UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

[ X]	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2004
OR
[ ]	Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from

Commission File Number: 001-05270

AMERICAN INDEPENDENCE CORP.

(Exact name of registrant as specified in its charter)

Delaware	11-1817252
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

485 Madison Avenue, New York, NY 10022	10022
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (212) 355-4141

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] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.) Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at November 15, 2004
Common stock, $0.01 par value	8,436,389


American Independence Corp. and Subsidiaries Index
	Page

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003	3

Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003	4

Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003	5

Notes to Consolidated Financial Statements	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3. Quantitative and Qualitative Disclosures About Market Risk	21

Item 4. Controls and Procedures	21


PART II - OTHER INFORMATION

Item 1. Legal Proceedings	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3. Defaults Upon Senior Securities	22

Item 4 Submission of Matters to a Vote of Security Holders	22

Item 5. Other Information.	22

Item 6. Exhibits	22

Signatures	23

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

American Independence Corp. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share data)

							September 30,			December 31,
							2004			2003
							(Unaudited)
ASSETS:
Investments:
Short-term investments, at fair value						$	6,526		$	5,817
Fixed maturities, at fair value							35,808			30,964
Equity securities, at fair value							1,876					1,477
Other investments							1,103					-

					Total investments			45,313				38,258

Cash and cash equivalents							3,776			2,360
Restricted cash							21,103			15,788
Accounts and notes receivable net of allowance for doubtful
			accounts of $37 and $37				110			150
Accrued investment income							466			362
Premiums receivable							1,993			1,423
Fixed assets							576			619
Deferred tax							14,304			15,990
Reinsurance receivable							6,209			4,299
Goodwill							24,154			23,668
Intangible assets							1,869			2,747
Accrued fee income								2,779				3,092
Other assets								6,080				3,335

				Total assets		$		128,732	$			112,091

LIABILITIES AND STOCKHOLDERS' EQUITY:
		LIABILITIES:
Insurance policy benefits Premium and claim funds payable Amounts due to brokers Accounts payable, accruals and other liabilities Income taxes Restructuring accrual Net liabilities associated with discontinued operations						$	21,023		$	17,858
							20,303			14,988
							2,289			120
							3,953			2,567
							435			170
								426				866
								1,200				1,368

				Total liabilities				49,629				37,937

Minority interest								4,026				4,026

Preferred stock, $0.10 par value, 1,000 shares designated
	no shares issued and outstanding						-			-
Common stock, $0.01 par value, 15,000,000 shares authorized;
	9,180,695 and 9,180,695 shares issued and 8,436,389 and
	8,422,195 shares outstanding, respectively						92			92
Additional paid-in-capital							478,933			478,563
Accumulated other comprehensive loss							(252)			(66)
Treasury stock, at cost, 744,306 and 758,500 shares, respectively							(8,907)			(9,077)
Accumulated deficit								(394,789)				(399,384)

				Total stockholders' equity				75,077			70,128

				Total liabilities and stockholders' equity		$		128,732	$			112,091

The accompanying notes are an integral part of these consolidated financial statements.

American Independence Corp. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

				Three Months Ended September 30,				Nine Months Ended September 30,
				2004		2003		2004		2003
REVENUES:
	Premiums earned		$	16,581	$	11,295	$	43,753	$	26,267
	Net investment income			597		468		1,702		1,503
	Net realized gains			89		30		345		379
	MGU fee income			4,275		3,868		13,164		10,734
	Other income			37		4		47		24

				21,579		15,665		59,011		38,907
EXPENSES:
	Insurance benefits, claims and reserves			10,731		7,080		28,074		16,279
	Selling, general and administrative, exclusive of non-cash
		compensation expense		7,484		5,552		21,336		13,957
	Amortization and depreciation			431		502		1,234		1,509
	Non-cash compensation expense related
		to stock options		86		29		353		105
	Restructuring expense			-		-		-		30
	Minority interest			184		137		517		475

				18,916		13,300		51,514		32,355

Income from continuing operations before income tax				2,663		2,365		7,497		6,552
Provision for income taxes				1,001		91		2,912		272

Income from continuing operations				1,662		2,274		4,585		6,280

Gain on discontinued operations				-		-		10		114

Net income			$	1,662	$	2,274	$	4,595	$	6,394

Basic income per common share:
	Income from continuing operations		$	.20	$	.27	$	.54	$	.75
	Gain on discontinued operations			-		-		-		.01
	Net income applicable to common shares		$	.20	$	.27	$	.54	$	.76

Shares used to compute basic income per share				8,436		8,417		8,432		8,409

Diluted income per common share:
	Income from continuing operations		$	.19	$	.27	$	.54	$	.74
	Gain on discontinued operations			-		-		-		.01
	Net income applicable to common shares		$	.19	$	.27	$	.54	$	.75

Shares used to compute diluted income per share				8,540		8,527		8,533		8,485

The accompanying notes are an integral part of these consolidated financial statements.

