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Independence Holding Company Announces 2013 Second-Quarter and Six-Month Results



Independence Holding Company Announces 2013 Second-Quarter and Six-Month
Results

STAMFORD, Conn., Aug. 7, 2013 (GLOBE NEWSWIRE) -- Independence Holding Company
(NYSE:IHC) today reported 2013 second-quarter and six-month results.

Financial Results

Net income per share attributable to IHC increased to $.21 per share, diluted,
or $3,691,000, for the three months ended June 30, 2013 compared to $.20 per
share, diluted, or $3,531,000, for the three months ended June 30, 2012.
Revenues increased 50% to $151,900,000 for the three months ended June 30,
2013 compared to revenues for the three months ended June 30, 2012 of
$101,443,000, primarily due to increases in premium revenue, fee income and
net realized investment gains.

Net income per share attributable to IHC increased to $.47 per share, diluted,
or $8,392,000, for the six months ended June 30, 2013 compared to $.41 per
share, diluted, or $7,453,000, for the six months ended June 30, 2012.
Revenues increased 42% to $289,782,000 for the six months ended June 30, 2013
compared to revenues for the six months ended June 30, 2012 of $203,599,000,
primarily due to an increase in premium revenue, fee income and net realized
investment gains.

During the quarter, Madison National Life entered into a coinsurance agreement
to cede approximately $219 million of reserves, primarily annuities. As a
result of this transaction, the Company wrote off approximately $9.3 million
of deferred acquisition costs. However, those costs were more than offset by
the gains realized by the Company in the transaction, most of which resulted
from the required sale and transfer of invested assets.

Chief Executive Officer's Comments

Roy Thung, Chief Executive Officer, commented, "Earned premium for medical
stop-loss, which is by far our largest line of business, grew 25% over the
same quarter last year, driven by annual growth rates in excess of 28% in our
direct-written segment. Profitability of this line continues at expected
levels. We see a significant portion of this growth arising from employer
groups moving from fully insured to self-funding as they consider alternatives
under health care reform. We expect a continuation of these trends through the
remainder of this year and into 2014. We are also encouraged by the
performance of our existing group-life, disability and DBL business lines and
our expansion into new business lines.

"We have made the decision to exit major-medical for individuals and families
in the majority of states in which we do business due to changes brought about
under health care reform. In addition, in the first two quarters of 2013, the
Company experienced an increase in loss ratios in our fully insured segment
from business produced by certain of our major-medical distributors.
Accordingly, we either have terminated, or soon will be terminating, all
small-group producers that were hindering our performance. In order to
leverage our expertise in fully insured health, we are concentrating on
expanding our products in markets not adversely affected by reform, including:
short-term medical, dental, small-group stop-loss; non-subscriber occupational
accident, insurance for overseas employees and travelers, and pet insurance.
We expect that the loss in underwriting income from substantially exiting the
individual major-medical market in 2014 will be offset by an increase in
underwriting income from growth in these other areas.

"Our overall investment portfolio continues to be very highly rated (on
average, AA) and has a duration of approximately six years. Our book value has
decreased to $15.44 per share at June 30, 2013 from $15.93 per share at
December 31, 2012 and our total stockholders' equity is $273 million. These
declines are primarily attributable to sharp increases in ten-year treasury
interest rates experienced during the quarter that caused a downward valuation
in our bond portfolio. Were rates to continue to increase, we would expect a
positive effect on future earnings as cash flows could be invested at higher
rates."

About Independence Holding Company

IHC is a holding company principally engaged in the life and health insurance
business and the acquisition of blocks of policies through its insurance
company subsidiaries (Standard Security Life Insurance Company of New York,
Madison National Life Insurance Company, Inc. and Independence American
Insurance Company) and its marketing and administrative affiliates. Standard
Security Life markets medical stop-loss, small group major medical, short-term
medical, limited medical, group long and short-term disability and life,
dental, vision and various supplemental products. Madison Life sells group
life and disability, small group major medical, major medical for individuals
and families, dental, individual life insurance, and various supplemental
products. Independence American offers major medical for individuals and
families, medical stop-loss, small group major medical, short-term medical,
pet insurance, and non-subscriber occupational accident and international
coverages. IHC owns certain subsidiaries through its majority ownership of
American Independence Corp. (Nasdaq:AMIC), which is a holding company
principally engaged in the insurance and reinsurance business.

Certain statements and information contained in this release may be considered
"forward-looking statements," such as statements relating to management's
views with respect to future events and financial performance. Such
forward-looking statements are subject to risks, uncertainties and other
factors which could cause actual results to differ materially from historical
experience or from future results expressed or implied by such forward-looking
statements. Potential risks and uncertainties include, but are not limited to,
economic conditions in the markets in which IHC operates, new federal or state
governmental regulation, IHC's ability to effectively operate, integrate and
leverage any past or future strategic acquisition, and other factors which can
be found in IHC's other news releases and filings with the Securities and
Exchange Commission. IHC expressly disclaims any duty to update its
forward-looking statements or earnings guidance, and does not undertake to
provide any such guidance in the future.

