SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 23, 2002
SECURITY NATIONAL FINANCIAL CORPORATION
(Exact name of registrant as specified in this Charter)
Utah 0-9341 87-0345941
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5300 South 360 West, Salt Lake City, Utah 84123
(Address of principal executive offices)(Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 264-1060
Does Not Apply
(Former name or former address, if changed since last report)
ITEM 2. Asset Purchase Transaction with Acadian Life Insurance Company
On December 23, 2002, Security National Financial Corporation, a Utah
corporation (the 'Company') completed an asset purchase transaction with Acadian
Life Insurance Company, a Louisiana domiciled life insurance company
('Acadian'), in which it acquired from Acadian $75,000,000 in assets and
$75,000,000 in insurance reserves through its wholly owned subsidiary, Security
National Life Insurance Company, a Utah domiciled life insurance company
("Security National Life"). The acquired assets consist primarily of funeral
insurance policies in force from over 275,000 policyholders in the state of
Mississippi.
As part of the transaction, Security National Life entered into a
Coinsurance Agreement with Acadian, in which Security National Life agreed to
reinsure all the liabilities related to the policies held by the Mississippi
policyholders, including the payment of all legal liabilities, obligations,
claims and commissions of the acquired policies. The effective date of the
Coinsurance Agreement was September 30, 2002, at 11:59:59 p.m. (Central Daylight
Time) subsequent to Acadian's recapture of the insurance in force from Scottish
Re (U.S.) Inc. on September 30, 2002, at 11:59 p.m. (Central Daylight Time).
Under the terms of the Coinsurance Agreement, Security National Life agreed
to assume all of the risks (including deaths, surrenders, disability, accidental
deaths and dismemberment) on the reinsurance policies as of the effective date
of the Agreement. Acadian represented and warranted that each of the reinsured
policies was in force as of the effective date (including policies which may be
lapsed subject to the right of reinstatement, policies not lapsed but in
arrears, and policies in force and in effect as paid up and extended term
policies) with premiums paid and its face amount, insured, and all other
characteristics accurately reflected. Security National Life accepted liability
for all the risks under the reinsured policies on eligible lives for all
benefits occurring on or after the effective date of the agreement. The
liability of Security National Life began as of September 30, 2002.
The Coinsurance Agreement also provides that Security National Life
reserves the right to assume all right, title and interest to the reinsured
policies, as well as other similar policies written by Acadian under similar
terms and conditions in the state of Mississippi from September 30, 2002,
through termination of the Coinsurance Agreement, with an assumption agreement,
at any time but in any event not later than nine months subsequent to December
16, 2002, subject to all regulatory approvals as required by law. In the event
Acadian shall come under any supervision by a state regulator or in the event
Acadian shall apply for or consent in the appointment of, or the taking of
possession by, a receiver, custodian, regulator, trustee or liquidator of itself
or of all or a substantial part of its assets, make a general assignment for the
benefit of its creditors, commence a voluntary case under the Federal Bankruptcy
Code, file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization or winding up, Security National Life and
Acadian shall be deemed to have converted the Coinsurance Agreement to an
assumption agreement one day prior to such insolvency or other actions and
Security National Life shall be deemed to have assumed the reinsurance policies
as of one day prior to the date thereof.
The Coinsurance Agreement further provides that Acadian is required to pay
Security National Life an initial coinsurance premium in cash or assets
acceptable to Security National Life in an amount equal to the full coinsurance
reserves, including the Incurred But Not Reported (IBNR) reserve as of the
effective date. The ceding commission to be paid by Security National Life to
Acadian for the reinsured policies is to be the recapture amount to be paid by
Acadian to Scottish Re (U.S.), Inc., which is $10,254,083 pursuant to the
Automatic Coinsurance Agreement dated June 1, 2001, between Acadian and Scottish
Re (U.S.), Inc. The coinsurance premiums payable by Acadian to Security National
Life are to be equal to all of the premiums collected by Acadian on the
reinsurance policies subsequent to December 31, 2002.
