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SEC Correspondence

Table of Contents

 July 19, 2005

 Mr. Jim B. Rosenberg

 Senior Assistant Chief Accountant

 Securities and Exchange Commission

 450 Fifth Street, N.W.

 Washington, D.C. 20549

Re:

Brooke Corporation

Form 10-K for the fiscal year ended December 31, 2004

Filed March 31, 2005

File No. 001-31698

 Dear Mr. Rosenberg:

  In response to the staff’s request, we have attached a draft of
Brooke Corporation’s Form 10-K/A for the fiscal year ended December 31, 2004. Please note that changes to the Form 10-K filed by the Company in March are marked. In addition, to make the text of Items 1, 4A and 6 consistent with our pending
registration statement on Form S-1, we have made some wording changes. However, because these changes are purely cosmetic, they are not shown as marked changes.

  We are submitting this letter response with attachment to you prior to any amendment to the Form 10-K for the fiscal
year ended December 31, 2004, and the Company’s pending registration statement on Form S-1. We would appreciate an indication from the Staff as soon as practicable whether the Staff has any further questions or comments with respect to the
Company’s Form 10-K prior to our amending these forms.

 Thank you for your time and consideration.

 Very truly yours,

 Robert D. Orr

 Chief Executive Officer

Cc:

Frank Wyman, Staff Accountant

Don Abbott, Senior Staff Accountant

Table of Contents

 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K/A

 (Amendment No. 1)

(Mark One)

x
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2004

 or

¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from             to

 Commission file number 001-31698

 BROOKE CORPORATION

 (Exact name of registrant as specified in its charter)

Kansas

48-1009756

 (State or other jurisdiction of

 incorporation or organization)

 (I.R.S. Employer

 Identification No.)

 10950 Grandview Drive, Suite 600,

 Overland Park, Kansas

66210

(Address of principal executive offices)

(Zip Code)

 Registrant’s
telephone number: (913) 661-0123

 Securities registered pursuant to Section 12(b) of the Act:

 Title of each class

 Name of each exchange on which registered

Common Stock, Par Value $.01 per share

American Stock Exchange

 Securities
registered under Section 12(g) of the Act:

 None

 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

 Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein this form, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K.  ¨

 Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

 The aggregate market value of
the registrant’s common stock held by non-affiliates, computed by reference to the price at which the stock was last sold, as of June 30, 2004, was approximately $55,470,000.

 The number of shares of issuer’s common stock, $.01 par value, outstanding on February 28, 2005, was 9,466,238.

 DOCUMENTS INCORPORATED BY REFERENCE

 Certain specified portions of our definitive proxy statement relating to the
registrant’s Annual Meeting of Shareholders, to be held on April 28, 2005, are incorporated by reference in Part III to the extent described therein.

Table of Contents

 BROOKE CORPORATION

 ANNUAL REPORT OF FORM 10-K/A-1 TO THE UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 FOR THE YEAR ENDED DECEMBER 31, 2004

 EXPLANATORY NOTE

  This Form 10-K/A-1 amends our Form 10-K for the year ended December 31, 2004, which
was filed with the Securities and Exchange Commission on March 31, 2005. We are filing this Form 10/K/A-1 in response to comments received by us from the Staff of the Division of Corporation Finance of the Securities and Exchange Commission and to
conform certain disclosures contained in our Form 10-K to those disclosures made in our pending registration statement on Form S-1. Changes in response to the staff’s comments are included on Items 7 and 8 to our Form 10-K. Conforming changes
appear in Items 1, 4A, and 6 to our Form 10-K.

  In addition, in
connection with the filing of this Form 10-K/A-1 and pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, we are including with this Form 10-K/A-1 certain currently dated certifications.

  This Amendment presents the 2004 Form 10-K, as amended, in its entirely, but does not
reflect any substantial changes or update the disclosure in the 2004 Form 10-K in any way other than as required or appropriate to reflect the changes discussed above. Furthermore, it does not reflect events occurring after the filing of the 2004
Form 10-K on March 31, 2005.

