Toggle SGML Header (+)


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): February 28, 2019
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 2.02.
Results of Operations and Financial Condition.

On February 28, 2019, Triple-S Management Corporation issued a press release announcing its unaudited financial results for the quarter ended December 31, 2018, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information furnished pursuant to this Item 2.02 of  this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.
Financial Statements and Exhibits.


99.1
Press release, dated February 28, 2019, issued by Triple-S Management Corporation.


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: February 28, 2019
By:
/s/ Juan José Román-Jiménez

 
Name: Juan José Román-Jiménez

 
Title: EVP and Chief Financial Officer




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1



Triple-S Management Corporation

1441 F.D. Roosevelt Ave.

San Juan, PR 00920

www.triplesmanagement.com

FOR FURTHER INFORMATION:

AT THE COMPANY:
INVESTOR RELATIONS:
Juan José Román-Jiménez
Mr. Garrett Edson
EVP and Chief Financial Officer
ICR
(787) 749-4949
(787) 792-6488

Triple-S Management Corporation Reports Fourth Quarter 2018 Results

SAN JUAN, Puerto Rico, February 28, 2019 – Triple-S Management Corporation (NYSE:GTS), a leading managed care company in Puerto Rico, today announced its fourth quarter 2018 results.

Quarterly Consolidated and Other Highlights


Net loss of $10.9 million, or $0.48 loss per share, versus net income of $24.2 million, or $1.03 per diluted share, in the prior-year period; net loss in the fourth quarter of 2018 was driven by net unrealized losses on equity investments and a change in the effective tax rate of certain deferred tax assets/liabilities, which together impacted after-tax results by approximately $29.6 million, or $1.30 per share;

Adjusted net income of $10.1 million, or $0.44 per diluted share, versus adjusted net income of $22.1 million, or $0.94 per diluted share, in the prior-year period.

Excluding the abovementioned deferred tax adjustment and the cost of retroactive reinsurance, adjusted net income was $17.8 million, or $0.78 per diluted share, compared to adjusted net income of $15.2 million, or $0.65 per diluted share, in the fourth quarter of 2017, after excluding the impact of the hurricanes in that period;

Operating revenues of $723.7 million, a 2.4% increase from the prior-year period, primarily reflecting higher Managed Care premiums;

Consolidated loss ratio rose 270 basis points to 80.9%;

Medical loss ratio (“MLR”) rose 290 basis points to 83.8%, primarily driven by lower Managed Care utilization in the 2017 period related to the hurricanes.

“The fourth quarter signaled a return to normalcy at Triple-S after undergoing a couple of quarters of hurricane-related impact,” said Roberto Garcia-Rodriguez, President and Chief Executive Officer.  "The financial results of our core Managed Care segment continued improving, driven once again by our Medicare Advantage offering.  We have also fared well under the revised Medicaid health plan, gaining a significant amount of membership that was initially assigned to other carriers.  We completed a smooth transition to our new consolidated pharmacy benefits manager.  And perhaps most importantly, there were no additional adverse reserve developments in our P&C segment during the quarter.”

1

Triple-S Management Corporation
“Looking forward, our overall strategy remains firmly on track," added Mr. Garcia-Rodriguez.  "We are focused on growing our market share in Medicare Advantage, buoyed by our 4.5-star quality rating in our HMO product and 4.0-star quality rating in our PPO product for payment year 2020.  Additionally, we will concentrate on further optimizing our infrastructure and developing both analytical and clinical capabilities to accelerate our top-line growth, generate operating efficiencies, improve patient outcomes and create long-term value for our shareholders."

Selected Consolidated Quarterly Details

Consolidated premiums earned were $702.3 million, up 2.2% from the prior-year period, primarily reflecting higher Medicare premiums within the Managed Care segment related to achieving a four-star rated Medicare Advantage HMO contract in 2018, resulting in a 5% bonus applied to the benchmark used in the premium calculation, as well as an increase in the 2018 Medicare reimbursement rates. The increase was partially offset by lower membership.

Consolidated claims incurred were $567.9 million, up 5.7% year-over-year, mostly driven by significantly lower utilization experienced in the prior-year period in the Managed Care segment following the hurricanes. Consolidated loss ratio of 80.9% rose 270 basis points from the prior-year period.

