##### Table of Contents



United States Securities and Exchange Commission
 Washington, D.C. 20549
 FORM 10-KSB
 (Mark One)
 þ
    
    Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2006.
 o
    
    Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to  .
 Commission file number : 0-25679
 FIRST AMERICAN CAPITAL CORPORATION
  Kansas
    
    48-1187574(State of incorporation)
    
    (I.R.S. Employer Identification Number)
 1303 SW First American Place, Topeka, KS 66604
 Issuers telephone number
    
    (785) 267-7077
 Title of Each Class
 Title of Each Class
 þ o
 o
      o þ




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##### 



PagePART I
    
    
    
    
    3Item 1.
    
    Description of Business
    
    
    3Item 2.
    
    Description of Property
    
    
    11Item 3.
    
    Legal Proceedings
    
    
    12Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    12PART II
    
    
    
    
    12Item 5.
    
    Market for Common Equity and Related Stockholder Matters
    
    
    12Item 6.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 7.
    
    Financial Statements
    
    
    20Item 8.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    20Item 8a.
    
    Controls and Procedures
    
    
    21PART III
    
    
    
    
    22Item 9.
    
    Directors, Executive Officers, Promoters, Control Persons, and Corporate Governance; Compliance With Section 16 (a) of the Exchange Act
    
    
    22Item 10.
    
    Executive Compensation
    
    
    24Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    26Item 12.
    
    Certain Relationships, Related Transactions, and Director Independence
    
    
    27Item 13.
    
    Exhibits
    
    
    29Item 14.
    
    Principal Accountant Fees and Services
    
    
    30SIGNATURES
    
    
    
    
    32Exhibit 3.3Exhibit 10.7Exhibit 10.8Exhibit 10.9Exhibit 10.10Exhibit 10.11Exhibit 10.12Exhibit 10.13Exhibit 10.14Exhibit 21Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



Item 1.
    
    Description of Business
 Overview
    Sale of Proprietary Life Insurance and Annuity Products
   3




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##### Table of Contents



Products of FLAC
  Golden Eagle Whole Life (Final Expense)
 First Whole Life
 First Term
 Value Builder
 First Step
 First Flex I
 First Max I
  4




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##### Table of Contents



First Max III
 Easy Pack
 Product Marketing and Sales
   Insurance Inforce
  (shown in thousands)Amounts of Insurance
    
    2006
    
    
    2005
    
    
    2004Beginning of the year
    
    $
    163,353
    
    
    $
    160,123
    
    
    $
    163,424Issued during year
    
    
    9,937
    
    
    
    26,306
    
    
    
    16,854Reinsurance assumed
    
    
    4,651
    
    
    
    1,096
    
    
    
    3,169Revived during year
    
    
    2,168
    
    
    
    2,147
    
    
    
    694Lapse, surrender and decreased
    
    
    (25,435
    )
    
    
    (26,319
    )
    
    
    (24,018
    )In-force end of year
    
    $
    154,674
    
    
    $
    163,353
    
    
    $
    160,123
   5




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##### Table of Contents



(Number of Policies)2006
    
    
    2005
    
    
    2004Beginning of the year
    
    
    9,856
    
    
    
    8,318
    
    
    
    6,582Issued during year
    
    
    1,137
    
    
    
    2,516
    
    
    
    1,676Reinsurance assumed
    
    
    135
    
    
    
    55
    
    
    
    726Revived during year
    
    
    143
    
    
    
    110
    
    
    
    50Lapse, surrender and decreased
    
    
    (1,297
    )
    
    
    (1,143
    )
    
    
    (716
    )In-force end of year
    
    
    9,974
    
    
    
    9,856
    
    
    
    8,318
  Reinsurance
   Underwriting
  Actuarial Services
   6




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##### Table of Contents



Investments
  Insurance Brokerage Operations
   Loan Brokerage Operations
   Administration
   7




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Competition
    Governmental Regulation
    8




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Federal Income Taxation
    9




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##### Table of Contents



Financial Information Relating to Industry Segments
  2006
    
    
    2005
    
    
    2004Revenues:Life and annuity insurance operations
    
    $
    4,880,259
    
    
    
    4,628,936
    
    
    $
    4,293,633Brokerage operations
    
    
    1,199,210
    
    
    
    765
    
    
    
    Corporate
    
    
    82,727
    
    
    
    230,801
    
    
    
    403,843Total
    
    $
    6,162,196
    
    
    $
    4,860,502
    
    
    $
    4,697,476Income (loss) before income taxes:Life and annuity insurance operations
    
    $
    254,517
    
    
    $
    271,992
    
    
    $
    464,114Brokerage operations
    
    
    1,083,796
    
    
    
    (13,965
    )
    
    
    Corporate
    
    
    (570,598
    )
    
    
    (958,656
    )
    
    
    (761,430
    )Total
    
    $
    767,715
    
    
    $
    (700,629
    )
    
    $
    (297,316
    )Depreciation and amortization expense:Life and annuity insurance operations
    
    $
    737,908
    
    
    
    630,737
    
    
    
    769,611Brokerage operations
    
    
    584
    
    
    
    438
    
    
    
    Corporate
    
    
    142,767
    
    
    
    153,863
    
    
    
    132,902$
    881,259
    
    
    $
    785,038
    
    
    $
    902,513Assets:Life and annuity insurance operations
    
    
    28,570,332
    
    
    
    23,337,149
    
    
    $
    18,305,111Brokerage operations
    
    
    1,198,212
    
    
    
    11,903
    
    
    
    Corporate
    
    
    1,488,199
    
    
    
    3,328,610
    
    
    
    4,649,885Total
    
    $
    31,256,743
    
    
    $
    26,677,662
    
    
    $
    22,954,996
 Employees
   10




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##### Table of Contents



Recent Developments
     
 Item 2.
    
    Description of Property
   11




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Item 3.
    
    Legal Proceedings
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
   
  
 Item 5.
    
