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Independence Holding Company Announces 2016 Third-Quarter and Nine-Month Results

STAMFORD, Conn., Nov. 09, 2016 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2016 third-quarter and nine-month results.

Financial Results

Net income attributable to IHC of $4,323,000, or $.25 per share diluted, for the three months ended September 30, 2016 decreased from $14,760,000, or $.85 per share diluted, in the same period of 2015. Income from continuing operations decreased to $.25 per share, diluted, or $4,366,000, for the three months ended September 30, 2016 compared to $.81 per share, diluted, or $14,159,000, for the three months ended September 30, 2015. The Company recorded two significant gains in the quarter ended September 30, 2015, which had a significant positive impact in 2015 but not 2016. The first was a gain of $3,285,000, net of applicable income tax, from the reinsurance of substantially all of our run-off blocks of individual life and annuities and the sale of the infrastructure related to those blocks. The second, effective September 1, 2015, related to IHC entering into a joint venture with Ebix, Inc. to form Ebix Health Exchange Holdings, LLC, which acquired our subsidiary Ebix Health Administration Exchange (fka IHC Health Solutions, Inc.). The transaction resulted in a gain of $6,884,000, net of applicable income tax.

Net income attributable to IHC of $114,769,000, or $6.60 per share diluted, for the nine months ended September 30, 2016 increased from $25,011,000, or $1.43 per share diluted, in the same period of 2015. As IHC previously reported, we completed the sale of IHC Risk Solutions, LLC (“Risk Solutions”) and exited the medical stop-loss business. The Company recorded a gain on this transaction of $99,934,000, net of applicable income taxes and noncontrolling interest, and is reflected in discontinued operations on our Condensed Consolidated Statement of Income for the nine months ended September 30, 2016. Income from continuing operations decreased to $.83 per share, diluted, or $14,757,000, for the nine months ended September 30, 2016 compared to $1.36 per share, diluted, or $24,082,000, for the nine months ended September 30, 2015, because there was no amount in 2016 comparable to the two significant gains recorded in 2015 noted above.

The Company reported revenues of $78,542,000 and $232,133,000 for the three months and nine months ended September 30, 2016, respectively, compared to revenues for the three months and nine months ended September 30, 2015 of $139,773,000 and $405,893,000, respectively. Revenues decreased primarily due to a reduction in premiums from the 100% co-insurance of the Company’s stop-loss business produced by Risk Solutions.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “Over the last several years, IHC’s insurance companies have transformed themselves by moving into lines of business that have higher margins, are less capital intensive and are less volatile. In addition, we are much stronger at the parent company level. We are in the extremely enviable position of having a large amount of cash and significant excess statutory surplus in our carriers, and we will be debt free by the end of the year. We are now a specialty benefits company with multiple group and individual specialty health lines and niche specialty group disability (including New York statutory disability benefit policies (DBL)) and group life lines. After we sold our stop-loss business, we made four relatively small investments to bolster the distribution of our specialty health products, including pet insurance, and to acquire worksite marketing expertise. We will continue to seek additional strategic investments, but we have not as yet made a final decision as how best to deploy the vast majority of our liquidity. 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 $25.72 per share at September 30, 2016 from $18.73 per share at December 31, 2015, and our total stockholders’ equity increased to $439 million at September 30, 2016 compared to $323 million at December 31, 2015. Both of these amounts are all-time highs.”

About The IHC Group

Independence Holding Company (NYSE:IHC) is a holding company that is principally engaged in underwriting, administering and/or distributing group and individual specialty benefit products, including disability, supplemental health, pet, and group life insurance through its subsidiaries since 1980. The IHC Group owns three insurance companies (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company), a minority interest in Ebix Health Administration Exchange, Inc., a fully insured third party administrator, and IHC Specialty Benefits, Inc., a technology-driven insurance sales and marketing company that creates value for insurance producers, carriers and consumers (both individuals and small businesses) through a suite of proprietary tools and products (including ACA plans and small group medical stop-loss). All products are placed with highly rated carriers.

