What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-31 compared with 2020-03-30 · 106 added, 199 removed, 117 unchanged (72% of the section changed)

Security National Financial Corporation (the “Company”) operates in three main business segments:

Security National Financial Corporation (the “Company”) operates in three reportable business segments:

life insurance, cemetery and mortuary, and mortgages.

The life insurance

segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance.

These products are marketed in 40 states through a commissioned sales force of independent licensed

insurance agents who may also sell insurance products of other companies.

The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products, and accident and health insurance.

These products are marketed in 40 states through a commissioned sales force of independent licensed insurance agents who may also sell insurance products of other companies.

The cemetery and mortuary segment consists of eight mortuaries and five cemeteries in the state of Utah and one cemetery in the state of California.

The Company also engages in

pre-need selling of funeral, cemetery, mortuary, and cremation services through its Utah and California operations.

The Company also engages in pre-need selling of funeral, cemetery, mortuary, and cremation services through its Utah and California operations.

Many of the insurance agents also sell pre-need funeral, cemetery, and cremation services.

The mortgage segment originates and

underwrites or otherwise purchases residential and commercial loans for new construction, existing homes, and other real estate projects.

The mortgage segment operates through 77 retail offices and one wholesale office in 21 states, and is an

approved mortgage lender in several other states.

The mortgage segment originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes, and other real estate projects.

The mortgage segment operates through 98 retail offices in 23 states, and is an approved mortgage lender in several other states.

The Company’s design and structure are that each business segment is related to the other business segments and contributes to the profitability of the other segments.

The Company’s cemetery and

mortuary segment provides a level of public awareness that assists in the sales and marketing of insurance and pre-need cemetery and funeral products.

The Company’s insurance segment invests their assets (including, in part, pre-need funeral products

and services) in investments authorized by the respective insurance departments of their states of domicile.

The Company’s cemetery and mortuary segment provides a level of public awareness that assists in the sales and marketing of insurance and pre-need cemetery and funeral products.

The Company’s insurance segment invests their assets (including, in part, pre-need funeral products and services) in investments authorized by the respective insurance departments of their states of domicile.

The Company also pursues growth through acquisitions.

The Company’s mortgage segment provides mortgage loans and other real estate investment

opportunities.

The Company was organized as a holding company in 1979 when Security National Life Insurance Company (“Security National Life”) became a wholly owned subsidiary of the Company and the former

stockholders of Security National Life became stockholders of the Company.

Security National Life was formed in 1965 and has acquired or purchased significant blocks of business which include Capital Investors Life Insurance Company (1994), Civil

Service Employees Life Insurance Company (1995), Southern Security Life Insurance Company (1998), Menlo Life Insurance Company (1999), Acadian Life Insurance Company (2002), Paramount Security Life Insurance Company (2004), Memorial Insurance Company

of America (2005), Capital Reserve Life Insurance Company (2007), Southern Security Life Insurance Company, Inc.

(2008), North America Life Insurance Company (2011, 2015), Trans-Western Life Insurance Company (2012), Mothe Life Insurance Company

(2012), DLE Life Insurance Company (2012), American Republic Insurance Company (2015), First Guaranty Insurance Company (2016), and Kilpatrick Life Insurance Company (2019).

The Company’s mortgage segment provides mortgage loans and other real estate investment opportunities.

The Company was organized as a holding company in 1979 when Security National Life Insurance Company (“Security National Life”) became a wholly owned subsidiary of the Company and the former stockholders of Security National Life became stockholders of the Company.

Security National Life was formed in 1965 and has acquired or purchased significant blocks of business which include Capital Investors Life Insurance Company (1994), Civil Service Employees Life Insurance Company (1995), Southern Security Life Insurance Company (1998), Menlo Life Insurance Company (1999), Acadian Life Insurance Company (2002), Paramount Security Life Insurance Company (2004), Memorial Insurance Company of America (2005), Capital Reserve Life Insurance Company (2007), Southern Security Life Insurance Company, Inc.

(2008), North America Life Insurance Company (2011, 2015), Trans-Western Life Insurance Company (2012), Mothe Life Insurance Company (2012), DLE Life Insurance Company (2012), American Republic Insurance Company (2015), First Guaranty Insurance Company (2016), and Kilpatrick Life Insurance Company (2019).

The cemetery and mortuary operations have also grown through the acquisition of other cemetery and mortuary companies.

