Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

UNITED ~~STATES SECURITIES~~STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Washington, DC. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: ~~April~~January 303, ~~2002~~2003 (Date of earliest event reported)

Insurance Management Solutions Group, Inc. (Exact name of Registrant as specified in its charter)

(Exact name of Registrant as specified in its charter)


Florida	000-25273	59-3422536

(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

Florida	000-25273	59-3422536
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification Number)


801 94th Avenue North St. Petersburg, Florida (Address of principal executive offices)		33702 (Zip Code)

360 Central Avenue
St. Petersburg, Florida		33701
(Address of principal executive offices)		(Zip Code)

(727) 803-2040

(Registrant’s telephone number, including area code)

TABLE OF CONTENTS

~~Item~~SIGNATURE 5.Flood ~~Other~~Insurance ~~Events.~~Vendor ~~SIGNATURE~~Agreement 01/03/03 Release of Security Interests First Community Insurance Termination Agreement

Item 5. Other Events and Regulation FD Disclosure.

Insurance Management Solutions Group, Inc. (including its subsidiaries, the “Company”) is filing this Current Report on Form 8-K to report that, on ~~June~~January 3, 102003, ~~2002~~Bankers Insurance Group, itInc. ~~received~~(including its ~~payment~~subsidiaries, in“BIG”) ~~full~~consummated the sale of ~~all~~First ~~amounts~~Community Insurance ~~due~~Company, a subsidiary of BIG and ~~owing~~a fifty-state licensed insurance carrier (~~approximately~~“FCIC”), $5and certain assets of BIG,~~000~~ including the rights to issue new and renewal flood insurance policies underwritten by BIG and its subsidiaries,~~000)~~ ~~from~~Bankers Insurance Company (“BIC”), Bankers Security Insurance ~~Group~~Company (“BSIC”) and FCIC, to Fidelity National Financial, Inc. (~~including~~“FNF”). ~~its~~(As ~~subsidiaries~~of the date of this Report, “BIG”), through BIC and BSIC, beneficially owns 68.0% of the outstanding common stock of the Company’s.) ~~principal~~FNF, ~~customer~~a ~~and~~Fortune ~~majority~~500 ~~shareholder~~company, ~~under~~is athe ~~short-term~~largest ~~secured~~title ~~line~~insurance and ofdiversified ~~credit~~real inestate ~~favor~~related ofservices ~~BIG~~company in the ~~amount~~United States, ofwith uptotal torevenue of nearly $53.09 billion ~~million~~in ~~(the~~2001. ~~“Line~~The transaction involves more than 360,000 flood insurance policies originated through a nationwide network of ~~Credit”)~~approximately 10,000 independent agents in conjunction with the National Flood Insurance Program.

As At ~~previously reported,~~ the ~~Line~~time of ~~Credit~~consummation ~~was~~of ~~originally~~the ~~established~~foregoing ontransaction ~~August~~between 14BIG and FNF, ~~2001.~~the OnCompany ~~March~~received ~~14,~~payment ~~2002,~~in ~~the~~full ~~Company~~of all amounts due and owing (approximately $6.7 million) from BIG ~~extended~~under the revolving line of credit of up to $7.0 million (the “Line of Credit”) ~~until~~established ~~May~~by 31the Company in favor of BIG and Bankers Underwriters, Inc., a wholly-owned subsidiary of BIG, in August 2002. The ~~principal~~Line ~~purpose~~of Credit was secured by a first priority lien security interest in the book of flood insurance business sold by BIG to FNF. This security interest, as well as all loan documentation relating to the Line of Credit, was toterminated ~~assist~~upon receipt ~~BIG~~by ~~with~~the ~~certain~~Company ~~short-term~~of ~~working~~all ~~capital~~amounts ~~needs~~due under the Line of Credit.

