8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): February 11, 2014

TRIPLE-S MANAGEMENT CORPORATION

(Exact Name of Registrant as Specified in Charter)

Puerto Rico	001-33865	66-0555678
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Registrant’s telephone number, including area code: 787-749-4949

1441 F.D. Roosevelt Avenue, San Juan, Puerto Rico 00920

(Address of Principal Executive Offices and Zip Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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))

Item 2.02. Results of Operations and Financial Condition

On February 11, 2014, Triple-S Management Corporation issued a press release announcing its Exhibit 99.1 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) The following items are filed as exhibits to this report:

99.1 Press release, February 11, 2014  issued by Triple-S Management Corporation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TRIPLE-S MANAGEMENT CORPORATION
Date: February 11, 2014	By:	/s/ Ramón M. Ruiz-Comas
		Name: Ramón M. Ruiz-Comas
		Title: President & Chief Executive Officer

EX-9.1

Exhibit 99.1

Triple-S Management Corporation

1441 F.D. Roosevelt Ave.

San Juan, PR 00920

www.triplesmanagement.com

FOR FURTHER INFORMATION:

AT THE COMPANY:	INVESTOR RELATIONS:
Alan Cohen	Kathy Waller
Chief Marketing & Communications Officer	AllWays Communicate, LLC
(787) 706-2570	(312) 543-6708

Triple-S Management Corporation Reports Results for Fourth Quarter 2013

SAN JUAN, Puerto Rico, February 11, 2014 – Triple-S Management Corporation (NYSE:GTS), the leading managed care company in Puerto Rico, today announced consolidated revenues of $587.7 million and a consolidated net loss of $1.7 million for the three months ended December 31, 2013. Net income for the year was $54.3 million, or $1.95 per diluted share, compared with $54.0 million, or $1.90 per diluted share, in 2012. Pro-forma net income was $37.8 million, or $1.36 per diluted share, compared with $49.6 million, or $1.74 per diluted share, in 2012.

Quarterly Consolidated Highlights

· Total consolidated operating revenues were $588.0 million;

· Consolidated operating loss was $3.2 million;

· Consolidated loss ratio was 85.5%;

· Medical loss ratio (MLR) was 89.4%;

· Managed Care member month enrollment increased 28.1% year over year;

· Medicaid self-insured member month enrollment was up 60.3% from the prior year;

· Medicare member month enrollment fell 7.4% compared with the year-ago period.

Ramón Ruiz-Comas, President and CEO of Triple-S Management Corporation commented, "Reflecting several challenges within our Managed Care segment, the Company’s quarterly and full-year financial results were below expectations.  Management is disappointed with this performance. The Commercial business incurred a net loss in the fourth quarter, which had historically been one of the most profitable in any given calendar year. In the period, the Commercial business experienced unexpectedly high utilization of preventive care services, including vaccinations, an outbreak of dengue fever and influenza, increased costs in specialty drugs, and continued losses in the U.S. Virgin Islands.  While the Medicare Advantage (MA) segment demonstrated improvement in 2013, its performance deteriorated in the fourth quarter substantially due to unfavorable prior period reserve developments.  Furthermore, the Managed Care business experienced an ongoing reduction in overall premiums due to membership losses, largely reflecting employee attrition.”

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Mr. Ruiz-Comas continued, “Several challenges still lie ahead, including the miSalud request for proposal (RFP) issued by the Government late last week, which incorporates a change to an at-risk model effective July 1, 2014, the impact of all recent regulations in the industry and taxes, continued pricing pressure in the Commercial segment stemming from heavy competition, and the unknown effect that the recent downgrade on Puerto Rico Government debt may have on the economy. Given these challenges, we believe that it is not prudent to provide 2014 guidance at this time.”

“In an effort to improve overall financial performance, the Company is embarking on a comprehensive strategic review of its businesses and processes, and management is taking immediate corrective steps. In the Commercial business, Triple-S will review its underwriting and pricing taking into account the latest trends in utilization and cost, implement new approaches and solutions to reduce specialty pharmacy costs, and revamp the U.S. Virgin Islands business model to ensure future profitability. Within MA, we will transfer pharmacy benefit management of the Triple-S MA portfolio to Abarca Health, seek an increase in MA membership by continuing to enroll new dual members throughout the year, continue the transition to a pay-for-performance physician model, and integrate the newly acquired Pharmacy Insurance Company of America (PICA) Part D portfolio, which had approximately 6,000 lives as of January 1, 2014,” Mr. Ruiz-Comas concluded.

