances (calculated on the basis of a 360-day year for actual days
      elapsed) at a rate per annum which shall, from day to day, be equal to the
      lesser of (i) the Maximum Rate, or (ii) a rate equal to the Applicable
      Rate.

            (b) Said interest, computed on the unpaid principal balances from
      time to time outstanding, shall be payable (i) on the last day of each and
      every July, October, January, and April, as to any portion of the Loan to
      which the Base Rate applies, and (ii) on the final day of the applicable
      Interest Period [and, in the case of any Interest Period of over three (3)
      months in duration, on the date which is three (3) months after the
      commencement of such Interest Period], as to any portion of the Loan to
      which the Adjusted LIBOR Rate applies.

            (c) Borrower's election(s) shall be in writing ("Notice of
      Conversion/Continuation"), signed by the Borrower and delivered to the
      Agent as provided in Section 2.2 hereof. An election by Borrower shall be
      in effect until (i) if the effective Applicable Rate is the Base Rate, a
      change in the election of the Applicable Rate by Borrower in accordance
      with the terms hereof or (ii) if the effective Applicable Rate is the
      Adjusted LIBOR Rate, the expiration of the Interest Period elected by
      Borrower. Upon the expiration of each Interest Period, the Borrower shall
      have the right to specify a new Interest Period for the portion of the
      Loan that will bear interest at the Adjusted LIBOR Rate by giving written
      notice of such requested Interest Period to the Agent (which shall
      promptly notify the Banks) no later than 10:00 a.m., Memphis time, on the
      third Business Day preceding the last day of such expiring Interest
      Period. Notwithstanding any other term or provision hereof, Borrower shall
      be required to elect the same Applicable Rate (i.e., same Base Rate and
      same Adjusted LIBOR Rate) to be applicable to all of the Notes and the
      Borrower shall be required to elect the Base Rate as to any Swing Line
      Loan.

            (d) If no election is made by Borrower, on or prior to 10:00 a.m.,
      Memphis time on the third (3rd) Business Day prior to the expiration of an
      Interest Period, to change the Applicable Rate or to continue to have the
      Loan bear interest at the Adjusted LIBOR Rate for a designated Interest
      Period, the Applicable Rate shall be the Base Rate upon the expiration of
      such Interest Period. If Borrower does not elect an Applicable Rate at any
      time, then the Applicable Rate shall automatically be the Base Rate. When
      the Applicable Rate is the Base Rate, each change in the Base Rate shall
      be effective without notice to the undersigned on the effective date of
      each change in the Maximum Rate or the Base Rate, as the case may be.

            (e) If the Agent shall have determined that the Bloomberg LLC
      Computer Service does not continue to report the LIBOR Rate, then upon
      notice from the Agent to the Borrower, the obligations of the Banks to
      make any portion of the Loan as a loan bearing interest at the Adjusted
      LIBOR Rate shall forthwith be suspended unless and until an alternative
      method for determining the LIBOR Rate is agreed to in accordance with
      Section 2.2(a) hereof, and until such alternative method is agreed to, all
      amounts owing under the Notes shall accrue interest at the Base Rate.

            (f) In the event that the foregoing provisions should be construed
      by a court of competent jurisdiction not to constitute a valid,
      enforceable designation of a rate of interest or method of determining
      same, the Loan shall bear interest at the maximum effective variable
      contract rate which may be charged by the Banks under applicable law from
      time to time in effect.

            (g) Borrower hereby indemnifies the respective Banks and holds each
      Bank harmless from any loss or expense which any such Bank may sustain or
      incur as a consequence of any Change in Law that results in the imposition
      on any Bank of reserve requirements in connection with LIBOR Rate loans
      made by such Bank. Borrower will make any payments under this indemnity to
      the respective Banks, upon demand. Borrower further agrees to enter into a
      modification of the Loan Agreement, at the request of the Agent, to bring
      the Loan Agreement into compliance with any Change in Law. This paragraph
      shall only apply to losses or expenses incurred by any Bank in connection
      with LIBOR Rate loans made to Borrower after notice by such Bank to Agent
      and Borrower that there has been a Change in Law that will result in such
      losses or expenses.

            (h) If any Bank shall determine (which determination shall, upon
      notice thereof to the Borrower and the Agent, be conclusive and binding on
      the Borrower) that the introduction of or any change in, or in the
      interpretation of, any law makes it unlawful, or any central bank or other
      governmental authority asserts that it is unlawful, for such Bank to
      continue or maintain any portion of the Loan as a loan bearing interest at
      the Adjusted LIBOR Rate, the obligation of such Bank to continue or
      maintain the indebtedness evidenced by such Bank's Note on such basis
      shall, upon such determination, forthwith be suspended until such Bank
      shall notify the Borrower that the circumstances causing such suspension
      no longer exist, and the entire indebtedness evidenced by such Bank's Note
      shall automatically bear interest at the Base Rate at the end of the then
      current Interest Period or sooner, if required by such law or assertion.