~~The~~ Effective ~~Company~~as isof ~~also~~the ~~filing~~consummation ~~this~~of ~~Report~~the onforegoing ~~Form~~transaction between ~~8-K~~BIG toand ~~report~~FNF, ~~that it is continuing to take actions designed to improve~~ the Company’s ~~cost~~entered ~~structure~~into ~~and~~a ~~financial~~new ~~performance.~~Flood ToInsurance ~~this~~Full Service ~~end~~Vendor Agreement, ondated ~~April 30~~January 3, ~~2002,~~2003 (the ~~Company~~“FCIC ~~notified BIG that~~Service Agreement”), ~~effective~~with ~~August 28~~FCIC, ~~2002,~~now ~~the~~a ~~Company~~wholly-owned issubsidiary ~~terminating~~of aFNF, ~~facility~~pursuant ~~sublease~~to which itthe ~~has~~Company inwill ~~place~~continue ~~with~~to ~~Bankers~~provide ~~Financial~~policy ~~Corporation~~administration, ~~the~~claims administration, ~~parent~~data ~~corporation~~processing ofand ~~BIG.~~other ~~This~~related ~~sublease~~services ~~relates~~ to ~~approximately~~FCIC ~~44,000~~in connection ~~square~~with ~~feet~~FCIC’s ofWrite ~~office~~Your ~~space~~Own in(“WYO”) ~~St.~~Flood ~~Petersburg,~~Insurance ~~Florida,~~Program. As ~~leased~~of atthe adate ~~monthly rate~~ of ~~approximately~~this ~~$56~~Report,~~000.~~ ~~This space currently houses the Company~~FCIC’s ~~corporate~~WYO ~~headquarters,~~Program asconsists ~~well~~solely ~~as a portion~~ of ~~its~~the flood ~~outsourcing~~insurance ~~operations.~~book ~~Similarly,~~of onbusiness ~~May~~previously 1,administered ~~2002,~~by the Company on ~~notified~~behalf of BIG. ~~that~~Given, ~~effective~~among ~~June~~other 30factors, ~~2002,~~FNF’s ~~the~~substantial ~~Company~~size isand financial ~~terminating~~strength ~~another~~relative ~~facility~~to ~~sublease~~BIG, itthe ~~has~~Company inbelieves ~~place~~that ~~with~~FCIC’s prospects ~~Bankers~~for ~~Life~~both ~~Insurance~~retention ~~Company,~~and agrowth ~~subsidiary~~ of ~~BIG.~~the ~~This~~existing ~~sublease~~flood ~~relates~~insurance book ~~to approximately 4,600 square feet~~ of ~~office~~business ~~space~~are ~~in St~~favorable. ~~Petersburg,~~No ~~Florida,~~assurances ~~leased~~can atbe agiven, ~~monthly rate of approximately $5~~however,~~100.~~ ~~This~~as to ~~space~~whether ~~currently~~FCIC ~~houses~~will ~~certain~~be ofable ~~the~~to ~~Company’s~~retain ~~information~~or ~~technology~~grow ~~functions. Prior to~~ the ~~respective~~existing ~~effective~~flood insurance ~~dates~~book of ~~termination of these two subleases~~business, ~~the~~or ~~Company~~as ~~expects~~ to ~~relocate~~whether ~~these~~the ~~operations~~acquisition toof ~~another~~FCIC ~~facility~~and certain inrelated ~~St.~~assets ~~Petersburg,~~by ~~Florida,~~FNF ~~that~~from ~~the~~BIG ~~Company~~will ~~currently~~have ~~leases~~a ~~from~~positive animpact ~~unaffiliated~~on ~~third party. The~~ the Company’s ~~expects to realize cost savings of approximately $725~~business,~~000~~ ~~annually~~financial ascondition aor ~~result~~results of ~~the termination of these two subleases~~operations.

~~Management~~ For of the ~~Company is also presently seeking to renegotiate certain terms of its existing Administration Services Agreement, effective October 1, 2001 with BIG (the “Service Agreement”), such that the~~ services to be provided by the Company tounder ~~BIG on an ongoing basis would consist solely of policy administration, claims administration and data processing in connection with BIG’s flood insurance line of business. Pursuant to~~ the FCIC Service Agreement, asFCIC ~~currently~~shall inpay ~~effect,~~ the Company: ~~provides~~(i) for policy administration, ~~claims administration~~ and ~~data processing services to BIG on connection with its flood, homeowners and automobile insurance lines of business, and claims administration and data processing services for BIG’s~~ other property and casualty insurance lines of business. If such a modification of the Service Agreement could be negotiated, management of the Company believes that the Company would be able to implement cost-saving measures, such as additional staffing reductions, that would more than offset the anticipated loss in revenue resulting from

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related services (other than claims administration services) a monthly fee equal to a fixed percentage (which percentage is higher for manual policies than for internet policies) of FCIC’s monthly gross written flood insurance premium (“GWP”) as measured on the ~~elimination~~effective date of ~~certain~~each ~~lines~~policy (commencing as of ~~business~~January 3, ~~most~~2005, ~~notably~~the ~~BIG’s~~applicable ~~automobile~~rates for internet policies and ~~homeowners~~manual ~~lines,~~policies shall each be reduced by 0.5%); and (ii) for claims administration services a monthly fee equal to a fixed percentage of incurred losses. The percentage rates initially applicable to FCIC under the ~~Service~~ FCIC Agreement are identical to those percentage rates which were applicable to BIG for flood insurance administration services immediately prior to the transaction between BIG and FNF.