Table of Contents

TABLE OF CONTENTS

Page No.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

14

PART I

ITEM 1.

BUSINESS

25

ITEM 2.

PROPERTIES

2023

ITEM 3.

LEGAL PROCEEDINGS

2124

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

2124

ITEM 4A

EXECUTIVE OFFICERS OF THE REGISTRANT

2124

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

2325

ITEM 6.

SELECTED FINANCIAL DATA

2527

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

2629

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

4559

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

4562

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

84102

ITEM 9A.

CONTROLS AND PROCEDURES

84102

ITEM 9B.

OTHER INFORMATION

84102

PART III

ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

84102

ITEM 11.

EXECUTIVE COMPENSATION

84102

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

85103

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

85103

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

85103

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

85104

SIGNATURES

88108

 3

Table of Contents

FORWARD-LOOKING AND CAUTIONARY STATEMENTS

 We caution you that this annual report on Form 10-K includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbor created
by that Act. Among other things, these statements relate to our financial condition, results of operations and business. These forward-looking statements are generally identified by the words or phrases “would be,” “will allow,”
“expect to,” “intend to,” “will continue,” “is anticipated,” “estimate,” “plan,” “may,” “believe,” “implement,” “build,” “project” or
similar expressions and references to strategies or plans.

 While we provide forward-looking statements to assist in the understanding of our anticipated future financial performance, we caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date
that we make them. Forward-looking statements are subject to significant risks and uncertainties, many of which are beyond our control. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the
assumptions could prove to be inaccurate. Actual results may differ materially from those contained in or implied by these forward-looking statements for a variety of reasons. These risks and uncertainties are discussed in more detail under
“Business” (including, but not limited to, the subsection therein entitled “Risk Factors”) and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in this report and include, but
are not limited to:

•

A significant part of our business strategy involves adding new franchise locations, and our failure to grow may adversely affect our business, prospects, results of operations and
financial condition.

•

Our franchisees’ financial performance may adversely affect their ability to repay amounts due to us.

•

Our financial condition could be adversely affected if we are unable to fund our loans through sales to third parties.

•

We make certain assumptions regarding the profitability of our securitizations which may not prove to be accurate.

•

The value of the collateral securing our loans to borrowers may be adversely affected by our borrowers’ actions.

•

Potential litigation and regulatory proceedings regarding commissions, fees, contingency payments, profit sharing and other compensation paid to brokers or agents could materially
adversely affect our financial condition.

•

We are dependent on key personnel.

•

We may be required to repurchase loans sold with recourse or make payments on guarantees.

•

We have experienced material weaknesses in our internal controls.

•

Efforts to comply with the Sarbanes-Oxley Act will entail significant expenditures; non-compliance with the Sarbanes-Oxley Act may adversely affect us.

•

We compete in a highly regulated industry, which may result in increased expenses or restrictions in our operations.

 We expressly disclaim any obligation to update or revise any of these
forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the market performance of our shares of common stock.

 4

Table of Contents

PART I

ITEM 1. BUSINESS.

 We sell
property and casualty insurance, and other services to individuals and small businesses through our network of over 385 franchised locations. We provide our franchisees with wealth creation opportunities associated with independent business
ownership while offering operational assistance more typical of a large insurance distribution company. In exchange for initial franchise fees and a share of ongoing revenues, through Brooke Franchise, we provide our franchise agencies with access
to the products of many leading insurance companies, marketing assistance and administrative support. As part of our strategy, we lend to our franchisees, through Brooke Credit, to fund the acquisition of franchises or the start up of new
franchises. Through Brooke Brokerage, we act as a wholesale insurance broker for both unaffiliated agents and our franchise agents. We also conduct limited self-insurance operations and are positioned to conduct reinsurance operations through our
Bermuda captive insurance companies.