<PAGE>

      22.   Section 2.6(b) of the Loan Agreement, as set forth in the Original
Loan Agreement, is hereby deleted in its entirety and the following is inserted
in lieu thereof:

            (b) All payments (including prepayments) to be made by the Borrower
      on account of principal, interest and fees shall be made without set-off
      or counterclaim and shall be made to the Agent, for the account of the
      Banks at the Agent's office located at 165 Madison Avenue, Memphis,
      Tennessee 38103, in lawful money of the United States of America and in
      immediately available funds. The Agent shall promptly distribute such
      payments upon receipt in like funds as received in proportion to their
      respective Facility Commitments; provided, however, that in the event that
      the indebtedness of Borrower to the several Banks at any time is not in
      proportion to the Facility Commitments of the Banks (as a result of
      failure or refusal of a Bank to fund a requested Advance, receipt by a
      Bank of a payment not shared pro rata with the other Banks, expense
      incurred in connection herewith not borne proportionately by the Banks or
      otherwise or because the Swing Line Lender has made a Swing Line Advance
      which has not been purchased or funded by the other Banks), further
      payments shall be paid to the Bank or Banks to which the Borrower's
      indebtedness is disproportionately greater than such Banks' pro rata share
      until such proportionality is reestablished.

      23.   Section 4.2(b) of the Loan Agreement, as set forth in the Original
Loan Agreement, is hereby deleted in its entirety and the following is inserted
in lieu thereof:

            (b) Neither Borrower shall be in default of any of the terms and
      provisions hereof or of any instrument or document now or at any time
      hereafter evidencing or securing all or any part of the Loan
      indebtednesses. Each of the Warranties and Representations of the Borrower
      and Guarantors, as set out in Section 5 hereof shall remain true and
      correct in all material respects as of the date of such Advance.

      24.   The first sentence of Section 8 of the Loan Agreement, as set forth
in the Original Loan Agreement, is hereby deleted in its entirety and the
following is inserted in lieu thereof:

            An "Event of Default" shall exist if any of the following shall
      occur (and as used in this Section 8, references to "Borrower" shall be
      construed to mean either Borrower):

      25.   Exhibit "B" to the Loan Agreement, as set forth in the Fifth
Amendment, is hereby deleted in its entirety, and the schedule attached hereto
marked REVISED EXHIBIT "B" shall be inserted in lieu thereof.

      26.   All terms and provisions of the Loan Agreement, as heretofore
amended, which are inconsistent with the provisions of this Amendment are hereby
modified and amended to conform hereto; and, as so modified and amended, the
Loan Agreement is hereby ratified, approved and confirmed. Except as otherwise
may be expressly provided herein, this Amendment shall become effective as of
the date set forth in the initial paragraph hereof.

      27.   All references in all Loan Documents (including, but not limited to,
the New Notes, the Security Agreement, and the Loan Agreement) to the "Loan
Agreement" shall, except as the context may otherwise require, be deemed to
constitute references to the Loan Agreement as amended hereby. All references in
the Loan Documents (including, but not limited to, the Security Agreement and
the Loan Agreement) to the "Notes" shall, except as the context may otherwise
require, be deemed to constitute references to the Notes as such term is defined
herein.

                        [SEPARATE SIGNATURE PAGES FOLLOW]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
         SEVENTH AMENDMENT TO EIGHTH AMENDED AND RESTATED LOAN AGREEMENT

      IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Banks and the Agent
have caused this Agreement to be executed by their duly authorized officers, all
as of the day and year first above written.

                           BORROWERS:

                           DIRECT GENERAL FINANCIAL SERVICES, INC., a Tennessee
                           corporation

                           By: /s/ Brian G. Moore
                               -------------------------------------------------
                           Name: Brian G. Moore
                           Title: President

                           DIRECT GENERAL PREMIUM FINANCE COMPANY, a Tennessee
                           corporation

                           By: /s/  Brian G. Moore
                               -------------------------------------------------
                           Name: Brian G. Moore
                           Title: President

                           GUARANTORS:

                           DIRECT GENERAL CORPORATION, a Tennessee corporation

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

                           DIRECT GENERAL INSURANCE AGENCY, INC., a Tennessee
                           corporation

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

                           [SIGNATURE PAGE CONTINUED]

<PAGE>

                           DIRECT GENERAL INSURANCE AGENCY, INC., an Arkansas
                           corporation

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

                           DIRECT GENERAL INSURANCE AGENCY, INC., a Mississippi
                           corporation

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

                           DIRECT GENERAL INSURANCE AGENCY OF LOUISIANA, INC.,
                           a Louisiana corporation

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

                           DIRECT GENERAL AGENCY OF KENTUCKY, INC., a Kentucky
                           corporation

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

                           DIRECT ADJUSTING COMPANY, INC., a Tennessee
                           corporation

                           By: /s/ J. Todd Hagely
                               -------------------------------------------------
                           Name: J. Todd Hagely
                           Title: Treasurer

                           DIRECT ADMINISTRATION, INC., a Tennessee corporation

                           By: /s/ J. Todd Hagely
                              -------------------------------------------------
                           Name: J. Todd Hagely
                           Title: Treasurer

                           [SIGNATURE PAGE CONTINUED]

<PAGE>

                           DIRECT GENERAL INSURANCE AGENCY, INC., a Texas
                           corporation

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

                           DIRECT GENERAL CONSUMER PRODUCTS, INC., a Tennessee
                           corporation

                           By: /s/ J. Todd Hagely
                              --------------------------------------------------
                           Name: J. Todd Hagely
                           Title: Treasurer

