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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): February 27, 2020
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. ☐
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading
Symbol(s)
Name of each exchange on which
registered
Common Stock Class B, $1.00 par value
GTS
New York Stock Exchange (NYSE)



Item 2.02.
Results of Operations and Financial Condition.
 
On February 27, 2020, Triple-S Management Corporation issued a press release announcing its unaudited financial results for the quarter ended December 31, 2019, 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.
 
Press release, dated February 27, 2020, issued by Triple-S Management Corporation.
 
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
 

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 27, 2020
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


 
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 2019 Results

SAN JUAN, Puerto Rico, February 27, 2020 – Triple-S Management Corporation (NYSE:GTS), a leading managed care company in Puerto Rico, today announced its fourth quarter 2019 results.

Quarterly Consolidated and Other Highlights


Net income of $13.2 million, or $0.55 per diluted share, versus net loss of $10.9 million, or $0.48 per share, in the prior-year period;

Adjusted net income of $6.0 million, or $0.25 per diluted share, versus adjusted net income of $10.1 million, or $0.44 per diluted share, in the prior-year period;

Operating revenues of $831.2 million, a 14.9% increase from the prior-year period, primarily reflecting higher Managed Care net premiums earned;

Consolidated loss ratio of 81.0%, a 10 basis point increase versus the fourth quarter of 2018;

Medical loss ratio (“MLR”) improved 10 basis points to 83.7%;

Consolidated operating income was $8.7 million, compared to consolidated operating income of $9.8 million in the prior-year period;

Under the Company’s share repurchase program, during the fourth quarter of 2019, the Company repurchased 527,881 shares at an aggregate cost of approximately $10.0 million.  As of February 26, 2020, $10.0 million remains available under the program.

“Our fourth quarter results concluded a strong 2019, exceeding our expectations with excellent growth in premiums earned at our core Managed Care segment,” said Roberto Garcia-Rodriguez, President and Chief Executive Officer.  “We also had a solid open enrollment season in Medicare Advantage−aided by an attractive product offering, a smart brand strategy, and focused retention efforts−and continue to see gains in our fully insured Commercial membership.”

“Looking ahead into 2020, we aim to further strengthen our core Managed Care products and membership rolls, particularly in Medicare Advantage and Commercial,” added Mr. Garcia-Rodriguez.  “We will also undertake additional initiatives to help ensure our customers continue to receive superior service, while keeping a watchful eye on medical cost trends and operating expenses.  Overall, we remain focused on generating long-term growth by creating a unique value proposition and healthcare experience for our members in partnership with our provider community.”

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Triple-S Management Corporation
Selected Consolidated Quarterly Details

Consolidated net premiums earned were $810.4 million, up 15.4% from the prior-year period, primarily reflecting an increase in membership and higher average premium rates within the Managed Care segment.

Consolidated claims incurred were $656.7 million, up 15.6% year-over-year. Consolidated loss ratio of 81.0% rose 10 basis points from the prior-year period, mostly reflecting higher loss ratios in the Company’s complementary businesses.

Consolidated operating expenses of $165.8 million increased by $19.8 million, or 13.6%, from the prior-year period, primarily resulting from higher provision for bad debt, personnel costs and other expenses related to an increase in volume.  These increases were partially offset by the waiver of the 2019 HIP Fee.  The Company’s operating expense ratio improved by 30 basis points year-over-year to 20.4%, primarily driven by premium growth compared to the prior-year quarter.

Selected Managed Care Segment Quarterly Details

Managed Care premiums earned were $741.6 million, up 15.3% year over year.


o
Medicare premiums earned of $342.3 million increased 22.7% from the prior-year period, largely due to an increase of approximately 55,000 member months and higher average premium rates, primarily reflecting a more competitive product offering and an increase in the average membership risk score.


o
Commercial premiums earned of $198.8 million increased 3.5% from the prior-year period, mainly reflecting an increase in fully insured enrollment during the quarter of approximately 37,000 member months, and partially offset by the suspension of the HIP Fee in 2019.


o
Medicaid premiums earned of $200.5 million increased 16.5% from the prior-year period, primarily reflecting higher membership of approximately 78,000 member months during the quarter and higher average premium rates, partially offset by the suspension of the HIP Fee in 2019.

