INDEPENDENCE HOLDING COMPANY - Form 8-K SEC filing
0000701869 false 0000701869 2021-08-09 2021-08-09

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

  

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) August 9, 2021

 

INDEPENDENCE HOLDING COMPANY

(Exact name of registrant as specified in its charter)

 

Delaware

001-32244

58-1407235

(State or other jurisdiction of incorporation or organization)

(Commission File Number)

(I.R.S. Employer Identification No.)

 

 

96 Cummings Point Road, Stamford, Connecticut

06902

(Address of principal executive offices)

(Zip Code)

 

Registrant's telephone number, including area code:  (203) 358-8000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 par value

IHC

NYSE

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) if the Exchange Act.  ¨

 

 

 



Item 2.02 Results of Operations and Financial Condition.

 

The information set forth under this Item 2.02 (Results of Operations and Financial Condition) is intended to be furnished. Such information, including the Exhibit attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities and Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

 

On August 9, 2021, Independence Holding Company issued a news release announcing its 2021 second-quarter and six-month results, a copy of which is attached as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits

 

(c)  Exhibits: 

 

 

Exhibit 99.1

News Release of Independence Holding Company dated August 9, 2021: Independence Holding Company Announces Second-Quarter and Six-Month Results.

Exhibit 104

Cover Page Interactive Data File ( embedded within the Inline XBRL document)

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

INDEPENDENCE HOLDING COMPANY

(Registrant)

 

 

 

By: Colleen P. Maggi

 

 

 

/s/ Colleen P. Maggi

Colleen P. Maggi

Corporate Vice President and Chief Financial Officer

 

Date:

 

August 10, 2021

 



 

 

EXHIBIT 99.1

 

INDEPENDENCE HOLDING COMPANY

CONTACT:  Loan Nisser

96 CUMMINGS POINT ROAD

(646) 509-2107

STAMFORD, CONNECTICUT 06902

www.IHCGroup.com

NYSE: IHC

 

 

NEWS RELEASE

 

INDEPENDENCE HOLDING COMPANY ANNOUNCES

2021 SECOND-QUARTER AND SIX-MONTH RESULTS

 

Stamford, Connecticut, August 9, 2021. Independence Holding Company (NYSE: IHC) today reported 2021 second-quarter and six-month results.

Financial Results

Net income attributable to IHC of $76,471,000 or $5.22 per share for the three months ended June 30, 2021 compared to $421,000 or $.03 per share, diluted, for the three months ended June 30, 2020.  Net income attributable to IHC was $82,092,000 or $5.61 per share, diluted, for the six months ended June 30, 2021 compared to $4,699,000 or $.32 per share, diluted, for the six months ended June 30, 2020.  

The Company entered into three transactions this year for the sales of Madison National Life Insurance Company, Inc. (“Madison National Life”)  to Horace Mann Educators Corporation, Standard Security Life Insurance Company of New York (“Standard Security Life”) to Reliance Standard Life Insurance Company and 70% of its pet business, including all of the common stock of Independence American Insurance Company and 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 three months and six months of 2021 include a gain on the sale of PetPartners of $62,693,000 net of tax.  Also included in income from discontinued operations is certain income from Standard Security Life and Independence American Insurance Company. The results of Madison National Life will be shown as discontinued operations in the third quarter.  The gain on the sale of Standard Security Life, Independence American Insurance Company and Madison National Life will be recorded when those transactions receive regulatory approval and are consummated.  

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “We are very pleased with the three transactions we entered into this year, and the consummation of the sales is expected to take most of the focus of the Company for the remainder of 2021. After all the transactions are closed, IHC projects that it will hold approximately $560 million in cash and investments, net of liabilities; a 30% interest in Iguana Capital carried at $115 million; and our health insurance agency and other assets with an aggregate carrying value of approximately $20 million, resulting in an estimated book value of approximately $47.00 per share which is calculated as if the transactions occurred and were recorded on June 30, 2021. Actual book value per share at June 30, 2021 was $37.45. 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, “We intend to invest, develop and expand our agency operations into a much larger and profitable operation. As we progress, our agency operations will be centered around INSXcloud.com (INSX), our CMS approved Web Broker. INSX provides an agent with the ability to quote, directly enroll and track applications on the Federally Facilitated Marketplace, plus much more. The balance of our agency includes our W-2 Call Centers and our captive independent Advisors unit, both of which sell into the under/over age 65 health insurance markets, as well as our Independence Brokerage Group which recruits independent agents and agencies to sell via our platforms and contracts. We are refocusing a portion of our over 65 division into the under 65 market in order to take advantage of the positioning of INSX, our agency and our lead generation capabilities, and the market growth resulting from the American Rescue Plan Act. Although these operations have been unprofitable, we expect these changes will improve the results and bring us to profitability in the future. In addition, we will also continue to monitor and support our minority interest investment in Iguana Capital.”

About The IHC Group

 

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.inxscloud.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 other 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.



INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

June 30, 2021

(In Thousands, Except Shares and Per Share Data)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

REVENUES:

 

 

 

 

 

 

 

 

Premiums earned

$

42,451  

$

49,138  

$

86,023  

$

99,804  

Net investment income

 

1,651  

 

2,329  

 

3,452  

 

4,828  

Fee income

 

4,944  

 

3,907  

 

11,079  

 

7,341  

Other income

 

410  

 

807  

 

1,026  

 

1,432  

Net investment gains (losses)

 

(126) 

 

274  

 

91  

 

117  

 

 

 

 

 

 

 

 

 

 

 

49,330  

 

56,455  

 

101,671  

 

113,522  

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

Insurance benefits, claims and reserves

 

17,192  

 

21,339  

 

39,113  

 

47,628  

Selling, general and administrative expenses

 

32,842  

 

37,974  

 

63,602  

 

69,034  

 

 

 

 

 

 

 

 

 

 

 

50,034  

 

59,313  

 

102,715  

 

116,662  

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes

 

(704) 

 

(2,858) 

 

(1,044) 

 

(3,140) 

Income tax benefit

 

(267) 

 

(1,066) 

 

(430) 

 

(1,187) 

 

 

 

 

 

 

 

 

 

Loss from continuing operations, net of tax

 

(437) 

 

(1,792) 

 

(614) 

 

(1,953) 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

Total pretax income from discontinued operations

 

92,375  

 

3,594  

 

99,574  

 

9,243  

Income tax expense on discontinued operations

 

15,570  

 

1,264  

 

17,026  

 

2,430  

Income from discontinued operations, net of tax

 

76,805  

 

2,330  

 

82,548  

 

6,813  

 

 

 

 

 

 

 

 

 

Net income

 

76,368  

 

538  

 

81,934  

 

4,860  

(Income) loss from nonredeemable noncontrolling interests

 

 

 

(43) 

 

 

 

(34) 

(Income) loss from redeemable noncontrolling interests

 

102  

 

(74) 

 

156  

 

(127) 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO IHC

$

76,471  

$

421  

$

82,092  

$

4,699  

 

 

 

 

 

 

 

 

 

Basic income per common share

 

 

 

 

 

 

 

 

Loss from continuing operations

$

(.03) 

$

(.12) 

$

(.04) 

$

(.13) 

Income from discontinued operations

 

5.25 

 

.15 

 

5.65 

 

.45 

Basic income per common share

$

5.22 

$

.03 

$

5.61 

$

.32 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

14,642  

 

14,765  

 

14,641  

 

14,811 

 

 

 

 

 

 

 

 

 

Diluted income per common share

 

 

 

 

 

 

 

 

Loss from continuing operations

$

(.03) 

$

(.12) 

$

(.04) 

$

(.13) 

Income from discontinued operations

 

5.25 

 

.15 

 

5.65 

 

.45 

Diluted income per common share

$

5.22 

$

.03 

$

5.61 

$

.32 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING

 

14,642  

 

14,765  

 

14,641  

 

14,811 

 

 

 

 

 

 

 

 

 

 

 

As of August 7, 2021, there were 14,644,389 common shares outstanding, net of treasury shares.



 

INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

 

 

 

 

 

June 30, 2021

 

 

December 31, 2020

 

 

 

 

 

 

 

ASSETS:

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

Short-term investments

 

$

1,550 

 

$

1,568 

Securities purchased under agreements to resell

 

 

70,323 

 

 

33,038 

Fixed maturities, available-for-sale

 

 

183,709 

 

 

210,719 

Equity securities

 

 

- 

 

 

1,753 

Other investments

 

 

2,022 

 

 

1,928 

Total investments

 

 

257,604 

 

 

249,006 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

22,834 

 

 

31,923 

Investment in Iguana Capital, Inc.

 

 

33,762 

 

 

- 

Due and unpaid premiums

 

 

10,950 

 

 

9,981 

Due from reinsurers

 

 

354,735 

 

 

357,237 

Goodwill

 

 

12,486 

 

 

12,486 

Funds held in escrow

 

 

78,779 

 

 

                             -

Other assets

 

 

29,864 

 

 

46,832 

Assets attributable to discontinued operations

 

 

416,162 

 

 

375,691 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

1,217,176 

 

$

1,083,156 

 

 

 

 

 

 

 

LIABILITIES AND  EQUITY:

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

Policy benefits and claims

 

$

127,815 

 

$

132,957 

Future policy benefits

 

 

196,026 

 

 

198,086 

Funds on deposit

 

 

142,155 

 

 

141,376 

Unearned premiums

 

 

1,763 

 

 

1,952 

Other policyholders' funds

 

 

11,988 

 

 

12,001 

Due to reinsurers

 

 

2,242 

 

 

3,872 

Accounts payable, accruals and other liabilities

 

 

66,519 

 

 

44,855 

Liabilities attributable to discontinued operations

 

 

120,180 

 

 

75,939 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

668,688 

 

 

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

 

 

125,653  

 

 

124,757  

Accumulated other comprehensive income

 

 

3,220  

 

 

4,197  

Treasury stock, at cost

 

 

(77,189) 

 

 

(77,088) 

Retained earnings

 

 

478,139  

 

 

399,273  

 

 

 

 

 

 

 

TOTAL IHC STOCKHOLDERS’ EQUITY

 

 

548,448  

 

 

469,764  

NONREDEEMABLE NONCONTROLLING INTERESTS

 

 

40  

 

 

42  

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

548,488  

 

 

469,806  

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

$

1,217,176 

 

$

1,083,156