August 15, 2016

Independence Holding Company Announces 2016 Second-Quarter and Six-Month Results

STAMFORD, Conn., Aug. 15, 2016 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2016 second-quarter and six-month results.

Financial Results

Net income attributable to IHC of $4,436,000, or $.26 per share diluted, for the three months ended June 30, 2016 decreased from $5,032,000, or $.29 per share diluted, in the same period of 2015. Income from continuing operations decreased to $.25 per share, diluted, or $4,495,000, for the three months ended June 30, 2016 compared to $.29 per share, diluted, or $5,222,000, for the three months ended June 30, 2015. The decrease is primarily due to a lower amount of net realized gains for the second quarter of 2016 compared to the same quarter in 2015.

On March 31, 2016, IHC completed the sale of IHC Risk Solutions LLC ("Risk Solutions") and exited the medical stop-loss business. Additionally, in connection with the sale, 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.

Net income attributable to IHC of $110,446,000, or $6.34 per share diluted, for the six months ended June 30, 2016 increased from $10,251,000, or $.59 per share diluted, in the same period of 2015. Income from continuing operations increased to $.58 per share, diluted, or $10,391,000, for the six months ended June 30, 2016 compared to $.56 per share, diluted, or $9,923,000, for the six months ended June 30, 2015. The increase in income from continuing operations is primarily due to ceding commissions earned as a result of the 100% co-insurance of the Company's stop-loss business produced by Risk Solutions, and higher volume and retention in various lines of business in our Group disability, life and New York statutory disability benefit policies (DBL) segment.

The Company reported revenues of $77,696,000 and $153,591,000 for the three months and six months ended June 30, 2016, respectively, compared to revenues for the three months and six months ended June 30, 2015 of $133,015,000 and $266,120,000.  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, IHC finds itself in the extremely enviable position of having a large amount of cash and significant excess statutory surplus in our carriers.  While we have made small investments in two call centers that focus on selling our specialty health products, and are currently negotiating another similar transaction, we have not as yet made a final decision as how best to deploy the vast majority of our liquidity. Having said that, it is important to note that our remaining core lines of business (group long term disability and life, New York statutory disability benefit policies (DBL), and group and individual specialty health insurance, including dental, vision, short term medical, hospital indemnity, gap and scheduled benefit plans) are growing and very profitable.  Our overall investment portfolio continues to be very highly rated (on average, AA) and has a duration of approximately four and a half years. Our book value increased to $25.58 per share at June 30, 2016 from $18.73 per share at December 31, 2015, and our total stockholders' equity increased to $439 million at June 30, 2016 compared to $323 million at December 31, 2015.  Both of these are all-time highs. The closing price of IHC stock on Friday August 12, 2015 was $16.30, or 64% of our book value, and 74% of our tangible book value. We have increased our stock buyback program from 215,000 shares to 3 million shares.  We are very optimistic that we will continue to drive significant increases in shareholder 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.

INDEPENDENCE HOLDING COMPANY
 
SECOND QUARTER REPORT
June 30, 2016
(In Thousands, Except Per Share Data)
       
  Three Months Ended  Six Months Ended
  June 30,  June 30,
  2016
  2015
  2016
  2015
REVENUES:           
 Premiums earned$ 65,627  $ 120,443  $ 128,189  $ 242,557 
 Net investment income  4,260    4,488    8,696    9,910 
 Fee income  3,412    4,417    8,491    6,994 
 Other income  3,379    1,567    6,637    2,559 
 Net realized investment gains  1,018    2,100    1,578    4,100 
            
   77,696    133,015    153,591    266,120 
EXPENSES:           
 Insurance benefits, claims and reserves  40,477    79,380    71,220    159,000 
 Selling, general and administrative expenses  29,897    44,954    65,124    90,438 
 Interest expense on debt  473    478    926    910 
            
   70,847    124,812    137,270    250,348 
             
 Income from continuing operations before income taxes  6,849    8,203    16,321    15,772 
 Income taxes  2,354    2,981    5,930    5,849 
             