Selected Quarterly Details

· Pro Forma Net Income Was $1.3 Million, or $0.05 Per Diluted Share.  Weighted average shares outstanding were 27.4 million. This compares with pro forma net income of $15.2 million, or $0.53 per diluted share, in the corresponding quarter of 2012, based on weighted average shares outstanding of 28.4 million.

· Managed Care Membership.  Our Managed Care membership increased by 27.1% year over year, reflecting the addition of the three new Medicaid (miSalud) regions effective October 1, 2013. Medicaid membership (all self-funded) increased 58.6%, to 1,420,371. Medicare membership decreased 8.1% year over year, to 112,839.  Fully-insured and self-funded Commercial membership declined by 7.0% and 6.5%, respectively.

· Consolidated Premiums Fell 2.6%, to $543.8 Million.  Thedecrease in consolidated premiums was principally due to lower Managed Care premiums, resulting from lower Medicare and Commercial fully-insured member month enrollment.

· Administrative Service Fees Increased 10.9%, to $30.6 Million.  The higher service fee income reflects the addition of the three new Medicaid regions offset, in part, by the lower per-member, per-month fees agreed upon in the new miSalud contract that became effective July 1, 2013.

· Managed Care MLR Increased 290 Basis Points, to 89.4%.  The increased MLR primarily reflects higher utilization and cost trends in the Commercial sector due to an outbreak of dengue fever and influenza, increased costs in specialty drugs, greater utilization of preventive care services, including vaccinations, and higher utilization and costs in the U.S. Virgin Islands business.

· Consolidated Loss Ratio Increased 260 Basis Points, to 85.5%.  The higher consolidated loss ratio mainly reflects the 290-basis-point increase in the Managed Care MLR. The loss ratio of the Property and Casualty segment increased by 740 basis points, while the loss ratio of the Life Insurance segment decreased by 170 basis points.

· Consolidated Operating Expense Ratio Rose 220 Basis Points, to 22.0%.  The higher consolidated operating expense ratio was largely due to the combination of decreased premiums and increased operating expenses, including expenses related to the addition of the three new miSalud ASO regions, a $2.4 million goodwill impairment charge related to the acquisition of a controlling interest in a health clinic, and premium taxes that became effective July 1, 2013.

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· Consolidated Operating Income Declined 115.0%, to a Loss of $3.2 Million.  The decrease in operating income primarily reflects the effect of the increased utilization in the Managed Care segment and increased operating expenses, resulting in a 400-basis-point decrease in the consolidated operatingmargin.

	Pro Forma Net Income
(Unaudited)	Three months ended December 31,					Year ended December 31,
(dollar amounts in millions)	2013			2012		2013			2012
Net income (loss)	$	(1.7	)	$	17.8	$	54.3		$	54.0
Less pro forma adjustments:
Net realized investment gains (losses), net of tax		(0.6	)		2.6		2.2			4.4
Goodwill impairment charge		(2.4	)		-		(2.4	)
Special Distribution received Puerto Rico Joint Underwriting Association		-			-		12.8			-
Guaranty Fund assessment		-			-		(1.0	)		-
Additional year-to-date current income tax expense after change in enacted tax rate		-			-		(2.8	)		-
Deferred tax benefit related to change in enacted tax rate		-			-		7.7			-
Pro forma net income	$	1.3		$	15.2	$	37.8		$	49.6
Diluted pro forma net income per share	$	0.05		$	0.53	$	1.36		$	1.74

Twelve-Month Recap

For the 12 months ended December 31, 2013, consolidated operating revenues decreased 2.3%, to $2.4 billion, primarily reflecting lower member month enrollment in the Medicare and Commercial sectors of the Managed Care segment. Consolidated claims incurred for the 12-month period were $1.8 billion, down 4.5% year over year. The 12-month consolidated loss ratio decreased 170 basis points, to 83.5%, and the MLR fell 190 basis points, to 86.9%.  This decline was driven by lower utilization and cost trends in the Medicare business, primarily at American Health. Consolidated operating expenses for the 12 months ended December 31, 2013 were $477.4 million and the operating expense ratio was 20.7%. Pro forma net income for the 12-month period was $37.8 million, or $1.36 per diluted share, based on weighted average shares outstanding of 27.8 million, compared with $49.6 million, or $1.74 per diluted share, based on weighted average shares outstanding of 28.5 million at the same time last year.

