Independence Holding Company (NYSE: IHC) today reported 2019
first-quarter results.
Financial Results
Net income attributable to IHC per share
increased 26% to $.58 per share, diluted, or $8,727,000, for the
three months ended March 31, 2019 compared to $.46 per share,
diluted, or $6,961,000, for the three months ended March 31, 2018.
The Company reported revenues of $94,182,000 for the three months
ended March 31, 2019 compared to revenues for the three months
ended March 31, 2018 of $88,304,000.
Chief Executive Officer’s Comments
Roy T. K. Thung, Chief Executive Officer,
commented, “We are pleased with our first quarter 2019
results. All of our lines of business (group life and
disability, New York DBL/PFL and specialty health), in the
aggregate, continued to grow and generate good underwriting
results. In particular, we are pleased with the advancements
made by IHC Specialty Benefits (SB), our standalone vertically
integrated agency.
While SB 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
career agents), it historically focused only on servicing products
underwritten by IHC’s carriers. By the end of the third quarter of
this year, SB will be uniquely situated, through its vertically
integrated structure, to better serve the growing demand for
creative health insurance solutions by offering products from a
multitude of highly rated carriers and to consumers of all age
groups in the majority of states. Our vertically integrated
structure starts with customer acquisition through lead
generation. IHC’s focus on expanding its digital footprint
and digital marketing efforts will continue to drive exclusive and
high-intent lead traffic for the sale of ancillary health and pet
insurance products. This digital expansion, that includes the
acquisition of high value domains, is an important part of our
strategy in that it results in lead generation that has a
significantly lower cost of acquisition as well as a higher
conversion rate. We are also growing our footprint with nationally
recognized affinity groups as evidenced by our responsibility for
servicing USAA members seeking health insurance and American Kennel
Club members seeking pet insurance. So as to provide an exceptional
consumer experience for interested customers, SB utilizes a
full-time call center agent model, which allows us to deploy a
highly trained and experienced staff. Supported by “always
available” on-line technology platforms, this dedicated and rapidly
growing group of full-time agents is capable of professionally
guiding a consumer through the complicated choices related to their
health insurance needs. While there is a cost associated with
maintaining a large number of employee agents throughout the year,
we have found that increased agent tenure benefits both the
satisfaction of our customers and our business retention.
Often, customers find it helpful to speak with a knowledgeable
licensed agent before deciding which coverage is best for them. We
offer these consumers an excellent portfolio of products (including
the only short-term medical that covers certain pre-existing
conditions) to fill gaps in coverage.
During the second quarter, we will apply our
vertically integrated model to the senior market. We are very
excited to be entering the Medicare market, which was estimated to
cover approximately 60 million people in 2018. This number is
estimated to be growing by 10,000 people per day, and by 2040 is
expected to cover 87 million people. This number could be
even higher if current proposals to lower the threshold age were to
become law. To this end, we expect to soon begin selling Medicare
products underwritten by highly rated carriers, and dental, vision
and hospital indemnity products underwritten by IHC’s
carriers. During the first quarter of 2020, we anticipate
being in the market with a portfolio of timely and competitive
Medicare Supplement plans in light of regulatory changes taking
effect January 1st.
In conclusion, by delivering an end-to-end
experience to the consumer, including a broad base of products
across the entire spectrum of age groups and needs, as well as
through state-of-the-art mobile and desktop solutions, IHC will
link individuals and families in need of insurance coverage, with
highly rated carriers across the country.”
Mr. Thung added, “We have increased our annual
cash dividend in each of our last five years (from $.07 per share
to $.40 per share), and, even after giving effect to these
increases, our book value increased from $17.25 at December 31,
2014 to $30.65 per share at March 31, 2019. 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
$36.25 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 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, and our dividends.”
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.
INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
INCOMEMarch 31, 2019(In
Thousands, Except Shares and Per Share Data)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2019 |
|
|
2018 |
|
REVENUES: |
|
|
|
|
Premiums earned |
$ |
82,789 |
|
$ |
79,492 |
|
Net investment
income |
|
3,996 |
|
|
3,681 |
|
Fee income |
|
4,188 |
|
|
5,211 |
|
Other income
(loss) |
|
3,684 |
|
|
(151 |
) |
Net investment
gains |
|
171 |
|
|
71 |
|
Net impairment losses
recognized in earnings |
|
(646 |
) |
|
- |
|
|
|
94,182 |
|
|
88,304 |
|
|
|
|
|
|
EXPENSES: |
|
|
|
|
Insurance benefits,
claims and reserves |
|
43,119 |
|
|
35,907 |
|
Selling, general and
administrative expenses |
|
40,529 |
|
|
43,343 |
|
|
|
|
|
|
|
|
83,648 |
|
|
79,250 |
|
|
|
|
|
|
Income before income
taxes |
|
10,534 |
|
|
9,054 |
|
Income taxes |
|
1,644 |
|
|
2,006 |
|
|
|
|
|
|
Net
income |
|
8,890 |
|
|
7,048 |
|
(Income) from
noncontrolling interests |
|
(163 |
) |
|
(87 |
) |
|
|
|
|
|
NET INCOME
ATTRIBUTABLE TO IHC |
$ |
8,727 |
|
$ |
6,961 |
|
|
|
|
|
|
|
|
|
|
|
Basic income
per common share |
$ |
.58 |
|
$ |
.47 |
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING |
|
14,948 |
|
|
14,832 |
|
|
|
|
|
|
Diluted
income per common share |
$ |
.58 |
|
$ |
.46 |
|
|
|
|
|
|
WEIGHTED
AVERAGE DILUTED SHARES OUTSTANDING |
|
15,066 |
|
|
15,074 |
|
|
|
|
|
|
|
As of May 3, 2019, there were 14,936,543 common shares
outstanding, net of treasury shares.
INDEPENDENCE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS(In Thousands)
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
ASSETS: |
|
|
|
|
|
|
|
Investments: |
|
|
|
|
|
|
|
Short-term investments |
|
$ |
50 |
|
|
$ |
1,050 |
|
|
Securities purchased under agreements to resell |
|
|
35,366 |
|
|
|
12,063 |
|
|
Fixed maturities, available-for-sale |
|
|
456,260 |
|
|
|
453,464 |
|
|
Equity securities |
|
|
5,359 |
|
|
|
5,166 |
|
|
Other investments |
|
|
11,014 |
|
|
|
13,192 |
|
|
Total investments |
|
|
508,049 |
|
|
|
484,935 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
20,560 |
|
|
|
26,173 |
|
|
Due and unpaid
premiums |
|
|
26,608 |
|
|
|
24,412 |
|
|
Due from
reinsurers |
|
|
367,071 |
|
|
|
368,731 |
|
|
Goodwill |
|
|
52,998 |
|
|
|
50,697 |
|
|
Other assets |
|
|
87,061 |
|
|
|
82,568 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,062,347 |
|
|
$ |
1,037,516 |
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY: |
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
|
Policy benefits and
claims |
|
$ |
164,910 |
|
|
$ |
160,115 |
|
|
Future policy
benefits |
|
|
206,199 |
|
|
|
208,910 |
|
|
Funds on deposit |
|
|
141,061 |
|
|
|
141,635 |
|
|
Unearned
premiums |
|
|
17,599 |
|
|
|
5,557 |
|
|
Other policyholders'
funds |
|
|
10,989 |
|
|
|
10,939 |
|
|
Due to
reinsurers |
|
|
2,352 |
|
|
|
3,613 |
|
|
Accounts payable,
accruals and other liabilities |
|
|
55,932 |
|
|
|
53,133 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
599,042 |
|
|
|
583,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
|
2,229 |
|
|
|
2,183 |
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
|
|
Preferred stock (none
issued) |
|
|
- |
|
|
|
- |
|
|
Common stock |
|
|
18,625 |
|
|
|
18,625 |
|
|
Paid-in capital |
|
|
122,055 |
|
|
|
124,395 |
|
|
Accumulated other
comprehensive loss |
|
|
(2,641 |
) |
|
|
(8,310 |
) |
|
Treasury stock, at
cost |
|
|
(65,926 |
) |
|
|
(66,392 |
) |
|
Retained
earnings |
|
|
386,164 |
|
|
|
380,431 |
|
|
|
|
|
|
|
|
TOTAL IHC STOCKHOLDERS’ EQUITY |
|
|
458,277 |
|
|
|
448,749 |
|
NONREDEEMABLE NONCONTROLLING INTERESTS |
|
|
2,799 |
|
|
|
2,682 |
|
|
|
|
|
|
|
|
|
|
TOTAL
EQUITY |
|
|
461,076 |
|
|
|
451,431 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
1,062,347 |
|
|
$ |
1,037,516 |
|
|
|
|
|
|
|
|
|
CONTACT: Loan Nisser |
(646) 509-2107 |
www.IHCGroup.com |
|
Independence (NYSE:IHC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Independence (NYSE:IHC)
Historical Stock Chart
From Apr 2023 to Apr 2024