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Preneed Activities Level 1 (Notes)
 12 Months Ended
Dec. 31, 2019
Preneed Activities [Abstract]  
Preneed Activities Text Block
3. Preneed Activities
Preneed receivables, net and trust investments
The components of Preneed receivables, net and trust investments in our Consolidated Balance Sheet were as follows:
 
Years Ended December 31,
 
2019
 
2018
 
(In thousands)
Preneed funeral receivables
$
130,971

 
$
107,612

Preneed cemetery receivables
922,171

 
883,432

Preneed receivables from customers
1,053,142

 
991,044

Unearned finance charge
(50,570
)
 
(44,981
)
Allowance for cancellation
(55,340
)
 
(48,380
)
Preneed receivables, net
947,232

 
897,683

 
 
 
 
Trust investments, at market
5,258,319

 
4,585,720

Insurance-backed fixed income securities and other
265,160

 
265,787

Trust investments
5,523,479

 
4,851,507

Less: Cemetery perpetual care trust investments
(1,681,149
)
 
(1,477,798
)
Preneed trust investments
3,842,330

 
3,373,709

 
 
 
 
Preneed receivables, net and trust investments
$
4,789,562

 
$
4,271,392



The table below sets forth certain investment-related activities associated with our trusts:
 
Years Ended December 31,
 
2019
 
2018
 
2017
 
 
 
(In thousands)
 
 
Deposits
$
421,460

 
$
393,523

 
$
371,234

Withdrawals
$
435,344

 
$
432,822

 
$
415,283

Purchases of securities
$
1,596,698

 
$
1,540,093

 
$
2,057,348

Sales of securities
$
1,495,733

 
$
1,564,968

 
$
1,999,918

Realized gains from sales of securities(1)
$
241,661

 
$
305,595

 
$
256,413

Realized losses from sales of securities(1)
$
(121,272
)
 
$
(77,996
)
 
$
(76,963
)

(1) 
All realized gains and losses are recognized in Other income (expense), net for our trust investments and are offset by a corresponding reclassification in Other income (expense), net to Deferred receipts held in trust and Care trusts’ corpus.
The activity in Preneed receivables, net and trust investments was as follows:
 
Years Ended December 31,
 
2019
 
2018
 
2017
 
 
 
(In thousands)
 
 
Beginning balance - Preneed receivables, net and trust investments
$
4,271,392

 
$
4,778,842

 
$
4,305,165

Net preneed contract sales
1,372,705

 
1,325,134

 
1,257,288

Cash receipts from customers, net of refunds
(1,280,468
)
 
(1,185,717
)
 
(1,109,380
)
Deposits to trust
372,644

 
347,601

 
328,241

Acquisitions of businesses, net
11,751

 
134,729

 
8,153

Net undistributed investment earnings (losses) (1)
489,577

 
(191,611
)
 
384,512

Maturities and distributed earnings
(442,507
)
 
(433,036
)
 
(411,452
)
Change in cancellation allowance
(2,006
)
 
62,131

 
(528
)
Change in amounts due on unfulfilled performance obligations
(10,223
)
 
(546,554
)
 
—

Effect of foreign currency and other
6,697

 
(20,127
)
 
16,843

Ending balance - Preneed receivables, net and trust investments
$
4,789,562

 
$
4,271,392

 
$
4,778,842

(1) 
Includes both realized and unrealized investment earnings (losses).
The cost and market values associated with trust investments recorded at market value at December 31, 2019 and 2018 are detailed below. Cost reflects the investment (net of redemptions) of control holders in the trusts. Fair value represents the value of the underlying securities held by the trusts.
 
 
December 31, 2019
 
Fair Value Hierarchy Level
Cost

 
Unrealized
Gains

 
Unrealized
Losses

 
Value

 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 

 
 

 
 

 
 

U.S. Treasury
2
$
49,728

 
$
752

 
$
(130
)
 
$
50,350

Canadian government
2
41,093

 
76

 
(850
)
 
40,319

Corporate
2
9,694

 
28

 
(172
)
 
9,550

Residential mortgage-backed
2
3,210

 
59

 
(1
)
 
3,268

Asset-backed
2
129

 
3

 
(4
)
 
128

Equity securities:
 
 
 
 
 
 
 
 

Preferred stock
2
6,338

 
804

 
(115
)
 
7,027

Common stock:
 
 
 
 
 
 
 
 

United States
1
1,349,828

 
303,766

 
(36,507
)
 
1,617,087

Canada
1
43,866

 
12,369

 
(2,075
)
 
54,160

Other international
1
95,257

 
18,227

 
(522
)
 
112,962

Mutual funds:
 
 
 
 
 
 
 
 

Equity
1
746,581

 
31,511

 
(54,020
)
 
724,072

Fixed income
1
1,247,930

 
16,424

 
(32,587
)
 
