IHC Group

Independence Holding Company

Aug 1, 2016

Independence Holding Company Announces 2016 First-Quarter Results

STAMFORD, Conn., Aug. 01, 2016 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2016 first-quarter results.

Financial Results

On March 31, 2016, IHC completed the sale of IHC Risk Solutions LLC ("Risk Solutions"), exited the medical stop-loss business and realized an after tax gain of approximately $99,793,000, net of noncontrolling interest.  In addition, under the purchase and sale agreement, all of IHC's in-force medical stop-loss business produced by Risk Solutions is 100% co-insured as of January 1, 2016 and is expected to run out by early 2017.    The disposal transaction qualified for reporting as discontinued operations in the first quarter of 2016.   

Net income attributable to IHC of $106,010,000, or $6.08 per share diluted, for the three months ended March 31, 2016 increased from $5,219,000, or $.30 per share diluted, in the same period of 2015 primarily due to the sale of Risk Solutions. Income from continuing operations increased to $.33 per share, diluted, or $5,896,000, for the three months ended March 31, 2016 compared to $.27 per share, diluted, or $4,701,000, for the three months ended March 31, 2015.

The Company reported revenues of $75,895,000 for the three months ended March 31, 2016 compared to revenues for the three months ended March 31, 2015 of $133,105,000.  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, "With the sale of our stop-loss business, we are now focused on growing our remaining lines of business: group long term disability and life, statutory disability benefit policies (DBL) in New York, and group and individual specialty health insurance (including dental, vision, short term medical, hospital indemnity, gap and scheduled benefit plans).  All of these lines performed well in the first quarter and we anticipate continued growth and good underwriting results from these lines of business for the remainder of 2016."

He continued, "Also as a result of the sale of our stop-loss business, we will have a very significant amount of cash and, by early next year as the stop-loss runs out, significant excess statutory surplus in our carriers.  We have designated a relatively small portion of our liquidity to generate growth in our current product lines, and to date we have made two investments in call centers that focus on selling our specialty health products.  We have not yet determined how to utilize our remaining large amount of liquidity. Our overall investment portfolio continues to be very highly rated (on average, AA) and has a duration of approximately five and a half years. Our book value increased to $25.08 per share at March 31, 2016 from $18.73 per share at December 31, 2015, and our total stockholders' equity increased to $432 million at March 31, 2016 compared to $323 million at December 31, 2015.  Both of these are all-time highs.  The closing price of IHC stock on Friday was $17.41 or 69% of our book value and 81% of our tangible book value."  

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 disability, specialty and supplemental health, pet, and life insurance through its subsidiaries since 1980.  The IHC Group (including through its 91.4% ownership of American Independence Corp. (NASDAQ:AMIC)) owns three insurance companies (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company), a majority of Ebix Health Administration Exchange, Inc., a fully insured third party administrator, and IHC Specialty Benefits, Inc., which is 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.


March 31, 2016
(In Thousands, Except Per Share Data)
  Three Months Ended
  March 31,
   2016   2015 
Premiums earned$   62,562 $   122,114 
Net investment income    4,436     5,422 
Fee income    5,079     2,577 
Other income    3,258     992 
Net realized investment gains    560     2,000 
     75,895     133,105 
Insurance benefits, claims and reserves    30,743     79,620 
Selling, general and administrative expenses    35,227     45,484 
Interest expense on debt    453     432 
     66,423     125,536 
Income from continuing operations before income taxes    9,472     7,569 
Income taxes    3,576     2,868 
Income from continuing operations    5,896     4,701 
Discontinued operations    
 Income from discontinued operations, before income taxes    117,636     1,031 
 Income taxes on discontinued operations    7,866     401 
 Income from discontinued operations    109,770     630 
Net income     115,666     5,331 
Less: income from noncontrolling interests in subsidiaries    (9,656)    (112)
NET INCOME ATTRIBUTABLE TO IHC$   106,010 $   5,219 
Basic income per common share    
 Income from continuing operations$  .34  $  .27  
 Income from discontinued operations    5.81    .03  
   Basic income per common share$   6.15 $  .30  
Diluted income per common share    
 Income from continuing operations$  .33  $  .27  
 Income from discontinued operations    5.75    .03  
   Diluted income per common share$   6.08 $  .30  
As of July 30, 2016, there were 17,170,933 common shares outstanding, net of treasury shares.


(In Thousands, Except Share Data)
   March 31,  December 31,
    2016    2015 
 Short-term investments $ 50  $   50 
 Securities purchased under agreements to resell   21,196      28,285 
 Trading securities   1,190      1,259 
 Fixed maturities, available-for-sale   520,638      428,601 
 Equity securities, available-for-sale   8,714      8,426 
 Other investments   20,501      21,538 
 Total investments   572,289      488,159 
 Cash and cash equivalents   145,696      17,500 
 Due and unpaid premiums   64,645      69,075 
 Due from reinsurers   462,087      483,073 
 Premium and claim funds   41,576      22,015 
 Goodwill   47,276      47,276 
 Other assets   48,257      57,934 
 Assets attributable to discontinued operations   -      12,931 
 TOTAL ASSETS $ 1,381,826  $   1,197,963 
 Policy benefits and claims $ 247,900  $   245,443 
 Future policy benefits   235,251      270,624 
 Funds on deposit   149,147      173,350 
 Unearned premiums   13,350      10,236 
 Other policyholders' funds   9,675      11,822 
 Due to reinsurers   70,283      46,355 
 Due to securities brokers   99,803      998 
 Accounts payable, accruals and other liabilities   57,020      63,111 
 Liabilities attributable to discontinued operations   6,085      (15)
 Debt   4,250      5,189 
 Junior subordinated debt securities   38,146      38,146 
 TOTAL LIABILITIES   930,910      865,259 
 Preferred stock (none issued)     -      - 
 Common stock   18,569      18,569 
 Paid-in capital   128,053      127,733 
 Accumulated other comprehensive income   (479)     (3,440)
 Treasury stock, at cost   (14,782)     (13,961)
 Retained earnings   300,457      194,450 
TOTAL IHC STOCKHOLDERS' EQUITY   431,818      323,351 
 TOTAL EQUITY   450,916      332,704 
 TOTAL LIABILITIES AND EQUITY  $ 1,381,826  $   1,197,963 


Loan Nisser
(646) 509-2107