Consolidated operating expenses of $145.9 million increased by $17.5 million, or 13.7%, from the prior-year period, while the Company’s operating expense ratio increased 210 basis points year-over-year to 20.7%. The increase in operating expenses primarily reflects the reinstatement of the Health Insurance Providers fee (“HIP fee”) of $13.1 million, higher professional services expense related to the Company’s ongoing Managed Care initiatives, as well as implementation costs related to the new Medicaid model that became effective November 1, 2018.

Consolidated income tax expense was $1.1 million, compared to $17.9 million in the prior-year period, primarily due to a change in the effective tax rate of certain deferred tax liabilities in the Company’s Property and Casualty segment to reflect the expected tax rate at which they will reverse, and a change in the enacted tax rate, from 39% to 37.5%, following the Puerto Rico income tax reform enacted in December 2018.  These changes increased the deferred tax expense by approximately $9.5 million.  The consolidated income tax expense also reflects the tax impact of net unrealized losses on equity investments and the lower operating income of the Managed Care segment.

Selected Managed Care Segment Quarterly Details

Managed Care premiums earned were $643.1 million, up 1.5% year over year.


o
Medicare premiums earned of $279.0 million increased 13.0% from the prior-year period, largely reflecting an increase in Puerto Rico’s 2018 Medicare fee-for-service benchmark for the first time since 2012, an increase in premium rates as the result of attaining a four-star rating for the Company’s 2018 HMO product, and higher average membership risk score. These increases were partially offset by a year-over-year decrease in member month enrollment of approximately 33,000.


o
Commercial premiums earned of $192.0 million declined 2.0% from the prior-year period, mainly due to an approximate year-over-year decline of 38,000 in fully-insured member month enrollment, and partially offset by the reinstatement of the HIP fee pass-through and higher premium rates.

2

Triple-S Management Corporation

o
Medicaid premiums earned decreased 9.9% from the prior-year period to $172.1 million, primarily reflecting a significant reduction in member month enrollment due to the commencement of the new Medicaid contract on November 1, and partially offset by $3.6 million associated with the reinstatement of the HIP fee pass-through in 2018.  As of January 31, 2019, the Company had approximately 333,000 Medicaid members enrolled in the Company’s program, which is an increase of 53,000 members from the initial assignment of approximately 280,000.

Reported MLR of 83.8% increased 290 basis points from the prior year, primarily reflecting lower utilization in the prior-year period related to hurricanes. The impact of the hurricanes reduced claims in the fourth quarter of 2017 by an estimated $20.7 million, or 320 basis points of MLR. Excluding this impact on utilization, adjusting for prior period reserve developments and moving risk-score revenue to its corresponding period, Managed Care MLR would have been approximately 85.1% in the fourth quarter of 2018, similar to the same metric for the prior-year period.

2019 Outlook

The Company is initiating the following full year 2019 consolidated guidance:

Consolidated operating revenue is expected to be between $3.04 billion to $3.08 billion, which includes Managed Care premiums earned, net between $2.71 billion and $2.75 billion;

Consolidated claims incurred ratio is expected to be between of 81.3% and 83.3%, while the Managed Care MLR is expected to be between 84.0% and 86.0%;

Consolidated operating expense ratio is expected to be between of 17.6% and 18.6%;

The effective tax rate is expected to be between 25.0% and 30.0%; and

Adjusted net income per diluted share is expected to be between $1.85 to $2.05.  Adjusted net income per diluted share guidance does not account for any share repurchase activity during 2019.

Conference Call and Webcast

Management will host a conference call and webcast today at 8:30 a.m. Eastern Time to discuss its financial results for the three months ended December 31, 2018. To participate, callers within the U.S. and Canada should dial 1-877-451-6152 and international callers should dial 1-201-389-0879 at least five minutes before the call.

To listen to the webcast, participants should visit the “Investor Relations” section of the Company’s website at www.triplesmanagement.com several minutes before the event is broadcast and follow the instructions provided to ensure they have the necessary audio application downloaded and installed. This program is provided at no charge to the user. An archived version of the call, also located on the “Investor Relations” section of Triple-S Management’s website, will be available about two hours after the call ends and for at least the following two weeks. This news release, along with other information relating to the call, will be available on the “Investor Relations” section of the website.

In addition, a replay will be available through March 14, 2019 by calling 1-844-512-2921 or 1-412-317-6671 and entering passcode 13687038. A replay will also be available at www.triplesmanagement.com for 30 days.

3

Triple-S Management Corporation
About Triple-S Management Corporation

Triple-S Management Corporation is an independent licensee of the Blue Cross Blue Shield Association. It is one of the leading players in the managed care industry in Puerto Rico. Triple-S Management has the exclusive right to use the Blue Cross Blue Shield name and mark throughout Puerto Rico, the U.S. Virgin Islands, and Costa Rica. With 60 years of experience in the industry, Triple-S Management offers a broad portfolio of managed care and related products in the Commercial, Medicare Advantage, and Medicaid markets under the Blue Cross Blue Shield marks. It also provides non-Blue Cross Blue Shield branded life and property and casualty insurance in Puerto Rico. For more information about Triple-S Management, visit www.triplesmanagement.com or contact investorrelations@ssspr.com.

Non-GAAP Financial Measures

This earnings release presents information about the Company’s adjusted net income, which is a non-GAAP financial metric provided as a complement to the results provided in accordance with accounting principles generally accepted in the United States of America (GAAP). A reconciliation of adjusted net income to net income, the most comparable GAAP financial measure, is provided in the accompanying tables found at the end of this release.

Forward-Looking Statements

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

Adverse regulatory actions, including in connection with operating challenges arising from the migration of our Medicare Advantage claims and clinical management platforms

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

4

Triple-S Management Corporation

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.

5

Triple-S Management Corporation
Earnings Release Schedules and Supplemental Information
 
Condensed Consolidated Balance Sheets
Exhibit I


Condensed Consolidated Statements of Earnings
Exhibit II


Condensed Consolidated Statements of Cash Flows
Exhibit III


Segment Performance Supplemental Information
Exhibit IV


Reconciliation of Non-GAAP Financial Measures
Exhibit V

6

Triple-S Management Corporation
Exhibit I

Condensed Consolidated Balance Sheets
(dollar amounts in thousands)
Unaudited


 
December 31,
2018
   
December 31,
2017
 
Assets
           

           
Investments
 
$
1,564,542
   
$
1,605,477
 
Cash and cash equivalents
   
117,544
     
198,941
 
Premium and other receivables, net
   
628,444
     
899,327
 
Deferred policy acquisition costs and value of business acquired
   
215,159
     
200,788
 
Property and equipment, net
   
81,923
     
74,716
 
Other assets
   
152,636
     
137,516
 

               
Total assets
 
$
2,760,248
   
$
3,116,765
 

               
Liabilities and Stockholders' Equity
               

               
Policy liabilities and accruals
 
$
1,600,310
   
$
1,761,553
 
Accounts payable and accrued liabilities
   
309,747
     
410,457
 
Long-term borrowings
   
28,883
     
32,073
 

               
Total liabilities
   
1,938,940
     
2,204,083
 

               
Stockholders’ equity:
               
Common stock
   
22,931
     
23,578
 
Other stockholders’ equity
   
799,053
     
889,786
 

               
Total Triple-S Management Corporation stockholders’ equity
   
821,984
     
913,364
 

               
Non-controlling interest in consolidated subsidiary
   
(676
)
   
(682
)

               
Total stockholders’ equity
   
821,308
     
912,682
 

               
Total liabilities and stockholders’ equity
 
$
2,760,248
   
$
3,116,765
 

7

Triple-S Management Corporation
Exhibit II

Condensed Consolidated Statements of Earnings
(dollar amounts in thousands, except per share data)
Unaudited


 
For the Three Months Ended
   
For the Twelve Months Ended
 

 
December 31,
   
December 31,
 

 
2018
   
2017
   
2018
   
2017
 
Revenues:
                       