                                  BANKS:

                           FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                           By: /s/ Sam Jenkins
                              --------------------------------------------------
                           Title: SVP

                           HIBERNIA NATIONAL BANK

                           By: /s/ Janet Olson Rack
                              --------------------------------------------------
                           Title: Sr. Vice President

                           U.S. BANK NATIONAL ASSOCIATION

                           By: /s/ Russell S. Rogers
                              --------------------------------------------------
                           Title: Vice President

                           CAROLINA FIRST BANK

                           By: /s/ Charles Chamberlain
                              --------------------------------------------------
                           Title: EVP

                           JPMORGAN CHASE BANK, N.A.
                           (successor by merger to Bank One, NA (Main
                           Office Chicago))

                           By: /s/ Robert D. Bond
                              --------------------------------------------------
                           Title: First Vice President

                           [SIGNATURE PAGE CONTINUED]

<PAGE>

                           REGIONS BANK

                           By: /s/ James Schmaltz
                               -------------------------------------------------
                           Title: Vice President

                           NATIONAL CITY BANK OF KENTUCKY

                           By: /s/ Kevin C. Anderson
                              --------------------------------------------------
                           Title: Sr. Vice President

                           FIFTH THIRD BANK, N.A. (TENNESSEE)

                           By: /s/ David Hicks
                              --------------------------------------------------
                           Title: VP

                           AGENT:

                           FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                           By: /s/ Sam Jenkins
                              --------------------------------------------------
                           Title: SVP

<PAGE>

                               REVISED EXHIBIT "B"

                        FACILITY COMMITMENTS OF THE BANKS

Revolving Facility Commitments

<TABLE>
<S>                                                  <C>
First Tennessee Bank National Association            $ 40,000,000.00*
Hibernia National Bank                                 20,000,000.00
U. S. Bank National Association                        30,000,000.00
Regions Bank                                           25,000,000.00
Carolina First Bank                                    15,000,000.00
National City Bank                                     15,000,000.00
Fifth Third Bank                                       10,000,000.00
JPMorgan Chase Bank, N.A. (successor by                35,000,000.00
merger to Bank One, NA (Main Office Chicago))
                                                     ---------------
                                TOTAL:               $190,000,000.00
                                                     ---------------
</TABLE>

* Includes $30,000,000.00 Swing Line Commitment of First Tennessee Bank National
Association.<PAGE>

                                                                   EXHIBIT 10.12

                                 FIFTH AMENDMENT
                                       TO
           SEVENTH AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

      THIS FIFTH AMENDMENT TO SEVENTH AMENDED AND RESTATED PLEDGE AND SECURITY
AGREEMENT (the "Amendment") made and entered into as of the 30th day of June,
2004, by and among DIRECT GENERAL CORPORATION, a Tennessee corporation (the
"Pledgor"), and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, whose address is 165
Madison Avenue, Memphis, Tennessee 38103, Attention: Metropolitan Division (in
its agency capacity being herein referred to as "Agent," and in its individual
capacity as "FTBNA"), as agent for itself, and for HIBERNIA NATIONAL BANK, Baton
Rouge, Louisiana ("Hibernia"), and for U. S. BANK NATIONAL ASSOCIATION, St.
Louis, Missouri ("U. S. Bank"), and for REGIONS BANK, Birmingham, Alabama
("Regions"), and for CAROLINA FIRST BANK, Greenville, South Carolina ("Carolina
First"), and for BANK ONE, NA (Main Office -- Chicago, Illinois), Baton Rouge,
Louisiana ("Bank One"), and for NATIONAL CITY BANK OF KENTUCKY, Louisville,
Kentucky ("National City Bank"), and for FIFTH THIRD BANK, N.A. (TENNESSEE),
Franklin, Tennessee ("Fifth Third") (Agent, Hibernia, U. S. Bank, Regions,
Carolina First and Bank One collectively, the "Original Banks") (the Original
Banks, Fifth Third and National City Bank collectively, the "Banks" and
individually, a "Bank").

                                Recitals of Fact

      Pursuant to that certain Seventh Amended and Restated Pledge and Security
Agreement dated as of October 31, 2002 (the "Original Pledge Agreement"),
Pledgor pledged a second lien security interest in all of the stock in the
Agency Subsidiaries and Affiliated Insurers (as those terms are defined in the
Eighth Amended and Restated Loan Agreement dated as of October 31, 2002, as
amended, referred to hereafter as the "Loan Agreement") to the Agent for the
benefit of the Original Banks as security for all of Pledgor's obligations under
the Eighth Amended and Restated Guaranty Agreement dated October 31, 2002 (the
"Eighth Guaranty").

      Pursuant to that certain First Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of March 31, 2003 (the "First
Amendment"), Pledgor pledged a second lien security interest in all of the stock
in the Agency Subsidiaries and Affiliated Insurers (as those terms are defined
in the Loan Agreement) to the Agent for the benefit of the Original Banks as
security for all of Pledgor's obligations under the Ninth Amended and Restated
Guaranty Agreement dated March 31, 2003 (the "Ninth Guaranty").