    Market for Common Equity and Related Stockholder Matters
 Market Information
  Holders
   12




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Dividends
  Sales of Unregistered Securities
    
 Item 6.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Critical Accounting Policies and Estimates
   13




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Investments.
 Deferred Policy Acquisition Costs
 Future Policy Benefits
 Future Annuity Benefits
 Premiums
 Income Taxes
 Reinsurance
 Financial Condition
    14




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15




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Results of Operations
   2006
    
    
    2005
    
    
    2004Whole life insurance:First year
    
    $
    671,152
    
    
    $
    1,091,667
    
    
    $
    899,629Renewal
    
    
    3,544,584
    
    
    
    3,069,155
    
    
    
    2,701,813Term insurance:First year
    
    
    3,543
    
    
    
    3,932
    
    
    
    1,099Renewal
    
    
    19,277
    
    
    
    18,305
    
    
    
    20,296Single premium
    
    
    14,800
    
    
    
    17,520
    
    
    
    17,720Gross premium income
    
    
    4,253,356
    
    
    
    4,200,579
    
    
    
    3,640,557Reinsurance premiums
assumed
    
    
    12,425
    
    
    
    12,240
    
    
    
    10,816Reinsurance premiums ceded
    
    
    (588,544
    )
    
    
    (419,660
    )
    
    
    (117,761
    )Net premium income
    
    $
    3,677,237
    
    
    $
    3,793,159
    
    
    $
    3,533,612
    16




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17




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Liquidity and Capital Resources
      18




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Capital Commitments
  Due within one year
    
    $
    1,937.000Due in one to three years
    
    
    4,507,000Due in three to five years
    
    
    5,416,000Due after five years
    
    
    7,907,000Total
    
    $
    19,767,000
  Recently Issued Accounting Principles
  Impact of Inflation and General Economic Conditions
   19




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Item 7.
    
    Financial Statements
  
 Item 8.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
     Regulation S-B.
  20




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Item 8a.
    
    Controls and Procedures
      21




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Item 9.
    
    Directors, Executive Officers, Promoters, Control Persons, and Corporate Governance; Compliance
With Section 16 (a) of the Exchange Act
  Name
    
    Age
    
    PositionRobert D. Orr
    
    
    53
    
    
    Chairman of the Board, President, Chief Executive Officer and DirectorJohn F. Van Engelen
    
    
    54
    
    
    Chief Financial Officer, Director and President of FLACPaul E. Burke Jr.
    
    
    73
    
    
    DirectorKeith E. Bouchey
    
    
    56
    
    
    DirectorRichard E. Gill
    
    
    52
    
    
    DirectorMichael S. Hess
    
    
    51
    
    
    Vice President, Director, and President of FLAC
  Robert D. Orr Death of an Insurance Salesman?
 John F. Van Engelen
 Paul E. Burke, Jr.
  22




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##### Table of Contents



Keith E. Bouchey
 Richard Gill
 Michael Hess
 Section 16(a) Beneficial Ownership Reporting Compliance
   23




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Audit Committee
  Code of Ethics
  
 Item 10.
    
    Executive Compensation
  Summary Compensation Table
 Non-EquityOption
    
    Incentive Plan
    
    All OtherSalary
    
    Bonus
    
    Awards
    
    Compensation
    
    Compensation
    
    TotalName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($) (1)
    
    ($)
    
    ($)
    
    ($)John Van Engelen,
Chief Financial
Officer (2)
    
    2006
    
    144,800
    
    25,000
    
    32,210
    
    28,000
    
    5,496
    
    235,506
 (1)
    
    The assumptions made in the valuation of this award are discussed in Note 10 of the Notes to Consolidated
Financial Statements at Item 7 Financial Statements.(2)
    
    Mr. Van Engelen was President and Chief Executive Officer of FACC until January 31, 2007.
    24




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##### Table of Contents



Outstanding Equity Awards at Fiscal Year-End
 Number of
    
    NumberSecurities
    
    of SecuritiesUnderlying
    
    Underlying
    
    OptionUnexercised
    
    Unexercised
    
    ExerciseOptions (#)
    
    Options (#)
    
    PriceName
    
    Exercisable
    
    Unexercisable
    
    ($)
    
    Option Expiration DateJohn Van Engelen
    
    50,000 (1)
    
    0
    
    1.72
    
    December 8, 2016
 (1)
    
    FACC granted Mr. Van Engelen a warrant for the right to purchase 50,000 shares of the Companys common
stock on October 5, 2006, which became exercisable on December 8, 2006.
 Compensation of Directors
  Directors Compensation Table
 Fees Earned orPaid in
    
    
    
    
    
    
    All OtherCash
    
    
    Option Awards
    
    
    Compensation
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Paul E. Burke, Jr.
    
    
    3,075
    
    
    
    0
    
    
    
    
    
    
    
    3,075Edward Carter
    
    
    3,400
    
    
    
    0
    
    
    
    
    
    
    
    3,658Thomas Fogt
    
    
    5,125
    
    
    
    64,420
    (1)
    
    
    50,000
    
    
    
    119,545Kenneth Frahm
    
    
    4,125
    
    
    
    0
    
    
    
    
    
    
    
    4,125Stephen Irsik
    
    
    750
    
    
    
    0
    
    
    
    
    
    
    
    750John Montgomery
    
    
    3,975
    
    
    
    0
    
    
    
    
    
    
    
    3,975Gary Yager
    
    
    4,950
    
    
    
    0
    
    
    
    
    
    
    
    4,950
 (1)
    
    The assumptions made in the valuation of this award are discussed in Note 10 of the Notes to
Consolidated Financial Statements at Item 7 Financial Statements.
   25




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Severance and Change in Control Agreements
  
 Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  Name and Address of
    
    
    
    Amount ofBeneficial Owner
    
    Status of Holder
    
    Beneficial Ownership
    
    
    Percent of Class(1)Brooke Corporation(2)
    
    Beneficial Owner
    
    
    5,386,403
    
    
    
    55
    %10959 Grandview, Suite 600
Overland Park, KS 66210Robert Orr(3)
    
    Director, Officer,
    
    
    5,386,403
    
    
    
    55
    %210 W. State Street
    
    Beneficial OwnerPhillipsburg, KS 67661John F. Van Engelen(4)
    
    Director, Officer
    
    
    51,000
    
    
    
    *1303 SW First America PlaceTopeka, KS 66604Paul E. Burke, Jr.
    
