FDL Annual Report 2022

THAN MORE

A PRENEED COMPANY

2022 was a record-breaking year in many respects. After two years of dealing with all types of issues related to COVID-19, we finally had a year that seemed normal…and we excelled!

As I reflected on the successes we had in 2022, I was reminded of what the Apostle Paul said in the book of Romans, chapter 5 (verses 1-5): “Therefore, having been justified by faith, we have peace with God through our Lord Jesus Christ, through whom we also have obtained our introduction by faith into this grace in which we stand; and we celebrate in hope of the glory of God. And not only this, but we also celebrate in our tribulations, knowing that tribulation brings about perseverance; and perseverance, proven character; and proven character, hope; and hope does not disappoint, because the love of God has been poured out within our hearts through the Holy Spirit who was given to us.”

For two years, 2020 and 2021, we had to have faith – faith that God would see us through a very uncertain time and lead us into a brighter, more promising future. In the world of leadership, the three most feared words have always been “I don’t know,” and our leadership and I said “I don’t know” more times than I would like to count in 2020 and 2021. It is virtually impossible to develop a strategy whenever you have no idea what’s going on in the present or what may happen in the near future. As leaders, we are wired to define the problem and then figure out a way to deal with it. We just don’t like uncertainty. We don’t know what to do with “I don’t know.” With COVID-19, we found out just how uncertain uncertainty can be!

By having faith and knowing that God was in control, our leadership recognized that the only certainty in all the uncertainty was God. We relied on Him, and we continued to discern and pursue His will, and Romans 5 made His will clear – by having faith in Jesus Christ, by continuing to focus on the work

that He had put in front of us, and by loving each other, we found peace and clarity. So, the faith we had in 2020 and 2021 led to our success in 2022. We persevered, we demonstrated character, and we never lost hope – “hope does not disappoint.”

Perseverance

Perseverance means being persistent and focused despite the difficulties, challenges, or issues we face. The Bible teaches us to persevere in faith, trusting God to help us through it all. When we face difficulties, we can trust that God understands our situation and will guide us to a brighter future. By persevering, we accomplished the following in 2022:

1. Preneed sales volume for all insurance companies grew by 20% and exceeded our budget by 8.3%Sales grew more than $77 million in 2022 over 2021.

2. The average preneed funeral contract increased by $455, from $5,481 in 2021 to $5,936 in 2022.

3. Marketing Partner sales were over $179 million for 2022, up 64% over 2021.

4. Our Select Producers (employed professional salespeople) had a record year, achieving more than $71 million in sales, up 11.6% over 2021.

5. DIGicare services (Social Media Management, Google Ads, Encore Livestreaming, Arrangement Guide, Circle of Friends+ aftercare) ended the year with more than $2 million in revenue – a 29% increase over 2021.

6. Funeral Directors Life (FDL) improved the overall security profile, as measured by the Texas Department of Insurance Cybersecurity Exam, to an excellent security rating of 800.

7. Directors Business Solutions had record sales and net income – net income exceeded budget by 16% with a margin of 36%, against a budget of 35%.

8. We increased investment returns for new investments from 3.8% for year-end 2021 to 5.14% for 2022.

9. We increased the number of BSI training events and states vetted to offer Burial Space Items, including long-awaited Kentucky.

Character

When we think of a person who has good character, we often describe them with terms like integrity, honesty, strong moral fiber, care and concern for others, and the like. Character is demonstrated in actions, but true character resides in the heart. Galatians 5:22-23 illustrates the fruit of the Spirit which defines the qualities of true character: love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, and self-control. This “fruit of the Spirit” is what forms the foundation of true Christian character.

By maintaining our character through uncertain times, we remained dedicated to pursuing continuous improvement in every area of our company:

1. The Marketing Department was successfully restructured in 2022 in order to scale the department for the overall business offerings of the company.

2. The 2022 National Funeral Directors Association (NFDA) Convention was viewed as the most successful national convention FDL has ever had.

3. Circle of Friends+ (a digital aftercare resource for funeral homes) was launched in 2022 and is gaining momentum. Note: Everything After (the company FDL partners with to provide this service) won the 2022 NFDA Innovation Award.

4. We created the Corporate Culture Department, which is focused on optimum work/life balance, camaraderie, and a culture of Christian values built around loyalty, trust, accountability, generosity, and service to others.

5. FDL conducted a successful incentive trip to Los Cabos, Mexico, which included building two new homes for deserving families, in the Los Cabos area, through a partnership with Vital Seed Ministries and Youth with a Mission.

6. We sponsored John O’Leary, who was a keynote speaker at the NFDA convention – the response to his presentation was extremely positive.

7. We added a critical component to the Virtual Wolfelt Experience, the “Why of the Final Resting Place,” to help families understand

the importance of permanent placement and memorialization.

8. FDL conducted 6 Select Producer regional meetings to further skill development, team building, and a cultural connection with the company.

9. We deepened mortuary school students’ knowledge concerning today’s funeral consumer through in-person and virtual class presentations and tools.

10. FDL actively participated in the American Board of Funeral Service Education this year, leading to new relationships and connections for the mortuary school initiative.

11. FDL increased the Customer Ambassador team by 4 employees, for a total of 9, to serve our funeral homes, sales managers, and agents at the next level.

12. We revamped our training programs for new employees to grasp everything the company does in half the time!

13. We further developed our Compliance team to consistently audit our processes and procedures

– this has led to better Enterprise Risk Management and more consistency as we scale.

14. We implemented updated and improved programs around Third-Party Risk Management, Cybersecurity Incident Response, and Secure Development LifeCycle.

