American Independence Corp. Announces Acquisition and Net Loss for Three Months Ended Dec. 31, 2002.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 10, 2003 American Independence Corp. (Nasdaq:AMIC Am´ic a. 1. (Chem.) Related to, or derived, ammonia; - used chiefly as a suffix; as, amic acid; phosphamic acid. s> Amic acid (Chem. ) today announced the expansion of its business through the acquisition of an employer medical stop-loss managing general underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. and reported a net loss of $7.1 million ($0.28 per share basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) for the three month transition period ended December 31, 2002. The three month transition period is a result of AMIC changing its fiscal year end from September 30 to December 31. During the quarter ended December 31, 2002, AMIC substantially completed the process of converting itself from an Internet services company to an insurance holding company. Acquisition AMIC and its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Independence American Insurance Company, acquired today, but effective as of January 1, 2003, an 80% interest in a managing general underwriter for $16 million cash. This MGU MGU Most General Unifier MGU Managing General Underwriter (insurance) MGU Mahatma Gandhi University (Kerala India) MGU Movement for Guatemalan Unity MGU Midcourse Guidance Unit had a block of approximately $63 million of annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. employer medical stop-loss premium written through 3 carriers as of December 31, 2002, and recorded unaudited operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (before taxes) of $3.6 million in 2002. There will be no changes in the management of the MGU as a result of the acquisition, and the current senior management will continue to own the remaining 20% interest of the MGU. Operating Results AMIC reported a net loss of $7.1 million ($0.28 per share basic and diluted) for the three months ended December 31, 2002. Included in the loss are a net loss on disposition of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $1.5 million ($0.06 per share basic and diluted) and a net loss of $5.6 million ($0.22 per share basic and diluted) from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . The loss from continuing operations relates to restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , provisions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc proposed settlements and awards, an increase in the allowance for doubtful accounts Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. and the write down of an equity investment. The company also reported revenues of $2.7 million for the quarter ended December 31, 2002, primarily from its new insurance operations, which commenced November 14, 2002. Chief Executive Officer's Comments Roy Thung, chief executive officer, commented: "The acquisition of an 80% interest in one of the largest employer medical stop-loss MGUs in the country marks the next step in fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. of our plan for the growth of AMIC. As a result of this acquisition, our stop-loss and managed care MGUs have a block of $115 million of annualized premiums as of December 31, 2002 written through several carriers. Also starting in 2003, our insurance company, Independence American, will begin to realize more fully the impact of reinsuring 15% of the entire block of stop-loss and managed care business produced by Standard Security Life and Madison National Life, which are wholly owned subsidiaries of Independence Holding Company (Nasdaq:INHO), and will receive the total benefit of these treaties in 2004. Independence American has also begun writing business directly. The acquisition of this MGU, together with the insurance and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. premiums being generated by Independence American, has truly transformed your company into a significant presence in the stop-loss and managed care markets. As part of this transformation, your company still has to close the books on some of its former operations. During the quarter ended December 31, 2002, we have taken restructuring charges, increased reserves and allowances with respect to discontinued operations and written down several assets relating to the old Internet operations. As a result of these charges, we are reporting a loss for the quarter from these prior operations. I am pleased to report that the insurance operations contributed an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. (before taxes and purchase accounting adjustments) of $0.4 million for the six week period ending December 31, 2002, and we look forward to a full year of income from our insurance operations and from our MGUs (including the newly acquired one) in 2003." AMIC is a holding company engaged principally in the insurance and reinsurance business through Independence American Insurance Company and its employer medical stop-loss and managed care managing general underwriters. Some of the statements included herein may be considered to be forward looking statements, which are subject to certain risks and uncertainties. Factors which could cause the actual results to differ materially from those suggested by such statements are described from time to time in AMIC's filings with the Securities and Exchange Commission.
AMERICAN INDEPENDENCE CORP.
TRANSITION QUARTER REPORT
(In Thousands except Per Share Data)
Three Months Ended
December 31,
2002 2001
Revenues:
Premiums earned 1,636 -
Investment income 292 598
MGU fee income 713 -
Other income 47 6
2,688 604
Net Loss:
Loss from continuing operations (5,577) (1,262)
Loss from discontinued operations - (928)
Loss on disposition of discontinued
operations (1,475) (590)
Net loss (7,052) (2,780)
Basic and Diluted Loss Per Common Share:
Loss from continuing operations (0.22) (0.05) $
Loss from discontinued operations - (0.04)
Loss on disposition of discontinued
operations (0.06) (0.02)
Net loss (0.28) (0.11)
Weighted average basic and diluted
common shares 25,184 25,171
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