SECURITY NATIONAL FINANCIAL CORP Segments Disclosure

 

20)	Business Segment Information

 

Description of Products and Services by Segment

 

The Company has identified three operating and reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment revenue consists of life insurance premiums; fees earned on insurance assignment funding and net investment income derived from investing policyholder and surplus funds. Its expenses include operating expenses to collect insurance premiums and insurance policy receivables, and administer claims, and commissions payable related to the sale of insurance products sold by the Company’s independent agency force. The Company’s cemetery and mortuary segment revenue consists of fees from the sale of at-need cemetery and mortuary merchandise, services at its mortuaries and cemeteries, pre-need sales of cemetery spaces and the net investment income from investing surplus cash. Its expenses include operating expenses to maintain mortuary and cemetery operations and commissions related to the sale of insurance products sold by the Company’s agents. The Company’s mortgage segment revenue consists of residential mortgage origination fee income and mortgage interest income. Its expenses include normal operating expenses related to the origination and sale of residential mortgage loans, loan servicing, and warehouse interest and fee expenses.

 

Services and Cost Sharing Policies

 

The accounting policies of the Company’s operating and reportable segments are the same as those described in the Significant Accounting Principles. Intersegment revenues are recorded at cost plus an agreed upon intercompany profit and are eliminated upon consolidation. In addition to revenues, the reportable segments share in business services and costs including personnel expenses, rent, information technology, software, interest expense, and other similar operating costs. These shared services and costs are allocated between the segments using prevailing market rates and other agreed upon allocation methods.

 

Factors Management Used to Identify the Company’s Operating and Reportable Segments

 

The Company’s operating and reportable segments are business units that are managed separately due to the different products provided and the need to report separately to the various regulatory jurisdictions.

 

Chief Operating Decision Maker (“CODM”)

 

The Company’s CODM is the Chief Executive Officer. The following table summarizes significant segment expenses. The significant expenses are based on the information that the CODM is regularly provided to assess segment performance. The CODM reviews the regularly provided information for each segment monthly and gives added emphasis on month-over-month and year-over-year comparative results. The CODM considers these comparative results when making decisions about the allocation of the Company’s resources to each segment. The measure of segment profit or loss for the Company’s three operating and reportable business segments is net earnings.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2025 and 2024

 

20)	Business Segment Information (Continued)

 

Schedule of Revenues and Expenses by Reportable Segment

		Year Ended December 31, 2025
		Life				Cemetery/
		Insurance				Mortuary				Mortgage				Total
Revenues:
From external sources:
Revenue from external customers		$	119,757,103			$	28,704,450			$	108,209,319			$	256,670,872
Net investment income			76,379,023				2,345,283				614,206				79,338,512
Gains on investments and other assets			3,229,181				1,347,054				60,142				4,636,377
Other revenues			1,903,939				920,325				1,117,513				3,941,777
Intersegment revenues			6,995,959				340,001				353,929				7,689,889
Total segment revenues			208,265,205				33,657,113				110,355,109				352,277,427
Elimination of intersegment revenues															(7,689,889	)
Total consolidated revenues															344,587,538
Less:
Policyholder benefits and claims			100,817,674				–				–
Amortization of deferred policy and pre-need acquisition costs and value of business acquired			10,946,671				714,037				–
Selling, general and administrative expenses:
Commissions			3,412,729				1,191,548				42,444,319
Personnel			34,946,951				10,808,207				41,396,645
Advertising			443,079				601,283				2,470,279
Rent and rent related			362,650				146,850				3,251,019
Depreciation on property and equipment			896,227				913,037				615,921
Cost related to funding mortgage loans			–				–				6,622,489
Data processing and IT related (1)			1,191,834				300,271				3,640,818
Premium taxes on insurance premiums and other considerations (1)			2,957,328				–				–
Other segment items (1)(2)			10,509,380				5,163,619				7,234,014
Intersegment expenses (3)			693,716				336,863				6,659,310
Interest expense			3,735,224				2,318				781,423
Costs of goods and services sold-mortuaries and cemeteries			–				4,660,090				–
Income tax expense (benefit)			7,912,489				2,235,035				(890,250	)
Segment net earnings (loss)			29,439,253				6,583,955				(3,870,878	)			32,152,330
Net earnings														$	32,152,330
Segment assets		$	1,409,753,605			$	105,970,868			$	72,460,214			$	1,588,184,687
Elimination of intersegment assets															(26,340,083	)
Total consolidated assets														$	1,561,844,604
Expenditures for long-lived assets		$	64,060,800			$	1,244,003			$	314,557			$	65,619,360