15. We instituted Multi-Factor Authentication across all platforms along with Conditional Access to improve cybersecurity insurance quotes and security defenses.

16. FDL improved its Security Awareness Training program by adding tools to analyze real reported phishing attempts more quickly so protection tools could remove threats before an improper click could occur.

Hope

What is hope? The contemporary idea of hope is “to wish for, to expect, but without certainty of the fulfillment.” In the Bible, according to the Hebrew and Greek words translated by the word “hope,” hope is an indication of certainty. Scripture expresses hope as akin to trust and a strong, confident expectation. In Romans, chapter 8, the Apostle Paul says, “For in hope we have been saved, but hope that is seen is not hope; for why does one

also hope for what he sees? But if we hope for what we do not see, with perseverance we wait eagerly for it.”

With hope for the future, we accomplished the following in 2022:

1. FDL entered new markets in 2022: Massachusetts, New Hampshire, New Jersey, and Vermont, with plans for expanding into Virginia.

2. FDL acquired American Life & Annuity Company to establish a greater Arkansas sales presence.

3. We improved the use of the Slope actuarial software resulting in more accurate asset modeling and significantly improved run times for monthly reserve calculations.

4. We implemented 7 new RPA (Robotic Processing Automation) processes that fully automate the setup of funeral homes and agents for canceling a contract.

5. We launched a widget library with the ability to create and customize dashboards within Online Access.

6. We created the preneed version of the Passare Planning Center, which gets us one step closer to Common Platform!

7. We launched a document scanner for DIGicon that allows funeral home clients to scan documents using the FDL mobile app and upload them.

8. We fully integrated Sepio Guard travel protection into the On the Go Protection plans through DIGicon.

Conclusion

Romans, chapter 5, certainly helps us see the culmination of two tough years followed by an extremely successful year – “… And not only this, but we also celebrate in our tribulations, knowing that tribulation brings about perseverance; and perseverance, proven character; and proven character, hope; and hope does not disappoint, because the love of God has been poured out within our hearts through the Holy Spirit who was given to us.” To reiterate, “HOPE DOES NOT DISAPPOINT!”

As I have said before, I am blessed with an incredible team of people who work here with me at Funeral Directors Life. Their perseverance, their character, and their hope for the future have pushed me to become a better leader and have made our company the envy of most!

Finally, we continue to appreciate the confidence you have shown in our company – thank you! All of us at Funeral Directors Life remain committed to you and to our vision – To be the best, most-respected provider of service to the funeral profession!

Blessings,

Kris Seale President & Chief Executive Officer

A PRENEED COMPANY THAN MORE

At Funeral Directors Life, we are on a mission. In fact, one of the verses that we quote often around the office is Nehemiah 6:3: “I am doing a great work and I cannot come down.”

So, you may be wondering…what is that great work we are doing?

As a company, we believe we are much more than a preneed company. We are called to serve not only the funeral profession, but our neighbors near and far. And we are not only talking the talk; we are walking the walk. We are demonstrating love in action to everyone we meet.

Throughout 2022, Funeral Directors Life had a tremendous impact both at home, in our nation, and abroad. Every day, love is put into action at our office, out in the field, and even in other nations. From the policyholder who calls in having a hard time financially, to our neighbors in Uvalde during the horrific school shootings, to our dear friends in Costa Rica, where our employees have served year after year…every day, we are being witnesses of God’s love for His people.

In Acts 1:8, one of the last things Jesus says to his followers before leaving them is this: “But you will receive power when the Holy Spirit comes on you; and you will be my witnesses in Jerusalem, and in all Judea and Samaria, and to the ends of the earth.”

We believe that part of our mission as a company is to fulfill this co-mission with Christ—to be witnesses of His love to everyone we meet.

As a result of being faithful to His calling, we feel that God has blessed our company above and beyond what we could have imagined. He has blessed us with amazing people who love to serve. He has blessed us with dedicated leaders who always try to do the “best, most-respected thing” daily. And He has blessed us with financial success so that we can, in turn, continue to be a blessing to others.

This year, we would like to share how God’s love has been demonstrated here in the office, locally, to our state, our nation, and to the ends of the earth.

After all, what could be better knowing that every act of love, big or small, is making an eternal impact on those around us?

How We Served Each Other

Funeral Directors Life has the best people. Every employee has a passion for what they do and a drive to help others. Because our people matter, we provide many opportunities for them to recognize each other’s accomplishments and life milestones…and provide a few fun events along the way.

“My command is this: Love each other as I have loved you.”

John 15:12

DIG Events

DIG Day, which happens every year in July, took place in the Home Office and was an all-day celebration! Employees were treated to Chick-fil-A, lunch, and snacks during the day. Everyone received a free t-shirt, attended the luncheon with live entertainment, watched a championship corn hole game, and visited with our service dog guests. What a day to celebrate our people!

Halloween was also a fun event this year, not only because we invite families to trick-or-treat around the office, but because employees are encouraged to wear costumes. The creativity really showed this year! The Corporate Culture Department dressed up as doctors, graphic designers dressed up as Barbies, and there was even a pumpkin carving contest! Having a culture of fun is how we serve each other and make Funeral Directors Life a great place to work.

Our end-of-year events were also a hit in 2022. These take the form of our annual Town Hall meetings with President and CEO Kris Seale and special guests. We invited Beltway Park Church Lead Pastor David McQueen and author and speaker Ross Bernstein to the Home Office to share how we can “Stand Firm and Love Well.”

We concluded our end-of-year events with a Casino Royale themed company party, which allowed us all to spend time together outside of the office. And, of course, we can’t forget about “Santa Kris!”

