Financial Results

Net income (loss) per share from continuing operations attributable to IHC increased to $.13 per share, diluted, or $1,976,000, for the three months ended June 30, 2009 compared to $(.43) per share, diluted, or $(6,693,000), for the three months ended June 30, 2008. Included in the prior year's net loss is a realized loss for other than temporary impairments in preferred stocks of $(11,145,000) or $(.72) per share, diluted, net of tax, which (net of gains) yielded a net realized loss of $(9,764,000) or $(.63) per share, diluted, net of tax.

Net income (loss) per share from continuing operations attributable to IHC increased to $.35 per share, diluted, or $5,332,000, for the six months ended June 30, 2009 compared to $(.24) per share, diluted, or $(3,621,000), for the six months ended June 30, 2008. Included in the prior year's net loss for the six months is a realized loss for other than temporary impairments in preferred stocks of $(11,197,000) or $(.73) per share, diluted, net of tax, which (net of gains) yielded a net realized loss of $(9,785,000) or $(.64) per share, diluted, net of tax.

IHC reported operating income(1) per share of $.08 per share, diluted, or $1,162,000, for the three months ended June 30, 2009, compared to $.20 per share, diluted, or $3,071,000, for the three months ended June 30, 2008. IHC reported operating income per share of $.23 per share, diluted, or $3,565,000, for the six months ended June 30, 2009, compared to $.40 per share, diluted, or $6,164,000, for the six months ended June 30, 2008.

Revenues increased 13% to $100,599,000 for the three months ended June 30, 2009, compared to revenues for the three months ended June 30, 2008 of $89,318,000. Revenues increased 3% to $199,970,000 for the six months ended June 30, 2009, compared to revenues for the six months ended June 30, 2008 of $193,736,000.

Chief Executive Officer's Comments

Roy Thung, Chief Executive Officer, commented, "Our operating income was adversely impacted by unexpectedly large health claims and unusually large legal and other expenses in connection with employment matters and the closing of a branch office. As a result of recessionary pressures and tighter underwriting guidelines, our premiums have decreased 6.0% for the first six months of 2009 compared to the first six months of 2008. In response to the decrease in premiums, we have initiated significant cost reductions in the fully insured division, which will be largely realized beginning in 2010."

Mr. Thung continued, "Even in the current challenging economy, our financial condition remains strong. Our insurance companies' statutory surplus at June 30, 2009 is at an all-time high. The Company recorded an increase in book value per share to $12.70 at June 30, 2009 from $10.56 at December 31, 2008, primarily as a result of a reduction in unrealized losses due to mark-to-market accounting on our available-for-sale securities. The adjusted book value per share(2) was $14.49 at June 30, 2009."

Non-GAAP Financial Measures

The Company provides non-GAAP financial measures to complement its consolidated financial statements presented in accordance with GAAP: (i) Operating income is income from continuing operations net of losses attributable to non-controlling interests and excluding net realized gains or losses, net of applicable income taxes, (ii) Operating income per share is operating income (loss) on a per share basis, and (iii) Adjusted book value per share represents IHC's book value per share excluding the per share value of net unrealized investment gains and losses (per SFAS 115), after taxes. 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. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding realized gains or losses, net of taxes, that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results.