Reported MLR of 83.7% improved 10 basis points from the prior-year period, reflective of better utilization trends in the Medicare and Commercial businesses, offset by the impact of the elimination of the 2019 HIP Fee and timing of the recognition of member acuity in Medicaid premiums.

Update on P&C Segment Reserves related to Hurricane María

As of December 31, 2019:


Triple-S Propiedad, Inc. (TSP), the Company’s P&C subsidiary, has paid a cumulative amount of $729 million in claims and expenses related to Hurricane María.  Estimated gross losses remain unchanged at $967 million.


TSP received 20 new claims and closed 84 claims during the fourth quarter of 2019.  645 claims remain open.

2

Triple-S Management Corporation

Of the 645 claims that remain open, the Company has been served with process in 313 cases and identified an additional 94 lawsuits that have been filed against TSP that had not been served as required by law.


As is the case for all claim liabilities, the gross losses related to Hurricane Maria are based on the Company’s best estimate of the ultimate expected cost of claims with the information currently on hand and are subject to change.

2020 Outlook
 
The Company is initiating the following full year 2020 guidance:

Consolidated operating revenue is expected to be between $3.62 billion and $3.66 billion, which includes Managed Care premiums earned, net between $3.25 billion and $3.29 billion;

Consolidated claims incurred ratio is expected to be between 81.0% and 83.0%, while the Managed Care MLR is expected to be between 83.5% and 85.5%;

Consolidated operating expense ratio is expected to be between 17.5% and 18.5%;

The effective tax rate is expected to be between 28.0% and 30.0%; and

Adjusted net income per diluted share is expected to be between $2.60 and $2.80.  This expectation is inclusive of the impact of approximately $0.24 per diluted share of estimated losses incurred at the Company’s Property and Casualty segment after the recent earthquake activity experienced in Puerto Rico during January 2020.  Adjusted net income per diluted share does not account for any potential share repurchase activity during 2020.  The Company is assuming a weighted average diluted share count for full year 2020 of 23.1 million shares.

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, 2019. 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 12, 2020 by calling 1-844-512-2921 or 1-412-317-6671 and entering passcode 13698869. 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 over 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 [email protected].

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

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

Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies

4

Triple-S Management Corporation

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,
2019
   
December 31,
2018
 
Assets
           
             
Investments
 
$
1,643,637
   
$
1,564,542
 
Cash and cash equivalents
   
109,837
     
117,544
 
Premium and other receivables, net
   
567,692
     
628,444
 
Deferred policy acquisition costs and value of business acquired
   
234,885
     
215,159
 
Property and equipment, net
   
88,588
     
81,923
 
Other assets
   
174,187
     
152,636
 
                 
Total assets
 
$
2,818,826
   
$
2,760,248
 
                 
Liabilities and Stockholders' Equity
               
                 
Policy liabilities and accruals
 
$
1,425,477
   
$
1,600,310
 
Accounts payable and accrued liabilities
   
370,483
     
309,747
 
Short-term borrowings
   
54,000
     
-
 
Long-term borrowings
   
25,694
     
28,883
 
                 
Total liabilities
   
1,875,654
     
1,938,940
 
                 
Stockholders’ equity:
               
Common stock
   
23,800
     
22,931
 
Other stockholders’ equity
   
920,065
     
799,053
 
                 
Total Triple-S Management Corporation stockholders’ equity
   
943,865
     
821,984
 
                 
Non-controlling interest in consolidated subsidiary
   
(693
)
   
(676
)
                 
Total stockholders’ equity
   
943,172
     
821,308
 
                 
Total liabilities and stockholders’ equity
 
$
2,818,826
   
$
2,760,248
 

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
December 31,
   
For the Twelve Months Ended
December 31,
 
   
2019
   
2018
   
2019
   
2018
 
Revenues:
                       
Premiums earned, net
 
$
810,364
   
$
702,342
   
$
3,252,880
   
$
2,938,591
 
Administrative service fees
   
2,251
     
3,485
     
9,946
     
14,701
 
Net investment income
   
16,393
     
16,279
     
62,007
     
61,909
 
Other operating revenues
   
2,218
     
1,560
     
8,553
     
5,794
 
Total operating revenues
   
831,226
     
723,666
     
3,333,386
     
3,020,995
 
                                 
Net realized investment gains (losses) on sale of securities
   
1,077
     
(767
)
   
