Puerto Rico
|
|
001-33865
|
|
66-0555678
|
(State or Other Jurisdiction of Incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer Identification No.)
|
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c)) |
99.1 | Press release, dated July 31, 2013 issued by Triple-S Management Corporation |
|
TRIPLE-S MANAGEMENT CORPORATION
|
|
|
|
|
Date: July 31, 2013
|
By:
|
/s/ Ramón M. Ruiz-Comas
|
|
|
Name: Ramón M. Ruiz-Comas
|
|
|
Title: President & Chief Executive Officer
|
AT THE COMPANY:
|
|
INVESTOR RELATIONS:
|
Alan Cohen
|
|
Kathy Waller
|
Chief Marketing & Communications Officer
|
|
AllWays Communicate, LLC
|
(787) 706-2570
|
|
(312) 543-6708
|
· | Total consolidated operating revenues were $597.8 million; |
· | Consolidated operating income was $16.8 million; |
· | Consolidated loss ratio was 82.9%; |
· | Medical loss ratio (MLR) was 85.8%; |
· | Managed Care member month enrollment fell 1.6%; |
· | Medicare member month enrollment decreased 6.7%. |
· | Pro Forma Net Income Was $14.9 Million, or $0.53 Per Diluted Share. Weighted average shares outstanding were 27.9 million. This compares with pro forma net income of $16.6 million, or $0.58 per diluted share, in the corresponding quarter of 2012, based on weighted average shares outstanding of 28.5 million. |
· | Managed Care Membership. Our Managed Care membership decreased by 1.8% year over year, reflecting lower Commercial and Medicare enrollment. Medicare membership decreased 6.7% year over year, to 113,984. Fully-insured Commercial membership fell 4.6% and self-funded Commercial membership declined 4.0%. Medicaid membership (all self-funded) increased 1.0%, to 898,180. |
· | Consolidated Premiums Decreased 4.5%, to $556.0 Million. The decrease was principally due to lower Managed Care premiums resulting from lower Commercial and Medicare member month enrollment. |
· | Managed Care MLR Decreased 290 Basis Points, to 85.8%. The MLR, adjusted to exclude prior period reserve developments and risk score adjustments, was 50 basis points higher, primarily reflecting higher utilization and cost trends in the Commercial business, offset by lower cost and utilization trends and improved drug costs in American Health, due to the new Pharmacy Benefit Manager (“PBM”) contract and the positive impact of the 2013 product design. These increases in utilization and cost trends in the Commercial business were lower than expected, taking into consideration that the Easter holiday fell in March 2013 and therefore, we were expecting to see utilization rise in the second quarter. |
· | Consolidated Loss Ratio Decreased 230 Basis Points, to 82.9%. The lower consolidated loss ratio mainly reflects the 290-basis-point improvement in the Managed Care MLR. The Property and Casualty and Life Insurance segments loss ratio increased by 1140 and 170 basis points, respectively. |
· | Consolidated Operating Expense Ratio Rose 380 Basis Points, to 20.6%. The higher consolidated operating expense ratio was mostly due to special technology initiatives, costs related to the reorganization of the Medicare business, and other non-recurring expenses. |
· | Consolidated Operating Income Declined 30.6%, to $16.8 Million. The decrease primarily reflects the effect of lower Managed Care segment premiums and increased operating expenses, partially offset by the lower Managed Care MLR. |
· | Consolidated Operating Income Margin Was 2.8%. The 110-basis-point decrease in the consolidated operating margin is primarily the result of lower profitability in our Managed Care and Property and Casualty Insurance segments. |
· | Shares of Common Stock Repurchased. During this quarter, Triple-S Management repurchased 1,000,000 shares of common stock as part of our secondary offering at an average cost per share of $18.25. |
|
Pro Forma Net Income
|
|||||||||||||||
(Unaudited)
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||
(dollar amounts in millions)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Net income
|
$
|
20.1
|
$
|
17.0
|
$
|
37.4
|
$
|
24.5
|
||||||||
Less pro forma adjustments:
|
||||||||||||||||
Net realized investment gains, net of tax
|
1.3
|
0.4
|
3.0
|
1.8
|
||||||||||||
Guaranty Fund assesment
|
(1.0
|
)
|
-
|
(1.0
|
)
|
-
|
||||||||||
Additional year-to-date current income tax expense after change in enacted tax rate
|
(2.8
|
)
|
-
|
(2.8
|
)
|
-
|
||||||||||
Deferred tax benefit related to change in enacted tax rate
|
7.7
|
-
|
7.7
|
-
|
||||||||||||
Pro forma net income
|
$
|
14.9
|
$
|
16.6
|
$
|
30.5
|
$
|
22.7
|
||||||||
Diluted pro forma net income per share
|
$
|
0.53
|
$
|
0.58
|
$
|
1.08
|
$
|
0.80
|
(Unaudited)
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||||||||||
(dollar amounts in millions)
|
2013
|
2012
|
Percentage
Change
|
2013
|
2012
|
Percentage
Change
|
||||||||||||||||||
Premiums earned, net:
|
||||||||||||||||||||||||
Managed Care:
|
||||||||||||||||||||||||
Commercial
|
$
|
238.7
|
$
|
242.8
|
(1.7
|
%)
|
$
|
472.3
|
$
|
484.4
|
(2.5
|
%)
|
||||||||||||
Medicare
|
260.6
|
285.7
|
(8.8
|
%)
|
520.9
|
539.9
|
(3.5
|
%)
|
||||||||||||||||
Total Managed Care
|
499.3
|
528.5
|
(5.5
|
%)
|
993.2
|
1,024.3
|
(3.0
|
%)
|
||||||||||||||||
Life Insurance
|
32.1
|
30.7
|
4.6
|
%
|
63.9
|
60.7
|
5.3
|
%
|
||||||||||||||||
Property and Casualty
|
25.3
|
23.6
|
7.2
|
%
|
50.2
|
45.8
|
9.6
|
%
|
||||||||||||||||
Other
|
(0.7
|
)
|
(0.6
|
)
|
(16.7
|
%)
|
(1.3
|
)
|
(1.3
|
)
|
0.0
|
%
|
||||||||||||
Consolidated premiums earned, net
|
$
|
556.0
|
$
|
582.2
|
(4.5
|
%)
|
$
|
1,106.0
|
$
|
1,129.5
|
(2.1
|
%)
|
||||||||||||
Operating revenues:
|
||||||||||||||||||||||||
Managed Care
|
$
|
533.0
|
$
|
561.3
|
(5.0
|
%)
|
$
|
1,058.9
|
$
|
1,089.7
|
(2.8
|
%)
|
||||||||||||
Life Insurance
|
37.8
|
35.9
|
5.3
|
%
|
74.9
|
70.8
|
5.8
|
%
|
||||||||||||||||
Property and Casualty
|
27.3
|
25.9
|
5.4
|
%
|
54.2
|
50.3
|
7.8
|
%
|
||||||||||||||||
Other
|
(0.3
|
)
|
(0.4
|
)
|
25.0
|
%
|
(0.6
|
)
|
(1.1
|
)
|
(45.5
|
%)
|
||||||||||||
Consolidated operating revenues
|
$
|
597.8
|
$
|
622.7
|
(4.0
|
%)
|
$
|
1,187.4
|
$
|
1,209.7
|
(1.8
|
%)
|
||||||||||||
Operating income:
|
||||||||||||||||||||||||
Managed Care
|
$
|
13.4
|
$
|
18.6
|
(28.0
|
%)
|
$
|
33.9
|
$
|
26.0
|
30.4
|
%
|
||||||||||||
Life Insurance
|
3.7
|
4.0
|
(7.5
|
%)
|
7.7
|
8.4
|
(8.3
|
%)
|
||||||||||||||||
Property and Casualty
|
0.2
|
3.5
|
(94.3
|
%)
|
0.6
|
2.1
|
(71.4
|
%)
|
||||||||||||||||
Other
|
(0.5
|
)
|
(1.9
|
)
|
73.7
|
%
|
(2.7
|
)
|
(3.4
|
)
|
(20.6
|
%)
|
||||||||||||
Consolidated operating income
|
$
