96 CUMMINGS POINT ROAD, STAMFORD, CT06902

                                        (Address of principal executive offices)                                          (Zip Code)

Registrant's telephone number, including area code:(203) 358-8000

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ___ [  ]   No  X[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ___[  ]   No  X[X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_[X]  No __  [  ]

Indicate by check mark whether the registrant has submitted electronically, and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405(232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes   X[X]   No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [ X  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer __ Accelerated filerXNon-accelerated filer

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting company __ under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    Yes ☒   No [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ___☐   No   X[X]

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold,sole, as of June 30, 20172020 was $104,174,000.$146,514,000.

14,803,468As of March 5, 2021, there were 14,639,449 shares of common stock were outstanding as of March 9, 2018.Common Stock outstanding.    

FORM 10-K CROSS REFERENCE INDEX

Forward-Looking Statements

This report on Form 10−K contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based our forward-looking statements on our current expectations and projections about future events. Our forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as the growth of our business and operations, our business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Also, when we use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “probably” or similar expressions, we are making forward-looking statements.  

Numerous risks and uncertainties may impact the matters addressed by our forward-looking statements, any of which could negatively and materially affect our future financial results and performance.  We describe some of these risks and uncertainties in greater detail in Item 1A-Risk Factors of this report.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this report, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. In light of these risks, uncertainties and assumptions, any forward-looking event discussed in this report may not occur. Our forward-looking statements speak only as of the date made, and we undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments, unless the securities laws require us to do so.

ITEM 1.  BUSINESS

Business Overview 

Independence Holding Company is a Delaware corporation (NYSE: IHC) that was formed in 1980.  We are a holding company principally engaged in the lifehealth, pet and healthlife insurance business with principal executive offices located at 96 Cummings Point Road, Stamford, Connecticut 06902. IHC and its subsidiaries are sometimes collectively referred to as the "Company", or "IHC", or are implicit in the terms "we", "us" and "our".

Our website is located at www.ihcgroup.com.  Detailed information about IHC, its corporate affiliates and insurance products and services can be found on our website. In addition, we make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such reports available, free of charge, through our website, as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission.  The information on our website, however, is not incorporated by reference in, and does not form part of, this Annual Report on Form 10-K.

IHC primarily provides specialized disability and health coverages and related services to commercial customers and individuals.  We focus on niche products and/or narrowly defined distribution channels primarily in the United States.  Our wholly ownedoperates through (i) its insurance company subsidiaries,carriers: Standard Security Life Insurance Company of New York ("Standard Security Life"), Madison National Life Insurance Company, Inc. ("Madison National Life") and Independence American Insurance Company (“Independence American”) market their products through independent and affiliated brokers, producers and agents.  Independence American also distributes to consumers through dedicated controlled distribution companies and through company-owned websites.

Madison National Life, Standard Security Life and Independence American arecollectively sometimes collectively referred to as the "Insurance Group.""IHC Carriers", which underwrite specialty health, pet, group life and short-term and long-term disability products and (ii) our Specialty Benefits division comprised of specialty health and pet divisions.  We have three continuing business segments: Specialty Health segment, Group disability, life, DBL and PFL segment, and corporate. Our individual life, annuities and other segment is in run-off.

The Specialty Health segment is comprised of (i) our traditional distribution through independent agents and national accounts, and (ii) our tech-enabled distribution through our call centers, career advisors, lead generation domains (www.healthinsurance.org, www.medicareresources.org, and www.petplace.com), transactional websites, and our lead generation company, Torchlight Technology Group LLC (“Torchlight”).  The pet division is comprised of: PetPartners, Inc. (“PetPartners”), www.akcpetinsurance.com, www.petplace.com, www.mypetinsurance.com and our independent distribution channels. Independence American Insurance Company takes the risk on the pet insurance and many of the specialty health products sold by these divisions, but our agencies also sell life and health products from other insurance companies for which they earn commissions.  Our proprietary platforms are designed to support multiple carriers and products, and we are recognized by the industry for our speed to market with innovative new products.

Standard Security Life focuses on underwriting and selling its New York short-term disability (“DBL”) and paid family leave rider (“PFL”) products through general agents primarily to small employers. Madison National Life emphasizes underwriting long-term and short-term disability (“LTD” and “STD”) and group life primarily to school districts and municipalities in the Upper Midwest through managing general agents and independent brokers, and a growing worksite marketing division.  Independence American Insurance Company is our primary specialty health and pet underwriter.  In 2020, Independence American Insurance Company began underwriting Medicare Supplement in many states.

The insurance agencies owned by IHC (collectively, the “IHC Agencies”) are as follows: IHC Specialty Benefits, Inc. (“IHCSB”), Independence Brokerage Group, Inc. (“IBG”), My1HR, Inc. (“My1HR”), and a majority interest in PetPartners.  IHCSB is our agency that operates through (i) our owned call centers, which currently has 65 licensed employee sales agents in three locations, (ii) our career advisors, which includes 225 licensed agents operating in 7 regions, and (iii) our direct-to-consumer (“D2C”) transactional websites, www.mypetinsurance.com and www.healthedeals.com. With respect to the

advisors, we typically provide them with leads (which they either “purchase” or “earn” through IHC production), but they are also expected to generate their own leads.  IHC has used this distribution model for over ten years, and we expect to significantly enhance this distribution in 2021.  With respect to the call centers, one of the offices is dedicated to servicing calls from members of USAA, while the others focus primarily on selling Medicare Supplement, Medicare Advantage and ancillary IHC products to the senior market utilizing leads generated organically or purchased.  

IBG is our agency that distributes through independent producers in the following ways: (i) through our regional sales directors who support non-owned general agents and call centers, (ii) through national account relationships, and (iii) through our 12 sales telebrokerage employees who function as company-owned general agents calling upon independent agents who have a book of business with small employers.  My1HR is a technology company that develops quoting and cloud based enrollment platforms for carriers and key distribution partners. My1HR is also a Web Broker which developed and manages INSX Cloud.  This platform enables agents to quote and enroll consumers in Affordable Care Act (“ACA”) plans as well as ancillary health products.  During the 2020 Open Enrollment Period (November 1, 2020 – December 31, 2020), INSX Cloud was utilized by more than 3,000 independent agents who submitted almost 230,000 enrollments covering approximately 300,000 members, which were predominantly ACA compliant plans and also included specialty health products underwritten by the IHC Carriers as well as other carriers.  PetPartners is a distributor and administrator of pet insurance underwritten by Independence American Insurance Company and an unaffiliated insurer.  IHC owns a number of web domains and a lead-generation technology company through its subsidiaries (includingsubsidiary, IHC Domain Holdings, LLC (“Domain Holdings”).  Domain Holdings owns Healthinsurance.org LLC (“HIO”), which is an on-line marketing company that owns www.healthinsurance.org and www.medicareresources.org, which are lead generation sites for Medicare and individual health and life insurance products.  Domain Holdings also owns www.petplace.com, which is a lead generation site for pet insurance that directs those interested in purchasing such insurance to www.petpartners.com.  Together these sites produce organic leads for IHCSB’s controlled agency force.  IHCSB, Domain Holdings and My1HR together provide the Insurance Group)backbone of our insure-tech operations by generating leads, enabling sales of products (both through IHC Carriers and highly rated unaffiliated insurers), and enable independent agents to access ACA (and IHC ancillary) policies through a licensed Web Broker.

The IHC Agencies and IHC Carriers perform underwriting, risk selection and pricing, policy administration and management for the majority of our specialty health business, which totaled $196.1 million of gross individual and group health premiums in 2020.  In addition, the IHC Agencies sell other coverages for multiple insurers, including small group stop-loss, ACA plans and senior products. The IHC Agencies receive commissions and fees for these services and do not bear any of the insurance risk of the companies to which they provide services. While the majority of sales by IHC Carriers have been to individuals and small employers from independent producers, national accounts and affinity relationships, increasingly we have focused on sales from our controlled distribution.  In general, companies that provide insurance through user-centric platforms, or create efficiencies in the insurance industry through technological advances, are sometimes collectively referred to as “insuretech” companies. As further described in Outlook, we are increasingly focused on expanding our “insuretech” footprint by (i) generating leads through Domain Holdings, (ii) sales through IHCSB’s owned call center, career advisors and transactional sites, and (iii) expansion of the "Company"number of agents using INSX Cloud.  Within this segment, the IHC Carriers sell the following products: (i) senior market products, including Medicare Supplement, Medicare Advantage, dental, vision and hospital indemnity (“HIP”), or "IHC", or are implicit(ii) ancillary benefits in the terms "we"under-age-65 market, including dental, vision, short-term medical (“STM”), "us"supplemental products including fixed indemnity limited benefit, critical illness, and "our".HIP; (ii) pet insurance; and (iii) various life insurance and non-insurance Rx and telemedicine services.  The segment includes run-off of a limited amount of discontinued major medical coverage and occupational accident from one producer that was sold in 2017. Several third party administrators, including Ebix Health Administration Exchange, Inc. (“EHAE”), perform claims and other administrative functions. IHC owns a 49% equity interest in Ebix Health Exchange Holdings, LLC (“Ebix Health Exchange”), which owns EHAE.

In 2018,2021, the IHC Carriers will retain the vast majority of the risk that it underwrites,they underwrite, and the IHC Agencies will focus on the following lines of business:

·Senior market products, including Medicare Supplement and Medicare Advantage 

·Pet insurance 

·Multiple specialty health lines 

·Group disability, life and New York short-term disability (“DBL”)Sales of ACA plans primarily through INSX Cloud 

·PetSales of stop-loss insurance for self-funded health plans for businesses of 5 to 100 employee lives  

Standard Security Life, Madison National Life and Independence American Insurance Company are each rated A- (Excellent) by A.M. Best Company, Inc. ("Best"). Standard Security Life is domiciled in New York and licensed as an insurance company in all 50 states, the District of Columbia, the Virgin Islands and Puerto Rico.  Madison National Life is domiciled in Wisconsin, licensed to sell insurance products in 49 states, the District of Columbia, the Virgin Islands and American Samoa. Independence American Insurance Company is domiciled in Delaware and licensed to sell insurance products in all 50 states and the District of Columbia. We have been informed by Best that a Best rating is assigned after an extensive quantitative and qualitative evaluation of a company's financial condition and operating performance and is also based upon factors relevant to policyholders, agents, and intermediaries, and is not directed toward protection of investors. Best ratings are not recommendations to buy, sell or hold any of our securities.  

Our administrative companies underwrite, market, administer and/or price life and health insurance business for our owned and affiliated carriers, and, to a lesser extent, for non-affiliated insurance companies.  They receive fees for these services and do not bear any of the insurance risk of the companies to which they provide services, other than through profit commissions. During 2017, our principal administrative companies were: (i) Specialty Benefits, a technology-driven full-service marketing and distribution

company that focuses on small employer and individual consumer products through general agents, tele-brokerages, advisor centers, private label arrangements, and through the following brands: www.HealtheDeals.com; Health eDeals Advisors; Aspira A Mas; www.PetPartners.com; and www.PetPlace.com; and (ii) IHC Carrier Solutions LLC (“Carrier Solutions”),a program management, actuarial and regulatory compliance company providing product development and valuation services for IHC’s specialty health segment. IHC owns controlling interests in Global Accident Facilities, LLC (“GAF”), Healthinsurance.org LLC (“HIO”) and PetPartners, Inc. (“PetPartners”). GAF is a holding company for an agency that produces injured on duty business. HIO is an online marketing company that owns www.healthinsurance.org, a lead generation site for individual health insurance.  PetPartners is the exclusive provider of pet insurance to the American Kennel Club and the Cat Fanciers Association. Specialty Benefits, GAF, HIO and PetPartners are collectively referred to as our “Agencies.”  Our Agencies earn commissions for selling life and health insurance products underwritten by IHC’s owned and affiliated insurance companies and also by unaffiliated carriers. IHC also owns a significant equity interest in Ebix Health Exchange Holdings, LLC (“Ebix Health Exchange”), an administration exchange for health and pet insurance. Ebix Health Exchange administers various lines of health insurance for IHC and non-affiliated carriers through Ebix Health Administration Exchange, Inc. (“EHAE”).

