Note 13: Statutory Financial Information and Dividend Limitations

12 Months Ended

Dec. 31, 2016

Notes

Note 13: Statutory Financial Information and Dividend Limitations

13)       Statutory Financial Information and Dividend Limitations

The Company’s insurance subsidiaries prepare their statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed.

All states require domiciled insurance companies to prepare statutory-basis financial statements in conformity with the NAIC Accounting Practices and Procedures Manual, subject to any deviations prescribed or permitted by the applicable insurance commissioner and/or director. Statutory accounting practices differ from GAAP primarily since they require charging policy acquisition and certain sales inducement costs to expense as incurred, establishing life insurance reserves based on different actuarial assumptions, and valuing certain investments and establishing deferred taxes on a different basis.

Statutory net income and capital and surplus of the Company’s insurance subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities are as follows:

	Net Income			Capital and Surplus
	2016	2015	2014	2016	2015
Amounts by insurance subsidiary:
Security National Life Insurance Company	$ 2,601,408	$ 3,478,338	$ 5,137,208	$ 36,789,358	$ 32,771,066
First Guaranty Insurance Company	174,562	-	-	4,091,847	-
Memorial Insurance Company of America	460	49	415	1,081,319	1,082,059
Southern Security Life Insurance Company, Inc.	889	491	467	1,592,440	1,590,605
Trans-Western Life Insurance Company	1,203	(52)	1,304	500,333	499,130
Total	$ 2,778,522	$ 3,478,826	$ 5,139,394	$ 44,055,297	$ 35,942,860

The Utah, Arkansas, Louisiana, Mississippi and Texas Insurance Departments impose minimum risk-based capital (“RBC”) requirements that were developed by the NAIC on insurance enterprises. The formulas for determining the RBC specify various factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio (the “Ratio”) of the enterprise’s regulatory total adjusted capital, as defined by the NAIC, to its authorized control level, as defined by the NAIC. Enterprises below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The life insurance subsidiaries have a combined weighted Ratio that is greater than the first level of regulatory action as of December 31, 2016.

Generally, the net assets of the life insurance subsidiaries available for transfer to the Company are limited to the amounts of the life insurance subsidiaries net assets, as determined in accordance with statutory accounting practices, which were $44,055,297 at December 31, 2016, exceed minimum statutory capital requirements; however, payments of such amounts as dividends are subject to approval by regulatory authorities.