November 9, 2016

Independence Holding Company Announces 2016 Third-Quarter and Nine-Month Results

STAMFORD, Conn., Nov. 09, 2016 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2016 third-quarter and nine-month results.    

Financial Results

Net income attributable to IHC of $4,323,000, or $.25 per share diluted, for the three months ended September 30, 2016 decreased from $14,760,000, or $.85 per share diluted, in the same period of 2015. Income from continuing operations decreased to $.25 per share, diluted, or $4,366,000, for the three months ended September 30, 2016 compared to $.81 per share, diluted, or $14,159,000, for the three months ended September 30, 2015. The Company recorded two significant gains in the quarter ended September 30, 2015, which had a significant positive impact in 2015 but not 2016.  The first was a gain of $3,285,000, net of applicable income tax, from the reinsurance of substantially all of our run-off blocks of individual life and annuities and the sale of the infrastructure related to those blocks.  The second, effective September 1, 2015, related to IHC entering into a joint venture with Ebix, Inc. to form Ebix Health Exchange Holdings, LLC, which acquired our subsidiary Ebix Health Administration Exchange (fka IHC Health Solutions, Inc.). The transaction resulted in a gain of $6,884,000, net of applicable income tax.

Net income attributable to IHC of $114,769,000, or $6.60 per share diluted, for the nine months ended September 30, 2016 increased from $25,011,000, or $1.43 per share diluted, in the same period of 2015. As IHC previously reported, we completed the sale of IHC Risk Solutions, LLC ("Risk Solutions") and exited the medical stop-loss business. The Company recorded a gain on this transaction of $99,934,000, net of applicable income taxes and noncontrolling interest, and is reflected in discontinued operations on our Condensed Consolidated Statement of Income for the nine months ended September 30, 2016. Income from continuing operations decreased to $.83 per share, diluted, or $14,757,000, for the nine months ended September 30, 2016 compared to $1.36 per share, diluted, or $24,082,000, for the nine months ended September 30, 2015, because there was no amount in 2016 comparable to the two significant gains recorded in 2015 noted above.

The Company reported revenues of $78,542,000 and $232,133,000 for the three months and nine months ended September 30, 2016, respectively, compared to revenues for the three months and nine months ended September 30, 2015 of $139,773,000 and $405,893,000, respectively.  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, "Over the last several years, IHC's insurance companies have transformed themselves by moving into lines of business that have higher margins, are less capital intensive and are less volatile.  In addition, we are much stronger at the parent company level.  We are in the extremely enviable position of having a large amount of cash and significant excess statutory surplus in our carriers, and we will be debt free by the end of the year. We are now a specialty benefits company with multiple group and individual specialty health lines and niche specialty group disability (including New York statutory disability benefit policies (DBL)) and group life lines.  After we sold our stop-loss business, we made four relatively small investments to bolster the distribution of our specialty health products, including pet insurance, and to acquire worksite marketing expertise.  We will continue to seek additional strategic investments, but we have not as yet made a final decision as how best to deploy the vast majority of our liquidity. Our overall investment portfolio continues to be very highly rated (on average, AA) and has a duration of approximately six years. Our book value increased to $25.72 per share at September 30, 2016 from $18.73 per share at December 31, 2015, and our total stockholders' equity increased to $439 million at September 30, 2016 compared to $323 million at December 31, 2015.  Both of these amounts are all-time highs."  

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), a minority interest in Ebix Health Administration Exchange, Inc., a fully insured third party administrator, 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, 2016
(In Thousands, Except Per Share Data)
 
   Three Months Ended  Nine Months Ended
   September 30,  September 30,
   2016  2015  2016  2015
             
REVENUES:            
Premiums earned $67,335  $119,038  $195,524  $361,595 
Net investment income  4,004   3,920   12,700   13,830 
Fee income  4,050   2,201   12,541   9,195 
Other income  2,261   5,790   8,898   8,349 
Gain on sale of subsidiary to joint venture  -   10,161   -   10,161 
Net realized investment gains  2,367   (1,109)  3,945   2,991 
Net impairment losses recognized in earnings  (1,475)  (228)  (1,475)  (228)
             
