Puerto Rico
|
66-0555678
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
1441 F.D. Roosevelt Avenue
|
||
San Juan, Puerto Rico
|
00920
|
|
(Address of principal executive offices)
|
(Zip code)
|
(787) 749-4949
|
(Registrant’s telephone number, including area code)
|
Not applicable
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer ☐
|
Accelerated filer ☑
|
||
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
||
Emerging growth company ☐
|
Title of each class
|
Outstanding at September 30, 2018
|
|
Common Stock Class A, $1.00 par value
|
950,968
|
|
Common Stock Class B, $1.00 par value
|
21,985,524
|
3 |
|||
Item 1.
|
3 |
||
Item 2.
|
34
|
||
34
|
||
34
|
||
35
|
||
37
|
||
38
|
||
39 |
||
41
|
||
44
|
||
45
|
||
46
|
Item 3.
|
47
|
||
Item 4.
|
48
|
||
48
|
|||
Item 1.
|
48
|
||
Item 1A.
|
48
|
||
Item 2.
|
49 |
||
Item 3.
|
49 |
||
Item 4.
|
49 |
||
Item 5.
|
49 |
||
Item 6.
|
49 |
||
50
|
Item 1.
|
Financial Statements
|
September 30,
2018 |
December 31,
2017 |
|||||||
Assets
|
||||||||
Investments and cash:
|
||||||||
Fixed maturities available for sale, at fair value
|
$
|
1,224,050
|
$
|
1,216,788
|
||||
Fixed maturities held to maturity, at amortized cost
|
2,490
|
2,319
|
||||||
Equity investments, at fair value
|
306,360
|
342,309
|
||||||
Other invested assets, at net asset value
|
73,127
|
34,984
|
||||||
Policy loans
|
9,680
|
9,077
|
||||||
Cash and cash equivalents
|
107,091
|
198,941
|
||||||
Total investments and cash
|
1,722,798
|
1,804,418
|
||||||
Premiums and other receivables, net
|
632,897
|
899,327
|
||||||
Deferred policy acquisition costs and value of business acquired
|
209,205
|
200,788
|
||||||
Property and equipment, net
|
78,445
|
74,716
|
||||||
Deferred tax asset
|
83,593
|
65,123
|
||||||
Goodwill
|
25,397
|
25,397
|
||||||
Other assets
|
66,093
|
46,996
|
||||||
Total assets
|
$
|
2,818,428
|
$
|
3,116,765
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Claim liabilities
|
$
|
1,038,114
|
$
|
1,106,876
|
||||
Liability for future policy benefits
|
355,366
|
339,507
|
||||||
Unearned premiums
|
78,544
|
86,349
|
||||||
Policyholder deposits
|
174,126
|
176,534
|
||||||
Liability to Federal Employees' Health Benefits and
|
||||||||
Federal Employees' Programs
|
41,880
|
52,287
|
||||||
Accounts payable and accrued liabilities
|
246,750
|
354,894
|
||||||
Deferred tax liability
|
3,210
|
21,891
|
||||||
Long-term borrowings
|
29,681
|
32,073
|
||||||
Liability for pension benefits
|
30,919
|
33,672
|
||||||
Total liabilities
|
1,998,590
|
2,204,083
|
||||||
Stockholders’ equity:
|
||||||||
Triple-S Management Corporation stockholders' equity
|
||||||||
Common stock Class A, $1 par value. Authorized 100,000,000 shares; issued and outstanding 950,968 at September 30, 2018 and December 31, 2017, respectively
|
951
|
951
|
||||||
Common stock Class B, $1 par value. Authorized 100,000,000 shares; issued and outstanding 21,985,524 and 22,627,077 shares at September 30, 2018 and December 31, 2017,
respectively
|
21,986
|
22,627
|
||||||
Additional paid-in capital
|
34,231
|
53,142
|
||||||
Retained earnings
|
772,872
|
785,390
|
||||||
Accumulated other comprehensive (loss) income
|
(9,531
|
)
|
51,254
|
|||||
Total Triple-S Management Corporation stockholders' equity
|
820,509
|
913,364
|
||||||
Non-controlling interest in consolidated subsidiary
|
(671
|
)
|
(682
|
)
|
||||
Total stockholders' equity
|
819,838
|
912,682
|
||||||
Total liabilities and stockholders' equity
|
$
|
2,818,428
|
$
|
3,116,765
|
Three months ended
September 30, |
Nine months ended
September 30, |
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Revenues:
|
||||||||||||||||
Premiums earned, net
|
$
|
742,445
|
$
|
714,325
|
$
|
2,236,249
|
$
|
2,139,489
|
||||||||
Administrative service fees
|
3,802
|
3,391
|
11,216
|
12,318
|
||||||||||||
Net investment income
|
16,168
|
12,395
|
45,630
|
37,109
|
||||||||||||
Other operating revenues
|
1,575
|
941
|
4,234
|
3,027
|
||||||||||||
Total operating revenues
|
763,990
|
731,052
|
2,297,329
|
2,191,943
|
||||||||||||
Net realized investment (losses) gains
|
(956
|
)
|
3,753
|
1,065
|
8,143
|
|||||||||||
Net unrealized investment gains (losses) on equity investments
|
5,632
|
-
|
(11,343
|
)
|
-
|
|||||||||||
Other income, net
|
1,943
|
3,409
|
3,600
|
6,521
|
||||||||||||
Total revenues
|
770,609
|
738,214
|
2,290,651
|
2,206,607
|
||||||||||||
Benefits and expenses:
|
||||||||||||||||
Claims incurred
|
648,580
|
583,625
|
1,959,707
|
1,815,785
|
||||||||||||
Operating expenses
|
141,026
|
119,145
|
408,772
|
348,811
|
||||||||||||
Total operating costs
|
789,606
|
702,770
|
2,368,479
|
2,164,596
|
||||||||||||
Interest expense
|
2,000
|
1,709
|
5,515
|
5,116
|
||||||||||||
Total benefits and expenses
|
791,606
|
704,479
|
2,373,994
|
2,169,712
|
||||||||||||
(Loss) income before taxes
|
(20,997
|
)
|
33,735
|
(83,343
|
)
|
36,895
|
||||||||||
Income tax (benefit) expense
|
(3,430
|
)
|
11,824
|
(30,944
|
)
|
6,622
|
||||||||||
Net (loss) income
|
(17,567
|
)
|
21,911
|
(52,399
|
)
|
30,273
|
||||||||||
Net (loss) income attributable to non-controlling interest
|
-
|
(1
|
)
|
1
|
(2
|
)
|
||||||||||
Net (loss) income attributable to Triple-S Management Corporation
|
$
|
(17,567
|
)
|
$
|
21,912
|
$
|
(52,400
|
)
|
$
|
30,275
|
Three months ended
September 30, |
Nine months ended
September 30, |
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net (loss) income
|
$
|
(17,567
|
)
|
$
|
21,911
|
$
|
(52,399
|
)
|
$
|
30,273
|
||||||
Other comprehensive (loss) income, net of tax:
|
||||||||||||||||
Net unrealized change in fair value of available for sale securities, net of taxes
|
(6,216
|
)
|
1,851
|
(21,312
|
)
|
14,719
|
||||||||||
Defined benefit pension plan:
|
||||||||||||||||
Actuarial loss, net
|
147
|
48
|
409
|
154
|
||||||||||||
Total other comprehensive (loss) income, net of tax
|
(6,069
|
)
|
1,899
|
(20,903
|
)
|
14,873
|
||||||||||
Comprehensive (loss) income
|
(23,636
|
)
|
23,810
|
(73,303
|
)
|
45,146
|
||||||||||
Comprehensive (loss) income attributable to non-controlling interest
|
-
|
(1
|
)
|
1
|
(2
