What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-03-29 · 166 added, 353 removed, 294 unchanged (64% of the section changed)

4 unchanged sentences

(ii) increased emphasis on cemetery and mortuary business;

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

and (iii) capitalizing on the housing market by originating

mortgage loans.

2 unchanged sentences

the Notes to Consolidated Financial Statements.

ended December 31

Years ended December 31

(in thousands of dollars)

4 unchanged sentences

Mortgage fee income

Gains (losses) on investments and other assets

Intersegment revenue

Earnings before income

Gains on investments and other assets

Other revenues

Intersegment revenues

Total segment revenues

Segment net earnings

Profitability

for 2023 increased due to (a) a $9,656,000 increase in insurance premiums and other considerations, (b) a $5,247,000 increase in net

investment income, (c) a $1,602,000 increase in intersegment revenue, (d) a $1,422,000 increase in gains on investments and other assets

primarily due to an increase in the fair value of equity securities, and (e) a $987,000 decrease in selling, general and administrative

expenses, which were partially offset by (i) a $5,150,000 increase in future policy benefits, (ii) a $1,936,000 increase in death, surrenders

and other policy benefits, (iii) a $266,000 decrease in other revenues, (iv) a $176,000 increase in intersegment interest expense and

other expenses, (v) a $133,000 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, (vi) a $111,000 increase in interest expense, and (vii) a $66,000

decrease in mortgage fee income.

for 2024 increased due to (a) a $4,998,000 increase in insurance premiums and other considerations, (b) a $3,301,000 decrease in

death, surrenders and other policy benefits, (c) a $2,323,000 decrease in amortization of deferred policy acquisition costs, (d) a

$1,092,000 increase in gains on investments and other assets, (e) a $443,000 increase in net investment income, and (f) a $354,000

decrease in interest expense, which were partially offset by (i) a $2,949,000 increase in income tax expense, (ii) a $2,929,000

increase in selling, general and administrative expenses, (iii) a $2,245,000 increase in future policy benefits, (iv) a $931,000

decrease in intersegment revenue, (v) a $102,000 decrease in other revenues, (vi) a $77,000 decrease in mortgage fee income, and

(vii) a $42,000 increase in intersegment interest expense and other expenses.

and Mortuary Operations

1 unchanged sentence

Note 15 of the Notes to Consolidated Financial Statements.

ended December 31

Years ended December 31

(in thousands of dollars)

4 unchanged sentences

Net investment income

Gains (losses) on investments and other assets

Earnings before income

Gains on investments and other assets

Other revenues

Intersegment revenues

Total segment revenues

Segment net earnings

Profitability

in 2023 increased due to (a) a $2,196,000 increase in cemetery pre-need sales, (b) a $1,513,000 increase in gains on investments and

other assets (primarily attributable to an increase in the fair value of equity securities classified as restricted assets and cemetery

perpetual care trust investments), (c) a $507,000 increase in net investment income, (d) a $99,000 increase in other revenues, (e) a

$59,000 decrease in amortization of deferred policy acquisition costs, and (f) a $44,000 decrease in intersegment interest expense and

other expenses, which were partially offset by (i) a $878,000 decrease in cemetery at-need sales, (ii) a $546,000 increase in selling,

general and administrative expenses, (iii) a $447,000 decrease in mortuary at-need sales, (iv) a $111,000 decrease in intersegment revenues,

and (v) a $85,000 increase in costs of goods sold.

in 2024 increased due to (a) a $1,140,000 increase in cemetery pre-need sales, (b) a $260,000 increase in mortuary at-need sales, (c)

a $156,000 increase in gains on investments and other assets, (d) a $139,000 increase in other revenues, and (e) a $26,000 decrease in

intersegment interest expense and other expenses, which were partially offset by (i) a $458,000 increase in selling, general and administrative

expenses, (ii) a $383,000 decrease in net investment income, (iii) a $239,000 increase in amortization of deferred policy acquisition

costs, (iv) a $228,000 decrease in cemetery at-need sales, and (v) a $96,000 increase in income tax expense.

Company’s wholly owned subsidiary, SecurityNational Mortgage, is a mortgage lender incorporated under the laws of the State of

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SecurityNational Mortgage originates and refinances mortgage loans on a retail

Mortgage loans originated or refinanced by SecurityNational Mortgage are funded through loan purchase agreements with Security

National Life, Kilpatrick Life and unaffiliated financial institutions.

Mortgage loans originated or refinanced by SecurityNational Mortgage are funded through loan purchase agreements with the Company,

Security National Life, Kilpatrick Life, and unaffiliated financial institutions.

SecurityNational

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0.44% of its loan origination volume.