5,843
     
298
 
Net unrealized investment gains (losses) on equity investments
   
7,892
     
(25,203
)
   
32,151
     
(36,546
)
Other income, net
   
847
     
7,712
     
4,206
     
11,312
 
Total revenues
   
841,042
     
705,408
     
3,375,586
     
2,996,059
 
                                 
Benefits and expenses:
                               
Claims incurred
   
656,752
     
567,906
     
2,666,256
     
2,527,613
 
Operating expenses
   
165,777
     
145,943
     
569,406
     
554,715
 
Total operating costs
   
822,529
     
713,849
     
3,235,662
     
3,082,328
 
                                 
Interest expense
   
1,991
     
1,388
     
7,672
     
6,903
 
                                 
Total benefits and expenses
   
824,520
     
715,237
     
3,243,334
     
3,089,231
 
 
                               
Income (loss) before taxes
   
16,522
     
(9,829
)
   
132,252
     
(93,172
)
                                 
Income tax expense (benefit)
   
3,300
     
1,078
     
39,375
     
(29,866
)
                                 
Net income (loss)
   
13,222
     
(10,907
)
   
92,877
     
(63,306
)
                                 
Net loss attributable to the non-controlling interest
   
(7
)
   
(5
)
   
(17
)
   
(4
)
                                 
Net income (loss) attributable to Triple-S Management Corporation
 
$
13,229
   
$
(10,902
)
 
$
92,894
   
$
(63,302
)
                                 
Earnings per share attributable to Triple-S Management Corporation:
                               
                                 
Basic net income (loss) per share
 
$
0.55
   
$
(0.48
)
 
$
3.98
   
$
(2.76
)
Diluted net income (loss) per share
 
$
0.55
   
$
(0.48
)
 
$
3.97
   
$
(2.76
)
                                 
Weighted average of common shares
   
23,839,165
     
22,727,997
     
23,318,742
     
22,975,385
 
Diluted weighted average of common shares
   
23,901,874
     
22,727,997
     
23,385,293
     
22,975,385
 

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,
 
   
2019
   
2018
 
             
Net cash (used in) provided by operating activities
 
$
(17,451
)
 
$
7,459
 
                 
Cash flows from investing activities:
               
Proceeds from investments sold or matured:
               
Securities available for sale:
               
Fixed maturities sold
   
426,688
     
1,302,810
 
Fixed maturities matured/called
   
18,808
     
24,945
 
Securities held to maturity - fixed maturities matured/called
   
1,708
     
8,182
 
Equity investments sold
   
169,153
     
203,841
 
Other invested assets sold
   
4,554
     
3,714
 
Acquisition of investments:
               
Securities available for sale - fixed maturities
   
(449,043
)
   
(1,343,346
)
Securities held to maturity - fixed maturities
   
(1,078
)
   
(8,356
)
Equity investments
   
(143,972
)
   
(156,486
)
Other invested assets
   
(28,501
)
   
(47,221
)
Increase in other investments
   
(2,981
)
   
(705
)
Net change in policy loans
   
(1,392
)
   
(392
)
Net capital expenditures
   
(20,194
)
   
(19,840
)
Capital contribution to equity method investees
   
(11,418
)
   
-
 
                 
Net cash used in investing activities
   
(37,668
)
   
(32,854
)
                 
Cash flows from financing activities:
               
Change in outstanding checks in excess of bank balances
   
(2,384
)
   
(22,243
)
Net change in short-term borrowings
   
54,000
     
-
 
Repayments of long-term borrowings
   
(3,236
)
   
(3,236
)
Repurchase and retirement of common stock
   
(9,989
)
   
(22,377
)
Dividends paid
   
(11
)
   
-
 
Proceeds from policyholder deposits
   
28,879
     
18,531
 
Surrender of policyholder deposits
   
(19,847
)
   
(26,677
)
                 
Net cash provided by (used in) financing activities
   
47,412
     
(56,002
)
 
               
Net decrease in cash and cash equivalents
   
(7,707
)
   
(81,397
)
                 
Cash and cash equivalents, beginning of period
   
117,544
     
198,941
 
                 
Cash and cash equivalents, end of period
 
$
109,837
   
$
117,544
 

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)
 