 For the year ended
December 31, 2004, we had total operating revenues and net income of $101,923,000 and $6,694,000 compared to $65,967,000 and $4,160,000, respectively, for the year ended December 31, 2003.

 Brooke Franchise Corporation

 Brooke Franchise is one of the largest franchisors of property and casualty
insurance agencies in the United States, based on number of locations. We offer to our franchise network access to the products of many leading insurance carriers, marketing and business management support, back office assistance, financial
management tools and association with an emerging brand identity. According to Entrepreneur Magazine, January 2005, we were ranked first in our industry category of franchisors of miscellaneous financial services based on factors such as
financial strength, stability, growth rate and size of system.

 We currently franchise businesses in the following four specialties:

•

General insurance services. Franchise locations that sell primarily property and casualty insurance, such as homeowners and small business insurance.

•

Auto insurance services. Franchise locations, typically in a storefront environment, that focus on drivers with higher risk profiles.

•

Financial services. Franchise locations that sell primarily group and individual health insurance, life insurance, annuities and securities, such as mutual funds.

•

Final expense/funeral services. Franchise locations, such as funeral homes, that sell insurance and investments to prepay burial and other funeral expenses, as well as
provide funeral and cremation services.

  Based on commission revenue for the year ended December 31, 2004, we generated approximately 65% of our retail commission income from personal lines insurance such as auto and homeowners insurance and approximately 35% from commercial lines
insurance such as business owners insurance. The following table shows revenues generated through our network of franchise locations by business specialty for the year ended December 31, 2004 (in thousands):

 Specialty

Year ended
December 31,
2004

 General Insurance

$
35,876

 Auto Insurance

18,340

 Financial Services

1,104

 Final Expense/Funeral Services

2,299

 Insurance commissions

$
57,619

 Franchisees. Our franchisees are typically entrepreneurial individuals with experience in the sale of insurance, or, in a limited number of cases, financial services or funeral services, and smaller businesses with annual
revenues of less than $1 million. We believe that these entrepreneurial individuals and smaller businesses will benefit from the business, operational and marketing support that we offer. Because they are locally owned and operated by motivated
entrepreneurs, we believe

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 that our franchises will perform better than their competitors. Our franchisees generally either convert an existing
insurance agency to a franchise or form a new insurance agency. As of December 31, 2004, 2003 and 2002, we had 370, 234 and 163 franchise locations, respectively.

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 The following table shows the states that have more than fifteen of our franchise locations as of
December 31, 2004.

 State

Number of
Franchise Locations

Property and
Casualty Insurance

Conversions

Start up

 Kansas

75

70

70

5

 Florida

53

51

53

0

 Texas

52

50

47

5

 California

29

29

24

5

 Arizona

24

24

13

11

 Illinois

20

14

15

5

 Missouri

18

18

17

1

 Colorado

17

17

15

2

 The other 18 states in
which we operate had a total of 82 franchise locations as of December 31, 2004, of which 80 were property and casualty insurance agencies (including general insurance and auto insurance businesses), 75 were conversion franchisees and seven were
start up franchisees. The conversions and start ups include our property and casualty insurance agencies as well as our financial services and funeral services locations.

 Support for our franchisees. We offer to our franchisees business opportunities and efficiencies more typical
of a large company and other resources, including:

 Access to the products of leading insurance carriers. As a general matter, insurance companies require their independent agents to produce specified minimum premium volumes in order to continue selling their products. While smaller
insurance agencies can generally meet such minimum premium volumes for one or even a few carriers, it is often difficult for such insurance agencies to meet these minimum requirements for many carriers, thereby limiting the agent’s ability to
offer an array of insurance products. We aggregate the insurance premium volumes generated by our franchisees, approximately $450,000,000 for the year ended December 31, 2004, in order to gain access to the insurance products of hundreds of
insurance companies, including 10 of the 15 largest property and casualty insurers in the Unit