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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