Independence Holding Company Announces 2021 Third-Quarter and Nine-Month Results

Rhea-AI Summary

Independence Holding Company (NYSE: IHC) reported its third-quarter and nine-month results for 2021, revealing a loss of $11,512,000 or $.79 per share for Q3, compared to a loss of $7,340,000 or $.50 per share in Q3 2020. For the nine-month period, the loss was $23,514,000 or $1.61 per share, up from $16,391,000 or $1.11 per share the previous year. However, net income for Q3 2021 was $17,359,000 or $1.18 per share, significantly higher than $8,688,000 or $.59 per share in Q3 2020. The company also announced plans to sell several subsidiaries and expects a pro forma book value of approximately $48.50 per share after these transactions.

Positive

• Net income for Q3 2021 was $17,359,000 or $1.18 per share, up from $8,688,000 or $.59 per share in Q3 2020.
• Projected pro forma book value of approximately $48.50 per share post-sale transactions.

Negative

• Loss from continuing operations for Q3 2021 was $11,512,000, higher than the $7,340,000 loss in Q3 2020.
• Agency operations remain unprofitable, with expected continued losses in the near term.

STAMFORD, Conn., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE: IHC) today reported 2021 third-quarter and nine-month results.

Financial Results

IHC reported a loss from continuing operations attributable to IHC, net of tax, of $11,512,000 or $.79 per share for the three months ended September 30, 2021 compared to a loss of $7,340,000 or $.50 per share for the three months ended September 30, 2020. Loss from continuing operations attributable to IHC, net of tax, of $23,514,000 or $1.61 per share for the nine months ended September 30, 2021 compared to a loss of $16,391,000 or $1.11 per share for the nine months ended September 30, 2020.

Net income attributable to IHC of $17,359,000 or $1.18 per share for the three months ended September 30, 2021 compared to $8,688,000 or $.59 per share, diluted, for the three months ended September 30, 2020. Net income attributable to IHC of $99,451,000 or $6.79 per share, diluted, for the nine months ended September 30, 2021 compared to $13,387,000 or $.91 per share, diluted, for the nine months ended September 30, 2020.

The Company entered into three transactions this year for the sale of (i) all of the shares of common stock of Madison National Life Insurance Company, Inc. (“Madison National Life”) to Horace Mann Educators Corporation, (ii) all of the shares of common stock of Standard Security Life Insurance Company of New York (“Standard Security Life”) to Reliance Standard Life Insurance Company and (iii) 70% of the Company’s pet business, including all of the shares of common stock of Independence American Insurance Company and the Company’s entire interest in 85% of the common stock of PetPartners, Inc. (“PetPartners”), to Iguana Capital, Inc. (“Iguana Capital”).

The Company completed the sale of PetPartners on June 30, 2021, and results for the nine months of 2021 include a gain on the sale of PetPartners of $62,229,000 net of tax. Also included in income from discontinued operations is the operating income from Madison National Life, Standard Security Life and Independence American Insurance Company. The gain on the sales of Madison National Life, Standard Security Life, and Independence American Insurance Company will be recorded when those transactions are consummated. They are currently pending regulatory approval.

The Company has also announced that it has entered into an Agreement and Plan of Merger with Geneve Holdings, Inc. its majority stockholder. Further information regarding the terms and conditions will be contained in a Current Report on Form 8-K filed with the SEC.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “The Company is focusing on the consummation of the three sale transactions for the remainder of the year. Pro forma, including the third quarter results, and after all the transactions are closed, IHC projects that it will hold approximately $575 million in cash and investments, net of liabilities; our interest in Iguana Capital; and our health insurance agency and other assets, resulting in an estimated fully diluted book value of approximately $48.50 per share, which is calculated as if the transactions occurred and were recorded on September 30, 2021. Actual book value per share at September 30, 2021 was $38.47 as compared to $32.08 per share at December 31, 2020. These projections are based on information currently known to management and include the use of estimates and assumptions with regards to anticipated transaction costs, estimated tax rates and other potential changes.”

Mr. Thung added, “Our agency operations have been unprofitable, and we will continue to report losses from our agencies for the near term. We continue to expand our agency digital assets by enhancing our core platform, INSXcloud.com, a CMS approved Web Broker. We have expanded product offerings on the platform and have developed marketing initiatives to drive both direct and partner initiated traffic to the platform. We will continue to invest in and enhance these capabilities at our agency operations as we enter 2022 and work towards building a profitable agency operation.”

About Independence Holding Company

Independence Holding Company (NYSE: IHC), through our current subsidiaries, 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. (“Madison National Life”). 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.insxcloud.com. As previously announced, IHC has entered into stock purchase agreements to sell all of the issued and outstanding capital stock of Standard Security Life, Madison National Life and Independence American Holdings Corp., which includes Independence American Insurance Company and the remaining assets of IHC’s pet business, each subject to regulatory approval. 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.