Special Recognition

Another way we took care of each other was through salary subsidies. Kris Seale and the DIG Board approved of salary subsidies for May, June, and July to provide some monetary relief and time for employees to adjust their personal budgets to offset the effects of the record-setting inflation that hit in 2022. One employee said, “It was so unexpected and much appreciated!”

Director of Wellness Haley Cooke and Nurse Practitioner Jennifer Flores continued to focus on employees’ health and well-being in 2022. Haley led book studies and wellness contests, while Jennifer saw sick employees and helped them get back to feeling 100%. She even helped to coordinate a blood drive to benefit Hendrick Hospital!

Performance Plus Awards are how employees can highlight the accomplishments of a fellow coworker during our company luncheons. In 2022, our people gave away 93 of these awards for a total amount of $6,550.

We also honored each other for special events, including birthdays, wedding showers, baby showers, cooking contests, and more.

Another way employees give each other unique recognition is in Lattice, our new people management platform. Every day, someone praises someone else for the work they’ve done, which encourages others to do the same. This has been a great tool for improving morale and community!

New Additions

In 2022, Drew Seale took over as Chief Marketing Officer, succeeding Jeff Stewart. About his new role, he said, “I’m honored that the board has placed their trust in me to make our marketing the best it can be.”

Jeff became our new Chief Culture Officer for Funeral Directors Life and introduced a brand-new department to our company: Corporate Culture. He said, “I am very excited about what the future holds for this new department.”

All in all, we experienced tremendous growth in 2022. We even hired 132 new employees! We can’t wait to see how our company improves in 2023, especially with how we serve each other.

How We Served

Locally

We love Abilene, so we always give back wherever we can. Last year, we supported our community in a variety of ways, whether that was through our time, donations, or prayers. Here are a few ways we served locally.

“Do not withhold good from those to whom it is due when it is in your power to act.”

Proverbs 3:27

Simply Hands & Feet Help

Customer Care Supervisor Mary Beth Hensley leads the Simply Hands & Feet program here at Funeral Directors Life, which means that when an employee has a need, the Hands & Feet team is there to answer the call. The name comes from the idea of being the hands and feet of Jesus and serving where needed!

In 2022, the team of volunteers assisted with nine moves and one financial hardship. We’re blessed to have so many volunteers willing to help at a moment’s notice!

AYSA Expansion

The Abilene Youth Sports Association (AYSA) team has been blessed to serve 50,000 visitors, hold 56 camps and 28 tournaments, and provide a space

for 7,000 sports participants since opening in 2020. But we’re dreaming bigger with a state-of-the-art field complex to complement our indoor facility. The complex will be versatile enough to be used for soccer, lacrosse, ultimate frisbee, and more!

In 2022, we started gathering donations for this new expansion. Donors so far include Beltway Park Church, Chick-fil-A, the City of Abilene, and Directors Foundation, to name a few.

Youth sports make a tremendous impact on families in Abilene and - with this new expansionall over Texas!

Supporting our Community

In April 2022, our company had the honor of gifting an endowed scholarship for Dr. Terry

Sergeant, Professor of Computer Science at HardinSimmons University (HSU). Our Vice President of Development Kyle Swearingen worked with an HSU professor to establish this scholarship in Dr. Sergeant’s honor. We raised $14,000 for the fund before the ceremony took place in April.

We also assisted our local universities in other ways by hosting “University Days” for students and faculty of Abilene Christian University and Hardin-Simmons University. Guests toured our facility and got to see what we do each and every day. Hopefully, some of those students will join our ever-growing family!

To support our local families, we always host a Giving Tree campaign, run by our Directors Foundation. In 2021, we raised $8,100 for families. In 2022, we raised $8,311 – a new record!

Another way we supported our community was through a bake sale that benefitted Pregnancy Resources of Abilene. Our employees brought their most delicious baked goods to the Home Office, and others placed their bids! Cookies, cinnamon rolls, monkey bread, cakes, and scones were a few sweet treats up for auction. The total raised last year was $1,305, but this year, we raised $1,633!

Additionally, we held our Mission Thanksgiving food drive to benefit the food kitchens of Abilene. Truckloads of food were delivered, all thanks to our employees giving so generously! We donated over 26,000 itemsmore than double the amount of last year!

A Special Recognition

We were also honored with a recognition by the Abilene Chamber of Commerce as winner of the inaugural 2022 Big Country Best Workplace in the large business category!

This was a huge honor, and we thank every employee for making our company a great place to work!

We even earned Great Place to Work Certification™ for July 2022-July 2023 through Great Place to Work®.

Overall, 2022 was a year full of opportunities for us to serve and be helpers of people. To those who donated money, devoted time, prayed without ceasing, or supported from afar, we thank you.

How We Served

Texas

May 24, 2022, was a day that started like any other. Then, the senseless Uvalde tragedy occurred. When Kris Seale heard the news, he reached out to Ron Clyde, Director of Special Projects, to volunteer the Encore team’s services to funeral homes affected. It would require going down to Uvalde to assist with livestreaming and anything else the funeral homes and families needed.

“The light shines in the darkness, and the darkness has not overcome it.”

John 1:5

While Ron was figuring out how to make this happen, the following departments and teams in the Home Office immediately stepped up to support: Accounting, Administrative, Corporate Culture, DIG Development, Endpoint, Information Security, Maintenance, Marketing, and the Prayer team.

Ron was able to assemble 5 teams with 22 total volunteers, including a back-up team (Tyler Ward, Kim Kent, Robert Durham, Bryan Sherman, and Alissa Davis) that was ready to travel when needed.