Premiums earned, net
 
$
702,342
   
$
687,443
   
$
$ 2,938,591
   
$
2,826,932
 
Administrative service fees
   
3,485
     
4,196
     
14,701
     
16,514
 
Net investment income
   
16,279
     
14,506
     
61,909
     
51,615
 
Other operating revenues
   
1,560
     
633
     
5,794
     
3,660
 

                               
Total operating revenues
   
723,666
     
706,778
     
3,020,995
     
2,898,721
 

                               
Net realized investment (losses) gains on sale of securities
   
(767
)
   
2,688
     
298
     
10,831
 
Net unrealized investment losses on equity investments
   
(25,203
)
   
-
     
(36,546
)
   
-
 
Other income, net
   
7,712
     
12
     
11,312
     
6,533
 

                               
Total revenues
   
705,408
     
709,478
     
2,996,059
     
2,916,085
 

                               
Benefits and expenses:
                               
Claims incurred
   
567,906
     
537,316
     
2,527,613
     
2,353,101
 
Operating expenses
   
145,943
     
128,402
     
554,715
     
477,213
 

                               
Total operating costs
   
713,849
     
665,718
     
3,082,328
     
2,830,314
 

                               
Interest expense
   
1,388
     
1,678
     
6,903
     
6,794
 

                               
Total benefits and expenses
   
715,237
     
667,396
     
3,089,231
     
2,837,108
 

                               
(Loss) income before taxes
   
(9,829
)
   
42,082
     
(93,172
)
   
78,977
 

                               
Income tax (benefit) expense
   
1,078
     
17,874
     
(29,866
)
   
24,496
 

                               
Net (loss) income
   
(10,907
)
   
24,208
     
(63,306
)
   
54,481
 
                                 
Net loss attributable to the non-controlling interest
   
(5
)
   
(3
)
   
(4
)
   
(5
)

                               
Net (loss) income attributable to Triple-S Management Corporation
 
$
(10,902
)
 
$
24,211
   
$
(63,302
)
 
$
54,486
 

                               
Earnings per share attributable to Triple-S Management Corporation:
                               

                               
Basic net (loss) income per share
 
$
(0.48
)
 
$
1.03
   
$
(2.76
)
 
$
2.27
 
Diluted net (loss) income per share
 
$
(0.48
)
 
$
1.03
   
$
(2.76
)
 
$
2.26
 

                               
Weighted average of common shares
   
22,727,997
     
23,459,879
     
22,975,385
     
23,996,503
 
Diluted weighted average of common shares
   
22,727,997
     
23,557,197
     
22,975,385
     
24,067,586
 

8

Triple-S Management Corporation
Exhibit III

Condensed Consolidated Statements of Cash Flows
(dollar amounts in thousands)
Unaudited


 
For the Twelve Months Ended
 

 
December 31,
 

 
2018
   
2017
 

           
Net cash provided by operating activities
 
$
7,459
   
$
288,918
 
                 
Cash flows from investing activities:
               
Proceeds from investments sold or matured:
               
Securities available for sale:
               
Fixed maturities sold
   
1,302,810
     
463,232
 
Fixed maturities matured/called
   
24,945
     
18,893
 
Securities held to maturity - fixed maturities matured/called
   
8,182
     
2,712
 
Equity investments sold
   
203,841
     
59,963
 
Other invested assets sold
   
3,714
     
-
 
Acquisition of investments:
               
Securities available for sale - fixed maturities
   
(1,343,346
)
   
(560,304
)
Securities held to maturity - fixed maturities
   
(8,356
)
   
(2,197
)
Equity investments
   
(156,486
)
   
(134,834
)
Other invested assets
   
(47,221
)
   
-
 
Increase in other investments
   
(705
)
   
(2,064
)
Net change in policy loans
   
(392
)
   
(513
)
Net capital expenditures
   
(19,840
)
   
(21,359
)

               
Net cash used in investing activities
   
(32,854
)
   
(176,471
)

               
Cash flows from financing activities:
               
Change in outstanding checks in excess of bank balances
   
(22,243
)
   
12,683
 
Repayments of long-term borrowings
   
(3,236
)
   
(2,836
)
Net proceeds from revolving line of credit
   
-
     
1,964
 
Repurchase and retirement of common stock
   
(22,377
)
   
(20,220
)
Proceeds from policyholder deposits
   
18,531
     
13,557
 
Surrender of policyholder deposits
   
(26,677
)
   
