STAMFORD, Conn., March 16, 2009 (GLOBE NEWSWIRE) -- Independence Holding Company (NYSE:IHC) today reported 2008 fourth-quarter and annual results. This press release contains both GAAP and non-GAAP financial information for which a reconciliation can be found on the final page.
Financial Results
Operating income(1) per share remained $.08 per share, diluted, or $1,172,000, for the three months ended December 31, 2008, compared to $1,218,000, for the three months ended December 31, 2007. The fourth quarter of 2008 and 2007 includes $725,000 and $299,000 of losses, respectively, net of tax, from certain investment partnerships caused by unprecedented turmoil in the financial markets. Operating income per share increased to $.57 per share, diluted, or $8,811,000, for the year ended December 31, 2008, compared to $.06 per share, diluted, or $888,000, for the year ended December 31, 2007. The 2008 results include a loss of $1,980,000, after tax, incurred due to certain investment partnerships as compared to break-even results in 2007.
Net loss per share increased to $.74 per share, diluted, or $11,471,000, for the three months ended December 31, 2008, compared to $.16 per share, diluted, or $2,436,000, for the three months ended December 31, 2007. Included in the current quarter's net loss is a charge for other-than-temporary impairments in investments of $6,064,000, or $.39 per share, diluted, net of tax that (net of gains) yielded a net realized loss of $11,975,000, or $.78 per share, diluted. The Company recorded these losses during the quarter as a result of the aforementioned market conditions.
Net loss per share increased to $1.55 per share, diluted, or $23,840,000, for the year ended December 31, 2008, compared to $.15 per share, diluted, or $2,328,000, for the year ended December 31, 2007. Included in the net loss for the year is a charge for other-than-temporary impairments in investments of $24,522,000 or $1.59 per share, diluted, net of tax that (net of gains) yielded a net realized loss of $32,581,000, or $2.12 per share, diluted.
Revenues decreased 21.1% to $78,017,000 for the three months ended December 31, 2008, compared to revenues for the three months ended December 31, 2007 of $98,821,000. Revenues decreased 12.1% to $353,687,000 for the year ended December 31, 2008, compared to revenues for the year ended December, 2007 of $402,322,000. The decrease in revenues is primarily the result of the net realized investment losses in 2008.
Chief Executive Officer's Comments
Roy Thung, Chief Executive Officer, commented, "We are pleased with the improvement in our profit margins in 2008, as reflected in the significant increase in operating income from continuing operations from $1.0 million or $.06 per share, diluted, in 2007 to $8.8 million or $.57 per share, diluted, in 2008. These improved results were achieved despite a $2.0 million loss recorded in 2008 from certain investment partnerships, which impacted operating income from continuing operations. The improvement in operating income is largely due to improved underwriting results on both of our health lines of business, in particular medical stop-loss. We are confident that our improved operating results will continue in 2009."
Mr. Thung continued, "Due to the unprecedented turmoil in the financial markets, Independence Holding Company, like many insurance and other companies in the financial sector, recognized a loss in 2008 for other-than-temporary impairments. These impairments were primarily on certain preferred stocks of financial institutions and Alt-A mortgages. At December 31, 2008, the Company had a carrying value of $33.4 million in preferred stocks of certain financial institutions and $28.8 million in Alt-A mortgages, which amounted to 8% of our total investment portfolio of $761 million. Our fixed-maturity portfolio continues to be rated, on average, AA. The Company recorded a decrease in our book value per share from $11.90 at September 30, 2008 to $10.56 at December 31, 2008, primarily as a result of unrealized losses due to mark-to-market accounting on our available for sale securities. We expect to recover the majority of the temporary unrealized losses in fixed maturities recorded in book value as the securities mature."
Non-GAAP Financial Measures
The Company provides non-GAAP financial measures to complement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future.
