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Investments in and Advances to Affiliates, Schedule of Investments [Text Block]
9 Months Ended
Sep. 30, 2020
Notes  
Investments in and Advances to Affiliates, Schedule of Investments

Note 6.Other Investments, Including Variable Interest Entities 

 

Equity Method Investments

 

Equity income (loss) from equity method investments for the three months and nine months ended September 30, 2020 was $204,000 and $176,000, respectively; and was $656,000 and $1,171,000 for the three and nine months ended September 30, 2019, respectively.

 

In the fourth quarter of 2019, the Company impaired its investment in Ebix Health Exchange, which administers various lines of health insurance for IHC’s insurance subsidiaries. The carrying value of the

Company’s equity investment is $0 at both September 30, 2020 and December 31, 2019. In 2020, the Company discontinued applying the equity method with regards to recording any additional equity losses. In 2019, the Company recorded $(406,000) and $(2,069,000), respectively, of equity income (loss) from its investment for the three months and nine months ended September 30, 2019.

 

In 2020, the Company acquired the remaining membership units it did not already own in both the Abacus Group, LLC and in Torchlight Technology Group, both of which were previously accounted for under the equity method. See Note 7 for more information about these acquisitions.  

 

In July 2020, the Company received a cash distribution in the amount of $3,462,000 from an equity method investment representing a final return on investment. 

 

Equity Investments Carried at Cost Less Impairments

 

In February 2020, the Company made an additional $1,250,000 equity investment in FIGO Pet Insurance LLC (“FIGO”), a leading insuretech brand company in the pet insurance space focused on referral partners as well as direct-to-consumer and employer benefit channels. In general, companies that provide insurance through user-centric platforms, or create efficiencies in the insurance industry through technological advances, are referred to as “insuretech” companies.

 

Variable Interest Entities

 

The Company has a minority interest in certain limited partnerships that we have determined to be Variable Interest Entities (“VIEs”).  The aforementioned VIEs are not required to be consolidated in the Company’s condensed consolidated financial statements as we are not the primary beneficiary since we do not have the power to direct the activities that most significantly impact the VIEs’ economic performance.

 

The Company will periodically reassess whether we are the primary beneficiary in any of these investments. The reassessment process will consider whether we have acquired the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances. Our maximum loss exposure is limited to our combined $1,788,000 carrying value in these equity investments which is included in other investments in the Condensed Consolidated Balance Sheet as of September 30, 2020.

 

Related Party Transactions

 

At September 30, 2020 and December 31, 2019, the Company’s Condensed Consolidated Balance Sheets include $0 and $5,000, respectively, of notes and other amounts receivable from Ebix Health Exchange, and include $131,000 and $250,000, respectively, of administrative fees and other expenses payable to Ebix Health Exchange, which are included in other assets and accounts payable, accruals and other liabilities, respectively. The Company’s Condensed Consolidated Statements of Income include administrative fee expenses to Ebix Health Exchange, which are included in selling, general and administrative expenses of $407,000 and $1,306,000, for the three months and nine months ended September 30, 2020, respectively,  and $621,000 and $1,608,000, respectively, for the same periods in 2019.

 

The Condensed Consolidated Statement of Income for the three months and nine months ended September 30, 2020 includes premiums earned of $4,873,000 and $8,835,000, respectively, and includes and selling, general and administrative expense $1,472,000 and $2,669,000 respectively, related to pet insurance business produced by FIGO. Selling, general and administrative expense for the three and nine months ended September 30, 2020 also includes approximately $0 and $1,507,000 of expense related to the purchase of leads from an affiliated lead generation company. The affiliated lead generation company was acquired in April 2020, see Note 7. Lead costs subsequent to the acquisition are eliminated in consolidation. The three and nine months ended September 30, 2019 include approximately $3,104,000 and $4,542,000, respectively, of expense related to the purchase of leads from this lead generation company although this entity was not an affiliate of  

the Company until June 2019.