What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-17 · 220 added, 197 removed, 149 unchanged (74% of the section changed)

19 unchanged sentences

underwriting practices that result in higher mortality costs.

response to the COVID-19 pandemic, the life insurance sales force has transitioned to virtual and tele sales processes and transitioned

approximately 95% of office staff to work remotely.

following table shows the condensed financial results of the insurance operations for three and six months ended June 30, 2021 and

response to the COVID-19 pandemic, the life insurance sales force began using virtual and tele sales processes to market its products.

This past quarter, the life insurance sales force returned to in person sales, however, it continues to use virtual and tele sales where

Currently, the insurance operations has approximately 75% of its office staff working in the office with the flexibility for

hybrid-remote or completely remote working arrangements as needed.

following table shows the condensed financial results of the insurance operations for three and nine months ended September 30, 2021

See Note 7 to the condensed consolidated financial statements.

months ended June 30

Three months ended

(in thousands of dollars)

months ended June 30

Nine months ended

(in thousands of dollars)

1 unchanged sentence

% Increase (Decrease)

from external customers

investment income

(losses) on investments and other assets

before income taxes

revenues are primarily interest income from the warehouse line for loans held for sale provided to Security National Mortgage Company

(“Security National Mortgage”).

Profitability for the six months ended June 30, 2021 has increased due to a $3,160,000 increase

in gains on investments and other assets primarily due to an increase in the fair value of equity securities, a $3,093,000 increase in

insurance premiums and other considerations, a $1,987,000 decrease in future policy benefits, a $1,909,000 increase in net investment

income, a $1,725,000 decrease in selling, general and administrative expenses, a $929,000 increase in intersegment revenue, a $444,000

increase in other revenues, a $177,000 decrease in interest expense, and a $99,000 decrease in intersegment interest expense and other

This increase was partially offset by a $6,002,000 increase in death, surrenders and other policy benefits and a$733,000 increase

in amortization of deferred policy acquisition costs primarily due to an increase in the average outstanding balance of deferred policy

and pre-need acquisition costs.

Revenues from external customers

Insurance premiums

Net investment income

Gains (losses) on investments and other assets

Intersegment revenue

Earnings before income taxes

revenues are primarily interest income from the warehouse line for loans held for sale provided to SecurityNational Mortgage.

Profitability

for the nine months ended September 30, 2021 has increased due to a $5,772,000 increase in insurance premiums and other considerations,

a $3,232,000 increase in gains on investments and other assets primarily due to an increase in the fair value of equity securities and

a decrease in impairment losses on real estate held for sale, a $1,785,000 increase in net investment income, a $1,459,000 decrease in

selling, general and administrative expenses, a $596,000 increase in other revenues, a $164,000 decrease in interest expense, a $96,000

decrease in intersegment selling, general and administrative expenses, and an $18,000 decrease in intersegment interest expense and other

This increase was partially offset by a $5,370,000 increase in death, surrenders and other policy benefits, a $1,177,000 increase

in amortization of deferred policy acquisition costs and value of business acquired primarily due to an increase in the average outstanding

balance of deferred policy and pre-need acquisition costs, a $606,000 increase in future policy benefits, and a $267,000 decrease in

intersegment revenue.

and Mortuary Operations

7 unchanged sentences

Recognition of revenue for cemetery land sales occurs when 10% of the purchase price

a result of the COVID-19 pandemic, the Company has seen a decrease in its average case size as funeral services have been limited.

Company has transitioned its pre-need sales force to virtual selling and has done in home sales as local regulations permit.

following table shows the condensed financial results of the cemetery and mortuary operations for the three and sixmonths ended June

response to the COVID-19 pandemic, the cemetery and mortuary’s pre-need sales force began using virtual selling processes to market

its products and services including some in home sales as local regulations permitted.

This past quarter, the sales force returned mostly

to in home sales, however, it continues to use virtual selling where needed.

Currently, the cemetery and mortuary operations office staff

works in the office with the flexibility for hybrid-remote or completely remote working arrangements as needed.

following table shows the condensed financial results of the cemetery and mortuary operations for the three and nine months ended September

30, 2021 and 2020.