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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
September 30, 2016
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
REVENUES:
Premiums earned $67,335 $119,038 $195,524 $361,595
Net investment income 4,004 3,920 12,700 13,830
Fee income 4,050 2,201 12,541 9,195
Other income 2,261 5,790 8,898 8,349
Gain on sale of subsidiary to joint venture - 10,161 - 10,161
Net realized investment gains 2,367 (1,109) 3,945 2,991
Net impairment losses recognized in earnings (1,475) (228) (1,475) (228)
78,542 139,773 232,133 405,893
EXPENSES:
Insurance benefits, claims and reserves 38,277 74,218 109,497 233,218
Selling, general and administrative expenses 32,823 43,202 97,947 133,640
Interest expense on debt 440 444 1,366 1,354
71,540 117,864 208,810 368,212
Income before income taxes 7,002 21,909 23,323 37,681
Income taxes 2,636 7,750 8,566 13,599
Income from continuing operations 4,366 14,159 14,757 24,082
Discontinued operations:
Income from discontinued operations, before
income taxes - 1,305 117,636 2,254
Income taxes on discontinued operations - 576 7,724 961
Income from discontinued operations - 729 109,912 1,293
Net income 4,366 14,888 14,757 25,375
Less: income from noncontrolling interests
in subsidiaries (43) (128) (9,900) (364)
NET INCOME ATTRIBUTABLE TO IHC $4,323 $14,760 $114,769 $25,011
Basic income per common share:
Income from continuing operations $.25 $.81 $0.83 $1.36
Income from discontinued operations .00 .04 5.77 .07
Basic income per common share $.25 $.85 $6.60 $1.43
WEIGHTED AVERAGE SHARES OUTSTANDING 17,120 17,292 17,189 17,331
Diluted income per common share:
Income from continuing operations $.25 $.81 $0.83 $1.36
Income from discontinued operations .00 .04 5.77 .07
Diluted income per common share $.25 $.85 $6.60 $1.43
WEIGHTED AVERAGE DILUTED SHARES
OUTSTANDING 17,340 17,457 17,402 17,496
As of November 7, 2016, there were 17,067,875 common shares outstanding, net of treasury shares.


INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
September 30, December 31,
2016 2015
ASSETS:
Investments:
Short-term investments $8,151 $50
Securities purchased under agreements to resell 11,282 28,285
Trading securities 1,135 1,259
Fixed maturities, available-for-sale 472,348 428,601
Equity securities, available-for-sale 6,685 8,426
Other investments 21,178 21,538
Total investments 520,779 488,159
Cash and cash equivalents 79,208 17,500
Due and unpaid premiums 57,454 69,075
Due from reinsurers 478,845 483,073
Premium and claim funds 25,881 22,015
Goodwill 41,573 47,276
Other assets 47,065 57,934
Assets attributable to discontinued operations - 12,931
TOTAL ASSETS $1,250,805 $1,197,963
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Policy benefits and claims $242,819 $245,443
Future policy benefits 233,261 270,624
Funds on deposit 150,651 173,350
Unearned premiums 11,567 10,236
Other policyholders' funds 9,797 11,822
Due to reinsurers 66,577 46,355
Accounts payable, accruals and other liabilities 55,930 64,109
Liabilities attributable to discontinued operations 408 (15)
Debt - 5,189
Junior subordinated debt securities 38,146 38,146
TOTAL LIABILITIES 809,156 865,259
STOCKHOLDERS’ EQUITY:
IHC STOCKHOLDERS' EQUITY:
Preferred stock (none issued) - -
Common stock 18,586 18,569
Paid-in capital 126,001 127,733
Accumulated other comprehensive income 3,448 (3,440)
Treasury stock, at cost (17,483) (13,961)
Retained earnings 308,415 194,450
TOTAL IHC STOCKHOLDERS’ EQUITY 438,967 323,351
NONCONTROLLING INTERESTS IN SUBSIDIARIES 2,682 9,353
TOTAL EQUITY 441,649 332,704
TOTAL LIABILITIES AND EQUITY $1,250,805 $1,197,963

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

Source:Independence Holding Company