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IHC Independence Holding Company

57.01
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Last Updated: 00:00:00
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Share Name Share Symbol Market Type
Independence Holding Company NYSE:IHC NYSE Common Stock
  Price Change % Change Share Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 57.01 0 00:00:00

- Current report filing (8-K)

10/11/2011 7:03pm

Edgar (US Regulatory)







 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549




FORM 8-K


CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) November 10, 2011


INDEPENDENCE HOLDING COMPANY

(Exact name of registrant as specified in its charter)


Delaware

010306

58-1407235

(State or other jurisdiction of incorporation or organization)

(Commission File Number)

(I.R.S. Employer Identification No.)

 

 

96 Cummings Point Road, Stamford, Connecticut

06902

(Address of principal executive offices)

(Zip Code)


Registrant's telephone number, including area code:   (203) 358-8000



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))














 





Item 2.02 Results of Operations and Financial Condition.


This information set forth under this Item 2.02 is intended to be furnished under this Item 2.02 "Results of Operations and Financial Condition." Such information, including the Exhibit attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.


On November 10, 2011, Independence Holding Company issued a news release announcing its 2011 Third-Quarter and Nine-Months Results, a copy of which is attached as Exhibit 99.1.


Item 9.01 Financial Statements and Exhibits


(c)  

Exhibits:


Exhibit 99.1

News Release of Independence Holding Company dated November 10, 2011: Independence Holding Company Announces 2011 Third-Quarter and Nine-Months Results.




SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



INDEPENDENCE HOLDING COMPANY

 

(Registrant)



By: Teresa A. Herbert




/s/ Teresa A. Herbert

Teresa A. Herbert

Senior Vice President and Chief Financial Officer


Date:


November 10, 2011









INDEPENDENCE HOLDING COMPANY

CONTACT:  DAVID T. KETTIG

96 CUMMINGS POINT ROAD

(212) 355-4141 Ext. 3047

STAMFORD, CONNECTICUT 06902

www.IHCGroup.com

NYSE: IHC

 


NEWS RELEASE


INDEPENDENCE HOLDING COMPANY ANNOUNCES

2011 THIRD-QUARTER AND NINE-MONTHS RESULTS


Stamford, Connecticut, November 10, 2011. Independence Holding Company (NYSE: IHC) today reported 2011 third-quarter and nine-month results.  This press release contains both GAAP and non-GAAP financial information for which reconciliations can be found at the end of this release.

Financial Results


Net income per share from continuing operations attributable to IHC was $.22 per share, diluted, or $3,554,000, for the three months ended September 30, 2011 compared to $.29 per share, diluted, or $4,441,000, for the three months ended September 30, 2010. Revenues decreased to $103,659,000 for the three months ended September 30, 2011, compared to revenues for the three months ended September 30, 2010 of $107,875,000.  The decrease in both net income and revenues were primarily due to a reduction in realized gains and lower yield on investments.  


Net income per share from continuing operations attributable to IHC was $.62 per share, diluted, or $9,778,000, for the nine months ended September 30, 2011 compared to $1.46 per share, diluted, or $22,355,000, for the nine months ended September 30, 2010. As a result of acquiring a controlling interest in American Independence Corp. (AMIC) in March 2010, IHC recorded a gain of $16,733,000, net of $11,097,000 of taxes, ($1.09 per share) on its investment in AMIC in the first quarter of 2010. Excluding the gain on AMIC, revenues increased 4% to $313,503,000 for the nine months ended September 30, 2011.


IHC reported operating income 1 per share of $.19 per share, diluted, or $3,033,000, for the three months ended September 30, 2011, compared to $.13 per share, diluted, or $1,957,000, for the three months ended September 30, 2010. IHC reported operating income per share of $.54 per share, diluted, or $8,486,000 for the nine months ended September 30, 2011, compared to $.23 per share, diluted, or $3,582,000 for the nine months ended September 30, 2010.


