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Cemetery Perpetual Care Trust Investments and Obligation and Restricted Assets
 3 Months Ended
Mar. 31, 2025
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 cemetery perpetual care investments and obligation as of March 31, 2025, are as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
March 31, 2025:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $650,126   $1,323   $(1,117)  $650,332 
Obligations of states and political subdivisions   123,933    -    (4,351)   119,582 
Total fixed maturity securities available for sale  $774,059   $1,323   $(5,468)  $769,914 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $3,917,228   $1,356,226   $(201,715)  $5,071,739 
Total equity securities at estimated fair value  $3,917,228   $1,356,226   $(201,715)  $5,071,739 
                     
Mortgage loans held for investment at amortized cost:                    
Residential construction  $1,195,310                
Less: Allowance for credit losses   (405)               
Total mortgage loans held for investment  $1,194,905                
                     
Other investments  $1,106,768                
                     
Cash and cash equivalents  $891,086                
                     
Accrued investment income  $3,767                
                     
Total cemetery perpetual care trust investments  $9,038,179                
                     
Cemetery perpetual care obligation  $(5,704,613)               
                     
Trust investments in excess of trust obligations  $3,333,566                

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

 

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

 

The components of 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                

 

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 March 31, 2025 and December 31, 2024. 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 
March 31, 2025                              
U.S. Treasury securities and obligations of U.S. Government agencies  $1,117   $500,705   $-   $-   $1,117   $500,705 
Obligations of states and political subdivisions   -    -    4,351    119,582    4,351    119,582 
Totals  $1,117   $500,705   $4,351   $119,582   $5,468   $620,287 
                               
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 
Totals  $6,960   $769,662   $-   $-   $6,960   $769,662 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

 

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

 

Relevant holdings were comprised of three securities with fair values aggregating 99.1% of the aggregate amortized cost as of March 31, 2025. Relevant holdings were comprised of four securities with fair values aggregating 99.1% of aggregate amortized cost as of December 31, 2024. No credit losses have been recognized for the three month periods ended March 31, 2025 and 2024, 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 March 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  $501,822   $500,705 
Due in 2-5 years   219,761    217,837 
Due in 5-10 years   52,476    51,372 
Due in more than 10 years   -    - 
Total  $774,059   $769,914 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (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.

 

Additionally, restricted cash 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 March 31, 2025, are summarized as follows:

 

   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Estimated Fair Value 
March 31, 2025:                    
Fixed maturity securities, available for sale, at estimated fair value:                    
U.S. Treasury securities and obligations of U.S. Government agencies  $1,740,244   $5,719   $(675)  $1,745,288 
Obligations of states and political subdivisions   470,113    172    (4,768)   465,517 
Corporate securities including public utilities   143,321    40    (1,694)   141,667 
Total fixed maturity securities available for sale  $2,353,678   $5,931   $(7,137)  $2,352,472 
                     
Equity securities at estimated fair value:                    
Common stock:                    
Industrial, miscellaneous and all other  $9,009,982   $2,100,071   $(551,700)  $10,558,353 
Total equity securities at estimated fair value  $9,009,982   $2,100,071   $(551,700)  $10,558,353 
                     
Mortgage loans held for investment at amortized cost:                     
Residential construction  $1,037,234                
Less: Allowance for credit losses   (2,074)               
Total mortgage loans held for investment  $1,035,160                
                     
Other investments  $2,313,436                
                     
Cash and cash equivalents (1)  $11,455,090                
                     
Accrued investment income  $8,387                
                     
Total restricted assets  $27,722,898                

 

 

(1)Including cash and cash equivalents of $10,828,570 for the life insurance and mortgage segments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

 

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

 

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.

 

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 March 31, 2025 and December 31, 2024. 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 March 31, 2025                              
U.S. Treasury securities and obligations of U.S. Government agencies  $675   $300,423   $-   $-   $675   $300,423 
Obligations of states and political subdivisions   240    25,366    4,528    289,979    4,768    315,345 
Corporate securities including public utilities   -    -    1,694    406,606    1,694    406,606 
Total unrealized losses  $915   $325,789   $6,222   $696,585   $7,137   $1,022,374 
                               
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 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2025 (Unaudited)

 

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

 

Relevant holdings were comprised of nine securities with fair values aggregating 99.0% of the aggregate amortized cost as of March 31, 2025. Relevant holdings were comprised of 15 securities with fair values aggregating 99.2% of the aggregate amortized cost as of December 31, 2024. No credit losses have been recognized for the three month periods ended March 31, 2025 and 2024, 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 March 31, 2025, 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  $1,614,956   $1,616,124 
Due in 2-5 years   308,335    310,642 
Due in 5-10 years   100,606    100,510 
Due in more than 10 years   329,781    325,196 
Total  $2,353,678   $2,352,472 

 

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

March 31, 2025 (Unaudited)