SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 9, 2007
SECURITY NATIONAL FINANCIAL CORPORATION
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(Exact name of registrant as specified in this Charter)
Utah 0-9341 87-0345941 (State or other jurisdiction of incorporation)
(Commission File Number) (IRS Employer Identification No.)
5300 South 360 West, Salt Lake City, Utah 84123
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 264-1060
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Does Not Apply
(Former name or former address, if changed since last report)
ITEM 1.01. Entry into Stock Purchase Agreement to Acquire Capital Reserve Life
Insurance Company.
On October 9, 2007, Security National Financial Corporation, through its
wholly owned subsidiary, Security National Life Insurance Company, entered into
a stock purchase agreement (the "Stock Purchase Agreement") with Capital Reserve
Life Insurance Company, a Missouri domiciled insurance company ("Capital
Reserve"), and its shareholders to purchase all of the outstanding shares of
common stock of Capital Reserve from its shareholders. Under the terms of the
transaction, Security National Life Insurance Company agrees to pay to the
shareholders of Capital Reserve purchase consideration equal to the capital and
surplus of Capital Reserve as of September 30, 2007 in the amount of $1,274,000,
plus the interest maintenance reserve in the amount of $31,000 and the asset
valuation reserve in the amount of $209,000 as of September 30, 2007, plus
$1,037,967, less certain adjustments. The adjustments consist of any losses
related to two litigation matters involving Capital Reserve and the difference
in the amount of Capital Reserve's capital and surplus at closing compared to
the amount of its capital and surplus on September 30, 2007.
As of December 31, 2006, Capital Reserve had 10,851 policies in force and
approximately 30 agents. For the year ended December 31, 2006, Capital Reserve
had revenues of $5,663,000 and a net loss of $244,000. As of December 31, 2006,
the statutory assets and the capital and surplus of Capital Reserve were
$24,084,000 and $1,960,000, respectively.
Security National Life Insurance Company anticipates completing the
transaction on or before November 30, 2007, or within seven days from the date
the required regulatory approvals are obtained. The obligations of Security
National Life Insurance Company and Capital Reserve to complete the transaction
are contingent upon satisfaction of the following conditions:
A complete and satisfactory review by Security National Life Insurance
Company of the books, records and business of Capital Reserve;
Approval and adoption of the Stock Purchase Agreement by the Board of
Directors of Security National Life Insurance Company and Capital Reserve; and
Approval of the transaction by any regulatory authorities having
jurisdiction over Security National Life Insurance Company and Capital Reserve,
including the insurance departments of the states of Missouri and Utah.
At the closing of the transaction, Security National Life Insurance Company
and Capital Reserve intend to enter into a reinsurance agreement to reinsure the
majority of the in force business of Capital Reserve, as reinsurer, to the
extent permitted by the Missouri Department of Insurance. Under the terms of the
reinsurance agreement, Security National Life Insurance Company would pay a
ceding commission to Capital Reserve in the amount of $1,738,000. In addition,
following the payment of the ceding commission, Capital Reserve intends to
declare a dividend to Security National Life Insurance Company in the amount of
$1,738,000. The reinsurance agreement and the dividend payment are subject to
approval by the Missouri Department of Insurance. Capital Reserve intends to
submit a Form D to the Missouri Department of Insurance in connection with its
request for approval of the dividend payment.
As a result of the reinsurance agreement, certain insurance business and
operations of Capital Reserve would be transferred to Security National Life
Insurance Company, including all policies in force as of the effective date
thereof. Any future business by Capital Reserve would be covered by this
reinsurance agreement. Thus, except for capital and surplus of $1,253,000,
$23,569,000 in assets and liabilities would be transferred from Capital Reserve
to Security National Life Insurance Company pursuant to the reinsurance
agreement. Following the closing of the transaction, Capital Reserve will
continue to sell and service life insurance, annuity products, accident and
health insurance, and funeral plan insurance.
ITEM 9.01. Financial Statements and Exhibits
(c) Exhibits
10.1 Stock Purchase Agreement among Security National Life
Insurance Company, Capital Reserve Life Insurance Company,
and the shareholders of Capital Reserve Life Insurance
Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SECURITY NATIONAL FINANCIAL CORPORATION
(Registrant)
Date: November 2, 2007 By:/s/ Scott M. Quist
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Scott M. Quist, President
President and Chief
Operating Officer