2019
   
2018
   
Percentage
Change
   
2019
   
2018
   
Percentage
Change
 
Premiums earned, net:
                                   
Managed Care:
                                   
Commercial
 
$
198.8
   
$
192.0
     
3.5
%
 
$
801.2
   
$
782.8
     
2.4
%
Medicare
   
342.3
     
279.0
     
22.7
%
   
1,408.0
     
1,130.3
     
24.6
%
Medicaid
   
200.5
     
172.1
     
16.5
%
   
778.3
     
776.0
     
0.3
%
Total Managed Care
   
741.6
     
643.1
     
15.3
%
   
2,987.5
     
2,689.1
     
11.1
%
Life Insurance
   
47.1
     
43.4
     
8.5
%
   
182.2
     
168.6
     
8.1
%
Property and Casualty
   
22.8
     
16.4
     
38.8
%
   
87.7
     
83.5
     
5.0
%
Other
   
(1.1
)
   
(0.6
)
   
(83.7
%)
   
(4.5
)
   
(2.6
)
   
(73.7
%)
Consolidated premiums earned, net
 
$
810.4
   
$
702.3
     
15.4
%
 
$
3,252.9
   
$
2,938.6
     
10.7
%
Operating revenues: 1
                                               
Managed Care
 
$
751.5
   
$
654.2
     
14.9
%
 
$
3,025.3
   
$
2,732.0
     
10.7
%
Life Insurance
   
54.4
     
50.0
     
8.9
%
   
209.5
     
194.2
     
7.9
%
Property and Casualty
   
25.1
     
19.5
     
28.7
%
   
97.5
     
94.3
     
3.3
%
Other
   
0.2
     
-
     
100.0
%
   
1.1
     
0.4
     
146.1
%
Consolidated operating revenues
 
$
831.2
   
$
723.6
     
14.9
%
 
$
3,333.4
   
$
3,021.0
     
10.3
%
Operating income (loss): 2
                                               
Managed Care
 
$
5.1
   
$
0.2
     
2400.0
%
 
$
61.9
   
$
26.5
     
133.9
%
Life Insurance
   
4.4
     
5.3
     
(16.4
%)
   
21.9
     
19.9
     
10.0
%
Property and Casualty
   
(0.5
)
   
4.7
     
(110.6
%)
   
14.5
     
(110.1
)
   
113.2
%
Other
   
(0.3
)
   
(0.4
)
   
14.8
%
   
(0.6
)
   
2.4
     
(124.8
%)
Consolidated operating income (loss)
 
$
8.7
   
$
9.8
     
(11.4
%)
 
$
97.7
   
$
(61.3
)
   
259.3
%
Operating margin: 3
                                               
Managed Care
   
0.7
%
   
0.0
%
   
70
bp
   
2.0
%
   
1.0
%
   
100
bp
Life Insurance
   
8.1
%
   
10.5
%
   
-240
bp
   
10.5
%
   
10.2
%
   
30
bp
Property and Casualty
   
(2.0
%)
   
24.1
%
   
-2,610
bp
   
14.9
%
   
(116.7
%)
   
13,160
bp
Consolidated
   
1.0
%
   
1.4
%
   
-40
bp
   
2.9
%
   
(2.0
%)
   
490
bp
Depreciation and amortization expense
 
$
3.9
   
$
3.6
     
8.3
%
 
$
14.6
   
$
13.5
     
7.9
%

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
Managed Care Additional Data
 
Three months ended
December 31,
   
Twelve months ended
December 31,
 
(Unaudited)
 
2019
   
2018
   
2019
   
2018
 
Member months enrollment:
                       
Commercial:
                       
Fully-insured
   
971,270
     
934,557
     
3,844,106
     
3,775,441
 
Self-insured
   
353,843
     
414,975
     
1,426,353
     
1,732,219
 
Total Commercial
   
1,325,113
     
1,349,532
     
5,270,459
     
5,507,660
 
Medicare Advantage
   
384,038
     
328,998
     
1,540,476
     
1,337,061
 
Medicaid
   
1,069,428
     
990,933
     
4,257,181
     
4,555,702
 
Total member months
   
2,778,579
     
2,669,463
     
11,068,116
     
11,400,423
 
Claim liabilities (in millions)
                 
$
341.3
   
$
394.2
 
Days claim payable
                   
49
     
63
 
Premium PMPM:
                               
Managed Care
 
$
305.85
   
$
285.26
   
$
309.85
   
$
278.14
 
Commercial
   
204.68
     
205.47
     
208.42
     
207.34
 
Medicare Advantage
   
891.32
     
847.89
     
914.00
     
845.36
 
Medicaid
   
187.48
     
173.71
     
182.82
     
170.34
 
Medical loss ratio:
   
83.7
%
   
83.8
%
   
84.6
%
   
84.5
%
Commercial
   
81.3
%
   
83.6
%
   
82.4
%
   
82.4
%
Medicare Advantage
   
75.0
%
   
79.7
%
   
79.8
%
   
83.2
%
Medicaid
   
100.9
%
   
90.7
%
   
95.4
%
   
88.5
%
Adjusted medical loss ratio: 1
   
85.0
%
   
83.8
%
   
85.3
%
   
83.7
%
Commercial
   
80.3
%
   
81.6
%
   
82.5
%
   
82.8
%
Medicare Advantage
   
79.4
%
   
85.2
%
   
80.3
%
   
82.7
%
Medicaid
   
100.2
%
   
84.0
%
   
97.4
%
   
86.1
%
Operating expense ratio:
                               
Consolidated
   
20.4
%
   
20.7
%
   
17.5
%
   
18.8
%
Managed Care
   
16.9
%
   
17.8
%
   
14.5
%
   
16.0
%

1 The adjusted medical loss ratio accounts for subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents them in their corresponding period.

Managed Care Membership by Segment
 
As of December 31,
 
   
2019
   
2018
 
Members:
           
Commercial:
           
Fully-insured
   
322,973
     
311,222
 
Self-insured
   
117,696
     
137,825
 
Total Commercial
   
440,669
     
449,047
 
Medicare Advantage
   
127,789
     
108,605
 
Medicaid
   
355,465
     
318,616
 
Total members
   
923,923
     
876,268
 

11

Triple-S Management Corporation
Exhibit V

Reconciliation of Non-GAAP Financial Measures

   
Adjusted Net Income (Loss)
 
(Unaudited)
 
Three months ended
December 31,
   
Twelve months ended
December 31,
 
(dollar amounts in millions)
 
2019
   
2018
   
2019
   
2018
 
Net income (loss)
 
$
13.2
   
$
(10.9
)
 
$
92.9
   
$
(63.3
)
Less adjustments:
                               
Net realized investment gains (losses), net of tax
   
0.8
     
(0.6
)
   
4.7
     
0.2
 
Unrealized gains (losses) on equity investments
   
6.3
     
(20.2
)
   
25.7
     
(29.2
)
Private equity investment income (loss), net of tax
   
0.1
     
(0.2
)
   
1.0
     
1.0
 
Adjusted net income (loss)
 
$
6.0
   
$
10.1
   
$
61.5
   
$
(35.3
)
Diluted adjusted net income (loss) per share
 
$
0.25
   
$
0.44
   
$
2.63
   
$
(1.54
)

   
Adjusted Net Income (Loss) and Operating Income
(Loss) Excluding Hurricane Maria Impact
 
(Unaudited)
 
Three months ended
December 31,
   
Twelve months ended
December 31,
 
(dollar amounts in millions)
 
2019
   
2018
   
2019
   
2018
 
Adjusted net income (loss)
 
$
6.0
   
$
10.1
   
$
61.5
   
$
(35.3
)
Less Hurricane Maria impact:
                               
Property and Casualty 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
 
Adjusted net income excluding Hurricane Maria impact
 
$
6.0
   
$
17.8
   
$
61.5
   
$
57.9
 
Diluted adjusted net income per share excluding Hurricane Maria impact
 
$
0.25
   
$
0.78
   
$
2.63
   
$
2.52
 
                                 
Operating income (loss)
 
$
8.7
   
$
9.8
   
$
97.7
   
$
(61.3
)
Less Hurricane Maria impact:
                               
Property and Casualty prior period reserve development
   
-
     
-
     
-
     
128.7
 
Impact of retroactive reinsurance agreement
   
-
     
5.0
     
-
     
5.0
 
Operating income excluding Huricane Maria impact
 
$
8.7
   
$
14.8
   
$
97.7
   
$
72.4
 

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.  This non-GAAP metric does not consider all 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

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