XML 34 R22.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets
 3 Months Ended
Mar. 31, 2024
Cemetery Perpetual Care Trust Investments And Obligation And Restricted Assets  
Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

15) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

 

Cemetery Perpetual Care Trust Investments and Obligation

 

State law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment rights for cemeteries that have established an endowment care trust. These endowment care trusts are defined as Variable Interest Entities pursuant to GAAP. The Company is the primary beneficiary of these trusts, as it absorbs both the losses and any expenses associated with the trusts. The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.

 

The components of the cemetery perpetual care investments and obligation as of March 31, 2024, are as follows:

  

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Allowance for Credit Losses   Estimated Fair Value 
March 31, 2024:                         
Fixed maturity securities, available for sale, at estimated fair value:                                    
U.S. Treasury securities and obligations of U.S. Government agencies  $478,900   $458   $(786)  $-   $478,572 
Obligations of states and political subdivisions   168,209    -    (6,002)   -    162,207 
Total fixed maturity securities available for sale  $647,109   $458   $(6,788)  $-   $640,779 
                          
Equity securities at estimated fair value:                         
Common stock:                         
Industrial, miscellaneous and all other  $3,657,164   $1,066,760   $(147,635)       $4,576,289 
Total equity securities at estimated fair value  $3,657,164   $1,066,760   $(147,635)       $4,576,289 
                          
Mortgage loans held for investment at amortized cost:                         
Residential construction  $123,600                     
Less: Allowance for credit losses   (247)                    
Total mortgage loans held for investment  $123,353                     
                          
Accrued investment income  $6,968                     
                          
Cash and cash equivalents  $3,021,586                     
                          
Total cemetery perpetual care trust investments  $8,368,975                     
                          
Cemetery perpetual care obligation  $(5,384,115)                    
                          
Trust investments in excess of trust obligations  $2,984,860                     

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

The components of the cemetery perpetual care investments and obligation as of December 31, 2023, are as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
December 31, 2023:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $477,797   $302   $(574)  $477,525 
Obligations of states and political subdivisions   115,792    -    (5,114)   110,678 
Corporate securities including public utilities   53,672    -    (171)   53,501 
Total fixed maturity securities available for sale  $647,261   $302   $(5,859)  $641,704 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $3,614,392   $859,680   $(146,771)  $4,327,301 
Total equity securities at estimated fair value  $3,614,392   $859,680   $(146,771)  $4,327,301 
                     
Mortgage loans held for investment at amortized cost:                    
Residential construction  $247,360                
Less: Allowance for credit losses   (495)               
Total mortgage loans held for investment  $246,865                
                     
Cash and cash equivalents  $2,867,047                
                     
Total cemetery perpetual care trust investments  $8,082,917                
                     
Cemetery perpetual care obligation  $(5,326,196)               
                     
Trust investments in excess of trust obligations  $2,756,721                

 

Fixed Maturity Securities

 

The table below summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value as of March 31, 2024 and December 31, 2023. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

 

   Unrealized Losses for Less than Twelve Months   Fair Value   Unrealized Losses for More than Twelve Months   Fair Value   Total Unrealized Loss   Fair Value 
March 31, 2024                              
U.S. Treasury securities and obligations of U.S. Government agencies  $786   $143,234   $-   $-   $786   $143,234 
Obligations of states and political subdivisions   -    -    6,002    162,207    6,002    162,207 
Totals  $786   $143,234   $6,002   $162,207   $6,788   $305,441 
                               
December 31, 2023                              
U.S. Treasury securities and obligations of U.S. Government agencies  $574   $143,448   $-   $-   $574   $143,448 
Obligations of states and political subdivisions   -    -    5,114    110,678    5,114    110,678 
Corporate securities including public utilities   -    -     171    53,501    171    53,501 
Totals  $574   $143,448   $5,285   $164,179   $5,859   $307,627 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

Relevant holdings were comprised of four securities with fair values aggregating 97.8% of the aggregate amortized cost as of March 31, 2024. Relevant holdings were comprised of four securities with fair values aggregating 98.1% of aggregate amortized cost as of December 31, 2023. No credit losses have been recognized for the three month periods ended March 31, 2024 and 2023, since the increase in unrealized losses is primarily a result of increases in interest rates. See Note 3 for additional information regarding the Company’s evaluation of the allowance for credit losses for fixed maturity securities available for sale.

 

The table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of March 31, 2024, by contractual maturity. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

   

   Amortized   Estimated Fair 
   Cost   Value 
Due in 1 year  $334,878   $335,336 
Due in 2-5 years   258,559    252,489 
Due in 5-10 years   -    - 
Due in more than 10 years   53,672    52,954 
Total  $647,109   $640,779 

 

Restricted Assets

 

The Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection with its pre-need sales for its cemetery and mortuary segment.

