American Independence Corp. Announces Net Income for the 2006 First Quarter

Business Wire, May 10, 2006

NEW YORK -- American Independence Corp. (NASDAQ: AMIC) today reported net income of $.4 million ($.05 per share, diluted), net of a provision for income taxes of $.2 million, for the three months ended March 31, 2006 compared to $1.2 million ($.14 per share, diluted), net of a provision for income taxes of $.7 million for the three months ended March 31, 2005. The decrease in income in the first quarter of 2006, as compared to the first quarter of 2005, is largely due to an increase in the loss ratio on the Company's medical stop-loss business and a reduction in fee income due to lower premiums produced by our MGU's and lower profit commissions due to higher loss ratios in previous years. Revenues amounted to $19.4 million for the three months ended March 31, 2006, compared to revenues of $20.1 million for the three months ended March 31, 2005. 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, 2006 was $.7 million ($.08 per share, diluted) as compared to $2.0 million ($.24 per share, diluted) for the three months ended March 31, 2005.

Roy T.K. Thung, Chief Executive Officer, commented, "Our results continue to be adversely affected by the higher loss ratios on Medical Stop-Loss business, which caused (i) reduced underwriting profitability for Independence American, (ii) lower MGU fee income as a result of corrective underwriting actions that reduced medical stop-loss premiums and (iii) lower fee income from profit commissions for our MGUs. Premiums, and the corresponding fee income, were reduced due to corrective underwriting actions taken in order to increase insurance company profitability. On the brighter side, our current block of medical stop-loss is performing well due to business written in 2005 and 2006, which appears to be more profitable than that incepting in 2004. In addition, Independence American has continued to ramp up its fully-insured medical segment, premiums from which will begin impacting the 2006 year, and are expected to have an even greater effect in 2007 and beyond. Independence American has also secured a license in North Carolina, which is an important state because a substantial portion of the fully-insured medical business that Employers Direct Health ("EDH") will transfer to Independence American is produced in that state. EDH has begun to submit to us medical stop-loss quotes and the bulk of all of its health business will be transferred in 2007. Independence American is now licensed in 37 states and the District of Columbia, and we are optimistic that we can add additional state licenses this year, which will position us to continue to further expand our fully-insured health business."

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 employer Medical Stop-Loss and managed care 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,
                                                  --------------------
                                                    2006       2005
                                                  ---------  ---------

Premiums earned                                  $  16,011  $  15,568
MGU fee income                                       2,639      3,855
Net Investment income                                  759        523
Net realized gains (losses)                            (10)        43
Other income                                             4         73
                                                  ---------  ---------

   Revenues                                         19,403     20,062
                                                  ---------  ---------

Insurance benefits, claims and reserves             10,965     10,065
Selling and general expenses                         7,546      7,634
Amortization and depreciation                          191        279
Other expenses                                          65        161
                                                  ---------  ---------

   Expenses                                         18,767     18,139
                                                  ---------  ---------

Income from continuing operations before income
 tax                                                   636      1,923
Provision for income tax                               243        729
                                                  ---------  ---------

Income from continuing operations                      393      1,194
                                                  ---------  ---------

    Net Income                                   $     393  $   1,194
                                                  =========  =========

Basic Income Per Common Share:
Income from continuing operations                $     .05  $     .14
                                                  ---------  ---------

     Net Income                                  $     .05  $     .14
                                                  =========  =========

Weighted average basic common shares                 8,451      8,442
                                                  =========  =========

Diluted Income Per Common Share:
Income from continuing operations                $     .05  $     .14
                                                  ---------  ---------

     Net Income                                  $     .05  $     .14
                                                  =========  =========

Weighted average diluted common shares               8,490      8,530
                                                  =========  =========

As of March 31 2006, there were 8,451,223 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,
                                                    ------------------
                                                     2006      2005
                                                    --------  --------

Income from continuing operations                  $    393  $  1,194
Amortization of intangible assets related to
 purchase accounting                                    116       202
Federal income tax charge related to deferred taxes     201       616
                                                    --------  --------

Income from continuing operations excluding
 amortization and Federal income tax charge        $    710  $  2,012
                                                    ========  ========

Non - GAAP Basic Income Per Common Share:
Income from continuing operations excluding
 amortization and Federal income tax charge        $    .08  $    .24
                                                    ========  ========

Non - GAAP Diluted Income Per Common Share:
Income from continuing operations excluding
 amortization and Federal income tax charge        $    .08  $    .24
                                                    ========  ========