Profile: Security National Financial Corp (SNFCA.OQ)

Security National Financial Corporation is a holding company. The Company operates in three business segments: life insurance, cemetery and mortuary, and mortgage loans. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and accident and health insurance. As of December 31, 2011, these products were marketed in 38 states through a commissioned sales force of independent licensed insurance agents who may also sell insurance products of other companies. The cemetery and mortuary segment of the Company consists of five cemeteries in the state of Utah and one cemetery in the state of California, and seven mortuaries in the state of Utah and one mortuary in the state of Arizona. The Company also engages in pre-need selling of funeral, cemetery, mortuary and cremation services through its Utah, Arizona and California operations. Insurance agents also sell pre-need funeral, cemetery and cremation services. The mortgage loan segment is an approved government and conventional lender, which originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes and real estate projects. As of December 31, 2011, the mortgage loan segment operated through 73 wholesale and retail offices in 16 states, and is an approved mortgage lender in other states. On March 30, 2011, the Company, through its wholly owned subsidiary, Security National Life, completed a Coinsurance Agreement with North America Life Insurance Company (North America Life). Under the terms of the Coinsurance Agreement, Security National Life agreed to reinsure certain insurance policies of North America Life. In April 2013, the Company acquired two stories commercial office building located at 5201 South Green Street in Murray, Utah.

Life Insurance

The Company, through Security National Life and its insurance subsidiaries, Memorial Insurance Company of America (Memorial Insurance Company) and Southern Security Life Insurance Company (Southern Security), issues and distributes selected lines of life insurance and annuities. The Company's life insurance business includes funeral plans, and interest-sensitive life insurance, as well as other traditional life and accident and health insurance products. The Company is licensed to sell insurance in 38 states. The Company, in marketing its life insurance products, seeks to locate, develop and service specific niche markets. The Company sells its life insurance products through direct agents, brokers and independent licensed agents who may also sell insurance products of other companies. The commissions on life insurance products range from approximately 10% to 120% of first year premiums.

The Company's annuity business includes single premium deferred annuities, flexible premium deferred annuities and immediate annuities. Annuities have guaranteed interest rates that range from 3% to 6.5% per annum. An immediate annuity is a contract in which the individual remits to the Company a sum of money in return for the Company's obligation to pay a series of payments on a periodic basis, such as an individual's life, or for such other period as may be designated. The market for the Company's annuities is middle to older age individuals who wish to save or invest their money in a tax-deferred environment. The source of annuity considerations comes from direct agents. Annuities are also sold in conjunction with other insurance sales.

The Company is offering diver's and limited recreational accident policies. These policies provide global coverage for medical expense reimbursement in the event of diving or certain recreational sports accidents. The Company markets its accident policies through Web marketing. The primary purpose of reinsurance is to enable an insurance company to write a policy in an amount larger than the risk it is willing to assume for itself. The Company cedes and assumes certain risks with various authorized unaffiliated reinsurers pursuant to reinsurance treaties, which are renewable annually. The premiums paid by the Company are based on a number of factors, including the age of the insured and the risk ceded to the reinsurer.

Cemetery and Mortuary

The Company has six wholly owned non denominational cemeteries and eight wholly owned mortuaries. Through its cemetery and mortuary operations, the Company markets a range of products and services both on a pre-need basis (prior to death) and an at-need basis (at the time of death). The products include plots, interment vaults, mausoleum crypts and niches, markers, caskets, flowers and other related products. The services include professional services of funeral directors, opening and closing of graves, use of chapels and viewing rooms, and use of automobiles and clothing. The Company has a funeral chapel at each of its cemeteries, other than Holladay Memorial Park and Singing Hills Memorial Park, and has four separate stand-alone mortuary facilities.

Mortgage Loans

The Company, through its wholly owned subsidiary, SecurityNational Mortgage Company (SecurityNational Mortgage) has been active in the residential real estate market. The Company has approvals through Housing and Urban Development HUD, Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and other market investors, which enable it to originate a range of residential mortgage loan products, which are sold to investors and the Company uses internal and external funding sources with unaffiliated financial institutions. Security National Life, an affiliate of SecurityNational Mortgage, originates commercial real estate loans both for internal investment, as well as for sale to unaffiliated investors and also originates residential construction loans. The Company's residential mortgage lending services are marketed to mortgage originators. SecurityNational Mortgage maintains its retail origination presence in the Utah, Florida, California, Illinois and Texas markets in addition to five wholesale branch offices located in California, Florida, Kansas, Texas and Utah, with sales representatives in these and other states.