8-K

UNITED STATES 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): October 25, 2005

STRATEGY INTERNATIONAL INSURANCE GROUP, INC.

(Exact Name of Registrant as Specified in Charter)

TEXAS (State or Other Jurisdiction of Incorporation) 333-106637 (Commission File Number) 16-1644353 (IRS Employer Identification Number)

200 Yorkland Blvd., Suite 710, Toronto, Ontario, M2J5C1, Canada

(Address of Principal Executive Offices with Zip Code)

Registrant’s telephone number, including area code: (416) 496-9988

                                              Not Applicable                                              

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

qWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

qSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

qPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

qPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 7 — Regulation FD

Item 7.01. Regulation FD Disclosure.

As used in this report, “Strategy International”, “we”, “us”, “our” or “the Registrant” refer to Strategy International Insurance Group, Inc., a Texas corporation.

On October 26, 2005, we issued the Press Release attached as Exhibit 99.2 hereto.

Section 8 — Other Events

Item 8.01. Other Events.

On October 25, 2005, Strategy International and its Barbados insurance subsidiary, Strategy Insurance Limited, or SIL, entered into a binding letter agreement (the “Letter Agreement”) with Grupo Lakas S.A., a Panamanian corporation (“Grupo Lakas”), pursuant to which Grupo Lakas agreed to make an investment, through its wholly-owned Barbados subsidiary (the “Investor”), in shares of preferred stock (“Preferred Stock”) of our subsidiary, Strategy Holding Company Limited (“Strategy Holding”), having a value of U.S.$700 million (the “Investment”). The Letter Agreement provides that the Preferred Stock of Strategy Holding will pay (i) a dividend at an annual rate of 0.0343% (that is, U.S.$24 million) per annum, which will accrue and be payable on the last day of June and December in each year, commencing on June 30, 2006; as well as (ii) an additional dividend equal to 12% of the gross premium written by SIL, above $U.S.200 million, provided that such additional dividend will not exceed U.S.$60 million in any year. The Letter Agreement further provides that the Preferred Stock will be perpetual, and will be redeemable by Strategy Holding, at its option, for an amount equal to U.S.$700 million plus accrued and unpaid dividends.

The Investor will pay the purchase price for the Preferred Stock by issuing to Strategy Holding a promissory note (the “Note”) in the principal amount of U.S.$700 million. The Note will have a term of ten years, bear an annual interest rate of 3%, and will be collateralized by U.S.$900 million worth of marketable assets. Strategy Holding has agreed to contribute the assets underlying the Note to SIL, in an effort to increase the statutory capital base of SIL. We believe that the assets underlying the Note qualify as additional statutory capital for SIL under the Barbados Exempt Insurance Act, and the Letter Agreement requires SIL, within sixty (60) days from the execution and delivery of the Letter Agreement, to make an application to the Barbados Supervisor of Insurance for a ruling confirming the same. In the event the Barbados Supervisor of Insurance does not provide a favorable ruling within ninety (90) days from the submission of the application by SIL, then either Grupo Lakas or we may opt out of, and unwind, any and all agreements entered into relating to the Investment.

As additional consideration for making the Investment, we agreed to issue to Grupo Lakas or its assigns warrants to acquire approximately 7 million shares of our common stock, exercisable for a period of two (2) years from the issue date at an exercise price of $1.75 per share. We agreed that the Investor will have a right to demand registration of shares of our common stock underlying the warrants if such shares are not registered within one (1) year from their issuance date. We further agreed to pay a fee to Grupo Lakas or its designees in the amount of U.S.$2 million within ninety (90) days of receipt by SIL of the above ruling from the Barbados Supervisor of Insurance. Separately, the Letter Agreement provides that, in connection with the Investment, for as long as more than 50% of the Preferred Stock remains outstanding, the holder of the Preferred Stock will be entitled to appoint two directors to our board of directors.