      Pursuant to that certain Second Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of May 28, 2003 (the "Second Amendment"),
Pledgor pledged a second lien security interest in all of the stock in the
Agency Subsidiaries and Affiliated Insurers (as those terms are defined in the
Loan Agreement) to the Agent for the benefit of the Original Banks and National
City Bank as security for all of Pledgor's obligations under the Tenth Amended
and Restated Guaranty Agreement dated May 28, 2003 (the "Tenth Guaranty").

      Pursuant to that certain Third Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of June 30, 2003 (the "Third Amendment"),
Pledgor pledged a second lien security interest in all of the stock in the
Agency Subsidiaries and Affiliated Insurers (as those terms are defined in the
Loan Agreement) to the Agent for the benefit of the Banks as security for all of
Pledgor's obligations under the Eleventh Amended and Restated Guaranty Agreement
dated June 30, 2003 (the "Eleventh Guaranty").

      Pursuant to that certain Fourth Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of November 26, 2003 (the "Fourth
Amendment"; the Original Pledge Agreement, as amended, the First Amendment, the
Second Amendment, the Third Amendment and the Fourth Amendment referred to
hereinafter as the "Pledge Agreement"), Pledgor pledged a second lien security
interest in all of the stock of the Agency Subsidiaries and Affiliated Insurers
(as those terms are defined in the Loan Agreement) to the Agent for the benefit
of the Banks as security for all of Pledgor's obligations under the Twelfth
Amended and Restated Guaranty Agreement dated November 26, 2003 (the "Twelfth
Guaranty").

      Pledgor is entering into a Thirteenth Amended and Restated Guaranty
Agreement of even date herewith (the "Thirteenth Guaranty"), which Thirteenth
Guaranty replaces the Twelfth Guaranty.

      The Pledgor and the Banks now desire to modify certain terms of the Pledge
Agreement as hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises as set forth in the
Recitals of Fact, the mutual covenants and agreements hereinafter set out, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is agreed by the parties as follows:

                                   Agreements

<PAGE>

      1.    All capitalized terms used and not defined herein shall have the
meaning ascribed to them in the Loan Agreement.

      2.    To induce the Banks to enter into this Amendment, the Pledgor does
hereby absolutely and unconditionally, certify, represent and warrant to the
Banks, and covenants and agrees with the Banks, that:

            (a)   All representations and warranties made by the Pledgor in the
      Loan Agreement, as amended, in the Pledge Agreement, as amended, in the
      Security Agreement, as amended, and in all other loan documents (all of
      which are herein sometimes called the "Loan Documents"), are true, correct
      and complete in all material respects as of the date of this Amendment.

            (b)   As of the date hereof and with the execution of this
      Amendment, there are no existing events, circumstances or conditions which
      constitute, or would, with the giving of notice, lapse of time, or both,
      constitute Events of Default.

            (c)   There are no existing offsets, defenses or counterclaims to
      the obligations of the Pledgor, as set forth in the Pledge Agreement, as
      amended, the Security Agreement, as amended, the Loan Agreement, as
      amended, or in any other Loan Document executed by the Borrower, in
      connection with the Loan.

            (d)   The Pledgor does not have any existing claim for damages
      against the Banks arising out of or related to the Loan; and, if and to
      the extent (if any) that the Borrower has or may have any such existing
      claim (whether known or unknown), the Borrower does hereby forever release
      and discharge, in all respects, the Banks with respect to such claim.

            (e)   The Loan Documents, as amended by this Amendment, are valid,
      genuine, enforceable in accordance with their respective terms, and in
      full force and effect.

      3.    Section 2(a) of the Pledge Agreement, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            (a)   the prompt payment by the Pledgor, as and when due and
      payable, of all amounts from time to time owing under or pursuant to that
      certain Thirteenth Amended and Restated Guaranty Agreement (the "Guaranty
      Agreement") dated as of June 30, 2004, pursuant to which Pledgor has
      guaranteed the indebtednesses of Direct General Financial Services, Inc.,
      a Tennessee corporation and Direct General Premium Finance Company, a
      Tennessee corporation (collectively, the "Borrower"), to FTBNA, Hibernia,
      U.S. Bank, Regions, Carolina First, Fifth Third, National City Bank and
      Bank One, which indebtednesses are evidenced by (i) Borrower's promissory
      note dated as of June 30, 2004, to FTBNA in the maximum principal amount
      of Forty Million Dollars ($40,000,000.00); (ii) Borrower's promissory note
      dated as of June 30, 2004, to Hibernia in the maximum principal amount of
      Twenty Million Dollars ($20,000,000.00); (iii) Borrower's promissory note
      dated as of June 30, 2004, to U.S. Bank in the maximum principal amount of
      Thirty Million Dollars ($30,000,000.00); (iv) Borrower's promissory note
      dated as of June 30, 2004, to Regions in the maximum principal amount of
      Twenty-Five Million Dollars ($25,000,000.00); (v) Borrower's promissory
      note dated as of June 30, 2004, to Carolina First in the maximum principal
      amount of Fifteen Million Dollars ($15,000,000.00); (vi) Borrower's
      promissory note dated as of June 30, 2004, to National City Bank in the
      maximum principal amount of Fifteen Million Dollars ($15,000,000.00);
      (vii) Borrower's promissory note dated as of June 30, 2004, to Fifth Third
      in the maximum principal amount of Ten Million Dollars ($10,000,000.00);
      and (viii) Borrower's promissory note dated as of June 30, 2004, to Bank
      One in the maximum principal amount of Thirty-Five Million Dollars
      ($35,000,000.00) [the eight (8) promissory notes herein described being
      collectively referred to as the "Notes," and FTBNA, Hibernia, U.S. Bank,
      Regions, Carolina First, National City Bank, Fifth Third and Bank One
      being collectively referred to as the "Banks"]; and