(22,082
)

               
Net cash used in financing activities
   
(56,002
)
   
(16,934
)

               
Net (decrease) increase in cash and cash equivalents
   
(81,397
)
   
95,513
 

               
Cash and cash equivalents, beginning of period
   
198,941
     
103,428
 

               
Cash and cash equivalents, end of period
 
$
117,544
   
$
198,941
 

9

Triple-S Management Corporation
Exhibit IV

Segment Performance Supplemental Information

(Unaudited)
 
Three months ended December 31,
   
Twelve months ended December 31,
 
(dollar amounts in millions)
 
2018
   
2017
   
Percentage
Change
   
2018
   
2017
   
Percentage
Change
 
Premiums earned, net:
                                   
Managed Care:
                                   
Commercial
 
$
192.0
   
$
195.9
     
(2.0
%)
 
$
782.8
   
$
803.3
     
(2.5
%)
Medicare
   
279.0
     
246.8
     
13.0
%
   
1,130.2
     
1,035.3
     
9.2
%
Medicaid
   
172.1
     
191.1
     
(9.9
%)
   
776.0
     
751.4
     
3.3
%
Total Managed Care
   
643.1
     
633.8
     
1.5
%
   
2,689.1
     
2,590.0
     
3.8
%
Life Insurance
   
43.4
     
40.4
     
7.4
%
   
168.6
     
161.8
     
4.2
%
Property and Casualty
   
16.4
     
13.8
     
19.0
%
   
83.5
     
77.2
     
8.2
%
Other
   
(0.6
)
   
(0.6
)
   
0.2
%
   
(2.6
)
   
(2.1
)
   
(23.3
%)
Consolidated premiums earned, net
 
$
702.3
   
$
687.4
     
2.2
%
 
$
2,938.6
   
$
2,826.9
     
4.0
%
Operating revenues (loss): 1
                                               
Managed Care
 
$
654.2
   
$
643.6
     
1.6
%
   
2,732.0
   
$
2,628.2
     
3.9
%
Life Insurance
   
50.0
     
46.7
     
7.0
%
   
194.2
     
186.6
     
4.1
%
Property and Casualty
   
19.5
     
17.1
     
14.0
%
   
94.3
     
86.7
     
8.8
%
Other
   
0.0
     
(0.6
)
   
105.3
%
   
0.4
     
(2.8
)
   
116.0
%
Consolidated operating revenues
 
$
723.7
   
$
706.8
     
2.4
%
 
$
3,021.0
   
$
2,898.7
     
4.2
%
Operating income (loss): 2
                                               
Managed Care
 
$
0.2
   
$
35.9
     
(99.4
%)
 
$
26.5
   
$
55.0
     
(51.9
%)
Life Insurance
   
5.3
   
$
6.0
     
(12.3
%)
   
19.9
     
19.4
     
2.6
%
Property and Casualty
   
4.7
   
$
(0.8
)
   
687.6
%
   
(110.1
)
   
(6.0
)
   
(1735.3
%)
Other
   
(0.4
)
   
-
     
(100.0
%)
   
2.4
     
-
     
100.0
%
Consolidated operating income (loss)
 
$
9.8
   
$
41.1
     
(76.1
%)
 
$
(61.3
)
 
$
68.4
     
(189.7
%)
Operating margin: 3
                                               
Managed Care
   
0.0
%
   
5.6
%
   
-560
bp
   
1.0
%
   
2.1
%
   
-110
bp
Life Insurance
   
10.5
%
   
12.8
%
   
-230
bp
   
10.2
%
   
10.4
%
   
-20
bp
Property and Casualty
   
24.1
%
   
(4.7
%)
   
2,880
bp
   
(116.7
%)
   
(6.9
%)
   
-10,980
bp
Consolidated
   
1.4
%
   
5.8
%
   
-440
bp
   
(2.0
%)
   
2.4
%
   
-440
bp
Depreciation and amortization expense
 
$
3.6
   
$
3.4
     
5.9
%
 
$
13.5
   
$
13.2
     
2.5
%

1
Operating revenues include premiums earned, net, administrative service fees and net investment income.
2
Operating income or loss include operating revenues minus operating costs. Operating costs include claims incurred and operating expenses.
3
Operating margin is defined as operating income or loss divided by operating revenues.

