SNFCA I bought some. Thanks Kik
Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019
Total revenues increased by $50,216,000, or 73.4%, to $118,662,000 for the three months ended June 30, 2020, from $68,445,000 for the comparable period in 2019. Contributing to this increase in total revenues was a $40,422,000 increase in mortgage fee income, a $3,279,000 increase in insurance premiums and other considerations, a $3,264,000 increase in gains on investments and other assets, a $2,422,000 increase in net investment income, a $700,000 increase in net mortuary and cemetery sales, and a $129,000 increase in other revenues.
Insurance premiums and other considerations increased by $3,280,000, or 16.7%, to $22,925,000 for the three months ended June 30, 2020, from $19,645,000 for the comparable period in 2019. This increase was primarily due to $2,880,000 from the acquisition of Kilpatrick Life in December 2019. See Note 15 to the condensed consolidated financial statements. This increase was also due to an increase in renewal premiums due to the growth of the Company in recent years, particularly in whole life products, which resulted in more premium paying business in force.
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Net investment income increased by $2,422,000, or 23.0%, to $12,963,000 for the three months ended June 30, 2020, from $10,541,000 for the comparable period in 2019. This increase was primarily attributable to a $1,056,000 increase in mortgage loan interest ($486,000 due to the acquisition of Kilpatrick Life), a $691,000 increase in rental income from real estate held for investment, a $614,000 increase in fixed maturity securities income ($609,000 due to the acquisition of Kilpatrick Life), a $477,000 increase in insurance assignment income, a $151,000 increase in policy loan income ($133,000 due to the acquisition of Kilpatrick Life), and a $36,000 increase in equity securities income. This increase was partially offset by a $443,000 decrease in interest on cash and cash equivalents, a $108,000 increase in investment expenses, and a $52,000 decrease in other investment income.
Net mortuary and cemetery sales increased by $700,000, or 17.5%, to $4,701,000 for the three months ended June 30, 2020, from $4,001,000 for the comparable period in 2019. This increase was primarily due to a $468,000 increase in cemetery pre-need sales, a $140,000 increase in cemetery at-need sales, and a $92,000 increase in mortuary at-need sales.
Gains on investments and other assets increased by $3,264,000, or 318.2%, to gains of $2,238,000 for the three months ended June 30, 2020, from losses of $1,026,000 for the comparable period in 2019. This increase in gains on investments and other assets was primarily due a $1,682,000 increase in gains on other assets mostly attributable to increases in the fair value of call and put option derivatives and a decrease in impairment losses on commercial real estate. This increase in gains on investments and other assets was also due to a $1,633,000 increase in gains on equity securities ($303,000 due to the acquisition of Kilpatrick Life) mostly attributable to increases in the fair value of these equity securities. Due to the adoption of Accounting Standards Update (“ASU”) 2016-01 on January 1, 2019, these changes in fair value are recognized in earnings instead of other comprehensive income. This decrease in gains on investments and other assets was partially offset by a $51,000 decrease in gains on fixed maturity securities.
Mortgage fee income increased by $40,422,000, or 122.7%, to $73,368,000, for the three months ended June 30, 2020, from $32,946,000 for the comparable period in 2019. This increase was primarily due to a $28,222,000 increase in secondary gains from loans sold to third-party investors, a $7,512,000 increase in loan fees and interest income, and a $6,060,000 increase in the fair value of loans held for sale and loan commitments. This increase in mortgage fee income was partially offset by a $1,372,000 increase in the provision for loan loss reserve.
Other revenues increased by $129,000, or 5.5%, to $2,467,000 for the three months ended June 30, 2020, from $2,338,000 for the comparable period in 2019. This increase was primarily attributable to a increase in servicing fee revenue.
Total benefits and expenses were $91,468,000, or 77.1% of total revenues, for the three months ended June 30, 2020, as compared to $63,821,000, or 93.2% of total revenues, for the comparable period in 2019.
Death benefits, surrenders and other policy benefits, and future policy benefits increased by an aggregate of $5,340,000 or 34.0%, to $21,029,000 for the three months ended June 30, 2020, from $15,689,000 for the comparable period in 2019. This increase was primarily the result of a $4,338,000 increase in death benefits ($2,305,000 due to the acquisition of Kilpatrick Life and $1,150,000 for COVID-19 related deaths), a $928,000 increase in future policy benefits ($1,000,000 due to the acquisition of Kilpatrick Life) and a $74,000 increase in surrender and other policy benefits ($284,000 due to the acquisition of Kilpatrick Life).
Amortization of deferred policy and pre-need acquisition costs and value of business acquired decreased by $47,000, or 1.5%, to $3,027,000 for the three months ended June 30, 2020, from $3,074,000 for the comparable period in 2019.
Selling, general and administrative expenses increased by $22,285,000, or 52.3%, to $64,871,000 for the three months ended June 30, 2020, from $42,586,000 for the comparable period in 2019. This increase was primarily the result of a $13,385,000 increase in commissions, a $4,839,000 increase in personnel expenses, a $3,149,000 increase in other expenses, a $820,000 increase in costs related to funding mortgage loans, a $95,000 increase in depreciation on property and equipment, and a $58,000 increase in advertising expenses. This increase was partially offset by a $61,000 decrease in rent and rent related expenses. Most of these increases are attributable to the mortgage segment due to the increase in mortgage loan originations and refinancings, most notably $12,954,000 in commissions,
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$3,099,000 in personnel expenses, and $3,04,000 in other expenses. Also, these increases are attributable to the acquisition of Kilpatrick Life, most notably $484,000 in personnel expenses, $398,000 in other expenses, and $371,000 in commissions.
Interest expense increased by $99,000, or 5.5%, to $1,881,000 for the three months ended June 30, 2020, from $1,782,000 for the comparable period in 2019. This increase was primarily due to an increase in interest expense on mortgage warehouse lines for loans held for sale.
Cost of goods and services sold-mortuaries and cemeteries decreased by $30,000, or 4.4%, to $660,000 for the three months ended June 30, 2020, from $690,000 for the comparable period in 2019. This decrease was primarily due to a $32,000 decrease in cemetery pre-need sales and a $31,000 decrease in mortuary at-need sales. This decrease was partially offset by a $33,000 increase in cemetery at-need sales.
