What changed in this filing

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Item 1. Business

2022-03-31 compared with 2021-03-31 · 516 added, 186 removed, 37 unchanged (95% of the section changed)

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 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.

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 cemetery and mortuary segment consists of eight

mortuaries and five cemeteries in the state of Utah, one cemetery in the state of California, and one cemetery and four mortuaries in

the state of New Mexico.

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

Utah, California and New Mexico 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 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 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 113 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

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 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 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).

August 2021, the Company sold Memorial Insurance Company of America.

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.

(1991), Cottonwood Mortuary, Inc.

(1991), Deseret Memorial, Inc.

(1991), Probst Family Funerals and Cremations L.L.C.

(2019), and Heber Valley Funeral Home, Inc.

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.

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

See Note 15 of the Notes to Consolidated Financial Statements for additional information regarding business segments of the Company.

(1991), Probst Family Funerals and Cremations

(2019), Heber Valley Funeral Home, Inc.

(2019), Rivera Funerals, Cremations and Memorial Gardens (2021), and Holbrook Mortuary

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.

(now known as EverLEND Mortgage Company) (“EverLEND Mortgage”) also to originate and refinance

residential mortgage loans.

In December 2021, the Company ceased operations in EverLEND Mortgage and merged its operations into SecurityNational

See Note 15 of the Notes to Consolidated Financial

Statements for additional information regarding business segments of the Company.

Life Insurance

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 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.

Markets and Distribution

The Company is licensed to sell insurance in 40 states.

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, 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.

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

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

The Company’s insurance subsidiaries,

Southern Security Life Insurance Company, Inc.

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

do not actively write policies, but service and maintain policies that were purchased prior to their acquisition by Security National

A funeral plan

is a small face value life insurance policy that generally has face coverage of up to $30,000.

The Company believes that funeral plans

represent a marketing niche that has lower competition because most insurance companies do not offer similar coverage.

The 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.

and Distribution

The Company is

licensed to sell insurance in 40 states.

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, 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

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.

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, 2020:

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.

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.

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

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, 2021:

Life Insurance

1 unchanged sentence

Insurance in force as of December 31 (omitted 000)

Premiums Collected (omitted 000)

$ 2,877,402 (1)

Premiums Collected (omitted 000)

Includes the acquisition of Kilpatrick

(2) Includes the acquisition of First Guaranty and the termination of the reinsurance assumed from Servicemembers’ Group Life Insurance (“SGLI”)

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:

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:

Nearest Birthday

Non-Medical Limits

Medical information

required (APS or exam)

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.

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.

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.

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.

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.

Markets and Distribution

The general market for the Company’s annuities is middle to older age individuals.

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

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:

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 interview of 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.

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.

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.

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.

and Distribution

The general market

for the Company’s annuities is middle to older age individuals.

A major source of annuity sales come from direct agents and are

sold in conjunction with other insurance sales.

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, 2021:

Annuities Policy/Cert Count as of December 31

1 unchanged sentence

Includes the acquisition of Kilpatrick

(2) Includes the acquisition of First Guaranty

Accident and Health

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 block of accident and health policies.

Markets and Distribution

The Company currently markets its diver’s accident policies through the internet.

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

Through its various

acquisitions, the Company occasionally acquires small blocks of accident and health policies, which it continues to service.

offers a low-cost comprehensive diver’s accident policy that provides worldwide coverage for medical expense reimbursement in the

event of a diving accident.

and Distribution

The Company currently

markets its diver’s accident policies through the internet.

The following

table summarizes the accident and health insurance business for the five years ended December 31, 2021:

Accident and Health Policy/Cert Count as of December 31

1 unchanged sentence

Includes the acquisition of Kilpatrick

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.

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.

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, 2020, was $377,138,000, which represents approximately 13.0% 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 reinsurance.

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.

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.

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 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.

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.

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, 2021, was $364,471,000, which represented approximately 12.7% 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 reinsurance.

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 boards of directors of the respective subsidiaries.

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.

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 investments.

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.

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.

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.

Markets and Distribution

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.

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.

and Distribution

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.

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.

The Company actively seeks to sell its cemetery and funeral products to customers on a pre-need basis.

The Company employs cemetery sales representatives on a commission basis to sell these products.

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 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.

The Company actively seeks

to sell its cemetery and funeral products to customers on a pre-need basis.

The Company employs cemetery sales representatives on a commission

basis to sell these products.

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 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

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.

through SecurityNational Mortgage is active in the residential real estate market.

SecurityNational Mortgage is approved by the U.S.

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 investors.

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.

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 investors.

EverLEND Mortgage is also approved

Department of Housing and Urban Development (HUD), and other secondary market investors, to originate a variety of residential

mortgage loan products.

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, 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.

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.

(“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.

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

Real Estate Development

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.

In December 2021, the Company

ceased operations in EverLEND Mortgage and merged its operations into SecurityNational Mortgage.

Security National

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

and Distribution

The Company’s

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

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.

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.

Recent Acquisitions

and Other Business Activities

of Rivera Funerals, Cremations and Memorial Gardens

On December 21,

2021, the Company, through Memorial Estates Inc., completed a business combination transaction with Rivera Funerals, Cremations and Memorial

The mortuaries and cemetery are located in New Mexico.

Under the terms

of the transaction, as set forth in the Asset Purchase Agreement, dated December 21, 2021, Memorial Estates Inc.

paid a net purchase price

of $10,693,395 for the business and assets of Rivera Funerals, Cremations and Memorial Gardens, subject to holdback amounts held by Memorial

Estates, Inc.

in the total amount of $1,120,000.

Pursuant to the Asset Purchase Agreement, Memorial Estates, Inc.

is to use $70,000 of

the holdback amount to pay, perform and discharge when due, trade accounts payable of Rivera Funerals, Cremations and Memorial Gardens

to third parties that remained unpaid.

Unapplied portions of the remaining $1,050,000 holdback amount are to be released and paid by Memorial

in annual payments of up to $105,000 each, beginning on the first anniversary date of the closing date and continuing thereafter

on the anniversary dates of the closing date.

of Holbrook Mortuary

On December 28,

2021, the Company, through its wholly-owned subsidiary, Memorial Mortuary Inc., completed a business combination transaction with Holbrook

Mortuary located in Salt Lake City, Utah.

Under the terms

of the transaction, as set forth in the Asset Purchase Agreement, dated December 28, 2021, Memorial Mortuary Inc.

paid a net purchase

price of $3,051,747 for the business and assets of Holbrook Mortuary.

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

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 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;

$100,000,000, primarily relating to the Center53 Development.

The Company plans to continue its development endeavors as based upon its

assessment of the market demand.

Center53 Development is an

office development project comprising nearly 20 acres of land that is currently owned by the Company in the central valley of Salt Lake

At final completion, the multi-year, phased development will create a campus atmosphere and include nearly one million square-feet

of office space in five buildings, ranging from four to eleven stories, and will be serviced by three parking structures with about 4,000

In 2015, the Company broke ground and commenced development on the first phase which included a six-story building of nearly 200,000

square feet and a parking garage with 748 parking stalls.

The first phase of the project was completed in July 2017 and is currently 100%

The second phase of the project began in March 2020 and includes a second six story building of nearly 221,000 square feet and

a parking garage with approximately 870 stalls.

The Company began its occupancy of a portion of the building in October 2021 and the remainder

of the building has been leased, with occupancy planned for April 2022.

The Company plans to initiate future phases of the Center53 Development

for additional Class A office space in the central valley of Salt Lake City.

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

standards of solvency which must be met and maintained;

licensing of insurers and their agents;

nature of and limitations on investments;

nature of and limitations on

deposits of securities for the benefit of policyholders;

approval of policy forms and premium rates;

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.

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 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.

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

Similarly, the mortuaries and cemeteries are governed and licensed by state statutes and city ordinances in Utah and California.

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.

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

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 conduct relevant

Such regulation may cause unforeseen costs and operational restrictions, and delay implementation of the Company’s business

The Company’s

life insurance subsidiaries are currently subject to regulation in Utah, 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 relevant state insurance department where, they are deemed “extraordinary”

under relevant state law.

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

The Company was notified in December 2020, that each of its life insurance subsidiaries had been selected for examination for

the year ended December 31, 2020 and the periods since their last examinations.

The Company was last examined in 2016 (First Guaranty

Insurance), 2017 (Security National Life, Southern Security and Trans-Western) and 2019 (Kilpatrick Life).

As of March 2022, the Utah,

Mississippi and Texas insurance departments had completed their examination and provided final examination reports to the Company.

The Texas Department

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

Pre-need policies include the 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 is also required to indicate 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.

Similarly, the mortuaries and cemeteries are governed and licensed by state statutes and city ordinances

in Utah, California and New Mexico.

The subsidiaries are required to keep annual reports on file including 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.

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.

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.

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

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 and;

procedures for loan origination and underwriting, licensing of brokers and loan officers and, quality

review audits and specify the fees that can be charged to borrowers.

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 with the relevant regulations.

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

EverLEND Mortgage is not required to have an audit for 2021 since it ceased operations in December 2021.

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.

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 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.

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 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:

Memorial Insurance, Southern Security, and Trans-Western.

The life insurance industry is highly competitive.

Life insurance

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

Under The Tax Cuts and Jobs Act, December 31, 2017 policyholder surplus account balances result in taxable income over a period of eight

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 Company’s

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

The Company’s subsidiaries

Southern Security and Trans-Western 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 life insurance

industry is highly competitive.

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.

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.

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.

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 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.

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 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.

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

and mortuary industry is also highly competitive.

In the Utah, California and New Mexico 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.

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

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

to changes in interest rates.

Human Capital

As of December 31, 2021, the

Company employed 1,619 full-time and 114 part-time employees.

Of the full-time employees, 1,118 were employed by the mortgage segment,

384 by the life insurance segment, and 116 by the cemetery and mortuary segment.

The Company requires monthly acknowledgement of its anti-discrimination

and anti-harassment policies and communicates to its employees how to report concerns that relate to their employment experience.

Employee Benefits

All eligible employees may

elect coverage under the Company’s group health (including health savings and flexible spending), retirement, supplemental life

and voluntary benefit programs.

As of December 31, 2021, 878 employees had elected to participate in the Company’s group health

insurance plans.

The Company has an employee

safe harbor retirement plan that qualifies under section 401(k) of the Internal Revenue Code and contributes a matching contribution based

on the employee’s contribution and years of service.

The Company provides other

time off benefits such as paid sick and paid vacation time.

The Company provides discounts on pre-need and death benefits to tenured employees.

Additionally, the Company offers an employee assistance program that provides 24/7 counseling services for employees who may be facing

challenges outside of the workplace.

reporting company, the Company is not required to provide information typically disclosed under this item.

Unresolved Staff

reporting company, the Company is not required to provide information typically disclosed under this item.

The following

tables set forth the location of the Company’s office facilities and certain other information relating to these properties.

Owned / Leased

Approximate Square Footage

Ascension Way

Salt Lake City

Corporate Headquarters, Insurance Operations, Cemetery and Mortuary Operations, Mortgage Operations and Sales

1044 River Oaks Dr.

Insurance Operations

1818 Marshall St.

Insurance Operations

812 Sheppard St.

Insurance Sales

909 Foisy Ave.

Insurance Sales

1 Sanctuary Blvd.

Insurance Sales

Funeral Service Sales

Salt Lake City

Funeral Service Sales

1627A Central Ave.

Funeral Service Sales

200 Market Way

Fast Funding Operations

Dobson Rd., Suite 202

Mortgage Sales

Dobson Rd., Suite 203

Mortgage Sales

Scottsdale Rd., Suite 125

Mortgage Sales

month to month

99th Ave., Suite 101

Mortgage Sales

month to month

99th Ave., Suite 111

Mortgage Sales

Hayden Rd., Suite 100

Mortgage Sales

month to month

Central Ave., Suite 1100A

Mortgage Sales

month to month

2636 Hwy 95, Suite 2

Bullhead City

Mortgage Sales

month to month

Price Road, Suite 318

Mortgage Sales

Camelback Rd., Suite 200

Mortgage Sales

month to month

4th St., Suite 920

Mortgage Sales

month to month

40977 Oak Dr.

Mortgage Sales

month to month

South, Suite 250

Mortgage Sales

month to month

573 Chouinard Cir.

Mortgage Sales

month to month

7398 Fox Trail Unit B

Mortgage Sales

month to month

26511 Silver Spring

Mortgage Sales

month to month

2325 El Empino

La Habra Heights

Mortgage Sales

month to month

University Ave., Apt.

Mortgage Sales

7315 Shady Oak Dr.

Mortgage Sales

month to month

Mortgage Sales

Grand Ave., Suite 1005

Mortgage Sales

March Ln., Suite 125

Mortgage Sales

Commercial Dr., Suite 285

Mortgage Sales

Highway 101, Suite 7

Mortgage Sales

36372 Canyon Terrace Dr.

Mortgage Sales

month to month

12821 War Horse St.

Mortgage Sales

month to month

5475 Tech Center Dr., Suite 100

Colorado Springs

Mortgage Sales

27 Main St., Suite C-104B

Mortgage Sales

month to month

4501 Mohawk Dr.

Mortgage Sales

month to month

Union Ave., Suite 550

Mortgage Sales

Main St., Suite 247

Mortgage Sales

month to month

1145 Town Park Ave., Suite 2215

Mortgage Sales

8191 College Parkway, Suite 201

Mortgage Sales

3180 Curlew Rd.

Mortgage Sales

8265 113th St., N.

Mortgage Sales

136 Parliament Loop

Mortgage Sales

2350 Fruitville Rd., Suite 101

Mortgage Sales

3956 Sunbeam Rd., Suite 1

Mortgage Sales

month to month

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