American Independence Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

				Nine Months Ended
				September 30,
					2004			2003

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net Income			$		4,595	$		6,394
	Adjustments to net income:
	Realized gains on sales of investment securities			(345)			(379)
	Deferred tax expense			2,407			-
	Gain on discontinued operations			(10)			(114)
	Provision for restructuring			-			30
	Amortization and depreciation			1,234			1,509
	Non-cash stock compensation expense			353			105
	Equity income on equity method investment			(15)			-
	Other			-			66
	Change in other assets and liabilities:
	Change in policy benefits			3,165			8,844
	Change in reinsurance receivable			(1,910)			(351)
	Change in accrued fee income			313			(1,098)
	Change in premiums receivable			(570)			(1,026)
	Change in deferred tax			(64)			-
	Change in income tax liability			265			(376)
	Change in other assets and other liabilities					(1,924)			(2,100)

Net cash provided by operating activities of continuing operations						7,494	11,504
Net cash used by operating activities of discontinued operations						(158)			(2,666)

						7,336			8,838

CASH FLOWS FROM INVESTMENT ACTIVITIES:
		Purchases of short-term investments		(16,195)			(4,522)
		Sales and maturities of short-term investments		15,485			-
		Change in resale and repurchase agreements		-			13,874
		Change in amounts due to and from brokers		2,169			1,513
		Purchases of fixed maturities		(69,215)			(109,474)
		Sales and maturities of fixed maturities		64,305			92,851
		Purchases of equity securities		(1,229)			(901)
		Sales of equity securities		784			454
		Redemption of investment in partnerships		-			10,000
		Business acquisitions, net				(2,210)			(16,102)

Net cash used by investing activities of continuing operations						(6,106)			(12,307)


CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options						186			109
Net cash provided by financing activities of continuing operations						186			109


			Increase (decrease) in cash and cash equivalents	1,416			(3,360)

Cash and cash equivalents, beginning of period						2,360			7,581

Cash and cash equivalents, end of period				$		3,776	$		4,221

The accompanying notes are an integral part of these consolidated financial statements.

American Independence Corp. and Subsidiaries

Notes to Consolidated Financial Statements

(in thousands, except per share data)

(unaudited)

1. Significant Accounting Policies and Practices
(A) Business and Organization

American Independence Corp. ("AMIC") is a holding company engaged in the insurance and reinsurance business through its wholly-owned insurance company, Independence American Insurance Company ("Independence American"), and its managing general underwriter subsidiaries: IndependenceCare Holdings L.L.C. and its subsidiaries (collectively referred to as "IndependenceCare"); Risk Assessment Strategies, Inc. ("RAS") and Voorhees Risk Management LLC d.b.a. Marlton Risk Group ("Marlton"). IndependenceCare, RAS and Marlton are collectively referred to as the "MGU Subsidiaries".

(B) Principles of Consolidation and Preparation of Financial Statements.

These consolidated financial statements and related disclosures were prepared in conformity with U.S. generally accepted accounting principles. The financial information included herein is unaudited, however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the consolidated balance sheet as of September 30, 2004 and December 31, 2003, and the consolidated statements of operations and cash flows for the interim periods ended September 30, 2004 and 2003. Additionally, certain reclassifications have been made to prior period financial statements in order to conform to the current period presentation.

American Independence Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, as filed with the Securities and Exchange Commission, should be read in conjunction with the accompanying consolidated financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect: (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the financial statements; and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. Income Per Common Share

Included in the diluted earnings per share calculation are 104 and 110 shares for the three months ended September 30, 2004 and 2003, respectively, and 101 and 76 shares for the nine months ended September 30, 2004 and 2003, respectively, from the assumed exercise of options using the treasury stock method. Net income does not change as a result of the assumed dilution of options.

