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Independence Holding Company Announces 32% Increase in 2015 Second-Quarter Results and 37% Increase in Six-Month Results

STAMFORD, Conn., Aug. 06, 2015 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2015 second-quarter and six-month results.

Financial Results

Net income attributable to IHC increased 32% to $.29 per share, diluted, or $5,032,000, for the three months ended June 30, 2015 compared to $.22 per share, diluted, or $3,848,000, for the three months ended June 30, 2014. Net income attributable to IHC increased 37% to $.59 per share, diluted, or $10,251,000, for the six months ended June 30, 2015 compared to $.43 per share, diluted, or $7,549,000, for the six months ended June 30, 2014.

Revenues decreased $2,914,000 to $133,105,000 for the three months ended June 30, 2015 compared to revenues for the three months ended June 30, 2014. Revenues decreased $9,721,000 to $267,370,000 for the six months ended June 30, 2015 compared to revenues for the six months ended June 30, 2014. The decrease in revenues is primarily due to the runoff of major medical premiums from lines that we exited largely as a result of the requirements of the Affordable Care Act (“ACA”) and amounted to $12,912,000 for the second quarter and $31,699,000 for the first six months of 2014, offset in part by an increase in medical stop-loss and specialty health premiums.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “Our significant earnings increase in the current quarter and for the six months was largely driven by continued growth in earned premium and significantly increased earnings from our direct medical stop-loss and group life, disability and DBL lines of business, and increased earnings from our specialty health line of business. We continue to see strong growth in our direct written stop loss business, increasing 38% in the twelve months ended July 2015. This growth has been driven by increased persistency and strong sales as a result of our industry leading suite of product features and options as well as solutions, such as our group captive model, that respond to the emerging needs of small and medium size employers. The Company currently has $285 million in direct in-force gross premiums and is expected to exceed $300 million by the end of 2015. Our disciplined underwriting approach has resulted in consistent underwriting margins, thus producing a growing contribution to net income. Our earnings were also positively impacted by our specialty health business, which grew significantly and has produced very positive profit margins in 2015. Our earnings should also reflect an immediate increase as a result of Madison National Life (MNL) and Standard Security Life completing the reinsurance of substantially all of their run-off blocks of individual life and annuities and the sale of MNL’s infrastructure related to those blocks for an aggregate purchase price of $42 million.

Despite a significant increase in premiums for the products we are currently selling, exiting major medical has negatively impacted our revenues for the first six months, although this impact will lessen over future quarters. We believe the proposed mergers of four of the largest health insurers and the exit of another significant player from the individual and certain specialty lines will create significant opportunities for our niche products, including short term medical and small group self-funding. The consolidation of traditional health insurers will create tremendous growth in health payer systems offering their own insurance products. We are confident that our fully insured national administrator can utilize its advanced IT platform to be a market leader in providing solutions to these payer systems.

Our overall investment portfolio continues to be very highly rated (on average, AA) and has a duration of approximately six years. Our book value increased to $17.13 per share at June 30, 2015 from $16.76 per share at December 31, 2014, and our total stockholders’ equity increased to $297 million at June 30, 2015 compared to $291 million at December 31, 2014.”

About Independence Holding Company

Independence Holding Company 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 furnishes medical stop-loss, group major and limited medical, short-term medical, group long-term and short-term disability, group life, short-term, employer-mandatory disability benefit policies in New York, group and individual dental, vision and various supplemental products. Madison National Life sells group life and disability, group limited medical, group and individual dental, individual life insurance and various supplemental products. Independence American offers pet insurance, non-subscriber occupational accident, short-term medical, medical stop-loss, group and individual dental and various supplemental products. 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.

Forward-looking Statements

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 unless required by applicable law.”

INDEPENDENCE HOLDING COMPANY
SECOND QUARTER REPORT
June 30, 2015
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
REVENUES:
Premiums earned$ 120,443 $ 121,135 $242,557$ 244,405
Net investment income 4,505 5,434 9,946 11,235
Fee income 4,487 3,861 8,203 13,200
Other income 1,570 1,070 2,564 2,181
Net realized investment gains 2,100 4,519 4,100 6,070
133,105 136,019 267,370 277,091
EXPENSES:
Insurance benefits, claims and reserves 79,380 83,263 159,000 168,572
Selling, general and administrative expenses 43,702 44,947 87,851 93,082
Amortization of deferred acquisitions costs 1,424 1,189 2,888 2,471
Interest expense on debt 478 337 910 818
124,984 129,736 250,649 264,943
Income before income taxes 8,121 6,283 16,721 12,148
Income taxes 2,965 2,403 6,234 4,263
Net income 5,156 3,880 10,487 7,885
Less: income from noncontrolling interests
in subsidiaries (124) (32) (236) (336)
NET INCOME ATTRIBUTABLE TO IHC$ 5,032 $ 3,848 $10,251$ 7,549
Basic income per common share$.29 $ .22 $.59$ .43
WEIGHTED AVERAGE SHARES OUTSTANDING 17,338 17,485 17,351 17,553
Diluted income per common share$.29 $ .22 $.59$ .43
WEIGHTED AVERAGE DILUTED SHARES
OUTSTANDING 17,501 17,657 17,516 17,709
As of August 1, 2015, there were 17,299,351 common shares outstanding, net of treasury shares.


INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
June 30, December 31,
2015 2014
ASSETS:
Investments:
Short-term investments$ 50 $50
Securities purchased under agreements to resell 23,429 16,790
Trading securities 9,242 11,095
Fixed maturities, available-for-sale 608,256 583,880
Equity securities, available-for-sale 9,051 13,895
Other investments 23,745 25,251
Total investments 673,773 650,961
Cash and cash equivalents 23,547 25,083
Deferred acquisition costs 31,767 30,806
Due and unpaid premiums 66,473 62,628
Due from reinsurers 266,597 278,242
Premium and claim funds 33,061 32,553
Goodwill 56,452 50,318
Other assets 51,533 57,126
TOTAL ASSETS$ 1,203,203 $1,187,717
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Policy benefits and claims$ 249,556 $236,803
Future policy benefits 275,501 277,041
Funds on deposit 181,307 186,782
Unearned premiums 12,176 9,455
Other policyholders' funds 17,637 18,802
Due to reinsurers 49,067 47,945
Accounts payable, accruals and other liabilities 65,516 67,641
Debt 8,326 4,000
Junior subordinated debt securities 38,146 38,146
TOTAL LIABILITIES 897,232 886,615
STOCKHOLDERS’ EQUITY:
IHC STOCKHOLDERS' EQUITY:
Preferred stock (none issued) - -
Common stock 18,553 18,531
Paid-in capital 127,451 127,098
Accumulated other comprehensive income (3,217) 22
Treasury stock, at cost (12,880) (12,141)
Retained earnings 167,092 157,667
TOTAL IHC STOCKHOLDERS’ EQUITY 296,999 291,177
NONCONTROLLING INTERESTS IN SUBSIDIARIES 8,972 9,925
TOTAL EQUITY 305,971 301,102
TOTAL LIABILITIES AND EQUITY $ 1,203,203 $1,187,717


Loan Nisser (646) 509-2107 www.IHCGroup.com

Source:Independence Holding Company