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): May 31, 1996
FORTUNE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 0-6869 25-1229620
(State of Incorporation) (Commission File Number) (IRS Employer ID No.)
10555 Richmond Avenue, Houston, Texas 77042
(Address of principal executive offices)
(713) 974-2242
(Registrant's telephone number)<PAGE>
Item 2. Acquisition or Disposition of Assets.
On May 31, 1996, American Capitol Insurance Company ("American Capitol") a
wholly-owned subsidiary of Acap Corporation, a majority-owned subsidiary of
Fortune National Corporation ("the Registrant") entered into a Reinsurance
and Assumption Agreement with World Service Life Insurance Company of
America ("World Service") and South Texas Bankers Life Insurance Company
("South Texas Bankers"), a wholly-owned subsidiary of World Service.
Pursuant to the agreement, American Capitol assumed all of the insurance in
force of World Service and South Texas Bankers. Immediately upon
acquisition, American Capitol reinsured the acquired business on a 100%
coinsurance basis with an unaffiliated reinsurer. American Capitol
retained the administration of the policies, for which it will receive an
expense allowance from the reinsurer. An experience refund formula in the
coinsurance allowance returns to American Capitol 50% of the profits
generated by the reinsured policies above a specified threshold. Also, at
American Capitol's option, the reinsured policies may be recaptured at a
price determined by the experience formula.
American Capitol purchased approximately 24,000 policies from World Service
and South Texas Bankers (the "Sellers") for cash of approximately $2.3
million. The assets transferred to American Capitol were $19.4 million in
cash and approximately $2.0 million of mortgage loans.
The consideration is subject to certain post-closing price adjustments.
However, it is not expected that such adjustments will be material.
American Capitol's source of the $2.3 million in cash is from the reinsurer
in the form of the initial ceding allowance under the coinsurance
agreement.
The nature and amount of the consideration paid to the Seller were arrived
at on the basis of arm's-length negotiations and American Capitol's
consideration of various factors, including an actuarial valuation of the
insurance in force and judgments with regard to the prospects and future of
the acquired policies.
There are no direct or indirect relationships between the Registrant or any
affiliate of the Registrant and the Sellers or any affiliate of the
Sellers.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
a. Financial Statements of Business Acquired.
As the acquisition was for assets only, a financial statement of the
business acquired in not applicable.
b. Pro Forma Financial Information.
It is impracticable at this time to provide the required pro forma
financial statements required by this Item 7. Such information will
be provided as soon as practicable, but in no event later than
August 14, 1996 under cover of Form 10QSB.<PAGE>
SIGNATURES
Pursuant to the requirments 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.
FORTUNE NATIONAL CORPORATION
Date: June 7, 1996 By: /s/John D. Cornett
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John D. Cornett,
Executive Vice President
and Treasurer
