v3.26.1
Future Policy Benefits and Unpaid Claims
 3 Months Ended
Mar. 31, 2026
Insurance [Abstract]  
Future Policy Benefits and Unpaid Claims

10) Future Policy Benefits and Unpaid Claims

 

The Company establishes liabilities for amounts payable under insurance policies. These liabilities are comprised of traditional and limited-payment contracts and associated deferred profit liabilities, unpaid claims, and additional insurance liabilities. Also, refer to Note 1 regarding the adoption of ASU 2018-12.

 

The following table provides a reconciliation of future policy benefits and unpaid claims and the related receivable from reinsurers to the condensed consolidated balance sheets.

 

   March 31, 2026   December 31, 2025 
Traditional and limited-payment life  $570,378,453   $581,389,399 
Deferred profit liability - traditional and limited-payment life   208,486,861    205,802,774 
Payout annuities   92,238    95,436 
Accident and health   502,669    505,208 
Other policyholder funds   4,487,939    4,514,783 
Reported but unpaid claims   3,004,213    3,299,899 
Incurred but not reported claims   3,993,134    4,099,447 
           
Gross future policy benefits and unpaid claims  $790,945,507   $799,706,946 
           
Receivable from reinsurers          
           
Traditional and limited-payment life   9,053,706    9,186,983 
Deferred profit liability - traditional and limited-payment life   972,336    985,258 
Accident and health   70,173    70,173 
Reported but unpaid claims   265,754    131,712 
Incurred but not reported claims   6,000    6,000 
           
Total receivable from reinsurers   10,367,969    10,380,126 
           
Net future policy benefits and unpaid claims  $780,577,538   $789,326,820 
           
Net unpaid claims  $6,725,593   $7,261,634 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

 

10) Future Policy Benefits and Unpaid Claims (Continued)

 

Traditional and Limited-Payment Life

 

The following table summarizes the balance of and changes in the liability for future policy benefits for traditional and limited-payment life:

 

       
   Three Months Ended March 31, 
   2026   2025 
Present Value of Expected Net Premiums:          
Balance, beginning of year  $250,450,302   $252,828,339 
Beginning balance at original discount rate   250,331,770    258,790,212 
Effect of changes in cash flow assumptions   -    - 
Effect of actual variances from expected experience (1)   (3,405,648)   (3,096,557)
Adjusted beginning of year balance   246,926,122    255,693,655 
Issuances   12,049,636    13,385,026 
Interest accrual   2,951,697    3,092,598 
Net premiums collected (2)   (12,686,388)   (12,953,003)
Ending balance at original discount rate   249,241,067    259,218,276 
Effect of changes in discount rate assumptions   (3,606,047)   (3,196,885)
Balance, end of period  $245,635,020   $256,021,391 
           
Present Value of Expected Future Policy Benefits:          
Balance, beginning of year  $831,839,700   $800,812,826 
Beginning balance at original discount rate   867,177,517    858,516,933 
Effect of changes in cash flow assumptions   -    - 
Effect of actual variances from expected experience (1)   (2,090,326)   (1,872,267)
Adjusted beginning of year balance   865,087,191    856,644,666 
Issuances   12,084,657    13,473,915 
Interest accrual   10,380,153    10,298,015 
Benefit payments   (17,940,051)   (17,455,096)
Ending balance at original discount rate   869,611,950    862,961,500 
Effect of changes in discount rate assumptions   (53,598,477)   (46,816,274)
Balance, end of period  $816,013,473   $816,145,226 
           
Net liability for future policy benefits, pre-flooring  $570,379,368   $560,112,641 
Flooring impact, end of period   (915)   11,194 
Net liability for future policy benefits, post-flooring   570,378,453    560,123,835 
Less: Receivable from reinsurers   9,053,706    9,262,372 
Net liability for future policy benefits, after reinsurance  $561,324,747   $550,861,463 

 

 

(1)For the three months ended March 31, 2026, and 2025, the net effect of actual variances from expected experience was primarily due to lapses. Actual mortality and surrenders were close to expected.
(2)Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected benefit payments.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