Chief Executive Officer’s Comments


Roy Thung, Chief Executive Officer, commented, “We are pleased that our operating income per share for the three months and nine months of 2011 has improved 46% and 135%, respectively, from the comparable periods in 2010. The Company’s financial condition remains very strong as our book value per share increased to $15.81 per share at September







30, 2011 as compared to $15.14 at December 31, 2010, and stockholders’ equity at September 30, 2011 reached an all-time high of $260 million.”


Mr. Thung continued, “We are encouraged by the significant improvement in the profitability of our medical stop-loss line of business, which was positively affected by the reorganization of our stop-loss business.  During the past three years we successfully changed the way we manage this line of business by terminating our relationship with most independent managing general underwriters (MGUs) and consolidating the operations of our owned MGUs into a direct writing operation known as IHC Risk Solutions.  This change has  made us more competitive and efficient, resulting in significantly higher profit margins and has led to the decision to take 100% of the risk (subject to customary excess coverage) on business written through IHC Risk Solutions in 2012. We are also gratified by the increasing profitability of the fully insured segment, and that our overall investment portfolio continues to be strong.  Its quality is very high (rated, on average, AA) and has a duration of approximately five years.  IHC continues to experience pressure on its investment income due to low yields (4.2% for the first nine months of 2011) and the short duration of our fixed maturities.  Finally, we are pleased with the success of the exchange offer completed in the third quarter which resulted in IHC increasing its ownership in AMIC to 76%.”


Non-GAAP Financial Measures


The Company provides non-GAAP financial measures to complement its consolidated financial statements presented in accordance with GAAP: (i) Operating income is income from continuing operations net of income or losses attributable to non-controlling interests and excluding net realized gains or losses, other-than-temporary impairment losses and gain on bargain purchase, net of applicable income taxes; and (ii) Operating income per share is operating income (loss) on a per share basis.  These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future.  Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding realized gains or losses, net of taxes, that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance.  However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results.  A reconciliation of the non-GAAP results to the GAAP results is provided in the "Reconciliation of GAAP Income from Continuing Operations to Non-GAAP Income from Continuing Operations” schedule below.


About Independence Holding Company


IHC is a holding company principally engaged in the life and health insurance business and the acquisition of blocks of policies through its insurance company subsidiaries (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company) and its managing general underwriters, third-party administrators, and marketing affiliates.  Standard Security Life markets medical stop-loss, small group major medical, short-term medical, major medical for individuals and families, limited medical, group long and short-term disability and life, dental, vision and managed health care products. Madison Life sells group life and disability, medical stop-loss, small group major medical, major medical for individuals and families, short-term medical, dental, vision, and individual life insurance. Independence American offers medical stop-loss, small group major medical, short-term medical, and major medical for individuals and families. IHC owns certain subsidiaries through its majority ownership of American Independence Corp. (NASDAQ: AMIC), which is a holding company principally engaged in the insurance and reinsurance business.








Certain statements in this news 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 which 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.







INDEPENDENCE HOLDING COMPANY

THIRD QUARTER REPORT 2

September 30, 2011

(In Thousands, Except Per Share Data)


 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2011

 

2010

 

2011

 

2010

REVENUES

 

 

 

 

 

 

 

 

Premiums earned

$

85,230

$

83,259 

$

255,104

$

238,757 

Net investment income

 

9,235

 

11,136 

 

28,984

 

30,638 

Fee income

 

7,118

 

8,102 

 

22,823

 

25,343 

Net realized investment gains

 

924

 

4,030 

 

2,605

 

6,013 

Total other-than-temporary impairment losses

 

(107)

 

(132)

 

(575)

 

(2,797)

Equity income from AMIC

 

-

 

-

 

-

 

280 

Gain on bargain purchase of AMIC

 

-

 

-

 

-

 

27,830 

Other income

 

1,259

 

1,480 

 

4,562

 

4,592 

 

 

103,659

 

107,875

 

313,503

 

330,656 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

Insurance benefits, claims and reserves

 

56,654

 

61,320 

 

183,060

 

182,827 

Selling, general  and administrative expenses

 

38,958

 

37,182 

 

111,275

 

105,007 

Amortization of deferred acquisition costs

 

1,844

 

1,678 

 

5,293

 