For weeks, the teams made sure the livestreaming services were running smoothly, supported funeral directors from all over Texas who stopped by to help, and leaned on each other.

Volunteer Klayton O’Neal said, “It was impressive seeing how many people came out of nowhere to help. There were police officers from Corpus Christi and El Paso, along with funeral professionals from all over Texas. They didn’t know the families, but still, they didn’t think twice to show up to help strangers that were hurting.”

Overall, our DIG team volunteers assisted with 30 events (services and graveside) over a span of 13

days and across five venues. Over 8,000 people tuned in via livestream to pay their respects – one service even had 2,000 people attend virtually.

At one of our employee luncheons, the volunteers were gifted Performance Plus Awards by the DIG Board for their service.

Thank you to Ron Clyde and the following volunteers who gave their time, traveled to Uvalde, and were truly helpers of people: Leland Payne, Rees Heizelman, Zach Sims, Jair Campos, Kyle Swearingen, Chris Mayhall, Klayton O’Neal, Austin Ryan, Gee Abordo, Jeff Stewart, Haley Cooke, Arthur Martinez, Brian Parker, Charles Rohus, John Wolfe, and Brenda Colyer.

In addition to providing volunteers, we gave over $30,000 of both employee and funeral home donations, run through our Helpers of People donation match program, to the Texas Funeral Directors Association. This donation directly supported the funeral professionals who gave their time to serve the families affected by the tragedy.

Though we can’t prevent senseless acts of violence from happening in the future, what we all can do (and did) is be a light in the darkness.

How We Served

Nationally

When we get outside of our beautiful state of Texas, we make it our mission to leave a positive impact wherever we go. Along the way, we build incredible friendships and business relationships that help people around the nation, from grieving families to funeral professionals. In 2022, we continued this mission.

“You are the light of the world. A city set on a hill cannot be hidden.”

Matthew 5:14

The Impact of NFDA

Funeral Directors Life, along with Passare, made a statement at the National Funeral Directors Association (NFDA) Convention last year in Baltimore, Maryland. Not only did our booths look amazing, but our people were kind and respectful to everyone they encountered.

“One of the event organizers was brought to tears after interacting with our team,” Kelly Gilgenbach recalled. “She said, ‘You all have been some of the nicest people I’ve spoken to all day.’ All we did was try to be a light in Baltimore and treat people with respect. That experience showed the littlest actions can make a lasting impact.”

We even sponsored John O’Leary’s life-giving keynote presentation and hosted a book signing at our booth for convention attendees. During the event, we had over 500 individual interactions with booth guests. We’re already planning for next year’s convention in Las Vegas!

Other Notable Conventions

Along with attending the NFDA convention, we also attended other national and state conventions, like Selected Independent’s Annual Meeting, to

strengthen our relationships with customers, prospects, and the organization itself.

Hope and Healing through Grief

Healing Hearts Connection (HHC), formerly named Children’s Grief Connection, is an organization we’ve supported for a long time. Based in St. Peter, Minnesota, HHC helps families and children find hope through grief. They host camps for children and do an event every year called “The Frunge,” where people jump into a freezing lake to raise money. We participate every year, and this year was no different!

Concierge LeAndra Pruett said, “It means the world to support such an incredible organization, especially with my friends.”

Growing our Business through Acquisition

2022 was also a great year for us because we acquired American Life & Annuity Company (ALAC) in Hot Springs, Arkansas. Kris Seale and ALAC President Claude Holloway worked closely together to ensure a smooth transition process for both companies, their respective funeral home clients, and the families they serve.

About the process, Kris said, “After a few conversations with Claude, I could tell immediately he was the type of guy I’d want on my team. He has strong Christian values and is dedicated to doing the best he can for his customers and funeral homes.”

“My team visited FDL and were blown away by the culture,” Claude mentioned. “Everything about Kris’ company exceeded our expectations, from the business principles to core values.”

This acquisition means we can serve families and funeral homes in Arkansas in the “best, mostrespected” way.

Expanding into New States

This year, we were also able to serve more families than ever by expanding into new states, including Massachusetts, New Hampshire, New Jersey, and Vermont. As a result, our Sales team continued to grow. Through their efforts, we saw an increase in sales for preneed, marketing, at-need, and technology offerings.

Our Customer Care team grew as well! They grew to 14 people and handled 97,965 calls last year. Plus, they prayed over policyholders and let the prayer team know when to pray over certain callers.

Updated Consumer Study

In 2022, we also received the results of the new funeral consumer study we conducted with McKee Wallwork + Co. (MW+C). Eric Layer of MW+C walked the sales team through the results and showed key differences between our decade-old consumer study and the updated one.

Then, the Marketing team took the results of the study to create a free report of insights for our prospects and customers to download. It’s another way we’re providing quality information to position ourselves as a thought leader in our profession.

To sum up, our company made quite the impact on organizations throughout our nation. In 2023, we aim to do the same and then some.

How We Served

Globally

We not only served locally this year, but we served globally in Mexico and Costa Rica through Directors Foundation on our mission trips. We ventured to Central and South America to help families in need. Here are those stories.

“In the same way, let your light shine before others, so that they may see your good works and give glory to your Father who is in heaven.”

Matthew 5:16

Mexico Build

In March 2022, the volunteers of the 2022 Cabo Incentive Trip were tasked with accomplishing the impossible: building two homes in three days. These homes were for two very deserving families: the Tolentino Mejia family (parents and one daughter) and the Gutierrez Chino family (parents and three children).