 

(1)	Included in other expenses on the consolidated statements of earnings. Data processing and IT related expenses includes various software subscriptions, maintenance, consulting, support and storage fees.
(2)	For each reportable segment, other segment items includes:

Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible assets, and certain overhead expenses.

Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization of intangible assets, and certain overhead expenses.

Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization expense of mortgage servicing rights, and certain overhead expenses.

(3)	For each reportable segment, intersegment expenses includes:

Life Insurance - mortgage servicing fees and interest expense.

Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.

Mortgage - rent expense and interest expense.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2025 and 2024

 

20)	Business Segment Information (Continued)

 

		Year Ended December 31, 2024
		Life				Cemetery/
		Insurance				Mortuary				Mortgage				Total
Revenues:
From external sources:
Revenue from external customers		$	119,655,745			$	29,037,173			$	107,558,640			$	256,251,558
Net investment income			68,254,989				2,568,511				901,749				71,725,249
Gains (losses) on investments and other assets			2,054,994				873,166				(986,262	)			1,941,898
Other revenues			1,563,812				543,354				2,496,797				4,603,963
Intersegment revenues			7,272,110				340,933				573,449				8,186,492
Total segment revenues			198,801,650				33,363,137				110,544,373				342,709,160
Elimination of intersegment revenues															(8,186,492	)
Total consolidated revenues															334,522,668
Less:
Policyholder benefits and claims			100,613,091				–				–
Amortization of deferred policy and pre-need acquisition costs and value of business acquired			10,235,240				777,376				–
Selling, general and administrative expenses:
Commissions			3,809,118				1,564,426				41,599,365
Personnel			30,396,560				10,215,565				44,472,677
Advertising			466,821				568,597				2,079,702
Rent and rent related			434,604				158,950				4,553,515
Depreciation on property and equipment			923,365				830,855				629,401
Cost related to funding mortgage loans			–				–				6,134,709
Data processing and IT related (1)			847,845				240,946				3,453,741
Premium taxes on insurance premiums and other considerations (1)			3,067,467				–				–
Other segment items (1)(2)			8,640,857				4,975,269				6,401,085
Intersegment expenses (3)			913,279				365,635				6,907,578
Interest expense			3,727,514				827				525,759
Costs of goods and services sold-mortuaries and cemeteries			–				4,803,528				–
Income tax expense (benefit)			7,291,246				2,227,353				(1,263,871	)
Segment net earnings (loss)			27,434,643				6,633,810				(4,949,288	)			29,119,165
Net earnings														$	29,119,165
Segment assets		$	1,344,932,334			$	95,565,758			$	90,459,481			$	1,530,957,573
Elimination of intersegment assets															(36,495,259	)
Total consolidated assets														$	1,494,462,314
Expenditures for long-lived assets		$	52,414,507			$	2,185,269			$	219,054			$	54,818,830

 

(1)	Included in other expenses on the consolidated statements of earnings. Data processing and IT related expenses includes various software subscriptions, maintenance, consulting, support and storage fees.
(2)	For each reportable segment, other segment items includes:

Life Insurance - bad debt, insurance expenses, professional service expenses, state insurance department fees, amortization of intangible assets, and certain overhead expenses.

Cemetery/Mortuary - bad debt, insurance expenses, professional service expenses, maintenance and utility expenses, property taxes, amortization of intangible assets, and certain overhead expenses.

Mortgage - bad debt, insurance expenses, professional service expenses, business license and registration fees, dues and subscriptions, amortization expense of mortgage servicing rights, and certain overhead expenses.

(3)	For each reportable segment, intersegment expenses includes:

Life Insurance - mortgage servicing fees and interest expense.

Cemetery/Mortuary - rent expense, data processing and IT related expenses, and interest expense.

Mortgage - rent expense and interest expense.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2025 and 2024