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Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets
 12 Months Ended
Dec. 31, 2024
Cemetery Perpetual Care Trust Investments And Obligation And Restricted Assets  
Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets

8) 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 December 31, 2024 are as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
December 31, 2024:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $651,428   $-   $(2,010)  $649,418 
Obligations of states and political subdivisions   125,194    -    (4,950)   120,244 
Total fixed maturity securities available for sale  $776,622   $-   $(6,960)  $769,662 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $3,874,522   $1,271,529   $(226,007)  $4,920,044 
Total equity securities at estimated fair value  $3,874,522   $1,271,529   $(226,007)  $4,920,044 
                     
Mortgage loans held for investment at amortized cost:                    
Residential construction  $202,600                
Less: Allowance for credit losses   (405)               
Commercial   1,939,269                
Less: Allowance for credit losses   -                
Total mortgage loans held for investment  $2,141,464                
Cash and cash equivalents  $1,002,396                
Accrued investment income  $2,937                
Total cemetery perpetual care trust investments  $8,836,503                
Cemetery perpetual care obligation  $(5,642,693)               
Trust investments in excess of trust obligations  $3,193,810                

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

8) Cemetery Perpetual Care Trust Investments and Obligation 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 December 31, 2024 and 2023. The unrealized losses were primarily related to interest rate fluctuations. 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 
At December 31, 2024                              
U.S. Treasury securities and obligations of U.S. Government agencies  $2,010   $649,419   $-   $-   $2,010   $649,419 
Obligations of states and political subdivisions   4,950    120,243    -    -    4,950    120,243 
Total unrealized losses  $6,960   $769,662   $-   $-   $6,960   $769,662 
                               
At 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 
Total unrealized losses  $574   $143,448   $5,285   $164,179   $5,859   $307,627 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued)

 

Relevant holdings were comprised of four securities with fair values aggregating 99.1% of aggregate amortized cost as of December 31, 2024. There were four securities with fair values aggregating 98.1% of aggregate amortized cost as of December 31, 2023. No credit losses have been recognized for 2024 and 2023, since the increase in unrealized losses is primarily a result of increases in interest rates. See Note 2 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 December 31, 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  $503,125   $501,375 
Due in 2-5 years   221,021    216,687 
Due in 5-10 years   52,476    51,600 
Due in more than 10 years   -    - 
Total  $776,622   $769,662 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

8) Cemetery Perpetual Care Trust Investments and Obligation 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 December 31, 2024 are summarized as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
December 31, 2024:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $1,741,029   $2,256   $(1,511)  $1,741,774 
Obligations of states and political subdivisions   471,217    180    (4,223)   467,174 
Corporate securities including public utilities   144,616    32    (2,227)   142,421 
Total fixed maturity securities available for sale  $2,356,862   $2,468   $(7,961)  $2,351,369 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $8,547,709   $1,914,309   $(489,852)  $9,972,166 
Total equity securities at estimated fair value  $8,547,709   $1,914,309   $(489,852)  $9,972,166 
                     
Mortgage loans held for investment at amortized cost:                    
Residential construction  $985,806                
Less: Allowance for credit losses   (1,972)               
Total mortgage loans held for investment  $983,834                
Other investments  $1,939,269                
Cash and cash equivalents (1)  $8,553,803                
Accrued investment income  $6,395                
Total restricted assets  $23,806,836                

 

 

(1)Including cash and cash equivalents of $7,657,958 for the life insurance and mortgage segments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

8) Cemetery Perpetual Care Trust Investments and Obligation 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 $6,930,933 for the life insurance and mortgage segments.

 

A surplus note receivable in the amount of $4,000,000 at December 31, 2024 and 2023, from Security National Life, was eliminated in consolidation.

 

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 December 31, 2024 and 2023. The unrealized losses were primarily related to interest rate fluctuations. 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 
At December 31, 2024                              
U.S. Treasury securities and obligations of U.S. Government agencies  $1,511   $558,707   $-   $-   $1,511   $558,707 
Obligations of states and political subdivisions   2,004    237,636    2,219    129,358    4,223    366,994 
Corporate securities including public utilities   1,316    51,685    911    65,704    2,227    117,389 
Total unrealized losses  $4,831   $848,028   $3,130   $195,062   $7,961   $1,043,090 
                               
At 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 
Total unrealized losses  $1,000   $249,877   $7,282   $673,319   $8,282   $923,196 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

8) Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets (Continued)

 

Relevant holdings were comprised of 15 securities with fair values aggregating 99.2% of aggregate amortized cost as of December 31, 2024. Relevant holdings were comprised of 12 securities with fair values aggregating of 99.1% of aggregate amortized cost at December 31, 2023. No credit losses have been recognized for 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 December 31, 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  $1,539,890   $1,539,487 
Due in 2-5 years   308,335    307,820 
Due in 5-10 years   100,606    100,648 
Due in more than 10 years   408,031    403,414 
Total  $2,356,862   $2,351,369 

 

See Notes 1, 2 and 17 for additional information regarding restricted assets and cemetery perpetual care trust investments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023