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 6, 2013


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.


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 6, 2013, Independence Holding Company issued a news release announcing its 2013 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 6, 2013: Independence Holding Company Announces 2013 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  6, 2013










INDEPENDENCE HOLDING COMPANY

CONTACT:  ADAM VANDERVOORT

96 CUMMINGS POINT ROAD

(646) 509-2156

STAMFORD, CONNECTICUT 06902

www.IHCGroup.com

NYSE: IHC

 


NEWS RELEASE


INDEPENDENCE HOLDING COMPANY ANNOUNCES

2013 THIRD-QUARTER AND NINE-MONTH RESULTS


Stamford, Connecticut, November 6, 2013. Independence Holding Company (NYSE: IHC) today reported 2013 third-quarter and nine-month results.  

Financial Results

Net income per share attributable to IHC amounted to $.21 per share, diluted, or $3,639,000, for the three months ended September 30, 2013 compared to $.22 per share, diluted, or $3,918,000, for the three months ended September 30, 2012. Revenues increased 27% to $141,644,000 for the three months ended September 30, 2013 compared to revenues for the three months ended September 30, 2012 of $111,502,000, primarily due to increases in premium revenue.

Net income per share attributable to IHC increased to $.68 per share, diluted, or $12,031,000, for the nine months ended September 30, 2013 compared to $.63 per share, diluted, or $11,371,000, for the nine months ended September 30, 2012. Revenues increased 37% to $431,426,000 for the nine months ended September 30, 2013 compared to revenues for the nine months ended September 30, 2012 of $315,101,000, primarily due to an increase in premium revenue and net realized investment gains.

Nine-month results include the write-off of approximately $9.3 million of deferred acquisition costs related to a coinsurance agreement entered into by Madison National Life to cede approximately $219 million of reserves, primarily annuities, in the second quarter of 2013.  However, those costs were more than offset by the gains realized by the Company in the transaction, most of which resulted from the required sale and transfer of invested assets.

Chief Executive Officer’s Comments

Roy Thung, Chief Executive Officer, commented, “Earned premium for medical stop-loss, our largest segment, grew substantially over the same quarter last year. We anticipate that, by the end of the year, the medical stop-loss we write on a direct basis will have increased by approximately 25% from 2012 levels. We attribute this growth to enhanced sales efforts, focused underwriting and an expansion in the market as new employer groups migrate to self-funding from fully insured in response to health care reform.  We expect this growth to continue in 2014. Profitability of our medical stop-loss line continues at expected levels. We are also encouraged by the performance of our existing group life, disability and DBL business lines and the expansion of our pet insurance line.  Additionally, as a result of an equity investment in a successful producer of non-subscriber occupational accident, we anticipate significant premiums and income from this new line of business in 2014.

During 2013, IHC has for the first time experienced underwriting losses in our individual major medical line of business, which are primarily attributable to the effects of health care reform.  As a result, like many insurance companies, we have exited this line in all states.  Since we have discontinued writing this business, the losses incurred in 2013 will not recur in 2014, except for any run-off.  We are also recording decreased underwriting margins in our small-group major medical line of business.  The Company attributes both the underwriting loss from individual major medical and the reduced profitability of the small-group major medical line to changes brought about by certain aspects of health care reform.  Although health care reform has led to adverse underwriting results in our major-medical business, it has had a positive effect on sales for our higher-margin business lines, including medical stop-loss and ancillary health products such as short-term medical, dental, small-group stop-loss, hospital indemnity, critical illness, scheduled-benefit and gap insurance plans.

Our overall investment portfolio continues to be very highly rated (on average, AA) and has a duration of approximately six years. Our book value has increased to $15.49 per share at September 30, 2013 from $15.44 per share at June 30, 2013 and our total stockholders’ equity is $274 million.  

As a result of our increased sales of stop-loss and higher-margin products not negatively affected by reform, increased sales of pet insurance and insurance for overseas employees and travelers, and the launching of a non-subscriber occupational accident product,  we remain optimistic as to our 2014 results.”   

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 marketing and administrative affiliates.  Standard Security Life markets medical stop-loss, group major medical, short-term medical, limited medical, group long-term and short-term disability and life, dental, vision and various supplemental products. Madison National Life sells group life and disability, group major medical, dental, individual life insurance and various supplemental products. Independence American offers pet insurance, non-subscriber occupational accident, international coverages, small-group major medical and short-term medical. 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 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 or earnings guidance, and does not undertake to provide any such guidance in the future.