      4.    Section 2(b) of the Pledge Agreement, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            (b)   the due performance and observance by the Pledgor of all of
      the Pledgor's covenants, agreements, duties, representations and
      obligations from time to time existing pursuant to this Agreement and that
      certain Eighth Amended and Restated Loan Agreement dated October 21, 2002,
      as amended by that certain First Amendment to Eighth Amended and Restated
      Loan Agreement dated as of March 31, 2003, as amended by that certain
      Second Amendment to Eighth Amended and Restated Loan Agreement dated as of
      May 28, 2003, as amended by that certain Third Amendment to Eighth Amended
      and Restated Loan Agreement dated as of June 30, 2003, as amended by that
      certain Fourth Amendment to Eighth Amended and Restated Loan Agreement
      dated on or about July 17, 2003, as amended by that certain Fifth
      Amendment to Eighth Amended and Restated Loan Agreement dated as of
      November 26, 2003, and as amended by that certain Sixth Amendment to
      Eighth Amended and Restated Loan

<PAGE>

      Agreement dated as of June 30, 2004 (as amended, the "Loan Agreement"),
      among Pledgor, Borrower, Agent, the Banks and others; and in any other
      instrument which now or hereafter secures the Guaranty Agreement.

      5.    All terms and provisions of the Pledge Agreement, as heretofore
amended, which are inconsistent with the provisions of this Amendment are hereby
modified and amended to conform hereto; and, as so modified and amended, the
Pledge Agreement is hereby ratified, approved and confirmed. Except as otherwise
may be expressly provided herein, this Amendment shall become effective as of
the date set forth in the initial paragraph hereof.

      6.    All references in all Loan Documents (including, but not limited to,
the Pledge Agreement, the Security Agreement, and the Loan Agreement) to the
"Pledge Agreement" shall, except as the context may otherwise require, be deemed
to constitute references to the Pledge Agreement as amended hereby.

                        [SEPARATE SIGNATURE PAGES FOLLOW]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
  FIFTH AMENDMENT TO SEVENTH AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

      IN WITNESS WHEREOF, the Pledgor, the Banks and the Agent have caused this
Agreement to be executed by their duly authorized officers, all as of the day
and year first above written.

                           PLEDGOR:

                           DIRECT GENERAL CORPORATION, a Tennessee corporation

                           By: /s/ Barry D. Elkins
                               -------------------
                               Barry D. Elkins, SVP & CFO

                           BANKS:

                           FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                           By: /s/ Sam Jenkins
                               ---------------
                           Title: SVP

                           HIBERNIA NATIONAL BANK

                           By: /s/ Janet Olson Rack
                               --------------------
                           Title: Sr. Vice President

                           U. S. BANK NATIONAL ASSOCIATION

                           By: /s/ Brian Gallagher
                               -------------------
                           Title: Vice President

                           CAROLINA FIRST BANK

                           By: /s/ Charles D. Chamberlain
                               --------------------------
                           Title: Executive Vice President

                  [SIGNATURE PAGE CONTINUED]

<PAGE>

                           BANK ONE, NA
                           (Main Office - Chicago, Illinois)

                           By: /s/ Robert D. Bond
                               ------------------
                           Title: First Vice President

                           REGIONS BANK

                           By: /s/ James Schmaltz
                               ------------------
                           Title: Vice President

                           NATIONAL CITY BANK OF KENTUCKY

                           By: /s/ Kevin C. Anderson
                               ---------------------
                           Title: SVP

                           FIFTH THIRD BANK, N.A. (TENNESSEE)

                           By: /s/ David Hicks
                               ---------------
                           Title: VP

                           AGENT:

                           FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                           By: /s/ Sam Jenkins
                               ---------------
                           Title: Senior Vice President

<PAGE>

                                 SIXTH AMENDMENT
                                       TO
           SEVENTH AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

      THIS SIXTH AMENDMENT TO SEVENTH AMENDED AND RESTATED PLEDGE AND SECURITY
AGREEMENT (the "Amendment") made and entered into as of the _3rd___ day of
December, 2004, by and among DIRECT GENERAL CORPORATION, a Tennessee corporation
(the "Pledgor"), and FIRST TENNESSEE BANK NATIONAL ASSOCIATION, whose address is
165 Madison Avenue, Memphis, Tennessee 38103, Attention: Metropolitan Division
(in its agency capacity being herein referred to as "Agent," and in its
individual capacity as "FTBNA"), as agent for itself, and for HIBERNIA NATIONAL
BANK, Baton Rouge, Louisiana ("Hibernia"), and for U. S. BANK NATIONAL
ASSOCIATION, St. Louis, Missouri ("U. S. Bank"), and for REGIONS BANK,
Birmingham, Alabama ("Regions"), and for CAROLINA FIRST BANK, Greenville, South
Carolina ("Carolina First"), and for JP MORGAN CHASE BANK, N.A. (successor by
merger to Bank One, NA (Main Office Chicago)), Baton Rouge, Louisiana
("JPMorgan"), and for NATIONAL CITY BANK OF KENTUCKY, Louisville, Kentucky
("National City Bank"), and for FIFTH THIRD BANK, N.A. (TENNESSEE), Franklin,
Tennessee ("Fifth Third") (Agent, Hibernia, U. S. Bank, Regions, Carolina First
and JPMorgan collectively, the "Original Banks") (the Original Banks, Fifth
Third and National City Bank collectively, the "Banks" and individually, a
"Bank").