Over 125 funeral directors, funeral home owners, sales professionals, DIG employees, and family members served two families in three tremendous ways:

1. They prayed for these families and safety for the build team.

2. They brought clothing, towels, utensils, and other furnishings for the newly built homes.

3. They built the homes for these families in record time.

This was the first incentive trip Patrick Walker, a DIG employee, and his wife had been on. The build was, by far, their favorite part: “The impact of building the two houses was one we will never forget,” he said. “We were glad we could be a part of changing a few people’s lives.”

The families who received the homes were incredibly thankful and overwhelmed with gratitude. One family even began cooking a full meal for the volunteers (homemade beans and tortillas) and got the neighbors involved to help.

Though we celebrated our successes on the yearly Incentive Trip, we also took the time to serve those less fortunate than ourselves to further God’s kingdom. We’re looking forward to the next build!

Costa Rica Build

In the summer, we had our second mission trip of the year and went to Liberia, Costa Rica. We worked with Vital Seed Ministries and Youth with a Mission. Construction took a record 2.5 days!

At the end, the Umana Reina family (parents, four children, and a grandchild) and the Contreras Noguera family (single mom with six children) received homes. Because we’ve worked in this area before, families from previous builds showed up to help us bless these two families. The camaraderie was inspiring and allowed us to accomplish a lot of productive work physically and spiritually.

All homes were furnished with beds and linens, bathroom supplies, a dining room table and chairs, dishes, and kitchen appliances and more.

These mission trips hosted by Directors Foundation and Funeral Directors Life continue to make an impact on people who have little resources and hope.

Nathan Kessler, Active Sales Manager for Funeral Directors Life, said it best:

“All five members of my family signed up for the mission day, and it was very meaningful to meet the husband and wife who were receiving the new house. We were told a story that this family’s neighbors had told the recipient family the house would not be built and that nobody would show up and actually follow through with their promises. I was proud to see my boys and wife working very hard on that day, and it allowed all of us to slow down for a moment and be reminded of how blessed we truly are!”

We can’t wait to bless even more families in 2023, especially by sharing God’s love!

How We Made an

Eternal Impact

Sharing God’s love with each other, our community, our state, our nation, and the world is how we’re serving eternally. There is a purpose behind everything we do. Our business is serving others and God Himself.

Being the light. Providing hope. Praying ceaselessly. Here’s how we did that last year.

“But you will receive power when the Holy Spirit comes on you; and you will be my witnesses in Jerusalem, and in all Judea and Samaria, and to the ends of the earth.”

Acts 1:8

Leading by Example

For over 31 years, Ray Thompson has been a light to our organization. As our Chaplain, he provides counsel, financial advice, marital words of wisdom, and much more to anyone who steps into his office.

He leads every employee luncheon with prayer, starts each day with the prayer group, and continually calls to God to work miracles with every prayer request he receives. He steps outside his normal working schedule to visit those in the hospital who need prayer and counsel.

On working here for over three decades, Ray said, “My favorite thing is the atmosphere. The Father, Son, and Holy Spirit are all welcome. I sense them here, and that sets our company apart. It means everything!”

Intercessory Prayer Group

The intercessory prayer group is led by Chaplain Ray Thompson and includes employees, friends, and prayer warriors. Whenever Ray receives a prayer request, he informs the group, and they all call on God to work miracles. In 2022, they received hundreds of requests and devoted time to each one.

Special Shoutout

Ray also has led book studies at our company for a long time. One of those book studies was a journey through the entire Bible. For four years, a select few in our company (and two retired employees: Pat Baxter and Susan Condry) spent weekly lunches diving into the Word, from Genesis to Revelation, to read through all 66 books of the Bible.

Congratulations to the following people who not only completed the reading, but even received their own Maxwell Leadership Bible at one of our luncheons: Shawna Thomas, Suzann Sharp, Annette Parmelly, Steven Dantzler, Will Laurence, Albert Jonas, Darrell Richardson, and Susie Daniel!

Our organization is blessed to have Ray, the prayer group, and all our volunteers who are doing God’s work while having unshakeable faith.

Glory be to God!

How We Will Continue to Serve

in 2023

From the Home Office to the ends of the earth, we dared to be bold and serve, lead with love, and be a light to those around us. God placed this light within all of us, so it was up to us to share his Gospel with others.

Thank you to everyone for being a light and a witness to His love to everyone we met in 2022.

In 2023, we’ll walk boldly with Christ and share his love with policyholders, our customers, our business partners, and each other. Because when we do that, we’re blessed beyond measure.

We’ve been blessed for the last 42 years since our company was founded. And by doing great work, we’re hopeful that He will continue to bless us as we serve our profession next year.

For any act of love – big or small – serves God, the most important one of all.

“I am doing a great work and I cannot come down.”

Nehemiah 6:3

Management’s Discussion & Analysis

December 31, 2022 Analysis of Financial Position

For 2022, the financial position of Funeral Directors Life Insurance Company (FDL) remained strong as the company maintained an AM Best Insurance Company Rating of A- (Excellent) with a stable outlook. The significant increase in year-overyear new business sales production along with the company’s consistent investment strategy resulted in a combined premium and investment income of $490.0 million. Claims came in slightly higher than expected, while reserve increases were approximately 34.1% higher than the previous year. General insurance expenses increased by just over 27.8% as the company continued to invest in infrastructure for future growth. Net income fell short of 2021 by $2.9 million due entirely to lower realized capital gains. Total assets increased by $179.3 million, while capital and surplus increased by $10.3 million, resulting in a strong ratio of capital and surplus to assets of 8.72%, despite the significant growth in new business.