1,231,767

Other
3
7,034

 
1,184

 
—

 
8,218

Trust investments, at fair value
 
3,600,688

 
385,203

 
(126,983
)
 
3,858,908

Commingled funds
 
 
 
 
 
 
 
 
Fixed income
 
444,744

 
5,077

 
(1,731
)
 
448,090

Equity
 
249,980

 
47,631

 
—

 
297,611

Money market funds
 
397,461

 
—

 
—

 
397,461

Private equity
 
176,388

 
80,283

 
(422
)
 
256,249

Trust investments, at net asset value
 
1,268,573

 
132,991

 
(2,153
)
 
1,399,411

Trust investments, at market
 
$
4,869,261

 
$
518,194

 
$
(129,136
)
 
$
5,258,319


 
 
December 31, 2018
 
Fair Value Hierarchy Level
Cost

 
Unrealized
Gains

 
Unrealized
Losses

 
Value

 
 
 
 
(In thousands)
 
 
Fixed income securities:
 
 

 
 

 
 

 
 

U.S. Treasury
2
$
49,187

 
$
153

 
$
(448
)
 
$
48,892

Canadian government
2
56,343

 
23

 
(1,797
)
 
54,569

Corporate
2
19,869

 
13

 
(516
)
 
19,366

Residential mortgage-backed
2
3,611

 
10

 
(50
)
 
3,571

Asset-backed
2
142

 
2

 
(11
)
 
133

Equity securities:
 
 
 
 
 
 
 
 

Preferred stock
2
9,058

 
180

 
(412
)
 
8,826

Common stock:
 
 
 
 
 
 
 
 

United States
1
1,236,513

 
149,233

 
(138,141
)
 
1,247,605

Canada
1
34,821

 
9,082

 
(3,026
)
 
40,877

Other international
1
77,676

 
6,057

 
(10,275
)
 
73,458

Mutual funds:
 
 
 
 
 
 
 
 

Equity
1
760,887

 
7,104

 
(151,853
)
 
616,138

Fixed income
1
1,180,325

 
800

 
(89,179
)
 
1,091,946

Other
3
6,548

 
3,210

 
(3
)
 
9,755

Trust investments, at fair value
 
3,434,980

 
175,867

 
(395,711
)
 
3,215,136

Commingled funds
 
 
 
 
 
 
 
 
Fixed income
 
419,206

 
2,419

 
(18,981
)
 
402,644

Equity
 
205,789

 
19,567

 
(11,723
)
 
213,633

Money market funds
 
466,429

 
—

 
—

 
466,429

Private equity
 
215,618

 
72,897

 
(637
)
 
287,878

Trust investments, at net asset value
 
1,307,042

 
94,883

 
(31,341
)
 
1,370,584

Trust investments, at market
 
$
4,742,022

 
$
270,750

 
$
(427,052
)
 
$
4,585,720


As of December 31, 2019, our unfunded commitment for our private equity investments was $134.9 million which, if called, would be funded by the assets of the trusts.
The change in our market-based trust investments with significant unobservable inputs (Level 3) is as follows:
 
 
Years Ended December 31,
 
 
2019
 
2018
 
2017
 
 
(In thousands)
Fair value, beginning balance at January 1
 
$
9,755

 
$
9,067

 
$
7,163

Net realized and unrealized (losses) gains included in Other income (expense), net(1)
 
(761
)
 
(697
)
 
912

Purchases
 
1,006

 
66

 
1,945

Sales
 
(1,782
)
 
(26
)
 
(953
)
Acquisitions, net
 
—

 
1,345

 
—

Fair value, ending balance at December 31
 
$
8,218

 
$
9,755

 
$
9,067


(1) 
All net realized and unrealized (losses) gains recognized in Other income (expense), net for our trust investments are offset by a corresponding reclassification in Other income (expense), net to Deferred receipts held in trust and Care trusts' corpus.
Maturity dates of our fixed income securities range from 2020 to 2040. Maturities of fixed income securities (excluding mutual funds) at December 31, 2019 are estimated as follows:
 
Fair Value
 
(In thousands)
Due in one year or less
$
58,452

Due in one to five years
36,994

Due in five to ten years
8,038

Thereafter
131

Total estimated maturities of fixed income securities
$
103,615


Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $119.0 million, $121.7 million, and $112.6 million for the years ended December 31, 2019, 2018, and 2017, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $77.5 million, $74.7 million, and $62.9 million for the years ended December 31, 2019, 2018, and 2017, respectively.
We have determined that the unrealized losses in our fixed income trust investments are considered temporary in nature, as the unrealized losses were due to temporary fluctuations in interest rates. The investments are diversified across multiple industry segments using a balanced allocation strategy to minimize long-term risk. We believe that none of the securities are other-than-temporarily impaired based on our analysis of the investments. Our analysis included a review of the portfolio holdings and discussions with the individual money managers as to the credit ratings and the severity and duration of the unrealized losses. Our fixed income investment unrealized losses, their associated fair values, and the duration of unrealized losses for the years ended December 31, 2019 and 2018, are shown in the following tables:
 