On March 31, 2016, the Company sold IHC Risk Solutions, LLC (“Risk Solutions”), its managing general underwriter of excess or stop-loss insurance for self-insured employer groups that desire to manage the risk of large medical claims (“Medical Stop-Loss”) 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 was 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 American Independence Corp. (“AMIC”). At the time of the transaction, IHC owned approximately 92% of AMIC. The balance of the purchase price was paid to Standard Security Life and other IHC subsidiaries. The aforementioned transaction is collectively referred to as the “Risk Solutions Sale and Coinsurance Transaction”. The Risk Solutions Sale and Coinsurance Transaction resulted in a gain on the sale estimated at approximately $100 million. 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 has had a major effect on the Company’s operations and financial results. The disposal transaction is reported as discontinued operations.

For information pertaining to the Company's business segments, reference is made to Note 1819 of the Notes to Consolidated Financial Statements included in Item 8 of this report.

Our Philosophy

OurHistorically, our business strategy consists ofhas focused on maximizing underwriting profits through a variety of niche specialty health insurance, pet, and group disability and life products and through distribution channels that enable us to access specialized or underserved markets in which we believe we have a competitive advantage.  Historically, our carriers have focusedIn 2021 and beyond, we will continue to focus on establishing preferred relationships with producers who seek an alternative to larger, more bureaucratic health insurers, and on providing these producers with personalized service, competitive compensation and a broad arraysale of products.  In 2017, larger health insurers marketed a significant amountproducts underwritten by the IHC Carriers, but we will also focus much of our ancillary health products to supplement or in lieu of their major medical products. A growing portionattention on the growth of our business comes frominsuretech division.  We are now at a point that much of the core infrastructure has been built and we are continuing to scale up the operations.  Our focus will be on increasing our pet insurance sales and recruiting experienced advisors and call center agents who are certified to sell Medicare Advantage, Medicare Supplement and Prescription Drug Plans. We will also continue to enhance our lead generation expertise and capacity, and launch additional transactional websites. We have already begun building retention teams and we believe that these teams, combined with improvements to the consumer experience on our direct-to-consumer initiatives.  Whiledomains, will help to improve policy retention and lifetime value. Lastly, as we rapidly expand our management considers a wide range of factorsdata assets, we will introduce artificial intelligence capabilities to our data analytics with the intent to improve both conversion and retention rates.

As further described in its strategic planning and decision-making, underwriting profit is consistently emphasized as the primaryOutlook, our goal in all decisions.

As a result2021 and beyond is to maximize the valuation of IHC through growth of our increased controlvery profitable life and disability lines of distribution through corporate acquisitions, we have strengthened our ability to respond to market cyclesbusiness, while investing in the health insurance sector by deployingexpansion of our insurance underwriting activity across a larger number“insuretech” capabilities to generate sales of business lines.

IHC’s greater emphasis on higher-margin specialty health, pet and Medicare products increased distribution (including as a result of equity investments)directly to consumers through our call centers, career advisors and greater market demand have helped to increase our earnings despite having exited medical stop-loss in 2016 and, prior to that, exiting the individual and small group major medical markets as a result of the Affordable Care Act (“ACA”).websites.

Specialty Health

IHC distributes its specialty health products in a variety of ways. We distribute directly to consumers through our call centers, career advisors and www.heathedeals.com.   In 2020 the core products sold by these agents were IHC’s STM and HIP plans as well as ACA-compliant offerings. In 2021, we plan

to emphasize the sale of Medicare Advantage plans underwritten by other carriers, and to a lesser extent, Medicare Supplement policies from Independence American Insurance Company and other carriers. Consumers often also purchase ancillary products, including dental, accident, telemedicine and Rx discounts plans, with a core plan.  Our career advisors are licensed agents who sell both IHC and non-IHC products.  IHC has used this distribution model for over ten years, but we have significantly enhanced this distribution model in 2020 and expect accelerated growth in 2021. Finally, we sell directly to consumers through www.healthedeals.com. In 2020, Independence American Insurance Company began selling its own Medicare Supplement through our call centers, advisors and select distributors of senior products.  

IBG distributes through independent producers in the following ways: (i) through our regional sales directors who support non-owned general agents, (ii) through national account relationships such as Anthem, United Health as well as single state Blue Cross organizations and regional health plans, and (iii) through our 12 sales telebrokerage employees who function as company-owned general agents calling upon independent agents who  have a book of business (often property & casualty) with small employers.  Our employees earn production bonuses for assisting the agent in placing the health sale with IHC carriers or our carrier partners. The Specialtylead product for the owned general agency is small group stop-loss underwritten by multiple non-affiliated carriers, although they also sell our individual and group ancillary products.  My1HR, through INSX Cloud, was used by over 3,000 agents in 2020 to distribute quote and enroll almost 230,000 ACA and specialty health plans. Regulations allow Health Segment is comprisedReimbursement Account (“HRA”) dollars that employers have contributed on a pre-tax basis to be used by employees to purchase STM as well as ACA plans.   The My1HR platform, which provides an enrollment tool to employees with little to no effort on the part of the following categories: (i) ancillary benefitsemployer, is well-suited for use with HRAs.  In addition to health insurance, IHC’s other products are readily available on INSX Cloud for purchase including dental, vision, short-term medical (“STM”), supplemental products (including fixed indemnity limited benefit, critical illness and hospital indemnity); (ii) pet insurance; and (iii) non-subscriber occupational accident and injured on duty.  The segment had some run-off of discontinued major medical coverage and occupational accident from one producer. Carrier Solutions and our Agencies collectively perform marketing, sales, underwriting and certain administrative functions on the majority of our Specialty Health business. EHAE and other third party administrators perform claims and other administrative functions. Prior to 2017, our pet insurance was marketed and administered by one independent agency, but IHC has expanded its distribution and administration of this product.  In 2016, we reinsured expatriate health business, however, this business is now in run-off. Our non-subscriber occupational accident coverage was largely marketed and administered by a subsidiary of GAF. This subsidiary was sold in 2016 and its business is in run-off.plans.

Pet Insurance

We distribute pet insurance in three ways: (i) through PetPartners, where IHC has madedistributes, administers and underwrites the following investments that have increasedrisk of two brands, PetPartners and AKC Pet Insurance, but will also delegate sales and marketing to unaffiliated companies or affinity groups, (ii) through three significant pet administrators where IHC only underwrites the distribution of our specialty health products: (1) 20%risk, and (iii) through leads generated by www.petplace.com.  We own 85% of the equity of American Insurance Agencies Direct Holding, Inc.,PetPartners, which is a call centerpet managing general agent that is one ofhas an exclusive license agreement to use the leading producers of hospital indemnityAmerican Kennel Club (“HIP”AKC”) on Independence American’s paper; (2)  10% of the equity of The iCan Group LLC, which isbrand, and has a call center that is alsoproprietary administrative platform.  In 2020, we generated a significant producerincrease in sales through leads generated from the AKC, and have introduced several initiatives that we expect will increase penetration and conversion of HIP on Independence American’s paper; (3)this exclusive lead source in 2021 and beyond. In addition, PetPartners is seeking other internally controlled sales channels, including through employer and affinity groups.  In 2019, we relaunched www.PetPlace.com, which we acquired in 2016, with significantly improved content curated by a 44% interest in The Abacus Group LLC (“Abacus”),board of veterinarians.  Average daily visitors to the site is over 30,000 which is a managing general underwriter specializing in worksite marketing of voluntary benefits that is producing life and disability business for Madison National Life and began selling group limited medical, STM, Group Gap and other ancillary products for that carrier; (4) the domain name and assets of www.petplace.com (“PetPlace”), which attracted over 15 million visitors in 2017 with more than 10,000 veterinarian-approved articles; and (5) 85% of the stock of PetPartners, a pet insurance marketing and administration company.  

The Specialty Health Segment performs underwriting, risk selection and pricing, policy administration and management ofwill improve lead generation from this domain.  At this time, the majority of our specialty healthIndependence American Insurance Company’s pet business which totaled approximately $187.8 million of gross individualis distributed by three independent pet insurance administrators: MetLife (formerly PetFirst Healthcare, LLC (“PetFirst”), Pets Best Insurance Services, LLC (“Pets Best”) and group health premiumsFIGO Pet Insurance, LLC (“FIGO”).  IHC owns a 4.73% equity stake in 2017.  In addition, our Agencies produce other coverages for multiple insurers including producing small group stop-loss for Westport.  Gross earned premiums produced by our Agencies was approximately $182.4 million in 2017.FIGO.

Except for a small number of licensed agents who are employed in IHC's call center, most agents and brokers who produce the Specialty Health business are non-salaried contractors who receive commissions.

Disability and Life Products

Our disability and life products are primarily distributed by general agents, agents and brokers. The short-term statutory disability benefit product, including the paid family leave benefits, in New York State is marketed primarily through independent general agents who are paid commissions based upon the amount of premiums produced. Madison National Life's disability and group life products are primarily sold in the Upper Midwest to school districts municipalities and hospital employer groupsmunicipalities through a managing general agent that

specializes in these target markets. Independence American Insurance Company also reinsured health products serving the needs of expatriates, third-party nationals and high net-worth local nationals, which is now in run out. The Abacus Group LLC (“Abacus”), specializes in worksite marketing of voluntary benefits and is producing life and disability business for Madison National Life.

Medical Stop-Loss

Standard Security Life was the primary carrier for our employer medical stop-loss products although, in 2016, we also wrote business for Madison National Life, Independence American and unaffiliated carriers. IHC’s carriers wrote the vast majority of their medical stop-loss business through Risk Solutions, which was sold on March 31, 2016, and TRU Services, LLC. IHC owned two managing general underwriters (“MGUs”), Majestic Underwriters, LLC and Alliance Underwriters, LLC, which transferred their stop-loss blocks and employees to Risk Solutions as of January 1, 2012 in exchange for fee income based on the business transferred.  These two MGUs were liquidated in 2016 as a result of the Risk Solutions Sale and Coinsurance Transaction. Risk Solutions was responsible for underwriting accounts in accordance with guidelines formulated and approved by its carriers, billing and collecting premiums, paying commissions to agents, third party administrators and/or brokers, and processing claims. With respect to the MGUs with which we did business, we established underwriting guidelines, maintained approved policy forms and oversaw claims for reimbursement, as well as appropriate accounting procedures and reserves. In order to accomplish this, we audited their underwriting, claims and policy issuance practices to assure compliance with our guidelines, provided them with access to our medical management and cost containment expertise, and reviewed cases that required referral based on our underwriting guidelines. MGUs are non-salaried contractors that receive fee income, generally a percentage of gross premiums produced by them on behalf of the insurance carriers they represent, and typically are entitled to additional income based on underwriting results. Standard Security Life and Independence American have now ceased writing medical stop-loss business.

The agents and brokers that produce this business are non-salaried contractors that receive commissions.

PRINCIPAL PRODUCTS UNDERWRITTEN BY IHC CARRIERS

Specialty Health Products

In 2017,2020, this line of business had the following categories: (i) ancillary benefits, including dental, vision, STM, and supplemental products (including fixed indemnity limited benefit, critical illness and hospital indemnity); (ii) pet insurance; and (iii) non-subscriber occupational accident.  This category also includes reinsured internationalEarned premium is expected to increase in 2021 primarily due to: increased sales of pet insurance, new sales of employer sponsored and voluntary health plans sold to expatriates in 2016. In 2015, IHC exitedand the major medical business as a result of ACA which caused adverse underwriting results in 2013 and 2014. As a result of exiting this line of business, we focused our attention on increasing our specialty health lines of business and significantly improved our bottom line performance. Sales of specialty health products nearly doubled in 2017, and earned premiums (which will typically lag behind sales) increased by 17.8% in 2017. We expect continued growth in the specialty health lines of business in 2018.our owned call centers and advisors.

Ancillary Products

This category is primarily comprised of dental, vision, STM, and supplemental products (including gap, fixed indemnity limited benefit, critical illness, and hospital indemnity). These are sold through multiple distribution strategies.strategies as described above.