INDEPENDENCE HOLDING COMPANY

THIRD QUARTER REPORT

September 30, 2013

(In Thousands, Except Per Share Data)



 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

Premiums earned

$

125,174

$

92,236

$

368,007

$

261,479

Net investment income

 

6,841

 

9,346

 

21,844

 

25,706

Fee income

 

6,290

 

7,754

 

18,871

 

21,064

Other income

 

922

 

1,155

 

3,933

 

3,558

Net realized investment gains

 

2,417

 

1,011

 

18,771

 

3,998

Net impairment losses recognized in earnings

 

-

 

-

 

-

 

(704)

 

 

 

 

 

 

 

 

 

 

 

141,644

 

111,502

 

431,426

 

315,101

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

Insurance benefits, claims and reserves

 

88,177

 

63,034

 

262,913

 

180,434

Selling, general and administrative expenses

 

45,597

 

39,791

 

133,339

 

109,594

Amortization of deferred acquisitions costs

 

1,404

 

1,587

 

13,792

 

4,812

Interest expense on debt

 

470

 

509

 

1,447

 

1,588

 

 

 

 

 

 

 

 

 

 

 

135,648

 

104,921

 

411,491

 

296,428

 

 

 

 

 

 

 

 

 

Income before income taxes

 

5,996

 

6,581

 

19,935

 

18,673

Income taxes

 

2,080

 

2,191

 

6,821

 

6,123

 

 

 

 

 

 

 

 

 

Net income

 

3,916

 

4,390

 

13,114

 

12,550

Less: income from noncontrolling interests

 

 

 

 

 

 

 

 

 

in subsidiaries

 

(277)

 

(472)

 

(1,083)

 

(1,179)

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO IHC

$

3,639

$

3,918

$

12,031

$

11,371

 

 

 

 

 

 

 

 

 

Basic income per common share

$

.21

$

.22

$

.68

$

.63

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

17,683

 

17,957

 

17,784

 

17,991

 

 

 

 

 

 

 

 

 

Diluted income per common share

$

.21

$

.22

$

.67

$

.63

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE DILUTED SHARES

 

 

 

 

 

 

 

 

 

OUTSTANDING

 

17,735

 

18,028

 

 17,890

 

18,076




As of November 1, 2013, there were 17,687,669 common shares outstanding, net of treasury shares.









INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)


 

 

 

September 30,

 

 

December 31,

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

ASSETS:

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

Short-term investments

 

$

50

 

$

50

 

Securities purchased under agreements to resell

 

 

34,036

 

 

33,956

 

Trading securities

 

 

6,394

 

 

7,016

 

Fixed maturities, available-for-sale

 

 

546,707

 

 

719,602

 

Equity securities, available-for-sale

 

 

5,605

 

 

15,598

 

Other investments

 

 

26,302

 

 

35,134

 

Total investments

 

 

619,094

 

 

811,356

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

16,835

 

 

23,945

 

Deferred acquisition costs

 

 

29,578

 

 

33,401

 

Due and unpaid premiums

 

 

58,343

 

 

49,430

 

Due from reinsurers

 

 

377,802

 

 

166,880

 

Premium and claim funds

 

 

40,795

 

 

40,596

 

Goodwill

 

 

50,318

 

 

50,318

 

Other assets

 

 

83,984

 

 

86,382

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

1,276,749

 

$

1,262,308

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

Claims and claim adjustment expenses-health

 

$

232,688

 

$

194,480 

 

Future policy benefits-life and annuity

 

 

285,175

 

 

290,238 

 

Funds on deposit

 

 

276,379

 

 

278,084 

 

Unearned premiums

 

 

10,970

 

 

8,453 

 

Other policyholders' funds

 

 

24,975

 

 

22,373 

 

Due to reinsurers

 

 

36,734

 

 

48,192 

 

Accounts payable, accruals and other liabilities

 

 

75,861

 

 

71,495 

 

Debt

 

 

6,000

 

 

8,000 

 

Junior subordinated debt securities

 

 

38,146

 

 

38,146 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

986,928

 

 

959,461 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

IHC STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

 

Preferred stock (none issued)

 

 

-

 

 

 

Common stock

 

 

18,520

 

 

18,462 

 

Paid-in capital

 

 

127,683

 

 

126,589 

 

Accumulated other comprehensive income (loss)

 

 

(5,923)

 

 

15,013 

 

Treasury stock, at cost

 

 

(7,430)

 

 

(4,533)

 

Retained earnings

 

 

141,564

 

 

130,153 

 

 

 

 

 

 

 

TOTAL IHC STOCKHOLDERS’ EQUITY

 

 

274,414

 

 

285,684 

NONCONTROLLING INTERESTS IN SUBSIDIARIES

 

 

15,407

 

 

17,163 

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

 

289,821

 

 

302,847 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

$

1,276,749

 

$

1,262,308