The cemetery and mortuary companies that the Company has acquired are Holladay

Memorial Park, Inc.

The cemetery and mortuary companies that the Company has acquired are Holladay Memorial Park, Inc.

(1991), Cottonwood Mortuary, Inc.

3 unchanged sentences

In 1993, the Company formed SecurityNational Mortgage Company (“SecurityNational Mortgage”) to originate and refinance residential mortgage loans.

In 2012, the Company formed Green Street Mortgage

Services, Inc.

In 2012, the Company formed Green Street Mortgage Services, Inc.

(now known as EverLEND Mortgage Company) (“EverLEND Mortgage”) also to originate and refinance residential mortgage loans.

1 unchanged sentence

Life Insurance

The Company, through Security National Life, issues and distributes selected lines of life insurance and annuities.

The Company’s life insurance business includes funeral plans and interest-sensitive

life insurance, as well as other traditional life, accident, and health insurance products.

The Company places specific marketing emphasis on funeral plans through pre-need planning.

The Company’s other insurance subsidiaries, Memorial Insurance

Company of America (“Memorial Insurance”), Southern Security Life Insurance Company, Inc.

(“Southern Security”), Trans-Western Life Insurance Company (“Trans-Western”), First Guaranty Insurance Company (“First Guaranty”), and Kilpatrick Life

Insurance Company (“Kilpatrick”), service and maintain policies that were purchased prior to their acquisition by Security National Life.

The Company, through Security National Life, First Guaranty Insurance Company (“First Guaranty”), and Kilpatrick Life Insurance Company (“Kilpatrick”), issues and distributes selected lines of life insurance and annuities.

The Company’s life insurance business includes funeral plans and interest-sensitive life insurance, as well as other traditional life, accident, and health insurance products.

The Company places specific marketing emphasis on funeral

plans through pre-need planning.

The Company’s insurance subsidiaries, Memorial Insurance Company of America (“Memorial Insurance”), Southern Security Life Insurance Company, Inc.

(“Southern Security”), Trans-Western Life Insurance Company (“Trans-Western”), First Guaranty, and Kilpatrick, service and maintain policies that were purchased prior to their acquisition by Security National Life.

A funeral plan is a small face value life insurance policy that generally has face coverage of up to $25,000.

The Company believes that funeral plans represent a marketing niche that has lower

competition because most insurance companies do not offer similar coverage.

The Company believes that funeral plans represent a marketing niche that has lower competition because most insurance companies do not offer similar coverage.

The purpose of the funeral plan policy is to pay the costs and expenses incurred at the time of a person’s death.

On a per thousand-dollar cost of insurance basis, these

policies can be more expensive to the policyholder than many types of non-burial insurance due to their low face amount, requiring the fixed cost of the policy administration to be distributed over a smaller policy size, and the simplified

underwriting practices that result in higher mortality costs.

On a per thousand-dollar cost of insurance basis, these policies can be more expensive to the policyholder than many types of non-burial insurance due to their low face amount, requiring the fixed cost of the policy administration to be distributed over a smaller policy size, and the simplified underwriting practices that result in higher mortality costs.

Markets and Distribution

1 unchanged sentence

The Company, in marketing its life insurance products, seeks to locate, develop and service specific niche markets.

The Company’s funeral plan

policies are sold primarily to persons who range in age from 45 to 85 and have low to moderate income.

A majority of the Company’s funeral plan premiums come from the states of Arkansas, California, Florida, Georgia, Louisiana, Mississippi, Texas,

The Company’s funeral plan policies are sold primarily to persons who range in age from 45 to 85 and have low to moderate income.

A majority of the Company’s funeral plan premiums come from the states of Arkansas, California, Florida, Georgia, Louisiana, Mississippi, Texas, and Utah.

The Company sells its life insurance products through direct agents, brokers, and independent licensed agents who may also sell insurance products of other companies.

The commissions on life

insurance products range from approximately 50% to 120% of first year premiums.

The commissions on life insurance products range from approximately 50% to 120% of first year premiums.

In those cases, where the Company utilizes its direct agents in selling such policies, those agents customarily receive advances against future commissions.

In some instances, funeral plan insurance is marketed in conjunction with the Company’s cemetery and mortuary sales force.

When it is marketed by that group, the beneficiary is usually the Company’s

cemeteries and mortuaries.

When it is marketed by that group, the beneficiary is usually the Company’s cemeteries and mortuaries.

