SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 22, 2005
SECURITY NATIONAL FINANCIAL CORPORATION
(Exact name of registrant as specified in this Charter)
Utah 0-9341 87-0345941
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) 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)
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ITEM 8. Other Events
Acquisition of Memorial Insurance Company of America.
On July 22, 2005, Security National Financial Corporation (the "Company")
entered into a letter of intent with Memorial Insurance Company of America
("Memorial Insurance Company"), an Arkansas domiciled insurance company, to
purchase all of the outstanding shares of common stock of Memorial Insurance
Company. Under the terms of the letter of intent, the stockholders of Memorial
Insurance Company are to receive $13,500,000 in consideration for all of the
outstanding common shares of Memorial Insurance Company, with each stockholder
to receive a prorata share of the total amount of the purchase consideration.
The stockholders are to receive a total $13,500,000 for their shares by means of
capital distribution, stock purchase, stock buyback, or similar transactions,
with the Company simultaneously contributing sufficient capital and surplus to
Memorial Insurance Company to maintain its status as an admitted insurer in good
standing in the state of Arkansas.
As of December 31, 2004, Memorial Insurance Company had 100,170 policies in
force and 50 agents. For the year ended December 31, 2004, Memorial Insurance
Company had revenues of $5,219,000 and net income of $2,267,000. As of December
31, 2004, the statutory assets and the capital and surplus of Memorial Insurance
Company were $45,065,000 and $13,411,000, respectfully.
Contemporaneously with the completion of the transaction with the
stockholders of Memorial Insurance Company, the letter of intent requires
Memorial Insurance Company to coinsure substantially all of its business to the
Company. The coinsurance agreement is required to have terms standard in the
industry for such agreements, and is to include a tri-party collateral provision
regarding the assets funding the reserves. The parties to the coinsurance
agreement are to consist of the Company, Memorial Insurance Company and the
Arkansas Insurance Department. Any future insurance business by Memorial
Insurance Company will be covered by this coinsurance agreement.
Additionally, Memorial Insurance Company agrees in the letter of intent to
make its marketing sales personnel available to the Company for hire. Moreover,
the Company agrees to maintain the corporate offices of Memorial Insurance
Company at its current location. The Company anticipates completing the
transaction no later than October 30, 2005.
The obligations of the Company and Memorial Insurance Company to complete
the transaction are contingent upon satisfaction of the following conditions:
o A complete and satisfactory review by the Company of the books, records and
business of Memorial Insurance Company, with such review to be completed by
August 12, 2005.
o Execution and delivery of a definitive agreement between the Company and
Memorial Insurance Company;
o Approval and adoption of the letter of intent by the Board of Directors of
the Company and Memorial Insurance Company;
o Approval of the transaction by any regulatory authorities having
jurisdiction over the Company and Memorial Insurance Company, including the
insurance departments of the states of Arkansas and Utah;
ITEM 9.01. Financial Statements and Exhibits
(c) Exhibits
10.1 Letter of Intent between Security National Financial Corporation
and Memorial Insurance Company of America.
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: August 10, 2005 By: /s/ Scott M. Quist
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Scott M. Quist
President and Chief Operating Officer
July 11, 2005
Mr. Larry Perrin
Shareholders of Memorial Insurance Company of America
Memorial Insurance Company of America
PO Box 505
634 Main Street,
Blytheville, Arkansas 72316-0505
Dear Sirs:
By this letter Security National Financial Corporation, including its
subsidiaries, expresses its intention to acquire, as outlined below, Memorial
Insurance Company of America agrees to the transactions contemplated herein, and
the Shareholders, as evidenced by their signatures attached hereto, express
their intention to sell, redeem, exchange, or otherwise convey, all their stock
in Memorial Insurance Company of America under the following terms and
conditions.
The Shareholders shall receive $13,500,000 for 100% of the outstanding
common stock of Memorial, each shareholder to receive their pro-rata share of
the total amount. The Shareholders shall receive $13,500,000 which shall be made
by capital distribution, stock buy back, purchase of similar transactions with
Security National simultaneously contributing sufficient capital and surplus to
Memorial to maintain its status as an admitted insurer in good standing in the
State of Arkansas. The Shareholders shall make all reasonable efforts to keep
Memorial's business in force.
Simultaneous with the receipt of the above funds by the Shareholders,
conveyance of stock, and simultaneous recapitalization of Memorial, Memorial
will coinsure, on a permanent basis, substantially all its business to Security
National Life Insurance Company. This coinsurance agreement is to have terms
standard in the industry for such agreements, and shall include a tri- party
collateral provision regarding the assets funding the reserves, the parties of
the agreement are to be Memorial, Security National, and the Arkansas Insurance
Department. Future business to be written by Memorial shall be covered by this
coinsurance agreement.
Memorial, consistent with the intentions of this letter and the agreements
contemplated herein, shall make available for hire, to the extent possible, the
marketing force associated with its business. Security National hereby expresses
its intention to maintain the current office location of Memorial.
The parties agree that this Letter of Intent shall be used in preparing the
definitive documents needed to memorialize the agreements contemplated herein
and all needed regulatory filings. Such definitive documents shall contain
representations and warranties customary for such transactions to include that
its financial condition is accurately represented in its statements. Memorial
acknowledges that Security National has not completed its due diligence review
of the transactions and business to be acquired as contemplated herein. Memorial
agrees to make available all records, personnel, systems, or other items or
resources it has to Security National such that the due diligence can be
completed. Such due diligence shall be completed within three weeks of the
signing hereof of at least 80% of the outstanding shares. Each party will bear
its own costs.
Memorial Insurance Company of America Letter of Intent p.2 of 3
This letter of intent and the transactions contemplated herein are subject
to the approval of the respective Boards of Directors of Memorial and Security
National, which agreement the parties agree to use their best efforts to obtain.
Furthermore, the transactions contemplated herein are contingent upon obtaining
regulatory approval of the states of Arkansas and Utah, and any other regulatory
bodies that may have jurisdiction over the matters.
Please indicate your acceptance of the terms and conditions of this Letter
of Intent as provided herein by signing the signature lines below. Assuming your
acceptance of this letter, we hope to close no later than October 30, 2005, or
within 5 business days of this transaction receiving the needed regulatory
approvals. This letter shall be valid for 8 business days from the date hereof.
Very Truly Yours:
Security National Financial Corporation
By: Scott M. Quist, President
Accepted:
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Memorial Insurance Company of America
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Memorial Insurance Company of America Letter of Intent p.3 of 3
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