    Director
    
    
    50,000
    
    
    
    *2009 Camelback Drive
Lenexa, KS 66047Keith E. Bouchey
    
    Director
    
    
    -0-
    
    
    
    *9820 Metcalf, Suite 110
Overland Park, KS 66212Richard E. Gill
    
    Director
    
    
    -0-
    
    
    
    *215 West Main Street
Cherryvale, KS 67335
  26




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##### Table of Contents



Name and Address of
    
    
    
    Amount ofBeneficial Owner
    
    Status of Holder
    
    Beneficial Ownership
    
    
    Percent of Class(1)Michael S. Hess
    
    Director, Officer
    
    
    -0-
    
    
    
    *10950 Grandview Drive, Suite 500Overland Park, KS 66210All Directors and Officers as a
    
    
    
    
    5,487,403
    
    
    
    56
    %Group (6 persons)
      
 Item 12.
    
    Certain Relationships, Related Transactions, and Director Independence
 Related Person Transactions
     27




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##### Table of Contents



Director Independence
  Current Directors:
    
    Former Directors Who Served in 2006Paul E. Burke
    
    Edward CarterKeith E. Bouchey
    
    Thomas FogtRichard E. Gill
    
    Kenneth FrahmStephen IrsikJohn MontgomeryHarland PriddleGary Yager
   28




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##### Table of Contents



Item 13.
    
    Exhibits
    Exhibit No.
    
    Description3.1
    
    Articles of Incorporation of First American Capital Corporation  (Incorporated by reference from Exhibit 2.1 to
the Registrants amended Form 10-SB filed August 13, 1999)3.2
    
    Certificate of Amendment of Articles of Incorporation of First American Capital Corporation adopted January 31,
2007 (Incorporated by reference from Exhibit 3.1 to the Registrants S-K filed on February 2, 2007)3.3
    
    Copy of Articles of Incorporation, as amended by the Certificate of Amendment adopted January 31, 2007 (*)3.4
    
    Amended and Restated Bylaws of First American Capital Corporation adopted April 7, 2005 (Incorporated by
reference from Exhibit 3.2 to the Registrants Form 8-K filed April 11, 2005)4
    
    Certificate of Designations, Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations, and Restrictions Thereof of 6% Non-Cumulative, Convertible,
Callable Preferred Stock (Incorporated by reference from Exhibit 3 to the Registrants amended Form 10-SB filed
August 13, 1999)10.1
    
    Service Agreement amended and restated effective January 1, 2002 between First American Capital Corporation and
First Life America Corporation (Incorporated by reference from Exhibit 10.3 to the Registrants Form 10-KSB filed
March 31, 2003)10.2
    
    Automatic Umbrella and Bulk ADB Reinsurance Agreements effective September 1, 1998 between First Life America
Corporation and Business Mens Assurance Company of America (Incorporated by reference from Exhibit 6.8 to the
Registrants Form 10-SB filed August 13, 1999)10.3
    
    Intercompany Tax Sharing Agreement dated December 31, 2003 between First American Capital Corporation and First
Life America Corporation (Incorporated by reference from Exhibit 10.6 to the Registrants Form 10-KSB filed March
29, 2004)10.4
    
    Automatic Reinsurance Agreement between First Life America Corporation and Wilton Reassurance Company effective
January 1, 2005 (Incorporated by reference from Exhibit 10.13 to the Registrants Form 10-KSB filed March 31,
2006)10.5
    
    Stock Purchase and Sale Agreement between First American Capital Corporation and Brooke Corporation dated October
6, 2006 (Incorporated by reference from Exhibit 7a to the Registrants Schedule 13 D/A filed December 19, 2006)10.6
    
    Stock Purchase Agreement between First American Capital Corporation and Brooke Brokerage Corporation dated
February 14, 2007 (Incorporated by reference from Exhibit 10.1 to the Registrants Form 8-K filed February 15,
2007)10.7
    
    Brokerage Agreement between First Life Brokerage, Inc. and CJD Associates, L.L.C. dated December 8, 2006 (*)
  29




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Exhibit No.
    
    Description10.8
    
    Servicing Agreement between First American Capital Corporation and Brooke Corporation dated December 8, 2006 (*)10.9
    
    Employment Agreement dated December 8, 2006 between First Life America Corporation and John F. Van Engelen (*)10.10
    
    Employment Agreement dated December 8, 2006 between First American Capital Corporation and Michael S. Hess (*)10.11
    
    Warrant for 50,000 shares of First American Capital Corporation common stock for $1.72 per share issued on
October 5, 2006 to John F. Van Engelen. (*)10.12
    
    Warrant for 100,000 shares of First American Capital Corporation common stock for $1.72 per share issued on
October 5, 2006 to Thomas M. Fogt. (*)10.13
    
    Warrant for 1,643,460 shares of First American Capital Corporation common stock for an aggregate exercise price
of $447,818.00 issued December 8, 2006 to Brooke Corporation. (*)10.14
    
    Commercial Lease Agreement between First Life America Corporation and First American Capital Corporation dated
May 1, 2006 (*)14.1
    
    First American Capital Corporation Code of Ethics for Executive Management and Board of Directors (Incorporated
by reference from Exhibit 14.1 to the Registrants Form 10-KSB filed March 29, 2004)16.1
    
    Letter on Change in Certifying Accountant (Incorporated by reference from Exhibit 16.1 to the Registrants Form
8-K/A filed November 15, 2006)21
    
    Subsidiaries of First American Capital Corporation (*)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (*)31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (*)32.1
    
    Certificate of Chief Executive Officer pursuant to Section 18 U.S.C. Section 1350 (*)32.2
    
    Certificate of Chief Financial Officer pursuant to Section 18 U.S.C. Section 1350 (*)
 
(*) Filed herewith
   
 Item 14.
    
    Principal Accountant Fees and Services
   30




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##### Table of Contents



Years Ended December 31,2006
    
    
    2005Audit Fees
    
    $
    68,206
    
    
    $
    $
    68,206
    
    
    $
    
 (1)
    
    Audit fees  Consists of fees billed and anticipated fees for professional services rendered for the audit of the
Companys annual financial statements and review of the interim financial statements included in quarterly
reports, and services that are normally provided by Summers, Spencer & Callison, CPAs, Chartered in connection
with statutory and regulatory filings or engagements.
  31




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FIRST AMERICAN CAPITAL CORPORATIONBy
    
    /s/ Robert D. Orr
    
    Date
    
    March 1, 2007Robert D. Orr, Chairman of the Board, President,
Chief Executive Officer and Director
   By
    
    /s/ Robert D. Orr
    
    Date
    
    March 1, 2007Robert D. Orr, Chairman of the Board, President,
Chief Executive Officer and DirectorBy
    
    /s/ John F. Van Engelen
    
    Date
    
    March 1, 2007John F. Van Engelen, Chief Financial Officer and
DirectorBy
    
    /s/ Michael Hess
    
    Date
    
    March 1, 2007Michael Hess, DirectorBy
    
    /s/ Keith E. Bouchey
    
    Date
    
    March 1, 2007Keith E. Bouchey, DirectorBy
    
    /s/ Paul E. Burke, Jr.
    
