Schedule II - Condensed Financial Information of Parent Company

12 Months Ended

Dec. 31, 2012

Notes

Schedule II - Condensed Financial Information of Parent Company

SCHEDULE II
INDEPENDENCE HOLDING COMPANY
CONDENSED BALANCE SHEETS (In thousands, except share data)
(PARENT COMPANY ONLY)
		DECEMBER 31,
		2012		2011
ASSETS:
Cash and cash equivalents	$	589	$	3,098
Fixed maturities, available-for-sale		5,667		-
Other investments		1,146		4,298
Investments in consolidated subsidiaries		365,235		331,784
Taxes receivable		17,356		16,233
Goodwill		228		228
Other assets		426		56
TOTAL ASSETS	$	390,647	$	355,697
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and other liabilities	$	6,692	$	4,586
Amounts due to consolidated subsidiaries, net		36,155		28,813
Income taxes payable		6,807		7,597
Junior subordinated debt securities		38,146		38,146
Dividends payable		-		411
TOTAL LIABILITIES		87,800		79,553
STOCKHOLDERS' EQUITY:
Preferred stock (none issued)		-		-
Common stock (A)		18,462		18,451
Paid-in capital		126,589		126,298
Accumulated other comprehensive income		15,013		7,853
Treasury stock, at cost (B)		(4,533)		(3,277)
Retained earnings		130,153		111,752
TOTAL IHC’S STOCKHOLDERS' EQUITY		285,684		261,077
NONCONTROLLING INTERESTS IN SUBSIDIARIES		17,163		15,067
TOTAL EQUITY		302,847		276,144
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	390,647	$	355,697

(A)    Common stock $1 par value, 23,000,000 and 20,000,000 shares authorized, respectively; 18,461,992 and 18,450,917 shares issued, respectively, 17,932,954 and 18,052,660 shares outstanding, respectively.

(B)    Treasury stock, at cost; 529,038 and 398,257 shares, respectively, outstanding.

The financial information of Independence Holding Company (Parent Company Only) should be read in conjunction with the Consolidated Financial Statements and Notes.

SCHEDULE II
(Continued)
INDEPENDENCE HOLDING COMPANY
CONDENSED STATEMENTS OF OPERATIONS (In thousands)
(PARENT COMPANY ONLY)
		2012		2011		2010
REVENUES:
Net investment income	$	491	$	929	$	746
Net realized investment gains		2		23		62
Other income		2,251		3,138		3,142
		2,744		4,090		3,950
EXPENSES:
Interest expense on debt		1,638		1,575		1,589
General and administrative expenses		5,125		4,088		3,805
		6,763		5,663		5,394
Loss before tax benefit		(4,019)		(1,573)		(1,444)
Income tax benefit		(1,528)		(563)		(559)
Loss before equity in net income of subsidiaries		(2,491)		(1,010)		(885)
Equity in net income of subsidiaries		25,102		15,776		24,554
Income from continuing operations		22,611		14,766		23,669
Discontinued operations:
Loss from discontinued operations		-		-		(256)
Net income		22,611		14,766		23,413
Less income from noncontrolling interests in
subsidiaries		(2,950)		(1,763)		(1,676)
Net income attributable to IHC	$	19,661	$	13,003	$	21,737

The financial information of Independence Holding Company (Parent Company Only) should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

SCHEDULE II
(Continued)
INDEPENDENCE HOLDING COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (In thousands)
(PARENT COMPANY ONLY)
		2012		2011		2010
CASH FLOWS PROVIDED BY (USED BY)
OPERATING ACTIVITIES:
Net income	$	22,611	$	14,766	$	23,413
Adjustments to net income:
Equity in net income of subsidiaries		(25,102)		(15,776)		(24,554)
Loss from discontinued operations		-		-		256
Other		604		(1,470)		(640)
Changes in other assets and liabilities		(439)		1,828		368
Net change in cash from operating activities		(2,326)		(652)		(1,157)
CASH FLOWS PROVIDED BY (USED BY)
INVESTING ACTIVITIES:
Decrease in investments in and advances to consolidated subsidiaries		5,109		2,264		1,762
Purchases of fixed maturities		(11,781)		(497)		(2,567)
Sales of fixed maturities		6,109		1,271		5,377
Net distributions from (additions to) other  investments		3,152		2,025		(659)
Other investing activities		-		-		(199)
Net change in cash  from investing activities		2,589		5,063		3,714
CASH FLOWS PROVIDED BY (USED BY)
FINANCING ACTIVITIES:
Repurchases of common stock		(941)		(911)		(1,591)
Cash paid in acquisitions of noncontrolling interests		(58)		(62)		-
Excess tax benefits from exercises of common stock options
and vesting of restricted stock		(94)		(164)		(51)
Dividends paid		(1,681)		(777)		(767)
Other financing activities		2		-		-
Net change in cash from financing activities		(2,772)		(1,914)		(2,409)
Net change in cash and cash equivalents		(2,509)		2,497		148
Cash and cash equivalents, beginning of year		3,098		601		453
Cash and cash equivalents, end of year	$	589	$	3,098	$	601

The financial information of Independence Holding Company (Parent Company Only) should be read in conjunction with the Consolidated Financial Statements and Notes thereto.