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:  **JUNE 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.
 

 

 
**14,198,296 SHARES OF COMMON STOCK, $1.00 PAR VALUE**
Common stock outstanding as of August 13, 2004
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

INDEX

 
**PART I - FINANCIAL INFORMATION**PAGE  **No.   
Item 1. Financial Statements      
Consolidated Balance Sheets -   
June 30, 2004 (unaudited) and December 31, 2003
3    
Consolidated Statements of Operations -   
Three Months and Six Months Ended June 30, 2004   
and 2003 (unaudited)
4    
Consolidated Statements of Cash Flows -   
Six Months Ended June 30, 2004 and 2003 (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
21  **PART II - OTHER INFORMATION    
Item 1.  Legal Proceedings
23    
Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases
23  
of Equity Securities     
Item 3.  Defaults upon Senior Securities
23    
Item 4.  Submission of Matters to a Vote of Security Holders
23    
Item 5.  Other Information
23   
Item 6.   Exhibits and Reports on Form 8-K
23   
Signatures
      25    
									
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
    **June 30,   **December 31,    **2004   **2003    **(Unaudited) **ASSETS:         
Investments:         
Short-term investments  
$
9,483  
$
8,640 
Securities purchased under agreements to resell   
13,186   
26,549 
Fixed maturities   
573,523   
490,311 
Equity securities   
17,815   
21,403 
Other investments   
46,785   
46,500          
Total investments   
660,792   
593,403          
Cash and cash equivalents   
31,559   
60,547 
Due from brokers   
158   
17,542 
Investment in American Independence Corp. ("AMIC")   
29,163   
27,345 
Deferred acquisition costs   
37,171   
33,113 
Due and unpaid premiums   
5,846   
6,210 
Due from reinsurers   
125,637   
128,418 
Notes and other receivables   
11,041   
13,882 
Other assets   
24,834   
17,842          **TOTAL ASSETS  
$
926,201  
$
898,302         **LIABILITIES AND STOCKHOLDERS' EQUITY:        **LIABILITIES:         
Insurance policy benefits  
$
331,539  
$
334,468 
Funds on deposit   
312,176   
281,837 
Unearned premiums   
18,007   
16,491 
Policy claims   
8,266   
7,634 
Other policyholders' funds   
8,186   
6,539 
Due to brokers   
14,403   
20,773 
Due to reinsurers   
8,746   
5,889 
Accounts payable, accruals and other liabilities   
18,853   
20,593 
Debt   
12,500   
12,500 
Junior subordinated debt securities   
22,682   
22,682          **TOTAL LIABILITIES   
755,358   
729,406         **STOCKHOLDERS' EQUITY:         
Preferred stock (none issued)   
-   
- 
Common stock, 14,061,310 and 13,904,258 shares         
issued and outstanding, net of  -0- and 3,708,122          
shares in treasury, respectively   
14,061   
13,904 
Paid-in capital   
75,619   
75,579 
Accumulated other comprehensive (loss) income   
(8,236)   
647 
Retained earnings   
89,399   
78,766          **TOTAL STOCKHOLDERS' EQUITY   
170,843   
168,896           **TOTAL LIABILITIES AND          **STOCKHOLDERS' EQUITY  
$
926,201  
$
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   **Six Months Ended   **June 30,   **June 30,   **2004  **2003   **2004  **2003      **(Unaudited)                 **REVENUES:              
Premiums earned 
$
45,439 
$
37,141  
$
85,776 
$
71,012 
Net investment income   
11,283  
9,828   
21,266  
18,238 
Net realized and unrealized gains  
425  
337   
1,320  
677 
Equity income from AMIC  
525  
536   
1,146  
937 
Other income (expense)  
441  
244   
1,037  
(288)                 
58,113  
48,086   
110,545  
90,576              **EXPENSES:              
Insurance benefits, claims and                
reserves  
31,877  
25,605   
61,808  
48,675 
Amortization of deferred acquisition                
costs  
2,762  
1,548   
4,141  
3,224 
Selling, general and administrative              
expenses  
14,381  
13,005   
26,498  
23,729 
Interest expense   
502  
249   
1,062  
349                 
49,522  
40,407   
93,509  
75,977              
Income before income tax  
8,591  
7,679   
17,036  
14,599
Income tax expense  
3,041  
2,721   
 5,986  
5,204              **Net income 
$
5,550 
$
4,958  
$
11,050 
$
9,395              **Basic income per common share 
$
.40 
$
.36  
$
.79 
$
.67              
WEIGHTED AVERAGE BASIC              
COMMON SHARES  
13,997  
13,963   
13,962  
14,017              **Diluted income per common share 
$
.39 
$
.35  
$
.77 
$
.66              
WEIGHTED AVERAGE DILUTED              
COMMON SHARES  
14,340  
14,222   
14,281  
14,267              
 

 

 

 

 

 
**See accompanying Notes to Consolidated Financial Statements.

INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

SIX MONTHS ENDED JUNE 30,				               2004                        2003
  **(Unaudited)       **CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income 
$************************************************************************************