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IHC Announces Second-Quarter and Six-Month Results and Entrance Into the Senior Market

1065 Days ago

STAMFORD, Conn., Aug. 06, 2019 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE: IHC) today reported 2019 second-quarter and six-month results.   

Financial Results

Net income attributable to IHC per share was $.46 per share, diluted, or $6,847,000, for the three months ended June 30, 2019 compared to $.45 per share, diluted, or $6,757,000, for the three months ended June 30, 2018. Net income attributable to IHC per share was $1.04 per share, diluted, or $15,574,000, for the six months ended June 30, 2019 compared to $.91 per share, diluted, or $13,718,000, for the six months ended June 30, 2018.

The Company reported revenues of $95,122,000 for the three months ended June 30, 2019 compared to revenues for the three months ended June 30, 2018 of $84,888,000. The Company reported revenues of $189,304,000 for the six months ended June 30, 2019 compared to revenues for the six months ended June 30, 2018 of $173,192,000.

Chief Executive Officer’s Comments

Roy T. K. Thung, Chief Executive Officer, commented, “We are pleased with our second quarter and six-month 2019 results despite the fact that our first six months were negatively impacted by expenses related to improvements in our systems and platforms for the expansion of our call centers. We will continue to have such expenses, but probably to a lesser degree, in the next six months. IHC Specialty Benefits (SB), our standalone vertically integrated agency, is already a substantial agency producing over $180 million of premiums both through its brokerage division (i.e. licensed independent agents) and its direct-to-consumer (D2C) distribution (i.e. owned lead generation domains, online enrollment, licensed call center employees and advisors.  All of our lines of business (group life and disability, New York DBL/PFL and specialty health) continue to generate very good underwriting results.

Entrance into the Senior Market

We have worked diligently for the last six months to prepare to enter the senior market and are pleased to announce that, as of August 1st, our SB Advisors division is selling Medicare Supplement, Medicare Advantage, and Prescription Drug Plans to seniors, as well as solutions, such as short-term-medical and dental, to spouses who have not yet turned 65. We will continue to invest in this expansion so that our call centers can fully enter this market prior to the 2019 Medicare Open Enrollment Period (OEP), which begins on October 15, 2019.  All of SB’s D2C distribution channels will have new products available by the OEP, including new IHC vision and hospital indemnity products in certain states as well as products from other carriers. IHC’s hospital indemnity plans will feature benefits and riders specifically designed to address the post-acute care needs of Medicare Advantage enrollees and Fee for Service Medicare beneficiaries, with insurance to cover incidental expenses and fill gaps in coverage. IHC expects to have its own Medicare Supplement product available in the first quarter of 2020, which when coupled with our impressive portfolio of ancillary insurance products will uniquely position IHC in the senior market.  According to the Kaiser Family Foundation, nearly 60 million Americans were enrolled in Medicare in 2018, with 10,000 new individuals aging in every day. We see significant opportunities in this space for years to come, and recognizing this, we will continue to invest in technology platform enhancements, infrastructure, organic lead generation capabilities, and product offerings as it relates to this expanding market.

From a lead generation perspective, our significant position in the under-age 65 specialty health insurance space provides us with a unique opportunity to help thousands of existing customers as they age into the senior space. This alone provides us with a solid foundation of entry into the senior market, but when combined with our aggressive efforts in organic lead generation, we become very well positioned to seize on what is a large and growing opportunity. Our investment in a lead generation firm, which utilizes advance data analytics and artificial intelligence (AI) to identify high-intent traffic, as well as our recent investments in multiple high value domains, including www.medicareresources.org, will supply us with a significant volume of high-intent consumers who are shopping for solutions in the Medicare market. Further, our growing affinity relationships will provide direct access to a large number of consumers who are currently seniors or will soon be aging into this space.  Those who are or soon will be turning age 65 often have spouses who are still several years from becoming seniors.  IHC’s new STM Extend product, which can provide coverage for up to 36 months, is often an ideal product to bridge the gap for these “near-seniors.”  This product is currently available in 11 states, and we expect to have it available in a total of 17 states by the first quarter of 2020. 

In conclusion, driven by our significant commitment and investment in the senior market space, our fully owned distribution (which includes: on-line, on-the-phone, and face-to-face), our existing customer base, our affinity relationships, and our organic lead generation capabilities, we are establishing an advantageous position in the market.  We believe that by delivering an end-to-end experience to the consumer, including through state-of-the-art mobile and desktop solutions, SB will link individuals and families in need of insurance coverage with a broad base of products through highly rated national carriers across the entire spectrum of age groups and needs.”