    Date
    
    March 1, 2007Paul E. Burke, Jr., DirectorBy
    
    /s/ Richard E. Gill
    
    Date
    
    March 1, 2007Richard E. Gill, Director
  32




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##### Table of Contents



PageConsolidated Financial Statements
    
    NumbersReport of Independent Registered Public Accounting Firm
for the year ended December 31, 2006
    
    
    F-2Report of Independent Registered Public Accounting Firm for the years ended
December 31, 2005 and 2004
    
    
    F-3Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    F-4Consolidated Statements of Operations for the years ended
December 31, 2006, 2005 and 2004
    
    
    F-6Consolidated Statements of Comprehensive Income (Loss) for the years
ended December 31, 2006, 2005 and 2004
    
    
    F-7Consolidated Statements of Changes in Shareholders Equity for the years
ended December 31, 2006, 2005, and 2004
    
    
    F-8Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2005, and 2005
    
    
    F-9Notes to Consolidated Financial Statements
    
    
    F-11
  F-1




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(LETTERHEAD) Report of Independent Registered Public Accounting Firm
 
  FIRST AMERICAN CAPITAL CORPORATION
    (Summers, Spencer and Callison, CPAs, Chartered) 
  F-2




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Report of Independent Registered Public Accounting Firm
 
     BKD, LLP
 
   
  F-3




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December 31,
    
    
    December 31,2006
    
    
    2005AssetsInvestments:Securities available-for-sale, at fair value:Fixed maturities (amortized cost, $12,532,067
in 2006 and $13,960,005 in 2005)
    
    $
    12,298,780
    
    
    $
    13,854,375Equity securities (cost of $258,400 in 2006
and $458,150 in 2005)
    
    
    283,060
    
    
    
    456,760Investments in real estate
    
    
    274,564
    
    
    
    274,564Policy loans
    
    
    166,026
    
    
    
    103,493Mortgage loans on real estate
    
    
    1,937,281
    
    
    
    1,566,382Other Investments
    
    
    3,067,369
    
    
    
    1,656,866Total investments
    
    
    18,027,080
    
    
    
    17,912,440Cash and cash equivalents
    
    
    3,542,928
    
    
    
    249,109Accrued investment income
    
    
    233,858
    
    
    
    250,984Accounts receivable
    
    
    281,894
    
    
    
    272,200Reinsurance receivables
    
    
    112,145
    
    
    
    78,725Deferred policy acquisition costs (net of accumulated
amortization of $4,444,081 in 2006 and $3,712,369 in 2005)
    
    
    5,209,693
    
    
    
    5,133,244Property and equipment (net of accumulated depreciation
of $945,228 in 2006 and $820,415 in 2005)
    
    
    2,627,586
    
    
    
    2,756,025Other assets
    
    
    1,221,559
    
    
    
    24,935Total assets
    
    $
    31,256,743
    
    
    $
    26,677,662
 See notes to consolidated financial statements.
  F-4




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##### Table of Contents



2006
    
    
    2005Liabilities and Shareholders EquityPolicy and contract liabilities:Future annuity benefits
    
    $
    13,658,174
    
    
    $
    10,301,546Future policy benefits
    
    
    6,109,055
    
    
    
    5,267,805Liability for policy claims
    
    
    211,932
    
    
    
    190,050Policyholder premium deposits
    
    
    104,038
    
    
    
    146,354Deposits on pending policy applications
    
    
    27,788
    
    
    
    9,361Reinsurance premiums payable
    
    
    54,732
    
    
    
    107,334Amounts held under reinsurance
    
    
    18,321
    
    
    
    219,079Total policy and contract liabilities
    
    
    20,184,040
    
    
    
    16,241,529Commissions, salaries, wages and benefits payable
    
    
    49,661
    
    
    
    131,873Other liabilities
    
    
    257,085
    
    
    
    180,086Notes payable
    
    
    
    
    
    
    2,272,986Deferred federal income taxes payable
    
    
    508,380
    
    
    
    527,941Total liabilities
    
    
    20,999,166
    
    
    
    19,354,415Shareholders equity:Common stock, $.10 par value, 8,000,000 shares authorized,
issued and outstanding in 2006; and 5,449,578 shares issued
and 4,257,057 shares outstanding in 2005
    
    
    800,000
    
    
    
    544,958Additional paid in capital
    
    
    13,757,298
    
    
    
    12,478,903Accumulated deficit
    
    
    (4,132,804
    )
    
    
    (3,496,404
    )Accumulated other comprehensive loss
    
    
    (166,917
    )
    
    
    (84,862
    )Less: Treasury stock held at cost (0 shares in 2006
and 1,192,521 in 2005)
    
    
    
    
    
    
    (2,119,348
    )Total shareholders equity
    
    
    10,257,577
    
    
    
    7,323,247Total liabilities and shareholders equity
    
    $
    31,256,743
    
    
    $
    26,677,662
 See notes to consolidated financial statements.
  F-5




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004Revenues:Gross premium income
    
    $
    4,253,356
    
    
    $
    4,200,579
    
    
    $
    3,640,557Reinsurance premiums assumed
    
    
    12,425
    
    
    
    12,240
    
    
    
    10,816Reinsurance premiums ceded
    
    
    (588,544
    )
    
    
    (419,660
    )
    
    
    (117,761
    )Net premium income
    
    
    3,677,237
    
    
    
    3,793,159
    
    
    
    3,533,612Net investment income
    
    
    1,085,897
    
    
    
    867,303
    
    
    
    517,486Net realized investment gain (loss)
    
    
    (39,955
    )
    
    
    (1,836
    )
    
    
    463,787Rental income
    
    
    239,678
    
    
    
