American Independence Corp. Announces Net Income for the 2005 First Quarter

Business Wire, May 10, 2005

NEW YORK -- American Independence Corp. (NASDAQ:AMIC) today reported net income of $1.2 million ($.14 per share, diluted), net of a provision for income taxes of $.7 million, for the three months ended March 31, 2005 compared to $1.6 million ($.19 per share, diluted), net of a provision for income taxes of $1.0 million for the three months ended March 31, 2004. The decrease in income in the first quarter of 2005, as compared to the first quarter of 2004, is largely due to an increase in loss ratio on the Company's medical stop-loss business which increase was first recorded starting in the second quarter of 2004. There has been no new significant development in claims during the first quarter of 2005 as compared to the fourth quarter of 2004. Revenues amounted to $20.1 million for the three months ended March 31, 2005, compared to revenues of $17.4 million for the three months ended March 31, 2004. For as long as AMIC utilizes its net operating loss carryforwards, it will not pay any income taxes, except for Federal alternative minimum taxes and state income taxes.

On a non-GAAP basis, the Company's income from continuing operations excluding amortization and Federal income tax charge related to deferred taxes for the three months ended March 31, 2005 was $2.0 million ($.24 per share, diluted) as compared to $2.7 million ($.32 per share, diluted) for the three months ended March 31, 2004, and relatively flat when compared to the fourth quarter of 2004.

Roy T.K. Thung, Chief Executive Officer, commented, "Although our premiums are higher for the first quarter of 2005 as compared to the same period of 2004, our income from continuing operations for the current quarter is lower than for the comparable period of 2004 due in large part to the increase in price competition and loss ratio, which has negatively affected our earnings for the last four quarters. AMIC has been quite profitable despite a generally "soft" medical stop-loss market, which has negatively impacted both Independence American and our MGU's. We continue to be heartened by the prospects for the balance of this year and beyond for the following reasons. AMIC has been able to increase its premiums due its higher assumption of business from IHC a and more diversified reinsurance mix (including DBL and first dollar medical insurance), while also enhancing the quality of the new medical stop-loss cases it reinsures through tighter underwriting guidelines. As a result of its increased premium base, AMIC is well-positioned to benefit if the market improves through greater volume and lower loss ratios than 2004. Finally, Independence American has grown significantly both in number of licenses and capital and surplus, and has begun selling short-term medical directly to consumers. We are also gratified that Independence Holding Company continues to show its confidence in AMIC by increasing its ownership to 42%."

The Company provides non-GAAP financial measures to complement its consolidated financial statements presented in accordance with GAAP. 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 identifying certain expenses 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. A reconciliation of the non-GAAP results to the GAAP results is provided in the "Reconciliation of GAAP Income from Continuing Operations to Non-GAAP Income from Continuing Operations" schedule below. Operating results reported on a non-GAAP basis exclude non-cash charges related to the amortization of intangible assets recorded in purchase accounting and the Federal income tax charge related to deferred taxes.

AMIC is a holding company principally engaged in the health insurance and reinsurance business through Independence American Insurance Company and its managing general underwriter division.

Some of the statements included herein may be considered to be forward looking statements that are subject to certain risks and uncertainties. Factors which could cause the actual results to differ materially from those suggested by such statements are described from time to time in AMIC's filings with the Securities and Exchange Commission.

AMERICAN INDEPENDENCE CORP.
                         FIRST QUARTER REPORT
                 (in Thousands Except Per Share Data)


                                                       Three Months
                                                            Ended
                                                         March 31,
                                                       2005     2004
                                                      -------  -------

Premiums earned                                      $15,568  $12,696
MGU fee income                                         3,855    4,040
Net Investment income                                    523      546
Net realized gains                                        43      130
Other income                                              73        5
                                                      -------  -------

   Revenues                                           20,062   17,417
                                                      -------  -------

Insurance benefits, claims and reserves               10,065    7,676
Selling and general expenses                           7,593    6,512
Amortization and depreciation                            279      382
Other expenses                                           202      255
                                                      -------  -------

   Expenses                                           18,139   14,825
                                                      -------  -------

Income from continuing operations before income tax    1,923    2,592
Provision for income tax                                (729)  (1,010)
                                                      -------  -------

Income from continuing operations                      1,194    1,582
Income from discontinued operations, net of
tax                                                        -       10
                                                      -------  -------

    Net Income                                       $ 1,194  $ 1,592
                                                      =======  =======

Basic Income Per Common Share:
Income from continuing operations                    $   .14  $   .19
Income from discontinued operations                        -        -
                                                      -------  -------

     Net Income                                      $   .14  $   .19
                                                      =======  =======

Weighted average basic common shares                   8,442    8,425
                                                      =======  =======

Diluted Income Per Common Share:
Income from continuing operations                    $   .14  $   .19
Income from discontinued operations                        -        -
                                                      -------  -------

     Net Income                                      $   .14  $   .19
                                                      =======  =======

Weighted average diluted common shares                 8,530    8,543
                                                      =======  =======

As of March 31 2005, there were 8,447,223 shares outstanding, net of
treasury shares.
RECONCILIATION of GAAP INCOME FROM CONTINUING OPERATIONS TO NON-GAAP
                   INCOME FROM CONTINUING OPERATIONS
                 (In Thousands Except Per Share Data)

                                                       Three Months
                                                           Ended
                                                         March 31,
                                                        2005     2004
                                                      -------  -------

Income from continuing operations                    $ 1,194  $ 1,582
Amortization of intangible assets related to purchase
accounting                                               202      324
Federal income tax charge related to deferred taxes      617      807
                                                      -------  -------

Income from continuing operations excluding
amortization and Federal income tax charge           $ 2,013  $ 2,713
                                                      =======  =======

Non - GAAP Basic Income Per Common Share:
Income from continuing operations excluding
amortization and Federal income tax charge           $   .24  $   .32
                                                      =======  =======

Non - GAAP Diluted Income Per Common Share:
Income from continuing operations excluding
amortization and Federal income tax charge           $   .24  $   .32
                                                      =======  =======