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

On October 31, 2022, the Company sold certain of its MSRs.

The MSRs related to mortgage loans previously originated by the Company in

aggregate unpaid principal amount of approximately $7.02 billion.

As a result of the sale, the book value of the Company’s MSRs

decreased $51,185,906.

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

Reserve will continue to raise rates in the near term.

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

loan originations classified as ‘refinance’.

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

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

2023 and 2022, SecurityNational Mortgage originated 7,185 loans ($2,173,081,000 total volume) and 10,663 loans ($3,373,554,000 total

volume), respectively.

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

sub-servicer.

Treasury rates continue to remain elevated despite the downward trend in inflation data and the Federal Reserve’s action to reduce

This has resulted in higher-than-expected mortgage rates, which in turn has further decreased the demand for loan originations

classified as refinance.

The higher-than-expected mortgage rates have also continued to have a negative effect on loan originations classified

as purchases.

2024 and 2023, SecurityNational Mortgage originated 7,269 loans ($2,295,830,000 total volume) and 7,185 loans ($2,173,081,000 total volume),

respectively.

following table shows the condensed financial results for the Company’s mortgage operations for 2024 and 2023.

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Notes to Consolidated Financial Statements.

ended December 31

Years ended December 31

(in thousands of dollars)

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Revenues from external customers:

Secondary gains

from investors

Secondary gains from investors

Income from loan originations

Change in fair value of

loans held for sale

Change in fair value of loans held for sale

Change in fair value of loan commitments

1 unchanged sentence

Gains on investments and other assets

Earnings (loss) before

in other revenues is service fee income.

Profitability in 2023 decreased due to (a) an $85,300,000 decrease in secondary gains from investors,

(b) a $15,004,000 decrease in other revenues due to the sale of certain MSRs in October 2022, (c) a $1,535,000 increase in intersegment

interest expense and other expenses, (d) a $1,527,000 decrease in income from loan originations, and (e) a $241,000 decrease in gains

on investments and other assets, which were partially offset by (i) a $23,662,000 decrease in commissions, (ii) a $17,871,000 decrease

in personnel expenses, (iii) a $13,180,000 decrease in other expenses, (iv) an $8,356,000 increase in the fair value of loans held for

sale, (v) a $3,185,000 increase in the fair value of loan commitments, (vi) a $3,077,000 decrease in interest expense, (vii) a $1,100,000

decrease in costs related to funding mortgage loans, (viii) a $1,011,000 decrease in advertising expenses, (ix) a $392,000 increase in

net investment income, (x) a $175,000 increase in intersegment revenues, (xi) a $42,000 decrease in depreciation on property and equipment,

and (xii) a $52,000 decrease in rent and rent related expenses.

Other revenues

Intersegment revenues

Total segment revenues

Segment net loss

in 2024 compared to 2023 decreased due to (a) a $4,251,000 decrease in other expenses, (b) a $3,348,000 increase in the fair value

of loans held for sale, (c) a $2,359,000 increase in income from loan originations, (d) a $2,177,000 decrease in personnel expenses,

(e) a $1,927,000 increase in secondary gains from investors, (f) a $1,854,000 increase in the fair value of loan commitments, (g) a

$1,729,000 decrease in rent and rent related expenses, (h) a $921,000 increase in other revenues, (i) a $904,000 decrease in

intersegment interest expense and other expenses, (j) a $330,000 decrease in advertising expenses, (k) a $306,000 decrease in costs

related to funding mortgage loans, (l) a $257,000 decrease in interest expense, (m) a $42,000 increase in intersegment revenues, and

(n) a $29,000 decrease in depreciation on property and equipment, which were partially offset by (i) a $7,410,000 increase in

commissions, (ii) a $2,717,000 increase in income tax expense, (iii) a $1,143,000 decrease in gains on investments and other assets,

and (iv) a $678,000 decrease in net investment income.

Accounting Policies and Estimates

following is a summary of the Company’s significant accounting policies and a review of the Company’s most critical accounting

See Note 1 of the Notes to Consolidated Financial Statements.

accordance with generally accepted accounting principles in the United States of America (“GAAP”), premiums and other considerations

received for interest sensitive products are reflected as increases in liabilities for policyholder account balances and not as revenues.

Revenues reported for these products consist of policy charges for the cost of insurance, administration charges, amortization of policy

initiation fees and surrender charges assessed against policyholder account balances.

Surrender benefits paid relating to these products

are reflected as decreases in liabilities for policyholder account balances and not as expenses.

Company receives investment income earned from the funds deposited into account balances, a portion of which is passed through to the

policyholders in the form of interest credited.