IHC sells group and individual dental products in all 50most states. EHAE administers the majority of IHC's dental business and IHC’s own distribution is the primary source of this line of business. The dental portfolio includes indemnity and PPO plans for employer groups of two or more lives and for individuals within affinity groups.individuals. Employer plans are offered on both employer paid and voluntary basis.  As part of the distribution of our individual dental products, we also offer vision benefits. Vision plans will offer a flat reimbursement amount for exams and materials. We expect to see a growth in vision sales primarily due to the dental/launch of an individual vision business to be relatively flatproduct in 2018.the majority of states and new distribution partnerships.

IHC sells STM products in the majority of states. STM is designed specifically for people with temporary needs for health coverage. Typically, STM products are written for a defined duration of at least 30 days and less than twelve months although in 20 states we underwrite STM policies that last up to 36 months. STM products with a duration between twelve and 36 months are referred to as Extend STM products. Among the typical purchasers of STM products are people who are in between open enrollment periods or need coverage for a limited duration until their ACA-compliant plan becomes effective, and others who need insurance for a specified period of time.  Our STM plans continuecontain many, but not all, of the essential health benefit (“EHB”)benefits found in ACA-compliant plans.  In addition, our STM plans often have lower deductibles and broader networks than many ACA-compliant policies, and are almost always more affordable for qualified purchasers. IHC’s gross premium increaseddecreased in this line of business in 2017, despite the Obama Administration’s2018 largely as a result of a ruling which limited STM to plans of 90-day duration or less. Effective October 1, 2018, an executive order which was effective April 1, 2017, that limitedfrom the duration of an STM policy to less than 90 days. Prior to the effectiveness of this executive order, the ACA and many states permitted STM to last for up to 364 days. The Trump Administration recently released for comment a rule that would reversereversed the previous executive order and restorerestored the decision on the duration of STM to the states. Comments on this proposed rule are due April 23, 2018 and it would go into effect 60 days after a final rule is issued.  Assuming adoption of a final rule similar to what has been proposed, we anticipate material growthGrowth in this line of business (and other products sold with it) in 2018 and beyond.2021 will be dictated in large part by the approach taken by the Biden Administration.

The Company markets supplemental products to individuals and families. These lines of business are generally used as either a supplement or in lieu of an ACA-compliant plan. The main driver for growth in this line is that consumers are moving to higher-cost sharing on their individual major medical plans, and are looking for products to help them offset the additional risk of higher deductibles and out of pocket limits. The product lines included in this supplemental grouping are hospital indemnity plans, fixed indemnity limited benefit plans, critical illness and bundled packages of accident medical coverage, critical illness and life insurance. These products, which are available in most states, are available through multiple distribution sources including Company owned direct-to-consumer websites, call center and career agents, general agents and on-line agencies. In 2017, we introduced a bundled benefit package including STM, HIP, dental and a tele-med and Rx benefit.  This is being sold by Company owned direct-to-consumer websites, call center and career agents, e-Health and Anthem. We anticipate material growth in theseIndependence American Insurance Company’s ancillary lines of business in 2018 as a result of increased distribution2021 from customers who purchase higher deductible ACA plans

on the INSX platform who will desire to also purchase supplemental plans to cover gaps in their ACA coverage, and demand for these products, and additional growth in 2019 duewill have more premium dollars to elimination of the individual mandate.spend since their ACA cost will be reduced.

IHC has medical benefitoffers gap plans for employersemployer groups, which help employees manage the financial impact of deductibles on their employer-sponsored plans. We expect that choose to offer non-EHB coverage to their employees. We offer a fixed indemnity limited benefit policy that offers affordable health coverage to hourly, part-time and/or seasonal employees, which is approved in a majority of states. Fixed indemnity limited benefit plans are a low cost alternative to EHB plans that permit employees who do not otherwise have health insurance to begin to participate in the healthcare system.  The Company anticipates meaningful growth in this line of business will be flat in 20182021 based on a change in distribution strategy, but will still be a significant portion of our employer group premium.

Pet Insurance

Independence American Insurance Company has products approved to sell in all 50 states and the District of Columbia. We use four distinct forms (policies) to achieve diversity of premium targeting channels focused on purebred puppies (through AKC), shelter/rescue/animal welfare markets, direct to consumer, and affiliate partnerships. In 2021, we expect to file a first-of-its-kind group pet policy for the worksite market. We are currently in discussions with insurers that distribute in the worksite market and will begin contracting worksite brokers in advance of the 2022 enrollment season. We believe an advantage in our product design is flexibility allowing for consumers to build plans of coverage tailored to their needs and budget by offering an array of deductible and coinsurance options and the availability of unlimited policy “maximum” levels. In our owned distribution product, we embed alternative, holistic and behavioral coverage benefits, two levels of wellness options (many competitors do not cover wellness and preventative), hereditary and congenital conditions coverage, as well as the option to have veterinary exam fees covered as a benefit (one of the leading pet insurance providers today specifically excludes exam fees). In 2021, we anticipate significant growth in our target channels due to increased consumer demandawareness of the product category, new distribution partnerships, as well as improved conversion rates through our AKC and increased distribution channels.  lead generation avenues.

PriorPetPartners acquired a mobile app in June 2020, TailTrax, which features a host of high-engagement features to 2016, IHC reinsured its expatriate business which provides employee benefit insurance,help pet parents manage the health and welfare of their pet.  The app is being provided at no additional charge to policyholders and allows access to policy self-service including medical, life,claims submission.  The app is also offered on a subscription basis for non-policyholders, featuring 24/7 access to a vet-help line, discounts on pet services and disability, to expatriate employeesproducts including prescription medications, and many of companies based in the United States.   This line of business is in run out.valuable tools.  

Pet InsuranceOccupational Accident

In 2017, we acquired 85% of the equity of PetPartners, which is a pet insurance producer that has an exclusive distribution relationship with The American Kennel Club (“AKC”), and has a strong IT platform. Using this as our administrative platform, we are actively seeking new distribution opportunities particularly in the employer, affinity and worksite space because of our ability to deduct pet insurance premiums directly from payroll. We are also exploring opportunities with new distribution partners where Independence American would be the carrier and PetPartners would be the back-end claims payer.  Also in 2017, we rebuilt the website for PetPlace.com, which we acquired in 2016, and we expect to improve lead generation from this domain. PetPlace.com attracted over 15 million visitors in 2017 with more than 10,000

veterinarian-approved articles.  During 2017, we filed a new pet policy for PetPartners and have begun marketing it in states where it has been approved; we believe that this new policy will increase sales.

We entered into an agreement with an independent pet insurance distributor/administrator that has a significant block of premiums. We are in the process of filing a new pet policy for this company and expect to begin to receive approvals in the second quarter of 2018.  Once this company begins writing new business on Independence American’s paper, we expect that we will receive a significant portion of their new and renewal business.

Substantially all of our pet premiums in 2017 were produced by a pet insurance distributor/administrator which was our first pet administrator, and in which we have a small equity position.  

Occupational Accident

In 2017, most of IHC’s occupational accident insurance had been written by Independence American through marketing and administrative companies previously owned by GAF, and other exclusive arrangements with independent entities. This occupational accident product provides accidental death, accident disability and accident medical benefits for occupational injuries to employees of companies that have elected to not participate in the Texas Worker’s Compensation system (non-subscribers). The product also givesThis program is marketed through two competing general agents and only focuses on the employer the option to purchase coverage for employer’s liability, which protects the employer from an action brought by an injured worker. The employer is covered for damages and costs arising from the settlement of such action, subject to the terms and limits of the policy.  In 2016, GAF sold the entity that provided administrative services for occupational accident insurance.  Independence American still offers Injured on Duty coverage through another subsidiary of GAF and IHC continues to write a smaller block of occupational accident coverage through unaffiliated entities. As a result of the aforementioned sale, total premiumsmicro market (under 10 lives). Overall premium levels are expected to continue to decreaseremain relatively constant in 2018.  

Major Medical Health Benefit Coverages

This category is primarily comprised of group major medical insurance and individual major medical policies, both of which are in run-off as we have exited that market. We were not able to earn an acceptable profit margin on ACA-compliant products. The Company will monitor proposals from the Trump Administration regarding association health plans and STM lasting longer than 12 months to see if these would be of interest to us given our continuing expertise in individual major medical business.2021.   

Group Disability;Disability, Life, DBL and DBLPFL

Group Long-Term and Short-Term Disability

The Company sells group long-term disability ("LTD")Madison National Life develops partnerships with distribution entities to develop targeted niche focused products to employers that wishresult in market dominate insurance solutions in both risk management and product design.  Our products are filed to provide thisconsiderable flexibility to meet the needs of our partners and the related niches. 

Our group life and disability products are offered on both an employer paid and a voluntary basis.  They are designed to protect the covered employee’s income when the employee is not able to work due to illness or injury and pay a benefit to their employees. Depending onthe beneficiary(ies) when an employer's requirements, LTD policies (i) cover between 40% and 90%employee dies.  

Madison National Life is the largest writer of insurable salary; (ii) have elimination periods (i.e., the period between the commencement of the disability and the start of benefit payments) of between 30 and 730 days; and (iii) terminate after two, five, or ten years, or extend to age 65 or the employee's Social Security normal retirement date. Benefit payments are reduced by social security, workers compensation, pension benefits and other income replacement payments. Optional benefits are available to employees, including coverage for partial or residual disabilities, survivor benefits and cost of living adjustments. The Company also markets short-term disability ("STD") policies that provide a weekly benefit to disabled employees until the earlier of:  recovery from disability, eligibility for long-term disability benefits or the end of the STD benefit period.k-12 school districts in 8 Midwestern states.  We continue to work with our effortsdistribution partner to expandfocus on product differentiation in the niche through product innovation – most recently having launched in 2020 a one of a kind Active Assailant Rider for school districts.  We also continue to develop affinity relationships with large health carriers to provide our disability programs.

We are expanding our position in the worksite market with new product filings and administration/distribution partners to position us for growth in 20182021 and beyond. We have developed relationships with large health carriers to provide ourThe product lines included in the worksite offering are fixed indemnity limited benefit plans, critical illness, accident as well as life and disability programs.  Weinsurance. These products, which are also negotiating with union-based entities to continue to leverage our strengths, namely overall risk management for

disability programsavailable in a benefit-rich and complex environment.most states, are available through multiple distribution relationships.  The Company anticipates moderate growth in 2018.2021 for these products through expansion of its sales through existing and new distribution relationships.

New York Short-Term Disability and Paid Family Leave (“PFL”)

Standard Security Life markets DBL.  All companies with more than one employee in New York State are required to provide DBL insurance for their employees. DBL coverage provides temporary cash payments to replace wages lost as a result of disability due to non-occupational injury or illness.  The DBL policy provides for (i) payment of 50% of salary to a maximum of $170 per week; (ii) a maximum of 26 weeks in a consecutive 52 week52-week period; and (iii) benefit commencement on the eighth consecutive day of disability. Policies covering fewer than 50 employees have fixed rates approved by the New York State Insurance Department.Department of Financial Services (“NYSDFS”). Policies covering 50 or more employees are individually underwritten.   

StartingAs of January 1, 2018, the DBL policy will bewas amended to include PFL.  The PFL benefit allows for parent bonding with a newborn or an adopted child, caring for a seriously ill family members and willto help military families during times of need.  Beginning January 1, 2018, with incremental changes until 2021, the benefit will be phased in.  The maximum benefit (once completely phased in starting January 1, 2021) will be for 12 weeks at 67% of an employees’ weekly wage up to a maximum benefit of $869 per week. BasedThe PFL premium rate is set by the NYSDFS.  In addition to mandating this benefit, the NYSDFS established a risk adjustment program so that all carriers would share on our current DBL block, we anticipate DBL premiums will increasea pro rata basis in the ultimate profit or loss of the PFL business across three group sizes for the entire industry. The goal of the PFL risk adjustment program is to protect issuers from disproportionate adverse or favorable risks that might arise because PFL premium rates are community rated and not allowed to vary by approximately $50 million in 2018.risk factors.

