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

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STAMFORD, Conn., Aug. 06, 2019 (GLOBE NEWSWIRE) -- Independence Holding Company 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 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 INCOME
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 
REVENUES:        
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 
         
EXPENSES:        
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 
         
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As of August 5, 2019, there were 14,892,668 common shares outstanding, net of treasury shares.

INDEPENDENCE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

  June 30,  December 31,
  2019  2018
      
ASSETS:     
Investments:     
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 
      
LIABILITIES AND STOCKHOLDERS' EQUITY:     
LIABILITIES:     
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 
      
STOCKHOLDERS' EQUITY:     
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 
NONREDEEMABLE NONCONTROLLING INTERESTS 43   2,682 
      
TOTAL EQUITY 468,142   451,431 
      
TOTAL LIABILITIES AND EQUITY $1,070,925  $1,037,516 
      

CONTACT: Loan Nisser
(646) 509-2107
www.IHCGroup.com

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Posted In: EarningsPress Releases
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