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Business Segment Information
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Business Segment Information

15) Business Segment Information

 

See Note 1 regarding the adoption of ASU 2023-07.

 

Description of Products and Services by Segment

 

The Company has three operating and reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment’s revenue consists of life insurance premiums, fees earned on factored life insurance policies and net investment income derived from investing policyholder and surplus funds. Its expenses include operating expenses to collect insurance premiums and insurance policy receivables, administer claims, and commissions related to the sale of insurance products sold by the Company’s independent agency force. The Company’s cemetery and mortuary segment’s revenue consists of fees from the sale of at-need cemetery and mortuary merchandise, 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 surplus cash. Its expenses include operating expenses to maintain mortuary and cemetery operations and commissions related to the sale of insurance products sold by the Company’s agents. The Company’s mortgage segment’s revenue consists of residential mortgage origination fee income and mortgage interest income. Its expenses include normal operating expenses related to the origination and sale of residential mortgage loans, loan servicing and warehouse interest and fee expenses.

 

Services and Cost Sharing Policies

 

The accounting policies of the Company’s operating and 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. In addition to revenues, the reportable segments share in business services and costs including personnel expenses, rent, information technology, software, interest expense, and other similar operating costs. These shared services and costs are allocated between the segments using prevailing market rates and other agreed upon allocation methods.

 

Factors Management Used to Identify the Company’s Operating and Reportable Segments

 

The Company’s operating and 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.

 

Chief Operating Decision Maker (“CODM”)

 

The Company’s CODM is the Chief Executive Officer. The following table summarizes significant segment expenses. The significant expenses are based on the information that the CODM is regularly provided to assess segment performance. The CODM reviews the regularly provided information for each segment monthly and gives added emphasis on month over month and year over year comparative results. The CODM considers these comparative results when making decisions about the allocation of the Company’s resources to each segment. The measure of segment profit or loss for the Company’s three operating and reportable business segments is net earnings.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

15) Business Segment Information (Continued)

 

 

   Insurance   Mortuary   Mortgage   Total 
   Year Ended December 31, 2024 
   Life   Cemetery/         
   Insurance   Mortuary   Mortgage   Total 
Revenues:                    
From external sources:                    
Revenue from external customers  $119,655,745   $29,037,173   $107,558,640   $256,251,558 
Net investment income   68,254,989    2,568,511    901,749    71,725,249 
Gains (losses) on investments and other assets   2,054,994    873,166    (986,262)   1,941,898 
Other revenues   1,563,812    543,354    2,496,797    4,603,963 
Intersegment revenues   7,272,110    340,933    573,449    8,186,492 
Total segment revenues   198,801,650    33,363,137    110,544,373    342,709,160 
                     
Elimination of intersegment revenues                  (8,186,492)
Total consolidated revenues                  334,522,668 
                     
Less:                    
Death benefits   58,116,837    -    -      
Surrenders and other policy benefits   4,584,763    -    -      
Increase in future policy benefits   36,253,859    -    -      
Amortization of deferred policy and pre-need acquisition costs and value of business acquired
   15,162,995    777,376    -      
Selling, general and administrative expenses:                    
Commissions   3,809,118    1,564,426    41,599,365      
Personnel   30,396,560    10,215,565    44,472,677      
Advertising   466,821    568,597    2,079,702      
Rent and rent related   434,604    158,950    4,553,515      
Depreciation on property and equipment   923,365    830,855    629,401      
Cost related to funding mortgage loans   -    -    6,134,709      
Data processing and IT related (1)   847,845    240,946    3,453,741      
Premium taxes on insurance premiums and other considerations (1)   3,067,467    -    -      
Other segment items (1)(2)   8,640,857    4,975,269    6,401,085      
Intersegment expenses (3)   913,279    365,635    6,907,578      
Interest expense   3,727,514    827    525,759      
Costs of goods and services sold-mortuaries and cemeteries   -    4,803,528    -      
Income tax expense (benefit)   6,604,520    2,227,353    (1,263,871)     
Segment net earnings (loss)   24,851,246    6,633,810    (4,949,288)   26,535,768 
                     
Net earnings                 $26,535,768 
                     
Segment assets  $ 1,396,093,195   $101,524,343   $85,174,812   $ 1,582,792,350 
                     
Elimination of intersegment assets                  (92,985,136)
Total consolidated assets                 $1,489,807,214 
                     
Expenditures for long-lived assets  $52,414,507   $2,185,269   $219,054   $54,818,830 

 

 

(1)Included in other expenses on the consolidated statements of earnings. Data processing and IT related expenses includes various software subscriptions, maintenance, consulting, support and storage fees.
   