                                Recitals of Fact

      Pursuant to that certain Seventh Amended and Restated Pledge and Security
Agreement dated as of October 31, 2002 (the "Original Pledge Agreement"),
Pledgor pledged a second lien security interest in all of the stock in the
Agency Subsidiaries and Affiliated Insurers (as those terms are defined in the
Eighth Amended and Restated Loan Agreement dated as of October 31, 2002, as
amended, referred to hereafter as the "Loan Agreement") to the Agent for the
benefit of the Original Banks as security for all of Pledgor's obligations under
the Eighth Amended and Restated Guaranty Agreement dated October 31, 2002 (the
"Eighth Guaranty").

      Pursuant to that certain First Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of March 31, 2003 (the "First
Amendment"), Pledgor pledged a second lien security interest in all of the stock
in the Agency Subsidiaries and Affiliated Insurers (as those terms are defined
in the Loan Agreement) to the Agent for the benefit of the Original Banks as
security for all of Pledgor's obligations under the Ninth Amended and Restated
Guaranty Agreement dated March 31, 2003 (the "Ninth Guaranty").

      Pursuant to that certain Second Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of May 28, 2003 (the "Second Amendment"),
Pledgor pledged a second lien security interest in all of the stock in the
Agency Subsidiaries and Affiliated Insurers (as those terms are defined in the
Loan Agreement) to the Agent for the benefit of the Original Banks and National
City Bank as security for all of Pledgor's obligations under the Tenth Amended
and Restated Guaranty Agreement dated May 28, 2003 (the "Tenth Guaranty").

      Pursuant to that certain Third Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of June 30, 2003 (the "Third Amendment"),
Pledgor pledged a second lien security interest in all of the stock in the
Agency Subsidiaries and Affiliated Insurers (as those terms are defined in the
Loan Agreement) to the Agent for the benefit of the Banks as security for all of
Pledgor's obligations under the Eleventh Amended and Restated Guaranty Agreement
dated June 30, 2003 (the "Eleventh Guaranty").

      Pursuant to that certain Fourth Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of November 26, 2003 (the "Fourth
Amendment"), Pledgor pledged a second lien security interest in all of the stock
of the Agency Subsidiaries and Affiliated Insurers (as those terms are defined
in the Loan Agreement) to the Agent for the benefit of the Banks as security for
all of Pledgor's obligations under the Twelfth Amended and Restated Guaranty
Agreement dated November 26, 2003 (the "Twelfth Guaranty").

      Pursuant to that certain Fifth Amendment to Seventh Amended and Restated
Pledge and Security Agreement dated as of June 30, 2004 (the "Fifth Amendment";
the Original Pledge Agreement, as amended, the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, and the Fifth Amendment
referred to hereinafter as the "Pledge Agreement"), Pledgor pledged a second
lien security interest in all of the stock of the Agency Subsidiaries and
Affiliated Insurers (as those terms are defined in the Loan Agreement) to the
Agent for the benefit of the Banks as security for all of the Pledgor's
obligations under the Thirteenth Amended and Restated Guaranty Agreement dated
June 30, 2004 (the "Thirteenth Guaranty").

      Pledgor is entering into a Fourteenth Amended and Restated Guaranty
Agreement of even date herewith (the "Fourteenth Guaranty"), which Fourteenth
Guaranty replaces the Thirteenth Guaranty.

<PAGE>

      The Pledgor and the Banks now desire to modify certain terms of the Pledge
Agreement as hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises as set forth in the
Recitals of Fact, the mutual covenants and agreements hereinafter set out, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is agreed by the parties as follows:

                                   Agreements

      1.    All capitalized terms used and not defined herein shall have the
meaning ascribed to them in the Loan Agreement.

      2.    To induce the Banks to enter into this Amendment, the Pledgor does
hereby absolutely and unconditionally, certify, represent and warrant to the
Banks, and covenants and agrees with the Banks, that:

        (a) All representations and warranties made by the Pledgor in the Loan
            Agreement, as amended, in the Pledge Agreement, as amended, in the
            Security Agreement, as amended, and in all other loan documents (all
            of which are herein sometimes called the "Loan Documents"), are
            true, correct and complete in all material respects as of the date
            of this Amendment.

        (b) As of the date hereof and with the execution of this Amendment,
            there are no existing events, circumstances or conditions which
            constitute, or would, with the giving of notice, lapse of time, or
            both, constitute Events of Default.

        (c) There are no existing offsets, defenses or counterclaims to the
            obligations of the Pledgor, as set forth in the Pledge Agreement, as
            amended, the Security Agreement, as amended, the Loan Agreement, as
            amended, or in any other Loan Document executed by the Borrower, in
            connection with the Loan.