 
 
INDEPENDENCE HOLDING COMPANY
SECOND QUARTER REPORT
June 30, 2013
(In Thousands, Except Per Share Data)
 
                                   Three Months Ended    Six Months Ended
                                   June 30,              June 30,
                                   2013        2012      2013       2012
                                                                     
REVENUES:                                                            
Premiums earned                     $ 125,465  $ 85,469  $ 242,833  $ 169,243 
Net investment income               7,002       7,609     15,003     16,360 
Fee income                          6,039       5,889     12,581     13,310 
Other income                        1,659       1,247     3,011      2,403 
Net realized investment gains       11,735      1,850     16,354     2,987 
Total other-than-temporary          --          (621)     --         (704)
impairment losses
                                                                     
                                    151,900     101,443   289,782    203,599 
                                                                     
EXPENSES:                                                            
Insurance benefits, claims and      89,276      60,265    174,736    117,400 
reserves
Selling, general and                44,862      33,331    87,742     69,803 
administrative expenses
Amortization of deferred            10,948      1,631     12,388     3,225 
acquisitions costs
Interest expense on debt            490         540       977        1,079 
                                                                     
                                    145,576     95,767    275,843    191,507 
                                                                     
Income before income taxes          6,324       5,676     13,939     12,092 
Income taxes                        2,166       1,846     4,741      3,932 
                                                                     
Net income                          4,158       3,830     9,198      8,160 
Less: income from noncontrolling     (467)       (299)    (806)       (707)
interests in subsidiaries
                                                                     
NET INCOME ATTRIBUTABLE TO IHC      $ 3,691     $ 3,531   $ 8,392    $ 7,453 
                                                                     
Basic income per common share      $ .21        $ .20     $ .47      $ .41 
                                                                     
WEIGHTED AVERAGE SHARES             17,753      17,987    17,836     18,008 
OUTSTANDING
                                                                     
Diluted income per common share    $ .21        $ .20     $ .47      $ .41 
                                                                     
WEIGHTED AVERAGE DILUTED SHARES      17,805     18,025     17,922     18,100 
OUTSTANDING

As of August 2, 2013, there were 17,667,526 common shares outstanding, net of
treasury shares.

 
 
INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
 
                                                 June 30,    December 31,
                                                 2013        2012
                                                              
ASSETS:                                                       
Investments:                                                  
Short-term investments                           $ 50        $ 50
Securities purchased under agreements to resell  10,588       33,956
Trading securities                               7,997        7,016
Fixed maturities, available-for-sale             573,527      719,602
Equity securities, available-for-sale            5,594        15,598
Other investments                                25,648       35,134
Total investments                                623,404      811,356
                                                              
Cash and cash equivalents                        18,977       23,945
Deferred acquisition costs                       29,624       33,401
Due and unpaid premiums                          73,146       49,430
Due from reinsurers                              383,848      166,880
Premium and claim funds                          36,524       40,596
Goodwill                                         50,318       50,318
Other assets                                     77,548       86,382
                                                              
TOTAL ASSETS                                     $ 1,293,389  $ 1,262,308
                                                              
LIABILITIES AND STOCKHOLDERS' EQUITY:                         
LIABILITIES:                                                  
Claims and claim adjustment expenses-health      $ 240,155   $ 194,480 
Future policy benefits-life and annuity          289,726      290,238 
Funds on deposit                                 276,287      278,084 
Unearned premiums                                11,106       8,453 
Other policyholders' funds                       24,990       22,373 
Due to reinsurers                                45,454       48,192 
Accounts payable, accruals and other liabilities 71,425       71,495 
Debt                                             8,000        8,000 
Junior subordinated debt securities              38,146       38,146 
                                                              
TOTAL LIABILITIES                                1,005,289    959,461 
                                                              
STOCKHOLDERS' EQUITY:                                         
IHC STOCKHOLDERS' EQUITY:                                     
Preferred stock (none issued)                     --          -- 
Common stock                                     18,474       18,462 
Paid-in capital                                  127,187      126,589 
Accumulated other comprehensive income           (3,459)      15,013 
Treasury stock, at cost                          (7,431)      (4,533)
Retained earnings                                137,921      130,153 
                                                              
TOTAL IHC STOCKHOLDERS' EQUITY                   272,692      285,684 
NONCONTROLLING INTERESTS IN SUBSIDIARIES         15,408       17,163 
                                                              
TOTAL EQUITY                                     288,100      302,847 
                                                              
TOTAL LIABILITIES AND EQUITY                     $ 1,293,389 $ 1,262,308 

CONTACT: DAVID T. KETTIG
         (212) 355-4141 Ext. 3047
         www.IHCGroup.com
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