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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 income or loss divided by operating revenues.  The adjusted medical loss ratio accounts for subsequent adjustments to estimates, such as MA premium adjustments and prior period reserve developments, and presents them in the corresponding period.

(Unaudited)	Three months ended December 31,									Year ended December 31,
(dollar amounts in millions)	2013			2012			Percentage Change			2013			2012			Percentage Change
Premiums earned, net:
Managed Care:
Commercial	$	229.9		$	235.1			(2.2	%)	$	935.8		$	960.0			(2.5	%)
Medicare		254.8			265.5			(4.0	%)		1,033.5			1,073.5			(3.7	%)
Total Managed Care		484.7			500.6			(3.2	%)		1,969.3			2,033.5			(3.2	%)
Life Insurance		34.3			32.2			6.5	%		130.6			124.7			4.7	%
Property and Casualty		25.4			26.0			(2.3	%)		100.3			97.7			2.7	%
Other		(0.6	)		(0.6	)		(0.0	%)		(2.5	)		(2.5	)		0.0	%
Consolidated premiums earned, net	$	543.8		$	558.2			(2.6	%)	$	2,197.7		$	2,253.4			(2.5	%)
Operating revenues:
Managed Care	$	520.7		$	534.1			(2.5	%)	$	2,098.5		$	2,164.7			(3.1	%)
Life Insurance		40.2			37.7			6.6	%		152.8			145.5			5.0	%
Property and Casualty		27.6			28.1			(1.8	%)		108.6			106.6			1.9	%
Other		(0.5	)		(0.6	)		16.7	%		(1.5	)		(2.2	)		(31.8	%)
Consolidated operating revenues	$	588.0		$	599.3			(1.9	%)	$	2,358.4		$	2,414.6			(2.3	%)
Operating income:
Managed Care	$	(7.7	)	$	13.7			(156.2	%)	$	33.4		$	47.0			(28.9	%)
Life Insurance		4.7			4.2			11.9	%		16.2			16.7			(3.0	%)
Property and Casualty		1.2			2.7			(55.6	%)		2.2			6.8			(67.6	%)
Other		(1.4	)		0.4			450.0	%		(5.1	)		(0.9	)		466.7	%
Consolidated operating income	$	(3.2	)	$	21.0			(115.2	%)	$	46.7		$	69.6			(32.9	%)
Operating margin:
Managed Care		(1.5	%)		2.6	%		-410	bp		1.6	%		2.2	%		-60	bp
Life Insurance		11.7	%		11.1	%		60	bp		10.6	%		11.5	%		-90	bp
Property and Casualty		4.3	%		9.6	%		-530	bp		2.0	%		6.4	%		-440	bp
Consolidated		(0.5	%)		3.5	%		-400	bp		2.0	%		2.9	%		-90	bp
Depreciation and amortization expense	$	7.8		$	6.3			23.8	%	$	25.6		$	24.2			5.8	%