Consummation of the Investment is subject to the preparation and execution of the definitive documentation for the Investment and the other transactions contemplated by the Letter Agreement, as well as receipt of favorable ruling from the Barbados Supervisor of Insurance as described above.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

99.1 Letter Agreement, dated October 25, 2005, between Strategy International Insurance Group, Inc. and Grupo Lakas S.A.

99.2 Press release of Strategy International Insurance Group, Inc., dated October 26, 2005.

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 thereunto duly authorized.

	STRATEGY INTERNATIONAL INSURANCE GROUP, INC.
Date: October 28, 2005	By:	/s/ Stephen Stonhill
		Name: Stephen Stonhill
		Title: Chairman of the Board and Chief Executive Officer

EXHIBIT INDEX

Number Description

99.1 Letter Agreement, dated October 25, 2005, between Strategy International Insurance Group, Inc. and Grupo Lakas S.A.

99.2 Press release of Strategy International Insurance Group, Inc., dated October 26, 2005.

EX-99.1

Exhibit 99.1

[Letterhead of Strategy International Insurance Group, Inc.]

October 25, 2005

Grupo Lakas S.A.

Av. De la Hortensa/497

Piso 5 San Borja

Lima, Peru

Attn: M. Otto Demetrio Lakas R.

Dear Mr. Lakas:

Re: U.S. $700,000,000 Investment

This Agreement (this “Agreement”) shall set forth the terms and conditions under which Strategy International Insurance Group, Inc. (“SG”) and Grupo Lakas S.A. (“Grupo Lakas”) will enter into a business relationship, which terms and conditions are as follows.

Investment: An investment by Grupo Lakas through a wholly-owned Barbados subsidiary of Grupo Lakas (the “Investor”) in shares of shares of preferred stock of SG’s Barbados subsidiary, Strategy Holdings Company, Ltd. (“Holdings”), designated as Class D Preferred Stock (the “Preferred Stock”), having a value of U.S.$700,000,000 (the “Investment”). The investment in the Preferred Stock shall be paid by the Investor by the issuance to Holdings of a promissory note in the principal amount of U.S.$700,000,000, which has a maturity date of ten (10) years from its date of issuance (the “Note”). The note will be secured by bearer certificates which entitle the holder thereof to obtain peat from sources in the Republic of Panama (the “Peat Certificates”), as more fully described herein.

Purpose: Holdings will contribute the Note to its Barbados subsidiary, Strategy Insurance Limited (“SIL”), which investment will qualify as additional statutory capital for SIL. SIL will use the capital to establish a book of business that will consist principally of writing insurance or reinsurance as determined by the Underwriting Committee of SIL, in accordance with applicable laws and regulations, and utilizing underwriting practices customary in the industry.

Preferred Stock: The Class D Preferred Stock in Holdings will provide for a dividend at an annual rate of 0.0343% (i.e., Twenty Four Million Dollars (US$24,000,000) per annum (the “Base Dividend”), which shall accrue and be payable on the last day of June and December in each year, commencing on June 30, 2006. In addition to the Base Dividend the Class D Preferred Stock will provide an additional dividend equal to 12% of the gross premium written by SIL, above $200,000,000 (the “Bonus Dividend”); provided that the Bonus Dividend shall not exceed $60,000,000 in any year. The Preferred Stock will be perpetual, but shall be redeemable by the Holdings, at its option, in an amount equal to US$700,000,000, plus accrued on unpaid dividends.

Term of Note: The Note issued shall provide that interest shall accrue on the outstanding principal amount of the Note at a rate of three percent (3%) per annum. Interest on the Note shall be payable on the last day of June and December in each year, commencing on June 30, 2006 and ending on the Maturity Date or until the Note is repaid in full.