See Note 7 to the condensed consolidated financial statements.

months ended June 30

Three months ended September 30

(in thousands of dollars)

months ended June 30

Nine months ended

(in thousands of dollars)

1 unchanged sentence

% Increase (Decrease)

from external customers

investment income

(losses) on investments and other assets

before income taxes

Revenues from external customers

Mortuary revenues

Cemetery revenues

Net investment income

Gains (losses) on investments and other assets

Earnings before income taxes

Profitability

in the six months ended June 30, 2021 has increased due to a $1,701,000 increase in cemetery pre-need sales,a $1,204,000 increase in

gains on investments and other assets primarily attributable to a $660,000 increase in gains on real estate sales and an $544,000 increase

in the nine months ended September 30, 2021 has increased due to a $2,441,000 increase in cemetery pre-need sales, a $1,157,000 increase

in gains on investments and other assets primarily attributable to a $955,000 increase in gains on real estate sales and a $203,000 increase

in the fair value of equity securities classified as restricted assets and cemetery perpetual care trust investments, a $851,000 increase

in cemetery at-need sales, a $484,000 increase in mortuary at-need sales, a $194,000 increase in net investment income, an $87,000 decrease

in interest expense, a $45,000 decrease in intersegment interest expense and other expenses, and a $44,000 decrease in amortization of

deferred policy acquisition costs.

This increase was partially offset by a $839,000 increase in selling, general and administrative expenses,

a $470,000 increase in costs of goods sold, a $37,000 decrease in intersegment revenues, and a $12,000 decrease in other revenues.

Company’s wholly owned subsidiaries, Security National Mortgage and EverLEND Mortgage Company, are mortgage lenders incorporated

in net investment income, a $693,000 increase in cemetery at-need sales, a $564,000 increase in mortuary at-need sales, a $113,000 decrease

in interest expense, a $69,000 decrease in intersegment interest expense and other expenses, and an $18,000 decrease in amortization

of deferred policy acquisition costs.

This increase was partially offset by a $1,637,000 increase in selling, general and administrative

expenses, a $479,000 increase in costs of goods sold, a $38,000 decrease in intersegment revenues, and a $10,000 decrease in other revenues.

Company’s wholly owned subsidiaries, SecurityNational Mortgage and EverLEND Mortgage Company, are mortgage lenders incorporated

under the laws of the State of Utah and approved and regulated by the Federal Housing Administration (FHA), a department of the U.S.

1 unchanged sentence

of default by the borrower, in addition to various conventional mortgage loan products.

Security National Mortgage and EverLEND Mortgage

SecurityNational Mortgage and EverLEND Mortgage

originate and refinance mortgage loans on a retail basis.

5 unchanged sentences

originated by the mortgage subsidiaries are generally sold with mortgage servicing rights released to third-party investors or retained

by Security National Mortgage.

Security National Mortgage currently retains the mortgage servicing rights on approximately 59% of its

loan origination volume.

These mortgage loans are serviced by either Security National Mortgage or an approved third-party sub-servicer.

the six months ended June 30, 2021 and 2020, Security National Mortgage originated 10,149 loans ($2,748,316,000 total volume) and 8,105

by SecurityNational Mortgage.

SecurityNational Mortgage currently retains the mortgage servicing rights on approximately 58% of its loan

origination volume.

These mortgage loans are serviced by either SecurityNational Mortgage or an approved third-party sub-servicer.

the nine months ended September 30, 2021 and 2020, SecurityNational Mortgage originated 14,898 loans ($4,157,704,000 total volume) and

14,462 loans ($3,708,810,000 total volume), respectively.

For the six months ended June 30, 2021 and 2020, Ever LEND Mortgage originated 191

For the nine months ended September 30, 2021 and 2020, EverLEND Mortgage originated

260 loans ($85,368,000 total volume) and 400 loans ($115,519,000 total volume), respectively.

the COVID-19 pandemic, the demand for mortgage loans has increased.

The Company has seen most markets increase their demand for new homes

and refinances on existing homes.

The Company has transitioned 90% of its processes to a work from home environment.

following table shows the condensed financial results of the mortgage operations for the three and six months ended June 30, 2021 and

low mortgage interest rates that prevailed during the third quarter of 2020 and into the first quarter of 2021 trended higher through

the second and third quarters of 2021.

Production volumes remained strong in the second and third quarters of 2021, particularly for

purchase mortgage transactions but were below those experienced during the earlier low interest rate period.

The work from home accommodations

made by necessity in 2020 as a result of COVID-19 have been integrated into 2021 standard operating procedures.

