Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

12 Months Ended

Dec. 31, 2017

Notes

Disposal Groups, Including Discontinued Operations, Disclosure

Note 3.Discontinued Operations 

On March 31, 2016, IHC and a subsidiary of AMIC sold the stock of Risk Solutions to Swiss Re Corporate Solutions, a division of Swiss Re (“Swiss Re”).  In addition, under the purchase and sale agreement, all of the in-force stop-loss business of Standard Security Life and Independence American produced by Risk Solutions is co-insured by Westport Insurance Corporation (“Westport”), Swiss Re’s largest US carrier, as of January 1, 2016.  The aggregate purchase price was $152,500,000 in cash, subject to adjustments and settlements. Approximately 89% of the purchase price was allocated to AMIC and its subsidiaries, with the balance being paid to Standard Security Life and other IHC subsidiaries. The Company recorded a gain of $100,819,000, net of taxes and amounts attributable to noncontrolling interests, as a result of the transaction. The aforementioned transaction, which includes the sale of Risk Solutions and the corresponding coinsurance agreement, is collectively referred to as the “Risk Solutions Sale and Coinsurance Transaction”.  IHC’s block of Medical Stop-Loss business is in run-off. The sale of Risk Solutions and exit from the medical stop-loss business represents a strategic shift that will have a major effect on the Company’s operations and financial results. The disposal transaction qualified for reporting as discontinued operations in the first quarter of 2016 as a result of the Board of Directors commitment to a plan for its disposal in January 2016. Aside from reinsurance and marketing of Westport small group stop-loss, there will be no further involvement with the discontinued operation.

The following is a reconciliation of the major line items constituting the pretax profit of discontinued operations, including adjustments for amounts previously eliminated in consolidation, for the periods indicated (in thousands):

		2017		2016		2015
Revenue	$	-	$	6,406	$	2,373
Selling, general and administrative expenses		-		5,689		(1,937)
Pretax profit of discontinued operations		-		717		4,310
Gain on  disposal of discontinued operations, pretax		-		116,900		-
Income from discontinued operations before income taxes		-		117,617		4,310
Income taxes on discontinued operations		-		6,813		1,762
Income from discontinued operations, net of tax	$	-	$	110,804	$	2,548

Liabilities attributable to discontinued operations at December 31, 2017 and 2016 consist of $0 and $68,000, respectively, of accounts payable and accrued liabilities.

Total operating and investing cash flows from discontinued operations were $128,000 and $(132,000), respectively, in 2015. In 2016, the Company elected to classify the proceeds received from the sale of discontinued operations in the investing activities section of the Consolidated Statement of Cash Flows. There were no other operating or investing cash flows from discontinued operations in 2017 or 2016.

In connection with the Risk Solutions Sale and Coinsurance Transaction in March 2016, AMIC utilized a significant amount of its Federal NOL carryforwards and made a corresponding adjustment to its valuation allowance (see Note 12). On a consolidated basis, the Company recorded income taxes on discontinued operations of $6,813,000 for the year ended December 31, 2016, consisting of $3,819,000 of state income taxes and $2,994,000 of Federal taxes. Federal income taxes differ from applying the Federal statutory income tax rate of 35% to pretax income from discontinued operations principally as the result of tax benefits from state income taxes and AMIC’s $38,169,000 decrease in its valuation allowance, net of a tax provision from limits on compensation deductions.