Security National Financial (SNFCA) - 2025 Q3 - Quarterly Report

Insurance Operations - Insurance premiums for the three months ended September 30, 2025, were $29,881,000, a 0% change from $30,011,000 in 2024, while for the nine months, they were $89,846,000, also a 0% change from $89,824,000[309] - Total segment revenues for the insurance operations increased by 4% to $52,835,000 for the three months ended September 30, 2025, and by 4% to $156,795,000 for the nine months compared to the previous year[309] - The company plans to continue focusing on niche insurance products, cemetery and mortuary business, and capitalizing on the improving housing market through mortgage loans[305] Investment Income - Net investment income increased by 13% to $19,279,000 for the three months ended September 30, 2025, compared to $17,106,000 in 2024, and by 9% to $57,910,000 for the nine months compared to $52,902,000 in 2024[309] - Net investment income rose by $2,310,000, or 13.0%, to $20,109,000 for the three-month period ended September 30, 2025, driven by a $3,117,000 increase in mortgage loan interest[322] - The company's investment policy focuses on fixed maturity securities, real estate, and mortgage loans, aiming to exceed the accruing liabilities under its cemetery and mortuary policies[351] Cemetery and Mortuary Operations - Cemetery revenues for the three months ended September 30, 2025, were $3,624,000, a 1% increase from $3,598,000 in 2024, while mortuary revenues increased by 9% to $3,517,000 from $3,216,000[312] - Total segment revenues for cemetery and mortuary operations increased by 4% to $9,014,000 for the three months ended September 30, 2025, but decreased by 2% to $25,442,000 for the nine months compared to 2024[312] - Net mortuary and cemetery sales increased by $327,000, or 4.8%, to $7,141,000 for the three-month period ended September 30, 2025, attributed to a $301,000 increase in mortuary at-need sales[324] Mortgage Operations - SecurityNational Mortgage originated 5,216 loans totaling $1,756,289,000 for the nine months ended September 30, 2025, compared to 5,505 loans totaling $1,723,036,000 in 2024[316] - Segment net earnings for the mortgage operations showed a loss of $2,752,000 for the nine months ended September 30, 2025, compared to a loss of $1,416,000 in 2024[318] Financial Performance - Total revenues increased by $1,052,000, or 1.2%, to $89,326,000 for the three-month period ended September 30, 2025, compared to $88,274,000 for the same period in 2024[319] - For the nine-month period ended September 30, 2025, total revenues increased by $6,354,000, or 2.5%, to $261,607,000 from $255,253,000 for the comparable period in 2024[334] - Total benefits and expenses were $79,173,000, or 88.6% of total revenues, for the three-month period ended September 30, 2025, compared to $73,059,000, or 82.8% of total revenues, for the same period in 2024[332] Expenses - The company experienced a $5,991,000 increase in selling, general and administrative expenses for the nine months ended September 30, 2025, primarily due to personnel expenses[309] - Selling, general and administrative expenses increased by $9,399,000, or 7.3%, to $138,351,000 for the nine-month period ended September 30, 2025, primarily due to a $3,966,000 increase in personnel expenses[343] - Mortgage fee income decreased by $1,085,000, or 3.6%, to $29,139,000 for the three-month period ended September 30, 2025, primarily due to a $3,163,000 decrease in the fair value of loans held for sale[320] Capitalization and Compliance - As of September 30, 2025, the company's total capitalization was $488,478,000, an increase from $445,522,000 as of December 31, 2024, primarily due to a $26,600,000 increase in stockholders' equity[354] - The combined statutory capital and surplus of the company's life insurance subsidiaries was approximately $133,949,000 as of September 30, 2025, up from $120,216,000 as of December 31, 2024[356] - The company is in compliance with risk-based capital guidelines established by regulators as of September 30, 2025[353] Other Financial Metrics - Death benefits, surrenders, and other policy benefits increased by $2,267,000, or 3.1%, to $76,223,000 for the nine-month period ended September 30, 2025[341] - Interest expense increased by $317,000, or 10.0%, to $3,479,000 for the nine-month period ended September 30, 2025, primarily due to an increase in interest expense on mortgage warehouse lines of credit[344] - The Company provided cash of approximately $27,553,000 from operations during the nine-month period ended September 30, 2025, a decrease from approximately $34,894,000 for the same period in 2024[349] Lapse Rate and Bond Investments - The lapse rate for life insurance increased to 7.0% in 2024 from 4.4% in 2023, with the 2025 lapse rate to date being approximately the same as 2024[355] - As of September 30, 2025, 1.6% of the company's total bond investments were in non-investment grade bonds, down from 2.4% as of December 31, 2024[352] - The company's bonds amounted to $370,953,000 at estimated fair value as of September 30, 2025, representing 35.4% of total investments, compared to $348,774,000 and 38.0% as of December 31, 2024[352] Legislative Impact - The company is currently assessing the impact of the One Big Beautiful Bill Act on its financial statements but does not expect a material impact[357]