(2)For each reportable segment, other segment items includes:

 

Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible assets, and certain overhead expenses.

 

Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization of intangible assets, and certain overhead expenses.

 

Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization expense of mortgage servicing rights, and certain overhead expenses.

 

(3)   For each reportable segment, intersegment expenses includes:
     

Life Insurance - mortgage servicing fees and interest expense.

 

Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.

 

Mortgage - rent expense and interest expense.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023

 

15) Business Segment Information (Continued)

 

   Insurance   Mortuary   Mortgage   Total 
   Year Ended December 31, 2023 
   Life   Cemetery/         
   Insurance   Mortuary   Mortgage   Total 
Revenues:                    
From external sources:                    
Revenue from external customers  $114,735,304   $27,864,811   $98,071,104   $240,671,219 
Net investment income   67,811,926    2,951,577    1,579,544    72,343,047 
Gains (losses) on investments and other assets   962,824    717,312    157,206    1,837,342 
Other revenues   1,666,020    404,256    1,575,606    3,645,882 
Intersegment revenues   8,203,306    340,001    531,406    9,074,713 
Total segment revenues   193,379,380    32,277,957    101,914,866    327,572,203 
                     
Elimination of intersegment revenues                  (9,074,713)
Total consolidated revenues                  318,497,490 
                     
Less:                    
Death benefits   61,390,517    -    -      
Surrenders and other policy benefits   4,612,346    -    -      
Increase in future policy benefits   34,008,997    -    -      
Amortization of deferred policy and pre-need acquisition costs and value of business acquired
   17,485,699    538,639    -      
Selling, general and administrative expenses:                    
Commissions   3,963,185    1,777,071    34,189,300      
Personnel   26,769,211    9,722,659    46,649,889      
Advertising   638,071    663,113    2,409,261      
Rent and rent related   414,564    159,877    6,282,696      
Depreciation on property and equipment   880,116    812,641    658,904      
Cost related to funding mortgage loans   -    -    6,440,439      
Data processing and IT related (1)   1,007,023    227,599    4,107,542      
Premium taxes on insurance premiums and other considerations (1)   2,939,828    -    -      
Other segment items (1)(2)   9,045,037    4,733,721    9,998,106      
Intersegment expenses (3)   871,407    391,316    7,811,990      
Interest expense   4,081,348    955    783,024      
Costs of goods and services sold-mortuaries and cemeteries   -    4,805,700    -      
Income tax expense (benefit)   3,655,148    2,131,289    (3,981,083)     
Segment net earnings (loss)   21,616,883    6,313,377    (13,435,202)   14,495,058 
                     
Net earnings                 $14,495,058 
                     
Segment assets  $1,329,049,024   $97,547,937   $97,018,754   $1,523,615,715 
                     
Elimination of intersegment assets                  (93,063,440)
Total consolidated assets                 $1,430,552,275 
                     
Expenditures for long-lived assets  $23,010,579   $856,716   $137,246   $24,004,541 

 

 

(1)Included in other expenses on the consolidated statements of earnings. Data processing and IT related expenses includes various software subscriptions, maintenance, consulting, support and storage fees.
   
(2)For each reportable segment, other segment items includes:

 

Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible assets, and certain overhead expenses.

 

Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization of intangible assets, and certain overhead expenses.

 

Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization expense of mortgage servicing rights, and certain overhead expenses.

 

(3)   For each reportable segment, intersegment expenses includes:

 

Life Insurance - mortgage servicing fees and interest expense.

 

Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.

 

Mortgage - rent expense and interest expense.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2024 and 2023