UNITED STATES






 


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 9, 2015


INDEPENDENCE HOLDING COMPANY

(Exact name of registrant as specified in its charter)


Delaware

001-32244

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.


The information set forth under this Item 2.02 (Results of Operations and Financial Condition) is intended to be furnished. 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 or the Securities and Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.


On November 9, 2015, Independence Holding Company issued a news release announcing its 2015 Third-Quarter and Nine-Month 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 9, 2015: Independence Holding Company Announces 2015 Third-Quarter and Nine-Month 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 9, 2015










INDEPENDENCE HOLDING COMPANY

CONTACT:  LOAN NISSER

96 CUMMINGS POINT ROAD

(646) 509-2107

STAMFORD, CONNECTICUT 06902

www.IHCGroup.com

NYSE: IHC

 


NEWS RELEASE


INDEPENDENCE HOLDING COMPANY ANNOUNCES 2015

THIRD-QUARTER AND NINE-MONTH RESULTS



Stamford, Connecticut, November 9, 2015. Independence Holding Company (NYSE: IHC) today reported 2015 third-quarter and nine-month results.    

Financial Results

 Net income attributable to IHC increased to $.85 per share, diluted, or $14,760,000, for the three months ended September 30, 2015 compared to $.27 per share, diluted, or $4,710,000, for the three months ended September 30, 2014. Net income attributable to IHC increased to $1.43 per share, diluted, or $25,011,000, for the nine months ended September 30, 2015 compared to $.69 per share, diluted, or $12,259,000, for the nine months ended September 30, 2014.

During the third quarter, IHC completed two significant transactions that resulted in gains, reduced overhead and further reinforced our future as a specialty health company.  On July 31, 2015, we closed on 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.  In addition to deleveraging IHC’s balance sheet, the Company recorded a gain of $3,285,000, net of applicable income tax, in the quarter ended September 30, 2015 from the transaction.  In addition, effective September 1, 2015, IHC entered 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.), a full service administrative services company that operates in the individual and employer markets. The transaction resulted in a gain of $6,884,000. Also included in net income, net of tax, are net realized investment losses and impairment losses of $844,000 and realized gains net of impairment losses of $1,826,000 for the three months and nine months ended September 30, 2015, respectively.  

Revenues increased $10,666,000 to $140,418,000 for the three months ended September 30, 2015 compared to revenues for the three months ended September 30, 2014. Revenues increased $945,000 to $407,788,000 for the nine months ended September 30, 2015 compared to revenues for the nine months ended September 30, 2014. Revenues increased primarily due to an increase in medical stop-loss and specialty health premiums and due to the two transactions noted above which more than offset the decrease in premiums from having exited major medical and the decrease in realized gains.  Exiting this line of business, which was triggered by the requirements of the Affordable Care Act (“ACA”), resulted in a reduction in revenue of $10,827,000 for the third quarter and $42,526,000 for the first nine months of 2015.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “The transactions referred to above allow us to focus on our future as a specialty health insurer, distributor and administrator with controlled and varied distribution, profitable blocks of business in multiple product lines in which we are market leaders, and a technology-enhanced third party administrative exchange.  We continue to see strong growth in our direct written stop loss business, increasing 32% in the twelve months ended October 31, 2015, which has been driven by increased persistency and strong sales.   The Company currently has $295 million gross premiums in-force and we expect







it to reach $305 million by the end of 2015. Our disciplined underwriting approach has resulted in consistent underwriting margins, thus producing a growing contribution to net income. Our earnings were also positively impacted by our specialty health business, which grew significantly and produced very positive profit margins in 2015.  Our earnings reflect an increase as a result of completing the reinsurance of substantially all of our run-off blocks of individual life and annuities.

Despite the negative impact on revenues resulting from exiting major medical, we are seeing strong sales of short-term medical and other ancillary products and we are optimistic that sales of our specialty products will continue to increase at favorable underwriting margins.  We believe that the prospects are bright for Ebix Health Administration Exchange, which provides state-of-the-art and highly efficient administrative services to health insurance exchanges and, through an affiliate, will provide pet insurance solutions through an open exchange model.  We project significant growth in fee income for this company during the next Open Enrollment and in the future due to the trend toward risk-bearing provider systems seeking technology driven solutions for their administrative needs.

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 $18.12 per share at September 30, 2015 from $16.76 per share at December 31, 2014, and our total stockholders’ equity increased to $313 million at September 30, 2015 compared to $291 million at December 31, 2014.  Both of these are all-time highs.”  

About Independence Holding Company

Independence Holding Company (NYSE:IHC) is a holding company principally engaged in the life and health insurance business 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 marketing and administrative affiliates. Standard Security Life furnishes medical stop-loss, group limited medical, short-term medical, group long-term and short-term disability, group life, statutory disability benefit policies (DBL) in New York, group and individual dental, vision and various supplemental products. Madison National Life sells group life and disability; group limited medical, group and individual dental, and various supplemental products. Independence American offers pet insurance, non-subscriber occupational accident, short-term medical, medical stop-loss, group and individual dental and various supplemental products. 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.