        (d) The Pledgor does not have any existing claim for damages against the
            Banks arising out of or related to the Loan; and, if and to the
            extent (if any) that the Borrower has or may have any such existing
            claim (whether known or unknown), the Borrower does hereby forever
            release and discharge, in all respects, the Banks with respect to
            such claim.

        (e) The Loan Documents, as amended by this Amendment, are valid,
            genuine, enforceable in accordance with their respective terms, and
            in full force and effect.

      3.    The Banks hereby expressly acknowledge and agree that the security
interest granted by Pledgor herein is a second lien security interest, subject
to the prior first lien security interest granted by the Pledgor to the DGC
Banks and related to the DGC Loan (as each term is defined in the Loan
Agreement).

      4.    Section 2(a) of the Pledge Agreement, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            (a) the prompt payment by the Pledgor, as and when due and payable,
      of all amounts from time to time owing under or pursuant to that certain
      Fourteenth Amended and Restated Guaranty Agreement (the "Guaranty
      Agreement") dated as of December 3rd, 2004, pursuant to which Pledgor has
      guaranteed the indebtednesses of Direct General Financial Services, Inc.,
      a Tennessee corporation and Direct General Premium Finance Company, a
      Tennessee corporation (collectively, the "Borrower"), to FTBNA, Hibernia,
      U.S. Bank, Regions, Carolina First, Fifth Third, National City Bank and
      Bank One, which indebtednesses are evidenced by (i) Borrower's promissory
      note dated as of December 3rd, 2004, to FTBNA in the maximum principal
      amount of Thirty Million Dollars ($30,000,000.00); (ii) Borrower's
      promissory note dated as of June 30, 2004, to FTBNA in the maximum
      principal amount of Forty Million Dollars ($40,000,000.00); (ii)
      Borrower's promissory note dated as of June 30, 2004, to Hibernia in the
      maximum principal amount of Twenty Million Dollars ($20,000,000.00); (iii)
      Borrower's promissory note dated as of June 30, 2004, to U.S. Bank in the
      maximum principal amount of Thirty Million Dollars ($30,000,000.00); (iv)
      Borrower's promissory note dated as of June 30, 2004, to Regions in the
      maximum principal amount of Twenty-Five Million Dollars ($25,000,000.00);
      (v) Borrower's promissory note dated as of June 30, 2004, to Carolina
      First in the maximum principal amount of Fifteen Million Dollars
      ($15,000,000.00); (vi) Borrower's promissory note dated as of June 30,
      2004, to National City Bank in the maximum principal amount of Fifteen
      Million Dollars ($15,000,000.00); (vii) Borrower's promissory note dated
      as of June 30, 2004, to Fifth Third in the maximum principal amount of Ten
      Million Dollars ($10,000,000.00); and (viii) Borrower's promissory note
      dated as of June 30, 2004, to Bank One (now JPMorgan) in the maximum
      principal amount of Thirty-Five Million Dollars ($35,000,000.00) [the nine
      (9) promissory notes herein described being collectively referred to as

<PAGE>

      the "Notes," and FTBNA, Hibernia, U.S. Bank, Regions, Carolina First,
      National City Bank, Fifth Third and JPMorgan being collectively referred
      to as the "Banks"]; and

      5.    Section 2(b) of the Pledge Agreement, is hereby deleted in its
entirety and the following is inserted in lieu thereof:

            (b) the due performance and observance by the Pledgor of all of the
      Pledgor's covenants, agreements, duties, representations and obligations
      from time to time existing pursuant to this Agreement and that certain
      Eighth Amended and Restated Loan Agreement dated October 21, 2002, as
      amended by that certain First Amendment to Eighth Amended and Restated
      Loan Agreement dated as of March 31, 2003, as amended by that certain
      Second Amendment to Eighth Amended and Restated Loan Agreement dated as of
      May 28, 2003, as amended by that certain Third Amendment to Eighth Amended
      and Restated Loan Agreement dated as of June 30, 2003, as amended by that
      certain Fourth Amendment to Eighth Amended and Restated Loan Agreement
      dated on or about July 17, 2003, as amended by that certain Fifth
      Amendment to Eighth Amended and Restated Loan Agreement dated as of
      November 26, 2003, and as amended by that certain Sixth Amendment to
      Eighth Amended and Restated Loan Agreement dated as of June 30, 2004, as
      amended by that certain Seventh Amendment to Eighth Amended and Restated
      Loan Agreement dated as of December 3rd__, 2004 (as amended, the "Loan
      Agreement"), among Pledgor, Borrower, Agent, the Banks and others; and in
      any other instrument which now or hereafter secures the Guaranty
      Agreement.

      6.    Exhibit "A" to the Pledge Agreement is hereby deleted in its
entirety and the "Revised Exhibit 'A'" attached hereto is inserted in lieu
thereof.

      7.    All terms and provisions of the Pledge Agreement, as heretofore
amended, which are inconsistent with the provisions of this Amendment are hereby
modified and amended to conform hereto; and, as so modified and amended, the
Pledge Agreement is hereby ratified, approved and confirmed. Except as otherwise
may be expressly provided herein, this Amendment shall become effective as of
the date set forth in the initial paragraph hereof.

