10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to            

COMMISSION FILE NUMBER 001-33865

TRIPLE-S MANAGEMENT CORPORATION

Puerto Rico	66-0555678
(STATE OF INCORPORATION)	(I.R.S. ID)

1441 F.D. Roosevelt Avenue, San Juan, PR 00920

(787) 749-4949

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock Class B, $1.00 par value	GTS	New York Stock Exchange (NYSE)

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act.         

☐ Yes ☑ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   

☐ Yes ☑ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐	Accelerated filer  ☑
Non-accelerated filer  ☐	Smaller reporting company  ☐
	Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

☐ Yes ☑ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2020 was $438,985,592 for the Class B common stock (the only stock of the registrant that trades in a public market).

As of February 18, 2021, the registrant had 23,680,932 of its Class B common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held on April 30, 2021 are incorporated by reference into Parts II and III of this Annual Report on Form 10-K.

Triple-S Management Corporation

FORM 10-K

For the Fiscal Year Ended December 31, 2020

Table of Contents

Special Note Regarding Forward-Looking Statement	4
Part I	7
Item 1.   Business	7
Item 1A.   Risk Factors	37
Item 1B.   Unresolved Staff Comments	57
Item 2.   Properties	57
Item 3.   Legal Proceedings	57
Item 4.   Mine Safety Disclosures	58
Part II	58
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	58
Item 6.   Selected Financial Data	61
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations	62
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk	88
Item 8.   Financial Statements and Supplementary Data	90
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	92
Item 9A.   Controls and Procedures	94
Item 9B.   Other Information	96
Part III	96
Item 10.   Directors, Executive Officers and Corporate Governance	96
Item 11.   Executive Compensation	96
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	96
Item 13.   Certain Relationships and Related Transactions, and Director Independence	96
Item 14.   Principal Accountant Fees and Services	96
Part IV	97
Item 15.   Exhibits and Financial Statements Schedules	97
Item 16.   Form 10-K Summary	97
SIGNATURES	102

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Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K and the documents we incorporated by reference in this report contains forward-looking statements, as such term is defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that include information about possible or assumed future sales, results of operations, developments, regulatory approvals or other circumstances and may be found in the Items of this Annual Report on Form 10-K entitled Item 1.   Business, Item 1A.   Risk Factors, Item 7   Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Annual Report on Form 10-K.  Statements that use the terms ‘‘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 Annual Report on Form 10-K reflect our current views about future events and are based on assumptions and subject to risks and uncertainties.  Consequently, actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including all the risks discussed in Item 1A.   Risk Factors and elsewhere in this Annual Report on Form 10-K.

In addition, we operate in a highly competitive, constantly changing environment that is significantly influenced by very large organizations that have resulted from business combinations, aggressive marketing and pricing practices of competitors and regulatory oversight.  The following list is a summary of factors, the results of which, either individually or in combination, if markedly different from our planning assumptions, could cause our business results of operations, financial condition, cash flow, or prospect, to be materially adversely affected from those expressed in any forward-looking statements contained in this Annual Report on Form 10-K:

• 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 our 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 our financial strength ratings;

• Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies;

• Ability to contract with providers and government agencies consistent with past practice;

• Ability to successfully implement our disease management and utilization management programs;

• Ability to maintain Federal Employees, Medicare, and Medicaid contracts;

• Volatility in the securities markets and investment losses and defaults; and

• General economic downturns, major disasters, epidemics and pandemics.

The foregoing list should not be construed to be exhaustive.  We believe the forward-looking statements in this Annual Report on Form 10-K 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 our results of operations or financial condition.  In view of these uncertainties, you should not place undue reliance on any forward-looking statements, which are based on our current expectations at the time the statements are made.  Further, forward-looking statements speak only as of the date they are made, and, other than as required by applicable law, including the securities laws of the United States, we do not intend to update or revise any of them in light of new information or future events.

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Set forth below is a summary of the principal risk factors we face during the normal course of business. You should review and carefully consider Item 1A. Risk Factors in this Annual Report on Form 10-K for a detailed description of these and other risk factors we face. The risks and uncertainties summarized below are not the only ones we face and the order in which these factors were summarized does not necessarily reflect their relative importance. Additional risks and uncertainties not summarized below or not presently known to us or that are currently deemed insignificant may also impair our business operations. The occurrence of any of the following risks could materially affect our business, financial condition, operating results, and cash flows.

Risks Related to Our Business

• Our inability to contain managed care costs or our current provider agreements, and our inability to enter into other appropriate provider agreements may adversely affect our business and profitability.

• We are dependent on a small number of government contracts to generate a significant amount of the revenues for our Managed Care segment.

• Our failure to accurately estimate incurred but not reported claims would affect our reported financial results.

• The termination or modification of our license agreements to use the Blue Cross and Blue Shield (BCBS) name and mark could have a material adverse effect on our business, financial condition and results of operations.

• Our ability to manage our exposure to underwriting risks in our Life Insurance and Property and Casualty segments depends on the availability and cost of reinsurance coverage.

• We are dependent on the success of our relationships with third parties for various services and functions, including outsourced IT, claims processing and PBM services.

• Significant competition and market conditions in Puerto Rico could negatively affect our ability to maintain or increase our profitability.

• As a holding company, we are largely dependent on rental payments, dividends and other payments from our subsidiaries. The ability of our regulated subsidiaries to pay dividends or make other payments to us is subject to the regulations of the Puerto Rico Office of the Insurance Commissioner (Commissioner of Insurance), including maintenance of minimum levels of capital, as well as covenant restrictions in their indebtedness.

• As an insurance company, we carry out significant investment activities and our investment portfolios are subject to varying economic and market conditions.

• Our business is geographically concentrated in Puerto Rico and weakness in the economy and the fiscal health of the government has adversely affected and may continue to adversely affect us.

• The success of our business is dependent on developing and maintaining effective information systems because we are materially dependent on such systems, including Internet-enabled products and information, for all aspects of our business operations.

• Because of the nature of our business, we are subject to a variety of legal actions relating to our business operations, including claims related to our products and services, claims relating to the denial of benefits or coverage, medical malpractice actions, allegations of anti-competitive and unfair business activities, provider disputes, broker and agent disputes, and claims by regulatory actions by agencies for noncompliance, among others.

• Large-scale natural disasters may have a material adverse effect on our business, financial condition and results of operations, because claims incurred by our Managed Care, Life Insurance and Property and Casualty segments could be materially affected and our properties may incur substantial damage.

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• Pandemics, like the COVID-19 pandemic and local, state and federal governments’ response to the pandemics may have a material adverse effect on our business, financial condition and results of operations.

Risks Relating to the Regulation of Our Industry

• Changes in public policy, enactment of new laws, changes in governmental regulations, or the application thereof, such as the health care reform law, may adversely affect our business, financial condition and results of operations.

• We are subject to complex regulations under the Medicare Advantage program. If we fail to comply with these regulations, we may be exposed to criminal sanctions and significant civil penalties. Our Medicare Advantage contracts may also be terminated or our operations may be required to change in a manner that has a material adverse impact on our business.

• We may be subject to government audits, regulatory proceedings or investigative actions, that may find our policies, procedures, practices or contracts are not compliant with, or are in violation of, applicable health care regulations.

• Effective prevention, detection and control systems are critical to maintaining regulatory compliance and preventing fraud. Failure of these systems could adversely affect the Company.

• Because of the nature of our business, if we fail to comply with applicable privacy and security laws, regulations and standards, or if we fail to address emerging security threats, including cybersecurity threats, or fail to detect and prevent privacy and security incidents, our business, reputation, results of operations, financial position and cash flows could be materially and adversely affected.

• The revised rate calculation system for Medicare Advantage, the payment system for Medicare Part D and changes in the methodology and payment policies used by Centers for Medicare & Medicaid Services (CMS) to establish rates could reduce our profitability and the benefits we offer our beneficiaries.

• CMS’s risk-adjustment payment system and other Medicare Advantage funding pressures make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.

• The Puerto Rico Health Insurance Administration’s (ASES by its Spanish acronym) risk-adjustment payment system and payment structure, and its dependence on scarce or unavailable data, make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.

• If our Medicare Advantage members enroll in another Medicare Advantage plan during the open enrollment season, they will be automatically disenrolled from our plan, possibly without our immediate knowledge.

• Our insurance subsidiaries are subject to minimum capital requirements.  Our failure to meet these standards could expose us to regulatory actions.

• Puerto Rico insurance laws and regulations, our license agreement with the Blue Cross and Blue Shield Association (BCBSA), and provisions of our Articles of incorporation and bylaws could delay, deter or prevent a takeover attempt that shareholders might consider to be in their best interests. It may also make it more difficult to replace members of our Board of Directors and have the effect of entrenching management.

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Part I

Item 1. Business

General Description of Business and Recent Developments

Triple-S Management Corporation (Triple-S, TSM, the Company, the Corporation, we, us or our) is a health services company and one of the top players in the Puerto Rico health care industry. With more than 60 years of experience, we are the premier health care brand and serve more people through the most attractive provider networks on the island. We have the exclusive right to use the Blue Cross and Blue Shield (BCBS) name and mark throughout Puerto Rico, the U.S. Virgin Islands (USVI), Costa Rica, the British Virgin Islands (BVI) and Anguilla, and we offer a broad portfolio of managed care and related products in the Commercial, Medicare Advantage and Medicaid markets. In the Commercial market, we offer products to corporate accounts, U.S. federal government employees, local government employees, individual accounts and Medicare Supplement. We also participate in the Government of Puerto Rico Health Insurance Plan, a government of Puerto Rico and U.S. federal government funded managed care program for the medically indigent that is similar to the Medicaid program in the U.S. (Medicaid or the Government health plan).

Our commitment to our valued customers and provider partners, backed by our heritage of excellent care, access and service have positioned Triple-S for continued growth in the health care arena. Our progressive use of technology and clinical data, value-based partnerships with care providers and initial investments in ambulatory and primary care assets are a strong foundation for differentiation and growth through the development of an integrated delivery system over the next several years. We believe continued investment and focus on delivering an excellent health care experience and great service, coupled with health management programs that improve outcomes and quality of life while reducing the total cost of care, will separate Triple-S from our competition and strengthen the financial performance of our business well into the future.

We participate in the managed care market through our subsidiaries, Triple-S Salud, Inc. (TSS); Triple-S Advantage, Inc. (TSA), and Triple-S Blue, Inc. I.I. (TSB). TSS, TSA and TSB are BCBS licensees. As of December 31, 2020, we served approximately 979,000 managed care members across all regions of Puerto Rico.

Triple-S is also a well-known brand in the life insurance and property and casualty insurance markets, with a significant share in each. We participate in the life insurance market through our subsidiary, Triple-S Vida, Inc. (TSV), and in the property and casualty insurance market through our subsidiary, Triple-S Propiedad, Inc. (TSP). Effective June 1, 2020, TSV acquired a life insurance portfolio from a local insurance company. The portfolio represents approximately $5.0 million in annualized premiums.

Substantially all of our premiums are from customers within Puerto Rico.  In addition, most of all of our long-lived assets, other than financial instruments, including deferred policy acquisition costs and value of business acquired, goodwill and other intangibles, and the deferred tax assets are related to Puerto Rico.

Operating revenues, with intersegment premiums and service revenue shown separately, operating income and total assets attributable to the reportable segments are set forth in Note 28, Segment Information of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

In 2018, our subsidiary TSP experienced a spillover of losses over its catastrophe reinsurance program for the first time since its incorporation 30 years ago.  This spillover was related to the losses caused by Hurricane Maria, a strong Category 4 hurricane that struck Puerto Rico in September 2017.  Following the impact of Hurricane Maria, TSP strengthened its reinsurance program by increasing its catastrophe protection and decreasing its insured values.  See Note 14, Reinsurance Activity of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.  Please refer also to Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations – III. Results of Operations – Property and Casualty Segment Operating Results.

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Our subsidiary TSS was granted Utilization Review Accreditation Commission (URAC) effective March 1, 2017.  We went through a reaccreditation process in January 2020 successfully maintaining our accreditation.  The URAC accreditation is a requirement for the Federal Employees Program representing over $170.0 million in premiums. The accreditation is extensive to the Commercial and Medicaid lines of business since they are managed in the same operational platforms as the Federal Employees Program.  Our Star Rating and URAC accreditation evidence the commitment to quality in health services for our members and affiliates.

In August 2017, the Board of Directors authorized the immediate commencement of a Class B $30.0 million share repurchase program.  In February 2018 the Company’s Board of Directors authorized a $25.0 million expansion to the existing $30.0 million Class B repurchase program. In October 2019 the Company’s Board of Directors authorized an additional expansion to this repurchase program increasing its remaining balance up to a total of $25.0 million, effective November 2019.  This share repurchase program was completed in May 2020 and was conducted in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. See Note 19, Stock Repurchase Programs of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

On July 16, 2019, the Company announced that its Board of Directors authorized the conversion (Conversion) of the Company’s remaining issued and outstanding Class A common shares into Class B common shares, effective August 7, 2019.  Preceding the Conversion, as the result of a recent litigation settlement, the Company issued 48,602 Class A shares to the heirs of a former shareholder.  The issuance of these new Class A shares entitled all Class B shareholders to certain anti-dilution rights; therefore, all holders of Class B shares at the close of business on July 26, 2019 (Record Date) received a share dividend of 0.051107 Class B shares for every Class B share they owned as of that time, as determined by the anti-dilution formula in the Company’s Articles of incorporation.  The Class B share dividend was paid on August 6, 2019; cash was paid in lieu of fractional shares.  Effective upon the Company’s public announcement on August 7, 2019, all Class A holders of record received one Class B share for each Class A share held.  Upon the Conversion, all remaining outstanding Class A shares were automatically cancelled and extinguished, and the Company now maintains a single class of common shares.  See Note 18, Stockholders’ Equity of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

In this Annual Report on Form 10-K, references to “shares” or “common stock” refer collectively to our Class A and Class B common stock, unless the context indicates otherwise.

Industry Overview

Managed Care

In response to increasing focus on health care costs by employers, the government and consumers, alternatives to traditional indemnity health insurance have increased; Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) are two prominent examples.  Through the introduction of these alternatives, the managed care industry has attempted to contain the cost of health care by negotiating contracts with hospitals, physicians and other providers to deliver health care services to plan members at favorable rates.  These products usually feature medical management and other quality and cost-optimization measures such as pre-admission review and approval for certain non-emergency services, pre-authorization of certain outpatient surgical procedures, network credentialing to determine that network doctors and hospitals have the required certifications and expertise, and various levels of care management programs to help members better understand and navigate the medical system.  In addition, providers may have incentives to achieve certain quality measures or may share medical cost risk.  Members generally pay co-payments, coinsurance and deductibles when they receive services.  While the distinctions between the various types of plans have lessened over recent years, PPO products generally provide reduced benefits for out-of-network services, while traditional HMO products generally provide little to no reimbursement for non-emergency out-of-network utilization.  An HMO plan may also require members to select one of the network primary care physicians (PCPs) to coordinate care and approve certain specialist or other services.

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The U.S. government provides hospital and medical insurance benefits to eligible people aged 65 and over as well as certain other qualified persons through the Medicare program, including the Medicare Advantage program.  The federal government also offers prescription drug benefits to Medicare eligible, both as part of the Medicare Advantage program and on a stand-alone basis, pursuant to Medicare Part D (also referred to as PDP stand-alone product or PDP).  In addition, the Government of Puerto Rico provides managed care coverage to the medically indigent population of Puerto Rico.

Economic factors and greater consumer awareness have resulted in (a) the increasing popularity of products that offer larger, more extensive networks; more member choice related to coverage, physicians and hospitals; greater access to preventive care and wellness programs, and a desire for greater flexibility for customers to assume larger deductibles and co-payments in return for lower premiums and (b) products with lower benefits and a narrower network in exchange for lower premiums.  We believe we are well positioned to respond to these market preferences due to the breadth and flexibility of our product offering and size of our provider networks.

Life Insurance

Total annual premiums in Puerto Rico for the year ended December 31, 2019 for the life insurance market approximated $1.8 billion.  The main products in this market are ordinary life, cancer and other dreaded diseases, term life, disability and annuities. The main distribution channels are independent agents and an internal salaried sales force.  Banks have established general agencies to cross sell life insurance products, such as term life and credit life.

Property and Casualty Insurance

The total property and casualty market in Puerto Rico in terms of gross premiums written was approximately $2.4 billion in 2019, an increase of $255.0 million over 2018. The nine months ended September 30, 2020 was approximately $1.8 billion, an increase of just $9.0 million over the same period in 2019. Property and casualty insurance companies compete for accounts based on pricing, policy terms, and quality of services. The main lines of business in Puerto Rico are personal and commercial auto, commercial multi-peril, fire and allied lines, and other general liabilities.  Approximately 64% of the market is written by the top six insurance groups or companies in terms of market share, and approximately 87% of the market is written by companies that are incorporated under the laws of and which operate principally in Puerto Rico.

The Puerto Rican property and casualty insurance market is highly dependent on reinsurance.  In September 2017 Puerto Rico was hit by two major hurricanes causing severe damages and losses to the insurance market.  As a result, premium rates and reinsurance costs increased significantly in 2018 and 2019.  Moreover, in January 2020, the southwest part of Puerto Rico was struck by an earthquake causing losses to the insurance industry and affecting catastrophe reinsurance costs. In March 2020 the World Health Organization (WHO) declared the coronavirus (COVID-19) outbreak to be a pandemic which also affected Puerto Rico. The government of Puerto Rico put in place measures to control the effects of the pandemic; these measures included, among others, lockdowns and curfews.  In a general sense, the Property and Casualty Insurance markets were not affected for insurance losses as exclusions were in effect for losses caused by the pandemic.  The insurers were able to operate using technology and communication tools and with less staff at its offices.  The measures to control the pandemic is causing a favorable loss experience in several lines of business.  On the other side, the pandemic and measures to control it has affected several economic sectors and businesses and accordingly the level of premiums is affected as new business opportunities are limited.  The pandemic has several impacts in the reinsurance worldwide market which are considered in establishing reinsurance costs for the local market.

Puerto Rico’s Economy

The dominant sectors of the Puerto Rico economy in terms of production and income are manufacturing and services.  The manufacturing sector now places increased emphasis on higher wages, high technology industries, such as pharmaceuticals, biotechnology, computers, microprocessors and certain high technology machinery and equipment with almost 90% of manufacturing generated by chemical and electronic products.  The services sector, which includes finance, insurance, real estate, wholesale and retail trade, transportation, communications and public utilities, and other services, plays a major role in the economy.  It ranks second to manufacturing in contribution to the gross domestic product and leads all sectors in providing employment.

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The economy of Puerto Rico is affected by external factors determined by the U.S. economy and the policies and results of the U.S. government.  These external factors include exports, direct investment, the amount of federal transfer payments, the level of interest rates and the rate of inflation.  Historically, the economy of Puerto Rico has followed the economic trends of the U.S. economy.  However, for more than a decade, economic growth in Puerto Rico has not been consistent with the performance of the U.S. economy.  The Government of Puerto Rico has also faced a number of fiscal challenges, which eventually resulted in it defaulting and having to restructure the majority of debt.

The Puerto Rico economy entered a recession in the fourth quarter of fiscal year 2006. Puerto Rico’s  gross national product (GNP) contracted (in real terms) every fiscal year between 2007 and 2018, with the exception of fiscal year 2012. GNP increased by 1.5% (in real terms) in fiscal year 2019, largely due to federal disaster recovery spending related to Hurricane María. The 2020 Fiscal Plan (discussed below) projected that the economy of Puerto Rico would contract by 4% in real terms in fiscal year 2020, largely because of the COVID-19 pandemic, with a limited recovery of 0.5% in fiscal year 2021.

Puerto Rico’s population has also been in decline over the past decade. Estimates by the U.S. Census Bureau indicate the population has decreased by 14.3%, or approximately 530,000 people, from April 1, 2010 to July 1, 2019. The 2020 Fiscal Plan projects that population will continue to decline through fiscal year 2025. The weakness of Puerto Rico’s economy has also adversely affected employment. Total average annual employment, as measured by the Puerto Rico Department of Labor and Human Resources (the DLHR) has decreased approximately 20% since 2007. The reduction in total employment began in the fourth quarter of fiscal year 2007, when total employment was 1,244,425, and continued consistently until the first half of fiscal year 2015, after which it mostly stabilized.  According to the most recent data from DLHR, Puerto Rico’s average total employment as of November 2020 was 949,000, a decrease of 26,000 from total employment of 975,000 as of November 2019.  The DLHR also reports an average unemployment rate of approximately 8.5% as of November 2020, the same unemployment rate reported by the DLHR as of November 2019.

PROMESA and the Oversight Board

The Commonwealth has been enduring a fiscal and economic crisis for over a decade. Such crisis prompted the U.S. Congress to enact the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) in June 2016. PROMESA, among other things, created a federal fiscal oversight board (the Oversight Board) with broad powers over the Commonwealth’s fiscal affairs and established two mechanisms for the restructuring of the obligations of the Commonwealth, its instrumentalities and municipalities, contained in Titles III and VI of PROMESA. The Commonwealth and several of its instrumentalities have been in the process of restructuring their debts through the mechanisms provided by PROMESA for some time.

In August 2016, President Barrack Obama appointed the seven voting members of the Oversight Board through the process established in PROMESA, which authorizes the President to select the members from several lists required to be submitted by congressional leaders and which process was recently upheld by the U.S. Supreme Court.  During 2020, President Donald Trump reappointed three of the original members and appointed four new members to the Oversight Board.

Commonwealth Fiscal Plan and Plan of Adjustment

The Oversight Board has certified several fiscal plans for the Commonwealth since 2017. The most recent fiscal plan for the Commonwealth certified by the Oversight Board is dated May 27, 2020 (the 2020 Fiscal Plan).  In January 2020, however, the Oversight Board established a schedule for a proposed revision to the 2020 Fiscal Plan to incorporate new information regarding Puerto Rico’s macroeconomic environment and government revenues and expenditures, to better inform the fiscal year 2022 budget development, and to incorporate the impact of expenses related to the potential certification of a plan of adjustment for the Commonwealth under Title III of PROMESA. Pursuant to the schedule, the Governor is required to submit a proposed updated fiscal plan to the Oversight Board by February 20, 2021, and the Oversight Board expects to certify a revised updated fiscal plan by April 23, 2021.

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The 2020 Fiscal Plan estimated that the economy of Puerto Rico would contract by 4% in real terms in fiscal year 2020, largely because of the COVID-19 pandemic, with a limited recovery of 0.5% in fiscal year 2021. The Oversight Board projected that this economic contraction would exacerbate the Commonwealth government’s fiscal challenges. As a result of this, the 2020 Fiscal Plan projected that the Commonwealth would have a pre-contractual debt service deficit each year through 2025 if the measures and structural reforms contemplated by the plan were not successfully implemented. It estimated that the proposed fiscal measures and structural reforms would drive approximately $10 billion in savings and extra revenue through 2025 and a cumulative 0.88% increase in growth by fiscal year 2029. However, even after the fiscal measures and structural reforms, and before contractual debt service, the 2020 Fiscal Plan’s projections reflected an annual deficit starting in fiscal year 2032.

On February 28, 2020, the Oversight Board filed a plan of adjustment for the Commonwealth, the Employees Retirement System of the Government of the Commonwealth and the Puerto Rico Public Buildings Authority in the pending debt restructuring proceedings under Title III of PROMESA.   In light of the COVID-19 pandemic, however, the Oversight Board requested that the court adjourn proceedings related to the proposed plan of adjustment so as to allow the Government and the Oversight Board to prioritize the health and safety of the people of Puerto Rico and gain a better understanding of the economic and fiscal impact of the pandemic. The Oversight Board, the Government and certain creditors of the Commonwealth recently resumed negotiations on the economic terms of a proposed plan of adjustment under a court-ordered mediation and, on February 10, 2021, the Oversight Board announced that it had reached an agreement in principle on the economic terms of a proposed plan with the principal parties to the previous plan support agreement. The Title III court set March 8, 2021 as the deadline for the filing of a new proposed plan of adjustment by the Oversight Board.

COVID-19

COVID-19 Situation in Puerto Rico

As of February 18, 2021, the Puerto Rico Department of Health reported 91,047 and 7,459 confirmed (RT-PCR+) and probable (antigen) COVID-19 cases, respectively, and a total of 1,940 confirmed and probable COVID-19-related deaths in Puerto Rico.

Puerto Rico was under a stay-at-home order (as amended and extended, the “Order”) from March 15, 2020 until June 16, 2020.  The Order required the closure of non-essential businesses for the same period of time.  On May 1, 2020, the Governor issued a new order providing for the gradual re-opening of the economy beginning on May 4, 2020.  The Governor has issued several other executive orders establishing the rules to continue the gradual re-opening of the economy, the latest of which is effective until March 14, 2021.

Health care is considered an essential service under the Order; therefore, all functions of our Managed Care business, other than sales, were excluded from closure.  Our Life Insurance and Property & Casualty businesses, which had been closed since March 16, 2020, re-opened on May 5, 2020, subject to compliance with certain safety and risk management measures.

Puerto Rico began its COVID-19 vaccination program in December 2020 and is currently implementing the second phase of such program, which includes persons 65 years and older.

We have implemented our business continuity and risk mitigation plans and are closely monitoring outbreak developments in order to ensure the health and safety of our employees and visitors.

Economic Impact

It is still too early to fully assess the ultimate economic impact of the pandemic and lockdown.  However, the 2020 Fiscal Plan (as defined above) projected that the economy of Puerto Rico would contract by 4% in real terms in fiscal year 2020 (which ended on June 30, 2020), largely due to the COVID-19 pandemic, with a limited recovery of 0.5% in fiscal year 2021.  These projections incorporate the combined effect of the measures enacted by the federal and Puerto Rico governments (discussed below), which are expected to play an essential role in mitigating the economic damage from the sudden economic shock caused by the pandemic.

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See Item 1A.  Risk Factors – Risks Related to our Business – Our business is geographically concentrated in Puerto Rico and weakness in the economy and the fiscal health of the government has adversely affected and may continue to adversely affect us. included in this Annual Report on Form 10-K.

Legislative Measures and Initiatives

The federal and state governments have enacted a number of measures in response to the COVID-19 outbreak and the impact the outbreak has had on the economy, public health, government, individuals, and businesses. We include summaries of some of those measures below.

Funding and Economic Relief for Puerto Rico

The Families First Coronavirus Response Act (FFCRA), enacted on March 18, 2020, makes approximately $182.9 million available for Puerto Rico’s Medicaid Program and increases the percentage of federal government funding for its Medicaid program expenditures from 76% to approximately 82% during the emergency period.  The Coronavirus Aid, Relief, and Economic Security or CARES Act, enacted on March 27, 2020, and the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, enacted on December 27, 2020 include a series of direct relief and financial assistance measures for Puerto Rico residents and businesses.  The CARES Act also assigns $2.2 billion to the Government of Puerto Rico to cover necessary expenditures related to COVID-19 and not included in the territory’s budget, among other measures. The Puerto Rico government has earmarked approximately $1 billion for its COVID-19 response.

Measures Impacting our Business

The FFCRA and CARES Act also require health plans and insurers to cover testing for COVID-19 without imposing cost-sharing or prior authorization requirements.  On April 16, 2020, the Puerto Rico Government enacted Act number 43, which requires health plans and insurers to cover COVID-19-related diagnostic and treatment services, including hospitalization, without cost-sharing.  Our regulators have also issued regulations and circular letters requiring waivers of pre-authorizations for certain services and drugs, requiring temporary coverage of certain out-of-network providers and services, and limiting cost-sharing for certain services.  See Item 1A. Risk Factors – Risks Related to our Business –  Pandemics, like the COVID-19 pandemics and local, state and federal governments’ response to the pandemics may have a material adverse effect on our business, financial condition and results of operations. included in this Annual Report on Form 10-K.

2020 Seismic Activity

On January 7, 2020, a magnitude 6.4 earthquake struck Puerto Rico, causing island-wide power outages and extensive damage to infrastructure and property in the southwest region of the island.  The 6.4 magnitude earthquake was preceded by foreshocks and followed by aftershocks.  During the three months ended March 31, 2020, the Company recognized $5 million in incurred losses related to this event, which is its maximum exposure for a single event under its current reinsurance program.  We also incurred in $3.0 million in reinstatement reinsurance premiums related to the event.

See Item 1A.  Risk Factors – Risks Related to Our Business – Large-scale natural disasters may have a material adverse effect on our business, financial condition and results of operations. included in this Annual Report on Form 10-K.

Products and Services

Managed Care

Through our subsidiaries TSS and TSA, we offer a broad range of managed care products, including HMO plans, PPO plans, Medicare Supplement, Medicare Advantage and Medicaid plans.  Managed care products represented approximately 92% of our consolidated premiums earned, net before elimination for each of the years ended December 31, 2020, 2019, and 2018.  We design our products to meet the needs and objectives of a wide range of customers, including employers, individuals and government entities.  Our customers either contract with us to assume underwriting risk or they self-fund underwriting risk and rely on us for provider network access, medical cost management, claim processing, stop-loss insurance and other administrative services.  Our products vary with respect to the level of benefits provided; the costs paid by employers and members, including deductibles and co-payments; and the extent to which our members’ access to providers is subject to referral or preauthorization requirements.

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Managed care generally refers to a method of integrating the financing and delivery of health care within a system that manages the cost, accessibility and quality of care.  Managed care products can be further differentiated by the types of provider networks offered, the ability to use providers outside such networks, and the scope of the medical management and quality assurance programs.  Our members receive medical care from our networks of providers in exchange for premiums paid by the individuals or their employers, including governmental entities, and, in some instances, a cost-sharing payment between the employer and the member.  We reimburse network providers according to pre-established fee arrangements and other contractual agreements.

We currently offer the following managed care plans.

Health Maintenance Organization.    We offer HMO plans that provide members with health care coverage for a fixed monthly premium in addition to applicable member co-payments.  Health care services can include emergency care; inpatient hospital and physician care; outpatient medical services; and supplemental services such as dental, vision, behavioral and prescription drugs, among others.  Members must select a primary care physician within the network to provide and assist in managing care, including referrals to specialists.

Preferred Provider Organization.    We offer PPO managed care plans that provide our members and their dependent family members with health care coverage in exchange for a fixed monthly premium.  In addition, we provide our PPO members with access to a larger network of providers than our HMO.  In contrast to our HMO product, we do not require our PPO members to select a primary care physician or to obtain a referral to utilize in-network specialists.  We also provide coverage for PPO members who access providers outside of the network.  Out-of-network benefits are generally subject to a higher deductible and coinsurance.  We also offer national in-network coverage to our PPO members through the BlueCard program.

BlueCard.    For our members who purchase our PPO and selected members under self-funded or Administrative Services Only (ASO) arrangements through our subsidiary TSS, we offer the BlueCard program.  The BlueCard program offers these members in-network benefits through the networks of the other BCBS plans in the United States and certain U.S. territories.  In addition, the BlueCard worldwide program provides our PPO members with coverage for medical assistance worldwide.

Medicare Supplement.    We offer Medicare Supplement products, which provide supplemental coverage for many of the medical expenses that the Medicare Parts A and B programs do not cover, such as deductibles, coinsurance and specified losses that exceed these programs’ maximum benefits.

ASO.    In addition to our fully insured plans, we also offer our PPO products on a self-funded or ASO basis, under which we provide claims processing and other administrative services to employers.  Employers choosing to purchase our products on an ASO basis fund their own claims, but their employees are able to access our provider network at our negotiated discounted rates.  We administer the payment of claims to the providers, but we do not bear any insurance risk in connection with claims costs because we are reimbursed in full by the employer. We are thus subject only to credit risk in this business.  For certain self-funded plans, we provide stop-loss insurance pursuant to which we assume some of the medical risk for a premium.  The administrative fee charged to self-funded groups is generally based on the size of the group and the scope of services provided.

Life Insurance

We offer a wide variety of life, accident, disability and health and annuity products in Puerto Rico through our subsidiary TSV.  TSV markets in-home service life and supplemental health products through a network of company-employed agents.  Ordinary life, cancer and dreaded diseases (Cancer line of business), and pre-need life products are marketed through independent agents.  TSV is the leading distributor of life products in Puerto Rico.  We are the only home service company in Puerto Rico and offer guaranteed issue, funeral and cancer policies to the lower and middle income market segments directly to people in their homes.  We also market our group life and disability coverage through our independent producers and brokers.

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Property and Casualty Insurance

We offer a wide range of property and casualty insurance products through our subsidiary TSP.  Our predominant insurance products are commercial multi-peril package, personal package, commercial auto, hospital malpractice, commercial liability, and commercial property.  This segment’s commercial products targeted mainly small-to medium-size accounts.

Because of our geographical location, property and casualty insurance operations in Puerto Rico are subject to natural catastrophic activity, in particular hurricanes, tropical storms and earthquakes.  As a result, local insurers, including ourselves, rely on the international reinsurance market.  The property and casualty insurance market is affected by the cost of reinsurance, which varies with the catastrophic experience.

We maintain a comprehensive reinsurance program as a means of protecting our surplus in the event of a catastrophe.  We also carry reinsurance to protect us from the impact of large unforeseen losses and prevent sudden and unpredictable changes in results of operations and equity.  Our policy is to enter into reinsurance agreements with reinsurers considered to be financially sound.  Practically all our reinsurers have an A.M. Best rating of ‘A-’ or better, or an equivalent rating from other rating agencies.  During the year ended December 31, 2020, 38.7% of the premiums written in the Property and Casualty segment were ceded to reinsurers.  Although these reinsurance arrangements do not relieve us of our direct obligations to our insured, we believe that the risk of our reinsurers not paying balances due to us is low.

Marketing and Distribution

Our marketing activities are focused on promoting our strong brands, quality care, customer service efforts, size and quality of provider networks, flexibility of plan designs, financial strength and breadth of product offerings.  We distribute and market our products through several channels, including our salaried and commission-based internal sales force, direct mail, independent brokers and agents, telemarketing staff, traditional media (including local and cable TV, national and regional press, billboards, radio and cinema) and digital media (social, search engine optimization and search engine marketing).

Branding and Marketing

Our branding and marketing efforts include brand advertising, which focuses on the Triple-S name and the BCBS brand for our managed care products and services, acquisition marketing, which focuses on attracting new customers; and institutional advertising, which focuses on our overall corporate image. We believe that the strongest element of our brand identity is the Triple-S name. We also believe that the BCBS name and marks are valuable brands of our products and services in the marketplace.  We seek to leverage what we believe to be the strong name recognition and comfort level that many existing and potential customers associate with this brand.

Acquisition marketing consists of business-to-business marketing efforts to generate leads for brokers and our sales force, as well as direct-to-consumer marketing efforts used to add new customers to our direct pay businesses.  Institutional advertising promotes key corporate interests and overall company image and communicates our company purpose.  We believe these efforts support and further our competitive brand advantage.  We will continue to utilize the Triple-S name and the BCBS brand for all managed care products and services in Puerto Rico, the USVI, Costa Rica, the BVI and Anguilla.

Sales and Marketing

We employ a wide variety of sales and marketing activities.  Such activities are closely regulated by CMS, the Office of Personnel Management (OPM), the U.S. Department of Health and Human Services (HHS), Commissioner of Insurance, Superintendencia General de Seguros de Costa Rica (Costa Rica Insurance Superintendency) and other government of Puerto Rico agencies.  For example, some of our sales and marketing materials must be approved in advance by the applicable regulatory authorities, and they often impose other regulatory restrictions on our marketing activities.

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Distribution

Managed Care Segment.   We rely principally on our internal sales force and a network of independent brokers and agents to market our products.  Individual Commercial policies are sold entirely through independent agents who exclusively sell our individual products, and Medicare Advantage and group products are sold through our 415-person internal sales force (promoters and sales representatives), as well through over 239 independent brokers and agents.  We believe that each of these marketing methods is optimally suited to address the specific needs of the customer base to which it is assigned.

Strong competition exists among managed care companies for brokers and agents with proven ability to secure new business and maintain existing accounts.  The basis of competition for the services of such brokers and agents are commission structure, support services, reputation and prior relationships, the ability to retain clients and the quality of products.  We pay monthly commissions based on premiums collections.  We believe that we have good relationships with our brokers and agents, and that our products, support services and commission structure are highly competitive in the marketplace.

Life Insurance Segment.    In our Life Insurance segment, we offer our insurance products through our network of company-employed home-service agency force, and approximately 300 independent agents and brokers.  Most of our premiums (63% in 2020, 63% in 2019 and 61% in 2018) were placed through our home-service distribution channel selling directly to customers in their homes.  TSV employs approximately 700 full-time active agents and managers who, operate from 25 district offices around the island.

Property and Casualty Segment.   In our Property and Casualty segment, business is primarily subscribed through approximately 13 general agencies, including our insurance agency, Triple-S Insurance Agency, Inc. (TSIA), where business is placed by independent insurance agents and brokers.  During the years ended December 31, 2020, 2019, and 2018 TSIA placed approximately 80%, 78%, and 76% of TSP’s total premium volume, respectively. General agencies contracted by TSP remit premiums net of their respective commission.

Customers

Managed Care

We offer our products in the Managed Care segment to three distinct market sectors in Puerto Rico.  The following table sets forth enrollment information with respect to each sector:

Market Sector	Enrollment at December 31, 2020		Percentage of Total Enrollment
Commercial		419,658		42.9	%
Medicare		137,092		14.0	%
Medicaid		422,023		43.1	%
Total		978,773		100.0	%

Commercial Sector

The commercial accounts sector includes corporate accounts, federal government employees, individual accounts, local government employees, and Medicare Supplement.

Corporate Accounts.    Corporate accounts consist of small (2 to 50 employees) and large employers (over 50 employees).  Employer groups may choose various funding options ranging from fully insured to self-funded financial arrangements or a combination of both.  While self-funded clients participate in our managed care networks, the clients bear the insurance risk, except to the extent they maintain stop loss coverage.

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Federal Government Employees.    For over 50 years, we have maintained our leadership in providing managed care services to federal government employees in Puerto Rico.  We provide our services to these employees under the Federal Employees Health Benefits Program pursuant to a direct contract with OPM and through the Federal Employee Program of the BCBSA.  We are one of two companies in Puerto Rico that has such a contract with OPM.  Every year, OPM allows other insurance companies to compete for this business, provided such companies comply with the applicable requirements for service providers.  This contract is subject to termination in the event of a noncompliance that is not corrected to the satisfaction of OPM.

Individual Accounts.    We provide managed care services to individuals and their dependent family members who contract these services directly with us through our network of independent brokers.  We provide individual and family contracts.

Local Government Employees.    We provide full risk managed care services to the local government of Puerto Rico employees through a government-sponsored program.  Annually, the government qualifies the managed care companies that participate in this program and sets the coverage, including benefits, co-payments and amount to be contributed by the government.  Employees then select from one of the authorized companies and pays for the difference between the premium of the selected carrier and the amount contributed by the government.

Medicare Supplement.    We offer Medicare Supplement products, which provide supplemental coverage for many of the medical expenses that the Medicare Parts A and B programs do not cover, such as deductibles, coinsurance and specified losses that exceed the federal program’s maximum benefits.

Medicare Advantage Sector

Medicare is a federal program administered by CMS that provides a variety of hospital and medical insurance benefits to eligible persons aged 65 and over as well as to certain other qualified persons.  With the approval of the Medicare Modernization Act, Medicare began communicating that managed care organizations (MCO) sponsored Medicare products that offers benefits similar to or better than the traditional Medicare product, but where the risk is assumed by the MCOs.  This program is called Medicare Advantage.  We have contracts with CMS to provide extended Medicare coverage to Medicare beneficiaries under our Dual and Non-Dual products.  Under these annual contracts, CMS pays us a set premium rate based on membership that is risk adjusted for health status.  Depending on the total benefits offered, for certain of our Medicare Advantage products the member will also be required to pay a premium.

Our Dual products target the sector of the population eligible for both Medicare and Medicaid, or dual-eligible beneficiaries.  The government of Puerto Rico has implemented a plan to allow dual-eligibles enrolled in Medicaid to move to a Medicare Advantage plan under which the government, rather than the insured, will assume all of the premiums for additional benefits not included in the Medicare Advantage programs, such as deductibles and co-payments of prescription drug benefits.

Medicaid

The government of Puerto Rico has privatized the delivery of services to the Medicaid and Child Health Insurance subscribers in Puerto Rico, as defined by the government, by contracting with private managed care companies instead of providing health services directly to such population.  This program is based on the Medicaid program, a joint federal and state health insurance program for medically indigent residents of the state.  The Medicaid program is structured to provide states the flexibility to establish eligibility requirements, benefits provided, payment rates, and program administration rules, subject to general federal guidelines.  As of December 31, 2020, this program provided health care coverage to over a million people.

Under the current agreement with the Health Department of Puerto Rico and ASES, TSS is responsible for the provision of medical, mental, pharmacy, and dental health care services on an at-risk basis to subscribers who enroll with TSS.  With this agreement, TSS is now able to serve subscribers who enroll in our plan on an island-wide basis, rather than participating in the specific service regions assigned by ASES.  ASES pays TSS a per member per month (PMPM) rate that varies depending on the clinical condition or category of the subscriber.

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Before November 1, 2018, the government divided Puerto Rico into eight geographical areas, where we provided health care services on at-risk basis to subscribers in the Metro-North and West regions.  Each of these geographical areas was awarded through a competitive bid process, to a managed care company doing business in Puerto Rico.

Our agreement with the government of Puerto Rico is subject to termination in the event of a noncompliance event that is not corrected or cured to the satisfaction of the government entity overseeing Medicaid, or in the event that the government determines that there is an insufficiency of funds to finance the program.  See Item 1A – Risks Factors – Risks Related to our Business – We are dependent on a small number of government contracts to generate a significant amount of the revenues of our Managed Care segment. included in this Annual Report on Form 10-K.

Life Insurance

Our Life Insurance segment mainly markets individual life and cancer and other dreaded diseases insurance products. Our policyholders consist primarily of individuals, who hold approximately 672,000 policies.  We also insure approximately 1,700 groups.

Property and Casualty Insurance

Our Property and Casualty segment targets mainly small- to medium-size accounts with low to average exposures to catastrophic losses.  The auto physical damage and auto liability customer bases are primarily of commercial accounts.  Personal business is primarily generated with sales of our personal package product, ProPack, which includes coverage for residences, personal property, and automobile.  In addition, a professional liability coverage is offered with hospital and medical malpractice products.

Underwriting and Pricing

Managed Care

We strive to maintain our market leadership by trying to provide all of our managed care members with the best health care coverage at a reasonable cost.  We believe that disciplined underwriting and appropriate pricing are core strengths of our business and important competitive advantages. We continually review our underwriting and pricing guidelines on a product-by-product and customer group-by-group basis to maintain competitive rates in terms of both price and scope of benefits.  Pricing is based on the overall risk level and the estimated administrative expenses attributable to each particular segment.

Our claims database enables us to establish rates based on each renewing group’s claims experience, which provides us with important insights about the risks in our service areas.  We tightly manage the overall rating process and have processes in place to ensure that underwriting decisions are made by properly qualified personnel.  In addition, we have developed and implemented a utilization review and fraud and abuse prevention program.

We have been able to maintain relatively high retention rates, which is the percentage of existing clients retained in the renewal process, in the corporate accounts sector of our Managed Care segment.  For 2020, 2019 and 2018 our corporate accounts retention factor was 92%, 93% and 96%, respectively.

Our managed care rates are set prospectively, meaning that a fixed premium rate is determined at the beginning of each contract year and revised at renewal.  We renegotiate the premiums of different groups in the corporate accounts as their existing annual contracts become due.  We set rates for individual contracts based on the most recent semi-annual claims data.  We consider the actual claims trend of each group when determining the premium rates for the following contract year.  Rates in the Medicare and Medicaid sectors and for federal and local government employees are generally set on an annual basis through negotiations with the U.S. Federal and Puerto Rico Governments, as applicable.

Life Insurance

The individual life insurance business has been priced using mortality, morbidity, lapses and expense assumptions which approximate actual experience for each line of business.  We review pricing assumptions on an annual basis.  Individual insurance applications are reviewed by utilizing common underwriting standards used in the United States and by our reinsurers, and only those applications that meet these commonly used underwriting requirements are approved for policy issuance.  Our group life insurance business is written on a group-by-group basis.  We develop the pricing for our group life business based on mortality and morbidity experience and estimated expenses attributable to each particular group.

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Property and Casualty Insurance

Prior to 2017, the property and casualty insurance market in Puerto Rico was soft, principally as a result of economic conditions and reinsurance capacity. After the losses generated by the hurricanes that made landfall in the Island during 2017, market conditions hardened.  Our Property and Casualty segment has maintained its strong position in the property insurance sector by following prudent underwriting and pricing practices.

Our core business mainly comprises of small- and medium-sized accounts.  The volume of business is subject to attentive risk assessment and strict adherence to underwriting guidelines, combined with maintenance of competitive rates on above-par risks designed to maintain a relatively high retention ratio.  Underwriting strategies and practices are closely monitored by senior management and constantly updated based on market trends, risk assessment results and loss experience.  Commercial risks in particular are fully reviewed by our underwriters.

Quality Initiatives and Medical Management

We utilize a broad range of focused traditional cost-containment and advanced care management processes across various product lines.  We continue to enhance our management strategies, which seek to control claims costs while fulfilling the needs of highly informed and demanding managed care consumers.  One of these strategies is the reinforcement of population and case management programs, which empower consumers by educating them and engaging them in actively maintaining or improving their own health.  Early identification of patients and inter-program referrals are the focus of these programs, which allow us to provide services to our customers based on their specific conditions.  Population management programs include programs that target asthma, congestive heart failure, hypertension, diabetes, and a prenatal program that focuses on preventing prenatal complications and promoting adequate nutrition.  We developed a medication therapy management program aimed at plan members who are identified as having high drug utilization and unrelated diagnostics.  In addition, TSS, through a third-party supplier, provides our members a 24-hour telephone-based triage program and health-information services.    We intend to maximize utilization of population and case management programs among our insured populations.  Other strategies include innovative partnerships and business alliances with other entities to provide new products and services such as an employee assistance program and the promotion of evidence-based protocols and patient safety programs among our providers.  We also employ registered nurses and social workers to manage individual cases and coordinate health care services.  We have enhanced our hospital concurrent-review program, the goal of which is to monitor the appropriateness of high admission rate diagnoses and unnecessary stays.  To expand the scope of the revision, we established a phone-based review for low admissions hospitals, which freed resources to cover the biggest hospitals and allowed the onsite nurses to participate in patient discharge planning; referral to programs; quality of services, including the occurrence of never events (which are adverse events that are clearly identifiable and measurable, serious and usually preventable).  As part of the cost-containment measures, we have preauthorization services for certain procedures and the mandatory validation of member eligibility prior to accessing services.  In addition, we provide a variety of services and programs for acute, chronic and complex populations.  These services and programs seek to enhance quality at physicians’ premises, thus reducing emergency care and hospitalizations.  We promote the use of a formulary for accessing medications, encouraging the use of generic drugs in the three-tier formulary, which offers three co-payment levels.

We have also established an exclusive pharmacy network with higher discounted rates than our broader network.  In addition, through arrangements with our pharmacy benefits manager, we are able to obtain discounts and rebates on certain medications based on formulary listing and market share.

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We have designed a comprehensive Quality Improvement Program (QIP).  This program is designed with a strong emphasis on continuous improvement of clinical and service indicators, such as Health Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers and Systems (CAHPS) measures.  Our QIP also includes a Physician Incentive Program (PIP) and a Hospital Quality Incentive Program (HQIP), which are directed to support corporate quality initiatives, utilizing clinical and benchmark criteria developed by governmental agencies and nationally recognized professional organizations.  The PIP encourages the participation of members in chronic care improvement programs and the achievement of specific clinical outcomes.  The HQIP encourages participating hospitals to achieve the national benchmarks related to the five core measures established by CMS and the Joint Commission.

Provider Arrangements

Approximately 99% of member services are provided through one of our contracted provider networks; the remainder is provided by out-of-network providers.  Our relationships with managed care providers, physicians, hospitals, other facilities and ancillary managed care providers are guided by standards established by applicable regulatory authorities for network development, reimbursement and contract methodologies.

We contract with our managed care providers in different forms, including capitation-based reimbursement.  For certain ancillary services, such as behavioral health services and certain products of primary care services, we generally enter into capitation arrangements with entities that offer broad-based services through their own contracts with providers.  We attempt to provide market-based reimbursement along industry standards.  We seek to ensure that providers in our networks are paid in a timely manner, and we provide means and procedures for claims adjustments and dispute resolution.  We also provide a dedicated service center for our providers.  We seek to maintain broad provider networks to ensure member choice while implementing effective management programs designed to improve the quality of care received by our members.

We promote the use of electronic claims billing by our providers.  Approximately 84% of claims are submitted electronically through our fully automated claims processing system, and our provider-claim first-pass rate, or rate at which a claim is approved for payment when first processed by our system without human intervention, has averaged 84% in 2020.

We believe that physicians and other providers primarily consider member volume, reimbursement rates, timeliness of reimbursement and administrative service capabilities along with the “non-hassle” factor, or reduction of non-value adding administrative tasks, when deciding whether to contract with a managed care plan.  As a result of our established position in the Puerto Rican market, the strength of the Triple-S name and our association with the BCBSA, we believe we have strong relationships with hospital and provider networks leading to a strong competitive position in terms of hospital count, number of providers and number of in-network specialists.

Hospitals  

We generally contract for hospital services to be paid on an all-inclusive per diem basis, which includes all services necessary during a hospital stay.  We also contract some hospital services to be paid on diagnosis-related groups (DRG), an all-inclusive rate per admission.  Negotiated rates vary among hospitals based on the complexity of services provided.  We annually evaluate these rates and revise them, as appropriate.

Physicians 

Fee-for-service is our predominant reimbursement methodology for physicians in our PPO products and for services referred by the independent practice associations (IPAs) under capitation agreements.  Our physician rate schedules applicable to services provided by in-network physicians are pegged to a resource-based relative value system fee schedule and then adjusted for competitive rates in the market.  This structure is similar to reimbursement agreement methodologies developed and used by the Medicare program and other major payers.  Payments to physicians under the Medicare Advantage program are based on Medicare fees.  For certain of our Medicare products we contract with IPAs in the form of capitation-based reimbursement for certain risks.  We have a network of IPAs that provide managed care services to our members in exchange for a capitation fee.  The IPAs assume the costs of certain primary care services provided and referred by their PCPs, including procedures and in-patient services not related to risks assumed by us.

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Services are provided to our members through our network providers with whom we contract directly.  Members seeking medical treatment outside of Puerto Rico are served by providers in these areas through the BlueCard program, which offers access to the provider networks of other BCBS plans.

Subcontracting

We subcontract our triage call center, certain utilization management, mental and substance abuse health services, and pharmacy benefits management services through contracts with third parties.  We also have a Master Services Agreement with OptumInsight, Inc. to provide health care technology and operations services, including information technology, claims processing, and application development, to TSS and its affiliates.

In addition, we contract with a number of other ancillary service providers, including laboratory service providers, home health agency providers and intermediate and long-term care providers, to provide access to a wide range of services.  These providers are normally paid on either a fee schedule or fixed per day or per case basis.

Competition

The insurance industry in Puerto Rico is highly competitive and comprises both local and national entities.  The approval of the Gramm-Leach-Bliley Act of 1999 has opened the insurance market to new competition by allowing financial institutions such as banks to enter into the insurance business.  Several banks in Puerto Rico have established subsidiaries that operate as insurance agencies, brokers and reinsurers.

Managed Care

The managed care industry is highly competitive, both nationally and in Puerto Rico.  Competition continues to be intense due to aggressive marketing, business consolidations, a proliferation of new products and increased quality awareness and price sensitivity among customers.  Industry participants compete for customers based on the ability to provide a total value proposition which we believe includes quality of service and flexibility in benefit design, access to and quality of provider networks, brand recognition and reputation, price and financial stability.

Competitors in the managed care industry include national and local managed care plans. Our market share in terms of premiums written in Puerto Rico was estimated at approximately 28% for the nine-month period ended September 30, 2020.

We believe that our competitive strengths, including our leading presence in Puerto Rico, our BCBS license, the size and quality of our provider network, the broad range of our product offerings, our strong complementary businesses, and our experienced management team position us well to satisfy these competitive requirements.

Life Insurance

We are one of the leading providers of life insurance products in Puerto Rico.  In 2019, we were the second largest life insurance company in Puerto Rico, as measured by direct premiums, with a market share of approximately 11.5%.  We are the only life insurance company that distributes our products through a home service agency force. However, we face competition in each of our product lines.  Excluding annuities, we are the largest company in the life insurance and cancer lines of business, with market shares of approximately 20.9% and 26.2% respectively.

Property & Casualty Insurance

Property and casualty insurance companies tend to compete for the same accounts through price, policy terms and quality of services.  We compete by reasonably pricing our products and providing efficient services to producers, agents and clients.

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In the nine-month period ended September 30, 2020, we were the fifth largest property and casualty insurance company in Puerto Rico, as measured by direct premiums, with a market share approximating 6.4%.

Blue Cross and Blue Shield License

We have license agreements with (BCBSA) that permit us the exclusive use of the BCBS name and marks for the sale, marketing and administration of managed care plans and related services in Puerto Rico, the USVI, Costa Rica, the BVI and Anguilla.  We believe that the BCBS name and marks are valuable brands of our products and services in the marketplace.  The license agreements, which have a perpetual term (but are subject to termination under circumstances described below), contain certain requirements and restrictions regarding our operations and our use of the BCBS name and marks.

Upon the occurrence of any event causing the termination of our license agreements, we would cease to have the right to use the BCBS name and marks.  We also would no longer have access to the networks of providers of the different plans that are members of the Association nor the BlueCard Program.  We would expect to lose some portion of our membership if we were to lose these licenses.  Loss of these licenses could impact our ability to compete in our markets and could require payment of a significant fee to the BCBSA.  Furthermore, if our licenses were terminated, the BCBSA would be free to issue a new license to use the BCBS name and marks to another entity, which could have a material adverse effect on our business, financial condition and results of operations.  See Item 1A   Risk Factors – Risks Related to Our Business – The termination or modification of our license agreements to use the BCBS name and mark could have a material adverse effect on our business, financial condition and results of operations. included in this Annual Report on Form 10-K.

Events which could result in termination of our license agreements include, but are not limited to:

• Failure to maintain our total adjusted capital at or above 375% of Health Risk-Based Capital (HRBC) Authorized Control Level (ACL) as defined by the National Association of Insurance Commissioners (NAIC) for the for Primary Licensee (TSM) and Larger BCBS Controlled Affiliate (TSS) and 100% HRBC ACL for the Smaller BCBS Controlled Affiliate (TSA);

• Failure to maintain liquidity of greater than one month of underwritten claims and administrative expenses, as defined by the BCBSA, for two consecutive quarters;

• Failure to satisfy state-mandated statutory net worth requirements;

• Impending financial insolvency; and

• A change of control not otherwise approved by the BCBSA or a violation of the BCBSA voting and ownership limitations on our capital stock.

The BCBSA license agreements and membership standards specifically permit a licensee to operate as a for-profit, publicly-traded stock company, subject to certain governance and ownership requirements.

Pursuant to our license agreements with BCBSA, at least 80% of the revenue that we earn from health care plans and related services in Puerto Rico, and at least 66.7% of the revenue that we earn from (or at least 66.7% of the enrollment for) health care plans and related services both in the United States and in Puerto Rico together, must be sold, marketed, administered, or underwritten through use of the BCBS name and marks.  However, although subject to final court approval, as part of the settlement agreement reached between Triple-S and other BCBS plans with subscribers in connection with an antitrust suit, the BCBSA will no longer restrict member plans’ unbranded business outside of their territories.