On September 15, 2022, FDL purchased 100% of FPA, Inc., an Arkansas corporation, for $7.4 million under the Statutory Purchase Method. FPA, Inc.’s only asset is its ownership in American Life and Annuity Company (ALAC), a preneed life insurance company domiciled in the state of Arkansas. No other material transactions occurred outside the normal scope of business during 2022.

Assets

The Total Assets of FDL grew to $1.9 billion, an increase of $179.3 million or 10.43% from year-end 2021. As of December 31, 2022, FDL’s assets were distributed as follows: 98.34% in investments, .91% in investment income due and accrued, .30% in receivables due from insurance companies, .24% in deferred tax assets, and .21% in various other assets.

Invested Assets: For 2022, the primary investment held by FDL was bonds (government, agency, and

corporate), representing 83.99% of invested assets or $1.6 billion. The emphasis regarding the investment portfolio has consistently involved maximizing book yield, limiting risk, achieving appropriate liquidity, and matching the cash inflow of invested assets with the projected cash outflow of the company’s insurance liabilities. This is known as an Asset Liability Management (ALM) strategy. Throughout 2022, FDL maintained this approach to matching the expected cash flows. This conservative approach to managing assets has been consistent since 1993 and was designed to reduce risk and provide assurance that the cash flow of assets is appropriate to provide for the claims of the company.

The growth in company assets has allowed FDL to “average into the market” over many different interest rate environments and in all areas of the yield curve. In combination with a disciplined approach to investing, this has enabled FDL to lower the market value volatility of the portfolio to interest rate fluctuations. During the year, FDL increased the diversification of its portfolio by both asset class and number of issues. Therefore, risk related to individual securities and single asset sectors has been reduced. Treasury yields were volatile throughout 2022, trending higher across all durations but especially on the short end of the curve. The treasury curve ended the year inverted, where shorter duration yields exceeded longer duration securities with the highest yielding

treasury being the 6-month treasury bill at 4.75%. FDL invested throughout the year over various parts of the curve but focused on shorter duration cash flows to increase liquidity while also seeking the best value in the market. Despite the volatility and economic concerns, FDL has continued to follow the long-term investment strategy and focus on diversification in terms of capital and surplus, asset valuation reserve, and the company’s asset liability matching strategy. Additionally, the company continues to look for ways to minimize book yield give-up, yet position the invested assets in a manner that is prudent for policyholders while maximizing the risk/return tradeoff.

At year-end 2022, there were no preferred stocks in the portfolio. FDL may consider investing in additional selective preferred securities going forward but only on a limited basis and consistent with the following parameters: a) investment in any one preferred stock shall not exceed 10% of capital and surplus; b) aggregate investment in all preferred stocks shall not exceed 40% of capital and surplus; c) preferred stocks with non-sinking fund provisions shall not exceed 10% of total assets; d) the yield must be greater than or equal to the average sector yield of a thirty-year bond less a deduction of one year’s asset valuation reserve requirement created by the asset; e) the purchase

of preferred stocks below an SVO 2 rating will be restricted; and f) the total amount invested in preferred stocks will not exceed 5% of the total assets of the company.

FDL’s total common stock portfolio was $25.1 million, representing 1.35% of invested assets and consisting largely of the company’s three whollyowned insurance subsidiaries totaling $19.7 million. The company owns Kentucky Funeral Directors Life Insurance Company domiciled in Kentucky, Funeral Directors Life Insurance Company of Louisiana domiciled in Louisiana, and American Life and Annuity Company domiciled in Arkansas. The public common stock portfolio consists solely of the Monteagle Select Value Fund, valued at $5.4 million, a mutual fund that invests only in Biblically responsible entities.

During 2022, FDL’s mortgage loan portfolio increased by $35.7 million for new loans of $53.1 million offset by $5.9 million in loans paid off, and $11.5 million in principal payments during the year. The mortgage loan portfolio represented 12.95% of invested assets as opposed to 12.19% in 2021. Virtually all mortgage loans made and retained by FDL are made to funeral home customers and have consistently performed. As of year-end, the company had no mortgage loans over 30 days past due.

At year-end 2022, real estate represented .92% of invested assets compared to 1.31% in 2021. $15.1 million represents the home office property, and $2.0 million represents the company’s investment property. The $4.5 million year-over-year decrease in real estate was due to the sale of investment properties resulting in net capital gains of $1.8 million.

Cash and short-term investments represented .45% of invested assets at $8.5 million compared to $6.6 million at year-end 2021.

Other invested assets consisted of loans to parent

that were issued in the first quarter of 2007, which comprised .16% of invested assets and surplus debentures of $3.3 million or .18% of invested assets. Principal reduction on the loans to parent was $546.7 thousand for the year.

The portfolio is conservatively positioned to allow for continued improvements going forward. FDL will maintain its long-term focus and not attempt to “time the market” with regard to interest rates. The focus will remain on providing for the policyholders and limiting both market risk and reinvestment risk. New cash flows during 2023 are expected to be reinvested at levels consistent with 2022. The overall book yield increased significantly during 2022, and the portfolio remains diversified and in a positive position to move forward in 2023 and the years to come. Diversification will continue in order to reduce exposure to single portfolio issues, and FDL will diligently invest to provide for the historical investment objectives of the company.

Other assets exceeded 2021 by approximately $3.0 million compared to the $7.0 million decrease between 2020 and 2021. Effective January 1, 2021, FDL elected to change its method of calculating life reserves in accordance with and as prescribed by SSAP3 and SSAP51R, resulting in a decrease in premiums deferred and uncollected. The impact of the election was a decrease in total assets of $7.5 million and a decrease in total liabilities of $8.1 million with an offsetting increase to surplus of $637.1 thousand.