Interest credited to policyholder account balances and benefit claims more than policyholder

account balances are reported as expenses in the consolidated financial statements.

and other considerations received for traditional life insurance products are recognized as revenues when due.

Future policy benefits

are recognized as expenses over the life of the policy by means of the provision for future policy benefits.

costs related to acquiring new business, including certain costs of issuing policies and other variable selling expenses (principally

commissions), defined as deferred policy acquisition costs, are capitalized, and amortized into expenses.

For nonparticipating traditional

life products, these costs are amortized over the premium paying period of the related policies, in proportion to the ratio of annual

premium revenues to total anticipated premium revenues.

Such anticipated premium revenues are estimated using the same assumptions used

for computing liabilities for future policy benefits and are generally “locked in” at the date the policies are issued.

interest sensitive products, these costs are amortized generally in proportion to expected gross profits from surrender charges and investment,

mortality, and expense margins.

This amortization is adjusted when the Company revises the estimate of current or future gross profits

For example, deferred policy acquisition costs are amortized earlier than originally estimated when policy terminations are

higher than originally estimated or when investments backing the related policyholder liabilities are sold at a gain prior to their anticipated

and other policyholder benefits reflect exposure to mortality risk and fluctuate from year to year on the level of claims incurred under

insurance retention limits.

The profitability of the Company is primarily affected by fluctuations in mortality, other policyholder benefits,

expense levels, interest spreads (i.e., the difference between interest earned on investments and interest credited to policyholders)

and persistency.

The Company can mitigate adverse experiences through sound underwriting, asset and liability duration matching, sound

actuarial practices, adjustments to credited interest rates, policyholder dividends and cost of insurance charges.

and Mortuary Operations

sales of funeral services and caskets, including revenue and costs associated with the sales of pre-need funeral services and caskets,

are deferred until the services are performed or the caskets are delivered.

sales of cemetery interment rights (cemetery burial property), including revenue and costs associated with the sales of pre-need cemetery

interment rights, are recognized in accordance with the retail land sales provisions of GAAP.

Under GAAP, recognition of revenue and

associated costs from constructed cemetery property must be deferred until a minimum percentage of the sales price has been collected.

Revenues related to the pre-need sale of unconstructed cemetery property will be deferred until such property is constructed and meets

the criteria of GAAP, described above.

sales of cemetery merchandise (primarily markers and vaults), including revenue and costs associated with the sales of pre-need cemetery

merchandise, are deferred until the merchandise is delivered, fulfilling the performance obligation.

sales of cemetery services (primarily merchandise delivery and installation fees and burial opening and closing fees), including revenue

and costs associated with the sales of pre-need cemetery services, are deferred until the services are performed.

funeral and pre-need cemetery customer obtaining costs, including costs incurred related to obtaining new pre-need cemetery and prearranged

funeral business are accounted for under the guidance of the provisions of GAAP.

Obtaining costs, which include only costs that vary

with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral business, are deferred until the merchandise

is delivered or services are performed.

and costs for at-need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured,

and there are no significant company obligations remaining.

fee income consists of origination fees, processing fees, interest income and certain other income related to the origination and sale

of mortgage loans.

The Company has elected to use fair value accounting for all mortgage loans that are held for sale.

Accordingly, all

revenues and costs are now recognized when the mortgage loan is funded and any changes in fair value are shown as a component of mortgage

Company, through its mortgage subsidiaries, sells mortgage loans to third-party investors without recourse, unless defects are identified

in the representations and warranties made at loan sale.

It may be required, however, to repurchase a loan or pay a fee instead of repurchasing

under certain events, which include the following:

to deliver original documents specified by the investor,

existence of misrepresentation or fraud in the origination of the loan,

loan becomes delinquent due to nonpayment during the first several months after it is sold,

pay-off of a loan, as defined by the agreements,

time to settle a loan,

declines purchase, and

● Discontinued

product and expired commitment.

purchase commitments generally specify a date 30 to 45 days after delivery upon which the underlying loans should be settled.

on market conditions, these commitment settlement dates can be extended at a cost to the Company.

is the Company’s policy to cure any documentation problems regarding such loans at a minimal cost for up to a six-month period

and to pursue efforts to enforce loan purchase commitments from third-party investors concerning the loans.

The Company believes that

six months allows adequate time to remedy any documentation issues, to enforce purchase commitments, and to exhaust other alternatives.

Remedial methods include the following:

reasons for rejection,

additional documents,

investor exceptions,

rejection decision to purchase committee, and

to secondary investors.

purchase commitments have expired and other alternatives to remedy are exhausted, which could be earlier than the six-month period, the

loans are repurchased and transferred to mortgage loans held for investment at the lower of cost or fair value and the previously recorded

sales revenue that was to be received from a third-party investor is written off against the loan loss reserve.

Any loan that later becomes

delinquent is evaluated by the Company at that time and any impairment is adjusted accordingly.

The cost for loans held for sale is equal to the amount paid to the warehouse bank and the amount originally funded by

Market value, while often difficult to determine and may contain significant unobservable inputs, is based on the following

loans that are committed, the Company uses the commitment price.

loans that are non-committed that have an active market, the Company uses the market price.

loans that are non-committed where there is no market but there is a similar product, the

Company uses the market value for the similar product.

loans that are non-committed where no active market exists, the Company determines that the

unpaid principal balance best approximates the market value, after considering the fair value

of the underlying real estate collateral, estimated future cash flows, and loan interest

appraised value of the real estate underlying the original mortgage loan adds significance to the Company’s determination of fair

value because, if the loan becomes delinquent, the Company has sufficient value to collect the unpaid principal balance or the carrying

value of the loan, thus minimizing credit risk.

Most loans originated are sold to third-party investors.

The amounts expected to be sold

to investors are shown on the consolidated balance sheets as loans held for sale.

of Significant Accounting Estimates

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported

amounts and disclosures.

It is reasonably possible that actual experience could differ from the estimates and assumptions utilized which

could have a material impact on the financial statements.

The following is a summary of our significant accounting estimates, and critical

issues that impact them:

Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage

loan, quoted mortgage-backed security (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate

of the probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense.

in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued and is shown net of related

Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of

the underlying mortgage loans.

Fallout rates and other factors from the Company’s recent historical data are used to estimate the

quantity and value of mortgage loans that will be funded within the terms of the commitments.

Acquisition Costs

Company’s significant accounting policies are fundamental to understanding its results of operations and financial condition as

they require that the Company use estimates and assumptions that may affect the value of its assets or liabilities and financial results.

See Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for further information.

Five of these policies, discussed below, relate to

critical estimates because they require management to make difficult, subjective and complex judgments about matters that are inherently

uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions.

Actual results could differ from those estimates.

Company’s Management and the Audit Committee of the Board of Directors have reviewed and approved the accounting policies associated

with these critical estimates.

Policy Benefits

for future policy benefits for traditional life insurance products requires the use of many assumptions, including the duration of the

policies, mortality experience, expenses, investment yield, lapse rates, surrender rates, and dividend crediting rates.

assumptions are made based upon historical experience, industry standards and a best estimate of future results and, for traditional

life products, include a provision for adverse deviation.

For traditional life insurance, once established for a particular series of

products, these assumptions are generally held constant.

Acquisition Costs and Value of Business Acquired

of deferred policy acquisition costs (“DAC”) for interest sensitive products is dependent upon estimates of current and future

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policies are issued.

of Business Acquired

of business acquired (“VOBA”) is the present value of estimated future profits of the acquired business and is amortized

1 unchanged sentence

The critical issues explained for deferred acquisition costs would also apply for value of business

Loans Foreclosed to Real Estate Held for Investment or Sale

properties are recorded at the lower of cost or fair value upon foreclosure.

The Company believes that in an orderly market, fair value

approximates the replacement cost of a home, and the rental income provides a cash flow stream for investment analysis.

The Company believes

the highest and best use of the properties are as income producing assets since it is the Company’s intent to hold the properties

as rental properties, matching the income from the investment in rental properties with the funds required for estimated future policy

Accordingly, the fair value determination is generally weighted more heavily toward the rental analysis.

The fair value is

also estimated by obtaining an independent appraisal, which typically considers area comparable properties and property condition.

Policy Benefits

for future policy benefits for traditional life insurance products requires the use of many assumptions, including the duration of the

policies, mortality experience, expenses, investment yield, lapse rates, surrender rates, and dividend crediting rates.

assumptions are made based upon historical experience, industry standards and a best estimate of future results and, for traditional

life products, include a provision for adverse deviation.

For traditional life insurance, once established for a particular series of

products, these assumptions are generally held constant.

Premium Reserve

universal life products the Company sells have significant policy initiation fees (front-end load) that are deferred and amortized into

revenues over the estimated expected gross profits from surrender charges and investment, mortality, and expense margins.

The same issues

that impact deferred acquisition costs apply to unearned revenue.

Deficiency and Loss Recognition Testing

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after-tax net investment earned rate.

Pre-need Cemetery and Funeral Contracts Revenues and Estimated Future Cost of Pre-need Sales

revenue and cost associated with the sales of pre-need cemetery merchandise and funeral services are deferred until the merchandise is

delivered or the service is performed.

Company, through its cemetery and mortuary operations, provides a guaranteed funeral arrangement wherein a prospective customer can receive

future goods and services at guaranteed prices.

