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15) Business Segment Information

12 Months Ended

Dec. 31, 2018

Notes

15) Business Segment Information

15)       Business Segment Information

Description of Products and Services by Segment

The Company has three reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Company’s independent agency force and net investment income derived from investing policyholder and segment surplus funds. The Company’s cemetery and mortuary segment consists of revenues and operating expenses from the sale of at-need cemetery and mortuary merchandise and services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase price and the net investment income from investing segment surplus funds. The Company’s mortgage segment consists of fee income and expenses from the originations of residential mortgage loans and interest earned and interest expenses from warehousing pre-sold loans before the funds are received from financial institutional investors.

Measurement of Segment Profit or Loss and Segment Assets

The accounting policies of the reportable segments are the same as those described in the Significant Accounting Principles. Intersegment revenues are recorded at cost plus an agreed upon intercompany profit, and are eliminated upon consolidation.

Factors Management Used to Identify the Enterprise’s Reportable Segments

The Company’s reportable segments are business units that are managed separately due to the different products provided and the need to report separately to the various regulatory jurisdictions. The Company regularly reviews the quantitative thresholds and other criteria to determine when other business segments may need to be reported.

	2018
	Life		Cemetery/				Intercompany
	Insurance		Mortuary		Mortgage		Eliminations		Consolidated
Revenues:
From external sources:
Revenue from customers	$       75,928,910		$       13,726,518		$     116,185,853		$                         -		$     205,841,281
Net investment income	38,720,365		283,343		909,559		-		39,913,267
Gains on investments and other assets	21,396,282		2,301,342		243,555		-		23,941,179
Other revenues	1,636,901		128,797		8,157,302		-		9,923,000
Intersegment revenues:
Net investment income	3,972,532		429,312		503,794		(4,905,638)		-
Total revenues	141,654,990		16,869,312		126,000,063		(4,905,638)		279,618,727
Expenses:
Death, surrenders and other policy benefits	39,185,087		-		-		-		39,185,087
Increase in future policy benefits	24,332,088		-		-		-		24,332,088
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	11,270,579		360,767		-		-		11,631,346
Selling, general and administrative expenses:
Commissions	3,242,745		1,222,642		45,825,965		-		50,291,352
Personnel	18,489,063		4,773,866		44,106,023		-		67,368,952
Advertising	566,154		333,852		3,702,585		-		4,602,591
Rent and rent related	321,701		33,138		7,250,536		-		7,605,375
Depreciation on property and equipment	400,686		372,469		1,093,846		-		1,867,001
Cost related to funding mortgage loans	-		-		6,423,944		-		6,423,944
Intersegment	402,213		182,009		531,370		(1,115,592)		-
Other	10,094,626		3,046,902		17,873,471		-		31,014,999
Interest expense:
Intersegment	481,587		173,807		3,134,652		(3,790,046)		-
Other	2,744,841		294,535		3,917,331		-		6,956,707
Cost of goods and services sold - mortuaries and cemeteries	-		2,158,895		-		-		2,158,895
Total benefits and expenses	111,531,370		12,952,882		133,859,723		(4,905,638)		253,438,337
Earnings before income taxes	$       30,123,620		$         3,916,430		$       (7,859,660)		$                         -		$       26,180,390
Income tax benefit (expense)	(5,275,662)		(946,820)		1,728,171		-		(4,494,311)
Net earnings	$       24,847,958		$         3,916,430		$       (6,131,489)		$                         -		$       21,686,079
Identifiable assets	$     928,251,387		$       90,639,130		$     159,680,649		$     (130,525,613)		$  1,048,045,553
Goodwill	$         2,765,570		$                        -		$                        -		$                         -		$         2,765,570

	2017
	Life		Cemetery/				Intercompany
	Insurance		Mortuary		Mortgage		Eliminations		Consolidated
Revenues:
From external sources:
Revenue from customers	$       70,412,476		$       12,657,117		$     153,797,171		$                         -		$     236,866,764
Net investment income	34,089,912		424,316		548,740		-		35,062,968
Gains (losses) on investments and other assets	(3,871,309)		186,335		736,492		-		(2,948,482)
Other than temporary impairments	(774,339)		-		-		-		(774,339)
Other revenues	856,094		97,602		7,765,483		-		8,719,179
Intersegment revenues:
Net investment income	5,987,731		422,623		401,283		(6,811,637)		-
Total revenues	106,700,565		13,787,993		163,249,169		(6,811,637)		276,926,090
Expenses:
Death, surrenders and other policy benefits	36,095,018		-		-		-		36,095,018
Increase in future policy benefits	23,622,750		-		-		-		23,622,750
Amortization of deferred policy and pre-need acquisition costs and value of business acquired	8,157,456		322,794		-		-		8,480,250
Selling, general and administrative expenses:
Commissions	3,095,319		1,053,449		63,954,249		-		68,103,017
Personnel	17,031,563		4,519,573		48,777,694		-		70,328,830
Advertising	518,117		293,009		4,943,614		-		5,754,740
Rent and rent related	446,701		51,742		8,212,251		-		8,710,694
Depreciation on property and equipment	484,349		401,564		1,334,780		-		2,220,693
Costs related to funding mortgage loans	-		-		8,663,223		-		8,663,223
Intersegment	315,588		184,853		499,707		(1,000,148)		-
Other	9,540,607		2,826,208		17,064,784		-		29,431,599
Interest expense:
Intersegment	445,520		181,793		5,184,176		(5,811,489)		-
Other	2,218,956		330,211		3,488,165		-		6,037,332
Cost of goods and services sold - mortuaries and cemeteries	-		1,945,832		-		-		1,945,832
Total benefits and expenses	101,971,944		12,111,028		162,122,643		(6,811,637)		269,393,978
Earnings before income    taxes	$         4,728,621		$         1,676,965		$         1,126,526		$                         -		$         7,532,112
Income tax benefit (expense)	6,301,872		(606,293)		885,243		-		6,580,822
Net earnings	$       11,030,493		$         1,676,965		$         2,011,769		$                         -		$       14,112,934
Identifiable assets	$     858,068,899		$       95,097,729		$     161,051,531		$     (134,810,675)		$     979,407,484
Goodwill	$         2,765,570		$                        -		$                        -		$                         -		$         2,765,570

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- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

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