Independence Holding Company (NYSE:IHC) today reported 2018
first-quarter results.
Financial Results
Net income attributable to IHC per share
increased 59% to $.46 per share, diluted, or $6,961,000, for the
three months ended March 31, 2018 compared to $.29 per share,
diluted, or $4,936,000, for the three months ended March 31, 2017.
The Company reported revenues of $88,304,000 for the three months
ended March 31, 2018 compared to revenues for the three months
ended March 31, 2017 of $71,840,000.
Chief Executive Officer’s Comments
Roy T. K. Thung, Chief Executive Officer,
commented, “We are very pleased with our results for the first
quarter of 2018. Our growth in earnings is largely
attributable to a substantial increase in earnings from the
specialty health segment, which significantly increased sales in
2017 and the first quarter of 2018. Given that the current
administration in Washington has endorsed affordable options to
expensive Obamacare-compliant major medical health insurance
coverages, IHC’s products are extremely well-positioned to have
accelerating sales growth in the fourth quarter of 2018 and all of
2019. The comment period has now closed on the proposed rule
extending the duration of short-term medical (“STM”) to up to 364
days, or longer, and we anticipate that the final rule will be
released soon and will likely be effective by the fourth quarter of
this year. In addition, beginning January 1, 2019, there will
no longer be a penalty for individuals who do not have Affordable
Care Act (“ACA”) plans. We believe that these developments
and the expected continuing increases in ACA premiums will make our
alternatives much more attractive as individuals compare prices and
benefits when the 2019 open enrollment period begins November 1,
2018.
We are recognized for our development of medical
insurance packages that provide affordable coverage alternatives
for consumers who cannot afford ACA policies or need our
supplemental products to cover their high deductibles. We
recently introduced Connect Plus, which is a first-of-its-kind
temporary medical plan providing coverage for certain pre-existing
conditions up to $25,000 to consumers who qualify, subject to a
deductible and coinsurance. Our portfolio of affordable
health insurance options also includes the following “core”
products: Connect Lite (STM for the budget-minded), Connect (STM
for those not concerned with pre-existing condition limitations),
Care Access (first dollar indemnity coverage for hospitalizations)
and Fusion (Care Access coupled with a high deductible STM product
which provides both first dollar coverage for hospitalizations and
peace of mind for large expenditures). We bundle our core
products with well-priced ancillary coverages, including: MetalGap
(affordable coverage for claims due to both accidents and critical
illnesses), dental, vision, Rx discount card and telemedicine.
We believe that sales of our bundled products will accelerate
once the duration of STM is extended as anticipated. In addition,
we are now targeting underserved small employer groups, which are
also seeking more affordable health care plans through our limited
medical and gap policies.
In addition to distributing our products through
the best known e-brokers and the largest health insurers, a point
of emphasis for IHC is enhancing our owned or internal
distribution. We have hired an experienced executive to expand our
call center distribution and upgrade our lead generation
capabilities through investing in www.healthedeals.com, which we
view as our central platform for generating leads and sales
opportunities for the call center, and creating a lead generation
division through acquisition or organic growth. We are also
seeking to recruit additional HealtheDeals career advisors and have
tasked one of our sales executives to focus on this effort.
Given the expected accelerated growth of our products later
this year and in 2019 and our expanded lead generation, call center
and advisor capabilities, we expect that a growing percentage of
our sales will be produced by our owned distribution channels,
which builds significant value for IHC. For all of the foregoing
reasons, we are very optimistic as to the growth and profitability
of our specialty health segment.”
Mr. Thung added, “We have also further invested
in our New York statutory disability (DBL) line of business, which
has begun to experience significant growth as a result of New
York’s enactment of a paid family leave (PFL) rider. We also
are confident that both Madison National Life’s group life and
disability business and Independence American’s pet insurance line
of business will grow profitably. Our book value is $29.17 per
share at March 31, 2018 compared to $28.98 per share at December
31, 2017. We have increased our dividend in each of the last four
years, and announced a 50% increase to $.30 per share annually
beginning with our next semi-annual dividend. In the first quarter
of 2018, we repurchased 95,263 shares at an average cost of $27.73
per share or $2.6 million. Subsequent to March 31, the Company has
repurchased an additional 8,200 shares at an average cost of $35.08
per share. Our overall investment portfolio continues to be
very highly rated (on average, AA) and has an effective duration of
approximately four years. Finally, IHC has a substantial amount of
free cash at the corporate level and excess capital in our
insurance companies, which will readily support our expected growth
and investments in distribution.”
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. The IHC Group owns 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, advisor centers, private
label arrangements, and through the following brands:
www.HealtheDeals.com; Health eDeals Advisors; Aspira A Mas;
www.PetPartners.com; and www.PetPlace.com. IHC creates value
for insurance producers, carriers and consumers (both individuals
and small businesses) through a suite of proprietary tools and
products, all of which are underwritten by IHC’s carriers or placed
with highly rated insurance companies.
