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Section 1: 8-K (8-K)


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 11, 2018
TRIPLE-S MANAGEMENT CORPORATION
(Exact Name of Registrant as Specified in Charter)

Puerto Rico
001-33865
66-0555678
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

Registrant’s telephone number, including area code: 787-749-4949

1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920
(Address of Principal Executive Offices and Zip Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company

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.



Item 7.01.
Regulation FD Disclosure.

Triple-S Management Corporation (the “Company”) is furnishing presentation materials that will be used at various investor meetings on May 11, 2018 to be held at New York City.  A copy of the presentation materials is attached as Exhibit 99.1 to this report.

The information in this Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Exchange Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.
Financial Statements and Exhibits.

Exhibit No.
Description

99.1
Investor presentation materials to be utilized by the Company at various investor meetings on May 11, 2018


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
TRIPLE-S MANAGEMENT CORPORATION
     
Date: May 11, 2018
By:
/s/ Juan José Román-Jiménez
   
Name: Juan José Román-Jiménez
   
Title: EVP and Chief Financial Officer



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Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1

 Investor Presentation  May 2018 
 

 *This document contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information about possible or assumed future sales, results of operations, developments, regulatory approvals or other circumstances. Sentences that include "believe", "expect", "plan", "intend", "estimate", "anticipate", "project", "may", "will", "shall", "should" and similar expressions, whether in the positive or negative, are intended to identify forward-looking statements. All forward-looking statements in this news release reflect management's current views about future events and are based on assumptions and subject to risks and uncertainties. Consequently, actual results may differ materially from those expressed here as a result of various factors, including all the risks discussed and identified in public filings with the U.S. Securities and Exchange Commission (SEC). In addition, the Company operates in a highly competitive, constantly changing environment, influenced by very large organizations that have resulted from business combinations, aggressive marketing and pricing practices of competitors, and regulatory oversight. The following factors, if markedly different from the Company's planning assumptions (either individually or in combination), could cause Triple-S Management's results to differ materially from those expressed in any forward-looking statements shared here: Trends in health care costs and utilization rates Ability to secure sufficient premium rate increases Competitor pricing below market trends of increasing costs Re-estimates of policy and contract liabilities Changes in government laws and regulations of managed care, life insurance or property and casualty insurance Significant acquisitions or divestitures by major competitors Introduction and use of new prescription drugs and technologies A downgrade in the Company's financial strength ratings A downgrade in the Government of Puerto Rico's debt Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies Ability to contract with providers consistent with past practice Ability to successfully implement the Company's disease management, utilization management and Star ratings programs Ability to maintain Federal Employees, Medicare and Medicaid contracts Volatility in the securities markets and investment losses and defaults General economic downturns, major disasters, and epidemics This list is not exhaustive. Management believes the forward-looking statements in this release are reasonable. However, there is no assurance that the actions, events or results anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on the Company's results of operations or financial condition. In view of these uncertainties, investors should not place undue reliance on any forward-looking statements, which are based on current expectations. In addition, forward-looking statements are based on information available the day they are made, and (other than as required by applicable law, including the securities laws of the United States) the Company does not intend to update or revise any of them in light of new information or future events. Readers are advised to carefully review and consider the various disclosures in the Company's SEC reports.   Safe Harbor Statement 
 

 Introduction to Triple-S    Who we are  Largest and most experienced managed care organization (MCO) in Puerto RicoExclusive BCBS licensee for Puerto Rico, Costa Rica and U.S. Virgin IslandsNYSE: GTS  First quarter 2018 premiums experienced 7% year over year growth2017 medical loss ratio (MLR) of 85.6%As of March 31, 2018, approximately $213 million in cash and $31 million of debt on balance sheet  Solid Financials  Recent Developments  Received 4-star Medicare Advantage designation in our HMO productPartnering with Optum to modernize and enhance infrastructureEstablished and expanding ambulatory clinic network in Puerto RicoExpanded share repurchase program in February 2018 by $25 million 
 

 Investment Highlights  Strong balance sheet and robust repurchase program in place  Well regulated market = strong barrier to entry  Upgrading infrastructure/technology to improve service, lower costs and enhance long-term margins  Rebuilt management team with deep managed care expertise leveraging 50+ year experience and brand equity   Well positioned to grow business as Puerto Rico recovers  
 

 Progressing and Creating Value      Now    Then    VS  Founded in 1959; received Blue Shield exclusive license six years later; operated initially as “non-profit”, became “for-profit in 1990s  IPO: December 2007  Went public with dual class structure  19 member Board; siloed management structure   In recent years, focused on short term; top-line growth at expense of bottom line  Underinvested in business  Rebuilt an experienced management team focused on long-term value and profitability  Rationalizing and stabilizing Managed Care business  More disciplined underwriting  Vast majority of shares outstanding in single class  Investing considerably in infrastructure to enhance long-term margins  Positioned to grow Managed Care despite ongoing Puerto Rico macro issues              
 

 Deep Senior Management Expertise    Roberto García-RodríguezPresident & CEO25+ years of health care / legal industry experienceHas held various roles since joining Triple-S in 2008, including COO from 2013-2016Member of the Board of Directors of the Blue Cross Blue Shield Association  Juan José Román-JiménezExecutive VP & CFO30+ years of financial and health care industry experience, CPAPrior to rejoining Triple-S, was CFO of EVERTEC, a NYSE-listed payments services companyPreviously spent 15 years at Triple-S and its subsidiaries in various positions  Madeline Hernández-UrquizaExecutive VP & COOPresident - Triple-S Salud and Triple-S Advantage30+ years of health care and financial industry experienceHeld various positions at Triple-S, including Chief Risk Officer for Commercial and Medicaid businessesSuccessfully reorganized company’s Medicare Advantage subsidiary, leading to upgraded 4-Star HMO rating in late 2016  Arturo Carrión-Crespo President – Triple-S Vida30+ years of life/health insurance industry experiencePresident of Triple-S Vida since 1998Also spent 11 years at Great American Life Assurance Company of Puerto Rico 
 

 Market Share – Health InsuranceAll Segments    2016  2017  Total Member Months*  *Based on annual statutory filings, as of 12/31/2017.                  
 

 Puerto Rico – Island Update  Macro  Puerto Rico in 12th year of recessionSought bankruptcy protection in mid-2017 – must restructure debtFiscal plan approved by PROMESA  Hurricane Maria  Hurricane caused significant displacement/migration to continental U.S.As of March 31, vast majority of essential services back on lineRebuilding process underway ($16B relief package from Washington, $18.5B from HUD)  Services Online*  Electric  Water  Telecom  95%  99%  99%  Deep experience navigating through challenging environments  *Source: StatusPR.com 
 

 Recent Government Developments      Medicaid RFP  February 2018 – disaster recovery package signed in Washington  Puerto Rico receiving $16 billion in Federal aid  $5 billion earmarked to Medicaid, funding PR Medicaid program for next two years and avoiding “Medicaid Cliff”  Remainder going to infrastructure, businesses, home repair/rebuild  Still require permanent solution to “Medicaid Cliff” by 2020  February 2018 – Puerto Rican government issues RFP for administration of Medicaid program  Under new model that will go into effect in 4Q18, MCOs will bear full risk but must serve and compete for membership across the island  MCOs must also participate in both risk pools – one for general population, one for “high cost, high need”  Triple-S proposal delivered in April; MCOs will be selected by May 25  Federal Aid Package     
 

 P&C Reserved for Hurricane Losses          $8.5M   Irma  $687.0M   María  Gross losses as of March 31, 2018*  *Estimated  of gross losses covered by catastrophe reinsurance  received as of May 4, 2018; new claims decelerating over time  Up to $700.0M   16,200 claims  Company has already closed over 69% of the claims received related to Hurricane MaríaExpect no additional impact to income statementManagement believes catastrophe coverage for losses and allocated loss expenses is sufficient to cover anticipated gross losses from the hurricanes 
 

 Strong and Stable Balance Sheet  Continuing to prudently allocate capital    Expanded existing $30 million share repurchase program by an additional $25 million in February 2018; as of May 4, 2018, $18.5 million of availability remained  As of March 31, 2018:Investment portfolio of $1.6 billion; generated net investment income of $51.6 million in 2017, an increase of 5.5% from prior yearLimited exposure to Puerto Rico devaluations; PR government obligation has fair value of $8 million, representing <1% of portfolioApproximately $213 million in cash and cash equivalentsLong-term debt of $31 million, no near-term maturities 
 

 Upgraded Medicare Advantage Product          Inconsistent productLack of cost control  HMO Plan Receives 4-star Designation  Reposition Reorganize Retain  Legacy  2013 - 2016  Late 2016 
 

 Competitive MA Offering Expands Growth Opportunities    Consistency  MA product benefits aligned to grow membership  Choice  75% of eligible consumers choose an MA plan  Cash  Designation provides 8-9% increase in rates  Continuing  to optimize costs in segment to drive improving bottom line  Can price  premiums more competitively than in prior years  Four-star designation provides company with growth engine 
 

 Optimizing Commercial Segment  *Adjusts for effect of prior period reserve developments; hurricane impact on utilization in 2017 accounted for 310 basis points of the 590 basis point decline.  Segment focused on disciplined underwriting  Triple-S maintains dominant market share in Commercial segment in Puerto RicoFocus in last couple of years to methodically reduce membership in order to clean up portfolio and remove unprofitable accounts, thus improving MLRWith portfolio underwriting improving, plan to carefully restart growth initiatives, including clinic network expansion    Commercial Members(as of year-end)  Annual Medical Loss Ratio (MLR)  Adjusted Annual Medical Loss Ratio (MLR)*  2015  547,634  84.2%  86.6%  2016  509,157  85.2%  83.8%  2017  475,026  77.5%  77.5% 
 

 Modernizing Infrastructure    Expanding Long-Term Profitability  Transition core IT and business processes  Modernize and simplify business functions  Upgrade customer service and overall efficiency  Become more competitive; focus on developing business / products    Partnership   
 

 Well-Positioned to Grow Long-Term    Creating long-term value by growing within Puerto Rico – can be accomplished despite migration  Focus on retaining current Medicare Advantage client base and using more competitive offering to win new business and capture additional market shareContinue modernizing infrastructure to further improve level of service while creating additional efficiencies to reduce costsExpand ambulatory clinic network – leverage as additional platform to provide better medical access, cost, quality, and build into competitive advantage 
 

 Investment Highlights  Strong balance sheet and robust repurchase program in place  Well regulated market = strong barrier to entry  Upgrading infrastructure/technology to improve service, lower costs and enhance long-term margins  Rebuilt management team with deep managed care expertise leveraging 50+ year experience and brand equity   Well positioned to grow business as Puerto Rico recovers  
 

 Appendix 
 

 Consolidated Premiums Earned, net  ($ in millions) 
 

 Managed Care Premiums Earned, net  ($ in millions) 
 

 Consolidated Claims Incurred and Loss Ratio  ($ in millions) 
 

 Consolidated Operating Expenses and Expense Ratio  ($ in millions) 
 



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