As required by our BCBS license agreements, our Articles of incorporation prohibit any institutional investor from owning 10% or more of our voting power, any person that is not an institutional investor from owning 5% or more of our voting power, and any person from beneficially owning shares of our common stock or other equity securities, or a combination thereof, representing a 20% or more ownership interest in us.  To the extent that a person, including an institutional investor, acquires shares in excess of these limits, our Articles provide that we will have the power to take certain actions, including refusing to give effect to a transfer or instituting proceedings to enjoin or rescind a transfer, in order to avoid a violation of the ownership limitation in the Articles.

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Pursuant to the rules and license standards of the BCBSA, TSM guarantees TSS and TSB contractual and financial obligations to their respective customers.  Also, TSS guarantees TSA’s contractual and financial obligations to their respective customers.  In addition, pursuant to the rules and license standards of the BCBSA, we have agreed to indemnify the BCBSA against any claims asserted against it resulting from our contractual and financial obligations.

Each license requires an annual fee to be paid to the BCBSA.  The fee is determined based on a per-contract charge from products using the BCBS name and marks.  The annual BCBSA fee for the year 2021 is $1,508,502.  During the years ended December 31, 2020 and 2019, we paid fees to the BCBSA in the amount of $1,299,208 and $1,367,352, respectively.  The BCBSA is a national trade association of 36 independent Primary Licensees (Plans), including TSM, the primary function of which is to promote and preserve the integrity of the BCBS name and marks, as well as to provide certain centralized services to entities licensed by the BCBSA (the Member Plans).  Each Member Plan is an independent legal organization and is not responsible for obligations of other BCBSA Member Plans.  With a few limited exceptions, we have no right to market products and services using the BCBS name and marks outside our BCBS licensed territory.

BlueCard 

Under the rules and license standards of the BCBSA, other Member Plans must make available their provider networks to members of the BlueCard Program in a manner and scope as consistent as possible to what such member would be entitled to in his or her home region.  Specifically, a plan located where a member receives the service (each, a Host Plan) must pass on discounts to BlueCard members from other Member Plans that are at least as great as the discounts that the providers give to the Host Plan’s local members.  The BCBSA requires us to pay fees to any Host Plan whose providers submit claims for health care services rendered to our members who receive care in their service area.  Similarly, we are paid fees for submitting claims and providing other services to members of other Member Plans who receive care in our service area.

Trademarks

We consider our trademarks Triple-S and SSS to be very important and material to all segments in which we are engaged.  These trademarks have been duly registered with the Department of State of Puerto Rico and the United States Patent and Trademark Office.  It is our policy to register all our important and material trademarks to protect our rights under applicable corporate and intellectual property laws.  In addition, we have the exclusive right to use the BCBS name and marks in Puerto Rico, Costa Rica, USVI, British Virgin Islands, and Anguilla.  See section – Blue Cross and Blue Shield License.

Regulation

Our business operations are subject to comprehensive and detailed regulation in all the jurisdictions in which we conduct business.  Regulatory agencies include the Commissioner of Insurance, ASES, which administers Medicaid, including the Medicare dual-eligible beneficiaries program; the Division of Banking and Insurance of the Office of the Lieutenant Governor of the U.S. Virgin Islands;  Costa Rica Insurance Superintendency; the Insurance Division of the Financial Service Commission of British Virgin Islands; and the Financial Services Commission of Anguilla.  Federal regulatory agencies that oversee our operations include HHS—directly and through the Office of the Inspector General (OIG), the Office of Civil Rights (OCR), CMS, the U.S. Department of Justice (DOJ), the U.S. Department of Labor (DOL), and OPM.  These government agencies have the right to:

• Grant, suspend and revoke licenses to transact business;

• Regulate many aspects of the products and services we offer, including the review and approval of health insurance rates in the individual and small group markets;

• Assess fines, penalties and/or sanctions;

• Monitor our solvency and the adequacy of our financial reserves; and

• Regulate our investment activities based on quality, diversification and other quantitative criteria, within the parameters of a list of permitted investments set forth in the insurance laws and regulations.

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Our operations and accounts are subject to examination and audits at regular intervals by a number of these agencies.  In addition, the U.S federal and local governments continue to consider and enact many legislative and regulatory proposals that have affected, or could materially affect, various aspects of the health care and insurance industries.  Some of the more significant current issues that may affect our business include:

• Initiatives to provide greater access to coverage for uninsured and under-insured populations without adequate funding to health plans, or to fund such coverage through taxes or other negative financial levies on health plans;

• Other efforts or specific legislative changes to the Medicare or Medicaid program, including changes in the bidding process or other means that materially reduce premiums;

• Local government regulatory changes;

• Increased government enforcement, or changes in interpretation or application of fraud and abuse laws; and

• Regulations that increase the operational burden on health plans or laws that increase a health plan’s exposure to liabilities, including efforts to expand the tort liability of health care plans.

The federal government and the government of Puerto Rico, including the Commissioner of Insurance, have adopted laws and regulations that govern our business activities in various ways.  These laws and regulations may restrict how we conduct our business and may result in additional burdens and costs to us.  Areas of governmental regulation include:

•          Licensure;   •          Policy forms, including plan design and disclosures;   •          Premium rates and rating methodologies;   •          Underwriting rules and procedures;   •          Benefit mandates;   •          Eligibility requirements;   •          Security of electronically transmitted individually identifiable health information;   •          Geographic service areas;   •          Market conduct;   •          Utilization review;   •          Payment of claims, including timeliness and accuracy of payment;   •          Special rules on contracts to administer government programs;   •          Transactions with affiliated entities;   •          Limitations on the ability to pay dividends;   •          Payment rates to health care providers;   •          Rate review and approval; •          Transactions resulting in a change of control;   •          Member rights and responsibilities;   •          Fraud and abuse;   •          Sales and marketing activities;   •          Quality assurance procedures;   •          Privacy of medical and other information and permitted disclosures;   •          Surcharges on payments to providers;   •          Provider contract forms;   •    Delegation of financial risk and other financial arrangements in rates paid to health care providers;   •          Agent licensing;   •          Financial condition (including reserves);   •          Reinsurance;   •          Business continuity plans;   •          Issuance of new capital stock shares;   •          Corporate governance;   •          Permissible investments; and   •          Guaranteed issue and renewability.

These laws and regulations are subject to amendments and changing interpretations in each jurisdiction.  Failure to comply with existing or future laws and regulations could materially and adversely affect our operations, financial condition and prospects.

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Puerto Rico Insurance Laws

Our insurance subsidiaries are subject to the regulations and supervision of the Commissioner of Insurance.  The regulations and supervision of the Commissioner of Insurance consist primarily of the approval of certain policy forms, solvency standards, the nature of and limitations on investments, deposits of securities for the benefit of policyholders, methods of accounting, periodic examinations and the form and content of the financial reports, among others.  In general, such regulations are for the protection of policyholders rather than shareholders.

Puerto Rico insurance laws prohibit any person from offering to purchase or sell voting stock of an insurance company that constitutes 10% or more of the total issued and outstanding stock of such company or of the total issued and outstanding stock of a company that controls an insurance company, without the prior approval of the Commissioner of Insurance.

Puerto Rico insurance laws also require that stock insurers obtain the Commissioner of Insurance’s approval prior to any merger or consolidation.  The Commissioner of Insurance cannot approve any such transaction unless it determines that such transaction is fair, equitable, consistent with law, and that no reasonable objection exists.  The reinsurance of all or substantially all of the insurance of an insurance company by another insurance company is deemed to be a merger or consolidation.

Puerto Rico insurance laws further prohibit insurance companies and insurance holding companies, among other entities, from soliciting or receiving funds in exchange for any new issuance of its securities, other than through a stock dividend, unless the Commissioner of Insurance has granted a solicitation permit in respect of such transaction.  The Commissioner of Insurance will issue the permit unless it finds that the funds proposed to be secured are excessive for the purpose intended, the proposed securities and their distribution would be inequitable, or the issuance of the securities would jeopardize the interests of policyholders or security-holders.

In addition, Puerto Rico insurance laws limit insurance companies’ ability to reinsure risk.  Insurance companies can only accept reinsurance in respect of the types of insurance which they are authorized to transact directly.  Also, except for life and disability insurance, insurance companies cannot accept any reinsurance in respect of any risk resident, located, or to be performed in Puerto Rico, which was insured as direct insurance by an insurance company not then authorized to transact such insurance in Puerto Rico.  Insurance companies cannot reinsure 75% or more of their direct risk with respect to any type of insurance without first obtaining the approval of the Commissioner of Insurance.

Privacy of Financial and Health Information

Puerto Rico law requires that companies that manage individual financial, insurance and health information maintain the confidentiality of such information. The Commissioner of Insurance has promulgated regulations relating to the privacy of such information. As a result, our Managed Care subsidiaries must periodically inform our clients of our privacy policies, and in the case of our Life Insurance and Property and Casualty subsidiaries, allow our clients to opt-out if they do not want their financial information to be shared.  Also, Puerto Rico law requires that managed care providers give patients access to their health information within a specified time and that they not charge more than a predetermined amount for such access.  The law imposes various sanctions on managed care providers that fail to comply with these provisions.

Managed Care Provider Services

Participating managed care providers of the dual-eligible sector of the population, administered by ASES, are required to provide specific services to their subscribers.  Such services include access to a provider network that guarantees emergency and specialty services.  In addition, the Patient’s Solicitor Office (the Solicitor) is authorized to review and supervise the operations of entities contracted by the government of Puerto Rico to provide services to the dual-eligible sector of the population.  The Solicitor may investigate and adjudicate claims filed by Medicaid beneficiaries against the various service providers contracted by the government of Puerto Rico.  See Business – Customers – Medicare Supplement and Medicare Advantage Sector sections included in this Item for more information.

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Capital and Reserve Requirements

Local insurers and health maintenance organizations are required by the Insurance Code to submit to the Puerto Rico Commissioner of Insurance, Risk Based Capital (RBC) reports following the National Association of Insurance Commissioners (NAIC) RBC Model Act, and accordingly are subject to certain regulatory actions if their capital levels do not meet minimum requirements.  Our minimum RBC requirement is currently 200%, subject to the compliance with certain regulatory ratios.  Noncompliance with required regulatory ratios would subject TSS, TSV, TSB and TSP to a minimum RBC requirement of 300%.  As a health maintenance organization TSA is not subject to compliance with regulatory ratios and is therefore always required to maintain a minimum RBC of 200%.

In addition, TSS, TSA, and TSB are subject to the capital and surplus licensure requirements of the BCBSA.  The capital and surplus requirements of the BCBSA are also based on the RBC Model Act and are intended to assess capital adequacy taking into account the risk characteristics of an insurer’s investments and products.  The RBC Model Act sets forth the formula for calculating the risk-based capital requirements, which are designed to take into account various risks, including insurance risks, interest rate risks and other relevant risks, with respect to an individual insurance company’s business.

The RBC Model Act requires increasing degrees of regulatory oversight and intervention as an insurance company’s risk-based capital declines.  The level of regulatory oversight ranges from requiring the insurance company to inform and obtain approval from the domiciliary insurance commissioner of a comprehensive financial plan for increasing its risk-based capital to mandatory regulatory intervention requiring an insurance company to be placed under regulatory control, in rehabilitation or liquidation proceeding.  The RBC Model Act provides for four different levels of regulatory attention depending on the ratio of the company’s total adjusted capital (defined as the total of its statutory capital, surplus, assets valuation reserve and dividend liability) to its “authorized control level.”  At the “company action level,” occurring when a company’s total adjusted capital is less than 200% but greater than or equal to 150% of its “authorized control level,” a company must submit to the regulatory authority a comprehensive plan proposing corrective actions to improve its capital position.  When a company’s adjusted capital is between 200% and 300% and it has a combined ratio greater than 150%, a company action level is triggered pursuant to a health trend test.  The regulatory action level is triggered if a company’s total adjusted capital is less than 150% but greater than or equal to 100% of its authorized control level.  At the regulatory action level, the regulatory authority will perform a special examination of the company and issue an order specifying corrective actions that must be followed.  The authorized control level is triggered if a company’s total adjusted capital is less than 100% but greater than or equal to 70% of its authorized control level, at which level the regulatory authority may take any action it deems necessary, including placing the company under regulatory control.  The ‘‘mandatory control level’’ is triggered if a company’s total adjusted capital is less than 70% of its authorized control level, at which level the regulatory authority must place the company under its control.

As of December 31, 2020, our insurance subsidiaries met and exceeded the minimum capital requirements established by the Commissioner of Insurance and the BCBSA, as applicable.

In addition to its catastrophic reinsurance coverage, TSP is required by local regulatory authorities to establish and maintain a reserve supported by a trust fund (the Trust) to protect policyholders against their dual exposure to hurricanes and earthquakes.  The funds in the Trust are solely to be used to pay catastrophic losses whenever qualifying catastrophic losses exceed 5% of catastrophe premiums or when authorized by the Commissioner of Insurance.  Contributions to the Trust, and accordingly additions to the reserve, are determined by a rate, imposed by the Commissioner of Insurance on the catastrophe premiums written in that year. As a result of the hurricanes affecting Puerto Rico in September 2017, TSP withdrew $10.0 million from the Trust in 2018.  TSP requested and obtained approval for a $5.0 million withdrawal from the Trust during the year ended December 31, 2020, to cover net earthquake-related losses. During January 2021, TSP withdrew the $5.0 million from the Trust.

At December 31, 2020 and 2019, the reserve for catastrophes is $35.9 and $39.4 million, respectively.  The supporting Trust has assets of $43.1 miliion and $41.0 million as of December 31, 2020 and 2019, respectively.  Assets consist primarily of investment in securities available-for-sale, securities held for maturity, accrued investment income, cash and cash equivalents.  The income generated by investment securities deposited in the Trust becomes part of the Trust fund balance and are therefore considered an addition to the reserve.  For additional details see Note 17, Catastrophe Loss Reserve and Trust Fund, of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

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Dividend Restrictions

We are subject to the provisions of the General Corporation Law of Puerto Rico (PRGCL), which contains certain restrictions on the declaration and payment of dividends by corporations organized pursuant to the laws of Puerto Rico.  These provisions specify that Puerto Rico corporations may only declare dividends charged to their surplus or, in the absence of such surplus, net profits of the fiscal year in which the dividend is declared and/or the preceding fiscal year.  The PRGCL also contains provisions regarding the declaration and payment of dividends and directors’ liability for illegal payments.

TSM’s ability to pay dividends is dependent on our receiving cash dividends from our subsidiaries.  Our insurance subsidiaries are subject to regulatory surplus requirements and additional regulatory requirements, which may restrict their ability to declare and pay dividends or distributions to TSM.  In addition, our secured term loan restricts our ability to pay dividends if a default thereunder has occurred and is continuing.  Please refer to Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Restrictions on Certain Payments by the Corporation’s Subsidiaries.

Guaranty Fund Assessments

We are required by Puerto Rico law and by the BCBSA guidelines to participate in certain guarantee associations.  See Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Contingencies—Guarantee Associations for additional information.

Federal Regulation

Our business is subject to extensive federal law and regulation.  New laws, regulations or guidance or changes to existing laws, regulations or guidance or their enforcement, may materially impact our business financial condition and results of operations.

Medicare Generally

Medicare is the federal health insurance program created in 1965 for all people aged 65 and older (regardless of income or medical history), qualifying disabled persons and persons suffering from end-stage renal disease.  Medicare is funded by the federal government and administered by CMS, with the day-to-day operations of the program (e.g., provider enrollment, claims payment) handled by private contractors under contract with CMS.  There are approximately 60 million Medicare beneficiaries.

Medicare is divided into four distinct parts:

• Part A covers, among other things, inpatient hospital stays, skilled nursing facility stays, home health visits (also covered under Part B), and hospice care.  Individuals are automatically enrolled in Part A and inpatient hospital stays are subject to an annual deductible.

• Part B covers physician visits, outpatient services, laboratory services, durable medical equipment, certain preventive services, and home health visits.  Enrollment in Part B is voluntary and subject to an annual deductible and monthly premiums.

• Part C, which encompasses Medicare Advantage in addition to other supplemental plans, allows beneficiaries to enroll in private health plans and receive Medicare-covered benefits.

Medicare Advantage.  Medicare Advantage plans are required to maintain a medical loss ratio (MLR) of at least 85%, meaning, very basically, that if Medicare Advantage plans do not spend at least 85% of their revenue on patient care costs, they may face various sanctions, including refunds, prohibition on enrolling new members, and contract termination. The Part C premium varies by plan.

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Other Medicare Supplemental Plans.  “Medigap” is another type of private plan that fills in the patient out-of-pocket gaps in traditional fee-for-service Medicare Part A and B coverage.  These Medigap policies are standardized by CMS, but funded and administered by private organizations.

• Part D is the voluntary, subsidized outpatient prescription drug benefit created under the Medicare Modernization Act of 2003 (the MMA).  Part D includes subsidies for beneficiaries with low incomes that do not apply to Puerto Rico.  Part D is offered through private plans that contract with Medicare, including stand-alone prescription drug plans and Medicare Advantage prescription drug plans.  Part D plans are also subject to MLR requirements and their premium varies by plan.

Historical Changes to the Medicare Program – Creation of Private Plans and the Part D Program

In the 1980s, as an alternative to the traditional fee-for-service Medicare program, Medicare began offering Medicare managed care benefits provided through contracted private health plans.  CMS initially reimbursed health plans participating in the Medicare program primarily on the basis of the demographic data of the plans’ members.  Beginning in 1997, CMS gradually phased in a risk-adjustment payment methodology that based its monthly premium payments to plans on various clinical and demographic factors.  This methodology uses two risk-adjustment models: a Hierarchical Condition Category based model and an End-Stage Renal Disease (ESRD) model, each applying to the corresponding population.  Beginning in 2003, Congress introduced a Medicare managed care approach, which itself has subsequently undergone several changes.

In 2006, Congress introduced the Medicare Part D program, which offered a voluntary outpatient prescription drug benefit to fee-for-service as well as Medicare Advantage beneficiaries.  An Rx Hierarchical Condition Category Model is used in the determination of the Part D premium, and a Low-Income Subsidy (LIS) is applied to Part D premiums for members that qualify.

Medicare Advantage Program Over Time

Under the Patient Protection and Affordable Care Act of 2010 (Pub. L No. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. No. 111-152), on March 30, 2010 (referred to herein as ACA), payments to Medicare Advantage plans were reduced over time, and bonus payments are available to certain plans based on quality ratings.

Among other things, the ACA mandated several changes, implemented by CMS, to the Medicare Advantage and Medicare Part D programs, including strengthening CMS’ ability to remove poor performers from the Medicare Advantage and Part D programs beginning in 2015.  Beginning with Medicare contract year 2015, CMS has the authority to terminate its contract with any Medicare Advantage or Part D plan for substantial contract noncompliance, or refuse to renew such plan, if the plan fails to achieve an overall Star Rating of 3.0 stars (out of 5.0) for any consecutive three year period.  Although CMS has issued annual Star Ratings for Part D plans since 2007 and for Medicare Advantage plans since 2008, CMS uses Star Ratings issued for Medicare contract years 2013 and beyond in implementing this provision. In April 2015, CMS announced that it would for the first time exercise its authority to terminate low performing Medicare Advantage and Part D plans beginning in 2016. CMS now issues Star Ratings on a prospective basis, typically in the fall preceding the contract year.  CMS also has the authority to use the lower Star Ratings as a means to invoke its existing authority under Section 1857(c)(2) of the Social Security Act to terminate a contract when CMS determines that the Medicare Advantage or Part D plan has failed to substantially carry out the contract or is carrying out the contract in a manner that is inconsistent with the efficient or effective administration of the Medicare Advantage or Part D program.

In addition, under the ACA, Medicare Advantage plan payment rates were subject to transitionally phased-in reductions intended to bring Medicare Advantage rates more in line with Medicare fee-for-service rates. The transition began in 2012 and was completed in 2017.

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Payments to Medicare Advantage Participating Plans

Since 2006, Medicare Advantage has used a bidding system by which plans submit bids based on costs per enrollee for Part A and Part B covered services.  Medicare Advantage also pays plans for providing prescription drug benefits under Part D.  Bids are based on estimated costs per enrollee for the Medicare-covered services.  The bids are then analyzed against a benchmark established by federal statute, and which vary by county or region.  A Medicare Advantage plan’s actual payment rate is based on a complex statutory formula that takes into account a number of factors, including the relationship between the plan’s bid and the applicable benchmark. When a bid is higher than the benchmark, enrollees generally pay the difference (through an additional premium) between the benchmark and the bid, in addition to any other Medicare premiums.  If the bid is lower than the benchmark, the plan and Medicare generally share the difference, and the plan must use its share (known as a rebate) to provide additional benefits to enrollees.  For plans obtaining up to 3.0 Stars (explained below), the rebate share to the plan is 50%.  When the plan reaches 3.5 or 4.0 Stars, that rebate share rises to 65%, and when the plan reaches 4.5 or 5.0 Stars it rises to 70%.

Plans reaching 4.0 Stars or higher, also receive a 5% quality bonus payment (QBP), which could be doubled for certain qualifying counties.  The resulting benchmark plus QBP amount can be reduced to a cap determined for each county, so the effective bonus payment for such qualifying counties could be between 5% and 10%.  Rebates and QBPs only apply to Part C premium payments.

Star Ratings for plans are calculated based on the results achieved by the plan on a contract in terms of measures (46 in the contract year 2021 as established in the 2021 Rate Announcement published by CMS in April 2020) spanning four categories: HEDIS measures, CAHPS and Health Outcomes Survey (HOS) measures, Administrative measures and Part D measures.  CMS assigns from one to five stars for each numeric measure score by applying one of two methods: relative distribution with significance testing (CAHPS) or clustering (all other measures).  Case-mix adjustments are applied to the survey results as part of the scoring.  CMS has recognized that socio-economic factors create significant variations in results for some metrics.  CMS’ interim response to address the within-contract disparity in performance associated with a contract’s percentages of beneficiaries with low income subsidy and dual eligible (LIS/DE) and disability status revealed in our comprehensive research conducted over multiple years culminated in the creation of the Categorical Adjustment Index (CAI).  Each measure is also assigned a relative weight used in the calculation of the Part C, Part D and overall Star Rating.  CMS has also adopted policies to consider the impact of extreme natural disasters in the results, recognizing that the aftermath can present unanticipated barriers to achieving solid results.

Medicaid Generally

Medicaid is a public insurance program intended for low-income individuals and families.  To participate in Medicaid, states are required to cover certain groups, but may cover additional population groups at their discretion.  States may apply to CMS for waivers to provide coverage to populations beyond those normally covered under the program.  States are able to establish eligibility criteria within federal minimum standards, to set Medicaid provider payment rates and to reimburse providers through fee-for-service or managed care.  They also have the flexibility to determine the type, amount, duration, and scope of services of their respective Medicaid programs, as long as they remain within federal guidelines, although states are required to cover certain mandatory benefits.  In Puerto Rico, the Medicaid program is administered by ASES.

Medicaid is jointly funded by the federal government and state governments.  States receive a percentage of their Medicaid program expenditures from the federal government, through a formula known as the Federal Medical Assistance Percentage (FMAP).  The FMAP varies by state based on factors such as per capita income.  However, unlike states, the FMAP for Puerto Rico and other U.S. territories is fixed, and federal funding is capped per funding period.  Pursuant to the Further Consolidated Appropriations Act of 2020, the FMAP for Puerto Rico is 76% until September 30, 2021, and up to approximately $5.342 billion will be provided in Medicaid funding to Puerto Rico through such date.  This funding will bring temporary financial stability to Puerto Rico’s Medicaid program, and funding conditions related to compliance with program management standards will further promote stability and predictability.  However, a longer-term solution is necessary due to a shortfall that continues to be perpetuated by the FMAP established in the ACA in 2010.

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Dual-Eligible Beneficiaries

A dual-eligible beneficiary is a person who is eligible for both Medicare, because of age or other qualifying status, and Medicaid, because of economic status.  Dual-eligibles are a high-cost population that account for a disproportionate share of government health care expenditures.  Given the disproportionately high cost of treating dual-eligibles, there has been a spate of initiatives designed to address the issue.  The government of Puerto Rico established a model that wraps-around benefits included in Medicaid that were not included in original Medicare benefits.  Dual-eligible beneficiaries in Puerto Rico have the option to participate in this model called Platino.  Health plans that offer Platino products receive premiums from CMS and the government of Puerto Rico.  In this plan the government, rather than the insured, will assume all of the premiums for additional benefits not included in traditional Medicare programs, such as prescription drug benefits.  By managing utilization and implementing disease management programs, many Medicare Advantage plans can profitably care for dual-eligible members.  The MMA established subsidies and reduced or eliminated deductibles for certain low-income beneficiaries, including dual-eligible individuals.  Pursuant to the MMA, dual-eligible individuals receive drug coverage from the Medicare program rather than the Medicaid program.  Companies offering Medicare Part D stand-alone prescription drug plans with bids at or below the regional weighted average bid resulting from the annual bidding process received a pro-rata allocation and auto-enrollment of the dual-eligible beneficiaries within the applicable region.

Additionally, ACA created the Medicare-Medicaid Coordination Office to better integrate Medicare and Medicaid benefits and improve coordination between federal and state governments, which has, among other things implemented initiatives such as demonstration projects and limited coordinated care contracts, intended to improve quality and lower costs with respect to dual eligible beneficiaries. Under authority of the ACA, a number of states (not including Puerto Rico) have been awarded contracts to support the design of demonstration projects that aim to improve the coordination of care for people with Medicare and Medicaid coverage.

Special Needs Plans

Special Needs Plans are intended to address Medicare beneficiaries with special care needs, particularly those with chronic conditions.  Essentially, Medicare Advantage Special Needs Plans (SNPs) are a type of Medicare Advantage Plan for people with certain chronic diseases and conditions or who have specialized needs (such as people who have both Medicare and Medicaid or people who live in certain institutions).  SNPs limit membership to people with specific diseases or characteristics, and tailor their benefits, provider choices, and drug formularies (list of covered drugs) to best meet the specific needs of the groups they serve.

Sales and Marketing.    Our sales and marketing activities are closely regulated by CMS, ASES, the Puerto Rico Office of the Commissioner of Insurance and the Solicitor General.  CMS regulations in this area preempt local law.

Fraud and Abuse Laws.    Insurance providers in Puerto Rico are subject to local and federal laws that prohibit fraud and abuse, and are required to have anti-fraud units in place.  In addition, entities, such as TSS and TSA, that receive federal funds from government health care programs, such as Medicare and Medicaid, are subject to a wide variety of federal fraud and abuse laws and enforcement activities.  Such laws include, among others, the federal anti-kickback laws and the False Claims Act.

Anti-kickback Laws.    Insurance providers in Puerto Rico are subject to local and federal anti-kickback laws.  These anti-kickback laws prohibit the payment, solicitation, offering or receipt of any form of remuneration (including kickbacks, bribes, and rebates) in exchange for business, and under federal law, in exchange for the referral of federal health care program patients or any item or service that is reimbursed by any federal health care program.  In addition, the federal regulations include certain safe harbors that describe relationships that have been determined by CMS not to violate the federal Anti-Kickback Statute.  Relationships that do not fall within one of the enumerated safe harbors are not a per se violation of the federal law, but will be subject to enhanced scrutiny by regulatory authorities.  The ACA amended the intent requirement of the federal Anti-Kickback Statute, and other health care criminal fraud statutes, so that a person or entity no longer needs to have actual knowledge of the federal Anti-Kickback Statute and other health care criminal fraud statutes, or the specific intent to violate them, to have committed a violation. The ACA also provided that a violation of the federal Anti-Kickback Statute is grounds for the government or a whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the federal False Claims Act. Failure to comply with the anti-kickback provisions, and other health care criminal fraud statutes, may result in civil damages and penalties, criminal sanctions, and administrative remedies, such as exclusion from the applicable federal health care program, and additional reporting requirements and oversight if subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance.

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Federal False Claims Act.    Federal regulations also strictly prohibit the presentation of false claims or the submission of false information to the federal government.  Under the federal False Claims Act, any person or entity that has knowingly presented or caused to be presented a false or fraudulent request for payment from the federal government or who has made a false statement or used a false record in the submission of a claim may be subject to treble damages and penalties of up to $23,331 thousand per claim.  The ACA codified the federal government’s prior position that claims presented in relationships that violate the federal Anti-Kickback Statute may also be considered to be violations of the federal False Claims Act.  Furthermore, the federal False Claims Act permits private citizen “whistleblowers” to bring actions on behalf of the federal government for violations of the False Claims Act and to share in the settlement or judgment that may result from the lawsuit.  Financial recoveries from civil health care matters brought under the False Claims Act are significant; according to the United States Department of Justice, it recovered over $3 billion from False Claims Act cases in fiscal year 2019.

HIPAA, HITECH, and Gramm-Leach-Bliley Act

Health care entities, such as TSS and TSA, are subject to laws, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH), and their respective implementing regulations, and the Gramm-Leach-Bliley Act, that require the protection of certain health and other information.  HIPAA authorized HHS to issue standards for administrative simplification, as well as privacy and security of medical records and other individually identifiable health information.  The regulations pursuant to the HIPAA Administrative Simplification provisions and HITECH impose a number of additional obligations on issuers of health insurance coverage and health benefit plan sponsors.  These requirements apply to self-funded group plans, health insurers and HMOs, health care clearinghouses and health care providers who transmit health information electronically (collectively, covered entities) and their business associates that access, maintain, create, and/or receive individually identifiable health information (collectively business associates). These regulations also establish significant criminal penalties and civil sanctions for noncompliance.

HHS also sets standards relating to the privacy of individually identifiable health information.  In general, these regulations restrict how covered entities and business associates may use and disclose medical records and other individually identifiable health information in any form, whether communicated electronically, on paper or orally, subject only to limited exceptions.  In addition, the regulations provide patients’ rights to understand and control how their health information is used.  HHS has also published security regulations designed to protect member health information from unauthorized use or disclosure and require notification to members, the Secretary of HHS, and in certain cases the media, in the event of a breach of unsecured individually identifiable health information.

HHS has released rules mandating the use of standard formats in electronic health care transactions (for example, health care claims submission and payment, plan eligibility, precertification, claims status, plan enrollment and disenrollment, payment and remittance advice, plan premium payments and coordination of benefits). HHS also has published rules mandating the use of standardized code sets and unique identifiers for employers and providers.  Our Managed Care subsidiaries believe that they are in material compliance with these requirements.

The Gramm-Leach-Bliley Act applies to financial institutions in the United States, including those domiciled in Puerto Rico, such as TSV and TSP.  The Gramm-Leach-Bliley Act generally places restrictions on the disclosure of non-public information to non-affiliated third parties, and requires financial institutions including insurers, to provide customers with notice regarding how their non-public personal information is used, including an opportunity to opt out of certain disclosures.  The Gramm-Leach-Bliley Act also gives banks and other financial institutions the ability to affiliate with insurance companies, which has led to new competitors in the insurance and health benefits fields in Puerto Rico.

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Employee Retirement Income Security Act of 1974

The services we provide to certain employee welfare benefit plans maintained by private sector employers are subject to regulation under the Employee Retirement Income Security Act of 1974, as amended (ERISA), a complex set of laws and regulations subject to interpretation and enforcement by the Internal Revenue Service, the U.S. Department of Labor, and federal courts.  ERISA regulates certain aspects of the relationships between us, private sector employers who maintain employee welfare benefit plans subject to ERISA, and the participants and beneficiaries in such plans.  Some of our administrative services and other activities may also be subject to regulation under ERISA.  In addition, certain states require licensure or registration of companies providing third-party claims administration services for benefit plans.  We provide a variety of products and services to employee welfare benefit plans that are covered by ERISA and its regulations.  Plans subject to ERISA can also be subject to state laws and the question of whether ERISA preempts a state law has been, and will continue to be, interpreted by federal and state courts.

Dodd-Frank Act

In 2010, Congress enacted the Dodd-Frank Wall-Street Reform and Consumer Protection Act (the Dodd-Frank Act) which provides for a number of reforms and regulations in the corporate governance, financial reporting and disclosure, investments, tax and enforcement areas that affect our subsidiaries.  Among other things, the Dodd-Frank Act creates a Federal Insurance Office (FIO) within the U.S. Department of the Treasury with powers that include information-gathering and subpoena authority.  Pursuant to the Dodd-Frank Act, the FIO issues annual reports on the insurance industry.  Although the FIO’s authority does not extend to health insurance, it extends to other parts of the business, primarily life and property and casualty insurance.  The FIO, however, does not have supervisory or regulatory authority over the insurance business.

In addition, the Dodd-Frank Act gives the Federal Reserve supervisory authority over a number of financial services companies, including insurance companies, if they are designated by the Financial Stability Oversight Council as systemically important. In such a case, the Federal Reserve’s supervisory authority could include the ability to impose heightened financial regulation upon that insurance company and could impact its capital, liquidity and leverage requirements as well as its business and investment conduct. We have not been designated as systemically important by the Financial Stability Oversight Council.

Legislative and Regulatory Initiatives

Puerto Rico Initiatives

In recent years we have seen an increase in legislative activity related to  managed care organizations, and in the enactment of laws that are inconsistent with the managed care model. These laws may increase operational costs, limit our ability to review courses of treatment, and alter the way we negotiate and contract with providers, among other adverse effects.

For example, Act 26-2017 among other things, calls for a considerable reduction in public corporations’ health plan contributions to its employees, to the extent required to comply with the government’s Fiscal Plan.  Contributions to employees with pre-existing catastrophic, chronic or terminal conditions, however, shall remain the same.  It also authorizes the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF) to negotiate health insurance coverage for such public employees.

Act 138-2019 requires health services organizations to contract any provider who requests to become a provider for the organization, when such provider meets the necessary requirements for practicing the medical profession and/or is authorized by the competent entities, among other things.  Act 138-2019 also forbids organizations from terminating a provider’s contract without cause, and provides for the Government of Puerto Rico’s automatic cancellation of all contracts with any organization that incurs in practices inconsistent with the purposes of the law or seeks to use subterfuges to circumvent its objectives.

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Act 138-2020 purports to reduce applicable periods for insurers to process and pay claims, and to further regulate the utilization review process, and Act 142-2020 limits insurers’ ability to review the course of treatment or medication prescribed by a physician and requires insurers to provide immediate, temporary coverage for prescribed medication to patients while their claims are resolved, among other matters.

Several of such laws have not yet been implemented, and a number have been challenged by health care insurers on federal preemption grounds, and by the Oversight  Board on grounds that they have not complied with the economic impact certification requirements of PROMESA, among others.  Recently, a federal court enjoined the Government from implementing and enforcing a number of legislative measures, including Act 138-2019, until such a time as the Government certifies the fiscal impact of the legislative measure.

See Item 1A.  Risk Factors—Risks Relating to the Regulation of Our Industry – Changes in public policy, enactment of new laws, changes in governmental regulations, or the application thereof, may adversely affect our business, financial condition and results of operations. included in this Annual Report on Form 10-K.

Federal Initiatives

When the ACA was enacted in 2010, it expanded Medicaid to an eligibility floor of 138% of the federal poverty level (FPL) beginning in 2014.  A 2012 U.S. Supreme Court decision regarding health care reform limited the federal government’s ability to enforce Medicaid expansion—meaning that the issue of Medicaid expansion is effectively left to each individual state as an option with enhanced federal match if they choose to do so.  Puerto Rico and the other U.S. territories were not included in the Medicaid expansion; instead Congress approved one billion in federal funding for Puerto Rico and the other U.S. territories to establish local affordable insurance exchanges or expand their Medicaid programs, at their option.  Puerto Rico elected to use the approximately $925 million made available by Congress for expanding its Medicaid program.

Most of the provisions of ACA with more significant effects on the health insurance marketplace went into effect on or before January 1, 2014, including a requirement that insurers guarantee the issuance of coverage to all individuals regardless of health status, strict rules on how health insurance is rated, and the assessment of new taxes and fees, including an annual Health Insurance Providers Fee (HIP Fee) on insurance plans.

On July 16, 2014, HHS notified the Commissioner of Insurance of Puerto Rico that the guarantee issue, community rating, single-risk pool, rate review, MLR, and essential health benefits provisions under the ACA do not apply to U.S. territories; however they continue to apply to Puerto Rico by virtue of an amendment to the Health Insurance Code of Puerto Rico passed on July 22, 2013 to enact similar provisions in Puerto Rico. ACA affects all aspects of the health care delivery and reimbursement system in the United States, including health insurers, managed care organizations, health care providers, employers, and U.S. states and territories.

The HIP Fee was allocated to health insurers based on the ratio of the amount of an insurer’s net premium revenues, and was assessed on plans in Puerto Rico even though Puerto Ricans did not receive subsidies or other ACA benefits.  In the years that followed, Congress waived the HIP Fee for 2017 and 2019, which – applied broadly – also provided relief to plans operating in Puerto Rico.  The total tax levied on the health insurance industry was $11.3 billion in 2016, $14.3 billion in 2018 and an estimated $16.0 billion in 2020.  We incurred $44.2 million, $50.1 million and $55.5 million in fees during 2016, 2018 and 2020, respectively.  In December 2019, the HIP Fee was permanently repealed for calendar years beginning after December 31, 2020 as part of the Further Consolidated Appropriations Act of 2020.

The Budget Control Act of 2011 was enacted to reduce the deficit and avoid default on the national debt.  When a joint committee of Congress established to develop debt reduction legislation failed to cut at least $1.5 trillion over the coming 10 years, an automatic process of across-the-board cuts (sequestration) split equally between defense and non-defense programs was triggered.  Under the sequestration, automatic spending cuts for the mandatory portion became effective beginning April 1, 2013, and these cuts have been extended through subsequent legislation through 2029 unless additional Congressional action is taken.  This resulted in a 2% cut to Medicare payments to providers.  Medicaid programs are not subject to automatic spending cuts.  Of note, the budget caps that were enacted to reduce the deficit are no longer in effect and were lifted for the final time in the Bipartisan Budget Act of 2019 for FY 2019 and FY 2020, which set the stage for the Further Consolidated Appropriations Act of 2020.

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In December 2017 Congress passed tax reform, the 2017 Tax Cuts and Jobs Act (TCJA), that also zeroed out the individual mandate tax penalty for not complying with the requirement to purchase qualified health insurance coverage.  In light of zeroing out the tax penalty, in 2018 a group of 20 states, led by Texas, sued the federal government in February 2018, (Texas v. Azar) seeking to have the entire ACA declared unconstitutional. They argued that with the removal of the tax penalty, the individual mandate and the entire law was no longer constitutional. They based their claim on the Supreme Court of the United States’ (SCOTUS) previous ruling in 2012 that the individual mandate was upheld under Congress’ constitutional authority to tax.  SCOTUS heard the case in November 2020, and is expected to rule in 2021.

We no longer anticipate significant legislative action regarding the repeal and replacement of the ACA in Washington in the near future. However, the White House and various federal agencies, including, but not limited to, HHS, DOL, and the U.S. Department of the Treasury may issue Executive Orders and regulations related to the stabilization of the individual insurance market and ACA generally. Congress, now controlled by Democrats, may also seek to make improvements to the ACA at some point.

See Item 1A Risk Factors – Risk Relating to the Regulation of Our Industry – The health care reform law, changes in laws related to the health care system, and the implementation of such law could have a material effect on our business, financial condition, cash flows, or results of operations. included in this Annual Report on Form 10-K.

Human Capital

Workforce Demographics

As of December 31, 2020, our workforce consists of 3,911 full time employees serving a variety of business units, of which, 73% identify as female. 50% of our executive team identifies as female and 68% of all company management identifies as female. Seven percent (7%) of the overall workforce identifies having a disability or special need. Given our location, nearly 100% of our workforce is Hispanic/Latino. Our workforce includes a variety of generations, from Baby Boomers to Generation Z which provides for a rich work environment where diverse perspectives, ideas and views are considered valuable and a key factor to company long-term success.  Approximately 12% of employees are unionized. The current labor agreement expires in 2023. Overall, Management considers the relationship with the Union to be satisfactory.

Our Strategy

We believe that our workforce is our most valuable asset. We invest in leadership, engagement, organizational culture and volunteer initiatives. The investments we make in our workforce are implemented in the context of our business strategy and provide for continuous evolution of our standards and expectations on effectively executing plans and achieving business objectives that sustain long-term growth and diversification.

Governance

Our Chief Human Resources Officer is accountable for workforce productivity, effectiveness and holistic well-being. The Board oversees human capital management through quarterly reports and discussion by the Chief Human Resources Officer to the Talent & Compensation Committee, including on specific enterprise wide metrics, operational key performance indicators and key initiatives on topics relative to Succession Planning, Leadership, Engagement Index and Diversity, Equity & Inclusion.

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As part of our governance structure, we have an executive-level Talent Management Council, led by the Chief Human Resources Officer and comprised of the Chief Executive Officer and the Chief Financial Officers and Presidents of each business line, whose main objective is to discuss and agree on strategies that attract, retain, develop and ensure adequate positioning of talent across the organization to meet evolving business needs.

In addition, human capital management is included in the Company Risk Management Program, which is subject to regular Board of Directors oversight.

Engagement

We believe that high employee engagement contributes to better service for our customers, lower turnover rates, and higher productivity.

We conduct an annual engagement survey of our employees, administered, and analyzed by a leading outside firm that specializes in employee engagement.  Our belief is that measuring engagement levels provides for perspective on how employees feel about the Company and the areas we should focus on to continually enhance employee experience. The results of this engagement survey are shared with all leaders and their teams, who are then tasked with designing an action plan based on their results, and employee’s feedback.  In 2019, we were recognized as Mejores Patronos de Puerto Rico, (Spanish for Best Employers of Puerto Rico) and we sustained adequate levels of engagement during 2020 in spite of the COVID-19 pandemic challenges.  Our results are in line with the average percentage for the insurance industry benchmark in Puerto Rico, and higher when compared with United States general engagement index.

Diversity, Equity and Inclusion

We value a diverse workforce and strive for an inclusive culture where the thoughts, ideas and styles of all our employees are valued and respected. Triple-S Management and subsidiaries values excellence and recognizes that by embracing the diverse backgrounds of its workforce, it will sustain a competitive advantage and continue to hold its position as an employer of choice on our island.

In 2020, we implemented a new microlearning training series titled Unconscious Bias for General Awareness about Diversity, Equity and Inclusion. Multiple other initiatives and activities aim at fostering inter-generational connections through common interests or characteristics, for example, we host an Annual Women Leadership Conference, and have running “Pets at Work,” “Bring Your Child to Work,” and “Play Soccer with Our CEO” initiatives, among others. We also encourage employee volunteering by offering four paid hours per month to volunteer at non-for-profit organizations. The total average annual volunteer hours is approximately 1,200.

In order to ensure continued diversity, equity and inclusion, we perform continued assessments on compensation internal equity by gender, organizational hierarchy, and work groups and constantly communicate policies on a safe environment against discrimination, retaliation or harassment.

Our compensation is internally equitable and externally competitive as a result of robust policies, continuous assessments and standard processes. We perform job evaluations, market data analysis, salary structures revision and have clear procedures for salary administration.

Talent Acquisition, Retention and Stability

We are committed to recruiting and retaining the best talent for our organization without regard to gender, ethnicity, religion, age, sexual orientation, gender identity, disability or protected veteran status or any other protected trait. We are an equal employment opportunity employer and we strongly believe in developing and promoting talent from within. We use internal and external resources to recruit skilled and talented people. As part of our efforts on employee retention, we measure employee engagement and reward employee innovation and productivity. The approach of our recognition program “Tu Brillas” (Spanish for “You Shine”) is to foster a culture that values those contributions and outcomes that are aligned with our organization’s goals and values. The program includes a variety of categories depending on the level of results achieved and behaviors we want to highlight.

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Our focus on retention is evident in the length of service of our employees -- who have an average tenure of seven years.

Triple-S aims to attract qualified resources through an inclusive and accessible recruiting process that encourages employee referrals. Triple-S also has partnerships with local universities and alumni organizations to attract external talent. Last year, we trained 47% of our management on competency-based interviewing techniques.

Training and Development

As part of the performance evaluation cycle, we include a professional development plan where the employee and the supervisor discuss the opportunities for training, development and priorities to enable performance excellence and career growth. Over 94% of our workforce complete their performance reviews.

Our team of 13 training and organizational development professionals provides employees with learning programs and experiences to enhance their leadership and technical skills, including: (a) corporate onboarding training and activities (b) mandatory annual compliance trainings (c) leadership development programs (d) professional and personal productivity courses and (e) specialized business and technical training programs based on specific job nature.

All learning experiences are designed and implemented in alignment with company strategy and business needs to ensure company performance and leadership.

In 2020, all training programs were converted from in-person classroom to virtual mode to ensure all training and development activities were on track regardless of the remote work mode forced on by the COVID-19 pandemic.  In 2020, our employees completed over 2,900 hours of training and development.

Safety and Wellbeing

Employee health, safety and wellness is a high priority at all times.  In addition to traditional employee benefits, we offer an in-house clinic with medical staff, two onsite gyms, employee assistance program, telemedicine, weight loss and stop smoking programs, financial, physical and emotional health awareness and support resources, among others.  In response to the COVID-19 pandemic, the Company took early actions aligned with the Center for Disease Control and Prevention rules, implementing comprehensive protocols to protect our employees, insurers, providers and patients.  These protocols include complying with social distancing and other health and safety standards as required by federal and local government agencies and public health authorities. During the pandemic we have also:

• Offered remote work and hybrid work options for over 92% of our workforce;

• Awarded Company-granted days above regulations;

• Implemented flexible use of PTO according to individual needs;

• Issued a variety of wellness education communications;

• Distributed personal protection equipment;

• Modified workstations and areas of common use to ensure required social distancing;

• Prohibited travelling; and

• Surveyed employees twice to listen to their needs and reaction to company actions, among other initiatives.

In spite of a difficult year, our turnover decreased when compared to the previous year, and engagement levels were sustained as validated through our annual survey, with absenteeism at a minimum.

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Available Information

We are an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) and are required, pursuant to Item 101 of Regulation S-K, to provide certain information regarding our website and the availability of certain documents filed with or furnished to the Securities and Exchange Commission (SEC).  We make available free of charge, or through our website (https://investors.triplesmanagement.com/sec-filings/documents/default.aspx, under the Investors − SEC Filings caption), our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with or furnish it to the SEC.  We also include on our website our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, Code of Ethics for Financial Managers and Supervisors and the charter of each standing committee of our Board of Directors (https://investors.triplesmanagement.com/governance/documents/default.aspx, under the ‘‘Investors − Corporate Governance’’ caption).  In addition, we intend to disclose on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics and Code of Ethics for Financial Managers and Supervisors that are required to be publicly disclosed pursuant to rules of the SEC and the New York Stock Exchange (NYSE).  The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (https://www.sec.gov/edgar/searchedgar/companysearch.html).  The website addresses listed above are provided for the information of the reader and are not intended to be an active link.  We will provide free of charge copies of our filings to any shareholder that requests them at the following address: Triple-S Management Corporation; Office of the Secretary; PO Box 363628; San Juan, P.R. 00936-3628.

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Item 1A. Risk Factors

We must deal with several risk factors during the normal course of business.  You should carefully consider the following risks and all other information set forth in this Annual Report on Form 10-K. The risk and uncertainties described below are not the only ones we face. Additional risks and uncertainties not  presently known to us or that are currently deemed insignificant may also impair our business operations.  The occurrence of any of the following risks could materially affect our business, financial condition, operating results, and cash flows. See section Special Note Regarding Forward-Looking Statements in this Annual Report on Form 10-K for a summary of our Risk Factors.

Risks Related to Our Business

Our inability to contain managed care costs may adversely affect our business and profitability.

A substantial portion of our managed care revenue is generated by premiums consisting of monthly payments per member that are established by contracts with our commercial customers, ASES or CMS (for our Medicare Advantage plans), all of which are typically renewable on an annual basis.  If our medical expenses exceed our estimates, except in very limited circumstances or resulting from risk score adjustments for member acuity in case of the Medicare Advantage products, we will be unable to increase the premiums we receive for these contracts during the then-current terms.  As a result, our profitability in any year depends, to a significant degree, on our ability to adequately predict and effectively manage our medical expenses related to the provision of managed care services through underwriting criteria, medical management, product design and negotiation of favorable provider contracts with hospitals, physicians and other health care providers.  The aging of the population and other demographic characteristics and advances in medical technology continue to contribute to rising health care costs.  Also, we may continue to enter into new lines of business in the future, and it may be difficult to estimate the anticipated costs.  Numerous factors affecting the cost of managed care, including changes in health care practices, inflation, new technologies such as genetic laboratory screening for diseases including breast cancer, electronic recordkeeping, cost of prescription drugs, clusters of high cost cases, changes in the regulatory environment including the implementation of ACA, may adversely affect our ability to predict and manage managed care costs, as well as our business, financial condition and results of operations.

Introduction of new high-cost specialty drugs and sudden costs spikes for existing drugs increase the risk that the pharmacy cost assumptions used to develop our rates are not adequate enough to cover the actual pharmacy costs, which jeopardizes the overall actuarial soundness of our rates. Bearing the high costs of new specialty drugs or the high cost inflation of generic drugs without an appropriate rate adjustment or other reimbursement mechanism adversely affects our financial condition and operational results.  In addition, evolving state and federal regulation may affect the ability of our health plans to continue to receive existing price discounts on pharmaceutical products for our members. Other factors affecting our pharmaceutical costs include, but are not limited to, geographic variation in utilization of new and existing pharmaceuticals, and changes in discounts. Although we will continue to work with state agencies in an effort to ensure that we receive appropriate and actuarially sound reimbursement for all new drug therapies and pharmaceutical cost and utilization trends, there can be no assurance that we will always be successful.

Our profitability may be adversely affected if we are unable to maintain our current provider agreements and unable to enter into other appropriate agreements.

Our profitability is partially dependent upon our ability to contract on favorable terms with hospitals, physicians and other managed care providers. Puerto Rico legislation authorizes providers to collectively negotiate the services fees through cooperatives, on a voluntary basis, with health insurance companies and other health care related organizations. If collective negotiations with providers become mandatory or we are otherwise required to enter into collective negotiations with providers, it could become more difficult to maintain cost-effective managed care provider contracts, which could adversely affect our business.

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We are dependent on a small number of government contracts to generate a significant amount of the revenues for our Managed Care segment.

Our managed care business participates in government contracts that generate a significant amount of our consolidated operating revenues, including:

• Commercial:    One of our Managed Care subsidiaries is a qualified contractor that provides managed care coverage to federal government employees within Puerto Rico.  Such coverage is provided pursuant to a contract with the OPM that is subject to termination in the event of noncompliance not corrected to the satisfaction of the OPM.  During each of the years ended December 31, 2020, 2019, and 2018 premiums generated under this contract represented 4.6%, 5.3%, and 5.5% of our consolidated premiums earned, net, respectively.

Under the commercial business, we also provide health coverage to certain employees of the Government of Puerto Rico and its instrumentalities.  During each of the years ended December 31, 2020, 2019, and 2018, earned premium revenue related to such health plans represented 1.8%, 2.2%, and 3.0% of our consolidated premiums earned, net, respectively.

• Medicare:    We provide services through our Medicare Advantage products pursuant to a limited number of contracts with CMS.  These contracts generally have terms of one year and must be renewed annually.  Each of our CMS contracts are cancellable for cause if we breach a material provision of the contract or violate relevant laws or regulations.  If we are unable to renew, or to successfully re-bid or compete for any of these contracts, or if the process for bidding materially changes or if any of these contracts are terminated, our business could be materially impaired.  During each of the years ended December 31, 2020, 2019, and 2018, contracts with CMS represented 42.9%, 43.3%, and 38.5% of our consolidated Premiums Earned, Net, respectively.

• Medicaid:    We participate in the government of Puerto Rico Health Reform Program (similar to Medicaid), known as Vital (Vital), to provide health coverage (including medical, mental, pharmacy and dental services) to medically indigent citizens in Puerto Rico.  The term of our current agreement with ASES is from November 1, 2018 to September 30, 2021, and may be extended for an additional year at ASES’s option.  Premium rates are negotiated for each contract year.  Participants may change insurance carriers once every year. Under the previous agreement with ASES, we provided services to eligible members in the Metro North and West regions of Puerto Rico. During the years ended December 31, 2020, 2019, and 2018 Medicaid premiums generated through our agreements with ASES represented 26.3%, 26.5% and 26.4%, respectively.

If any of these contracts is terminated for any reason, including noncompliance by us, or not renewed or replaced by a comparable contract, our consolidated premiums and profitability earned could be materially adversely affected.  See also Risks Relating to the Regulation of our Industry — As a Medicare Advantage program participant, we are subject to complex regulations. If we fail to comply with these regulations, we may be exposed to criminal sanctions and significant civil penalties. Our Medicare Advantage contracts may also be terminated or our operations may be required to change in a manner that has a material effect on our business. in this Annual Report on Form 10-K.

A change in our managed care commercial product mix may affect our profitability.

Our managed care products that involve greater potential risk, such as fully insured arrangements, generally tend to be more profitable than ASO products and those managed care products where employer groups retain the risk, such as self-funded financial arrangements.  As of December 31, 2020, 2019 and 2018, 76%, 73% and 69% of our managed care commercial customers, respectively, had fully insured arrangements and 24%, 27% and 31%, respectively, had ASO arrangements.  Unfavorable changes in the relative profitability or customer participation among our various products could have a material adverse effect on our business, financial condition, and results of operations.

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Our failure to accurately estimate incurred but not reported claims would affect our reported financial results.

A portion of the claim liabilities recorded by our insurance segments represents an estimate of amounts needed to pay for insured events that have occurred, including events that have not yet been reported to us.  These amounts are based on estimates of the ultimate expected cost of claims and on actuarial estimation techniques.  Judgment is required in actuarial estimation to ascertain the relevance of historical payment and claim settlement patterns under each segment’s current facts and circumstances.  Accordingly, the ultimate liability may be in excess of or less than the amount provided.  We regularly compare prior period liabilities to re-estimate claim liabilities based on subsequent claims development; any difference between these amounts is adjusted in the operations of the period determined.  Additional information on how each reportable segment determines its claim liabilities, and the variables considered in the development of this amount, is included elsewhere in this Annual Report on Form 10-K under Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations―Critical Accounting Estimates.  Actual experience will likely differ from assumed experience. And to the extent the actual claims experience is less favorable than estimated based on our underlying assumptions, our incurred losses would increase and future earnings could be adversely affected.

The termination or modification of our license agreements to use the BCBS name and mark could have a material adverse effect on our business, financial condition and results of operations.

We are a party to license agreements with the BCBSA that entitle us to the exclusive use of the BCBS name and mark in Puerto Rico, the USVI, Costa Rica, the BVI and Anguilla.  These license agreements contain certain standards, requirements and restrictions regarding our operations and our use of the BCBS name and mark, which may be modified in certain instances by the BCBSA. Changes to the terms of our license agreements may restrict various potential business activities.  Failure to comply with the standards, requirements and restrictions established could result in the termination of a license agreement.  Events that could cause the termination of a license agreement with the BCBSA: include failure to comply with minimum capital requirements imposed by the BCBSA, a change of control or violation of the BCBSA ownership limitations on our capital stock, impending financial insolvency and the appointment of a trustee or receiver or the commencement of any action against a licensee seeking its dissolution.  Upon termination of a license agreement, the BCBSA would impose a re-establishment fee upon us, which would allow the BCBSA to entitle another managed care company to use the BCBS name and marks in the service areas we currently serve.  This re-establishment fee is currently $98.33 per licensed enrollee.  If the re-establishment fee were applied to our total BCBS enrollees as of December 31, 2020, we would be assessed approximately $96.0 million by the BCBSA.