|
16.8
|
$
|
24.2
|
(30.6
|
%)
|
$
|
39.5
|
$
|
33.1
|
19.3
|
%
|
||||||||||||
Operating margin:
|
||||||||||||||||||||||||
Managed Care
|
2.5
|
%
|
3.3
|
%
|
-80
|
bp
|
3.2
|
%
|
2.4
|
%
|
80
|
bp
|
||||||||||||
Life Insurance
|
9.8
|
%
|
11.1
|
%
|
-130
|
bp
|
10.3
|
%
|
11.9
|
%
|
-160
|
bp
|
||||||||||||
Property and Casualty
|
0.7
|
%
|
13.5
|
%
|
-1,280
|
bp
|
1.1
|
%
|
4.2
|
%
|
-310
|
bp
|
||||||||||||
Consolidated
|
2.8
|
%
|
3.9
|
%
|
-110
|
bp
|
3.3
|
%
|
2.7
|
%
|
60
|
bp
|
||||||||||||
Depreciation and amortization expense
|
$
|
6.0
|
$
|
5.9
|
1.7
|
%
|
$
|
12.2
|
$
|
11.8
|
3.4
|
%
|
Managed Care Additional Data
|
Three months ended June 30,
|
Six months ended
June 30,
|
||||||||||||||
(Unaudited)
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Member months enrollment:
|
||||||||||||||||
Commercial:
|
||||||||||||||||
Fully-insured
|
1,388,125
|
1,459,127
|
2,783,148
|
2,926,275
|
||||||||||||
Self-insured
|
656,408
|
672,128
|
1,323,584
|
1,331,628
|
||||||||||||
Total Commercial
|
2,044,533
|
2,131,255
|
4,106,732
|
4,257,903
|
||||||||||||
Medicare:
|
||||||||||||||||
Medicare Advantage
|
315,656
|
339,026
|
638,414
|
668,970
|
||||||||||||
Stand-alone PDP
|
24,365
|
25,424
|
48,438
|
50,695
|
||||||||||||
Total Medicare
|
340,021
|
364,450
|
686,852
|
719,665
|
||||||||||||
Medicaid - Self-insured
|
2,670,314
|
2,641,905
|
5,320,932
|
5,254,863
|
||||||||||||
Total member months
|
5,054,868
|
5,137,610
|
10,114,516
|
10,232,431
|
||||||||||||
Claim liabilities (in millions)
|
$
|
278.7
|
$
|
292.3
|
*
|
|||||||||||
Days claim payable
|
59
|
58
|
*
|
|||||||||||||
Premium PMPM:
|
||||||||||||||||
Managed Care
|
$
|
288.98
|
$
|
289.82
|
$
|
286.22
|
$
|
280.94
|
||||||||
Commercial
|
171.96
|
166.40
|
169.70
|
165.53
|
||||||||||||
Medicare
|
766.42
|
783.92
|
758.39
|
750.21
|
||||||||||||
Medical loss ratio
|
85.8
|
%
|
88.7
|
%
|
85.8
|
%
|
89.6
|
%
|
||||||||
Commercial
|
87.5
|
%
|
88.4
|
%
|
88.0
|
%
|
88.9
|
%
|
||||||||
Medicare Advantage
|
84.1
|
%
|
88.6
|
%
|
83.6
|
%
|
89.8
|
%
|
||||||||
Stand-alone PDP
|
82.5
|
%
|
81.9
|
%
|
85.1
|
%
|
87.3
|
%
|
||||||||
Adjusted medical loss ratio
|
89.1
|
%
|
88.6
|
%
|
86.8
|
%
|
88.6
|
%
|
||||||||
Commercial
|
88.9
|
%
|
87.3
|
%
|
88.5
|
%
|
88.1
|
%
|
||||||||
Medicare Advantage
|
89.2
|
%
|
89.7
|
%
|
85.1
|
%
|
89.0
|
%
|
||||||||
Stand-alone PDP
|
82.8
|
%
|
79.8
|
%
|
84.7
|
%
|
83.8
|
%
|
||||||||
Operating expense ratio:
|
||||||||||||||||
Consolidated
|
20.6
|
%
|
16.8
|
%
|
20.2
|
%
|
17.3
|
%
|
||||||||
Managed Care
|
17.2
|
%
|
13.2
|
%
|
16.5
|
%
|
13.5
|
%
|
Managed Care Membership by Segment
|
As of June 30,
|
|||||||
|
2013
|
2012
|
||||||
Members:
|
||||||||
Commercial:
|
||||||||
Fully-insured
|
462,541
|
485,013
|
||||||
Self-insured
|
216,003
|
225,102
|
||||||
Total Commercial
|
678,544
|
710,115
|
||||||
Medicare:
|
||||||||
Medicare Advantage
|
105,842
|
113,669
|
||||||
Stand-alone PDP
|
8,142
|
8,482
|
||||||
Total Medicare
|
113,984
|
122,151
|
||||||
Medicaid - Self-insured
|
898,180
|
889,091
|
||||||
Total members
|
1,690,708
|
1,721,357
|
|
2013 Range
|
Medical enrollment fully-insured
(member months)
|
6.8 - 7.2 million
|
|
|
Medical enrollment self-insured
(member months)
|
14.6 – 15.0 million
|
|
|
Consolidated operating revenues
(in billions)
|
$2.28 - $2.34
|
|
|
Consolidated loss ratio
|
82.0% - 83.0%
|
|
|
Medical loss ratio
|
85.5% - 86.5%
|
|
|
Consolidated operating expense ratio
|
19.8% - 20.6%
|
|
|
Consolidated operating income
(in millions)
|
$76.6 - $86.3
|
|
|
Pro forma earnings per share
|
$1.95 - $2.05
|
|
|
Weighted average of diluted shares outstanding
(in millions)
|
27.8
|
|
|
Effective tax rate
|
17.3% - 18.3%
|
· | Trends in health care costs and utilization rates |
· | Changes in government laws and regulations of managed care, life insurance or property and casualty insurance |
· | Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies |
· | Ability to successfully implement the Company’s disease management, utilization management and Star ratings programs |
· | Ability to maintain Federal Employer, Medicare and Medicaid contracts |
|
Unaudited
June 30,
2013
|
December 31,
2012
|
||||||
Assets
|
||||||||
|
||||||||
Investments
|
$
|
1,304,351
|
$
|
1,280,644
|
||||
Cash and cash equivalents
|
55,821
|
89,564
|
||||||
Premium and other receivables, net
|
337,711
|
292,197
|
||||||
Deferred policy acquisition costs and value of business acquired
|
170,566
|
168,657
|
||||||
Property and equipment, net
|
93,339
|
92,423
|
||||||
Other assets
|
134,388
|
135,859
|
||||||
|
||||||||
Total assets
|
$
|
2,096,176
|
$
|
2,059,344
|
||||
|
||||||||
|
||||||||
Liabilities and Stockholders’ Equity
|
||||||||
|
||||||||
Policy liabilities and accruals
|
$
|
921,322
|
$
|
922,393
|
||||
Accounts payable and accrued liabilities
|
296,639
|
243,533
|
||||||
Short-term borrowings
|
28,095
|
30,000
|
||||||
Long-term borrowings
|
100,288
|
101,271
|
||||||
|
||||||||
Total liabilities
|
1,346,344
|
1,297,197
|
||||||
|
||||||||
Stockholders’ equity:
|
||||||||
Common stock
|
27,475
|
28,365
|
||||||
Other stockholders’ equity
|
722,236
|
733,542
|
||||||
|
||||||||
Total Triple-S Management Corporation stockholders’ equity
|
749,711
|
761,907
|
||||||
|
||||||||
Non-controlling interest in consolidated subsididary
|
121
|
240
|
||||||
|
||||||||
Total stockholders’ equity
|
749,832
|
762,147
|
||||||
|
||||||||
Total liabilities and stockholders’ equity
|
$
|
2,096,176
|
$
|
2,059,344
|
|
For the Three Months Ended
|
For the Six Months Ended
|
||||||||||||||
|
June 30,
|
June 30,
|
||||||||||||||
|
Unaudited
2013
|
Unaudited
2012
|
Unaudited
2013
|
Unaudited
2012
|
||||||||||||
Revenues:
|
||||||||||||||||
Premiums earned, net
|
$
|
556,035
|
$
|
582,246
|
$
|
1,105,996
|
$
|
1,129,550
|
||||||||
Administrative service fees
|
28,543
|
27,768
|
55,653
|
55,292
|
||||||||||||
Net investment income
|
12,019
|
11,562
|
23,386
|
22,754
|
||||||||||||
Other operating revenues
|
1,212
|
1,105
|
2,399
|
2,152
|
||||||||||||
|
||||||||||||||||
Total operating revenues
|
597,809
|
622,681
|
1,187,434
|
1,209,748
|
||||||||||||
|
||||||||||||||||
Net realized investment gains
|
1,661
|
458
|
3,549
|
2,136
|
||||||||||||
Other income, net
|
366
|
(154
|
)
|
847
|
916
|
|||||||||||
|
||||||||||||||||
Total revenues
|
599,836
|
622,985
|
1,191,830
|
1,212,800
|
||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Benefits and expenses:
|
||||||||||||||||
Claims incurred
|
460,818
|
496,249
|
912,818
|
971,893
|
||||||||||||
