UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended:  **SEPTEMBER 30, 2004**
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 _
Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes __. No.  X.
 

 

 
**14,121,496 SHARES OF COMMON STOCK, $1.00 PAR VALUE**
Common stock outstanding as of November 15, 2004
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

INDEX

 
**PART I - FINANCIAL INFORMATION**PAGE  **No.   
Item 1. Financial Statements      
Consolidated Balance Sheets -   
September 30, 2004 (unaudited) and December 31, 2003
3    
Consolidated Statements of Operations -    
Three Months and Nine Months Ended September 30, 2004   
and 2003 (unaudited)
4    
Consolidated Statements of Cash Flows -    
Nine Months Ended September 30, 2004 and 2003 (unaudited)
5   
Notes to Consolidated Financial Statements (unaudited)
6   
Item 2. Management's Discussion and Analysis of Financial Condition 
15  
and Results of Operations    
Item 3. Quantitative and Qualitative Disclosures about Market Risk
23   
Item 4. Controls and Procedures
24  **PART II - OTHER INFORMATION    
Item 1.  Legal Proceedings
25    
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
25    
Item 3.  Defaults upon Senior Securities
25    
Item 4.  Submission of Matters to a Vote of Security Holders
25    
Item 5.  Other Information
25   
Item 6.   Exhibits 
26   
Signatures
      27    
									
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
    **September 30,   **December 31,    **2004   **2003    **(Unaudited) **ASSETS:         
Investments:         
Short-term investments  
$
8,058  
$
8,640 
Securities purchased under agreements to resell   
71,109   
26,549 
Fixed maturities   
568,720   
490,311 
Equity securities   
18,385   
21,403 
Other investments   
47,009   
46,500          
Total investments   
713,281   
593,403          
Cash and cash equivalents   
18,419   
60,547 
Due from brokers   
11,108   
17,542 
Investment in American Independence Corp.          
("AMIC")   
30,031   
27,345 
Deferred acquisition costs   
35,704   
33,113 
Due and unpaid premiums   
6,486   
6,210 
Due from reinsurers   
125,872   
128,418 
Notes and other receivables   
10,324   
13,882 
Other assets   
24,483   
17,842          **TOTAL ASSETS  
$
975,708  
$
898,302         **LIABILITIES AND STOCKHOLDERS' EQUITY:        **LIABILITIES:         
Insurance policy benefits  
$
331,067  
$
334,468 
Funds on deposit   
317,041   
281,837 
Unearned premiums   
17,903   
16,491 
Policy claims   
8,435   
7,634 
Other policyholders' funds   
8,970   
6,539 
Due to brokers   
40,863   
20,773 
Due to reinsurers   
10,081   
5,889 
Accounts payable, accruals and other liabilities   
21,977   
20,593 
Debt   
12,500   
12,500 
Junior subordinated debt securities   
22,682   
22,682          **TOTAL LIABILITIES   
791,519   
729,406         **STOCKHOLDERS' EQUITY:         
Preferred stock (none issued)   
-   
- 
Common stock, 14,182,496 and 13,904,258          
shares issued and outstanding, net of 31,300                
and 3,708,122 shares in treasury, respectively   
14,182   
13,904 
Paid-in capital   
77,294   
75,579 
Accumulated other comprehensive (loss) income   
(2,233)   
647 
Retained earnings   
94,946   
78,766          **TOTAL STOCKHOLDERS' EQUITY   
184,189   
168,896           **TOTAL LIABILITIES AND          **STOCKHOLDERS' EQUITY  
$
975,708  
$
898,302**See accompanying Notes to Consolidated Financial Statements.
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)
           **Three Months Ended   **Nine Months Ended   **September 30,   **September 30,   **2004  **2003   **2004  **2003      **(Unaudited)                 **REVENUES:              
Premiums earned 
$
43,799 
$
37,996  
$
129,575 
$
109,008 
Net investment income   
11,514  
8,715   
32,780  
26,953 
Net realized and unrealized gains               
(losses)  
941  
(159)   
2,261  
518 
Equity income from AMIC  
665  
770   
1,811  
1,707 
Other income (expense)  
1,753  
273   
2,790  
(15)                 
58,672  
47,595   
169,217  
138,171              **EXPENSES:              
Insurance benefits, claims and                
reserves  
32,526  
26,061   
94,334  
74,736 
Amortization of deferred acquisition                
costs  
1,511  
2,062   
5,652  
5,286 
Selling, general and administrative              
expenses  
15,636  
12,388   
42,134  
36,117 
Interest expense   
526  
259   
1,588  
608                 
50,199  
40,770   
143,708  
116,747              
Income before income tax  
8,473  
6,825   
25,509  
21,424
Income tax expense  
2,927  
2,332   
8,913  
7,536              **Net income 
$
5,546 
$
4,493  
$
16,596 
$
13,888              **Basic income per common share 
$
.39 
$
.32  
$
1.18 
$
.99              
WEIGHTED AVERAGE BASIC              
COMMON SHARES  
14,186  
13,910   
14,036  
13,981              **Diluted income per common share 
$
.38 
$
.32  
$
1.16 
$
.97              
WEIGHTED AVERAGE DILUTED              
COMMON SHARES  
14,532  
14,238   
14,359  
14,252              
 

 

 

 

 
**See accompanying Notes to Consolidated Financial Statements.

INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

NINE MONTHS ENDED SEPTEMBER 30,			               2004                        2003
  **(Unaudited)       **CASH FLOWS FROM OPERATING ACTIVITIES:      ************************************************************************************