~~Any~~ The ~~such~~FCIC ~~modification~~Service toAgreement ~~the~~is ~~Company’s~~for ~~existing~~a ~~service~~six-year ~~arrangements~~term, ~~with BIG would be~~ subject to ~~the~~early termination ~~prior~~by ~~approval~~either ofparty ~~the~~under ~~Audit~~certain ~~Committee~~circumstances. ofFCIC, ~~the~~for example, ~~Board~~may ofterminate ~~Directors~~the ofFCIC ~~the~~Service ~~Company.~~Agreement ~~Although~~in the ~~Company~~event ~~and~~of, ~~BIG~~among other ~~are~~things, ~~proceeding with discussions regarding such~~ (i) a ~~modification~~material tobreach by the ~~existing~~Company ~~Service~~of ~~Agreement~~any material representation, nowarranty ~~assurances~~or ~~can~~covenant becontained ~~given~~therein as(subject to certain ~~whether~~limited ~~any~~cure ~~agreement~~rights) ~~will~~or be(ii) the ~~reached or~~lapse, ~~if so~~termination, ~~when~~ or cancellation ~~upon~~of ~~what~~the ~~terms and conditions. Moreover~~fidelity, ~~even~~errors ifand ~~such~~omissions aninsurance ~~agreement~~coverages required ~~is reached with BIG~~ to ~~modify the Service Agreement, no assurances can~~ be ~~given~~maintained ~~that~~by the Company ~~would~~under ~~be able to implement corresponding cost-saving measures that would offset~~ the ~~anticipated~~FCIC ~~loss in affiliated outsourcing service revenues~~Service Agreement.

~~The~~ Pursuant ~~foregoing~~to ~~description of~~ the FCIC Service Agreement, isthe ~~qualified~~Company inhas agreed to indemnify FCIC and its ~~entirety~~directors, byofficers, ~~reference~~representatives, agents and employees from losses and expenses (including losses and expenses relating to ~~the~~lost ~~Insurance~~business ~~Administration~~or ~~Services~~profits ~~Agreement~~and ~~previously~~special, ~~filed~~consequential asor punitive ~~Exhibit~~damages, ~~10.71~~but only to the ~~Annual~~extent ~~Report~~they onarise ~~Form~~out ~~10-K/A~~of ~~for~~ the ~~year~~Company’s gross ~~ended~~negligence, ~~December~~bad ~~31,~~faith ~~2001~~or ~~filed~~willful bymisconduct) resulting from any act or omission of the Company onor ~~April~~its 9agents in violation or breach of, outside ~~2002~~the scope of, or otherwise in contravention of the terms of the FCIC Service Agreement.

The ~~Company~~FCIC isService ~~also~~Agreement ~~filing~~is ~~this~~not ~~Current~~assignable ~~Report~~by oneither ~~Form~~party ~~8-K~~without the toprior ~~report~~written ~~that~~consent of the ~~Special~~other ~~Committee~~(which consent may not be unreasonably withheld). For purposes of the ~~Board~~FCIC Service Agreement, a change of ~~Directors~~control of the Company (as defined in the agreement) would be deemed to be an assignment. Notwithstanding the foregoing, ~~established~~without onthe prior ~~January~~written 30consent of the other party, ~~2002~~(i) FCIC ~~and~~may ~~currently~~assign ~~comprised~~the FCIC Service Agreement to certain affiliated entities of FCIC and FNF and (ii) the Company’s ~~four~~may ~~independent~~assign ~~directors,~~the isFCIC ~~continuing~~Service Agreement to ~~evaluate~~a ~~possible~~third ~~strategic~~party ~~alternatives~~in connection ~~for~~with a change of control of the Company., Noprovided ~~assurances~~all ~~can~~of bethe following ~~given,~~are ~~however,~~satisfied: as(a) the tothird ~~whether~~party is not a direct competitor of FNF or any ~~strategic~~of ~~alternatives~~its ~~will~~affiliates; be(b) the ~~recommended~~third party (or ~~undertaken~~an affiliate thereof) has (or, ifwill ~~so,~~cause ~~upon~~the ~~what~~Company ~~terms~~to have) sufficient financial strength at the time of the proposed assignment to perform the services thereunder for the duration of the term; (c) the third party has at least three years experience in the WYO Program or agrees to maintain the Company’s operations substantially intact for a period of two years after such assignment; and ~~conditions~~(d) the third party assumes or guarantees the performance of all of the Company’s obligations under the FCIC Service Agreement.

~~Finally,~~ The ~~the~~Audit ~~Company~~Committee ~~is filing this Current Report on Form 8-K to report that Alejandro M. Sanchez resigned as a director~~ of the ~~Company~~Board ~~effective May 21, 2002 to pursue other interests. Prior to his resignation Mr. Sanchez also served as a member~~ of ~~the~~Directors ~~Audit, Compensation and Special Committees~~ of the Company’s approved ~~Board. As a result of Mr. Sanchez’s resignation,~~ the ~~Company’s~~FCIC ~~Board~~Service ofAgreement ~~Directors~~on ~~presently consists of seven (7) members~~December 26, ~~with three (3) vacancies remaining unfulfilled~~2002.