Operating expenses
|
120,225
|
102,268
|
235,090
|
204,774
|
||||||||||||
|
||||||||||||||||
Total operating costs
|
581,043
|
598,517
|
1,147,908
|
1,176,667
|
||||||||||||
|
||||||||||||||||
Interest expense
|
2,426
|
2,667
|
4,810
|
5,225
|
||||||||||||
|
||||||||||||||||
Total benefits and expenses
|
583,469
|
601,184
|
1,152,718
|
1,181,892
|
||||||||||||
|
||||||||||||||||
Income before taxes
|
16,367
|
21,801
|
39,112
|
30,908
|
||||||||||||
|
||||||||||||||||
Income tax expense (benefit)
|
(3,711
|
)
|
4,785
|
1,851
|
6,392
|
|||||||||||
|
||||||||||||||||
Net income
|
20,078
|
17,016
|
37,261
|
24,516
|
||||||||||||
|
||||||||||||||||
Less: Net loss attributable to the non-controlling interest
|
64
|
19
|
119
|
33
|
||||||||||||
|
||||||||||||||||
Net income attributable to TSM
|
$
|
20,142
|
$
|
17,035
|
$
|
37,380
|
$
|
24,549
|
||||||||
|
||||||||||||||||
Earnings per share attributable to TSM:
|
||||||||||||||||
|
||||||||||||||||
Basic net income per share
|
$
|
0.72
|
$
|
0.60
|
$
|
1.33
|
$
|
0.87
|
||||||||
Diluted earnings per share
|
$
|
0.72
|
$
|
0.60
|
$
|
1.33
|
$
|
0.86
|
|
For the Six Months Ended
|
|||||||
|
June 30,
|
|||||||
|
Unaudited
2013
|
Unaudited
2012
|
||||||
|
||||||||
Net cash provided by operating activities
|
$
|
24,283
|
$
|
125,485
|
||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Proceeds from investments sold or matured:
|
||||||||
Securities available for sale:
|
||||||||
Fixed maturities sold
|
35,173
|
55,080
|
||||||
Fixed maturities matured/called
|
62,494
|
64,292
|
||||||
Equity securities sold
|
76,966
|
29,217
|
||||||
Securities held to maturity:
|
||||||||
Fixed maturities matured/called
|
520
|
10,580
|
||||||
Acquisition of investments:
|
||||||||
Securities available for sale:
|
||||||||
Fixed maturities
|
(100,054
|
)
|
(114,064
|
)
|
||||
Equity securities
|
(131,862
|
)
|
(76,134
|
)
|
||||
Securities held to maturity:
|
||||||||
Fixed maturities
|
(500
|
)
|
(560
|
)
|
||||
Other investments
|
(116
|
)
|
(246
|
)
|
||||
Net inflows (outflows) from policy loans
|
(176
|
)
|
140
|
|||||
Acquisition of business, net of cash acquired of $816 in the six months ended June 30, 2012
|
-
|
(2,685
|
)
|
|||||
Net capital expenditures
|
(8,639
|
)
|
(5,680
|
)
|
||||
|
||||||||
Net cash used in investing activities
|
(66,194
|
)
|
(40,060
|
)
|
||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Change in outstanding checks in excess of bank balances
|
27,786
|
(10,135
|
)
|
|||||
Net change in short-term borrowings
|
(1,905
|
)
|
2,855
|
|||||
Repayments of long-term borrowings
|
(983
|
)
|
(976
|
)
|
||||
Repurchase and retirement of common stock
|
(18,250
|
)
|
(637
|
)
|
||||
Proceeds from exercise of stock options
|
-
|
316
|
||||||
Proceeds from policyholder deposits
|
6,580
|
19,587
|
||||||
Surrenders of policyholder deposits
|
(5,060
|
)
|
(3,311
|
)
|
||||
|
||||||||
Net cash provided by financing activities
|
8,168
|
7,699
|
||||||
|
||||||||
Net (decrease) increase in cash and cash equivalents
|
(33,743
|
)
|
93,124
|
|||||
|
||||||||
Cash and cash equivalents, beginning of period
|
89,564
|
71,834
|
||||||
|
||||||||
Cash and cash equivalents, end of period
|
$
|
55,821
|
$
|
164,958
|
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