Navigation Links
Triple-S Management Corporation Reports Third Quarter 2008 Results; Board Approves Share Repurchase Authorization of up to $40 Million
Date:10/30/2008

SAN JUAN, Puerto Rico, Oct. 30 /PRNewswire-FirstCall/ -- Triple-S Management Corporation (NYSE: GTS), the largest managed care company in Puerto Rico, today announced record consolidated revenues for the three months ended September 30, 2008. Net income of $9.5 million, or $0.29 per diluted share, includes an after tax net loss of $5.4 million, or $0.17 per diluted share, in net realized and unrealized losses on investments and derivatives. Also, the Company's Board of Directors has authorized the repurchase of up to $40 million of the Company's common shares, to be effected by means to be determined after the December 6, 2008 expiration of the lockup agreement.

Third-Quarter Highlights

* Net premiums earned increased 15.3 percent year over year to

$433.2 million

* Operating income was $22.6 million

* Excluding net realized and unrealized losses and a loss from

derivatives included within other income (expenses), and excluding

prior period unfavorable reserve developments in the managed care

segment, net of tax, pro forma net income was $18.2 million and

diluted earnings per share were $0.57, based on 32.2 million

weighted average shares outstanding

* Medical Loss Ratio (MLR) rose 170 basis points to 88.6 percent;

excluding prior period unfavorable reserve developments, the MLR

would have been 88 percent

* Consolidated operating expense ratio improved 80 basis points to

14.5 percent

* Continued expansion of Medicare Advantage business: over 80,000

additional members at September 30, 2008, a 74.1 percent year-over-

year increase

"We achieved a solid top-line performance in the quarter. As expected, our managed care segment delivered significant growth in the Medicare Advantage business. We continued to leverage our infrastructure by managing administrative costs without sacrificing the quality of care that we provide to each of our members," said Ramon M. Ruiz-Comas, President and Chief Executive Officer. "While we are disappointed with our managed care MLR, and in particular the MLR for our Medicare Advantage dual eligible product, our Commercial MLR has shown great improvement. We have a thorough understanding of the issues involved with the Medicare Advantage dual eligible product and are working aggressively to reduce our MLR. We continue to execute on our focused business strategy and believe wholeheartedly that we are well positioned for 2009 and beyond."

Consolidated operating revenues for the three months ended September 30, 2008 were $451.8 million, 15.6 percent higher than the same period of the previous year. The increase was principally due to growth in Medicare Advantage membership enrollment; however, we also experienced growth in Commercial and Reform premiums due to premium rate increases.

Consolidated claims incurred and operating expenses for the quarter were $429.2 million, an increase of 16.6 percent from a year ago. Consolidated claims incurred were up $55.6 million, or 17.9 percent, largely due to increased claims in the managed care segment driven by higher enrollment and utilization trends, particularly in the Medicare Advantage business. The consolidated loss ratio rose 190 basis points to 84.4 percent, primarily due to higher utilization trends in the managed care segment. Claims incurred in this quarter included an unfavorable development from the June 30, 2008 managed care reserves of $4.6 million, or $0.10 net of tax per diluted share. Consolidated operating expenses increased by $5.6 million, or 9.7 percent, to $63.6 million, primarily attributable to the higher Medicare Advantage volume of business. The consolidated operating expense ratio improved 80 basis points to 14.5 percent in 2008 mainly due to our scalable infrastructure that enabled us to manage the aforementioned volume increase.

Net income for the three months ended September 30, 2008 was $9.5 million, or $0.29 per diluted share, based on weighted average shares outstanding of 32.2 million. This compares with net income for the three months ended September 30, 2007 of $15.5 million, or $0.58 per diluted share, based on weighted average shares of 26.8 million. Excluding the effect of realized and unrealized gains (losses) on investments and derivatives and prior period reserve developments in the three months ended September 30 in both 2008 and 2007, net of taxes, pro forma net income was $18.2 million, or $0.57 per diluted share, based on weighted average shares outstanding of 32.2 million, in the quarter ended September 30, 2008, compared with $12.9 million, or $0.48 per diluted share, based on weighted average shares outstanding of 26.8 million, in the comparable 2007 quarter.

