Preneed Activities Level 1 (Notes)

12 Months Ended

Dec. 31, 2022

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,
	2022		2021
	(In thousands)
Preneed receivables, net	$	1,402,209	$	1,243,781
Trust investments, at fair value	5,663,163		6,536,851
Insurance-backed fixed income securities and other	214,440		231,589
Trust investments	5,877,603		6,768,440
Less: Cemetery perpetual care trust investments	(1,702,313)		(1,996,898)
Preneed trust investments	4,175,290		4,771,542
Preneed receivables, net and trust investments	$	5,577,499	$	6,015,323

Preneed receivables, net comprised the following:

	December 31, 2022
	Funeral		Cemetery		Total
	(In thousands)
Preneed receivables	$	180,108	$	1,267,304	$	1,447,412
Unearned finance charges	(11,129)		(6,760)		(17,889)
Preneed receivables, at amortized cost	$	168,979	$	1,260,544	$	1,429,523
Reserve for credit losses	(14,438)		(12,876)		(27,314)
Preneed receivables, net	$	154,541	$	1,247,668	$	1,402,209

	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 December 31, 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	$	76,430	$	43,211	$	21,593	$	11,546	$	4,072	$	12,127	$	168,979
Cemetery	541,067		362,433		204,553		88,270		39,415		24,806		1,260,544
Total preneed receivables, at amortized cost	$	617,497	$	405,644	$	226,146	$	99,816	$	43,487	$	36,933	$	1,429,523

At December 31, 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	$	3,628	$	3,113	$	2,181	$	21,732	$	30,654	$	138,325	$	168,979
Cemetery	41,043		32,948		10,126		5,077		89,194		1,171,350		1,260,544
Total preneed receivables, at amortized cost	$	44,671	$	36,061	$	12,307	$	26,809	$	119,848	$	1,309,675	$	1,429,523

The following table summarizes the activity for the reserve for credit losses on preneed receivables for the twelve months ended December 31, 2022.

	December 31, 2021		Provision for Expected Credit Losses		Acquisitions (Divestitures), Net		Write Offs		Effect of Foreign Currency		December 31, 2022
	(In thousands)
Funeral	$	(12,722)	$	(4,631)	$	—	$	2,907	$	8	$	(14,438)
Cemetery	(8,005)		(5,615)		—		731		13		(12,876)
Total reserve for credit losses on preneed receivables	$	(20,727)	$	(10,246)	$	—	$	3,638	$	21	$	(27,314)

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

	Years Ended December 31,
	2022		2021		2020
	(In thousands)
Deposits	$	534,586	$	519,023	$	429,307
Withdrawals	$	507,872	$	477,443	$	424,986
Purchases of securities	$	1,647,032	$	1,823,267	$	2,147,935
Sales of securities	$	1,518,779	$	1,744,618	$	1,994,684
Realized gains from sales of securities(1)	$	332,738	$	584,863	$	418,851
Realized losses from sales of securities(1)	$	(201,173)	$	(91,715)	$	(262,974)

(1)All realized gains and losses are recognized in Other income, net for our trust investments and are offset by a corresponding reclassification in Other income, 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,
	2022		2021		2020
	(In thousands)
Beginning balance - Preneed receivables, net and trust investments	$	6,015,323	$	5,345,720	$	4,789,562
Cumulative effect of accounting changes	—		—		26,394
Net preneed contract sales	1,978,266		1,870,972		1,494,557
Cash receipts from customers, net of refunds	(1,639,291)		(1,550,735)		(1,279,295)
Deposits to trust	468,482		452,554		373,663
Acquisitions of businesses, net	15,860		4,912		19,299
Net undistributed investment (losses) earnings (1)	(611,057)		448,469		407,770
Maturities and distributed earnings	(500,216)		(464,247)		(430,608)
Change in cancellation allowance	(6,609)		(1,523)		(4,468)
Change in amounts due on unfulfilled performance obligations	(123,385)		(87,207)		(55,269)
Effect of foreign currency and other	(19,874)		(3,592)		4,115
Ending balance - Preneed receivables, net and trust investments	$	5,577,499	$	6,015,323	$	5,345,720

(1)    Includes both realized and unrealized investment earnings.

The cost and fair values associated with trust investments recorded at fair value at December 31, 2022 and 2021 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, 2022
	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Value
				(In thousands)
Fixed income securities:
U.S. Treasury	2	$	45,084	$	22	$	(2,033)	$	43,073
Canadian government	2	30,200		—		—		30,200
Corporate	2	175		—		(18)		157
Residential mortgage-backed	2	1,420		—		(101)		1,319
Asset-backed	2	294		—		(52)		242
Equity securities:
Preferred stock	2	4,144		—		(2,340)		1,804
Common stock:
United States	1	1,707,240		283,423		(208,523)		1,782,140
Canada	1	47,821		11,765		(11,117)		48,469
Other international	1	123,440		10,561		(19,009)		114,992
Mutual funds:
Equity	1	917,686		64,895		(112,374)		870,207
Fixed income	1	1,135,815		1,231		(166,286)		970,760
Trust investments, at fair value		4,013,319		371,897		(521,853)		3,863,363
Commingled funds
Fixed income		730,940		2		(89,246)		641,696
Equity		309,893		40,820		(3,846)		346,867
Money market funds		325,562		—		—		325,562
Alternative investments		307,275		179,491		(1,091)		485,675
Trust investments, at net asset value		1,673,670		220,313		(94,183)		1,799,800
Trust investments, at market		$	5,686,989	$	592,210	$	(616,036)	$	5,663,163

As of December 31, 2022, our unfunded commitment for our private equity investments was $292.3 million which, if called, would be funded by the assets of the trusts.

		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.

Maturity dates of our fixed income securities range from 2023 to 2040. Maturities of fixed income securities (excluding mutual funds) at December 31, 2022 are estimated as follows:

	Fair Value
	(In thousands)
Due in one year or less	$	51,365
Due in one to five years	19,763
Due in five to ten years	3,726
Thereafter	137
Total estimated maturities of fixed income securities	$	74,991

Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $143.8 million, $179.7 million, and $129.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $85.1 million, $96.1 million, and $77.8 million for the years ended December 31, 2022, 2021, and 2020, 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 Consolidated Balance Sheet were as follows:

	Years Ended December 31,
	2022		2021
	(In thousands)
Deferred revenue	$	2,472,693	$	2,259,364
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts	(848,665)		(726,615)
Deferred revenue, net	$	1,624,028	$	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:

	Years Ended December 31,
	2022		2021		2020
	(In thousands)
Beginning balance — Deferred revenue, net and Deferred receipts held in trust	$	6,299,241	$	5,761,291	$	5,306,479
Net preneed contract sales	1,448,371		1,314,001		1,089,060
Acquisitions (dispositions) of businesses, net	10,824		4,707		19,664
Net investment (losses) gains (1)	(618,760)		443,088		402,048
Recognized revenue from backlog(2)	(498,242)		(471,160)		(412,127)
Recognized revenue from current period sales	(726,584)		(669,025)		(598,768)
Change in amounts due on unfulfilled performance obligations	(123,337)		(87,207)		(55,087)
Change in cancellation reserve	8,351		(459)		1,070
Effect of foreign currency and other	(12,316)		4,005		8,952
Ending balance — Deferred revenue, net and Deferred receipts held in trust	$	5,787,548	$	6,299,241	$	5,761,291

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

(2)Includes current year trust fund income through the date of performance.