Group Term Life

The Company sells group term life products, including group term life (which includes new term to 120 product), accidental death and dismemberment ("AD&D"), supplemental life and supplemental AD&D and dependent life.  As with its group disability business, IHC anticipates modest growth in this line of business through expansion of its sales of these group term life products through existing distribution sources.  

Medical Stop-Loss

The Company was a leading writer nationally of excess or stop-loss insurance for self-insured employer groups that desire to manage the risk of large medical claims. Medical Stop-Loss insurance provides coverage to public and private entities that elect to self-insure their employees' medical coverage for losses within specified ranges, which permits such groups to manage the risk of excessive health insurance costs by limiting specific and aggregate losses to predetermined amounts.  This coverage is available on either a specific or a specific and aggregate basis, although the majority of the Insurance Group's policies covered both specific and aggregate claims. Plans were designed to fit the identified needs of the self-insured employer by offering a variety of deductibles (i.e., the level of claims after which the medical stop-loss benefits become payable).

The Risk Solutions Sale and Coinsurance Transaction closed on March 31, 2016 and as a result, this line is in run-off and had substantially reduced premiums in 2017.  

Individual Life, Annuities and Other

Madison National Life ceded 100% of its remaining runoff life and annuity policies to National Guardian Life Insurance Company in 2015. In addition, Madison National Life ceased writing anyindividual life orand annuity policies in 2015 and the summer of 2015.remaining policies in runoff are 100% ceded.

The following lines of Standard Security Life's in-force business are in runoff: individual accident and health, individual life (of which a significant portion wasis 100% ceded to National Guardian Life Insurance Company in 2015)ceded), single premium immediate annuities, disability income and miscellaneous insurance business.

ADDITIONAL PRODUCTS SOLD BY IHC AGENCIES

Senior Products

Medicare Supplement

The IHC Agencies earn commissions and marketing fees from selling Medicare Supplements(also known as Medigap), which isinsurance sold by private companies which help pay some of the healthcare costs that Medicare does not cover, including copayments, coinsurance and deductibles. The IHC Agencies sell Medicare Supplements manufactured by Insurance Company and a few carefully selected carriers.

Medicare Advantage

The IHC Agencies earn commissions and marketing fees from selling Medicare Advantage (“MA”), which is a type of HMO, PPO or Special Needs Plans sold by private companies, that contract with the federal government through the Centers for Medicare and Medicaid Services, to cover all Medicare Part A and Part B benefits.  Many MA plans also include Medicare Part D (prescription drugs), known as MAPD plans, as well as other supplemental benefits, including dental, eyeglasses, transportation and hearing coverage. The IHC Agencies sell MA plans offered by a select few of the leading carriers in each market.

Other Products

Small Group Self-Funded

The IHC Agencies earn commissions and marketing fees from non-IHC carriers for selling employer group and individual insurance products, including self-funded programs for groups of five to 75 employees in 21 states. The self-funded plans are generally less expensive than ACA qualified group health coverage.  In addition to earning commission overrides on group health sales the IHC Agencies use our proprietary quoting and enrollment tools to offer IHC ancillary plans along with self-funded plans.

Affordable Care Act Plans

The IHC Agencies earn commission overrides by offering ACA plans through 13 ACA carriers in many states.  The majority of these customers are enrolled through My1HR, our wholly owned Web Broker, under the INSX Cloud brand. Independent agents can also use INSX Cloud to enroll their customers in ACA plans for which we earn a transaction fee.

Prior to reinsuring the life and annuity business in 2015 IHC’s acquisition group acquired blocks of existing life insurance, annuity and disability policies from other insurance companies, guaranty associations and liquidators.  Now the acquisition group’s focus is on existing blocks of long-term and short-term disability policies, group life policies, and specialty health policies.

The Insurance Group remains liable with respect to the insurance in-force, which has been reinsured in the unlikely event that the assuming reinsurers are unable to satisfy their obligations. The Insurance Group cedes business (i) to individual reinsurance companies that are rated "A-" or better by Best or (ii) upon provision of adequate security. The ceding of reinsurance does not discharge the primary liability of the original insurer to the insured. At December 31, 20172020 and 2016,2019, the Insurance Group's ceded reinsurancelife insurance in-force was $6.9$4.8 billion and $6.3$6.6 billion, respectively.

For further information pertaining to reinsurance, reference is made to Note 910 of Notes to Consolidated Financial Statements included in Item 8.

The Company's cash, cash equivalents and securities portfolio are managed by employees of IHC and its affiliates, and ultimate investment authority rests with IHC's in-house investment group. As a result of the nature of IHC's insurance liabilities, IHC endeavors to maintain a significant percentage of its assets in investment grade securities, cash and cash equivalents. At December 31, 2017, 100%2020, 99.5% of the Company’s fixed maturities were investment grade and continue to be rated on average AA. The internal investment group provides a summary of the investment portfolio and the performance thereof at the meetings of the Company's board of directors.

As required by insurance laws and regulations, the Insurance Group establishes reserves to meet obligations on policies in-force. These reserves are amounts that, with additions from premiums expected to be received and with interest on such reserves at certain assumed rates, are calculated to be sufficient to meet anticipated future policy obligations.   Premiums and reserves are based upon certain assumptions with respect to mortality, morbidity on health insurance, lapses and interest rates effective at the time the polices are issued. The Insurance Group also establishes appropriate reserves for substandard business, annuities and additional policy benefits, such as waiver of premium and accidental death.  Standard Security Life and Madison National Life are also required by law to have an annual asset adequacy analysis, which, in general, projects the amount and timing of cash flows to the estimated maturity date of liabilities, prepared by the certifying actuary for each insurance company. The Insurance Group invests their respective assets, which support the reserves and other funds in accordance with applicable insurance law, under the supervision of their respective board of directors. The Company manages interest rate risk seeking to maintain a portfolio with a duration and average life that falls within the band of the duration and average life of the applicable liabilities. The Company occasionally utilizes options to modify the duration and average life of the assets.

Under Wisconsin insurance law, there are restrictions relating to the percentage of an insurer's admitted assets that may be invested in a specific issuer or in the aggregate in a particular type of investment. With respect to the portion of an insurer's assets equal to its liabilities plus a statutorily-determined security surplus amount, a Wisconsin insurer cannot, for example, invest more than a certain percentage of its assets in non-amortizable evidences of indebtedness, securities of any issuer and its affiliates (other than a subsidiary and the United States government), or common stock of any corporation and its affiliates (other than a subsidiary or mutual funds).

Under New York insurance law, there are restrictions relating to the percentage of an insurer's admitted assets that may be invested in a specific issuer or in the aggregate in a particular type of investment. For example, a New York life insurer cannot invest more than a certain percentage of its admitted assets in common or preferred shares of any one institution, obligations secured by any one property (other than those issued, guaranteed or insured by the United States or any state government or agency thereof), or medium and lower grade obligations. In addition, there are certain qualitative investment restrictions. 

Under Delaware insurance law, there are restrictions relating to the percentage of an insurer's admitted assets that may be invested in a specific issuer or in the aggregate in a particular type of investment.  In addition, there are qualitative investment restrictions.

The Company's total pre-tax investment performance for each of the last threetwo years is summarized below, including amounts recognized in net income and unrealized gains and losses recognized in other comprehensive income or loss (in thousands):

Net unrealizedUnrealized gains (losses) on available-for-sale securities recognized through other comprehensive income (loss) represents the pre-tax change in unrealized gains and losses on available-for-sale securities arising during the year net of reclassification adjustments and includes the portion attributable to noncontrolling interests. The Company does not have any non-performing fixed maturity investments at December 31, 2017.2020.

We compete with many large mutual and stock insurance companies, small regional health insurers and managed care organizations.  Mutual companies may have certain competitive advantages since profits inure directly to the benefit of the policyholders.

The health insurance industry tends to be cyclical, and excess products, such as medical stop-loss, tend to be more volatile than specialty health products.cyclical.  During a “soft” market cycle, a larger number of companies offer insurance on a certain line of business, which causes premiums in that line to trend downward.  In a “hard” market cycle, insurance companies limit their writings in certain lines of business following periods of excessive losses and insurance and reinsurance companies redeploy their capital to lines that they believe will achieve higher margins.

IHC is an insurance holding company; and as such, IHC and its subsidiary carriers and administrative companies are subject to regulation and supervision by multiple state insurance regulators, including the New York State Insurance DepartmentNYSDFS (Standard Security Life's domestic regulator), the Wisconsin Office of the Commissioner of Insurance (Madison National Life's domestic regulator) and the Office of the Insurance Commissioner of the State of Delaware (Independence American’sAmerican Insurance Company’s domestic regulator).  Each of Standard Security Life, Madison National Life and Independence American Insurance Company is subject to regulation and supervision in every state in which it is licensed to transact business. These supervisory agencies have broad administrative powers with respect to the granting and revocation of licenses to transact business, the licensing of agents, the approval of policy forms, the approval of commission rates, the form and content of mandatory financial statements, reserve requirements and the

types and maximum amounts of investments which may be made. Such regulation is primarily designed for the benefit of policyholders rather than the stockholders of an insurance company or insurance holding company.

Certain transactions within the IHC holding company system are also subject to regulation and supervision by such regulatory agencies.  All such transactions must be fair and equitable.  Notice to or prior approval by the applicable insurance department is required with respect to transactions affecting the ownership or control of an insurer and of certain material transactions, including dividend declarations, between an insurer and any person in its holding company system. Under New York, Wisconsin and Delaware insurance laws, "control" is defined as the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person.  Under New York law, control is

presumed to exist if any person, directly or indirectly, owns, controls or holds, with the power to vote ten percent or more of the voting securities of any other person. In Wisconsin, control is presumed if any person, directly or indirectly, owns, controls or holds with the power to vote more than ten percent of the voting securities of another person. In Delaware, control is presumed if any person, directly or indirectly, owns, controls or holds with the power to vote ten percent or more of the voting securities of any other person. In all three states, the acquisition of control of a domestic insurer needs to be approved in advance by the Commissioner of Insurance. See Note 1718 of Notes to Consolidated Financial Statements included in Item 8 for information as to restrictions on the ability of the Company's insurance subsidiaries to pay dividends.

Risk-based capital requirements are imposed on life, accident and health and property and casualty insurance companies. The risk-based capital ratio is determined by dividing an insurance company's total adjusted capital, as defined, by its authorized control level risk-based capital.  Companies that do not meet certain minimum standards require specified corrective action.  The risk-based capital ratios for each of Standard Security Life, Madison National Life and Independence American Insurance Company exceed such minimum ratios.

We recognize that sustainable human capital complements and contributes to superior longer-term financial performance. We believe that our employees are our greatest assets. Our continued success and growth depends, in large part, upon the efforts of our employees and on our ability to attract and retain highly qualified personnel.

At December 31, 2017,2020, the Company, including its direct and indirect majority or wholly owned subsidiaries, collectively had approximately 350550 employees.

ITEM 1A.RISK FACTORS  

Investors should carefully considerRisks related to our Business

We continue to face risks related to the risks set forth belowongoing Coronavirus (COVID-19) pandemic that could impact our sales, operating results and all other information contained in this report and other documents we file with the SEC.  Manyfinancial condition.

Sales of the factors that affect our business and operations involve risk and uncertainty. The risks and uncertainties described below are not the only ones that we face, but are those that we have identified as being the most significant factors.  Our business is also subject to general risk and uncertainties that affect many other companies, such as market conditions, geopolitical events, changes in laws or accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expected economic or business conditions.  Additional risks and uncertainties that we do not know about, or that we deem less significant than those identified below, may also materially and adversely affect our business, financial condition orhealthcare products, results of operations, and the trading priceoverall financial condition of the Company could be adversely affected to the extent that the COVID-19 or any other epidemic or health care emergency harms the economy, our common stock.industry or the Company specifically. The COVID-19 outbreak situation is very fluid and we continue to closely monitor developments related to the COVID-19 pandemic to assess its ongoing impact on our business and operations, specifically:

Risks·Many regulators have mandated that insurers cover COVID-19 testing costs, and in some cases costs for related treatment and vaccines, as well as waiving any applicable deductible and coinsurance member payments. These mandates are primarily directed at major medical carriers, but a minority include STM insurance products.  Attempts to extend these mandates beyond STM will likely not impact our supplemental products. Additionally, some states are requiring coverage for telehealth services. Mandated extended coverage of COVID-19 claims may negatively impact the Company’s operating results, cash flows and financial condition as such extended coverage was not contemplated in the initial product pricing.  Even though we have experienced lower overall utilization for non-COVID related expenses within our STM block that is enough to absorb expected cost increases related to our Business

Our investment portfolio is subject to various risks thatCOVID related claims so far, this may result in realized investment losses.  In particular, decreaseschange in the fair valuefuture depending on the further outcome of fixed maturitiesthe virus impacts and other related regulatory actions. 