December 31, 2019
 
In Loss Position
Less Than 12 Months
 
In Loss Position
Greater Than 12 Months
 
Total
 
Fair
Market
Value

 
Unrealized
Losses

 
Fair
Market
Value

 
Unrealized
Losses

 
Fair
Market
Value

 
Unrealized
Losses

 
 
 
 
 
(In thousands)
 
 
 
 
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury
$
3,023

 
$
(36
)
 
$
1,947

 
$
(94
)
 
$
4,970

 
$
(130
)
Canadian government
—

 
—

 
13,804

 
(850
)
 
13,804

 
(850
)
Corporate
30

 
—

 
4,826

 
(172
)
 
4,856

 
(172
)
Residential mortgage-backed
—

 
—

 
51

 
(1
)
 
51

 
(1
)
Asset-backed
—

 
—

 
28

 
(4
)
 
28

 
(4
)
Total fixed income temporarily impaired securities
$
3,053

 
$
(36
)
 
$
20,656

 
$
(1,121
)
 
$
23,709

 
$
(1,157
)

 
December 31, 2018
 
In Loss Position
Less Than 12 Months
 
In Loss Position
Greater Than 12 Months
 
Total
 
Fair
Market
Value

 
Unrealized
Losses

 
Fair
Market
Value

 
Unrealized
Losses

 
Fair
Market
Value

 
Unrealized
Losses

 
 
 
 
 
(In thousands)
 
 
 
 
Fixed income securities:
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury
$
6,899

 
$
(226
)
 
$
16,374

 
$
(222
)
 
$
23,273

 
$
(448
)
Canadian government
2,254

 
(9
)
 
25,330

 
(1,788
)
 
27,584

 
(1,797
)
Corporate
11,579

 
(206
)
 
6,563

 
(310
)
 
18,142

 
(516
)
Residential mortgage-backed
351

 
(4
)
 
3,010

 
(46
)
 
3,361

 
(50
)
Asset-backed
—

 
—

 
79

 
(11
)
 
79

 
(11
)
Total fixed income temporarily impaired securities
$
21,083

 
$
(445
)
 
$
51,356

 
$
(2,377
)
 
$
72,439

 
$
(2,822
)

Deferred revenue, net
At December 31, 2019 and 2018, Deferred revenue, net represents future revenue, including distributed trust investment earnings associated with unperformed trust-funded preneed contracts that are not held in trust accounts. Future revenue and net trust investment earnings that are held in trust accounts are included in Deferred receipts held in trust.
The components of Deferred revenue, net in our Consolidated Balance Sheet were as follows:
 
Years Ended December 31,
 
2019
 
2018
 
(In thousands)
Deferred revenue
$
2,046,000

 
$
1,989,232

Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts (1)
(578,897
)
 
(570,418
)
Deferred revenue, net
$
1,467,103

 
$
1,418,814

(1) 
Prior to adoption of "Revenue from Contracts with Customers" on January 1, 2018, amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts were included in Preneed receivables, net and trust investments.
The following table summarizes the activity for our contract liabilities, which are reflected in Deferred revenue, net and Deferred receipts held in trust:
 
Years Ended December 31,
 
2019
 
2018
 
(In thousands)
Beginning balance — Deferred revenue, net and Deferred receipts held in trust
$
4,790,552

 
$
5,265,206

Cumulative effect of accounting changes
—

 
37,991

Net preneed contract sales
984,575

 
977,378

(Dispositions) acquisitions of businesses, net
(12,741
)
 
159,560

Net investment gains (losses)(1)
484,577

 
(195,051
)
Recognized revenue from backlog (2)
(368,908
)
 
(381,041
)
Recognized revenue from current period sales
(573,804
)
 
(572,428
)
Change in amounts due on unfulfilled performance obligations
(10,223
)
 
(546,554
)
Change in cancellation reserve
1,066

 
65,817

Effect of foreign currency and other
11,385

 
(20,326
)
Ending balance — Deferred revenue, net and Deferred receipts held in trust
$
5,306,479

 
$
4,790,552

(1) 
Includes both realized and unrealized investment gains (losses).
(2) 
Includes current year trust fund income through the date of performance.
The following table summarizes the activity in Deferred revenue, net:
 
Year Ended December 31,
 
2017
 
(In thousands)
Beginning balance — Deferred revenue, net
$
1,731,417

Net preneed contract sales
900,037

Acquisitions of businesses, net
10,488

Net investment earnings (1)
381,436

Recognized revenue
(876,857
)
Change in cancellation allowance
(165
)
Change in deferred receipts held in trust
(361,499
)
Effect of foreign currency and other
4,919

Ending balance — Deferred revenue, net
$
1,789,776

(1) 
Includes both realized and unrealized investment earnings.