To accomplish this, the Company, through its life insurance operations, sells to the

customer an increasing benefit life insurance policy that is assigned to the mortuaries.

If, at the time of need, the policyholder or

potential mortuary customer utilizes one of the Company’s facilities, the guaranteed funeral arrangement contract that has been

assigned will provide the funeral goods and services at the contracted price.

The increasing life insurance policy will cover the difference

between the original contract prices and current prices.

Risks may arise if the difference cannot be fully met by the life insurance

Servicing Rights

Service Rights (“MSR”) arise from contractual agreements between the Company and third-party investors (or their agents)

when mortgage loans are sold.

Under these contracts, the Company is obligated to retain and provide loan servicing functions on the loans

sold, in exchange for fees and other remuneration.

The servicing functions typically performed include, among other responsibilities,

collecting and remitting loan payments;

responding to borrower inquiries;

accounting for principal and interest;

holding custodial (impound)

funds for payment of property taxes and insurance premiums;

counseling delinquent mortgagors;

and supervising the acquisition of real

estate owned and property dispositions.

The Company initially accounts for MSRs at fair value and subsequently accounts for them using

the amortization method.

MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of the estimated

future net servicing income of the underlying financial assets.

The Company periodically assesses MSRs accounted for using the amortization

method for impairment.

Allowance for Credit Losses and Loan Loss Reserve

Company provides for losses on its mortgage loans held for investment through an allowance for credit losses (a contra-asset account)

and through the mortgage loan loss reserve (a liability account).

mortgage allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the Company’s mortgage

loans held for investment to present the net amount expected to be collected.

When a loan becomes delinquent, the Company proceeds to

foreclose on the real estate and all expenses for foreclosure are expensed as incurred.

Once foreclosed, an adjustment for the lower

of cost or fair value is made, if necessary, and the amount is classified as real estate held for investment.

The Company will rent the

properties until it is deemed desirable to sell them.

Company provides for losses on its mortgage loans held for sale through the mortgage loan loss reserve (a liability account).

mortgage loan loss reserve is an estimate of probable losses at the balance sheet date that the Company will realize in the future on

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for indemnification losses is included in other liabilities and accrued expenses.

Tax Assets and Liabilities

tax assets and liabilities require various estimates and judgments and may be affected favorably or unfavorably by various internal and

external factors.

These estimates and judgments occur in the calculation of certain deferred tax assets and liabilities that arise from

temporary differences in the recognition of revenues and expenses for tax and financial reporting purposes and in estimating the ultimate

amount of deferred tax assets recoverable in future periods.

Factors affecting the deferred tax assets and liabilities include, but are

not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, and changes

to overall levels of pre-tax earnings.

Changes in these estimates, judgments or factors may result in an increase or decrease to the

Company’s deferred tax assets and liabilities with a related increase or decrease in the Company’s provision for income taxes.

Company estimates the fair value of a mortgage loan commitment based on the change in estimated fair value of the underlying mortgage

loan, quoted mortgage-backed security (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate

of the probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense.

in fair value of the underlying mortgage loan is measured from the date the mortgage loan commitment is issued and is shown net of related

Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of

the underlying mortgage loans.

Fallout rates and other factors from the Company’s recent historical data are used to estimate the

quantity and value of mortgage loans that will be funded within the terms of the commitments.

of Consolidated Operations

Compared to 2023

revenues decreased by $71,155,000, or 18.3%, to $318,497,000 for 2023 from $389,652,000 for 2022.

Contributing to this decrease in total

revenues was primarily a $75,352,000 decrease in mortgage fee income and a $15,171,000 decrease in other revenues.

This decrease in total

revenues was offset by a $9,657,000 increase in insurance premiums and other considerations, a $6,145,000 increase in net investment

income, a $2,695,000 increase in gains on investments and other assets, and an $871,000 increase in net cemetery and mortuary sales.

fee income decreased by $75,352,000, or 43.4%, to $98,148,000 for 2023, from $173,500,000 for 2022.

This decrease was primarily due to

an $85,366,000 decrease in secondary gains from mortgage loans sold to third-party investors into the secondary market, and a $2,579,000

decrease in loan fees and interest income.

This decrease in mortgage fee income was partially offset by a $11,541,000 increase in the

fair value of loans held for sale and loan commitments and a $1,052,000 decrease in the provision for loan loss reserve.

revenues increased by $16,025,000, or 5.0%, to $334,522,000 for 2024 from $318,497,000 for 2023.