Thus, death benefits that become payable under the policy are paid to the Company’s cemetery and mortuary subsidiaries to the extent of services performed and products purchased.

In marketing funeral plan insurance, the Company also seeks and obtains third-party endorsements from other cemeteries and mortuaries within its marketing areas.

Typically, these cemeteries and

mortuaries will provide letters of endorsement and may share in mailing and other lead-generating costs since these businesses are usually made the beneficiary of the policy.

The following table summarizes the life insurance business for the five

years ended December 31, 2019:

Typically, these cemeteries and mortuaries will provide letters of endorsement and may share in mailing and other lead-generating costs since these businesses are usually made the beneficiary of the policy.

The following table summarizes the life insurance business for the five years ended December 31, 2020:

Life Insurance

6 unchanged sentences

The factors considered in evaluating an application for ordinary life insurance coverage can include the applicant’s age, occupation, general health, and medical history.

Upon receipt of a

satisfactory (non-funeral plan insurance) application, which contains pertinent medical questions, the Company issues insurance based upon its medical limits and requirements subject to the following general non‑medical limits:

Upon receipt of a satisfactory (non-funeral plan insurance) application, which contains pertinent medical questions, the Company issues insurance based upon its medical limits and requirements subject to the following general non-medical limits:

Medical information

1 unchanged sentence

When underwriting life insurance, the Company will sometimes issue policies with higher premium rates for substandard risks.

The Company’s funeral plan insurance is written on a simplified medical application with underwriting requirements being a completed application, a phone inspection on the applicant, and an

intelliscript prescription history inquiry.

The Company’s funeral plan insurance is written on a simplified medical application with underwriting requirements being a completed application, a phone inspection on the applicant, and an intelliscript prescription history inquiry.

There are several underwriting classes in which an applicant can be placed.

The Company’s annuity business includes single premium deferred annuities, flexible premium deferred annuities, and immediate annuities.

A single premium deferred annuity is a contract where the

individual remits a sum of money to the Company, which is retained on deposit until such time as the individual may wish to annuitize or surrender the contract for cash.

A flexible premium deferred annuity gives the contract holder the right to make

premium payments of varying amounts or to make no further premium payments after his initial payment.

A single premium deferred annuity is a contract where the individual remits a sum of money to the Company, which is retained on deposit until such time as the individual may wish to annuitize or surrender the contract for cash.

A flexible premium deferred annuity gives the contract holder the right to make premium payments of varying amounts or to make no further premium payments after his initial payment.

These single and flexible premium deferred annuities can have initial surrender charges.

The surrender charges act as a deterrent to individuals who

may wish to prematurely surrender their annuity contracts.

An immediate annuity is a contract in which the individual remits a sum of money to the Company in return for the Company’s obligation to pay a series of payments on a periodic basis over a

designated period of time, such as an individual’s life, or for such other period as may be designated.

The surrender charges act as a deterrent to individuals who may wish to prematurely surrender their annuity contracts.

An immediate annuity is a contract in which the individual remits a sum of money to the Company in return for the Company’s obligation to pay a series of payments on a periodic basis over a designated period of time, such as an individual’s life, or for such other period as may be designated.

Annuities have guaranteed interest rates that range from 1% to 6.5% per annum.

Rates above the guaranteed interest rate credited are periodically modified by the Board of

Directors at its discretion.

Rates above the guaranteed interest rate credited are periodically modified by the Board of Directors at its discretion.

In order for the Company to realize a profit on an annuity product, the Company must maintain an interest rate spread between its investment income and the interest rate credited to the annuities.

Commissions, issuance

expenses, and general and administrative expenses are deducted from this interest rate spread.

Commissions, issuance expenses, and general and administrative expenses are deducted from this interest rate spread.

Markets and Distribution

1 unchanged sentence

A major source of annuity sales come from direct agents and are sold in conjunction with other insurance sales.

an individual does not qualify for a funeral plan, the agent will often sell that individual an annuity to fund final expenses.

If an individual does not qualify for a funeral plan, the agent will often sell that individual an annuity to fund final expenses.

The following table summarizes the annuity business for the five years ended December 31, 2020:

5 unchanged sentences

With the acquisition of Capital Investors in 1994, the Company acquired a small block of accident and health policies.

Since 1999, the Company has offered a low-cost comprehensive diver’s accident

policy that provides worldwide coverage for medical expense reimbursement in the event of a diving accident.

With the acquisition of Kilpatrick in 2019, the Company also acquired a small block of accident and health policies.