·Widespread unemployment due to the unprecedented state-mandated shutdowns of businesses could mean that policyholders may greatly reducebe unable to meet their obligations to pay premiums on our health, disability, life and pet policies. An increase in delayed, delinquent or non-collectable payments from customers may lead to cash flow volatility or shortfalls.  Additionally, some regulators have mandated that insurers provide an extended grace period for premium collection and some require payment of claims during the valuegrace period.  Additional legal and regulatory responses include changes to insurance policy conditions such as suspension of cancellations and extensions of proof of loss deadlines. Some states have limited the impact to major medical insurance, while others have applied it to all policies in their states. These mandates may negatively impact the Company’s operating results and cash flows. 

·The hiring and licensing by our investments,marketing companies of sales agents who sell Medicare advantage and Medicare supplement as a result,well as other products may be delayed, as many state regulators have limited licensing services. This may impact any future growth of the Company’s call centers and career agents, and negatively impact expected sales of these products and our financial condition may suffer.results.  

We are subject to credit risk·Changes in our investment portfolio. Defaults by third parties in the payment or performanceutilization of their obligations under these securities could reduce our investment incomemedical facilities and realized investment gains or result in the continued recognition of investment losses. The value of our investments may be materially adversely affected by increases in interest rates, downgrades in the preferred stocks and bonds included in our portfolio and by other factors that may result in the continued recognition of other-than-temporary impairments. Each of these events may cause us to reduce the carrying value of our investment portfolio.  

In particular, at December 31, 2017, fixed maturities represented $441.9 million or 92.7% of our total investments of $476.9 million. The fair value of fixed maturities and the related investment income fluctuates depending on general economic and market conditions. The fair value of these investments generally increases or decreases in an inverse relationship with fluctuations in interest rates, while net investment income realized by us will generally increase or decrease in line with changes in market interest rates. In addition, actual net investment income and/or cash flows from investments that carry prepayment risk, such as mortgage-backedservices, medical expenses and other asset-backed securities, may differ from those anticipated at the

ITEM 1B.UNRESOLVED STAFF COMMENTS  

None.

ITEM 2. PROPERTIES 

IHC

IHC has entered into a renewable short-term arrangement with Geneve Corporation, an affiliate, for the use of 6,750 square feet of office space as its corporate headquarters in Stamford, Connecticut.

Standard Security Life

Standard Security Life leases 13,000 square feet of office space in New York, New York as its corporate headquarters.

Madison National Life

Madison National Life leases 15,35718,188 square feet of space in Madison, Wisconsin as its corporate headquarters.

IHC Carrier SolutionsIndependence American Insurance Company

IHC Carrier SolutionsIndependence American Insurance Company leases 11,29712,253 square feet of office space in Phoenix, Arizona asfor its corporate headquarters.actuarial, agency and administrative operations.

IHC Specialty BenefitsIHCSB

IHC Specialty BenefitsIHCSB leases 6,3918,479 square feet of office space in Minneapolis,St. Louis Park, Minnesota as its corporate headquarters.headquarters; 14,209 square feet of office space in Tampa, Florida and 10,297 square feet in Milwaukee, Wisconsin for call center operations.

ITEM 3.LEGAL PROCEEDINGS 

We are involved in legal proceedings and claims that arise in the ordinary course of our businesses. We have established reserves that we believe are sufficient given information presently available relating to our outstanding legal proceedings and claims.  We do not anticipate that the result of any pending legal proceeding or claim will have a material adverse effect on our financial condition or cash flows, although there could be such an effect on our results of operations for any particular period.

Third Party Administrator

A third party administrator with whom we formerly did business (“Plaintiff” or “TPA”) filed a Complaint datedcommenced an action on May 17, 2017 in the United States District Court, Northern District of Texas, Dallas Division (the “Texas Action”), naming IHC, Madison National Life, Standard Security Life, and Independence Brokerage Group, Inc. (formerly IHC Carrier Solutions, Inc. (collectively referred to) as “Defendants”defendants (“Defendants”).  The Complaint concerns agreements entered intoIn the action, which is currently stayed, the Plaintiff seeks contractual payments allegedly owed by Standard Security Life and Madison National Life with Plaintiff, as well as other allegations made by Plaintiff against the Defendants.  The Complaint seeks injunctive relief and damages in an amount exceeding $50,000,000, profit share payments allegedly owed to Plaintiff under the agreements totaling at least $3,082,000 through 2014, plus additional amounts for 2015 and 2016, and exemplary and punitive damages as allowed by law and fees and costs.  During the stay, two arbitrations involving the same parties proceeded.  The first arbitration resulted in a judicially-confirmed award in favor of Standard Security Life and Madison National Life in the amount of $5,641,000, which the Plaintiff has satisfied.  The Company received payment on September 9, 2020 and recorded it in other income on the Consolidated Statement of Income in the third quarter.  The second arbitration resulted in no monetary obligations owed by any of the parties.  The Defendants believe these claimshave not had to be without merit.  The Defendants movedfile an answer in the Texas Action.  At the point they do have to Compel Arbitrationfile an answer to the Complaint, they will assert a variety of defenses, set-offs and Dismiss or Stay the original Complaint.  The Plaintiff filed an Amended Complaint oncounterclaims.

Multistate Market Conduct Examination (MCE)

August 18, 2017.  The Defendants filed a Motion to Compel Arbitration or Stay the Amended Complaint, which is still pending.

As previously disclosed, our subsidiaries Standard Security Life, Madison National Life and Independence American Insurance Company were selected for MCE related to our STM, limited medical and fixed indemnity limited health insurance products for the period of January 1, 2014 through September 30, 2017. The insurance departments of five jurisdictions (Delaware, Wisconsin, District of Columbia, Kansas and South Dakota) served as lead states, and the District of Columbia Department of Insurance, Securities and Banking and the Delaware Department of Insurance served as the managing lead states of the MCE. In addition to the five lead states, 37 other states participated in the MCE. Each of Standard Security Life, have demanded arbitration against this third party administrator.  In the fourth quarter of 2017, Madison National Life paid finesand Independence American Insurance Company responded to inquiries and document production requests in the stateMCE and proactively communicated and cooperated with the applicable regulatory agencies for the MCE. Each of Texas primarilythese subsidiaries also provided a detailed action plan to regulators that summarized its enhanced compliance and control mechanisms.

In an effort to avoid long‐term litigation and/or administrative proceedings that would be required to resolve disputes between Standard Security Life, Madison National Life and Independence American Insurance Company and the states involved in the MCE, the Lead States and Standard Security Life, Madison National Life and Independence American Insurance Company entered into separate RSAs on

July 14, 2020. The RSAs require the implementation of a compliance plan, impose certain requirements related to specified business practices and monetary payments.  The thirty-seven participating states adopted the claimsRSAs. The Company accrued $3,660,000 in accounts payable, accruals and other liabilities on the Consolidated Balance Sheet in the second quarter and processed payment practicesin October 2020. As set forth in the RSAs, the Company denies any wrongdoing or violation of any applicable laws or regulations, and the Plaintiff.entry into the RSAs is not an admission or acknowledgment by the Company of any wrongdoing or liability.

ITEM 4.MINE SAFETY DISCLOSURES 

Not applicable.

PART II

ITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED 

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The Company's common stock trades under the symbol IHC on the New York Stock Exchange.  The following table shows for the periods indicated the high and low sales prices for IHC's common stock as reported by the New York Stock Exchange.

IHC's stock price closed at $27.45$41.00 on December 31, 2017.2020.

Holders of Record

At March 09, 2018,05, 2021, the number of record holders of IHC's common stock was 1,598.1,276. The number of record owners was determined from the Company’s stockholder records maintained by the Company’s transfer agent.

Dividends

IHC declared a cash dividenddividends of $.06$.22 per share on its common stock on July 5, 2017both March 16, 2020 and declaredDecember 11, 2020, for a cashtotal annual dividend of $.10$.44 per share.

IHC declared cash dividends of $.20 per share on its common stock on both March 18, 2019 and December 20, 2017,10, 2019, for a total annual dividend of $.16$.40 per share.

IHC declared a cash dividend of $.045 per share on its common stock on June 20, 2016 and declared a cash dividend of $.06 per share on its common stock on November 29, 2016, for a total annual dividend of $.105 per share.

IHC declared a cash dividend of $.045 per share on its common stock on each of June 22, 2015 and December 23, 2015 for a total annual dividend of $.09 per share.

Tender OfferSecurities Authorized for Issuance Under Equity Compensation Plans

In November 2016, the stockholders approved the Independence Holding Company 2016 Stock Incentive Plan and in November 2020 approved amendments to that plan (the”2016 Plan, as amended”).

Tender Offer

On May 26, 2017,April 24, 2020, IHC commenced a tender offer to purchase up to 2,000,0001,000,000 shares of its common stock at a price per share of $20.00,$27.00, net, to the seller in cash. On June 26, 2017,May 21, 2020, at the close of business, the offer expired and the Company accepted for purchase 1,385,11836,377 shares of its common stock at $20.00$27.00 per share, for an aggregate purchase price of $27.7 million.$982,000.

Share Repurchase Program

IHC has a program, initiated in 1991, under which it repurchases shares of its common stock. In August 2016, the Board of Directors increased the number of shares that can be repurchased to 3,000,000 shares of IHC common stock, excluding the shares under the aforementioned tender offer. As of December 31, 2017, 1,991,0582020, 1,538,991 shares were still authorized to be repurchased.

Share repurchases during the fourth quarter of 20172020 are summarized as follows:

Performance Graph

Set forth below is a line graph comparing the five year cumulative total return of IHC’s common stock with that of the Russell 2000 Index and the S & P 500 Life & Health Insurance index. The graph assumes that dividends were reinvested and is based on a $100 investment on December 31, 2012. Indices data was obtained from Research Data Group, Inc.  The performance graph represents past performance and should not be considered to be an indication of future performance.

ITEM 6. SELECTED FINANCIAL DATA 

The following is a summary of selected consolidated financial data of the CompanyNot required for each of the last five years.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

Independence Holding Company, a Delaware corporation (NYSE: IHC), is a holding company principally engaged in theunderwriting, administering and/or distributing group and individual specialty benefit products, including disability, supplemental health, pet, and group life and health insurance business through: (i) its insurance companies, Standard Security Life, Insurance Company of New York ("Standard Security Life"),  Madison National Life, Insurance Company, Inc. ("Madison National Life"), and Independence American Insurance Company (“Independence American”);Company; and (ii) its marketing and administrative companies including IHC Specialty Benefits Inc. IHC Carrier Solutions, Inc.consisting of IHCSB, IBG, My1HR and a majority interest in PetPartners Inc. (“PetPartners”(collectively the “IHC Agencies”). IHC also owns a significant equity interest in Ebix Health Exchange Holdings, LLC (“Ebix Health Exchange”), an administration exchange for health insurance. and its lead generation company, Torchlight. Standard Security Life, Madison National Life and Independence American Insurance Company are sometimes collectively referred to as the “Insurance Group”. IHC and its subsidiaries (including the Insurance Group) are sometimes collectively referred to as the "Company", or “IHC”, or are implicit in the terms “we”, “us” and “our”.   