Liabilities

At year-end 2022, FDL’s liabilities were distributed as follows: 97.39% in aggregate reserve for life contracts, .99% in asset valuation reserve, .47% in interest maintenance reserve, .36% in accrued commissions, .35% in premiums and annuity consideration received in advance, .06% in policy claims, .06% in provision for policyholders’ dividends, .04% in borrowed funds, and .28% in all other liabilities.

The life insurance and annuity reserves are primarily medium to long-term in nature. Life insurance reserves are calculated on a conservative basis, with 95.83% of the reserves being calculated using an interest factor of 4% or less. Annuity reserves are equal to the current cash surrender value of the annuities plus additional reserves required by Actuarial Guideline 33. The terms of the annuity contracts are conservative, offering interest guarantees of 1% to 5% and no bailout provisions.

Provision for policyholders’ dividends remained the same at year-end 2022. Essentially, a policyholder dividend is the growth rate applied to preneed products and credited to funeral home customers. Annually, the company estimates the dollar amount of dividends to be paid with respect to participating policies in the following calendar year.

The interest maintenance reserve decreased by $2.5 million from year-end 2021 for net realized capital losses of $2.2 million and amortization of $332.3 thousand. The asset valuation reserve increased $1.9 million or 12.35% in 2022 compared to a $2.9 million increase from 2020 to 2021. The significant increase in 2021 was due to the National Association of Insurance Commissioners’ (NAIC) changes to the designations for mortgagebacked securities. The NAIC moved from a financial modeling price breakpoints process to a single NAIC designation, and the NAIC designation category for mortgage-backed securities closed after December 31, 2012. Though there were no changes to the underlying characteristics of these type securities held by FDL, the impact was a $2 million increase to AVR with the offsetting decrease to capital and surplus for 2021.

Borrowed money for 2022 includes a $776.2 thousand grant from the Development Corporation of Abilene, Inc (DCOA). The initial investment incentive payment of $1.0 million was based upon the company’s expansion of its corporate

headquarters and its commitment to create 70 additional positions over a 5-year period. The original terms of the grant required the funds to be recorded as a liability for the first four years until the employment terms had been satisfied, at which time the loan would be forgiven and converted to income. The company surpassed the requirement to add 70 additional positions in 2022, so the DCOA amended the terms of the grant to allow FDL to convert one-fourth of the grant into income over a four-year period beginning in 2022.

Generally, the differences between years in the other liability categories did not result from any significant changes in liability trends but were the result of normal business.

Capital and Surplus

Total capital and surplus increased $10.3 million for 2022 as compared to the increase of $14.5 million in 2021. The increase in 2022 consisted of net income of $12.0 million, $343.6 thousand increase in net deferred income tax, unrealized gains of $65.2 thousand, offset by a $1.9 million increase in asset valuation reserve, and a $241.6 thousand increase in non-admitted assets. The majority of nonadmitted assets relate to negative agent reserve balances and prepaid expenses partially offset by depreciation on non-admitted capital assets. The

ratio of capital and surplus to total assets was 8.72% at year-end 2022 compared to 9.03% at year-end 2021. No other material favorable or unfavorable trends existed in FDL’s capital and surplus accounts.

Results of Operations Revenue

New business issued for 2022 exceeded $466 million, surpassing 2021 by $77.5 million. New business sales were 108.3% of projected and 19.9% higher than 2021.

Annuity premium income increased 19.78% from 2021 to 2022, while Ordinary Life, Group Life, and Industrial Life premiums increased 20.91%, for a total increase between years of $68.5 million or 20.22%, compared to a 37.36% increase from 2020 to 2021. The significant increase for 2021 was due entirely to the impact of COVID-19 on new business sales and therefore premium income for 2020. Single-pay new business sales production for 2022 was 72.1% of total production compared to 72.8% for 2021. The company’s five largest states – Texas, Minnesota, Ohio, Pennsylvania, and Wisconsin –contributed $280 million in new business sales. A large part of the growth in 2022 was also attributed to the growth of third-party marketing partners. In 2022, approximately $3.0 million in premium income came from trust conversions, compared to $3.3 million in 2021. Trust conversions typically result in higher commissions and reserves in year one but are profitable in future years.

Net investment income increased $7.7 million from year-end 2021 to year-end 2022 compared to the $1.2 million decrease from year-end 2020 to year-end 2021. 2022 investment income included $1.7 million in prepayment income from calls and tenders. Income from bond investments increased as interest rates increased, and new business sales provided additional funds for investment. As of December 2022, future asset cash flows exceeded the liability cash flows for a projected thirty years.

A continued focus in 2022 was to better align some of the upcoming calendar years and any cash flow discrepancies. The average yield on new bond purchases in 2022 increased by approximately 140 basis points, while the yield on the total bond portfolio increased from 4.56% at year-end 2021 to 4.70% at year-end 2022. The average yield on new mortgage loans increased slightly and was 58 basis points higher than bond yields. Net new dollars invested for 2022 were $176.2 million compared to $98.8 million for 2021.

Expenses

For 2022, overall expenses increased $77.3 million or 19.2% from the previous year compared to an increase of $90.4 million or 29.1% from year-end 2020 to year-end 2021. Death and annuity benefits paid during the year increased by $12.4 million when compared to 2021 and were $2.9 million more than expected. Monthly claims expenses averaged $17.3 million in 2022 compared to $16.3 million in 2021. With the significant year-overyear increase in new business sales, aggregate reserves increased $43.1 million or 34.1% from 2021. Commissions were up approximately $13.4 million or 30.71% when compared to 2021. General insurance expenses exceeded 2021 by $7.0 million or 23.2% compared to a $3.4 million

or 12.8% increase from 2020 to 2021, largely due to an increase in salaries and benefits and sales related expenses to support the growth of the company. Net realized capital gains of $2.0 million occurred in 2022 compared to $4.7 million of net realized capital gains in 2021. Capital gains for 2022 were related to the sale of real estate investment property. Capital gains for 2021 included $2.1 million for the sale of real estate and $2.6 million for forgiveness of the Paycheck Protection Program (PPP) loan received in 2020. No other material expense changes occurred during 2022.

Net Income

For 2022, net income was $12.0 million, down from 2021 net income of $14.9 million. The following facts are relevant when comparing net income between 2021 and 2022: 1) new business sales continued to increase; 2) investment yields and additional funds to invest increased; 3) claims were in line with projections, but the increase in new business production led to increased reserves and commissions; 4) the company continued to invest heavily in personnel to support future growth; and 5) the net realized capital gains in 2021 exceeded 2022 due to the forgiveness of the PPP loan in 2021. Net income fell short of 2021 by $2.9 million.

Cash Flow and Liquidity

Through the inflows of premium income and the growth of investment income, FDL has continued to maintain extremely positive cash flow. Premium and investment income have allowed FDL to meet all obligations and invest a considerable amount of the remainder. This trend is expected to continue in 2023 and beyond. However, FDL has made appropriate plans for the future by continuing the investment strategy of matching asset maturities with liability cash flow projections.

FDL continues to be positively positioned from a portfolio structure as well as a reporting standpoint. Moreover, the diversification, structure

of the investment portfolio, and limited exposure to troubled securities has afforded FDL the opportunity to benefit versus our competition. New cash flows during 2023 are expected to be reinvested at similar levels as that of 2022. During 2022, inflation concerns drove interest rates up to a large degree, with the 10-year increasing nearly 237 basis points to finish the year at 3.88%. While inflation has begun trending downwards, the Fed remains cautious to cut rates preemptively, thus we anticipate rates to remain elevated throughout the first half of 2023 before trending modestly lower.

FDL has maintained considerable liquidity over the years and will continue to do so in the future. As stated previously, current cash flow has always been sufficient to meet maturing insurance and annuity obligations, as well as operating expenses; however, if FDL is required, by some catastrophic event, to generate cash flow, it may do so by liquidating its highly marketable securities.

Conclusion

The company entered 2022 with a very strong ratio of capital and surplus to assets and continued the steady and consistent growth that was interrupted by the pandemic in early 2020. The investment portfolio is highly diversified and structured to generate cash flows sufficient to provide for the cash needs of the company. These cash needs include

the expected claims and all operating needs of the company. FDL is constantly monitoring investment activity, using technology to communicate with employees and customers, and evaluating opportunities to reduce expenses. FDL is strongly positioned for growth in 2023 and beyond.

SELECTED FINANCIAL AND STATISTICAL DATA (FIVE YEAR SUMMARY)

BALANCE SHEET

STATEMENT OF CASH FLOW

BOARD OF DIRECTORS

Allan Adams Denton, TX

Jack Cypert Snyder, TX

Jerry Edwards Granbury, TX

Robert Hamil Abilene, TX

Pat Patton Sauk Centre, MN

Drew Seale Abilene, TX

Kris Seale Abilene, TX

Kasi Welch Baker Midland, TX

BOARD OF DIRECTORS

Allan Adams Denton, TX

Leslie Branon Montz Brownwood, TX

Jack Cypert Snyder, TX

Jerry Edwards Granbury, TX

Mark France Austin, TX

Robert Hamil Abilene, TX

Jeff Harper San Angelo, TX

Mike Lemons Austin, TX

Pat Patton Sauk Centre, MN

Darrell Rains Austin, TX

Dr. Reagan Ramsower Waco, TX

Drew Seale Abilene, TX

Kris Seale Abilene, TX

Kasi Welch Baker Midland, TX

President & Chief Executive Officer, Chairman of

Terri Bannister

Executive Vice President & Chief Learning Officer

Todd Carlson

Executive Vice President & Chief Sales Officer

Terry Groban

Executive Vice President & Chief Financial Officer, Secretary, Treasurer

Paul Lovelace

Executive Vice President & Chief Corporate Development Officer

Dwayne McGraw

Executive Vice President & Chief Actuary

Dawson Rodriguez

Executive Vice President & Chief Information Security Officer

Drew Seale

Executive Vice President & Chief Marketing Officer

Jeff Stewart

Executive Vice President & Chief Culture Officer

Addison Templeton

Executive Vice President & Chief Operations Officer

Amy Biggs

Vice President of Operations

Rob Davidson

Vice President of Creative Services

Jason Gazaille

Vice President of Finance

Melissa Magers

Vice President of Accounting

Mitchell McLean

Vice President of Digital Marketing

Zack Shahan

Vice President of Security Operations

Kyle Swearingen

Vice President of Development

Kevin Gaffney

Regional Sales Vice President

John Harrington

Regional Sales Vice President

Mark Owen

Regional Sales Vice President

Jeffery “Stewy” Stewart

Regional Sales Vice President

Kris Seale

Todd Carlson

Dwayne McGraw

Dawson Rodriguez

Terri Bannister

Terry Groban

Paul Lovelace

Jeff Stewart

Kris Seale

the Board

Addison Templeton

Drew Seale