Since 1999, the Company has offered a low-cost comprehensive diver’s accident policy that provides worldwide coverage for medical expense reimbursement in the event of a diving accident.

With the acquisition of Kilpatrick in 2019, the Company also acquired a block of accident and health policies.

Markets and Distribution

5 unchanged sentences

The primary purpose of reinsurance is to enable an insurance company to issue an insurance policy in an amount larger than the risk the insurance company is willing to assume for itself.

insurance company remains obligated for the amounts reinsured (ceded) in the event the reinsurers do not meet their obligations.

The insurance company remains obligated for the amounts reinsured (ceded) in the event the reinsurers do not meet their obligations.

The Company currently cedes and assumes certain risks with various authorized unaffiliated reinsurers pursuant to reinsurance treaties, which are generally renewed annually.

The premiums paid by the

Company are based on a number of factors, primarily including the age of the insured and the risk ceded to the reinsurer.

The premiums paid by the Company are based on a number of factors, primarily including the age of the insured and the risk ceded to the reinsurer.

It is the Company’s policy to retain no more than $100,000 of ordinary insurance per insured life, with the excess risk being reinsured.

The total amount of life insurance reinsured by other

companies as of December 31, 2019, was $465,460,000, which represents approximately 16.2% of the Company’s life insurance in force on that date.

See “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Notes to Consolidated Financial Statements” for additional disclosure and discussion regarding

The investments that support the Company’s life insurance and annuity obligations are determined by the investment committees of the Company’s subsidiaries and ratified by the full Board of Directors

of the respective subsidiaries.

The total amount of life insurance reinsured by other companies as of December 31, 2020, was $377,138,000, which represents approximately 13.0% of the Company’s life insurance in force on that date.

A significant portion of the Company’s investments must meet statutory requirements governing the nature and quality of permitted investments by its insurance subsidiaries.

The Company maintains a diversified

investment portfolio consisting of common stocks, preferred stocks, municipal bonds, corporate bonds, mortgage loans, real estate, and other securities and investments.

The Company maintains a diversified investment portfolio consisting of common stocks, preferred stocks, municipal bonds, corporate bonds, mortgage loans, real estate, and other securities and investments.

Cemetery and Mortuary

Through its cemetery and mortuary segment, the Company markets a variety of products and services both on a pre-need basis (prior to death) and an at-need basis (at the time of death).

The products include:

plots, interment vaults, mausoleum crypts, markers, caskets, urns and other death care related products.

These services include:

professional services of funeral directors, opening and closing of graves, use of chapels and viewing rooms, and

use of automobiles and clothing.

professional services of funeral directors, opening and closing of graves, use of chapels and viewing rooms, and use of automobiles and clothing.

The Company has a mortuary at each of its cemeteries, other than Holladay Memorial Park and Singing Hills Memorial Park, and has six separate stand-alone mortuary facilities.

1 unchanged sentence

The Company’s pre-need cemetery and mortuary sales are marketed to persons of all ages but are generally purchased by persons 45 years of age and older.

The Company is limited in its geographic

distribution of these products to areas lying within an approximate 20-mile radius of its mortuaries and cemeteries.

The Company is limited in its geographic distribution of these products to areas lying within an approximate 20-mile radius of its mortuaries and cemeteries.

The Company’s at-need sales are similarly limited in geographic area.

2 unchanged sentences

Many of these pre-need cemetery and mortuary sales representatives are also licensed insurance salesmen and sell funeral plan insurance.

In some instances, the Company’s cemetery and mortuary facilities are the named beneficiaries of the funeral plan

In some instances, the Company’s cemetery and mortuary facilities are the named beneficiaries of the funeral plan policies.

Potential customers are located via telephone sales prospecting, responses to letters mailed by the pre-planning consultants, newspaper inserts, referrals, and door-to-door canvassing.

trains its sales representatives and helps generate leads for them.

The Company trains its sales representatives and helps generate leads for them.

Mortgage Loans

The Company, through its wholly owned subsidiaries, SecurityNational Mortgage and EverLEND Mortgage, are active in the residential real estate market.

SecurityNational Mortgage is approved by the

Department of Housing and Urban Development (HUD), the Federal National Mortgage Association (Fannie Mae), and other secondary market investors, to originate a variety of residential mortgage loan products, which are subsequently sold to

SecurityNational Mortgage is approved by the U.S.

EverLEND Mortgage is approved by the U.S.