 Income from continuing operations  4,495    5,222    10,391    9,923 
             
 Discontinued operations:            
 Income (loss) from discontinued operations, before income taxes  -    (82)   117,636    949 
 Income taxes (benefits) on discontinued operations  (142)   (16)   7,724    385 
 Income (loss) from discontinued operations  142    (66)   109,912    564 
             
 Net income   4,637    5,156    120,303    10,487 
 Less: Income from noncontrolling interests in subsidiaries  (201)   (124)   (9,857)   (236)
             
 NET INCOME ATTRIBUTABLE TO IHC$ 4,436  $ 5,032  $ 110,446  $ 10,251 
                     
Basic income per common share:                     
 Income from continuing operations$ .25  $ .29  $ .59  $  .56 
 Income (loss) from discontinued operations  .01    (.00)   5.83     .03 
 Basic income per common share$ .26  $ .29  $ 6.42  $ .59 
                     
WEIGHTED AVERAGE SHARES OUTSTANDING  17,204    17,338    17,223    17,351 
                     
Diluted income per common share:                     
 Income from continuing operations$ .25  $ .29  $ .58  $  .56 
 Income (loss) from discontinued operations  .01    (.00)   5.76     .03 
 Diluted income per common share$ .26  $ .29  $ 6.34  $  .59 
            
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING  17,417    17,501    17,433    17,516 
                    
As of August 12, 2016, there were 17,170,933 common shares outstanding, net of treasury shares.
 


INDEPENDENCE HOLDING COMPANY
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
 
   June 30,  December 31,
   2016  2015
       
ASSETS:      
 Investments:      
 Short-term investments $ 50  $ 50 
 Securities purchased under agreements to resell   16,232    28,285 
 Trading securities   1,216    1,259 
 Fixed maturities, available-for-sale   560,135    428,601 
 Equity securities, available-for-sale   8,941    8,426 
 Other investments   20,294    21,538 
 Total investments   606,868    488,159 
       
 Cash and cash equivalents   26,624    17,500 
 Due and unpaid premiums   59,386    69,075 
 Due from reinsurers   488,337    483,073 
 Premium and claim funds   24,671    22,015 
 Goodwill   47,276    47,276 
 Other assets   44,718    57,934 
 Assets attributable to discontinued operations   -    12,931 
       
 TOTAL ASSETS $ 1,297,880  $ 1,197,963 
       
LIABILITIES AND STOCKHOLDERS' EQUITY:      
LIABILITIES:      
 Policy benefits and claims $ 247,568  $ 245,443 
 Future policy benefits   233,603    270,624 
 Funds on deposit   150,040    173,350 
 Unearned premiums   11,747    10,236 
 Other policyholders' funds   9,695    11,822 
 Due to reinsurers   81,550    46,355 
 Accounts payable, accruals and other liabilities   60,406    64,109 
 Liabilities attributable to discontinued operations   2,410    (15)
 Debt   4,025    5,189 
 Junior subordinated debt securities   38,146    38,146 
       
 TOTAL LIABILITIES   839,190    865,259 
       
STOCKHOLDERS' EQUITY:      
IHC STOCKHOLDERS' EQUITY:      
 Preferred stock (none issued)   -    - 
 Common stock   18,584    18,569 
 Paid-in capital   128,303    127,733 
 Accumulated other comprehensive income (loss)   4,054    (3,440)
 Treasury stock, at cost   (15,753)   (13,961)
 Retained earnings   304,075    194,450 
       
TOTAL IHC STOCKHOLDERS' EQUITY   439,263    323,351 
NONCONTROLLING INTERESTS IN SUBSIDIARIES   19,427    9,353 
        
 TOTAL EQUITY   458,690    332,704 
        
 TOTAL LIABILITIES AND EQUITY  $ 1,297,880  $ 1,197,963 
            
CONTACT:  Loan Nisser
(646) 509-2107
www.IHCGroup.com


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