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 **June 30, 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 August  8, 2005**Common stock, $ 1.00  par value**13,898,777 Shares  
 
** 

 

 

 

INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

INDEX

 
**PART I - FINANCIAL INFORMATION**PAGE  **NO.   
Item 1. Financial Statements      
Consolidated Balance Sheets -   
June 30, 2005 (unaudited) and December 31, 2004
3    
Consolidated Statements of Operations -   
Three Months and Six Months Ended June 30, 2005 and 2004 (unaudited)
4    
Consolidated Statements of Cash Flows -   
Six Months Ended June 30, 2005 and 2004 (unaudited)
5   
Notes to Consolidated Financial Statements (unaudited)
6   
Item 2. Management's Discussion and Analysis of Financial Condition 
14  
and Results of Operations    
Item 3. Quantitative and Qualitative Disclosures about Market Risk
29   
Item 4. Controls and Procedures
30  **PART II - OTHER INFORMATION    
Item 1.  Legal Proceedings
30    
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
30    
Item 3.  Defaults Upon Senior Securities
31    
Item 4.  Submission of Matters to a Vote of Security Holders
31    
Item 5.  Other Information
31   
Item 6.   Exhibits 
31   
Signatures
32    **Copies of the Company's SEC filings can be found on its website at www.independenceholding.com
**PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	    
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
    **June 30,   **December 31,    **2005   **2004    **(unaudited)    **ASSETS:         
Investments:         
Short-term investments  
$
14,765  
$
21,470 
Securities purchased under agreements to resell   
12,437   
93,544 
Fixed maturities   
684,640   
546,384 
Equity securities   
48,101   
12,099 
Other investments   
56,080   
48,679          
Total investments   
816,023   
722,176          
Cash and cash equivalents   
10,293   
13,196 
Due from securities brokers   
29,715   
4,795 
Investment in American Independence Corp. ("AMIC")   
33,255   
30,626 
Deferred acquisition costs   
56,358   
37,386 
Due and unpaid premiums   
10,463   
7,100 
Due from reinsurers   
116,484   
121,987 
Notes and other receivables   
9,611   
7,172 
Goodwill   
13,625   
5,901 
Other assets   
25,466   
18,154          **Total assets  
$
1,121,293  
$
968,493         **LIABILITIES AND STOCKHOLDERS' EQUITY:        **LIABILITIES:         
Insurance reserves-health  
$
149,032  
$
166,087 
Insurance reserves-life and annuity    
258,024   
171,365 
Funds on deposit   
359,909   
308,465 
Unearned premiums   
19,559   
17,468 
Policy claims-life   
6,473   
6,590 
Policy claims-health   
3,112   
2,495 
Other policyholders' funds   
11,919   
8,859 
Due to securities brokers   
27,342   
14,760 
Due to reinsurers   
6,933   
6,957 
Accounts payable, accruals and other liabilities   
29,181   
25,948 
Debt   
12,500   
12,500 
Junior subordinated debt securities   
38,146   
38,146          **Total liabilities   
922,130   
779,640         **STOCKHOLDERS' EQUITY:         
Preferred stock (none issued)   
-   
- 
Common stock $1.00 par value, 20,000,000 shares authorized;        
14,235,066 shares issued; 13,903,607 and 14,102,766
shares outstanding, respectively
14,235
14,235 
Paid-in capital   
77,629   
78,033 
Accumulated other comprehensive income (loss)    
1,125   
(1,976) 
Treasury stock, at cost; 331,459 and 132,300 shares,           
respectively   
(6,033)   
(2,376) 
Retained earnings   
112,207   
100,937 **Total stockholders' equity   
199,163   
188,853           **Total liabilities and stockholders' equity   
$
1,121,293  
$
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 **Six Months Ended  **June 30, **June 30,  **2005 **2004 **2005 **2004                  **REVENUES:         
Health premiums earned
$
46,490
$
37,057
$
86,198
$
69,993 
Life and annuity premiums earned 
9,291 
8,382 
19,011 
15,783 
Net investment income 
9,037 
11,283 
18,536 
21,266 
Net realized and unrealized gains 
836 
425 
1,084 
1,320 
Equity income from AMIC 
509 
525 
986 
1,146 
MGU fee income 
1,872 
191 
4,329 
384 
Other income 
947 
250 
4,511 
653  
68,982 
58,113 
134,655 
110,545                  **EXPENSES:         
Insurance benefits, claims and reserves -           
health 
25,567 
23,127 
51,324 
44,084 
Insurance benefits, claims and reserves -          
life and annuity 
10,220 
8,750 
21,124 
17,724 
Amortization of deferred acquisition costs 
2,673 
2,762 
5,324 
4,141 
Interest expense on debt 
865 
502 
1,710 
1,062 
Selling, general and administrative expenses 
21,028 
14,381 
37,536 
26,498           
60,353 
49,522 
117,018 
93,509 
Income before income taxes 
8,629 
8,591 
17,637 
17,036 
Income tax expense 
2,763 
3,041 
6,019 
5,986          **Net income
$
5,866
$
5,550
$
11,618
$
11,050         **Basic income per common share
$
.42
$
.40
$**************************************************************************************