Independence Holding Company Announces 2021 First-Quarter Results

Rhea-AI Summary

Independence Holding Company (NYSE: IHC) reported a net income of $5,621,000, or $0.38 per share, for Q1 2021, up from $4,278,000, or $0.29 per share, in Q1 2020. Revenues rose to $124,657,000 from $103,997,000, driven by growth in Paid Family Leave, pet insurance, and insurance sales. However, the company anticipates continued weakness in short-term medical sales due to ACA changes. The group life incidence rate increased due to COVID-19 deaths, but it has since normalized. IHC maintains a strong balance sheet with no debt and a book value of $32.36 per share.

Positive

• Net income for Q1 2021 increased to $5,621,000 from $4,278,000 in Q1 2020.
• Revenues rose to $124,657,000, driven by higher sales in various insurance products.
• Strong balance sheet with no indebtedness and substantial free cash.
• Book value per share is $32.36.

Negative

• Decline in short-term medical sales expected due to ACA changes.
• Higher than expected group life incidence rate related to COVID-19.

STAMFORD, Conn., May 06, 2021 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE: IHC) today reported 2021 first-quarter results.

Financial Results

Net income attributable to IHC was $5,621,000, or $.38 per share, diluted, for the three months ended March 31, 2021 compared to $4,278,000, or $.29 per share, diluted, for the three months ended March 31, 2020.

The Company reported revenues of $124,657,000 for the three months ended March 31, 2021 compared to revenues for the three months ended March 31, 2020 of $103,997,000. The increase in revenues primarily relates to an increase for the Paid Family Leave (“PFL”) portion of our New York disability law (“DBL”) business, higher premium volume in our pet insurance business and an increase in sales of insurance products (primarily senior products, Affordable Care Act (“ACA”) plans and small group stop-loss) by the IHC agencies for multiple unaffiliated insurance carriers.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “We are pleased with the increases in net income and revenues for the first quarter of 2021, primarily attributable to the performance of our DBL/PFL line of business as referenced above. Partially offsetting these positive results, we are experiencing a sharp drop in short term medical sales due to changes in the ACA, including the extended Special Enrollment Period for ACA coverage and the increased Advanced Premium Tax Credits, also known as subsidies, which have made ACA plans more affordable for many people who in the past may have elected short term medical. The Company expects weak sales in short term medical to continue. In addition, the group life incidence rate was higher than expected in the first quarter due to COVID-19 reported deaths, but subsequent to March 31^st the death rates have returned to normal.”

Mr. Thung added, “IHC has a very strong balance sheet with no indebtedness and a very substantial amount of free cash at the corporate level and significant excess capital in our insurance companies. Our book value was $32.36 per share at March 31, 2021. Our overall investment portfolio continues to be very highly rated (on average, AA) and has an effective duration of under three years.”  

About Independence Holding Company

Through our subsidiaries, Independence Holding Company (NYSE: IHC) 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. 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.mypetinsurance.com. As previously announced, IHC recently entered into a stock purchase agreement to sell all of the issued and outstanding capital stock of Standard Security Life. 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 INCOME
March 31, 2021

(In Thousands, Except Shares and Per Share Data)

			Three Months Ended
			March 31,
			2021		2020
REVENUES:
Premiums earned		$	115,141	$	96,050
Net investment income			2,592		3,240
Fee income			6,356		3,942
Other income			353		477
Net investment gains			215		288
			124,657		103,997
EXPENSES:
Insurance benefits, claims and reserves			67,378		54,058
Selling, general and administrative expenses			50,420		44,574
			117,798		98,632
Income before income taxes			6,859		5,365
Income taxes			1,293		1,043
Net income			5,566		4,322
(Income) loss from noncontrolling interests			55		(44	)
NET INCOME ATTRIBUTABLE TO IHC		$	5,621	$	4,278
Basic income per common share		$	.38	$	.29
WEIGHTED AVERAGE SHARES OUTSTANDING			14,641		14,856
Diluted income per common share		$	.38	$	.29
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING			14,778		14,911

As of May 6, 2021, there were 14,639,449 common shares outstanding, net of treasury shares.

INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

							March 31,				December 31,
							2021				2020
ASSETS:
	Investments:
		Short-term investments				$	1,559			$	2,634
		Securities purchased under agreements to resell					145,392				49,990
		Fixed maturities, available-for-sale					390,942				406,649
		Equity securities					2,671				6,119
		Other investments					10,768				8,238
			Total investments				551,332				473,630
	Cash and cash equivalents						22,123				72,089
	Due and unpaid premiums						40,688				29,182
	Due from reinsurers						357,053				357,205
	Goodwill						74,900				74,900
	Other assets						78,876				76,150
				TOTAL ASSETS		$	1,124,972			$	1,083,156
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
	Policy benefits and claims					$	193,282			$	179,232
	Future policy benefits						196,439				198,086
	Funds on deposit						141,891				141,376
	Unearned premiums						43,798				12,789
	Other policyholders’ funds						11,920				12,001
	Due to reinsurers						2,634				3,872
	Accounts payable, accruals and other liabilities						58,961				63,682
				TOTAL LIABILITIES			648,925				611,038
Commitments and contingencies
Redeemable noncontrolling interest							2,258				2,312
STOCKHOLDERS’ EQUITY:
	Preferred stock (none issued)						-				-
	Common stock						18,625				18,625
	Paid-in capital						125,189				124,757
	Accumulated other comprehensive income						2,268				4,197
	Treasury stock, at cost						(77,228	)			(77,088	)
	Retained earnings						404,894				399,273
TOTAL IHC STOCKHOLDERS’ EQUITY							473,748				469,764
NONREDEEMABLE NONCONTROLLING INTERESTS							41				42
				TOTAL EQUITY			473,789				469,806
				TOTAL LIABILITIES AND EQUITY		$	1,124,972			$	1,083,156

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

FAQ

What were Independence Holding Company's Q1 2021 financial results?

Independence Holding Company reported a net income of $5,621,000 and revenues of $124,657,000 for Q1 2021.

How did IHC's net income change from Q1 2020 to Q1 2021?

Net income increased from $4,278,000 in Q1 2020 to $5,621,000 in Q1 2021.

What factors contributed to the revenue increase for IHC in Q1 2021?

The revenue increase was primarily due to growth in the Paid Family Leave portion of their disability business, pet insurance, and sales of various insurance products.

What challenges is Independence Holding Company facing in its short-term medical sales?

IHC anticipates continued weakness in short-term medical sales due to changes in the Affordable Care Act.

What is IHC's book value per share as of March 31, 2021?

The book value per share is $32.36 as of March 31, 2021.