A larger percentage of

fulfillment employees are in office in 2021 compared to 2020, however the flexibility remains to accommodate in office or work from home

functionality.

following table shows the condensed financial results of the mortgage operations for the three and nine months ended September 30, 2021

See Note 7 to the condensed consolidated financial statements.

months ended June 30

Three months ended

(in thousands of dollars)

months ended June 30

Nine months ended

(in thousands of dollars)

1 unchanged sentence

% Increase (Decrease)

from external customers

gains from investors

from loan originations

in fair value of loans held for sale

in fair value of loan commitments

Net investment

on investments and other assets

before income taxes

Revenues from external customers

Secondary gains from investors

Income from loan originations

Change in fair value of loans held for sale

Change in fair value of loan commitments

Net investment income

Gains on investments and other assets

Earnings before income taxes

in other revenues is service fee income.

Profitability for the six months ended June 30, 2021 has decreased due to $18,912,000 increase

in commissions, a $10,803,000 decrease in the fair value of loans held for sale,a $9,762,000 increase in personnel expenses,a $8,721,000

decrease in the fair value of loan commitments,a $4,028,000 decrease in income from loan originations, a $3,196,000 increase in other

expenses, a $1,342,000 increase in costs related to funding mortgage loans,a $984,000 increase in advertising expenses,a $962,000 increase

in intersegment interest expense, a $472,000 increase in rent and rent related expenses,an $83,000 increase in interest expense, and

a $74,000 decrease in intersegment revenues.

This increase was partially offset by a $47,190,000 increase in secondary gains from investors,

a $3,489,000 increase in other revenues, a $868,000 decrease in the provision for loan loss reserve, a $47,000 increase in gains on investments

and other assets, a $4,000 increase in net investment income, and a $3,000 decrease in depreciation on property and equipment.

Profitability for the nine months ended September 30, 2021 has decreased due to a $13,304,000

increase in personnel expenses, a $13,003,000 decrease in the fair value of loan commitments, a $12,551,000 decrease in the fair value

of loans held for sale, a $10,926,000 decrease in income from loan originations, a $9,741,000 increase in commissions, a $4,434,000 increase

in other expenses, a $826,000 increase in advertising expenses, a $663,000 increase in costs related to funding mortgage loans, a $563,000

increase in rent and rent related expenses, a $145,000 decrease in net investment income, and a $89,000 decrease in intersegment revenues.

This decrease was partially offset by a $28,685,000 increase in secondary gains from investors, a $5,103,000 increase in other

revenues, a $459,000 decrease in interest expense, a $213,000 decrease in intersegment interest expense, a $199,000 increase in gains

on investments and other assets, and a $70,000 decrease in depreciation on property and equipment.

Loan Loss Settlements

3 unchanged sentences

The estimated liability

for indemnification losses was included in other liabilities and accrued expenses and, as of June 30, 2021 and December 31, 2020, the

balances were $2,412,652 and $20,583,618, respectively.

for indemnification losses was included in other liabilities and accrued expenses and, as of September 30, 2021 and December 31, 2020,

the balances were $2,408,233 and $20,583,618, respectively.

Consolidation

Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

revenues decreased by $1,911,000, or 1.6%, to $116,750,000 for the three months ended June 30, 2021, from $118,662,000 for the comparable

period in 2020.

Contributing to this decrease in total revenues was a $8,210,000 decrease in mortgage fee income and a $761,000 decrease

in gains on investments and other assets.

This decrease was partially offset by a $1,618,000 increase in net mortuary and cemetery sales,

a $2,194,000 increase in other revenues, a $2,034,000 increase in insurance premiums and other considerations, and an $1,214,000 increase

in net investment income.

fee income decreased by $8,210,000, or 11.2%, to $65,158,000, for the three months ended June 30, 2021, from $73,368,000 for the comparable

period in 2020.

This decrease was primarily due to a $5,761,000 decrease in the fair value of loan commitments, a $5,569,000 decrease

in loan fees and interest income net of a decrease in the provision for loan loss reserve, and a $3,478,000 decrease in the fair value

of loans held for sale.

This decrease in mortgage fee income was partially offset by a $6,598,000 increase in secondary gains from mortgage

loans sold to third-party investors into the secondary market.

Insurance premiums and other considerations increased by $2,034,000, or

8.9%, to $24,959,000 for the three months ended June 30, 2021, from $22,925,000 for the comparable period in 2020.

This increase was

due to an increase in renewal premiums due to the growth of the Company in recent years, particularly in whole life products, which resulted

in more premium paying business in force.

investment income increased by $1,214,000, or 9.4%, to $14,177,000 for the three months ended June 30, 2021, from $12,963,000 for the

Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

revenues decreased by $26,696,000, or 18.3%, to $119,509,000 for the three months ended September 30, 2021, from $146,205,000 for the

comparable period in 2020.

