Independence Holding Company (NYSE: IHC) today reported 2021 second-quarter and six-month results.   

Financial Results

Net income attributable to IHC of $76,471,000 or $5.22 per share for the three months ended June 30, 2021 compared to $421,000 or $.03 per share, diluted, for the three months ended June 30, 2020.   Net income attributable to IHC was $82,092,000 or $5.61 per share, diluted, for the six months ended June 30, 2021 compared to $4,699,000 or $.32 per share, diluted, for the six months ended June 30, 2020.  

The Company entered into three transactions this year for the sales of Madison National Life Insurance Company, Inc. (“Madison National Life”) to Horace Mann Educators Corporation, Standard Security Life Insurance Company of New York (“Standard Security Life”) to Reliance Standard Life Insurance Company and 70% of its pet business, including all of the common stock of Independence American Insurance Company and 85% of the common stock of PetPartners, Inc. (“PetPartners”), to Iguana Capital, Inc. (“Iguana Capital”).

The Company completed the sale of PetPartners on June 30, 2021, and results for the three months and six months of 2021 include a gain on the sale of PetPartners of $62,693,000 net of tax. Also included in income from discontinued operations is certain income from Standard Security Life and Independence American Insurance Company. The results of Madison National Life will be shown as discontinued operations in the third quarter. The gain on the sale of Standard Security Life, Independence American Insurance Company and Madison National Life will be recorded when those transactions receive regulatory approval and are consummated.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “We are very pleased with the three transactions we entered into this year, and the consummation of the sales is expected to take most of the focus of the Company for the remainder of 2021. After all the transactions are closed, IHC projects that it will hold approximately $560 million in cash and investments, net of liabilities; a 30% interest in Iguana Capital carried at $115 million; and our health insurance agency and other assets with an aggregate carrying value of approximately $20 million, resulting in an estimated book value of approximately $47.00 per share which is calculated as if the transactions occurred and were recorded on June 30, 2021. Actual book value per share at June 30, 2021 was $37.45. These projections are based on information currently known to management and include the use of estimates and assumptions with regards to anticipated transaction costs, estimated tax rates and other potential changes.”

Mr. Thung added, “We intend to invest, develop and expand our agency operations into a much larger and profitable operation. As we progress, our agency operations will be centered around INSXcloud.com (INSX), our CMS approved Web Broker. INSX provides an agent with the ability to quote, directly enroll and track applications on the Federally Facilitated Marketplace, plus much more. The balance of our agency includes our W-2 Call Centers and our captive independent Advisors unit, both of which sell into the under/over age 65 health insurance markets, as well as our Independence Brokerage Group which recruits independent agents and agencies to sell via our platforms and contracts. We are refocusing a portion of our over 65 division into the under 65 market in order to take advantage of the positioning of INSX, our agency and our lead generation capabilities, and the market growth resulting from the American Rescue Plan Act. Although these operations have been unprofitable, we expect these changes will improve the results and bring us to profitability in the future. In addition, we will also continue to monitor and support our minority interest investment in Iguana Capital.”

About The IHC Group

Independence Holding Company (NYSE: IHC), through our current subsidiaries, 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. (“Madison National Life”). 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.inxscloud.com. As previously announced, IHC has entered into stock purchase agreements to sell all of the issued and outstanding capital stock of Standard Security Life, Madison National Life and Independence American Holdings Corp., which includes Independence American Insurance Company and other assets of IHC’s pet business, each subject to regulatory approval. 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 INCOMEJune 30, 2021(In Thousands, Except Shares and Per Share Data)
 
 
 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2021   2020   2021   2020
REVENUES:                
Premiums earned $ 42,451   $ 49,138   $ 86,023   $ 99,804  
Net investment income   1,651     2,329     3,452     4,828  
Fee income   4,944     3,907     11,079     7,341  
Other income   410     807     1,026     1,432  
Net investment gains (losses)   (126 )   274     91     117  
                 
    49,330     56,455     101,671     113,522  
                 
EXPENSES:                
Insurance benefits, claims and reserves   17,192     21,339     39,113     47,628  
Selling, general and administrative expenses   32,842     37,974     63,602     69,034  
                 
