Security National Financial Corporation (SNFCA): PESTLE Analysis [Nov-2025 Updated]

You're trying to map out the next few years for Security National Financial Corporation (SNFCA), and frankly, the external picture in late 2025 is a mixed bag of tailwinds and headwinds. While higher rates near 5.5% are sweetening their investment income, the steady rise in cremation rates, now over 59%, and looming data privacy compliance costs are immediate threats to their traditional model. Let's cut through the noise and look at the six macro forces-from political scrutiny to ESG pressures-that will defintely define your strategy moving forward.

Security National Financial Corporation (SNFCA) - PESTLE Analysis: Political factors

The political landscape for Security National Financial Corporation (SNFCA) is less about partisan politics and more about the complex, state-by-state regulatory environment for insurance and funeral services. The most immediate impact comes from the National Association of Insurance Commissioners (NAIC) model laws and state-level consumer protection agencies, which directly shape product design, pricing, and compliance costs.

State insurance commissioners heavily influence product approval and reserve requirements.

You have to remember that insurance is regulated at the state level, not the federal one. This means SNFCA must navigate 50 different sets of rules for its life insurance products. The NAIC acts as the key coordinator, and its Best Interest for Annuities Standard was adopted by 48 states by the end of 2024, with the final two expected to follow in 2025. This widespread adoption forces a uniform, higher standard of care when selling annuities, which are a core part of the life insurance segment's product mix.

Also, the NAIC's 2025 priorities include a focus on Insurer Financial Oversight and Transparency. This translates to stricter reserve requirements and capital adequacy assessments, which is a constant pressure point. To help manage this multi-state complexity, the NAIC is modernizing its System for Electronic Rates & Forms Filing (SERFF) platform in 2025, with life and property/casualty users moving to the new system. This should defintely streamline the product approval process, but it requires a significant internal IT and compliance investment from the company.

Federal tax policy shifts on life insurance cash value could impact sales.

While the core tax-advantaged status of life insurance cash value remains, incremental federal tax changes can dramatically shift consumer behavior. The 2021 changes to Section 7702 of the IRS tax code, which lowered the required interest rate assumptions, continue to make cash value life insurance more attractive in 2025 by allowing clients to put more money into the policy while keeping its favorable tax status. This is a tailwind for SNFCA's permanent life insurance sales.

For high-net-worth clients, the inflation-adjusted estate tax exemption is a critical factor. For a decedent dying in 2025, the Unified Credit Against Estate Tax is set to increase to $13.99 million, up from $13.61 million in 2024. Here's the quick math: a higher exemption reduces the immediate need for life insurance purely for estate tax liquidity, but it also frees up capital for other tax-advantaged vehicles like cash value life insurance, which is a net positive for the industry.

Increased scrutiny on pre-need funeral contract funding mechanisms is a defintely risk.

SNFCA's Cemeteries/Mortuaries segment, which reported $8.1 million in Q2 2025 revenues, relies heavily on pre-need funeral contracts. These contracts are often funded by life insurance policies, which links the two segments directly to consumer protection scrutiny. State Departments of Consumer Protection are actively issuing guidance and investigating complaints related to fund mismanagement and fraud, as seen in recent 2025 state-level actions.

This scrutiny is a risk because it can lead to more restrictive state laws on how pre-need funds are invested, potentially limiting the investment returns that fund the guaranteed price of the funeral. The key regulatory focus areas for pre-need contracts include:

• Mandating clear disclosures on cancellation and refund policies.
• Requiring verification that 100 percent of prepaid funds are deposited with an escrow agent or insurance company.
• Increasing oversight on the transferability of contracts if the consumer moves or the funeral home fails.

Potential for new federal data privacy legislation affecting customer records.

The lack of a single, comprehensive federal data privacy law means SNFCA must comply with a patchwork of state laws (like California's CCPA) and existing federal sector-specific rules. The Gramm-Leach-Bliley Act (GLBA) already governs the protection of customer Non-Public Personal Information (NPI) for financial services like insurance.