Pro Forma Net Income

(Unaudited)

(dollar amounts Three months Nine months

in millions) ended Sept. 30, ended Sept. 30,

2008 2007 2008 2007

Pro forma net income

Net income $9.5 15.5 $22.8 40.8

Net realized investment

(gains) loss net of tax 0.9 (1.0) 1.9 (5.0)

Net unrealized

investment (gains)

losses on trading

securities net of tax 3.1 (0.5) 9.2 0.6

Derivative (gain)

loss net of tax 1.4 0.7 3.5 (0.4)

Prior period

(favorable) unfavorable

reserve developments

net of tax 3.3 (1.8) 3.4 (8.6)

Retroactive Reform

premium adjustment

net of tax - - - (1.2)

Pro forma net

income $18.2 12.9 $40.8 26.2

Diluted pro forma net

income per share $0.57 0.48 $1.27 0.98

Continued Progress for the Nine Months

For the nine months ended September 30, 2008, consolidated operating revenues rose 14.4 percent to $1,310.7 million, primarily reflecting the growth in the managed care segment. Consolidated claims incurred for the nine months ended September 30, 2008 were $1,070.6 million, up 17.0 percent year over year. The consolidated loss ratio increased 210 basis points to 85.2 percent. Nine-month consolidated operating expenses were $185.0 million and the operating expense ratio improved 100 basis points to 14.6 percent. Pro forma net income for the nine months ended September 30, 2008 was $40.8 million, or $1.27 per diluted share, based on weighted average shares outstanding of 32.2 million, compared with $26.2 million, or $0.98 per diluted share, based on weighted average shares outstanding of 26.7 million at the same time last year.

For the nine-month period ended September 30, 2008, net cash used in operating activities amounted to $19.9 million. This is mainly due to the fact that the Company collected in advance $22.8 million in managed care premiums in December 2007 that were recognized in January 2008. In addition, premiums receivable for the managed care segment as of September 30, 2008 increased by approximately $43.8 million, mostly from the Government of Puerto Rico and its instrumentalities, which were subsequently collected. Excluding both situations, cash flow from operations would have been $46.7 million.

As of September 30, 2008, Triple-S Management had $80.5 million in parent company cash, cash equivalents, and investments, most of which resulted from the IPO's net proceeds.

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 Sept. 30, Nine months ended Sept. 30,

(Unaudited)

(dollar amounts Percentage Percentage

in millions) 2008 2007 Change 2008 2007 Change

Operating

revenues:

Managed Care $399.0 340.4 17.2% $1,154.1 996.0 15.9%

Life Insurance 27.7 25.8 7.4% 80.7 78.2 3.2%

Property and

Casualty 25.8 26.1 (1.1%) 78.2 76.9 1.7%

Other (0.7) (1.4) (50.0%) (2.3) (5.1) (54.9%)

Total

operating

revenues $451.8 390.9 15.6% $1,310.7 1,146.0 14.4%

Operating income:

Managed Care $15.1 17.5 (14.3%) $34.4 39.4 (12.9%)

Life Insurance 3.0 2.6 15.4% 8.7 8.3 4.8%

Property and

Casualty 2.9 1.4 107.1% 7.3 6.4 14.1%

Other 1.6 1.4 14.3% 4.7 3.1 51.6%

Total

operating

income $22.6 22.9 (1.3%) $55.1 57.2 (3.7%)

Operating margin:

Managed Care 3.8% 5.1% 3.0% 4.0%

Life Insurance 10.8% 10.1% 10.8% 10.6%

Property and

Casualty 11.2% 5.4% 9.3% 8.3%

Consolidated 5.0% 5.9% 4.2% 5.0%

Managed Care Results Summary

Total medical premiums earned for the three months ended September 30, 2008 were $387.9 million, up 17.2 percent versus the same period a year ago, primarily due to an increase in Medicare Advantage member months enrollment and a change in the product mix within this sector, coupled with rate increases across all businesses.

Medical premiums earned in the Medicare business rose $45.2 million to $113.1 million for the three months ended September 30, 2008. This reflected an increase in member months enrollment of 78,581, or an increase of 55.0 percent, and a change in the product mix. The rise in member months is the net result of an increase of 80,690, or 74.1 percent, in Medicare membership and a decrease of 2,109, or 6.2 percent, in PDP membership.

Medical premiums earned in the Reform business increased $5.0 million, or 5.9 percent, to $90.4 million for the three months ended September 30, 2008. The fluctuation is primarily due to the effect in the 2008 period of the nearly 10 percent premium rate increase effective on July 1, 2008 and a decrease in member months enrollment of 41,923, when compared to the same period last year.