 

10) Future Policy Benefits and Unpaid Claims (Continued)

 

The following table summarizes the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for traditional and limited-payment life:

 

       
   Three Months Ended March 31, 
   2026   2025 
Undiscounted expected future benefit payments  $1,932,292,660   $1,935,169,657 
Discounted expected future benefit payments (at original discount rate)   869,611,949    862,961,500 
Discounted expected future benefit payments (at current discount rate)   816,013,472    816,145,226 
           
Undiscounted expected future gross premiums  $809,818,009   $839,169,818 
Discounted expected future gross premiums (at original discount rate)   542,367,174    560,102,998 
Discounted expected future gross premiums (at current discount rate)   534,520,146    553,195,364 

 

The following table summarizes the amount of gross premiums and interest accretion recognized in insurance premiums and other considerations and policyholder benefits and claims, respectively, in the condensed consolidated statements of earnings for traditional and limited-payment life:

 

       
  

Three Months Ended

March 31,

 
   2026   2025 
Gross premiums  $28,778,299   $29,585,306 
Interest accretion  $7,428,456   $7,205,417 

 

The following table summarizes the weighted-average interest rates for traditional and limited-payment life:

 

       
   As of March 31, 
   2026   2025 
Interest accretion rate   4.90%   4.90%
Current discount rate   5.90%   5.60%

 

The following table summarizes the weighted-average duration of the liability for traditional and limited-payment life:

 

         
   As of March 31, 
   2026   2025 
Duration of the liability in years (at original discount rate)   15    15 
Duration of the liability in years (at current discount rate)   13    14 

 

Adverse Development

 

For the three months ended March 31, 2026 and 2025, respectively, there were immaterial impacts to net earnings for traditional and limited-payment life, where net premiums exceeded gross premiums for certain issue-year cohorts.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)

 

10) Future Policy Benefits and Unpaid Claims (Continued)

 

Deferred Profit Liability

 

The following table summarizes the balances of and changes in deferred profit liability for traditional and limited-payment life:

 

       
   Three Months Ended March 31, 
   2026   2025 
Balance, beginning of year  $205,802,774   $192,278,993 
Effect of actual variances from expected experience (1)   (1,026,648)   (1,320,624)
Adjusted balance, beginning of period   204,776,126    190,958,369 
Profits deferred   16,091,911    16,632,303 
Interest accrual   2,553,079    2,394,251 
Amortization   (14,934,255)   (14,635,574)
Other adjustments   -    - 
Balance, end of period   208,486,861    195,349,349 
Less: Receivable from reinsurers   972,336    1,011,354 
Deferred profit liability, net of reinsurance  $207,514,525   $194,337,995 

 

 

(1)For the three months ended March 31, 2026, and 2025, the net effect of actual variances from expected experience was primarily due to lapses. Actual mortality and surrenders were close to expected.

 

Unpaid Claims

 

The following table provides a roll forward of the Company’s liability for reported but unpaid claims and incurred but not reported claims, net of the related receivable from reinsurers.

 

   Life   Annuities   Accident and Health   Total 
Balance at 12/31/2025  $6,941,791   $302,843   $17,000   $7,261,634 
Incurred   15,889,797(1)   3,602,875(2)   11,375(3)   19,504,047 
Settled   (16,474,852)   (3,563,861)   (1,375)   (20,040,088)
Balance at 3/31/2026  $6,356,736   $341,857   $27,000   $6,725,593 

 

   Life   Annuities   Accident and Health   Total 
Balance at 12/31/2024  $6,363,243   $255,480   $17,000   $6,635,723 
Incurred   16,045,465(1)   3,208,604(2)   300(3)   19,254,369 
Settled   (15,559,375)   (2,938,897)   (300)   (18,498,572)
Balance at 3/31/2025  $6,849,333   $525,187   $17,000   $7,391,520 

 

 

(1)Included in policyholder benefits and claims on the condensed consolidated statements of earnings
(2)Released from policyholder account balances
(3)Included in policyholder benefits and claims on the condensed consolidated statements of earnings

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2026 (Unaudited)