PERPETUAL CARE TRUSTS

9 Months Ended

Sep. 30, 2021

Investments Debt And Equity Securities [Abstract]

At September 30, 2021 and December 31, 2020, the Company’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 13 Fair Value of Financial Instruments. There were no Level 3 assets. The perpetual care trusts are VIEs for which the Company is the primary beneficiary.

A reconciliation of the Company’s perpetual care trust activities for the nine months ended September 30, 2021 and 2020 is presented below (in thousands):


	Nine months ended September 30,
	2021			2020
Balance—beginning of period	$	316,746		$	343,619
Contributions		6,669			6,568
Distributions		(32,587	)		(32,147	)
Interest and dividends		28,844			16,071
Capital gain distributions		6,125			447
Realized gains and losses, net		7,265			(1,416	)
Other than temporary impairment		(55	)		(930	)
Taxes		(1,178	)		(610	)
Fees		(3,695	)		(1,817	)
Unrealized change in fair value		6,942			(22,109	)
Total		335,076			307,676
Less: Assets held for sale		—			(6,938	)
Balance—end of period	$	335,076		$	300,738

During the nine months ended September 30, 2021 and 2020, purchases of available for sale securities were approximately $27.1 million. During the nine months ended September 30, 2021 and 2020, sales, maturities and paydowns of available for sale securities were approximately $12.2 million and $108.9 million, respectively. Cash flows from perpetual care trust related contracts are presented as operating cash flows in Company’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 September 30, 2021 and December 31, 2020 were as follows (in thousands):


September 30, 2021	Fair Value Hierarchy Level	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments	1	$	22,981	$	—	$	—		$	22,981
Fixed maturities:
U.S. governmental securities	2		14		2		—			16
Corporate debt securities	2		363		108		(1	)		470
Other debt securities	2		—		—		—			—
Total fixed maturities			377		110		(1	)		486
Mutual funds—debt securities	1		2,306		37		(14	)		2,329
Mutual funds—equity securities	1		3,902		1,261		(31	)		5,132
Other investment funds(1)			274,979		23,113		(7,064	)		291,028
Equity securities	1		10,273		2,915		(79	)		13,109
Other invested assets	2		9		2		—			11
Total investments		$	314,827	$	27,438	$	(7,189	)	$	335,076

(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 zero to fifteen years with three potential one year extensions at the discretion of the funds’ general partners. As of September 30, 2021, there were $72.5 million in unfunded investment commitments to the private credit funds, which are callable at any time.


December 31, 2020	Fair Value Hierarchy Level	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments	1	$	21,217	$	—	$	—		$	21,217
Fixed maturities:
U.S. governmental securities	2		48		4		—			52
Corporate debt securities	2		505		92		(44	)		553
Other debt securities	2		433		—		(28	)		405
Total fixed maturities			986		96		(72	)		1,010
Mutual funds—debt securities	1		2,386		62		(9	)		2,439
Mutual funds—equity securities	1		9,240		1,244		(7	)		10,477
Other investment funds(1)			247,845		21,952		(10,813	)		258,984
Equity securities	1		21,748		873		(19	)		22,602
Other invested assets	2		16		1		—			17
Total investments		$	303,438	$	24,228	$	(10,920	)		316,746
Less: Assets held for sale										(4,518	)
Total									$	312,228

(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 zero to six years with three potential one year extensions at the discretion of the funds’ general partners. As of December 31, 2020, there were $41.1 million in unfunded investment commitments to the private credit funds, which are callable at any time.

The contractual maturities of debt securities as of September 30, 2021 and December 31, 2020 were as follows (in thousands):


September 30, 2021	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	—	$	1	$	—	$	15
Corporate debt securities		—		470		—		—
Other debt securities		—		—		—		—
Total fixed maturities	$	—	$	471	$	—	$	15


December 31, 2020	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	25	$	6	$	—	$	21
Corporate debt securities		—		553		—		—
Other debt securities		405		—		—		—
Total fixed maturities	$	430	$	559	$	—	$	21

Temporary Declines in Fair Value

The Company 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 Company’s investments in debt and equity securities within the perpetual care trusts as of September 30, 2021 and December 31, 2020 is presented below (in thousands):


	Less than 12 months				12 months or more				Total
September 30, 2021	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	—	$	—	$	990	$	—	$	990	$	—
Corporate debt securities		—		—		1,959		1		1,959		1
Other debt securities		—		—		—		—		—		—
Total fixed maturities		—		—		2,949		1		2,949		1
Mutual funds—debt securities		1,294		13		82		1		1,376		14
Mutual funds—equity securities		373		28		1		3		374		31
Other investment funds		43,262		7,064		—		—		43,262		7,064
Equity securities		807		79		—		—		807		79
Total	$	45,736	$	7,184	$	3,032	$	5	$	48,768	$	7,189


	Less than 12 months				12 months or more				Total
December 31, 2020	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	—	$	—	$	990	$	—	$	990	$	—
Corporate debt securities		—		—		1,959		44		1,959		44
Other debt securities		405		28		—		—		405		28
Total fixed maturities		405		28		2,949		44		3,354		72
Mutual funds—debt securities		600		9		—		—		600		9
Mutual funds—equity securities		288		7		—		—		288		7
Other investment funds		74,885		10,813		—		—		74,885		10,813
Equity securities		45		4		19		15		64		19
Total	$	76,223	$	10,861	$	2,968	$	59	$	79,191	$	10,920

For all securities in an unrealized loss position, the Company 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 Company 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 Company assesses its perpetual care trust assets for other-than-temporary declines in fair value on a quarterly basis. During the nine months ended September 30, 2021, the Company determined, based on its review, that there were 6 securities with an aggregate cost basis of approximately $84,000 and an aggregate fair value of approximately $30,000, resulting in an impairment of $54,000, with such impairment considered to be other than temporary due to credit indicators. During the nine months ended September 30, 2020, the Company determined, based on its review, that there were 2 securities with an aggregate cost basis of approximately $9.4 million and an aggregate fair value of approximately $8.5 million, resulting in an impairment of $0.9 million, with such impairment considered to be other than temporary due to credit indicators. Accordingly, the Company adjusted the cost basis of these assets to their current value with the offset going against the liability for perpetual care trust corpus.