    50,034     59,313     102,715     116,662  
                 
Loss from continuing operations before income taxes   (704 )   (2,858 )   (1,044 )   (3,140 )
Income tax benefit   (267 )   (1,066 )   (430 )   (1,187 )
                 
Loss from continuing operations, net of tax   (437 )   (1,792 )   (614 )   (1,953 )
                 
Discontinued operations:                
Total pretax income from discontinued operations   92,375     3,594     99,574     9,243  
Income tax expense on discontinued operations   15,570     1,264     17,026     2,430  
Income from discontinued operations, net of tax   76,805     2,330     82,548     6,813  
                 
Net income   76,368     538     81,934     4,860  
(Income) loss from nonredeemable noncontrolling interests   1     (43 )   2     (34 )
(Income) loss from redeemable noncontrolling interests   102     (74 )   156     (127 )
                 
NET INCOME ATTRIBUTABLE TO IHC $ 76,471   $ 421   $ 82,092   $ 4,699  
                 
Basic income per common share                
Loss from continuing operations $ (.03 ) $ (.12 ) $ (.04 ) $ (.13 )
Income from discontinued operations   5.25     .15     5.65     .45  
Basic income per common share $ 5.22   $ .03   $ 5.61   $ .32  
                 
WEIGHTED AVERAGE SHARES OUTSTANDING   14,642     14,765     14,641     14,811  
                 
Diluted income per common share                
Loss from continuing operations $ (.03 ) $ (.12 ) $ (.04 ) $ (.13 )
Income from discontinued operations   5.25     .15     5.65     .45  
Diluted income per common share $ 5.22   $ .03   $ 5.61   $ .32  
                 
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING   14,642     14,765     14,641     14,811  
                 

As of August 7, 2021, there were 14,644,389 common shares outstanding, net of treasury shares.

 
INDEPENDENCE HOLDING COMPANY
 
CONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands)
 
 
 
      June 30, 2021     December 31, 2020
             
ASSETS:            
Investments:            
Short-term investments   $ 1,550     $ 1,568  
Securities purchased under agreements to resell     70,323       33,038  
Fixed maturities, available-for-sale     183,709       210,719  
Equity securities     -       1,753  
Other investments     2,022       1,928  
Total investments     257,604       249,006  
             
Cash and cash equivalents     22,834       31,923  
Investment in Iguana Capital, Inc.     33,762       -  
Due and unpaid premiums     10,950       9,981  
Due from reinsurers     354,735       357,237  
Goodwill     12,486       12,486  
Funds held in escrow     78,779       -  
Other assets     29,864       46,832  
Assets attributable to discontinued operations     416,162       375,691  
             
TOTAL ASSETS   $ 1,217,176     $ 1,083,156  
             
LIABILITIES AND EQUITY:            
LIABILITIES:            
Policy benefits and claims   $ 127,815     $ 132,957  
Future policy benefits     196,026       198,086  
Funds on deposit     142,155       141,376  
Unearned premiums     1,763       1,952  
Other policyholders' funds     11,988       12,001  
Due to reinsurers     2,242       3,872  
Accounts payable, accruals and other liabilities     66,519       44,855  
Liabilities attributable to discontinued operations     120,180       75,939  
             
TOTAL LIABILITIES     668,688       611,038  
             
Commitments and contingencies            
Redeemable noncontrolling interest     -       2,312  
             
STOCKHOLDERS’ EQUITY:            
Preferred stock (none issued)     -       -  
Common Stock     18,625       18,625  
Paid-in capital     125,653       124,757  
Accumulated other comprehensive income     3,220       4,197  
Treasury stock, at cost     (77,189 )     (77,088 )
Retained earnings     478,139       399,273  
             
TOTAL IHC STOCKHOLDERS’ EQUITY     548,448       469,764  
NONREDEEMABLE NONCONTROLLING INTERESTS     40       42  
             
TOTAL EQUITY     548,488       469,806  
             
TOTAL LIABILITIES AND EQUITY   $ 1,217,176     $ 1,083,156  
                 

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

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