   78,542   139,773   232,133   405,893 
                 
EXPENSES:                
Insurance benefits, claims and reserves  38,277   74,218   109,497   233,218 
Selling, general and administrative expenses  32,823   43,202   97,947   133,640 
Interest expense on debt  440   444   1,366   1,354 
                 
   71,540   117,864   208,810   368,212 
             
Income before income taxes  7,002   21,909   23,323   37,681 
Income taxes  2,636   7,750   8,566   13,599 
                 
Income from continuing operations  4,366   14,159   14,757   24,082 
                 
Discontinued operations:                 
Income from discontinued operations, before                
income taxes  -   1,305   117,636   2,254 
Income taxes on discontinued operations  -   576   7,724   961 
Income from discontinued operations  -   729   109,912   1,293 
                 
                 
Net income   4,366   14,888   14,757   25,375 
Less: income from noncontrolling interests            
in subsidiaries  (43)  (128)  (9,900)  (364)
             
NET INCOME ATTRIBUTABLE TO IHC $4,323  $14,760  $114,769  $25,011 
             
Basic income per common share:            
Income from continuing operations $.25  $.81  $0.83  $1.36 
Income from discontinued operations  .00   .04   5.77   .07 
Basic income per common share $.25  $.85  $6.60  $1.43 
                 
WEIGHTED AVERAGE SHARES OUTSTANDING  17,120   17,292   17,189   17,331 
                 
Diluted income per common share:                
Income from continuing operations $.25  $.81  $0.83  $1.36 
Income from discontinued operations  .00   .04   5.77   .07 
Diluted income per common share $.25  $.85  $6.60  $1.43 
                 
WEIGHTED AVERAGE DILUTED SHARES                
OUTSTANDING  17,340   17,457   17,402   17,496 
 
As of November 7, 2016, there were 17,067,875 common shares outstanding, net of treasury shares.
 


INDEPENDENCE HOLDING COMPANY
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
 
 
   September 30,  December 31,
   2016  2015
       
ASSETS:      
Investments:      
Short-term investments $8,151  $50 
Securities purchased under agreements to resell  11,282   28,285 
Trading securities  1,135   1,259 
Fixed maturities, available-for-sale  472,348   428,601 
Equity securities, available-for-sale  6,685   8,426 
Other investments  21,178   21,538 
Total investments  520,779   488,159 
       
Cash and cash equivalents  79,208   17,500 
Due and unpaid premiums  57,454   69,075 
Due from reinsurers  478,845   483,073 
Premium and claim funds  25,881   22,015 
Goodwill  41,573   47,276 
Other assets  47,065   57,934 
Assets attributable to discontinued operations  -   12,931 
       
TOTAL ASSETS $1,250,805  $1,197,963 
       
LIABILITIES AND STOCKHOLDERS' EQUITY:      
LIABILITIES:      
Policy benefits and claims $242,819  $245,443 
Future policy benefits  233,261   270,624 
Funds on deposit  150,651   173,350 
Unearned premiums  11,567   10,236 
Other policyholders' funds  9,797   11,822 
Due to reinsurers  66,577   46,355 
Accounts payable, accruals and other liabilities  55,930   64,109 
Liabilities attributable to discontinued operations  408   (15)
Debt  -   5,189 
Junior subordinated debt securities  38,146   38,146 
       
TOTAL LIABILITIES  809,156   865,259 
       
STOCKHOLDERS' EQUITY:      
IHC STOCKHOLDERS' EQUITY:      
Preferred stock (none issued)  -   - 
Common stock  18,586   18,569 
Paid-in capital  126,001   127,733 
Accumulated other comprehensive income  3,448   (3,440)
Treasury stock, at cost  (17,483)  (13,961)
Retained earnings  308,415   194,450 
       
TOTAL IHC STOCKHOLDERS' EQUITY  438,967   323,351 
NONCONTROLLING INTERESTS IN SUBSIDIARIES  2,682   9,353 
       
TOTAL EQUITY  441,649   332,704 
       
TOTAL LIABILITIES AND EQUITY  $1,250,805  $1,197,963 
         
CONTACT:  Loan Nisser
(646) 509-2107
www.IHCGroup.com


Close window | Back to top

Copyright 2017 Independence Holding Company