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Managed Care Additional Data	Three months ended December 31,						Twelve months ended December 31,
(Unaudited)	2013			2012			2013			2012
Member months enrollment:
Commercial:
Fully-insured		1,347,461			1,441,749			5,503,281			5,817,009
Self-insured		630,401			674,327			2,595,162			2,681,962
Total Commercial		1,977,862			2,116,076			8,098,443			8,498,971
Medicare:
Medicare Advantage		316,804			343,151			1,274,652			1,354,301
Stand-alone PDP		24,566			25,478			97,496			101,675
Total Medicare		341,370			368,629			1,372,148			1,455,976
Medicaid - Self-insured		4,271,181			2,676,176			12,260,349			10,562,571
Total member months		6,590,413			5,160,881			21,730,940			20,517,518
Claim liabilities (in millions)	$	282.9		$	284.8
Days claim payable		60			58
Premium PMPM:
Managed Care	$	287.00		$	276.52		$	286.43		$	279.60
Commercial		170.62			163.07			170.04			165.03
Medicare		746.40			720.24			753.20			737.31
Medical loss ratio		89.4	%		86.5	%		86.9	%		88.8	%
Commercial		91.4	%		86.6	%		89.5	%		88.6	%
Medicare Advantage		87.4	%		86.6	%		84.4	%		88.9	%
Stand-alone PDP		90.8	%		40.4	%		88.9	%		74.3	%
Adjusted medical loss ratio		89.5	%		87.8	%		86.9	%		86.2	%
Commercial		91.1	%		87.0	%		89.4	%		87.7	%
Medicare Advantage		87.7	%		88.4	%		84.4	%		88.8	%
Stand-alone PDP		93.6	%		84.9	%		88.8	%		81.2	%
Operating expense ratio:
Consolidated		22.0	%		19.8	%		20.7	%		18.0	%
Managed Care		18.4	%		16.5	%		17.0	%		14.5	%

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Managed Care Membership by Segment	As of December 31,
	2013		2012
Members:
Commercial:
Fully-insured		445,098		478,784
Self-insured		209,631		224,288
Total Commercial		654,729		703,072
Medicare:
Medicare Advantage		104,655		114,249
Stand-alone PDP		8,184		8,492
Total Medicare		112,839		122,741
Medicaid - Self-insured		1,420,371		895,301
Total members		2,187,939		1,721,114

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Conference Call and Webcast

Management will host a conference call and webcast on February 11, 2014 at 8:00 a.m., Eastern Time to discuss its financial results for the three months ended December 31, 2013.  To participate, callers within the U.S. and Canada should dial 1-877-941-6009, and international callers should dial 1-480-629-9819 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 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 an independent licensee of the Blue Cross Blue Shield Association.  It is the leading player in the managed care industry in Puerto Rico.  Triple-S Management also has the exclusive right to use the Blue Cross Blue Shield name and mark throughout Puerto Rico and the U.S. Virgin Islands.  With more than 50 years of experience in the industry, Triple-S Management offers a broad portfolio of managed care and related products in the Commercial and Medicare Advantage markets under the Blue Cross Blue Shield marks.  In addition to its managed care business, Triple-S Management provides non-Blue Cross Blue Shield branded life and property and casualty insurance in Puerto Rico.

For more information about Triple-S Management, visit www.triplesmanagement.com or contact kwaller@allwayscommunicate.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:

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· 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

· A downgrade in the Government of Puerto Rico’s debt

· 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, utilization management and Star ratings programs

· Ability to maintain Federal Employer, Medicare and Medicaid contracts

· Volatility in the securities markets and investment losses and defaults

· General economic downturns, major disasters, and epidemics

This list is not exhaustive.  Management believes the forward-looking statements in this release are reasonable.  However, there is no assurance that the actions, events or results anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on the Company’s results of operations or financial condition.  In view of these uncertainties, investors should not place undue reliance on any forward-looking statements, which are based on current expectations.  In addition, forward-looking statements are based on information available the day they are made, and (other than as required by applicable law, including the securities laws of the United States) the Company does not intend to update or revise any of them in light of new information or future events.

Readers are advised to carefully review and consider the various disclosures in the Company’s SEC reports.

-FINANCIAL TABLES ATTACHED-

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Condensed Consolidated Balance Sheets

(Dollar amounts in thousands, except per share data)

	UnauditedDecember 31, 2013			December 31, 2012
Assets
Investments	$	1,308,651		$	1,280,644
Cash and cash equivalents		74,356			89,564
Premium and other receivables, net		270,745			292,197
Deferred policy acquisition costs and value of business acquired		177,289			168,657
Property and equipment, net		89,086			92,423
Other assets		124,473			135,859
Total assets	$	2,044,600		$	2,059,344
Liabilities and Stockholders’ Equity
Policy liabilities and accruals	$	935,529		$	922,393
Accounts payable and accrued liabilities		236,204			243,533
Short-term borrowings		-			30,000
Long-term borrowings		89,302			101,271
Total liabilities		1,261,035			1,297,197
Stockholders’ equity:
Common stock		27,469			28,365
Other stockholders’ equity		756,274			733,542
Total Triple-S Management Corporation stockholders’ equity		783,743			761,907
Non-controlling interest in consolidated subsidiary		(178	)		240
Total stockholders’ equity		783,565			762,147
Total liabilities and stockholders’ equity	$	2,044,600		$	2,059,344