    201,008
    
    
    
    182,553Consulting fees
    
    
    1,199,339
    
    
    
    868
    
    
    
    38Total revenue
    
    
    6,162,196
    
    
    
    4,860,502
    
    
    
    4,697,476Benefits and expenses:Increase in policy reserves
    
    
    841,250
    
    
    
    1,118,501
    
    
    
    1,020,812Policyholder surrender values
    
    
    270,113
    
    
    
    236,594
    
    
    
    135,518Interest credited on annuities and
premium deposits
    
    
    579,074
    
    
    
    405,778
    
    
    
    344,918Death claims
    
    
    736,830
    
    
    
    506,750
    
    
    
    288,741Commissions
    
    
    809,549
    
    
    
    1,200,741
    
    
    
    1,059,798Policy acquisition costs deferred
    
    
    (814,016
    )
    
    
    (1,246,987
    )
    
    
    (1,275,646
    )Amortization of deferred policy
acquisition costs
    
    
    737,567
    
    
    
    630,737
    
    
    
    769,611Salaries, wages, and employee benefits
    
    
    933,707
    
    
    
    1,234,824
    
    
    
    1,119,185Miscellaneous taxes
    
    
    123,638
    
    
    
    137,886
    
    
    
    171,886Other operating costs and expenses
    
    
    1,176,769
    
    
    
    1,336,307
    
    
    
    1,359,969Total benefits and expenses
    
    
    5,394,481
    
    
    
    5,561,131
    
    
    
    4,994,792Income (Loss) before income tax expense
    
    
    767,715
    
    
    
    (700,629
    )
    
    
    (297,316
    )Income tax expense (benefit)
    
    
    11,867
    
    
    
    
    
    
    
    (64,380
    )Net Income (Loss)
    
    $
    755,848
    
    
    $
    (700,629
    )
    
    $
    (232,936
    )Net Income (Loss) per common share:Basic
    
    $
    0.50
    
    
    $
    (0.49
    )
    
    $
    (0.15
    )Diluted
    
    $
    0.39
    
    
    $
    (0.49
    )
    
    $
    (0.15
    )
 See notes to consolidated financial statements.
  F-6




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    755,848
    
    
    $
    (700,629
    )
    
    $
    (232,936
    )Unrealized gain (loss) on available-for-sale securities:Unrealized holding gain (loss) during the period
    
    
    (141,563
    )
    
    
    (382,700
    )
    
    
    138,928Less: Reclassification for gains (loss) included in net income
    
    
    (39,955
    )
    
    
    (1,836
    )
    
    
    463,787Tax benefit (expense)
    
    
    19,553
    
    
    
    75,548
    
    
    
    93,011Other comprehensive loss
    
    
    (82,055
    )
    
    
    (305,316
    )
    
    
    (231,848
    )Comprehensive income (loss)
    
    $
    673,793
    
    
    $
    (1,005,945
    )
    
    $
    (464,784
    )
 See notes to consolidated financial statements.
  F-7




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004Common stock:Balance, beginning of year
    
    $
    544,958
    
    
    $
    544,958
    
    
    $
    544,958Common shares issued
    
    
    255,042
    
    
    
    
    
    
    
    Balance, end of year
    
    
    800,000
    
    
    
    544,958
    
    
    
    544,958Additional paid in capital:Balance, beginning of year
    
    
    12,478,903
    
    
    
    12,380,716
    
    
    
    12,380,523Stock warrants issued
    
    
    564,150
    
    
    
    35,465
    
    
    
    Additional paid in capital on issuance of common stock
    
    
    714,245
    
    
    
    62,722
    
    
    
    Additional paid in capital on sale of treasury stock
    
    
    
    
    
    
    
    
    
    
    193Balance, end of year
    
    
    13,757,298
    
    
    
    12,478,903
    
    
    
    12,380,716Accumulated deficit:Balance, beginning of year
    
    
    (3,496,404
    )
    
    
    (2,795,775
    )
    
    
    (2,562,839
    )Loss on sale of treasury stock
    
    
    (1,392,248
    )
    
    
    
    
    
    
    Net income (loss)
    
    
    755,848
    
    
    
    (700,629
    )
    
    
    (232,936
    )Balance, end of year
    
    
    (4,132,804
    )
    
    
    (3,496,404
    )
    
    
    (2,795,775
    )Accumulated other comprehensive income:Balance, beginning of year
    
    
    (84,862
    )
    
    
    220,454
    
    
    
    452,302Other comprehensive income
    
    
    (82,055
    )
    
    
    (305,316
    )
    
    
    (231,848
    )Balance, end of year
    
    
    (166,917
    )
    
    
    (84,862
    )
    
    
    220,454Treasury stock:Balance, beginning of year
    
    
    (2,119,348
    )
    
    
    (1,383,666
    )
    
    
    (1,385,483
    )Sale of 1,192,521 shares at a cost of $1.78 per share
    
    
    2,119,348
    
    
    
    
    
    
    
    Purchase of 450,500 common shares at $1.71 per share
    
    
    
    
    
    
    (770,355
    )
    
    
    Issuance of 19,479 shares at cost of $1.78 per share
    
    
    
    
    
    
    34,673
    
    
    
    Sale of 1,000 shares at cost of $1.82 per share
    
    
    
    
    
    
    
    
    
    
    1,817Balance, end of year
    
    
    
    
    
    
    (2,119,348
    )
    
    
    (1,383,666
    )Total shareholders equity
    
    $
    10,257,577
    
    
    $
    7,323,247
    
    
    $
    8,966,687
 See notes to consolidated financial statements.
  F-8




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004Operating activities:Net income (loss)
    
    $
    755,848
    
    
    $
    (700,629
    )
    
    $
    (232,936
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Interest credited on annuities and premium deposits
    
    
    579,074
    
    
    
    405,778
    
    
    
    344,918Net realized investment (gain) loss
    
    
    39,955
    
    
    
    1,836
    
    
    
    (463,787
    )Provision for depreciation
    
    
    143,692
    
    
    
    154,301
    
    
    
    132,902Equity loss in investment in affiliate
    
    
    
    
    
    
    
    
    
    
    28,516Settlement loss
    
    
    
    
    
    
    35,465
    
    
    
    Amortization of premium and accretion of discount on
fixed maturity and short-term investments
    