CONTACT: Loan Nisser

(646) 509-2107

www.IHCGroup.com

INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
September 30, 2021
(In Thousands, Except Shares and Per Share Data)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
REVENUES:
Net investment income	$	119			$	170			$	430			$	916
Fee income		5,569				6,113				20,291				18,465
Other income		873				615				1,660				1,739
Net investment gains (losses)		(48	)			(53	)			105				122
		6,513				6,845				22,486				21,242
EXPENSES:
Selling, general and administrative expenses		21,592				16,431				53,028				43,221
Loss from continuing operations before income taxes		(15,079	)			(9,586	)			(30,542	)			(21,979	)
Income tax benefits		(3,567	)			(2,241	)			(7,026	)			(5,617	)
Loss from continuing operations, net of tax		(11,512	)			(7,345	)			(23,516	)			(16,362	)
Discontinued operations:
Total pretax income from discontinued operations		36,383				20,295				150,376				38,790
Income tax expense on discontinued operations		7,512				4,218				27,567				8,836
Income from discontinued operations, net of tax		28,871				16,077				122,809				29,954
Net income		17,359				8,732				99,293				13,592
(Income) loss from nonredeemable noncontrolling interests		-				5				2				(29	)
(Income) loss from redeemable noncontrolling interests		-				(49	)			156				(176	)
NET INCOME ATTRIBUTABLE TO IHC	$	17,359			$	8,688			$	99,451			$	13,387
Basic income per common share
Loss from continuing operations	$	(.79	)		$	(.50	)		$	(1.61	)		$	(1.11	)
Income from discontinued operations		1.97				1.09				8.40				2.02
Basic income per common share	$	1.18			$	.59			$	6.79			$	.91
WEIGHTED AVERAGE SHARES OUTSTANDING		14,654				14,670				14,645				14,763
Diluted income per common share
Loss from continuing operations	$	(.79	)		$	(.50	)		$	(1.61	)		$	(1.11	)
Income from discontinued operations		1.97				1.09				8.40				2.02
Diluted income per common share	$	1.18			$	.59			$	6.79			$	.91
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING		14,654				14,670				14,645				14,763

As of November 9, 2021, there were 14,674,936 common shares outstanding, net of treasury shares.

INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

			September 30, 2021				December 31, 2020
ASSETS:
Investments:
Securities purchased under agreements to resell		$	25,458			$	23,962
Fixed maturities, available-for-sale			29,070				44,003
Other investments			2,050				1,928
Total investments			56,578				69,893
Cash and cash equivalents			7,946				17,215
Investment in Iguana Capital, Inc.			33,475				-
Funds held in escrow			78,263				-
Other assets			33,975				49,475
Assets attributable to discontinued operations			995,383				946,573
TOTAL ASSETS		$	1,205,620			$	1,083,156
LIABILITIES AND EQUITY:
LIABILITIES:
Accounts payable, accruals and other liabilities		$	39,817			$	28,387
Liabilities attributable to discontinued operations			601,253				582,651
TOTAL LIABILITIES			641,070				611,038
Commitments and contingencies
Redeemable noncontrolling interest			-				2,312
STOCKHOLDERS’ EQUITY:
Preferred stock (none issued)			-				-
Common stock			18,625				18,625
Paid-in capital			125,357				124,757
Accumulated other comprehensive income			2,320				4,197
Treasury stock, at cost			(77,247	)			(77,088	)
Retained earnings			495,498				399,273
TOTAL IHC STOCKHOLDERS’ EQUITY			564,553				469,764
NONREDEEMABLE NONCONTROLLING INTERESTS			(3	)			42
TOTAL EQUITY			564,550				469,806
TOTAL LIABILITIES AND EQUITY		$	1,205,620			$	1,083,156

FAQ

What were Independence Holding Company's financial results for Q3 2021?

IHC reported a Q3 loss of $11,512,000 or $.79 per share, compared to a loss of $7,340,000 or $.50 per share in Q3 2020.

How did IHC's net income change in Q3 2021 compared to the previous year?

Net income for Q3 2021 was $17,359,000 or $1.18 per share, a significant increase from $8,688,000 or $.59 per share in Q3 2020.

What is the expected pro forma book value for IHC after recent transactions?

The projected pro forma book value is approximately $48.50 per share after the completion of the sales of certain subsidiaries.

What was the loss from continuing operations for IHC in the nine-month period ending September 30, 2021?

The loss from continuing operations for the nine-month period was $23,514,000 or $1.61 per share, up from $16,391,000 or $1.11 per share in the same period of 2020.

Why is IHC's agency operations considered unprofitable?

IHC's agency operations are unprofitable, and the company expects to continue reporting losses from these operations in the near term.