What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-31 · 385 added, 427 removed, 126 unchanged (87% 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.

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

3 unchanged sentences

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 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 engages in pre-need selling of funeral, cemetery, mortuary, and cremation services through

its cemetery and mortuary locations.

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 118 retail offices

in 26 states, and is an approved mortgage lender in several other states.

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 its

assets (including, in part, pre-need funeral products and services) in investments authorized by the respective insurance departments

of their states of domicile.

The Company also pursues growth through acquisitions.

The Company’s mortgage segment provides mortgage loans and other

real estate investment opportunities.

The Company was organized

as a holding company in 1979 when Security National Life Insurance Company (“Security National Life”) became a wholly owned

subsidiary of the Company and the former stockholders of Security National Life became stockholders of the Company.

Security National

Life was formed in 1965 and has acquired or purchased significant blocks of business which include Capital Investors Life Insurance Company

(1994), Civil Service Employees Life Insurance Company (1995), Southern Security Life Insurance Company (1998), Menlo Life Insurance Company

(1999), Acadian Life Insurance Company (2002), Paramount Security Life Insurance Company (2004), Memorial Insurance Company of America

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

(2008), North America Life Insurance

Company (2011, 2015), Trans-Western Life Insurance Company (2012), Mothe Life Insurance Company (2012), DLE Life Insurance Company (2012),

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

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.

The Company’s mortgage segment provides mortgage

loans and other real estate investment opportunities.

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.

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).

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

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

(1991), Deseret Memorial,

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

(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

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.

(2019), Rivera Funerals, Cremations

and Memorial Gardens (2021), and Holbrook Mortuary (2021).

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 Mortgage.

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

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

5 unchanged sentences

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.

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

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.

Company sells its life insurance products through direct agents, brokers, and independent licensed agents who may also sell insurance

products of other companies.

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

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

Policy/Cert Count as of December 31

Insurance in force as of December 31 (omitted 000)

$ 2,877,402 (1)

Premiums Collected (omitted 000)

Includes the acquisition of Kilpatrick

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:

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

future commissions.

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

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

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, 2022:

Count as of December 31

Insurance in force

as of December 31 (in thousands)

Collected (in thousands)

of Kilpatrick

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

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 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.

(APS or exam)

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

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.

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.

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

Deposits Collected (omitted 000)

Includes the acquisition of Kilpatrick

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.

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.

following table summarizes the annuity business for the five years ended December 31, 2022:

Policy/Cert Count as of December 31

Collected (in thousands)

(1) Acquisition

of Kilpatrick

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

The Company 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

Premiums Collected (omitted 000)

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.

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

following table summarizes the accident and health insurance business for the five years ended December 31, 2022:

and Health Policy/Cert Count as of December 31

Collected (in thousands)

(1) Acquisition

of Kilpatrick

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).

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.

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, 2022, was $346,749,000, which represented approximately

12.1% of the Company’s life insurance in force on that date.

“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.

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.

“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.

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.

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.

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

of age and older.

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

radius of its mortuaries and cemeteries.

The Company’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

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

Mortgage Loans

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

SecurityNational Mortgage is approved by the U.S.

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.

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.

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.

customers are located via telephone sales prospecting, responses to letters mailed by the pre-planning consultants, billboards and other

outside advertising, referrals, and door-to-door canvassing.

The Company trains its sales representatives and helps generate leads for

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

SecurityNational Mortgage is approved by

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.

uses internal and external funding sources to fund mortgage loans.

In December 2021, the Company ceased operations through EverLEND Mortgage

and merged its operations into SecurityNational Mortgage.

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

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

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 many other states across

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.

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

December 21, 2021, the Company, through Memorial Estates Inc., completed a business combination transaction with Rivera Funerals, Cremations

and Memorial Gardens.

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.

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

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.

$70,000 of the holdback amount to pay trade accounts payable of Rivera Funerals, Cremations and Memorial Gardens to third parties that

remained unpaid at the time of purchase.

The remaining $1,050,000 holdback amount is to be released and paid by Memorial Estates Inc.

in annual payments of up to $105,000 each, beginning in January 2023.

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

$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

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.

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

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

Estate Development

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

The cost to acquire

existing for-sale assets currently exceeds the replacement costs, thus creating the opportunity for development and redevelopment of

the land that the Company currently owns.

The Company has developed, or is in the process of developing, assets that have an initial

development cost exceeding $100,000,000, primarily relating to the Center53 Development.

The Company plans to continue its development

endeavors as based upon its assessment of the market demand.

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 City.

At final completion, the multi-year, phased development is expected to 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 stalls.

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% leased.

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 is currently 100% leased.

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.

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;

standards of solvency which must be met and maintained;

licensing of insurers and their agents;

nature of and limitations on

licensing of insurers

and their agents;

nature of and limitations on investments;

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

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”

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 conduct relevant business.

