A US life insurer’s third-quarter results lay bare a disconnect that runs across the sector: new life coverage is selling well, yet the same interest rate environment inflating balance sheets is hollowing out the earnings figure brokers and counterparties typically look at first.
Security National Financial Corporation (SNFC), a Salt Lake City-based life insurer and mortgage lender listed on NASDAQ, reported after-tax earnings of $6.2 million for the three months ended September 30, 2026, down 38.6% from $10 million in the same period of 2025, according to the company’s November 9, 2026, earnings release. Total revenues fell 10.5% to $79.9 million. Pre-tax earnings dropped 37.2% to $8.2 million.
The company’s CEO Scott M. Quist attributed the pressures primarily to rising interest rates and a deteriorating mortgage market, but also pointed to a balance sheet result that told a starkly different story.
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First-year life insurance sales rose more than 20% year to date by annualized premium and 27% by face amount, compared with 2025. The company attributed the gains to new sales management put in place following a near-complete leadership overhaul the prior year.
That growth sits within a broader market upswing. Total US individual life insurance new annualized with excess premium rose 3% year over year to $4.75 billion in the second quarter of 2026, with the number of policies sold up 8%, according to LIMRA’s US Life Insurance Sales Survey. Policy count outpaced premium growth, a signal that more consumers are buying coverage rather than simply paying more for existing policies.
For brokers placing life business, strong new business volumes at a carrier do not automatically signal financial health in the short term. Under standard accounting treatment, first-year life sales are mildly profit-negative – acquisition costs are recognized immediately while the income they generate emerges over time.
“Due to how first year sales are accounted for, the profits from those sales will not be realized from an accounting point of view until future years. In fact, first year sales are mildly profit negative,” Quist said.
Stockholders’ equity rose approximately $36 million, or 8.2%, to $469 million in the quarter – what Quist described as the largest single-quarter dollar increase in the company’s history.
The driver was a downward revaluation of life reserves triggered by higher interest rates. Under current accounting rules, that revaluation flows into stockholders’ equity through Other Comprehensive Income, bypassing the earnings statement entirely.
“Our liabilities have a longer average duration than our assets, so increases in interest rates generally have the effect noted, and decreases generally have the opposite effect,” Quist said.
This split, where the income statement weakens while book value strengthens, is a structural feature of life insurance balance sheets that rate volatility exposes. Reading only quarterly earnings figures, without accounting for reserve movements and book value changes, can produce a misleading picture of a carrier’s financial position.
Quist cited National Association of Insurance Commissioners data showing industry book yields at year-end 2025 were in the mid-4% range, while SNFC’s own portfolio yield for Q3 2026 was in the mid-5% range. Despite that relative outperformance, the company’s average portfolio yield still declined approximately 90 basis points year over year, driven by the timing of home builder profit recognition and the impact of credit loss provisions.
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The mortgage segment moved from a $66,000 profit in Q3 2025 to a $2.6 million loss in Q3 2026, with revenues down 28.5% to $21.2 million. The company cited geopolitical uncertainty and deteriorating housing conditions throughout the quarter.
The national picture supports that read. Pending home sales across the US fell 7.3% month over month and 11.3% year over year in September 2026, according to the National Association of Realtors (NAR). NAR chief economist Lawrence Yun attributed the decline to fast-rising mortgage rates weakening market conditions and suppressing housing affordability.
SNFC flagged Utah, one of its key operating markets, as particularly affected, with pending home sales down 27% year over year in September and closed sales down 12%.
The company also recorded a provision for credit losses of approximately $2 million in Q3 under the Current Expected Credit Losses (CECL) accounting standard, primarily related to two loans that defaulted during the quarter. Quist noted that if ultimate recoveries exceed current estimates, a portion of the provision could be reversed in future periods.
The cemetery and mortuary segment posted a 16.9% decline in pre-tax earnings to $2.5 million, partly due to unrealized stock portfolio losses of more than $400,000 and the absence of a leasing income gain recorded a year earlier.
Net earnings per share for the nine months ended September 30, 2026, were $0.82, compared with $0.93 in the prior-year period. Book value per share was $17.98, up from $15.75 at December 31, 2025. The company scheduled an earnings call for November 12, 2026.