Contributing to this increase in total

revenues was primarily a $9,411,000 increase in mortgage fee income, a $4,997,000 increase in insurance premiums and other considerations,

a $1,172,000 increase in net cemetery and mortuary sales, a $958,000 increase in other revenues, and a $105,000 increase in gains on

investments and other assets.

This increase in total revenues was offset by a $618,000 decrease in net investment income.

fee income increased by $9,411,000, or 9.6%, to $107,559,000 for 2024, from $98,148,000 for 2023.

This increase was primarily due to

a $5,202,000 increase in the fair value of loans held for sale and loan commitments, a $3,264,000 increase in loan fees and interest

income, a $1,850,000 increase in secondary gains from mortgage loans sold to third-party investors into the secondary market.

This increase

in mortgage fee income was partially offset by a $905,000 increase in the provision for loan loss reserve.

premiums and other considerations increased by $4,997,000, or 4.4%, to $119,656,000 for 2024, from $114,659,000 for 2023.

3 unchanged sentences

paying policies in force.

investment income increased by $6,145,000, or 9.3%, to $72,343,000 for 2023, from $66,198,000 for 2022.

This increase was primarily attributable

to a $4,476,000 increase in fixed maturity securities income, a $2,583,000 increase in interest on cash and cash equivalents, a $477,000

decrease in investment expenses, a $223,000 increase in rental income from real estate held for investment, a $106,000 increase in equity

securities income, a $99,000 increase in income in other investments, and a $5,000 increase in insurance assignment income.

This increase

was partially offset by a $1,708,000 decrease in mortgage loan interest and a $116,000 decrease in policy loan income.

investment income decreased by $618,000, or 0.9%, to $71,725,000 for 2024, from $72,343,000 for 2023.

This decrease was primarily attributable

to a $3,416,000 decrease in rental income from real estate held for investment and a $3,290,000 decrease in mortgage loan interest.

decrease was partially offset by a $2,427,000 increase in interest on cash and cash equivalents, a $1,853,000 increase in insurance assignment

income, a $941,000 decrease in investment expenses, a $461,000 increase in fixed maturity securities income, a $189,000 increase in income

in other investments, a $137,000 increase in policy loan income, and an $82,000 increase in equity securities income.

mortuary and cemetery sales increased by $1,172,000, or 4.2%, to $29,037,000 for 2024, from $27,865,000 for 2023.

This increase was primarily

due to a $2,196,000 increase in cemetery pre-need sales.

This increase was partially offset by a $878,000 decrease in cemetery at-need

sales and a $447,000 decrease in mortuary at-need sales.

on investments and other assets increased by $2,695,000, or 314.3%, to $1,837,000 in gains for 2023, from $858,000 in losses for 2022.

This increase in gains on investments and other assets was primarily due to a $4,157,000 increase in gains on equity securities mostly

attributable to increases in the fair value of these equity securities.

This increase was partially offset by a $527,000 decrease in

gains on fixed maturity securities, a $485,000 decrease in gains on other assets, and a $450,000 decrease in gains on real estate held

for investment.

revenues decreased by $15,171,000, or 80.6%, to $3,646,000 for 2023 from $18,817,000 for 2022.

This decrease was primarily attributable

to a decrease in servicing fee revenue because of the sale of certain mortgage servicing rights in October 2022.

due to a $1,140,000 increase in cemetery pre-need sales and a $260,000 increase in mortuary at-need sales.

This increase was partially

offset by a $228,000 decrease in cemetery at-need sales.

on investments and other assets increased by $105,000, or 5.7%, to $1,942,000 for 2024, from $1,837,000 for 2023.

This increase in gains

on investments and other assets was primarily due to a $614,000 increase in gains on real estate held for investment, a $234,000 increase

in gains on other assets, a $210,000 increase in gains on equity securities mostly attributable to increases in the fair value of these

equity securities, and a $208,000 increase in gains on fixed maturity securities.

This increase was partially offset by a $1,161,000

decrease in gains on mortgage loans held for investment.

revenues increased by $958,000, or 26.3%, to $4,604,000 for 2024 from $3,646,000 for 2023.

This increase was primarily attributable to

a $1,350,000 legal settlement, which was partially offset by a decrease of $392,000 in other miscellaneous revenues.

benefits and expenses were $300,419,000, or 89.8% of total revenues for 2024, as compared to $302,197,000, or 94.9% of total revenues

benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $7,086,000, or 7.6%, to $100,012,000

benefits, surrenders and other policy benefits, and future policy benefits decreased by an aggregate of $1,056,000, or 1.1%, to $98,956,000

for 2024, from $100,012,000 for 2023.

This increase was primarily the result of a $5,150,000 increase in future policy benefits and a

$2,012,000 increase in death benefits.