However, the regulatory burden is rising in 2025. The Securities and Exchange Commission (SEC)'s amendment on safeguarding customer information, which requires written incident response programs, comes into effect for large entities on December 3, 2025. Also, the New York Department of Financial Services (NYDFS)'s revised Cybersecurity Requirements for Financial Services Companies, which includes insurance firms, will become fully effective by 2025. This means a significant, non-negotiable increase in compliance spending to protect the company's $1.563 billion in total assets and its customer data.

Security National Financial Corporation (SNFCA) - PESTLE Analysis: Economic factors

You're looking at how the broader economy is shaping up for Security National Financial Corporation (SNFCA) as we close out 2025, and honestly, it's a mixed bag of tailwinds and headwinds for your diverse business lines.

The interest rate environment is a double-edged sword. While the Federal Reserve has been easing policy, the effective Federal Funds Rate was sitting around 3.88% in late November 2025, following a target range reduction to 3.75%-4.00% after the October meeting. This higher-for-longer environment, compared to the ultra-low rates of a few years ago, definitely helps SNFCA's investment portfolio, especially within the Life Insurance segment. For the third quarter of 2025, investment income was reported at $1.44 million, showing that reserves are earning a better return, which is a clear positive for the balance sheet.

Inflation and Operating Costs

Inflation, which settled at 3.0% for the twelve months ending September 2025, directly pressures the Cemetery and Mortuary segment. Every cost associated with operations-from supplies to labor-gets pushed up. To be fair, the Cemetery segment showed resilience, posting Earnings Before Tax (EBT) of $880,000 in Q3 2025, which was a 21.7% increase over Q3 2024, suggesting management is passing some costs along or finding efficiencies. Still, persistent inflation eats into margins if price increases lag. What this estimate hides is the specific cost inflation within specialized mortuary supplies versus general CPI.

Employment and Discretionary Demand

The job market is a key driver for your Life Insurance segment, as demand for discretionary products like certain life policies hinges on consumer confidence and disposable income. While the Fed has cited downside risks to employment, strong wage growth in many sectors has kept consumer spending relatively firm. This underlying economic stability supports the sales of pre-need cemetery contracts and life insurance policies, which are less essential than immediate needs but crucial for long-term segment growth.

Real Estate Market Volatility

The Mortgage segment feels the volatility most directly. We are seeing weakness in new home sales, especially starter homes, which dampens anticipated profit splits from builder relationships. However, SNFCA is actively deploying capital into this area for future yield, having made a gross additional investment of approximately $50MM in residential land holdings this year. This shows a long-term view despite near-term market choppiness. The company's overall Return on Equity (ROE) for the nine months ending September 30, 2025, was 7.9%, which management noted was below the 10-year average but credible given the mortgage industry's state.

Here's a quick look at how these macro factors map to SNFCA's recent performance:

The economic reality for SNFCA right now means you need to manage costs aggressively while capitalizing on investment income opportunities.

• Monitor inflation's effect on Cemetery/Mortuary cost of goods sold.
• Stress-test Mortgage segment profitability under current origination volumes.
• Leverage higher yields on Life Insurance reserves for earnings stability.
• Track regional housing starts in Utah, Florida, and Texas closely.

Finance: draft 13-week cash view by Friday

Security National Financial Corporation (SNFCA) - PESTLE Analysis: Social factors

You're looking at how American society is changing, and for Security National Financial Corporation (SNFCA), these shifts are the bedrock of both your opportunity and your risk profile. The core takeaway is that the demographic tailwind is strong, but consumer preferences are demanding a complete overhaul of traditional service delivery.

The aging of the US population is a massive, sustained driver for your core business. By 2030, we expect one in five Americans to be over 65, which directly translates to a higher volume of need for both final expense insurance and pre-need funeral planning. For context, the US funeral market was estimated at around $75 billion in 2025, with about 3.1 million deaths projected for that year alone. This demographic reality underpins the growth you saw in your Life Insurance segment, which hit a record year in 2024 with 25% growth.

However, the way people choose to be remembered is changing fast. Cremation is now the dominant choice, which pressures the margins on traditional, high-cost burial services. We need to map this out clearly, because it affects your Cemetery and Mortuary segment's revenue mix.

