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:  **MARCH 31, 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_.
 

 

 
**7,799,221 SHARES OF COMMON STOCK, $1.00 PAR VALUE**
Common stock outstanding as of May 12, 2004
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

INDEX

 
**PART I - FINANCIAL INFORMATION**PAGE  **No.   
Item 1. Financial Statements      
Consolidated Balance Sheets -   
March 31, 2004 (unaudited) and December 31, 2003
3    
Consolidated Statements of Operations -   
Three Months Ended March 31, 2004 and 2003 (unaudited)
4    
Consolidated Statements of Cash Flows -   
Three Months Ended March 31, 2004 and 2003 (unaudited)
5   
Notes to Consolidated Financial Statements (unaudited)
6   
Item 2. Management's Discussion and Analysis of Financial Condition 
10  
and Results of Operations    
Item 3. Quantitative and Qualitative Disclosures about Market Risk
16   
Item 4. Controls and Procedures
16  **PART II - OTHER INFORMATION    
Item 1.  Legal Proceedings
18    
Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases
18  
of Equity Securities     
Item 3.  Defaults upon Senior Securities
18    
Item 4.  Submission of Matters to a Vote of Security Holders
18    
Item 5.  Other Information
18   
Item 6.   Exhibits and Reports on Form 8-K
18   
Signatures
      19    
									
**INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
    **March 31,   **December 31,    **2004   **2003    **(Unaudited) **ASSETS:         
Investments:         
Short-term investments  
$
8,771  
$
8,640 
Securities purchased under agreements to resell   
15,051   
26,549 
Fixed maturities   
620,615   
490,311 
Equity securities   
17,780   
21,403 
Other investments   
46,901   
46,500          
Total investments   
709,118   
593,403           
Cash and cash equivalents   
2,598   
60,547 
Due from brokers   
31,624   
17,542 
Investment in American Independence Corp. ("AMIC")   
28,222   
27,345 
Deferred acquisition costs   
32,295   
33,113 
Due and unpaid premiums   
5,859   
6,210 
Due from reinsurers   
128,359   
128,418 
Notes and other receivables   
10,024   
13,882 
Other assets   
21,556   
17,842          **TOTAL ASSETS  
$
969,655  
$
898,302         **LIABILITIES AND STOCKHOLDERS' EQUITY:        **LIABILITIES:         
Insurance policy benefits  
$
336,873  
$
334,468 
Funds on deposit   
284,488   
281,837 
Unearned premiums   
18,222   
16,491 
Policy claims   
8,102   
7,634 
Other policyholders' funds   
6,692   
6,539 
Due to brokers   
64,772   
20,773 
Due to reinsurers   
10,373   
5,889 
Accounts payable, accruals and other liabilities   
24,747   
20,593 
Debt   
12,500   
12,500 
Junior subordinated debt securities   
22,682   
22,682          **TOTAL LIABILITIES   
789,451   
729,406         **STOCKHOLDERS' EQUITY:         
Preferred stock (none issued)   
-   
- 
Common stock,  7,738,471 and 7,724,588 shares         
issued and outstanding, net of  2,060,068 shares in          
treasury   
7,738   
7,725 
Paid-in capital   
75,913   
75,579 
Accumulated other comprehensive income   
6,108   
647 
Retained earnings   
90,445   
84,945          **TOTAL STOCKHOLDERS' EQUITY   
180,204   
168,896           **TOTAL LIABILITIES AND          **STOCKHOLDERS' EQUITY  
$
969,655  
$
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 MARCH 31,
**2004**2003**(Unaudited)**REVENUES
Premiums earned 
$
40,337
$
33,871
Net investment income 
9,983
8,410
Net realized and unrealized gains
895
340
Equity income on AMIC
621
401
Other income (expense) 
596
(532)
52,432
42,490**EXPENSES
Insurance benefits, claims and reserves
29,931
23,070
Amortization of deferred acquisition costs 
1,379
1,676
Selling, general and administrative expenses
12,117
10,724
Interest expense on debt
560
100
43,987
35,570
Income before income taxes
8,445
6,920
Income tax expense
2,945
2,483**NET INCOME
$
5,500
$
4,437**Basic income per common share
$
.71
$
.57
WEIGHTED AVERAGE BASIC COMMON 
SHARES 
7,737
7,816**Diluted income per common share
$
.69
$
.56
WEIGHTED AVERAGE DILUTED COMMON
SHARES
7,967
7,956
 

 

 

 

 

 

 

 

 

 
**See accompanying Notes to Consolidated Financial Statements.

INDEPENDENCE HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

THREE MONTHS ENDED MARCH 31,
****2004****2003**(Unaudited)**CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
5,500
$
4,437
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred policy acquisition costs
1,379
1,676
Net realized gains on investments
(895)
(340)
Depreciation and amortization
201
184
Deferred tax expense (benefit)
6
(157)
Other
(574)
(568)
Changes in assets and liabilities:
Change in insurance liabilities
2,152
6,344
Additions to deferred acquisition costs
(1,967)
(1,620)
Change in net amounts due from and to reinsurers
4,543
876
Change in income tax liability
1,449
(1,426)
Change in due and unpaid premiums
351
(174)
Other
(3,689)
(2,765)
Net cash provided by operating activities
8,456
6,467**CASH FLOWS FROM INVESTING ACTIVITIES
Change in net amount due from and to brokers
29,917********************************************************************************