IHC’s health insurance products serve niche sectors of the commercial market through multiple classes of business and varied distribution channels.  With regard to those persons in the growing individual market, IHC’s products offer coverage for individuals and families with short-term needs, and fixed indemnity limited benefit and scheduled benefit plans through multiple distribution partners.  We offer pet insurance for dogs and cats in all 50 states through select distributors. Our fixed indemnity limited benefit product is primarily purchased by hourly workers and others who are generally not eligible for coverage

under their employer’s group medical plan. The dental and vision products are marketed to large and small groups as well as individuals. With respect to IHC’s life and disability business, Madison National Life has historically sold almost all of this business through one distribution source specializing in serving school districts and municipalities.

Medical stop-loss was marketed to employer groups that self-insure their medical risks. On March 31, 2016, the Company sold IHC Risk Solutions, LLC (“Risk Solutions”), a managing general underwriter that was its principal source of medical stop-loss business. In addition, all of the in-force medical stop-loss business of Standard Security Life and Independence American produced by Risk Solutions was 100% co-insured as of January 1, 2016 and IHC’s block of medical stop-loss business is in run-off.  

On December 22, 2017, President Trump signed tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to reducing the federal corporate income tax rate from 35% to 21%.The Company has completed its accounting for the income tax effects under the Tax Act that are relevant to the Company using best estimates based on reasonable and supportable assumptions and available inputs and underlying information. We believe that our accounting is final relative to the Tax Act. The Consolidated Financial Statements reflect all such adjustments and disclosures related to the Tax Act. Refer to Note 12 of the Consolidated Financial Statements for more information regarding the impacts of the Tax Act.

While management considers a wide range of factors in its strategic planning and decision-making, underwriting profit is consistently emphasized as the primary goal in all decisions as to whether or not to increase our retention in a core line, expand into new products, acquire an entity or a block of business, or otherwise change our business model.  Management's assessment of trends in healthcare and morbidity, with respect to specialty medical,health, disability, DBL and New York short-term disability (“DBL”);PFL, mortality rates with respect to life insurance;insurance, and changes in market conditions in general play a significant role in determining the rates charged, deductibles and attachment points quoted, and the percentage of business retained. IHC also seeks transactions that permit it to leverage its vertically integrated organizational structure by generating fee income from production and administrative operating companies as well as risk income for its carriers.  Management has always focused on managing the costs of its operations.

COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19, a global health pandemic and the United States declared a national health emergency. COVID-19 has led to large scale disruption in the global economy, market instability and widespread unemployment in the United States.

The COVID-19 outbreak continues to be a fluid situation. The business continuity and emergency response plans we implemented in March 2020 continue to ensure we provide a high level of service to our customers and support our everyday business needs. To help protect the safety and wellbeing of our employees and mitigate the spread of COVID-19, we have limited travel and directed our employees to work remotely whenever possible. As the COVID-19 outbreak continues to evolve, the duration of COVID-19 and its potential effects on our business cannot be certain. Regulatory mandates have affected, and we anticipate will continue to impact, the insurance industry. We currently cannot predict if there will be a material impact to our business, results of operations or financial condition in future reporting periods.For more information, see the risk factor under the heading “We face risks related to health epidemics, like the

Coronavirus (COVID-19) that could impact our sales, operating results and financial condition” in Item 1A. Risk Factors.

The following is a summary of key performance information and events:

Results of operations are summarized as follows for the periods indicated (in thousands):

·Income from continuing operations of $2.63$1.28 per share, diluted, for the year ended December 31, 20172020 compared to $1.27$.83 per share, diluted, for the same period in 2016. 2019;  

oThe Company reduced AMIC’s deferred tax asset valuation allowance by $20.3 million atNet income for the year ended December 31, 2020 includes the recognition of an Arbitration Award with a former TPA (as described in Note 16) amounting to $3.7 million, net of associated legal expenses and income taxes and includes $3.7 million of expenses, net of taxes, for compliance with the MCE related to our STM, limited medical and fixed indemnity limited benefit health insurance products for the period of January 1, 2014 through September 30, 2017, primarily due to an increasealso discussed in projected future income and associated utilization of Federal net operating losses. No such adjustment was recorded forNote 16; 

oFor the years ended December 31, 20162020 and 2019, the Company accrued $25.0 million and $10.7 million, respectively, of estimated amounts that the Company paid or 2015.will potentially pay into the New York State adjustment pool as a result of IHC having significantly better experience with its PFL business than that of the industry as a whole;  

oSelling, general and administrative expenses for the year ended December 31, 2019 include $4.2 million of bad debt expense; 

oIncome taxes for the years ended December 31, 20172020 and 2016,2019 include income tax benefitsincreases of $11.6$4.5 million and $3.9$7.9 million, respectively, on worthless stock deductions representingin the valuation allowance of the Company’s tax basis on its unrecovered investments in those subsidiaries.

oAs a result of the Tax Act, the Company recorded a deferred income tax expense of $9.4 millionwholly-owned subsidiary, AMIC Holdings, Inc. (“AMIC”), due to the re-measurementreduction of deferredestimated tax assets, liabilitiesbenefits from the expected utilization of AMIC’s net operating loss carryforwards that either expired in 2020 or will expire in 2021. Earnings expectations decreased relative to the remaining period that AMIC’s net operating loss carryforwards are available to offset income and relatedtherefore necessitated an increase in the valuation allowance.   

·Consolidated investment yields (on an annualized basis) of 3.2%2.3% and 3.0% in 2017compared to 2.7% in 2016;2020 and 2019, respectively;  

·Book value of $28.98$32.08 per common share at December 31, 20172020 compared to $25.53$30.92 at December 31, 2016. 2019; and  

·Results for 2020 in the Specialty Health segment were impacted by COVID-19 during 2020. We expected that sales of STM might have grown more if not for displaced workers taking advantage of Special Enrollment Periods for ACA coverage, and the subsidies provided through Advanced Premium Tax Credits, as well as employers continuing to offer employer sponsored coverage to  

furloughed workers. Evolving regulatory mandates for testing and treatment coverage, the length and severity of the outbreak, claims activity, and impacts on payment of premiums have not had a significant impact on the 2020 results to date, however, we may incur additional expenses in 2021 relating to possible COVID-19 related claims activity and possible non-payment of premiums as the full effects of the outbreak continue to unfold. To date, we have experienced lower utilization related to the deferral of services which more than offset the extra incurred costs mentioned previously.  It is still unpredictable how this level of deferred utilization will reverse or not in the future but emerging results will continue to be monitored.   Results for the Group disability, life, DBL and PFL segment were not materially impacted by COVID-19 from an aggregate claims standpoint.  Decreases in incidence rates for disability products earlier in the year returned to near historical averages later in the year.  The life incidence rate was not affected by COVID-19 in aggregate. Premiums decreased in the DBL business as a result of higher unemployment and the loss of smaller groups that have gone out of business due to COVID-19.

The following is a summary of key performance information by segment:

·The Specialty Health segment reported $13.2$4.3 million of income before taxes for the year ended December 31, 20172020 compared to $7.2$7.8 million for the comparable period in 2016. 2019. The decrease in 2020 when compared to 2019 is primarily due to: (i) $3.7 million of expenses for compliance with the MCE; (ii) shift in product mix in 2020 to higher earned premium from somewhat higher loss ratio products than those impacting 2019; (iii) increased costs related to overall infrastructure improvements in lead generation capabilities and sales automation platforms at IHC Specialty Benefits, Inc. without a meaningful increase in sales yet; partially offset by (iv) other income of $5.6 million for the recognition of an arbitration award received in 2020. 

oPremiums earned increased 17.8%7.2% or $27.5$12.8 million for the year ended December 31, 20172020 over the comparable period in 2016. Short term medical2019. Increases in premiums increased $9.7 million,from the pet and fixed indemnity limited benefit premiums increased $36.7 million as a result of the growing demand for these products and new significant distribution relationships. Premium increases in theseSTM lines were partially offset by reduced premium volumedecreases in premiums from fixed indemnity limited benefit, group gap, occupational accident business following the saleand group health modified indemnity lines of Accident Insurance Services, Inc., our primary producer of occupational accident business, in 2016, other lines in run-off, and dental business.business;  

oUnderwriting experience, as indicated by its U.S. GAAPgenerally accepted accounting principles (“GAAP”) Combined Ratios, for the Specialty Health segment are as follows for the years indicated (in thousands): 

(A)Loss ratio represents insurance benefits claims and reserves divided by premiums earned. 

(B)Expense ratio represents net commissions, administrative fees, premium taxes and other underwriting expenses divided by premiums earned. 

(C)The combined ratio is equal to the sum of the loss ratio and the expenses ratio. 

oAlthough theThe higher loss ratios in 2017 are2020 primarily reflects the broadening of the mix of business, with a higher concentration of product lines with lower thanprofit margins. The higher  

expense ratio in 2020 is primarily due to $3.7 million of expenses for compliance with the comparable periods in 2016, the expense ratios are higher in 2017 because ofMCE as well as changes in the mix of products withinin the Specialty Health segment and as a result of the reallocation of certain fixed costs from the Medical Stop-Loss segment to the Specialty Health segment as the premium volume of one segment shrinks and the other one grows.segment.

·Income before taxes from the Group disability, life, DBL and DBLPFL segment increased $0.4$11.4 million in 20172020 compared to the prior year resultsyear.  The increase in 2020 primarily reflects an increase in PFL profitability due to lower claims in the short and long term disability and group term life lines,increased premium rates partially offset by lower income frombenefits recorded for a potential risk adjustment payment amounting to $25.0 million in 2020, as compared to $10.7 million in the international line2019, associated with the Company’s PFL product due to run-offestimated amounts that the Company may have to pay into the New York State adjustment pool as a result of IHC’s experience with PFL being significantly better than that of the industry as a whole. In addition, DBL had favorable premium reserve adjustments offset by higher loss ratios and unfavorable loss development in the Group STD line of business;business and, beginning in third quarter 2020, a decrease in DBL premium volume as a result of higher unemployment due to COVID-19. 

·The Individual life, annuities and other segment in run-off reported an insignificant amount of income before income taxes in 2020 compared with losses before income taxes of $0.5$1.1 million in 2017 compared with losses of $2.5 million in 2016.  The losses in 2016 were related to the accelerated amortization of deferred costs in connection with the assumption of certain ceded life and annuity policies for which there are no minimal amounts in 2017;2019; 

·The Medical Stop-LossCorporate segment reported incomelosses before taxestax of $2.8$9.0 million for the year ended December 31, 2017 as2020 compared to income before taxes of $16.7$7.1 million for the year ended December 31, 2016. The reduction in income in 2017 in the Medical Stop-loss segment is principally due to the sale of Risk Solutions and exit from the medical stop-loss business. Premiums earned and amounts recorded for benefits, claims and reserves in the Medical Stop-Loss segment represent the activity of the medical stop-loss business in run-off;

Loss before tax from the Corporate segment for the year ended December 31, 2017 decreased $0.7 million over the same period in 20162019. The change is primarily due to changeslower annualized yields on investments in share-based2020 and less income from equity method investments, partially offset by lower compensation consulting, legal and accounting expenses; andexpenses in 2020; 

·Premiums by principal product for the years indicated are as follows (in thousands): 

Information pertaining to the Company's business segments is provided in Note 1819 of Notes to Consolidated Financial Statements included in Item 8.

The accounting and reporting policies of the Company conform to U.S. GAAP. The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires the Company's management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. A summary of the Company's significant accounting policies and practices is provided in Note 1 of the Notes to the Consolidated Financial Statements included in Item 8 of this report. Management has identified the accounting policies described below as those that, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company's Consolidated Financial Statements and this Management's Discussion and Analysis.

Insurance Premium Revenue Recognition and Policy Charges

Premiums for short-duration medical insurance contracts are intended to cover expected claim costs resulting from insured events that occur during a fixed period of short duration. The Company has the ability to not renew the contract or to revise the premium rates at the end of each annual contract period to cover future insured events. Insurance premiums from annual health contracts are collected monthly and are recognized as revenue evenly as insurance protection is provided.

Premiums related to long-term and short-term disability contracts are recognized on a pro rata basis over the applicable contract term.

Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Premiums from these products are recognized as revenue when due.

