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