Note Collateral: The Note will provide that it shall at all times be secured by Peat Certificates, which shall be in bearer form and shall be held by Baker & McKenzie LLP, as bailee and escrow agent for Holdings (the “Escrow Agent”), which have a value of not less than U.S.$900,000,000 at any time based upon the then quoted “ex-mine price” of peat, as quoted from time to time by the United States Department of Agriculture. If the value of the Peat Certificates are less than U.S.$900,000,000 at any time, then the Investor shall tender to the Escrow Agent additional Peat Bonds, so that the aggregate value of the Peat Certificates then held is not less than U.S.$900,000,000.

Regulatory Approval:   Within sixty (60) days from the establishment of the execution and delivery of this Agreement, SIL will undertake to make application to the Secretary of Insurance in Barbados to determine that the Investment by Holdings into SIL qualifies as regulatory capital under Barbados law. Should the Secretary of Insurance not provide a favorable ruling with ninety (90) days from the submission by SIL, then, upon the option of either SG or Grupo Lakas, the parties agree to unwind any and all agreements entered the into relating to the Investment. In particular, if the Investment is unwound, the shares of Preferred Stock shall be redeemed in consideration of the tender by Holdings to the Investor of the Note and the Peat Bonds. The date, that the approval of the Investment is received from the Secretary of Insurance, if applicable, is herein called the “Approval Date”.

Underwriting Business:   The Investor and Grupo Lakas shall be entitled to comfort from SG that it shall continue to operate its business and those of its subsidiaries in a prudential and appropriate risk basis consistent with reasonable industry practices and insurance underwriting standards. SG shall provide the Investor and Grupo Lakas with reports in form, content and substance sufficient to allow each of the Investor and Grupo Lakas to satisfy itself that these standards are being maintained, such report to be delivered on a semi-annual basis during the first year and quarterly thereafter.

Stock Ownership: As additional consideration for making the Investment, SG shall issue to Grupo Lakas or its assigns warrants to acquire 6,944,009 shares of SG’s common stock or such greater number of shares as shall equal 9.9% of the fully diluted common stock of SG as of the Approval Date (the “Warrants”). The Warrants will be issued on the Approval Date and will be exerciseable for a period of two (2) years from the issue date at an exercise price of $1.75 per share. If not registered within one (1) year from their date of issuance, the Investor shall have a demand registration right with respect to the common stock underlying the Warrants.

Board Membership: During the term that more than 50% of the Preferred Stock is outstanding, the holder of the Preferred Stock shall be entitled to appoint two members to the Board of Directors of SG, which appointment shall be effectuated within thirty (30) days after the Approval Date.

Legal Expenses: The parties herein agree that each will pay their respective legal expenses. SG agrees that should SIL not obtain the approval of the Secretary of Insurance of Barbados within the time stated above, SIG shall reimburse Grupo Lakas for all reasonable out-of-pocket expenses incurred by Grupo Lakas and/or the Investor in respect of the transaction contemplated hereby.

Facility Activation Fee:   SIG agrees to pay a fee to Grupo Lakas or its designees of US$2,000,000 upon receipt of regulatory approval from the Secretary of Insurance in a manner which is reasonably acceptable to SG, which fee will be paid within ninety (90) days of the Approval Date.

Binding Agreement: The parties acknowledge that is a binding agreement between them with respect to the subject matter of this Agreement. Promptly following the execution and delivery of this Agreement, the parties shall prepare and execute the definitive documentation for Investment and the other transactions contemplated hereby. The definitive documentation shall contain customary provisions with respect to defaults (including cure provisions), confidentiality and indemnification as are customary for transactions of this nature. Until such definitive documentation is executed and delivered, this letter agreement shall be the sole embodiment of the understanding and agreement of the parties with respect to the subject matter hereof.

Press Releases: SG will not issue any press release relating to this Agreement or the transactions contemplated hereby without the prior written consent of Grupo Lakas, which consent shall not be unreasonably withheld or delayed, except that SG may make such disclosure as may be required by applicable securities laws or regulations.

Governing Law: This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to any of its conflicts of law provisions which would result in the application of the substantive laws of another jurisdiction.

