Preneed Activities Level 1 (Notes)

6 Months Ended

Jun. 30, 2022

Preneed Activities [Abstract]

Preneed Activities Text Block

Preneed Activities

Preneed Receivables, Net and Trust Investments

The components of Preneed receivables, net and trust investments in our unaudited Condensed Consolidated Balance Sheet were as follows:

	June 30, 2022		December 31, 2021
	(In thousands)
Preneed receivables, net	$	1,326,506	$	1,243,781
Trust investments, at market	5,547,990		6,536,851
Insurance-backed fixed income securities and other	225,828		231,589
Trust investments	5,773,818		6,768,440
Less: Cemetery perpetual care trust investments	(1,681,703)		(1,996,898)
Preneed trust investments	4,092,115		4,771,542
Preneed receivables, net and trust investments	$	5,418,621	$	6,015,323

Preneed receivables, net comprised the following:

	June 30, 2022
	Funeral		Cemetery		Total
	(In thousands)
Preneed receivables	$	174,770	$	1,195,158	$	1,369,928
Unearned finance charges	(11,429)		(8,427)		(19,856)
Preneed receivables, at amortized cost	163,341		1,186,731		1,350,072
Reserve for credit losses	(14,034)		(9,532)		(23,566)
Preneed receivables, net	$	149,307	$	1,177,199	$	1,326,506
	December 31, 2021
	Funeral		Cemetery		Total
	(In thousands)
Preneed receivables	$	162,183	$	1,125,539	$	1,287,722
Unearned finance charges	(12,038)		(11,176)		(23,214)
Preneed receivables, at amortized cost	150,145		1,114,363		1,264,508
Reserve for credit losses	(12,722)		(8,005)		(20,727)
Preneed receivables, net	$	137,423	$	1,106,358	$	1,243,781

At June 30, 2022, the amortized cost basis of our preneed receivables by year of origination was as follows:

	2022		2021		2020		2019		2018		Prior		Total
	(In thousands)
Preneed receivables, at amortized cost:
Funeral	$	45,242	$	54,855	$	28,813	$	15,829	$	5,417	$	13,185	$	163,341
Cemetery	279,990		438,945		252,283		116,143		60,011		39,359		1,186,731
Total preneed receivables, at amortized cost	$	325,232	$	493,800	$	281,096	$	131,972	$	65,428	$	52,544	$	1,350,072

At June 30, 2022, the payment status of our preneed receivables was as follows:

	Past Due
	<30 Days		30-90 Days		90-180 Days		>180 Days		Total		Current		Total
	(In thousands)
Preneed receivables, at amortized cost:
Funeral	$	3,241	$	2,743	$	1,662	$	19,934	$	27,580	$	135,761	$	163,341
Cemetery	33,783		24,728		5,538		4,535		68,584		1,118,147		1,186,731
Total preneed receivables, at amortized cost	$	37,024	$	27,471	$	7,200	$	24,469	$	96,164	$	1,253,908	$	1,350,072

The following table summarizes the activity for the reserve for credit losses on preneed receivables for the six months ended June 30, 2022:

	December 31, 2021		Provision for Expected Credit Losses		Write Offs		Effect of Foreign Currency		June 30, 2022
	(In thousands)
Funeral	$	(12,722)	$	(2,950)	$	1,636	$	2	$	(14,034)
Cemetery	(8,005)		(1,861)		333		1		(9,532)
Total reserve for credit losses on preneed receivables	$	(20,727)	$	(4,811)	$	1,969	$	3	$	(23,566)

The table below sets forth certain investment-related activities associated with our trusts:

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
	(In thousands)
Deposits	$	140,450	$	133,819	$	268,422	$	254,102
Withdrawals	$	123,787	$	117,578	$	246,151	$	230,158
Purchases of securities	$	434,659	$	379,836	$	903,956	$	812,567
Sales of securities	$	429,281	$	399,076	$	823,683	$	831,075
Realized gains from sales of securities(1)	$	117,684	$	174,732	$	221,239	$	304,919
Realized losses from sales of securities(1)	$	(52,711)	$	(17,644)	$	(80,643)	$	(33,812)

(1)All realized gains and losses are recognized in Other (expense) income, net for our trust investments and are offset by a corresponding reclassification in Other (expense) income, net to Deferred receipts held in trust and Care trusts’ corpus.

The cost and market values associated with trust investments recorded at market value 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.