Mr. Thung added, “Our book value increased from $17.25 at December 31, 2014 to $30.65 at March 31, 2019 and to $31.40 per share at June 30, 2019.  IHC increased its annual dividend to $.40 per share in 2019, which is the fifth increase since December 2014 when the annual dividend paid to the stockholders was $.07 per share. Our overall investment portfolio continues to be very highly rated (on average, AA) and has an effective duration of approximately four years. The Company has continued to repurchase its shares in the market to the maximum allowed under applicable rules, and paid an average cost of $36.96 per share for purchases in 2019.  IHC has no indebtedness and a substantial amount of free cash at the corporate level and excess capital in our insurance companies.  This capital (which will continue to grow due to the substantial positive cash flow of the Company) will be more than enough to finance our dividends, organic growth plans, including investments in bringing new senior products to market, marketing initiatives, expansion of our telesales capacity, and enhancement of our technology platform and online sales capacity.”

About The IHC Group

Independence Holding Company (NYSE: IHC), formed in 1980, is a holding company that is principally engaged in underwriting, administering and/or distributing group and individual specialty benefit products, including disability, supplemental health, pet, and group life insurance through its subsidiaries (Independence Holding Company and its subsidiaries collectively referred to as “The IHC Group”).  The IHC Group consists of three insurance companies (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company), and IHC Specialty Benefits, Inc., a technology-driven full-service marketing and distribution company that focuses on small employer and individual consumer products through general agents, telebrokerage, call centers, private label arrangements, and through the following brands: www.HealtheDeals.com; Health eDeals Agents; www.PetPartners.com; and www.PetPlace.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.


June 30, 2019
(In Thousands, Except Shares and Per Share Data)

    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2019     2018     2019     2018  
Premiums earned $ 84,947   $ 77,334   $ 167,736   $ 156,826  
Net investment income   4,134     3,687     8,130     7,368  
Fee income   3,707     4,585     7,895     9,796  
Other income (loss)   879     (295 )   4,563     (446 )
Net investment gains (losses)   1,455     (423 )   1,626     (352 )
Net impairment losses recognized in earnings   -     -     (646 )   -  
    95,122     84,888     189,304     173,192  
Insurance benefits, claims and reserves   44,410     33,701     87,529     69,608  
Selling, general and administrative expenses   42,206     41,693     82,735     85,036  
    86,616     75,394     170,264     154,644  
Income before income taxes   8,506     9,494     19,040     18,548  
Income taxes   1,590     2,652     3,234     4,658  
Net income   6,916     6,842     15,806     13,890  
(Income) from noncontrolling interests   (69 )   (85 )   (232 )   (172 )
NET INCOME ATTRIBUTABLE TO IHC $ 6,847   $ 6,757   $ 15,574   $ 13,718  
Basic income per common share $ .46   $ .46   $ 1.04   $ .93  
WEIGHTED AVERAGE SHARES OUTSTANDING   14,929     14,799     14,939     14,815  
Diluted income per common share $ .46   $ .45   $ 1.04   $ .91  
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING   14,948     15,128     15,007     15,101  

As of August 5, 2019, there were 14,892,668 common shares outstanding, net of treasury shares.


(In Thousands)

    June 30,     December 31,
    2019     2018
Short-term investments $ 50     $ 1,050  
Securities purchased under agreements to resell   38,864       12,063  
Fixed maturities, available-for-sale   461,426       453,464  
Equity securities   5,543       5,166  
Other investments   13,328       13,192  
Total investments   519,211       484,935  
Cash and cash equivalents   14,982       26,173  
Due and unpaid premiums   25,014       24,412  
Due from reinsurers   367,241       368,731  
Goodwill   60,205       50,697  
Other assets   84,272       82,568  
TOTAL ASSETS $ 1,070,925     $ 1,037,516  
Policy benefits and claims $ 168,984     $ 160,115  
Future policy benefits   205,355       208,910  
Funds on deposit   141,523       141,635  
Unearned premiums   14,636       5,557  
Other policyholders' funds   11,757       10,939  
Due to reinsurers   3,837       3,613  
Accounts payable, accruals and other liabilities   54,420       53,133  
TOTAL LIABILITIES   600,512       583,902  
Commitments and contingencies          
Redeemable noncontrolling interest   2,271       2,183  
Preferred stock (none issued)   -       -  
Common stock   18,625       18,625  
Paid-in capital   121,586       124,395  
Accumulated other comprehensive income (loss)   2,298       (8,310 )
Treasury stock, at cost   (67,428 )     (66,392 )
Retained earnings   393,018       380,431  
TOTAL IHC STOCKHOLDERS’ EQUITY   468,099       448,749  
TOTAL EQUITY   468,142       451,431  
TOTAL LIABILITIES AND EQUITY $ 1,070,925     $ 1,037,516  

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