UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________________________

FORM 10-Q

 

[X]	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

	For the quarterly period ended **March 31, 2005**
[   ]	Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934. 

For the transition period from: ________ to _________  

Commission File Number: **0-10306****INDEPENDENCE HOLDING COMPANY

(Exact name of registrant as specified in its charter)
**Delaware **58-1407235
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
**96 CUMMINGS POINT ROAD, STAMFORD, CONNECTICUT                                                                 06902

(Address of principal executive offices)                                                                                                                                                                         	 (Zip Code)

Registrant's telephone number, including area code: **(203) 358-8000**NOT APPLICABLE**
Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [  ]

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  [X]   No  [  ]

 
**Class**Outstanding at May 9, 2005**Common stock, $ 1.00  par value**                                                             13,912,157 Shares  
 
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

INDEX

 
**PART I - FINANCIAL INFORMATION**PAGE  **NO.   
Item 1. Financial Statements      
Consolidated Balance Sheets -   
March 31, 2005 (unaudited) and December 31, 2004
3    
Consolidated Statements of Operations -   
Three Months Ended March 31, 2005 and 2004 (unaudited)
4    
Consolidated Statements of Cash Flows -   
Three Months Ended March 31, 2005 and 2004 (unaudited)
5   
Notes to Consolidated Financial Statements (unaudited)
6   
Item 2. Management's Discussion and Analysis of Financial Condition 
13  
and Results of Operations    
Item 3. Quantitative and Qualitative Disclosures about Market Risk
21   
Item 4. Controls and Procedures
22  **PART II - OTHER INFORMATION    
Item 1.  Legal Proceedings
22    
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
22    
Item 3.  Defaults Upon Senior Securities
22    
Item 4.  Submission of Matters to a Vote of Security Holders
22    
Item 5.  Other Information
22   
Item 6.   Exhibits 
23   
Signatures
24    ** 

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	    
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
    **March 31,   **December 31,    **2005   **2004    **(unaudited)    **ASSETS:         
Investments:         
Short-term investments  
$
21,333  
$
21,470 
Securities purchased under agreements to resell   
56,437   
93,544 
Fixed maturities   
555,516   
546,384 
Equity securities   
23,174   
12,099 
Other investments   
46,286   
48,679          
Total investments   
702,746   
722,176          
Cash and cash equivalents   
13,051   
13,196 
Due from securities brokers   
16,746   
4,795 
Investment in American Independence Corp. ("AMIC")   
30,968   
30,626 
Deferred acquisition costs   
43,007   
37,386 
Due and unpaid premiums   
7,786   
7,100 
Due from reinsurers   
119,992   
121,987 
Notes and other receivables   
7,871   
7,172 
Other assets   
37,349   
24,055          **Total assets  
$
979,516  
$
968,493         **LIABILITIES AND STOCKHOLDERS' EQUITY:        **LIABILITIES:         
Insurance reserves-health  
$
158,556  
$
166,087 
Insurance reserves-life and annuity    
181,450   
171,365 
Funds on deposit   
314,725   
308,465 
Unearned premiums   
19,583   
17,468 
Policy claims-life   
6,701   
6,590 
Policy claims-health   
3,197   
2,495 
Other policyholders' funds   
9,455   
8,859 
Due to securities brokers   
23,112   
14,760 
Due to reinsurers   
6,261   
6,957 
Accounts payable, accruals and other liabilities   
19,056   
25,948 
Debt   
12,500   
12,500 
Junior subordinated debt securities   
38,146   
38,146          **Total liabilities   
792,742   
779,640         **STOCKHOLDERS' EQUITY:         
Preferred stock (none issued)   
-   
- 
Common stock $1.00 par value, 20,000,000 shares authorized;        
14,235,066 shares issued; 13,973,017 and 14,102,766
14,235
14,235
shares outstanding, respectively 
Paid-in capital   
77,957   
78,033 
Accumulated other comprehensive loss    
(7,333)   
(1,976) 
Treasury stock, at cost; 262,049 and 132,300 shares,           
respectively   
(4,774)   
(2,376) 
Retained earnings   
106,689   
100,937 **Total stockholders' equity   
186,774   
188,853           **Total liabilities and stockholders' equity   
$
979,516  
$
968,493**The accompanying notes are an integral part of these consolidated financial statements.

INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)
   **Three Months Ended   **March 31,   **2005 **2004      **REVENUES:      
Health premiums earned 
$
39,708
$
32,936 
Life and annuity premiums earned  
9,720 
7,401 
Net investment income  
9,499 
9,983 
Net realized and unrealized gains  
248 
895 
Equity income from AMIC  
477 
621 
Other income  
6,021 
596         
65,673 
52,432      **EXPENSES:      
Insurance benefits, claims and reserves - health  
25,757 
20,957 
Insurance benefits, claims and reserves - life and        
annuity  
10,904 
8,974 
Amortization of deferred acquisition costs  
2,651 
1,379 
Interest expense on debt  
845 
560 
Selling, general and administrative expenses  
16,508 
12,117         
56,665 
43,987       
Income before income taxes  
9,008 
8,445 
Income tax expense  
3,256 
2,945       **Net income 
$
5,752
$
5,500      **Basic income per common share 
$
.41
$
.39      
Weighted average shares outstanding  
14,009 
13,927      **Diluted income per common share 
$
.40
$
.38      
Weighted average diluted shares outstanding  
14,332 
14,341** 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands)

(Unaudited)
  **Three Months Ended  **March 31,  **2005   **2004  **CASH FLOWS FROM OPERATING ACTIVITIES:       
Net income
$
5,752  
$
5,500 
Adjustments to reconcile net income to net cash from      
operating  activities: 
Amortization of deferred acquisition costs 
2,651   
1,379 
Net realized and unrealized gains  
(248)   
(895) 
Equity income from AMIC  
(477)   
(621) 
Depreciation and amortization 
378   
201 
Deferred tax expense 
2,261   
6 
Other 
(554)   
47
  Changes in assets and liabilities:       
Net sales of trading securities 
201   ******************************************************************************************