XML 36 R24.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets
 6 Months Ended
Jun. 30, 2024
Cemetery Perpetual Care Trust Investments And Obligation And Restricted Assets  
Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

15) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

 

Cemetery Perpetual Care Trust Investments and Obligation

 

State law requires the Company to pay into endowment care trusts a portion of the proceeds from the sale of certain cemetery property interment rights for cemeteries that have established an endowment care trust. These endowment care trusts are defined as Variable Interest Entities pursuant to GAAP. The Company is the primary beneficiary of these trusts, as it absorbs both the losses and any expenses associated with the trusts. The Company has consolidated cemetery endowment care trust investments with a corresponding amount recorded as Cemetery Perpetual Care Obligation in the accompanying consolidated balance sheets.

 

The components of the cemetery perpetual care investments and obligation as of June 30, 2024, are as follows:

  

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Allowance for Credit Losses   Estimated Fair Value 
June 30, 2024:                         
Fixed maturity securities, available for sale, at estimated fair value:                         
U.S. Treasury securities and obligations of U.S. Government agencies  $443,508   $1,481   $(1,975)  $-   $443,014 
Obligations of states and political subdivisions   167,073    20    (6,908)               -    160,185 
Total fixed maturity securities available for sale  $610,581   $1,501   $(8,883)  $-   $603,199 
                          
Equity securities at estimated fair value:                         
Common stock:                         
Industrial, miscellaneous and all other  $3,739,763   $1,059,494   $(204,627)       $4,594,630 
Total equity securities at estimated fair value  $3,739,763   $1,059,494   $(204,627)       $4,594,630 
                          
Mortgage loans held for investment at amortized cost:                         
Residential construction  $115,000                     
Commercial   1,920,000                     
Less: Allowance for credit losses   (4,070)                    
Total mortgage loans held for investment  $2,030,930                     
                          
Accrued investment income  $20,248                     
                          
Cash and cash equivalents  $1,203,075                     
                          
Total cemetery perpetual care trust investments  $8,452,082                     
                          
Cemetery perpetual care obligation  $(5,487,676)                    
                          
Trust investments in excess of trust obligations  $2,964,406                     

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

The components of the cemetery perpetual care investments and obligation as of December 31, 2023, are as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
December 31, 2023:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $477,797   $302   $(574)  $477,525 
Obligations of states and political subdivisions   115,792    -    (5,114)   110,678 
Corporate securities including public utilities   53,672    -    (171)   53,501 
Total fixed maturity securities available for sale  $647,261   $302   $(5,859)  $641,704 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $3,614,392   $859,680   $(146,771)  $4,327,301 
Total equity securities at estimated fair value  $3,614,392   $859,680   $(146,771)  $4,327,301 
                     
Mortgage loans held for investment at amortized cost:                     

Residential construction		  $247,360                
Less: Allowance for credit losses   (495)               
Total mortgage loans held for investment  $246,865                
                     
Cash and cash equivalents  $2,867,047                
                     
Total cemetery perpetual care trust investments  $8,082,917                
                     
Cemetery perpetual care obligation  $(5,326,196)               
                     
Trust investments in excess of trust obligations  $2,756,721                

 

Fixed Maturity Securities

 

The table below summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value as of June 30, 2024 and December 31, 2023. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

 

   Unrealized Losses for Less than Twelve Months   Fair Value   Unrealized Losses for More than Twelve Months   Fair Value   Total Unrealized Loss   Fair Value 
June 30, 2024                              
U.S. Treasury securities and obligations of U.S. Government agencies  $1,975   $144,156   $-   $-   $1,975   $144,156 
Obligations of states and political subdivisions   -    -    6,908    120,165    6,908    120,165 
Totals  $1,975   $144,156   $6,908   $120,165   $8,883   $264,321 
                               
December 31, 2023                              
U.S. Treasury securities and obligations of U.S. Government agencies  $574   $143,448   $-   $-   $574   $143,448 
Obligations of states and political subdivisions   -    -    5,114    110,678    5,114    110,678 
Corporate securities including public utilities   -    -    171    53,501    171    53,501 
Totals  $574   $143,448   $5,285   $164,179   $5,859   $307,627 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

Relevant holdings were comprised of three securities with fair values aggregating 96.7% of the aggregate amortized cost as of June 30, 2024. Relevant holdings were comprised of four securities with fair values aggregating 98.1% of aggregate amortized cost as of December 31, 2023. No credit losses have been recognized for the three and six month periods ended June 30, 2024 and 2023, since the increase in unrealized losses is primarily a result of increases in interest rates. See Note 3 for additional information regarding the Company’s evaluation of the allowance for credit losses for fixed maturity securities available for sale.

 

The table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of June 30, 2024, by contractual maturity. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

   

   Amortized   Estimated Fair 
   Cost   Value 
Due in 1 year  $297,377   $298,857 
Due in 2-5 years   260,123    252,508 
Due in 5-10 years   -    - 
Due in more than 10 years   53,081    51,834 
Total  $610,581   $603,199 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

Restricted Assets

 

The Company has also established certain restricted assets to provide for future merchandise and service obligations incurred in connection with its pre-need sales for its cemetery and mortuary segment.