Department of Housing and Urban Development (HUD), and other secondary market investors, to originate a variety of residential mortgage loan products, which are subsequently sold to investors.

Company uses internal and external funding sources to fund mortgage loans.

The Company uses internal and external funding sources to fund mortgage loans.

Security National Life originates and funds commercial real estate loans, residential construction loans, and land development loans for internal investment.

Markets and Distribution

The Company’s residential mortgage lending services are marketed primarily to real estate brokers and some independent mortgage loan originators.

The Company has a strong retail origination presence

in the Utah, Florida, Nevada, and Texas markets in addition to one wholesale branch office located in Utah, with sales representatives in these and other states.

See “Management’s Discussion and Analysis of Results of Operations and Financial

Condition” and “Notes to Consolidated Financial Statements” for additional disclosure and discussion regarding mortgage loans.

The Company’s residential mortgage lending services are marketed primarily to real estate brokers, builders and directly with consumers.

The Company has a strong retail origination presence in the Utah, Florida, Texas, Nevada and Arizona markets and is experiencing rapid growth with sales representatives in these and many other states across the country.

Recent Acquisitions and Other Business Activities

Acquisition of Kilpatrick Life Insurance Company

On December 13, 2019, the Company, through its wholly-owned subsidiary, Security National Life, completed a stock purchase transaction with Kilpatrick, a Louisiana domiciled insurance company, and

Kilpatrick’s shareholders, to purchase all the outstanding shares of common stock of Kilpatrick.

Under the terms of the transaction, as set forth in the Stock Purchase Agreement, dated October 11, 2019, the Company paid purchase consideration at the closing of the transaction equal to

$23,779,940 subject to a $1,400,000 holdback that was deposited into an interest bearing escrow account to be held for a period of eighteen months from the closing date.

On December 13, 2019, the Company, through its wholly-owned subsidiary, Security National Life, completed a stock purchase transaction with Kilpatrick, a Louisiana domiciled insurance company, and Kilpatrick’s shareholders, to purchase all the outstanding shares of common stock of Kilpatrick.

Under the terms of the transaction, as set forth in the Stock Purchase Agreement, dated October 11, 2019, the Company paid purchase consideration at the closing of the transaction equal to $23,779,940 subject to a $1,400,000 holdback that was deposited into an interest bearing escrow account to be held for a period of eighteen months from the closing date.

The current amount that is available to be disbursed to the prior owners is $598,949.

Acquisition of Probst Family Funerals and Cremations and Heber Valley Funeral Home

On February 15, 2019, the Company, through its wholly-owned subsidiary, Memorial Mortuary Inc., completed an asset purchase transaction with Probst Family Funerals and Cremations, LLC.

Family Funerals”) and Heber Valley Funeral Home, Inc.

(“Probst Family Funerals”) and Heber Valley Funeral Home, Inc.

(“Heber Valley Funeral Home”).

These funeral homes are both located in Heber Valley, a community situated about 45 miles southeast of Salt Lake City.

Under the terms of the transaction, as set forth in the Asset Purchase Agreement, dated February 15, 2019, the Company paid the net purchase price of $3,315,647 for the business and assets of Probst

Family Funerals and Heber Valley Funeral Home, subject to a $150,000 holdback.

Under the terms of the transaction, as set forth in the Asset Purchase Agreement, dated February 15, 2019, the Company paid the net purchase price of $3,315,647 for the business and assets of Probst Family Funerals and Heber Valley Funeral Home, subject to a $150,000 holdback.

In August 2019, this escrow account was settled and $137,550 was paid to the prior owners.

Acquisition of Beta Capital Corp.

On June 1, 2018, the Company completed a stock purchase transaction with Beta Capital Corp.

("Beta Capital") and Ronald D.

Maxson, the sole owner of all the outstanding shares of common stock of Beta

Capital, to purchase all of the outstanding shares of common stock of Beta Capital.

Beta Capital is engaged in the operation of a factoring business with the principal purpose of providing funding for funeral homes and mortuaries.

Under the terms of the transaction, as set forth in the Stock Purchase Agreement, dated June 1, 2018, the Company paid Mr.

Maxson the purchase consideration at the closing of the transaction equal to

the sum of (i) $890,000 in cash plus (ii) the accounts receivable value of $2,515,783, representing the total amount of the Company's outstanding receivables as of the closing date of June 1, 2018, for a total closing payment of $3,405,783.