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

THIRD QUARTER REPORT

September 30, 2015

(In Thousands, Except Per Share Data)


 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

Premiums earned

$

119,038 

$

117,705

$

361,595 

$

362,110

Net investment income

 

3,938 

 

5,439

 

13,884 

 

16,674

Fee income

 

2,826 

 

4,813

 

11,029 

 

18,013

Other income

 

5,792 

 

951

 

8,356 

 

3,132

Gain on sale of subsidiary to joint venture

 

10,161 

 

-

 

10,161 

 

-

Net realized investment gains

 

(1,109)

 

844

 

2,991 

 

6,914

Impairment losses

 

(228)

 

-

 

(228)

 

-

 

 

 

 

 

 

 

 

 

 

 

140,418 

 

129,752 

 

407,788 

 

406,843 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

Insurance benefits, claims and reserves

 

74,218 

 

74,916

 

233,218 

 

243,488

Selling, general and administrative expenses

 

41,984 

 

44,916

 

129,835 

 

137,998

Amortization of deferred acquisitions costs

 

558 

 

1,416

 

3,446 

 

3,887

Interest expense on debt

 

444 

 

539

 

1,354 

 

1,357

 

 

 

 

 

 

 

 

 

 

 

117,204 

 

121,787 

 

367,853 

 

386,730

 

 

 

 

 

 

 

 

 

Income before income taxes

 

23,214 

 

7,965

 

39,935 

 

20,113

Income taxes

 

8,326 

 

3,141

 

14,560 

 

7,404

 

 

 

 

 

 

 

 

 

Net income

 

14,888 

 

4,824 

 

25,375 

 

12,709 

Less: income from noncontrolling interests

 

 

 

 

 

 

 

 

 

in subsidiaries

 

(128)

 

(114)

 

(364)

 

(450)

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO IHC

$

14,760 

$

4,710 

$

25,011

$

12,259 

 

 

 

 

 

 

 

 

 

Basic income per common share

$

.85 

$

.27 

$

1.44

$

.70 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

17,292 

 

17,410 

 

17,331

 

17,505 

 

 

 

 

 

 

 

 

 

Diluted income per common share

$

.85 

$

.27 

$

1.43

$

.69 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE DILUTED SHARES

 

 

 

 

 

 

 

 

 

OUTSTANDING

 

17,457 

 

17,578 

 

17,496

 

17,665 






As of November 1, 2015, there were 17,263,258 common shares outstanding, net of treasury shares.









INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)


 

 

 

September 30,

 

 

December 31,

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

ASSETS:

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

Short-term investments

 

$

50

 

$

50 

 

Securities purchased under agreements to resell

 

 

11,082

 

 

16,790 

 

Trading securities

 

 

8,993

 

 

11,095 

 

Fixed maturities, available-for-sale

 

 

435,929

 

 

583,880 

 

Equity securities, available-for-sale

 

 

8,748

 

 

13,895 

 

Other investments

 

 

24,037

 

 

25,251 

 

Total investments

 

 

488,839

 

 

650,961 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

18,730

 

 

25,083 

 

Deferred acquisition costs

 

 

524

 

 

30,806 

 

Due and unpaid premiums

 

 

68,988

 

 

62,628 

 

Due from reinsurers

 

 

481,813

 

 

278,242 

 

Premium and claim funds

 

 

24,420

 

 

32,553 

 

Goodwill

 

 

53,371

 

 

50,318 

 

Other assets

 

 

54,637

 

 

57,126 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

1,191,322

 

$

1,187,717 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

Policy benefits and claims

 

$

252,927

 

$

236,803 

 

Future policy benefits

 

 

270,047

 

 

277,041 

 

Funds on deposit

 

 

172,087

 

 

186,782 

 

Unearned premiums

 

 

13,448

 

 

9,455 

 

Other policyholders' funds

 

 

12,035

 

 

18,802 

 

Due to reinsurers

 

 

36,904

 

 

47,945 

 

Accounts payable, accruals and other liabilities

 

 

68,659

 

 

67,641 

 

Debt

 

 

5,189

 

 

4,000 

 

Junior subordinated debt securities

 

 

38,146

 

 

38,146 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

869,442

 

 

886,615 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

IHC STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

Preferred stock (none issued)

 

 

-

 

 

 - 

 

Common stock

 

 

18,556

 

 

18,531 

 

Paid-in capital

 

 

127,580

 

 

127,098 

 

Accumulated other comprehensive income

 

 

(1,346)

 

 

22 

 

Treasury stock, at cost

 

 

(13,890)

 

 

(12,141)

 

Retained earnings

 

 

181,817

 

 

157,667 

 

 

 

 

 

 

 

TOTAL IHC STOCKHOLDERS’ EQUITY

 

 

312,717

 

 

291,177 

NONCONTROLLING INTERESTS IN SUBSIDIARIES

 

 

9,163

 

 

9,925 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

321,880

 

 

301,102 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

$

1,191,322

 

$

1,187,717