This increase was partially offset by a $76,000 decrease in surrender and other policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired increased by $74,000, or 0.4%, to $18,024,000 for 2023,

This decrease was primarily the result of a $3,274,000 decrease in death benefits and a $27,000

decrease in surrender and other policy benefits.

This decrease was partially offset by a $2,245,000 increase in future policy benefits.

of deferred policy and pre-need acquisition costs and value of business acquired decreased by $2,084,000, or 11.6%, to $15,940,000 for

2024, from $18,024,000 for 2023.

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 an aggregate of $57,358,000, or 24.7%, to $174,490,000 for 2023, from $231,848,000 for

This decrease was primarily the result of a $23,391,000 decrease in commissions, a $16,970,000 decrease in personnel expenses,

a $13,739,000 decrease in other expenses, a $1,987,000 decrease in advertising expenses, a $1,100,000 decrease in costs related to funding

mortgage loans, a $145,000 decrease in depreciation on property and equipment, and a $26,000 decrease in rent and rent related expenses.

This decrease was primarily due to increased payment consistency from premium-paying products along

with a decrease in new business.

general and administrative expenses increased by an aggregate of $1,975,000, or 1.1%, to $176,465,000 for 2024, from $174,490,000 for

This increase was primarily the result of a $7,043,000 increase in commissions, a $1,943,000 increase in personnel expenses, and

a $32,000 increase in depreciation on property and equipment.

This increase was partially offset by a $4,432,000 decrease in other expenses,

a $1,710,000 decrease in rent and rent related expenses, a $595,000 decrease in advertising expenses, and a $306,000 decrease in costs

related to funding mortgage loans.

expense decreased by $611,000, or 12.6%, to $4,254,000 for 2024, from $4,865,000 for 2023.

This decrease was primarily due to a decrease

of $3,077,000 in interest expense on mortgage warehouse lines of credit for loans held for sale, which was partially offset by a $112,000

increase in interest expense on bank loans.

of goods and services sold of the cemeteries and mortuaries increased by $85,000, or 1.8%, to $4,806,000 for 2023, from $4,721,000 for

This increase was primarily due to a $218,000 increase in cemetery at-need sales and a $40,000 increase in cemetery pre-need sales,

which was partially offset by a $173,000 decrease in mortuary at-need sales.

tax expense decreased by $6,881,000, or 79.2%, to $1,805,000 for 2023, from $8,687,000 for 2022.

This decrease was primarily due to

a decrease in earnings before income taxes for 2023 compared to 2022.

The Company’s overall effective tax rate decreased from

25.3% for 2022 to 11.1% in 2023, a 14.2% decrease in the effective tax rate or a 56.1% change.

of $354,000 in interest expense on bank loans and a decrease of $257,000 in interest expense on mortgage warehouse lines of credit for

loans held for sale.

tax expense increased by $5,763,000, or 319.2%, to $7,568,000 for 2024, from $1,805,000 for 2023.

This increase was primarily due to

an increase in earnings before income taxes for 2024 compared to 2023.

The Company’s overall effective tax rate increased from

11.1% for 2023 to 22.2% in 2024, a 11.1% increase in the effective tax rate or a 100.6% change.

This increase was partially due to the

prior period reducing the valuation allowance to zero and no valuation allowance adjustment in the current period.

following is a description of the material risks facing the Company and how it mitigates those risks:

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The Company aims to mitigate these risks by offering a wide range of products and by diversifying

its operations, thus reducing its exposure to any single product or jurisdiction, and also by employing underwriting practices that identify

its operations, thus reducing its exposure to any single product or jurisdiction, and by employing underwriting practices that identify

and minimize the adverse impact of such risks.

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estimates are based upon historical loss experience and the best estimate of the probable loan loss liabilities.

2023 and 2022 the Company decreased its loan loss reserve by $1,178,000 and increased its loan loss reserve by $1,079,000, respectively,

2024 and 2023 the Company increased its loan loss reserve by $150,000 and decreased its loan loss reserve by $1,178,000, respectively,

for loan originations, and the charges have been included in mortgage fee income.

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in foreclosure proceedings.

The Company has not received or recognized any interest income on the $6,149,000 in mortgage loans with delinquencies

exceeding 90 days.

During 2023 and 2022, the Company increased its allowance for credit losses by $1,184,000 and by $270,000, respectively,

which was charged to bad debt expense and included in selling, general and administrative expenses for the period.

The Company also increased

its allowance for credit losses by $665,000 at the beginning of 2023 due to the adoption of the new accounting standard (Refer to Note

1 of the Notes to the Consolidated Financial Statements).

The Company has not received or recognized any interest income on the $11,400,000 in mortgage loans with

delinquencies exceeding 90 days.

