PERPETUAL CARE TRUSTS

9 Months Ended

Sep. 30, 2020

Investments Debt And Equity Securities [Abstract]

8.	PERPETUAL CARE TRUSTS

At September 30, 2020 and December 31, 2019, the Company’s perpetual care trusts consisted of investments in debt and equity marketable securities and cash equivalents, both directly as well as through mutual and investment funds.

All of these investments are carried at fair value. All of the investments subject to the fair value hierarchy are considered either Level 1 or Level 2 assets pursuant to the three-level hierarchy described in Note 14 Fair Value of Financial Instruments. There were no Level 3 assets. The perpetual care trusts are VIEs for which the Company is the primary beneficiary.

A reconciliation of the Company’s perpetual care trust activities for the nine months ended September 30, 2020 and 2019 is presented below (in thousands):

	Nine months ended September 30,
	2020			2019
Balance—beginning of period	$	343,619		$	330,562
Contributions		6,568			5,520
Distributions		(32,147	)		(16,709	)
Interest and dividends		16,071			15,621
Capital gain distributions		447			1,134
Realized gains and losses, net		(1,416	)		2,303
Other than temporary impairment		(930	)		(1,297	)
Taxes		(610	)		(634	)
Fees		(1,817	)		(2,388	)
Unrealized change in fair value		(22,109	)		8,916
Total		307,676			343,028
Less: Assets held for sale		(6,938	)		—
Balance—end of period	$	300,738		$	343,028

During the nine months ended September 30, 2020 and 2019, purchases of available for sale securities were approximately $27.1 million and $42.5 million, respectively. During the nine months ended September 30, 2020 and 2019, sales, maturities and paydowns of available for sale securities were approximately $108.9 million and $28.1 million, respectively. Cash flows from perpetual care trust related contracts are presented as operating cash flows in Company’s unaudited condensed consolidated statements of cash flows.

The cost and market value associated with the assets held in the perpetual care trusts as of September 30, 2020 and December 31, 2019 were as follows (in thousands):

September 30, 2020	Fair Value Hierarchy Level	Cost			Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments	1	$	9,500		$	—	$	—		$	9,500
Fixed maturities:
U.S. governmental securities	2		1,012			64		(50	)		1,026
Corporate debt securities	2		3,129			278		(144	)		3,263
Other debt securities	2		416			—		(13	)		403
Total fixed maturities			4,557			342		(207	)		4,692
Mutual funds—debt securities	1		17,406			274		(402	)		17,278
Mutual funds—equity securities	1		16,712			2,012		(5,355	)		13,369
Other investment funds⁽¹⁾			236,701			17,637		(12,929	)		241,409
Equity securities	1		35,768			741		(15,090	)		21,419
Other invested assets	2		8			1		—			9
Total investments		$	320,652		$	21,007	$	(33,983	)	$	307,676
Less: Assets held for sale			(7,923	)		—		985			(6,938	)
Total		$	312,729		$	21,007	$	(32,998	)	$	300,738

⁽¹⁾

Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 1 to 30 days, and private credit funds, which have lockup periods ranging from zero to six years with three potential one year extensions at the discretion of the funds’ general partners. As of September 30, 2020 there were $50.8 million in unfunded investment commitments to the private credit funds, which are callable at any time.

December 31, 2019	Fair Value Hierarchy Level	Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Short-term investments	1	$	50,358		$	—		$	—		$	50,358
Fixed maturities:
U.S. governmental securities	2		1,069			32			(52	)		1,049
Corporate debt securities	2		2,020			22			(142	)		1,900
Total fixed maturities			3,089			54			(194	)		2,949
Mutual funds—debt securities	1		49,963			1,439			(38	)		51,364
Mutual funds—equity securities	1		16,698			1,617			(66	)		18,249
Other investment funds⁽¹⁾			186,355			10,526			(5,472	)		191,409
Equity securities	1		30,423			1,333			(12	)		31,744
Other invested assets	2		16			—			—			16
Total investments		$	336,902		$	14,969		$	(5,782	)	$	346,089
Less: Assets held for sale			(2,416	)		(54	)		—			(2,470	)
Total		$	334,486		$	14,915		$	(5,782	)	$	343,619

⁽¹⁾

Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 1 to 30 days, and private credit funds, which have lockup periods ranging from one to seven years with three potential one year extensions at the discretion of the funds’ general partners. As of December 31, 2019, there were $62.4 million in unfunded investment commitments to the private credit funds, which are callable at any time.

The contractual maturities of debt securities as of September 30, 2020 and December 31, 2019 were as follows (in thousands):

September 30, 2020	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	25	$	450	$	490	$	61
Corporate debt securities		81		1,856		1,326		—
Other debt securities		403		—		—		—
Total fixed maturities	$	509	$	2,306	$	1,816	$	61

December 31, 2019	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	60	$	192	$	684	$	114
Corporate debt securities		294		1,522		84		-
Total fixed maturities	$	354	$	1,714	$	768	$	114

Temporary Declines in Fair Value

The Company evaluates declines in fair value below cost of each individual asset held in the perpetual care trusts on a quarterly basis.

An aging of unrealized losses on the Company’s investments in debt and equity securities within the perpetual care trusts as of September 30, 2020 and December 31, 2019 is presented below (in thousands):

	Less than 12 months				12 months or more				Total
September 30, 2020	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	119	$	—	$	990	$	50	$	1,109	$	50
Corporate debt securities		395		2		1,959		142		2,354		144
Other debt securities		403		13		—		—		403		13
Total fixed maturities		917		15		2,949		192		3,866		207
Mutual funds—debt securities		9,643		237		2		165		9,645		402
Mutual funds—equity securities		5,835		5,135		3		220		5,838		5,355
Other investment funds		86,383		12,929		—		—		86,383		12,929
Equity securities		18,902		15,067		15		23		18,917		15,090
Total	$	121,680	$	33,383	$	2,969	$	600	$	124,649	$	33,983

	Less than 12 months				12 months or more				Total
December 31, 2019	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	291	$	4	$	942	$	48	$	1,233	$	52
Corporate debt securities		463		46		1,887		96		2,350		142
Total fixed maturities		754		50		2,829		144		3,583		194
Mutual funds—debt securities		2,856		38		—		—		2,856		38
Mutual funds—equity securities		566		66		—		—		566		66
Other investment funds		53,426		5,472		—		—		53,426		5,472
Equity securities		121		12		—		—		121		12
Total	$	57,723	$	5,638	$	2,829	$	144	$	60,552	$	5,782

For all securities in an unrealized loss position, the Company evaluated the severity of the impairment and length of time that a security has been in a loss position and concluded the decline in fair value below the asset’s cost was temporary in nature. In addition, the Company is not aware of any circumstances that would prevent the future market value recovery for these securities.

Other-Than-Temporary Impairment of Trust Assets

The Company assesses its perpetual care trust assets for other-than-temporary declines in fair value on a quarterly basis. During the nine months ended September 30, 2020, the Company determined, based on its review, that there were 2 securities with an aggregate cost basis of approximately $9.4 million and an aggregate fair value of approximately $8.5 million, resulting in an impairment of $0.9 million, with such impairment considered to be other than temporary due to credit indicators. During the nine months ended September 30, 2019, the Company determined that there were 68 securities with an aggregate cost basis of approximately $35.8 million and an aggregate fair value of approximately $34.5 million, resulting in an impairment of $1.3 million, with such impairment considered to be other-than-temporary due to credit indicators. Accordingly, the Company adjusted the cost basis of these assets to their current value with the offset going against the liability for perpetual care trust corpus.