UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 10, 2015

INDEPENDENCE HOLDING COMPANY

(Exact name of registrant as specified in its charter)

Delaware	010306	58-1407235
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

Item 2.02 Results of Operations and Financial Condition.

The information set forth under this Item 2.02 (Results of Operations and Financial Condition) is intended to be furnished. Such information, including the Exhibit attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities and Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

On March 10, 2015, Independence Holding Company issued a news release announcing its 2014 Fourth-Quarter and Annual results, a copy of which is attached as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(c)  

Exhibits:

Exhibit 99.1

News Release of Independence Holding Company dated March 10, 2015: Independence Holding Company Announces 2014 Fourth-Quarter and Annual Results.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INDEPENDENCE HOLDING COMPANY

(Registrant)

By: Teresa A. Herbert


/s/ Teresa A. Herbert Teresa A. Herbert Senior Vice President and Chief Financial Officer
Date:
March 11, 2015

INDEPENDENCE HOLDING COMPANY	CONTACT:  LOAN NISSER
96 CUMMINGS POINT ROAD	(646) 509-2107
STAMFORD, CONNECTICUT 06902	www.IHCGroup.com
NYSE: IHC

NEWS RELEASE

INDEPENDENCE HOLDING COMPANY ANNOUNCES

2014 FOURTH-QUARTER AND ANNUAL RESULTS

Stamford, Connecticut, March 10, 2015. Independence Holding Company (NYSE: IHC) today reported 2014 fourth-quarter and annual results.  

Financial Results

Net income attributable to IHC increased to $.23 per share, diluted, or $4,034,000, for the three months ended December 31, 2014 compared to $.10 per share, diluted, or $1,748,000, for the three months ended December 31, 2013. Net income attributable to IHC increased to $.92 per share, diluted, or $16,293,000, for the year ended December 31, 2014 compared to $.77 per share, diluted, or $13,779,000, for the year ended December 31, 2013.

Revenues decreased to $127,090,000 for the three months ended December 31, 2014 as compared to revenues for the three months ended December 31, 2013 of $143,618,000; and revenues decreased to $533,933,000 for the year ended December 31, 2014 compared to revenues for the year ended December 31, 2013 of $575,044,000. The decrease in revenues for both the fourth quarter and the year ended December 31, 2014 is primarily due to the runoff of major medical business from lines that we exited largely as a result of the requirements of the Affordable Care Act (“ACA”), offset in part by an increase in medical stop-loss and specialty health premiums.

Chief Executive Officer’s Comments

Roy Thung, Chief Executive Officer, commented, “We are pleased with the 19% increase in our earnings in 2014 to $.92 per share from $.77 per share in 2013.  We achieved this increase despite recording significant underwriting losses on major medical in 2014 as a result of ACA, which will not reoccur in 2015, and significant amortization of deferred loss, which will be substantially less in 2015.

Our positive earnings development in the current year was largely driven by continued growth in earned premium and significantly increased earnings from our direct medical stop-loss, by far our largest line of business.  We expect continued growth in this line of business, as evidenced by the 38% increase in our direct business written in the twelve months ended January 31, 2015, while maintaining consistent profit margins on a growing premium base. Our earnings were also positively impacted by our specialty health business, which grew by 34% and produced very positive profit margins in 2014. We are also pleased with our group life, disability and DBL line of business, which continued to perform well.   

Our fully insured segment has been adversely affected the last two years by the ACA, including the runoff of major-medical business and the health insurance tax, causing the 2014 fourth quarter income before income taxes to be impacted by approximately $4.2 million and the full year 2014 by approximately $7.1 million.  As a result of exiting major medical health plans for individuals and families, the Company will not have any earned premiums or administrative fee income from this line in 2015.    Therefore, we expect to see significantly better underwriting results for the fully insured segment as we continue to ramp up the specialty line of business and largely eliminate the underwriting losses from major medical that has negatively impacted our last two years.

In addition, in the three-month and twelve-month periods, the Company recorded $0.6 million and $3.5 million, respectively, in amortization of deferred loss in connection with the assumption of certain ceded annuity policies from the prior year’s coinsurance agreement.  This amortization will be substantially less in 2015 as the majority of policies were assumed in 2014. Offsetting these charges, IHC’s 2014 results (Q4 and year-end) were positively affected by an increase of $2,250,000, net of minority interest, for an increase in the deferred tax asset related to AMIC’s federal net operating loss carryforward (NOL); there was not a corresponding positive effect during 2013.

Our overall investment portfolio continues to be very highly rated (on average, AA) and has a duration of approximately six years. Our book value was $16.76 per share at December 31, 2014, an increase of 10% over the book value per share at December 31, 2013, and our total stockholders’ equity is $291 million at December 31, 2014 compared to $269 million at December 31, 2013. Through December 31, 2014, we have repurchased 296,775 shares of IHC stock for $4.0 million at an average price of $13.38 per share.

Although 2015 will be impacted by the decrease in administrative fee income due to the exit from major medical (which we are seeking to replace by administering major medical for other carriers and by continuing to ramp up our specialty benefits sales) and by reduced investment income resulting from the continued low interest rate environment, we are optimistic that we will achieve a meaningful improvement in operating results in 2015, largely as a result of the accelerating growth in premiums and income from our direct medical stop-loss and specialty health insurance lines of business and the continued profitability of the group life and disability business.”     