During 2024 and 2023, the Company decreased its allowance for credit losses by $1,934,000 and increased

it by $1,184,000, respectively, which was charged to bad debt expense and included in selling, general and administrative expenses for

The main reasons for the decrease in 2024 when compared to 2023 were due to a decrease in the commercial loan held for investment

portfolio, further refinement of the Company’s quantitative loss analysis and general market improvements related to the residential

mortgage loan held for investment single family portfolio.

The allowances for credit losses on the Company’s mortgage loans held

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The Company’s actuarial assumptions differing from actual mortality and morbidity experienced may mean

that the Company’s relevant products sold were underpriced, may require the Company to liquidate insurance or other claims earlier

than planned, and have other potentially adverse consequences to the business.

The Company aims to minimize this risk through sound underwriting

practices, asset and liability duration matching, and sound actuarial practices.

Environment .

March 10, 2023, and March 12, 2023, Silicon Valley Bank and Signature Bank were placed in receivership with the Federal Deposit Insurance

Corporation (FDIC).

Normal banking activities resumed shortly thereafter.

On May 1, 2023, First Republic Bank was placed in receivership

with the FDIC and was immediately purchased by a national bank.

Company does not maintain any deposit or other accounts or credit facilities with Silicon Valley Bank, Signature Bank or First Republic

The Company may periodically transfer funds to these banks to pay for services rendered by third party vendors that continue to

maintain banking relationships with these banks.

The Company continues to monitor the banking industry and its relationships with regional

and community banks.

that the Company’s relevant products sold were underpriced, may require the Company to liquidate insurance or make other claims

earlier than planned, and have other potentially adverse consequences to the business.

The Company aims to minimize this risk through

sound underwriting practices, asset and liability duration matching, and sound actuarial practices.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the

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Actual results could differ from those estimates.

estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of

derivative assets and liabilities;

estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative

assets and liabilities;

those used in determining deferred acquisition costs and the value of business acquired;

used in determining the value of mortgage loans foreclosed to real estate held for investment or sale;

those used in determining the

liability for future policy benefits and unearned revenue;

those used in determining the estimated future costs for pre-need sales;

those used in determining the value of mortgage servicing rights;

those used in determining

the liability for future policy benefits;

those used in determining the value of loans held for sale;

used in determining allowances for credit losses;

those used in determining loan loss reserve;

and those used in determining

deferred tax assets and liabilities.

Although some variability is inherent in these estimates, management believes the amounts

provided are fairly stated in all material respects.

and those used in determining loan

loss reserve.

Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in

all material respects.

and Capital Resources

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2024 and 2023, the Company’s operations provided cash of $57,320,000 and of $53,875,000, respectively.

The decrease in cash provided

by operations was due primarily to decreased proceeds from the sale of loans held for sale.

The increase in cash provided

by operations was due primarily to the increase in net earnings.

Company expects to pay out liabilities under its funeral plans over the long term given the nature of those plans.

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on the respective basis point swing (the change in the fair values were calculated using a modeling technique):

Change in Fair Value

(in thousands)

Company’s life insurance subsidiaries are subject to risk-based capital guidelines established by statutory regulators requiring

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31, 2024, as compared to $418,450,000 as of December 31, 2023.

This decrease was primarily due to a decrease of $56,158,000 in bank loans

and other loans payable which was partially offset by a $20,108,000 increase in stockholders’ equity.

Stockholders’ equity

as a percent of total capitalization was 74.8% and 64.4% as of December 31, 2023 and 2022, respectively.

This increase was primarily due to a $26,122,000 increase in stockholders’

equity and an increase of $1,185,000 in bank loans and other loans payable.

Stockholders’ equity as a percentage of total capitalization

was 76.1% and 74.8% as of December 31, 2024 and 2023, respectively.

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

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31, 2024 and 2023, respectively.

The life insurance subsidiaries cannot pay a dividend to their parent company without the approval of

The life insurance subsidiaries cannot pay dividends to their parent company without the approval of

state insurance regulatory authorities.

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Maturities range between six and eighteen months.

the ordinary course of the Company’s operations, the Company enters into certain contractual obligations.

Such obligations include

operating leases for office space, agreements with respect to borrowed funds and future policy benefits.

See Notes 7, 22, 24 of the Notes

to Consolidated Financial Statements for more information about these obligations.

the ordinary course of the Company’s operations, the Company enters certain contractual obligations.

Such obligations include operating

leases for office space, agreements with respect to borrowed funds and future policy benefits.

See Notes 7, 22, 24 of the Notes to Consolidated

Financial Statements for more information about these obligations.

Insurance Participation

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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-K

Item 7. Management’s Discussion and Analysis