IHC Group

Independence Holding Company

Nov 9, 2021

Independence Holding Company Announces 2021 Third-Quarter and Nine-Month Results

STAMFORD, Conn., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE: IHC) today reported 2021 third-quarter and nine-month results.

Financial Results

IHC reported a loss from continuing operations attributable to IHC, net of tax, of $11,512,000 or $.79 per share for the three months ended September 30, 2021 compared to a loss of $7,340,000 or $.50 per share for the three months ended September 30, 2020. Loss from continuing operations attributable to IHC, net of tax, of $23,514,000 or $1.61 per share for the nine months ended September 30, 2021 compared to a loss of $16,391,000 or $1.11 per share for the nine months ended September 30, 2020.

Net income attributable to IHC of $17,359,000 or $1.18 per share for the three months ended September 30, 2021 compared to $8,688,000 or $.59 per share, diluted, for the three months ended September 30, 2020. Net income attributable to IHC of $99,451,000 or $6.79 per share, diluted, for the nine months ended September 30, 2021 compared to $13,387,000 or $.91 per share, diluted, for the nine months ended September 30, 2020.

The Company entered into three transactions this year for the sale of (i) all of the shares of common stock of Madison National Life Insurance Company, Inc. (“Madison National Life”) to Horace Mann Educators Corporation, (ii) all of the shares of common stock of Standard Security Life Insurance Company of New York (“Standard Security Life”) to Reliance Standard Life Insurance Company and (iii) 70% of the Company’s pet business, including all of the shares of common stock of Independence American Insurance Company and the Company’s entire interest in 85% of the common stock of PetPartners, Inc. (“PetPartners”), to Iguana Capital, Inc. (“Iguana Capital”).

The Company completed the sale of PetPartners on June 30, 2021, and results for the nine months of 2021 include a gain on the sale of PetPartners of $62,229,000 net of tax. Also included in income from discontinued operations is the operating income from Madison National Life, Standard Security Life and Independence American Insurance Company. The gain on the sales of Madison National Life, Standard Security Life, and Independence American Insurance Company will be recorded when those transactions are consummated. They are currently pending regulatory approval.

The Company has also announced that it has entered into an Agreement and Plan of Merger with Geneve Holdings, Inc. its majority stockholder. Further information regarding the terms and conditions will be contained in a Current Report on Form 8-K filed with the SEC.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “The Company is focusing on the consummation of the three sale transactions for the remainder of the year. Pro forma, including the third quarter results, and after all the transactions are closed, IHC projects that it will hold approximately $575 million in cash and investments, net of liabilities; our interest in Iguana Capital; and our health insurance agency and other assets, resulting in an estimated fully diluted book value of approximately $48.50 per share, which is calculated as if the transactions occurred and were recorded on September 30, 2021. Actual book value per share at September 30, 2021 was $38.47 as compared to $32.08 per share at December 31, 2020. These projections are based on information currently known to management and include the use of estimates and assumptions with regards to anticipated transaction costs, estimated tax rates and other potential changes.”

Mr. Thung added, “Our agency operations have been unprofitable, and we will continue to report losses from our agencies for the near term. We continue to expand our agency digital assets by enhancing our core platform, INSXcloud.com, a CMS approved Web Broker. We have expanded product offerings on the platform and have developed marketing initiatives to drive both direct and partner initiated traffic to the platform. We will continue to invest in and enhance these capabilities at our agency operations as we enter 2022 and work towards building a profitable agency operation.”

About Independence Holding Company

Independence Holding Company (NYSE: IHC), through our current subsidiaries, underwrites and distributes health, group disability and life, New York State DBL and paid family leave, and pet insurance. IHC underwrites policies in all 50 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands through our three carriers: Independence American Insurance Company, Standard Security Life Insurance Company of New York (“Standard Security Life”) and Madison National Life Insurance Company, Inc. (“Madison National Life”). We also distribute products nationally through multiple channels, including our agencies, call centers, advisors, direct and affinity relationships, Web Broker, and web properties, including www.healthedeals.com; www.healthinsurance.org; www.medicareresources.org; www.petplace.com; and www.insxcloud.com. As previously announced, IHC has entered into stock purchase agreements to sell all of the issued and outstanding capital stock of Standard Security Life, Madison National Life and Independence American Holdings Corp., which includes Independence American Insurance Company and the remaining assets of IHC’s pet business, each subject to regulatory approval. To learn more, visit https://ihcgroup.com/.