    
    (145,087
    )
    
    
    25,958
    
    
    
    138,001Provision for deferred federal income taxes
    
    
    
    
    
    
    
    
    
    
    (64,380
    )Acquisition costs capitalized
    
    
    (814,016
    )
    
    
    (1,246,987
    )
    
    
    (1,275,646
    )Amortization of deferred acquisition costs
    
    
    737,567
    
    
    
    630,737
    
    
    
    769,611(Increase) decrease in assets:Accrued investment income
    
    
    17,126
    
    
    
    (36,844
    )
    
    
    (33,071
    )Accounts receivable
    
    
    (9,694
    )
    
    
    (14,006
    )
    
    
    38,172Reinsurance receivables
    
    
    (33,420
    )
    
    
    (78,725
    )
    
    
    Policy loans
    
    
    (62,533
    )
    
    
    (16,547
    )
    
    
    (26,495
    )Other assets
    
    
    (1,196,624
    )
    
    
    5,430
    
    
    
    (22,717
    )Increase (decrease) in liabilities:Future policy benefits
    
    
    841,250
    
    
    
    1,118,501
    
    
    
    1,020,812Liability for policy claims
    
    
    21,882
    
    
    
    77,144
    
    
    
    4,888Deposits on pending policy applications
    
    
    18,427
    
    
    
    (307
    )
    
    
    (22,823
    )Reinsurance premiums payable
    
    
    (52,602
    )
    
    
    84,214
    
    
    
    (8,593
    )Amounts held under reinsurance
    
    
    (200,758
    )
    
    
    219,079
    
    
    
    Commissions, salaries, wages and benefits payable
    
    
    (82,212
    )
    
    
    27,929
    
    
    
    50,929Other liabilities
    
    
    76,999
    
    
    
    76,611
    
    
    
    26,593Net cash provided by operating activities
    
    $
    634,874
    
    
    $
    768,938
    
    
    $
    404,894
 See notes to consolidated financial statements.
  F-9




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004Investing activities:Purchase of available-for-sale fixed maturities
    
    $
    (2,670,727
    )
    
    $
    (2,748,760
    )
    
    $
    (10,022,949
    )Sale of available-for-sale fixed maturities
    
    
    3,409,932
    
    
    
    400,080
    
    
    
    6,732,704Maturity of available-for-sale fixed maturities
    
    
    576,046
    
    
    
    1,502,624
    
    
    
    1,850,000Purchase of available-for-sale equities
    
    
    
    
    
    
    (247,750
    )
    
    
    (193,600
    )Sale of available-for-sale equities
    
    
    222,699
    
    
    
    25,000
    
    
    
    Additions to property and equipment
    
    
    (15,253
    )
    
    
    (135,140
    )
    
    
    (71,275
    )Purchase of other investments
    
    
    (1,593,368
    )
    
    
    (1,520,232
    )
    
    
    (202,760
    )Maturity of other investments
    
    
    377,726
    
    
    
    134,416
    
    
    
    Purchase of investments in affiliate
    
    
    
    
    
    
    
    
    
    
    (11,500
    )Dispositions of investment in affiliate
    
    
    
    
    
    
    
    
    
    
    48,184Purchase of mortgage loans
    
    
    (429,500
    )
    
    
    (1,244,600
    )
    
    
    (350,000
    )Payments received on mortgage loans
    
    
    58,601
    
    
    
    27,760
    
    
    
    458Payment on notes receivable
    
    
    
    
    
    
    
    
    
    
    13,741Purchases of short-term investments
    
    
    
    
    
    
    
    
    
    
    (3,925,512
    )Sale or maturity of short term investments
    
    
    
    
    
    
    
    
    
    
    4,375,507Net cash used in investing activities
    
    
    (63,844
    )
    
    
    (3,806,602
    )
    
    
    (1,757,002
    )Financing activities:Proceeds from note payable
    
    
    
    
    
    
    570,355
    
    
    
    Payments on notes payable
    
    
    (2,272,986
    )
    
    
    (88,976
    )
    
    
    (51,400
    )Deposits on annuity contracts
    
    
    3,548,635
    
    
    
    3,754,742
    
    
    
    1,839,573Surrenders on annuity contracts
    
    
    (766,138
    )
    
    
    (658,617
    )
    
    
    (269,794
    )Policyholder premium deposits
    
    
    9,486
    
    
    
    23,938
    
    
    
    22,472Withdrawals on policyholder premium deposits
    
    
    (56,745
    )
    
    
    (71,342
    )
    
    
    (61,514
    )Proceeds from issuance of warrants
    
    
    564,150
    
    
    
    
    
    
    
    Proceeds from sale of common stock
    
    
    969,287
    
    
    
    
    
    
    
    Proceeds from sale of treasury stock
    
    
    727,100
    
    
    
    
    
    
    
    2,010Purchase of treasury stock
    
    
    
    
    
    
    (770,355
    )
    
    
    Net cash provided by financing activities
    
    
    2,722,789
    
    
    
    2,759,745
    
    
    
    1,481,347Increase (decrease) in cash and cash equivalents
    
    
    3,293,819
    
    
    
    (277,919
    )
    
    
    129,239Cash and cash equivalents, beginning of period
    
    
    249,109
    
    
    
    527,028
    
    
    
    397,789Cash and cash equivalents, end of period
    
    $
    3,542,928
    
    
    $
    249,109
    
    
    $
    527,028Supplemental disclosure of cash activities:Interest paid
    
    $
    62,295
    
    
    $
    105,084
    
    
    $
    111,104Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    Schedule of non-cash investing transactions:Issuance of treasury stock
    
    $
    
    
    
    $
    97,935
    
    
    $
    
 See notes to consolidated financial statements.
  F-10




---



##### Table of Contents



1. Nature of Operations
  2. Significant Accounting Policies
 Basis of Presentation
   Principles of Consolidation
  Managements Estimates
  Investments
  Deferred Policy Acquisition Costs
   F-11




---



##### Table of Contents



2. Significant Accounting Policies (continued)
 Property and Equipment
  Building and capitalized interest
    
    39 yearsLand improvements
    
    15 yearsFurniture, fixtures and equipment
    
    
    3 to 7 years
 Future Annuity Benefits
  Future Policy Benefits
  Liability for Policy Claims
  Policyholder Premium Deposits
  Treasury Stock
  Premiums
   F-12




