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Reinsurance, Commitments and Contingencies
 12 Months Ended
Dec. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
Reinsurance, Commitments and Contingencies

10) Reinsurance, Commitments and Contingencies

 

Reinsurance

 

The Company follows the procedure of reinsuring risks of more than a specified limit, which ranges from $25,000 to $100,000 on newly issued policies. The Company has also assumed various reinsurance agreements through acquisition of various life companies and has assets held in trust related to certain agreements. The Company is ultimately liable for these reinsured amounts in the event such reinsurers are unable to pay their portion of the claims. The Company evaluates the financial condition of reinsurers and monitors the concentration of credit risk. The Company had a significant concentration of credit risk with a single reinsurer of 94.4% and 94.0% of ceded life insurance in force as of December 31, 2024 and 2023, respectively. This represented approximately 7.8% and 8.8% of the Company’s total life insurance in force as of December 31, 2024 and 2023, respectively.

 

The Company’s life insurance in force and premiums for reinsurance are summarized as follows:

 

                   Percentage 
       Ceded to   Assumed       of Amount 
   Direct   Other   from Other   Net   Assumed 
   Amount   Companies   Companies   Amount   to Net 
2024                         
Life Insurance in force ($000)  $3,914,583   $325,189   $33,088   $3,622,482    0.9%
                          
Premiums:                         
Life Insurance  $121,392,765   $2,142,678   $217,701   $119,467,788    0.2%
Accident and Health Insurance   187,949    -    8    187,957    0.0%
Total premiums  $121,580,714   $2,142,678   $217,709   $119,655,745    0.2%
                          
2023                         
Life Insurance in force ($000)  $3,517,812   $333,211   $34,742   $3,219,343    1.1%
                          
Premiums:                         
Life Insurance  $116,141,852   $1,938,610   $239,744   $114,442,986    0.2%
Accident and Health Insurance   215,442    -    8    215,450    0.0%
Total premiums  $116,357,294   $1,938,610   $239,752   $114,658,436    0.2%

 

Mortgage Loan Loss Settlements

 

Future loan losses can be extremely difficult to estimate. However, the Company believes that the Company’s reserve methodology and its current practice of property preservation allow it to estimate potential losses on loans sold. See Note 3 for additional information about the Company’s loan loss reserve.

 

Non-Cancelable Leases

 

The Company leases office space and equipment under various non-cancelable agreements. See Note 23 regarding leases.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

10) Reinsurance, Commitments and Contingencies (Continued)

 

Other Contingencies and Commitments

 

The Company has commitments to fund existing construction and land development loans pursuant to the various loan agreements. As of December 31, 2024, the Company’s commitments were approximately $216,368,000 for these loans, of which $152,361,000 had been funded. The Company advances funds in accordance with the loan agreements once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed at 5.25% to 8.50% per annum. Maturities range between six and eighteen months.

 

The Company belongs to a captive insurance group (“the captive group”) for certain casualty insurance, worker compensation and general liability programs. The captive group maintains insurance reserves relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive group considers several factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required from the Company and its members. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date.

 

The Company is a defendant in various other legal actions arising from the normal conduct of business. The Company believes that none of the actions, if adversely determined, will have a material effect on the Company’s financial position or results of operations. Based on the Company’s assessment and legal counsel’s representations concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the above claims in the consolidated financial statements. The Company is not a party to any other material legal proceedings outside the ordinary course of business or to any other legal proceedings, which, if adversely determined, would have a material adverse effect on its financial condition or results of operations.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023