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.

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


INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
September 30, 2021
(In Thousands, Except Shares and Per Share Data)

    Three Months Ended     Nine Months Ended
    September 30,     September 30,
    2021     2020     2021     2020
REVENUES:                      
Net investment income $ 119     $ 170     $ 430     $ 916  
Fee income   5,569       6,113       20,291       18,465  
Other income   873       615       1,660       1,739  
Net investment gains (losses)   (48 )     (53 )     105       122  
                       
    6,513       6,845       22,486       21,242  
                       
EXPENSES:                      
Selling, general and administrative expenses   21,592       16,431       53,028       43,221  
                       
Loss from continuing operations before income taxes   (15,079 )     (9,586 )     (30,542 )     (21,979 )
Income tax benefits   (3,567 )     (2,241 )     (7,026 )     (5,617 )
                       
Loss from continuing operations, net of tax   (11,512 )     (7,345 )     (23,516 )     (16,362 )
                       
Discontinued operations:                      
Total pretax income from discontinued operations   36,383       20,295       150,376       38,790  
Income tax expense on discontinued operations   7,512       4,218       27,567       8,836  
Income from discontinued operations, net of tax   28,871       16,077       122,809       29,954  
                       
Net income   17,359       8,732       99,293       13,592  
(Income) loss from nonredeemable noncontrolling interests   -       5       2       (29 )
(Income) loss from redeemable noncontrolling interests   -       (49 )     156       (176 )
                       
NET INCOME ATTRIBUTABLE TO IHC $ 17,359     $ 8,688     $ 99,451     $ 13,387  
                       
Basic income per common share                      
Loss from continuing operations $ (.79 )   $ (.50 )   $ (1.61 )   $ (1.11 )
Income from discontinued operations   1.97       1.09       8.40       2.02  
Basic income per common share $ 1.18     $ .59     $ 6.79     $ .91  
                       
WEIGHTED AVERAGE SHARES OUTSTANDING   14,654       14,670       14,645       14,763  
                       
Diluted income per common share                      
Loss from continuing operations $ (.79 )   $ (.50 )   $ (1.61 )   $ (1.11 )
Income from discontinued operations   1.97       1.09       8.40       2.02  
Diluted income per common share $ 1.18     $ .59     $ 6.79     $ .91  
                       
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING   14,654       14,670       14,645       14,763  
                       

As of November 9, 2021, there were 14,674,936 common shares outstanding, net of treasury shares.


INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

      September 30, 2021     December 31, 2020
             
ASSETS:            
Investments:            
Securities purchased under agreements to resell   $ 25,458     $ 23,962  
Fixed maturities, available-for-sale     29,070       44,003  
Other investments     2,050       1,928  
Total investments     56,578       69,893  
             
Cash and cash equivalents     7,946       17,215  
Investment in Iguana Capital, Inc.     33,475       -  
Funds held in escrow     78,263       -  
Other assets     33,975       49,475  
Assets attributable to discontinued operations     995,383       946,573  
             
TOTAL ASSETS   $ 1,205,620     $ 1,083,156  
             
LIABILITIES AND EQUITY:            
LIABILITIES:            
Accounts payable, accruals and other liabilities   $ 39,817     $ 28,387  
Liabilities attributable to discontinued operations     601,253       582,651  
             
TOTAL LIABILITIES     641,070       611,038  
             
Commitments and contingencies            
Redeemable noncontrolling interest     -       2,312  
             
STOCKHOLDERS’ EQUITY:            
Preferred stock (none issued)     -       -  
Common stock     18,625       18,625  
Paid-in capital     125,357       124,757  
Accumulated other comprehensive income     2,320       4,197  
Treasury stock, at cost     (77,247 )     (77,088 )
Retained earnings     495,498       399,273  
             
TOTAL IHC STOCKHOLDERS’ EQUITY     564,553       469,764  
NONREDEEMABLE NONCONTROLLING INTERESTS     (3 )     42  
             
  TOTAL EQUITY     564,550       469,806  
             
  TOTAL LIABILITIES AND EQUITY   $         1,205,620      $         1,083,156   


Independence Holding Company