---



##### Table of Contents



2. Significant Accounting Policies (continued)
 Consulting Fees
   Federal Income Taxes
  Reinsurance
  Net Earnings (Loss) Per Common Share
   F-13




---



##### Table of Contents



2. Significant Accounting Policies (continued)
 Years ended December 31,2006
    
    
    2005
    
    
    2004Numerator:Net income (loss)  numerator for basic earnings per share
    
    $
    755,848
    
    
    $
    (700,629
    )
    
    $
    (232,936
    )Effect of dilutive securities
    
    
    
    
    
    
    
    
    
    
    Numerator for diluted earnings per share
    
    $
    755,848
    
    
    $
    (700,629
    )
    
    $
    (232,936
    )Denominator:Average common shares outstanding
    
    
    4,492,914
    
    
    
    4,313,774
    
    
    
    4,687,078Effect of 3-for-1 reverse stock split
    
    
    (2,995,276
    )
    
    
    (2,875,849
    )
    
    
    (3,124,719
    )Shares used for basic earnings per share
    
    
    1,497,638
    
    
    
    1,437,925
    
    
    
    1,562,359Effect of diluted warrant outstanding (adjusted for split)
    
    
    547,820
    
    
    
    
    
    
    
    Assumed repurchase of shares with procceds of exercise
    
    
    (86,786
    )
    
    
    
    
    
    
    Shares used for diluted earnings per share
    
    
    1,958,672
    
    
    
    1,437,925
    
    
    
    1,562,359Earnings per share:Basic
    
    $
    0.50
    
    
    $
    (0.49
    )
    
    $
    (0.15
    )Diluted
    
    $
    0.39
    
    
    $
    (0.49
    )
    
    $
    (0.15
    )
 Comprehensive Income
  New Accounting Pronouncements
   F-14




---



##### Table of Contents



2. Significant Accounting Policies (continued)
     F-15




---



##### Table of Contents



3. Investments
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2006:U.S. Government Agency
    
    $
    1,559,006
    
    
    $
    9,879
    
    
    $
    18,414
    
    
    $
    1,550,471Corporate bonds
    
    
    10,973,061
    
    
    
    75,128
    
    
    
    299,880
    
    
    
    10,748,309Total
    
    $
    12,532,067
    
    
    $
    85,007
    
    
    $
    318,294
    
    
    $
    12,298,780Equity securities
    
    $
    258,400
    
    
    $
    28,960
    
    
    $
    4,300
    
    
    $
    283,060December 31, 2005:U.S. Government Agency
    
    $
    1,408,079
    
    
    $
    16,891
    
    
    $
    14,026
    
    
    $
    1,410,944Corporate bonds
    
    
    12,551,926
    
    
    
    223,559
    
    
    
    332,054
    
    
    
    12,443,431Total
    
    $
    13,960,005
    
    
    $
    240,450
    
    
    $
    346,080
    
    
    $
    13,854,375Equity securities
    
    $
    458,150
    
    
    $
    22,005
    
    
    $
    23,395
    
    
    $
    456,760
  Amortized Cost
    
    
    Fair ValueDue in one year or less through five years
    
    $
    2,454,322
    
    
    $
    2,470,426Due after five years through ten years
    
    
    5,176,566
    
    
    
    5,064,874Due after ten years
    
    
    4,901,179
    
    
    
    4,763,480$
    12,532,067
    
    
    $
    12,298,780
      F-16




---



##### Table of Contents



3. Investments (continued)
   Years ended December 31,2006
    
    
    2005
    
    
    2004Fixed maturities
    
    $
    720,022
    
    
    $
    713,645
    
    
    $
    509,933Equity securities
    
    
    25,929
    
    
    
    18,666
    
    
    
    70Notes receivables
    
    
    
    
    
    
    
    
    
    
    238Mortgage loans on real estate
    
    
    116,584
    
    
    
    66,625
    
    
    
    2,275Equity loss on investment in related parties
    
    
    
    
    
    
    
    
    
    
    (28,516
    )Short-term and other investments
    
    
    249,418
    
    
    
    90,007
    
    
    
    43,798Gross investment income
    
    
    1,111,953
    
    
    
    888,943
    
    
    
    527,798Investment expenses
    
    
    (26,056
    )
    
    
    (21,640
    )
    
    
    (10,312
    )Net investment income
    
    $
    1,085,897
    
    
    $
    867,303
    
    
    $
    517,486
    F-17




---



##### Table of Contents



3. Investments (continued)
  Less than 12 months
    
    
    12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesDecember 31, 2006:U.S. Government
Agency
    
    $
    
    
    
    $
    
    
    
    $
    694,830
    
    
    $
    18,414
    
    
    $
    694,830
    
    
    $
    18,414Corporate bonds
    
    
    4,360,312
    
    
    
    77,558
    
    
    
    4,743,034
    
    
    
    222,322
    
    
    
    9,103,346
    
    
    
    299,880Total
    
    $
    4,360,312
    
    
    $
    77,558
    
    
    $
    5,437,864
    
    
    $
    240,736
    
    
    $
    9,798,176
    
    
    $
    318,294Equity securities
    
    $
    2,300
    
    
    $
    50
    
    
    $
    95,750
    
    
    $
    4,250
    
    
    $
    98,050
    
    
    $
    4,300
 Less than 12 months
    
    
    12 months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesDecember 31, 2005:U.S. Government
Agency
    
    $
    598,965
    
    
    $
    11,324
    
    
    $
    96,879
    
    
    $
    2,702
    
    
    $
    695,844
    
    
    $
    14,026Corporate bonds
    
    
    6,047,377
    
    
    
    212,041
    
    
    
    1,414,230
    
    
    
    120,013
    
    
    
    7,461,607
    
    
    
    332,054Total
    
    $
    6,646,342
    
    
    $
    223,365
    
    
    $
    1,511,109
    
    
    $
    122,715
    
    
    $
    8,157,451
    
    
    $
    346,080Equity securities
    
    $
    47,980
    
    
    $
    20
    
    
    $
    126,275
    
    
    $
    23,375
    
    
    $
    174,255
    
    
    $
    23,395
 4. Concentrations of Credit Risk
  5. Property and Equipment
  2006
    
