PERPETUAL CARE TRUSTS

6 Months Ended

Jun. 30, 2020

Investments Debt And Equity Securities [Abstract]

8.	PERPETUAL CARE TRUSTS

At June 30, 2020 and December 31, 2019, 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 14 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 six months ended June 30, 2020 and 2019 is presented below (in thousands):

	Six months ended June 30,
	2020			2019
Balance—beginning of period	$	343,619		$	330,562
Contributions		3,616			3,668
Distributions		(27,765	)		(12,461	)
Interest and dividends		11,279			10,480
Capital gain distributions		318			250
Realized gains and losses, net		(831	)		1,019
Other than temporary impairment		(930	)		(713	)
Taxes		(86	)		(555	)
Fees		(912	)		(1,574	)
Unrealized change in fair value		(23,454	)		12,632
Total		304,854			343,308
Less: Assets held for sale		(6,633	)		—
Balance—end of period	$	298,221		$	343,308

During the six months ended June 30, 2020 and 2019, purchases of available for sale securities were approximately $9.3 million and $37.2 million, respectively. During the six months ended June 30, 2020 and 2019, sales, maturities and paydowns of available for sale securities were approximately $22.0 million and $25.9 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 June 30, 2020 and December 31, 2019 were as follows (in thousands):

June 30, 2020	Fair Value Hierarchy Level	Cost			Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments	1	$	14,279		$	—	$	—		$	14,279
Fixed maturities:
U.S. governmental securities	2		1,017			70		(50	)		1,037
Corporate debt securities	2		3,213			213		(137	)		3,289
Other debt securities	2		1,071			125		—			1,196
Total fixed maturities			5,301			408		(187	)		5,522
Mutual funds—debt securities	1		17,018			231		(568	)		16,681
Mutual funds—equity securities	1		16,617			1,500		(4,368	)		13,749
Other investment funds⁽¹⁾			230,150			14,067		(14,000	)		230,217
Equity securities	1		35,794			293		(11,698	)		24,389
Other invested assets	2		16			1		—			17
Total investments		$	319,175		$	16,500	$	(30,821	)	$	304,854
Less: Assets held for sale			(7,923	)		—		1,290			(6,633	)
Total		$	311,252		$	16,500	$	(29,531	)	$	298,221

⁽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 June 30, 2020 there were $53.1 million in unfunded investment commitments to the private credit funds, which are callable at any time.

December 31, 2019	Fair Value Hierarchy Level	Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Short-term investments	1	$	50,358		$	—		$	—		$	50,358
Fixed maturities:
U.S. governmental securities	2		1,069			32			(52	)		1,049
Corporate debt securities	2		2,020			22			(142	)		1,900
Total fixed maturities			3,089			54			(194	)		2,949
Mutual funds—debt securities	1		49,963			1,439			(38	)		51,364
Mutual funds—equity securities	1		16,698			1,617			(66	)		18,249
Other investment funds⁽¹⁾			186,355			10,526			(5,472	)		191,409
Equity securities	1		30,423			1,333			(12	)		31,744
Other invested assets	2		16			—			—			16
Total investments		$	336,902		$	14,969		$	(5,782	)	$	346,089
Less: Assets held for sale			(2,416	)		(54	)		—			(2,470	)
Total		$	334,486		$	14,915		$	(5,782	)	$	343,619

⁽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 December 31, 2019, there were $62.4 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, 2020 and December 31, 2019 were as follows (in thousands):

June 30, 2020	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	25	$	286	$	660	$	66
Corporate debt securities		402		1,962		925		—
Other debt securities		627		569		—		—
Total fixed maturities	$	1,054	$	2,817	$	1,585	$	66

December 31, 2019	Less than 1 year		1 year through 5 years		6 years through 10 years		More than 10 years
U.S. governmental securities	$	60	$	192	$	684	$	114
Corporate debt securities		294		1,522		84		-
Total fixed maturities	$	354	$	1,714	$	768	$	114

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 June 30, 2020 and December 31, 2019 is presented below (in thousands):

	Less than 12 months				12 months or more				Total
June 30, 2020	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	122	$	—	$	998	$	50	$	1,120	$	50
Corporate debt securities		411		1		1,836		136		2,247		137
Total fixed maturities		533		1		2,834		186		3,367		187
Mutual funds—debt securities		9,847		423		2		145		9,849		568
Mutual funds—equity securities		7,289		4,164		6		204		7,295		4,368
Other investment funds		106,608		14,000		—		—		106,608		14,000
Equity securities		23,552		11,677		10		21		23,562		11,698
Total	$	147,829	$	30,265	$	2,852	$	556	$	150,681	$	30,821

	Less than 12 months				12 months or more				Total
December 31, 2019	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturities:
U.S. governmental securities	$	291	$	4	$	942	$	48	$	1,233	$	52
Corporate debt securities		463		46		1,887		96		2,350		142
Total fixed maturities		754		50		2,829		144		3,583		194
Mutual funds—debt securities		2,856		38		—		—		2,856		38
Mutual funds—equity securities		566		66		—		—		566		66
Other investment funds		53,426		5,472		—		—		53,426		5,472
Equity securities		121		12		—		—		121		12
Total	$	57,723	$	5,638	$	2,829	$	144	$	60,552	$	5,782

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 six months ended June 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. During the six months ended June 30, 2019, the Company 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 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.