What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 184 added, 192 removed, 168 unchanged (69% of the section changed)

7 unchanged sentences

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,

14 unchanged sentences

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.

following table shows the condensed financial results of the insurance operations for three and nine months ended September 30, 2022

See Note 7 to the condensed consolidated financial statements.

Three months ended June 30

months ended September 30

(in thousands of dollars)

Six months ended June 30

months ended September 30

(in thousands of dollars)

1 unchanged sentence

Increase (Decrease)

Revenues from external customers

Insurance premiums

Net investment income

Gains on investments and other assets

Intersegment revenue

Earnings before income taxes

from external customers

investment income

on investments and other assets

before income taxes

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

(“SecurityNational Mortgage”).

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.

Profitability for the nine months ended September 30, 2022 decreased due to (a) a $5,000,000

decrease in gains on investments and other assets primarily due to a decrease in the fair value of equity securities, (b) a $3,911,000

increase in selling, general and administrative expenses, (c) a $1,620,000 increase in future policy benefits, (d) a $1,578,000 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 $1,268,000 increase in interest expense, and (f) an $2,000 decrease in other revenues, which were

partially offset by (i) a $5,409,000 increase in net investment income, (ii) a $3,737,000 increase in insurance premiums and other considerations,

(iii) a $1,821,000 decrease in death, surrenders and other policy benefits, (iv) a $198,000 decrease in intersegment interest expense

and other expenses, and an (v) $86,000 increase in intersegment revenue.

and Mortuary Operations

14 unchanged sentences

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

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

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

30, 2022 and 2021.

See Note 7 to the condensed consolidated financial statements.

Three months ended June 30

months ended September 30

(in thousands of dollars)

Six months ended June 30

months ended September 30

(in thousands of dollars)

1 unchanged sentence

Increase (Decrease)

Revenues from external customers

Mortuary revenues

Cemetery revenues

Net investment income

Gains (losses) on investments and other assets

Earnings before income taxes

from external customers

investment income

(losses) on investments and other assets

before income taxes

Profitability

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.

in the nine months ended September 30, 2022 decreased due to (a) a $2,528,000 decrease in gains on investments and other assets primarily

attributable to a $579,000 decrease in gains on real estate sales and a $1,949,000 decrease in gains on equity securities classified

as restricted assets and cemetery perpetual care trust investments primarily due to a decrease in the fair value of equity securities,

(b) a $2,510,000 increase in selling, general and administrative expenses, (c) a $1,433,000 decrease in cemetery pre-need sales, (d)

a $748,000 increase in costs of goods sold, and (e) a $173,000 increase in intersegment interest expense and other expenses, which were

partially offset by (i) a $3,775,000 increase in mortuary at-need sales, (ii) a $620,000 increase in net investment income, (iii) a $356,000

increase in cemetery at-need sales, (iv) a $143,000 increase in other revenues (v) a $125,000 increase in intersegment revenues, (vi)

a $54,000 decrease in interest expense, and (vii) an $8,000 decrease in amortization of deferred policy acquisition costs.

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

21 unchanged sentences

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

the nine months ended September 30, 2022 and 2021, SecurityNational Mortgage originated 8,886 loans ($2,837,349,000 total volume) and

14,898 loans ($4,157,704,000 total volume), respectively.

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

total volume).

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

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

260 loans ($85,368,000 total volume).

response to the COVID-19 pandemic, mortgage operations 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 and six months ended June 30, 2022 and

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

See Note 7 to the condensed consolidated financial statements.

Three months ended June 30

months ended September 30

(in thousands of dollars)

Six months ended June 30

months ended September 30

(in thousands of dollars)

1 unchanged sentence

Increase (Decrease)

Revenues from external customers

Secondary gains from investors

Income from loan originations

Change in fair value of loans held for sale

Change in fair value of loan commitments

Net investment income

Gains on investments and other assets

Earnings before income taxes

from external customers

gains from investors

from loan originations

in fair value of loans held for sale

in fair value of loan commitments

investment income

on investments and other assets

before income taxes

in other revenues is service fee income.

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.

Loan Loss Settlements

mortgage loan losses can be extremely difficult to estimate.

However, management believes that the Company’s reserve methodology

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.

Profitability for the nine months ended September 30, 2022 decreased due to (a) a $76,681,000

decrease in secondary gains from investors, (b) a $6,919,000 decrease in income from loan originations, (c) $2,294,000 decrease in the

fair value of loan commitments, (d) a $911,000 increase in intersegment expenses, (e) a $217,000 decrease in intersegment revenues, and

(e) a $32,000 increase in depreciation on property and equipment, which were partially offset by (i) a $37,978,000 decrease in commissions,

(ii) a $4,918,000 decrease in other expenses, (iii) a $2,652,000 increase in other revenues, (iv) a $1,800,000 decrease in costs related

to funding mortgage loans, (v) a $1,019,000 decrease in personnel expenses, (vi) a $1,154,000 decrease in advertising expenses, (vii)

a $893,000 decrease in intersegment interest expense and other expenses, (viii) a $778,000 decrease in interest expense, (ix) a $347,000

increase in the fair value of loans held for sale, (x) a $282,000 decrease in rent and rent related expenses, (xi) a $192,000 increase

in gains on investments and other assets, and (xii) $175,000 increase in net investment income.

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 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.

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

revenues decreased by $36,032,000, or 30.1%, to $83,477,000 for the three months ended September 30, 2022, from $119,509,000 for the

comparable period in 2021.

Contributing to this decrease in total revenues was a $37,650,000 decrease in mortgage fee income and a $3,156,000

decrease in gains on investments and other assets, a $208,000 decrease in insurance premiums and other considerations, which were partially

offset by a $3,510,000 increase in net investment income, a $503,000 increase in net mortuary and cemetery sales, and a $969,000 increase

in other revenues.

fee income decreased by $37,650,000, or 56.8%, to $28,608,000, for the three months ended September 30, 2022, from $66,258,000 for the

comparable period in 2021.

This decrease was primarily due to a $26,500,000 decrease in secondary gains from mortgage loans sold to third-party

1 unchanged sentence

value of loan commitments, and a $4,387,000 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

premiums and other considerations decreased by $208,000, or 0.8%, to $26,238,000 for the three months ended September 30, 2022, from

$26,446,000 for the comparable period in 2021.

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 decrease was primarily due to a decrease of $497,000 in renewal premiums which was

partially offset by a $289,000 increase in first year premiums.

investment income increased by $3,510,000, or 23.3%, to $18,603,000 for the three months ended September 30, 2022, from $15,093,000 for

the comparable period in 2021.

This increase was primarily attributable to a $3,437,000 increase in mortgage loan interest, a $610,000

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

increase in real estate income, a $521,000 increase in fixed maturity securities income, a $434,000 increase in interest on cash and

cash equivalents, a $146,000 increase in income on other investments, and a $28,000 increase in equity securities income, which were

partially offset by a $1,087,000 increase in investment expenses, a $563,000 decrease in insurance assignment income, and a $16,000 decrease

in policy loan income.

mortuary and cemetery sales increased by $503,000, or 8.4%, to $6,470,000 for the three months ended September 30, 2022, from $5,967,000

for the comparable period in 2021.

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

This increase was primarily due to a $835,000 increase in mortuary at-need sales, which were partially

offset by a $207,000 decrease in cemetery pre-need sales and a $125,000 decrease in cemetery at-need sales.

on investments and other assets decreased by $3,156,000, or 323.0%, to $2,179,000 in losses for the three months ended September 30,

2022, from $977,000 in gains for the comparable period in 2021.

This decrease in gains on investments and other assets was primarily

due to a $1,512,000 decrease in gains on equity securities mostly attributable to decreases in the fair value of these equity securities,

a $1,420,000 decrease in gains on other assets, and a $224,000 decrease in gains on fixed maturity securities.

revenues increased by $969,000, or 20.3%, to $5,737,000 for the three months ended September 30, 2022, from $4,768,000 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,

benefits and expenses were $86,780,000, or 104.0% of total revenues, for the three months ended September 30, 2022, as compared to $105,366,000,

or 88.2% of total revenues, for the comparable period in 2021.

benefits, surrenders and other policy benefits, and future policy benefits decreased by an aggregate of $1,213,000 or 5.1%, to $22,724,000

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

for the three months ended September 30, 2022, from $23,937,000 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

of a $1,478,000 decrease in death benefits ($1,023,000 for COVID-19 related deaths), a $96,000 decrease in future policy benefits, which

were partially offset by a $361,000 increase in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $352,000, or 7.5%, to $5,062,000 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 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,

three months ended September 30, 2022, from $4,710,000 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 $18,346,000, or 24.8%, to $55,657,000 for the three months ended September 30, 2022,

from $74,003,000 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

This decrease was primarily the result of a $13,765,000 decrease in commissions,

a $2,597,000 decrease in other expenses, a $1,008,000 decrease in costs related to funding mortgage loans, a $729,000 decrease in personnel

expenses, and $318,000 decrease in advertising expense, and a $153,000 decrease in rent and rent related expenses, which were partially

offset by a $224,000 increase in depreciation on property and equipment.

expense increased by $329,000, or 18.2%, to $2,137,000 for the three months ended September 30, 2022, from $1,807,000 for the comparable

period in 2021.

This increase was primarily due to an increase of $423,000 in interest expense on bank loans, which was partially offset

by a decrease of $94,000 in interest expense on mortgage warehouse lines for loans held for sale.

of goods and services sold-mortuaries and cemeteries increased by $292,000, or 32.2%, to $1,200,000 for the three months ended September

30, 2022, from $908,000 for the comparable period in 2021.

This increase was primarily due to a $346,000 increase in mortuary at-need

sales, which were partially offset by a $30,000 decrease in cemetery pre-need sales and a $24,000 decrease in cemetery at-need sales.

Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

revenues decreased by $77,448,000, or 21.6%, to $281,470,000 for the nine months ended September 30, 2022, from $358,918,000 for the

comparable period in 2021.

Contributing to this decrease in total revenues was a $85,431,000 decrease in mortgage fee income and a $7,335,000

decrease in gains on investments and other assets, which were partially offset by a $3,736,000 increase in insurance premiums and other

considerations, a $6,205,000 increase in net investment income, a $2,698,000 increase in net mortuary and cemetery sales, and a $2,679,000

increase in other revenues.

fee income decreased by $85,431,000, or 41.8%, to $118,983,000, for the nine months ended September 30, 2022, from $204,414,000 for the

comparable period in 2021.

This decrease was primarily due to a $76,565,000 decrease in secondary gains from mortgage loans sold to third-party

investors into the secondary market and a $6,919,000 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

loan loss reserve, and a $2,294,000 decrease in the fair value of loan commitments, which were partially offset by a $347,000 increase

in the fair value of loans held for sale.

premiums and other considerations increased by $3,736,000, or 5.0%, to $78,491,000 for the nine months ended September 30, 2022, from

$74,755,000 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

This increase was due to an increase of $1,996,000 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 $1,740,000 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

investment income increased by $6,205,000, or 14.2%, to $49,769,000 for the nine months ended September 30, 2022, from $43,564,000 for

the comparable period in 2021.

This increase was primarily attributable to a $7,655,000 increase in mortgage loan interest, a $1,617,000

increase in income on real estate, a $544,000 increase in interest on cash and cash equivalents, a $446,000 increase in fixed maturity

securities income, a $262,000 increase in income on other investments, a $37,000 increase in equity securities income, and a $33,000

increase in policy loan income, which were partially offset by a $3,800,000 increase in investment expenses and a $589,000 decrease in

insurance assignment income.

mortuary and cemetery sales increased by $2,698,000, or 14.8%, to $20,926,000 for the nine months ended September 30, 2022, from $18,228,000

for the comparable period in 2021.

1 unchanged sentence

increase in cemetery at-need sales, which were partially offset by a $1,433,000 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

on investments and other assets decreased by $7,335,000, or 166.2%, to $2,921,000 in losses for the nine months ended September 30, 2022,

from $4,414,000 in gains for the comparable period in 2021.

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

to a $5,849,000 decrease in gains on equity securities mostly attributable to decreases in the fair value of these equity securities,

a $1,169,000 decrease in gains on other assets, and a $317,000 decrease in gains on fixed maturity securities.

revenues increased by $2,679,000, or 19.8%, to $16,221,000 for the nine months ended September 30, 2022, from $13,542,000 for the comparable

period in 2021.

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

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,

benefits and expenses were $275,599,000, or 97.9% of total revenues, for the nine months ended September 30, 2022, as compared to $313,742,000,

or 87.4% 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 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).

benefits, surrenders and other policy benefits, and future policy benefits decreased by an aggregate of $201,000 or 0.3%, to $70,296,000

for the nine months ended September 30, 2022, from $70,497,000 for the comparable period in 2021.

This decrease was primarily the result

of a $2,910,000 decrease in death benefits ($2,339,000 for COVID-19 related deaths), which were partially offset by $1,620,000 increase

in future policy benefits and a $1,089,000 increase in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $1,570,000, or 13.2%, to $13,511,000 for

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

the nine months ended September 30, 2022, from $11,941,000 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 $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 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,

general and administrative expenses decreased by $40,698,000, or 18.2%, to $182,398,000 for the nine months ended September 30, 2022,

from $223,096,000 for the comparable period in 2021.

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

This decrease was primarily the result of a $38,089,000 decrease in commissions,

a $3,311,000 decrease in other expenses, a $1,800,000 decrease in costs related to funding mortgage loans, a $532,000 decrease in rent

and rent related expenses, and a $409,000 decrease in advertising expenses, which were partially offset by a $2,950,000 increase in personnel

expenses and a $493,000 increase in depreciation on property and equipment.

expense increased by $437,000, or 8.2%, to $5,764,000 for the nine months ended September 30, 2022, from $5,327,000 for the comparable

period in 2021.

This increase was primarily due to a $1,215,000 increase in interest expense on bank loans, which was partially offset

by decrease of $778,000 in interest expense on mortgage warehouse lines for loans held for sale.

of goods and services sold-mortuaries and cemeteries increased by $747,000, or 26.0%, to $3,628,000 for the nine months ended September

30, 2022, from $2,881,000 for the comparable period in 2021.

This increase was primarily due to a $942,000 increase in mortuary at-need

sales and a $42,000 increase in cemetery at-need sales, which were partially offset by and a $237,000 decrease in cemetery pre-need sales.

and Capital Resources

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and refinancing mortgage loans and fees from mortgage loans held for sale that are sold to investors into the secondary market.

be noted that current conditions in the financial markets and economy caused by the COVID-19 pandemic may affect the realization of these

expected cash flows.

The Company considers these sources of cash flow to be adequate to fund future policyholder and cemetery and mortuary

liabilities, which generally are long-term, and adequate to pay current policyholder claims, annuity payments, expenses related to the

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

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.

be noted that current conditions in the financial markets and economy caused by COVID-19 may affect the realization of these expected

The Company considers these sources of cash flow to be adequate to fund future policyholder and cemetery and mortuary liabilities,

which generally are long-term, and adequate to pay current policyholder claims, annuity payments, expenses related to the issuance of

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

As of September 30, 2022, SecurityNational

Mortgage was not in compliance with its warehouse line debt covenants, but received waivers or amendments from the warehouse banks.

the unlikely event the Company is required to repay the warehouse lines, the Company has sufficient cash and borrowing capacity to do

so and to continue to fund its origination activities through other internal funding sources.

the nine months ended September 30, 2022 and 2021, the Company’s operations provided cash of $109,318,000 and $128,891,000, respectively.

The decrease in cash provided by operations from the nine months ended September 30, 2021 to those ended September 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

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Bonds owned by the insurance subsidiaries amounted to $320,546,000 (at estimated fair value)

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

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

This represented 34.7% and 31.5%

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.

of the total investments as of September 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 bonds.

At September 30, 2022, 2.2% (or $7,311,000) 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 June 30, 2022 and December 31, 2021, the life insurance

At September 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 $480,830,000 as of June 30, 2022,

Company’s total capitalization of stockholders’ equity, bank and other loans payable was $470,342,000 as of September 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 June 30, 2022 and December 31, 2021, respectively.

Stockholders’ equity as a percent of total capitalization was 57.2%

and 54.4% as of September 30, 2022 and December 31, 2021, respectively.

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

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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 $83,477,000 and $82,823,000 as of June

combined statutory capital and surplus of the Company’s life insurance subsidiaries was $90,667,000 and $82,823,000 as of September

30, 2022 and December 31, 2021, respectively.

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

The Company continues to closely monitor developments relating to the ongoing COVID-19 pandemic and assessing its impact on

the Company’s business.

The continued uncertainty surrounding the COVID-19 pandemic has had and continues to have a significant

impact on the global economy and financial markets.

Governments and businesses have taken numerous measures to try to contain the virus

and its variants, which include the implementation of travel bans, self-imposed quarantine periods, social distancing, and various mask

and vaccine mandates.

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

Governments and central banks have

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

Most monetary and fiscal interventions

have been significantly curtailed.

The Company continues to closely monitor developments relating to COVID-19 and assessing its impact on the Company’s business.

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

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

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

These measures have disrupted

and will continue to disrupt businesses globally.

Governments and central banks have reacted with significant monetary and fiscal interventions

designed to stabilize the economic conditions.

Most 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

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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.

To the extent COVID-19 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

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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