Annuities and interest-sensitive life contracts, such as universal life and interest-sensitive whole life, are contracts whose terms are not fixed and guaranteed. Premiums from these policies are reported as funds on deposit. Policy charges consist of fees assessed against the policyholder for cost of insurance (mortality risk), policy administration and early surrender. These revenues are recognized when assessed against the policyholder account balance.

Policies that do not subject the Company to significant risk arising from mortality or morbidity are considered investment contracts. Deposits received from such contracts are reported as other policyholder funds. Policy charges for investment contracts consist of fees assessed against the policyholder account for maintenance, administration and surrender of the policy prior to contractually specified dates, and are recognized when assessed against the policyholder account balance.

Fee Income Revenue Recognition

Fee income includes fees and commissions for various sales, marketing and administrative services provided by the IHC Agencies and lead generation company. Revenue is recognized as these services are performed in an amount that reflects the consideration we expect to be entitled to in exchange for these services.

The Company utilizes the following five-step approach to recognize revenue from contracts with customers:

(1)identification of the contract, or contracts, with a customer; 

(2)identification of the performance obligation in the contract; 

(3)determination of the transaction price; 

(4)allocation of the transaction price to the performance obligations in the contract; and 

(5)recognition of revenue when, or as, we satisfy a performance obligation. 

Commission revenues result from the sales of certain policies by the IHC Agencies on behalf of multiple unaffiliated insurance carriers. The Company has identified the unaffiliated insurance carriers as its customers. A significant portion of our commission revenues are recorded at a point in time based on expected constrained LTV that represent expected commissions to be received over the lifetime of the policies sold. These policies primarily consist of senior products, such as Medicare Advantage, Medicare Part D prescription drug plans and Medicare Supplement plans, as well as ACA plans and small group stop-loss. Commission rates are agreed to in advance with the relevant insurance carrier and vary by carrier and policy type. Other commission revenues are recorded over a period of time commensurate with the performance of certain policy retention and renewal services. In circumstances where the contract is terminable at any time by either party, commission revenues are recorded when consideration is received to the extent it is nonrefundable.

Constrained LTV commissions are recorded at a point in time upon the issuance of a policy by the unaffiliated insurance carrier. It is at this point the performance obligation is considered satisfied. No significant additional performance obligation occurs with renewal of the initial policy. IHC records substantially all of the anticipated revenue from these policies on this date, adjusted for certain expected constraints. Various factors are analyzed to estimate the constrained LTV commissions. These include, but are not limited to, commission rates, carrier mix, contract amendments and terminations, estimated average plan durations, cancellations and non-renewals. After our initial estimate and constraints are made, the Company reassesses its estimates and constraints at the end of each reporting period. We recognize any material impact of changes to commission revenue in the period when the changes are made to the assumptions we use to calculate constrained LTV or previously estimated constrained LTV already recognized as revenue.

Revenues for administrative services, such as premium collections, client services and claims processing, all considered to be a single performance obligation, are recognized over time as these services are performed. One of our agencies administers a block of pet business for an unaffiliated pet insurer that is in run-off and, until its sale in June 2020, another one of our agencies administered occupational accident plans including injured-on-duty accident plans and employer liability plans, and self-funded workers’ compensation plans. The Company has identified the unaffiliated insurance carriers as its customers. Some payments are received monthly or quarterly over the underlying policy period which is shorter than the life of the administrative period. A portion of these payments, in addition to any payments that are received as a lump-sum in advance, are recorded as deferred revenues and recognized in income over the life of the administrative contracts.

Revenues for marketing services, primarily STM, Fixed Indemnity Limited Benefit and other ancillary policies, are recognized over time. The Company has identified the unaffiliated insurance carriers as its customers. The Company receives fees for these marketing services each month based on a flat fee times monthly enrollment figures.

Revenues for the use of our INSX cloud-based enrollment platform are recognized over time. This platform enables brokers and agents to quote and enroll consumers in ACA plans as well as ancillary health products. In this case, the independent brokers and agents are the customers and they are charged a monthly fee for the right to use the hosted cloud software. Amounts received in advance (annually or quarterly) are recorded as deferred revenues and recognized in income over the life of the contract.

Certain IHC subsidiaries earn fees for various lead and referral services. Each service has one performance obligation which is satisfied at a point in time when a lead is transferred to the customer or a referral results in a completed application. The Company has identified the unaffiliated insurance carriers as its customer. All prices are specified in the applicable contract.

IHC Agencies also earn fees from policyholders for: (i) the convenience of paying for pet premiums

in installments or by credit card; and (ii) the submission of online application or enrollment forms for various products. These fees are earned, and simultaneously received, from the policyholder/applicant at the point in time premium payments are made or online applications/enrollments are submitted.

Insurance Liabilities

Policy Benefits and Claims

The Company maintains loss reserves to cover its estimated liability for unpaid losses and loss adjustment expenses, where material, (including legal, other fees, and costs not associated with specific claims but related to the claims payment function) for reported and unreported claims incurred as of the end of each accounting period.  These loss reserves are based on actuarial assumptions and are maintained at levels that are in accordance with U.S. GAAP accounting principles.assumptions.  Many factors could affect these reserves, including economic and social conditions, frequency and severity of claims, medical trend resulting from the influences of underlying cost inflation, changes in utilization and demand for medical services, and changes in doctrines of legal liability and damage awards in litigation. Therefore, the Company’s reserves are necessarily based on estimates, assumptions and analysis of historical experience. The Company’s results depend upon the variation between actual claims experience and the assumptions used in determining reserves and pricing products. Reserve assumptions and estimates require significant judgment and, therefore, are inherently uncertain. The Company cannot determine with precision the ultimate amounts that will be paid for actual claims or the timing of those payments. The Company's estimate of loss represents management's best estimate of the Company's liability at the balance sheet date.

Loss reserves differ for short-duration and long-duration insurance policies, including annuities. Reserves are based on approved actuarial methods, but necessarily include assumptions about expenses, mortality, morbidity, lapse rates and future yield on related investments.

All of the Company’s short-duration contracts are generated from its accident, health, term life, disability and pet insurance business, and are accounted for based on actuarial estimates of the amount of loss inherent in that period’s claims, including losses incurred for which claims have not been reported. Short-duration contract loss estimates rely on actuarial observations of ultimate loss experience for similar historical events.

The Company believes that its liability for policy benefits and claims is reasonable and adequate to satisfy its ultimate liability.  The Company primarily uses its own loss development experience, but will also supplement that with data from its outside actuaries, reinsurers and industry loss experience as warranted. To illustrate the impact that Loss Ratios have on the Company’s loss reserves and related expenses, each hypothetical 1% change in the Loss Ratio for the health business (i.e., the ratio of insurance benefits, claims and settlement expenses to earned health premiums) for the year ended December 31, 2017,2020, would increase reserves (in the case of a higher ratio) or decrease reserves (in the case of a lower ratio) by approximately $2.6$3.7 million with a corresponding increase or decrease in the pre-tax expense for  insurance benefits, claims and reserves in the Consolidated Statement of Income.  Depending on the circumstances surrounding a change in the Loss Ratio, other pre-tax amounts reported in the Consolidated Statement of Income could also be affected, such as amortization of deferred acquisition costs and commission expense.

The gross liability for policy benefits and claims by segment is as follows (in thousands):

Specialty Health

For the Specialty Health business, incurred but not reported (“IBNR”) claims liabilities plus expected development on reported claims are calculated using standard actuarial methods and practices. The “primary” assumption in the determination of Specialty Health reserves is that historical Claim Development Patterns are representative of future Claim Development Patterns. Factors that may affect this assumption include changes in claim payment processing times and procedures, changes in time delay in submission of claims, and the incidence of unusually large claims. Liabilities for policy benefits and claims for specialty health medical and disability coverage are computed using completion factors and expected Net Loss Ratios derived from actual historical premium and claim data.  The reserving analysis includes a review of claim processing statistical measures and large claim early notifications; the potential impacts of any changes in these factors are not material. The Company has business that is serviced by third-party administrators.  From time to time, there are changes in the timing of claims processing due to any number of factors including, but not limited to, system conversions and staffing changes during the year.  These changes are monitored by the Company and the effects of these changes are taken into consideration during the claim reserving process.  Other than these considerations, there have been no significant changes to methodologies and assumptions from the prior year.

While these calculations are based on standard methodologies, they are estimates based on historical patterns.  To the extent that actual claim payment patterns differ from historical patterns, such estimated reserves may be redundant or inadequate.  The effects of such deviations are evaluated by considering claim backlog statistics and reviewing the reasonableness of projected claim ratios.  Other factors which may affect the accuracy of policy benefits and claim estimates include the proportion of large claims which may take longer to adjudicate, changes in billing patterns by providers and changes in claim management practices such as hospital bill audits.

Since our analysis considered a variety of outcomes related to these factors, the Company does not believe that any reasonably likely change in these factors will have a Material Effect.

Disability

The Company’s disability business is comprised of group disability and DBL.  The two “primary” assumptions on which disability policy benefits and claims are based are: (i) morbidity levels; and (ii) recovery rates. If morbidity levels increase, for example due to an epidemic or a recessionary environment, the Company would increase reserves because there would be more new claims than expected.  In regard to the assumed recovery rate, if disabled lives recover more quickly than anticipated then the existing claims reserves would be reduced; if less quickly, the existing claims reserves would be increased. Advancements in medical treatments could affect future recovery, termination, and mortality rates.

With respect to DBL, the liability for policy benefits and claims for the most recent quarter of earned premium is established using a Net Loss Ratio methodology.  The Net Loss Ratio is determined by applying the completed prior four quarters of historical Net Loss Ratios to the last quarter of earned premium.  Policy benefits and claims associated with the premium earned prior to the last quarter are established using a completion factor methodology. The completion factors are developed using the

historical payment patterns for DBL. The NYSDFS can order the Company to refund a portion of the premium, to each policyholder, to meet the mandated minimum loss ratio requirements.  The Company adjusts this premium refund reserve each year based on its loss ratio in relation to the mandated minimum loss ratio requirements. With respect to PFL, policy benefits and claims associated with the premiums earned are established using a completion factor methodology. As this is the third year of this product, the completion factors used were based on the PFL payment patterns developed during 2018, 2019 and 2020. Since the NYSDFS established a risk adjustment program, the Company is required to record in its financial statements an accrual for a potential payment to, or recovery from, the risk adjustment program depending on how its loss ratio compares to the industry wide loss ratio. To determine the amount of this risk adjustment, knowledge of industry wide performance is necessary. The NYSDFS does not share the industry loss ratio data for the current reporting year until the following year.  However, the Company uses available unaudited industry information to make its best estimate of its potential payment or refund under the risk adjustment program until actual information is available.

With respect to group disability, other assumptions are: (i) changes in market interest rates; (ii) changes in offsets; (iii) advancements in medical treatments; and (iv) cost of living.  Changes in market interest rates could change reserve assumptions since the payout period could be as long as 40 years. Changes in offsets such as Social Security benefits, retirement plans and state disability plans also impact reserving. As a result of the forgoing assumptions, it is possible that the historical trend may not be an accurate predictor of the future development of the block. As with most long term insurance reserves that require judgment, the reserving process is subject to uncertainty and volatility and fluctuations may not be indicative of the claim development overall.

While the Company believes that larger variations are possible, the Company does not believe that reasonably likely changes in its “primary” assumptions would have a Material Effect.

Medical Stop-Loss

Due to the sale of Risk Solutions, the Medical Stop-Loss segment is in run-off.  The Company has $2.3 million in reserves at December 31, 2017.  Liabilities for policy benefits and claims on medical stop-loss coverage are computed using completion factors and expected Net Loss Ratios derived from actual historical premium and claim data. Policy benefits and claims for medical stop-loss insurance are more volatile in nature than those for specialty health medical insurance.  This is primarily due to the excess nature of medical stop-loss, with very high deductibles applying to specific claims on any individual claimant and in the aggregate for a given group.  The level of these deductibles makes it more difficult to predict the amount and payment pattern of such claims.  Furthermore, these excess claims are highly sensitive to changes in factors such as medical trend, provider contracts and medical treatment protocols, adding to the difficulty in predicting claim values and estimating reserves.  Also, because medical stop-loss is in excess of an underlying benefit plan, there is an additional layer of claim reporting and processing that can affect claim payment patterns.  Finally, changes in the distribution of business by effective month can affect reserve estimates due to the timing of claim occurrences and the time required to accumulate claims against the stop-loss deductible.

