Preneed Activities Level 1 (Notes)

3 Months Ended

Mar. 31, 2024

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:



	March 31, 2024		December 31, 2023
	(In thousands)
Preneed receivables, net	$	1,513,458	$	1,513,933

Trust investments, at market	6,719,664		6,394,796

Insurance-backed fixed income securities and other	232,135		222,424
Trust investments	6,951,799		6,617,220
Less: Cemetery perpetual care trust investments	(2,034,432)		(1,939,241)
Preneed trust investments	4,917,367		4,677,979

Preneed receivables, net and trust investments	$	6,430,825	$	6,191,912

Preneed receivables, net comprised the following:


	March 31, 2024
	Funeral		Cemetery		Total
	(In thousands)
Preneed receivables	$	189,783	$	1,374,763	$	1,564,546
Unearned finance charges	(10,239)		(6,455)		(16,694)
Preneed receivables, at amortized cost	179,544		1,368,308		1,547,852
Reserve for credit losses	(17,852)		(16,542)		(34,394)
Preneed receivables, net	$	161,692	$	1,351,766	$	1,513,458

	December 31, 2023
	Funeral		Cemetery		Total
	(In thousands)
Preneed receivables	$	190,514	$	1,371,804	$	1,562,318
Unearned finance charges	(10,100)		(5,810)		(15,910)
Preneed receivables, at amortized cost	180,414		1,365,994		1,546,408
Reserve for credit losses	(17,026)		(15,449)		(32,475)
Preneed receivables, net	$	163,388	$	1,350,545	$	1,513,933

At March 31, 2024, the amortized cost basis of our preneed receivables by year of origination was as follows:



	2024		2023		2022		2021		2020		Prior		Total
	(In thousands)
Preneed receivables, at amortized cost:
Funeral	$	21,075	$	66,928	$	41,887	$	20,954	$	9,712	$	18,988	$	179,544
Cemetery	140,995		508,951		356,583		206,946		102,217		52,616		1,368,308
Total preneed receivables, at amortized cost	$	162,070	$	575,879	$	398,470	$	227,900	$	111,929	$	71,604	$	1,547,852

At March 31, 2024, 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	$	6,910	$	3,455	$	2,619	$	27,799	$	40,783	$	138,761	$	179,544
Cemetery	34,438		28,523		9,147		5,360		77,468		1,290,840		1,368,308
Total preneed receivables, at amortized cost	$	41,348	$	31,978	$	11,766	$	33,159	$	118,251	$	1,429,601	$	1,547,852

The following table summarizes the activity for the reserve for credit losses on preneed receivables for the three months ended March 31, 2024:



	December 31, 2023		Provision for Expected Credit Losses		Write Offs		Effect of Foreign Currency and Other		March 31, 2024
	(In thousands)
Funeral	$	(17,026)	$	(1,622)	$	779	$	17	$	(17,852)
Cemetery	(15,449)		(1,302)		201		8		(16,542)
Total reserve for credit losses on preneed receivables	$	(32,475)	$	(2,924)	$	980	$	25	$	(34,394)

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


	Three months ended March 31,
		2024		2023
		(In thousands)
Deposits		$	156,119	$	137,245
Withdrawals		$	130,607	$	124,245
Purchases of securities		$	341,998	$	607,476
Sales of securities		$	334,719	$	630,740
Realized gains from sales of securities(1)		$	105,445	$	82,330
Realized losses from sales of securities(1)		$	(31,815)	$	(49,910)

(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 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.


		March 31, 2024
	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Value
				(In thousands)
Fixed income securities:
U.S. Treasury	2	$	42,605	$	90	$	(1,285)	$	41,410
Canadian government	2	31,337		—		—		31,337
Corporate	2	10,808		105		(16)		10,897
Residential mortgage-backed	2	5,269		23		(95)		5,197
Asset-backed	2	286		—		(47)		239
Equity securities:
Preferred stock	2	420		—		(72)		348
Common stock:
United States	1	1,725,582		646,399		(57,808)		2,314,173
Canada	1	41,553		20,424		(866)		61,111
Other international	1	122,152		35,834		(10,413)		147,573
Mutual funds:
Equity	1	892,823		149,405		(5,188)		1,037,040
Fixed income	1	1,043,839		4,753		(114,631)		933,961

Trust investments, at fair value		3,916,674		857,033		(190,421)		4,583,286
Commingled funds
Fixed income		823,946		1,692		(66,005)		759,633
Equity		336,779		90,667		(208)		427,238
Money market funds		369,276		—		—		369,276
Alternative investments		429,754		159,323		(8,846)		580,231
Trust investments, at net asset value		1,959,755		251,682		(75,059)		2,136,378
Trust investments, at market		$	5,876,429	$	1,108,715	$	(265,480)	$	6,719,664


		December 31, 2023
	Fair Value Hierarchy Level	Cost		Unrealized Gains		Unrealized Losses		Value
				(In thousands)
Fixed income securities:
U.S. Treasury	2	$	45,645	$	145	$	(1,376)	$	44,414
Canadian government	2	31,896		—		—		31,896
Corporate	2	10,642		138		(17)		10,763
Residential mortgage-backed	2	5,452		29		(104)		5,377
Asset-backed	2	291		—		(51)		240
Equity securities:
Preferred stock	2	417		—		(97)		320
Common stock:
United States	1	1,744,919		478,226		(78,630)		2,144,515
Canada	1	42,721		20,251		(676)		62,296
Other international	1	108,106		19,580		(11,088)		116,598
Mutual funds:
Equity	1	876,620		118,476		(9,540)		985,556
Fixed income	1	998,767		5,727		(109,231)		895,263

Trust investments, at fair value		3,865,476		642,572		(210,810)		4,297,238
Commingled funds
Fixed income		827,600		2,432		(63,021)		767,011
Equity		337,500		71,819		(642)		408,677
Money market funds		346,672		—		—		346,672
Alternative investments		412,482		169,825		(7,109)		575,198
Trust investments, at net asset value		1,924,254		244,076		(70,772)		2,097,558
Trust investments, at market		$	5,789,730	$	886,648	$	(281,582)	$	6,394,796

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 2024 to 2040. Maturities of fixed income securities (excluding mutual and commingled funds) at March 31, 2024 are estimated as follows:


	Fair Value
	(In thousands)
Due in one year or less	$	53,339
Due in one to five years	29,654
Due in five to ten years	6,003
Thereafter	84
Total estimated maturities of fixed income securities	$	89,080

Recognized trust fund income (realized and unrealized) related to our preneed trust investments was $42.7 million and $36.0 million for the three months ended March 31, 2024 and 2023, respectively. Recognized trust fund income (realized and unrealized) related to our cemetery perpetual care trust investments was $23.3 million and $22.0 million for the three months ended March 31, 2024 and 2023, 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:


	March 31, 2024		December 31, 2023
	(In thousands)
Deferred revenue	$	2,690,118	$	2,649,397
Amounts due from customers for unfulfilled performance obligations on cancelable preneed contracts	(976,468)		(945,888)
Deferred revenue, net	$	1,713,650	$	1,703,509

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


	Three months ended March 31,
	2024		2023
	(In thousands)
Beginning balance — Deferred revenue, net and Deferred receipts held in trust	$	6,374,393	$	5,787,548
Net preneed contract sales	367,166		364,463
Acquisitions (dispositions) of businesses, net	7,678		2,904
Net investment gains (losses)(1)	208,719		178,220
Recognized revenue from backlog(2)	(172,580)		(180,172)
Recognized revenue from current period sales	(130,146)		(137,324)
Change in amounts due on unfulfilled performance obligations	(27,954)		(22,519)
Change in cancellation reserve	(83)		26
Effect of foreign currency and other	(4,363)		(832)
Ending balance — Deferred revenue, net and Deferred receipts held in trust	$	6,622,830	$	5,992,314

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

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