$3,405,783 closing payment, a holdback amount equal to $175,000 was deposited into an interest bearing escrow account to be held for a period of eighteen months from the closing date to pay off any uncollected accounts receivable and other

liabilities of Beta Capital as of the closing date .

In November 2019, this escrow account was settled and $169,190 was paid to the prior owner.

Real Estate Development

The Company is capitalizing on the opportunity to develop commercial assets on its existing properties.

The cost to acquire existing for-sale assets currently exceeds the replacement costs, thus

creating the opportunity for development and redevelopment of the land that the Company currently owns.

The Company is capitalizing on the opportunity to develop commercial and residential assets on its existing properties.

The cost to acquire existing for-sale assets currently exceeds the replacement costs, thus creating the opportunity for development and redevelopment of the land that the Company currently owns.

The Company has developed, or is in the process of developing, assets that have an initial development cost exceeding $100,000,000.

plans to continue its development endeavors as the market demands.

Center53 Development

The Company plans to continue its development endeavors as the market demands.

C enter 53 Development

In 2015, the Company broke ground and commenced development on the first phase of its new corporate campus.

The anticipated project, comprising nearly 20 acres of land that is currently owned by the

Company in the central valley of Salt Lake City, is envisioned to be a multi-year, phased development.

At full development, the project will include nearly one million square-feet in six buildings, ranging from four to ten stories, and will be

serviced by three parking structures with about 4,000 stalls.

The first phase of the project includes a building and a parking garage consisting of nearly 200,000 square feet of office and retail space with 748 parking stalls.

This phase of the

campus was completed in July 2017 and is currently 71% leased.

The Company continues to market this building to potential tenants.

The second phase of the project includes a six story building of nearly 200,000 square feet and will be partially

occupied by the Company.

Construction preparation for the second phase began in March 2020, and the Company anticipates occupying a portion of the building in June 2021 as its corporate headquarters.

Sale of Dry Creek at East Village Apartments

On March 29, 2018, the Company through its wholly owned subsidiary, Security National Life, completed the sale of the Dry Creek at East Village (“Dry Creek”) apartments to a subsidiary of Dinapoli

Capital Partners, LLC (“Dinapoli Capital”) pursuant to the terms of the Purchase and Sale Agreement, dated February 14, 2018, between Security National Life and Dinapoli Capital.

The purchase price paid for the Dry Creek apartments was $57,000,000.

From the proceeds that Security National Life received from the sale of the apartment complex, $26,802,904 was used to pay off an existing loan at Zions First National Bank, N.A., which was secured by a security interest in the apartment complex.

brokerage commission of $285,000 and legal fees and related costs were also paid from the purchase proceeds.

The Company’s book basis in Dry Creek was approximately $34,250,000, and the Company recognized a gain of approximately $22,252,000 from the

sale in the first quarter of 2018.

The Company’s insurance subsidiaries are subject to comprehensive regulation in the jurisdictions in which they do business under statutes and regulations administered by state insurance

commissioners.

The anticipated project, comprising nearly 20 acres of land that is currently owned by the Company in the central valley of Salt Lake City, is envisioned to be a multi-year, phased development.

At full development, the project will include nearly one million square-feet in five buildings, ranging from four to ten stories, and will be serviced by three parking structures with about 4,000 stalls.

The first phase of the project includes a building and a parking garage consisting of nearly 200,000 square feet of office space with 748 parking stalls.

This phase of the campus was completed in July 2017 and is currently 96% occupied.

The second phase of the project began in March 2020 and includes a six story building of nearly 218,000 square feet and a parking garage with approximately 870 stalls.

The Company will occupy half of the building as its corporate headquarters, and has leased the remainder of the building.

It is anticipated that the Company will occupy the building in September 2021.

The Company’s insurance subsidiaries are subject to comprehensive regulation in the jurisdictions in which they do business under statutes and regulations administered by state insurance commissioners.

Such regulation relates to, among other things, prior approval of the acquisition of a controlling interest in an insurance company;

1 unchanged sentence

licensing of insurers and their agents;

of and limitations on investments;

nature of and limitations on investments;

deposits of securities for the benefit of policyholders;

1 unchanged sentence

periodic examinations of the affairs of insurance companies;

annual and other reports required to be filed on the

financial condition of insurers or for other purposes;

and requirements regarding aggregate reserves for life policies and annuity contracts, policy claims, unearned premiums, and other matters.