About Independence Holding Company

Independence Holding Company is a holding company principally engaged in the life and health insurance business, and the acquisition of blocks of policies, through its insurance company subsidiaries (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company) and its marketing and administrative affiliates.  Standard Security Life furnishes medical stop-loss, group major and limited medical, short-term medical, group long-term and short-term disability and life, group and individual dental, vision and various supplemental products. Madison National Life sells group life and disability, group major and limited medical, group and individual dental, individual life insurance and various supplemental products. Independence American offers pet insurance, non-subscriber occupational accident, short-term medical, medical stop-loss, group and individual dental and various supplemental products. IHC owns certain subsidiaries through its majority ownership of American Independence Corp. (NASDAQ: AMIC), which is a holding company principally engaged in the insurance and reinsurance business.

Forward-looking Statements

Certain statements and information contained in this release may be considered “forward-looking statements,” such as statements relating to management's views with respect to future events and financial performance.  Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements.  Potential risks and uncertainties include, but are not limited to, economic conditions in the markets in which Independence Holding Company (IHC) operates, new federal or state governmental regulation, IHC’s ability to effectively operate, integrate and leverage any past or future strategic acquisition, and other factors which can be found in IHC’s other news releases and filings with the Securities and Exchange Commission.  IHC expressly disclaims any duty to update its forward-looking statements unless required by applicable law.

INDEPENDENCE HOLDING COMPANY

FOURTH QUARTER REPORT

December 31, 2014

(In Thousands, Except Per Share Data)

			Three Months Ended				Year Ended
			December 31,				December 31,
			2014		2013		2014		2013
REVENUES:
Premiums earned		$	116,938	$	127,984	$	479,048	$	495,991
Net investment income			5,018		5,627		21,692		27,471
Fee income			2,633		8,083		20,646		26,954
Other income			1,727		945		4,859		4,878
Net realized investment gains			774		979		7,688		19,750
Net impairment losses recognized in earnings			-		-		-		-
			127,090		143,618		533,933		575,044
EXPENSES:
Insurance benefits, claims and reserves			82,547		91,877		326,035		354,790
Selling, general and administrative expenses			39,850		46,214		177,848		179,553
Amortization of deferred acquisitions costs			1,054		1,340		4,941		15,132
Interest expense on debt			440		468		1,797		1,915
			123,891		139,899		510,621		551,390
Income before income taxes			3,199		3,719		23,312		23,654
Income taxes			(1,013)		1,577		6,391		8,398
Net income			4,212		2,142		16,921		15,256
Less: income from noncontrolling interests
	in subsidiaries		(178)		(394)		(628)		(1,477)
NET INCOME ATTRIBUTABLE TO IHC		$	4,034	$	1,748	$	16,293	$	13,779
Basic income per common share		$	.23	$	.10	$	.93	$	.78
WEIGHTED AVERAGE SHARES OUTSTANDING			17,371		17,682		17,471		17,758
Diluted income per common share		$	.23	$	.10	$	.92	$	.77
WEIGHTED AVERAGE DILUTED SHARES
	OUTSTANDING		17,549		17,815		17,635		17,781

As of March 6, 2015, there were 17,352,918 common shares outstanding, net of treasury shares.

INDEPENDENCE HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

					December 31,		December 31,
					2014		2013
ASSETS:
	Investments:
		Short-term investments		$	50	$	50
		Securities purchased under agreements to resell			16,790		22,594
		Trading securities			11,095		7,125
		Fixed maturities, available-for-sale			583,880		542,287
		Equity securities, available-for-sale			13,895		11,803
		Other investments			25,251		25,123
			Total investments		650,961		608,982
	Cash and cash equivalents				25,083		24,229
	Deferred acquisition costs				30,806		29,777
	Due and unpaid premiums				62,628		59,435
	Due from reinsurers				278,242		380,229
	Premium and claim funds				32,553		37,353
	Goodwill				50,318		50,318
	Other assets				57,126		78,712
			TOTAL ASSETS	$	1,187,717	$	1,269,035
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
	Policy benefits and claims			$	236,803	$	237,754
	Future policy benefits				277,041		287,449
	Funds on deposit				186,782		274,826
	Unearned premiums				9,455		12,423
	Other policyholders' funds				18,802		25,129
	Due to reinsurers				47,945		37,113
	Accounts payable, accruals and other liabilities				67,641		71,889
	Debt				4,000		6,000
	Junior subordinated debt securities				38,146		38,146
			TOTAL LIABILITIES		886,615		990,729
STOCKHOLDERS’ EQUITY:
IHC STOCKHOLDERS' EQUITY:
	Preferred stock (none issued)				-		-
	Common stock				18,531		18,524
	Paid-in capital				127,098		126,239
	Accumulated other comprehensive income (loss)				22		(10,472)
	Treasury stock, at cost				(12,141)		(8,169)
	Retained earnings				157,667		142,669
TOTAL IHC STOCKHOLDERS’ EQUITY					291,177		268,791
NONCONTROLLING INTERESTS IN SUBSIDIARIES					9,925		9,515
			TOTAL EQUITY		301,102		278,306
			TOTAL LIABILITIES AND EQUITY	$	1,187,717	$	1,269,035