American Independence Corp. Announces Net Income for Three Months and Nine Months Ended September 30, 2005

Business Wire, Nov 9, 2005

NEW YORK -- American Independence Corp. (NASDAQ: AMIC) today reported net income of $1.1 million ($.13 per share, diluted), net of a provision for income taxes of $.7 million, for the three months ended September 30, 2005 compared to $1.7 million ($.19 per share, diluted), net of a provision for income taxes of $1.0 million for the three months ended September 30, 2004. The decrease in net income in the third quarter of 2005, as compared to the third quarter of 2004, is largely due to decreased MGU fee income resulting from lower production in 2005 and higher loss ratios in the quarter. MGU production has been negatively impacted by stricter underwriting guidelines. Revenues amounted to $21.2 million for the three months ended September 30, 2005, compared to revenues of $21.6 million for the three months ended September 30, 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.

AMIC also reported net income of $3.5 million ($.41 per share, diluted) for the nine months ended September 30, 2005 compared to $4.6 million ($.54 per share, diluted) for the nine months ended September 30, 2004. The decrease in net income for the nine months of 2005 as compared to 2004 is largely a result of higher loss ratios and lower MGU fee income from profit commissions due to higher loss ratios in prior treaty years. Revenues amounted to $62.3 million for the nine months ended September 30, 2005, compared to revenues of $59.0 million for the nine months ended September 30, 2004, largely due to an increase in the percentage of premiums assumed from Independence Holding Company (NYSE:IHC).

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 September 30, 2005 was $1.9 million ($.22 per share, diluted) as compared to $2.8 million ($.33 per share, diluted) for the three months ended September 30, 2004 and was relatively consistent with the first two quarters of 2005. On a non-GAAP basis, the Company's income from continuing operations excluding amortization and federal income tax charge for the nine months ended September 30, 2005 was $6.0 million ($.70 per share, diluted) as compared to $7.9 million ($.93 per share, diluted) for the nine months ended September 30, 2004.

Roy T.K. Thung, Chief Executive Officer, commented, "Our 2005 results continue to be adversely affected by the generally 'soft' Medical Stop-Loss market, which has resulted in higher loss ratios and caused us to tighten our underwriting guidelines which in turn generated lower production. On a more positive note, despite these market conditions, the Company was able to increase our total premiums due to assuming a higher percentage of Medical Stop-Loss and assuming new lines of business from IHC. The Company will also benefit, as a reinsurer, from the new appointment of MGU's recently announced by IHC and when and if the Medical Stop-Loss market hardens. Furthermore, Independence American continues to advance towards its goal of becoming an issuing carrier by adding additional state licenses (currently 37 jurisdictions) and filing its health products in these states. AMIC remains quite profitable and we are hopeful that our underwriting discipline and increase in premiums will produce greater profits for Independence American and higher profit commissions for the MGUs in future years."

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.