Security National Life also entered into an Assumption Agreement effective
January 1, 2003, with Acadian, in which Security National Life agreed to assume
all of the liabilities related to the reinsurance policies. Under the terms of
the Assumption Agreement, Acadian agreed to cede to Security National Life, and
Security National Life agreed to assume, reinsure and guaranty all of the
insurance risks and contractual obligations of Acadian relating to the reinsured
business, including the reinsured policies. Security National Life agreed to pay
all legal liabilities and obligations, including claims and commissions, of
Acadian with respect to the reinsured business arising on or after January 1,
2002, in accordance with the terms and conditions of the reinsured policies. In
addition, Security National Life agreed to assume and carry out the obligations
of Acadian contained in the reinsured policies.
The Assumption Agreement also requires Security National Life to issue a
certificate of assumption for each policy in force included in the reinsured
business, reinsuring such policies according to the terms thereof, provided that
Security National Life may be subrogated to and substituted for all rights,
privileges and interests accruing under such policies, and provided further that
all obligations and liabilities assumed by Security National Life are assumed
subject to the terms, limitations and conditions of the insurance policies
included in the reinsured business and all defenses, counterclaims and off-sets
that are or might thereafter become available to Security National Life.
Under the Assumption Agreement Security National Life agreed to assume only
those insurance risks in contractual obligations included within the reinsured
business of Acadian. Security National Life did not agree to assume any extra
contractual or other liability or obligations of Acadian. In addition, Security
National Life did not agree to assume any policy issued to an insured whose
death occurred prior to January 1, 2003, and for which a death claim had been
received by Acadian prior to that date. However, Security National Life did
agree to assume any valid claim of an insured whose death occurred prior to
January 1, 2003, and for which a death claim was not received by Acadian prior
to that date.
The Assumption Agreement also provides that as of January 1, 2003, Acadian
agreed to transfer and assign to Security National Life all of its right, title
and interest in the reinsured policies, including policies which may be lapsed
subject to the right of reinstatement and policies in force and in effect as
paid up and extended term policies. Acadian agreed to turn over to Security
National Life, as of January 1, 2003, all policy owner service, underwriting and
other files on hand that may be needed by Security National Life in the
continuation of the reinsured business, and Acadian further agreed to turn over
all such records and record books as may be necessary for carrying on the
reinsured business, including all such permanent records of Acadian necessary
for Security National Life to continue in force in effect the reinsured
policies.
On December 23, 2002, Security National Life also entered into an Asset
Purchase Agreement with Acadian, in which Acadian agreed to transfer and convey
to Security National Life, and Security National Life agreed to purchase from
Acadian, all of Acadian's right, title and interest in and to the certain assets
of Acadian. The assets included the following: (i) computer hardware; (ii)
licensed software from International Business Machines, Inc. ('IBM') for certain
software utilized in the maintenance of Acadian's general ledger accounting
records, for use on Acadian's AS400 computer; (iii) owned software developed by
employees or contractors of Acadian or Gulf National Life Insurance Company and
utilized by Acadian in accounting for premiums received, reserve computations,
and for other purposes; (iv) certain furniture and equipment; (v) the use of the
name 'Gulf National Life Insurance Company' alone or as part of any other
tradename, as well as the logo 'GNL'; (vi) the sublease of certain real property
located at 6522 Dogwood View Parkway in Jackson, Mississippi; and (vii) the
assignment and assumption of certain agreements and arrangements. Following the
closing of the asset purchase transaction with Acadian, Security National Life
intends to continue to operate the business it acquired from Acadian in the
state of Mississippi.
ITEM 7. Financial Statements
(a) It is impractical for the Company to provide audited financial
statements of the assets acquired from Acadian at the time this report is
required to be filed. The Company intends to file the required audited financial
statements as soon as practicable but not later than 60 days after this report
must be filed.
(b) The Company intends to file the pro forma financial information as soon
as practicable but not later than 60 days after this report has been filed.
(c) Exhibits
10.1 Coinsurance Agreement between Security National Life and Acadian.
10.2 Assumption Agreement among Acadian, Acadian Financial Group, Inc.,
Security National Life and the Company.
10.3 Asset Purchase Agreement among Acadian, Acadian Financial Group, Inc.,
Security National Life and the 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: January 8, 2003 By:
Scott M. Quist, President