FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: **SEPTEMBER 30, 2002
Commission File Number: **0-10306
 
**INDEPENDENCE HOLDING COMPANY**
(Exact name of registrant as specified in its charter)
**Delaware**58-1407235
(State of Incorporation)
(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.
 
**7,732,217 SHARES OF COMMON STOCK, $1.00 PAR VALUE**
Common stock outstanding as of November 11, 2002
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

INDEX
**PART I - FINANCIAL INFORMATION**PAGE NO.  **Item 1. - Financial Statements  
Consolidated Balance Sheets -  
September 30, 2002 (unaudited) and December 31, 2001 
        3   
Consolidated Statements of Operations -  
Three Months and Nine Months Ended September 30, 2002   
and 2001 (unaudited) 
        4   
Consolidated Statements of Cash Flows -  
Nine Months Ended September 30, 2002 and 2001 (unaudited) 
        5   
Notes to Consolidated Financial Statements (unaudited) 
6 - 10  **Item 2. - Management's Discussion and Analysis of Financial  **Condition and Results of Operations 
11 - 15  **Item 3.- Quantitative and Qualitative Disclosures about Market  **Risk 
         16  **Item 4. - Controls and Procedures
                       16

   **PART II - OTHER INFORMATION   **Item 6 -  Exhibits and Reports on Form-K 
      17
Signatures
      18
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
19 - 22
									
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES****CONSOLIDATED BALANCE SHEETS**SEPTEMBER 30,**DECEMBER 31,**2002**2001**(UNAUDITED)**ASSETS:
Investments:
Short-term investments
$
        1,255,000
$
       3,705,000
Securities purchased under agreements
to resell 
           48,260,000
7,156,000
Fixed maturities 
         387,227,000
423,745,000
Equity securities 
17,756,000
26,042,000
Other investments 
96,420,000
76,442,000
Total investments
550,918,000
537,090,000
Cash and cash equivalents
8,227,000
10,395,000
Due from brokers
4,769,000
2,650,000
Deferred acquisition costs 
27,057,000
25,751,000
Due and unpaid premiums
8,409,000
7,500,000
Due from reinsurers
131,986,000
125,852,000
Notes and other receivables
7,725,000
5,255,000
Goodwill
7,638,000
3,985,000
Other assets 
13,559,000
10,816,000**TOTAL ASSETS
$
760,288,000
$
729,294,000**LIABILITIES AND STOCKHOLDERS' EQUITY:**LIABILITIES:
Future insurance policy benefits 
$
318,315,000
$
298,310,000
Funds on deposit
190,457,000
189,791,000
Unearned premiums
16,648,000
16,067,000
Policy claims 
8,185,000
7,771,000
Other policyholders' funds
4,539,000
4,783,000
Due to brokers
35,448,000
41,461,000
Due to reinsurers
8,321,000
4,498,000
Accounts payable, accruals and other
liabilities
16,556,000
15,001,000
Income taxes 
3,680,000
1,876,000
Long-term debt 
10,313,000
12,188,000**TOTAL LIABILITIES
612,462,000
591,746,000**STOCKHOLDERS' EQUITY: 
Preferred stock (none issued)
-
-
Common stock, 7,752,717and
7,789,667 shares issued and outstanding,           
respectively, net of 2,079,089 and 
1,994,487 shares in treasury, respectively
7,753,000
7,790,000
Paid-in-capital
77,674,000
78,352,000
Accumulated other comprehensive income:
Unrealized (losses) gains on investments, 

net
(1,229,000)
94,000
Retained earnings
63,628,000
51,312,000**TOTAL STOCKHOLDERS' EQUITY
147,826,000
137,548,000**TOTAL LIABILITIES AND**STOCKHOLDERS' EQUITY
$
760,288,000
$
729,294,000**See Accompanying Notes to Consolidated Financial Statements.

3
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)                               THREE MONTHS ENDED              NINE MONTHS ENDED

				            SEPTEMBER 30,                           SEPTEMBER 30,

				         2002	            2001		     2002                   2001
**REVENUES:          
Premiums earned
$
36,932,000
$
26,866,000
$
99,441,000
$
79,061,000 
Net investment income 
8,414,000 
7,638,000
27,535,000 
26,244,000 
Net realized and     
unrealized gains 
138,000 
1,142,000 
464,000 
3,528,000 
Other income 
1,502,000 
1,212,000 
5,171,000 
3,652,000       
46,986,000 
36,858,000 
132,611,000 
112,485,000     **EXPENSES:     
Insurance benefits, claims     
and reserves 
28,741,000 
21,732,000 
75,803,000 
62,701,000 
Amortization of deferred     
acquisition costs 
1,422,000 
1,488,000 
4,354,000 
4,865,000 
Selling, general and         
administrative expenses 
10,026,000 
8,859,000 
32,947,000 
27,046,000 
Interest expense on     
long-term debt 
113,000 
216,000 
336,000 
745,000        
40,302,000 
32,295,000 
113,440,000 
95,357,000      
Operating income before     
income taxes 
6,684,000 
4,563,000 
19,171,000 
17,128,000 
Income tax expense 
2,410,000 
1,539,000 
6,855,000 
6,115,000      **NET INCOME
$
4,274,000
$
3,024,000
$
12,316,000
$
11,013,000     **BASIC INCOME PER     **COMMON SHARE
$
              .55
$
              .38
$
              1.58
$
             1.40     
WEIGHTED AVERAGE     
COMMON SHARES     
OUTSTANDING 
7,790,000 
7,927,000 
7,788,000 
7,893,000     **DILUTED INCOME PER     **COMMON SHARE
$
              .53
$
              .37
$
              1.54
$
1.37     
WEIGHTED AVERAGE     
DILUTIVE SHARES     
OUTSTANDING 
8,025,000 
8,094,000 
8,015,000

8,036,000     
 
**See Accompanying Notes to Consolidated Financial Statements.********************************************************************************