Here's the quick math on the disposition shift:

What this estimate hides is the pressure on profit. The average profit from a funeral dropped by 37% as families opt for lower-cost cremation. You must ensure your pre-need contracts are structured to handle this shift, or you'll be funding a lower-cost service with a higher-cost contract.

Consumer preferences are leaning toward simplicity and personalization, which means the physical service is evolving. It's not just about cremation; it's about the experience surrounding it. We're seeing a clear move away from rigid tradition, partly driven by a changing religious landscape-the religiously unaffiliated grew from 16% to 28% between 2007 and 2023.

To stay relevant, SNFCA needs to lean into these evolving service demands:

• Digital Integration: Over half of NFDA-member homes now offer livestreaming.
• Personalization: 47% of US funeral homes offer virtual funerals.
• Sustainability: 61.4% of consumers are interested in 'green' funeral options.

Finally, let's talk about the insurance side, which is where your pre-need sales live. Growing financial literacy is a double-edged sword. On one hand, better-informed consumers are more likely to buy insurance products, but they demand transparency and value. If people don't understand the product, they won't buy it, and low literacy impedes interest. For younger buyers, like Gen Z and Millennials, the main barrier is a price misconception-they think it's too expensive. Your final expense sales pitch defintely needs to cut through the noise by showing clear, demonstrable value, perhaps using the personalization tools that Gartner predicts will drive 20% better sales by 2025.

Finance: draft a sensitivity analysis on pre-need contract funding assumptions based on a 65% cremation rate for the 2026 budget by next Wednesday.

Security National Financial Corporation (SNFCA) - PESTLE Analysis: Technological factors

You're looking at how technology is reshaping the insurance and funeral service landscape, and for Security National Financial Corporation (SNFCA), this isn't just about staying current-it's about survival and margin defense. The big takeaway for 2025 is that technology adoption is moving from pilot projects to scaled deployment, especially in areas that directly impact your bottom line, like claims and customer acquisition.

InsurTech adoption streamlines policy administration and digital sales channels

The industry is rapidly adopting InsurTech (Insurance Technology) to cut down on the friction in policy administration. For SNFCA's Life Insurance segment, this means moving away from paper-heavy processes that drive up the Selling, General, and Administrative Expenses that squeezed Q1 2025 profitability. While specific InsurTech investment figures for Security National Financial Corporation aren't public, the industry trend is clear: digital-first policy management is the new baseline for efficiency. If onboarding still takes 14+ days, churn risk rises, especially when competitors are offering instant digital quotes.

Artificial intelligence (AI) is starting to automate claims processing, improving efficiency

Artificial Intelligence is the engine driving operational leverage right now. In the broader insurance sector, AI is now expected to reduce claims processing time by up to 80% and lower associated costs by 30%. For Security National Financial Corporation, this automation is critical. You've already seen personnel costs rise about 6% year-to-date as of September 30, 2025, but the company has managed to make Q3 personnel costs flat by implementing efficiencies. AI-driven automation in claims intake and data extraction is a key way to achieve this cost control without sacrificing service quality, which is vital for maintaining customer trust.

Digital marketing and online presence are crucial for attracting pre-need funeral customers

Attracting pre-need funeral customers is increasingly an online game. The entire digital advertising market in the US is projected to hit $137 billion in 2025, with digital spend growing by 7.9%. Security National Financial Corporation's Death Care Segment needs to capture a share of this digital attention. This means your digital presence must be sharp, offering seamless online information and perhaps even virtual tours or digital planning tools. If your online lead generation isn't optimized for mobile and search, you are definitely losing out to competitors who are investing heavily in precision advertising.

Cybersecurity investment is vital to protect sensitive policyholder and financial data

With more data moving online, cybersecurity investment is non-negotiable. You hold sensitive policyholder and financial data, making you a prime target. While the specific dollar amount Security National Financial Corporation allocates to cybersecurity isn't itemized in the Q3 2025 reports, the regulatory environment demands robust governance. A material weakness in internal controls or a data breach could severely harm investor confidence, which is already sensitive given the 30% year-to-date decrease in after-tax earnings through September 30, 2025. Protecting the data underpinning your $14.79 book value per common share as of that date is paramount.

