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) 509-2107www.IHCGroup.com

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