 

Restricted cash also represents escrows held for borrowers and investors under servicing and appraisal agreements relating to mortgage loans, funds held by warehouse banks in accordance with loan purchase agreements and funds held in escrow for certain real estate construction development projects. Additionally, the Company elected to maintain its medical benefit fund without change from the prior year and has included this amount as a component of restricted cash. These restricted cash items are for the Company’s life insurance and mortgage segments.

 

Restricted assets as of June 30, 2024, are summarized as follows:

  

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Allowance for Credit Losses   Estimated Fair Value 
June 30, 2024:                         
Fixed maturity securities, available for sale, at estimated fair value:                         
U.S. Treasury securities and obligations of U.S. Government agencies  $796,855   $3,235   $(3,440)  $-   $796,650 
Obligations of states and political subdivisions   551,620    6    (6,935)   -    544,691 
Corporate securities including public utilities   221,710    23    (2,808)              -    218,925 
Total fixed maturity securities available for sale  $1,570,185   $3,264   $(13,183)  $-   $1,560,266 
                          
Equity securities at estimated fair value:                         
Common stock:                         
Industrial, miscellaneous and all other  $7,435,400   $1,487,896   $(376,325)       $8,546,971 
Total equity securities at estimated fair value  $7,435,400   $1,487,896   $(376,325)       $8,546,971 
                          
Mortgage loans held for investment at amortized cost:                         
Residential construction  $639,061                     
Less: Allowance for credit losses   (1,278)                    
Total mortgage loans held for investment  $637,783                     
                          
Accrued investment income  $5,908                     
                          
Cash and cash equivalents (1)  $11,849,488                     
                          
Total restricted assets  $22,600,416                     

 

 

(1)Including cash and cash equivalents of $8,178,110 for the life insurance and mortgage segments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

Restricted assets as of December 31, 2023, are summarized as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
December 31, 2023:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $932,737   $1,433   $(1,000)  $933,170 
Obligations of states and political subdivisions   652,770    305    (4,542)   648,533 
Corporate securities including public utilities   274,688    209    (2,740)   272,157 
Total fixed maturity securities available for sale  $1,860,195   $1,947   $(8,282)  $1,853,860 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $6,516,044   $1,117,155   $(247,996)  $7,385,203 
Total equity securities at estimated fair value  $6,516,044   $1,117,155   $(247,996)  $7,385,203 
                     
Mortgage loans held for investment at amortized cost:                     

Residential construction		  $676,572                
Less: Allowance for credit losses   (1,353)               
Total mortgage loans held for investment  $675,219                
                     
Cash and cash equivalents (1)  $10,114,694                
                     
Total restricted assets  $20,028,976                

 

 
(1)Including cash and cash equivalents of $6,930,930 for the life insurance and mortgage segments.

 

Fixed Maturity Securities

 

The table below summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value as of June 30, 2024 and December 31, 2023. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities.

 

   Unrealized Losses for Less than Twelve Months   Fair Value   Unrealized Losses for More than Twelve Months   Fair Value   Total Unrealized Loss   Fair Value 
June 30, 2024                              
U.S. Treasury securities and obligations of U.S. Government agencies  $3,440   $251,111   $-   $-   $3,440   $251,111 
Obligations of states and political subdivisions   2,161    230,634    4,774    289,322    6,935    519,956 
Corporate securities including public utilities   81    25,331    2,727    168,571    2,808    193,902 
Totals  $5,682   $507,076   $7,501   $457,893   $13,183   $964,969 
                               
December 31, 2023                              
U.S. Treasury securities and obligations of U.S. Government agencies  $1,000   $249,877   $-   $-   $1,000   $249,877 
Obligations of states and political subdivisions   -    -    4,542    451,985    4,542    451,985 
Corporate securities including public utilities   -    -    2,740    221,334    2,740    221,334 
Totals  $1,000   $249,877   $7,282   $673,319   $8,282   $923,196 

 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2024 (Unaudited)

 

15) Cemetery Perpetual Care Trust Investments and Obligations and Restricted Assets (Continued)

 

Relevant holdings were comprised of 14 securities with fair values aggregating 98.7% of the aggregate amortized cost as of June 30, 2024. Relevant holdings were comprised of 12 securities with fair values aggregating 99.1% of the aggregate amortized cost as of December 31, 2023. No credit losses have been recognized for the three and six month periods ended June 30, 2024 and 2023, since the increase in unrealized losses is primarily a result of increases in interest. See Note 3 for additional information regarding the Company’s evaluation of the allowance for credit losses for fixed maturity securities available for sale.

 

The table below presents the amortized cost and estimated fair value of fixed maturity securities available for sale as of June 30, 2024, by contractual maturity. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

   Amortized   Estimated Fair 
   Cost   Value 
Due in 1 year  $542,305   $545,540 
Due in 2-5 years   362,834    356,778 
Due in 5-10 years   101,523    100,716 
Due in more than 10 years   563,523    557,232 
Total  $1,570,185   $1,560,266 

 

See Notes 3 and 8 for additional information regarding restricted assets and cemetery perpetual care trust investments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2024 (Unaudited)