4,716 

Interest expense on debt

 

516

 

499 

 

1,433

 

1,447 

 

 

97,972

 

100,679 

 

301,061

 

293,997 

Income from continuing operations

 

 

 

 

 

 

 

 

 

before income taxes

 

5,687

 

7,196 

 

12,442

 

36,659 

Income taxes

 

1,676

 

2,145 

 

1,167

 

12,913 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

4,011

 

5,051

 

11,275

 

23,746 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

-

 

(21)

 

-

 

(203)

 

 

 

 

 

 

 

 

 

Net Income

 

4,011

 

5,030 

 

11,275

 

23,543 

Less income from noncontrolling interests in

 

 

 

 

 

 

 

 

 

subsidiaries

 

(457)

 

(610)

 

(1,497)

 

(1,391)

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO IHC

$

3,554

$

4,420 

$

9,778

$

22,152 

 

 

 

 

 

 

 

 

 

Basic income per common share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

.22

$

.29 

$

.62

$

1.46 

 

Loss from discontinued operations

 

-

 

-

 

-

 

(.01)

 

Basic income per common share

$

.22

$

.29

$

.62

$

1.45 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

16,173

 

15,233 

 

15,831

 

15,279 

 

 

 

 

 

 

 

 

 

Diluted income per common share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

.22

$

.29 

$

.62

$

1.46 

 

Loss from discontinued operations

 

-

 

-

 

-

 

(.01)

 

Diluted income per common share

$

.22

$

.29 

$

.62

$

1.45 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE DILUTED SHARES

 

 

 

 

 

 

 

 

 

OUTSTANDING

 

16,178

 

15,233 

 

15,839

 

15,282 



As of November 7, 2011, there were 16,415,671 common shares outstanding, net of treasury shares.








RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS TO NON-GAAP INCOME FROM CONTINUING OPERATIONS

(In Thousands, Except Per Share Data)


 

 

  Three Months Ended

 

  Nine Months Ended

 

 

 September 30,

 

  September 30,

 

 

2011

 

2010

 

2011

 

 2010

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

4,011

$

5,051

$

11,275

$

23,746 

 

 

 

 

 

 

 

 

 

(Income) loss from noncontrolling interest in

 

 

 

 

 

 

 

 

 

subsidiaries

 

(457)

 

(610)

 

(1,497)

 

(1,391)

Realized gains, net of taxes

 

(597)

 

(2,569)

 

(1,670)

 

(3,840)

Other-than temporary impairment losses, net of taxes

 

76

 

85 

 

378

 

1,800 

Gain on bargain purchase of AMIC, net of taxes

 

-

 

-

 

-

 

(16,733)

 

 

 

 

 

 

 

 

 

    Operating income from continuing operations

$

3,033

$

1,957 

$

8,486

$

3,582 

 

 

 

 

 

 

 

 

 

Non - GAAP basic income per common share:

 

 

 

 

 

 

 

 

 

  Operating income from continuing operations

$

.19

 

.13

$

.54

 

.23 

 

 

 

 

 

 

 

 

 

Non - GAAP diluted income per common share:

 

 

 

 

 

 

 

 

 

  Operating income from continuing operations

$

.19

 

.13

$

.54

 

.23 





Included in the realized gains, net of taxes, above are IHC’s proportionate share of AMIC’s realized gains (losses) net of taxes. The other-than-temporary-impairment losses are primarily due to the write down in value of certain Alt-A mortgage fixed maturities.








Footnotes

1 Operating income is a non-GAAP measure representing income from continuing operations net of (income) losses attributable to non-controlling interests and excluding net realized investment gains (losses), other-than-temporary impairment losses and gain on bargain purchase of AMIC, net of applicable income tax. The Company believes that the presentation of operating income may offer a better understanding of the core operating results of the Company.  A reconciliation of income from continuing operations to operating income is included in this press release.


2 IHC applied business acquisition accounting and consolidated the financial results of AMIC as of March 5, 2010, resulting in a consolidated statement of income which consolidates approximately seven months of AMIC results and reflects the equity method of accounting for the first two months of 2010.





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