Please indicate Grupo Lakas’s agreement to the foregoing, by executing and returning the enclosed copy of this Agreement.

Very truly yours,

Strategy International Insurance Group, Inc.

By: /s/ Stephen Stonhill                                  

Name: Stephen Stonhill

Title: Chairman of the Board and Chief Executive Officer

Strategy Holdings Company Limited

By: /s/ Stephen Stonhill                                  

Name: Stephen Stonhill

Title: Chairman of the Board and Chief Executive Officer

Agreed and Accepted this

25 day of October 2005

Grupo Lakas S.A.

By: /s/ Otto D. Lakas                                

Name: Otto D. Lakas

Title: President

EX-99.2

Exhibit 99.2

[Strategy International Insurance Group, Inc. letterhead]

For Immediate Release

October 26, 2005

Strategy International Announces $700 Million Investment

Toronto, Ontario - Strategy International Insurance Group, Inc. (OTCBB: SGYI) (“Strategy”) announced today that it has completed the sale of $700 million of Preferred Stock of Strategy Holding Company Limited to Grupo Lakas S.A., a Panamanian corporation (“Grupo Lakas”), in exchange for a $700 million note collateralized by $900 million worth of marketable assets. Strategy Holding Company Limited has agreed to pledge theses marketable assets to its wholly owned subsidiary, Strategy Insurance Limited (“SIL”). As part of Grupo Lakas’ investment in Strategy, Grupo Lakas will receive approximately seven million two-year warrants, exercisable into common stock of Strategy at an exercise price of $1.75 per share.

The Company believes that the investment into SIL will immediately increase the statutory capital base of SIL, and will apply to the Barbados Supervisor of Insurance that the assets underlying the note qualify as regulatory capital under the Barbados Exempt Insurance Act. Should the Barbados Supervisor of Insurance not provide a favorable ruling within 90 days from the submission by SIL, then either party may opt out of the investment agreement.

Mr. Otto Lakas, Chief Executive Officer of Grupo Lakas, stated, “We see this transaction as a unique opportunity to invest in an innovative and unique insurance and reinsurance company with considerable growth potential. We believe we will see a strong ROI through the growth in the Company.”

Commenting on the investment, Stephen Stonhill, Strategy CEO, stated, “This capitalization will allow Strategy Insurance Limited to grow to new levels within the insurance industry by allowing us to pursue the strategic opportunities identified by the company. Additionally, we are pleased to partner with an investment group that sees and appreciates the true long term growth potential of Strategy Insurance Limited.”

About Grupo Lakas

Grupo Lakas is a Panamanian holding company with investments in mineral mining, portuary activities, fuels and power generation.

About Strategy International Insurance Group, Inc.

Strategy Insurance Limited ("Strategy"), a Barbados-formed and licensed provider of specialty lines of insurance, reinsurance and structured risk underwriting, focusing on credit risk and credit enhancement, is a wholly-owned subsidiary of Strategy Holding Company Limited, a Barbados company which is itself a wholly-owned subsidiary of Strategy International Insurance Group, Inc. (OTCBB: SGYI). Strategy conducts its insurance and reinsurance operations principally through its subsidiary incorporated in Barbados, West Indies. Strategy has offices in Barbados, London and Toronto.

Forward-Looking Statement

Statements included in this press release which are not historical in nature, are intended to be, and are hereby identified as “Forward Looking Statements” for purposes of safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. Forward Looking Statements may be identified by words including “anticipate”, “await”, “envision”, “foresee”, “aim at”, “believe”, “intends”, “estimates” including without limitation, those relating to the company’s future business prospects, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the Forward Looking Statements. Readers are directed to the company’s filings with the U.S. Securities and Exchange Commission for additional information and a presentation of the risks and uncertainties that may affect the company’s business and results of operations.

Investor Contact:

Patti Cooke pressreleases@corbitrockwell.com

Corbit Rockwell Investments

212.655.3048 or 416.907.0948