Exhibit 99.1
INDEPENDENCE HOLDING COMPANY | CONTACT: | DAVID T. KETTIG |
96 CUMMINGS POINT ROAD | (212) 355-4141 Ext. 3047 |
STAMFORD, CONNECTICUT 06902 | www.Independenceholding.com |
NYSE: IHC
NEWS RELEASE
INDEPENDENCE HOLDING COMPANY ANNOUNCES
2006 THIRD QUARTER AND NINE MONTHS RESULTS
Stamford, Connecticut, November 9, 2006. Independence Holding Company (NYSE: IHC) today reported 2006 third quarter and nine months results.
Financial Results
Revenues increased 19% to $93,094,000 for the three months ended September 30, 2006 compared to three months ended September 30, 2005 revenues of $78,435,000. Net income decreased to $4,069,000, including net realized investment gains of $253,000, or $.27 per share, diluted, for the three months ended September 30, 2006 compared to $4,788,000, including net realized investment gains of $994,000, or $.34 per share, diluted, for the three months ended September 30, 2005.
Revenues increased 27% to $271,403,000 for the nine months ended September 30, 2006 compared to nine months ended September 30, 2005 revenues of $213,090,000. Net income decreased to $10,464,000, including net realized investment gains of $720,000, or $.69 per share, diluted, for the nine months ended September 30, 2006 compared to $16,406,000, including net realized investment gains of $2,078,000, or $1.15 per share, diluted, for the nine months ended September 30, 2005. The 2005 first nine months income before taxes was positively impacted by $3,500,000 recorded in other income relating to a commutation agreement and loss cover (these agreements apply only to the 2003 and 2004 treaty years; no similar agreements have been, or are contemplated to be, entered into since that time).
Chief Executive Officer’s Comments
Roy Thung, Chief Executive Officer, commented, "We are encouraged by another significant increase in revenues for the quarter and the nine months ended September 30, 2006. Our net income for the third quarter and the nine months ended September 30, 2006 was negatively impacted by further development on our medical stop-loss business incepting in 2005 and in 2004, which caused reduced underwriting profitability. Based upon our best estimate, the experience on business incepting in 2005 is continuing to perform better than business written in 2004, and business written in 2006 continues to track better, at the same point in time, than business written in the prior two years. As described in a recent A.M. Best Special Report, the medical stop loss industry as a whole reported increased loss ratios in 2004 and 2005, but it also stated that there are indications that the market should show signs of hardening by sometime in 2007. During 2006, IHC and its affiliate, American Independence Corp.
(NASDAQ: AMIC), have reported several new fully-insured initiatives with regard to major medical plans for small groups, self-employed, individuals and families, as well as vision and limited medical plans. In most cases, IHC will first begin benefiting from these new relationships in 2007. As a result of the significant increase in premiums and anticipated incremental income from these initiatives and improved loss ratio on our medical stop-loss business, we anticipate that our earnings will improve in 2007.”
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 and Madison National Life Insurance Company, Inc.), its affiliate (American Independence Corp. (NASDAQ: AMIC)), and its managing general underwriters, third party administrators, and marketing affiliates. Standard Security Life markets medical stop-loss, employer-sponsored group major medical, short-term medical, group long and short-term disability and life, dental, vision and managed health care products. Madison Life sells group life and disability, employer medical stop-loss, employer-sponsored group major medical, short-term medical, dental, vision, credit life and disability and individual life insurance. AMIC is a holding company principally engaged in the insurance and reinsurance business through Independence American Insurance Company and its managing general underwriter division.
Certain statements in this news 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 which 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.
INDEPENDENCE HOLDING COMPANY
THIRD QUARTER REPORT
SEPTEMBER 30, 2006
(In Thousands, Except Per Share Data)
| | | Three Months | | Nine Months |
| | | Ended | Ended |
| | | September 30, | | September 30, |
| | | 2006 | | 2005 | | 2006 | | 2005 |
| | | | | | | | | |
Revenues | | | | | | | | | |
Premiums earned | | $ | 71,551 | $ | 62,691 | $ | 209,129 | $ | 167,900 |
Net investment income | | | 11,855 | | 10,928 | | 35,188 | | 29,464 |
Fee income | | | 8,791 | | 2,933 | | 23,904 | | 7,262 |
Net realized investment gains and losses | | | 253 | | 994 | | 720 | | 2,078 |
Equity income from AMIC | | | 47 | | 478 | | 406 | | 1,464 |
Other income | | | 597 | | 411 | | 2,056 | | 4,922 |
| | | 93,094 | | 78,435 | | 271,403 | | 213,090 |
| | | | | | | | | | |
| | | | | | | | | |
Expenses | | | | | | | | | |
Insurance benefits, claims and reserves | | | 52,366 | | 45,995 | | 155,167 | | 118,443 |
Selling, general and administrative expenses | | | 31,716 | | 21,982 | | 90,530 | | 59,518 |
Amortization of deferred acquisition costs | | | 2,352 | | 2,442 | | 7,541 | | 7,766 |
Interest expense on debt | | | 990 | | 883 | | 2,821 | | 2,593 |
| | | | | | | | | |
| | | | 87,424 | | 71,302 | | 256,059 | | 188,320 |
| | | | | | | | | |
Income before income taxes | | | 5,670 | | 7,133 | | 15,344 | | 24,770 |
Income tax expense | | | 1,601 | | 2,345 | | 4, 880 | | 8,364 |
| | | | | | | | | |
| Net Income | | $ | 4,069 | $ | 4,788 | $ | 10,464 | $ | 16,406 |
| | | | | | | | | |
| Basic income per common share | | $ | .27 | $ | .34 | $ | .71 | $ | 1.17 |
| | | | | | | | | |
Weighted average basic common shares | | | 15,028 | | 14,019 | | 14,797 | | 13,981 |
| | | | | | | | | |
| Diluted income per common share | | $ | .27 | $ | .34 | $ | .69 | $ | 1.15 |
| | | | | | | | | |
Weighted average diluted common shares | | | 15,235 | | 14,286 | | 15,117 | | 14,255 |
| | | | | | | | | |
| | | | | | | | | |
As of November 8, 2006, there were 15,048,567 shares outstanding, net of treasury shares.