This increase was primarily attributable to a $1,320,000 increase in mortgage loan interest, a $316,000 decrease

in investment expenses, a $214,000 increase in rental income from real estate held for investment, a $39,000 increase in income on other

investments, and a $12,000 increase in interest on cash and cash equivalents.

This increase was partially offset by a $445,000 decrease

in fixed maturity securities income, a $212,000 decrease in insurance assignment income, a $25,000 decrease in policy loan income, and

a $5,000 decrease in equity securities income.

mortuary and cemetery sales increased by $1,618,000, or 34.4%, to $6,319,000 for the three months ended June 30, 2021, from $4,701,000

Contributing to this decrease in total revenues was a $32,302,000 decrease in mortgage fee income.

This decrease

was partially offset by a $2,679,000 increase in insurance premiums and other considerations, a $1,771,000 increase in other revenues,

a $596,000 increase in net mortuary and cemetery sales, a $384,000 increase in net investment income, and a $176,000 increase in gains

on investments and other assets.

fee income decreased by $32,302,000, or 32.8%, to $66,258,000 for the three months ended September 30, 2021, from $98,560,000 for the

comparable period in 2020.

This decrease was primarily due to a $15,187,000 decrease in secondary gains from mortgage loans sold to third-party

investors into the secondary market, a $11,170,000 decrease in loan fees and interest income net of a decrease in the provision for loan

loss reserve, a $4,282,000 decrease in the fair value of loan commitments, and a $1,663,000 decrease in the fair value of loans held

premiums and other considerations increased by $2,679,000, or 11.3%, to $26,446,000 for the three months ended September 30, 2021, from

$23,767,000 for the comparable period in 2020.

This increase was primarily due to an $874,000 increase in cemetery pre-need sales, a $518,000 increase

in cemetery at-need sales, and a $226,000 increase in mortuary at-need sales.

on investments and other assets decreased by $761,000, or 34.0%, to $1,477,000 for the three months ended June 30, 2021, from $2,238,000

This increase was due to a $1,676,000 increase in first year premiums as a result of increased

insurance sales and a $1,003,000 increase in renewal premiums due to the growth of the Company in recent years, particularly in whole

life products, which resulted in more premium paying business in force.

investment income increased by $384,000, or 2.6%, to $15,093,000 for the three months ended September 30, 2021, from $14,709,000 for

the comparable period in 2020.

This increase was primarily attributable to a $309,000 increase in rental income from real estate held

for investment, a $254,000 decrease in investment expenses, a $220,000 increase in insurance assignment income, a $123,000 increase in

mortgage loan interest, a $35,000 increase in income on other investments, and a $16,000 increase in interest on cash and cash equivalents.

This increase was partially offset by a $523,000 decrease in fixed maturity securities income, a $35,000 decrease in policy loan income,

and a $15,000 decrease in equity securities income.

mortuary and cemetery sales increased by $596,000, or 11.1%, to $5,968,000 for the three months ended September 30, 2021, from $5,372,000

for the comparable period in 2020.

This decrease in gains on investments and other assets was primarily due to a $1,051,000 decrease

in gains on equity securities mostly attributable to decreases in the fair value of these equity securities.

This decrease in gains on

investments and other assets was partially offset by a $147,000 increase in gains on other assets and a $143,000 increase in gains on

fixed maturity securities.

revenues increased by $2,194,000, or 88.9%, to $4,661,000 for the three months ended June 30, 2021, from $2,467,000 for the comparable

This increase was primarily due to a $740,000 increase in cemetery pre-need sales and a $79,000 increase

in mortuary at-need sales.

This increase was partially offset by a $223,000 decrease in cemetery at-need sales.

on investments and other assets increased by $176,000, or 22.0%, to $977,000 for the three months ended September 30, 2021, from $801,000

for the comparable period in 2020.

This increase in gains on investments and other assets was primarily due to a $569,000 increase in

gains on other assets and a $216,000 increase in gains on fixed maturity securities.

This increase in gains on investments and other

assets was partially offset by a $609,000 decrease in gains on equity securities mostly attributable to decreases in the fair value of

these equity securities.

revenues increased by $1,771,000, or 59.1%, to $4,768,000 for the three months ended September 30, 2021, from $2,997,000 for the comparable

period in 2020.

