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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.