      8.    All references in all Loan Documents (including, but not limited to,
the Pledge Agreement, the Security Agreement, and the Loan Agreement) to the
"Pledge Agreement" shall, except as the context may otherwise require, be deemed
to constitute references to the Pledge Agreement as amended hereby.

                        [SEPARATE SIGNATURE PAGES FOLLOW]

<PAGE>

                                 SIGNATURE PAGE
                                       TO
  SIXTH AMENDMENT TO SEVENTH AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

      IN WITNESS WHEREOF, the Pledgor, the Banks and the Agent have caused this
Agreement to be executed by their duly authorized officers, all as of the day
and year first above written.

                           PLEDGOR:

                           DIRECT GENERAL CORPORATION, a Tennessee corporation

                           By: /s/ Barry D. Elkins
                               -------------------
                               Barry D. Elkins, SVP & CFO

                           BANKS:

                           FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                           By: /s/ Sam Jenkins
                               ---------------
                           Title: SVP

                           HIBERNIA NATIONAL BANK

                           By: /s/ Janet Olson Rack
                               --------------------
                           Title: Senior Vice President

                           U. S. BANK NATIONAL ASSOCIATION

                           By: /s/ Russell S. Rogers
                               ---------------------
                           Title: Vice President

                           CAROLINA FIRST BANK

                           By: /s/ Charles Chamberlain
                               -----------------------
                           Title: Executive Vice President

                        [SIGNATURE PAGE CONTINUED]

<PAGE>

                     JPMORGAN CHASE BANK, N.A.
                     (successor by merger to Bank One, NA (Main Office Chicago))

                     By: /s/ Robert D. Bond
                         ------------------
                     Title: First Vice President

                     REGIONS BANK

                     By: /s/ Sam Prudhomme
                         ------------------
                     Title: Assistant Vice President

                     NATIONAL CITY BANK OF KENTUCKY

                     By: /s/ Kevin C. Anderson
                         ---------------------
                     Title: Sr.  Vice President

                     FIFTH THIRD BANK, N.A. (TENNESSEE)

                     By: /s/ David Hicks
                         ---------------
                     Title: VP

                     AGENT:

                     FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                     By: /s/ Sam Jenkins
                         ---------------
                     Title: SVP

<PAGE>

                               Revised Exhibit "A"

                                 Pledged Shares

1.    Sixteen thousand seven hundred ninety-four and one-half (16,794.5) shares
      of the common capital stock of DIRECT INSURANCE COMPANY, a Tennessee
      corporation, registered on the stock records of such corporation in the
      name of DIRECT GENERAL CORPORATION, represented by Certificate No. 87.

2.    Six thousand (6,000) shares of the common capital stock of DIRECT GENERAL
      INSURANCE AGENCY, INC., a Tennessee corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION
      (f/k/a Direct Corporation), represented by Certificate No. 15.

3.    One thousand (1,000) shares of the common capital stock of DIRECT GENERAL
      FINANCIAL SERVICES, INC., a Tennessee corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION
      (f/k/a Direct Corporation), represented by Certificate No. 1.

4.    One hundred (100) shares of the common capital stock of DIRECT GENERAL
      INSURANCE AGENCY, INC., an Arkansas corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION,
      represented by Certificate No. 1.

5.    One hundred (100) shares of the common capital stock of DIRECT GENERAL
      INSURANCE AGENCY, INC., a Mississippi corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION,
      represented by Certificate No. 1.

6.    One hundred (100) shares of the common capital stock of DIRECT GENERAL
      INSURANCE AGENCY OF LOUISIANA, INC., a Louisiana corporation, registered
      on the stock records of such corporation in the name of DIRECT GENERAL
      CORPORATION, represented by Certificate No. 3.

7.    One thousand (1,000) shares of the common capital stock of DIRECT GENERAL
      AGENCY OF KENTUCKY, INC., a Kentucky corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION,
      represented by Certificate No. 1.

8.    One thousand (1,000) shares of the common capital stock of DIRECT
      ADJUSTING COMPANY, INC., a Tennessee corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION,
      represented by Certificate No. 1.

9.    One thousand (1,000) shares of the common capital stock of DIRECT
      ADMINISTRATION, INC., a Tennessee corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION,
      represented by Certificate No. 1.

10.   One hundred eighty thousand (180,000) shares of the common capital stock
      of DIRECT GENERAL INSURANCE COMPANY, a South Carolina corporation
      (formerly a Tennessee corporation), registered on the stock records of
      such corporation in the name of DIRECT GENERAL CORPORATION, represented by
      Certificate No. 008.

11.   Ten thousand (10,000) shares of the common capital stock of DIRECT GENERAL
      INSURANCE AGENCY, INC. (f/k/a Bright General Agency, Inc.), a Texas
      corporation, registered on the stock records of such corporation in the
      name of DIRECT GENERAL CORPORATION, represented by Certificate No. 86.

12.   One thousand (1,000) shares of the common capital stock of DIRECT GENERAL
      CONSUMER PRODUCTS, INC., a Tennessee corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION,
      represented by Certificate No. 1.

13.   Five Thousand (5,000) shares of the common capital stock of DIRECT GENERAL
      PREMIUM FINANCE COMPANY, a Tennessee corporation, registered on the stock
      records of such corporation in the name of DIRECT GENERAL CORPORATION,
      represented by Certificate No. 1.

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