Independence Holding Company Announces 2013 Third-Quarter and Nine-Month Results STAMFORD, Conn., Nov. 6, 2013 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2013 third-quarter and nine-month results. Financial Results Net income per share attributable to IHC amounted to $.21 per share, diluted, or $3,639,000, for the three months ended September 30, 2013 compared to $.22 per share, diluted, or $3,918,000, for the three months ended September 30, 2012. Revenues increased 27% to $141,644,000 for the three months ended September 30, 2013 compared to revenues for the three months ended September 30, 2012 of $111,502,000, primarily due to increases in premium revenue. Net income per share attributable to IHC increased to $.68 per share, diluted, or $12,031,000, for the nine months ended September 30, 2013 compared to $.63 per share, diluted, or $11,371,000, for the nine months ended September 30, 2012. Revenues increased 37% to $431,426,000 for the nine months ended September 30, 2013 compared to revenues for the nine months ended September 30, 2012 of $315,101,000, primarily due to an increase in premium revenue and net realized investment gains. Nine-month results include the write-off of approximately $9.3 million of deferred acquisition costs related to a coinsurance agreement entered into by Madison National Life to cede approximately $219 million of reserves, primarily annuities, in the second quarter of 2013. 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, our largest segment, grew substantially over the same quarter last year. We anticipate that, by the end of the year, the medical stop-loss we write on a direct basis will have increased by approximately 25% from 2012 levels. We attribute this growth to enhanced sales efforts, focused underwriting and an expansion in the market as new employer groups migrate to self-funding from fully insured in response to health care reform. We expect this growth to continue in 2014. Profitability of our medical stop-loss line continues at expected levels. We are also encouraged by the performance of our existing group life, disability and DBL business lines and the expansion of our pet insurance line. Additionally, as a result of an equity investment in a successful producer of non-subscriber occupational accident, we anticipate significant premiums and income from this new line of business in 2014. "During 2013, IHC has for the first time experienced underwriting losses in our individual major medical line of business, which are primarily attributable to the effects of health care reform. As a result, like many insurance companies, we have exited this line in all states. Since we have discontinued writing this business, the losses incurred in 2013 will not recur in 2014, except for any run-off.We are also recording decreased underwriting margins in our small-group major medical line of business.The Company attributes both the underwriting loss from individual major medical and the reduced profitability of the small-group major medical line to changes brought about by certain aspects of health care reform.Although health care reform has led to adverse underwriting results in our major-medical business, it has had a positive effect on sales for our higher-margin business lines, including medical stop-loss and ancillary health products such as short-term medical, dental, small-group stop-loss, hospital indemnity, critical illness, scheduled-benefit and gap insurance plans. "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 increased to $15.49 per share at September 30, 2013 from $15.44 per share at June 30, 2013 and our total stockholders' equity is $274 million. "As a result of our increased sales of stop-loss and higher-margin products not negatively affected by reform, increased sales of pet insurance and insurance for overseas employees and travelers, and the launching of a non-subscriber occupational accident product, we remain optimistic as to our 2014 results." 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, group major medical, short-term medical, limited medical, group long-term and short-term disability and life, dental, vision and various supplemental products. Madison National Life sells group life and disability, group major medical, dental, individual life insurance and various supplemental products. Independence American offers pet insurance, non-subscriber occupational accident, international coverages, small-group major medical and short-term medical. 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 that 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 THIRD QUARTER REPORT September 30, 2013 (In Thousands, Except Per Share Data) Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 REVENUES: Premiums earned $125,174 $92,236 $368,007 $261,479 Net investment income 6,841 9,346 21,844 25,706 Fee income 6,290 7,754 18,871 21,064 Other income 922 1,155 3,933 3,558 Net realized investment gains 2,417 1,011 18,771 3,998 Net impairment losses recognized in -- -- -- (704) earnings 141,644 111,502 431,426 315,101 EXPENSES: Insurance benefits, claims and 88,177 63,034 262,913 180,434 reserves Selling, general and administrative 45,597 39,791 133,339 109,594 expenses Amortization of deferred 1,404 1,587 13,792 4,812 acquisitions costs Interest expense on debt 470 509 1,447 1,588 135,648 104,921 411,491 296,428 Income before income taxes 5,996 6,581 19,935 18,673 Income taxes 2,080 2,191 6,821 6,123 Net income 3,916 4,390 13,114 12,550 Less: income from noncontrolling (277) (472) (1,083) (1,179) interests in subsidiaries NET INCOME ATTRIBUTABLE TO IHC $3,639 $3,918 $12,031 $11,371 Basic income per common share $.21 $.22 $.68 $.63 WEIGHTED AVERAGE SHARES OUTSTANDING 17,683 17,957 17,784 17,991 Diluted income per common share $.21 $.22 $.67 $.63 WEIGHTED AVERAGE DILUTED SHARES 17,735 18,028 17,890 18,076 OUTSTANDING As of November 1, 2013, there were 17,687,669 common shares outstanding, net of treasury shares. INDEPENDENCE HOLDING COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Data) September 30, December 31, 2013 2012 ASSETS: Investments: Short-term investments $50 $50 Securities purchased under agreements to resell 34,036 33,956 Trading securities 6,394 7,016 Fixed maturities, available-for-sale 546,707 719,602 Equity securities, available-for-sale 5,605 15,598 Other investments 26,302 35,134 Total investments 619,094 811,356 Cash and cash equivalents 16,835 23,945 Deferred acquisition costs 29,578 33,401 Due and unpaid premiums 58,343 49,430 Due from reinsurers 377,802 166,880 Premium and claim funds 40,795 40,596 Goodwill 50,318 50,318 Other assets 83,984 86,382 TOTAL ASSETS $1,276,749 $1,262,308 LIABILITIES AND STOCKHOLDERS' EQUITY: LIABILITIES: Claims and claim adjustment expenses-health $232,688 $194,480 Future policy benefits-life and annuity 285,175 290,238 Funds on deposit 276,379 278,084 Unearned premiums 10,970 8,453 Other policyholders' funds 24,975 22,373 Due to reinsurers 36,734 48,192 Accounts payable, accruals and other liabilities 75,861 71,495 Debt 6,000 8,000 Junior subordinated debt securities 38,146 38,146 TOTAL LIABILITIES 986,928 959,461 STOCKHOLDERS' EQUITY: IHC STOCKHOLDERS' EQUITY: Preferred stock (none issued) -- -- Common stock 18,520 18,462 Paid-in capital 127,683 126,589 Accumulated other comprehensive income (loss) (5,923) 15,013 Treasury stock, at cost (7,430) (4,533) Retained earnings 141,564 130,153 TOTAL IHC STOCKHOLDERS' EQUITY 274,414 285,684 NONCONTROLLING INTERESTS IN SUBSIDIARIES 15,407 17,163 TOTAL EQUITY 289,821 302,847 TOTAL LIABILITIES AND EQUITY $1,276,749 $1,262,308 CONTACT: ADAM VANDERVOORT (646) 509-2156 www.IHCGroup.com
Independence Holding Company Announces 2013 Third-Quarter and Nine-Month Results
Press spacebar to pause and continue. Press esc to stop.