This increase was primarily attributable to an increase in servicing fee revenue.

benefits and expenses were $102,073,000, or 87.4% of total revenues, for the three months ended June 30, 2021, as compared to $91,468,000,

benefits and expenses were $105,366,000, or 88.2% of total revenues, for the three months ended September 30, 2021, as compared to $107,621,000,

or 73.6% of total revenues, for the comparable period in 2020.

benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $1,961,000 or 8.9%, to $23,937,000

for the three months ended June 30, 2021, from $21,029,000 for the comparable period in 2020.

for the three months ended September 30, 2021, from $21,976,000 for the comparable period in 2020.

This increase was primarily the result

of a $1,257,000 increase in death benefits (including, approximately, a $140,000 decrease in COVID-19 related deaths) and a $797,000

increase in future policy benefits.

This increase was partially offset by a $167,000 decrease in surrender and other policy benefits.

of and a $2,592,000 increase in future policy benefits.

This increase was partially offset by a $552,000 decrease in death benefits (including,

approximately, a $501,000 decrease in COVID-19 related deaths) and a $79,000 decrease in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $470,000, or 11.1%, to $4,710,000 for the

three months ended June 30, 2021, from $3,027,000 for the comparable period in 2020.

This increase was primarily due to an increase in

the average outstanding balance of deferred policy and pre-need acquisition costs.

general and administrative expenses increased by $8,065,000, or 12.4%, to $72,936,000 for the three months ended June 30,2021, from $64,871,000

three months ended September 30, 2021, from $4,240,000 for the comparable period in 2020.

This increase was primarily due to an increase

in the average outstanding balance of deferred policy and pre-need acquisition costs.

general and administrative expenses decreased by $4,139,000, or 5.3%, to $74,003,000 for the three months ended September 30,2021, from

$78,142,000 for the comparable period in 2020.

This increase was primarily the result of a $3,790,000 increase in personnel expenses, a $2,654,000

increase in commissions, a $726,000 increase in other expenses, a $367,000 increase in advertising expenses,a $361,000 increase in costs

related to funding mortgage loans, and a $211,000 increase in rent and rent related expenses.

expense decreased by $187,000, or 10.0%, to $1,694,000 for the three months ended June 30, 2021, from $1,881,000 for the comparable period

This decrease was primarily due to a decrease of $224,000 in interest expense on mortgage warehouse lines for loans held for

This decrease was partially offset by a $37,000 increase in interest expense on bank loans.

of goods and services sold-mortuaries and cemeteries increased by $212,000, or 32.2%, to $873,000 for the three months ended June 30,

This decrease was primarily the result of a $8,993,000 decrease in commissions, a $678,000

decrease in costs related to funding mortgage loans, and a $104,000 decrease in depreciation on property and equipment.

This decrease

was partially offset by a $3,422,000 increase in personnel expenses, a $2,073,000 increase in other expenses, an $84,000 increase in

advertising expenses, and a $57,000 increase in rent and rent related expenses.

expense decreased by $556,000 or 23.5%, to $1,807,000 for the three months ended September 30, 2021, from $2,363,000 for the comparable

period in 2020.

This decrease was primarily due to a decrease of $543,000 in interest expense on mortgage warehouse lines for loans held

for sale and a $13,000 decrease in interest expense on bank loans.

of goods and services sold-mortuaries and cemeteries increased by $9,000, or 1.0%, to $908,000 for the three months ended September 30,

2021, from $899,000 for the comparable period in 2020.

This increase was primarily due to a $33,000 increase in cemetery at-need sales

a $78,000 increase in cemetery pre-need sales,and a $42,000 increase in mortuary at-need sales.

Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

revenues increased by $41,138,000, or 20.7%, to $239,409,000 for the six months ended June 30, 2021, from $198,271,000 for the comparable

period in 2020.

Contributing to this increase in total revenues was a $24,506,000 increase in mortgage fee income, a $4,411,000 increase

in gains on investments and other assets, a $3,918,000 increase in other revenues, a $3,102,000 increase in net mortuary and cemetery

sales, a $3,093,000 increase in insurance premiums and other considerations, and an $2,108,000 increase in net investment income.

fee income increased by $24,506,000, or 21.6%, to $138,156,000, for the six months ended June 30, 2021, from $113,650,000 for the comparable

and a $27,000 increase in mortuary at-need sales.

This increase was partially offset by a $51,000 decrease in cemetery pre-need sales.

Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

revenues increased by $14,443,000, or 4.2%, to $358,918,000 for the nine months ended September 30, 2021, from $344,475,000 for the comparable

period in 2020.

This increase was primarily due to a $47,190,000 increase in secondary gains from mortgage loans sold to third-party

investors into the secondary market.

This decrease in mortgage fee income was partially offset by a $10,803,000 decrease in the fair

value of loans held for sale, a $8,721,000 decrease in the fair value of loan commitments, and a $3,160,000 decrease in loan fees and

interest income net of a decrease in the provision for loan loss reserve.

premiums and other considerations increased by $3,093,000, or 6.8%, to $48,309,000 for the six months ended June 30, 2021, from $45,216,000

Contributing to this increase in total revenues was a $5,772,000 increase in insurance premiums and other considerations,

a $5,689,000 increase in other revenues, a $4,588,000 increase in gains on investments and other assets, a $3,698,000 increase in net

mortuary and cemetery sales, and a $2,492,000 increase in net investment income.

This increase was partially offset by a $7,796,000 decrease

in mortgage fee income.

fee income decreased by $7,796,000, or 3.7%, to $204,414,000, for the nine months ended September 30, 2021, from $212,210,000 for the

comparable period in 2020.

This decrease was primarily due to a $12,551,000 decrease in the fair value of loans held for sale, a $13,003,000

decrease in the fair value of loan commitments, and a $10,927,000 decrease in loan fees and interest income net of a decrease in the

provision for loan loss reserve.

This decrease in mortgage fee income was partially offset by a $28,685,000 increase in secondary gains

from mortgage loans sold to third-party investors into the secondary market.

premiums and other considerations increased by $5,772,000, or 8.4%, to $74,755,000 for the nine months ended September 30, 2021, from

$68,983,000 for the comparable period in 2020.

This increase was due to an increase in renewal premiums due to the growth of the Company in recent

years, particularly in whole life products, which resulted in more premium paying business in force.

investment income increased by $2,108,000, or 8.0%, to $28,471,000 for the six months ended June 30, 2021, from $26,363,000 for the comparable

period in 2020.

This increase was primarily attributable to a $1,751,000 increase in mortgage loan interest, an $835,000 increase in

insurance assignment income, a $179,000 decrease in investment expenses, a $104,000 increase in rental income from real estate held for

investment, a $31,000 increase in equity securities income, and a $28,000 increase in income on other investments.

This increase was

partially offset by a $546,000 decrease in fixed maturity securities income, a $247,000 decrease in interest on cash and cash equivalents,

This increase was due to a $4,243,000 increase in first year premiums as a result of increased

insurance sales and a $1,529,000 increase in renewal premiums due to the growth of the Company in recent years, particularly in whole

life products, which resulted in more premium paying business in force.

investment income increased by $2,492,000, or 6.1%, to $43,564,000 for the nine months ended September 30, 2021, from $41,072,000 for

the comparable period in 2020.

This increase was primarily attributable to a $1,874,000 increase in mortgage loan interest, a $1,054,000

increase in insurance assignment income, a $434,000 decrease in investment expenses, a $413,000 increase in rental income from real estate

held for investment, a $63,000 increase in income on other investments, and a $16,000 increase in equity securities income.

This increase

was partially offset by a $1,069,000 decrease in fixed maturity securities income, a $231,000 decrease in interest on cash and cash equivalents,

and a $62,000 decrease in policy loan income.

mortuary and cemetery sales increased by $3,102,000, or 33.9%, to $12,261,000 for the six months ended June 30, 2021, from $9,159,000

mortuary and cemetery sales increased by $3,698,000, or 25.4%, to $18,228,000 for the nine months ended September 30, 2021, from $14,530,000

for the comparable period in 2020.

1 unchanged sentence

in cemetery at-need sales, and a $564,000 increase in mortuary at-need sales.

on investments and other assets increased by $4,411,000, or 452.9%, to gains of $3,437,000 for the six months ended June 30, 2021, from

losses of $974,000 for the comparable period in 2020.

on investments and other assets increased by $4,588,000, or 2644.8%, to gains of $4,414,000 for the nine months ended September 30, 2021,

from losses of $174,000 for the comparable period in 2020.

This increase in gains on investments and other assets was primarily due a

$2,217,000 increase in gains on equity securities mostly attributable to increases in the fair value of these equity securities.

This increase in

gains on investments and other assets was also due to a $1,465,000 increase in gains on other assets mostly attributable gains on real

estate and mortgage loans.