3. Stock-Based Compensation and Change in Accounting Principle

In November 2002, the Company adopted certain provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation"("SFAS 123"). SFAS 123 established a fair-value-based method of accounting for stock-based compensation plans. Pursuant to the transition provisions of SFAS 123, the Company will apply the fair value method of accounting to all option grants issued on or after October 1, 2002. The fair value method will not be applied to stock option awards granted prior to October 1, 2002. Such awards will continue to be accounted for under the intrinsic value method pursuant to APB 25, except to the extent those prior years' awards are modified subsequent to October 1, 2002. The Company recorded an expense of approximately $86 and $29 for the three months ended September 30, 2004 and 2003, respectively and approximately $287 and $87 for the nine months ended September 30, 2004 and 2003, respectively related to the issuance of options issued u nder the fair value method. Also, for the nine months ended September 30, 2004, the Company recorded an expense of $66 for the reissuance of options to a director. For the nine months ended September 30, 2003, the Company recorded $18 of additional non-cash compensation expense related to options issued under the intrinsic value method pursuant to APB 25.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure ("SFAS 148")." As permitted by SFAS No. 148, the Company has elected to prospectively account for all stock option grants issued on or after October 1, 2002, under the fair value based method. As part of the election to prospectively account for all stock option grants under the fair value based method, the Company is permitted to continue accounting for all stock option grants issued before October 1, 2002, under the intrinsic value method. Under the fair value based method, stock compensation cost for stock option grants is measured at the grant date based on the value of the award, and such cost is recognized as an expense over the vesting period of the stock option grant. Under the intrinsic value method, compensation expense is recognized for stock options issued with an exercise price less than the stock's fair value on the date of grant and such expense is recogni zed over the vesting period.

Had the Company applied the fair value based method of accounting for stock-based compensation awards issued prior to October 1, 2002, net income and net income per share for the three months and the nine months ended September 30, 2004, and 2003 would have been as follows (in thousands):

			Three Months Ended						Nine Months Ended
			September 30,						September 30,
			2004			2003			2004			2003
Net income as reported		$	1,662		$	2,274		$	4,595		$	6,394
Add stock-based compensation expense included in reported income			86			29			353			105
Deduct stock-based compensation expense determined under the fair value based method for all awards				(86)			(86)			(270)			(290)
Pro forma net income		$		1,662	$		2,217	$		4,678	$		6,209

Basic income per common share:
	As reported	$	.20		$	.27		$	.54		$	.76
	Pro forma	$	.20		$	.26		$	.55		$	.74

Diluted income per common share:
	As reported	$	.19		$	.27		$	.54		$	.75
	Pro forma	$	.19		$	.26		$	.55		$	.73

4. Discontinued Operations

Prior to becoming an insurance holding company as a result of the acquisition of Independence American Holdings Corp. ("IAHC") on November 14, 2002, the Company was a holding company principally engaged in providing Internet services through the following discontinued operations, Intelligent Communications, Inc. ("Intellicom"), Aerzone Corporation ("Aerzone"), ISP Channel, Inc. ("ISP Channel"), Micrographic Technology Corporation ("MTC"), and Kansas Communications Inc. ("KCI"). The operating results of these discontinued operations have been segregated from continuing operations and are reported as a gain (loss) on discontinued operations on the consolidated statements of operations. Although it is difficult to predict the final results, the loss on disposition from discontinued operations includes management's estimates of costs to wind down the business and costs to settle its outstanding liabilities. The actual results could differ materially from these estima tes. The estimated loss on disposition reserve for all discontinued operations is reflected in net liabilities associated with discontinued operations in the accompanying consolidated balance sheets.

Gain (loss) from discontinued operations is as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

2004

2003

2004

2003

Intellicom

$

-

$

-

$

10

$

(363)

Aerzone

-

-

-

120

ISP Channel

-

-

-

146

MTC

-

-

-

527

KCI

-

-

-

(316)

Net gain from

discontinued operations

$

-

$

-

$

10

$

114

Net liabilities associated with discontinued operations at September 30, 2004 and December 31, 2003, are as follows (in thousands):

September 30, December 31,

2004 2003

Liabilities:

Estimated closure costs

$

952

$

1,120

Other accrued expenses

248

248

Total liabilities

$

1,200

$

1,368

Intellicom

$

952

$

1,120

Aerzone

26

26

ISP Channel

153

153

MTC

49

49

KCI

20

20

Net liabilities associated with discontinued

operations

$

1,200

$

1,368

5. Restructuring Reserve

On December 28, 2000, the Company's Board of Directors approved a plan to reduce its corporate headquarters staff in conjunction with discontinuing the Aerzone and ISP Channel businesses. At September 30, 2004, the Company had a remaining reserve of $426 relating to the restructuring. This reserve primarily relates to the leasehold obligations of the former corporate headquarters in San Francisco, California; the Company maintains an $800 security deposit with respect to this liability which is included in restricted cash.

			(In thousands)
Balance, December 31, 2003:		$	866
	Less: Payments		(440)
Balance, September 30, 2004:		$	426

6. Investment Impairments

The following table summarizes, for all securities in an unrealized loss position at September 30, 2004, the aggregate fair value and gross unrealized loss by length of time those securities have continuously been in an unrealized loss position (in thousands):

		Less than 12 Months					12 Months or Longer				Total
			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Corporate securities		$	8,843	$	333	$	-	$	-	$	8,843	$	333
Collateralized mortgage obligations
	("CMOs") and asset backed securities	4,315			230		1,878		40		6,193		270
U.S. Government and agencies obligations		4,265			31		-		-		4,265		31
Agency mortgage backed pass through
	securities	2,413			18		-		-		2,413		18
	Total, fixed maturities		19,836		612		1,878		40		21,714		652


Preferred stock			1,062		39		-		-		1,062		39

Total temporarily impaired securities		$	20,898	$	651	$	1,878	$	40	$	22,776	$	691

Substantially all of the unrealized losses at September 30, 2004 relate to investment grade securities and are attributable to changes in market interest rates subsequent to purchase. The Company reviews its investments regularly and monitors its investments continually for impairments. A total of 56 securities were in a continuous unrealized loss position for less than 12 months and 4 securities 12 months or longer. For the three months ended September 30, 2004 and 2003, the Company realized a loss of $9 and $0 respectively, from other than temporay impairments. For the nine months ended September 30, 2004 and 2003, the Company realized a loss of $53 and $0, respectively, from other than temporary impairments. The remaining unrealized losses were evaluated in accordance with the Company's policy and were determined to be temporary in nature at September 30, 2004. For all remaining fixed maturities, there are no securities for which the Company currently believes it is not probable that it will collect all amounts due according to the contractual terms of the investment (see Note 13 for discussion of a new accounting pronouncement that will provide additional guidance with respect to impairment evaluations).

7. MGU Fee Income

The Company records MGU fee income as policy premium payments are earned. MGUs are compensated in two ways. They earn fee income based on the volume of business produced, and collect profit-sharing commissions if such business exceeds certain profitability benchmarks. Profit-sharing commissions are accounted for beginning in the period in which the Company believes they are reasonably estimable. Profit-sharing commissions are a function of an MGU attaining certain profitability thresholds and could vary from quarter to quarter.

MGU fee income consisted of the following (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
		2004		2003		2004		2003

MGU fee income-administration fees	$	3,797	$	3,121	$	11,128	$	9,407

MGU fee income-profit commissions		478		747		2,036		1,327

	$	4,275	$	3,868	$	13,164	$	10,734

8. Commitments and Contingencies

Legal Proceedings

The Company is involved in legal proceedings and claims, which arise in the ordinary course of its businesses. The Company has established reserves that it believes are sufficient given information presently available related to its outstanding legal proceedings and claims. The Company believes the results of the other pending legal proceedings and claims are not expected to have a material adverse effect on its results of operations, financial condition or cash flows.

9. Comprehensive Income

The components of comprehensive income include (i) net income or loss reported in the Consolidated Statements of Operations; and (ii) after-tax net unrealized gains and losses on securities available for sale which are reported directly in stockholders' equity. Comprehensive income for the three and nine months ended September 30, 2004 and 2003 is as follows (in thousands):

Three Months Ended

Nine Months En

		September 30, December 31,
		2004 2003

Liabilities:
Estimated closure costs			$	952	$	1,120
Other accrued expenses				248		248

Total liabilities			$	1,200	$	1,368

	Intellicom		$	952	$	1,120
	Aerzone			26		26
	ISP Channel			153		153
	MTC			49		49
	KCI			20		20
Net liabilities associated with discontinued
operations			$	1,200	$	1,368