Medical premiums earned in the Commercial business increased by $6.6 million, or 3.7 percent, to $184.4 million for the three months ended September 30, 2008. The increase is attributable an average 5 percent premium rate hike in corporate accounts and a decrease in the fully-insured member months enrollment of 8,243, or 0.7 percent.

Medical claims incurred were up $56.2 million, or 19.5 percent, to $343.8 million. The overall MLR rose 170 basis points for the three months ended September 30, 2008, to 88.6 percent. The Medicare business experienced an overall year-over-year increase in utilization trends and had a higher concentration of dual-eligible members. Partially offsetting the rise in the Medicare MLR was a decline in the Reform MLR. The Commercial MLR increased by 230 basis points. However, if we consider the effect of reserve developments in both periods, the MLR actually decreased by 180 basis points.

Operating expenses rose $4.9 million, or 13.9 percent, to $40.2 million, compared with the same period last year. The increase is primarily attributable to the higher volume, particularly within the Medicare business. The segment's operating expense ratio decreased 30 basis points, to 10.2 percent.

Managed Care Three months ended Nine months ended

September 30, September 30,

Additional Data 2008 2007 2008 2007

Member months

enrollment

Commercial:

Fully-insured 1,234,011 1,242,254 3,698,285 3,743,350

Self-funded 527,145 483,459 1,522,524 1,447,287

Total

Commercial 1,761,156 1,725,713 5,220,809 5,190,637

Reform 1,024,093 1,066,016 3,089,384 3,199,546

Medicare 221,412 142,831 627,769 407,675

Total member

months 3,006,661 2,934,560 8,937,962 8,797,858

Medical loss ratio 88.6% 86.9% 89.4% 87.7%

Operating expense

ratio 10.2% 10.5% 10.3% 11.0%

Managed Care As of September 30,

Membership by Segment 2008 2007

Members

Commercial:

Fully-insured 411,524 415,055

Self-funded 176,549 161,545

Total Commercial 588,073 576,600

Reform 340,710 352,722

Medicare 73,893 48,291

Total members 1,002,676 977,613

Managed Care As of

Days claims payable Sept. 30, 2008 June 30, 2008

60.9 days 60.5 days

Investment Portfolio Review

Despite the recent turbulence in global capital markets, Triple-S' investment portfolio and capital position remains solid. The Company has minimal exposure ($496,000) to equity of companies that have gone bankrupt, been part of a distressed sale, or had the federal government step in to provide financial assistance. In addition, we recorded an other-than-temporary impairment amounting to $ 1.5 million related to a corporate bond issued by one of the previously mentioned companies. Moreover, less than 9% of its $1.1 billion investment portfolio is exposed to corporate asset- or non-agency mortgage-backed securities. Finally, financial services bonds represent just 1.7% of the total investment portfolio, well below that of its peers.

Share Repurchase Plan

Triple-S has both Class A and B common shares. Class A shares do not trade on a public market and only the Board of Directors can authorize their conversion to Class B shares. In recognition of the fact that 4.9 million Class A common shares will become transferable when the lockup period expires on December 6, 2008 and that 2.2 million Class A shares have been transferable since the IPO, the Company's Board of Directors has authorized the repurchase of up to $40 million of common shares following the lock-up expiration using available cash on hand, subject to interest on the part of Class A shareholders. Such a repurchase could be effected by an open-market repurchase program, a tender offer or any other means. In the event that demand for the repurchase of Class A shares amounts to less than $40 million, the Board of Directors may use the balance of the $40 million share authorization to repurchase Class B shares on the open market.

Revised 2008 Guidance

The Company's 2008 revised outlook is as follows:

* Total medical enrollment is expected to grow approximately 4-4.5

percent, with Medicare Advantage enrollment rising approximately

47-52 percent, up from our previous estimate of 45-48 percent.

* Consolidated operating revenues are now anticipated to be

$1.73-$1.76 billion, an increase from our prior estimate of

$1.70-$1.74 billion.

* Consolidated loss ratio is expected to be 84.5-85.0 percent, a 100

basis point increase from previous guidance, with the managed care

MLR now ranging between 88.5-89.0 percent, driven largely by the

Company's Medicare dual eligible product.

* Consolidated operating expense ratio is unchanged and anticipated to

be approximately 14.7 percent.

