What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-16 · 190 added, 119 removed, 170 unchanged (65% of the section changed)

3 unchanged sentences

life products;

(ii) increased emphasis on cemetery and mortuary business;

and (iii) capitalizing on an improving housing market by originating

mortgage loans.

The Company has adjusted its strategies to respond to the changing economic circumstances resulting from the COVID-19

(ii) increased emphasis on the cemetery and mortuary business;

and (iii) capitalizing on an improving housing market by

originating mortgage loans.

The Company has adjusted its strategies to respond to the changing economic circumstances resulting from

the COVID-19 pandemic.

Company’s life insurance business includes funeral plans and interest-sensitive life insurance, as well as other traditional life,

12 unchanged sentences

and tele sales where needed.

As of March 31, 2022, approximately 75% of insurance operations office staff were 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 months ended March 31, 2022 and 2021.

Note 7 to the condensed consolidated financial statements.

Three months ended March 31

Currently, approximately 75% of insurance operations office staff work 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 six months ended June 30, 2022 and 2021.

See Note 7 to the condensed consolidated financial statements.

Three months ended June 30

(in thousands of dollars)

Six months ended June 30

(in thousands of dollars)

% Increase (Decrease)

Revenues from external customers

6 unchanged sentences

(“SecurityNational Mortgage”).

Profitability for the three months ended March 31, 2022 has decreased due to a $2,516,000

increase in future policy benefits, a $1,733,000 increase in selling, general and administrative expenses, a $1,054,000 decrease in gains

on investments and other assets primarily due to a decrease in the fair value of equity securities, a $783,000 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, a $466,000 increase in interest expense, a $206,000 decrease in intersegment revenue, and a $21,000 decrease in other

This increase was partially offset by a $2,992,000 increase in insurance premiums and other considerations, a $1,182,000 decrease

in death, surrenders and other policy benefits, a $642,000 increase in net investment income, and an $86,000 decrease in intersegment

interest expense and other expenses.

Profitability for the six months ended June 30, 2022 decreased due to (a) a $2,965,000 increase

in selling, general and administrative expenses, (b) a $2,530,000 decrease in gains on investments and other assets primarily due to

a decrease in the fair value of equity securities, (c) a $1,716,000 increase in future policy benefits, (d) a $1,184,000 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, (e) a $823,000 increase in interest expense, and (f) a $311,000 decrease in other revenues, which were

partially offset by (i) a $3,945,000 increase in insurance premiums and other considerations, (ii) a $1,963,000 increase in net investment

income, (iii) a $704,000 decrease in death, surrenders and other policy benefits, (iv) a $158,000 decrease in intersegment interest expense

and other expenses, and a (v) $119,000 increase in intersegment revenue.

and Mortuary Operations

10 unchanged sentences

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

During the third quarter 2021, the sales force

During the third quarter of 2021, the sales force

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

1 unchanged sentence

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 months ended March 31, 2022

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

30, 2022 and 2021.

See Note 7 to the condensed consolidated financial statements.

Three months ended March 31

Three months ended June 30

(in thousands of dollars)

Six months ended June 30

(in thousands of dollars)

% Increase (Decrease)

Revenues from external customers

5 unchanged sentences

Profitability

in the three months ended March 31, 2022 has decreased due to a $1,092,000 increase in selling, general and administrative expenses,

a $1,053,000 decrease in gains on investments and other assets primarily attributable to a $579,000 decrease in gains on real estate

sales and a $495,000 decrease in the fair value of equity securities classified as restricted assets and cemetery perpetual care trust

investments, a $561,000 decrease in cemetery pre-need sales, an $85,000 increase in costs of goods sold, a $54,000 increase in intersegment

interest expense and other expenses, a $37,000 increase in amortization of deferred policy acquisition costs, and a $13,000 decrease

in other revenues.

This increase was partially offset by a $1,746,000 increase in mortuary at-need sales, a $266,000 increase in net

investment income, a $105,000 increase in intersegment revenues, a $79,000 increase in cemetery at-need sales, and an $18,000 decrease

in interest expense.

in the six months ended June 30, 2022 decreased due to (a) a $2,001,000 decrease in gains on investments and other assets primarily attributable

to a $579,000 decrease in gains on real estate sales and a $1,443,000 decrease in the fair value of equity securities classified as restricted

assets and cemetery perpetual care trust investments, (b) a $1,955,000 increase in selling, general and administrative expenses, (c)

a $1,226,000 decrease in cemetery pre-need sales, (d) a $455,000 increase in costs of goods sold, (e) a $114,000 increase in intersegment

interest expense and other expenses, (f) a $35,000 increase in amortization of deferred policy acquisition costs, and (g) a $13,000 decrease

in other revenues, which were partially offset by (i) a $2,940,000 increase in mortuary at-need sales, (ii) a $765,000 increase in net

investment income, (iii) a $482,000 increase in cemetery at-need sales, (iv) a $112,000 increase in intersegment revenues, and (v) a

$36,000 decrease in interest expense.

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

15 unchanged sentences

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

the three months ended March 31, 2022 and 2021, SecurityNational Mortgage originated 3,356 loans ($1,039,217,000 total volume) and 5,361

rates have followed the US Treasury yields up in response to the higher than expected inflation and the expectation that the Federal

Reserve will continue to raise rates in the near term.

As expected, the rapid increase in mortgage rates has resulted in a decrease in

loan originations classified as ‘refinance’.

Higher mortgage rates have also had a negative effect on loan originations classified

as ‘purchase’, although not as significant as those in the refinance classification.

the six months ended June 30, 2022 and 2021, SecurityNational Mortgage originated 6,419 loans ($2,049,959,000 total volume) and 10,149

loans ($2,748,316,000 total volume), respectively.

For the three months ended March 31, 2021, EverLEND Mortgage originated 110 loans

For the six months ended June 30, 2021, EverLEND Mortgage originated 191 loans ($61,914,000

total volume).

response to the COVID-19 pandemic, the mortgage operations has integrated employee work from home accommodations into its standard operating

response to the COVID-19 pandemic, mortgage operations have integrated employee work from home accommodations into its standard operating

A large percentage of fulfillment employees are in office 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 months ended March 31, 2022 and 2021.

following table shows the condensed financial results of the mortgage operations for the three and six months ended June 30, 2022 and

See Note 7 to the condensed consolidated financial statements.

Three months ended March 31

Three months ended June 30

(in thousands of dollars)

Six months ended June 30

(in thousands of dollars)

% Increase (Decrease)

Revenues from external customers

7 unchanged sentences

in other revenues is service fee income.

Profitability for the three months ended March 31, 2022 has decreased due to a $28,836,000 decrease

in secondary gains from investors, a $2,733,000 decrease in income from loan originations, a $1,224,000 increase in personnel expenses,

an $86,000 decrease in intersegment revenues, and a $7,000 decrease in net investment income.

This increase was partially offset by a

$12,811,000 decrease in commissions, a $4,199,000 increase in the fair value of loans held for sale, a $2,361,000 increase in the fair

value of loan commitments, a $1,088,000 increase in other revenues, a $943,000 decrease in other expenses, a $546,000 decrease in interest

expense, a $505,000 decrease in advertising expenses, a $355,000 decrease in the provision for loan loss reserve, a $319,000 increase

in gains on investments and other assets, a $155,000 decrease in intersegment interest expense and other expenses, a $132,000 decrease

in rent and rent related expenses, a $98,000 decrease in costs related to funding mortgage loans, and a $22,000 decrease in depreciation

Profitability for the six months ended June 30, 2022 decreased due to (a) a $47,696,000 decrease

in secondary gains from investors, (b) a $2,532,000 decrease in income from loan originations, (c) a $1,114,000 increase in personnel

expenses, (d) a $164,000 decrease in intersegment revenues, (e) a $110,000 increase in intersegment interest expense and other expenses,

and a (f) $34,000 decrease in net investment income, which were partially offset by (i) a $24,216,000 decrease in commissions, (ii) a

$2,338,000 decrease in other expenses, (iii) a $2,034,000 increase in other revenues, (iv) a $1,850,000 increase in the fair value of

loans held for sale, (v) a $793,000 decrease in costs related to funding mortgage loans, (vi) a $782,000 decrease in advertising expenses,

(vii) a $679,000 decrease in interest expense, (viii) $597,000 increase in the fair value of loan commitments, (ix) a $351,000 increase

in gains on investments and other assets, (x) a $230,000 decrease in rent and rent related expenses, and (xi) a $27,000 decrease in depreciation

on property and equipment.

2 unchanged sentences

However, management believes that the Company’s reserve methodology

and its current practice of property preservation allow it to estimate its potential losses on mortgage loans sold.

The estimated liability

for indemnification losses was included in other liabilities and accrued expenses and, as of March 31, 2022 and December 31, 2021, the

balances were $2,143,390 and $2,447,139, respectively.

Consolidated Results of Operations

Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

revenues decreased by $20,233,000, or 16.5%, to $102,426,000 for the three months ended March 31, 2022, from $122,659,000 for the comparable

and its current practice of property preservation allow it to reasonably estimate its potential losses on mortgage loans sold.

The estimated

liability for indemnification losses was included in other liabilities and accrued expenses and, as of June 30, 2022 and December 31,

2021, the balances were $1,940,786 and $2,447,139, respectively.

Results of Operations

Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

revenues decreased by $21,184,000, or 18.1%, to $95,567,000 for the three months ended June 30, 2022, from $116,750,000 for the comparable

period in 2021.

Contributing to this decrease in total revenues was a $23,127,000 decrease in mortgage fee income and a $2,392,000 decrease

in gains on investments and other assets.

This decrease was partially offset by a $2,992,000 increase in insurance premiums and other

considerations, a $1,264,000 increase in net mortuary and cemetery sales, a $1,054,000 increase in other revenues, and a $900,000 increase

in net investment income.

fee income decreased by $24,654,000, or 33.8%, to $48,345,000, for the three months ended March 31, 2022, from $72,999,000 for the comparable

in gains on investments and other assets which were partially offset by a $1,794,000 increase in net investment income, a $953,000 increase

in insurance premiums and other considerations, a $932,000 increase in net mortuary and cemetery sales, and a $656,000 increase in other

fee income decreased by $23,127,000, or 35.5%, to $42,031,000, for the three months ended June 30, 2022, from $65,158,000 for the comparable

period in 2021.

This decrease was primarily due to a $18,860,000 decrease in secondary gains from mortgage loans sold to third-party

investors into the secondary market and a $2,378,000 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 $4,199,000 increase in the fair value of loans held

for sale and a $2,361,000 increase in the fair value of loan commitments.

premiums and other considerations increased by $2,992,000, or 12.8%, to $26,342,000 for the three months ended March 31, 2022, from $23,350,000

investors into the secondary market a $2,349,000 decrease in the fair value of loans held for sale, a $1,764,000 decrease in the fair

value of loan commitments, and a $154,000 decrease in loan fees and interest income net of a decrease in the provision for loan loss

premiums and other considerations increased by $953,000, or 3.8%, to $25,912,000 for the three months ended June 30, 2022, from $24,959,000

for the comparable period in 2021.

This increase was due to an increase of $1,691,000 in first year premiums as a result of increased

insurance sales and an increase of $1,300,366 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 $900,000, or 6.3%, to $15,194,000 for the three months ended March 31, 2022, from $14,294,000 for the

This increase was primarily due to an increase of $1,194,000 in renewal premiums due to the growth

of the Company’s outstanding policies in recent years, particularly in whole life products, which resulted in more premium paying

business in force.

investment income increased by $1,794,000, or 12.7%, to $15,971,000 for the three months ended June 30, 2022, from $14,177,000 for the

comparable period in 2021.

This increase was primarily attributable to a $1,876,000 increase in mortgage loan interest, a $74,000 increase

in policy loan income, a $57,000 increase in income on other investments, a $51,000 increase in insurance assignment income, and a $36,000

increase in interest on cash and cash equivalents.

This increase was partially offset by a $997,000 increase in investment expenses,

and a $188,000 decrease in fixed maturity securities income.

mortuary and cemetery sales increased by $1,264,000, or 21.3%, to $7,206,000 for the three months ended March 31, 2022, from $5,942,000

This increase was primarily attributable to a $2,342,000 increase in mortgage loan interest, a $1,010,000

increase in real estate income, a $114,000 increase in fixed maturity securities income, a $74,000 increase in interest on cash and cash

equivalents, a $59,000 increase in income on other investments, and a $14,000 increase in equity securities income, which were partially

offset by a $1,716,000 increase in investment expenses, a $78,000 decrease in insurance assignment income, and a $25,000 decrease in

policy loan income.

mortuary and cemetery sales increased by $932,000, or 14.8%, to $7,250,000 for the three months ended June 30, 2022, from $6,318,000

for the comparable period in 2021.

This increase was primarily due to a $1,746,000 increase in cemetery at-need sales and a $79,000 increase

in mortuary at-need sales.

This increase was partially offset by a $561,000 decrease in cemetery pre-need sales.

on investments and other assets decreased by $1,788,000, or 91.2%, to $172,000 for the three months ended March 31, 2022, from $1,960,000

This increase was primarily due to a $1,194,000 increase in mortuary at-need sales and a $403,000

increase in cemetery at-need sales, which were partially offset by a $665,000 decrease in cemetery pre-need sales.

on investments and other assets decreased by $2,392,000, or 161.9%, to $914,000 in losses for the three months ended June 30, 2022, from

$1,477,000 in gains for the comparable period in 2021.

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

$2,661,000 decrease in gains on equity securities mostly attributable to decreases in the fair value of these equity securities and a

$67,000 decrease in gains on fixed maturity securities, which were partially offset by a $336,000 increase in gains on other assets.

revenues increased by $656,000, or 14.1%, to $5,316,000 for the three months ended June 30, 2022, from $4,660,000 for the comparable

period in 2021.

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

benefits and expenses were $90,837,000, or 95.1% of total revenues, for the three months ended June 30, 2022, as compared to $102,073,000,

or 87.4% of total revenues, for the comparable period in 2021.

benefits, surrenders and other policy benefits, and future policy benefits decreased by an aggregate of $323,000 or 1.4%, to $22,593,000

for the three months ended June 30, 2022, from $22,916,000 for the comparable period in 2021.

This decrease was primarily the result

of a $800,000 decrease in future policy benefits and a $5,000 decrease in death benefits ($518,000 for COVID-19 related deaths), which

were partially offset by a $483,000 increase in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $399,000, or 10.9%, to $4,053,000 for the

three months ended June 30, 2022, from $3,654,000 for the comparable period in 2021.

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 $11,889,000, or 16.3%, to $61,047,000 for the three months ended June 30, 2022, from

$72,936,000 for the comparable period in 2021.

This decrease in gains on investments and other assets was primarily due to a $1,676,000 decrease

in gains on equity securities mostly attributable to decreases in the fair value of these equity securities, an $85,000 decrease in gains

on other assets, and a $27,000 decrease in gains on fixed maturity securities.

revenues increased by $1,054,000, or 25.6%, to $5,168,000 for the three months ended March 31, 2022, from $4,114,000 for the comparable

This decrease was primarily the result of a $11,496,000 decrease in commissions, a $856,000

decrease in other expenses, a $695,000 decrease in costs related to funding mortgage loans, and a $172,000 decrease in rent and rent

related expenses, which were partially offset by a $1,176,000 increase in personnel expenses and a $154,000 increase in depreciation

on property and equipment.

expense increased by $206,000, or 12.2%, to $1,900,000 for the three months ended June 30, 2022, from $1,694,000 for the comparable period

This increase was primarily due to an increase of $335,000 in interest expense on bank loans, which was partially offset by

a decrease of $129,000 in interest expense on mortgage warehouse lines for loans held for sale.

of goods and services sold-mortuaries and cemeteries increased by $370,000, or 42.4%, to $1,243,000 for the three months ended June 30,

2022, from $873,000 for the comparable period in 2021.

This increase was primarily due to a $293,000 increase in mortuary at-need sales

and a $102,000 increase in cemetery at-need sales, which were partially offset by a $25,000 decrease in cemetery pre-need sales.

Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

revenues decreased by $41,416,000, or 17.3%, to $197,993,000 for the six months ended June 30, 2022, from $239,409,000 for the comparable

period in 2021.

Contributing to this decrease in total revenues was a $47,781,000 decrease in mortgage fee income and a $4,180,000 decrease

in gains on investments and other assets, which were partially offset by a $3,945,000 increase in insurance premiums and other considerations,

a $2,694,000 increase in net investment income, a $2,196,000 increase in net mortuary and cemetery sales, and a $1,710,000 increase in

other revenues.

fee income decreased by $47,781,000, or 34.6%, to $90,375,000, for the six months ended June 30, 2022, from $138,156,000 for the comparable

period in 2021.

This decrease was primarily due to a $47,696,000 decrease in secondary gains from mortgage loans sold to third-party

investors into the secondary market and a $2,532,000 decrease in loan fees and interest income net of a decrease in the provision for

loan loss reserve, which were partially offset by a $1,850,000 increase in the fair value of loans held for sale and a $597,000 increase

in the fair value of loan commitments.

premiums and other considerations increased by $3,945,000, or 8.2%, to $52,254,000 for the six months ended June 30, 2022, from $48,309,000

for the comparable period in 2021.

This increase was due to an increase of increase of $2,494,000 in renewal premiums due to the growth

of the Company’s outstanding policies in recent years, particularly in whole life products, which resulted in more premium paying

business in force and an increase of $1,451,000 in first year premiums as a result of increased insurance sales.

investment income increased by $2,694,000, or 9.5%, to $31,165,000 for the six months ended June 30, 2022, from $28,471,000 for the comparable

period in 2021.

This increase was primarily attributable to a $4,218,000 increase in mortgage loan interest, a $1,006,000 increase in

income on real estate, a $116,000 increase in income on other investments, a $110,000 increase in interest on cash and cash equivalents,

a $49,000 increase in policy loan income, and a $8,000 increase in equity securities income, which were partially offset by a $2,713,000

increase in investment expenses, a $74,000 decrease in fixed maturity securities income, and a $26,000 decrease in insurance assignment

mortuary and cemetery sales increased by $2,196,000, or 17.9%, to $14,456,000 for the six months ended June 30, 2022, from $12,260,000

for the comparable period in 2021.

This increase was primarily due to a $2,940,000 increase in mortuary at-need sales and a $482,000

increase in cemetery at-need sales, which were partially offset by a $1,226,000 decrease in cemetery pre-need sales.

on investments and other assets decreased by $4,180,000, or 121.6%, to $742,000 in losses for the six months ended June 30, 2022, from

$3,437,000 in gains for the comparable period in 2021.

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

$4,337,000 decrease in gains on equity securities mostly attributable to decreases in the fair value of these equity securities and a

$94,000 decrease in gains on fixed maturity securities, which were partially offset by a $251,000 increase in gains on other assets.

revenues increased by $1,710,000, or 19.5%, to $10,484,000 for the six months ended June 30, 2022, from $8,774,000 for the comparable

period in 2021.

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

benefits and expenses were $97,982,000, or 95.7% of total revenues, for the three months ended March 31, 2022, as compared to $106,304,000,

benefits and expenses were $188,819,000, or 95.4% of total revenues, for the six months ended June 30, 2022, as compared to $208,377,000,

or 87.0% of total revenues, for the comparable period in 2021.

benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $1,012,000 or 2.2%, to $47,572,000

for the three months ended March 31, 2022, from $23,644,000 for the comparable period in 2021.

This increase was primarily the result

of a $2,516,000 increase in future policy benefits and a $246,000 increase in surrender and other policy benefits.

This increase was

partially offset by a $1,427,000 decrease in death benefits ($1,646,698 for COVID-19 related deaths).

of deferred policy and pre-need acquisition costs and value of business acquired increased by $819,000, or 22.9%, to $4,396,000 for the

three months ended March 31, 2022, from $3,577,000 for the comparable period in 2021.

for the six months ended June 30, 2022, from $46,560,000 for the comparable period in 2021.

This increase was primarily the result of

a $1,716,000 increase in future policy benefits and a $728,000 increase in surrender and other policy benefits, which were partially

offset by a $1,432,000 decrease in death benefits ($1,341,000 for COVID-19 related deaths).

of deferred policy and pre-need acquisition costs and value of business acquired increased by $1,219,000, or 16.9%, to $8,450,000 for

the six months ended June 30, 2022, from $7,231,000 for the comparable period in 2021.

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 $10,462,000, or 13.7%, to $65,695,000 for the three months ended March 31, 2022, from

general and administrative expenses decreased by $22,351,000, or 15.0%, to $126,742,000 for the six months ended June 30, 2022, from

$149,093,000 for the comparable period in 2021.

This increase was primarily the result of a $12,827,000 decrease in commissions, a $207,000

decrease in rent and rent related expenses, a $98,000 decrease in costs related to funding mortgage loans, and an $89,000 decrease in

advertising expenses.

This decrease was partially offset by a $2,503,000 increase in personnel expenses, a $142,000 increase in other

expenses, and a $114,000 increase in depreciation on property and equipment.

expense decreased by $98,000, or 5.4%, to $1,727,000 for the three months ended March 31, 2022, from $1,825,000 for the comparable period

This decrease was primarily due to a decrease of $546,000 in interest expense on mortgage warehouse lines for loans held for

This decrease was partially offset by a $448,000 increase in interest expense on bank loans.

of goods and services sold-mortuaries and cemeteries increased by $85,000, or 7.7%, to $1,185,000 for the three months ended March 31,

This decrease was primarily the result of a $24,324,000 decrease in commissions, a $793,000

decrease in costs related to funding mortgage loans, a $714,000 decrease in other expenses, a $379,000 decrease in rent and rent related

expenses, and a $91,000 decrease in advertising expenses, which were partially offset by a $3,679,000 increase in personnel expenses

and a $269,000 increase in depreciation on property and equipment.

expense increased by $108,000, or 3.1%, to $3,628,000 for the six months ended June 30, 2022, from $3,520,000 for the comparable period

This increase was primarily due to a $778,000 increase in interest expense on bank loans, which was partially offset by decrease

of $670,000 in interest expense on mortgage warehouse lines for loans held for sale.

of goods and services sold-mortuaries and cemeteries increased by $455,000, or 23.1%, to $2,428,000 for the six months ended June 30,

2022, from $1,973,000 for the comparable period in 2021.

This increase was primarily due to a $596,000 increase in mortuary at-need sales

This increase was partially offset by a $35,000 decrease in cemetery at-need sales and a $180,000 decrease in cemetery pre-need sales.

and a $66,000 increase in cemetery at-need sales, which were partially offset by and a $207,000 decrease in cemetery pre-need sales.

and Capital Resources

9 unchanged sentences

issuance of new policies, the maintenance of existing policies, debt service, and to meet current operating expenses.

the three months ended March 31, 2022 and 2021, the Company’s operations provided cash of $72,509,000 and provided cash of $100,976,000,

respectively.

This decrease in cash provided by operations was due primarily to decreased proceeds from the sale of mortgage loans held

the six months ended June 30, 2022 and 2021, the Company’s operations provided cash of $97,639,000 and $124,476,000, respectively.

The decrease in cash provided by operations from the six months ended June 30, 2021 to those ended June 30, 2022 was due primarily to

decreased proceeds from the sale of mortgage loans held for sale.

Company’s liability for future policy benefits is expected to be paid out over the long-term due to the Company’s market

17 unchanged sentences

Bonds owned by the insurance subsidiaries amounted to $270,404,000 (at estimated fair value)

and $259,005,000 (at estimated fair value) as of March 31, 2022 and December 31, 2021, respectively.

and $259,005,000 (at estimated fair value) as of June 30, 2022 and December 31, 2021, respectively.

This represented 32.6% and 31.5%

of the total investments as of March 31, 2022, and December 31, 2021, respectively.

Generally, all bonds owned by the life insurance

subsidiaries are rated by the National Association of Insurance Commissioners.

Under this rating system, there are six categories used

for rating bonds.

At March 31, 2022, 3.5% (or $9,597,000) and at December 31, 2021, 3.9% (or $9,991,000) of the Company’s total

bond investments were invested in bonds in rating categories three through six, which are considered non-investment grade.

of the total investments as of June 30, 2022, and December 31, 2021, respectively.

Generally, all bonds owned by the life insurance subsidiaries

are rated by the National Association of Insurance Commissioners.

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

At June 30, 2022, 3.0% (or $7,969,000) and at December 31, 2021, 3.9% (or $9,991,000) of the Company’s total bond investments

were invested in bonds in rating categories three through six, which are 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 March 31, 2022 and December 31, 2021, the life insurance

At June 30, 2022 and December 31, 2021, the life insurance

subsidiaries were in compliance with the regulatory criteria.

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $525,928,000 as of March 31, 2022,

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $480,830,000 as of June 30, 2022,

as compared to $551,054,000 as of December 31, 2021.

Stockholders’ equity as a percent of total capitalization was 58.3% and 54.4%

as of March 31, 2022 and December 31, 2021, respectively.

as of June 30, 2022 and December 31, 2021, respectively.

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

2 unchanged sentences

The 2022 lapse rate to date has been approximately the same as 2021.

combined statutory capital and surplus of the Company’s life insurance subsidiaries was $81,822,000 and $82,823,000 as of March

combined statutory capital and surplus of the Company’s life insurance subsidiaries was $83,477,000 and $82,823,000 as of June

30, 2022 and December 31, 2021, respectively.

13 unchanged sentences

reacted with significant monetary and fiscal interventions designed to stabilize the economic conditions.

Most monetary and fiscal interventions

have been significantly curtailed.

most businesses, COVID-19 has impacted the Company, including the temporary adoption of work from home arrangements and a restructuring

1 unchanged sentence

The Company also experienced increased expenses for cleaning services of its offices.

Throughout 2021 and the first quarter of 2022, the Company continues to adapt to the impact of COVID-19 and its related economic effects.

The Company cannot, with any certainty predict the severity or duration with which COVID-19 will impact the Company’s business,

financial condition, results of operations, and cash flows.

To the extent the COVID-19 pandemic adversely affects the Company’s

business, financial condition, and results of operations, it may also have the effect of heightening many of the other Company risks.

These uncertainties have the potential to negatively affect the risk of credit default for the issuers of the Company’s fixed maturity

debt securities and individual borrowers with mortgage loans held by the Company.

Throughout 2021 and 2022, the Company continued to adapt to the impact of COVID-19 and its related economic effects.

The Company cannot,

with any certainty predict the severity or duration with which COVID-19 will impact the Company’s business, financial condition,

results of operations, and cash flows.

To the extent the COVID-19 pandemic adversely affects the Company’s business, financial

condition, and results of operations, it may also have the effect of heightening many of the other Company risks.

These uncertainties

have the potential to negatively affect the risk of credit default for the issuers of the Company’s fixed maturity debt securities

and individual borrowers with mortgage loans held by the Company.

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

4 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