Independence Holding Company Announces 2006 Second Quarter and Six Months Results.STAMFORD Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn. -- Independence Holding Company (NYSE NYSE See: New York Stock Exchange : IHC IHC Immunohistochemistry IHC Intermountain Health Care IHC Inner Hair Cells IHC International Harvester Company IHC Internet Healthcare Coalition IHC Indian Head Cent IHC Interactive Health Communication IHC International Hurricane Center ) today reported 2006 second quarter and six months results. Financial Results Revenues increased 33% to $91,469,000 for the three months ended June June: see month. 30, 2006 compared to three months ended June 30, 2005 revenues of $68,982,000. Net income decreased to $2,366,000, or $.16 per share, 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 months ended June 30, 2006 compared to $5,866,000, or $.41 per share, diluted, for the three months ended June 30, 2005. Revenues increased 32% to $178,309,000 for the six months ended June 30, 2005 compared to six months ended June 30, 2005 revenues of $134,655,000. Net income decreased to $6,395,000, or $.43 per share, diluted, for the six months ended June 30, 2006 compared to $11,618,000, or $.82 per share, diluted, for the six months ended June 30, 2005. The 2005 first six months income before taxes was positively impacted by $3,500,000 recorded in other income relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a commutation agreement and loss cover (these agreements apply only to the 2003 and 2004 treaty years; no similar agreements are contemplated to be entered into in 2006). Chief Executive Officer's Comments Roy Roy, city (1990 pop. 24,603), Weber co., N Utah, near Great Salt Lake; settled by Mormons 1877, inc. 1937. Computer equipment is manufactured, and many residents work at nearby Hill Air Force Base. Thung, Chief Executive Officer, commented, "While we are encouraged by the significant increase in revenues for the quarter and the six months ended June 30, 2006, our net income decreased primarily due to factors that we do not expect to repeat in future quarters. Our Medical Stop-Loss stop-loss, n a general term referring to that category of coverage that provides insurance protection (reinsurance) to an employer for a self-funded plan. line was affected by further development on business incepting in 2005 and, to a lesser extent, in 2004, which caused reduced underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. profitability. We believe that the experience on business written in 2004 should now be nearly complete; consequently, we believe that business written in 2005 will be nearing completion during the second quarter of 2007. Based upon our best estimate, the experience on business incepting in 2005 is tracking significantly better than business written in 2004, and business written in 2006 is tracking better than business incepting in 2005 at this point in time. We also experienced an increase in death and disability claims in the second quarter of 2006, which we do not believe is a trend that will be repeated in future quarters. In addition, we incurred significant expenses (exceeding current revenue growth) related to our recent acquisitions in the fully-insured segment and expansion of staff in anticipation of accelerated growth in revenues and a continued focus on underwriting profitability in this line of business. Based on the better performance of our Medical Stop-Loss business written in 2005 and 2006, and the factors referred to above, we anticipate that future quarters will be improved, especially commencing with the first quarter of 2007. Our fully-insured segment continues to combine rapid growth with profitable underwriting returns, and we remain very confident as to the importance of this new segment to IHC in 2007 and beyond, although we did not enter into a definitive agreement to become the carrier for the previously-announced $40 million block of dental business. On a positive note, we have entered into an agreement to become the carrier on a $13 million block of vision insurance in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ." 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 Madison, cities, United States Madison. 1 City (1990 pop. 12,006), seat of Jefferson co., SE Ind., on the Ohio River; settled c.1806, inc. 1838. It is a port of entry and a tobacco marketing center. National Life Insurance Company, Inc.), its affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. (American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Independence Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : 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. )), and its managing general underwriters, third party administrators, and marketing affiliates. Standard Security Life markets medical stop-loss, employer-sponsored group major medical, short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. 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, employer-sponsored group major medical, short-term medical, dental, vision, credit life and disability and individual life insurance. AMIC is a holding company principally engaged in 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. business through Independence American Insurance Company and its 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. division. 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 IHC's filings with the Securities and Exchange Commission.
INDEPENDENCE HOLDING COMPANY
SECOND QUARTER REPORT
JUNE 30, 2006
(In Thousands, Except Per Share Data)
Three Months Six Months
Ended Ended
June 30, June 30,
2006 2005 2006 2005
------- ------- -------- --------
Revenues
Premiums earned $71,290 $55,781 $137,578 $105,209
Net investment income 11,402 9,037 23,333 18,536
Fee income 7,702 1,872 15,113 4,329
Net realized and unrealized gains 50 836 467 1,084
Equity income from AMIC 183 509 359 986
Other income 842 947 1,459 4,511
------- ------- -------- --------
91,469 68,982 178,309 134,655
------- ------- -------- --------
Expenses
Insurance benefits, claims and
reserves 52,621 35,787 102,801 72,448
Selling, general and
administrative expenses 31,665 21,028 58,814 37,536
Amortization of deferred
acquisition costs 2,671 2,673 5,189 5,324
Interest expense on debt 928 865 1,831 1,710
------- ------- -------- --------
87,885 60,353 168,635 117,018
------- ------- -------- --------
Income before income taxes 3,584 8,629 9,674 17,637
Income tax expense 1,218 2,763 3,279 6,019
------- ------- -------- --------
Net Income $ 2,366 $ 5,866 $ 6,395 $ 11,618
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Basic income per common share $ .16 $ .42 $ .44 $ .83
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Weighted average basic common
shares 14,862 13,916 14,679 13,962
======= ======= ======== ========
Diluted income per common share $ .16 $ .41 $ .43 $ .82
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Weighted average diluted common
shares 15,178 14,200 15,003 14,255
======= ======= ======== ========
As of August 9, 2006, there were 15,020,224 shares outstanding, net of
treasury shares.
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