The Company’s insurance subsidiaries are subject to

this type of regulation in any state in which they are licensed to do business.

annual and other reports required to be filed on the financial condition of insurers or for other purposes;

and requirements regarding aggregate reserves for life policies

and annuity contracts, policy claims, unearned premiums, and other matters.

The Company’s insurance subsidiaries are subject to this type of regulation in any state in which they are licensed to do business.

Such regulation could involve additional costs, restrict operations, or delay implementation of the Company’s business plans.

The Company’s life insurance subsidiaries are currently subject to regulation in Utah, Arkansas, Louisiana, Mississippi and Texas under insurance holding company legislation, and other states where

The Company’s life insurance subsidiaries are currently subject to regulation in Utah, Arkansas, Louisiana, Mississippi and Texas under insurance holding company legislation, and other states where applicable.

Generally, intercompany transfers of assets and dividend payments from insurance subsidiaries are subject to prior notice of approval from the state insurance department, if they are deemed “extraordinary” under these statutes.

insurance subsidiaries are required, under state insurance laws, to file detailed annual reports with the supervisory agencies in each of the states in which they do business.

Their business and accounts are also subject to examination by these

The Company’s subsidiary, First Guaranty, completed an examination by Louisiana for the three year period ending December 31, 2016.

The Company’s subsidiary, Security National Life, has also completed examinations by Arkansas, Mississippi,

Texas and Utah for the four year period ending December 31, 2017.

The Company’s newly acquired subsidiary, Kilpatrick Life, is currently under examination for the three year period ending December 31, 2018.

The Texas Department of Banking also audits

pre-need insurance policies that are issued in the state of Texas.

The insurance subsidiaries are required, under state insurance laws, to file detailed annual reports with the supervisory agencies in each of the states in which they do business.

Their business and accounts are also subject to examination by these agencies.

The Company was notified that all of its life insurance subsidiaries have been selected for examination for the year ended December 31, 2020 and periods since their last examination.

The Company was last examined in 2016 (First Guaranty Insurance), 2017 (Security National Life) and 2019 (Kilpatrick Life).

The Texas Department of Banking also audits pre-need insurance policies that are issued in the state of Texas.

Pre-need policies are life and annuity products sold as the funding mechanism for funeral plans through funeral homes by Security National agents.

The Company is required to send

the Texas Department of Banking an annual report that summarizes the number of policies in force and the face amount or death benefit for each policy.

This annual report also indicates the number of new policies issued for that year, all death

claims paid that year, and all premiums received.

The Company’s cemetery and mortuary subsidiaries are subject to the Federal Trade Commission’s comprehensive funeral industry rules and to state regulations in the various states where such

operations are domiciled.

The Company is required to send the Texas Department of Banking an annual report that summarizes the number of policies in force and the face amount or death benefit for each policy.

This annual report also indicates the number of new policies issued for that year, all death claims paid that year, and all premiums received.

The Company’s cemetery and mortuary subsidiaries are subject to the Federal Trade Commission’s comprehensive funeral industry rules and to state regulations in the various states where such operations are domiciled.

The morticians must be licensed by the respective state in which they provide their services.

1 unchanged sentence

Reports are required to be kept on file on a yearly basis which include financial information concerning the number of spaces sold and, where applicable, funds provided to the Endowment Care Trust Fund.

Licenses are issued annually on the basis of

such reports.

Licenses are issued annually on the basis of such reports.

The cemeteries maintain city or county licenses where they conduct business.

The Company’s mortgage subsidiaries are subject to the rules and regulations of the U.S.

Department of Housing and Urban Development (HUD), and to various state licensing acts and regulations and the

Consumer Financial Protection Bureau (CFPB).

These regulations, among other things, specify minimum capital requirements, procedures for loan origination and underwriting, licensing of brokers and loan officers, quality review audits and the fees

that can be charged to borrowers.

Department of Housing and Urban Development (HUD), and to various state licensing acts and regulations and the Consumer Financial Protection Bureau (CFPB).

Each year, the Company is required to have an audit completed for each mortgage subsidiary by an independent registered public accounting firm to verify compliance under some of these regulations.

In addition to the

government regulations, the Company must meet loan requirements, and underwriting guidelines of various investors who purchase the loans.

In addition to the government regulations, the Company must meet loan requirements, and underwriting guidelines of various investors who purchase the loans.

The Company’s insurance subsidiaries, Security National Life, First Guaranty and Kilpatrick, are taxed under the Life Insurance Company Tax Act of 1984.