We believe that the BCBS name and mark are valuable identifiers of our products and services in the marketplace.  Termination of these license agreements, including modifications to the current term and conditions, could have a material adverse effect on our business, financial condition and results of operations. See Item 1.  Business ― Blue Cross and Blue Shield License for more information.

Our ability to manage our exposure to underwriting risks in our Life Insurance and Property and Casualty segments depends on the availability and cost of reinsurance coverage.

Reinsurance is the practice of transferring part of an insurance company’s liability and premium under an insurance policy to another insurance company.  We use reinsurance arrangements to limit and manage the amount of risk we retain, to stabilize our underwriting results and to increase our underwriting capacity.  During 2020, 40.4%, or $62.5 million, of the premiums written in the Property and Casualty segment and 4.9%, or $10.0 million, of the premiums written in the Life Insurance segment were ceded to reinsurers.  Total premiums ceded, on a consolidated basis, represent 2.1%, or $76.8 million of our premiums.  The premiums ceded and the availability and cost of reinsurance is subject to changing market conditions and may vary significantly over time.  Any decrease in the amount of our reinsurance coverage will increase our risk of loss.  We may be unable to maintain our desired reinsurance coverage or obtain other reinsurance coverage in adequate amounts and at favorable rates.  If we are unable to renew our expiring coverage or obtain new coverage, it will be difficult for us to manage our underwriting risks and operate our business profitably.

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It is also possible that the losses we experience on insured risks for which we have obtained reinsurance will exceed the coverage limits of the reinsurance.  See Risks Related to Our Business ― Large-scale natural disasters may have a material adverse effect on our business, financial condition and results of operations. If the amount of our reinsurance coverage is insufficient, our insurance losses could increase substantially.

If our reinsurers do not pay our claims or do not pay them in a timely manner, we may incur losses.

We are subject to loss and credit risk with respect to the reinsurers with whom we deal.  In accordance with general industry practices, our Property and Casualty and Life Insurance subsidiaries annually purchase reinsurance to lessen the impact of large unforeseen losses and mitigate sudden and unpredictable changes in our net income and shareholders’ equity.  Reinsurance contracts do not relieve us from our obligations to policyholders.  In the event that all or any of the reinsurance companies are unable to meet their obligations under existing reinsurance agreements or pay on a timely basis, we will continue to be liable to our policyholders notwithstanding such defaults or delays.  If our reinsurers are not capable of fulfilling their financial obligations to us, our insurance losses would increase, which would negatively affect our financial condition and results of operations.

A downgrade in our A.M. Best rating could affect our ability to write new business or renew our existing business in our Property and Casualty segment.

Ratings assigned by AM Best are an important factor influencing the competitive position of the property and casualty insurance companies in Puerto Rico.  On June 18, 2020, AM Best rated our Property and Casualty subsidiary B+ (Good).

AM Best ratings represent independent opinions of financial strength and ability to meet obligations to policyholders and are not directed toward the protection of investors.  Financial strength ratings are used by brokers and customers as a means of assessing the financial strength and quality of insurers.  AM Best reviews its ratings periodically and we may be further downgraded following their annual evaluation.  Since the lines of business that this segment writes and the market in which it operates are particularly sensitive to changes in AM Best financial strength ratings, any downgrade of our Property and Casualty segment’s rating could limit or prevent us from writing and renewing certain types of business or accounts that requires insurers with stronger ratings.

We are dependent on the success of our relationships with third parties for various services and functions, including outsourced IT, claims processing and PBM services.

We contract with various third parties to perform certain functions and services and provide us with certain information technology systems.  Certain of these third parties provide us with significant portions of our business infrastructure and operating requirements, and we could become overly dependent on key vendors, which could cause us to lose core competencies.  We are also dependent on some third parties for compliance with certain regulatory requirements.  A termination of our agreements with, or disruption in the performance of, one or more of these service providers could result in service disruptions or unavailability; reduced service quality and effectiveness; increased or duplicative costs; fines or corrective action plans imposed by our regulators; or an inability to meet our obligations to our customers.  In addition, we may also have to seek alternative service providers, which may be unavailable or only available on less favorable contract terms. Any of these outcomes could adversely affect our business, reputation, cash flows, financial condition and operating results.

TSS has a Master Services Agreement (MSA) with OptumInsight, Inc. (Optum), pursuant to which Optum provides health care technology and operations services, including information technology, claims processing and application development, to Triple-S and its affiliates.  As a result, we are dependent on Optum for the provision of essential services to our business, and there can be no assurances that the quality of the services will be appropriate or that Optum will be able to continue to provide us with the necessary claims processing and technology services.  Potential breakdowns or failures of Optum could harm our business by disrupting our delivery of services, which could have a material adverse impact on our financial condition and results of operations.

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Abarca Health provides pharmacy benefit management services for all of our Commercial and Medicare Advantage managed care members.  Therefore, any issues or failures affecting this vendor or the services it provides us could have a material adverse effect on our managed care business, which could adversely affect our reputation, financial condition and operating results.

Significant competition and market conditions in Puerto Rico could negatively affect our ability to maintain or increase our profitability.

We are subject to strong competition in each line of business in which we operate.  Competition in the insurance industry is based on many factors, including premiums charged, services provided, speed of claim payments and reputation.  This competitive environment has produced and will likely continue to produce significant pressures on our profitability. The industry in which we operate has unique characteristics that, if we are unable to manage adequately, may adversely affect our business, financial conditions and results of operations.  Some of the trends and characteristics related to the competition we contend with in our different lines of business include the following:

The managed care market in Puerto Rico is mature.  According to the U.S. Census Bureau, Puerto Rico’s population decreased by 14.3% between 2010 and 2019.  However, for the same period, the population 65 years and older increased.  As a result, the competition for this segment of the market is significant.

Local economy is in a downturn.  A challenging economy and a shrinking population in Puerto Rico continue to produce conditions that are adverse to the generation of new sources of business in this segment.  As a result, insurance companies compete for the same customers through pricing, policy terms and quality of services.  Also, our industry is subject to aggressive marketing and sales practices that target our current and prospective customers. We may not be successful in attracting and retaining our customers. See Risks Related to Our Business ― Our business is geographically concentrated in Puerto Rico and weakness in the economy and the fiscal health of the government has adversely affected and may continue to adversely affect us.

Our industry is highly regulated.  Future legislation at the federal and local levels may also result in increased competition, especially in the Managed Care segment.  While we do not anticipate that any of the current legislative proposals of which we are aware would increase the competition we face, future legislative proposals, if enacted, might do so.

Market concentration. Concentration in our industry has created an increasingly competitive environment, both for customers and for potential acquisition targets, which may make it difficult for us to grow our business.  The parent companies of some of our competitors are larger and have greater financial and other resources than we do.  We may have difficulty competing with larger companies, which can create downward price pressures on premium rates.

We believe these trends will continue.  There can be no assurance that these competitive pressures will not adversely affect our business, financial condition and results of operations.

As a holding company, we are largely dependent on rental payments, dividends and other payments from our subsidiaries. The ability of our regulated subsidiaries to pay dividends or make other payments to us is subject to the regulations of the Commissioner of Insurance including maintenance of minimum levels of capital, as well as covenant restrictions in their indebtedness.

We are a holding company whose assets include, among other things, all of the outstanding shares of common stock of our subsidiaries, including our regulated insurance subsidiaries.  We principally rely on rental income and dividends from our subsidiaries to fund our debt service, dividend payments and operating expenses, although our subsidiaries may not declare dividends every year.  We also benefit to a lesser extent from income on our investment portfolio.

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Our insurance subsidiaries are subject to the regulations of the Commissioner of Insurance, which include, among other things, the requirement that insurance entities to maintain certain levels of capital, thereby restricting the amount of earnings that can be distributed.  See Risks Related to Our Business ― Our insurance subsidiaries are subject to minimum capital requirements.  Our failure to meet these standards could subject us to regulatory actions.  Our subsidiaries’ ability to make any payments to us will also depend on their earnings, the terms of their indebtedness, if any, and other business and legal restrictions.  Furthermore, our subsidiaries are not obligated to make funds available to us, and creditors of our subsidiaries have a superior claim to such subsidiaries’ assets.  Our subsidiaries may not be able to pay dividends or otherwise contribute or distribute funds to us in an amount sufficient for us to meet our financial obligations.  In addition, from time to time, we may find it necessary to provide financial assistance, either through subordinated loans or capital infusions to our subsidiaries that may adversely affect our financial condition.

Our results may fluctuate as a result of many factors, including cyclical changes in the insurance industry.

Results of companies in the insurance industry, historically have been subject to significant fluctuations and uncertainties.  The industry’s profitability can be affected significantly by:

• Rising levels of actual costs that are not known by companies at the time they price their products;

• Volatile and unpredictable developments, including man-made and natural catastrophes;

• Changes in reserves resulting from the general claims and legal environments as different types of claims arise and judicial interpretations relating to the scope of insurers’ liability develop; and

• Fluctuations in interest rates, inflationary pressures and other changes in the investment environment, which affect returns on invested capital.

Historically, the financial performance of the insurance industry has fluctuated in cyclical periods of low premium rates and excess underwriting capacity resulting from increased competition, followed by periods of high premium rates and a shortage of underwriting capacity resulting from decreased competition.  Fluctuations in underwriting capacity, demand and competition, and the impact on us from the other factors identified above, could have a negative impact on our results of operations and financial condition.  We believe that underwriting capacity and price competition in the current market is increasing.  This additional underwriting capacity may result in increased competition from other insurers seeking to expand the kinds or amounts of business they write or cause some insurers to seek to maintain market share at the expense of underwriting discipline.  We may not be able to retain or attract customers in the future at prices we consider adequate.

Our investment portfolios are subject to varying economic and market conditions.

We have exposure to market risk and credit risk in our investment activities.  The fair values of our investments vary from time to time depending on economic and market conditions.  Fixed-maturity securities expose us to interest rate risk as well as credit risk.  Equity securities expose us to equity price risk.  Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic and political conditions.  These and other factors also affect the equity securities we own.  The outlook of our investment portfolio depends on the future direction of interest rates, fluctuations in the equity markets and the amount of cash flows available for investment.

Therefore, adverse conditions in the U.S. and global capital markets could significantly and adversely affect the value of our investments in debt and equity securities, other investments, our profitability and our financial position.

As an insurer, we have a substantial investment portfolio comprised mainly of debt and equity securities of issuers located in the U.S.  As a result, the income we earn from our investment portfolio is largely driven by interest rate levels in the U.S. financial markets, volatility, uncertainty and/or disruptions in the global capital markets, particularly the U.S. credit markets, and governments’ monetary policy.  These factors can significantly and adversely affect the value of our investment portfolio, our profitability and/or our financial position by:

• Significantly reducing the value of debt and equity securities we hold in our investment portfolio, and creating net unrealized capital losses that reduce our operating results and/or net realized capital losses in the event we are required to sell some of those investments.

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• Lowering interest rates on high-quality short-term debt securities and thereby materially reducing our net investment income and operating results.

• Making it more difficult to value certain of our investment securities. For example, if trading becomes less frequent, it could lead to significant period-to-period changes in our estimates of the fair values of these securities and cause period-to-period volatility in our operating results and shareholders’ equity.

• Reducing our ability to issue other securities.

We believe our cash balances, investment securities, operating cash flows, and funds available under credit agreement, taken together, provide adequate resources to fund ongoing operating and regulatory requirements.  However, continuing adverse securities and credit market conditions could significantly affect the availability of credit.

For additional information, see Item 7A.   Quantitative and Qualitative Disclosures About Market Risk for an analysis of our exposure to interest and equity price risks and the procedures in place to manage these risks.  Our investment portfolios may lose money in future periods, which could have a material adverse effect on our financial condition.

In addition, our insurance subsidiaries are subject to local laws and regulations that require diversification of our investment portfolios and limit the amount of investments in certain riskier investment categories, such as below-investment-grade fixed income securities, equities, and private market investments, among others, which could generate higher returns on our investments.  Notwithstanding, the Insurance Code of Puerto Rico requires insurers to invest an amount equal to no less than half of the insurer’s required capital in Puerto Rico Securities.  Since February 2014, the credit ratings of bonds issued by the Government of Puerto Rico and most of Puerto Rico public corporations have been downgraded to below-investment grade, which makes it difficult to comply with this requirement.  We therefore requested and obtained a waiver authorization from the Commissioner of Insurance to fulfill the requirement by investing in mortgage securities issued by Ginnie Mae, backed by mortgages issued in Puerto Rico for 2020, and will request an extension of this waiver for 2021.  These securities are of high credit quality due to the Ginnie Mae guarantee.

If we experience a significant realized or unrealized loss on investments or fail to comply with the Insurance Code requirements, any investments exceeding regulatory limitations would be treated as non-admitted assets for purposes of measuring statutory surplus and risk-based capital and may adversely affect our financial condition and results of operations.

Our business is geographically concentrated in Puerto Rico and weakness in the economy and the fiscal health of the government has adversely affected and may continue to adversely affect us.

Our principal lines of business are concentrated in Puerto Rico, which is currently in the midst of a severe fiscal and economic crisis.  The Puerto Rico economy entered a recession in the fourth quarter of fiscal year 2006 and its GNP contracted (in real terms) every fiscal year between 2007 and 2018, with the exception of fiscal year 2012. The 2020 Fiscal Plan estimated that the economy of Puerto Rico would contract by 4% in real terms in fiscal year 2020, largely because of the COVID-19 pandemic, with a limited recovery of 0.5% in fiscal year 2021.

Puerto Rico’s population has also been in decline over the past decade. Estimates by the U.S. Census Bureau indicate the population has declined in the past decade by approximately 14.3%, from  2010 to 2019, and the 2020 Fiscal Plan projects that the population will continue to decline through fiscal year 2025.

The weakness of Puerto Rico’s economy has also adversely affected employment. Total average annual employment, as measured by the Puerto Rico Department of Labor and Human Resources (the DLHR) has decreased approximately 20% since 2007, and the unemployment rate stands at 8.5% as of November 2020.

The Government of Puerto Rico has also faced significant fiscal and financial challenges over the past years.

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In response to such challenges, the U.S. Congress enacted PROMESA in June 2016. The Commonwealth of Puerto Rico and several of its instrumentalities are currently in the process of restructuring their debts through the mechanisms provided by PROMESA. In February 2020, the Oversight Board announced it had reached an agreement with certain creditors on a new framework for a plan of adjustment for the Commonwealth of Puerto Rico and certain of its instrumentalities. However, the confirmation of such proposed plan was put on hold as a result of the COVID-19 pandemic, and stakeholders are currently in court-ordered mediation negotiating the economic terms of a revised plan of adjustment.

We have significant direct exposure to the government through our contract with ASES, which administers the Medicaid program in Puerto Rico, and certain other business relationships with the government of Puerto Rico and its instrumentalities. As a result, we may be adversely affected by the liquidity problems of such entities, reductions in such entities’ contributions to their employees’ health plans as a result of fiscal control measures, by a reduction in the size of government or privatization of public corporations.

On the other hand, as part of the Further Consolidated Appropriations Act of 2020, Puerto Rico’s Medicaid program will receive up to approximately $5.342 billion in funding through September 30, 2021.  This action has brought temporary financial stability to Puerto Rico’s Medicaid program, and funding conditions related to compliance with program management standards have further promoted stability and predictability. The government of Puerto Rico and the health care industry are lobbying Congress to address Puerto Rico’s Medicaid spending cliff permanently. However, there are no guarantees that these efforts will succeed.  If our efforts are not successful, ASES may not be able to fulfill its payment obligations to us under our agreement for the provision of health coverage to Vital participants, which would adversely affect our financial results

Furthermore, our insureds’ financial capacity is affected by, among other things, the general economic conditions in Puerto Rico and other adverse conditions affecting Puerto Rico consumers and businesses. The effects of the prolonged recession are reflected as a decrease in insured customers in our commercial line of business and premiums earned, net.  Moreover, the measures taken to address the fiscal crisis and those that may have to be taken in the near future, will likely affect many of our insureds, which could result in a lower amount of insureds, insureds moving to lower premium plans, among others. The foregoing could also result in decreased demand for our insurance products or migration to less profitable products.

If global or local economic conditions worsen or the government of Puerto Rico is unable to manage its fiscal and economic challenges, including consummating an orderly restructuring of its debt obligations while continuing to provide essential services, the conditions described above could continue or worsen in ways that are unpredictable and outside of our control.  While PROMESA provides the government with tools to restructure Puerto Rico’s debt obligations and that of its instrumentalities, these restructuring tools are relatively new and untested.  Furthermore, the Fiscal Plan’s projections indicate the possibility of significant creditor losses. Both of these factors have made the debt restructuring processes lengthy and highly adversarial.

The success of our business depends on developing and maintaining effective information systems.

Our business and operations may be affected if we do not maintain and upgrade our information systems and the integrity of our proprietary information.  We are materially dependent on our information systems, including Internet-enabled products and information, for all aspects of our business operations.  Monitoring utilization and other factors, supporting our managed care management techniques, processing provider claims, providing data to our regulators, and our ability to compete depends on adopting technology on a timely and cost-effective basis.  Malfunctions in our information systems, fraud, error, communication and energy disruptions, security breaches or the failure to maintain effective and up-to-date information systems could disrupt our business operations, alienate customers, and contribute to customer and provider disputes.  This could result in regulatory violations, possible liability, increase administrative expenses or lead to other adverse consequences any of which could have a material adverse effect on our results of operations or financial condition.

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The use of member data by all of our businesses is regulated at federal and local levels.  These laws and rules change frequently, and developments require adjustments or modifications to our technology infrastructure. Our information systems and applications therefore require an ongoing commitment of significant resources to maintain, upgrade and enhance existing systems and develop new systems in order to keep pace these changes and evolving operational needs, technology and industry standards. In addition, we may from time to time obtain significant portions of our systems-related or other services or facilities from independent third parties, which may make our operations vulnerable to such third parties’ failure to perform adequately or failure to secure against cyber threats.

The accuracy and reliability of the information we rely upon to run our business is crucial.  Therefore, failure to maintain our information systems and data integrity effectively could result in operational disruptions, such as the inability to pay claims or to make claims payments on a timely basis, problems in determining medical cost estimates and establishing appropriate pricing and reserves, loss of members, and difficulty in attracting new members, regulatory violations, possible liability and limitations on our operations, increases in operating expenses or suffer other adverse consequences.  See Item 1A   Risk Factors – Risks Relating to the Regulation of Our Industry – As a Medicare Advantage program participant, we are subject to complex regulations.  If we fail to comply with these regulations, we may be exposed to criminal sanctions and significant civil penalties.Our Medicare Advantage contracts may also be terminated or our operations may be required to change in a manner that has a material effect on our business. See also Item 1A. Risk Factors – Risks Relating to the Regulation of Our Industry – We may be subject to government audits, regulatory proceedings or investigative actions, that, may find our policies, procedures, practices or contracts are not compliant with, or are in violation of, applicable health care regulations.

Security breaches could result in misappropriation of our confidential information or interruptions in services or operations. Because of the confidential health information we store and transmit, such security breaches could expose us to a risk of regulatory action, litigation, possible liability and loss. See “Item 1A. Risk Factors–Risks Relating to the Regulation of Our Industry – If we fail to comply with applicable privacy and security laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information on our behalf; or if we fail to address emerging security threats, including cybersecurity threats, or fail to detect and prevent privacy and security incidents, including those related to cybersecurity, our business, reputation, results of operations, financial position and cash flows could be materially and adversely affected.  In the past, computer viruses or software programs that disable or impair computers have been distributed and have rapidly spread over the internet.  Computer viruses could be introduced into our systems, or those of our providers or regulators, which could disrupt our operations, or make our systems inaccessible to our providers or regulators.

We may be required to expend significant capital and other resources to protect against the threat of security breaches or to alleviate problems caused by breaches.

We face risks related to litigation.

We are subject to a variety of legal actions that affect any business, such as employment-related suits, employee benefit claims, breach of contract actions, tort claims and intellectual property-related litigation.  In addition, because of the nature of our business, we are subject to a variety of legal actions relating to our business operations, including the design, management and offering of our products and services, claims relating to the denial of benefits or coverage, medical malpractice actions, allegations of anti-competitive and unfair business activities, provider disputes, broker and agent disputes, and regulatory action claims by agencies for noncompliance, among others.  We may also be subject to increases in litigation in connection with insureds’ claims following large scale natural disasters.  For example, we experienced an increase in litigation in our Property and Casualty segment in connection with insureds’ Hurricanes Irma and Maria claims.  See Risks Related to Our Business ― Large-scale natural disasters may have a material adverse effect on our business, financial condition and results of operations.  Legal proceedings are inherently unpredictable and we cannot ascertain their outcome. We have insurance to cover liabilities relating to litigation; however, insurance coverage may not be sufficient to cover any such liability or our insurers could deny or dispute coverage.  Results of regulatory actions could require us to change our business practices and may affect our profitability.  Substantial liability relating to legal or regulatory actions could adversely affect our cash flow, results of operations, and financial condition.  See Item 3. Legal Proceedings.

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Large-scale natural disasters may have a material adverse effect on our business, financial condition and results of operations.

Puerto Rico has historically had a relatively high risk of natural disasters, such as hurricanes and earthquakes.  If Puerto Rico were to experience a large-scale natural disaster, claims incurred by our Managed Care, Life Insurance and Property and Casualty segments would likely increase and our properties may incur substantial damage, which could have a material adverse effect on our business, financial condition and results of operations.  Puerto Rico has recently experienced consecutive large-scale natural disasters, such as Hurricane Maria in September 2017, and a series of earthquakes affecting certain areas in the southern portion of the island in January 2020.  If the severity of any such natural disaster exceeds what our catastrophe reinsurance protection, as was the case of Hurricane Maria in September 2017, we may potentially incur material losses.  Furthermore, unforeseen major public health issues following these catastrophic events, such as pandemics and epidemics, like mosquito-borne epidemics (Dengue, Zika, etc.), where conditions for vaccines may not exist, are not effective, or have not been widely administered, could have a material adverse effect on our business, financial condition and results of operations.

The Puerto Rico Insurance Code requires the Company to resolve claims within a period of 90 days.  Due to the substantial increase in the volume of claims following a catastrophic event, there is a business risk that not all claims will be resolved within the timeframe stipulated in the Puerto Rico Insurance Code, which may result in penalties imposed by the Commissioner of Insurance of Puerto Rico.  Claims in our Property and Casualty segment increased in 2017 and 2018 as a result of the losses caused by Hurricanes Irma and Maria in Puerto Rico.  Furthermore, following a large-scale catastrophic event, there is a risk of an increase in the volume of litigations by insureds who are not satisfied with the insurance payout or adjustments.  In fact, lawsuits against our Property and Casualty segment increased in 2018 and 2019.  As of December 31, 2020, our Property and Casualty segment had been served in a total of 477 lawsuits, of which 300 remained opened as of December 31, 2020. After a review of all cases, we have determined that our reserves as of December 31, 2020 are adequate.  However, there is a risk that litigation results in payments and expenses may materially exceed our reserved amount.  See Note 25, Contingencies, of the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Pandemics, like the COVID-19 pandemic and local, state and federal governments’ response to the pandemics may have a material adverse effect on our business, financial condition and results of operations.

On March 11, 2020, the World Health Organization characterized the outbreak of a novel strain of coronavirus (COVID-19) as a global pandemic. In response, the Puerto Rico Governor issued a stay at home order (as amended and extended, the Order) from March 15, 2020 until June 16, 2020. The Order required the closure of non-essential businesses for the same period of time. On May 1, 2020, the Governor issued a new order providing for the gradual reopening of the economy beginning on May 4, 2020. The Governor has issued several other executive orders establishing the rules to continue the gradual reopening of the economy, the latest of which is effective until March 14, 2021.

 Although a number of COVID-19 vaccines have been approved by the U.S. and several other countries, at this point it is not possible to reliably estimate the speed and effectiveness of inoculation efforts worldwide, and therefore the length or severity of this outbreak, the length and effectiveness of government and private sector mitigation measures, and other variables that will determine the ultimate financial impact of the pandemic on the Company. However, certain risks discussed in our Annual Report on Form 10-K may increase or materialize. We are closely monitoring the development of the situation to assess its impact on our business. New sales were affected in all our segments and lines of business during the lockdown given that sales functions of all our businesses were not considered essential under the Order and therefore had to be performed remotely. Even though the government-mandated lockdown has been relaxed and most of our sales force has returned to our offices, new sales continue to be affected as social distancing measures continue to restrict certain sales activities. We also experienced a temporary decrease in utilization caused by postponement or cancelation of elective services and medical appointments driven by the Order, which caused our MLR to temporarily drop. Conversely, the pandemic could result in a material increase in medical claims as COVID-19 cases rise and deferred utilizations return. In addition, the postponement or cancellation of medical appointments, treatments and evaluations in our High Cost High Needs (HCHN) Medicaid membership during the pandemic has and may continue to affect our ability to provide qualifying encounter or utilization data to certify them as such, which has and may continue to result in assignment of such members to a different rate cell with lower premium payments and retroactive premium adjustments by ASES. See Item 1A. Risk Factors – Risks Relating to the Regulation of Our Industry – ASES’s risk-adjustment payment system and payment structure, and its dependence on scarce or unavailable data, make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.

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Furthermore, COVID-19 related federal and state legislation and regulation may adversely impact our business, financial condition and results of operations. For example, the U.S. and Puerto Rico legislatures have enacted or are contemplating measures requiring health care insurers to cover and/or waive pre-authorization and cost-sharing for COVID-19 related testing, vaccines, treatment or services, which may adversely affect our profitability. In addition, any legislation requiring insurance companies to make advance payments to providers not linked to services previously provided increases our credit risk and could have a material impact on our financial condition and results of operations. See Item 1A. Risk Factors – Risks Related to our Business – Our inability to contain managed care costs may adversely affect our business and profitability. Our Property & Casualty business interruption policies include an exclusion of coverage due to virus or bacteria. However, there have been federal and local legislative efforts to retroactively eliminate such exclusions or otherwise require property and casualty insurers to cover COVID-19 losses under their business interruption policies. While such efforts have not prospered, and if enacted, we believe this type of legislative measure could be challenged on constitutional and other grounds, if successfully implemented, such measures would have a material adverse effect on our Property and Casualty Insurance segment. With respect to our Life Insurance segment, there is a risk that the pandemic could result in a higher number of deaths, and therefore a higher number of claims for death benefits than assumed in our actuarial models. See Item 1A. Risk Factors – Risks Related to our Business – Large-scale natural disasters may have a material adverse effect on our business, financial condition and results of operations. Finally, while estimates vary, the COVID-19 pandemic is widely considered to have had and continue to have a significant effect on the Puerto Rico, U.S. and global economies. Financial market volatility caused by the pandemic may decrease the value of our investment portfolios, including our pension plan asset portfolio. Furthermore, as the financial capacity of our customers is adversely affected, we may experience delinquency in premium payments and ultimately a decrease in insured customers in our commercial line of business and premiums earned, net, or other adverse effects. See Item 1A. Risk Factors – Risks Related to our Business – Our investment portfolios are subject to varying economic and market conditions. See also Our business is geographically concentrated in Puerto Rico and weakness in the economy and the fiscal health of the government has adversely affected and may continue to adversely affect us. These and other risks, some of which we may be unable to identify at this time due to the evolving and highly uncertain nature of this event, could adversely impact our business, financial condition and results of operations.

Present and future covenants in our secured term loans and note purchase agreements may restrict our operations and adversely affect our ability to pursue desirable business opportunities.

The secured term loans contain financial and non-financial covenants that restrict, among other things, the granting of certain liens, limitations on acquisitions and limitations on changes in control. These non-financial covenants could restrict our operations.  In addition, if we fail to make any required payment under our secured term loans or to comply with any of the non-financial covenants included therein, we would be in default and the lenders or holders of our debt, as the case may be, could cause all of our outstanding debt obligations under our secured term loans to become immediately due and payable, together with accrued and unpaid interest, and cease to make further extensions of credit.  If the indebtedness under our secured term loans is accelerated, we may be unable to repay or refinance the amounts due and our business may be materially adversely affected.

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We may incur additional indebtedness in the future.  Our debt service obligations may require us to use a portion of our cash flow to pay interest and principal on debt instead of for other corporate purposes, including funding future expansion.  If our cash flow and capital resources are insufficient to service our debt obligations, we may be forced to seek extraordinary dividends from our subsidiaries, sell assets, seek additional equity or debt capital or restructure our debt.  However, these measures might be prohibited by applicable regulatory requirements, unsuccessful or inadequate in permitting us to meet scheduled debt service obligations. We may also incur future debt obligations that might subject us to restrictive covenants that could affect our financial and operational flexibility.

Our breach or failure to comply with any of these covenants could result in a default under our secured term loan and the acceleration of amounts due thereunder.  Indebtedness could also limit our ability to pursue desirable business opportunities and may affect our ability to maintain an investment grade rating for our indebtedness.

If we do not effectively manage the organic and inorganic growth of our operations, we may not be able to achieve our profitability targets.

Our growth strategy includes expanding our health care delivery business, expanding our participation in Puerto Rico’s health and insurance industry, introducing new products and operating models, further developing our relationships with customers, care delivery providers, independent agencies and brokers and pursuing acquisition opportunities.  Our growth strategy exposes us to additional risks, including our ability to:

• Identify profitable growth opportunities in current and new markets where we do not presently participate;

• Transact successful acquisitions, capital investments and other growth initiatives;

• Determine the correct value of assets and investments;

• Implement adequate pricing and operational models and structures, including underwriting and claim management processes;

• Design attractive and profitable insurance and health care products and services;

• Implement new, or modify existing operating models and implement internal monitoring and control systems to manage them;

• Recruit required personnel for expanded operations, including officers, agents, brokers, medical providers, and other key personnel;

• Obtain regulatory permission required to operate in other jurisdictions or lines of business;

• Comply with regulatory requirements;

• Integrate acquired businesses into our operations, including integration of information technology, management and personnel, culture and administrative systems;

• Acquire business and regulatory knowledge and expertise necessary to manage new lines of business; and

• Create the expected return over time.

Additionally, our management and other key personnel may expend considerable time and effort which may distract them from their core activities. We may face risks associated with unknown or unidentified liabilities resulting from our investments or acquisitions, or new products, services, business models and markets, and the processes we implement to materialize them. We may also be subject to changes in trade protection laws, policies and measures, and other regulatory requirements affecting our business, including the Foreign Corrupt Practices Act and laws prohibiting corrupt payments.

If our goodwill or intangible assets become impaired, our financial condition and future results of operations may be adversely affected.

As of December 31, 2020, we had approximately $28.6 million and $1.4 million of goodwill and intangible assets recorded on our Balance Sheet, primarily related to the TSA acquisition, that represent 1.0% of our total consolidated assets and 3.1% of our consolidated stockholders’ equity.  In an effort to expand the health clinics reporting unit, the Company purchased various health clinics across different municipalities in Puerto Rico, resulting in a recognition of goodwill of approximately $3.2 million in 2019.  The fair values initially assigned to the assets acquired and liabilities assumed are preliminary and are subject to refinement for up to one year after the closing date of the acquisition, as new information becomes available.  If we make additional acquisitions, it is likely that we will record additional goodwill and intangible assets on our consolidated balance sheet.

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In accordance with applicable accounting standards, we periodically evaluate our goodwill and other intangible assets to determine the recoverability of their carrying values.  Goodwill and other intangible assets with indefinite lives are tested for impairment at least annually.  Impairment testing requires us to make assumptions and judgments regarding the estimated fair value of our reporting units, including goodwill and other intangible assets (with indefinite lives).  Estimated fair values developed based on our assumptions and judgments might be significantly different if other reasonable assumptions and estimates were to be used.  If estimated fair values are less than the carrying values of the equity and other intangible assets (with indefinite lives) in future impairment tests, or if significant impairment indicators are noted relative to other intangible assets subject to amortization, we may be required to record significant impairment losses against future income.  Factors that may be considered a change in circumstances, indicating that the carrying value of the goodwill or amortizable intangible assets may not be recoverable, include reduced future cash flow estimates and slower growth rates than the industry.

Any future evaluations requiring an impairment of our goodwill and other intangible assets could adversely affect our results of operations and stockholders’ equity in the period in which the impairment occurs.  A material decrease in stockholders’ equity could, in turn, negatively impact our debt ratings or potentially impact our compliance with existing debt covenants.

In addition, the estimated value of our reporting units may be affected as a result of the implementation of various Health Care Reform regulations.  Such regulations could have significant effects on our future operations, which in turn could unfavorably affect our ability to support the carrying value of certain goodwill and other intangible assets, and result in significant impairment charges in future periods.  See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations―Critical Accounting Estimates―Goodwill and Other Intangible Assets.

Risks Relating to Taxation

If we are considered to be a controlled foreign corporation under the related person insurance income rules or a passive foreign investment company for U.S federal income tax purposes, U.S. persons owning our shares of Class B common stock could be subject to adverse tax consequences.

We do not expect that we will be considered a controlled foreign corporation under the related person insurance income rules (a RPII CFC) for U.S. federal income tax purposes.  However, because RPII CFC status depends in part upon the correlation between an insurance company’s shareholders and its insurance customers and the extent of insurance business outside its country of incorporation, there can be no assurance that we will not be a RPII CFC in any taxable year.  We do not intend to monitor whether we generate RPII or becomes a RPII CFC.

Based on our current business assets and operations, we do not expect that we will be considered a passive foreign investment company (a PFIC) for U.S. federal income tax purposes.  However, because PFIC status depends upon the composition of our income and assets and the market value of our assets (including, among others, less than 25% owned equity investments) in each year, which may be uncertain and may vary substantially over time, there can be no assurance that we will not be considered a PFIC for any taxable year.  Our belief that our Company is not a PFIC is based, in part, on the fact that the PFIC rules include provisions intended to provide an exception for bona fide insurance companies predominately engaged in an insurance business.  However, the scope of this exception is not entirely clear and there are no administrative pronouncements, judicial decisions or Treasury regulations that provide guidance as to the application of the PFIC rules to insurance companies.

If we were a RPII CFC in any taxable year or if the Company was treated as a PFIC for any taxable year, certain adverse consequences could apply to certain U.S. persons that own our shares of Class B common stock.

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Legislative and other measures that may be taken by local and federal government taxing authorities could materially increase our tax burden.

Our business is subject to substantial federal and local tax regulation and frequent changes to the applicable legislative and regulatory schemes could have a material impact in our business, cash flows, financial position or operating results.

Risks Relating to the Regulation of Our Industry

Changes in public policy, enactment of new laws, changes in governmental regulations, or the application thereof, may adversely affect our business, financial condition and results of operations.

Our business is subject to substantial federal and local regulation and frequent changes to the applicable legislative and regulatory schemes, including general business regulations and laws relating to taxation, privacy, data protection, pricing, insurance, Medicare and health care fraud and abuse laws.  Please refer to Item 1.   Business – Regulation.  Changes in these laws, enactment of new laws or regulations, shifts in public policy, changes in interpretation of existing laws or changes in enforcement of existing laws and regulations may materially impact our business.  Such changes include without limitation:

• Initiatives to provide greater access to coverage for uninsured and under-insured populations without adequate funding to health plans, or to be funded through taxes or other negative financial levy on health plans;

• Initiatives to limit health plans’ ability to review courses of treatment of patients;

• Payments to health plans that are tied to the achievement of certain quality performance measures and medical loss ratio requirements;

• Specific legislative or regulatory changes to the Medicare or Medicaid programs, including changes in the bidding process or other means to materially reduce premiums;

• Local government regulatory changes;

• Increased government enforcement actions, or changes in the interpretation or application, of fraud and abuse of health information privacy laws; and

• Regulations that increase the operational burden on health plans, or that increase a health plan’s exposure to liabilities, including efforts to expand the tort liability of health plans.

Regulations promulgated by the Commissioner of Insurance and CMS and other agencies, among other things, influence how our insurance subsidiaries conduct business and place limitations on investments and dividends.  Possible penalties for violations of such regulations include fines, orders to cease and desist, and possible suspension or termination of licenses.  The regulatory powers of the Commissioner of Insurance are mainly designed to protect policyholders, not shareholders.  While we cannot predict the terms of future regulation, the enactment of new legislation could affect the cost or demand for insurance policies, limit our ability to obtain rates or premiums, when needed, otherwise restrict our operations, limit the expansion of our business, expose us to expanded liability or impose additional compliance requirements.  In addition, we may incur increased operating expenses in order to comply with new legislation.

Future regulatory actions by the Commissioner of Insurance or other governmental agencies, including federal authorities, could have a material adverse effect on the profitability or marketability of our business, financial condition and results of operations, which in turn could impact the value of our business model and result in potential impairments of our goodwill and other intangible assets.

The health care reform law, changes in laws related to the health care system, and the implementation of such law could have a material adverse effect on our business, financial condition, cash flows or results of operations.

The ACA provides comprehensive changes to the U.S. health care system.

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For example, health plans serving the individual market are subject to the guaranteed issue provisions under which the plans are required to issue coverage to individuals without regard to their health status of pre-existing conditions, which could lead to adverse selection by consumers.  On July 16, 2014, the Department of Health and Human Services sent a letter to the Commissioner of Insurance of Puerto Rico notifying that guarantee issue provisions under ACA are not applicable to U.S. territories. However, on July 22, 2013, similar guarantee issue and other market reform provisions were enacted in Puerto Rico as part of amendments made to the Health Insurance Code of Puerto Rico. Although the Puerto Rico legislature is considering additional legislation to provide insurance companies more flexibility to comply with the additional requirements enacted in 2013, it is uncertain whether such legislation will in fact be enacted or the effect of any such additional legislation may have on our business.  If we are unable to adapt our premium structure to address the guaranteed issue requirement, our results of operations, financial position and liquidity may be materially adversely affected.

In the years since its enactment, there have been, and continue to be, significant developments in and continued legislative activity around ACA, including attempts to repeal or repeal and replace the ACA. For example, on October 12, 2017, President Trump signed an executive order requiring the implementation of regulations that would exempt certain association plans from complying with ACA requirements, easing restrictions on certain short-term health plans and health reimbursement arrangements and limiting hospital and insurance company consolidation while promoting competition and choice. In August 2018 the Administration adopted a final rule to support short-term, limited duration scope policies. Additional activity related to the individual market is anticipated through state waivers although the Biden administration may seek to change this.

The Further Consolidated Appropriations Act of 2020 provides up to approximately $5.342 billion in Medicaid funding to Puerto Rico through September 30, 2021.  Although we believe this legislation, together with the ACA and any changes thereto, may provide us with significant opportunities to grow our business, the implementation of enacted reforms, as well as future regulations and legislative changes, may have a material adverse effect on our results of operations, financial position or liquidity.  If we fail to effectively implement our operational and strategic initiatives with respect to the implementation of health care reform, or do not do so as effectively as our competitors, our business may be materially adversely affected.

As a Medicare Advantage program participant, we are subject to complex regulations.  If we fail to comply with these regulations, we may be exposed to criminal sanctions and significant civil penalties. Our Medicare Advantage contracts may also be terminated or our operations may be required to change in a manner that has a material effect on our business.

The laws and regulations governing Medicare Advantage program participants are complex, subject to interpretation and frequent change and can expose us to penalties for noncompliance.  If we fail to comply with these laws and regulations, we could be subject to criminal fines, civil penalties or other sanctions, including the termination of our Medicare Advantage contracts.  In addition, maintaining compliance with such laws and regulations as they change may, in some cases, entail substantial direct costs.

Under CMS regulations to implement certain ACA requirements that became effective on June 1, 2012, CMS has the authority not to renew our contracts beginning in 2015 based solely on the Star Ratings of our Medicare Advantage plans if their respective ratings do not achieve three or more stars (out of 5.0 stars) for three consecutive contract years.  See the subcaption Federal Regulation in Item 1 of this Annual Report on Form 10-K for detailed information of the Stars Ratings.  In the final call letter to Medicare Advantage organizations dated April 6, 2015, CMS stated that it would not delay contract terminations based on a plan’s Star Ratings.

CMS provides an increase to the rebate share in the bid from 50% to 65% when a program reaches 3.5 Stars, and to 70% when a plan reaches 4.5 Stars.  Also, a 5% quality bonus is provided to plans with Star Ratings of 4.0 or more.  As of December 31, 2020, TSA’s HMO plan achieved 4.0 Stars overall on a 5.0 Star rating system and TSA’s PPO plan achieved an overall rating of 3.5 Stars on a 5.0-Star rating system effective for product offerings in the year 2021.

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The Company is subject, and will likely continue to be subject, to audits from CMS in connection with the Medicare Advantage contracts.  A CMS audit may review the effectiveness of multiple matters, including the performance of the benefit administration, coverage determinations, claims processing and payment, process of appeals and grievances, dismissals, oversight of agents and brokers, and enrollment process.  CMS may impose civil monetary penalties as a result of their findings or require changes to our business practices that may adversely affect our profitability.  CMS may also prevent us from subscribing new members or terminate any of our Medicare Advantage contracts if it determines that any of these plans have failed to substantially carry out the contract or is carrying out the contract in a manner that is inconsistent with the efficient or effective administration of the Medicare Advantage program.  Compliance with CMS requirements may require us to divert resources that may affect the results of our operations and financial condition.  Any termination or nonrenewal of our Medicare Advantage plans would have a material adverse effect on our business and financial results.

We may be subject to government audits, regulatory proceedings or investigative actions, that, may find that our policies, procedures, practices or contracts are not compliant with, or are in violation of, applicable health care regulations.

Federal, Puerto Rico, and Costa Rica government authorities, including but not limited to the Commissioner of Insurance, ASES, CMS, the OIG, the Office of the Civil Rights of HHS, the U.S. Department of Justice, the U.S. Department of Labor, and the OPM, regularly make inquiries and conduct audits concerning our compliance with applicable insurance and other laws and regulations.  In addition, CMS has the right to require Medicare Advantage plan sponsors such as ourselves to self-disclose instances of noncompliance, enter into a corrective action plan,  and/or hire an independent auditor to work in accordance with CMS specifications to validate if the deficiencies that were found during a CMS full or partial program audit have been corrected and provide CMS with a copy of their audit findings.  If, in the future, we are required by CMS to hire an independent auditor, such an audit would entail direct costs to us, in addition to potential penalties in the event of negative audit findings.  We may also become the subject of nonroutine regulatory or other investigations or proceedings brought by these or other authorities, and our compliance with and interpretation of applicable laws and regulations may be challenged.  In addition, our regulatory compliance may also be challenged by private citizens under the whistleblower provisions of applicable laws.  The defense of any such challenge could result in substantial cost, diversion of resources, and a possible material adverse effect on our business.

An adverse action could result in one or more of the following:

• Recoupment of amounts we have been paid pursuant to our government contracts;

• Mandated changes in our business practices;

• Imposition of significant civil or criminal penalties, fines or other sanctions on us and/or our key employees;

• Additional reporting requirements and oversight and mandated corrective action or remediation plans;

• Loss or nonrenewal of our government contracts or loss of our ability to participate in Medicare or other federal or local governmental payer programs;

• Damage to our reputation;

• Increased difficulty in marketing our products and services;

• Inability to obtain approval for future services or geographic expansions;

• Loss of one or more of our licenses to act as an insurance company, preferred provider or managed care organization or other licensed entity or to otherwise provide a service; and

• Suspension of ability to subscribe members.

Our failure to maintain an effective corporate compliance program may increase our exposure to civil damages and penalties, criminal sanctions and administrative remedies, such as program exclusion, resulting from an adverse review.  Any adverse review, audit or investigation could reduce our revenue and profitability and otherwise adversely affect our operating results.

Effective prevention, detection and control systems are critical to maintaining regulatory compliance and preventing fraud. Failure of these systems could adversely affect the Company.

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Failure to prevent, detect or control systems related to regulatory compliance or the failure of employees to comply with our internal policies, including data systems security or unethical conduct by managers and employees, could adversely affect our reputation and also expose us to litigation and other proceedings, fines and penalties.  Federal and state governments have made investigating and prosecuting health care and other insurance fraud and abuse a priority.  Fraud and abuse prohibitions encompass a wide range of activities, including kickbacks for referral of members, billing for unnecessary medical services, improper marketing, and violations of patient privacy rights.  The regulations and contractual requirements applicable to the Company are complex and subject to change.  In addition, ongoing vigorous law enforcement, a highly technical regulatory scheme and the Dodd-Frank legislation and related regulations being adopted that enhance regulators’ enforcement powers and whistleblower incentives and protections, mean that the compliance efforts in this area will continue to require significant resources.

In addition, provider or member fraud that is not prevented or detected could impact our medical costs or those of our self-insured customers.  Further, during an economic downturn, our segments, including our Life Insurance and Property and Casualty segments may see increased fraudulent claims volume which may lead to additional costs because of increased disputed claims and litigation.

If we fail to comply with applicable privacy and security laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information on our behalf; or if we fail to address emerging security threats, including cybersecurity threats, or fail to detect and prevent privacy and security incidents, including those related to cybersecurity, our business, reputation, results of operations, financial position and cash flows could be materially and adversely affected.

The collection, maintenance, protection, use, transmission, disclosure and disposal of sensitive personal information are regulated at the federal, state, international and industry levels and requirements are imposed on us by contracts with customers.  HIPAA regulations also provide access rights and other rights for health plan beneficiaries with respect to their health information.  These regulations include standards for certain electronic transactions, including encounter and claims information, health plan eligibility and payment information.  Health plans are also subject to beneficiary notification and remediation obligations in the event of an authorized use or disclosure of personal health information.  HIPAA also requires business associates as well as covered entities to comply with certain privacy and security requirements.  Even though we provide for appropriate protections through our contracts with our third-party service providers and, in certain cases assess their security controls, we still have limited oversight or control over their actions and practices.

Our facilities and systems and those of our third-party service providers may be vulnerable to privacy and security incidents, security attacks and breaches, acts of vandalism or theft, computer viruses, coordinated attacks by activist entities, emerging cybersecurity risks, misplaced or lost data, programming and/or human errors or other similar events. Emerging and advanced security threats, including coordinated attacks, require additional layers of security that may disrupt or impact efficiency of operations.

Compliance with multiple and/or new privacy and security laws, regulations and requirements may result in increased operating costs, and may constrain our ability to manage our business model. In addition, HHS has expanded its HIPAA audit program to assess compliance efforts not only by covered entities, but also business associates.  Although we are not aware of HHS plans to audit any of our covered entities or business associates, an audit resulting in findings or allegations of noncompliance could have a material adverse effect on our results of operations, financial position and cash flows.  We are also subject to stricter breach notification requirements than those imposed on covered entities by virtue of HIPAA in terms of having to provide ASES with notice of a breach within 24 hours.  These and other regulatory aspects make compliance with applicable health information laws more difficult.  For these reasons, our total compliance costs may increase in the future.

Noncompliance or findings of noncompliance with applicable laws, regulations or requirements, or the occurrence of any privacy or security breach involving the misappropriation, loss or other unauthorized disclosure of sensitive personal information, whether by us or by one of our third-party service providers, could have a material adverse effect on our reputation and business. This includes mandatory disclosure to the media, significant increases in the cost of managing and remediating privacy or security incidents and material fines, penalties and litigation awards, among other consequences, any of which could have a material and adverse effect on our results of operations, financial position and cash flows.

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The revised rate calculation system for Medicare Advantage, the payment system for Medicare Part D, and changes in the methodology and payment policies used by CMS to establish rates could reduce our profitability and the benefits we offer our beneficiaries.

Medicare Advantage managed care plans are paid based off a CMS-calculated benchmark amount, and plans submit competitive bids that reflect the costs they expect to incur in providing the base Medicare benefits.  A Medicare Advantage plan’s actual payment rate is based on a complex statutory formula that takes into account a number of factors, including the relationship between the plan’s bid and the benchmark.  Medicare generally will rebate a portion of the amount by which the benchmark amount exceeded the accepted bid for certain plans. For plans achieving a Star rating of at least 3.5 Stars, the portion of the savings retained by the plan is higher.  For plans achieving a Star rating of at least 4 Stars, the starting benchmark amount from which the savings is computed is also higher (a quality bonus).  If the bid is greater than the benchmark, the plan will be required to charge a premium to enrollees equal to the difference between the bid and the benchmark, which could affect our ability to attract enrollees.  CMS reviews the methodology and assumptions used in bidding with respect to medical and administrative costs, profitability and other factors.  CMS could challenge such methodology or assumptions or seek to cap or limit plan profitability.  CMS also could administratively seek to implement certain methodological changes to the Medicare Advantage rate calculations that could result in functionally lower payment rates, and may have a material adverse effect on our revenue, financial position, results of operations or cash flow.

We also face the risk of reduced or insufficient government funding and we may need to terminate our Medicare Advantage contracts with respect to unprofitable markets.  In addition, as a result of the competitive bidding process, our ability to participate in the Medicare Advantage program is affected by the pricing and design of our competitors’ bids.  Moreover, we may in the future be required to reduce benefits or charge our members an additional premium in order to maintain our current level of profitability, either of which could make our health plans less attractive to members and adversely affect our membership.

CMS’s risk-adjustment payment system and other Medicare Advantage funding pressures make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.

CMS has implemented a risk-adjustment payment system for Medicare Advantage plans to improve the accuracy of payments and establish incentives for such plans to enroll and treat less healthy Medicare beneficiaries.  The risk-adjusted premiums we receive are based on claims and encounter data that we submit to CMS within prescribed deadlines.  We develop our estimates for risk-adjusted premiums utilizing historical experience, or other data, and predictive models as sufficient member risk score data becomes available over the course of each CMS plan year. We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured. This is possible as additional diagnosis code information is reported to CMS, when the ultimate adjustment settlements are received from CMS, or we receive notification of such settlement amounts.  CMS adjusts premiums on two separate occasions on a retrospective basis.  The first retrospective adjustment for a given plan year generally occurs during the third quarter of that year.  This initial settlement represents the update of risk scores for the current plan year based on the severity of claims incurred in the prior plan year.  CMS then issues a final retrospective risk adjusted premium settlement for that plan year in the following year.  The data provided to CMS to determine members’ risk scores is subject to audit by CMS even after the annual settlements occur, which may result in the refund of premiums to CMS.  The result of these audits could materially reduce premium revenue in the year in which CMS determines a refund is required and could be material to our result of operations, financial position and cash flows.

CMS is making significant changes to the manner in which it determines risk-adjustment payments, including possible retroactive recoveries.  CMS introduced a new model for 2020 and continues to shift towards encounter-based risk scores (EDS).  As a result of the risk-adjustment process and CMS’s ability to modify the manner in which it applies such risk-adjustments, it is difficult to predict with certainty our future revenue or profitability.  In addition, our own risk scores for any period may result in favorable or unfavorable adjustment to payment from CMS and our Medicare payment revenue.

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Finally, we generally rely on providers, including certain network providers who are not our employees, to appropriately document all medical data, including the diagnosis codes submitted with claims, as the basis for our risk scores under the program.  Thus, our ability to meet our premium revenue estimates depends largely on the success of third-party efforts to collect and properly reflect medical data, including diagnosis codes that must be submitted with claims.  There is no assurance that our providers will be successful in accurately collecting such medical data and diagnosis codes and, to the extent their efforts are not successful, such failure may have a material adverse effect on our premium revenues.

ASES’s risk-adjustment payment system and payment structure, and its dependence on scarce or unavailable data, make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.

ASES has implemented a risk-adjustment payment system for the Vital Program plan to reflect the differences in morbidity of enrolled members and differences in the regional cost of care.  The risk adjusted payment transfers are based on claims and encounter data that is submitted to ASES.  The risk-adjustment factors are based on a prospective model, whereby the data for the prior year is used to establish the risk-adjustment payments for the current year. For example, the risk scores are assigned to each member for the contract year ending October 31, 2019 using claims data for those members during the year ending October 31, 2018. We have been unable to develop reliable estimates for risk-adjusted premiums due to the lack of available data from prior periods which are the basis for risk scores. We were instructed of a final risk-adjustment transfer payment for the fiscal period ending October 31, 2019, but have not received any notification for the second fiscal period ending June 30, 2020. We have not recognized any expected risk-adjustment payment or receipt and the final risk-adjustment calculations may result in an unfavorable adjustment. ASES has not provided a timeline for the communication of the risk transfer payments.

Furthermore, the premium rates for the second contract year, which represents the period November 1, 2019 to June 30, 2020, will be adjusted by a morbidity factor that will reflect the change in the overall morbidity of the population from the base period (July 1, 2016 to June 30, 2017) and the contract year. This adjustment may result in unfavorable adjustment to payments from ASES and our Medicaid premium revenue.

ASES has additionally implemented a payment structure for the program that assigns members to one of 37 rate cells based on their age, gender, eligibility category and health conditions. Members assigned to High Cost High Needs (HCHN) rate cells receive premium payments that are much higher than those assigned based only on age and gender. If our enrollees are not assigned to the adequate rate cell, the premium we receive may not be sufficient to cover their utilization, particularly in the case of HCHN members.

Finally, ASES may recover premiums paid for non-eligible participants.  However, we are dependent on ASES, which is in turn dependent on the local Medicaid office, for eligibility data.  Historically, ASES has not received updated eligibility data from the local Medicaid office in a timely manner.  Therefore, if we are not provided with timely eligibility data and we bill ASES for non-eligible members, ASES could attempt to recoup premiums from us, which could have a significant impact on our consolidated premiums and profitability.

If our Medicare Advantage members enroll in another Medicare Advantage plan during the open enrollment season, they will be automatically disenrolled from our plan, possibly without our immediate knowledge.

Pursuant to the MMA, members enrolled in one insurer’s Medicare Advantage program will be automatically disenrolled from that program if they enroll in another insurer’s Medicare Advantage program.  If our members enroll in another insurer’s Medicare Advantage program, we may not discover that such member has been disenrolled from our program until we fail to receive reimbursement from CMS in respect of such member, which may occur sometime after the disenrollment.  Therefore, we may discover that a member has disenrolled from our program after we have already provided services to such individual.  Our profitability would be reduced as a result of such failure to receive payment from CMS, if we had made related payments to providers and were unable to recoup such payments from them.

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Our insurance subsidiaries are subject to minimum capital requirements.  Our failure to meet these standards could expose us to regulatory actions.

Puerto Rico insurance laws and the regulations promulgated by the Commissioner of Insurance, among other things, impose minimum capital requirements on our insurance subsidiaries.  Although our insurance subsidiaries are currently in compliance with these requirements, there can be no assurance that we will continue to comply in the future.  Failure to maintain required levels of capital or to otherwise comply with the reporting requirements of the Commissioner of Insurance could subject our insurance subsidiaries to corrective actions, including involuntary rehabilitation or liquidation processes, or require us to provide financial assistance, either through subordinated loans or capital infusions, to ensure they maintain their minimum statutory capital requirements.

We are also subject to minimum capital requirements pursuant to our BCBSA license agreements.  See Risks Related to Our Business―The termination or modification of our license agreements to use the BCBS name and mark could have a material adverse effect on our business, financial condition and results of operations.

Puerto Rico insurance laws and regulations, our license agreement with the BCBSA, and provisions of our Articles of incorporation and bylaws could delay, deter or prevent a takeover attempt that shareholders might consider to be in their best interests. It may also make it more difficult to replace members of our Board of Directors and have the effect of entrenching management.

Puerto Rico insurance laws and the regulations promulgated thereunder, in addition to our amended and restated Articles of Incorporations (Articles) and bylaws, may delay, defer, prevent or render more difficult a takeover attempt that our shareholders might consider to be in their best interests.  For instance, they may prevent our shareholders from receiving the benefit from any premium to the market price of our common stock offered by a bidder in a takeover context.  Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

Our Articles and bylaws have anti-takeover effects and may delay, defer or prevent a takeover attempt that our shareholders might consider to be in their best interests.  In particular, our Articles and bylaws:

• Permit our Board of Directors to issue one or more series of preferred stock;

• Divide our Board of Directors into three classes serving staggered three-year terms;

• Limit the ability of shareholders to remove Directors;

• Impose restrictions on shareholders’ ability to fill vacancies on our Board of Directors;

• Impose advance notice requirements for shareholder proposals and nominations of Directors to be considered at meetings of shareholders; and

• Impose restrictions on shareholders’ ability to amend our Articles and bylaws.

Puerto Rico insurance laws and the regulations promulgated by the Commissioner of Insurance may also delay, defer, prevent or render more difficult a takeover attempt that our shareholders might consider to be in their best interests.  For instance, the Commissioner of Insurance must review any merger, consolidation or new issuance of shares of capital stock of an insurer or its parent company and make a determination as to the fairness of the transaction.  Also, a Director of an insurer must meet certain requirements imposed by Puerto Rico insurance laws.

Furthermore, change of control statutes that apply to insurance companies provide that no person may make an offer to acquire or to sell the issued and outstanding voting stock of an insurance company, which constitutes 10% or more of its issued and outstanding stock, or of the total issued and outstanding stock of an insurance holding company, without the prior approval of the Commissioner of Insurance.  We are also subject to change of control limitations pursuant to our BCBSA license agreements.  The BCBSA ownership limits restrict beneficial ownership of our voting capital stock to less than 10% for an institutional investor and less than 5% for a non-institutional investor, both as defined in our amended and restated Articles.  In addition, no person may beneficially own shares of our common stock or other equity securities, or a combination thereof, representing a 20% or more ownership interest, whether voting or non-voting, in our company.  This provision in our Articles cannot be changed without prior approval of the BCBSA and the vote of holders of at least 75% of our common stock.

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These voting and other restrictions may operate to make it more difficult to replace members of our Board of Directors and may have the effect of entrenching management regardless of their performance.

General Risk Factors

The effectiveness of our Company’s strategy, our ability to align talent to our business needs and risks, and our ability to manage and safeguard our brand and reputation present overarching risks for our Company.

Effectiveness of our enterprise strategy, talent management and alignment of talent to our business needs and risks to our brand and reputation present overarching risks to our Company.  There can be no assurance regarding the effectiveness of our enterprise strategy, our ability to manage and align our talent to our business needs or our ability to avoid harm to our brand and reputation.  In addition, there can be no assurance that U.S. government fiscal policy, the implementation of the ACA, repeal or other changes to the ACA or additional changes to the U.S. health care system will not require us to revise the ways in which we conduct business, put us at risk of loss of business or materially adversely affect our business, cash flows, financial position or operating results.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We own a seven-story building located at 1441 F.D. Roosevelt Avenue, in San Juan, Puerto Rico, and two adjacent buildings, as well as the adjoining parking lot, which is mainly used by the Managed Care segment.  We also own a neighboring ten-story building located at 1451 F.D. Roosevelt Avenue, in San Juan, Puerto Rico, and an adjacent multi-level parking, as a well as the adjoining parking lot, of which six floors are currently leased. In the near future the Company expects to move its Corporate operations to this building. In addition, we own five floors of a fifteen-story building located at 1510 F.D. Roosevelt Avenue, in Guaynabo, Puerto Rico, which is mainly used by the Property and Casualty segment.  We also own land and a multi-segment customer service center in the municipalities of Mayagüez and Ponce, Puerto Rico.  Through a health clinic we own land and a two-story medical facility in the municipality of Bayamón, Puerto Rico.  These properties are subject to liens under our credit facilities. We also own a two-story building located in the city of San José, Costa Rica, which is used by the Life Insurance segment.  In addition to the properties described above, we or our subsidiaries are parties to operating leases that are entered into in the ordinary course of business.  See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity and Capital Resources.

We believe that our facilities are in good condition and that the facilities, together with capital improvements and additions currently underway, are adequate to meet our operating needs for the foreseeable future.  The need for expansion, upgrading and refurbishment of facilities is continually evaluated in order to keep facilities aligned with planned business growth and corporate strategy.

Item 3. Legal Proceedings

Our business is subject to numerous laws and regulations promulgated by Federal, Puerto Rico, U.S. Virgin Islands, Costa Rica, British Virgin Islands, and Anguilla governmental authorities. Compliance with these laws and regulations can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. The Commissioner of Insurance of Puerto Rico, as well as other Federal, Puerto Rico, U.S. Virgin Islands, Costa Rica, British Virgin Islands, and Anguilla government authorities, regularly make inquiries and conduct audits concerning the Company’s compliance with such laws and regulations. Penalties associated with violations of these laws and regulations may include significant fines and exclusion from participating in certain publicly funded programs and may require the Company to comply with corrective action plans or changes in our practices.  For a description of our legal proceedings, see Note 25, Contingencies of the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

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Item 4. Mine Safety Disclosures

None.

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Class B common stock is listed on the NYSE under the trading symbol GTS.  The following table presents high and low sales prices of our Class B common stock for each quarter of the years ended December 31:

	High		Low
2020
First quarter	$	19.45	$	9.13
Second quarter		21.51		11.92
Third quarter		20.82		17.01
Fourth quarter		24.70		17.55
2019
First quarter	$	26.46	$	15.93
Second quarter		26.51		19.42
Third quarter		27.64		13.10
Fourth quarter		20.25		12.66

On February 18, 2021 the closing price of our Class B common stock on the NYSE was $23.15.

Prior to August 2019 we had Class A common stock that had no established public trading market.  During July 2019, our Board of Directors authorized and approved the conversion (Conversion) of our remaining issued and outstanding Class A shares into Class B common shares.  Effective August 7, 2019, all Class A holders of record received one Class B share for each Class A share held.  Upon the Conversion, all remaining outstanding Class A shares were automatically cancelled and extinguished, and we now maintain a single class of common shares.

Holders

As of February 18, 2021, there were 23,680,932 shares of Class B common Stock outstanding. The number of holders of our shares was approximately 4,000.

Dividends

Subject to the limitations under Puerto Rico corporation law and any preferential dividend rights of outstanding preferred stock, of which there is currently none outstanding, holders of common stock are entitled to receive their pro-rata share of such dividends or other distributions as may be declared by our Board of Directors out of funds legally available therefore.

TSM’s ability to pay dividends to stockholders is dependent on the performance of its subsidiaries.  Our subsidiaries are subject to regulatory surplus requirements and additional regulatory requirements, which may restrict their ability to declare and pay dividends or distributions to TSM.  In addition, our secured term loan restricts our ability to pay dividends if a default thereunder has occurred and is continuing.  Please refer to Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Restriction on Certain Payments by the Corporation’s Subsidiaries.  Also, see Note 18, Stockholders’ Equity of the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

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During the year ended December 31, 2019, we issued 48,602 Class A shares of our common stock to the heirs of a former shareholder, as a result of a litigation settlement.  The issuance of these Class A shares entitled all Class B shareholders to certain anti-dilution rights; therefore, all holders of Class B shares at the close of business on July 26, 2019 (record date) received a share dividend of 0.051107 Class B shares for every Class B share they owned as of that time.  On August 6, 2019, the Company paid the Class B share dividend of $24.7 million.  Cash of $11 thousand was paid to shareholders in lieu of fractional shares.

Other than as described above, we did not declare any cash dividends during the two most recent fiscal years and do not expect to pay any cash dividends in the near future.  We currently intend to retain future earnings, if any, to finance operations and expand our business.  The ultimate decision to pay any dividend remains within the discretion of our Board of Directors and may be affected by various factors, including our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual limitations and other considerations our Board of Directors deems relevant.

Securities Authorized for Issuance Under Equity Compensation Plan

See Note 21, Share-Based Compensation, of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Performance Graph

The following graph compares the price performance of our Class B common stock for the period from January 1, 2016 through December 31, 2020, with the price performance over such period of (i) the Standard and Poor’s 500 Stock Index (the S&P 500 Index) and (ii) the Standard & Poor’s 500 Managed Health Care Index (the S&P MHC Index).  The comparison assumes an investment of $100 on January 1, 2016 in each of our Class B common stock, the S&P 500 Index, and the S&P MHC Index.

The comparisons shown in the graph are based on historical data and the Company cautions that the stock price in the graph below is not indicative of, and is not intended to forecast, the potential future performance of our Class B common stock.  Information used in the preparation of the graph was obtained from Bloomberg; a source we believe to be reliable; however, the Company is not responsible for any errors or omissions in such information.

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Ticker	Name	1/4/2016		12/30/2016		12/29/2017		12/31/2018		12/31/2019		12/31/2020
GTS US Equity	TRIPLE-S MANAGEMENT CORP		100.00		92.70		111.29		77.88		87.03		100.50
SPX Index	S&P 500 INDEX		100.00		111.24		132.84		124.55		160.52		186.62
S5MANH Index	S&P MHC Index		100.00		118.29		168.48		184.73		219.08		250.49

Recent Sales of Unregistered Securities

Not applicable.

Purchases of Equity Securities by the Issuer

The following table presents information related to our repurchases of common stock for the period indicated:

(Dollar amounts in millions, except per  share data)	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (2)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
October 1, 2020 to October 31, 2020		-	$	-		-	$	-
November 1, 2020 to November 30, 2020		446		23.62		-		-
December 1, 2020 to December 31, 2020		-		-		-		-

(1) Represents shares repurchased and retired as the result of non-cash tax witholdings upon vesting of shares of participants under the Company’s equity compensation plans.  In November 2020, 446 shares were repurchased and retired as the result of non-cash tax witholdings upon vesting of shares.

(2) In August 2017 the Company’s Board of Directors authorized a $30.0 million Share Repurchase Program of its Class B common stock. In October 2019 the Company’s Board of Directors authorized an expansion to this repurchase program, effective November 2019, increasing its remaining balance up to a total of $25.0 million. This program was completed in May 2020.

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Item 6.          Selected Financial Data

Statement of Earnings Data

	2020		2019		2018			2017		2016
(Dollar amounts in millions, except per share data)
Years ended December 31,
Premiums earned, net	$	3,605.5	$	3,252.9	$	2,938.6		$	2,826.9	$	2,890.6
Administrative service fees		12.6		9.9		14.7			16.5		17.9
Net investment income		57.5		62.0		61.9			51.6		48.9
Other operating revenues		9.0		8.6		5.8			3.7		3.5
Total operating revenues		3,684.6		3,333.4		3,021.0			2,898.7		2,960.9
Net realized investments gains		0.6		5.8		0.3			10.8		17.4
Net unrealized investment gains (losses) on equity investments		7.6		32.2		(36.5	)		-		-
Other income, net		9.6		4.2		11.3			6.6		6.5
Total revenues		3,702.4		3,375.6		2,996.1			2,916.1		2,984.8
Benefits and expenses:
Claims incurred		2,946.8		2,666.3		2,527.6			2,353.1		2,472.2
Operating expenses		655.9		569.4		554.7			477.2		493.9
Total operating costs		3,602.7		3,235.7		3,082.3			2,830.3		2,966.1
Interest expense		8.0		7.6		6.9			6.8		7.6
Total benefits and expenses		3,610.7		3,243.3		3,089.2			2,837.1		2,973.7
Income (loss) before taxes		91.7		132.3		(93.1	)		79.0		11.1
Income tax expense (benefit)		24.5		39.4		(29.8	)		24.5		(6.3	)
Net income (loss)		67.2		92.9		(63.3	)		54.5		17.4
Net loss attributable to non-controlling interest		-		-		-			-		-
Net income (loss) attributable to TSM	$	67.2	$	92.9	$	(63.3	)	$	54.5	$	17.4
Basic net income (loss) per share (1):	$	2.90	$	3.98	$	(2.76	)	$	2.27	$	0.71
Diluted net income (loss) per share:	$	2.88	$	3.97	$	(2.76	)	$	2.26	$	0.71

Balance Sheet Data

	2020		2019		2018		2017		2016
Years ended December 31,
Cash and cash equivalents	$	111.0	$	109.8	$	117.5	$	198.9	$	103.4
Total assets	$	3,088.4	$	2,818.8	$	2,766.5	$	3,116.8	$	2,219.0
Long-term borrowings	$	52.8	$	25.7	$	28.9	$	32.1	$	35.1
Total stockholders’ equity	$	968.2	$	943.9	$	821.9	$	913.4	$	863.2

Additional Managed Care Data ⁽²⁾

	2020			2019			2018			2017			2016
Years ended December 31,
Medical loss ratio		84.5	%		84.6	%		84.5	%		85.6	%		88.6	%
Operating expense ratio		15.4	%		14.5	%		16.0	%		13.6	%		14.0	%
Medical membership (period end)		978,773			923,923			876,268			977,939			1,017,372

(1) Further details of the calculation of basic and diluted earnings per share are set forth in Notes 2 and 22 of the audited Consolidated Financial Statements for the years ended December 31, 2020, 2019 and 2018.

(2) Does not reflect inter-segment eliminations.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This financial discussion contains an analysis of our consolidated financial position and financial performance as of December 31, 2020 and 2019, and consolidated results of operations for 2020, 2019 and 2018.  References to the terms “we,” “our” or “us” used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), refer to TSM and unless the context otherwise requires, its direct and indirect subsidiaries.  This analysis should be read in its entirety and in conjunction with the Consolidated Financial Statements, notes and tables included elsewhere in this Annual Report on Form 10-K.

The structure of our MD&A is as follows:

Executive Summary	61
Overview details	61
Membership	64
Results of Operations	65
Consolidated Operating Results	65
Managed Care Segment Operating Results	67
Life Insurance Segment Operating Results	70
Property and Casualty Segment Operating Results	71
Liquidity and Capital Resources	72
Critical Accounting Estimates	78
Recently Issued Accounting Standards	87

Executive Summary

Key developments in our business during 2020 are described below:

• Net income for the year was $67.2 million, a decrease from a net income of $92.9 million for the prior year. The decrease in net income primarily reflects the recognition of a $32 million contingency reserve related to a legal proceeding in our Managed Care segment (see Note 25, Contingencies, of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) and the impact of lower net unrealized gains on equity investments.

• Consolidated premiums earned, net increased 10.8% year over year, to $3.6 billion, primarily reflecting an increase in membership and higher average premium rates within the Managed Care segment.

• Consolidated claims incurred for the year were $2.9 billion, up 10.5% over last year, mostly reflecting higher claims incurred in the Managed Care segment by $279.1 million mostly driven by higher enrollment.  The consolidated loss ratio decreased 30 basis points, to 81.7%.  The Managed Care segment’s MLR was to 84.5%, down 10 basis points year over year.

• Consolidated operating expenses for the year were $655.9 million and the operating expense ratio was 18.1%, 60 basis points higher than last year mostly driven by the return of the HIP fee.

Overview details

Triple-S is a health services company and one of the top players in the Puerto Rico health care industry. With more than 60 years of experience, we are the premier health care brand and serve more people through the most attractive provider networks on the island. We have the exclusive right to use the BCBS name and mark throughout Puerto Rico, the USVI, Costa Rica, the BVI, and Anguilla, and we offer a broad portfolio of managed care and related products in the Commercial, Medicare Advantage and Medicaid markets. In the Commercial market, we offer products to corporate accounts, U.S. federal government employees, local government employees, individual accounts and Medicare Supplement. We also participate in the Government of Puerto Rico Health Insurance Plan, a government of Puerto Rico and U.S. federal government funded managed care program for the medically indigent that is similar to the Medicaid program in the U.S. (Medicaid or the Government health plan).

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Our commitment to our valued customers and provider partners  ̶  backed by our heritage of excellent care, access and service  ̶  has positioned Triple-S for continued growth in the health care arena. Our progressive use of technology and clinical data, partnerships with care providers and initial investments in ambulatory and primary care assets are a strong foundation for differentiation and growth through the development of an integrated delivery system over the next several years. We believe continued investment and focus on delivering an excellent health care experience and great service, coupled with health management programs that improve outcomes and quality of life while reducing the total cost of care, will separate Triple-S from our competition and strengthen the financial performance of our business well into the future.

We participate in the managed care market through our subsidiaries, TSS, TSA, and TSB. TSS, TSA and TSB are BCBS licensees. As of December 31, 2020, we served approximately 979,000 managed care members across all regions of Puerto Rico.

Triple-S is also a well-known brand in the life insurance and property and casualty insurance markets, with a significant share in each. We participate in the life insurance market through our subsidiary TSV, and in the property and casualty insurance market through our subsidiary, TSP.

The Commissioner of Insurance of the Government of Puerto recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the Puerto Rico insurance laws, and for determining whether its financial condition warrants the payment of a dividend to its stockholders.  No consideration is given by the Commissioner of Insurance of Puerto Rico to financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) in making such determinations.  See Note 26, Statutory Accounting of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Intersegment revenues and expenses are reported on a gross basis in each of the operating segments but eliminated in the consolidated results.  Except as otherwise indicated, the numbers presented in this Annual Report on Form 10-K do not reflect intersegment eliminations.  These intersegment revenues and expenses affect the amounts reported on the financial statement line items for each segment, but are eliminated in consolidation and do not change net income.  The following table shows Premiums Earned, Net and Administrative Service Fees and Operating Income for each segment, as well as the intersegment premiums earned, service revenues and other intersegment transactions, which are eliminated in the consolidated results:

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	Years ended December 31,
(Dollar amounts in millions)	2020			2019			2018
Premiums earned, net:
Managed care	$	3,322.3		$	2,987.5		$	2,689.1
Life insurance		196.0			182.2			168.6
Property and casualty insurance		92.0			87.7			83.5
Intersegment premiums earned		(4.8	)		(4.5	)		(2.6	)
Consolidated premiums earned, net	$	3,605.5		$	3,252.9		$	2,938.6
Administrative service fees:
Managed care	$	13.0		$	14.3		$	19.1
Intersegment administrative service fees		(0.4	)		(4.4	)		(4.4	)
Consolidated administrative service fees	$	12.6		$	9.9		$	14.7
Operating income (loss):
Managed care	$	38.3		$	61.9		$	26.5
Life insurance		27.8			21.9			19.9
Property and casualty insurance		19.8			14.5			(110.1	)
Intersegment and other		(4.0	)		(0.6	)		2.4
Consolidated operating income (loss)	$	81.9		$	97.7		$	(61.3	)

Revenue

General.    Our revenue consists primarily of (i) premium revenue generated from our Managed Care segment, (ii) administrative service fees received for Managed Care services provided to self-insured employers, (iii) premiums we generate from our Life Insurance and Property and Casualty segments and (iv) investment income.

Premium Revenue.    Our revenue primarily consists of premiums earned from the sale of managed care products to the Commercial, Medicare Advantage and Medicaid sectors.  We receive a monthly payment from or on behalf of each member enrolled in our managed care plans (excluding ASO).  We recognize all premium revenue in our Managed Care segment during the month in which we are obligated to provide services to an enrolled member.  Premiums we receive in advance of that date are recorded as unearned premiums. See Note 2, Significant Accounting Policies – Revenue Recognition – of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Administrative Service Fees.    Administrative service fees include amounts paid to us for administrative services provided to self-insured contracts.  We provide a range of customer services pursuant to our ASO contracts, including claims administration, billing, access to our provider networks and membership services.  Administrative service fees are recognized in the month in which services are provided.

Investment Income.    Investment income consists of interest and dividend income from investment securities. See Note 5, Net Investment Income of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Other Operating Revenues.    Other operating revenues primarily consist of revenues generated by the health clinics reporting unit.

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Expenses

Claims Incurred.    Our largest expense is the Managed Care segment’s medical claims incurred, or the cost of medical services we arrange for our members.  Medical claims incurred include the payment of benefits and losses, mostly to physicians, hospitals, pharmacies and other service providers, and to policyholders.  We generally pay our providers on one of three forms: (1) fee-for-service contracts based on negotiated fee schedules; (2) capitation arrangements, generally on a fixed PMPM payment basis, whereby the provider generally assumes some of the medical expense risk; and (3) risk-sharing arrangements, whereby we advance a PMPM payment and share the risk of certain medical costs of our members with the provider based on actual experience as measured against pre-determined sharing ratios.  Claims incurred also include claims incurred in our Life Insurance and Property and Casualty segments.  Each segment’s results of operations depend to a significant extent on our ability to accurately predict and effectively manage claims and losses.  A portion of the claims incurred for each period consists of claims reported but not paid during the period, as well as a management and actuarial estimate of claims incurred but not reported during the period.

The MLR, which is calculated by dividing managed care Claims Incurred by managed care Premiums Earned, Net is one of our primary management tools for measuring these costs and their impact on our profitability.  The MLR is affected by the cost and utilization of services.  The cost of services is affected by many factors, in particular our ability to negotiate competitive rates with our providers.  The cost of services is also influenced by inflation and new medical discoveries, including new prescription drugs, therapies and diagnostic procedures.  Utilization rates, which reflect the extent to which beneficiaries utilize health care services, significantly influence our medical costs.  The level of utilization of services depends in large part on the age, health and lifestyle of our members, among other factors.  As the MLR is the ratio of Claims Incurred to Premiums Earned, Net, it is affected not only by our ability to contain cost trends but also by our ability to increase premium rates to levels consistent with or above medical cost trends.  We use MLRs both to monitor our management of health care costs and to make various business decisions, including what plans or benefits to offer and our selection of health care providers.

Operating Expenses.    Operating expenses include commissions to external brokers, general and administrative expenses, cost containment expenses such as case and disease management programs, and depreciation and amortization.  The operating expense ratio is calculated by dividing Operating Expenses by Premiums Earned, Net, plus administrative service fees.  A significant portion of our operating expenses are fixed costs.  Accordingly, it is important that we maintain a certain level of business volume in order to compensate for the fixed costs.  Significant changes in our volume of business will affect our operating expense ratio and results of operations.  We also have variable costs, which vary in proportion to changes in business volume.

Membership

Our results of operations depend in large part on our ability to maintain or grow our membership.  In addition to driving revenues, membership growth is necessary to successfully introduce new products, maintain an extensive network of providers and achieve economies of scale.  Our ability to maintain or grow our membership is affected principally by the competitive environment, the economy and general market conditions.

The following table sets forth selected membership data as of the dates set forth below:

			As of December 31,
	2020		2019		2018
Commercial (1)		419,658		440,669		449,047
Medicare		137,092		127,789		108,605
Medicaid		422,023		355,465		318,616
Total		978,773		923,923		876,268

⁽¹⁾ Commercial membership includes corporate accounts, self-funded employers, individual accounts, Medicare Supplement, federal government employees and local government employees.

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Results of Operations

Consolidated Operating Results

The following table sets forth our consolidated operating results for the years ended December 31, 2020, 2019, and 2018.  Further details of the results of operations of each reportable segment are included in the analysis of operating results for the respective segments.

(Dollar amounts in millions)	2020		2019		2018
Years ended December 31,
Revenues:
Premiums earned, net	$	3,605.5	$	3,252.9	$	2,938.6
Administrative service fees		12.6		9.9		14.7
Net investment income		57.5		62.0		61.9
Other operating revenues		9.0		8.6		5.8
Total operating revenues		3,684.6		3,333.4		3,021.0
Net realized investment gains		0.6		5.8		0.3
Net unrealized investment gains (losses) on equity investments		7.6		32.2		(36.5	)
Other income, net		9.6		4.2		11.3
Total revenues		3,702.4		3,375.6		2,996.1
Benefits and expenses:
Claims incurred		2,946.8		2,666.3		2,527.6
Operating expenses		655.9		569.4		554.7
Total operating costs		3,602.7		3,235.7		3,082.3
Interest expense		8.0		7.6		6.9
Total benefits and expenses		3,610.7		3,243.3		3,089.2
Income (loss) before taxes		91.7		132.3		(93.1	)
Income tax expense (benefit)		24.5		39.4		(29.8	)
Net income (loss) attributable to TSM	$	67.2	$	92.9	$	(63.3	)

Year Ended December 31, 2020 Compared With the Year Ended December 31, 2019

Premiums Earned, Net

Consolidated premiums earned, net increased by $352.6 million, or 10.8%, to $3.6 billion during the year ended December 31, 2020.  This increase primarily reflects higher premiums earned, net in the Managed Care segment by $334.8 million due to higher average premium rates and fully insured member months across all Managed Care businesses.

Net Unrealized Investment Gains on Equity Investments

The $7.6 million in consolidated net unrealized investment gains on equity investments reflect the impact of changes in equity markets.

Claims Incurred

Consolidated claims incurred increased by $280.5 million, or 10.5%, to $2.9 billion, during the year ended December 31, 2020 mostly due to the increase in membership.  The consolidated loss ratio decreased 30 basis points, to 81.7%, from the prior year, mostly reflecting lower Managed Care utilization of services since mid-March as the result of the government-enforced lockdown during the COVID-19 pandemic and the effect in the MLR of the reinstatement of the HIP fee pass-through in 2020. These decreases were partially offset by the increased benefits in our 2020 Medicare product offering, unfavorable prior-period reserve development in the Managed Care segment and $5.0 million of earthquake losses recorded by the Property and Casualty segment.

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Following the government-enforced lockdown related to the COVID-19 pandemic in mid-March, we saw a decrease in utilization of Managed Care services as members and providers deferred non-emergent or elective health services.  While this trend has caused, and may continue to cause, a short-term decrease in our claim costs, we experienced an increase in these costs during the second half of the year, that affected our medical cost trends as the demand for deferred non-emergent or elective health services resumed.  The access to and demand for care was most constrained from mid-March through April, and began to recover in late May, gradually increasing to expected levels in the fourth quarter.

Operating Expenses

Consolidated operating expenses increased by $86.5 million, or 15.2%, to $655.9 billion. The increase in operating expenses mostly resulted from the reinstatement of the HIP fee in 2020 of $55.5 million, the recognition of a $32.0 million contingency reserve related to a legal proceeding in our Managed Care segment (see Note 25, Contingencies of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K), higher amortization of deferred acquisition costs and higher business promotion expenses, mainly related to COVID-19 relief efforts.  These increases were partially offset by lower professional fees and provision for doubtful accounts. The consolidated operating expense ratio increased 60 basis points, to 18.1%.

Income Taxes

Consolidated income tax expense for the year ended December 31, 2020 decreased by $14.9 million, to $24.5 million, primarily reflecting a lower taxable income in all segments in 2020.

Year Ended December 31, 2019 Compared With the Year Ended December 31, 2018

Premiums Earned, Net

Premiums earned, net increased by $314.3 million, or 10.7%, to $3.3 billion.  This increase primarily reflects higher premiums in the Managed Care segment by $298.4 million.  The growth in managed care premiums reflects higher average premium rates across all lines of business and an increase in Medicare and Commercial fully insured membership.  The increase was partially offset by lower Medicaid membership.

Net Unrealized Investment Gains on Equity Investments

The $32.2 million in consolidated net unrealized investment gains on equity investments reflects the impact of changes in equity markets.

Claims Incurred

Consolidated claims incurred increased by $138.7 million, or 5.5%, to $2.7 billion, mostly driven by an increase in the claims incurred in the Managed Care segment of $254.2 million, partially offset by lower claims incurred in the Property and Casualty segment of $128.7 million.  The increase in Managed Care claims primarily reflects higher Medicare and Commercial fully insured enrollment, offset in part by the decrease in Medicaid membership.  The decrease in claims incurred in the Property and Casualty segment was due to prior year losses related to hurricane Maria.  The consolidated loss ratio decreased by 400 basis points to 82.0%.

Operating Expenses

Consolidated operating expenses increased by $14.7 million, or 2.7%, to $569.4 million.  The higher operating expenses are mostly the result of higher personnel costs, provision for bad debts, and commission expense; partially offset by the waiver of the 2019 HIP Fee.  The consolidated expense ratio decreased 130 basis points to 17.5%.

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Income taxes

Consolidated income tax expense for the year ended December 31, 2019 was $39.4 million, compared to a benefit of $29.8 million in 2018.  The year over year change in income taxes primarily reflects higher taxable income in all segments and the 2018 loss before taxes in the Property and Casualty segment.

Managed Care Segment Operating Results

We offer our products in the Managed Care segment to three distinct market sectors in Puerto Rico: Commercial, Medicare Advantage and Medicaid.  For the year ended December 31, 2020, the Commercial, Medicare and Medicaid sectors represented 22.6%, 43.1%, and 26.4% of our consolidated premiums earned, net, respectively.

(Dollar amounts in millions)	2020			2019			2018
Operating revenues:
Medical premiums earned, net:
Commercial	$	815.6		$	801.2		$	782.8
Medicare		1,553.5			1,408.0			1,130.3
Medicaid		953.2			778.3			776.0
Medical premiums earned, net		3,322.3			2,987.5			2,689.1
Administrative service fees		13.0			14.3			19.1
Net investment income		20.8			23.5			23.8
Total operating revenues		3,356.1			3,025.3			2,732.0
Medical operating costs:
Medical claims incurred		2,805.7			2,526.7			2,272.5
Medical operating expenses		512.1			436.7			433.0
Total medical operating costs		3,317.8			2,963.4			2,705.5
Medical operating income	$	38.3		$	61.9		$	26.5
Additional data:
Member months enrollment:
Commercial:
Fully insured		3,882,185			3,844,106			3,775,441
Self-funded		1,285,366			1,426,353			1,732,219
Total Commercial member months		5,167,551			5,270,459			5,507,660
Medicare member months		1,631,059			1,540,476			1,337,061
Medicaid member months		4,515,196			4,257,181			4,555,702
Total member months		11,313,806			11,068,116			11,400,423
Medical loss ratio		84.5	%		84.6	%		84.5	%
Operating expense ratio		15.4	%		14.5	%		16.0	%

Year Ended December 31, 2020 Compared With the Year Ended December 31, 2019

Medical Premiums Earned, Net

Medical premiums earned increased by $334.8 million, or 11.2%, to $3.3 billion. This increase is principally the result of the following:

• Premiums generated by the Medicare business increased by $145.5 million, or 10.3%, to $1.6 billion, mostly due to higher average premium rates, reflecting an increase in the CMS benchmark, and higher member months enrollment by approximately 91,000.

• Premiums generated by the Medicaid business increased by $174.9 million, or 22.5%, to $953.2 million, primarily reflecting higher average premium rates following the premium rates increases that became effective on November 1, 2019, May 1, 2020 and July 1, 2020, an increase in enrollment of approximately 258,000 member months, the reinstatement of the HIP fee pass-through in 2020, and a profit-sharing accrual recorded in 2019.

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• Premiums generated by the Commercial business increased by $14.4 million, or 1.8%, to $815.6 million.  This fluctuation primarily reflects higher fully insured enrollment during the year by approximately 38,000 member months and higher average premium rates, mostly due to the reinstatement of the HIP fee pass-through in 2020.

Medical Claims Incurred

Managed Care claims incurred increased by $279.0 million, or 11.0%, to $2.8 billion when compared to the year ended December 31, 2019.  The MLR of the segment decreased 10 basis points during 2020, to 84.5%. This fluctuation is primarily attributed to the net effect of the following:

• Claims incurred in the Medicare business increased by $132.2 million, or 11.8%, during the 2020 period and its MLR increased 110 basis points, to 80.9%.  The increase in claims incurred is due to higher member months, improved benefits in product offerings, and unfavorable prior-period reserve development, partially offset by lower utilization of services as the result of the government-enforced lockdown during the COVID-19 pandemic.

• Claims incurred in the Medicaid business increased by $162.0 million, or 21.8%, during 2020 and its MLR decreased 50 basis points, to 94.9%. The increase in claim cost is due to higher member months, and unfavorable prior-period reserve development in the 2020 period. Lower MLR, reflected higher premium rates and the reinstatement of the HIP fee pass-through in 2020. In addition, the 2020 MLR reflects lower utilization of services as the result of the government-enforced lockdown during the COVID-19 pandemic.

• Claims incurred in the Commercial business decreased by $15.1 million, or 2.3%, during 2020 and its MLR decreased 330 basis points, to 79.1%. These decreases mostly result from lower utilization related to the COVID-19 lockdown, partially offset by the higher fully insured enrollment and an unfavorable change in prior-period reserve developments when compared to the 2019 period.  In addition, the lower MLR was impacted by the reinstatement of the HIP fee pass-through in 2020.

Medical Operating Expenses

Managed Care operating expenses increased by $75.4 million, or 17.3%, to $512.1 million. The operating expense ratio increased 90 basis points, to 15.4% in 2020. The higher operating expenses mostly resulted from the reinstatement in 2020 of the HIP fee of $55.5 million, the recognition of $32.0 million as a contingency reserve related to a legal proceeding (see Note 25, Contingencies of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K), and expenses related to providing much-needed assistance to seniors to help them manage through the COVID-19 pandemic, offset in part by a decrease in the provision for doubtful accounts and professional fees.

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Year Ended December 31, 2019 Compared With the Year Ended December 31, 2018

Medical Premiums Earned, Net

Medical premiums earned increased by $298.4 million, or 11.1%, to $3.0 billion.  This increase is principally the result of the following:

• Medical premiums generated by the Medicare business increased by $277.7 million, or 24.6%, to $1,408.0 million, primarily reflecting an increase in enrollment of approximately 203,000 member months and higher average premium rates, mainly reflecting higher membership risk score in 2019 and an increase in reimbursement rates.

• Medical premiums generated by the Commercial business increased by $18.4 million, or 2.4%, to $801.2 million.  This fluctuation primarily reflects higher fully insured member months during the year by approximately 69,000 member months and higher average premium rates, offset in part by $12.1 million related to the suspension of the HIP fee pass-through in 2019.

• Medical premiums generated by the Medicaid business increased by $2.3 million, or 0.3%, to $778.3 million.  This increase primarily reflects higher premiums rates, offset by a decrease of $14.5 million related to the suspension of the HIP fee pass-through in 2019 and lower enrollment by approximately 299,000 member months.  The decrease in membership follows the lower membership assigned to us by ASES when implementing the current Medicaid contract, which was effective November 1, 2018.

Medical Claims Incurred

Medical claims incurred increased by $254.2 million, or 11.2%, to $2.5 billion.  The MLR of the segment increased 10 basis points during the 2019 period, to 84.6%.  This fluctuation is primarily attributed to the net effect of the following:

• The medical claims incurred of the Medicare business increased by $183.1 million, or 19.5%, during the 2019 period mostly driven by higher enrollment.  The MLR at 79.8% was 340 basis points lower than the same period last year, driven by favorable prior period reserve developments in 2019 and the impact of cost containment initiatives.  These decreases were partially offset by improved benefits in the 2019 product offerings.

• The medical claims incurred of the Medicaid business increased by $55.5 million, or 8.1%, during the 2019 period. The MLR at 95.4% was 690 basis points higher than the same period last year.  The increased MLR reflects the higher required target MLR of the current Medicaid contract, the impact of the elimination of the HIP fee pass-through in 2019, and a timing difference in the recognition of member acuity in premiums.  The current Medicaid contract requires a minimum MLR of 92%, including allocation of health care quality improvements expenses.

• The medical claims incurred of the Commercial business increased by $15.6 million, or 2.4%, during the 2019 period and its MLR, remained steady at 82.4% despite impact of the elimination of the HIP fee pass-through in 2019.  The HIP Fee pass-through lowered the 2018 MLR by approximately 130 basis points.

Medical Operating Expenses

Medical operating expenses increased by $3.7 million, or 0.9%, to $436.7 million.  The higher operating expenses are mainly due to an increase in personnel costs, provision for bad debts, and commission expense, partially offset by the waiver of the 2019 HIP fee.  The operating expense ratio decreased 150 basis points, to 14.5%, in 2019.

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Life Insurance Segment Operating Results

(Dollar amounts in millions)	2020			2019			2018
Years ended December 31,
Operating revenues:
Premiums earned, net:
Premiums earned	$	205.9		$	188.4		$	175.3
Assumed earned premiums		0.1			2.1			2.1
Ceded premiums earned		(10.0	)		(8.3	)		(8.8	)
Premiums earned, net		196.0			182.2			168.6
Net investment income		27.3			27.3			25.6
Total operating revenues		223.3			209.5			194.2
Operating costs:
Policy benefits and claims incurred		107.2			105.9			99.0
Underwriting and other expenses		88.3			81.7			75.3
Total operating costs		195.5			187.6			174.3
Operating income	$	27.8		$	21.9		$	19.9
Additional data:
Loss ratio		54.7	%		58.1	%		58.7	%
Expense ratio		45.1	%		44.8	%		44.7	%

Year Ended December 31, 2020 Compared With the Year Ended December 31, 2019

Operating Revenues

Premiums earned, net increased by $13.8 million, or 7.6%, to $196.0 million, mainly as the result of higher sales across all lines of business, mainly in the Individual Life, Cancer and Group lines of business, and the acquisition of an insurance portfolio during the second quarter of 2020.

Policy Benefits and Claims Incurred

Policy benefits and claims incurred increased by $1.3 million, or 1.2%, to $107.2 million, mostly as the result of higher actuarial reserves following portfolio growth offset in part by a slowdown in claim trends in the Cancer and Accidental Death lines of business due to the COVID-19 lockdown. The segment’s loss ratio decreased 340 basis points, to 54.7%.

Underwriting and Other Expenses

Underwriting and other expenses increased $6.6 million, or 8.1%, to $88.3 million, mostly reflecting higher amortization of deferred acquisition costs as a result of higher lapses during the COVID-19 lockdown. The segment’s operating expense ratio increased 30 basis points to 45.1%.

Year Ended December 31, 2019 Compared With the Year Ended December 31, 2018

Operating Revenues

Premiums earned, net increased by $13.6 million, or 8.1% to $182.2 million, mainly as the result of higher sales and improved policy retention in the Individual Life and Cancer lines of business.

Policy Benefits and Claims Incurred

Policy benefits and claims incurred increased by $6.9 million, or 7.0%, to $105.9 million, mostly resulting from higher volume of sales and actuarial reserves following improved portfolio persistency during 2019.  The segment’s loss ratio decreased 60 basis points, to 58.1%.

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Underwriting and Other Expenses

Underwriting and other expenses increased by $6.4 million, or 8.5%, to $81.7 million mostly resulting from higher commission expense reflecting the segment’s higher volume of business and improved portfolio persistency.  As a result, the segment’s operating expense ratio increased 10 basis points, to 44.8%.

Property and Casualty Segment Operating Results

(Dollar amounts in millions)	2020			2019			2018
Years ended December 31,
Operating revenues:
Premiums earned, net:
Premiums written	$	157.9		$	150.5		$	139.8
Premiums ceded		(61.1	)		(52.3	)		(60.4	)
Change in unearned premiums		(4.8	)		(10.5	)		4.1
Premiums earned, net		92.0			87.7			83.5
Net investment income		9.0			9.8			10.8
Total operating revenues		101.0			97.5			94.3
Operating costs:
Claims incurred		35.1			39.6			159.9
Underwriting and other operating expenses		46.0			43.4			44.5
Total operating costs		81.1			83.0			204.4
Operating income (loss)	$	19.9		$	14.5		$	(110.1	)
Additional data:
Loss ratio		38.2	%		45.2	%		191.5	%
Expense ratio		50.0	%		49.5	%		53.3	%

Year Ended December 31, 2020 Compared With the Year Ended December 31, 2019

Operating Revenues

Total premiums written increased by $7.4 million, or 4.9%, to $157.9 million, mostly driven by higher premiums, particularly in Commercial Auto, Commercial Package and Personal Package products.

The premiums ceded to reinsurers increased by $8.8 million, or 16.8%, mostly due to approximately $3.0 million of reinsurance reinstatement premiums following losses recorded after the earthquakes in the southwest region of Puerto Rico in January 2020, as well as higher premiums written.

The lower change in unearned premiums had a favorable impact on premiums earned of $5.7 million when compared to prior year, mostly reflecting higher premiums written and the effect of changes in the current year’s reinsurance program.

Claims Incurred

Claims incurred decreased by $4.5 million, or 11.4%, to $35.1 million because of better loss experience in the segment’s on-going business from the effects of the COVID-19 measures and lockdown, partially offset by the recognition of $5.0 million of earthquake losses after the January 2020 events. As a result, the loss ratio decreased by 700 basis points, to 38.2% during this period.

Underwriting and Other Expenses

Underwriting and other operating expenses increased by $2.6 million, or 6.0%, to $46.0 million, mostly because of higher net commission expense following the increase in net premiums earned. Current year net commission expense is affected by a lower capitalization of deferred acquisition costs. The operating expense ratio was 50.0%, 50 basis points higher than prior year.

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Year Ended December 31, 2019 Compared With the Year Ended December 31, 2018

Operating Revenues

Total premiums written increased by $10.7 million, or 7.7%, to $150.5 million, driven by higher volume of Commercial and Personal Package, Commercial Auto and Commercial Liability products.  This increase in volume was offset by lower sales of Commercial Property products, mostly resulting from the selective and disciplined underwriting of Commercial risks.

The premiums ceded to reinsurers decreased by $8.1 million, or 13.4%, mostly reflecting a decrease in cessions in the Commercial quota share agreement from 35% in 2017 to 25% since April 2019, as well as the impact of the related incoming portfolio transfer. These decreases were offset in part by higher non-proportional reinsurance costs, mostly in property catastrophe reinsurance.

The $14.6 million decrease in the change in unearned premiums reflects the segments higher premiums written in 2019.

Claims Incurred

Claims incurred decreased by $120.3 million, or 75.2%, to $39.6 million driven by a $128.7 million unfavorable prior period reserve development in claims in prior year related to Hurricane Maria.  As a result, the segment’s loss ratio decreased to 45.2%.

Underwriting and Other Expenses

Underwriting and other operating expenses decreased by $1.1 million, or 2.5%, to $43.4 million mostly due to lower net commission expense.  The segment’s operating expense ratio decreased by 380 basis points, to 49.5%.

Liquidity and Capital Resources

Cash Flows

A summary of our major sources and uses of cash for the periods indicated is presented in the following table:

(Dollar amounts in millions)	2020			2019			2018
Sources (uses) of cash:
Cash provided by (used in) operating activities	$	257.8		$	(16.8	)	$	7.5
Net purchases of investment securities		(186.4	)		(4.7	)		(12.6	)
Net capital expenditures		(57.9	)		(20.8	)		(19.8	)
Capital contribution to equity method investees		(8.2	)		(11.4	)		-
Proceeds from long-term borrowings		30.8			-			-
Payments of long-term borrowings		(3.9	)		(3.2	)		(3.2	)
Proceeds from policyholder deposits		25.7			28.9			18.5
Surrenders of policyholder deposits		(15.1	)		(19.9	)		(26.7	)
Repurchase and retirement of common stock		(15.0	)		(10.0	)		(22.4	)
Net change in short-term borrowings		(24.0	)		54.0			-
Other		(2.6	)		(3.8	)		(22.7	)
Net increase (decrease) in cash and cash equivalents	$	1.2		$	(7.7	)	$	(81.4	)

Year Ended December 31, 2020 Compared With the Year Ended December 31, 2019

The increase of approximately $274.6 million in net cash provided by operating activities is mostly the result of higher premium collections due to the growth in volume of business, a reduction in account receivable and an increase in accounts payable, partially offset by higher claims paid, due to increased volume of business, cash paid to suppliers, employees and income taxes.

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Net purchases from investment securities are part of our asset/liability management strategy.

On June 19, 2020, TSM entered into a $31.4 million Credit Agreement (the Loan) with a commercial bank in Puerto Rico. The proceeds of the Loan were used by the Company to partially finance the acquisition of a building (the Building), which is included in Capital Expenditures in the Statement of Cash Flows.  For further details, see Note 13, Borrowing of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

The increase in capital contribution reflects capital contributions in exchange for a participation in equity method investees.

The net change in short-term borrowings represents the repayment of short-term facilities available to address timing differences between cash receipts and disbursements.

In August 2017, the Company’s Board of Directors authorized a $30.0 million repurchase program of its Class B common stock and in February 2018 the Company’s Board of Directors authorized a $25.0 million expansion of this program. In October 2019, the Company’s Board of Directors authorized an additional expansion to this program increasing its remaining balance up to a total of $25.0 million, effective November 2019. Repurchases were conducted through open-market purchases of Class B shares only, in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2020, the Company repurchased and retired under this program 952,820 shares at an average per share price of $15.72, for an aggregate cost of $15.0 million, completing the amount available for repurchases under this program.

Year Ended December 31, 2019 Compared With the Year Ended December 31, 2018

Cash flows from operating activities decreased by $24.3 million during the year ended December 31, 2019, mostly due to higher claims paid by $296.6 million partially offset by an increase in premium collections of $223.6 million; both fluctuations reflected the increased volume in 2019.  In addition, cash paid to suppliers and employees decreased by $45.5 million when compared to the prior year.

Decrease in net purchases of investments in securities are part of our asset/liability management strategy.

Increase in capital contribution reflects capital contributions in exchange for fifty percent participation in equity method investees.

In August 2017, the Company’s Board of Directors authorized a $30.0 million repurchase program of its Class B common stock (2017 Repurchase Program).  In February 2018 the Company’s Board of Directors authorized a $25.0 million expansion of this program.  In October 2019 the Company’s Board of Directors authorized an additional expansion to this program increasing its remaining balance up to a total of $25.0 million, effective November 2019.  Repurchases were conducted through open-market purchases of Class B shares only, in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.  During the year 2019, the Company repurchased and retired 527,881 shares of our Class B Common Stock shares at an average per share price of $18.92, for an aggregate cost of $10.0 million.

 The net change in short-term borrowings represents the outstanding balance of short-term facilities available to address timing differences between cash receipts and disbursements.

Decrease in other uses of cash reflects the change in outstanding checks in excess of bank balances.

Stock Repurchase Program

The Company repurchases shares through open market transactions, in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, under repurchase programs authorized by the Board of Directors.  Shares purchased under share repurchase programs are retired and returned to authorized and unissued status. See Note 19, Stock Repurchase Program of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

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Financing and Financing Capacity

Long-Term Borrowings

TSM has a $35.5 million credit agreement with a commercial bank in Puerto Rico.  The agreement consists of three term loans: (i) Term Loan A in the principal amount of $11.2 million, (ii) Term Loan B in the principal amount of $20.2 million, and (iii) Term Loan C in the principal amount of $4.1 million.  Term Loan A matures in October 2023, while Term Loans B and C mature in January 2024.  Term Loan A was used to refinance a previous $41.0 million secured loan payable with the same commercial bank.  Pursuant to the credit agreement, interest is payable on the outstanding balance of the Loan at the following annual rate: (i) 100 basis points over LIBOR for Term Loan A, (ii) 275 basis points over LIBOR for Term Loan B, and, (iii) 325 basis points over LIBOR for Term Loan C.  The loan includes certain financial and non-financial covenants, which are customary for this type of facility, including negative covenants imposing certain restrictions on the Company’s business.  Failure to meet these covenants may trigger the accelerated payment of the outstanding balance.  The Company was in compliance with these covenants as of December 31, 2020.

As detailed above the three term loans under our credit agreement with a commercial bank in Puerto Rico bear interest rates in relation to 1-month and 3-month LIBOR, a widely used interest rate benchmark.

In July 2017, the Financial Conduct Authority (FCA) in the United Kingdom, which regulates LIBOR, announced that it would phase out this benchmark by the end of 2021. In response, the U.S. Federal Reserve convened the Alternative Reference Rates Committee (ARRC), a working group comprised of private market participants, to ensure a transition to a new reference rate.

The ARRC has recommended the use of the Secured Overnight Financing Rate (SOFR), which is an index based on the cost of borrowing overnight cash collateralized by U.S. Treasury securities. Currently, there is no definitive information regarding the future use of SOFR as a widely accepted benchmark or any other replacement rate.

If LIBOR rates are no longer available, we are subject to an alternative benchmark rate, as defined in the credit agreement of our long-term bank loan.  At this time we cannot assess the impact, if any, on the interest paid on this loan. Alternatively, the loan could be refinanced by us without prepayment penalties.

We will closely follow any new developments regarding the LIBOR phase out.

On June 19, 2020, TSM entered into a $31.4 million Credit Agreement with a commercial bank in Puerto Rico. The proceeds were used by the Company to partially finance the acquisition of the Building. The Credit Agreement is guaranteed by a mortgage over the Building, a pledge of all collateral related to the Building and an assignment of the rents collected for the lease of office space in the Building. Approximately 64.25% of the acquired Building is currently leased to third parties. The Company expects to move within the next year some of its offices currently leased to third parties to the new Building and together with the leased space to fully occupy the new facilities. Pursuant to the Credit Agreement, interest is payable on the outstanding principal balance of the Loan at an annual rate equal to the Prime Rate. Monthly interest payments commenced on July 1, 2020, and will continue to be paid each month until the principal of the Loan has been paid in full.

The Company may, at its option and at any time, upon notice as specified in the Credit Agreement, prepay prior to maturity, all or any part of the Loan upon the payment of a penalty fee of the outstanding principal amount at the time of the prepayment of 3% during the first year, 2% during the second year, 1% during the third year and thereafter at par.

The Credit Agreement includes certain customary financial and non-financial covenants, including negative covenants imposing certain restrictions on the Corporation’s business. The Company was in compliance with these covenants as of December 31, 2020.

For further details, see Note 13, Borrowings of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

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Short-Term Facilities

We have several short-term facilities available to address timing differences between cash receipts and disbursements, consisting of collateralized advances from the Federal Home Loan Bank of New York (FHLBNY), repurchase agreements, and a revolving credit facility.

• In August 2019, TSS and TSV became members of the FHLBNY, which provides access to collateralized advances.  The borrowing capacity of TSS and TSV is up to 30% of their admitted assets as disclosed in the most recent filing with the Commissioner of Insurance but is constrained by the amount of collateral held at the FHLBNY.  See Note 3, Investment in Securities of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.  As of December 31, 2020 and 2019, the borrowing capacity was approximately $200.3 million and $131.1 million, respectively.  The outstanding balance as of December 31, 2020 and 2019 was $30.0 million and $54.0 million, respectively.  The average interest rate of the outstanding balances was 0.33% and 1.79% as of December 31, 2020 and 2019, respectively.

• As of December 31, 2020, TSS has $35.0 million of available credit under repurchase agreements with broker-dealers, which are short-term borrowing facilities using securities as collateral.  There were no outstanding short-term borrowings under these facilities as of December 31, 2020.

• TSA has a $10.0 million revolving loan agreement with a commercial bank in Puerto Rico.  This line of credit has an interest rate of 30-day LIBOR plus 250 basis points and contains certain financial and non-financial covenants that are customary for this type of facility.  This line of credit matures on June 30, 2021 and had no outstanding balance as of December 31, 2020.

We anticipate that we will have sufficient liquidity to support our currently expected needs.

Contractual Obligations

Our contractual obligations impact our short-and long-term liquidity and capital resource needs.  However, our future cash flow prospects cannot be reasonably assessed based solely on such obligations.  Future cash outflows, whether contractual or not, will vary based on our future needs.  While some cash outflows are completely fixed (such as commitments to repay principal and interest on borrowings), most are dependent on future events (such as the payout pattern of claim liabilities which have been incurred but not reported).

The table below describes the payments due under our contractual obligations, aggregated by type of contractual obligation, including the maturity profile of our debt, operating leases and other long-term liabilities, but excludes an estimate of the future cash outflows related to the following:

• Alternative investments – The Company has $52.6 million of unfunded capital commitments related to alternative investments.  These commitments were excluded from this disclosure due to the undetermined timing of their cash flows.

• Unearned premiums – This amount accounts for the premiums collected prior to the end of coverage period and does not represent a future cash outflow.  As of December 31, 2020, we had $97.5 million in unearned premiums.

• Policyholder deposits – The cash outflows related to these instruments are not included because they do not have defined maturities, such that the timing of payments and withdrawals is uncertain.  There are currently no significant policyholder deposits in paying status.  As of December 31, 2020, our policyholder deposits had a carrying amount of $206.1 million.

• Other long-term liabilities – Due to the indeterminate nature of their cash outflows, $199.8 million of other long-term liabilities are not reflected in the following table, consisting of $139.6 million of liability for pension benefits, $45.1 million in liabilities to the Federal Employees’ Health Benefits Plan Program and $15.1 million in deferred tax liabilities.

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			Contractual obligations by year
(Dollar amounts in millions)	Total		2021		2022		2023		2024		2025		Thereafter
Borrowings (1)	$	90.5	$	36.3	$	6.1	$	6.5	$	15.4	$	26.2	$	-
Operating leases		15.1		4.0		3.4		2.3		1.9		0.7		2.8
Purchase obligations (2)		300.4		291.8		5.1		2.7		0.6		0.1		0.1
Claim liabilities (3)		640.9		520.3		87.2		14.6		7.2		3.7		7.9
Estimated obligation for future  policy benefits (4)		759.3		149.9		134.2		126.6		119.6		112.8		116.2
	$	1,806.2	$	1,002.3	$	236.0	$	152.7	$	144.7	$	143.5	$	127.0

(1) As of December 31, 2020, our long-term borrowings consist of credit agreements with commercial banks in Puerto Rico.  Short-term borrowings represent the outstanding balance of short-term facilities available to address timing differences between cash receipts and disbursements.  See the “Financing and Financing Capacity” section for additional information regarding our borrowings

(2) Purchase obligations represent payments required by us under material agreements to purchase goods or services that are enforceable and legally binding and where all significant terms are specified, including: quantities to be purchased, price provisions and the timing of the transaction.  Other purchase orders made in the ordinary course of business for which we are not liable are excluded from the table above.  Estimated pension plan contributions amounting to $10.0 million were included within the total purchase obligations. However, this amount is an estimate which may be subject to change in view of the fact that contribution decisions are affected by various factors such as market performance, regulatory and legal requirements and plan funding policy.

(3) Claim liabilities represent the amount of our claims processed and incomplete as well as an estimate of the amount of incurred but not reported claims and loss-adjustment expenses.  This amount does not include an estimate of claims to be incurred subsequent to December 31, 2020.  The expected claims payments are an estimate and may differ materially from the actual claims payments made by us in the future.  Also, claim liabilities are presented gross, and thus do not reflect the effects of reinsurance under which $344.0 million of reserves had been ceded at December 31, 2020.

(4) Our Life Insurance segment establishes, and carries as liabilities, actuarially determined amounts that are calculated to meet its policy obligations when a policy matures or surrenders, an insured dies or becomes disabled or upon the occurrence of other covered events.  A significant portion of the estimated obligation for future policy benefits to be paid included in this table considers contracts under which we are currently not making payments and will not make payments until the occurrence of an insurable event not under our control, such as death, illness, or the surrender of a policy.  We have estimated the timing of the cash flows related to these contracts based on historical experience as well as expectations of future payment patterns.  The amounts presented in the table above represent the estimated cash payments for benefits under such contracts based on assumptions related to the receipt of future premiums and assumptions related to mortality, morbidity, policy lapses, renewals, retirements, disability incidence and other contingent events as appropriate for the respective product type.  All estimated cash payments included in this table are not discounted to present value nor do they take into account estimated future premiums on policies in-force as of December 31, 2020 and are gross of any reinsurance recoverable.  The $759.3 million total estimated cash flows for all years in the table is different from the Liability of Future Policy Benefits of $415.0 million included in our Consolidated Financial Statements principally due to the time value of money.  Actual cash payments to policyholders could differ significantly from the estimated cash payments as presented in this table due to differences between actual experience and the assumptions used in the estimation of these payments.

Off-Balance-Sheet Arrangements

We have no off-balance-sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources.

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Restriction on Certain Payments by the Corporation’s Subsidiaries

Our insurance subsidiaries are subject to the regulations of the Commissioner of Insurance.  These regulations, among other things, require insurance companies to maintain certain levels of capital, thereby restricting the amount of earnings that can be distributed by the insurance subsidiaries to TSM.  As of December 31, 2020, our insurance subsidiaries were in compliance with such minimum capital requirements.  Please refer to Item 1. Business – Capital and Reserve Requirements.

These regulations are not directly applicable to TSM, as a holding company, since it is not an insurance company.

The $35.5 million credit agreement limits the amount of dividends or other distributions (including share repurchases) payable by the Corporation to $50.0 million per year.

We do not expect that any of the previously described dividend restrictions will have a significant effect on our ability to meet our cash obligations.

Solvency Regulation

To monitor the solvency of the operations, the BCBSA requires us, TSS, TSA, and TSB to comply with certain specified levels of RBC.  RBC is designed to identify weakly capitalized companies by comparing each company’s adjusted surplus to its required surplus (RBC ratio).  The RBC ratio reflects the risk profile of insurance companies.  At December 31, 2020, TSM and TSS estimated RBC ratio was above the 375% minimum BCBSA RBC requirement to avoid monitoring.  At December 31, 2020, TSA estimated RBC ratio was above the minimum BCBSA RBC requirement of 100% for smaller controlled affiliate.

BCBSA’s primary licensees could be subject to monitoring if, over a 6 or 12 month period, its RBC ratio declines by 80 or more points and which results in a level that is below 500%.

Other Contingencies

Legal Proceedings

Various litigation claims and assessments against us have arisen in the course of our business, including but not limited to, our activities as an insurer and employer.  Furthermore, the Commissioner of Insurance, as well as other Federal, Puerto Rico, and Costa Rica government authorities, regularly make inquiries and conduct audits concerning our compliance with applicable insurance and other laws and regulations.

Given the inherent unpredictability of these matters, it is possible that an adverse outcome in certain matters could, from time to time, have an adverse effect on our operating results and/or cash flows.  For a description of our legal proceedings, see Note 25, Contingencies, of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Guarantee Associations and Other Regulatory Commitments

To operate in Puerto Rico, insurance companies, such as our insurance subsidiaries, are required to participate in guarantee associations, which are organized to pay policyholders contractual benefits on behalf of insurers declared insolvent.  These associations levy assessments, up to prescribed limits, on a proportional basis, to all member insurers in the line of business in which the insolvent insurer was engaged.  In 2019, two local property and casualty insurance companies entered a liquidation process; accordingly, the property and casualty guarantee fund initiated the process to settle unpaid claims and return unearned premiums of the insolvent insurers.  In December 2019, the guarantee fund determined and imposed an assessment to cover claims and return premiums, payable in two installments during 2020 based on premiums written in 2018.  TSP’s share in this assesment was $912 thousand.  Annual assessments are limited to 2% of direct premiums written, as defined.  TSP accrued $716 thousand to cover its estimate of assessments based in premiums written in 2019 and loss data made available by the guaranty fund.  In accordance with insurance laws and regulations, assessments are recoverable through policy surcharges upon the approval by the Commissioner of Insurance.  During 2018, no assessment or payment was made for this contingency.  It is the opinion of management that any possible future guarantee association assessments will not have a material effect on our operating results and/or cash flows, although there is no ceiling on these payment obligations.

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Pursuant to the Puerto Rico Insurance Code, our Property and Casualty subsidiary is a member of Sindicato de Aseguradores para la Suscripción Conjunta de Seguros de Responsabilidad Profesional Médico-Hospitalaria (SIMED).  The syndicate was organized for the purpose of underwriting medical-hospital professional liability insurance.  As a member, the Property and Casualty segment shares risks with other member companies and, accordingly, is contingently liable in the event the syndicate cannot meet their obligations.  During 2020, 2019, and 2018, no assessment or payment was made for this contingency.  It is the opinion of management that any possible future syndicate assessments will not have a material effect on our operating results and/or cash flows, although there is no ceiling on these payment obligations.  In December 2018, SIMED declared a distribution to its members; the TSP’s share of this distribution was $2.9 million, which is presented with Other Income in the accompanying Consolidated Statement of Earnings.

In addition, our Property and Casualty insurance subsidiary is a member of the Compulsory Vehicle Liability Insurance Joint Underwriting Association (the Association).  The Association was organized in 1997 to underwrite insurance coverage of motor vehicle property damage liability risks effective January 1, 1998.  As a participant, the segment shares the risk proportionally with other members based on a formula established by the Insurance Code.  During the years 2020, 2019 and 2018, the Association distributed to the Company $0.2 million each year, respectively, based on the good experience of the business.  In June 2017, the Association declared a special dividend of $70.0 million as authorized by a recent amendment to the Act creating the Association.  The distribution was subject to a unique and special tax rate of 50%.  The dividend was paid net of its related tax in December 2018.  The share of the Property and Casualty segment in this distribution was $2.4 million.

The Property and Casualty segment is also member of the Puerto Rico Fire and Allied Lines Underwriting Association and the Puerto Rico Auto Assign Plan.  These entities periodically impose assessments to cover operations and other charges.  The assessments recorded from these entities were $1 thousand, $10 thousand, and $9 thousand in 2020, 2019 and 2018, respectively.

Critical Accounting Estimates

Our Consolidated Financial Statements and accompanying Notes included in this Annual Report on Form 10-K have been prepared in accordance with GAAP applied on a consistent basis.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  We continually evaluate the accounting policies and estimates we use to prepare our consolidated financial statements.  In general, management’s estimates are based on historical experience and various other assumptions it believes to be reasonable under the circumstances.  The following is an explanation of our accounting policies considered most significant by management.  These accounting policies require us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Such estimates and assumptions could change in the future as more information is known.  Actual results could differ materially from those estimates.

The policies discussed below are considered by management to be critical to an understanding of our consolidated financial statements because their application places the most significant demands on management’s judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain.  For all these policies, management cautions that future events may not necessarily develop as forecasted, and that the best estimates routinely require adjustment.  Management believes that the amounts provided for these critical accounting estimates are adequate.

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Claim Liabilities

Claim liabilities by segment as of December 31, 2020 were as follows:

(Dollar amounts in millions)
Managed care	$	444.4
Property and casualty insurance		292.8
Life insurance		49.9
Consolidated	$	787.1

Management continually evaluates the potential impact of changes in the factors considered for its claim liabilities estimates, both positive and negative, and uses the results of these evaluations to adjust recorded claim liabilities and underwriting criteria.  Our profitability depends in large part on our ability to accurately predict and effectively manage the amount of claims incurred, particularly those of the Managed Care segment and the losses arising from the Life Insurance and Property and Casualty segments.  Management regularly reviews its premiums and benefits structure to reflect our underlying claims experience and revised actuarial data; however, several factors could adversely affect our underwriting results.  Some of these factors are beyond management’s control and could adversely affect its ability to accurately predict and effectively control claims incurred.  Examples of such factors include changes in health practices, economic conditions, change in utilization trends including those caused by epidemic conditions, health care costs, the advent of natural disasters and malpractice litigation.  Costs in excess of those anticipated could have a material adverse effect on our results of operations.

We recognize claim liabilities as follows:

Managed Care Segment

At December 31, 2020, claim liabilities for the Managed Care segment amounted to $444.4 million and represented 56.5% of our total consolidated claim liabilities and 21.0% of our total consolidated liabilities.

Claim liabilities are determined employing actuarial methods that are commonly used by managed care actuaries and meet Actuarial Standards of Practice, which require that the claim liabilities be adequate under moderately adverse circumstances.  The segment determines the amount of the liability by following a detailed actuarial process that entails using both historical claim payment patterns as well as emerging medical cost trends to project a best estimate of claim liabilities.  Under this process, historical claims incurred dates are compared to actual dates of claims payment.  This information is analyzed to create “completion” or “development” factors that represent the average percentage of total incurred claims that have been paid through a given date after being incurred.  Completion factors are applied to claims paid through the consolidated financial statement date to estimate the ultimate claim expense incurred for the current period.  Actuarial estimates of claim liabilities are then determined by subtracting the actual paid claims from the estimate of the total expected claims incurred.  The majority of unpaid claims, both reported and unreported, for any period, are those claims which are incurred in the final months of the period.  Since the percentage of claims paid during the period with respect to claims incurred in those months is generally very low, the above-described completion factor methodology is less reliable for such months.  In order to complement the analysis to determine the unpaid claims, historical completion factors and payment patterns are applied to incurred and paid claims for the most recent twelve months and compared to the prior twelve month period.  Incurred claims for the most recent twelve months also take into account recent claims expense levels and health care trend levels (trend factors).  Using all of the above methodologies, our actuaries determine based on the different circumstances the unpaid claims as of the end of period.

Because the reserve methodology is based upon historical information, it must be adjusted for known or suspected operational and environmental changes.  These adjustments are made by our actuaries based on their knowledge and their estimate of emerging impacts to benefit costs and payment speed.

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Managed Care claim liabilities also include a provision for adverse deviation, which is an estimate for known environmental factors that are reasonably likely to affect the required level of reserves. This provision for adverse deviation is intended to capture the potential adverse development from known environmental factors such as our entry into new geographical markets, changes in our geographic or product mix, the introduction of new customer populations, variation in benefit utilization, disease outbreaks, changes in provider reimbursement, fluctuations in medical cost trend, variation in claim submission patterns and variation in claims processing speed and payment patterns, changes in technology that provide faster access to claims data or change the speed of adjudication and settlement of claims, variability in claim inventory levels, non-standard claim development and/or exceptional situations that require judgmental adjustments in setting the reserves for claims.

Circumstances to be considered in developing our best estimate of reserves include changes in enrollment, utilization levels, unit costs, mix of business, benefit plan designs, provider reimbursement levels, processing system conversions and changes, claim inventory levels, regulatory and legislative requirements, claim processing patterns and claim submission patterns.  A comparison or prior period liabilities to re-estimated claim liabilities based on subsequent claims development is also considered in making the liability determination.  In the actuarial process, the methods and assumptions are not changed as reserves are recalculated, but rather the availability of additional paid claims information drives our changes in the re-estimate of the unpaid claim liability.  Changes in such development are recorded as a change to current period benefit expense.  The re-estimates or recasts are done monthly for the previous four calendar quarters.  On average, about 93% of the claims are paid within three months after the last day of the month in which they were incurred and about 4% are within the next three months, for a total of 97% paid within six months after the last day of the month in which they were incurred.

Management regularly reviews its assumptions regarding claim liabilities and makes adjustments to claims incurred when necessary.  If management’s assumptions regarding cost trends and utilization are significantly different than actual results, our Consolidated Statement of Earnings and Balance Sheets could be affected in future periods.  Changes to prior year estimates may result in an increase in claims incurred or a reduction of claims incurred in the period the change is made.  Further, due to the considerable variability of health care costs, adjustments to claims liabilities are made in each period and are sometimes significant as compared to the net income recorded in that period.  Prior year development of claim liabilities is recognized immediately upon the actuary’s judgment that a portion of the prior year liability is no longer needed or that an additional liability should have been accrued.  Health care trends are monitored in conjunction with the claim reserve analysis.  Based on these analyses, rating trends are adjusted to anticipate future changes in health care cost or utilization.  Thus, the Managed Care segment incorporates those trends as part of the development of premium rates in an effort to keep premium rating trends in line with claims trends.

As described above, completion factors and claims trend factors can have a significant impact on the determination of our claim liabilities.  The following example provides the estimated impact on our December 31, 2020 claim liabilities, assuming the indicated hypothetical changes in completion and trend factors:

(Dollar amounts in millions)
Completion Factor 1						Claims Trend Factor 2
(Decrease) Increase						(Decrease) Increase
			In unpaid claim liabilities			In claims trend factor			In unpaid claim liabilities
In completion factor
	-1.2	%	$	20.4			1.5	%	$	22.5
	-0.8	%		13.5			1.0	%		15.0
	-0.4	%		6.7			0.5	%		7.5
	0.4	%		(6.7	)		-0.5	%		(7.5	)
	0.8	%		(13.3	)		-1.0	%		(15.0	)
	1.2	%		(19.8	)		-1.5	%		(22.5	)

 ⁽¹⁾Assumes (decrease) increase in the completion factors for the most recent twelve months.

⁽²⁾Assumes (decrease) increase in the claims trend factors for the most recent twelve months.

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The segments’ reserving practice is to consistently recognize the actuarial best estimate as the ultimate liability for claims within a level of confidence required by actuarial standards.  Management believes that the methodology for determining the best estimate for claim liabilities at each reporting date has been consistently applied.

Amounts incurred related to prior years vary from previously estimated liabilities as the claims are ultimately settled.  Liabilities at any year-end are continually reviewed and re-estimated as information regarding actual claims payments or run-out becomes known.  This information is compared to the originally established year-end liability.  Negative amounts reported for incurred claims related to prior years result from claims being settled for amounts less than originally estimated.  The reverse is true of reserve shortfalls.  Medical claim liabilities are usually described as having a “short tail”, which means that they are generally paid within several months of the member receiving service from the provider.  Accordingly, the majority, or approximately 93%, of any redundancy or shortfall relates to claims incurred in the previous calendar year-end, with the remaining 7% related to claims incurred prior to the previous calendar year-end.  Management has not noted any significant emerging trends in claim frequency and severity and the normal fluctuations in enrollment and utilization trends from year to year.

The following table shows the variance between the segment’s incurred claims for current period insured events and the incurred claims for such years had they been determined retrospectively (the “Incurred claims related to current period insured events” for the year shown plus or minus the “Incurred claims related to prior period insured events” for the following year as included in Note 11, Claim Liabilities and Claim Adjustment Expenses of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.  This table shows that the segments’ estimates of this liability have approximated the actual development.

(Dollar amounts in millions)	2019			2018			2017
Years ended December 31,
Total incurred claims:
As reported (1)	$	2,556.0		$	2,308.5		$	2,231.1
On a retrospective basis		2,590.7			2,279.2			2,195.1
Variance	$	(34.7	)	$	29.3		$	36.0
Variance to total incurred claims as reported		-1.4	%		1.3	%		1.6	%

⁽¹⁾ Includes total claims incurred less adjustments for prior year reserve development.

Management expects that substantially all of the development of the 2020 estimate of medical claims payable will be known during 2021.

In the event this segment experiences an unexpected increase in health care cost or utilization trends, we have the following options to cover claim payments:

• Through the management of our cash flows and investment portfolio.

• In the Commercial business we have the ability to increase the premium rates throughout the year in the monthly renewal process when renegotiating the premiums for the following contract year of each group as they become due.  We consider the actual claims trend of each group when determining the premium rates for the following contract year.

• We have available short-term borrowing facilities to address differences between cash receipts and disbursements.

For additional information on our credit facilities, see section Financing and Financing Capacity of this Item.

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Life Insurance Segment

At December 31, 2020, claim liabilities for the Life Insurance segment amounted to $49.9 million and represented 6.3% of total consolidated claim liabilities and 2.4% of our total consolidated liabilities.

The claim liabilities related to the Life Insurance segment are based on methods and underlying assumptions in accordance with GAAP.  The estimate of claim liabilities for this segment is based on the amount of benefits contractually determined for reported claims and, for unreported claims, on estimates based on past experience modified for current trends.  This estimate relies on observations of ultimate loss experience for similar historical events.

Claim reserve reviews are generally conducted on a monthly basis, in light of continually updated information. We review reserves using current inventory of policies and claims data.  These reviews incorporate a variety of actuarial methods, judgments and analysis.

The key assumption about claim liabilities for our Life Insurance segment is related to claims incurred prior to the end of the year but not yet reported to our subsidiary.  A liability for these claims is estimated based upon experience with regards to amounts reported subsequent to the close of business in prior years.  There are uncertainties in the development of these estimates; however, in recent years our estimates have resulted in immaterial redundancies or deficiencies.

Property and Casualty Segment

At December 31, 2020, claim liabilities for the Property and Casualty segment amounted to $292.8 million and represented 37.2% of the total consolidated claim liabilities and 13.8% of our total consolidated liabilities.  Claims liabilities related to losses caused by catastrophe events amounted to approximately $216.1 million.

Estimates of the ultimate cost of claims and loss-adjustment expenses of this segment are based largely on the assumption that past developments, with appropriate adjustments due to known or unexpected changes, are a reasonable basis on which to predict future events and trends, and involve a variety of actuarial techniques that analyze current experience, trends and other relevant factors.  Property and Casualty insurance claim liabilities are categorized and tracked by line of business.  Medical malpractice policies are written on a claims-made basis.  Policies written on a claims-made basis require that claims be reported during the policy period.  Other lines of business are written on an occurrence basis.  Hurricane losses initially include the use of models from industry recognized firms having data, historical and current information about the events to estimate ultimate losses.  These estimates are supplemented by internal estimates of other costs deemed necessary to develop the ultimate losses.  As loss information emerges, claims are separated between those with solid estimates and those for which we cannot make a reasonable estimate of ultimate cost of claim.  Additional reserves are provided based on paid loss experience for unreported, potential development, and loss expenses.

Individual case estimates for reported claims are established by a claims adjuster and are changed as new information becomes available during the course of handling the claim.  Our Property and Casualty business, other than medical malpractice, is primarily a short-tailed business, where losses (e.g. paid losses and case reserves) are generally reported quickly.

Claim reserve reviews are generally conducted on a quarterly basis, in light of continually updated information.  Our actuary certifies reserves for both current and prior accident years using current claims data.  These reviews incorporate a variety of actuarial methods, judgments and analysis.  For each line of business, a variety of actuarial methods are used, with the final selections of ultimate losses that are appropriate for each line of business selected based on the current circumstances affecting that line of business.  These selections incorporate input from management, particularly from the claims, underwriting and operations divisions, about reported loss cost trends and other factors, including the severity and frequency of such claims, that could affect the reserve estimates.

Key assumptions are based on the consideration that past emergence of paid losses and case reserves is credible and likely indicative of future emergence and ultimate losses.  A key assumption is the expected loss ratio for the current accident year.  This expected loss ratio is generally determined through a review of the loss ratios of prior accident years and expected changes to earned pricing, loss costs, mix of business and other factors that are expected to impact the loss ratio for the current accident year.  Another key assumption is the development patterns for paid and reported losses (also referred to as the loss emergence and settlement patterns).  The reserves for unreported claims for each year are determined after reviewing the indications produced by each actuarial projection method, which, in turn, rely on the expected paid and reported development patterns and the expected loss ratio for that year.

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At December 31, 2020, the claim liabilities of the Property and Casualty segment fall within the actuarial reserve range determined by the actuaries.  Management reviews the results of the reserve estimates in order to determine any appropriate adjustments in the recording of reserves.  Adjustments to reserve estimates are made after management’s consideration of numerous factors, including but not limited to the magnitude of the difference between the actuarial indication and the recorded reserves, improvement or deterioration of actuarial indications in the period, the maturity of the accident year, trends observed over the recent past and the level of volatility within a particular line of business.  In general, changes are made more quickly to more mature accident years and less volatile lines of business.  Varying the net expected loss ratio by +/-1% in all lines of business for the six most recent accident years would increase/decrease the claims incurred by approximately $5.2 million.

Liability for Future Policy Benefits

Our Life Insurance segment establishes, and carries as liabilities, actuarially determined amounts that are calculated to meet its policy obligations when a policy matures or surrenders, an insured die, becomes disabled or upon the occurrence of other covered events.  We compute the amounts for actuarial liabilities in conformity with GAAP.

Liabilities for future policy benefits for whole life and term insurance products and active life reserves for accident and health products are computed by the net level premium method, using interest assumptions  of 3.90% in 2020, 4.40% in 2019 and ranging from 3.90% to 5.75% in 2018, and withdrawal, mortality, morbidity and maintenance expense assumptions appropriate at the time the policies were issued (or when a block of business was purchased, as applicable).  Accident and health unpaid claim reserves are stated at amounts determined by estimates on individual claims and estimates of unreported claims based on past experience.  Deferred annuity reserves are carried at the account value.

For deferred annuities and universal life products, the liability for future policy benefits is equal to total policy account values.  The liabilities for all other products are based upon a variety of actuarial assumptions that are uncertain.  The most significant of these assumptions is the level of anticipated death and health claims.  Other assumptions that are less significant to the appropriate level of the liability for future policy benefits are anticipated policy persistency rates, investment yields and operating expense levels.  Policy portfolio valuations are performed frequently by our subsidiary’s external actuaries, to assure that the current level of liabilities for future policy benefits is sufficient, in combination with anticipated future cash flows, to provide for all contractual obligations.  For all products, except for deferred annuities and universal life products, the basis for the liability for future policy benefits is established at the time of issuance of each contract and would only change if our experience deteriorates to the point that the level of the liability is not adequate to provide for future policy benefits.  We do not currently expect that level of deterioration to occur.

Deferred Policy Acquisition Costs and Value of Business Acquired

Certain costs incurred for acquiring life and property and casualty insurance business are deferred.  Acquisition costs related to the Managed Care segment are expensed as incurred.

The costs of acquiring new life business, principally commissions, and certain variable underwriting and policy issue expenses of our Life Insurance segment, have been deferred.  These costs, including value of business acquired (VOBA) recorded upon our acquisitions of TSV and TSB, are amortized to income over the premium-paying period of the related whole life and term insurance policies in proportion to the ratio of the expected annual premium revenue to the expected total premium revenue, and over the anticipated lives of universal life policies in proportion to the ratio of the expected annual gross profits to the expected total gross profits.  The expected premiums revenue and gross profits are based upon the same mortality and withdrawal assumptions used in determining the liability for future policy benefits.  For universal life and deferred annuity policies, changes in the amount or timing of expected gross profits result in adjustments to the cumulative amortization of these costs.  The effect on the amortization of deferred policy acquisition costs (DPAC or DAC) of revisions to estimated gross profits (unlock adjustment) is reported in earnings in the period such estimated gross profits are revised.

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The schedules of amortization of life insurance DPAC and VOBA are based upon actuarial assumptions regarding future events that are uncertain.  For all products, other than universal life and deferred annuities, the most significant of these assumptions is the level of contract persistency and investment yield rates.  For these products the basis for the amortization of DPAC and VOBA is established at the issue of each contract and would only change if our segment’s experience deteriorates to the point that the level of the net liability is not adequate.  We do not currently expect that level of deterioration to occur.  For the universal life and deferred annuity products, amortization schedules are based upon the level of historic and anticipated gross profit margins, from the date of each contract’s issued (or purchase, in the case of VOBA).  These schedules are based upon several actuarial assumptions that are uncertain, are reviewed annually and are modified if necessary.  The most significant of these assumptions are claims, investment yield rates and contract persistency.  Based upon the most recent actuarial reviews of all the assumptions, we do not currently anticipate material changes to these amortization schedules.

The property and casualty business acquisition costs consist of commissions net of reinsurance commissions, during the production of business and are deferred and amortized ratably over the terms of the policies.  The method used in calculating deferred acquisition costs limits the amount of such deferred costs to actual costs or their estimated realizable value, whichever is lower.

Impairment of Investments

An investment is considered to be impaired when the estimated fair value is below the amortized cost of the security and it is more likely than not the Company will have to sell the fixed-maturity security before the recovery of its amortized cost basis. Management regularly monitors and evaluates the difference between the amortized cost and estimated fair value of fixed-maturity investments and other invested assets.  For fixed-maturity securities with a fair value below amortized cost, the process includes evaluating: (1) the extent to which the estimated fair value has been less than amortized cost, (2) the financial condition, near-term and long-term prospects for the issuer, including relevant industry conditions and trends, and implications of rating agency actions, (3) the Company’s intent to sell or the likelihood of a required sale prior to recovery, (4) the recoverability of principal and interest, and (5) other factors, as applicable.  This process is not exact and requires further consideration of risks such as credit and interest rate risks.  Consequently, if an investment’s cost exceeds its estimated fair value solely due to changes in interest rates, an allowance for credit losses is not recorded.

Because of the subjective nature of the Company’s analysis and the judgment that must be applied in it, the Company could reach a different conclusion about whether to impair a security if it had access to additional information about the investee.  Additionally, it is possible that the investee’s ability to meet future contractual obligations may be different than what the Company determined during its analysis, which may lead to a different impairment conclusion in future periods.

If a fixed-maturity security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the fixed-maturity security before recovery of its amortized cost basis, the Company will write off any previously recognized allowance for credit losses and will decrease the amortized cost basis of the security. If the allowance has been fully written off and the fair value is less than its amortized cost basis, the amortized cost basis is written down and an impairment loss is recognized in the Company’s Consolidated Statements of Earnings.

The credit component of the impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed-maturity security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed-maturity security at the date of acquisition. If there is an increase in the projected future cash flows of the fixed-maturity security in subsequent periods, all or part of the allowance for credit losses may be reversed.

In addition, the Company considers the following factors when evaluating whether or not a credit loss exists: the reasons for the impairment, the severity of the impairment, market conditions, changes in the security’s rating, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates.

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Management reviews the available-for-sale and other invested assets portfolios under the Company’s impairment review policy.  Given market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and material allowances for credit losses may be recorded in future periods.  The Company from time to time may sell investments as part of its asset/liability management process or to reposition its investment portfolio based on current and expected market conditions.

During the years ended December 31, 2020, 2019 and 2018, we were not required to recognize a credit-related impairment.  The impairment analysis indicated that none of the securities whose carrying amount exceeded its estimated fair value was considered credit impaired as of that date; however, several factors are beyond management’s control, such as the following: financial condition of the issuers, movement of interest rates, specific situations within corporations, among others.  Over time, the economic and market environment may provide additional insight regarding the estimated fair value of certain securities, which could change management’s judgment regarding impairment.  This could result in the recognition of realized losses because of credit-related impairments that are charged against future income.

Our fixed-maturity securities are sensitive to interest rate and credit risk fluctuations, which impact the fair value of individual securities.  Our equity securities are sensitive to equity price risks, for which potential losses could arise from adverse changes in the value of equity securities.  For additional information on the sensitivity of our investments, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk in this Annual Report on Form 10-K.

A detail of the gross unrealized losses on investment securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2020 and 2019 is included in Note 3, Investment in Securities of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Allowance for Doubtful Receivables

We estimate the amount of uncollectible receivables in each period and establish an allowance for doubtful receivables considering, among other things, the continued deterioration of the local economy, the exposure to government accounts and the challenging business environment in the Island.  The allowance for doubtful receivables amounted to $50.7 million and $56.5 million as of December 31, 2020 and 2019, respectively.  As of December 31, 2020 and 2019, the Company had premiums and other receivables of 52.5 million and $49.2 million, respectively, from the Government of Puerto Rico, including its agencies, municipalities, and public corporations.  The related allowance for doubtful receivables as of December 31, 2020 and 2019 was $21.5 million and $22.1 million, respectively.  The amount of the allowance is based on the aging of unpaid accounts, information about the customer’s creditworthiness and other relevant information.  The estimates of uncollectible accounts are revised each period, and changes are recorded in the period they become known.  In determining the allowance, we use predetermined percentages applied to aged account balances, as well as individual analysis of large accounts.  These percentages are based on our collection experience and are periodically evaluated.  A significant change in the level of uncollectible accounts would have a material effect on our results of operations.

In addition to premium-related receivables, we evaluate the risk in the realization of other accounts receivable, including balances due from third parties related to overpayment of medical claims and rebates, among others.  These amounts are individually analyzed, and the allowance determined based on the specific collectivity assessment and circumstances of each individual case.

We consider this allowance adequate to cover probable losses that may result from our inability to subsequently collect the amounts reported as accounts receivable.  However, such estimates may change significantly in the event that unforeseen economic conditions adversely impact the ability of third parties to repay the amounts due to us.

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Goodwill and Other Intangible Assets

Our consolidated goodwill and other intangible assets at December 31, 2020 were $28.6 million and $1.4 million, respectively.  At December 31, 2019 the consolidated goodwill and other intangible assets were $28.6 million and $1.9 million, respectively.  The goodwill and other intangible assets balance for both years were primarily related to the acquisition of TSA in 2011.  As of December 31, 2020 and 2019, the goodwill related to TSA was $25.0 million.  As of December 31, 2020 and 2019 other intangible assets related to the TSA acquisition were $1.4 million and $1.9 million, respectively.

We account for goodwill and intangible assets with indefinite lives in accordance with Accounting Standard Codification (ASC) No. 350, Goodwill and Other Intangible Assets, which specifies the types of acquired intangible assets that are required to be recognized and reported separately from goodwill.  Under this guidance, goodwill is not amortized but is tested for impairment at least annually and more frequently if events and circumstances indicate that the asset might be impaired.  An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.  For goodwill, the impairment determination is made at the reporting unit level.

Our impairment tests involve the use of estimates related to the fair value of the reporting unit and require a significant degree of management judgment and the use of subjective assumptions.  The Company may perform a qualitative analysis or perform a quantitative analysis.  In the qualitative analysis, the Company determines if it is more likely than not that the fair value of a reporting unit is less than its carrying amount by assessing current events and circumstances. If there are factors present indicating potential impairment, the Company would proceed to the quantitative analysis.  The quantitative analysis is used to identify potential goodwill impairment and measure the amount (if any) of a goodwill impairment loss to be recognized.  The goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount and recognizing an impairment charge for the difference by which the carrying amount exceeds the reporting unit’s fair value, up to the carrying amount of the goodwill.

Our goodwill impairment test uses the income and market approach to estimate a reporting unit’s fair value.  Use of the income and market approach for our goodwill impairment test reflects our view that valuation methodology provides a reasonable estimate of fair value.  The income approach is developed using assumptions about future premiums, expected claims, MLR, operating expenses and net income derived from our internal planning process and historical trends.  These estimated future cash flows are then discounted. Our assumed discount rate is based on our industry’s weighted average cost of capital.  It assumes the effective implementation of measures to contain the utilization and cost trends.  Events or changes in circumstances, including a decrease in membership, an increase in MLR and/or operating expenses, could result in goodwill impairment. The market approach is developed based upon the valuation multiples of various financial or operational measures calculated using the market value of minority interest in publicly traded guideline companies. These multiples are then applied to the relevant financial or operational metrics of the interest and used to develop an estimate of value.

We completed our annual impairment tests of existing goodwill during the fourth quarter of 2020 and 2019.  Limited interim impairment tests are also performed when potential impairment indicators exist or other changes in our business occur.  If we do not achieve our earnings objectives or the cost of capital rises significantly, the assumptions and estimates underlying these impairment evaluations could be adversely affected and result in future impairment charges that would negatively impact our operating results.  The result of the impairment test performed in 2020 and 2019 indicated that the fair value of the TSA unit exceeded its carrying value by approximately 25% and 35%, respectively.

While we believe we have appropriately allocated the purchase price of our acquisitions, this allocation requires many assumptions to be made regarding the fair value of assets and liabilities acquired.  In addition, estimated fair values developed based on our assumptions and judgments might be significantly different if other reasonable assumptions and estimates were to be used.  If estimated fair values are less than the carrying values of the reporting unit or if significant impairment indicators are noted relative to other intangible assets subject to amortization, we may be required to record impairment losses against future income.

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Other Significant Accounting Policies

We have other accounting policies that are important to an understanding of the Consolidated Financial Statements.  See Note 2, Significant Accounting Policies of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Recently Issued Accounting Standards

For a description of our recently issued accounting standards, see Note 2, Significant Accounting Policies of the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks that are inherent in our financial instruments, which arise from transactions in the normal course of business.  We are also subject to additional market risk with respect to certain of our financial instruments.  We must effectively manage, measure and monitor the market risk associated with our invested assets and interest rate sensitive liabilities.  We have established and implemented comprehensive policies and procedures to minimize the effects of potential market volatility.

Market Risk Exposure

We have exposure to market risk mostly in our investment activities.  For purposes of this disclosure, “market risk” is defined as the risk of loss resulting from changes in interest rates and equity prices.  Analytical tools and monitoring systems are in place to assess each one of the elements of market risks.

Our investment portfolio consists mainly of investment grade fixed-maturity securities and a smaller portion is held in equity securities and alternative investments. The investment portfolio is conservative, diversified across and within asset classes, and has the following objectives, in order of importance: capital preservation, liquidity, income generation and capital appreciation. The interest rate risk of both our investments and liabilities is regularly evaluated.

The investment portfolio is centrally managed by investment professionals and decisions are taken based on the guidelines and limitations described in our Investment Policy and the Puerto Rico Insurance Code. The Investment Policy is approved by the Board of Directors following the recommendation of the Investment and Financing Committee of the Board of Directors (the Investment and Financing Committee). The Investment and Financing Committee establishes guidelines to ensure the Investment Policy is adhered to and any exception must be reported to the Investment and Financing Committee.

We use a sensitivity analysis to measure the market risk related to our holdings of invested assets and other financial instruments.  This analysis estimates the potential changes in fair value of the instruments subject to market risk.  This sensitivity analysis is an estimate and should not be viewed as predictive of our future financial performance.  Our actual losses in any year could exceed the amounts indicated in the following paragraphs.  Limitations related to this sensitivity analysis include:

• The market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis, including the impact of prepayment rates on mortgages; and

• The model assumes that the composition of assets and liabilities remains unchanged throughout the year.

Accordingly, we use such models as tools and not as a substitute for the experience and judgment of our management.

Interest Rate Risk

Our exposure to interest rate changes results from our significant holdings of fixed-maturity securities.  We are also exposed to interest rate risk from our variable interest secured term loan and from our policyholder deposits.

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Equity Price Risk

Our investments in equity securities expose us to price risks, for which potential losses could arise from adverse changes in the value of these investments.

Risk Measurement

Our investment securities are a source of market risk.  As of December 31, 2020, approximately 72% of our investment portfolio consisted of fixed-maturity securities.  The remaining balance is comprised of equity securities and alternative investments.  Our fixed-maturity securities classified as available-for-sale and alternative investments are recorded at fair value and changes in the fair value of these securities, net of the related tax effect, are excluded from operations and are reported as a separate component of other comprehensive income (loss) until realized.  Fixed-maturity securities classified as held-to-maturity are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.  Equity securities are recorded at fair value and changes in fair value are included in earnings.  The fair value of the investments in our available-for-sale and held-to-maturity portfolios is exposed to both interest rate risk and equity price risk.

Interest Rate Risk

We have evaluated the net impact to the fair value of our fixed-income investments of a significant one-time change in interest rate risk using a combination of both statistical and fundamental methodologies.  From these shocked values, a resultant market price appreciation/depreciation can be determined after portfolio cash flows are modeled and evaluated over instantaneous 100, 200, and 300 basis point rate shifts.  Techniques used in the evaluation of cash flows include Monte Carlo simulation through a series of probability distributions over 200 interest rate paths.  Necessary prepayment speeds are compiled using Yield Book, which sources numerous factors in deriving speeds, including but not limited to: historical speeds, economic indicators, street consensus speeds, etc.  Securities evaluated by us under these scenarios include mortgage pass-through certificates and collateralized mortgage obligations of U.S. agencies, and private label structures, if cash flows information is available.  The following table sets forth the result of this analysis for the years ended December 31, 2020 and 2019.  The analysis does not consider any action that management can take to mitigate the impact of changes in market rates.

(Dollar amounts in millions)
Change in Interest Rates			Expected Fair Value		Amount of Decrease			% Change
December 31, 2020:
Base Scenario			$	1,343.5
	+100	bp		1,288.6		(54.9	)		(4.1	)%
	+200	bp		1,232.9		(110.6	)		(8.2	)%
	+300	bp		1,178.8		(164.7	)		(12.3	)%
December 31, 2019:
Base Scenario			$	1,244.9
	+100	bp		1,187.4		(57.5	)		(4.3	)%
	+200	bp		1,130.8		(114.1	)		(8.5	)%
	+300	bp		1,077.0		(167.9	)		(12.5	)%

We believe that an interest rate shift in a 12-month period of 100 basis points represents a moderately adverse outcome, while a 200 basis point shift is significantly adverse, and a 300 basis point shift is less likely given historical precedents.  Although we classify 99.9% of our fixed-maturity securities as available-for-sale, our cash flows and the intermediate duration of our investment portfolio should allow us to hold securities until maturity, thereby avoiding the recognition of losses, should interest rates rise significantly.

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Equity Price Risk

Our equity securities are composed of mutual funds whose underlying assets are comprised of domestic equity securities, domestic preferred equity securities, international equity securities and higher risk fixed-income instruments. The fixed income mutual funds invest mainly in loan participations and high yield debt.  The securities in these funds are issued by corporations, financial institutions and governmental entities that are either unrated or have non-investment grade ratings from either Standard & Poor’s or Moody’s.

Our investments in mutual funds exposes us to equity price risk and credit risk.  We manage these exposures by closely monitoring the performance of these mutual funds.

Assuming an immediate decrease of 10% in the market value of our equity securities as of December 31, 2020 and 2019, the hypothetical loss in the fair value of these investments would have been approximately $40.3 million and $28.8 million, respectively.

Alternative Price Risk

Our alternative investments in the available-for-sale portfolio are comprised of commitments to limited liability partnerships.  These private funds call capital over time and invest in various asset classes such as traditional private equity, infrastructure equity, real estate debt and corporate debt.  These investments are unrated, illiquid and expose us to a variety of underlying risks. We manage these exposures by closely monitoring the performance of these funds.  The fair value of alternative investments is estimated using the net asset value of the Company’s ownership interest in the partnerships as a practical expedient to determining an independent fair value.

Assuming an immediate decrease of 10% in the market value of our alternative investments as of December 31, 2020 and 2019, the hypothetical loss in the fair value of these investments would have been approximately $13.4 million and $10.1 million, respectively.

Other Risk Measurement

We are subject to interest rate risk on our variable interest secured term loan and our policyholder deposits.  Shifting interest rates do not have a material effect on the fair value of these instruments.  The secured term loan has a variable interest rate structure, which reduces the potential exposure to interest rate risk.  The policyholder deposits have short-term interest rate guarantees, which also reduce the accounts’ exposure to interest rate risk.

Item 8. Financial Statements and Supplementary Data

Financial Statements

For our Audited Consolidated Financial Statements as of December 31, 2020 and 2019 and for each of the three years ended December 31, 2020, 2019 and 2018 see Index of the Consolidated Financial Statements in Item 15.   Exhibits and Financial Statements Schedules of this Annual Report on Form 10-K.

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Selected Quarterly Financial Data

(Dollar amounts in thousands)
	2020
	March 31			June 30			September 30		December 31			Total
Revenues
Premiums earned, net	$	875,897		$	858,535		$	922,934	$	948,084		$	3,605,450
Administrative service fees		2,194			2,809			3,752		3,830			12,585
Net investment income		14,311			13,815			14,168		15,253			57,547
Other operating revenues		4,039			303			2,052		2,597			8,991
Total operating revenues		896,441			875,462			942,906		969,764			3,684,573
Net realized investment (losses) gains		(466	)		(221	)		507		821			641
Net unrealized investment (losses) gains on equity investments		(56,806	)		28,338			11,040		25,067			7,639
Other income, net		3,605			801			1,811		3,368			9,585
Total revenues		842,774			904,380			956,264		999,020			3,702,438
Benefits and expenses
Claims incurred		714,522			653,087			761,792		817,419			2,946,820
Operating expenses		162,201			178,659			158,809		156,230			655,899
Total operating costs		876,723			831,746			920,601		973,649			3,602,719
Interest expense		1,853			1,864			2,096		2,173			7,986
Total benefits and expenses		878,576			833,610			922,697		975,822			3,610,705
(Loss) income before taxes		(35,802	)		70,770			33,567		23,198			91,733
Income tax (benefit) expense		(9,650	)		27,181			9,989		(2,952	)		24,568
Net (loss) income		(26,152	)		43,589			23,578		26,150			67,165
Less: Net loss attributable to non-controlling interest		7			10			3		4			24
Net (loss) income attributable to TSM	$	(26,145	)	$	43,599		$	23,581	$	26,154		$	67,189
Basic net (loss) income per share	$	(1.12	)	$	1.88		$	1.02	$	1.13		$	2.90
Diluted net (loss) income per share	$	(1.12	)	$	1.87		$	1.02	$	1.13		$	2.88

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	2019
	March 31		June 30		September 30		December 31		Total
Revenues
Premiums earned, net	$	768,002	$	859,493	$	815,021	$	810,364	$	3,252,880
Administrative service fees		2,632		2,456		2,607		2,251		9,946
Net investment income		15,376		15,062		15,176		16,393		62,007
Other operating revenues		1,577		1,591		3,167		2,218		8,553
Total operating revenues		787,587		878,602		835,971		831,226		3,333,386
Net realized investment gains		1,315		2,364		1,087		1,077		5,843
Net unrealized investment gains on equity investments		19,669		3,323		1,267		7,892		32,151
Other income, net		1,169		1,705		485		847		4,206
Total revenues		809,740		885,994		838,810		841,042		3,375,586
Benefits and expenses
Claims incurred		623,190		706,304		680,010		656,752		2,666,256
Operating expenses		132,663		134,084		136,882		165,777		569,406
Total operating costs		755,853		840,388		816,892		822,529		3,235,662
Interest expense		1,788		1,831		2,062		1,991		7,672
Total benefits and expenses		757,641		842,219		818,954		824,520		3,243,334
Income before taxes		52,099		43,775		19,856		16,522		132,252
Income tax expense		17,316		12,849		5,910		3,300		39,375
Net income		34,783		30,926		13,946		13,222		92,877
Less: Net loss attributable to non-controlling interest		3		5		2		7		17
Net income attributable to TSM	$	34,786	$	30,931	$	13,948	$	13,229	$	92,894
Basic net income per share	$	1.53	$	1.35	$	0.59	$	0.55	$	3.98
Diluted net income per share	$	1.52	$	1.35	$	0.58	$	0.55	$	3.97

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

There have been no changes in or disagreements with our independent registered public accounting firm on accounting or financial disclosures.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Triple-S Management Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Triple-S Management Corporation and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 26, 2021 expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

San Juan, Puerto Rico

February 26, 2021

Stamp No. E441243

affixed to original.

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Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Annual Report on Form 10-K, management, under the supervision and with the participation of the Chief Executive Officer and the Executive Vice President and Chief Financial Officer, conducted an evaluation of the effectiveness of our “disclosure controls and procedures” as of the end of this period (as such term is defined under Exchange Act Rule 13a-15(e)) of the Corporation and its subsidiaries.  Disclosure controls and procedures are designed to ensure that information required to be disclosed by the issuer in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Executive Vice President  and Chief Financial Officer, to allow timely decisions regarding required disclosures.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility that judgments in decision-making can be faulty, and breakdowns as a result of simple errors or mistake.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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Based on this evaluation, our Chief Executive Officer and Executive Vice President and Chief Financial Officer have concluded that as of December 31, 2020, which is the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures are effective to a reasonable level of assurance.

There were no significant changes in our disclosure controls and procedures, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Executive Vice President and Chief Financial Officer completed the evaluation referred to above.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of “internal control over financial reporting,” as defined under Exchange Act Rule 13a-15(f).  The Company’s internal control over financial reporting is a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Executive Vice President and Chief Financial Officer, and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s Consolidated Financial Statements for external purposes in accordance with GAAP, and includes those policies and procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Consolidated Financial Statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Consolidated Financial Statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, under the supervision and with the participation of the Chief Executive Officer and Executive Vice President and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 based on criteria described in the “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) on May 14, 2013.  Based on that assessment and those criteria, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s Consolidated Financial Statements for external reporting purposes in accordance with GAAP.

The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Deloitte & Touche, LLP, an independent registered public accounting firm, as stated in their report that is included in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting (as such term is defined in the Exchange Act Rule 13a-15(f)) occurred during the fiscal quarter ended December 31, 2020 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Item 9B. Other Information

None.

Part III

Item 10. Directors, Executive Officers and Corporate Governance

The Board has established a code of business conduct and ethics that applies to our employees, agents, independent contractors, consultants, officers and directors, as well as a supplemental code of ethics applicable to all financial personnel in supervisory roles of the Company and its affiliates (the Code of Ethics for Financial Managers and Supervisors).

The Code of Ethics for Financial Managers and Supervisors was amended on February 24, 2020.  The changes to the Code of Ethics for Financial Managers and Supervisors include clarifying the reporting requirements pursuant to such code, emphasizing the Code of Ethics for Financial Managers and Supervisors does not limit the ability of employees to report matters to governmental authorities, and further developing the requirements for interaction with auditors.  The amendments did not materially change the responsibilities and obligations that applied previously, and the amendments did not relate to or result in any waiver, explicit or implicit, of any provision of the previous Code of Ethics for Financial Managers and Supervisors.  The description of the Code of Ethics for Financial Managers and Supervisors contained in this report is qualified in its entirety by reference to the full text of the Code of Ethics for Financial Managers and Supervisors, filed as Exhibit 14 to this Annual Report on Form 10-K.

The complete text of the Code of Business Conduct and Ethics and Code of Ethics for Financial Managers and Supervisors is available on the Company’s website at www.triplesmanagement.com.

The information required by this Item is incorporated herein by reference from our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference from our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference from our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference from our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

Item 14. Principal Accountant Fees and Services

The information required by this Item is incorporated herein by reference from our definitive Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

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Part IV

Item 15. Exhibits and Financial Statements Schedules

Financial Statements and Schedules

Financial Statements	Description
F-1	Report of Independent Registered Public Accounting Firm
F-2	Consolidated Balance Sheets as of December 31, 2020 and 2019
F-3	Consolidated Statements of Earnings for the years ended December 31, 2020, 2019 and 2018
F-4	Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
F-5	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018
F-6	Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
F-7	Notes to Consolidated Financial Statements for the years ended December 31, 2020, 2019 and 2018

Financial Statements Schedules	Description
S-1	Schedule II – Condensed Financial Information of the Registrant
S-2	Schedule III – Supplementary Insurance Information
S-3	Schedule IV – Reinsurance
S-4	Schedule V – Valuation and Qualifying Accounts
S-5	Schedule VI – Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations

Schedule I – Summary of Investments was omitted because the information is disclosed in the Notes to Consolidated Financial Statements.

Item 16. Form 10-K Summary

None

The exhibits listed on the Exhibits starting on page 97 of this report are filed herewith or are incorporated herein by reference.

97

Exhibits

Exhibits	Description
3(i)(a)	Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3(i)(d) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865).
3(i)(b)	Amendment to Article Tenth of the Amended and Restated Articles of Incorporation of Triple-S Management Corporation, incorporated by reference to Exhibit 3(i)(b) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 001-33865).
3(i)(c)	Articles of Incorporation of Triple-S Management Corporation, as currently in effect, incorporated by reference to Exhibit 3(i)(c) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 001-33865).
3(i)(d)	Amendments to Article Tenth and Thirteenth of the Amended and Restated Articles of Incorporation of Triple-S Management Corporation (incorporated herein by reference to Exhibit 3(i)(d) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-33865)).
3(i)(e)	Composite Amended and Restated Articles of Incorporation of Triple-S Management Corporation (incorporated herein by reference to Exhibit 3(i)(e) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-33865)).
3(ii)	Amended and Restated Bylaws of Triple-S Management Corporation (incorporated herein by reference to Exhibit 3.1 to TSM’s Current Report on Form 8-K filed on June 11, 2010 (File No. 001-33865)).
10.1	Master Services Agreement, dated as of August 29, 2017, by and between Triple-S Salud, Inc. and OptumInsight, Inc. (incorporated herein by reference to Exhibit 10.2 to TSM’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No. 001-33865)).
10.2	Amendment to Extend Contract for the Provision of Physical & Behavioral Health Services under the Government Health Plan Program dated as of June 30, 2018, by and between the Administracion de Seguros de Salud de Puerto Rico and Triple-S Salud, Inc. (incorporated herein by reference to Exhibit 10.1 to TSM’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-33865)).
10.3	Amendment to the Contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc. to administer the provision of physical and behavioral health services under the Government Health Plan (incorporated herein by reference to Exhibit 10.3 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 001-33865)).
10.4	Federal Employees Health Benefits Contract (incorporated herein by reference to Exhibit 10.5 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).
10.5	Non-Contributory Retirement Program (incorporated herein by reference to Exhibit 10.8 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).

98

Exhibits	Description
10.6	TSM 2007 Incentive Plan, dated October 16, 2007 (incorporated herein by reference to Exhibit C to TSM’s 2007 Proxy Statement (File No. 001-33865)).
10.7	TSM 2017 Incentive Plan (incorporated herein by reference to Exhibit 99.1 to TSM’s Form S-8 dated May 11, 2017 (File No. 001-33865)).
10.8	Blue Shield License Agreement by and between BCBSA and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.11 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
10.9	Blue Shield Controlled Affiliate License Agreement by and among BCBSA, TSS and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.12 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
10.10	Blue Cross License Agreements by and between BCBSA and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.13 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
10.11	Blue Cross Controlled Affiliate License Agreement by and among BCBSA, TSS and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.14 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
10.12	Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS dated August 16, 2007 (incorporated herein by reference to Exhibit 10.15 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
10.13	Addendum Number One to the Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS (incorporated herein by reference to Exhibit 10.15(a) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
10.14	Addendum Number Two to the Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS (incorporated herein by reference to Exhibit 10.15(b) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
10.15	Addendum Number Three to the Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS (incorporated herein by reference to Exhibit 10.15(c) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
10.16	Work Order Agreement between Quality Care Solutions, Inc. and TSS (incorporated herein by reference to Exhibit 10.16 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
10.17	Employment Contract between Roberto García-Rodríguez and TSM (incorporated herein by reference to Exhibit 10.1 to TSM’s Current Report on Form 8-K filed on December 26, 2018 (File No. 001-33865)).
10.18	Credit Agreement with FirstBank Puerto Rico in the amount of $41,000,000 (incorporated herein by reference to Exhibit 10.6 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).

99

Exhibits	Description
10.19	Credit Agreement with FirstBank Puerto Rico in the amount of $20,000,000 (incorporated herein by reference to Exhibit 10.7 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).
10.20	Credit Agreement dated December 28, 2016 by and between Triple-S Management Corporation and FirstBank Puerto Rico (incorporated herein by reference to Exhibit 10.1 to TSM’s Current Report on Form 8-K filed on December 30, 2016 (File No. 001-33865)).
10.21	Agreement between the Administracion de Seguros de Salud de Puerto Rico and Triple-S Salud, Inc. for the Provision of Physical & Behavioral Health Services under the Government Health Plan Program dated as of September 21, 2018, (incorporated herein by reference to Exhibit 10.1 to TSM’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (File No. 001-33865)).
10.22*	Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of February 21, 2020.
10.23*	Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of February 26, 2020.
10.24	Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of May 1, 2020.
10.25	Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of June 29, 2020.
10.26	Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of July 31, 2020.
10.27	Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of August 28, 2020.
10.28	Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of September 9, 2020.
10.29	Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of September 24, 2020.
10.30*	Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of December 17, 2020.

100

Exhibits	Description
11.1	Statement re computation of per share earnings; an exhibit describing the computation of the earnings per share 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 II of this Annual Report on Form 10-K.
14	Code of Ethics for Financial Managers and Supervisors.
21*	List of Subsidiaries of TSM
23.1*	Consent of Independent Registered Public Accounting Firm (Deloitte & Touche LLP).
31.1*	Certification of the President and Chief Executive Officer required by Rule 13a-14(a)/15d-14(a).
31.2*	Certification of the Vice President of Finance and Chief Financial Officer required by Rule 13a-14(a)/15d-14(a).
32.1*	Certification of the President and Chief Executive Officer required pursuant to 18 U.S. Section 1350.
32.2*	Certification of the Vice President of Finance and Chief Financial Officer required pursuant to 18 U.S. Section 1350.
99.1	Incentive Compensation Recoupment Policy (incorporated herein by reference to Exhibit 99.1 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-33865)).

All other exhibits for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions or are inapplicable, and therefore have been omitted.

*  Filed herein.

101

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Triple-S Management Corporation

Registrant

By:	/s/ Roberto García-Rodríguez	Date:	February 26, 2021
	Roberto García-Rodríguez
	President and Chief Executive Officer

By:	/s/ Juan J. Román-Jiménez	Date:	February 26, 2021
	Juan J. Román-Jiménez
	Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Luis A. Clavell-Rodríguez	Date:	February 26, 2021
	Luis A. Clavell-Rodríguez
	Director and Chairman of the Board

By:	/s/ Cari M. Domínguez	Date:	February 26, 2021
	Cari M. Domínguez
	Director and Vice Chairman of the Board

By:	/s/ David H. Chafey, Jr	Date:	February 26, 2021
	David H. Chafey, Jr.
	Director

By:	/s/ Manuel Figueroa-Collazo	Date:	February 26, 2021
	Manuel Figueroa-Collazo Director

By:	/s/ Joseph A.  Frick	Date:	February 26, 2021
	Joseph A.  Frick
	Director

102

By:	/s/ Roberto Santa María-Ros	Date:	February 26, 2021
	Roberto Santa María-Ros
	Director

By:	/s/ Gail B. Marcus	Date:	February 26, 2021
	Gail B. Marcus
	Director

By:	/s/ Stephen L. Ondra	Date:	February 26, 2021
	Stephen L. Ondra
	Director

103

Triple-S Management Corporation and Subsidiaries

Consolidated Financial Statements

December 31, 2020, 2019, and 2018

Page(s)

Report of Independent Registered Public Accounting Firm	2
Consolidated Financial Statements
Consolidated Balance Sheets	5
Consolidated Statements of Earnings	6
Consolidated Statements of Comprehensive Income	7
Consolidated Statements of Stockholders’ Equity	8
Consolidated Statements of Cash Flows	9
Notes to Consolidated Financial Statements	11–75

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Triple-S Management Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Triple-S Management Corporation and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of earnings, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2021 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill – Medicare Advantage Reporting Unit — Refer to Notes 2 and 9 the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of the reporting unit using the income approach and the market approach. The determination of fair value using the income approach requires management to make significant estimates and assumptions related to future premiums, medical loss ratio, operating expenses and net income and discount rate based on industry’s weighted average cost of capital. The market approach is developed upon the valuation multiples of various financial or operational measures calculated using the market value of minority interest in publicly traded guideline companies.

Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, or both. The fair value of the Medicare Advantage reporting unit exceeded the carrying value as of the measurement date and, therefore, no impairment was recognized.

2

We identified goodwill as a critical audit matter because of the significant judgments made by management to estimate the fair value of the reporting unit. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions of the income approach related to the selection of the discount rate and forecasts of future premiums, medical loss ratio, operating expenses and net income.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures to evaluate the reasonableness of management’s estimates and assumptions of the income approach related to the discount rate and forecast of future premiums, medical loss ratio, operating expenses and net income (“forecasts”) for the Medicare Advantage reporting unit included the following among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the forecasts and the selection of the discount rates.

• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in press releases, analyst and industry reports of the Company and companies in its peer group.

• We considered the impact of changes in the regulatory environment on management’s forecasts.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, including testing the mathematical accuracy of the calculation and (2) discount rate and company specific risks by:

o Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation

o Developing a range of independent discount rate estimates and comparing to those selected by management.

Claims Liabilities —Managed Care Segment —Refer to Notes 2 and 11 to the financial statements

Critical Audit Matter Description

The Company determines its managed care liabilities for unpaid claims using an actuarial process that entails using both historical claim payment patterns as well as medical cost trends to project a best estimate of incurred but not yet paid claims. Because the methodology is based upon historical information, actuarial adjustments are made for known or suspected operational and environmental changes to estimate emerging impacts of benefit costs and payment speed including an estimated provision for adverse deviation for known environmental factors that are reasonably likely to affect the required level of reserves. The most significant assumptions used in the development of managed care claim liabilities included current payment experience, trend factors and completion factors.

We identified the managed care claim liabilities as a critical audit matter because of the significant assumptions made by management in estimating the liability. This required a high degree of auditor judgment as well as increased effort, including the involvement of actuarial specialists in performing procedures to evaluate the reasonableness of management’s judgement in estimating the liability.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the estimate of the liability for medical costs incurred but not yet paid included the following, among others:

• We tested the effectiveness of controls related to managed care claim liabilities, including those over the assumptions used to estimate the medical costs incurred but not yet paid.

• We evaluated the methods and assumptions used by management to estimate the medical costs incurred but not yet paid by:

o Testing the underlying data that served as the basis for the actuarial analysis, including historical paid claims, to test that the inputs to the actuarial estimate were reasonable.

o Comparing management prior-year assumptions of payment experience, trend factors and completion factors to actuals incurred during the current year.

• With the assistance of our actuarial specialists, we developed an independent estimate of medical costs incurred but not yet paid and compared our estimate to management’s estimate.

3

Claims Liabilities —Property and Casualty Segment —Refer to Notes 2 and 11 to the financial statements

Critical Audit Matter Description

Property and casualty claim liabilities represent individual case estimates for reported claims and estimates for unreported losses. These liabilities include amounts for claims related to Hurricane Maria. These reserves require management to make significant assumptions about the frequency and severity of claims. The projected settlement values of these claims are estimated based on the Company’s historical claims experience and are established using actuarial methods followed in the insurance industry.

We identified property and casualty claims liabilities as a critical audit matter because of the significant assumptions of frequency and severity of claims made by management in estimating the liabilities. This required a high degree of auditor judgment as well as increased effort, including the involvement of actuarial specialists in performing procedures to evaluate the reasonableness of management’s judgments in estimating the liabilities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the property and casualty claims liabilities included the following, among others:

• We tested the effectiveness of controls related to property and casualty claims liabilities, including those over the assumptions about the frequency and severity of claim in projecting the settlement value of reported and unreported claims.

• We tested the underlying data that served as the basis for the estimate, including historical claims, to test that the inputs to the actuarial estimate were reasonable.

• With the assistance of our actuarial specialists, we tested the mathematical accuracy of the calculation and evaluated the methods and assumptions used by management to estimate the liabilities.

/s/ DELOITTE & TOUCHE LLP

San Juan, Puerto Rico

February 26, 2021

Stamp No. E441242

affixed to original.

We have served as the Company’s auditor since 2015.

4

Triple-S Management Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, 2020 and 2019

(dollar in thousands, except per share information)

Assets	2020			2019
Investments and cash
Fixed-maturities available-for-sale, at fair value (amortized cost of $1,227,422 in 2020 and $1,173,043 in 2019)	$	1,342,465		$	1,242,883
Fixed-maturities held-to-maturity, at amortized cost (fair value of $2,085 in 2020 and $2,019 in 2019)		1,867			1,860
Equity investments, at fair value (amortized cost of $351,233 in 2020 and $242,069 in 2019)		404,328			287,525
Other invested assets, at net asset value (amortized cost of $112,171 in 2020 and $97,575 in 2019)		114,905			100,508
Policy loans		10,459			10,861
Cash and cash equivalents		110,989			109,837
Total investments and cash		1,985,013			1,753,474
Premium and other receivables, net		488,840			567,692
Deferred policy acquisition costs and value of business acquired		248,325			234,885
Property and equipment, net		131,974			88,588
Deferred tax asset		119,534			77,294
Goodwill		28,614			28,599
Other assets		86,118			68,294
Total assets	$	3,088,418		$	2,818,826
Liabilities and Stockholders’ Equity
Claim liabilities	$	787,102		$	709,258
Liability for future policy benefits		414,997			386,017
Unearned premiums		97,481			93,301
Policyholder deposits		206,109			189,120
Liability to Federal Employees’ Health Benefits and     Federal Employees’ Programs		45,109			47,781
Accounts payable and accrued liabilities		332,699			325,761
Deferred tax liability		15,046			10,257
Short-term borrowings		30,000			54,000
Long-term borrowings		52,751			25,694
Liability for pension benefits		139,611			34,465
Total liabilities		2,120,905			1,875,654
Commitments and contingencies
Stockholders’ equity
Triple-S Management Corporation stockholders’ equity Common stock Class B, $1 par value. Authorized 100,000,000 shares; issued and outstanding 23,430,292 and 23,799,633 shares at December 31, 2020 and 2019, respectively		23,430			23,800
Additional paid-in capital		57,399			60,504
Retained earnings		897,221			830,198
Accumulated other comprehensive income, net		(9,820	)		29,363
Total Triple-S Management Corporation stockholders’ equity		968,230			943,865
Non-controlling interest in consolidated subsidiary		(717	)		(693	)
Total stockholders’ equity		967,513			943,172
Total liabilities and stockholders’ equity	$	3,088,418		$	2,818,826

The accompanying notes are an integral part of these consolidated financial statements.

5

Triple-S Management Corporation and Subsidiaries

Consolidated Statements of Earnings

December 31, 2020, 2019 and 2018

(dollars in thousands, except per share information)

	2020		2019		2018
Revenues:
Premiums, net	$	3,605,450	$	3,252,880	$	2,938,591
Administrative service fees		12,585		9,946		14,701
Net investment income		57,547		62,007		61,909
Other operating revenues		8,991		8,553		5,794
Total operating revenues		3,684,573		3,333,386		3,020,995
Net realized investment gains		641		5,843		298
Net unrealized investment gains (losses) on equity investments		7,639		32,151		(36,546	)
Other income, net		9,585		4,206		11,312
Total revenues		3,702,438		3,375,586		2,996,059
Benefits and expenses:
Claims incurred, net of reinsurance		2,946,820		2,666,256		2,527,613
Operating expenses		655,899		569,406		554,715
Total operating costs		3,602,719		3,235,662		3,082,328
Interest expense		7,986		7,672		6,903
Total benefits and expenses		3,610,705		3,243,334		3,089,231
Income (loss) before taxes		91,733		132,252		(93,172	)
Income tax expense (benefit)		24,568		39,375		(29,866	)
Net income (loss)		67,165		92,877		(63,306	)
Less: Net loss attributable to non-controlling interest		24		17		4
Net income (loss) attributable to Triple-S Management Corporation	$	67,189	$	92,894	$	(63,302	)
Earnings per share attributable to Triple-S Management Corporation
Basic net income (loss) per share	$	2.90	$	3.98	$	(2.76	)
Diluted net income (loss) per share	$	2.88	$	3.97	$	(2.76	)

The accompanying notes are an integral part of these consolidated financial statements.

6

Triple-S Management Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

December 31, 2020, 2019, and 2018

(dollars in thousands)

	2020			2019			2018
Net income (loss)	$	67,165		$	92,877		$	(63,306	)
Other comprehensive income (loss), net of tax:
Net unrealized change in fair value of available-for-sale-securities, net of taxes		33,859			30,522			(9,048	)
Defined benefit pension plan:
Actuarial (loss) gain, net		(73,042	)		(4,221	)		738
Total other comprehensive (loss) income, net of tax		(39,183	)		26,301			(8,310	)
Comprehensive income (loss)		27,982			119,178			(71,616	)
Comprehensive loss attributable to non-controlling interest		24			17			4
Comprehensive income (loss) attributable to Triple-S Management Corporation	$	28,006		$	119,195		$	(71,612	)

The accompanying notes are an integral part of these consolidated financial statements.

7

Triple-S Management Corporation and Subsidiaries

Consolidated Statements of Stockholders’ Equity

December 31, 2020, 2019 and 2018

(dollars in thousands)

	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Triple-S Management Corporation Stockholders’ Equity			Non-controlling Interest in Consolidated Subsidiary			Total Stockholders’ Equity
Balance, December 31, 2017	$	951		$	22,627		$	53,142		$	785,390		$	51,254		$	913,364		$	(682	)	$	912,682
Share-based compensation		-			287			3,070			-			-			3,357			-			3,357
Repurchase and retirement of common stock		-			(934	)		(22,191	)		-			-			(23,125	)		-			(23,125	)
Comprehensive (loss) income		-			-			-			(63,302	)		(8,310	)		(71,612	)		6			(71,606	)
Cumulative effect adjustment due to implementation of ASU 2016-01		-			-			-			39,882			(39,882	)		-			-			-
Balance, December 31, 2018	$	951		$	21,980		$	34,021		$	761,970		$	3,062		$	821,984		$	(676	)	$	821,308
Share-based compensation		-			222			11,383			-			-			11,605			-			11,605
Repurchase and retirement of common stock		-			(534	)		(9,573	)		-			-			(10,107	)		-			(10,107	)
Issuance of Common Stock		48			-			1,151			-			-			1,199			-			1,199
Stock dividend		-			1,133			23,522			(24,655	)		-			-			-			-
Dividend		-			-			-			(11	)		-			(11	)		-			(11	)
Common Stock Class A conversion to Class B		(999	)		999			-			-			-			-			-			-
Comprehensive income (loss)		-			-			-			92,894			26,301			119,195			(17	)		119,178
Balance, December 31, 2019	$	-		$	23,800		$	60,504		$	830,198		$	29,363		$	943,865		$	(693	)	$	943,172
Share-based compensation		-			604			11,285			-			-			11,889			-			11,889
Repurchase and retirement of common stock		-			(974	)		(14,390	)		-			-			(15,364	)		-			(15,364	)
Comprehensive income (loss)		-			-			-			67,189			(39,183	)		28,006			(24	)		27,982
Cummulative effect adjustment due to implementation of ASU 2016-13		-			-			-			(166	)		-			(166	)		-			(166	)
Balance, December 31, 2020	$	-		$	23,430		$	57,399		$	897,221		$	(9,820	)	$	968,230		$	(717	)	$	967,513

The accompanying notes are an integral part of these consolidated financial statements.

8

Triple-S Management Corporation and Subsidiaries

Consolidated Statements of Cash Flows

December 31, 2020, 2019, and 2018

(dollars in thousands)

	2020			2019			2018
Cash flows from operating activities
Net income (loss)	$	67,165		$	92,877		$	(63,306	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		14,403			14,600			13,535
Net amortization of investments		3,342			2,326			3,976
Provision for doubtful receivables		3,556			18,899			11,321
Deferred tax (benefit) expense		(2,285	)		3,661			(32,078	)
Net realized investment gains on sale of securities		(641	)		(5,843	)		(298	)
Net unrealized (gains) losses on equity investments		(7,639	)		(32,151	)		36,546
Interest credited to policyholder deposits		6,383			5,978			5,722
Share-based compensation		11,889			11,605			3,357
Gain on sale of property and equipment		154			-			-
(Increase) decrease in assets
Premium and other receivables, net		83,344			41,853			259,561
Deferred policy acquisition costs and value of business acquired		(15,905	)		(21,746	)		(12,258	)
Deferred taxes		(7	)		(226	)		946
Other assets		2,827			1,385			(1,470	)
Increase (decrease) in liabilities
Claim liabilities		77,844			(227,531	)		(170,087	)
Liability for future policy benefits		28,980			24,522			21,988
Unearned premiums		4,180			10,311			(3,359	)
Liability to FEHBP		(2,672	)		2,855			(7,361	)
Accounts payable and accrued liabilities		(17,073	)		39,799			(59,276	)
Net cash provided by (used in) operating activities		257,845			(16,826	)		7,459

The accompanying notes are an integral part of these consolidated financial statements.

9

Triple-S Management Corporation and Subsidiaries

Consolidated Statements of Cash Flows

December 31, 2020, 2019 and 2018

(Dollars in thousands)

	2020			2019			2018
Cash flows from investing activities
Proceeds from investments sold or matured
Securities available-for-sale:
Fixed-maturities sold	$	149,265		$	424,239		$	1,302,810
Fixed-maturities matured		84,416			21,258			24,945
Securities held-to-maturity:
Fixed-maturities matured		1,079			1,708			8,182
Equity investments sold		134,926			169,153			203,841
Other invested assets sold		17,013			4,554			3,714
Acquisition of investments
Securities available-for-sale
Fixed-maturities		(287,998	)		(449,043	)		(1,343,346	)
Securities held-to-maturity
Fixed-maturities		(1,088	)		(1,078	)		(8,356	)
Equity investments		(248,123	)		(143,972	)		(156,486	)
Other invested assets		(30,178	)		(28,501	)		(47,221	)
Other investments		(5,683	)		(2,981	)		(705	)
Net change in policy loans		402			(1,392	)		(392	)
Net capital expenditures		(57,873	)		(20,820	)		(19,840	)
Capital contribution to equity method investees		(8,184	)		(11,418	)		-
Net cash used in investing activities		(252,026	)		(38,293	)		(32,854	)
Cash flows from financing activities
Change in outstanding checks in excess of bank balances		(3,249	)		(2,384	)		(22,243	)
Net (repayments) proceeds from short-term borrowings		(24,000	)		54,000			-
Proceeds of long-term borrowings		30,841			-			-
Repayments of long-term borrowings		(3,883	)		(3,236	)		(3,236	)
Repurchase and retirement of common stock		(14,982	)		(9,989	)		(22,377	)
Dividends paid		-			(11	)		-
Proceeds from policyholder deposits		25,740			28,879			18,531
Surrenders of policyholder deposits		(15,134	)		(19,847	)		(26,677	)
Net cash (used in) provided by financing activities		(4,667	)		47,412			(56,002	)
Net increase (decrease) in cash and cash equivalents		1,152			(7,707	)		(81,397	)
Cash and cash equivalents
Beginning of year		109,837			117,544			198,941
End of year	$	110,989		$	109,837		$	117,544

The accompanying notes are an integral part of these consolidated financial statements.

10

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

1. Nature of Business

Triple-S Management Corporation (the Corporation, the Company, Triple-S, or TSM) was incorporated under the laws of the Commonwealth of Puerto Rico to engage among other things, as the holding company of entities primarily involved in the insurance industry. Triple-S is a health services company and one of the top players in the Puerto Rico health care industry. We have the exclusive right to use the Blue Cross Blue Shield (BCBS) name and mark throughout Puerto Rico, the U.S. Virgin Islands (USVI), Costa Rica, the British Virgin Islands (BVI) and Anguilla, and we offer a broad portfolio of managed care and related products in the Commercial, Medicare Advantage and Medicaid markets. Triple-S is also a well-known brand in the life insurance and property and casualty insurance markets, with a significant share in each.

The Company was incorporated under the laws of the Commonwealth of Puerto Rico to engage, among other things, as the holding company of entities primarily involved in the insurance industry. The Company has the following wholly-owned subsidiaries:

• Triple-S Salud, Inc. (TSS) and Triple-S Advantage, Inc. (TSA), which are managed care organizations that provide health benefits services to subscribers through contracts with hospitals, physicians, dentists, laboratories, and other organizations

• Triple-S Vida, Inc. (TSV) and Triple-S Blue, Inc. (TSB), which are engaged in the underwriting of life and accident and health insurance policies and the administration of annuity contracts

• Triple-S Propiedad, Inc. (TSP), which is engaged in the underwriting of property and casualty insurance policies.

The Company, TSS, TSA and TSB are members of the Blue Cross and Blue Shield Association (BCBSA). The Company and the above mentioned subsidiaries are subject directly or indirectly to the regulations of the Commissioner of Insurance of the Commonwealth of Puerto Rico (the Commissioner of Insurance), the General Superintendence of Insurance of Costa Rica, the Office of the Commissioner of Insurance of the government of the U.S. Virgin Islands (USVI), the British Virgin Islands (BVI) Financial Services Commission, and the Anguilla Financial Services Commission.

The Company has begun a program to achieve sustained growth as a leading health services company providing holistic and affordable health care. The Company owns a controlling interest in a health clinic in Puerto Rico, as part of our strategic initiatives, and besides its current operations, this health clinic owns controlling interests in other health clinics throughout the island.

Through our subsidiary TSS, we provide services to participants of the Commonwealth of Puerto Rico Health Insurance Plan (similar to Medicaid) (Medicaid).  On September 21, 2018, TSS entered into a contract with the Puerto Rico Health Insurance Administration (ASES by its Spanish acronym) to offer health care services to Medicaid and Child Health Insurance subscribers for the government of Puerto Rico’s revised Medicaid health insurance program.  The contract is effective from November 1, 2018 to September 30, 2021, which term may be extended an additional year at ASES’s option.  The revised delivery model requires managed care organizations (MCOs) to serve subscribers in an island-wide basis, rather than through the assignment of specific regions within the Island.  Under the new agreement, TSS is responsible for the provision of medical, mental, pharmacy, and dental healthcare services on an at-risk basis to subscribers who enroll with TSS.  ASES pays TSS a per member per month rate that varies depending on the clinical condition or category of the subscriber.  Prior to the effective date of the new contract, TSS provided medical, mental, pharmacy and dental healthcare services to Medicaid subscribers in the Metro-North and West regions of the government of Puerto Rico’s health insurance program on an at-risk basis.

11

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

A substantial majority of the Company’s business activity is within Puerto Rico, and as such, the Company is subject to the risks associated with the Puerto Rico economy.

2. Significant Accounting Policies

The following are the significant accounting policies followed by the Company and its subsidiaries:

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP).  The consolidated financial statements include the financial statements of the Company and its subsidiaries.  Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period.  Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid debt instruments with maturities of three months or less at the date of acquisition to be cash equivalents.  Cash and cash equivalents are recorded at cost, which approximates fair value.  Cash equivalents of $43,032 and $25,060 at December 31, 2020 and 2019, respectively, consist principally of money market funds and certificates of deposit with original maturities of three months or less.

Investments

Fixed-maturities

Investment in debt securities at December 31, 2020 and 2019 consisted mainly of obligations of government‑sponsored enterprises, U.S. Treasury securities and obligations of U.S. government instrumentalities, municipal securities, corporate bonds, residential mortgage-backed securities, and collateralized mortgage obligations.  The Company classifies its debt securities into one of two categories: available-for-sale or held-to-maturity.  Securities classified as held-to-maturity are those securities in which the Company has the ability and intent to hold until maturity.  All other securities not included in held-to-maturity are classified as available-for-sale.

Available-for-sale securities are recorded at fair value.  The fair values of debt securities (both available-for-sale and held-to-maturity investments) are based on quoted market prices for those or similar investments at the reporting date.  Held-to-maturity debt securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums and discounts, respectively.  For available-for-sale securities, unrealized holding gains or losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of Other Comprehensive Income. Realized gains and losses from the sale of available-for-sale securities are included in earnings and determined on a specific‑identification basis.

12

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Transfers of securities between categories are recorded at fair value at the date of transfer.  Unrealized holding gains or losses associated with transfers of securities from held-to-maturity to available-for-sale are recorded as a separate component of Other Comprehensive Income. These are maintained and amortized into earnings over the remaining life of the security as an adjustment to yield in a manner consistent with the amortization or accretion of premium or discount on the associated security.

If a fixed-maturity security is in an unrealized loss position and the Company does not intend to sell the security, or it is more likely than not that the Company will not have to sell the fixed maturity security before recovery of its amortized cost basis, the credit component of the impairment, if any, is recorded as an allowance for credit losses with an offsetting entry in the Company’s Consolidated Statements of Earnings. The non-credit component of the impairment is recognized in Other Comprehensive Income. Furthermore, unrealized losses caused entirely by non-credit related factors associated with fixed-maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in Accumulated Other Comprehensive Income.

If a fixed-maturity security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the fixed-maturity security before recovery of its amortized cost basis, the Company will write off any previously recognized allowance for credit losses and will decrease the amortized cost basis of the security. If the allowance has been fully written off and the fair value is less than its amortized cost basis, the amortized cost basis is written down and an impairment loss is recognized in the Company’s Consolidated Statements of Earnings. As of December 31, 2020, no allowance for credit losses was recorded in the consolidated financial statements.

The credit component of the impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security at the date of acquisition. If there is an increase in the projected future cash flows of the fixed-maturity security in subsequent periods, all or part of the allowance for credit losses may be reversed.

In addition, the Company considers the following factors when evaluating whether or not a credit loss exists: the reasons for the impairment, the severity of the impairment, market conditions, changes in the security’s rating, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates.

Premiums and discounts are amortized or accreted over the life of the related held-to-maturity or available-for-sale security as an adjustment to yield using the effective interest method.  Dividend and interest income are recognized when earned.

The Company regularly invests in mortgaged-backed securities and other securities subject to prepayment and call risk.  Significant changes in prevailing interest rates may adversely affect the timing and amount of cash flows on such securities.  In addition, the amortization of market premium and accretion of market discount for mortgaged-backed securities is based on historical experience and estimates of future payment speeds on the underlying mortgage loans.  Actual prepayment speeds may differ from original estimates and may result in material adjustments to amortization or accretion recorded in future periods.

13

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Equity investments

Investment in equity securities at December 31, 2020 and 2019 consisted of mutual funds whose underlying assets are comprised of domestic equity securities, international equity securities and higher risk fixed income instruments. Equity investments are recorded at fair value.  The fair values of equity investments are mainly based on quoted market prices for those or similar investments at the reporting date.  For a specific equity investment, the fair value is estimated using the net asset value (NAV) of the Company’s ownership interest in the partnership.  Following the implementation on January 1, 2018 of Accounting Standards Update (ASU) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, unrealized holding gains and losses on equity investments are included in earnings.  Realized gains and losses from the sale of equity investments are included in earnings and are determined on a specific‑identification basis.

Other invested assets

Other invested assets at December 31, 2020 and 2019 consisted mainly of alternative investments in partnerships that invest in several private debt and private equity funds.  Portfolios are diversified by vintage year, stage, geography, business sectors and number of investments. These investments are not redeemable with the funds. Distributions from each fund are received as the underlying investments of the fund is liquidated. It is estimated that the underlying assets of the funds will be liquidated in the next 5 to 12 years. The fair value of the investments in this class have been estimated using the net asset value (NAV) of the Company’s ownership interest in the partnerships. Total unfunded capital commitments for these positions was $52,557 as of December 31, 2020.  The remaining average commitments period is approximately three years.

Revenue Recognition

Managed Care

Subscriber premiums on the managed care business are billed in advance of their respective coverage period and the related revenue is recorded as earned during the coverage period.  Managed care premiums are billed in the month prior to the effective date of the policy with a grace period of up to two months.  If the insured fails to pay, the policy can be cancelled at the end of the grace period at the option of the Company.

Premiums for the Medicaid business are based on a bid contract with ASES and billed in advance of coverage period. The Medicaid contract that became effective November 1, 2018 includes a minimum medical loss ratio (MLR) provision that mandates that the Company remit to ASES the excess of the target MLR of 92% over the actual MLR for any given contract year and be reflected as an adjustment to premium revenue in current operations. The target established in the contract follows regulation requirements of the Centers for Medicare and Medicaid Services (CMS) for Medicaid managed care contracts codified in 42 CFR part 438. As of December 31, 2020, and 2019, there was no accrued amount due to ASES related to this provision.

Under the risk-based Medicaid contract that expired on October 31, 2018, an excess profit agreement stipulates that the profit of TSS for a specified period within the contract term shall not exceed two and a half percentage (2.5%) of the fixed amount paid by ASES for each member.  In the event that the profit exceeds this amount, TSS and ASES shall share the excess profit in proportions of fifty percent (50%), subject to the compliance by TSS with certain quality metrics.  ASES retains the right to determine the outcome of the excess profit agreement based on audited financial statements of the contracted services submitted annually by TSS and the validation of the incurred-but-not-reported reserve by ASES’s actuary. We report any estimated net amounts due to ASES within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets. As of December 31, 2020 and 2019, the Company had accrued an estimated profit sharing of $1,948, respectively.

14

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

We reassess the profitability on existing medical insurance contracts when current operating results or forecasts indicate probable future losses. We establish a premium deficiency reserve in current operations to the extent that the sum of expected future costs, claim adjustment expenses, and maintenance costs exceeds related future premiums under contracts without consideration of investment income. For purposes of determining premium deficiencies, contracts are grouped in a manner consistent with our method of acquiring, servicing, and measuring the profitability of such contracts. Losses recognized as a premium deficiency result in a beneficial effect in subsequent periods as operating losses under these contracts are charged to the liability previously established. As of December 31, 2020, the Company established a premium deficiency reserve amounting to $9,900 which is included within Accounts Payable and Accrued Liabilities in ther Consolidated Balance Sheets.

Premiums for the Medicare Advantage (MA) business are based on a bid contract with CMS and billed in advance of the coverage period.  We recognize premium revenue in the period in which we are obligated to provide services to our members. We record premiums earned but not received as premiums receivable and record premiums received in advance of the period of service as unearned premiums in the Consolidated Balance Sheets. Unearned premiums are recognized as revenue throughout the related coverage period.  MA contracts are renewed annually and provide for a risk factor to adjust premiums paid for members that represent a higher or lower risk to the Company.  Retroactive rate adjustments are made periodically based on the aggregate health status and risk scores of the Company’s MA membership.  These risk adjustments are evaluated quarterly, based on actuarial estimates.  Actual results could differ from these estimates.  We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured, which is possible as additional diagnosis code information is reported to CMS, when the ultimate settlements are received from CMS, or when we receive notification of such settlement amounts.  The data provided to CMS to determine members’ risk scores is subject to audit by CMS even after the annual settlements occur, which may result in the refund of premiums to CMS. The recorded estimate is revised and reflected in operating results in the period in which additional information becomes available.

Prescription drug coverage is offered to Medicare eligible beneficiaries as part of MA plans (MA-PD).  Premiums are based on a bid contract with CMS that considers the estimated costs of providing prescription drug benefits to enrolled participants.  MA-PD premiums are subject to adjustment, positive or negative, based upon the application of risk corridors that compare the estimated prescription drug costs included in the bids to CMS to actual prescription drug costs.  Variances exceeding certain thresholds may result in CMS making additional payments or in CMS requesting a refund for a portion of the premiums collected.  The Company estimates and records adjustments to earned premiums related to estimated risk corridor payments based on actual prescription drug costs for each reporting period as if the annual contract were to expire at the end of each reporting period.

Administrative service fees include revenue from certain groups that have managed care contracts that provide for the group to be at risk for all or a portion of their claims experience.  For these groups, the Company is not at risk and only handles the administration of managed care coverage for an administrative service fee.  The Company pays claims under commercial self-funded arrangements from its own funds, and subsequently receives reimbursement from these groups.  Claims paid under self-funded arrangements are excluded from the Claims Incurred, Net of Reinsurance in the accompanying Consolidated Statement of Earnings. Administrative service fees under the self-funded arrangements are recognized based on the group’s membership or incurred claims for the period multiplied by an administrative fee rate plus other fees.  In addition, some of these self-funded groups purchase aggregate and/or specific stop-loss coverage.  In exchange for a premium, the group’s aggregate liability or liability on any one episode of care is capped for the year.  Premiums for the stop-loss coverage are actuarially determined based on experience and other factors and are recorded as earned over the period of the contract in proportion to the coverage provided.  This fully insured portion of premiums is included within the Premiums Earned, net in the accompanying Consolidated Statements of Earnings.

15

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Life Insurance

Premiums on life insurance policies are billed in advance of their respective coverage period and the related revenue is recorded as earned when due.  Premiums on accident and health and other short‑term policies are recognized as earned primarily on a pro rata basis over the contract period.  Premiums on credit life policies are recognized as earned in proportion to the amounts of insurance in‑force.  Revenues from universal life and interest sensitive policies represent amounts assessed against policyholders, including mortality charges, surrender charges actually paid, and earned policy service fees. Revenues for limited payment contracts are recognized over the period that benefits are provided rather than on collection of premiums.

Property and Casualty Insurance

Premiums on property and casualty contracts are billed in advance of their respective coverage period and recognized as earned on a pro rata basis over the policy term.  The portion of premiums related to the period prior to the end of coverage is recorded in the Consolidated Balance Sheets as Unearned Premiums and is transferred to premium revenue as earned.

Allowance for Doubtful Receivables

The allowance for doubtful receivables is based on management’s evaluation of the aging of accounts and such other factors that deserve current recognition, including the continued deterioration of the local economy, the exposure to government accounts and the challenging business environment in the island.  This evaluation is performed individually on larger accounts and includes the use of all available information such as the customer’s credit worthiness and other relevant information.  Actual losses could differ from these estimates.  Receivables are charged-off against their respective allowance accounts when deemed to be uncollectible.

Deferred Policy Acquisition Costs and Value of Business Acquired

Certain direct costs of acquiring business in the Life Insurance, and Property and Casualty segments are deferred by the Company.  Substantially all acquisition costs related to the Managed Care segment are expensed as incurred.

In the Life Insurance segment, deferred policy acquisition costs (DPAC) consist of commissions and certain expenses related to the successful acquisition of the production of life, annuity, accident and health, and credit business.  In the event that future premiums, in combination with policyholder reserves and anticipated investment income, could not provide for all future benefits and maintenance and settlement expenses, the amount of DPAC would be reduced to provide for such amount.  The related amortization is provided over the anticipated premium-paying period of the related policies in proportion to the ratio of annual premium revenue to expected total premium revenue to be received over the life of the policies.  Interest is considered in the amortization of DPAC and value of business acquired (VOBA).  For these contracts interest is considered at a level rate at the time of issue of each contract, of 3.90% for 2020,4.40% for 2019 and from 3.90% to 5.75% for 2018, and, in the case of the value of business acquired, at the time of any acquisition.

16

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

For certain other long-duration contracts, deferred amounts are amortized at historical and forecasted credited interest rates.  Expected premium revenue is estimated by using the same mortality and withdrawal assumptions used in computing liabilities for future policy benefits.  The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated net realizable value.  In determining estimated net realizable value, the computations give effect to the premiums to be earned, related investment income, losses and loss-adjustment expenses, and certain other costs expected to be incurred as the premium is earned.

Costs deferred on universal life and interest sensitive products are amortized as a level percentage of the present value of estimated gross profits from investment yields, mortality, expenses and surrender charges.  Estimates are based on the Company’s experience as adjusted to provide for possible adverse deviations.  These estimates are periodically reviewed and compared with actual experience.  When it is determined that future expected experience differs significantly from that assumed, the estimates are updated for current and future issues which may result in a change or release of deferred policy acquisition costs amortization through the Consolidated Statements of Earnings.

The VOBA assigned to the life insurance in-force at the date of the acquisition is amortized using methods similar to those used to amortize the DPAC of the life and accident and health segment.

In the Property and Casualty segment, acquisition costs consist primarily of commissions and other cost incurred during the production of business and are deferred and amortized ratably over the terms of the policies.

Property and Equipment

Property and equipment are stated at cost.  Maintenance and repairs are expensed as incurred.  Depreciation is calculated on the straight-line method over the estimated useful lives of the assets.  Costs of computer equipment, programs, systems, installations and enhancements are capitalized and amortized straight-line over their estimated useful lives.  The following is a summary of the estimated useful lives of the Company’s property and equipment:

Asset Category	Estimated Useful Life
Buildings	35 years
Building improvements	5 years
Leasehold improvements	Lesser of lease term or 10 years
Office furniture	7 years
Computer software	3 to 10 years
Computer equipment, equipment, and automobiles	3 to 5 years

Long-Lived Assets, including Goodwill

Long-Lived Assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated future cash flows, we recognize an impairment charge equal to the amount by which the carrying amount of the asset exceeds the fair value of the asset.  The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate Asset and Liability sections of the Consolidated Balance Sheets.  During 2020, 2019, and 2018 impairment tests on intangible assets were performed, and based on the results of the tests no impairment was recorded.

17

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Goodwill and Intangible Assets that have indefinite useful lives are tested at least annually for impairment, and are tested for impairment more frequently if events or circumstances indicate that the asset might be impaired.  An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.  For Goodwill, the impairment determination is made at the reporting unit level.  The Company may perform a qualitative analysis or perform a quantitative analysis.  In the qualitative analysis, the Company determines if it is more likely than not that the fair value of a reporting unit is less than its carrying amount by assessing current events and circumstances. If there are factors present indicating potential impairment, the Company would proceed to the quantitative analysis.  The quantitative analysis is used to identify potential goodwill impairment and measure the amount (if any) of a goodwill impairment loss to be recognized. The goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount and recognizing an impairment charge for the difference by which the carrying amount exceeds the reporting unit’s fair value, up to the carrying amount of the goodwill.

The annual impairment test is based on an evaluation of estimated future discounted cash flows. The Company also uses the market approach as part of their impairment analysis.  The estimated discounted cash flows are based on the best information available, including supportable assumptions and projections we believe are reasonable. Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account the operating plans and strategies of our operating segments. Other key assumptions, including changes in membership, premium, health care costs, operating expenses, fees, assessments and taxes and effective tax rates, are based on estimates consistent with those used in our annual budgeting and planning process that we believe are reasonable. However, if we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion of our goodwill, which would adversely affect our operating results in the period of impairment. Impairments, if any, are classified as an operating expense.

Claim Liabilities

Managed Care claim liabilities mostly represent the Company’s estimate of medical costs incurred but not yet paid to providers based on experience and accumulated statistical data.  Loss-adjustment expenses related to such claims are currently accrued based on estimated future expenses necessary to process such claims.  Claim liabilities are the most significant estimate included in our consolidated financial statements.  Such estimate is developed consistently using standard actuarial methodologies based upon key assumptions, which vary by business segment.  The most significant assumptions used in the development of managed care claim liabilities include current payment experience, trend factors and completion factors.  Managed care trend factors in our standard actuarial methodologies include contractual requirements, historic utilization trends, the interval between the date services are rendered and the date claims are paid, denied claims activity, disputed claims activity, benefit changes, expected health care cost inflation, seasonality patterns, maturity of lines of business, changes in membership and other factors.

18

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Managed care claim liabilities also include a provision for adverse deviation, which is an estimate for known environmental factors that are reasonably likely to affect the required level of reserves. This provision for adverse deviation is intended to capture the potential adverse development from known environmental factors such as our entry into new geographical markets, changes in our geographic or product mix, the introduction of new customer populations, variation in benefit utilization, disease outbreaks, changes in provider reimbursement, fluctuations in medical cost trend, variation in claim submission patterns and variation in claims processing speed and payment patterns, changes in technology that provide faster access to claims data or change the speed of adjudication and settlement of claims, variability in claim inventory levels, non-standard claim development, and/or exceptional situations that require judgmental adjustments in setting the reserves for claims.

The Company contracts with various independent practice associations (IPAs) for certain medical care services provided to certain policies subscribers.  The IPAs are compensated on a capitation basis, and capitation payables are included within claim liabilities. Capitation is amounts paid to IPAs on a fixed-fee per-member per-month basis.

Claim liabilities also include unpaid claims and loss-adjustment expenses of the Life Insurance segment based on a case-basis estimate for reported claims, and on estimates, based on experience, for unreported claims and loss-adjustment expenses.  The liability for policy and contract claims and claims expenses has been established to cover the estimated net cost of insured claims.

Also included within claim liabilities is the liability for losses and loss-adjustment expenses for the Property and Casualty segment, which represents individual case estimates for reported claims and estimates for unreported losses, net of any salvage and subrogation based on past experience modified for current trends and estimates of expenses for investigating and settling claims.

Claim liabilities are necessarily based on estimates and, while management believes that the amounts are adequate, the ultimate liability may be in excess of or less than the amounts provided.  The methods for making such estimates and for establishing the resulting liability are continually reviewed, and any adjustments are reflected in the Consolidated Statements of Earnings in the period determined.

Future Policy Benefits

The liability for future policy benefits has been computed using the level‑premium method based on estimated future investment yield, mortality, morbidity and withdrawal experience.  Mortality has been calculated on select and ultimate tables in common usage in the industry, modified by the Company’s experience.  Morbidity has been calculated based on industry tables, modified by the Company’s experience; as well as, withdrawals that have been estimated principally based on industry tables, modified by Company’s experience.  Assumptions are established at the time the policy is issued and are generally not changed during the life of the policy.  The Company periodically reviews the adequacy of reserves for these policies on an aggregate basis using actual experience. If actual experience is significantly adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DPAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required.  The interest rate assumption was 3.90% for 2020, 4.40% for 2019 and ranged from 3.90% to 5.75%  for 2018.

19

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Policyholder Deposits

Amounts received for annuity contracts are considered deposits and recorded as a liability along with the accrued interest and reduced for charges and withdrawals.  Interest incurred on such deposits, which amounted to $2,946, $2,639, and $2,615, during the years ended December 31, 2020, 2019, and 2018, respectively, is included in Interest Expense in the accompanying Consolidated Statements of Earnings.

Policyholder account balances for universal life and interest-sensitive products are equal to policy account values. The policy account primarily comprises cumulative deposits received and interest credited to the policyholder less cumulative contract benefits, surrenders, withdrawals, maturities and contract charges for mortality or administrative expenses.  Interest rates credited to policyholder account balances during 2020 was approximately 3.7% for interest-sensitive life products and 2.92% for annuities, while for 2019 they ranged from 2.0% to 4.5% for universal life and interest-sensitive products.  The universal life and interest-sensitive products represented $101,310 and $91,694 of the Policyholder Deposits balance on the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

Reinsurance

In the normal course of business, the insurance-related subsidiaries seek to limit their exposure that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers.

Prospective reinsurance premiums, commissions, and expense reimbursements, related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.  Accordingly, reinsurance premiums are reported as prepaid reinsurance premiums and amortized over the remaining contract period in proportion to the amount of insurance protection provided.

Premiums ceded and recoveries of losses and loss-adjustment expenses under prospective reinsurance treaties have been reported as a reduction of premiums earned and losses and loss-adjustment expenses incurred, respectively.  Property and casualty commission and expense allowances received in connection with reinsurance ceded are accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.  Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy and are presented within Premium and Other Receivables, Net in the accompanying Consolidated Balance Sheets.

Retroactive reinsurance reimburses a ceding company for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance.  In certain instances, reinsurance contracts cover losses both on a prospective basis and on a retroactive basis and where practical the Company bifurcates the prospective and retrospective elements of these reinsurance contracts and accounts for each element separately.  Initial gains in connection with retroactive reinsurance contracts are deferred and amortized into income over the settlement period, while losses are recognized immediately.  When changes in the estimated amount recoverable from the reinsurer or in the timing of receipts related to that amount occur, a cumulative amortization adjustment is recognized in earnings in the period of the change so that the deferred gain reflects the balance that would have existed had the revised estimate been available at the inception of the reinsurance transaction.  The Company uses the recovery method to amortize any deferred gain, which is included in Claims Incurred in the accompanying Consolidated Statements of Earnings.  The recovery method provides an amortization in proportion to the estimated recoveries made as of each reporting date as a percentage of total estimated recoveries. No deferred gain was amortized into operations during the years ended December 31, 2020, 2019 and 2018.

20

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Earnings in the period that includes the enactment date.  The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  Changes in recognition or measurement are reflected in the period in which the change in circumstances occurs.

The Company records any interest and penalties related to unrecognized tax benefits within Operating Expenses in the Consolidated Statement of Earnings.

Health Insurance Providers Fee

The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act mandates an annual Health Insurance Providers Fee (HIP Fee).  The annual HIP Fee becomes payable to the U.S. Treasury once the entity provides health insurance for any U.S. health risk in each applicable calendar year.  The initial estimated annual fee is accrued as of January 1, with a corresponding deferred cost amortized over 12 months on a straight-line basis. The fee payment is due on September 30 of each year.  The Company incurred approximately $55,500 and $50,100 of such fee in 2020 and 2018,  respectively, which is presented within Operating Expenses in the accompanying Consolidated Statements of Earnings. The HIP Fee was waived for all health insurance providers during the year ended December 31, 2019.  The Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the Further Consolidated Appropriations Act, 2020, signed into law on December 20, 2019, repealed the HIP Fee effective for calendar years beginning after December 31, 2020.

Insurance-Related Assessments

The Company records a liability for insurance-related assessments when the following three conditions are met: (1) the assessment has been imposed or the information available prior to the issuance of the consolidated financial statements indicates it is probable that an assessment will be imposed; (2) the event obligating an entity to pay (underlying cause of) an imposed or probable assessment has occurred on or before the date of the consolidated financial statements; and (3) the amount of the assessment can be reasonably estimated.  A related asset is recognized when the paid or accrued assessment is recoverable through either premium taxes or policy surcharges. The Company had accrued $722 and $1,629 within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.  Legal costs incurred in connection with loss contingencies are expensed as incurred.  Recoveries of costs from third parties, which are probable of realization, are separately recorded as assets, and are not offset against the related liability.

21

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Share‑Based Compensation

Share-based compensation is measured at the fair value of the award and recognized as an expense in the consolidated financial statements over the vesting period.

Earnings per Share

Basic earnings per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period, excluding non-vested restricted stocks.  Diluted earnings per share is computed in the same manner as basic earnings per share except that the number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.  Dilutive common shares are included in the diluted earnings per share calculation using the Treasury stock method.

Recently Adopted Accounting Standards

On June 16, 2016, the Financial Accounting Standards Board (FASB) issued guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In addition, on April 25, 2019, the FASB issued Accounting Standard Update (ASU) 2019-04: Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this update represent changes to clarify, correct errors in or improve the codification. Such amendments should make the codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. Within the clarifications was the FASB’s intent to include all reinsurance recoverables within the scope of ASU 2016-13 (Topic 326). For public companies, the improvements related to ASU 2016-13 (Topic 326) and ASU 2016-01 (Topic 825) are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the standard effective January 1, 2020 and recognized $166, net of deferred tax asset, as a cumulative effect adjustment to the opening balance of retained earnings on the adoption date.

On January 26, 2017, the FASB issued guidance to simplify the manner in which an entity is required to evaluate goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this guidance, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, this guidance removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, these amendments, which should be applied on a prospective basis, are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Upon adoption of this standard, if the carrying amount of any of the reporting units exceeds its fair value, the Company will be required to record an impairment charge for the difference up to the amount of the goodwill. The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the results of the Company’s consolidated financial statements.

22

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

 On August 27, 2018, the FASB issued guidance for Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement.  This update focuses on improving the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of each entity’s financial statements.  Specifically, certain disclosure requirements are removed (the amount of, and reasons for, transfer between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements), while certain other disclosures are modified and added (changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements).  The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent period in the initial fiscal year of adoption.  All other amendments should be applied retrospectively to all periods presented upon their effective date.  The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the presentation and disclosures of the Company’s consolidated financial statements.

On August 29, 2018, the FASB issued guidance for Intangibles – Goodwill and Other – Internal-Use Software. Guidance addresses customers’ accounting for implemented costs incurred in a cloud computing arrangement that is a service contract and aims to reduce complexity in the accounting for costs of implementing a cloud computing service arrangement. The amendments require a customer in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense.  Additionally, it requires the customer to expense the capitalized implementation costs over the term of the hosting arrangement. The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the results of the Company’s consolidated financial statements.

Future Adoptions of Accounting Standards

On August 15, 2018, the FASB issued ASU 2018-12: Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts – which provides meaningful improvements to the existing revenue recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity.  The amendments improve the timeliness of recognizing changes in the liability for future policy benefits and modify rate used to discount future cash flows, simplify and improve the accounting for certain market-based options or guarantees associated with deposit contracts, simplify the amortization of deferred acquisition costs, and improves the effectiveness of the required disclosures.  Specifically, this guidance requires an insurance entity to review and update, if needed, the assumptions used to measure cash flows and discount rate at each reporting date; measure all market risk benefits associated with deposit; and disclose liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in measurement, including changes thereto and the effect of those changes on measurement.  Additionally, the amendment simplifies the amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits or gross margins, and requires that those balances be amortized on a constant level basis over the expected term of the related contracts.  On November 5, 2020, the FASB issued ASU 2020-11: Financial Services – Insurance (Topic 944): Effective Date and Early Application – which defer the effective date of ASU 2018-12 by one year for all insurance entities.  For public companies, these amendments will be applied for fiscal years beginning after December 15, 2022.  We are currently evaluating the impact the adoption of this guidance may have on the Company’s consolidated financial statements.

23

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

On August 28, 2018, the FASB issued guidance for Compensation – Retirement Benefits – Defined Benefit Plans – General which addresses changes to the disclosure requirement for defined benefit plans. The amendments in this guidance modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  Specifically, the guidance removes certain disclosure requirements, including the amounts of accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, related-party disclosures concerning the amount of future annual benefits covered by an insurance and annuity contracts and significant transactions between the employer and related-parties and the plan, and adds other disclosures including the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and an explanation for the reasons for significant gains and losses related to changes in the benefit obligation for the period.   For public companies, these amendments, will be applied for fiscal years beginning after December 15, 2020.  The adoption of this guidance will not have a material impact on the presentation and disclosures of the Company’s consolidated financial statements.

On December 18, 2019, the FASB issued ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. Also, the amendments simplify the accounting for income taxes by requiring the following: (1) that an entity recognize a franchise tax that is partially based on income in accordance with Topic 740 and account for any incremental amount incurred as a non-income-based tax; (2) that an entity evaluate when a step-up in the tax basis of Goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should instead be considered a separate transaction; and (3) that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that included the enactment date. For public companies, these amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this guidance will not have a material impact on the results of the Company’s consolidated financial statements.

On January 16, 2020, the FASB issued guidance to clarify the interaction between the accounting standards on recognition and measurement of financial instruments in Topic 321: Investments – Equity Securities, the one on equity method investments in Topic 323: Investments – Equity Method and Joint Ventures, and forward contracts and purchased options in Topic 815: Derivatives and Hedging. The amendments clarify that upon an increase or decrease in level of ownership or degree of influence, a company should remeasure the interest held in the investee to take into account observable transactions immediately before applying or discontinuing the equity method of accounting under Topic 323. The guidance also clarifies that an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchase option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option. For public companies, these amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this guidance will not have a material impact on the results of the Company’s consolidated financial statements.

24

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

On March 12, 2020, the FASB issued ASU 2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU was issued to provide optional guidance, for a limited time, to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments, which are elective and apply to all entities, provide expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate that is expected to be discontinued as a result of reference rate reform. Because the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect for a limited time, from March 12, 2020 through December 31, 2022. The Company is currently in the process of identifying its LIBOR-based contracts that will be affected by the phase-out of LIBOR and expects to use the optional expedients provided in this ASU.

On January 7, 2021, the FASB issued ASU 2021-01: Reference Rate Reform (Topic 848): Scope Refinement – to clarify the scope of the recent reference reform guidance in Topic 848. This ASU refines the scope of Topic 848 and clarifies that certain optional expedients and exceptions therein for contract modifications and hedge accounting apply to contracts that are affected by the discounting transition. Specifically, modifications related to reference rate reform would not be considered an event that requires reassessment of previous accounting conclusions. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. The amendments in the ASU are effective immediately for all entities. The Company is currently in the process of identifying its LIBOR-based contracts that will be affected by the phase-out of LIBOR and expects to use the optional expedients provided in this ASU.

Other than the accounting pronouncements disclosed above, there were no other new accounting pronouncements issued during the year that could have a material impact on the Corporation’s financial position, operating results or financials statement disclosures.

25

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

3. Investment in Securities

The amortized cost for debt securities and alternative investments, gross unrealized gains and losses, and estimated fair value for the Company’s investments in securities by major security type and class of security as of December 31, were as follows:

	2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed-maturities available-for-sale
Obligations of government- sponsored enterprises	$	24,496	$	665	$	(9	)	$	25,152
U.S. Treasury securities and obligations of U.S.- government instrumentalities		103,694		7,993		-			111,687
Municipal securities		646,961		54,067		-			701,028
Corporate bonds		189,516		30,280		-			219,796
Residential mortgage-backed securities		249,801		21,487		(57	)		271,231
Collateralized mortgage obligations		12,954		638		(21	)		13,571
Total fixed-maturities available-for-sale	$	1,227,422	$	115,130	$	(87	)	$	1,342,465

	2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises	$	17,209	$	477	$	-		$	17,686
U.S. Treasury securities and obligations of U.S.- government instrumentalities		102,230		4,779		-			107,009
Municipal securities		595,051		34,735		(22	)		629,764
Corporate bonds		187,096		21,721		(74	)		208,743
Residential mortgage-backed securities		262,783		8,073		(320	)		270,536
Collateralized mortgage obligations		8,674		471		-			9,145
Total fixed-maturities available-for-sale	$	1,173,043	$	70,256	$	(416	)	$	1,242,883

26

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

	2020
	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	$	614	$	201	$	-	$	815
Residential mortgage-backed securities		164		17		-		181
Certificates of deposits		1,089		-		-		1,089
Total fixed-maturities held-to-maturity	$	1,867	$	218	$	-	$	2,085

	2019
	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 instrumentalties	$	615	$	158	$	-	$	773
Residential mortgage-backed securities		165		1		-		166
Certificates of deposits		1,080		-		-		1,080
Total fixed-maturities held-to-maturity	$	1,860	$	159	$	-	$	2,019

	2020
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Other invested assets - Alternative investments	$	112,171	$	6,119	$	(3,385	)	$	114,905

	2019
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Other invested assets - Alternative investments	$	97,575	$	3,721	$	(788	)	$	100,508

27

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Gross unrealized losses on investment securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, were as follows:

	2020
	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	$	1,539	$	(9	)		1	$	-	$	-			-	$	1,539	$	(9	)		1
Residential mortgage-backed securities		3,624		(57	)		1		-		-			-		3,624		(57	)		1
Collateralized mortgage obligations		6,060		(21	)		2		-		-			-		6,060		(21	)		2
Total fixed-maturities available-for-sale	$	11,223	$	(87	)		4	$	-	$	-			-	$	11,223	$	(87	)		4
Other invested assets - Alternative investments	$	12,584	$	(808	)		4	$	16,396	$	(2,577	)		6	$	28,980	$	(3,385	)		10

	2019
	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
Municipal securities	$	10,656	$	(22	)		3	$	-	$	-			-	$	10,656	$	(22	)		3
Corporate bonds		5,047		(74	)		1		-		-			-		5,047		(74	)		1
Residential mortgage backed securities		79,902		(320	)		16		-		-			-		79,902		(320	)		16
Total fixed-maturities available-for-sale	$	95,605	$	(416	)		20	$	-	$	-			-	$	95,605	$	(416	)		20
Other invested assets - Alternative investments	$	24,437	$	(605	)		8	$	10,580	$	(183	)		1	$	35,017	$	(788	)		9

The Company regularly monitors and evaluates the difference between the amortized cost and estimated fair value of fixed-maturity securities.  For fixed-maturity securities with a fair value below amortized cost, the process includes evaluating: (1) the extent to which the estimated fair value has been less than amortized cost, (2) the financial condition, near-term and long-term prospects for the issuer, including relevant industry conditions and trends, and implications of rating agency actions, (3) the Company’s intent to sell or the likelihood of a required sale prior to recovery, (4) the recoverability of principal and interest, and (5) other factors, as applicable.  This process is not exact and requires further consideration of risks such as credit and interest rate risks.  Consequently, if an investment’s cost exceeds its estimated fair value solely due to changes in interest rates, an allowance for credit losses is not recorded.

Because of the subjective nature of the Company’s analysis and the judgment that must be applied in it, the Company could reach a different conclusion about whether to impair a security if it had access to additional information about the investee.  Additionally, it is possible that the investee’s ability to meet future contractual obligations may be different than what the Company determined during its analysis, which may lead to a different impairment conclusion in future periods.

28

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The Company’s process for identifying and reviewing available-for-sale and other invested assets for impairments during any quarter includes the following:

• Identification and evaluation of securities that have possible indications of impairment, which includes an analysis of all investments with gross unrealized investment losses that represent 20% or more of their cost and all investments with an unrealized loss greater than $100;

• For any securities with a gross unrealized investment loss we might review and evaluate the investee’s current financial condition, liquidity, near-term recovery prospects, implications of rating agency actions, the outlook for the business sectors in which the investee operates and other factors;

• Consideration of evidential matter, including an evaluation of factors or triggers that may or may not cause individual investments to qualify as having a credit-related impairment; and

• Determination of the status of each analyzed security as credit-impaired or not, with documentation of the rationale for the decision.

The Company reviews the available-for-sale and other invested assets portfolios under the Company’s impairment review policy.  Given market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and material allowances for credit losses may be recorded in future periods.  The Company from time to time may sell investments as part of its asset/liability management process or to reposition its investment portfolio based on current and expected market conditions.

• Obligations of government-sponsored enterprises:  The unrealized losses of these securities were mainly caused by fluctuations in interest rates and general market conditions. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment. In addition, they have investment-grade ratings. The Company does not consider these investments to be credit-impaired because of several factors: the decline in fair value is attributable to changes in interest rates and not credit quality; the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.

• Residential mortgage-backed securities and Collateralized mortgage obligations: The unrealized losses on these investments were mostly caused by fluctuations in interest rates and credit spreads. The contractual cash flows of these securities are guaranteed by a U.S. government-sponsored enterprise. Any loss in these securities is determined according to the seniority level of each tranche, with the least senior, typically the unrated residual tranche, taking any initial loss. The investment grade credit rating of our securities reflects the seniority of the securities that the Company owns. The Company does not consider these investments to be credit-impaired because of several factors: the decline in fair value is attributable to changes in interest rates and not credit quality; the Company does not intend to sell the investments and it is more likely than not that the Company will not be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.

• Alternative Investments:  As of December 31, 2020, alternative investments with unrealized losses were not considered credit-impaired based on market conditions.

29

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Maturities of investment securities classified as available-for-sale and held-to-maturity at December 31, 2020 were as follows:

	Amortized Cost		Estimated Fair Value
Securities available-for-sale
Due in one year or less	$	36,645	$	36,935
Due after one year through five years		583,264		628,468
Due after five years through ten years		194,778		209,096
Due after ten years		149,980		183,164
Residential mortgage-backed securities		249,801		271,231
Collateralized mortgage obligations		12,954		13,571
	$	1,227,422	$	1,342,465
Securities held-to-maturity
Due in one year or less	$	1,089	$	1,089
Due after five years through ten years		614		815
Residential mortgage-backed securities		164		181
	$	1,867	$	2,085

Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

Investments with an amortized cost of $6,884 and $6,940 (fair value of $7,526 and $7,274) at December 31, 2020 and 2019, respectively, were deposited with the Commissioner of Insurance to comply with the deposit requirements of the Insurance Code of the Commonwealth of Puerto Rico (the Insurance Code).

Investments with an amortized cost of $227,890 and $145,981 (fair value of $250,088 and $152,916) at December 31, 2020 and 2019, respectively, were pledged with the Federal Home Loan Bank of New York (FHLBNY) to secure short-term borrowings. 

30

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

4. Realized and Unrealized Gains

Information regarding realized and unrealized gains and losses from investments for the years ended December 31, is as follows:

	2020			2019			2018
Realized gains (losses)
Fixed-maturity securities:
Securities available-for-sale
Gross gains	$	3,943		$	3,844		$	3,730
Gross losses		(488	)		(387	)		(18,627	)
Total fixed-maturity securities		3,455			3,457			(14,897	)
Equity investments:
Gross gains		1,852			3,056			16,045
Gross losses		(5,074	)		(1,669	)		(2,290	)
Gross losses from impaired securities		(678	)		-			-
Total equity investments		(3,900	)		1,387			13,755
Other invested assets:
Gross gains		1,086			1,055			1,492
Gross losses		-			(56	)		(52	)
Total other invested assets		1,086			999			1,440
Net realized gains on securities	$	641		$	5,843		$	298

The gross losses from impaired securities during the year ended December 31, 2020 are related to an equity method investment held by the Company.

	2020			2019		2018
Changes in unrealized gains (losses)
Recognized in accumulated other comprehensive income (loss)
Fixed-maturities – available-for-sale	$	45,203		$	38,807	$	(14,104	)
Other invested assets		(199	)		1,545		1,073
Not recognized in the consolidated financial statements
Fixed-maturities – held-to-maturity	$	59		$	32	$	(29	)

The change in deferred tax asset (liability) on unrealized gains (losses) recognized in Accumulated Other Comprehensive Income during the years 2020, 2019, and 2018 was ($9,160), ($8,206), and $2,292, respectively.

As of December 31, 2020 and 2019 no individual investment in securities exceeded 10% of stockholders’ equity.

31

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

5. Net Investment Income

Interest and/or dividend income for the years ended December 31 were are as follows:

	2020		2019		2018
Fixed maturities	$	38,919	$	42,005	$	43,873
Equity securities		13,158		12,453		12,261
Other invested assets		3,545		3,436		1,679
Policy loans		809		761		754
Cash equivalents and interest-bearing deposits		483		1,602		1,407
Other		633		1,750		1,935
Total	$	57,547	$	62,007	$	61,909

6. Premium and Other Receivables, Net

Premium and Other Receivables, Net as of December 31 were as follows:

	2020		2019
Premium	$	106,322	$	188,861
Self-funded group receivables		26,412		28,672
FEHBP		12,830		13,894
Agent balances		31,509		30,784
Accrued interest		10,418		11,307
Reinsurance recoverable		216,314		239,767
Other		135,774		110,952
		539,579		624,237
Less allowance for doubtful receivables:
Premium		37,231		36,622
Other		13,508		19,923
		50,739		56,545
Premium and other receivables, net	$	488,840	$	567,692

As of December 31, 2020 and 2019, the Company had premiums and other receivables of $53,397 and $49,176, respectively, from the Government of Puerto Rico, including its agencies, municipalities and public corporations. The related allowance for doubtful receivables as of December 31, 2020 and 2019 were $23,752 and $22,091, respectively.

Reinsurance recoverable as of December 31, 2020 and 2019 includes $172,021 and $189,621 related to catastrophe losses covered by the Property and Casualty segment’s reinsurance program.

32

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

7. Deferred Policy Acquisition Costs and Value of Business Acquired

The change in deferred policy acquisition costs and value of business acquired for the years ended December 31 is summarized as follows:

	DPAC			VOBA			Total
Balance, December 31, 2017		177,721			23,067			200,788
Additions		51,144			-			51,144
VOBA interest at an average rate of 5.11%		-			1,120			1,120
Amortization		(35,005	)		(2,888	)		(37,893	)
Net change		16,139			(1,768	)		14,371
Balance, December 31, 2018		193,860			21,299			215,159
Additions		59,399			-			59,399
VOBA interest at an average rate of 4.53%		-			1,031			1,031
Amortization		(37,496	)		(3,208	)		(40,704	)
Net change		21,903			(2,177	)		19,726
Balance, December 31, 2019	$	215,763		$	19,122		$	234,885
Additions		57,458			3,700			61,158
VOBA interest at an average rate of 4.47%		-			923			923
Amortization		(45,687	)		(2,954	)		(48,641	)
Net change		11,771			1,669			13,440
Balance, December 31, 2020	$	227,534		$	20,791		$	248,325

A portion of the amortization of the DPAC and VOBA is recorded as an amortization expense and included within the operating expenses in the accompanying Consolidated Statements of Earnings.  The remaining portion of the DPAC and VOBA amortization includes the unrealized investment gains and losses that would have been amortized if such gains and losses had been realized, which for the years ended December 31, 2020 and 2019 was ($2,478) and ($2,028), respectively, and is included within the unrealized gains on securities component of other comprehensive income.

The estimated amount of the year-end VOBA balance expected to be amortized during the next five years is as follows:

Year ending December 31:
2021	$	2,683
2022		1,810
2023		1,608
2024		1,430
2025		1,280

33

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

8. Property and Equipment, Net

Property and Equipment, Net as of December 31 is composed of the following:

	2020		2019
Land	$	15,867	$	10,976
Buildings and leasehold improvements		128,629		92,752
Office furniture and equipment		32,547		27,878
Computer equipment and software		136,801		133,922
Automobiles		667		761
		314,511		266,289
Less accumulated depreciation and amortization		182,537		177,701
Property and equipment, net	$	131,974	$	88,588

The Company recognized depreciation expense on property and equipment of $13,866, $13,880 and $12,583 for the years ended December 31, 2020, 2019, and 2018, respectively.

On June 19, 2020, the Company acquired a nine-story office building (the Building), located at 1451 F.D. Roosevelt Avenue, in San Juan, Puerto Rico, as well as the adjoining multi-level parking structure and a parking lot. See Note 13 for further information on the credit agreement obtained to partially finance the acquisition of the Building.

9. Goodwill

Certain business combination transactions have resulted in goodwill, which represents the excess of the acquisition cost over the fair value of net assets acquired and is assigned to reporting units.  Goodwill recorded as of December 31, 2020 and 2019 was $28,614 and $28,599, respectively, which mostly all is attributable to the Medicare Advantage reporting unit within the Managed Care segment.

In an effort to expand the health clinics reporting unit, the Company purchased on April 1, 2019 various health clinics across different municipalities in Puerto Rico, resulting in a recognition of goodwill of $3,217.

As required by accounting guidance, annual goodwill impairment tests were performed and based on the results of the tests no impairment charge was required during the years ended December 31, 2020, 2019, and 2018.  If the Company does not achieve its earnings objectives or the cost of capital rises significantly, the assumptions and estimates underlying these impairment tests could be adversely affected and result in future impairment charges that would negatively impact its operating results.  Cumulative goodwill impairment charges were $2,369 as of December 31, 2020 and 2019, all related to the health clinics reporting unit.

34

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

10. Fair Value Measurements

Assets recorded at fair value in the Consolidated Balance Sheets are categorized based on the level of judgment associated with the inputs used to measure their fair value.  Level inputs, as defined by current accounting guidance for fair value measurements and disclosures, are as follows:

Level 1 Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.

Level 3 Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The Company uses observable inputs when available. Fair value is based on quoted market prices when available. The Company limits valuation adjustments to those deemed necessary to ensure that the security’s fair value adequately represents the price that would be received or paid in the marketplace. Valuation adjustments may include consideration of counterparty credit quality and liquidity as well as other criteria.  The estimated fair value amounts are subjective in nature and may involve uncertainties and matters of significant judgment for certain financial instruments. Changes in the underlying assumptions used in estimating fair value could affect the results.  The fair value measurement levels are not indicative of risk of investment.

Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company’s best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement.  Transfers between levels, if any, are recorded as of the actual date of the event or change in circumstance that caused the transfer.  There were no transfers between Levels 1 and 2 during the years ended December 31, 2020 and 2019.

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	2020			2019
Balance as of January 1,	$	5,209		$	3,805
Unrealized gain in other accumulated comprehensive income		(107	)		154
Purchases		-			1,250
Balance as of December 31,	$	5,102		$	5,209

The fair value of investment securities is estimated based on quoted market prices for those or similar investments.  Additional information pertinent to the estimated fair value of investment in securities is included in Note 3.

35

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The following table summarizes fair value measurements by level at December 31, for assets measured at fair value on a recurring basis:

	2020
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
Obligations of government-sponsored enterprises	$	-	$	25,152	$	-	$	25,152
U.S. Treasury securities and obligations of U.S.-government instrumentalities		111,687		-		-		111,687
Municipal securities		-		701,028		-		701,028
Corporate bonds		-		219,796		-		219,796
Residential agency mortgage-backed securities		-		271,231		-		271,231
Collaterized mortgage obligations		-		13,571		-		13,571
Total fixed-maturities	$	111,687	$	1,230,778	$	-	$	1,342,465
Equity investments	$	220,118	$	179,108	$	5,102	$	404,328

	2019
	Level 1		Level 2		Level 3		Total
Securities available-for-sale
Fixed-maturity securities
Obligations of government-sponsored enterprises	$	-	$	17,686	$	-	$	17,686
U.S. Treasury securities and obligations of U.S.-government instrumentalities		107,009		-		-		107,009
Municipal securities		-		629,764		-		629,764
Corporate bonds		-		208,743		-		208,743
Residential agency mortgage-backed securities		-		270,536		-		270,536
Collaterized mortgage obligations		-		9,145		-		9,145
Total fixed-maturities	$	107,009	$	1,135,874	$	-	$	1,242,883
Equity securities	$	177,136	$	105,180	$	5,209	$	287,525

The fair value of fixed-maturity and equity securities included in the Level 2 category were based on market values obtained from independent pricing services, which use previously evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information. For structured securities, cash flow and loan performance data, when available, is also used.  Because many fixed income securities do not trade on a daily basis, the models used by independent pricing service providers to prepare evaluations apply available information, such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing.  For certain equity securities, quoted market prices for the identical security are not always available, and the fair value is estimated by reference to similar securities for which quoted prices are available.  The independent pricing service providers monitor market indicators, industry and economic events, and for broker-quoted only securities, obtain quotes from market makers or broker-dealers that they recognize to be market participants. The fair value of an equity security included in level 3 was based using the NAV of the Company’s ownership interest in the partnership.

36

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

In addition to the preceding disclosures on assets recorded at fair value in the Consolidated Balance Sheets, accounting guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the consolidated balance sheets.

Non-financial instruments such as property and equipment, other assets, deferred income taxes and intangible assets, and certain financial instruments such as claim liabilities are excluded from the fair value disclosures. Therefore, the fair value amounts cannot be aggregated to determine our underlying economic value.

The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, receivables, accounts payable and accrued liabilities, and short-term borrowings approximate fair value because of the short-term nature of these items.

To estimate the fair value of each class of these Level 2 financial instruments, the following methods, assumptions and inputs are used:

• Policy loans – these financial instruments have no stated maturity dates and are part of the related insurance contract. The carrying amount of policy loans approximates fair value because their interest rate is reset periodically in accordance with current market rates.

• Policyholder deposits – the fair value of policyholder deposits is the amount payable on demand at the reporting date, and accordingly, the carrying value amount approximates fair value.

• Long-term borrowings – the carrying amount of the loans payable to bank approximates fair value due to its floating interest-rate structure.

37

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

11. Claim Liabilities and Claim Adjustment Expenses

The tables below present a reconciliation of the beginning and ending balances of Claim Liabilities in 2020, 2019 and 2018:

	2020
	Managed Care		Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	341,277	$	367,981		$	709,258
Reinsurance recoverable on claim liabilities		-		(137,017	)		(137,017	)
Net claim liabilities at beginning of year		341,277		230,964			572,241
Claims incurred
Current period insured events		2,772,084		112,296			2,884,380
Prior period insured events		33,654		(9,765	)		23,889
Total		2,805,738		102,531			2,908,269
Payments of losses and loss-adjustment expenses
Current period insured events		2,408,173		65,414			2,473,587
Prior period insured events		293,187		65,450			358,637
Total		2,701,360		130,864			2,832,224
Net claim liabilities at end of year		445,655		202,631			648,286
Reinsurance recoverable on claim liabilities		-		138,816			138,816
Claim liabilities at end of year	$	445,655	$	341,447		$	787,102

38

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

	2019
	Managed Care			Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	394,226		$	542,563		$	936,789
Reinsurance recoverable on claim liabilities		-			(315,543	)		(315,543	)
Net claim liabilities at beginning of year		394,226			227,020			621,246
Claims incurred
Current period insured events		2,556,027			110,513			2,666,540
Prior period insured events		(29,344	)		(5,191	)		(34,535	)
Total		2,526,683			105,322			2,632,005
Payments of losses and loss-adjustment expenses
Current period insured events		2,293,251			61,966			2,355,217
Prior period insured events		286,381			39,412			325,793
Total		2,579,632			101,378			2,681,010
Net claim liabilities at end of year		341,277			230,964			572,241
Reinsurance recoverable on claim liabilities		-			137,017			137,017
Claim liabilities at end of year	$	341,277		$	367,981		$	709,258

	2018
	Managed Care			Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	367,357		$	739,519		$	1,106,876
Reinsurance recoverable on claim liabilities		-			(633,099	)		(633,099	)
Net claim liabilities at beginning of year		367,357			106,420			473,777
Claims incurred
Current period insured events		2,308,516			103,368			2,411,884
Prior period insured events		(36,015	)		120,961			84,946
Total		2,272,501			224,329			2,496,830
Payments of losses and loss-adjustment expenses
Current period insured events		1,982,372			57,260			2,039,632
Prior period insured events		263,260			46,469			309,729
Total		2,245,632			103,729			2,349,361
Net claim liabilities at end of year		394,226			227,020			621,246
Reinsurance recoverable on claim liabilities		-			315,543			315,543
Claim liabilities at end of year	$	394,226		$	542,563		$	936,789

* Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.

39

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The actual amounts of claims incurred in connection with insured events occurring in a prior period typically differ from estimates of such claims made in the prior-period.  Amounts included as incurred claims for prior-period insured events reflect the aggregate net amount of these differences.

The unfavorable development in the claims incurred and loss-adjustment expenses for prior-period insured events for 2020 are primarily due to higher than expected utilization trends in the Managed Care segment. The favorable development in the claims incurred and loss-adjustment expenses for prior-period insured events for 2019 are primarily due to better than expected utilization trends in the Managed Care segment.  The unfavorable developments in the claims incurred and loss-adjustment expenses for prior period insured events in 2018 is driven by an adverse development of approximately $128,678 in the Property and Casualty segment losses related to Hurricane Maria, partially offset by better than expected utilization trends in the Managed Care segment. Reinsurance recoverable on unpaid claims is reported within the premium and other receivables, net in the accompanying consolidated financial statements.

The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $38,551, $34,251, and $30,783 that is included within the consolidated claims incurred during the years ended December 31, 2020, 2019 and 2018, respectively.

The following is information about incurred and paid claims development, net of reinsurance, as of December 31, 2020, as well as cumulative claim frequency.  Additional information presented includes total incurred-but-not-reported liabilities plus expected development on reported claims which is included within the net incurred claims amounts.

The information about incurred and paid claims development for the year ended December 31, 2015 and previous years are presented as supplementary information and are unaudited where indicated.

Managed Care

The Company estimates its liabilities for unpaid claims following a detailed actuarial process that entails using both historical claim payment patterns as well as emerging medical cost trends to project a best estimate of claim liabilities. This process includes comparing the historical claims incurred dates to the actual dates on claims payment.  Completion factors are applied to claims paid through the consolidated financial statements date to estimate the claim expense incurred for the current period.  The liability for claim adjustment expenses consists of adjustments made by our actuaries based on their knowledge and their estimate of emerging impacts to benefit costs and payment speed.

40

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance					As of December 31, 2020
							(in thousands)
Incurred Year	(unaudited) 2019		2020		Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
2019	$	2,556,027	$	2,568,474	$	10,523		37,971
2020				2,772,084		363,911		35,822
	Total		$	5,340,558

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Incurred Year	(unaudited) 2019		2020
2019	$	2,293,251	$	2,557,951
2020				2,408,173
	Total		$	4,966,124
All outstanding liabilities before 2019, net of reinsurance				71,221
Liabilities for claims and claim adjustment expenses, net of reinsurance			$	445,655

41

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Property and Casualty

Claims liability for Property and Casualty represents individual case estimates for reported claims and estimates for unreported losses, net of any salvage and subrogation based on past experience modified for current trends and estimates of expense for investigating and setting claims.

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31, 2020
Incurred Year	Incurred amount																				Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of reported claims
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	51,315	$	50,287	$	51,105	$	50,776	$	51,895	$	52,099	$	51,729	$	51,684	$	51,771	$	51,807	$	74		20,780
2012				49,040		49,856		48,900		49,817		48,945		48,186		47,731		47,725		47,340		94		21,243
2013						52,343		51,030		49,606		49,168		48,229		47,550		47,104		46,777		173		20,909
2014								48,430		45,410		43,707		42,547		41,457		41,147		40,702		275		19,110
2015										45,067		40,175		37,271		35,505		34,889		34,149		332		18,047
2016												48,127		44,294		41,168		39,488		38,418		443		20,874
2017														60,694		187,376		189,162		195,376		2,406		39,466
2018																40,619		37,603		34,306		1,296		16,381
2019																		43,589		34,373		4,107		10,311
2020																				44,455		18,511		7,595
																	Total		$	567,703

Cumulative Paid claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Incurred Year
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	24,534	$	34,835	$	41,606	$	44,996	$	47,908	$	49,598	$	50,457	$	50,761	$	51,127	$	$51,209
2012				22,677		33,620		40,406		43,663		45,607		46,094		46,441		46,625		46,724
2013						21,376		33,249		38,979		42,840		44,252		45,234		45,502		45,621
2014								18,752		28,657		33,809		36,875		37,857		38,773		39,214
2015										17,063		24,935		28,040		30,729		32,188		32,554
2016												20,099		28,996		32,820		34,546		35,395
2017														28,414		41,855		48,574		83,613
2018																16,555		24,402		26,997
2019																		16,305		22,379
2020																				19,431
																			$	403,137
	All outstanding liabilities before 2011, net of reinsurance																			2,001
	Liabilities for claims and claims adjustment expenses, net of reinsurance																		$	166,567

The table below includes the average annual percentage payout of incurred claims by age, net of reinsurance, for the Property and Casualty segment, presented as required supplementary information as of December 31, 2020:

	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)
	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Average	44.3%	20.7%	10.3%	8.5%	3.6%	1.9%	1.0%	0.4%	0.5%	0.2%

42

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The reconciliation of the net incurred and paid claims development tables, by segment, to the liability for claims and claim adjustment expenses in the Consolidated Balance Sheets is as follows:

	As of December 31, 2020
Net outstanding liabilities
Managed Care	$	445,655
Property and Casualty		166,567
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		612,222
Reinsurance recoverable on unpaid claims - Property and Casualty		126,268
Insurance lines other than short-duration		49,932
Intersegment elimination		(1,320	)
Total gross liability for unpaid claims and claim adjustment expense	$	787,102

Claim Liabilities as of December 31, 2020 and 2019 include approximately $183,023 and $241,663, respectively, of gross losses related to the impact of Hurricanes Irma and Maria, which made landfall in Puerto Rico in September 2017.

12. Federal Employees’ Health Benefits (FEHBP) and Federal Employees’ (FEP) Programs

FEHBP

In prior years, TSS entered in a contract, renewable annually, with the Office of Personnel Management (OPM) as authorized by the Federal Employees’ Health Benefits Act of 1959, as amended, to provide health benefits under the FEHBP.  The FEHBP covers postal and federal employees residing in the Commonwealth of Puerto Rico and the USVI, as well as retirees and eligible dependents.  The FEHBP is financed through a negotiated contribution made by the federal government and employees’ payroll deductions.

The accounting policies for the FEHBP are the same as those described in the Company’s summary of significant accounting policies.  Premium rates are determined annually by TSS and approved by the federal government.  Claims are paid to providers based on the guidelines determined by the federal government.  Operating expenses are allocated from TSS’s operations to the FEHBP based on applicable allocation guidelines (such as the number of claims processed for each program) and are subject to contractual expense limitations.

The operations of the FEHBP do not result in any excess or deficiency of revenue or expense as this program has a special account available to compensate any excess or deficiency on its operations to the benefit or detriment of the federal government.  Any transfer to/from the special account necessary to cover any excess or deficiency in the operations of the FEHBP is recorded as a reduction/increment to the premiums earned.  The contract with OPM provides that the cumulative excess of the FEHBP earned income over health benefits charges and expenses represents a restricted fund balance denoted as the special account.  Upon termination of the contract and satisfaction of all the FEHBP’s obligations, any unused remainder of the special reserve would revert to the Federal Employees Health Benefit Fund.  In the event that the contract terminates and the special reserve is not sufficient to meet the FEHBP’s obligations, the FEHBP contingency reserve will be used to meet such obligations.  If the contingency reserve is not sufficient to meet such obligations, the Company is at risk for the amount not covered by the contingency reserve.

43

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The contract with OPM allows for the payment to the Company of service fees as negotiated between TSS and OPM.

The Company also has funds available related to the FEHBP amounting to $58,290 and $65,309 as of December 31, 2020 and 2019, respectively, and are included within Cash and Cash Equivalents in the accompanying Consolidated Balance Sheets.  Such funds are used to cover health benefits charges, administrative expenses and service charges required by the FEHBP.

A contingency reserve is maintained by the OPM at the U.S. Treasury, and is available to the Company under certain conditions as specified in government regulations.  Accordingly, such reserve is not reflected in the Consolidated Balance Sheets.  The balance of such reserve as of December 31, 2020 and 2019 was $99,005 and $76,380, respectively. The Company did not receive contingency reserve payments during 2020, 2019 and 2018.  During the year ended December 31, 2020, 2019 and 2018, the Company returned excess reserves of $13,959, $6,006 and $23,030 to the contingency reserve fund, respectively.

The claim payments and operating expenses charged to the FEHBP are subject to audit by the U.S. government.  Management is of the opinion that an adjustment, if any, resulting from such audits will not have a significant effect on the accompanying consolidated financial statements.  The claim payments and operating expenses reimbursed in connection with the FEHBP have been audited through 2011 by OPM.

FEP

In prior years, TSS entered in a contract with the BCBSA as per Contract No. C.S. 1039 with OPM to provide health benefits under one Government-wide Service Benefit Plan as contemplated in Title 5, Chapter 89, United States Code. The FEP covers employees and annuitants residing in the Commonwealth of Puerto Rico and the USVI as well as eligible dependents. The FEP is financed through a negotiated contribution made by the federal government and employees’ payroll deductions.  The accounting methodology and operations of the FEP are similar to those of the FEHBP as described above.

The claims payments and operating expenses charged to the FEP are subject to audit by the BCBSA. Management is of the opinion that the adjustments, if any, resulting from such audits will not have a significant effect in the accompanying consolidated financial statements. Operating expenses reimbursed in connection with the FEP have been audited through January 2020 by BCBSA.

44

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

13. Borrowings

Long-Term Borrowings

A summary of the borrowings entered by the Company as of December 31 is as follows:

	2020		2019
Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.15% at December 31, 2020).	$	4,627	$	6,267
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 2.98% at December 31, 2020).		16,204		17,211
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.48% at December 31, 2020).		1,813		2,401
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.25% at December 31, 2020). Last payment of $25,185 due on June 19, 2025.		30,723		-
Total borrowings		53,367		25,879
Less: unamortized debt issuance costs		616		185
	$	52,751	$	25,694

The secured loans payable maturing on 2023 and 2024 are guaranteed by a first mortgage held by the bank on the Company’s land, building and substantially all leasehold improvements, as collateral for the term of the loan under a continuing general security agreement.

On June 19, 2020, TSM entered into a $31,350 Credit Agreement (the Loan) with a commercial bank in Puerto Rico. The Company used the proceeds of the Loan to partially finance the acquisition of the Building (see Note 8).

The Loan is guaranteed by a mortgage over the Building, a pledge of all collateral related to the Building and an assignment of the rents collected for the lease of office space in the Building. Pursuant to the credit agreement, interest is payable on the outstanding principal balance of the Loan at an annual rate equal to the Prime Rate. Monthly interest payments commenced on July 1, 2020, and will continue to be paid each month until the principal of the Loan has been paid in full.

45

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Aggregate maturities of the Company’s borrowings as of December 31, 2020 are:

Year ending December 31
2021	$	4,490
2022		4,490
2023		4,196
2024		14,484
2025		25,707
	$	53,367

The Company may, at its option and at any time, upon written notice as specified in the credit agreement, prepay prior to maturity all or any part of the Loan upon the payment of a penalty fee of the outstanding principal amount at the time of the prepayment of 3% during the first year, 2% during the second year, 1% during the third year and thereafter at par.

The four term loans under credit agreements with commercial banks in Puerto Rico include certain customary financial and non-financial covenants, including negative covenants imposing certain restrictions on the Company’s business. The Company was in compliance with all these covenants as of December 31, 2020.

Interest expense on the above borrowings amounted to $1,362, $1,320, and $1,375, for the years ended December 31, 2020, 2019, and 2018, respectively.

Short-Term Borrowings 

The Company has several short-term facilities available to address timing differences between cash receipts and disbursements, consisting of collateralized advances from the FHLBNY and a revolving credit facility.

• In August 2019, TSS and TSV became members of the FHLBNY, which provides access to collateralized advances. The borrowing capacity of TSS and TSV is up to 30% of their admitted assets as disclosed in the most recent filing with the Commissioner of Insurance but is constrained by the amount of collateral held at the FHLBNY (see Note 3). As of December 31, 2020 and 2019, the borrowing capacity was approximately $200,338 and $131,100, respectively. The outstanding balance as of December 31, 2020 and 2019 was $30,000 and $54,000, respectively.  The average interest rate of the outstanding balances was 0.33% and 1.79% as of December 31, 2020 and 2019, respectively.

• As of December 31, 2020, TSS has $35,000 of available credit under repurchase agreements with broker-dealers, which are short-term borrowing facilities using securities as collateral. There are no outstanding short-term borrowings under these facilities as of December 31, 2020.

• TSA has a $10,000 revolving loan agreement with a commercial bank in Puerto Rico.  This line of credit has an interest rate of 30-day LIBOR plus 250 basis points and contains certain financial and non-financial covenants that are customary for this type of facility.  This line of credit matures on June 30, 2021 and had no outstanding balance as of December 31, 2020.

46

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

14. Reinsurance Activity

The effect of reinsurance on premiums earned and claims incurred is as follows:

				Premiums Earned									Claims Incurred(1)
	2020			2019			2018			2020			2019			2018
Gross	$	3,681,830		$	3,316,802		$	3,009,830		$	2,967,719		$	2,645,599		$	2,657,639
Ceded		(76,809	)		(66,320	)		(73,591	)		(60,702	)		(15,924	)		(163,898	)
Assumed		429			2,398			2,352			1,252			2,330			3,089
Net	$	3,605,450		$	3,252,880		$	2,938,591		$	2,908,269		$	2,632,005		$	2,496,830

⁽¹⁾  The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $38,551, $34,251 and $30,783 that is included within the consolidated claims incurred during the years ended December 31, 2020, 2019 and 2018, respectively.

TSS, TSA, TSP and TSV, in accordance with general industry practices, annually purchase reinsurance to protect them from the impact of large unforeseen losses and prevent sudden and unpredictable changes in net income and stockholders’ equity of the Company.  Reinsurance contracts do not relieve any of the subsidiaries from their obligations to policyholders.  In the event that all or any of the reinsuring companies might be unable to meet their obligations under existing reinsurance agreements, the subsidiaries would be liable for such defaulted amounts.  During 2020, 2019, and 2018 TSP placed 19.36%, 21.50%, and 16.45%, respectively of its reinsurance business with one reinsurance company.

TSS has excess of loss reinsurance treaties whereby it cedes a portion of its premiums to third parties.  Reinsurance contracts are primarily for periods of one year and are subject to modifications and negotiations at each renewal date.  Premiums ceded under these contracts amounted to $1,291, $1,446, and $1,524 in 2020, 2019 and 2018, respectively.  Claims ceded amounted to $453, $1,215, and $320, in 2020, 2019, and 2018, respectively.  Principal reinsurance agreements include an organ transplant excess of loss treaty, which covers:

• For group policies, 80% of the claims up to a maximum of $800 (80% of $1,000), per person, per life. For other group policies with other options, the agreement covers 80% of the claims up to a maximum of $400 (80% of $500), per person, per life.

• For policies provided to the active and retired employees of the Commonwealth of Puerto Rico and its instrumentalities, the treaty covers 100% of the claims up to a maximum of $1,000 per person, per life with major medical coverage, only if the covered person uses providers that are members of TSS network.

• For policies provided to the municipalities of Puerto Rico, the treaty covers 100% of the claims up to a maximum of $250, per person, per life, and all other plans with lifetime covers 100% of the claims up to a maximum of $1,000, per person, per life.

TSA has an excess of loss reinsurance treaty whereby it cedes a portion of its premiums to a third party.  This reinsurance contract is for a period of one year and is subject to modifications and negotiations in each renewal date.  Premiums ceded under this contract amounted to $3,050, $2,850, and $2,300 in 2020, 2019, and 2018 respectively. Claims ceded amounted to $3,862, $3,186, and $1,804 in 2020, 2019, and 2018, respectively.  This reinsurance agreement includes an excess of loss reinsurance coverage for certain hospital inpatient, hospital outpatient, ambulance, and physician services as well as pharmaceutical drugs. This agreement covers a maximum of $2,000 per person, in excess of the Specific Deductible and Reimbursement Percentage, per agreement term.

47

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

TSP utilized facultative reinsurance, pro rata, and excess of loss reinsurance treaties to manage its exposure to losses, including those from catastrophe events.  TSP has geographic exposure to catastrophe losses from hurricanes and earthquakes.  The incidence and severity of catastrophes are inherently unpredictable.  Under these treaties, TSP ceded premiums written were $61,145, $52,355, and $60,354, in 2020, 2019, and 2018, respectively. TSP ceded (refunded) claims incured were $50,295, ($3,368) and $152,704, in 2020, 2019 and 2018, respectively.

During 2018, as part of the catastrophe program, TSP signed a multiyear reinsurance contract providing for retroactive and prospective reinsurance coverage.  The retroactive coverage resulted in a deferred gain on retroactive reinsurance of $25,000, which is presented within the Accounts Payable and Accrued Liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2020 and 2019.  The deferred gain on the retroactive reinsurance will be amortized using the recovery method.  The recovery method provides for the amortization in proportion to the estimated recoveries made as of the reporting date as a percentage of total estimated recoveries.

Ceded unearned reinsurance premiums arising from TSP reinsurance transactions amounted to $9,101 and $10,427 as of December 31, 2020 and 2019, respectively, and are reported as Other Assets in the accompanying Consolidated Balance Sheets.

Most principal reinsurance contracts are for a period of one year and are subject to modifications and negotiations in each renewal.  Current property and catastrophe reinsurance program was renewed effective April 1, 2020 for the twelve-month period ending March 31, 2021. Other contracts were renewed as expiring on January 1, 2021.

Principal reinsurance agreements are as follows:

• Casualty excess of loss treaty provides reinsurance for losses up to $20,000, subject to a retention of $225.

• Medical malpractice excess of loss treaty provides reinsurance for losses up to $3,000, subject to a retention of $150.

• Property reinsurance treaty includes proportional cessions and a per risk excess of loss contract limiting losses to $400 in $30,000 risks.

• Catastrophe protection limits losses to $5,000 per event with losses up to approximately $809,000 in a $814,000 event.

TSV also cedes insurance with various reinsurance companies under a number of pro rata, excess of loss and catastrophe treaties. Under these treaties, TSV ceded premiums of $9,997, $8,337, and $8,780, in 2020, 2019, and 2018, respectively. Principal reinsurance agreements are as follows:

• Group life insurance facultative agreement, reinsuring risk in excess of $25 of certain group life policies and a combined pro rata and excess of loss agreement effective July 1, 2008, reinsuring 50% of the risk up to $200 and ceding the excess.

48

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

• Facultative pro rata agreements for the long‑term disability insurance, reinsuring 65% of the risk.

• For certain policies, all personal accident and certain woman related cancer claims, the treaty covers 100% of the risk and for other cancer claims it covers 65% of the risk.

• Several reinsurance agreements, mostly on an excess of loss basis up to a maximum retention of $200.

• Excess of loss agreement for the major medical business in Costa Rica reinsuring 100% of all claims over $35 for claims incurred up to May 31, 2020 and claims over $50 for claims incurred on or after June 1, 2020.

15. Income Taxes

The Company and its subsidiaries are subject to Puerto Rico income taxes. Under Puerto Rico income tax law, the Company is not allowed to file consolidated tax returns with its subsidiaries. The Company’s insurance subsidiaries are also subject to U.S. federal income taxes for foreign source investment income.  The Company is potentially subject to income tax audits in the Commonwealth of Puerto Rico for the taxable year 2016 and after, until the applicable statute of limitations expires. Tax audits by their nature are often complex and can require several years to complete.

Managed Care and Property and Casualty corporations are taxed essentially the same as other corporations, with taxable income primarily determined on the basis of the statutory annual statements filed with the insurance regulatory authorities. The corporations are also subject to an alternative minimum income tax, which is calculated based on the formula established by existing tax laws. Any alternative minimum income tax paid may be used as a credit against the excess, if any, of regular income tax over the alternative minimum income tax in future years up to a limit of 25% of the excess.

The Company, through one of its Managed Care corporations, has a branch in the USVI that is subject to a 5% premium tax on policies underwritten therein. As a qualified foreign insurance company, the Company is subject to income taxes in the USVI, which has implemented a mirror tax law based on the U.S. Internal Revenue Code.  The branch operations in the USVI had certain net operating losses for USVI tax purposes for which a valuation allowance has been recorded.

Companies within our Life Insurance segment operate as qualified domestic life insurance companies and are subject to the alternative minimum tax and taxes on its capital gains.

On December 22, 2017, U.S Government enacted the Tax Cut and Jobs Act (TCJA). The TCJA incorporates a series of changes in tax rates at the federal level applicable for taxable years beginning after December 31, 2017 and before January 1, 2026.  The U.S. federal maximum corporate income tax rate is reduced from 35% to a 21% flat rate. This change did not have a significant impact for the Company and its insurance subsidiaries since they are only taxed in that jurisdiction for passive income earned on investments, which continue to be subject to withholding at source at its gross level. In addition, the TCJA incorporates restrictions on insurance business exception to passive foreign investment company (PFIC) rules, that were taxed under the PFIC’s earnings, subject to an exception for certain income derived in the active conduct of an insurance business. At the moment, no significant impact for the Company has been identified.  We annually test our compliance with the new guidelines for Section 1297 PFIC test, at the insurance subsidiary level.

49

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

On December 10, 2018, the Puerto Rico Government signed into Law Act 257 of 2018, better known as the Puerto Rico Tax Reform. With this Law, additional amendments are incorporated to the Puerto Rico Internal Revenue Code. Approved changes include: (i) a decrease in the maximum corporate tax rate from 39% to 37.5%; (ii) an increase from 80% to a 90% in the amount of net operating loss carryover deduction available to be claimed against current year net income for regular tax purposes; (iii) an increase in the withholding at source for services rendered from 7% to 10% ; (iv) a limitation in the amounts of net operating losses generated by a corporate shareholder allowed to be netted against net income distributed from a flow-through investment, not permitted for taxable years beginning after December 31, 2019; and (v) a revised large taxpayer definition to include flow-through entities and extend the determination of audited financial statement requirements at the group level.  The Puerto Rico Tax Reform also adds requirements for the deductibility of certain expenses as well as disclosure requirements related to any uncertain tax position (UTP) recorded following GAAP.  All of these changes are effective for taxable years beginning January 1, 2019.

On April 16, 2020, was signed into Law by the Government of Puerto Rico Act 40 of 2020, which incorporates additional amendments to the Puerto Rico Internal Revenue Code for a New Puerto Rico, as amended. Amendments focused on changes to the audited financial statement threshold requirements; corrects wording on Net Operating Losses to clarify that these will not consider the dividend receipt deduction; and states that for Capital Losses Carryover, they shall only be carried forward as a short term gains up to 90% of net capital gains for the year. In addition, it introduces changes to the filing due date of income tax returns of non-for-profits, exempt (grant) corporations, and insurance companies to June 15, for calendar year entities.

Federal income taxes recognized by the Company’s insurance subsidiaries amounted to approximately $1,981, $2,209, and $1,147, in 2020, 2019, and 2018, respectively.

All other corporations within the group are subject to Puerto Rico income taxes as regular corporations, as defined in the P.R. Internal Revenue Code, as amended.

The components of income tax expense (benefit) consisted of the following:

	2020			2019		2018
Current income tax expense	$	26,853		$	35,714	$	2,212
Deferred income tax (benefit) expense		(2,285	)		3,661		(32,078	)
Total income tax expense (benefit)	$	24,568		$	39,375	$	(29,866	)

50

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The income tax expense (benefit) differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	2020			2019			2018
Income (loss) before taxes	$	91,733		$	132,252		$	(93,172	)
Statutory tax rate		37.50	%		38.00	%		39.00	%
Income tax expense (benefit) at statutory rate		34,400			49,595			(36,337	)
(Decrease) increase in taxes resulting from:
Exempt income, net		(10,510	)		-			(2,330	)
Effect of taxing life insurance operations as a qualified domestic life insurance company instead of as a regular corporation		(3,379	)		(4,823	)		(3,445	)
Effect of taxing capital gains at a preferential rate		1			(743	)		194
Adjustment to deferred tax assets and liabilities for changes in statutory tax rates		-			-			9,217
Other adjustments to deferred tax assets and liabilities		736			(469	)		(43	)
Unrealized gains or losses included in earnings		1,338			(5,627	)		4,625
Effect of extraordinary dividend distribution from the JUA Association - reported net of taxes in other income		-			(55	)		-
Effect of net operating loss limitations		2,369			1,239			-
Tax credit benefit		(1,190	)		(62	)		(306	)
Tax returns to provision true up		922			36			(798	)
Subtotal		(9,713	)		(10,504	)		7,114
Other permanent disallowances, net:
Other		(46	)		37			(229	)
Other adjustments		(73	)		247			(414	)
Total income tax expense (benefit)	$	24,568		$	39,375		$	(29,866	)

51

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Deferred income taxes reflect the tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The composition of the net deferred tax asset at December 31, 2020 and 2019 of the Company and its subsidiaries is as follows:

	2020			2019
Deferred tax assets
Allowance for doubtful receivables	$	16,542		$	18,882
Liability for pension benefits		59,205			15,378
Postretirement benefits		280			415
Deferred compensation		2,106			2,187
Accumulated depreciation		193			920
Impairment loss on investments		648			522
Contingency reserves		10,430			4,063
Share-based compensation		6,880			8,086
Alternative minimum income tax credit		3,998			3,432
Purchased tax credits		286			458
Net operating loss		56,930			51,246
Reinsurance agreement		9,375			9,375
Accrued liabilities		7,069			5,599
Difference in tax basis of investments portfolio		-			77
Other		2,137			1,349
Gross deferred tax assets		176,079			121,989
Less: valuation allowance		(7,765	)		(6,705	)
Deferred tax assets		168,314			115,284
Deferred tax liabilities
Deferred policy acquisition costs		(9,608	)		(8,413	)
Catastrophe loss reserve		(11,693	)		(13,014	)
Unrealized gain on securities available for sale		(23,843	)		(14,965	)
Unrealized gain on equity investments		(10,740	)		(9,091	)
Difference in tax basis of investments portfolio		(306	)		-
Unamortized debt issue costs		(231	)		(69	)
Intangible asset		(492	)		(669	)
Employee benefits plan		(6,913	)		(2,026	)
Gross deferred tax liabilities		(63,826	)		(48,247	)
Net deferred tax asset	$	104,488		$	67,037

The net deferred tax asset shown in the table above at December 31, 2020 and 2019 is reflected in the Consolidated Balance Sheets as $119,534 and $77,294, respectively, in Deferred Tax Assets and $15,046 and $10,257, in Deferred Tax Liabilities, respectively, reflecting the aggregate deferred tax assets or liabilities of individual tax-paying subsidiaries of the Company.

52

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management believes that it is more likely than not that the Company will realize the benefits of these deductible differences.  The valuation allowance is mostly related to the net operating losses generated by the Company’s USVI operations and the health clinic’s operations which based on the available evidence are not considered to be realizable at the reporting dates.

At December 31, 2020, the Company and its subsidiaries have net operating loss carry-forwards for Puerto Rico income tax purposes of approximately $168,800, which are available to offset future taxable income for up to December 2030. The carryforwards generally expire in 2026 through 2030.  Except for the valuation allowance described in the previous paragraph, the Company concluded that as of December 31, 2020, it is more likely than not that the entities that have these net operating loss carry-forwards will generate sufficient taxable income within the applicable net operating loss carry-forward periods to realize its deferred tax asset. This conclusion is based on the historical results of each entity, adjusted to exclude non-recurring conditions, and the forecast of future profitability.  Management will continue to evaluate on a quarterly basis if there are any significant events that will affect the Company’s ability to utilize these deferred tax assets.

16. Pension Plans

Non-contributory Defined‑Benefit Pension Plan

The Company sponsors a non-contributory defined-benefit pension plan for its employees and for the employees of certain subsidiaries.  Pension benefits begin to vest after five years of vesting service, as defined, and are based on years of service and final average salary, as defined. The funding policy is to contribute to the plan as necessary to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, as amended, plus such additional amounts as the Company may determine to be appropriate from time to time.  The measurement date used to determine pension benefit for the pension plan is December 31.

In December 2016, the Company announced that effective January 31, 2017, it would freeze the pay and service amounts used to calculate pension benefits for active employees who participated in the pension plan. Therefore, as of the effective date, active employees in the pension plan do not accrue additional benefits for future service and eligible compensation received.

53

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The following table sets forth the plan’s benefit obligations, fair value of plan assets, and funded status as of December 31, 2020 and 2019.

	2020			2019
Change in benefit obligation
Benefit obligation at beginning of year	$	190,555		$	159,477
Interest cost		6,073			6,992
Benefit payments		(9,176	)		(9,672	)
Actuarial loss		17,241			33,758
Benefit obligation at end of year	$	204,693		$	190,555
Accumulated benefit obligation at end of year	$	204,693		$	190,555
Change in fair value of plan assets
Fair value of plan assets at beginning of year	$	163,558		$	134,957
Actual return on assets		(91,542	)		36,273
Employer contributions		10,000			2,000
Benefit payments		(9,176	)		(9,672	)
Fair value of plan assets at end of year	$	72,840		$	163,558
Funded status at end of year	$	(131,853	)	$	(26,997	)

The amounts recognized in the Consolidated Balance Sheets as of December 31, 2020 and 2019 consist of the following:

	2020		2019
Pension liability	$	131,853	$	26,997
Net actuarial loss recognized in accumulated other comprehensive loss, net of a deferred tax of $55,848 and $12,692 in 2020 and 2019, respectively		100,685		27,907

The following assumptions were used on a weighted average basis to determine benefits obligations of the plan as of December 31, 2020 and 2019.

	2020			2019
Discount rate		2.75	%		3.25	%
Expected return on plan assets		5.75	%		6.25	%
Rate of compensation increase		N/A			N/A

54

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income were as follows:

	2020			2019			2018
Components of net periodic benefit cost
Interest cost	$	6,073		$	6,992		$	6,853
Expected return on plan assets		(8,840	)		(8,835	)		(9,020	)
Actuarial loss		1,178			392			961
Settlement loss		-			-			2,110
Net periodic benefit (income) cost	$	(1,589	)	$	(1,451	)	$	904

Net periodic benefit (income) cost includes settlement charges as a result of retirees selecting lump-sum distributions. Settlement charges may increase in the future if the number of eligible participants deciding to receive distributions and the amount of their benefits increases.

The estimated net actuarial loss that will be amortized from Accumulated Other Comprehensive Loss into net periodic pension benefits cost during the next twelve months is $3,893.

The following assumptions were used on a weighted average basis in computing the periodic benefit cost for the years ended December 31, 2020, 2019, and 2018:

	2020			2019			2018
Discount rate		3.25	%		4.50	%		3.75	%
Expected return on plan assets		6.25	%		6.50	%		6.50	%
Rate of compensation increase		N/A			N/A			N/A

The basis of the overall expected long-term rate of return on assets assumption is a forward-looking approach based on the current long-term capital market outlook assumptions of the assets categories in which the trust invests and the trust’s target asset allocation. At December 31, 2020, the assumed target asset allocation for the program is: 45% to 55% in equity securities, 40% to 48% in debt securities, and 2% to 10% in other securities. Using a mean-variance model to project returns over a 30-year horizon under the target asset allocation, the 35 to 65 percentile range of annual rates of return is 5.1% to 6.6%. The Company selected a rate from within this range of 6.25% for 2020 and 6.50% for 2019, which reflects the Company’s best estimate for this assumption based on the data described above, information on the historical returns on assets invested in the pension trust, and expected future conditions. This rate is net of both investment related expenses and a 0.15% reduction for other administrative expenses charged to the trust.

55

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Plan assets

Plan assets recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. For level inputs and input definition, see Note 10.

The tables below summarize fair value measurements by level at December 31, 2020 and 2019 for assets measured at fair value on a recurring basis:

	2020
	Level 1		Level 2		Level 3		Total		NAV
Government obligations	$	-	$	4,127	$	-	$	4,127	$	-
Non-agency backed securities		-		157		-		157		-
Corporate obligations		-		13,134		-		13,134		-
Real estate		-		-		-		-		6,033
Registered investments		1,183		1,886		-		3,069		-
Common/Collective trusts		-		46,006		-		46,006		-
Common stocks		1,196		-		-		1,196		-
Interest-bearing cash		371		-		-		371		-
Derivatives		-		2		-		2		-
	$	2,750	$	65,312	$	-	$	68,062	$	6,033

	2019
	Level 1		Level 2		Level 3		Total		NAV
Government obligations	$	-	$	6,782	$	-	$	6,782	$	-
Non-agency backed securities		-		656		-		656		-
Corporate obligations		-		9,353		-		9,353		-
Limited Liability Corporations		-		-		-		-		126,989
Real estate		-		-		-		-		6,720
Registered investments		3,754		382		-		4,136		-
Common/Collective trusts		-		7,527		-		7,527		-
Common stocks		1,885		-		-		1,885		-
Preferred stocks		-		14		-		14		-
Interest-bearing cash		300		-		-		300		-
	$	5,939	$	24,714	$	-	$	30,653	$	133,709

The Company’s plan assets are invested in the National Retirement Trust. The National Retirement Trust was formed to provide financial and legal resources to help members of the BCBSA offer retirement benefits to their employees.

The investment program for the National Retirement Trust is based on the precepts of capital market theory that are generally accepted and followed by institutional investors, who by definition are long‑term oriented investors. This philosophy holds that:

• Increasing risk is rewarded with compensating returns over time, and therefore, prudent risk taking is justifiable for long-term investors.

56

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

• Risk can be controlled through diversification of asset classes and investment approaches, as well as diversification of individual securities.

• Risk is reduced by time, and over time the relative performance of different asset classes is reasonably consistent. Over the long-term, equity investments have provided and should continue to provide superior returns over other security types. Fixed-income securities can dampen volatility and provide liquidity in periods of depressed economic activity.  Lengthening duration of fixed income securities may reduce surplus volatility.

• The strategic of long-term allocation of assets among various asset classes is an important driver of long‑term returns.

• Relative performance of various asset classes is unpredictable in the short‑term and attempts to shift tactically between asset classes are unlikely to be rewarded.

Investments will be made for the sole interest of the participants and beneficiaries of the programs participating in the National Retirement Trust. Accordingly, the assets of the National Retirement Trust shall be invested in accordance with these objectives:

• To ensure assets are available to meet current and future obligations of the participating programs when due.

• To earn the maximum return that can be realistically achieved in the markets over the long‑term at a specified and controlled level of risk in order to minimize future contributions.

• To invest assets with consideration of the liability characteristics in order to better align assets and liabilities.

• To invest the assets with the care, skill, and diligence that a prudent person acting in a like capacity would undertake. In the process, the Administration of the Trust has the objective of controlling the costs involved with administering and managing the investments of the National Retirement Trust.

Cash flows

The Company expects to contribute $10,000 to its pension program in 2021.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Year ending December 31
2021	$	11,805
2022		10,378
2023		10,611
2024		10,664
2025		10,656
2026 – 2029		56,709

57

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

Non-contributory Supplemental Pension Plan

In addition, the Company sponsors a non-contributory supplemental pension plan. This plan covers employees with qualified defined benefit retirement plan benefits limited by the U.S. Internal Revenue Code maximum compensation and benefit limits.  At December 31, 2020 and 2019, the Company had recorded a pension liability of $7,758 and $7,468, respectively.  The charge to accumulated other comprehensive loss related to the non-contributory pension plan at December 31, 2020 and 2019 amounted to $828 and $562, respectively, net of a deferred tax asset of $519 and $359, respectively.

17. Catastrophe Loss Reserve and Trust Fund

In accordance with Chapter 25 of the Puerto Rico Insurance Code, as amended, TSP is required to record a catastrophe loss reserve. This catastrophe loss reserve is supported by a trust fund for the payment of catastrophe losses. The reserve increases by amounts determined by applying a contribution rate, not in excess of 5%, to catastrophe written premiums as instructed annually by the Commissioner of Insurance, unless the level of the reserve exceeds 8% of catastrophe exposure, as defined. The reserve also increases by an amount equal to the resulting return in the supporting trust fund and decreases by payments on catastrophe losses or authorized withdrawals from the trust fund.  Additions to the catastrophe loss reserve are deductible for income tax purposes.

This trust may invest its funds in securities authorized by the Insurance Code, but not in investments whose value may be affected by hazards covered by the catastrophic insurance losses. The interest earned on these investments and any realized gains (losses) on investment transactions are part of the trust fund and are recorded as income (expense) of the Company. An amount equal to the investment return is recorded as an addition to the trust fund.

During the year ended December 31, 2018, TSP received the approval of the Commissioner of Insurance and withdrew $10,000 from the catastrophe fund following the payment for catastrophe losses related to the impact of Hurricane Maria in September 2017.

In December 2020, TSP received the approval of the Commissioner of Insurance to withdraw $5,000 from the catastrophe fund following the payment of catastrophe losses of the earthquake that hit the southwest part of Puerto Rico in January 2020.  During January 2021, TSP withdrew the $5,000 from the catastrophe fund. Also, TSP presented a petition for approval to the Commissioner of Insurance to withdraw an additional $5,300 from the catastrophe fund covering losses related to Hurricane Irma, which is still under evaluation.

The interest-earning assets in this fund, which amounted to $43,124 and $41,047 as of December 31, 2020 and 2019, respectively, are to be used solely and exclusively to pay catastrophe losses covered under policies written in Puerto Rico.

TSP is required to contribute to the trust fund, if needed or necessary, on or before January 31 of the following year. Contributions are determined by a rate determined or established by the Commissioner of Insurance for the catastrophe policies written in that year. No contribution was required for 2020 and 2019 since the level of the catastrophe reserve exceeded 8% of the catastrophe exposure.

The amount in the trust fund may be withdrawn or released in the case that TSP ceases to underwrite risks subject to catastrophe losses. Also, authorized withdrawals are allowed when the catastrophe loss reserve exceeds 8% of the catastrophe exposure, as defined.

58

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

TSP retained earnings are restricted in the accompanying Consolidated Balance Sheets by the total catastrophe loss reserve balance, which as of December 31, 2020 and 2019 amounted to $35,904 and $39,425, respectively.

18. Stockholders’ Equity

Common Stock

On July 29, 2019, the Company issued 48,602 Class A shares to the heirs of a former shareholder, as a result of a litigation settlement.  During July 2019, the Board of Directors authorized and approved the conversion (Conversion) of the Company’s remaining issued and outstanding Class A common shares into Class B common shares. Effective on August 7, 2019, all Class A holders of record received one Class B share for each Class A share held. Upon the Conversion, all remaining outstanding Class A shares were automatically cancelled and extinguished, and the Company now maintains a single class of common shares.

Preferred Stock

Authorized capital stock includes 100,000,000 of preferred stock with a par value of $1.00 per share. As of December 31, 2020 and 2019, there are no issued and outstanding preferred shares.

Liquidity Requirements

As members of the BCBSA, the Company, TSS, and TSA are required by membership standards of this association to maintain liquidity as defined by BCBSA. That is, to maintain total adjusted capital at or above 375% of Health Risk-Based Capital (HRBC) Authorized Control Level (ACL) as defined by the National Association of Insurance Commissioners (NAIC) for the for Primary Licensee (TSM) and Larger BCBS Controlled Affiliate (TSS) and 100% HRBC ACL for the Smaller BCBS Controlled Affiliate (TSA).

Dividends

As a holding company, the Company’s most significant assets are the common shares of its subsidiaries.  The principal sources of funds available to the Company are rental income and dividends from its subsidiaries, which are used to fund our debt service and operating expenses.

The Company is subject to the provisions of the General Corporation Law of Puerto Rico, which restricts the declaration and payment of dividends by corporations organized pursuant to the laws of Puerto Rico.  These provisions provide that Puerto Rico corporations may only declare dividends charged to their retained earnings or, in the absence of retained earnings, net profits of the fiscal year in which the dividend is declared and/or the preceding fiscal year.

The Company’s ability to pay dividends is dependent, among other factors, on its ability to collect cash dividends from its subsidiaries, which are subject to regulatory requirements, which may restrict their ability to declare and pay dividends or distributions.  In addition, an outstanding secured term loan restricts our ability to pay dividends in the event of default (see Note 13).

The accumulated earnings of TSS, TSA, TSV, TSB, and TSP are restricted as to the payment of dividends by statutory limitations applicable to domestic insurance companies. Under Puerto Rico insurance regulations, the regulated subsidiaries are permitted, without requesting prior regulatory approval, to pay dividends as long as the aggregate amount of all such dividends in any calendar year does not exceed the lesser of: (i) 10% of its surplus as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains).  Regulated subsidiaries will be permitted to pay dividends in excess of the lesser of such two amounts only if notice of its intent to declare such a dividend and the amount thereof is filed with the Commissioner of Insurance and such dividend is not disapproved within 30 days of its filing. As of December 31, 2020, the dividends permitted to be distributed in 2021 by the regulated subsidiaries without prior regulatory approval from the Commissioner of Insurance amounted to approximately $25,619.

59

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The issuance of 48,602 Class A shares entitled all Class B shareholders to certain anti-dilution rights; therefore, all holders of Class B shares at the close of business on July 26, 2019 (Record Date) received a share dividend of 0.051107 Class B shares for every Class B share they owned as of that time. On August 6, 2019, the Company paid the Class B share dividend which amounted to $24,655; cash of $11 was paid in lieu of fractional shares so that shareholders receive a whole number of shares of common stock.

19. Stock Repurchase Programs

The Company repurchases shares through open market transactions, in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, under repurchase programs authorized by the Board of Directors.  Shares purchased under share repurchase programs are retired and returned to authorized and unissued status.

In August 2017 the Company’s Board of Directors authorized a $30,000 repurchase program (2017 $30,000 program) of its Class B common stock.  In February 2018 the Company’s Board of Directors authorized a $25,000 expansion of this program.  In October 2019 the Company’s Board of Directors authorized an expansion to this repurchase program increasing its remaining balance up to a total of $25,000, effective November 2019. This program was completed in May 2020.