Certain statements contained in this Current Report, including statements regarding the ability of the Company to implement cost-saving measures, the possible modification of the Company’s Service Agreement with BIG, the Company’s intentions involving possible strategic alternatives, and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, uncertainties regarding economic conditions and the market, uncertainties regarding BIG (including its subsidiaries), its business and financial condition, the Company’s reliance on BIG as its principal customer and majority shareholder, and those risks and uncertainties discussed in filings made by the Company with the Securities

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~~Exchange~~ The ~~Commission~~FCIC Service Agreement expressly removes FCIC as a party from the existing Administrative Services Agreement, effective October 1, 2001, as amended, between the Company and each of BIG, BIC, BSIC and FCIC (the “Big Service Agreement”). Pursuant to the BIG Service Agreement, however, the Company will continue to provide BIG, including ~~those~~its ~~risks~~BIC and ~~uncertainties~~BSIC ~~contained~~subsidiaries, ~~under~~with IT hosting and support services, as well as various other back-office support services, including cash office processing, records management, policy assembly, and print and mail distribution services, in connection with all of BIG’s personal and commercial insurance lines of business, with no changes in the ~~heading~~existing ~~“Item~~fee structure. Nevertheless, as a result of the consummation of the sale of FCIC and related assets by BIG to FNF, the Company believes its reliance on its affiliated customers will diminish significantly on a going-forward basis. If the foregoing transaction between BIG and FNF had occurred effective January 1:, ~~Business—Risk~~2002, ~~Factors”~~BIG, inwhich accounted for approximately 70.8% of the Company’s ~~Annual~~total ~~Report~~revenue on ~~Form~~an actual 10basis for the nine-Kmonth period ended September 30, 2002, would have accounted for only approximately 36.8% of the Company’s total revenue during such period, and FCIC would have accounted for approximately 34.0% of the Company’s total revenue during such period.

As of the date of this Report, BIG owes the Company an aggregate of approximately $5.0 million under the BIG Service Agreement, of which approximately $4.1 million (including approximately $310,000 in late payment fees) is currently past due. The Company has made written demand on BIG for payment in full of all past due amounts owing under the BIG Service Agreement, and the Audit Committee of the Company’s Board of Directors is currently considering various alternatives for collecting such past due amounts.

Certain statements contained in this Current Report, including statements regarding the potential impact on the Company of the sale of FCIC and related assets by BIG to FNF, the anticipated decrease in the dependence of the Company on BIG and its affiliates as customers, and the other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, uncertainties regarding economic conditions and the market as those affect the Company, its business and financial condition, uncertainties regarding the ability of FCIC to maintain its existing flood insurance book of business following the acquisition of FCIC by FNF, uncertainties regarding FCIC’s ability to grow its flood book of business, and those risks and uncertainties discussed in filings made by the Company with the Securities Exchange Commission including those risks and uncertainties contained under the heading “Item 1: Business—Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2002

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Item 7. Financial Statements and Exhibits.

(a)

Financial statements of business acquired.


	Not applicable.

(b)

Pro forma financial information.


	Not applicable.

(c)

Exhibits.

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SIGNATURE

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 thereunto duly authorized.

INSURANCE ~~MANAGEMENT~~MANAGEMENTSOLUTIONS ~~SOLUTIONS~~ GROUP, INC. By: ~~/s/~~ David M. Howard David M. Howard Chairman of the Board, President and Chief Executive Officer

Date: ~~June~~January 137, ~~2002~~2003

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EXHIBIT INDEX


Exhibit No.		Description

10.1.		Flood Insurance Full Service Vendor Agreement, dated as of January 3, 2003, by and between First Community Insurance Company and Insurance Management Solutions Group, Inc.

10.2		Release of Security Interests, dated as of January 3, 2003, by and between Bankers Insurance Group, Inc., Bankers Underwriters, Inc. and Insurance Management Solutions Group, Inc.

10.3		Termination Agreement (relating to Technical Support Agreement), dated as of January 3, 2003, by and between Insurance Management Solutions, Inc., Bankers Insurance Group, Inc., and First Community Insurance Company.

E-1

Flood Insurance Full Service Vendor Agreement, dated as of January 3, 2003, by and between First Community Insurance Company and Insurance Management Solutions Group, Inc.

Release of Security Interests, dated as of January 3, 2003, by and between Bankers Insurance Group, Inc., Bankers Underwriters, Inc. and Insurance Management Solutions Group, Inc.

Termination Agreement (relating to Technical Support Agreement), dated as of January 3, 2003, by and between Insurance Management Solutions, Inc., Bankers Insurance Group, Inc., and First Community Insurance Company.

Filing Compare · INSURANCE MANAGEMENT SOLUTIONS GROUP INC