Under the act, life insurance companies are

taxed at standard corporate rates on life insurance company taxable income.

Under the act, life insurance companies are taxed at standard corporate rates on life insurance company taxable income.

Life insurance company taxable income is gross income less general business deductions and reserves for future policyholder benefits (with modifications).

The Company may be

subject to the corporate Alternative Minimum Tax (AMT) for tax years ending prior to January 1, 2018.

The Company may be subject to the corporate Alternative Minimum Tax (AMT) for tax years ending prior to January 1, 2018.

The Tax Cuts and Jobs Act (the “Tax Act”) repealed the corporate AMT for tax years beginning after December 31, 2017.

Also, under the Tax Act,

December 31, 2017 policyholder surplus account balances result in taxable income over a period of eight years.

Security National Life, First Guaranty and Kilpatrick calculate their life insurance taxable income after establishing a provision representing a portion of the costs of acquisition of such life

insurance business.

Also, under the Tax Act, December 31, 2017 policyholder surplus account balances result in taxable income over a period of eight years.

Security National Life, First Guaranty and Kilpatrick calculate their life insurance taxable income after establishing a provision representing a portion of the costs of acquisition of such life insurance business.

The effect of the provision is that a certain percentage of the Company’s premium income is characterized as deferred expenses and recognized over a five or ten-year period.

The Tax Act changed this recognition period for amounts

deferred after December 31, 2017 to a five or fifteen-year period.

The Tax Act changed this recognition period for amounts deferred after December 31, 2017 to a five or fifteen-year period.

The Company’s non-life insurance company subsidiaries are taxed in general under the regular corporate tax provisions.

The following subsidiaries are regulated as life insurance companies but do not

meet the Internal Revenue Code definition of a life insurance company, so they are taxed as insurance companies other than life insurance companies:

The following subsidiaries are regulated as life insurance companies but do not meet the Internal Revenue Code definition of a life insurance company, so they are taxed as insurance companies other than life insurance companies:

Memorial Insurance, Southern Security, and Trans-Western.

1 unchanged sentence

There are approximately 800 legal reserve life insurance companies in business in the United States.

These insurance companies differentiate

themselves through marketing techniques, product features, price, and customer service.

The Company’s insurance subsidiaries compete with a large number of insurance companies, many of which have greater financial resources, a longer business

history, and more diversified line of insurance products than the Company.

These insurance companies differentiate themselves through marketing techniques, product features, price, and customer service.

The Company’s insurance subsidiaries compete with a large number of insurance companies, many of which have greater financial resources, a longer business history, and more diversified line of insurance products than the Company.

In addition, such companies generally have a larger sales force.

Further, the Company competes with mutual insurance companies which may have a competitive advantage because

all profits accrue to policyholders.

Further, the Company competes with mutual insurance companies which may have a competitive advantage because all profits accrue to policyholders.

Because the Company is smaller by industry standards and lacks broad diversification of risk, it may be more vulnerable to losses than larger, better-established companies.

The Company believes that its policies

and rates for the markets it serves are generally competitive.

The Company believes that its policies and rates for the markets it serves are generally competitive.

The cemetery and mortuary industry is also highly competitive.

In the Utah and California markets where the Company competes, there are a number of cemeteries and mortuaries which have longer

business histories, more established positions in the community, and stronger financial positions than the Company.

In addition, some of the cemeteries with which the Company must compete for sales are owned by municipalities and, as a result, can

offer lower prices than can the Company.

In the Utah and California markets where the Company competes, there are a number of cemeteries and mortuaries which have longer business histories, more established positions in the community, and stronger financial positions than the Company.

In addition, some of the cemeteries with which the Company must compete for sales are owned by municipalities and, as a result, can offer lower prices than can the Company.

The Company bears the cost of a pre-need sales program that is not incurred by those competitors which do not have a pre-need sales force.

The Company believes that its products and prices are generally

competitive with those in the industry.

The Company believes that its products and prices are generally competitive with those in the industry.

The mortgage industry is highly competitive with a large number of mortgage companies and banks in the same geographic area in which the Company is operating.

The mortgage industry in general is

sensitive to changes in interest rates and the refinancing market is particularly vulnerable to changes in interest rates.

The mortgage industry in general is sensitive to changes in interest rates and the refinancing market is particularly vulnerable to changes in interest rates.

As of December 31, 2020, the Company had 1,511 full-time and 197 part-time employees.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business