Predicting ultimate claims and estimating reserves in Medical Stop-Loss is more complex than specialty health medical and disability business due to the “excess of loss” nature of these products with very high deductibles applying to specific claims on any individual claimant and in the aggregate for a given group.  The level of these deductibles makes it more difficult to predict the amount and payment pattern of such claims.  Fluctuations in results for specific coverage are primarily due to the severity and frequency of individual claims, whereas fluctuations in aggregate coverage are largely attributable to frequency of underlying claims rather than severity. Liabilities for first dollar medical reserves and disability coverages are computed using completion factors and expected Net Loss Ratios derived from actual historical premium and claim data.

Due to the short-term nature of Medical Stop-Loss, redundancies or deficiencies will typically emerge during the course of the following year rather than over a number of years.  For Medical Stop-Loss, as noted above, the Company maintains its reserves based on underlying assumptions until it determines that an adjustment is appropriate based on emerging experience from all of its prior underwriting years. 

Individual Accident and Health and Other

This segment is a combination of closed lines of business as well as certain small existing lines.  While the assumptions used in setting reserves vary between these different lines of business, the assumptions would generally relate to the following: (i) the rate of disability; (ii) the morbidity rates on specific diseases; and (iii) accident rates. The reported reserves are based on management’s best estimate for each line within this segment. General uncertainties that surround all insurance reserving methodologies would apply.  However, since the Company has so few policies of this type, volatility may occur due to the small number of claims.

Management believes that the Company's methods of estimating the liabilities for policy benefits and claims provided appropriate levels of reserves at December 31, 2017.2020. Changes in the Company's policy benefits and claims estimates are recorded through a charge or credit to its earnings.

Future Policy Benefits

The liability for future policy benefits consists of the liabilities related to insured events for the Company’s long-duration contracts, primarily its life and annuity products. For traditional life insurance

products, the Company computes the liability for future policy benefits primarily using the net premium method based on anticipated investment yield, mortality, and withdrawals. These methods are widely used in the life insurance industry to estimate the liabilities for insurance reserves. Inherent in these calculations are management and actuarial judgments and estimates that could significantly impact the ending reserve liabilities and, consequently, operating results. Actual results may differ, and these estimates are subject to interpretation and change.

Management believes that the Company's methods of estimating the liabilities for future policy benefits provided appropriate levels of reserves at December 31, 20172020 and 2016.2019. Changes in the Company's future policy benefits estimates are recorded through a charge or credit to its earnings.

Other Policyholders’ Funds

Other policyholders’ funds represent interest-bearing liabilities arising from the sales of products, such as universal life, interest-sensitive life and annuities. Policyholder funds are primarily comprised of deposits received and interest credited to the benefit of the policyholder less surrenders and withdrawals, mortality charges and administrative expenses.

Interest credited to policyholder funds represents interest accrued or paid on interest-sensitive life policies and investment policies. These amounts are reported in insurance benefits, claims and reserves on the Consolidated Statements of Income. Credit rates for certain annuities and interest-sensitive life policies are adjusted periodically by the Company to reflect current market conditions, subject to contractually guaranteed minimum rates.

Investments

The Company has classified all of its investmentsfixed maturities as either available-for-sale or trading securities.available-for-sale. These investments are carried at fair value with unrealized gains and losses reported through other comprehensive income (loss) for. Fixed maturities available-for-sale securities or as unrealized gains or losses in the Consolidated Statements of Income for trading securities. Available-for-sale securities totaled $447.5$406.6 million and $454.8$385.0 million at December 31, 20172020 and 2016,2019, respectively. Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Income, using the constant yield method over the period to maturity. Net realizedEquity securities are carried at fair value. Realized gains and losses on investmentsfixed maturities available-for-sale and equity securities are computed using the specific identification method and are reported in the Consolidated Statements of Income on the trade date.

Fair value is determined using quoted market prices when available. In some cases, we use quoted market prices for similar instruments in active markets and/or model-derived valuations where inputs are observable in active markets. When there are limited or inactive trading markets, we use industry-standard pricing methodologies, including discounted cash flow models, whose inputs are based on management assumptions and available current market information. Further, we retain independent pricing vendors to assist in valuing certain instruments. Most of the securities in our portfolio are classified in either Level 1 or Level 2 of the Fair Value Hierarchy.

The Company periodically reviews and assesses the vendor’s qualifications and the design and appropriateness of its pricing methodologies.  Management will on occasion challenge pricing information on certain individual securities and, through communications with the vendor, obtain information about the assumptions, inputs and methodologies used in pricing those securities, and corroborate it against documented pricing methodologies. Validation procedures are in place to determine completeness and accuracy of pricing information, including, but not limited to: (i) review of exception reports that (a) identify any zero or un-priced securities; (b) identify securities with no price change; and (c) identify securities with significant price changes; (ii) performance of trend analyses; (iii) periodic comparison of pricing to alternative pricing sources; and (iv) comparison of pricing changes to expectations based on rating changes, benchmarks or control groups.  In certain circumstances, pricing is unavailable from the vendor and broker

pricing information is used to determine fair value. In these instances, management will assess the quality of the data sources, the underlying assumptions and the reasonableness of the broker quotes based on the current market information available. To determine if an exception represents an error, management will often have to exercise judgment. Procedures to resolve an exception vary depending on the significance of the security and its related class, the frequency of the exception, the risk of material misstatement, and the availability of information for the security. These procedures include, but are not limited to: (i) a price challenge process with the vendor; (ii) pricing from a different vendor; (iii) a reasonableness review; and (iv) a change in price based on better information, such as an actual market trade, among other things.  Management considers all facts and relevant information obtained during the above procedures to determine the proper classification of each security in the Fair Value Hierarchy.

Declines in value of securitiesfixed maturities available-for-sale that are judged to be other-than-temporary are determined based on the specific identification method. The Company reviews its investment securities regularly and determines whether other-than-temporary impairments have occurred. The factors considered by management in its regular review to identify and recognize other-than-temporary impairment losses on fixed maturities include, but are not limited to:  the length of time and extent to which the fair value has been less than cost; the Company's intent to sell, or be required to sell, the debt security before the anticipated recovery of its remaining amortized cost basis; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support; whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions including the effect of changes in market interest rates. If the Company intends to sell a debt security, or it is more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference between the security's amortized cost basis and its fair value at the balance sheet date would be recognized by a charge to total other-than-temporary impairment losses in the Consolidated Statement of Income.  If a decline in fair value of a debt security is judged by management to be other-than-temporary and; (i) the Company does not intend to sell the security; and (ii) it is not more likely than not that it will be required to sell the security prior to recovery of the security’s amortized cost, the Company assesses whether the present value of the cash flows to be collected from the security is less than its amortized cost basis. To the extent that the present value of the cash flows generated by a debt security is less than the amortized cost basis, a credit loss exists. For any such security, the impairment is bifurcated into (a) the amount of the total impairment related to the credit loss, and (b) the amount of the total impairment related to all other factors. The amount of the other-than-temporary impairment related to the credit loss is recognized by a charge to total other-than-temporary impairment losses in the Consolidated Statement of Income, establishing a new cost basis for the security. The amount of the other-than-temporary impairment related to all other factors is recognized in other comprehensive income (loss). It is reasonably possible that further declines in estimated fair values of such investments, or changes in assumptions or estimates of anticipated recoveries and/or cash flows, may cause further other-than-temporary impairments in the near term, which could be significant.

In assessing corporate debt securities for other-than-temporary impairment, the Company evaluates the ability of the issuer to meet its debt obligations and the value of the company or specific collateral securing the debt position. For mortgage-backed securities where loan level data is not available, the Company uses a cash flow model based on the collateral characteristics. Assumptions about loss severity and defaults used in the model are primarily based on actual losses experienced and defaults in the collateral pool. Prepayment speeds, both actual and estimated, are also considered. The cash flows generated by the collateral securing these securities are then determined with these default, loss severity and prepayment assumptions. These collateral cash flows are then utilized, along with consideration for the issue’s position in the overall structure, to determine the cash flows associated with the mortgage-backed security held by the Company. In addition, the Company evaluates other asset-backed securities for other-than-temporary impairment by examining similar characteristics referenced above for mortgage-backed securities.  The Company evaluates U.S. Treasury securities and obligations of U.S. Government corporations, U.S.

Government agencies, and obligations of states and political subdivisions for other-than-temporary impairment by examining the terms and collateral of the security.

Equity securities may experience other-than-temporary impairment in the future based on the prospects for full recovery in value in a reasonable period of time and the Company’s ability and intent to hold the security to recovery. If a decline in fair value is judged by management to be other-than-temporary or management does not have the intent or ability to hold a security, a loss is recognized by a charge to total other-than-temporary impairment losses in the Consolidated Statement of Income. For the purpose of other-than-temporary impairment evaluations, redeemable preferred stocks are evaluated in a manner similar to debt securities. Declines in the creditworthiness of the issuer of debt securities with both debt and equity-like features are evaluated using the equity model in consideration of other-than-temporary impairment.

Goodwill and Other Intangible Assets

Goodwill carrying amounts are evaluated for impairment, at least annually, at the reporting unit level that is equivalent to an operating segment.segment or one level below an operating segment, referred to as a component.  Goodwill associated with the Specialty Health operating segment and the Group component of the Group disability, life, DBL and PFL operating segment were tested for impairment at December 31, 2020. If the fair value of a reporting unit is less than its carrying amount, further evaluation is required to determine if a write-down of goodwill is required. In determining the fair value of each reporting unit, we

used an income approach, applying a discounted cash flow method that included a residual value.  Based on historical experience, we make assumptions as to: (i) expected future performance and future economic conditions, (ii) projected operating earnings, (iii) projected new and renewal business as well as profit margins on such business, and (iv) a discount rate that incorporated an appropriate risk level for the reporting unit. Any impairment of goodwill would be charged to expense.

At December 31, 2017, the Company’s market capitalization was less than its book value indicating a potential impairment of goodwill.  As a result, the Company assessed the factors contributing to the performance of IHC stock in 2017, and concluded that the market capitalization does not represent the fair value of the Company.  The Company noted several factors that have led to a difference between the market capitalization and the fair value of the Company, including (i) the Company’s stock is thinly traded and a sale of even a small number of shares can have a large percentage impact on the price of the stock, (ii) Geneve Corporation and insiders own approximately 67% of the outstanding shares, which has had a significant adverse impact on the number of shares available for sale and therefore the trading potential of IHC stock, and (iii) lack of analyst coverage of the Company. If we experience a sustained decline in our results of operations and cash flows, or other indicators of impairment exist, we may incur a material non-cash charge to earnings relating to impairment of our goodwill, which could have a material adverse effect on our results.  No impairment charge for goodwill was required in 2017, 20162020 or 2015.2019.

Other intangible assets are amortized to expense over their estimated useful lives and are subject to impairment testing. Any impairment of other intangible assets would be charged to expense. No impairment charges for intangible assets were required in 2017, 20162020 or 2015.2019.

Deferred Income Taxes

The provision for deferred income taxes is based on the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized by applying enacted statutory tax rates to temporary differences between amounts reported in the Consolidated Financial Statements and the tax bases of existing assets and liabilities in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recognized for the portion of deferred tax assets that, in management's judgment, is not likely to be realized.  A liability for uncertain tax positions is recorded when it is more likely than not that a tax position will not be sustained upon examination by taxing authorities. The effect on deferred income taxes of a change in tax rates or laws is recognized in income tax expense in the period that includes the enactment date. 

RESULTS OF OPERATIONS

Results of Operations for the Year Ended December 31, 20172020 Compared to the Year Ended December 31, 20162019

Information by business segment for the periods indicated is as follows (in thousands):