Here's a quick look at where technology intersects with your operational reality in 2025:

Finance: draft 13-week cash view by Friday.

Security National Financial Corporation (SNFCA) - PESTLE Analysis: Legal factors

You're looking at the legal landscape for Security National Financial Corporation, and honestly, it's a minefield of state-by-state rules layered on top of federal standards. For a company like SNFCA, which sits at the intersection of insurance, funeral services, and mortgage lending, compliance isn't just paperwork; it's a core operational cost and a constant source of risk.

Compliance with the National Association of Insurance Commissioners (NAIC) solvency models is mandatory

As a life insurer, Security National Life Insurance Company must adhere to the standards set by the NAIC to ensure it can pay out on its policies. The NAIC is actively working on 'modernizing the Risk-Based Capital (RBC) framework' in 2025 to keep pace with market shifts and monitor solvency. For Security National Financial Corporation, maintaining compliance with these regulatory capital requirements was confirmed as of their March 31, 2025, filing. This isn't optional; it dictates how much capital they must hold in reserve against potential losses.

It's not just about the capital models, though. The company has to keep up with the NAIC's ongoing work, like the updates discussed at their Summer National Meeting in 2025, which included reviewing reports on long-term investment portfolios and approving investment policy statements.

State-specific regulations govern the trust and investment of pre-need funeral funds

The funeral services arm, operating eleven mortuaries and five cemeteries in Utah alone, deals with pre-need contracts where funds are collected now for services later. These funds are heavily regulated at the state level regarding how they must be held in trust and invested. For instance, Security National Life Insurance Company uses an annuity contract or a life insurance policy to fund these agreements. Furthermore, the revenue recognition for cemetery interment rights follows specific GAAP rules for retail land sales, meaning they can only recognize revenue after a minimum percentage of the sales price is collected.

If you look at their Q1 2025 performance, the Death Care Segment still managed to increase families served by 4% despite a flat to declining mortality climate. Still, the investment income tied to these long-term assets is subject to intense scrutiny, which directly impacts reported earnings.

New data protection laws, like California's, increase compliance costs for customer data

Handling customer data across insurance and mortgage segments means navigating a patchwork of privacy laws. While Security National Financial Corporation's public privacy policy details how they handle mobile information sharing, the broader regulatory environment is tightening. In 2025, the average cost of a single data breach across the financial sector hit a staggering $4.44 million.

For financial services, this means adhering to rules like GLBA and CCPA, which mandate how sensitive data-like account numbers and loan application details-is secured. The cost of regulatory change is real, even if it's not always labeled as 'data protection.' For example, the adoption of the CECL (Current Expected Credit Losses) accounting standard in Q1 2024 resulted in an increase in bad debt expense of roughly $900,000 in Q1 2025. That's a direct, measurable impact from a new regulatory requirement.

Litigation risk related to investment performance or policyholder claims remains constant

Investment performance is a major legal and financial risk because the company's investment income is 'lumpy' due to its tie to real estate and public equity markets. When performance lags, litigation risk rises, especially when policyholders or shareholders feel the company hasn't managed assets prudently. In Q1 2025, Security National Financial Corporation's after-tax earnings dropped 42% to $4.338 million from $7.475 million in Q1 2024, with about 75% of the pretax income decline attributed to investment income drops.

This volatility shows up in key metrics. The company achieved an 8% Return on Equity (ROE) for the first half of 2025, which is significantly below its 10-year average of 13.3%. Any sustained period below that average invites closer regulatory and shareholder scrutiny over investment strategy and claims handling discipline.

Here's a quick look at how regulatory and investment volatility hit the bottom line in early 2025:

What this estimate hides is the specific cost of defending against policyholder claims litigation, which isn't broken out in the earnings release, but the investment performance pressure definitely increases the overall legal exposure.

You need to ensure the compliance team has a clear escalation path for any new state-level data privacy mandates that might have popped up after the Q1 filings. Finance: draft 13-week cash view by Friday.

