PERPETUAL CARE TRUSTS

6 Months Ended

Jun. 30, 2019

Investments Debt And Equity Securities [Abstract]

7.	PERPETUAL CARE TRUSTS

At June 30, 2019 and December 31, 2018, the Partnership’s perpetual care trusts consisted of investments in debt and equity marketable securities and cash equivalents, both directly as well as through mutual and investment funds.

All of these investments are carried at fair value. All of the investments subject to the fair value hierarchy are considered either Level 1 or Level 2 assets pursuant to the three-level hierarchy described in Note 14 Fair Value of Financial Instruments. There were no Level 3 assets. The perpetual care trusts are VIEs for which the Partnership is the primary beneficiary.

A reconciliation of the Partnership’s perpetual care trust activities for the six months ended June 30, 2019 and 2018 is presented below (in thousands):

	Six months ended June 30,
	2019			2018
Balance—beginning of period	$	330,562		$	339,928
Contributions		3,668			7,442
Distributions		(12,461	)		(9,314	)
Interest and dividends		10,480			12,097
Capital gain distributions		250			173
Realized gains and losses, net		1,019			(323	)
Other than temporary impairment		(713	)		(6,834	)
Taxes		(555	)		(242	)
Fees		(1,574	)		(3,293	)
Unrealized change in fair value		12,632			730
Balance—end of period	$	343,308		$	340,364

During the six months ended June 30, 2019 and 2018, purchases of available for sale securities were approximately $37.2 million and $22.5 million, respectively. During the six months ended June 30, 2019 and 2018, sales, maturities and paydowns of available for sale securities were approximately $25.9 million and $19.1 million, respectively. Cash flows from perpetual care trust related contracts are presented as operating cash flows in Partnership’s unaudited condensed consolidated statements of cash flows.

The cost and market value associated with the assets held in the perpetual care trusts as of June 30, 2019 and December 31, 2018 were as follows (in thousands):

June 30, 2019	Fair Value Hierarchy Level	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments	1	$	6,564	$	—	$	—		$	6,564
Fixed maturities:
U.S. governmental securities	2		1,117		35		(89	)		1,063
Corporate debt securities	2		2,022		17		(221	)		1,818
Total fixed maturities			3,139		52		(310	)		2,881
Mutual funds—debt securities	1		106,095		3,673		(15	)		109,753
Mutual funds—equity securities	1		16,894		2,483		(24	)		19,353
Other investment funds⁽¹⁾			184,121		7,597		(4,313	)		187,405
Equity securities	1		15,436		2,001		(104	)		17,333
Other invested assets	2		19		—		—			19
Total investments		$	332,268	$	15,806	$	(4,766	)	$	343,308

⁽¹⁾

Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 1 to 30 days, and private credit funds, which have lockup periods ranging from one to seven years with three potential one year extensions at the discretion of the funds’ general partners. As of June 30, 2019 there were $71.3 million in unfunded investment commitments to the private credit funds, which are callable at any time.

December 31, 2018	Fair Value Hierarchy Level	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments	1	$	12,835	$	—	$	—		$	12,835
Fixed maturities:
U.S. governmental securities	2		960		4		(121	)		843
Corporate debt securities	2		4,883		161		(321	)		4,723
Total fixed maturities			5,843		165		(442	)		5,566
Mutual funds—debt securities	1		108,451		227		(837	)		107,841
Mutual funds—equity securities	1		19,660		304		(142	)		19,822
Other investment funds⁽¹⁾			165,284		3,039		(4,607	)		163,716
Equity securities	1		20,025		826		(145	)		20,706
Other invested assets	2		56		20		—			76
Total investments		$	332,154	$	4,581	$	(6,173	)	$	330,562

⁽¹⁾

Other investment funds are measured at fair value using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the balance sheet. This asset class is composed of fixed income funds and equity funds, which have a redemption period ranging from 1 to 30 days, and private credit funds, which have lockup periods ranging from two to eight years with three potential one year extensions at the discretion of the funds’ general partners. As of December 31, 2018 there were $94.5 million in unfunded investment commitments to the private credit funds, which are callable at any time.

The contractual maturities of debt securities as of June 30, 2019 and December 31, 2018, were as follows below (in thousands):

June 30, 2019	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	60	$	70	$	812	$	121
Corporate debt securities		148		1,498		172		-
Total fixed maturities	$	208	$	1,568	$	984	$	121

December 31, 2018	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	—	$	416	$	395	$	32
Corporate debt securities		705		3,702		265		51
Total fixed maturities	$	705	$	4,118	$	660	$	83

Temporary Declines in Fair Value

The Partnership evaluates declines in fair value below cost of each individual asset held in the perpetual care trusts on a quarterly basis.

An aging of unrealized losses on the Partnership’s investments in debt and equity securities within the perpetual care trusts as of June 30, 2019 and December 31, 2018 is presented below (in thousands):

	Less than 12 months				12 months or more				Total
June 30, 2019	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	—	$	—	$	1,327	$	89	$	1,327	$	89
Corporate debt securities		66		43		2,631		178		2,697		221
Total fixed maturities		66		43		3,958		267		4,024		310
Mutual funds—debt securities		706		14		34		1		740		15
Mutual funds—equity securities		188		5		280		19		468		24
Other investment funds		60,385		4,313		—		—		60,385		4,313
Equity securities		2,485		104		-		-		2,485		104
Total	$	63,830	$	4,479	$	4,272	$	287	$	68,102	$	4,766

	Less than 12 months				12 months or more				Total
December 31, 2018	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	—	$	—	$	790	$	121	$	790	$	121
Corporate debt securities		405		15		2,902		306		3,307		321
Total fixed maturities		405		15		3,692		427		4,097		442
Mutual funds—debt securities		21,867		591		2,814		246		24,681		837
Mutual funds—equity securities		1,382		141		—		1		1,382		142
Other investment funds		101,536		4,607		—		—		101,536		4,607
Equity securities		241		16		583		129		824		145
Total	$	125,431	$	5,370	$	7,089	$	803	$	132,520	$	6,173

For all securities in an unrealized loss position, the Partnership evaluated the severity of the impairment and length of time that a security has been in a loss position and concluded the decline in fair value below the asset’s cost was temporary in nature. In addition, the Partnership is not aware of any circumstances that would prevent the future market value recovery for these securities.

Other-Than-Temporary Impairment of Trust Assets

The Partnership assesses its perpetual care trust assets for other-than-temporary declines in fair value on a quarterly basis. During the six months ended June 30, 2019, the Partnership determined that there were 66 securities with an aggregate cost basis of approximately $29.2 million and an aggregate fair value of approximately $28.5 million, resulting in an impairment of $0.7 million, with such impairment considered to be other-than-temporary. During the six months ended June 30, 2018, the Partnership determined that there were 105 securities with an aggregate cost basis of approximately $118.0 million and an aggregate fair value of approximately $111.2 million, resulting in an impairment of $6.8 million, with such impairment considered to be other-than-temporary. Accordingly, the Partnership adjusted the cost basis of these assets to their current value with the offset going against the liability for perpetual care trust corpus. During the three months ended June 30, 2019 and 2018, the Partnership determined that there were no other-than-temporary impairments to the investment portfolio in the perpetual care trusts.