STAMFORD, Conn., Aug. 10, 2009 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2009 second-quarter and six months results. This press release contains both GAAP and non-GAAP financial information for which reconciliations can be found at the end of this release.
Financial Results
Net income (loss) per share from continuing operations attributable to IHC increased to $.13 per share, diluted, or $1,976,000, for the three months ended June 30, 2009 compared to $(.43) per share, diluted, or $(6,693,000), for the three months ended June 30, 2008. Included in the prior year's net loss is a realized loss for other than temporary impairments in preferred stocks of $(11,145,000) or $(.72) per share, diluted, net of tax, which (net of gains) yielded a net realized loss of $(9,764,000) or $(.63) per share, diluted, net of tax.
Net income (loss) per share from continuing operations attributable to IHC increased to $.35 per share, diluted, or $5,332,000, for the six months ended June 30, 2009 compared to $(.24) per share, diluted, or $(3,621,000), for the six months ended June 30, 2008. Included in the prior year's net loss for the six months is a realized loss for other than temporary impairments in preferred stocks of $(11,197,000) or $(.73) per share, diluted, net of tax, which (net of gains) yielded a net realized loss of $(9,785,000) or $(.64) per share, diluted, net of tax.
IHC reported operating income(1) per share of $.08 per share, diluted, or $1,162,000, for the three months ended June 30, 2009, compared to $.20 per share, diluted, or $3,071,000, for the three months ended June 30, 2008. IHC reported operating income per share of $.23 per share, diluted, or $3,565,000, for the six months ended June 30, 2009, compared to $.40 per share, diluted, or $6,164,000, for the six months ended June 30, 2008.
Revenues increased 13% to $100,599,000 for the three months ended June 30, 2009, compared to revenues for the three months ended June 30, 2008 of $89,318,000. Revenues increased 3% to $199,970,000 for the six months ended June 30, 2009, compared to revenues for the six months ended June 30, 2008 of $193,736,000.
Chief Executive Officer's Comments
Roy Thung, Chief Executive Officer, commented, "Our operating income was adversely impacted by unexpectedly large health claims and unusually large legal and other expenses in connection with employment matters and the closing of a branch office. As a result of recessionary pressures and tighter underwriting guidelines, our premiums have decreased 6.0% for the first six months of 2009 compared to the first six months of 2008. In response to the decrease in premiums, we have initiated significant cost reductions in the fully insured division, which will be largely realized beginning in 2010."
Mr. Thung continued, "Even in the current challenging economy, our financial condition remains strong. Our insurance companies' statutory surplus at June 30, 2009 is at an all-time high. The Company recorded an increase in book value per share to $12.70 at June 30, 2009 from $10.56 at December 31, 2008, primarily as a result of a reduction in unrealized losses due to mark-to-market accounting on our available-for-sale securities. The adjusted book value per share(2) was $14.49 at June 30, 2009."
Non-GAAP Financial Measures
The Company provides non-GAAP financial measures to complement its consolidated financial statements presented in accordance with GAAP: (i) Operating income is income from continuing operations net of losses attributable to non-controlling interests and excluding net realized gains or losses, net of applicable income taxes, (ii) Operating income per share is operating income (loss) on a per share basis, and (iii) Adjusted book value per share represents IHC's book value per share excluding the per share value of net unrealized investment gains and losses (per SFAS 115), after taxes. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding realized gains or losses, net of taxes, that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results. A reconciliation of the non-GAAP results to the GAAP results is provided in the "Reconciliation of GAAP Income from Continuing Operations to Non-GAAP Income from Continuing Operations" and "Reconciliation of GAAP Book Value Per Share to Non-GAAP Adjusted Book Value Per Share" schedules below.
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, small group major medical, short-term medical, major medical for individuals and families, limited 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, small group major medical, major medical for individuals and families, short-term medical, dental, vision, and individual life insurance. AMIC is a holding company principally engaged in the insurance and reinsurance business through Independence American Insurance Company and its agencies and 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.
(1) Operating income is a non-GAAP measure representing income from continuing operations net of losses attributable to non-controlling interests and excluding net realized investment gains (losses), net of applicable income tax. The Company believes that the presentation of operating income may offer a better understanding of the core operating results of the Company. A reconciliation of income from continuing operations to operating income is included in this press release.
(2) Adjusted book value per share is a non-GAAP measure which represents IHC's book value per share and excludes the per share value of net unrealized investment gains and losses (per SFAS 115), after taxes. A reconciliation of book value per share to adjusted book value per share is included in this press release.
INDEPENDENCE HOLDING COMPANY
SECOND QUARTER REPORT
JUNE 30, 2009
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
-------- -------- -------- --------
REVENUES
Premiums earned $ 77,081 $ 81,684 $153,514 $163,338
Net investment income 11,428 11,156 22,147 21,801
Fee income 8,486 10,218 17,521 21,417
Net realized investment gains 1,262 2,306 2,927 2,501
Total other-than-temporary
impairment losses -- (17,393) (271) (17,474)
Equity income from AMIC 235 389 928 790
Other income 2,107 958 3,204 1,363
-------- -------- -------- --------
100,599 89,318 199,970 193,736
-------- -------- -------- --------
EXPENSES
Insurance benefits, claims and
reserves 60,423 61,615 116,619 122,399
Selling, general and
administrative expenses 35,607 35,915 72,661 72,752
Amortization of deferred
acquisition costs 1,300 1,955 2,350 3,409
Interest expense on debt 761 909 1,531 1,895
-------- -------- -------- --------
98,091 100,394 193,161 200,455
-------- -------- -------- --------
Income (loss) from continuing
operations before income taxes
(benefits) 2,508 (11,076) 6,809 (6,719)
Income taxes (benefits) 545 (4,409) 1,497 (3,056)
-------- -------- -------- --------
Income (loss) from continuing
operations 1,963 (6,667) 5,312 (3,663)
Discontinued operations:
Loss from discontinued
operations (117) -- (354) --
-------- -------- -------- --------
Net Income (loss) 1,846 (6,667) 4,958 (3,663)
(Income) loss from non-
controlling interests in
subsidiaries 13 (26) 20 42
-------- -------- -------- --------
NET INCOME (LOSS)
ATTRIBUTABLE TO IHC $ 1,859 $ (6,693) $ 4,978 $ (3,621)
======== ======== ======== ========
Basic income (loss) per common
share:
Income (loss) from continuing
operations $ .13 $ (.43) $ .35 $ (.24)
Loss from discontinued
operations (.01) -- (.03) --
-------- -------- -------- --------
Basic income (loss) per
common share $ .12 $ (.43) $ .32 $ (.24)
======== ======== ======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING 15,419 15,388 15,413 15,359
======== ======== ======== ========
Diluted income(loss) per common
share
Income (loss) from continuing
operations $ .13 $ (.43) $ .35 $ (.24)
Loss from discontinued
operations (.01) -- (.03) --
-------- -------- -------- --------
Diluted income (loss) per
common share $ .12 $ (.43) $ .32 $ (.24)
======== ======== ======== ========
WEIGHTED AVERAGE DILUTED
SHARES OUTSTANDING 15,419 15,388 15,415 15,359
======== ======== ======== ========
As of August 7, 2009, there were 15,423,175 common shares outstanding,
net of treasury shares.
RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS
TO NON-GAAP INCOME FROM CONTINUING OPERATIONS
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Income (loss) from continuing
operations $ 1,963 $ (6,667) $ 5,312 $ (3,663)
(Income) loss from non-
controlling interest in
subsidiaries 13 (26) 20 42
Realized (gains) losses net of
taxes (814) (1,381) (1,939) (1,412)
Other-than temporary impairment
losses, net of taxes -- 11,145 172 11,197
-------- -------- -------- --------
Operating income from
continuing operations $ 1,162 $ 3,071 $ 3,565 $ 6,164
======== ======== ======== ========
Non - GAAP basic income per
common share:
Operating income from
continuing operations $ .08 $ .20 $ .23 $ .40
======== ======== ======== ========
Non - GAAP diluted income per
common share:
Operating income from
continuing operations $ .08 $ .20 $ .23 $ .40
======== ======== ======== ========
Included in the realized gains (losses), net of taxes, above are IHC's
proportionate share of AMIC's realized gains (losses) net of taxes.
The other-than-temporary impairment losses are primarily due to the
write down in value of preferred stocks of certain financial
institutions.
RECONCILIATION OF GAAP BOOK VALUE PER SHARE TO
NON-GAAP ADJUSTED BOOK VALUE PER SHARE
June 30,
2009
--------
Book Value per share $ 12.70
Net unrealized losses, after tax, per share 1.79
--------
Adjusted book value per share $ 14.49
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