**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 September 30,  2003
OR
[    ]
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**54-1407235
(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
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 the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes [   ] No [X]
****
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
**Class**Outstanding at November 13, 2003**Common stock, $1.00 value**7,726,688**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

INDEX

 
 **PAGE **NO.  
Item 1. Financial Statements     
Consolidated Balance Sheets -  
September 30, 2003 (unaudited) and December 31, 2002
3   
Consolidated Statements of Operations -  
Three and Nine Months Ended September 30, 2003 and 2002 (unaudited)
4   
Consolidated Statements of Cash Flows -  
Nine Months Ended September 30, 2003 and 2002 (unaudited)
5   
Notes to Consolidated Financial Statements (unaudited)
6  
Item 2. Management's Discussion and Analysis of Financial Condition and
14 
Results of Operations   
Item 3. Quantitative and Qualitative Disclosures about Market Risk
22  
Item 4. Controls and Procedures
22  **PART II - OTHER INFORMATION    
Item 1.  Legal Proceedings
23    
Item 2.  Changes in Securities and Use of Proceeds
23    
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
24    **INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)    **September 30,   **December 31,    **2003   **2002    **(Unaudited) **ASSETS:         
Investments:         
Short-term investments  
$
1,738  
$
1,101 
Securities purchased under agreements to resell   
34,571   
25,805 
Fixed maturities   
436,521   
429,217 
Equity securities   
25,409   
14,745 
American Independence Corp.   
20,214   
11,055 
Other investments   
44,152   
62,713          
Total investments   
562,605   
544,636          
Cash and cash equivalents   
32,473   
13,292 
Due from brokers   
22,668   
6,878 
Deferred acquisition costs   
27,420   
26,427 
Due and unpaid premiums   
5,946   
7,303 
Due from reinsurers   
137,183   
125,874 
Notes and other receivables   
8,568   
7,989 
Other assets   
15,025   
11,729          **TOTAL ASSETS  
$
811,888  
$
744,128         **LIABILITIES AND STOCKHOLDERS' EQUITY:        **LIABILITIES:         
Future insurance policy benefits  
$
327,720  
$
308,611 
Funds on deposit   
198,760   
191,386 
Unearned premiums   
16,908   
16,502 
Policy claims   
7,042   
7,654 
Other policyholders' funds   
5,118   
4,686 
Due to brokers   
45,070   
32,488 
Due to reinsurers   
7,191   
6,232 
Accounts payable, accruals and other liabilities   
17,106   
14,413 
Trust preferred securities   
10,000   
- 
Debt   
12,500   
8,438          **TOTAL LIABILITIES   
647,415   
590,410         **STOCKHOLDERS' EQUITY:         
Preferred stock (none issued)   
-   
- 
Common stock, 7,729,388 and 7,746,262 shares                                 
issued and outstanding, net of 2,055,268 and                               
2,038,394  shares in treasury   
7,729   
7,746 
Paid-in capital   
75,610   
77,539 
Accumulated other comprehensive income:          
   Unrealized gains on investments, net   
508   
1,695 
Retained earnings   
80,626   
66,738          **TOTAL STOCKHOLDERS' EQUITY   
164,473   
153,718           **TOTAL LIABILITIES AND          **STOCKHOLDERS' EQUITY  
$
811,888  
$
744,128**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,   **2003  **2002   **2003  **2002      **(Unaudited)                 **REVENUES:              
Premiums earned 
$
37,996 
$
36,932  
$
109,008 
$
99,441 
Net investment income  
8,715  
9,014   
26,953  
28,135 
Net realized (losses) gains  
(159)  
138   
518  
464 
Equity income (loss) from American                
Independence Corp.  
770  
(600)   
1,707  
(600) 
Other income (expense)  
273  
1,502   
(15)  
5,171                 
47,595  
46,986   
138,171  
132,611              **EXPENSES:              
Insurance benefits, claims and reserves  
26,061  
28,741   
74,736  
75,803 
Amortization of deferred acquisition                
costs  
2,062  
1,422   
5,286  
4,354 
Selling, general and administrative              
expenses  
12,388  
10,026   
36,117  
32,947 
Interest expense   
259  
113   
608  
336                 
40,770  
40,302   
116,747  
113,440              
Income before income taxes  
6,825  
6,684   
21,424  
19,171
Income tax expense  
2,332  
2,410   
7,536  
6,855              **Net income 
$
4,493 
$
4,274  
$
13,888 
$
12,316              **Basic income per common share 
$
.58 
$
.55  
$
1.79 
$
1.58              
WEIGHTED AVERAGE BASIC              
COMMON SHARES  
7,728  
7,790   
7,767  
7,788              **Diluted income per common share 
$
.57 
$
.53  
$
1.75 
$
1.54              
WEIGHTED AVERAGE DILUTED              
COMMON SHARES  
7,910  
8,025   
7,918  
8,015              
 

 

 

 

 

 

 

 

 
**See accompanying notes to consolidated financial statements.

INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

NINE MONTHS ENDED SEPTEMBER 30,			                  	        2003                             2002
**CASH FLOWS FROM OPERATING ACTIVITIES:      **************************************************************************************************