* The Company reduced its earnings per share expectation to

$1.72-$1.82 from $1.88-$1.98, based on 32.2 million weighted average

diluted shares outstanding, which excludes net realized and

unrealized gains (losses) on investments and derivatives.

Conference Call and Webcast

Management will host a conference call and webcast Thursday, October 30 at 10:00 a.m. Eastern Time to discuss its financial results for the third quarter and nine months ended September 30, 2008, as well as expectations for future earnings. To participate, callers within the U.S. and Canada should dial 1-800-257-3401, and international callers should dial 1-303-262-2141 about five minutes before the presentation.

To listen to the webcast, participants should visit the Investor Relations section of the Company's Web site at http://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 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 http://www.triplesmanagement.com.

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

* 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.

-FINANCIAL TABLES ATTACHED-

Condensed Consolidated Balance Sheets

(Dollar amounts in thousands, except per share data)

Unaudited

September 30, December 31,

2008 2007

Assets

Investments $1,051,419 $1,011,009

Cash and cash equivalents 43,451 240,153

Premium and other receivables, net 250,562 202,268

Deferred policy acquisition costs

and value of business acquired 125,322 117,239

Property and equipment, net 50,101 43,415

Other assets 48,510 45,458

Total assets $1,569,365 $1,659,542

Liabilities and Stockholders' Equity

Policy liabilities and accruals $706,174 $726,519

Accounts payable and accrued liabilities 177,545 279,539

Borrowings 201,512 170,946

Total liabilities 1,085,231 1,177,004

Stockholders' equity:

Common stock 32,329 32,309

Other stockholders' equity 451,805 450,229

Total stockholders' equity 484,134 482,538

Total liabilities and stockholders'

equity $1,569,365 $1,659,542

Condensed Consolidated Statements of Earnings

(Dollar amounts in thousands, except per share data)

For the Nine Months Ended

September 30,

Unaudited Historical

2008 2007

Revenues:

Premiums earned, net $1,256,775 $1,101,614

Administrative service fees 12,081 11,034

Net investment income 41,806 33,397

Total operating revenues 1,310,662 1,146,045

Net realized investment gains (losses) (2,233) 6,163

Net unrealized investment loss on

trading securities (10,806) (764)

Other income (loss), net (1,308) 1,842

Total revenues 1,296,315 1,153,286

Benefits and expenses:

Claims incurred 1,070,572 915,374

Operating expenses 185,002 173,439

Total operating costs 1,255,574 1,088,813

Interest expense 11,348 11,948

Total benefits and expenses 1,266,922 1,100,761

Income before taxes 29,393 52,525

Income tax expense 6,583 11,725

Net income $22,810 $40,800

Basic net income per share $0.71 $1.53

Diluted earnings per share $0.71 $1.53

Condensed Consolidated Statements of Earnings

(Dollar amounts in thousands, except per share data)

For the Three Months Ended

September 30,

Unaudited Historical

2008 2007

Revenues:

Premiums earned, net $433,219 $375,803

Administrative service fees 4,448 3,908

Net investment income 14,072 11,229

Total operating revenues 451,739 390,940

Net realized investment gains (losses) (1,101) 1,183

Net unrealized investment loss on trading

securities (3,605) 588

Other income, net (1,147) (525)

Total revenues 445,886 392,186

Benefits and expenses:

Claims incurred 365,585 310,033

Operating expenses 63,572 57,944

Total operating costs 429,157 367,977

Interest expense 3,749 3,938

Total benefits and expenses 432,906 371,915

Income before taxes 12,980 20,271

Income tax expense 3,509 4,781

Net income $9,471 $15,490

Basic net income per share $0.29 $0.58

Diluted earnings per share $0.29 $0.58

Condensed Consolidated Statements of Cash Flows

(Dollar amounts in thousands, except per share data)

For the Nine Months Ended

September 30,

Unaudited Historical

2008 2007

Net cash (used in) provided by

operating activities $(19,894) $51,490

Cash flows from investing activities:

Proceeds from investments sold or matured:

Securities available for sale:

Fixed maturities sold 162,802 101,828

Fixed maturities matured 65,088 25,733

Equity securities 4,449 1,000

Securities held to maturity:

Fixed maturities matured 20,107 7,172

Acquisition of investments:

Securities available for sale:

Fixed maturities (449,515) (147,357)

Equity securities (17,069) (16,759)

Securities held to maturity:

Fixed maturities (554) (4,891)

Net disbursements for policy loans 73 (297)

Net capital expenditures (12,116) (6,329)

Net cash used in investing activities (226,735) (39,900)

Cash flows from financing activities:

Change in outstanding checks in excess of

bank balances 17,992 17,477

Repayments of short-term borrowings (864,419) (43,559)

Proceeds from short-term borrowings 896,214 43,559

Repayments of long-term borrowings (1,229) (11,730)

Dividends - (2,448)

Proceeds from policyholder deposits 7,156 5,133

Surrenders of policyholder deposits (5,793) (5,614)

Other 6 1

Net cash provided by financing activities 49,927 2,819

Net increase in cash and cash equivalents (196,702) 14,409

Cash and cash equivalents, beginning of period 240,153 81,564

Cash and cash equivalents, end of period $43,451 $95,973


'/>"/>
SOURCE Triple-S Management Corporation
Copyright©2008 PR Newswire.
All rights reserved


Related medicine news :

1. Triple-S Management Corporation Schedules Second-Quarter Earnings Release and Webcast
2. Triple-S Management Corporation Reports First Quarter 2008 Results; Cites Growth Resulting From Strong Market Position
3. Triple-S Management Corporation Schedules First-Quarter Earnings Release and Webcast
4. Triple-S Management Corporation Reports Record Consolidated Operating Income, Net Income and EPS for 2007
5. Triple-S Management Corporation to Present at UBS Global Healthcare Conference
6. Triple-S Management Corporation Announces Full Exercise of Underwriters Over-Allotment Option
7. PharmaSmart International, Inc. Redefines Blood Pressure Management through Technology and Pharmacy Focused Patient Services
8. CareAnalyzer From DST Health Solutions Helps Health Plans Improve Care Management and Quality for Members
9. Wound Management Technologies, Inc. Announces Strategic Business Directions, Recent Conference Presentation, in Addition to Symposium Exhibit Plans for Las Vegas
10. Four Companies Are First to Achieve Accreditation Under Two New URAC Pharmacy Quality Management(SM) Programs
11. Alexion Pharmaceuticals Chooses Blue Mountain Regulatory Asset Manager(R) for Best-in-class Calibration Management Integrated with SAP(R)
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:2/13/2016)... ... , ... Valentine’s Day is nearly upon us, and most singles could probably ... flawless hair, and a sparkling personality are all well and good, but if somebody ... home with Rover. (Actually, man’s best friend might not even want to be near ...
(Date:2/13/2016)... ... February 13, 2016 , ... In its newly ... vein visualization technology should be used to ensure patient safety when placing an ... INS Standards mandate the use of vein visualization technology in patients with difficult ...
(Date:2/12/2016)... ... 12, 2016 , ... According to an article published February 4th ... significant portion of hernia repairs throughout the United States. Commenting on this article, Beverly ... that this trend has not only been expected, but it seems to be a ...
(Date:2/12/2016)... ... February 12, 2016 , ... CDRH Enforcement Trends: , Back to the Future , ... , As Winston Churchill said, “Those who don’t learn from history are doomed to ... expect when they come knocking this year. But that takes time. , Take a ...
(Date:2/12/2016)... ... February 12, 2016 , ... T.E.N., a ... closed for the ISE Southeast Awards 2016. Finalists and winners of the ISE® ... Southeast Executive Forum and Awards Gala on March 15, 2016 at the Westin ...
Breaking Medicine News(10 mins):
(Date:2/12/2016)... February 12, 2016 ... vermerkt)   http://www.sedar.com ) und ... abrufbar.    --> http://www.sedar.com ... http://www.telestatherapeutics.com abrufbar.    --> ... heute seinen Konzernabschluss des zweiten Quartals ...
(Date:2/12/2016)...  Memorial Hermann Health System has teamed up with ... bring a one-of-a-kind experience to pediatric patients at ... as 360-degree video and Google Cardboard, Howard was able ... giving the patients and their families an unexpected, and ... on video . Memorial Hermann IRONMAN ...
(Date:2/12/2016)... , Feb. 12, 2016  Eli Lilly and Company ... Court decided the Alimta® (pemetrexed disodium) vitamin regimen patent would ... the UK, France , Italy ... to dilute the product only with dextrose solution.  ... 2015, the UK Court of Appeal held that Lilly,s patent ...
Breaking Medicine Technology: