On July 2, 2012, Kohlberg & Company, a leading U.S. private equity firm, announced that it acquired Aurora Casket Company. Homesteaders Life Company CEO Graham Cook reports that he has no reason to believe this event will affect the Homesteaders-‐Aurora Casket Price Protection program.
The Homesteaders-‐Aurora Casket Alliance was formed in 1998 to help funeral home owners preserve the value of funeral service through casket price protection.
According to Jerry Reichert, member and senior advisor to the Aurora Board of Directors, “The purpose and mission of Aurora will not change. We remain dedicated to helping create an honorable closure to a life lived.”
Steve Lang, Homesteaders’ COO says the acquisition of Aurora Casket Company has no impact on Homesteaders. “Aurora Casket has been a strong partner with us in offering the benefits of casket price protection and we don’t see the program changing as a result of this announcement.”
“Aurora and Homesteaders have provided the industry’s leading casket price protection program for more than a decade,” said Reichert. “Both companies continue to believe that this program provides excellent benefits to our customers and, most importantly, the families they serve.”
Any questions regarding the casket alliance and price protection program should be directed to your Homesteaders or Aurora representative, who is the most qualified to answer.
Focused solely on funeral insurance funding and support, Homesteaders Life Company is a market leader associated with nearly 4,000 funeral homes and 8,000 licensed agents across the United States. Visit homesteaderslife.com for more information.
I see more in the shadows than the quotes from Homesteaders acknoledges. I hope that this is all “much ado about nothing” but there are economics at play. The plus side for Aurora (regardless of who owns it) is that this helps sell caskets. The negative for Aurora (regardless of who owns it) is that the caskets are provided in the future at a discounted rate.
Therefore the price of the average unit sold is declining due to consumers choosing less expensive caskets (more 20 gauge and vaneer caskets are sold today versus previous years) and other units are being sold at a lower wholesale due to the reduced recognized price via the marketing agreement. So, without actions to increase market share, Aurora’s average unit sale price is going to decline. Add to that as cremation increases by 1 percentile per year even if Aurora keeps every customer, the number of units sold will be declining while the cost of fixed investment is going to stay the same or increase slightly.
Kohlberg is going to have to do the math, but if I owned a funeral home today and I used Homesteaders and Aurora, I would reread the provision guaranteeing casket pricing in the future.