How Does Security National Company Work?

The life insurance segment focuses on selling and servicing life insurance, annuity products, and accident and health insurance. This business line targets individuals aged 45 to 85 with low to moderate incomes, often marketing funeral plans. In Q1 2025, this segment achieved its second-best first quarter in five years, benefiting from improved premium margins due to rate increases.

This segment manages eleven mortuaries and five cemeteries in Utah, one cemetery in California, and one cemetery with four mortuaries in New Mexico. It handles both pre-need and at-need sales of funeral services and products. Despite a stable mortality environment, the company saw a 4% increase in families served in Q1 2025, marking its third-best Q1 performance in the past five years.

Through its subsidiary, the company originates and underwrites residential and commercial loans via 97 retail offices across 26 states. In Q1 2025, mortgage volume rose by 11% compared to the previous year, with an improved product mix. This segment was profitable and cash flow positive in March 2025, outperforming the national origination volume increase of just 2%.

The company's unique value proposition stems from its interconnected business segments, facilitating cross-functional support and integrated customer experiences, particularly in end-of-life planning. The company focuses on enhancing its sales force value proposition and strategically increasing premium rates to boost profitability. This approach is supported by strategic hiring, which resulted in an 11.7% increase in personnel costs in Q1 2025, aligning with growth objectives.

In 2024, Security National Financial Corporation reported a strong financial year with after-tax earnings from operations surging by 83% to $26.5 million, supported by a 5% revenue increase to $334.5 million. Both the Life Insurance and Cemetery and Mortuary segments achieved their best operational years on record, with improvements of 25% and 5% respectively over 2023. The Mortgage Segment also saw significant progress, reducing its loss by over $11 million (64%) and boosting revenue by more than 8%.

Recent strategic moves include the company's inclusion in the broad-market Russell 3000 Index, effective June 30, 2025, which is expected to increase market visibility. Furthermore, the company announced its 37th consecutive stock dividend, with a 5% stock dividend for stockholders of record on July 11, 2025. A residential development loan in Arrowhead Ranch was also completed in May 2025, reinforcing its commitment to core operations and financial stability.

The first quarter of 2025 presented operational challenges, with a 42% decrease in after-tax earnings. This was largely due to a $3 million reduction in investment income, stemming from lower construction profits, reduced residential lot sales, and stock market downturns. Personnel costs also increased by 11.7% ($2.2 million) due to compensation adjustments and strategic hiring.

Despite the Q1 headwinds, the company's core segments demonstrated resilience. The insurance segment recorded its second-best Q1 in five years, while the death care segment saw a 4% increase in families served. The mortgage segment experienced an 11% volume increase and achieved profitability and positive cash flow in March 2025.

Security National Company holds a distinct market position through its integrated approach to end-of-life services and financial products. Its life insurance segment focuses on funeral plans, while its cemetery and mortuary operations, particularly strong in Utah, have earned consistent recognition. The mortgage division, with 97 retail offices across 26 states, saw an 11% increase in loan volume in Q1 2025, outperforming national trends.

The company faces risks from investment income fluctuations, tied to real estate and equity markets, which caused a $3 million decrease in Q1 2025. Mortgage industry risks, including loan sales and interest rate sensitivity, also impact investment values. Additionally, the adoption of CECL in Q1 2024 increased bad debt expenses, and rising personnel costs, up 11.7% in Q1 2025, present ongoing challenges.

Management is optimistic about leveraging the diversified business model for sustained growth. Key strategies involve focusing on niche insurance products, expanding the cemetery and mortuary segment, and capitalizing on housing market opportunities through mortgage origination. The company aims to maintain liquidity for liabilities and operations while exploring capital investments and growth initiatives, including projects like Center53 Development.

Efforts are underway to modernize commission systems and equip sales forces with advanced tools. These initiatives are designed to boost efficiency and enhance consumer value, thereby supporting revenue generation and reinforcing the company's ability to serve its customers effectively.