|
)
|
||||||||||
Comprehensive (loss) income attributable to Triple-S Management Corporation
|
$
|
(23,636
|
)
|
$
|
23,811
|
$
|
(73,303
|
)
|
$
|
45,148
|
2018
|
2017
|
|||||||
Balance at January 1
|
$
|
913,364
|
$
|
863,163
|
||||
Share-based compensation
|
3,462
|
1,651
|
||||||
Repurchase and retirement of common stock
|
(23,014
|
)
|
(12,553
|
)
|
||||
Comprehensive (loss) income
|
(73,303
|
)
|
45,148
|
|||||
Total Triple-S Management Corporation stockholders' equity
|
820,509
|
897,409
|
||||||
Non-controlling interest in consolidated subsidiary
|
(671
|
)
|
(679
|
)
|
||||
Balance at September 30
|
$
|
819,838
|
$
|
896,730
|
Nine months ended
September 30,
|
||||||||
2018
|
2017
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$
|
(52,399
|
)
|
$
|
30,273
|
|||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
9,933
|
9,835
|
||||||
Net amortization of investments
|
3,747
|
7,396
|
||||||
Additions to the allowance for doubtful receivables
|
7,085
|
2,043
|
||||||
Deferred tax benefit
|
(33,006
|
)
|
(9,993
|
)
|
||||
Net realized investment gain on sale of securities
|
(1,065
|
)
|
(8,143
|
)
|
||||
Net unrealized loss on equity investments
|
11,343
|
-
|
||||||
Interest credited to policyholder deposits
|
4,288
|
3,151
|
||||||
Share-based compensation
|
3,462
|
1,651
|
||||||
Decrease (increase) in assets:
|
||||||||
Premium and other receivables, net
|
259,345
|
(646,650
|
)
|
|||||
Deferred policy acquisition costs and value of business acquired
|
(5,943
|
)
|
(7,139
|
)
|
||||
Deferred taxes
|
606
|
(218
|
)
|
|||||
Other assets
|
(19,657
|
)
|
2,976
|
|||||
(Decrease) increase in liabilities:
|
||||||||
Claim liabilities
|
(68,762
|
)
|
620,755
|
|||||
Liability for future policy benefits
|
15,859
|
15,286
|
||||||
Unearned premiums
|
(7,805
|
)
|
86,509
|
|||||
Liability to Federal Employees' Health Benefits and Federal Employees' Programs
|
(10,407
|
)
|
12,372
|
|||||
Accounts payable and accrued liabilities
|
(120,552
|
)
|
71,745
|
|||||
Net cash (used in) provided by operating activities
|
(3,928
|
)
|
191,849
|
Nine months ended
September 30,
|
||||||||
2018
|
2017
|
|||||||
Cash flows from investing activities:
|
||||||||
Proceeds from investments sold or matured:
|
||||||||
Securities available for sale:
|
||||||||
Fixed maturities sold
|
$
|
1,042,720
|
$
|
287,223
|
||||
Fixed maturities matured/called
|
18,133
|
15,503
|
||||||
Securities held to maturity:
|
||||||||
Fixed maturities matured/called
|
2,066
|
1,546
|
||||||
Equity investments sold
|
150,024
|
38,318
|
||||||
Other invested assets sold
|
2,040
|
-
|
||||||
Acquisition of investments:
|
||||||||
Securities available for sale:
|
||||||||
Fixed maturities
|
(1,113,587
|
)
|
(260,538
|
)
|
||||
Securities held to maturity:
|
||||||||
Fixed maturities
|
(2,238
|
)
|
(1,550
|
)
|
||||
Equity investments
|
(113,108
|
)
|
(75,507
|
)
|
||||
Other invested assets
|
(38,501
|
)
|
-
|
|||||
Decrease in other investments
|
(144
|
)
|
(2,207
|
)
|
||||
Net change in policy loans
|
(603
|
)
|
(696
|
)
|
||||
Net capital expenditures
|
(12,315
|
)
|
(15,949
|
)
|
||||
Net cash used in investing activities
|
(65,513
|
)
|
(13,857
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Change in outstanding checks in excess of bank balances
|
9,104
|
8,371
|
||||||
Repayments of long-term borrowings
|
(2,427
|
)
|
(2,028
|
)
|
||||
Repurchase and retirement of common stock
|
(22,390
|
)
|
(12,553
|
)
|
||||
Proceeds from policyholder deposits
|
14,726
|
12,130
|
||||||
Surrenders of policyholder deposits
|
(21,422
|
)
|
(17,398
|
)
|
||||
Net cash used in financing activities
|
(22,409
|
)
|
(11,478
|
)
|
||||
Net (decrease) increase in cash and cash equivalents
|
(91,850
|
)
|
166,514
|
|||||
Cash and cash equivalents:
|
||||||||
Beginning of period
|
198,941
|
103,428
|
||||||
End of period
|
$
|
107,091
|
$
|
269,942
|
(1) |
Basis of Presentation
|
(2) |
Significant Accounting Policies
|
(3) |
Investment in Securities
|
September 30, 2018
|
||||||||||||||||
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Estimated
fair value
|
|||||||||||||
Fixed maturities available for sale:
|
||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
11,460
|
$
|
-
|
$
|
(130
|
)
|
$
|
11,330
|
|||||||
U.S. Treasury securities and obligations of U.S. government instrumentalities
|
225,968
|
11
|
(1,488
|
)
|
224,491
|
|||||||||||
Obligations of the
Commonwealth of Puerto Rico and its instrumentalities
|
8,234
|
-
|
(5
|
)
|
8,229
|
|||||||||||
Municipal securities
|
679,796
|
13,967
|
(4,521
|
)
|
689,242
|
|||||||||||
Corporate bonds
|
213,048
|
9,525
|
(1,007
|
)
|
221,566
|
|||||||||||
Residential mortgage-backed securities
|
59,483
|
-
|
(987
|
)
|
58,496
|
|||||||||||
Collateralized mortgage obligations
|
11,054
|
-
|
(358
|
)
|
10,696
|
|||||||||||
Total fixed maturities available for sale
|
$
|
1,209,043
|
$
|
23,503
|
$
|
(8,496
|
)
|
$
|
1,224,050
|
|
September 30, 2018
|
|||||||||||||||
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Estimated
fair value
|
|||||||||||||
Fixed maturities held to maturity:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government instrumentalities
|
$
|
617
|
$
|
107
|
$
|
-
|
$
|
724
|
||||||||
Residential mortgage-backed securities
|
190
|
3
|
-
|
193
|
||||||||||||
Certificates of deposit
|
1,683
|
-
|
-
|
1,683
|
||||||||||||
Total
|
$
|
2,490
|
$
|
110
|
$
|
-
|
$
|
2,600
|
September 30, 2018
|
||||||||||||||||
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Estimated
fair value
|
|||||||||||||
Equity investments - Mutual funds
|
$
|
267,852
|
$
|
39,518
|
$
|
(1,010
|
)
|
$
|
306,360
|
September 30, 2018
|
||||||||||||||||
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Estimated
fair value
|
|||||||||||||
Other invested assets - Alternative investments
|
$
|
71,479
|
$
|
1,950
|
$
|
(302
|
)
|
$
|
73,127
|
December 31, 2017
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
|||||||||||||
Securities available for sale:
|
||||||||||||||||
Fixed maturities:
|
||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
1,431
|
$
|
13
|
$
|
-
|
$
|
1,444
|
||||||||
U.S. Treasury securities and obligations of U.S. government instrumentalities
|
118,858
|
41
|
(550
|
)
|
118,349
|
|||||||||||
Obligations of the
Commonwealth of Puerto Rico and its instrumentalities
|
8,059
|
34
|
-
|
8,093
|
||||||||||||
Municipal securities
|
771,789
|
30,468
|
(1,467
|
)
|
800,790
|
|||||||||||
Corporate bonds
|
217,046
|
17,767
|
(489
|
)
|
234,324
|
|||||||||||
Residential mortgage-backed securities
|
32,465
|
2
|
(355
|
)
|
32,112
|
|||||||||||
Collateralized mortgage obligations
|
22,003
|
10
|
(337
|
)
|
21,676
|
|||||||||||
Total fixed maturities
|
1,171,651
|
48,335
|
(3,198
|
)
|
1,216,788
|
|||||||||||
Equity securities:
|
||||||||||||||||
Mutual funds
|
292,460
|
50,072
|
(223
|
)
|
342,309
|
|||||||||||
Alternative investments
|
34,669
|
559
|
(244
|
)
|
34,984
|
|||||||||||
Total equity securities
|
327,129
|
50,631
|
(467
|
)
|
377,293
|
|||||||||||
Total
|
$
|
1,498,780
|
$
|
98,966
|
$
|
(3,665
|
)
|
$
|
1,594,081
|
|
December 31, 2017
|
|||||||||||||||
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Estimated
fair value
|
|||||||||||||
Securities held to maturity:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government instrumentalities
|
$
|
617
|
$
|
154
|
$
|
-
|
$
|
771
|
||||||||
Residential mortgage-backed securities
|
191
|
2
|
-
|
193
|
||||||||||||
Certificates of deposit
|
1,511
|
-
|
-
|
1,511
|
||||||||||||
Total
|
$
|
2,319
|
$
|
156
|
$
|
-
|
$
|
2,475
|
September 30, 2018
|
||||||||||||||||||||||||||||||||||||
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||||||||||||||
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
||||||||||||||||||||||||||||
Fixed maturities available for sale:
|
||||||||||||||||||||||||||||||||||||
Obligations of government-sponsored
enterprises
|
$
|
11,330
|
$
|
(130
|
)
|
2
|
$
|
-
|
$
|
-
|
-
|
$
|
11,330
|
$
|
(130
|
)
|
2
|
|||||||||||||||||||
U.S. Treasury securities and obligations of U.S. governmental instrumentalities
|
196,342
|
(1,488
|
)
|
21
|
-
|
-
|
-
|
196,342
|
(1,488
|
)
|
21
|
|||||||||||||||||||||||||
Obligations of the Commonwealth of Puerto Rico and its instrumentalities
|
7,485
|
(5
|
)
|
4
|
-
|
-
|
-
|
7,485
|
(5
|
)
|
4
|
|||||||||||||||||||||||||
Municipal securities
|
306,834
|
(3,727
|
)
|
56
|
23,631
|
(794
|
)
|
2
|
330,465
|
(4,521
|
)
|
58
|
||||||||||||||||||||||||
Corporate bonds
|
128,028
|
(1,007
|
)
|
44
|
-
|
-
|
-
|
128,028
|
(1,007
|
)
|
44
|
|||||||||||||||||||||||||
Residential mortgage-backed securities
|
53,395
|
(741
|
)
|
21
|
5,100
|
(246
|
)
|
4
|
58,495
|
(987
|
)
|
25
|
||||||||||||||||||||||||
Collateralized mortgage obligations
|
6,333
|
(148
|
)
|
2
|
4,115
|
(210
|
)
|
1
|
10,448
|
(358
|
)
|
3
|
||||||||||||||||||||||||
Total fixed maturities
|
$
|
709,747
|
$
|
(7,246
|
)
|
150
|
$
|
32,846
|
$
|
(1,250
|
)
|
7
|
$
|
742,593
|
$
|
(8,496
|
)
|
157
|
||||||||||||||||||
Other invested assets - Alternative investments
|
$
|
13,460
|
$
|
(224
|
)
|
5
|
$
|
8,817
|
$
|
(78
|
)
|
2
|
$
|
22,277
|
$
|
(302
|
)
|
7
|
December 31, 2017
|
||||||||||||||||||||||||||||||||||||
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||||||||||||||
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
||||||||||||||||||||||||||||
Securites available for sale:
|
||||||||||||||||||||||||||||||||||||
Fixed maturities:
|
||||||||||||||||||||||||||||||||||||
U.S. Treasury securities and obligations of U.S. governmental instrumentalities
|
$
|
96,617
|
$
|
(550
|
)
|
7
|
$
|
-
|
$
|
-
|
-
|
$
|
96,617
|
$
|
(550
|
)
|
7
|
|||||||||||||||||||
Municipal securities
|
162,731
|
(1,467
|
)
|
27
|
-
|
-
|
-
|
162,731
|
(1,467
|
)
|
27
|
|||||||||||||||||||||||||
Corporate bonds
|
80,374
|
(489
|
)
|
16
|
-
|
-
|
-
|
80,374
|
(489
|
)
|
16
|
|||||||||||||||||||||||||
Residential mortgage-backed securities
|
31,736
|
(355
|
)
|
19
|
-
|
-
|
-
|
31,736
|
(355
|
)
|
19
|
|||||||||||||||||||||||||
Collateralized mortgage obligations
|
13,630
|
(239
|
)
|
3
|
7,294
|
(98
|
)
|
2
|
20,924
|
(337
|
)
|
5
|
||||||||||||||||||||||||
Total fixed maturities
|
385,088
|
(3,100
|
)
|
72
|
7,294
|
(98
|
)
|
2
|
392,382
|
(3,198
|
)
|
74
|
||||||||||||||||||||||||
Equity securities:
|
||||||||||||||||||||||||||||||||||||
Mutual funds
|
42,983
|
(223
|
)
|
6
|
-
|
-
|
-
|
42,983
|
(223
|
)
|
6
|
|||||||||||||||||||||||||
Alternative investments
|
9,986
|
(212
|
)
|
5
|
3,162
|
(32
|
)
|
1
|
13,148
|
(244
|
)
|
6
|
||||||||||||||||||||||||
Total equity securities
|
52,969
|
(435
|
)
|
11
|
3,162
|
(32
|
)
|
1
|
56,131
|
(467
|
)
|
12
|
||||||||||||||||||||||||
Total for securities available for sale
|
$
|
438,057
|
$
|
(3,535
|
)
|
83
|
$
|
10,456
|
$
|
(130
|
)
|
3
|
$
|
448,513
|
$
|
(3,665
|
)
|
86
|
September 30, 2018
|
||||||||
Amortized
cost
|
Estimated
fair value
|
|||||||
Fixed maturities available for sale
|
||||||||
Due in one year or less
|
$
|
11,238
|
$
|
11,263
|
||||
Due after one year through five years
|
400,523
|
398,067
|
||||||
Due after five years through ten years
|
419,705
|
418,411
|
||||||
Due after ten years
|
307,040
|
327,117
|
||||||
Residential mortgage-backed securities
|
59,483
|
58,496
|
||||||
Collateralized mortgage obligations
|
11,054
|
10,696
|
||||||
$
|
1,209,043
|
$
|
1,224,050
|
|||||
Fixed maturities held to maturity
|
||||||||
Due in one year or less
|
1,683
|
1,683
|
||||||
Due after ten years
|
617
|
724
|
||||||
Residential mortgage-backed securities
|
190
|
193
|
||||||
$
|
2,490
|
$
|
2,600
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Realized gains (losses)
|
||||||||||||||||
Fixed maturity securities:
|
||||||||||||||||
Securities available for sale:
|
||||||||||||||||
Gross gains
|
$
|
587
|
$
|
933
|
2,099
|
$
|
1,334
|
|||||||||
Gross losses
|
(2,892
|
)
|
(194
|
)
|
(13,695
|
)
|
(830
|
)
|
||||||||
Total fixed securities
|
(2,305
|
)
|
739
|
(11,596
|
)
|
504
|
||||||||||
Equity investments:
|
||||||||||||||||
Gross gains
|
1,218
|
3,014
|
9,972
|
7,641
|
||||||||||||
Gross losses
|
(67
|
)
|
-
|
(1,091
|
)
|
(2
|
)
|
|||||||||
Total equity investments
|
1,151
|
3,014
|
8,881
|
7,639
|
||||||||||||
Other invested assets:
|
||||||||||||||||
Gross gains
|
311
|
-
|
4,104
|
-
|
||||||||||||
Gross losses
|
(113
|
)
|
-
|
(324
|
)
|
-
|
||||||||||
Total other invested assets
|
198
|
-
|
3,780
|
-
|
||||||||||||
Net realized investment (losses) gains
|
$
|
(956
|
)
|
$
|
3,753
|
$
|
1,065
|
$
|
8,143
|
|
Three months ended
September 30, |
Nine months ended
September 30, |
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Changes in net unrealized (losses) gains:
|
||||||||||||||||
Recognized in accumulated other comprehensive (loss) income:
|
||||||||||||||||
Fixed maturities – available for sale
|
$
|
(8,873
|
)
|
$
|
(1,199
|
)
|
$
|
(30,130
|
)
|
$
|
1,614
|
|||||
Other invested assets
|
894
|
3,605
|
1,333
|
17,516
|
||||||||||||
|
$
|
(7,979
|
)
|
$
|
2,406
|
$
|
(28,797
|
)
|
$
|
19,130
|
||||||
Not recognized in the consolidated financial statements:
|
||||||||||||||||
Fixed maturities – held to maturity
|
$
|
(13
|
)
|
$
|
(2
|
)
|
$
|
(46
|
)
|
$
|
(10
|
)
|
(4)
|
Premiums and Other Receivables, Net
|
September 30,
2018 |
December 31,
2017 |
|||||||
Premium
|
$
|
73,624
|
$
|
103,027
|
||||
Self-funded group receivables
|
34,851
|
39,859
|
||||||
FEHBP
|
13,670
|
13,346
|
||||||
Agent balances
|
26,076
|
32,818
|
||||||
Accrued interest
|
12,243
|
14,331
|
||||||
Reinsurance recoverable
|
428,298
|
661,679
|
||||||
Other
|
84,460
|
70,150
|
||||||
673,222
|
935,210
|
|||||||
Less allowance for doubtful receivables:
|
||||||||
Premium
|
31,379
|
26,490
|
||||||
Other
|
8,946
|
9,393
|
||||||
40,325
|
35,883
|
|||||||
Total premium and other receivables, net
|
$
|
632,897
|
$
|
899,327
|
(5)
|
Fair Value Measurements
|
September 30, 2018
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Fixed maturity securities available for sale:
|
||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
-
|
$
|
11,330
|
$
|
-
|
$
|
11,330
|
||||||||
U.S. Treasury securities and obligations of U.S government instrumentalities
|
224,491
|
-
|
-
|
224,491
|
||||||||||||
Obligations of the Commonwealth of Puerto Rico and its instrumentalities
|
-
|
8,229
|
-
|
8,229
|
||||||||||||
Municipal securities
|
-
|
689,242
|
-
|
689,242
|
||||||||||||
Corporate bonds
|
-
|
221,566
|
-
|
221,566
|
||||||||||||
Residential agency mortgage-backed securities
|
-
|
58,496
|
-
|
58,496
|
||||||||||||
Collateralized mortgage obligations
|
-
|
10,696
|
-
|
10,696
|
||||||||||||
Total fixed maturities
|
224,491
|
999,559
|
-
|
1,224,050
|
||||||||||||
Equity investments
|
$
|
143,638
|
$
|
162,722
|
$
|
-
|
$
|
306,360
|
December 31, 2017
|
||||||||||||||||
Securities available for sale:
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Fixed maturity securities:
|
||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
-
|
$
|
1,444
|
$
|
-
|
$
|
1,444
|
||||||||
U.S. Treasury securities and obligations of U.S government instrumentalities
|
118,349
|
-
|
-
|
118,349
|
||||||||||||
Obligations of the Commonwealth of Puerto Rico and its instrumentalities
|
-
|
8,093
|
-
|
8,093
|
||||||||||||
Municipal securities
|
-
|
800,790
|
-
|
800,790
|
||||||||||||
Corporate bonds
|
-
|
234,324
|
-
|
234,324
|
||||||||||||
Residential agency mortgage-backed securities
|
-
|
32,112
|
-
|
32,112
|
||||||||||||
Collateralized mortgage obligations
|
-
|
21,676
|
-
|
21,676
|
||||||||||||
Total fixed maturities
|
118,349
|
1,098,439
|
-
|
1,216,788
|
||||||||||||
Equity securities - Mutual funds
|
193,160
|
149,149
|
-
|
342,309
|
||||||||||||
Alternative investments - measured at net asset value
|
-
|
-
|
-
|
34,984
|
||||||||||||
Total equity securities
|
193,160
|
149,149
|
-
|
377,293
|
||||||||||||
Total
|
$
|
311,509
|
$
|
1,247,588
|
$
|
-
|
$
|
1,594,081
|
|
September 30, 2018
|
|||||||||||||||||||
|
Carrying
|
Fair Value
|
||||||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Assets:
|
||||||||||||||||||||
Policy loans
|
$
|
9,680
|
$
|
-
|
$
|
9,680
|
$
|
-
|
$
|
9,680
|
||||||||||
|
||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||
Policyholder deposits
|
$
|
174,126
|
$
|
-
|
$
|
174,126
|
$
|
-
|
$
|
174,126
|
||||||||||
Long-term borrowings:
|
||||||||||||||||||||
Loans payable to bank - variable
|
29,924
|
-
|
29,924
|
-
|
29,924
|
|||||||||||||||
Total liabilities
|
$
|
204,050
|
$
|
-
|
$
|
204,050
|
$
|
-
|
$
|
204,050
|
|
December 31, 2017
|
|||||||||||||||||||
|
Carrying
|
Fair Value
|
||||||||||||||||||
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Assets:
|
||||||||||||||||||||
Policy loans
|
$
|
9,077
|
$
|
-
|
$
|
9,077
|
$
|
-
|
$
|
9,077
|
||||||||||
|
||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||
Policyholder deposits
|
$
|
176,534
|
$
|
-
|
$
|
176,534
|
$
|
-
|
$
|
176,534
|
||||||||||
Long-term borrowings:
|
||||||||||||||||||||
Loans payable to bank - variable
|
32,350
|
-
|
32,350
|
-
|
32,350
|
|||||||||||||||
Total liabilities
|
$
|
208,884
|
$
|
-
|
$
|
208,884
|
$
|
-
|
$
|
208,884
|
(6)
|
Claim Liabilities
|
Nine months ended
September 30, 2018 |
||||||||||||
Managed
Care
|
Other
Business
Segments *
|
Consolidated
|
||||||||||
Claim liabilities at beginning of period
|
$
|
367,357
|
$
|
739,519
|
$
|
1,106,876
|
||||||
Reinsurance recoverable on claim liabilities
|
-
|
(633,099
|
)
|
(633,099
|
)
|
|||||||
Net claim liabilities at beginning of period
|
367,357
|
106,420
|
473,777
|
|||||||||
Claims incurred:
|
||||||||||||
Current period insured events
|
1,764,038
|
80,774
|
1,844,812
|
|||||||||
Prior period insured events
|
(30,404
|
)
|
122,951
|
92,547
|
||||||||
Total
|
1,733,634
|
203,725
|
1,937,359
|
|||||||||
Payments of losses and loss-adjustment expenses:
|
||||||||||||
Current period insured events
|
1,438,611
|
40,317
|
1,478,928
|
|||||||||
Prior period insured events
|
249,073
|
40,621
|
289,694
|
|||||||||
Total
|
1,687,684
|
80,938
|
1,768,622
|
|||||||||
Net claim liabilities at end of period
|
413,307
|
229,207
|
642,514
|
|||||||||
Reinsurance recoverable on claim liabilities
|
-
|
395,600
|
395,600
|
|||||||||
Claim liabilities at end of period
|
$
|
413,307
|
$
|
624,807
|
$
|
1,038,114
|
* |
Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.
|
Nine months ended
September 30, 2017 |
||||||||||||
Managed
Care
|
Other
Business
Segments *
|
Consolidated
|
||||||||||
Claim liabilities at beginning of period
|
$
|
349,047
|
$
|
138,896
|
$
|
487,943
|
||||||
Reinsurance recoverable on claim liabilities
|
-
|
(38,998
|
)
|
(38,998
|
)
|
|||||||
Net claim liabilities at beginning of period
|
349,047
|
99,898
|
448,945
|
|||||||||
Claims incurred:
|
||||||||||||
Current period insured events
|
1,724,890
|
95,227
|
1,820,117
|
|||||||||
Prior period insured events
|
(19,158
|
)
|
(5,920
|
)
|
(25,078
|
)
|
||||||
Total
|
1,705,732
|
89,307
|
1,795,039
|
|||||||||
Payments of losses and loss-adjustment expenses:
|
||||||||||||
Current period insured events
|
1,456,098
|
38,222
|
1,494,320
|
|||||||||
Prior period insured events
|
242,384
|
35,325
|
277,709
|
|||||||||
Total
|
1,698,482
|
73,547
|
1,772,029
|
|||||||||
Net claim liabilities at end of period
|
356,297
|
115,658
|
471,955
|
|||||||||
Reinsurance recoverable on claim liabilities
|
-
|
636,743
|
636,743
|
|||||||||
Claim liabilities at end of period
|
$
|
356,297
|
$
|
752,401
|
$
|
1,108,698
|
*
|
Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.
|
Incurred
Year
|
Total of IBNR Liabilities Plus Expected
Development on Reported Claims
|
||||
2017
|
$
|
11,965
|
|||
2018
|
325,427
|
||||
(7) |
Pension Plan
|
Three months ended
September 30, |
Nine months ended
September 30, |
|||||||||||||||
Components of net periodic benefit cost:
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Interest cost
|
$
|
1,713
|
$
|
1,652
|
$
|
5,099
|
$
|
5,248
|
||||||||
Expected return on assets
|
(2,255
|
)
|
(2,021
|
)
|
(6,817
|
)
|
(6,419
|
)
|
||||||||
Amortization of actuarial loss
|
240
|
79
|
670
|
251
|
||||||||||||
Settlement loss
|
395
|
580
|
1,045
|
1,211
|
||||||||||||
Net periodic benefit cost
|
$
|
93
|
$
|
290
|
$
|
(3
|
)
|
$
|
291
|
|||||||
(8) |
Reinsurance
|
(9) |
Income Taxes
|
September 30,
2018 |
December 31,
2017 |
|||||||
Deferred tax assets
|
||||||||
Gross deferred tax assets
|
$
|
127,563
|
$
|
87,058
|
||||
Less: valuation allowance
|
(12,696
|
)
|
(8,283
|
)
|
||||
Deferred tax assets
|
114,867
|
78,775
|
||||||
Deferred tax liabilities
|
||||||||
Gross deferred tax liabilities
|
(34,485
|
)
|
(35,543
|
)
|
||||
Net deferred tax asset
|
$
|
80,382
|
$
|
43,232
|
(10) |
Comprehensive Income (Loss)
|
Three months ended
September 30, |
Nine months ended
September 30, |
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net Unrealized Gain on Securities Beginning Balance
|
$
|
21,260
|
$
|
75,239
|
$
|
76,238
|
$
|
62,371
|
||||||||
Unrealized loss reclassified to beginning retained
earnings as a result of implementation new accounting pronouncement
|
-
|
-
|
(39,882
|
)
|
-
|
|||||||||||
Other comprehensive (loss) income before reclassifications
|
(6,981
|
)
|
4,853
|
(20,460
|
)
|
21,233
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
765
|
(3,002
|
)
|
(852
|
)
|
(6,514
|
)
|
|||||||||
Net current period change
|
(6,216
|
)
|
1,851
|
(21,312
|
)
|
14,719
|
||||||||||
Ending Balance
|
15,044
|
77,090
|
15,044
|
77,090
|
||||||||||||
Liability for Pension Benefits Beginning Balance
|
(24,722
|
)
|
(19,870
|
)
|
(24,984
|
)
|
(19,976
|
)
|
||||||||
Amounts reclassified from accumulated other comprehensive income
|
147
|
48
|
409
|
154
|
||||||||||||
Ending Balance
|
(24,575
|
)
|
(19,822
|
)
|
(24,575
|
)
|
(19,822
|
)
|
||||||||
Accumulated Other Comprehensive (Loss) Income Beginning Balance
|
(3,462
|
)
|
55,369
|
51,254
|
42,395
|
|||||||||||
Unrealized loss reclassified to beginning retained
earnings as the result of implementing new accounting pronouncement
|
-
|
-
|
(39,882
|
)
|
-
|
|||||||||||
Other comprehensive (loss) income before reclassifications
|
(6,981
|
)
|
4,853
|
(20,460
|
)
|
21,233
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
912
|
(2,954
|
)
|
(443
|
)
|
(6,360
|
)
|
|||||||||
Net current period change
|
(6,069
|
)
|
1,899
|
(20,903
|
)
|
14,873
|
||||||||||
Ending Balance
|
$
|
(9,531
|
)
|
$
|
57,268
|
$
|
(9,531
|
)
|
$
|
57,268
|
(11) |
Stock Repurchase Program
|
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(Unaudited)
(12) |
Share-Based Compensation
|
(13) |
Net (Loss) Income Available to Stockholders and Net (Loss) Income per Share
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Numerator for earnings per share:
|
||||||||||||||||
Net (loss) income attributable to TSM available to stockholders
|
$
|
(17,567
|
)
|
$
|
21,912
|
$
|
(52,400
|
)
|
$
|
30,275
|
||||||
Denominator for basic earnings per share:
|
||||||||||||||||
Weighted average of common shares
|
22,895,582
|
24,142,192
|
23,058,754
|
24,177,344
|
||||||||||||
Effect of dilutive securities
|
-
|
65,830
|
-
|
54,364
|
||||||||||||
Denominator for diluted earnings per share
|
22,895,582
|
24,208,022
|
23,058,754
|
24,231,708
|
||||||||||||
Basic net (loss) income per share attributable to TSM
|
$
|
(0.77
|
)
|
$
|
0.91
|
$
|
(2.27
|
)
|
$
|
1.25
|
||||||
Diluted net (loss) income per share attributable to TSM
|
$
|
(0.77
|
)
|
$
|
0.91
|
$
|
(2.27
|
)
|
$
|
1.25
|
(14) |
Contingencies
|
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(Unaudited)
(15) |
Segment Information
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Operating revenues:
|
||||||||||||||||
Managed Care:
|
||||||||||||||||
Premiums earned, net
|
$
|
680,393
|
$
|
653,734
|
$
|
2,044,989
|
$
|
1,955,246
|
||||||||
Administrative service fees
|
3,802
|
3,391
|
11,216
|
12,318
|
||||||||||||
Intersegment premiums/service fees
|
1,390
|
1,781
|
4,061
|
4,946
|
||||||||||||
Net investment income
|
6,776
|
4,097
|
17,547
|
12,135
|
||||||||||||
Total managed care
|
692,361
|
663,003
|
2,077,813
|
1,984,645
|
||||||||||||
Life Insurance:
|
||||||||||||||||
Premiums earned, net
|
42,049
|
40,845
|
124,318
|
121,001
|
||||||||||||
Intersegment premiums
|
235
|
107
|
832
|
409
|
||||||||||||
Net investment income
|
6,428
|
6,070
|
19,105
|
18,487
|
||||||||||||
Total life insurance
|
48,712
|
47,022
|
144,255
|
139,897
|
||||||||||||
Property and Casualty Insurance:
|
||||||||||||||||
Premiums earned, net
|
20,003
|
19,746
|
66,662
|
62,962
|
||||||||||||
Intersegment premiums
|
153
|
153
|
460
|
460
|
||||||||||||
Net investment income
|
2,518
|
2,106
|
7,724
|
6,164
|
||||||||||||
Total property and casualty insurance
|
22,674
|
22,005
|
74,846
|
69,586
|
||||||||||||
Other segments: *
|
||||||||||||||||
Intersegment service revenues
|
(5
|
)
|
2,796
|
283
|
6,641
|
|||||||||||
Operating revenues from external sources
|
1,575
|
976
|
4,234
|
3,130
|
||||||||||||
Total other segments
|
1,570
|
3,772
|
4,517
|
9,771
|
||||||||||||
Total business segments
|
765,317
|
735,802
|
2,301,431
|
2,203,899
|
||||||||||||
TSM operating revenues from external sources
|
446
|
87
|
1,254
|
220
|
||||||||||||
Elimination of intersegment premiums/service fees
|
(1,778
|
)
|
(2,041
|
)
|
(5,073
|
)
|
(5,535
|
)
|
||||||||
Elimination of intersegment service revenues
|
5
|
(2,796
|
)
|
(283
|
)
|
(6,641
|
)
|
|||||||||
Consolidated operating revenues
|
$
|
763,990
|
$
|
731,052
|
$
|
2,297,329
|
$
|
2,191,943
|
* |
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinic.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Operating income (loss):
|
||||||||||||||||
Managed care
|
$
|
14,229
|
$
|
34,819
|
$
|
26,264
|
$
|
19,157
|
||||||||
Life insurance
|
5,681
|
4,477
|
14,637
|
13,402
|
||||||||||||
Property and casualty insurance
|
(46,880
|
)
|
(11,115
|
)
|
(114,820
|
)
|
(5,273
|
)
|
||||||||
Other segments *
|
288
|
373
|
890
|
517
|
||||||||||||
Total business segments
|
(26,682
|
)
|
28,554
|
(73,029
|
)
|
27,803
|
||||||||||
TSM operating revenues from external sources
|
446
|
87
|
1,254
|
220
|
||||||||||||
TSM unallocated operating expenses
|
(1,780
|
)
|
(2,759
|
)
|
(6,575
|
)
|
(7,876
|
)
|
||||||||
Elimination of TSM intersegment charges
|
2,400
|
2,400
|
7,200
|
7,200
|
||||||||||||
Consolidated operating (loss) income
|
(25,616
|
)
|
28,282
|
(71,150
|
)
|
27,347
|
||||||||||
Consolidated net realized investment (losses) gains
|
(956
|
)
|
3,753
|
1,065
|
8,143
|
|||||||||||
Consolidated net unrealized investment losses on equity investments
|
5,632
|
-
|
(11,343
|
)
|
-
|
|||||||||||
Consolidated interest expense
|
(2,000
|
)
|
(1,709
|
)
|
(5,515
|
)
|
(5,116
|
)
|
||||||||
Consolidated other income, net
|
1,943
|
3,409
|
3,600
|
6,521
|
||||||||||||
Consolidated (loss) income before taxes
|
$
|
(20,997
|
)
|
$
|
33,735
|
$
|
(83,343
|
)
|
$
|
36,895
|
||||||
Depreciation and amortization expense:
|
||||||||||||||||
Managed care
|
$
|
2,214
|
$
|
2,567
|
$
|
7,659
|
$
|
7,455
|
||||||||
Life insurance
|
272
|
315
|
868
|
913
|
||||||||||||
Property and casualty insurance
|
89
|
136
|
301
|
388
|
||||||||||||
Other segments*
|
175
|
166
|
515
|
489
|
||||||||||||
Total business segments
|
2,750
|
3,184
|
9,343
|
9,245
|
||||||||||||
TSM depreciation expense
|
197
|
197
|
590
|
590
|
||||||||||||
Consolidated depreciation and amortization expense
|
$
|
2,947
|
$
|
3,381
|
$
|
9,933
|
$
|
9,835
|
* |
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinic.
|
September 30,
2018
|
December 31,
2017
|
|||||||
Assets:
|
||||||||
Managed care
|
$
|
1,130,401
|
$
|
1,092,715
|
||||
Life insurance
|
852,750
|
853,289
|
||||||
Property and casualty insurance
|
762,705
|
1,094,773
|
||||||
Other segments *
|
20,787
|
19,027
|
||||||
Total business segments
|
2,766,643
|
3,059,804
|
||||||
Unallocated amounts related to TSM:
|
||||||||
Cash, cash equivalents, and investments
|
59,496
|
81,169
|
||||||
Property and equipment, net
|
21,326
|
22,257
|
||||||
Other assets
|
23,547
|
22,763
|
||||||
104,369
|
126,189
|
|||||||
Elimination entries-intersegment receivables and others
|
(52,584
|
)
|
(69,228
|
)
|
||||
Consolidated total assets
|
$
|
2,818,428
|
$
|
3,116,765
|
* |
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinic.
|
(16) |
Subsequent Events
|
As of September 30,
|
||||||||
2018
|
2017
|
|||||||
Managed care enrollment:
|
||||||||
Commercial 1
|
453,823
|
492,498
|
||||||
Medicare
|
111,389
|
123,194
|
||||||
Medicaid
|
394,149
|
379,199
|
||||||
Total
|
959,361
|
994,891
|
||||||
Managed care enrollment by funding arrangement:
|
||||||||
Fully-insured
|
819,267
|
831,170
|
||||||
Self-insured
|
140,094
|
163,721
|
||||||
Total
|
959,361
|
994,891
|
(1) |
Commercial membership includes corporate accounts, self-funded employers, individual accounts, Medicare Supplement, Federal government employees and local government
employees.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
(dollar amounts in millions)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Revenues:
|
||||||||||||||||
Premiums earned, net
|
$
|
742.4
|
$
|
714.3
|
$
|
2,236.3
|
$
|
2,139.5
|
||||||||
Administrative service fees
|
3.8
|
3.4
|
11.2
|
12.3
|
||||||||||||
Net investment income
|
16.2
|
12.4
|
45.6
|
37.1
|
||||||||||||
Other operating revenues
|
1.6
|
1.0
|
4.2
|
3.0
|
||||||||||||
Total operating revenues
|
764.0
|
731.1
|
2,297.3
|
2,191.9
|
||||||||||||
Net realized investment (losses) gains
|
(0.9
|
)
|
3.7
|
1.1
|
8.1
|
|||||||||||
Net unrealized investment gains (losses) on equity investments
|
5.6
|
-
|
(11.3
|
)
|
-
|
|||||||||||
Other income, net
|
1.9
|
3.4
|
3.6
|
6.6
|
||||||||||||
Total revenues
|
770.6
|
738.2
|
2,290.7
|
2,206.6
|
||||||||||||
Benefits and expenses:
|
||||||||||||||||
Claims incurred
|
648.6
|
583.6
|
1,959.7
|
1,815.8
|
||||||||||||
Operating expenses
|
141.0
|
119.2
|
408.8
|
348.8
|
||||||||||||
Total operating expenses
|
789.6
|
702.8
|
2,368.5
|
2,164.6
|
||||||||||||
Interest expense
|
2.0
|
1.7
|
5.5
|
5.1
|
||||||||||||
Total benefits and expenses
|
791.6
|
704.5
|
2,374.0
|
2,169.7
|
||||||||||||
(Loss) income before taxes
|
(21.0
|
)
|
33.7
|
(83.3
|
)
|
36.9
|
||||||||||
Income tax (benefit) expense
|
(3.4
|
)
|
11.8
|
(30.9
|
)
|
6.6
|
||||||||||
Net (loss) income attributable to TSM
|
$
|
(17.6
|
)
|
$
|
21.9
|
$
|
(52.4
|
)
|
$
|
30.3
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
(dollar amounts in millions)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Operating revenues:
|
||||||||||||||||
Medical premiums earned, net:
|
||||||||||||||||
Commercial
|
$
|
197.3
|
$
|
198.9
|
$
|
590.8
|
$
|
607.4
|
||||||||
Medicare
|
283.6
|
264.3
|
851.3
|
788.5
|
||||||||||||
Medicaid
|
199.8
|
190.9
|
603.9
|
560.3
|
||||||||||||
Medical premiums earned, net
|
680.7
|
654.1
|
2,046.0
|
1,956.2
|
||||||||||||
Administrative service fees
|
4.9
|
4.8
|
14.3
|
16.3
|
||||||||||||
Net investment income
|
6.8
|
4.1
|
17.5
|
12.1
|
||||||||||||
Total operating revenues
|
692.4
|
663.0
|
2,077.8
|
1,984.6
|
||||||||||||
Medical operating costs:
|
||||||||||||||||
Medical claims incurred
|
566.1
|
539.2
|
1,733.6
|
1,705.7
|
||||||||||||
Medical operating expenses
|
112.1
|
89.0
|
317.9
|
259.7
|
||||||||||||
Total medical operating costs
|
678.2
|
628.2
|
2,051.5
|
1,965.4
|
||||||||||||
Medical operating income
|
$
|
14.2
|
$
|
34.8
|
$
|
26.3
|
$
|
19.2
|
||||||||
Additional data:
|
||||||||||||||||
Member months enrollment:
|
||||||||||||||||
Commercial:
|
||||||||||||||||
Fully-insured
|
939,110
|
994,409
|
2,840,884
|
3,009,252
|
||||||||||||
Self-funded
|
427,791
|
495,616
|
1,317,244
|
1,504,283
|
||||||||||||
Total Commercial
|
1,366,901
|
1,490,025
|
4,158,128
|
4,513,535
|
||||||||||||
Medicare
|
334,836
|
368,102
|
1,008,063
|
1,095,086
|
||||||||||||
Medicaid
|
1,191,681
|
1,138,162
|
3,564,769
|
3,480,525
|
||||||||||||
Total member months
|
2,893,418
|
2,996,289
|
8,730,960
|
9,089,146
|
||||||||||||
Medical loss ratio
|
83.2
|
%
|
82.4
|
%
|
84.7
|
%
|
87.2
|
%
|
||||||||
Operating expense ratio
|
16.4
|
%
|
13.5
|
%
|
15.4
|
%
|
13.2
|
%
|
• |
Medical premiums generated by the Medicare business amounted to $283.6 million, $19.3 million, or 7.3% higher than last year, primarily reflecting an increase in the Medicare reimbursement rates for the first time since 2012, the increase related
to the 4-star rating achievement in our 2018 HMO product, and higher average membership risk score. These increases were offset partially by a decrease in enrollment of approximately 33,000 member months.
|
• |
Medical premiums generated by the Medicaid business increased $8.9 million, or 4.7% to $199.8 million.
Increase primarily reflects higher membership by approximately 54,000 member months, $8.7 million of premiums related to the achievement of the contract’s quality incentive metrics, and $3.6 million related to the reinstatement of
the HIP fee pass-through in 2018. These increases were partially offset by the impact of the profit sharing accrual, which decreased 2018 premiums by approximately $5.6 million.
|
• |
Medical premiums generated by the Commercial business decreased by $1.6 million, or 0.8%, to $197.3
million. This fluctuation primarily reflects lower fully-insured enrollment during the year by approximately 55,000 member months offset by $3.0 million related to the reinstatement of the HIP fee pass-through in 2018.
|
• |
The medical claims incurred of the Commercial business increased by $21.2 million, or 14.6%, during the 2018 period and its MLR, at 84.5 points higher than last year, primarily reflecting the
decrease in utilization in the 2017 period caused by Hurricanes Irma and Maria and unfavorable prior period reserve development. The hurricane related decrease in utilization was estimated to lower 2017 claims by approximately
$16.6 million, or 830 basis points of last year’s MLR. Adjusting for the effect of prior period reserve development in 2018 and 2017 period as well as
adjusting for the 2017 hurricane related impact in utilization, the Commercial MLR would have been approximately 83.3%, 410 basis points higher than last year, reflecting claim trends higher than premium trends.
|
• |
Medical claims incurred of the Medicare business increased by $7.8 million, or 3.5%, during the 2018 period and its MLR decreased by 300 basis points, to 80.3%, primarily
reflecting higher premium rates, the estimated impact in utilization in the 2017 period caused by Hurricanes Irma and Maria, and higher benefits on the 2018 products. The hurricane related decrease in utilization was estimated to
lower 2017 claims by approximately $15.3 million, or 580 basis points of last year’s MLR. Adjusting for the effect of prior period reserve development in the 2018 and 2017 periods, moving the risk score revenue to it corresponding
period, as well as adjusting for the 2017 hurricane related impact in utilization, the Medicare MLR would have been approximately 82.7%, 510 basis points lower than last year, primarily reflecting the higher premium rates in the 2018
period.
|
• |
The Medicaid claims incurred decreased by $2.0 million, or 1.2%, during the 2018 period and its MLR, at 85.9%, is 510 basis points lower than last year. The hurricane
related decrease in utilization was estimated to lower 2017 claims by approximately $1.0 million, or 50 basis points of last year’s MLR. Adjusting for the effect of prior period reserve developments, the increase in quality incentive
premiums, and the 2018 profit sharing accrual, the Medicaid MLR would have been approximately 87.3%, 50 basis points lower than the adjusted MLR for last year.
|
• |
Medical premiums generated by the Medicare business increased by $62.8 million, or 8.0%, to $851.3 million,
primarily reflecting an increase in the Medicare reimbursement rates for the first time since 2012, the increase related to the 4-star rating achievement in our 2018 HMO product, increase in the risk score adjustment, as well as to a
higher average membership risk score.
|
• |
Medical premiums generated by the Medicaid business amounted to $603.9 million, $43.6 million, or 7.8%
higher when compared to the prior period. Increase primarily reflects higher premiums rates effective July 1, 2017, $10.9 million related to the reinstatement of the HIP fee pass-through in 2018, an $8.7 million increase in
premiums related to the achievement of the contract’s quality incentive metrics, and an increase in member months enrollment of approximately 84,000. These increases were partially offset by impact of the profit sharing accrual,
which decreased 2018 premiums by approximately $5.6 million.
|
• |
Medical premiums generated by the Commercial business decreased by $16.6 million, or 2.7%, to $590.8 million. This fluctuation primarily reflects lower fully-insured
enrollment during the year by approximately 168,000 member months and $9.0 million related to the reinstatement of the HIP fee pass-through in 2018.
|
• |
The medical claims incurred of the Medicare business increased by $14.0 million, or 2.0%, during the 2018 period and its MLR decreased by 490 basis points, to 84.4%,
primarily reflecting higher premium rates, the decrease in utilization in the 2017 period caused by Hurricanes Irma and Maria and higher benefits on 2018 products. The hurricane related decrease in utilization was estimated to lower
2017 claims by approximately $15.3 million, or 200 basis points of last year’s MLR. Adjusting for the effect of prior period reserve development in 2018 and 2017 period, moving the risk score revenue to it corresponding period, as
well as adjusting for the 2017 hurricane related impact in utilization, the Medicare MLR would have been approximately 85.1%, about 590 basis points lower than last year, primarily reflecting the higher premium rates in the 2018
period offset in part by the increased utilization of services as the result of the waiver of pre-authorization requirements mandated by CMS following the impact of the hurricanes in 2017 and changes in benefits. The waiver was in
place until June 15, 2018.
|
• |
Medicaid medical claims incurred increased by $10.1 million, or 1.9%, in the 2018 period and its MLR decreased by 500 basis points, to 87.9%. The hurricane related
decrease in utilization was estimated to lower 2017 claims by approximately $1.0 million, or 10 basis points of last year’s MLR. Adjusting for the effect of prior period reserve developments, the increase in quality incentive
premiums, and the 2018 profit sharing accrual, the Medicaid MLR would have been approximately 87.8%, 380 basis points lower than the adjusted MLR for last year mostly reflecting the impact of higher premium rates in 2018 and the
impact of cost containment initiatives.
|
• |
The Commercial medical claims incurred increased by $3.7 million, or 0.8%, during the 2018 period and its MLR, at 82.0%, was 290 basis points higher year over year,
primarily reflecting the decrease in utilization in the 2017 period caused by Hurricanes Irma and Maria offset in part by favorable prior period reserve development. The hurricane related decrease in utilization was estimated to
lower 2017 claims by approximately $16.6 million, or 280 basis points of last year’s MLR. Adjusting for the effect of prior period reserve development in 2018 and 2017 period as well as adjusting for the 2017 hurricane related impact
in utilization, the Commercial MLR would have been approximately 83.5%, 250 basis points higher than last year, reflecting claim trends higher than premium trends.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
(dollar amounts in millions)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Operating revenues:
|
||||||||||||||||
Premiums earned, net:
|
||||||||||||||||
Premiums earned
|
$
|
43.7
|
$
|
41.0
|
$
|
129.7
|
$
|
124.6
|
||||||||
Assumed earned premiums
|
0.7
|
2.0
|
2.0
|
3.4
|
||||||||||||
Ceded premiums earned
|
(2.1
|
)
|
(2.1
|
)
|
(6.6
|
)
|
(6.6
|
)
|
||||||||
Premiums earned, net
|
42.3
|
40.9
|
125.1
|
121.4
|
||||||||||||
Net investment income
|
6.4
|
6.1
|
19.1
|
18.5
|
||||||||||||
Total operating revenues
|
48.7
|
47.0
|
144.2
|
139.9
|
||||||||||||
Operating costs:
|
||||||||||||||||
Policy benefits and claims incurred
|
25.3
|
23.1
|
73.8
|
68.7
|
||||||||||||
Underwriting and other expenses
|
17.7
|
19.4
|
55.8
|
57.8
|
||||||||||||
Total operating costs
|
43.0
|
42.5
|
129.6
|
126.5
|
||||||||||||
Operating income
|
$
|
5.7
|
$
|
4.5
|
$
|
14.6
|
$
|
13.4
|
||||||||
Additional data:
|
||||||||||||||||
Loss ratio
|
59.8
|
%
|
56.5
|
%
|
59.0
|
%
|
56.6
|
%
|
||||||||
Operating expense ratio
|
41.8
|
%
|
47.4
|
%
|
44.6
|
%
|
47.6
|
%
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
(dollar amounts in millions)
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Operating revenues:
|
||||||||||||||||
Premiums earned, net:
|
||||||||||||||||
Premiums written
|
$
|
33.3
|
$
|
31.0
|
$
|
99.7
|
$
|
104.8
|
||||||||
Premiums ceded
|
(12.6
|
)
|
(13.4
|
)
|
(40.1
|
)
|
(40.1
|
)
|
||||||||
Change in unearned premiums
|
(0.5
|
)
|
2.3
|
7.5
|
(1.3
|
)
|
||||||||||
Premiums earned, net
|
20.2
|
19.9
|
67.1
|
63.4
|
||||||||||||
Net investment income
|
2.5
|
2.1
|
7.7
|
6.2
|
||||||||||||
Total operating revenues
|
22.7
|
22.0
|
74.8
|
69.6
|
||||||||||||
Operating costs:
|
||||||||||||||||
Claims incurred
|
58.2
|
22.0
|
155.1
|
43.5
|
||||||||||||
Underwriting and other expenses
|
11.4
|
11.1
|
34.5
|
31.3
|
||||||||||||
Total operating costs
|
69.6
|
33.1
|
189.6
|
74.8
|
||||||||||||
Operating loss
|
$
|
(46.9
|
)
|
$
|
(11.1
|
)
|
$
|
(114.8
|
)
|
$
|
(5.2
|
)
|
||||
Additional data:
|
||||||||||||||||
Loss ratio
|
288.1
|
%
|
110.6
|
%
|
231.1
|
%
|
68.6
|
%
|
||||||||
Operating expense ratio
|
56.4
|
%
|
55.8
|
%
|
51.4
|
%
|
49.4
|
%
|
Nine months ended
September 30,
|
||||||||
(dollar amounts in millions)
|
2018
|
2017
|
||||||
Sources (uses) of cash:
|
||||||||
Cash (used in) provided by operating activities
|
$
|
(3.9
|
)
|
$
|
191.8
|
|||
Net (purchases) sales of investment securities
|
(52.5
|
)
|
2.8
|
|||||
Net capital expenditures
|
(12.3
|
)
|
(15.9
|
)
|
||||
Proceeds from long-term borrowings
|
-
|
24.3
|
||||||
Payments of long-term borrowings
|
(2.4
|
)
|
(26.3
|
)
|
||||
Proceeds from policyholder deposits
|
14.7
|
12.1
|
||||||
Surrenders of policyholder deposits
|
(21.4
|
)
|
(17.4
|
)
|
||||
Repurchase and retirement of common stock
|
(22.4
|
)
|
(12.6
|
)
|
||||
Other
|
8.3
|
7.7
|
||||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(91.9
|
)
|
$
|
166.5
|
(Dollar amounts in millions, except per
share data)
|
Total Number
of Shares
Purchased
|
Average
Price
Paid per
Share
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Programs ¹
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the
Programs
|
||||||||||||
|
||||||||||||||||
July 1, 2018 to July 31, 2018
|
-
|
$
|
-
|
-
|
$
|
18.5
|
||||||||||
August 1, 2018 to August 31, 2018
|
115,626
|
25.93
|
115,626
|
15.5
|
||||||||||||
September 1, 2018 to September 30, 2018
|
144,299
|
20.77
|
144,299
|
12.5
|
Exhibits
|
Description
|
Contract between the Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc. for the provision of physical
& behavioral health services under the Government Health Plan Program (File No. 001-33865).
|
|
11
|
Statement re computation of per share earnings; an exhibit describing the computation of the earnings per share for the three and nine
months ended September 30, 2018 and 2017 has been omitted as the detail necessary to determine the computation of earnings per share can be clearly determined from the material contained in Part I of this Quarterly Report on Form 10-Q.
|
Certification of the President and Chief Executive Officer required by Rule 13a-14(a)/15d-14(a).
|
|
Certification of the Executive Vice President and Chief Financial Officer required by Rule 13a-14(a)/15d-14(a).
|
|
Certification of the President and Chief Executive Officer required pursuant to 18 U.S.C Section 1350.
|
|
Certification of the Executive Vice President and Chief Financial Officer required pursuant to 18 U.S.C Section 1350.
|
Triple-S Management Corporation
|
||||
Registrant
|
||||
Date:
|
November 8, 2018
|
By:
|
/s/ Roberto García-Rodríguez
|
|
Roberto García-Rodríguez
|
||||
President and Chief Executive Officer
|
||||
Date:
|
November 8, 2018
|
By:
|
/s/ Juan J. Román-Jiménez
|
|
Juan J. Román-Jiménez
|
||||
Executive Vice President and Chief Financial Officer
|