    
    2005Land and improvements
    
    $
    357,675
    
    
    $
    357,675Building and capitalized interest
    
    
    2,605,330
    
    
    
    2,605,330Furniture, fixtures and equipment
    
    
    500,939
    
    
    
    510,063Tenant improvements
    
    
    108,870
    
    
    
    103,372Total property and equipment
    
    
    3,572,814
    
    
    
    3,576,440Less  accumulated depreciation and amortization
    
    
    (945,228
    )
    
    
    (820,415
    )Net property and equipment
    
    $
    2,627,586
    
    
    $
    2,756,025
  F-18




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6. Leases
    Year EndingDecember 31,
    
    Amount2007
    
    
    238,3852008
    
    
    238,3852009
    
    
    238,3852010
    
    
    220,9192011
    
    
    185,988Total
    
    $
    936,073
 7. Federal Income Taxes
  Years ended December 31,2006
    
    
    2005
    
    
    2004Current
    
    $
    11,867
    
    
    $
    
    
    
    $
    Deferred
    
    
    
    
    
    
    
    
    
    
    (64,380
    )Federal income tax (benefit) expense
    
    $
    11,867
    
    
    $
    
    
    
    $
    (64,380
    )
  2006
    
    
    2005
    
    
    2004Federal income tax expense (benefit) at
statutory rate
    
    $
    261,023
    
    
    $
    (238,213
    )
    
    $
    (101,088
    )Small life insurance company deduction
    
    
    (32,165
    )
    
    
    (36,106
    )
    
    
    (64,975
    )Increase (decrease) in valuation allowance
    
    
    (289,533
    )
    
    
    273,190
    
    
    
    100,202Other
    
    
    72,542
    
    
    
    1,129
    
    
    
    1,481Federal income tax (benefit) expense
    
    $
    11,867
    
    
    
    
    
    
    $
    (64,380
    )
  F-19




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##### Table of Contents



7. Federal Income Taxes (continued)
  December 31,2006
    
    
    2005Deferred tax liability:Due premiums
    
    $
    10,571
    
    
    $
    11,832Policy reserves
    
    
    4,069
    
    
    
    Deferred policy acquisition costs
    
    
    873,841
    
    
    
    868,699Accrual of discount
    
    
    8,524
    
    
    
    5,387Premium deposit
    
    
    8,463
    
    
    
    Total deferred tax liability
    
    
    905,468
    
    
    
    885,918Deferred tax asset:Policy reserves
    
    
    
    
    
    
    92,810Capital loss carryforward
    
    
    9,948
    
    
    
    AMT credit carryforward
    
    
    11,867
    
    
    
    Reinsurance premiums
    
    
    2,298
    
    
    
    3,514Net operating loss carryforward
    
    
    2,019,534
    
    
    
    2,217,307Net unrealized investment loss
    
    
    41,726
    
    
    
    22,164Total deferred tax asset
    
    
    2,085,373
    
    
    
    2,335,795Valuation allowance
    
    
    (1,688,285
    )
    
    
    (1,977,818
    )Net deferred tax asset
    
    
    397,088
    
    
    
    357,977Net deferred tax liability
    
    $
    508,380
    
    
    $
    527,941
  8. Intercompany Sale of Building and Payoff of Related Mortgage Notes Payable
   F-20




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##### Table of Contents



9. Shareholders Equity and Statutory Accounting Practices
   GAAP
    
    
    SAPNet Income
    
    
    Capital and
    
    
    Net Income
    
    
    Capital and(loss)
    
    
    Surplus
    
    
    (loss)
    
    
    Surplus2006
    
    
    254,517
    
    
    
    7,659,130
    
    
    
    216,259
    
    
    
    3,966,2332005
    
    
    271,995
    
    
    
    6,490,251
    
    
    
    (64,575
    )
    
    
    2,724,9802004
    
    
    528,494
    
    
    
    6,251,955
    
    
    
    (54,205
    )
    
    
    2,539,348
     F-21




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##### Table of Contents



10. Shareholders Equity Transactions
      F-22




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##### Table of Contents



11. Reinsurance
     12. Related Party Transactions
    F-23




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F-24




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##### Table of Contents



13. Fair Values of Financial Instruments
  Fixed Maturities
  Equity Securities
  Policy Loans
  Mortgage Loans on Real Estate
  Other Investments
  Cash and Cash Equivalents
   F-25




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##### Table of Contents



14. Segment Information
  2006
    
    
    2005
    
    
    2004Revenues:Life and annuity insurance operations
    
    $
    4,880,259
    
    
    $
    4,628,936
    
    
    $
    4,293,633Brokerage operations
    
    
    1,199,210
    
    
    
    765
    
    
    
    Corporate
    
    
    82,727
    
    
    
    230,801
    
    
    
    403,843Total
    
    $
    6,162,196
    
    
    $
    4,860,502
    
    
    $
    4,697,476Income (loss) before income taxes:Life and annuity insurance operations
    
    $
    254,517
    
    
    $
    271,992
    
    
    $
    464,114Brokerage operations
    
    
    1,083,796
    
    
    
    (13,965
    )
    
    
    Corporate
    
    
    (570,598
    )
    
    
    (958,656
    )
    
    
    (761,430
    )Total
    
    $
    767,715
    
    
    $
    (700,629
    )
    
    $
    (297,316
    )Depreciation and amortization expense:Life and annuity insurance operations
    
    $
    737,908
    
    
    $
    630,737
    
    
    $
    769,611Brokerage operations
    
    
    584
    
    
    
    438
    
    
    
    Corporate
    
    
    142,767
    
    
    
    153,863
    
    
    
    132,902Total
    
    $
    881,259
    
    
    $
    785,038
    
    
    $
    902,513Assets:Life and annuity insurance operations
    
    $
    28,570,332
    
    
    $
    23,337,149
    
    
    $
    18,305,111Brokerage operations
    
    
    1,198,212
    
    
    
    11,903
    
    
    
    Corporate
    
    
    1,488,199
    
    
    
    3,328,610
    
    
    
    4,649,885Total
    
    $
    31,256,743
    
    
    $
    26,677,662
    
    
    $
    22,954,996
  F-26




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15.  Liquidity and Capital Resources
   16. Other Regulatory Matters
   17. Subsequent Events
      F-27