Independence Holding Company (NYSE: IHC) today reported 2021 first-quarter results.

Financial Results

Net income attributable to IHC was $5,621,000, or $.38 per share, diluted, for the three months ended March 31, 2021 compared to $4,278,000, or $.29 per share, diluted, for the three months ended March 31, 2020.

The Company reported revenues of $124,657,000 for the three months ended March 31, 2021 compared to revenues for the three months ended March 31, 2020 of $103,997,000. The increase in revenues primarily relates to an increase for the Paid Family Leave (“PFL”) portion of our New York disability law (“DBL”) business, higher premium volume in our pet insurance business and an increase in sales of insurance products (primarily senior products, Affordable Care Act (“ACA”) plans and small group stop-loss) by the IHC agencies for multiple unaffiliated insurance carriers.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “We are pleased with the increases in net income and revenues for the first quarter of 2021, primarily attributable to the performance of our DBL/PFL line of business as referenced above. Partially offsetting these positive results, we are experiencing a sharp drop in short term medical sales due to changes in the ACA, including the extended Special Enrollment Period for ACA coverage and the increased Advanced Premium Tax Credits, also known as subsidies, which have made ACA plans more affordable for many people who in the past may have elected short term medical. The Company expects weak sales in short term medical to continue. In addition, the group life incidence rate was higher than expected in the first quarter due to COVID-19 reported deaths, but subsequent to March 31st the death rates have returned to normal.”

Mr. Thung added, “IHC has a very strong balance sheet with no indebtedness and a very substantial amount of free cash at the corporate level and significant excess capital in our insurance companies. Our book value was $32.36 per share at March 31, 2021. Our overall investment portfolio continues to be very highly rated (on average, AA) and has an effective duration of under three years.”  

About Independence Holding Company

Through our subsidiaries, Independence Holding Company (NYSE: IHC) underwrites and distributes health, group disability and life, New York State DBL and paid family leave, and pet insurance. IHC underwrites policies in all 50 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands through our three carriers: Independence American Insurance Company, Standard Security Life Insurance Company of New York (“Standard Security Life”) and Madison National Life Insurance Company, Inc. We also distribute products nationally through multiple channels, including our agencies, call centers, advisors, direct and affinity relationships, Web Broker, and web properties, including www.healthedeals.com; www.healthinsurance.org; www.medicareresources.org; www.petplace.com; and www.mypetinsurance.com. As previously announced, IHC recently entered into a stock purchase agreement to sell all of the issued and outstanding capital stock of Standard Security Life. To learn more, visit https://ihcgroup.com/.

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 INCOMEMarch 31, 2021

(In Thousands, Except Shares and Per Share Data)

    Three Months Ended
    March 31,
    2021   2020
REVENUES:        
Premiums earned $ 115,141 $ 96,050  
Net investment income   2,592   3,240  
Fee income   6,356   3,942  
Other income   353   477  
Net investment gains   215   288  
    124,657   103,997  
         
EXPENSES:        
Insurance benefits, claims and reserves   67,378   54,058  
Selling, general and administrative expenses   50,420   44,574  
         
    117,798   98,632  
         
Income before income taxes   6,859   5,365  
Income taxes   1,293   1,043  
         
Net income   5,566   4,322  
(Income) loss from noncontrolling interests   55   (44 )
         
NET INCOME ATTRIBUTABLE TO IHC $ 5,621 $ 4,278  
         
         
Basic income per common share $ .38 $ .29  
         
WEIGHTED AVERAGE SHARES OUTSTANDING   14,641   14,856  
         
Diluted income per common share $ .38 $ .29  
         
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING   14,778   14,911  

As of May 6, 2021, there were 14,639,449 common shares outstanding, net of treasury shares.

INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands)

      March 31,     December 31,
      2021     2020
             
ASSETS:            
  Investments:            
  Short-term investments   $ 1,559     $ 2,634  
  Securities purchased under agreements to resell     145,392       49,990  
  Fixed maturities, available-for-sale     390,942       406,649  
  Equity securities     2,671       6,119  
  Other investments     10,768       8,238  
  Total investments     551,332       473,630  
             
  Cash and cash equivalents     22,123       72,089  
  Due and unpaid premiums     40,688       29,182  
  Due from reinsurers     357,053       357,205  
  Goodwill     74,900       74,900  
  Other assets     78,876       76,150  
             
  TOTAL ASSETS   $ 1,124,972     $ 1,083,156  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY:            
LIABILITIES:            
  Policy benefits and claims   $ 193,282     $ 179,232  
  Future policy benefits     196,439       198,086  
  Funds on deposit     141,891       141,376  
  Unearned premiums     43,798       12,789  
  Other policyholders’ funds     11,920       12,001  
  Due to reinsurers     2,634       3,872  
  Accounts payable, accruals and other liabilities     58,961       63,682  
             
  TOTAL LIABILITIES     648,925       611,038  
             
             
Commitments and contingencies            
Redeemable noncontrolling interest     2,258       2,312  
             
STOCKHOLDERS’ EQUITY:            
  Preferred stock (none issued)     -       -  
  Common stock     18,625       18,625  
  Paid-in capital     125,189       124,757  
  Accumulated other comprehensive income     2,268       4,197  
  Treasury stock, at cost     (77,228 )     (77,088 )
  Retained earnings     404,894       399,273  
             
TOTAL IHC STOCKHOLDERS’ EQUITY     473,748       469,764  
NONREDEEMABLE NONCONTROLLING INTERESTS     41       42  
               
  TOTAL EQUITY     473,789       469,806  
               
  TOTAL LIABILITIES AND EQUITY   $ 1,124,972     $ 1,083,156  

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

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