November 9, 2017

Independence Holding Company Announces 2017 Third-Quarter and Nine-Month Results

STAMFORD, Conn., Nov. 09, 2017 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2017 third-quarter and nine-month results. 

Financial Results

Net income attributable to IHC per share increased 36% to $.34 per share, diluted, or $5,229,000, for the three months ended September 30, 2017 compared to $.25 per share, diluted, or $4,323,000, for the three months ended September 30, 2016. Net income attributable to IHC of $24,496,000, or $1.50 per share diluted, for the nine months ended September 30, 2017 decreased from $114,769,000, or $6.60 per share diluted, in the same period of 2016 primarily due to the gain on sale of IHC Risk Solutions, LLC ("Risk Solutions") in 2016.

The Company reported revenues of $83,752,000 for the three months ended September 30, 2017 compared to revenues for the three months ended September 30, 2016 of $78,542,000.  The Company reported revenues of $237,829,000 for the nine months ended September 30, 2017 compared to revenues for the nine months ended September 30, 2016 of $232,133,000.  Revenues increased primarily due to significant increases in specialty health premiums largely offset by a reduction in premiums from the exit of the Company's stop-loss business. 

Chief Executive Officer's Comments

Roy T. K. Thung, Chief Executive Officer, commented, "We are pleased with the 36% increase in our earnings per share for the quarter primarily attributable to a substantial increase in sales and earnings from the specialty health segment. The sale of Risk Solutions and exiting the medical stop-loss segment generated not only a large gain on sale but also significant liquidity and excess capital, which we have partially redeployed by purchasing equity stakes in several companies that distribute our products, repurchasing IHC stock, paying off all of our debt, and improving our infrastructure in anticipation of growth in specialty health, and the group disability and DBL segment.

We are one of the fastest growing and most innovative underwriters of specialty health products in the United States. In addition to our own distribution, several of the largest national health insurers and e-brokers (including eHealth) are now distributing a significant amount of our products. We are recognized for our development of medical insurance packages (including IHC's Fusion product) that provide affordable coverage alternatives for consumers who either cannot afford Obamacare-compliant major medical health insurance coverages or who, because of increased subsidies, qualify for no cost Bronze plans under the Affordable Care Act, but need our supplemental products to cover their very high deductibles. We are also very well positioned for the expected increase in the duration of short-term medical plans as a result of the Trump Administration's executive order directing federal agencies to extend the duration of these products to 364 days, subject to state law. For all the preceding reasons, we believe that we will continue the solid sales growth we have been experiencing for the balance of 2017, and will report significantly higher earned premiums and income in this segment in 2018."

Mr. Thung continued, "Our marginal Federal tax rate is 35% and any reduction in the Federal tax rate, if the proposed tax reform legislation were to pass, would have a significant positive impact on our after tax earnings.  During the first nine months of 2017, the Company repurchased an aggregate 2,211,629 shares of our common stock at a total cost of $44.4 million primarily through a tender offer at a price per share of $20.00, and through private purchases. Our parent company's balance sheet is very strong, we have no debt, and we still have substantial cash and un-deployed capital.  Our book value is $28.19 per share at September 30, 2017 compared to $25.53 per share at December 31, 2016, and $18.73 per share at December 31, 2015. Our overall investment portfolio continues to be very highly rated (on average, AA) and has a duration of approximately five years." 

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), 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, 2017
(In Thousands, Except Per Share Data)

  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016  2017  2016 
REVENUES:        
Premiums earned$75,639$67,335 $210,507 $195,524 
Net investment income 4,403 4,004  12,414  12,700 
Fee income 2,634 4,050  11,556  12,541 
Other income 361 2,261  2,365  8,898 
Net realized investment gains 715 2,367  987  3,945 
Net impairment losses recognized in earnings - (1,475) -  (1,475)
         
  83,752 78,542  237,829  232,133 
         
EXPENSES:        
Insurance benefits, claims and reserves 33,536 38,277  103,071  109,497 
Selling, general and administrative expenses 42,337 32,823  115,404  97,947 
Interest expense on debt - 440  -  1,366 
         
  75,873 71,540  218,475  208,810 
         
Income from continuing operations before income taxes 7,879 7,002  19,354  23,323 
Income taxes (benefits) 2,666 2,636  (5,175) 8,566 
         
Income from continuing operations, net of tax 5,213 4,366  24,529  14,757 
         
Discontinued operations        
 Income from discontinued operations, before income taxes - -  -  117,636 
 Income taxes on discontinued operations - -  -  7,724 
 Income from discontinued operations, net of tax - -  -  109,912 
         
Net income  5,213 4,366  24,529  124,669 
Less: (Income) loss from noncontrolling interests in subsidiaries 16 (43) (33) (9,900)
         
NET INCOME ATTRIBUTABLE TO IHC$5,229$4,323 $24,496 $114,769 
         
Basic income per common share        
 Income from continuing operations$.35$.25 $1.53 $.84 
 Income from discontinued operations - -  -  5.84 
 Basic income per common share$.35$.25 $1.53 $6.68 
            
WEIGHTED AVERAGE SHARES OUTSTANDING 14,965 17,120  15,999  17,189 
            
Diluted income per common share           
 Income from continuing operations$.34$.25 $1.50 $.83 
 Income from discontinued operations - -  -  5.77 
 Diluted income per common share$.34$.25 $1.50 $6.60 
            
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING 15,274 17,340  16,287  17,402 
         

As of November 3, 2017, there were 14,862,346 common shares outstanding, net of treasury shares.


INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)

   September 30,  December 31,
   2017   2016 
       
ASSETS:      
 Investments:      
 Short-term investments $50  $6,912 
 Securities purchased under agreements to resell  20,597   28,962 
 Trading securities  516   592 
 Fixed maturities, available-for-sale  426,000   449,487 
 Equity securities, available-for-sale  5,460   5,333 
 Other investments  18,338   23,534 
   Total investments  470,961   514,820 
       
 Cash and cash equivalents  26,565   22,010 
 Due and unpaid premiums  32,678   42,896 
 Due from reinsurers  383,192   440,285 
 Premium and claim funds  13,665   17,952 
 Goodwill  50,697   41,573 
 Other assets  61,472   54,928 
       
   TOTAL ASSETS $1,039,230  $1,134,464 
       
LIABILITIES AND STOCKHOLDERS' EQUITY:      
LIABILITIES:      
 Policy benefits and claims $169,547  $219,113 
 Future policy benefits  217,415   219,450 
 Funds on deposit  143,637   145,749 
 Unearned premiums  7,993   9,786 
 Other policyholders' funds  10,249   9,769 
 Due to reinsurers  5,715   35,796 
 Accounts payable, accruals and other liabilities  59,747   55,477 
 Liabilities attributable to discontinued operations  -   68 
       
   TOTAL LIABILITIES  614,303   695,208 
       
       
Commitments and contingencies      
Redeemable noncontrolling interest  2,035   - 
       
STOCKHOLDERS' EQUITY:      
 Preferred stock (none issued)  -   - 
 Common stock  18,625   18,620 
 Paid-in capital  126,135   126,468 
 Accumulated other comprehensive loss  (2,344)  (6,964)
 Treasury stock, at cost  (61,712)  (17,483)
 Retained earnings  339,512   315,918 
       
TOTAL IHC STOCKHOLDERS' EQUITY  420,216   436,559 
NONREDEEMABLE NONCONTROLLING INTERESTS  2,676   2,697 
        
 TOTAL EQUITY  422,892   439,256 
        
 TOTAL LIABILITIES AND EQUITY  $1,039,230  $1,134,464 
        

 

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


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