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
INCOMEMarch 31, 2018(In
Thousands, Except Per Share Data)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2018 |
|
2017 |
REVENUES: |
|
|
|
|
Premiums
earned |
$ |
79,492 |
|
$ |
62,941 |
|
Net
investment income |
|
3,186 |
|
|
3,911 |
|
Fee
income |
|
5,211 |
|
|
3,225 |
|
Other
income |
|
344 |
|
|
1,591 |
|
Net
investment gains |
|
71 |
|
|
172 |
|
|
|
88,304 |
|
|
71,840 |
|
|
|
|
|
|
EXPENSES: |
|
|
|
|
Insurance
benefits, claims and reserves |
|
35,907 |
|
|
32,211 |
|
Selling,
general and administrative expenses |
|
43,343 |
|
|
32,082 |
|
|
|
|
|
|
|
|
79,250 |
|
|
64,293 |
|
|
|
|
|
|
Income
before income taxes |
|
9,054 |
|
|
7,547 |
|
Income
taxes |
|
2,006 |
|
|
2,538 |
|
|
|
|
|
|
Net
income |
|
7,048 |
|
|
5,009 |
|
(Income)
from noncontrolling interests |
|
(87 |
) |
|
(73 |
) |
|
|
|
|
|
NET
INCOME ATTRIBUTABLE TO IHC |
$ |
6,961 |
|
$ |
4,936 |
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share |
$ |
.47 |
|
$ |
.30 |
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
14,832 |
|
|
16,701 |
|
|
|
|
|
|
Diluted income per common share |
$ |
.46 |
|
$ |
.29 |
|
|
|
|
|
|
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING |
|
15,074 |
|
|
16,978 |
|
|
|
|
|
|
|
As of May 3, 2018, there were 14,795,049 common shares
outstanding, net of treasury shares.
INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS(In Thousands, Except Share
Data)
|
|
March 31, |
|
|
December 31, |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
ASSETS: |
|
|
|
|
|
Investments: |
|
|
|
|
|
Short-term investments |
$ |
50 |
|
|
$ |
50 |
|
Securities purchased under agreements to resell |
|
9,597 |
|
|
|
10,269 |
|
Fixed
maturities, available-for-sale |
|
443,190 |
|
|
|
441,912 |
|
Equity
securities, available-for-sale |
|
6,019 |
|
|
|
6,120 |
|
Other
investments |
|
18,033 |
|
|
|
18,547 |
|
Total
investments |
|
476,889 |
|
|
|
476,898 |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
19,897 |
|
|
|
26,465 |
|
Due and
unpaid premiums |
|
32,013 |
|
|
|
21,950 |
|
Due from
reinsurers |
|
374,358 |
|
|
|
380,593 |
|
Goodwill |
|
50,697 |
|
|
|
50,697 |
|
Other
assets |
|
86,387 |
|
|
|
84,020 |
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
1,040,241 |
|
|
$ |
1,040,623 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY: |
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
Policy
benefits and claims |
$ |
165,923 |
|
|
$ |
168,683 |
|
Future
policy benefits |
|
212,174 |
|
|
|
214,766 |
|
Funds on
deposit |
|
143,802 |
|
|
|
143,537 |
|
Unearned
premiums |
|
15,678 |
|
|
|
6,666 |
|
Other
policyholders' funds |
|
10,314 |
|
|
|
10,402 |
|
Due to
reinsurers |
|
2,159 |
|
|
|
3,808 |
|
Accounts
payable, accruals and other liabilities |
|
53,629 |
|
|
|
56,453 |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
603,679 |
|
|
|
604,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
Redeemable
noncontrolling interest |
|
2,148 |
|
|
|
2,065 |
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
Preferred
stock (none issued) |
|
- |
|
|
|
- |
|
Common
stock |
|
18,625 |
|
|
|
18,625 |
|
Paid-in
capital |
|
124,774 |
|
|
|
124,538 |
|
Accumulated other comprehensive loss |
|
(8,985 |
) |
|
|
(4,598 |
) |
Treasury
stock, at cost |
|
(65,996 |
) |
|
|
(63,404 |
) |
Retained
earnings |
|
363,378 |
|
|
|
356,383 |
|
|
|
|
|
|
|
TOTAL IHC STOCKHOLDERS’ EQUITY |
|
431,796 |
|
|
|
431,544 |
|
NONREDEEMABLE NONCONTROLLING INTERESTS |
|
2,618 |
|
|
|
2,699 |
|
|
|
|
|
|
|
TOTAL EQUITY |
|
434,414 |
|
|
|
434,243 |
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
$ |
1,040,241 |
|
|
$ |
1,040,623 |
|
|
|
|
|
|
|
CONTACT: Loan Nisser(646)
509-2107www.IHCGroup.com
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