		June 30, 2022
	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Value
				(In thousands)
Fixed income securities:
U.S. Treasury	2	$	49,838	$	159	$	(1,480)	$	48,517
Canadian government	2	32,889		17		—		32,906
Corporate	2	1,362		1		(99)		1,264
Residential mortgage-backed	2	1,428		1		(61)		1,368
Asset-backed	2	300		1		(44)		257
Equity securities:
Preferred stock	2	4,341		—		(1,492)		2,849
Common stock:
United States	1	1,723,029		236,461		(254,580)		1,704,910
Canada	1	48,097		11,750		(14,763)		45,084
Other international	1	149,430		8,764		(27,600)		130,594
Mutual funds:
Equity	1	908,801		55,050		(130,621)		833,230
Fixed income	1	1,109,802		9,875		(140,217)		979,460
Other	3	187		1		—		188
Trust investments, at fair value		4,029,504		322,080		(570,957)		3,780,627
Commingled funds
Fixed income		677,724		78,464		(73,699)		682,489
Equity		234,318		65,230		(6,194)		293,354
Money market funds		319,375		—		—		319,375
Alternative investments		309,352		163,765		(972)		472,145
Trust investments, at net asset value		1,540,769		307,459		(80,865)		1,767,363
Trust investments, at market		$	5,570,273	$	629,539	$	(651,822)	$	5,547,990

		December 31, 2021
	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Value
				(In thousands)
Fixed income securities:
U.S. Treasury	2	$	51,002	$	795	$	(283)	$	51,514
Canadian government	2	29,881		28		—		29,909
Corporate	2	170		6		(2)		174
Residential mortgage-backed	2	1,407		58		(15)		1,450
Asset-backed	2	274		2		(10)		266
Equity securities:
Preferred stock	2	4,843		4		(1,024)		3,823
Common stock:
United States	1	1,648,785		624,349		(56,092)		2,217,042
Canada	1	34,787		19,617		(898)		53,506
Other international	1	129,486		42,171		(9,819)		161,838
Mutual funds:
Equity	1	875,828		140,893		(10,116)		1,006,605
Fixed income	1	1,025,327		12,560		(18,675)		1,019,212
Other	3	187		1		—		188
Trust investments, at fair value		3,801,977		840,484		(96,934)		4,545,527
Commingled funds
Fixed income		662,125		115,939		(3,171)		774,893
Equity		230,926		161,125		(114)		391,937
Money market funds		408,762		—		—		408,762
Alternative investments		292,888		128,197		(5,353)		415,732
Trust investments, at net asset value		1,594,701		405,261		(8,638)		1,991,324
Trust investments, at market		$	5,396,678	$	1,245,745	$	(105,572)	$	6,536,851

Our alternative investments include funds invested in limited partnerships with interests in private equity, private market real estate, energy and natural resources, infrastructure, transportation, and private debt including both distressed debt and mezzanine financing. These investments can never be redeemed by the funds. Instead, due to the nature of the investments in this category, distributions are received through the liquidation of the underlying assets of the funds. The funds' managers have not communicated the timing of any liquidations.

The change in our market-based trust investments with significant unobservable inputs (Level 3) is as follows:

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
	(In thousands)
Fair value, beginning balance	$	188	$	190	$	188	$	190
Net realized and unrealized (losses) included in Other income, net(1)	—		(1)		—		(1)
Fair value, ending balance	$	188	$	189	$	188	$	189

(1)All net realized and unrealized (losses) recognized in Other (expense) income, net for our trust investments are offset by a corresponding reclassification in Other (expense) income, net to Deferred receipts held in trust and Care trusts' corpus.

Maturity dates of our fixed income securities range from 2022 to 2040. Maturities of fixed income securities (excluding mutual funds) at June 30, 2022 are estimated as follows:

	Fair Value
	(In thousands)
Due in one year or less	$	53,260
Due in one to five years	25,888
Due in five to ten years	4,963
Thereafter	201
Total estimated maturities of fixed income securities	$	84,312

Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $35.7 million and $43.8 million, for the three months ended June 30, 2022 and 2021, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $20.8 million and $27.0 million for the three months ended June 30, 2022 and 2021, respectively.

Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $81.5 million and $88.8 million, for the six months ended June 30, 2022 and 2021, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $45.3 million and $47.8 million for the six months ended June 30, 2022 and 2021, respectively.

Deferred Revenue, Net

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 unaudited Condensed Consolidated Balance Sheet were as follows:

	June 30, 2022		December 31, 2021
	(In thousands)
Deferred revenue	$	2,386,552	$	2,259,364
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts	(803,158)		(726,615)
Deferred revenue, net	$	1,583,394	$	1,532,749

The following table summarizes the activity for our contract liabilities, which are reflected in Deferred revenue, net and Deferred receipts held in trust:

	Six months ended June 30,
	2022		2021
	(In thousands)
Beginning balance — Deferred revenue, net and Deferred receipts held in trust	$	6,299,241	$	5,761,291
Net preneed contract sales	753,691		644,559
Acquisitions (dispositions) of businesses, net	889		(604)
Net investment (losses) gains(1)	(692,181)		312,837
Recognized revenue from backlog(2)	(301,448)		(270,817)
Recognized revenue from current period sales	(312,274)		(285,596)
Change in amounts due on unfulfilled performance obligations	(76,884)		(40,933)
Change in cancellation reserve	(331)		(108)
Effect of foreign currency and other	(1,652)		8,170
Ending balance — Deferred revenue, net and Deferred receipts held in trust	$	5,669,051	$	6,128,799

(1)Includes both realized and unrealized investment (losses) gains