 

Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has included this amount as a component of restricted cash. These restricted cash items are for the Company’s life insurance and mortgage segments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

Restricted assets as of March 31, 2024, are summarized as follows:

  

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Allowance for Credit Losses   Estimated Fair Value 
March 31, 2024:                         
Fixed maturity securities, available for sale, at estimated fair value:                                   
U.S. Treasury securities and obligations of U.S. Government agencies  $932,737   $5,273   $(1,370)  $-   $936,640 
Obligations of states and political subdivisions   555,848    12    (8,102)   -    547,758 
Corporate securities including public utilities   324,253    18    (4,055)   -    320,216 
Total fixed maturity securities available for sale  $1,812,838   $5,303   $(13,527)  $-   $1,804,614 
                          
Equity securities at estimated fair value:                         
Common stock:                         
Industrial, miscellaneous and all other  $7,023,615   $1,506,405   $(251,408)       $8,278,612 
Total equity securities at estimated fair value  $7,023,615   $1,506,405   $(251,408)       $8,278,612 
                          
Mortgage loans held for investment at amortized cost:                         
Residential construction  $183,942                     
Less: Allowance for credit losses   (368)                    
Total mortgage loans held for investment  $183,574                     
                          
Accrued investment income  $13,377                     
                          
Cash and cash equivalents (1)  $10,598,384                     
                          
Total restricted assets  $20,878,561                     

 

 

(1)Including cash and cash equivalents of $6,925,987 for the life insurance and mortgage segments.

 

Restricted assets as of December 31, 2023, are summarized as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
December 31, 2023:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $932,737   $1,433   $(1,000)  $933,170 
Obligations of states and political subdivisions   652,770    305    (4,542)   648,533 
Corporate securities including public utilities   274,688    209    (2,740)   272,157 
Total fixed maturity securities available for sale  $1,860,195   $1,947   $(8,282)  $1,853,860 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $6,516,044   $1,117,155   $(247,996)  $7,385,203 
Total equity securities at estimated fair value  $6,516,044   $1,117,155   $(247,996)  $7,385,203 
                     
Mortgage loans held for investment at amortized cost:                    
Residential construction  $676,572                
Less: Allowance for credit losses   (1,353)               
Total mortgage loans held for investment  $675,219                
                     
Cash and cash equivalents (1)  $10,114,694                
                     
Total restricted assets  $20,028,976                

 

 

(1)Including cash and cash equivalents of $6,930,930 for the life insurance and mortgage segments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

Fixed Maturity Securities

 

The table below summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value as of March 31, 2024 and December 31, 2023. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities.

 

 

   Unrealized Losses for Less than Twelve Months   Fair Value   Unrealized Losses for More than Twelve Months   Fair Value   Total Unrealized Loss   Fair Value 
March 31, 2024                              
U.S. Treasury securities and obligations of U.S. Government agencies  $1,370   $249,507   $-   $-   $1,370   $249,507 
Obligations of states and political subdivisions   4,206    335,100    3,896    187,645    8,102    522,745 
Corporate securities including public utilities   684    75,757    3,371    219,442    4,055    295,199 
Totals  $6,260   $660,364   $7,267   $407,087   $13,527   $1,067,451 
                               
December 31, 2023                              
U.S. Treasury securities and obligations of U.S. Government agencies  $1,000   $249,877   $-   $-   $1,000   $249,877 
Obligations of states and political subdivisions   -    -    4,542    451,985    4,542    451,985 
Corporate securities including public utilities   -    -    2,740    221,334    2,740    221,334 
Totals  $1,000   $249,877   $7,282   $673,319   $8,282   $923,196 

 

Relevant holdings were comprised of 15 securities with fair values aggregating 98.7% of the aggregate amortized cost as of March 31, 2024. Relevant holdings were comprised of 12 securities with fair values aggregating 99.1% of the aggregate amortized cost as of December 31, 2023. No credit losses have been recognized for the three month periods ended March 31, 2024 and 2023, since the increase in unrealized losses is primarily a result of increases in interest. See Note 3 for additional information regarding the Company’s evaluation of the allowance for credit losses for fixed maturity securities available for sale.

 

The table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of March 31, 2024, by contractual maturity. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

   Amortized   Estimated Fair 
   Cost   Value 
Due in 1 year  $681,860   $687,133 
Due in 2-5 years   461,092    455,800 
Due in 5-10 years   102,422    101,308 
Due in more than 10 years   567,464    560,373 
Total  $1,812,838   $1,804,614 

 

See Notes 3 and 8 for additional information regarding restricted assets and cemetery perpetual care trust investments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 (Unaudited)