This increase in gains on investments and other assets was also due to a $120,000 increase in gains on fixed

maturity securities.

revenues increased by $3,918,000, or 80.7%, to $8,774,000 for the six months ended June 30, 2021, from $4,856,000 for the comparable

increase in gains on investments and other assets was also due to a $2,035,000 increase in gains on other assets mostly attributable

gains on real estate and mortgage loans.

This increase in gains on investments and other assets was also due to a $336,000 increase in

gains on fixed maturity securities.

revenues increased by $5,689,000, or 72.4%, to $13,542,000 for the nine months ended September 30, 2021, from $7,853,000 for the comparable

period in 2020.

This increase was primarily attributable to an increase in servicing fee revenue.

benefits and expenses were $208,377,000, or 87.0% of total revenues, for the six months ended June 30, 2021, as compared to $169,603,000,

benefits and expenses were $313,742,000, or 87.4% of total revenues, for the nine months ended September 30, 2021, as compared to $277,223,000,

or 80.5% of total revenues, for the comparable period in 2020.

benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $5,976,000 or 9.3%, to $70,497,000

for the six months ended June 30, 2021, from $42,545,000 for the comparable period in 2020.

This increase was primarily the result of

a $6,162,000 increase in death benefits (approximately $3,443,000 for COVID-19 related deaths).

This increase was partially offset by

a $1,987,000 decrease in future policy benefits and a $160,000 increase in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $689,000, or 10.5%, to $7,231,000 for the

six months ended June 30, 2021, from $6,542,000 for the comparable period in 2020.

This increase was primarily due to an increase in

the average outstanding balance of deferred policy and pre-need acquisition costs

general and administrative expenses increased by $33,780,000, or 29.3%, to $149,093,000 for the six months ended June 30, 2021, from

$115,313,000 for the comparable period in 2020.

This increase was primarily the result of a $18,829,000 increase in commissions, a $9,442,000

increase in personnel expenses, a $2,601,000 increase in other expenses, a $1,342,000 increase in costs related to funding mortgage loans,

a $1,163,000 increase in advertising expenses, and a $463,000 increase in rent and rent related expenses.

expense decreased by $180,000, or 4.9%, to $3,520,000 for the six months ended June 30, 2021, from $3,700,000 for the comparable period

This decrease was primarily due to a $264,000 decrease in interest expense on bank loans.

This decrease was partially offset

by an increase of $84,000 in interest expense on mortgage warehouse lines for loans held for sale.

of goods and services sold-mortuaries and cemeteries increased by $470,000, or 31.3%, to $1,973,000 for the six months ended June 30,

for the nine months ended September 30, 2021, from $64,521,000 for the comparable period in 2020.

This increase was primarily the result

of a $5,609,000 increase in death benefits (including, approximately, $2,922,000 for COVID-19 related deaths) and a $606,000 increase

in future policy benefits.

This increase was partially offset by a $239,000 decrease in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $1,159,000, or 10.8%, to $11,941,000 for

the nine months ended September 30, 2021, from $10,781,000 for the comparable period in 2020.

This increase was primarily due to an increase

in the average outstanding balance of deferred policy and pre-need acquisition costs

general and administrative expenses increased by $29,640,000, or 15.3%, to $223,096,000 for the nine months ended September 30, 2021,

from $193,456,000 for the comparable period in 2020.

This increase was primarily the result of a $12,863,000 increase in personnel expenses,

a $9,837,000 increase in commissions, a $4,674,000 increase in other expenses, a $1,247,000 increase in advertising expenses, a $663,000

increase in costs related to funding mortgage loans, and a $519,000 increase in rent and rent related expenses.

This increase was partially

offset by a $163,000 decrease in depreciation on property and equipment.

expense decreased by $736,000, or 12.1%, to $5,327,000 for the nine months ended September 30, 2021, from $6,063,000 for the comparable

period in 2020.

This decrease was primarily due to a $459,000 decrease in interest expense on mortgage warehouse lines for loans held

for sale and a $277,000 decrease in interest expense on bank loans.

of goods and services sold-mortuaries and cemeteries increased by $479,000, or 20.0%, to $2,881,000 for the nine months ended September

30, 2021, from $2,402,000 for the comparable period in 2020.

This increase was primarily due to a $189,000 increase in cemetery pre-need

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in the financial markets and economy caused by the COVID-19 pandemic may affect the cash flows of the Company.

the six months ended June 30, 2021 and 2020, the Company's operations provided cash of $124,476,000 and used cash of $109,562,000,

the nine months ended September 30, 2021 and 2020, the Company’s operations provided cash of $128,891,000 and used cash of $ 164,589,000,

respectively.