10

Triple-S Management Corporation
Additional Data
 
Three months ended
December 31,
   
Twelve months ended
December 31,
 
(Unaudited)
 
2018
   
2017
   
2018
   
2017
 
Managed Care
                       
Member months enrollment:
                       
Commercial:
                       
Fully-insured
   
934,557
     
972,095
     
3,775,441
     
3,981,347
 
Self-insured
   
414,975
     
463,385
     
1,732,219
     
1,967,668
 
Total Commercial
   
1,349,532
     
1,435,480
     
5,507,660
     
5,949,015
 
Medicare Advantage
   
328,998
     
362,277
     
1,337,061
     
1,457,363
 
Medicaid
   
990,933
     
1,150,791
     
4,555,702
     
4,631,316
 
Total member months
   
2,669,463
     
2,948,548
     
11,400,423
     
12,037,694
 
Claim liabilities (in millions)
                 
$
394.2
   
$
367.4
 
Days claim payable
                   
63
     
60
 
Premium PMPM:
                               
Managed Care
 
$
285.26
   
$
255.03
   
$
278.14
   
$
257.20
 
Commercial
   
205.47
     
201.52
     
207.34
     
201.77
 
Medicare Advantage
   
847.89
     
681.25
     
845.31
     
710.39
 
Medicaid
   
173.71
     
166.06
     
170.34
     
162.24
 
Medical loss ratio:
   
83.8
%
   
80.9
%
   
84.5
%
   
85.6
%
Commercial
   
83.6
%
   
72.5
%
   
82.4
%
   
77.5
%
Medicare Advantage
   
79.7
%
   
82.3
%
   
83.2
%
   
87.7
%
Medicaid
   
90.7
%
   
87.6
%
   
88.5
%
   
91.5
%
Adjusted medical loss ratio: 1
   
85.1
%
   
81.9
%
   
84.9
%
   
85.5
%
Commercial
   
83.6
%
   
71.8
%
   
83.4
%
   
76.7
%
Medicare Advantage
   
82.6
%
   
84.2
%
   
83.9
%
   
87.9
%
Medicaid
   
90.7
%
   
89.4
%
   
87.8
%
   
91.7
%
Adjusted medical loss ratio excluding impact of hurricanes: 2
   
85.1
%
   
85.1
%
   
84.9
%
   
87.6
%
Commercial
   
83.6
%
   
77.4
%
   
83.4
%
   
80.1
%
Medicare Advantage
   
82.6
%
   
87.7
%
   
83.9
%
   
90.3
%
Medicaid
   
90.7
%
   
89.9
%
   
87.8
%
   
92.0
%
Consolidated loss ratio:
                               
Loss ratio
   
80.9
%
   
78.2
%
   
86.0
%
   
83.2
%
Adjusted loss ratio 1
   
82.0
%
   
79.1
%
   
86.4
%
   
83.1
%
Adjusted loss ratio excluding impact of hurricanes 3
   
81.5
%
   
81.3
%
   
81.8
%
   
84.2
%
Property and Casualty loss ratio:
                               
Loss ratio
   
29.3
%
   
52.3
%
   
191.4
%
   
65.7
%
Loss ratio excluding impact of hurricanes 4
   
23.0
%
   
32.1
%
   
35.2
%
   
41.6
%
Operating expense ratio:
                               
Consolidated
   
20.7
%
   
18.6
%
   
18.8
%
   
16.8
%
Managed Care
   
17.8
%
   
14.9
%
   
16.0
%
   
13.6
%

1 The adjusted medical loss ratio and adjusted consolidated loss ratio accounts for subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents then in their corresponding period.
2 The adjusted medical loss ratio excluding impact of hurricanes accounts for subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents them in the corresponding period, as well as adjusts the 2017 periods for the estimated impact in utilization following the hurricanes.
3 The consolidated loss ratio excluding impact of hurricanes accounts for the Managed Care segment’s subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents them in the corresponding period, as well as adjusts the 2017 period for the estimated impact in utilization following the hurricanes.  In addition, it excludes the adverse reserve development experienced in the Property and Casualty segment in 2018 periods as well as the net retained losses incurred in the 2017 period.
4 The Property and Casualty loss ratio excluding impact of hurricanes excludes the adverse reserve development experienced by this segment in 2018 periods as well as the net retained losses incurred in the 2017 period.