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Condensed Consolidated Statements of Earnings

(Dollar amounts in thousands, except per share data)

	For the Three Months Ended December 31,					For the Year Ended  December 31,
	Unaudited 2013			Unaudited 2012		Unaudited 2013		2012
Revenues:
Premiums earned, net	$	543,783		$	558,197	$	2,197,653	$	2,253,354
Administrative service fees		30,577			27,637		108,680		110,110
Net investment income		12,539			12,441		47,288		46,790
Other operating revenues		1,140			998		4,778		4,356
Total operating revenues		588,039			599,273		2,358,399		2,414,610
Net realized investment gains (losses)		(818	)		3,040		2,587		5,197
Other income, net		485			682		15,263		2,196
Total revenues		587,706			602,995		2,376,249		2,422,003
Benefits and expenses:
Claims incurred		465,075			462,471		1,834,325		1,919,859
Operating expenses		126,117			115,795		477,363		425,173
Total operating costs		591,192			578,266		2,311,688		2,345,032
Interest expense		2,285			2,418		9,474		10,599
Total benefits and expenses		593,477			580,684		2,321,162		2,355,631
Income before taxes		(5,771	)		22,311		55,087		66,372
Income tax expense (benefit)		(3,774	)		4,610		1,219		12,472
Net income (loss)		(1,997	)		17,701		53,868		53,900
Less: Net loss attributable to the non-controlling interest		262			67		418		132
Net income (loss) attributable to TSM	$	(1,735	)	$	17,768	$	54,286	$	54,032
Earnings per share attributable to TSM:
Basic net income (loss) per share	$	(0.06	)	$	0.63	$	1.96	$	1.90
Diluted earnings (loss) per share	$	(0.06	)	$	0.63	$	1.95	$	1.89

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Condensed Consolidated Statements of Cash Flows

(Dollar amounts in thousands, except per share data)

	For the Year Ended
	December 31,
	Unaudited 2013			2012
Net cash provided by operating activities	$	112,948		$	109,720
Cash flows from investing activities:
Proceeds from investments sold or matured:
Securities available for sale:
Fixed maturities sold		160,978			116,718
Fixed maturities matured/called		96,597			141,266
Equity securities sold		132,433			53,120
Securities held to maturity:
Fixed maturities matured/called		1,440			11,635
Acquisition of investments:
Securities available for sale:
Fixed maturities		(323,003	)		(313,188	)
Equity securities		(132,543	)		(98,095	)
Securities held to maturity:
Fixed maturities		(1,325	)		(1,639	)
Other investments		(512	)		(206	)
Net inflows (outflows) from policy loans		(313	)		146
Acquisition of business, net of cash acquired of $4,618 and $816 in the year ended December 31, 2013 and 2012		(4,795	)		(2,685	)
Net capital expenditures		(11,809	)		(12,078	)
Net cash used in investing activities		(82,852	)		(105,006	)
Cash flows from financing activities:
Change in outstanding checks in excess of bank balances		15,123			(19,841	)
Net change in short-term borrowings		(30,000	)		30,000
Repayments of long-term borrowings		(11,969	)		(26,955	)
Repurchase and retirement of common stock		(18,250	)		(2,299	)
Proceeds from exercise of stock options		-			316
Proceeds from policyholder deposits		9,212			39,709
Surrenders of policyholder deposits		(9,420	)		(7,059	)
Net cash (used in) provided by financing activities		(45,304	)		13,871
Net (decrease) increase in cash and cash equivalents		(15,208	)		18,585
Cash and cash equivalents, beginning of period		89,564			70,979
Cash and cash equivalents, end of period	$	74,356		$	89,564

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