20 unchanged sentences

sale carried at estimated fair value amounted to $264,562,000 (at estimated fair value) and $294,384,000 (at estimated fair value) as

of June 30, 2021 and December 31, 2020, respectively.

This represents 33.2% and 38.0% of the total investments as of June 30, 2021 and

December 31, 2020, respectively.

of September 30, 2021 and December 31, 2020, respectively.

This represents 30.9% and 38.0% of the total investments as of September 30,

2021 and December 31, 2020, respectively.

Generally, all bonds owned by the life insurance subsidiaries are rated by the National Association

1 unchanged sentence

Under this rating system, there are six categories used for rating bonds.

At June 30, 2021, 4.2% (or $10,914,000)

and at December 31, 2020,4.2% (or $12,418,000) of the Company’s total bond investments were invested in bonds in rating categories

three through six, which were considered non-investment grade.

At September 30, 2021, 4.5% (or

$11,780,000) and at December 31, 2020, 4.2% (or $12,418,000) of the Company’s total bond investments were invested in bonds in

rating categories three through six, which were considered non-investment grade.

Company is subject to risk-based capital guidelines established by statutory regulators requiring minimum capital levels based on the

perceived risk of assets, liabilities, disintermediation, and business risk.

At June 30, 2021 and December 31, 2020, the life insurance

At September 30, 2021 and December 31, 2020, the life insurance

subsidiaries were in compliance with the regulatory criteria.

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $517,821,000 as of June 30, 2021,

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $559,903,000 as of September 30,

2021, as compared to $561,811,000 as of December 31, 2020.

Stockholders’ equity as a percent of total capitalization was 55.2% and 47.0%

as of June 30, 2021 and December 31, 2020, respectively.

Stockholders’ equity as a percent of total capitalization was 53.0%

and 47.0% as of September 30, 2021 and December 31, 2020, respectively.

rates measure the amount of insurance terminated during a particular period.

2 unchanged sentences

The 2021 lapse rate to date has been approximately the same as 2020.

June 30, 2021,the combined statutory capital and surplus of the Company’s life insurance subsidiaries was $76,532,000.

insurance subsidiaries cannot pay a dividend to its parent company without approval of state insurance regulatory authorities.

September 30, 2021, the combined statutory capital and surplus of the Company’s life insurance subsidiaries was $74,042,000.

life insurance subsidiaries cannot pay a dividend to its parent company without approval of state insurance regulatory authorities.

2020, the outbreak of COVID-19 had spread worldwide and was declared a global pandemic by the World Health Organization on March 11,

COVID-19 poses a threat to the health and economic well-being of the Company’s employees, customers, and vendors.

is closely monitoring developments relating to the COVID-19 pandemic and assessing its impact on the Company’s business.

The continued

uncertainty surrounding the COVID-19 pandemic has had and continues to have a major impact on the global economy and financial markets.

Governments and businesses have taken numerous measures to try to contain the virus, which include the implementation of travel bans,

self-imposed quarantine periods, and social distancing.

These measures have disrupted and will continue to disrupt businesses globally.

Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize the economic conditions.

COVID-19, and its variants, pose a threat to the health and economic well-being of the Company’s employees, customers, and

The Company is closely monitoring developments relating to the ongoing COVID-19 pandemic and assessing its impact on the Company’s

The continued uncertainty surrounding the COVID-19 pandemic has had and continues to have a major impact on the global economy

and financial markets.

Governments and businesses have taken numerous measures to try to contain the virus and its variants, which include

the implementation of travel bans, self-imposed quarantine periods, social distancing, and various mask and vaccine mandates.

These measures

have disrupted and will continue to disrupt businesses globally.

Governments and central banks have reacted with significant monetary

and fiscal interventions designed to stabilize the economic conditions.

most businesses, COVID-19 has impacted the Company.

6 unchanged sentences

default for the issuers of the Company’s fixed maturity debt securities and individual borrowers with mortgage loans held by the

Company has implemented risk management, business continuity plans and has taken preventive measures and other precautions, such as business

travel restrictions and remote work arrangements.

Company has implemented risk management, business continuity plans and has taken preventive measures and other precautions, including

some remote work arrangements.

Such measures and precautions have enabled the Company to continue to conduct business.

2 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis