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Triple-S Management Corporation Reports Record Consolidated Operating Income, Net Income and EPS for 2007

Continued Improvements in Medical Loss Ratio

SAN JUAN, Puerto Rico, Feb. 11 /PRNewswire-FirstCall/ -- Triple-S Management Corporation (NYSE: GTS), the largest managed care company in Puerto Rico, today announced record consolidated operating income of $83.5 million, net income of $58.5 million and EPS of $2.15 for the year ended December 31, 2007 (including $0.07 per share in net realized and unrealized gains) reflecting the Company's strong market position and medical cost management.

2007 Highlights

-- Operating income increased 13.9 percent to $83.5 million

-- Net income rose 7.3 percent to $58.5 million

-- Earnings per share was $2.15 based on 27.2 million weighted average

shares outstanding

-- Medical Loss Ratio (MLR) improved 50 basis points to 87.1 percent

-- Continued success expanding Medicare Advantage business: 38,000

members at December 31, 2007, a 41 percent year-over-year increase

-- Completed IPO on December 7, 2007

"While 2007 was a memorable year because we made our debut as a public company in December, we also strengthened the foundation of our business, allowing us to better serve our network of providers and our members going forward," said Ramon M. Ruiz-Comas, President and Chief Executive Officer.

Consolidated operating revenues for 2007 were $1.54 billion, 1.5 percent lower than the previous year. The decrease resulted primarily from the change in carrier for the Metro-North Region in the Commonwealth of Puerto Rico Health Reform business, which is similar to Medicaid (the Reform business) effective November 1, 2006 (which represented premiums of approximately $162 million for the ten-month period ended October 31, 2ties and accruals $726,519 $654,109

Accounts payable and accrued liabilities 279,539 156,472

Borrowings 170,946 183,087

Income tax payable 0 9,242

Total liabilities 1,177,004 1,002,910

Stockholders' equity:

Common stock 32,309 26,733

Other stockholders equity 450,229 315,866

Total stockholders' equity 482,538 342,599

Total liabilities and stockholders'

equity $1,659,542 $1,345,509

Condensed Consolidated Statements of Earnings

Years ended December 31, 2007 and 2006

(Dollar amounts in thousands, except per share data)

Unaudited 2007 2006


Premiums earned, net $1,483,548 $1,511,626

Administrative service fees 14,018 14,089

Net investment income 47,194 42,657

Total operating revenues 1,544,760 1,568,372

Net realized investment gains 5,931 837

Net unrealized investment (loss)

gain on trading securities (4,116) 7,699

Other income, net 3,217 2,323

Total revenues 1,549,792 1,579,231

Benefits and expenses:

Claims incurred 1,223,775 1,258,981

Operating expenses 237,533 236,065

Total operating costs 1,461,308 1,495,046

Interest expense 15,839 16,626

Total benefits and expenses 1,477,147 1,511,672

Income before taxes 72,645 67,559

Income tax expense 14,127 13,026

Net income $58,518 $54,533

Basic net income per share $2.15 $2.04

Condensed Consolidated Statements of Earnings

Three-month periods ended December 31, 2007 and 2006

(Dollar amounts in thousands, except per share data)

Unaudited 2007 2006


Premiums earned, net $381,934 $353,027

Administrative service fees 2,984 3,733

Net investment income 13,797 11,332

Total operating revenues 398,715 368,092

Net realized investment losses (232) (487)

Net unrealized investment (loss) gain

on trading securities (3,352) 3,981

Other income, net 1,375 1,115

Total revenues 396,506 372,701

Benefits and expenses:

Claims incurred 308,401 284,677

Operating expenses 64,094 65,593

Total operating costs 372,495 350,270

Interest expense 3,891 4,239

Total benefits and expenses 376,386 354,509

Income before taxes 20,120 18,192

Income tax expense 2,402 2,489

Net income $17,718 $15,703

Basic net income per share $0.62 $0.59

Condensed Consolidated Statements of Cash Flows

Years ended December 31, 2007 and 2006

(Dollar amounts in thousands, except per share data)

Unaudited 2007 2006

Net cash provided by operating

activities $115,534 $75,586

Cash flows from investing activities:

Proceeds from investments sold or


Securities available for sale:

Fixed maturities sold 299,561 51,519

Fixed maturities matured 41,248 32,826

Equity securities 1,000 1,209

Securities held to maturity:

Fixed maturities matured 13,246 492

Acquisition of investments:

Securities available for sale:

Fixed maturities (327,409) (81,496)

Equity securities (18,379) (11,620)

Securities held to maturity:

Fixed maturities (8,244) (2,197)

Acquisition of business, net of

$10,403 of cash acquired 0 (27,793)

Net disbursements for policy loans (287) (415)

Capital expenditures (9,390) (11,873)

Other 0 2

Net cash used in investing

activities (8,654) (49,346)

Cash flows from financing activities:

Net proceeds from initial public offering 70,480 0

Change in outstanding checks in

excess of bank balances (3,076) (8,224)

Repayments of short-term borrowings (54,519) (119,547)

Proceeds from short-term borrowings 54,519 117,807

Repayments of long-term borrowings (12,141) (2,503)

Proceeds from long-term borrowings 0 35,000

Dividends (2,448) (6,231)

Proceeds from annuity contracts 6,329 6,008

Surrenders of annuity contracts (7,435) (16,036)

Net cash provided by financing

activities 51,709 6,274

Net increase in cash and cash

equivalents 158,589 32,514

Cash and cash equivalents, beginning

of year 81,564 49,050

Cash and cash equivalents, end of year $240,153 $81,564

006 and an average enrollment of 200,000 members). This decline was partially offset by membership enrollment growth in the Medicare Advantage business, as well as premium rate increases in the managed care segment. Excluding the effect of the Metro-North Region contract, consolidated revenues for 2007 increased by $133.6 million, or 9.4 percent over 2006.

Consolidated claims incurred and operating expenses for the year were $1.46 billion, a decline of 2.3 percent from the prior year. Consolidated claims incurred fell due to a lower MLR and a reduction in business volume. Meanwhile, operating expenses remained relatively flat.

Net income for 2007 was $58.5 million, or $2.15 per share based on weighted average shares outstanding of 27.2 million. This compares with net income for 2006 of $54.5 million, or $2.04 per share based on weighted average shares outstanding of 26.7 million. The improvement in 2007 reflected higher operating margins in Triple-S Management's managed care segment. The margin expansion is primarily the result of a change in the mix of business within this segment, a decrease in the MLR in both the Commercial and Reform businesses, and continued increases in Medicare Advantage membership enrollment.

Fourth Quarter Highlights

For the three months ended December 31, 2007, consolidated operating revenues were $398.7 million, up 8.3 percent from $368.1 million in the prior year, primarily reflecting enrollment growth in Medicare Advantage, premium rate increases across all businesses in the managed care segment, volume increases in the P&C segment and the effect of the termination of the Metro- North Region contract in 2006. Consolidated operating costs rose by 6.3 percent to $372.5 million largely due to business volume increases. MLR improved 20 basis points for the quarter year over year. Operating expenses declined $1.5 million, or 2.3 percent, to $64.1 million. Net income came in at $17.7 million, or $0.62 per share, 12.8 percent above the $15.7 million, or $0.59 cents per share, recorded for the quarter ended December 31, 2006. Weighted average shares were 28.6 million and 26.7 million during the quarters ended December 31, 2007 and 2006, respectively. The 2007 and 2006 results included a loss of $3.6 million, or ($0.13) per share, and a gain of $3.5 million, or $0.13 per share, of realized investment gains/(loss) and net unrealized investment gains/(loss) on trading securities, respectively.

Segment Performance

Triple-S Management operates in three segments: 1) Managed Care, 2) Life Insurance, and 3) Property and Casualty Insurance. Management evaluates performance based primarily on the operating revenues and operating income of each segment. Operating revenues include premiums earned, net administrative service fees and net investment income. Operating costs include claims incurred and operating expenses. The Company calculates operating income or loss as operating revenues minus operating expenses. Operating margin is defined as operating gain or loss divided by operating revenues.

Three months ended Dec. 31, 12 months ended Dec. 31,


(dollar amounts in

millions) Percentage Percentage

2007 2006 Change 2007 2006 Change

Operating revenues:

Managed Care $342.7 318.7 7.5% $1,338.7 1,375.5 (2.7%)

Life Insurance 25.7 25.9 (0.8%) 103.9 100.6 3.3%

Property and

Casualty 31.8 25.0 27.2% 108.7 98.1 10.8%

Other (1.5) (1.5) 0.0% (6.5) (5.8) 12.1%

Total operating

revenues $398.7 368.1 8.3% $1,544.8 1,568.4 (1.5%)

Operating income:

Managed Care $18.0 12.3 46.3% $57.4 45.5 26.2%

Life Insurance 2.5 2.1 19.0% 10.7 11.2 (4.5%)

Property and

Casualty 4.2 3.3 27.3% 10.7 11.3 (5.3%)

Other 1.5 0.1 1400.0% 4.7 5.3 (11.3%)

Total operating

income $26.2 17.8 47.2% $83.5 73.3 13.9%

Operating margin:

Managed Care 5.3% 3.9% 140 bp 4.3% 3.3% 100 bp

Life Insurance 9.5% 8.2% 130 bp 10.3% 11.1% -80 bp

Property and

Casualty 15.4% 14.7% 70 bp 11.1% 12.7% -160 bp

Managed Care Results Summary

Total medical premiums earned for 2007 were $1.30 billion, down 2.8 percent versus 2006, primarily due to the termination of the Metro-North Region contract, partially offset by higher Medicare Advantage member enrollment and rate increases.

Medical premiums earned in the Reform business decreased by $128.4 million, or 28.2 percent, to $327.5 million during the year, mainly due to the termination of the Metro-North Region contract, offset by rate increases of 7.7 percent in 2007. Excluding the Metro-North Region, medical revenues for the remaining two regions increased $33.2 million or 11.3 percent.

Medical premiums earned in the Medicare business increased by $84.8 million, or 49.6 percent. This reflected an increase in member month's enrollment of 92,322, or an increase of 20.0 percent, and higher average per member per month premiums.

Medical premiums earned in the Commercial business increased by $5.6 million, or 0.8 percent, to $718.7 million during the year. Increase is due to the net effect of an increase in rates of approximately 5 percent and a decrease in member month's enrollment of 289,007 or 5.5 percent.

Medical claims incurred decreased by $40.4 million, or 3.4 percent, to $1.13 billion largely driven by the lower MLR and a decrease in the volume of Reform business. The overall MLR declined 50 basis points during 2007, to 87.1 percent. The decrease was the result of significant improvements in the Commercial MLR, and relatively stable Reform MLR, offset by an increase in the Medicare Advantage MLR.

Operating expenses declined by $8.4 million, or 5.4 percent, to $148.1 million, compared with last year. The decrease is primarily attributed to lower direct costs in the Reform business resulting from the reduction in volume. The segment's operating expense ratio fell by 30 basis points, to 11.2 percent.

Three months ended Dec 31, 12 months ended Dec 31,

Managed Care

Additional Data 2007 2006 2007 2006

Member months



Fully-insured 1,240,630 1,277,461 4,983,980 5,272,987

Self-funded 483,563 474,492 1,930,850 1,861,833


commercial 1,724,193 1,751,953 6,914,830 7,134,820

Reform 1,062,702 1,272,737 4,262,248 6,484,270

Medicare 146,365 134,429 554,040 461,718

Total member

months 2,933,260 3,159,119 11,731,118 14,080,808

Medical loss ratio 85.2% 85.4% 87.1% 87.6%

Operating expense

ratio 12.0% 13.4% 11.2% 11.5%

Managed Care As of December 31,

Membership by Segment 2007 2006



Fully-insured 412,663 423,442

Self-funded 161,588 157,408

Total commercial 574,251 580,850

Reform 353,694 357,515

Medicare 49,245 41,141

Total members 977,190 979,506

2008: Building on Last Year's Successes

"This year, we fully expect to leverage the strong foundation we built for our business in 2007, while delivering solid future earnings growth and continuing to offer customers the quality care they have come to expect." Ruiz-Comas said. "We plan to continue executing on our strategy of improving margins, broadening the Medicare Advantage business; strengthening our Commercial segment; developing new products; pursuing opportunities to cross- sell our different lines of insurance; and expanding into new products or geographic markets."

The Company's outlook for full year 2008 is as follows:

-- Total medical enrollment is expected to grow approximately one percent,

with Medicare Advantage enrollment rising 30-35 percent.

-- Consolidated operating revenues are anticipated to be $1.66 -- $1.70


-- Consolidated loss ratio is expected to be 83.0 -- 83.5 percent, with

the managed care MLR ranging between 87.6 and 88.1 percent.

-- Consolidated operating expense ratio is anticipated to be approximately

15.2 percent.

-- The Company expects earnings per share of $1.88 -- $1.98, based on 32.1

million weighted average shares outstanding.

Conference Call and Webcast

Management will host a conference call and webcast today at 10:00 a.m. Eastern Time to discuss its financial results for 2007 and the fourth quarter, and expectations for future earnings. To participate, callers within the U.S. and Canada should dial 1-800-218-4007, and international callers should dial 1-303-262-2138 about five minutes before the presentation. The pass code is 11107838.

To listen to the webcast, participants should visit the Investor Relations section of the Company's Web site at 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 Web site, 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 Web site.

About Triple-S Management Corporation

Triple-S Management Corporation is the largest managed care company in Puerto Rico and has the exclusive right to use the Blue Shield name and mark throughout the country. It holds a leading market position, with approximately 1 million members across all regions, or about 25 percent of the population. With more than 45 years of experience in the industry, Triple-S Management offers a broad portfolio of managed care and related products in the commercial, Medicare and the Reform markets. It also provides complementary products and services. The Company is the largest provider of life and accident and health insurance and the fourth largest provider of property and casualty insurance in its market.

For more information about Triple-S Management, visit

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 regulation 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

-- Ability to contract with providers consistent with past practice

-- Ability to successfully implement the Company's disease management and

utilization management programs

-- 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.

Condensed Consolidated Balance Sheets

December 31, 2007 and 2006

(Dollar amounts in thousands, except per share data)

Unaudited 2007 2006


Investments $1,011,009 $900,882

Cash and cash equivalents 240,153 81,564

Premium and other receivables, net 202,268 165,626

Deferred policy acquisition costs and

value of business acquired 117,239 111,417

Property and equipment, net 43,415 41,615

Other assets 45,458 44,405

Total assets $1,659,542 $1,345,509

Liabilities and Stockholders' Equity

Policy liabili

SOURCE Triple-S Management Corporation
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