Such regulation may cause unforeseen costs and operational restrictions,

and delay implementation of the Company’s business plans.

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.

1 unchanged sentence

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.

Their business and accounts are also subject to examination by

these agencies.

The Company was last examined in 2021 (First Guaranty Insurance), 2022 (Security National Life, Southern Security and

Trans-Western) and 2021 (Kilpatrick Life).

Its most recent final examination reports have been approved by the insurance departments

and are public record.

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.

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.

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.

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 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

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

In addition to the government regulations, the Company must meet loan requirements, and underwriting guidelines of various

investors who purchase the loans.

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

The Company’s

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

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).

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.

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

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 years.

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.

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

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.

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

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.

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.

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, pricing, and customer

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.

The Company believes that its policies and rates for the

markets it serves are generally competitive.

cemetery 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.

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.

Capital Management

of December 31, 2022, the Company employed 1,422 full-time and 202 part-time employees.

Of the full-time employees, 934 were employed

by the mortgage segment, 368 by the life insurance segment, and 120 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.

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, 2022, 826 employees had elected to participate in the Company’s

group health insurance plans.

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.

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.

Company’s internet address is securitynational.com.

The Company’s investor relations website is investor.securitynational.com

and the Company promptly makes available on this website, free of charge, the reports that it files or furnishes with the Securities

and Exchange Commission.

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

Unresolved Staff Comments

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

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

433 Ascension Way, Floors 4, 5 and 6

Salt Lake City

18 unchanged sentences

Fast Funding Operations

Dobson Rd., Suite 202

Mortgage Sales

Dobson Rd., Suite 203

Mortgage Sales

Scottsdale Rd., Suite 125

500 Blount Avenue,

Mortgage Sales

1101 McMurtrie Drive, Suite F1

Mortgage Sales

month to month

99th Ave., Suite 101/103

1 unchanged sentence

month to month

99th Ave., Suite 111

Mortgage Sales

Hayden Rd., Suite 100

1 unchanged sentence

month to month

Central Ave., Suite 1100A

1819 Dobson Rd., Suite 202

Mortgage Sales

month to month

2636 Hwy 95, Suite 2

Bullhead City

Central Ave., Suite 1100A

Mortgage Sales

2 unchanged sentences

Mortgage Sales

Camelback Rd., Suite 200

99th Ave., Suite 111

Mortgage Sales

month to month

4th St., Suite 920

1951 West Camelback Rd, Ste 200

Mortgage Sales

month to month

40977 Oak Dr.

AZ (01144) 2636 Hwy 95 Suite 2 Bullhead City, 86442 (az-2636)

Bullhead City

Mortgage Sales

month to month

South, Suite 250

6870 S Highway 95 Building C Suite 451B,

Mohave Valley

Mortgage Sales

month to month

573 Chouinard Cir.

Country Club Drive Suite 101

Mortgage Sales

El Caminito Dr.

Mortgage Sales

month to month

7398 Fox Trail Unit B

Paseo De La Masada

Mortgage Sales

month to month

26511 Silver Spring

350 West 16th Street #209

Mortgage Sales

102 North Cortez St.

Mortgage Sales

month to month

2325 El Empino

La Habra Heights

40977 Oak Dr.

Mortgage Sales

month to month

University Ave., Apt.

South, Suite 250

Mortgage Sales

7315 Shady Oak Dr.

month to month

7398 Fox Trail Unit B

Mortgage Sales

month to month

3247 West March Lane, Ste 125

Mortgage Sales

Grand Ave., Suite 1005

Commercial Dr, Ste 285

Mortgage Sales

March Ln., Suite 125

Highway 101 Suite 7

Mortgage Sales

Commercial Dr., Suite 285

44441 West 16th Street #101

Mortgage Sales

Highway 101, Suite 7

1420 Magnolia Ave

Mortgage Sales

36372 Canyon Terrace Dr.

81 Broadmoor Ct.

Mortgage Sales

month to month

12821 War Horse St.

625 The City Drive, Suite 450

Mortgage Sales

month to month

5475 Tech Center Dr., Suite 100

9 unchanged sentences

Mortgage Sales

Main St., Suite 247

Mortgage Sales

5982 s Zeno Ct

Mortgage Sales

4 unchanged sentences

Mortgage Sales

3180 Curlew Rd.

and 82nd Ave.

Mortgage Sales

8265 113th St., N.

2350 Fruitville Rd Ste, Ste 101

Mortgage Sales

136 Parliament Loop

921 Club House Blvd, New Smyrna Beach,

Mortgage Sales

2350 Fruitville Rd., Suite 101

month to month

5237 Summerlin Commons Blvd.

Mortgage Sales

3956 Sunbeam Rd., Suite 1

month to month

10752 Deerwood Park Blvd South Waterview II, Suite 135, Office # 170

Mortgage Sales

3331 Pasadena Court

Mortgage Sales

month to month

106 A Adamson Square

Mortgage Sales

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