STAMFORD, Conn., March 17, 2011 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2010 fourth-quarter and annual results. This press release contains both GAAP and non-GAAP financial information for which reconciliations can be found at the end of this release.
Financial Results
Net loss per share from continuing operations attributable to IHC was $(.02) per share, diluted, or $(362,000), for the three months ended December 31, 2010 compared to $(.95) per share, diluted, or $(14,631,000), for the three months ended December 31, 2009. Net income per share from continuing operations attributable to IHC was $1.44 per share, diluted, or $21,993,000, for year ended December 31, 2010 compared to net loss per share of $(.48) diluted, or $(7,423,000), for the year ended December 31, 2009.
Revenues increased 65% to $104,712,000 for the three months ended December 31, 2010 compared to revenues for the three months ended December 31, 2009 of $63,548,000. Revenues increased 23% to $435,368,000 for the year ended December 31, 2010 compared to revenues for the year ended December 31, 2009 of $354,838,000.
These results were positively impacted by the gain on bargain purchase under acquisition accounting as a result of IHC acquiring a controlling interest in American Independence Corp. (AMIC) in March 2010. The gain recorded in the 2010 first quarter on IHC's investment in AMIC was $16,733,000, net of $11,097,000 of taxes. In the fourth quarter of 2009, the Company was required to record an other-than-temporary impairment (OTTI) loss on its equity investment in AMIC at December 31, 2009 of approximately the same amount due to the length of time and the magnitude of the amount by which the quoted market price of AMIC had been below IHC's carrying value.
IHC reported operating income1 per share of $.07 per share, diluted, or $1,066,000, for the three months ended December 31, 2010, compared to $.14 per share, diluted, or $2,210,000, for the three months ended December 31, 2009. IHC reported operating income per share of $.30 per share, diluted, or $4,648,000, for the year ended December 31, 2010, compared to $.48 per share, diluted, or $7,352,000 for the year ended December 31, 2009.
Chief Executive Officer's Comments
Roy Thung, Chief Executive Officer, commented, "The Company's financial condition remains very strong as our book value per share increased 15% to $15.14 at December 31, 2010 from $13.16 at December 31, 2009, and stockholders' equity at December 31, 2010 reached $231 million. We have accomplished this increase despite taking significant impairment charges in 2008 at the height of the economic crisis."
Mr. Thung continued, "The Company experienced a decrease in 2010 fourth quarter earnings primarily due to an increase in loss ratios in our medical stop-loss segment arising from development in cancelled programs and business underwritten by an MGU that we did not own. As we begin 2011, we believe our core business will be quite profitable. On an annual basis, IHC continues to experience a decrease in investment income due to lower yields (4.6% for 2010 compared to 5.1% for the comparable period of 2009) and the low duration of our portfolio. We are pleased to report that our overall portfolio continues to be in an unrealized gain position and is rated, on average, AA."
Non-GAAP Financial Measures
The Company provides non-GAAP financial measures to complement its consolidated financial statements presented in accordance with GAAP: (i) Operating income is income from continuing operations net of income or losses attributable to non-controlling interests and excluding net realized gains or losses, other-than-temporary impairment losses and gain on bargain purchase, net of applicable income taxes; and (ii) Operating income per share is operating income (loss) on a per share basis. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding realized gains or losses, net of taxes, that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results. A reconciliation of the non-GAAP results to the GAAP results is provided in the "Reconciliation of GAAP Income from Continuing Operations to Non-GAAP Income from Continuing Operations" schedule below.
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, Madison National Life Insurance Company, Inc. and Independence American Insurance Company) and its managing general underwriters, third-party administrators, and marketing affiliates. Standard Security Life markets medical stop-loss, small group major medical, short-term medical, major medical for individuals and families, limited medical, group long and short-term disability and life, dental, vision and managed health care products. Madison Life sells group life and disability, medical stop-loss, small group major medical, major medical for individuals and families, short-term medical, dental, vision, and individual life insurance. Independence American offers medical stop-loss, small group major medical, short-term medical, and major medical for individuals and families. IHC owns certain subsidiaries through its majority ownership of American Independence Corp. (Nasdaq:AMIC), which is a holding company principally engaged in the insurance and reinsurance business.
Certain statements in this news 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 which 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.
1Operating income is a non-GAAP measure representing income from continuing operations net of (income) losses attributable to non-controlling interests and excluding net realized investment gains (losses), other-than-temporary impairment losses and gain on bargain purchase of AMIC, net of applicable income tax. The Company believes that the presentation of operating income may offer a better understanding of the core operating results of the Company. A reconciliation of income from continuing operations to operating income is included in this press release.
2IHC applied business acquisition accounting and consolidated the financial results of AMIC as of March 5, 2010, resulting in a consolidated statement of income which consolidates approximately ten months of AMIC results and reflects the equity method of accounting for the first two months of 2010.
CONTACT: David T. Kettig (212) 355-4141 Ext. 3047 www.IHCGroup.com