11

Triple-S Management Corporation
Exhibit V

Reconciliation of Non-GAAP Financial Measures


 
Adjusted Net (Loss) Income
 
(Unaudited)
 
Three months ended
December 31,
   
Twelve months ended
December 31,
 
(dollar amounts in millions)
 
2018
   
2017
   
2018
   
2017
 
Net (loss) income
 
$
(10.9
)
 
$
24.2
   
$
(63.3
)
 
$
54.5
 
Less adjustments:
                               
Net realized investment (losses) gains, net of tax
   
(0.6
)
   
2.2
     
0.2
     
8.7
 
Unrealized losses on equity investments
   
(20.2
)
   
-
     
(29.2
)
   
-
 
Private equity investment (loss) income, net of tax
   
(0.2
)
   
(0.1
)
   
1.0
     
0.3
 
Adjusted net income (loss)
 
$
10.1
   
$
22.1
   
$
(35.3
)
 
$
45.5
 
Adjusted net income per share
 
$
0.44
   
$
0.94
   
$
(1.54
)
 
$
1.89
 


 
Adjusted Net Income (Loss) and Operating Income
(Loss) Excluding Hurricanes Impact
 
(Unaudited)
 
Three months ended
December 31,
   
Twelve months ended
December 31,
 
(dollar amounts in millions)
 
2018
   
2017
   
2018
   
2017
 
Adjusted net income (loss)
 
$
10.1
   
$
22.1
   
$
(35.3
)
 
$
45.5
 
Less hurricanes impact:
                               
2018 Property and Casualty Hurricane Maria unfavorable prior period reserve development, net of tax
   
-
     
-
     
(85.5
)
   
-
 
Net of tax impact of retroactive reinsurance agreement and hurricane-related tax adjustment
   
(7.7
)
   
-
     
(7.7
)
   
-
 
2017 Hurricanes impact in Managed Care segment, net of tax
   
-
     
12.2
     
-
     
31.4
 
2017 Hurricanes Irma and Maria net retained losses in Property and Casualty segment, net of tax
   
-
     
(5.3
)
   
-
     
(19.2
)
Adjusted net income excluding hurricanes impact
 
$
17.8
   
$
15.2
   
$
57.9
   
$
33.3
 
Adjusted net income per share excluding hurricanes impacts
 
$
0.78
   
$
0.65
   
$
2.52
   
$
1.38
 
Operating income (loss)
 
$
9.8
   
$
41.1
   
$
(61.3
)
 
$
68.4
 
Less hurricanes impact:
                               
2018 Property and Casualty Hurricane Maria unfavorable prior period reserve development
   
-
     
-
     
(128.7
)
   
-
 
Impact of retroactive reinsurance agreement
   
(5.0
)
   
-
     
(5.0
)
   
-
 
2017 Hurricanes impact in Managed Care segment
   
-
     
21.5
     
-
     
52.9
 
2017 Hurricanes Irma and Maria net retained losses in Property and Casualty segment
   
-
     
(7.1
)
   
-
     
(24.4
)
Operating income excluding hurricanes impact
 
$
14.8
   
$
26.7
   
$
72.4
   
$
39.9
 

Adjusted net income is a non-GAAP financial metric and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management believes that the use of this adjusted net income and adjusted net income per share provides investors and management useful information about the earnings impact of realized and unrealized investment gains or losses, as well as other non-recurring items impacting the Company’s results of operations. We are also including adjusted net income and operating income excluding the impact of the unfavorable prior period reserve development of Hurricane Maria reserves recognized by the Property and Casualty segment in the 2018 periods and the estimated hurricane-related impact in the Managed Care and Property and Casualty segments in the 2017 period as Management believes this metric provides useful information about the financial performance of the Company’s underlying business. These non-GAAP metrics do not consider all of the items associated with the Company’s operations as determined in accordance with GAAP. As a result, one should not consider these measures in isolation.


12

(Back To Top)