Security National Financial Corporation (SNFCA) - PESTLE Analysis: Environmental factors

You're looking at the external pressures shaping how Security National Financial Corporation manages its physical assets and public perception, especially in the death care space. Honestly, the environmental shift is moving faster than some legacy models can handle, and that shows up in the numbers.

Growing consumer interest in green burial options requires adapting cemetery services

The move toward eco-friendlier end-of-life choices is definitely gaining traction in 2025. Green burials, or natural burials, appeal to families looking to minimize environmental impact by avoiding things like embalming chemicals and concrete vaults. This trend directly pressures Security National Financial Corporation's Memorial Mortuaries & Cemeteries segment, which operates 10 locations across Utah, plus sites in New Mexico and California.

We see this market shift reflected in service mix changes. For the first half of 2025, the company noted that while total service counts were modestly up, traditional service counts were down while cremations increased; the nationwide cremation rate is now above 50%. Since cremation services generally don't generate the same revenue as traditional burials, this impacts the bottom line. For the first half of 2025, Cemetery and Mortuary Revenue actually declined by 4.7%, falling from $17.0 Million in 2024 to $16.2 million in 2025.

Here's the quick math on profitability pressure: Earnings before taxes for that segment for the same six-month period dropped by 21.6%, from $5.14 million in 2024 to $4.03 million in 2025.

To adapt, Security National Financial Corporation needs to ensure its offerings align with these values. This means:

• Evaluating land use for conservation burial sections.

• Training staff on natural disposition options.

• Marketing the financial appeal of simpler, eco-conscious services.

Climate-related weather events pose a physical risk to cemetery and mortuary assets

For a company with significant physical assets like cemeteries and mortuaries, extreme weather is a tangible financial risk, not just a headline. While Security National Financial Corporation doesn't publish a specific dollar figure for climate-related asset impairment in its Q2 2025 filings, the risk is real, especially in regions like California where they operate.

Increased frequency of severe weather-think intense rain leading to erosion or flooding, or extreme heat affecting grounds maintenance-requires capital expenditure for mitigation and repair. We saw public concern in California in mid-2025 regarding cemetery upkeep and financial stability.

The physical risks translate into operational challenges:

What this estimate hides is the potential for increased insurance premiums or uninsurable risks over time.

Increased focus on Environmental, Social, and Governance (ESG) reporting from investors

Investors, including those watching the NASDAQ-listed Security National Financial Corporation, are demanding more transparency on non-financial risks, and ESG is the framework they use. While the company celebrates its 60th anniversary and its commitment to conservative financial principles, the market now expects clear environmental stewardship metrics.

For the first half of 2025, Security National Financial Corporation reported an 8% Return on Equity (ROE), which management noted was credible given the mortgage segment's troubles, but still below the 10-year average of 13.3%. Investors will increasingly scrutinize how environmental factors might affect that ROE going forward.

Actionable insight: You need to look beyond the standard financial reports, like the Q2 2025 10-Q, for forward-looking statements on sustainability goals. The market is rewarding firms that proactively address these areas.

Operational energy efficiency is a minor but growing cost-management factor

For a business with multiple physical locations-funeral homes, offices, and cemeteries-energy consumption is a persistent, though often secondary, cost. In 2025, the focus on operational efficiency is being driven by both cost control and broader ESG alignment.

While Security National Financial Corporation's Q2 2025 earnings report focused on segment revenue and earnings, energy costs are baked into the general Cost of Doing Business that President Quist noted needs to be reflected in pricing.

The trend in commercial real estate, particularly in states like California, is toward mandatory efficiency standards, such as the 2025 Building Energy Efficiency Standards which will take effect January 1, 2026. This means capital planning for facility upgrades-like implementing predictive analytics for energy use-is becoming a necessary part of the long-term budget, even if it's currently a minor cost item.

You should track capital expenditure plans for:

• HVAC system modernizations.

• Lighting retrofits across all 10 Memorial locations.

• Adopting smart building technologies for optimization.

Still, these improvements don't have to break the bank; they often pay for themselves over time.

Finance: draft 13-week cash view by Friday