STAMFORD, Conn., Nov. 9, 2009 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2009 third-quarter and nine 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 $.12 per share, diluted, or $1,876,000, for the three months ended September 30, 2009 compared to $(.61) per share, diluted, or $(9,456,000), for the three months ended September 30, 2008. Included in the prior year's net loss is a realized loss for other than temporary impairments of investments of $(10,136,000) or $(.66) per share, diluted, net of tax which (net of gains) yielded a net realized loss of $(10,945,000) or $(.71) per share, diluted, net of tax.
Net income (loss) per share from continuing operations attributable to IHC increased to $.47 per share, diluted, or $7,208,000, for the nine months ended September 30, 2009 compared to $(.85) per share, diluted, or $(13,077,000), for the nine months ended September 30, 2008. Included in the prior year's net loss for the nine months is a realized loss for other than temporary impairments of investments of $(21,334,000) or $(1.39) per share, diluted, net of tax which (net of gains) yielded a net realized loss of $(20,729,000) or $(1.35) per share, diluted, net of tax.
IHC reported operating income(1) per share of $.10 per share, diluted, or $1,528,000, for the three months ended September 30, 2009, compared to $.10 per share, diluted, or $1,489,000, for the three months ended September 30, 2008. IHC reported operating income per share of $.33 per share, diluted, or $5,093,000, for the nine months ended September 30, 2009, compared to $.50 per share, diluted, or $7,653,000, for the nine months ended September 30, 2008.
Revenues increased 14% to $93,082,000 for the three months ended September 30, 2009, compared to revenues for the three months ended September 30, 2008 of $81,934,000. Revenues increased 6% to $293,052,000 for the nine months ended September 30, 2009, compared to revenues for the nine months ended September 30, 2008 of $275,670,000. The prior year's revenues for the three-month and nine-month periods were decreased by $15,783,000 and $33,256,000, respectively, of other-than-temporary losses, net.
Chief Executive Officer's Comments
Roy Thung, Chief Executive Officer, commented, "Even in the current challenging economy, our financial condition remains strong. Our insurance companies' statutory surplus at September 30, 2009 is at an all-time high. The Company's book value per share increased 36% to $14.33 at September 30, 2009 from $10.56 at December 31, 2008, primarily due to an improvement in our investment portfolio. Moreover, our stockholders equity at September 30, 2009 was $221 million as compared to $223 million at December 31, 2007, the period before the onset of the current financial crisis. Our investment portfolio is rated on average AA."
Mr. Thung continued, "Our operating income was adversely impacted by unexpectedly large health claims, and a reduction in our top line due to recessionary pressures and the late development in our stop-loss segment from our 2007 and 2006 treaty years by certain non-owned MGU's that have been terminated. In response to the decrease in premiums and increase in loss ratio in the fully insured segment, we have initiated a restructuring of that division, which we believe will result in significant cost reductions and improved underwriting results beginning in 2010."
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. 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" schedule 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.
INDEPENDENCE HOLDING COMPANY
THIRD QUARTER REPORT
SEPTEMBER 30, 2009
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
-------- -------- -------- --------
REVENUES
Premiums earned $ 71,742 $ 76,932 $225,256 $240,270
Net investment income 11,303 11,887 33,450 33,688
Fee income 7,184 9,351 24,705 30,768
Net realized investment gains
(losses) 553 (1,355) 3,480 1,145
Total other-than-temporary
impairment losses -- (15,783) (271) (33,256)
Equity income from AMIC 76 297 1,004 1,087
Other income 2,224 605 5,428 1,968
-------- -------- -------- --------
93,082 81,934 293,052 275,670
-------- -------- -------- --------
EXPENSES
Insurance benefits, claims
and reserves 55,467 59,471 172,086 181,870
Selling, general and
administrative expenses 33,820 35,444 106,481 108,196
Amortization of deferred
acquisition costs 1,001 1,419 3,351 4,828
Interest expense on debt 701 900 2,232 2,795
-------- -------- -------- --------
90,989 97,234 284,150 297,689
-------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes
(benefits) 2,093 (15,300) 8,902 (22,019)
Income taxes (benefits) 212 (5,836) 1,709 (8,892)
-------- -------- -------- --------
Income (loss) from
continuing operations 1,881 (9,464) 7,193 (13,127)
Discontinued operations:
Income (loss) from
discontinued operations 49 708 (305) 708
-------- -------- -------- --------
Net Income (loss) 1,930 (8,756) 6,888 (12,419)
(Income) loss from
noncontrolling interests in
subsidiaries (5) 8 15 50
-------- -------- -------- --------
NET INCOME (LOSS)
ATTRIBUTABLE TO IHC $ 1,925 $ (8,748) $ 6,903 $(12,369)
======== ======== ======== ========
Basic income (loss) per
common share:
Income (loss) from
continuing operations $ .12 $ (.61) $ .47 $ (.85)
Income (loss) from
discontinued operations -- .04 (.02) .05
-------- -------- -------- --------
Basic income (loss) per
common share $ .12 $ (.57) $ .45 $ (.80)
======== ======== ======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING 15,423 15,421 15,417 15,380
======== ======== ======== ========
Diluted income(loss) per
common share
Income (loss) from
continuing operations $ .12 $ (.61) $ .47 $ (.85)
Income (loss) from
discontinued operations -- .04 (.02) .05
-------- -------- -------- --------
Diluted income (loss) per
common share $ .12 $ (.57) $ .45 $ (.80)
======== ======== ======== ========
WEIGHTED AVERAGE DILUTED
SHARES OUTSTANDING 15,429 15,421 15,420 15,380
======== ======== ======== ========
As of November 6, 2009, there were 15,423,164 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 Nine Months Ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
---- ---- ---- ----
Income (loss) from
continuing operations $ 1,881 $ (9,464) $ 7,193 $(13,127)
(Income) loss from non-
controlling interest in
subsidiaries (5) 8 15 50
Realized (gains) losses net
of taxes (348) 809 (2,115) (604)
Other-than temporary
impairment losses, net of
taxes -- 10,136 -- 21,334
-------- -------- -------- --------
Operating income from
continuing operations $ 1,528 $ 1,489 $ 5,093 $ 7,653
======== ======== ======== ========
Non - GAAP basic income per
common share:
Operating income from
continuing operations $ .10 $ .10 $ .33 $ .50
======== ======== ======== ========
Non - GAAP diluted income
per common share:
Operating income from
continuing operations $ .10 $ .10 $ .33 $ .50
======== ======== ======== ========
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, fixed maturities (primarily Alt-A
securities) and common stocks.