The stock repurchase activity under active stock repurchase programs for the years ended December 31 was:

	2020						2019						2018
	Shares Repurchased		Average Share Price		Amount Repurchased		Shares Repurchased		Average Share Price		Amount Repurchased		Shares Repurchased		Average Share Price		Amount Repurchased
2017  $30,000 program		952,820	$	15.72	$	14,982		527,881	$	18.92	$	9,989		903,888	$	24.76	$	22,390

60

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

20. Comprehensive Income

The accumulated balances for each classification of Other Comprehensive Income are:

	Unrealized Gains on Securities			Liability for Pension Benefits			Accumulated Other Comprehensive Income
Beginning balance at December 31, 2019	$	57,830		$	(28,467	)	$	29,363
Net current period change		37,654			(73,807	)		(36,153	)
Reclassification adjustments for gains and losses reclassified in income		(3,795	)		765			(3,030	)
Ending balance at December 31, 2020	$	91,689		$	(101,509	)	$	(9,820	)

The related deferred tax effects allocated to each component of Other Comprehensive Income in the accompanying Consolidated Statements of Stockholders’ Equity and Comprehensive Income in 2020, 2019 and 2018 are:

	2020
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	47,067		$	(9,413	)	$	37,654
Less reclassification adjustment for gains and losses realized in income		(4,541	)		746			(3,795	)
Net change in unrealized gain		42,526			(8,667	)		33,859
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		1,224			(459	)		765
Net change arising from assumptions and plan changes and experience		(118,092	)		44,285			(73,807	)
Net change in liability for pension benefits		(116,868	)		43,826			(73,042	)
Net current period change	$	(74,342	)	$	35,159		$	(39,183	)

61

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

	2019
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	42,780		$	(8,556	)	$	34,224
Less reclassification adjustment for gains and losses realized in income		(4,456	)		754			(3,702	)
Net change in unrealized gain		38,324			(7,802	)		30,522
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		396			(149	)		247
Net change arising from assumptions and plan changes and experience		(7,149	)		2,681			(4,468	)
Net change in liability for pension benefits		(6,753	)		2,532			(4,221	)
Net current period change	$	31,571		$	(5,270	)	$	26,301

	2018
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	(24,375	)	$	4,875		$	(19,500	)
Less reclassification adjustment for gains and losses realized in income		13,457			(3,005	)		10,452
Net change in unrealized gain		(10,918	)		1,870			(9,048	)
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		(995	)		373			(622	)
Net change arising from assumptions and plan changes and experience		2,190			(830	)		1,360
Net change in liability for pension benefits		1,195			(457	)		738
Net current period change	$	(9,723	)	$	1,413		$	(8,310	)

62

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

21. Share-Based Compensation

In December 2007, the Company adopted the 2007 Incentive Plan (the 2007 plan), which permits the Board to grant stock options, restricted stock awards and performance awards to eligible officers, directors and employees. The 2007 plan authorized the granting of up to 4,700,000 of Class B common shares of authorized but unissued stock. The 2007 plan was terminated in April 2017, when the 2017 Incentive Plan (the 2017 plan) was adopted.  The 2017 plan permits the Board to grant stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, performance awards, and other stock-based awards, to our officers and employees.  In addition, the 2017 plan authorizes the grant of equity-based compensation incentives to our directors and to any independent contractor and consultants.  The 2017 plan originally authorized the granting of up to 1,700,000 of Class B common shares plus the number of shares that were subject to any outstanding awards under the 2007 plan that are forfeited, cancelled, expire, terminate or otherwise lapse, in whole or in part, without the delivery of the shares. In October 2020 an additional 1,100,000 of Class B common shares were authorized under the 2017 plan. At December 31, 2020, there were 1,133,224 shares available for the Company to grant under the 2017 Plan.

Stock options and SARs can be granted with an exercise price, which shall not be less than the stock’s fair market value at the grant date. The term of stock options and SARs shall be fixed by the Board of Directors but shall not exceed 10 years from the date of grant.  The restricted stock, restricted stock units and performance awards are issued at the fair value of the stock on the grant date.  Restricted stock awards and restricted stock units vest in installments, as stipulated in each restricted stock agreement. Performance awards vest on the last day of the performance period, provided that at least minimum performance standards are achieved.

There was no stock option activity during the years ended December 31, 2020, 2019 and 2018. No options were granted during the three years ended December 31, 2020, 2019 and 2018.  No cash was received from stock options exercises during the years ended December 31, 2020, 2019 and 2018. During the years ended December 31, 2020, 2019, and 2018, 21,368, 6,124  and 29,779 shares, respectively, were repurchased and retired as the result of non-cash tax withholding upon vesting of shares.

63

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

A summary of the status of the Company’s non-vested restricted and performance shares as of December 31, 2020, and changes during the year ended December 31, 2020, are presented below:

	Restricted Awards					Performance Awards
	Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Exercise Price
Outstanding balance at January 1, 2020		308,387		$	24.16		515,688		$	25.60
Granted		228,157			14.89		521,357			14.44
Lapsed		(167,701	)		23.23		(200,801	)		26.50
Forfeited (due to termination)		(5,671	)		19.03		(29,882	)		22.19
Quantity adjusted (due to performance payout more than 100%), net of forfeited		-			-		(32,008	)		26.50
Outstanding balance at December 31, 2020		363,172		$	18.87		774,354		$	18.05

The weighted average grant date fair value of restricted shares granted during the year 2020, 2019 and 2018 were $14.89, $24.53, and $28.49, respectively. Total fair value of restricted stock vested during the year ended December 31, 2020, 2019 and 2018 was $3,896, $2,861 and $2,390, respectively.

At December 31, 2020, there was $11,200 of total unrecognized compensation cost related to non-vested share‑based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.95 years. The Company currently uses authorized and unissued Class B common shares to satisfy share award exercises.

22. Net Income Available to Stockholders and Basic Net Income per Share

The table below sets forth the computation of basic and diluted earnings per share for the three-year period ended December 31:

	2020		2019		2018
Numerator for earnings per share
Net income (loss) attributable to TSM available to stockholders	$	67,189	$	92,894	$	(63,302	)
Denominator for basic earnings per share – Weighted average of common shares		23,179,544		23,318,742		22,975,385
Effect of dilutive securities		130,198		66,551		-
Denominator for diluted earnings per share		23,309,742		23,385,293		22,975,385
Basic net income (loss) per share attributable to TSM	$	2.90	$	3.98	$	(2.76	)
Diluted net income  (loss) per share attributable to TSM	$	2.88	$	3.97	$	(2.76	)

The Company excluded the effect of dilutive securities during the year ended December 31, 2018 because their effect would have been anti-dilutive given the net loss attributable to stockholders during this year.  If the Company had generated income from continuing operations during the year ended December 31, 2018, the effect of the restricted stock awards on the diluted shares calculation would have been an increase in shares of 81,023 shares.

64

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

23. Leases

The Company’s subsidiaries lease their regional offices, certain equipment and warehouse facilities under non-cancelable operating leases.  These contracts generally do not include purchase options or residual value guarantees.  The remaining lease terms ranges from 0.2 to 13.9 years.  The Company identifies leases when it has both the right to obtain substantially all economic benefits from the use of the asset and the right to direct the use of the asset.

The Company recognizes the right-of-use assets and lease liabilities related to operating leases in its Consolidated Balance Sheets within Other Assets and Accounts Payables and Accrued Liabilities, respectively. As of December 31, 2020, the right-of-use asset and lease liabilities balance was $12,957 and $13,191, respectively.  As of December 31, 2019, the right-of-use asset and lease liabilities balance was $10,438 and $10,586, respectively.  The weighted-average remaining lease term was 5.9 years and 5.8 years as of December 31, 2020 and 2019, respectively.

The Company uses the incremental borrowing rate for purposes of discounting lease payments for our operating leases since our lease agreements do not provide a readily determinable implicit rate. We estimate our incremental borrowing rate using an interest rate index to which we add a credit spread based on financing transactions with a similar credit risk profile.  The weighted-average discount rate of our operating leases was 4.6% and 5.3% as of December 31, 2020 and 2019, respectively.

The Company adopted the following two accounting policies as a result of the adoption of the ASU 2016-02: Leases (Topic 842): (1) to not separate lease components from non-lease components and (2) to not apply the recognition requirements of ASC 842 to short-term leases.

Undiscounted cash flows of operating leases are shown below:

Year ending December 31
2021	$	3,961
2022		3,366
2023		2,330
2024		1,856
2025		709
Thereafter		2,888
Total lease payments		15,110
Less: imputed interest		(1,919	)
Total	$	13,191

65

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The following presents the lease cost recognized by the Company:

For the years ended December 31,
	2020		2019
Operating lease cost	$	4,600	$	4,900
Short-term lease cost		977		509
	$	5,577	$	5,409

The Company leases certain floors of one of its buildings and generates rental income. Maturity analysis of lease payments to be received from its lessees as of December 31, 2020, is summarized as follows:

Year ending December 31,
2021	$	1,909
2022		1,947
2023		1,986
2024		2,026
2025		1,177
Thereafter		1,448
	$	10,493

24. Commitments

Pursuant to the provisions of the Puerto Rico Insurance Code and Regulations, TSP is a member of the Compulsory Vehicle Liability Insurance Joint Underwriting Association (JUA).  As a participant, TSP shares the risk, proportionately with other members, based on a formula established by the Puerto Rico Insurance Code, of the results and financial condition of the JUA, and accordingly, may be subject to assessments to cover obligations of the JUA or may receive refund distributions for good experience.  The Company received $212, $172 and $215 in 2020, 2019 and 2018, respectively, as an ordinary dividend.

25. Contingencies

The Company’s business is subject to numerous laws and regulations promulgated by Federal, Puerto Rico, USVI, Costa Rica, BVI, and Anguilla governmental authorities. Compliance with these laws and regulations can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. The Commissioner of Insurance of Puerto Rico, as well as other Federal, Puerto Rico, USVI, Costa Rica, BVI, and Anguilla government authorities, regularly make inquiries and conduct audits concerning the Company’s compliance with such laws and regulations. Penalties associated with violations of these laws and regulations may include significant fines and exclusion from participating in certain publicly funded programs and may require the Company to comply with corrective action plans or changes in our practices.

66

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

As of December 31, 2020, the Company is involved in various legal actions arising in the ordinary course of business. The Company is also defendant in various other litigations and proceedings, some of which are described below.  Where the Company believes that a loss is both probable and estimable, such amounts have been recorded. Although the Company believes the estimates of such losses are reasonable, these estimates could change as a result of further developments in these matters. In other cases, it is at least reasonably possible that the Company may incur a loss related to one or more of the mentioned pending lawsuits or investigations, but the Company is unable to estimate the range of possible loss which may be ultimately realized, either individually or in the aggregate, upon their resolution. However, there are legal proceedings where a loss is reasonably possible, and for which it is possible to reasonably estimate the amount of the possible loss or range of losses, we currently believe that the range of possible losses in excess of established reserves is, in the aggregate, from $0 to approximately $10,000 at December 31, 2020.  The outcome of legal proceedings is inherently uncertain, and pending matters for which accruals have not been established have not progressed sufficiently to enable us to estimate a range of possible loss, if any.  Given the inherent unpredictability of these matters, it is possible that an adverse outcome in one or more of these matters could have a material effect on the consolidated financial condition, operating results and/or cash flows of the Company.

Joint Underwriting Association Litigation

On August 19, 2011, plaintiffs, purportedly a class of motor vehicle owners, filed an action in the United States District Court for the District of Puerto Rico against the JUA and TSP, alleging violations under the Puerto Rico Insurance Code, the Puerto Rico Civil Code, the Racketeer Influenced and Corrupt Organizations Act (RICO) and the local statute against organized crime and money laundering. JUA is a private association created by law to administer a compulsory public liability insurance program for motor vehicles in Puerto Rico (CLI). As required by its enabling act, JUA is composed of all the insurers that underwrite private motor vehicle insurance in Puerto Rico and exceed the minimum underwriting percentage established in such act. TSP is a member of JUA.

In this lawsuit, entitled Noemí Torres Ronda, et al v. JUA et al., plaintiffs allege that the defendants illegally charged and misappropriated a portion of the CLI premiums paid by motor vehicle owners in violation of the Puerto Rico Insurance Code. Specifically, they claim that because the defendants did not incur in acquisition or administration costs allegedly totaling 12% of the premium dollar, charging for such costs constitutes the illegal traffic of premiums. Plaintiffs also claim that the defendants, as members of JUA, violated RICO through various inappropriate actions designed to defraud motor vehicle owners located in Puerto Rico and embezzle a portion of the CLI premiums for their benefit.

Plaintiffs seek the reimbursement of funds for the class amounting to $406,600 treble damages under RICO, and equitable relief, including a permanent injunction and declaratory judgment barring defendants from their alleged conduct and practices, along with costs and attorneys’ fees.

Since 2011, TSP has been defending this claim and, jointly with other defendants, has filed several pleas in connection with the certification of the class and the dismissal of the claim. On October 7, 2019, defendants’ petition for summary judgment was granted. On December 18, 2019 plaintiffs filed an appeal to contest the Court’s judgment dismissing their complaint.

67

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

In re Blue Cross Blue Shield Antitrust Litigation

TSS is a co-defendant with multiple Blue Plans and the Blue Cross Blue Shield Association in a multi-district class action litigation filed by a group of providers and subscribers on July 24, 2012 and October 1, 2012, respectively, that has since been consolidated by the United States District Court for the Northern District of Alabama, Southern Division, in the case captioned In re Blue Cross Blue Shield Association Antitrust Litigation. Essentially, provider plaintiffs allege that the exclusive service area requirements of the Primary License Agreements with the Blue Plans constitute an illegal horizontal market allocation under federal antitrust laws. As per provider plaintiffs, the quid pro quo for said “market allocation” is a horizontal price fixing and boycott conspiracy implemented through BCBSA and whose benefits are allegedly derived through the BCBSA’s BlueCard/National Accounts Program. Among the remedies sought, provider plaintiffs seek increased compensation rates and operational changes. In turn, subscriber plaintiffs allege that the alleged conspiracy to allocate markets have prevented subscribers from being offered competitive prices and resulted in higher premiums for Blue Plan subscribers. Subscribers seek damages for the amounts that the Blue Plan premiums allegedly have been artificially inflated as a result of the alleged antitrust violations. Both actions seek injunctive relief.

Prior to consolidation, motions to dismiss were filed by several plans, including TSS, whose request was ultimately denied by the court without prejudice. On April 6, 2015, plaintiffs filed suit in the United States District Court of Puerto Rico against TSS. Said complaint, nonetheless, is believed not to preclude TSS’ jurisdictional arguments. Since inception, the Company has joined BCBSA and other Blue Plans in vigorously contesting these claims. On April 5, 2018, the United States District Court for the Northern District of Alabama, Southern Division, issued its ruling on the parties’ respective motions for partial summary judgment on the standard of review applicable to plaintiffs’ claims under Section 1 of the Sherman Act and subscriber plaintiffs’ motion for partial summary judgment on the Blue Plan’s single entity defense. After considering the “undisputed” facts (for summary judgment purposes only) and evidence currently on record in the light most favorable to defendants, the court essentially found that: (a) the combination of Exclusive Service Areas and the National Best Efforts Rule are subject to the Per Se standard of review; (b) there remain genuine issues of material fact as to whether defendants’ conduct can be shielded by the “single entity” defense; and (c) claims concerning the BlueCard Program and uncoupling rules are due to be analyzed under the Rule of Reason standard.

On April 16, 2018 Defendants moved the Federal District Court for the Northern District of Alabama to certify for immediate interlocutory appeal the Court’s April 5, 2018 Standard of Review Ruling. On June 12, 2018 Hon. Judge Proctor agreed to grant Defendant’s motion for certification pursuant to 28 U.S.C. §1292(b). Defendants filed their Notice of Appeal on July 12, 2018. On December 12, 2018, the Court of Appeals for the Eleventh Circuit denied Defendants’ petition to appeal the District Court’s Standard of Review Ruling. The parties re-commenced mediation with subscribers in April 2019 and with providers in September 2019. On July 29, 2020, the Defendants reached a settlement agreement with subscribers, which was subject to approval by the BCBSA and Member Plans boards, as well as from the Federal District Court for the Northern District of Alabama. Following the BCBSA Board of Directors and Members Plans’ August 14^th, 2020 approval, on September 30, 2020, the Company’s Board of Directors voted to approve the Settlement Agreement. On November 30, 2020, the Federal District Court for the Northern District of Alabama issued its Memorandum Opinion and Preliminary Order approving settlement terms.  The Settlement Agreement requires a monetary settlement payment from defendants. The Company’s portion of the monetary settlement payment is estimated at $32,000, which was accrued during the year ended December 31, 2020 and is presented within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets.

68

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

26. Statutory Accounting

TSS, TSA, TSV, TSP and TSB (collectively known as the regulated subsidiaries) are regulated by the Commissioner of Insurance. The regulated subsidiaries are required to prepare financial statements using accounting practices prescribed or permitted by the Commissioner of Insurance, which uses a comprehensive basis of accounting other than GAAP. Specifically, the Commissioner of Insurance has adopted the NAIC’s Statutory Accounting Principles (NAIC SAP) as the basis of its statutory accounting practices, as long as they do not contravene the provisions of the Puerto Rico Insurance Code, its regulations and the Circular Letters issued by the Commissioner of Insurance. The Commissioner of Insurance may permit other specific practices that may deviate from prescribed practices and NAIC SAP. Statutory accounting principles that are established by state laws and permitted practices mandated by the Commissioner of Insurance may cause the statutory capital and surplus of the regulated subsidiaries to differ from that calculated under the NAIC SAP.

Prescribed statutory accounting practices in Puerto Rico allow TSP to disregard a deferred tax liability resulting from additions to the catastrophe loss reserve trust fund that would otherwise be required under NAIC SAP. The use of prescribed and permitted accounting practices, both individually and in the aggregate, did not change significantly the combined statutory capital and surplus that would have been reported following NAIC SAP, which as of December 31, 2020 and 2019 is approximately 1.5% and 1.7%, respectively, lower than the combined reported statutory capital and surplus.

The regulated subsidiaries are required by the NAIC and the Commissioner of Insurance to submit risk-based capital (RBC) reports following the NAIC’s RBC Model Act and accordingly, are subject to certain regulatory actions if their capital levels do not meet minimum specific RBC requirements.  RBC is a method developed by the NAIC to determine the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The RBC is calculated by applying capital requirement factors to various assets, premiums and reserve items. The factor is higher for those items with greater underlying risk and lower for less risky items. The adequacy of an organization’s actual capital can then be measured by a comparison to its RBC as determined by the formula.

The RBC Model Act requires increasing degrees of regulatory oversight and intervention as an organization’s risk-based capital declines. The level of regulatory oversight ranges from requiring organizations to inform and obtain approval from the domiciliary insurance commissioner of a comprehensive financial plan for increasing its RBC, to mandatory regulatory intervention requiring an insurance company to be placed under regulatory control, in a rehabilitation or liquidation proceeding.

The Commissioner of Insurance adopted in 2009 an RBC policy that requires that the regulated entities maintain statutory reserves at or above the “Company Action Level,” in order to avoid regulatory monitoring and intervention.  The Company Action Level is currently set at 200% of the RBC for TSA, since it is organized as a health service organization, and 300% of the RBC for TSS, TSV, and TSB. The RBC requirement for TSP is 300%, but compliance with certain trend analysis can lower this requirement to 200%.  As of December 31, 2020 and 2019, all regulated subsidiaries comply with minimum statutory reserve requirements.

69

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The following table sets forth the combined net admitted assets, capital and surplus, RBC requirement, which is our statutory capital and surplus requirement, and net income (loss) for the regulated subsidiaries at December 31, 2020, 2019 and 2018:

(dollar amounts in millions)	2020		2019		2018
Net admitted assets	$	2,473	$	2,394	$	2,089
Capital and surplus		771		767		602
RBC requirement		641		546		312
Net income (loss)		53		68		(32	)

As more fully described in Note 17, a portion of the accumulated earnings and admitted assets of TSP are restricted by the catastrophe loss reserve and the trust fund balance as required by the Insurance Code.  The total catastrophe loss reserve and trust fund amounted to $35,904 and $43,124 as of December 31, 2020, respectively. The total catastrophe loss reserve and trust fund amounted to $39,425 and $41,047 as of December 31, 2019, respectively.  In addition, the admitted assets of the regulated subsidiaries are restricted by the investments deposited with the Commissioner of Insurance to comply with requirements of the Insurance Code (see Note 3).  Investments with an amortized cost of $6,884 and $6,940 (fair value of $7,526 and $7,274) at December 31, 2020 and 2019, respectively, were deposited with the Commissioner of Insurance. As a result, the combined restricted assets for our regulated subsidiaries were $50,008 and $47,987 as of December 31, 2020 and 2019, respectively.

70

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

27. Supplementary Information on Cash Flow Activities

	2020			2019			2018
Supplementary information
Non-cash transactions affecting cash flow activities
Change in net unrealized (gain) loss on securities available for sale, including deferred income tax liability (asset) of $8,667, $7,802, and ($1,870) in 2020, 2019, and 2018 respectively	$	(33,859	)	$	(30,522	)	$	9,048
Change in liability for pension benefits, and deferred income tax (asset) liability of ($43,826), ($2,532), $457, in 2020, 2019, and 2018, respectively		73,042			4,221			(738	)
Repurchase and retirement of common stock		(382	)		(119	)		(748	)
Stock dividend		-			(24,655	)		-
Issuance of common stocks		-			1,200			-
Capitalization of lease right of use asset		8,014			10,438			-
Other
Income taxes paid		40,568			3,147			8,978
Interest paid		7,986			7,672			6,903

28. Segment Information

The operations of the Company are conducted principally through three reportable business segments: Managed Care, Life Insurance, and Property and Casualty Insurance.  Reportable business segments were identified according to the type of insurance products offered and are consistent with the information provided to the chief operating decision maker. These segments and a description of their respective operations are as follows:

Managed Care Segment

This segment is engaged in the sale of managed care products to the Medicare, Commercial, and Medicaid market sectors. The Commercial accounts sector includes corporate accounts, U.S. federal government employees, individual accounts, local government employees, and Medicare supplement. The following represents a description of the major contracts by sector:

● The segment provides services through its Medicare health plans pursuant to a limited number of contracts with CMS. Earned premium revenue related to the Medicare business amounted to $1,553,455, $1,408,039, and $1,130,226 for the years ended December 31, 2020, 2019, and 2018, respectively.

● Under its Commercial business, the segment also provides health coverage to certain employees of the Commonwealth of Puerto Rico and its instrumentalities. Earned premium revenue related to such health plans amounted to $13,349, $16,805 and $24,186 for years ended December 31, 2020, 2019, and 2018, respectively.

71

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

● The segment is a qualified contractor to provide health coverage to federal government employees within Puerto Rico and the USVI. Earned premiums revenue related to this contract amounted to $159,588, $161,716 and $150,232 for the years ended December 31, 2020, 2019, and 2018, respectively (see Note 12).

● The segment also participates in the Medicaid program to provide health coverage to medically indigent citizens in Puerto Rico, as defined by the laws of the government of Puerto Rico.  Earned premium revenue related to this business amounted to $953,208, $778,263, and $776,038 for the years ended December 31, 2020, 2019, and 2018, respectively.

Life Insurance Segment

This segment offers primarily life and accident and health insurance coverage, and annuity products. The premiums for this segment are mainly subscribed through an internal sales force and a network of independent brokers and agents.

Property and Casualty Insurance segment

The predominant insurance products of this segment are commercial package, commercial auto, and personal package. The premiums for this segment are originated through a network of independent insurance agents and brokers. Agents or general agencies collect the premiums from the insureds, which are subsequently remitted to the segment, net of commissions. Remittances are generally due 60 days after the closing date of the general agent’s account current.

The Company 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 less operating costs.

The accounting policies for the segments are the same as those described in the summary of significant accounting policies included in the Notes to Consolidated Financial Statements.  The financial data of each segment is accounted for separately; therefore, no segment allocation is necessary. However, certain operating expenses are centrally managed, therefore requiring an allocation to each segment. Most of these expenses are distributed to each segment based on different parameters, such as payroll hours, processed claims, or square footage, among others. In addition, some depreciable assets are kept by one segment, while allocating the depreciation expense to other segments. The allocation of the depreciation expense is based on the proportion of assets used by each segment. Certain expenses are not allocated to the segments and are kept within TSM’s operations.

72

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

The following tables summarize the operations by operating segment for each of the years in the three‑year period ended December 31:

	2020			2019			2018
Operating revenues
Managed care
Premiums earned, net	$	3,320,181		$	2,985,600		$	2,687,773
Fee revenue		12,585			9,946			14,701
Intersegment premiums/fee revenue		2,525			6,269			5,690
Net investment income		20,783			23,468			23,827
Total managed care		3,356,074			3,025,283			2,731,991
Life
Premiums earned, net		193,889			180,204			167,888
Intersegment premiums		2,066			1,987			668
Net investment income		27,317			27,323			25,658
Total life		223,272			209,514			194,214
Property and casualty
Premiums earned, net		91,380			87,076			82,930
Intersegment premiums		613			613			613
Net investment income		8,974			9,773			10,800
Total property and casualty		100,967			97,462			94,343
Other segments*
Intersegment service revenues		10,630			8,836			283
Operating revenues from external sources		8,991			8,553			5,794
Total other segments		19,621			17,389			6,077
Total business segments		3,699,934			3,349,648			3,026,625
TSM operating revenues from external sources		473			1,443			1,624
Elimination of intersegment premiums		(5,204	)		(8,869	)		(6,971	)
Elimination of intersegment service revenue		(10,630	)		(8,836	)		(283	)
Consolidated operating revenues	$	3,684,573		$	3,333,386		$	3,020,995

* Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinics.

73

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

	2020			2019			2018
Operating income (loss)
Managed care	$	38,301		$	61,907		$	26,468
Life		27,796			21,912			19,901
Property and casualty		19,829			14,492			(110,119	)
Other segments*		(6,217	)		(3,054	)		8
Total business segments		79,709			95,257			(63,742	)
TSM operating revenues from external sources		473			1,443			1,624
TSM unallocated operating expenses		(7,940	)		(8,588	)		(8,815	)
Elimination of TSM charges		9,612			9,612			9,600
Consolidated operating income (loss)		81,854			97,724			(61,333	)
Consolidated net realized investment gains		641			5,843			298
Consolidated net unrealized investment gains (losses) on equity securities		7,639			32,151			(36,546	)
Consolidated interest expense		(7,986	)		(7,672	)		(6,903	)
Consolidated other income, net		9,585			4,206			11,312
Consolidated income (loss) before taxes	$	91,733		$	132,252		$	(93,172	)

	2020		2019		2018
Depreciation and amortization expense
Managed care	$	10,478	$	11,527	$	10,525
Life		1,226		1,081		1,134
Property and casualty		381		385		384
Other segments*		1,261		910		705
Total business segments		13,346		13,903		12,748
TSM depreciation expense		1,057		697		787
Consolidated depreciation and amortization expense	$	14,403	$	14,600	$	13,535

* Includes segments that are not required to be reported separately, primarily the data processing services  organization and the health clinics.

74

Triple-S Management Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(dollar amounts in thousands, except per share and share data)

	2020			2019			2018
Assets
Managed care	$	1,319,389		$	1,190,538		$	1,078,262
Life		1,051,819			981,370			863,470
Property and casualty		583,404			592,758			747,583
Other segments*		34,020			28,346			20,705
Total business segments		2,988,632			2,793,012			2,710,020
Unallocated amounts related to TSM
Cash, cash equivalents, and investments		16,489			28,167			57,818
Property and equipment, net		68,678			25,623			21,733
Other assets		88,684			37,176			22,521
		173,851			90,966			102,072
Elimination entries – intersegment receivables and others		(74,065	)		(65,152	)		(51,844	)
Consolidated total assets	$	3,088,418		$	2,818,826		$	2,760,248

	2020			2019		2018
Significant noncash items
Net change in unrealized gain (loss) on securities available for sale
Managed care	$	12,504		$	9,687	$	2,585
Life		18,336			17,442		(11,285	)
Property and casualty		3,503			3,023		(583	)
Other segments*		-			-		-
Total business segments		34,343			30,152		(9,283	)
Amount related to TSM		(484	)		370		235
Consolidated net change in unrealized (loss) gain on securities available for sale	$	33,859		$	30,522	$	(9,048	)

* Includes segments that are not required to be reported separately, primarily the data processing services  organization and the health clinics.

29. Subsequent Events

The Company evaluated subsequent events through the date the consolidated financial statements were issued.  No events, other than those described in these notes, have occurred that require adjustment or disclosure pursuant to current Accounting Standards Codification.

75

Triple-S Management Corporation

Schedule II

Condensed Financial Information of Triple-S Management Corporation

(Registrant)

Balance Sheets

(in thousands)

	As of December 31,
	2020			2019
Assets:
Cash and cash equivalents	$	973		$	3,712
Securities available-for-sale, at fair value:
Equity Securities (cost of $5,853 in 2019)		-			5,857
Other invested assets, measured at net asset value (amortized cost of $15,234 in 2020 and $17,711 in 2019)		15,516			18,598
Investment in subsidiaries		957,299			878,695
Notes receivable and accrued interest from subsidiaries		61,479			59,085
Due from subsidiaries		17,521			19,575
Deferred tax asset		63,934			20,701
Other assets		93,428			42,098
Total assets	$	1,210,150		$	1,048,321
Liabilities:
Notes payable and accrued interest to subsidiary		19,876			18,965
Due to subsidiaries		9,657			1,531
Long-term borrowings		52,751			25,694
Liability for pension benefits		139,611			34,465
Other liabilities		20,025			23,801
Total liabilities		241,920			104,456
Stockholders’ equity:
Common stock, class B		23,430			23,800
Additional paid-in-capital		57,399			60,504
Retained earnings		897,221			830,198
Accumulated other comprehensive income, net		(9,820	)		29,363
Total stockholders’ equity		968,230			943,865
Total liabilities and stockholders’ equity	$	1,210,150		$	1,048,321

The accompanying notes are an integral part of these condensed financial statements

Triple-S Management Corporation

Schedule II

Condensed Financial Information of Triple-S Management Corporation

Triple-S Management Corporation

Statements of Earnings

(in thousands)

	2020			2019			2018
Investment income	$	473		$	1,443		$	1,624
Net realized investment gains (losses)		95			(63	)		33
Net unrealized investment (losses) gains on equity investments		(4	)		459			(462	)
Other revenues		13,712			11,613			11,778
Total revenues		14,276			13,452			12,973
Operating expenses:
General and administrative expenses		7,940			8,588			8,815
Interest expense		1,365			1,334			1,375
Total operating expenses		9,305			9,922			10,190
Income before income taxes		4,971			3,530			2,783
Income tax expense		2,208			7			344
Income from parent company		2,763			3,523			2,439
Equity in net income (loss) of subsidiaries		64,426			89,371			(65,741	)
Net income (loss)	$	67,189		$	92,894		$	(63,302	)

The accompanying notes are an integral part of these condensed financial statements

Triple-S Management Corporation

Schedule II

Condensed Financial Information of Triple-S Management Corporation

(Registrant)

Statements of Cash Flows

(in thousands)

	2020			2019			2018
Net income (loss)	$	67,189		$	92,894		$	(63,302	)
Adjustment to reconcile net (loss) income to net cash provided by operating activities:
Equity in net (income) loss of subsidiaries		(64,426	)		(89,371	)		65,741
Net realized investment (gains) losses		(95	)		63			(33	)
Net unrealized investment losses (gains) on equity investments		4			(459	)		462
Depreciation and amortization		1,469			871			961
Net amortization of investments		-			-			53
Shared- based compensation		11,889			11,605			3,357
Deferred income tax expense (benefit)		714			(438	)		(330	)
Dividends received from subsidiaries		20,000			8,750			6,000
Changes in assets and liabilities:
Accrued interest from subsidiaries, net		(1,483	)		(1,876	)		(642	)
Due from subsidiaries		2,054			(11,694	)		1,093
Other assets		(724	)		(357	)		(99	)
Due to subsidiaries		8,126			(4,033	)		5,498
Other liabilities		(15,783	)		4,953			(3,680	)
Net cash provided by operating activities		28,934			10,908			15,079
Cash flows from investing activities:
Acquisition of investment in securities classified as available-for-sale		-			-			(18,007	)
Acquisition of equity investments		-			(13,930	)		(11,856	)
Acquisition of investment in other invested assets, measured at net asset value		(3,562	)		(3,738	)		(10,862	)
Capital contribution to subsidiaries		-			-			(12,189	)
Proceeds from sale and maturities of investment in securities classified as available-for-sale		-			-			17,959
Proceeds from sales of other invested assets		6,166			377			-
Proceeds from sale of equity investments		5,822			32,389			47,506
Issuance of note receivable to subsidiary		-			(12,000	)		-
Capital contribution in equity method investees		(7,551	)		(11,418	)		-
Net acquisition of property and equipment		(44,524	)		(4,761	)		(437	)
Net cash (used in) provided by investing activities		(43,649	)		(13,081	)		12,114
Cash flow from financing activities:
Repayments of long-term borrowings		(3,883	)		(3,236	)		(3,236	)
Proceeds from long-term borrowings		30,841			-			-
Repurchase of common stock		(14,982	)		(9,989	)		(22,377	)
Dividends paid		-			(11	)		-
Net cash provided by (used in) financing activities		11,976			(13,236	)		(25,613	)
Net (decrease) increase in cash and cash equivalents		(2,739	)		(15,409	)		1,580
Cash and cash equivalents, beginning of year		3,712			19,121			17,541
Cash and cash equivalents, end of year	$	973		$	3,712		$	19,121

The accompanying notes are an integral part of these condensed financial statements

Triple-S Management Corporation

(Parent Company Only)

Notes to Condensed Financial Statements

December 31, 2020, 2019 and 2018

(dollar amounts in thousands)

The accompanying notes to the condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto included in Item 15 of the Annual Report on Form 10-K.

1. Nature of Business

For purposes of these condensed financial statements, Triple‑S Management Corporation’s (the Company or TSM) investment in its wholly owned subsidiaries is recorded using the equity method of accounting.

2. Significant Accounting Policies

The significant accounting policies followed by the Company are set forth in the Notes to the Consolidated Financial Statements and the accompanying notes thereto.  Refer to Item 15 of the Annual Report on Form 10‑K.

3. Long‑Term Borrowings

A summary of the long‑term borrowings entered by the Company as of December 31 is as follows:

	2020		2019
Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.15% at December 31, 2020).	$	4,627	$	6,267
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 2.98% at December 31, 2020).		16,204		17,211
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.48% at December 31, 2020).		1,813		2,401
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.25% at December 31, 2020). Last payment of $25,185 due on June 19, 2025.		30,723		-
Total borrowings		53,367		25,879
Less: unamortized debt issuance costs		616		185
	$	52,751	$	25,694

Triple-S Management Corporation

(Parent Company Only)

Notes to Condensed Financial Statements

December 31, 2020, 2019 and 2018

(dollar amounts in thousands)

The secured loans payable maturing on 2023 and 2024 are guaranteed by a first mortgage held by the bank on the Company’s land, building and substantially all leasehold improvements, as collateral for the term of the loan under a continuing general security agreement.

On June 19, 2020, TSM entered into a $31,350 Credit Agreement (the Loan) with a commercial bank in Puerto Rico. The Company used the proceeds of the Loan to partially finance the acquisition of the Building (see Note 8, Property and Equipment, Net in Item 15 of the Annual Report on Form 10-K).

The Loan is guaranteed by a mortgage over the Building, a pledge of all collateral related to the Building and an assignment of the rents collected for the lease of office space in the Building. Pursuant to the credit agreement, interest is payable on the outstanding principal balance of the Loan at an annual rate equal to the Prime Rate. Monthly interest payments commenced on July 1, 2020 and will continue to be paid each month until the principal of the Loan has been paid in full.

Aggregate maturities of the Company’s long term borrowings as of December 31, 2020 are:

Year ending December 31
2021	$	4,490
2022		4,490
2023		4,196
2024		14,484
2025		25,707
	$	53,367

The Company may, at its option and at any time, upon written notice as specified in the credit agreement, prepay prior to maturity all or any part of the Loan upon the payment of a penalty fee of the outstanding principal amount at the time of the prepayment of 3% during the first year, 2% during the second year, 1% during the third year and thereafter at par.

The four term loans under credit agreements with commercial banks in Puerto Rico include certain customary financial and non-financial covenants, including negative covenants imposing certain restrictions on the Company’s business.  The Company was in compliance with all these covenants as of December 31, 2020.

Interest expense on the above borrowings amounted to $1,362, $1,320, and $1,375, for the years ended December 31, 2020, 2019, and 2018, respectively.

Triple-S Management Corporation

(Parent Company Only)

Notes to Condensed Financial Statements

December 31, 2020, 2019 and 2018

(dollar amounts in thousands)

4. Transactions with Related Parties

The following are the significant related parties’ transactions made for the period ended December 31, 2020, 2019 and 2018:

	2020		2019		2018
Rent charges to subsidiaries	$	7,810	$	7,809	$	7,874
Interest charged to subsidiaries on notes receivable		2,672		2,275		1,935
Interest charged from subsidiary on note payable		911		869		829

As of December 31, 2020, and 2019, the Company has three notes receivable from subsidiaries amounting to $37,000  in accordance with the provisions of Article 20.30 of the Puerto Rico Insurance Code. The notes receivable from subsidiaries are due on demand; however, pursuant to the requirements established by the Commissioner of Insurance, the parties agreed that no payment of the total principal nor the interest due on the loans will be made without first obtaining written authorization from the Commissioner of Insurance within at least 60 days prior to the proposed payment date. These notes bear interest at 4.70%. Accrued interest at December 31, 2020 and 2019 amounted to $12,616 and $10,342, respectively.

In addition, as of December 31, 2020 and 2019, the Company has various notes receivable from a subsidiary amounting to $11,214 and $11,405, respectively.  Accrued interest at December 31, 2020 and 2019 amounted to $335 and $338, respectively.  These notes bear an average interest of 5.10%. The Company is in the process of  renewing theses notes for a period of one year .

As of December 31, 2020, and 2019 the Company has a note payable to a subsidiary amounting to $15,000.  The note is due on December 31, 2022 and bears interest at 4.70%.  Accrued interest at December 31, 2020 and 2019 amounted to $4,876 and $3,965, respectively.

Also, the Company leases certain floors of its buildings to subsidiaries and generates rental income. Maturity analysis of lease payments to be received from its subsidiary lessees as of December 31, 2020, is summarized as follows:

Year ending December 31
2021	$	7,810
2022		7,810
2023		7,745
	$	23,365

Triple-S Management Corporation

(Parent Company Only)

Notes to Condensed Financial Statements

December 31, 2020, 2019 and 2018

(dollar amounts in thousands)

5. Stockholders’ Equity

a. Common Stock

On July 29, 2019, the Company issued 48,602 Class A shares to the heirs of a former shareholder, as a result of a litigation settlement.  During July 2019, the Board of Directors authorized and approved the conversion (Conversion) of the Company’s remaining issued and outstanding Class A common shares into Class B common shares. Effective on August 7, 2019, all Class A holders of record received one Class B share for each Class A share held. Upon the Conversion, all remaining outstanding Class A shares were automatically cancelled and extinguished, and the Company now maintains a single class of common shares.

b. Preferred Stock

Authorized capital stock includes 100,000,000 of preferred stock with a par value of $1.00 per share. As of December 31, 2020, and 2019, there are no issued and outstanding preferred shares.

c. Dividends

The issuance of 48,602 Class A shares entitled all Class B shareholders to certain anti-dilution rights; therefore, all holders of Class B shares at the close of business on July 26, 2019 (Record Date) received a share dividend of 0.051107 Class B shares for every Class B share they owned as of that time. On August 6, 2019, the Company paid the Class B share dividend which amounted to $24,655; cash of $11 was paid in lieu of fractional shares so that shareholders receive a whole number of shares of common stock.

Triple-S Management Corporation and Subsidiaries

Schedule III - Supplementary Insurance Information

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

Segment	Deferred Policy Acquisition Costs and Value of Business Acquired		Claim Liabilities			Liability for Future Policy Benefits		Unearned Premiums		Other Policy Claims and Benefits Payable		Premium Revenue			Net Investment Income		Claims Incurred			Amortization of Deferred Policy Acquisition Costs and Value of Business Acquired		Other Operating Expenses		Net Premiums Written
2020
Managed Care	$	-	$	445,655		$	-	$	1,609	$	-	$	3,322,266		$	20,783	$	2,805,738		$	-	$	512,035	$	3,322,266
Life Insurance		222,703		49,932			414,997		12,190		-		195,955			27,317		107,226			18,567		69,683		195,955
Property and Casualty Insurance		25,622		292,835			-		83,682		-		91,993			8,974		35,140			26,685		19,313		96,777
Other Non-reportable segments, Parent Company operations and net consolidating entries.		-		(1,320	)		-		-		-		(4,764	)		473		(1,284	)		-		9,616		-
Total	$	248,325	$	787,102		$	414,997	$	97,481	$	-	$	3,605,450		$	57,547	$	2,946,820		$	45,252	$	610,647	$	3,614,998
2019
Managed Care	$	-	$	341,277		$	-	$	2,188	$	-	$	2,987,466		$	23,468	$	2,526,682		$	-	$	436,694	$	2,987,466
Life Insurance		212,345		47,095			386,017		10,889		-		182,191			27,323		105,889			14,911		66,802		182,191
Property and Casualty Insurance		22,434		322,018			-		80,224		-		87,689			9,773		39,548			22,742		20,679		98,164
Other Non-reportable segments, Parent Company operations and net consolidating entries.		-		-			-		-		-		-			1,443		(5,863	)		-		7,578		-
Total	$	234,779	$	710,390		$	386,017	$	93,301	$	-	$	3,257,346		$	62,007	$	2,666,256		$	37,653	$	531,753	$	3,267,821
2018
Managed Care	$	-	$	394,226		$	-	$	2,418	$	-	$	2,689,082		$	23,827	$	2,272,501		$	-	$	433,022	$	2,689,082
Life Insurance		198,140		46,157			361,495		9,490		-		168,556			25,658		99,048			11,017		64,248		168,556
Property and Casualty Insurance		17,019		496,876			-		71,082		-		83,543			10,800		159,942			25,756		18,764		79,472
Other Non-reportable segments, Parent Company operations and net consolidating entries.		-		(470	)		-		-		-		(2,590	)		1,624		(3,878	)		-		1,908		-
Total	$	215,159	$	936,789		$	361,495	$	82,990	$	-	$	2,938,591		$	61,909	$	2,527,613		$	36,773	$	517,942	$	2,937,110

See accompanying independent registered public accounting firm’s report and Notes to Consolidated Financial Statements.

Triple-S Management Corporation and Subsidiaries

Schedule IV - Reinsurance

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

	Gross Amount (1)		Ceded to Other Companies		Assumed from Other Companies		Net Amount		Percentage of Amount Assumed to Net
2020
Life Insurance in force	$	10,317,331					$	10,317,331		0.0	%
Premiums:
Life Insurance	$	203,818	$	9,997	$	68	$	193,889		0.0	%
Accident and Health Insurance		3,324,161		4,341		361		3,320,181		0.0	%
Property and Casualty Insurance		153,851		62,471		-		91,380		0.0	%
Total premiums	$	3,681,830	$	76,809	$	429	$	3,605,450		0.0	%
2019
Life insurance in force	$	9,739,154					$	9,739,154		0.0	%
Premiums:
Life Insurance	$	186,489	$	8,337	$	2,052	$	180,204		1.1	%
Accident and Health Insurance		2,989,550		4,296		346		2,985,600		0.0	%
Property and Casualty Insurance		140,763		53,687		-		87,076		0.0	%
Total premiums	$	3,316,802	$	66,320	$	2,398	$	3,252,880		0.1	%
2018
Life insurance in force	$	9,158,253					$	9,158,253		0.0	%
Premiums:
Life Insurance	$	174,624	$	8,780	$	2,044	$	167,888		1.2	%
Accident and Health Insurance		2,691,289		3,824		308		2,687,773		0.0	%
Property and Casualty Insurance		143,917		60,987		-		82,930		0.0	%
Total premiums	$	3,009,830	$	73,591	$	2,352	$	2,938,591		0.1	%

(1) Gross premiums amount is presented net of intercompany eliminations of $4,764, $4,466 and $2,590 for the years ended December 31, 2020, 2019, and 2018, respectively.

See accompanying independent registered public accounting firm’s report and Notes to Consolidated Financial Statements.

Triple-S Management Corporation and Subsidiaries

Schedule V - Valuation and Qualifying Accounts

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

			Additions
	Balance at Beginning of Period		Charged to Costs and Expenses		Charged (Reversal) To Other Accounts - Describe (1)			Deductions - Describe (2)			Balance at End of Period
2020
Allowance for doubtful receivables	$	56,545		1,841		(5,985	)		(1,662	)	$	50,739
2019
Allowance for doubtful receivables	$	42,042		17,539		1,360			(4,396	)	$	56,545
2018
Allowance for doubtful receivables	$	35,883		4,754		6,569			(5,164	)	$	42,042

(1) Represents premiums adjustment to provide for unresolved reconciliation items with the Government of Puerto Rico and other entities.

(2) Deductions represent the write-off of accounts deemed uncollectible.

Triple-S Management Corporation and Subsidiaries

Schedule VI - Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

	As of December 31,						For the Years Ended December 31,
Year	Deferred Policy Acquisition Costs		Reserve for Unpaid Claims and Claims Adjustment Expenses		Unearned Premiums		Earned Premiums		Net Investment Income		Claims and Claim Adjustment Expenses Incurred Related to					Amortization of Deferred Policy Acquisition Costs		Paid Claims and Claim Adjustment Expenses		Premiums Written
											Current Year		Prior Years
2020	$	25,622	$	292,835	$	83,682	$	91,993	$	8,974	$	44,455	$	(9,315	)	$	26,685	$	65,601	$	157,922
2019	$	22,434	$	322,018	$	80,224	$	87,689	$	9,773	$	43,589	$	(4,041	)	$	22,742	$	36,467	$	150,519
2018	$	17,019	$	496,876	$	71,082	$	83,543	$	10,800	$	40,619	$	119,323		$	25,756	$	40,158	$	139,826

See accompanying independent registered public accounting firm’s report and Notes to Consolidated Financial Statements.

EX-10.22

Exhibit 10.22

COMPARECE

DE LA PRIMERA PARTE: LA ADMINISTRACIÓN DE SEGUROS DE SALUD DE PUERTO RICO, representada en este acto por su Director Ejecutivo, Jorge E. Galva Rodríguez, JD, MHA, mayor de edad, casado y vecino de Vega Alta, Puerto Rico, en virtud de Ia autoridad conferida por el Artículo IV, Sección 2(k) de Ia Ley Núm. 72-1993, según enmendada, conocida como Ia Ley de la Administración de Seguros de Salud de Puerto Rico y la Ley Núm. 95 del 29 de junio de 1963, según enmendada, conocida como la Ley de Beneficios de Salud para Empleados Públicos, en adelante denominada la ASES.

DE LA SEGUNDA PARTE: TRIPLE-S SALUD, INC., entidad debidamente autorizada por el Comisionado de Seguros de Puerto Rico, de conformidad con lo dispuesto en la Ley Núm. 77 del 19 de junio de 1957, según enmendada, conocida como Código de Seguros de Puerto Rico, representada en este acto par su Vicepresidente de Ventas y Administración de Cuentas, Gustavo A. Pérez Fernández, mayor de edad, casado y vecino de Dorado, Puerto Rico, cuya facultad para el otorgamiento de la presente enmienda a contrato acreditará siempre que le fuere requerido, en adelante denominada EL ASEGURADOR / ORGANIZACIÓN DE SERVICIOS DE SALUD.

EXPONEN

1. El Plan de Reorganización Núm. 3 de 29 de julio de 2010 (Plan de Reorganización Núm. 3) faculta a ASES para administrar, negociar, contratar y gestionar los beneficios de salud para los retirados y empleados públicos del Gobierno de Puerto Rico, conforme a la Ley Núm. 95 del 29 de junio de 1963 (Ley Núm. 95), según enmendada, conocida como Ley de Beneficios de Salud para Empleados Públicos y su Reglamento.

2. En virtud del Plan de Reorganización Núm. 3, la Junta de Directores de ASES autoriza al Director Ejecutivo a contratar con las aseguradores u organizaciones de servicios de salud que cualifiquen de acuerdo con la ley y los requisitos al efecto, para que conforme a las normas y fechas establecidas por ASES mercadeen, suscriban y provean a los funcionarios, empleados y pensionados del Gobierno de Puerto Rico, sus municipios e instrumentalidades que deseen acogerse sabre bases voluntarias, planes de beneficios médico-hospitalarios, que incluyan entre otros, servicios quirúrgicos, dentales, medicamentos y hospitalización, según las cubiertas de beneficios mínimos y uniformes establecidas par ASES.

3. De conformidad con el Plan de Reorganización Núm. 3 y de las disposiciones de la Ley Núm. 95 y su Reglamento, el Departamento de Hacienda conserva las funciones de pago de aportaciones patronales del Gobierno Central de Puerto Rico mediante el Sistema de Recursos Humanos y Nóminas (RHUM), incluyendo la participación en el pago de prima, si alguna, del empleado. En cuanto a las corporaciones públicas y otras instrumentalidades que no sean parte del Gobierno Central, así coma aquellos municipios que se acojan voluntariamente a participar de la Ley Núm. 95, dichas compensaciones de pagos de primas, incluyendo la aportación del empleado, provendrán del municipio, corporación pública o instrumentalidad, según corresponda. En cuanto a pensionados, los pagos de aportaciones, tanto del patrono coma del Sistema de Retiro, provendrán directamente de parte de la Administración de los Sistemas de Retiro, o directamente del pensionado, según aplique. En todo caso, ASES no será responsable de forma directa o indirecta sobre la compensación o pago de primas acordadas bajo este Contrato, según enmendado.

4. En cumplimiento con los propósitos de la Ley Núm. 95, ASES llevó a cabo un Proceso de Solicitud de Propuestas "RFP #EMPU-2019", el cual fue adjudicado a favor de cinco (5) aseguradoras u organizaciones de servicios de salud, incluyendo la compareciente en este otorgamiento. En virtud de dicho RFP las partes otorgaron el Contrato 2019-000082 con vigencia del 1 de abril de 2019 al 31 de marzo de 2020.

2019-000082A - Enmienda a Contrato de Seguro de Salud para Empleados y Pensionados del Gobierno de Puerto Rico entre ASES y

Triple-S Salud, lnc.

Página 2 de 2

5. Las partes comparecen a los fines de formalizar la enmienda al contrato para extender la prestación de servicios de cuidado de salud mediante un plan de beneficios médico-quirúrgicos, dentales, medicina, hospitalización y beneficios suplementarios para los funcionarios, empleados y pensionados del Gobierno de Puerto Rico, sus instrumentalidades, municipios participantes no exentos por otras leyes especiales, y para los miembros de sus familias, cohabitantes y dependientes de éstos que sean elegibles de conformidad con lo dispuesto en la Ley Núm. 95; el Reglamento Núm. 8398 conocido como el Reglamenta para la Cantratación de los Planes de Beneficios de Salud para los Empleados Públicos, aprobado el 31 de octubre de 2013, y según sea enmendado o sustituido; así como de conformidad con cualquier otra reglamentación que durante la vigencia de este Contrato promulgue ASES para la contratación de los planes de beneficios de salud para los empleados públicos. Mediante esta enmienda se extiende el periodo de cubierta desde el 1 de abril de 2020 al 31 de mayo de 2020.

6. En virtud de todo lo anterior y de acuerdo con lo dispuesto en el Plan de Reorganización Núm. 3 y en la Ley Núm. 95, los aquí comparecientes otorgan libre y voluntariamente la presente enmienda al Contrato bajo las siguientes:

CLÁUSULAS Y CONDlClONES

1. Se enmienda la Cláusula 51 del Contrato 2019-000082 para extender el término de vigencia desde el 1 de abril de 2020 al 31 de mayo de 2020.

2. El resto de las cláusulas y condiciones del Contrato Número 2019-000082 permanecen en efecto e inalteradas.

3. La vigencia y validez de esta enmienda están supeditadas a la aprobación de las agendas que por ley o reglamento deban intervenirlo.

4. La presente enmienda no conlleva desembolso de fondos por parte de ASES.

5. Las partes aceptan y estipulan que ninguna prestación o contraprestación objeto de este Contrato podrá exigirse hasta tanto el mismo se haya presentado para registro en la Oficina del Contralor de Puerto Rico, conforme a los dispuesto en la Ley 18 de 30 de octubre de 1975, según enmendada.

ACEPTAClÓN

Las partes contratantes certifican haber leído y entendido todas las cláusulas de la presente enmienda al Contrato y muestran su conformidad con los términos y condiciones de la presente enmienda a Contrato, al incluir su firma y al estampar sus iniciales en todas y cada una de sus páginas, en San Juan, Puerto Rico, hoy 21 de febrero de 2020.

 

EX-10.23

Exhibit 10.23

THIS AMENDMENT TO THE CONTRACT BETWEEN ADMINISTRACION DE SEGUROS DE SALUD DE PUERTO RICO (ASES) AND TRIPLE-S SALUD, INC., FOR THE PROVISION OF PHYSICAL AND BEHAVIORAL HEALTH SERVICES UNDER THE GOVERNMENT HEALTH PLAN (the "Amendment") is by and between Triple-S Salud, Inc. ("the Contractor"), a managed care organization duly organized and authorized to do business under the laws of the Commonwealth of Puerto Rico, with employer identification number 66-0555677 and represented by its President, Madeline Hernandez Urquiza, of legal age, single, resident of San Juan, Puerto Rico, and the Puerto Rico Health Insurance Administration (Administración de Seguros de Salud de Puetto Rico, hereinafter referred to as "ASES"or "the Administration"),a public corporation of the Commonwealth of Puerto Rico, with employer identification number 66-0500678, represented by its Executive Director, Jorge E. Galva Rodriguez, JD, MHA, of legal age, married and resident of Vega Alta, Puerto Rico.

WHEREAS, the Contractor and ASES executed a Contract for the provision of Physical Health and Behavioral Health Services under the Government Health Plan for the Commonwealth of Puerto Rico, on September 21, 2018, (hereinafter referred to as the "Contract");

WHEREAS, the Contract provides, pursuant to Article 55, that the Parties may amend such Contract by mutual written consent;

WHEREAS, all provisions of the Contract will remain in full force and effect as described therein; except as otherwise provided in this Amendment.

NOW, THEREFORE, and in consideration of the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree to clarify and/or amend the Contract as follows:

I. AMENDMENTS

1. Attachment 11 of the Contract shall be amended to extend the coverage period until May 31, 2020, with no other changes made to this attachment:

Administracion de Seguros de Salud

April 1, 2019 until May 31, 2020

PSG (MI Salud} PMPM Premium Rate

Rate Cell	PMPM Premium Rate
Law 72, Article VI Public Employees and Pensioners*	$	180.00

II. RATIFICATION

All other terms and provisions of the original Contract, as amended by Contract Amendments A, B, C, D E and F and of any and all documents incorporated by reference therein, not specifically deleted or modified herein shall remain in full force and effect. The Parties hereby affirm their respective undertakings and representations as set forth therein, as of the date thereof. Capitalized terms used in this Amendment, if any, shall have the same meaning assigned to such terms in the Contract.

III. EFFECT; CMS APPROVAL

The Parties agree and acknowledge that this Amendment, including any attachments, is subject to approval by the United States Department of Health and Human Services Centers for Medicare and Medicaid Services ("CMS"),and Financial Oversight and Management Board of Puerto Rico ("FOMB");ASES shall submit this Amendment for approval by those regulatory bodies;

IV. AMENDMENT EFFECTIVE DATE

For purposes of the provisions contained herein, this Amendment shall become effective on April 1, 2020 until May 31, 2020.

V. ENTIRE AGREEMENT

This Amendment constitutes the entire understanding and agreement of the Parties with regards to the subject matter hereof, and the parties by their execution and delivery of this Amendment to the Contract hereby ratify all of the terms and conditions of the Contract, as amended by Contract Number 2019-000052, including amendments A, B, C, D, E, and F as supplemented by this Agreement.

The Parties agree that ASES will be responsible for the submission and registration of this Amendments in the Office of the Comptroller General of the Commonwealth, as required under law and applicable regulations.

[Signature Page Follows]

Page 2

ACKNOWLEDGED BY THE PARTIES by their duly authorized representatives on this 26 day of  february , 2020.

ADMINISTRACIÓN DE SEGUROS DE SALUD DE PUERTO RICO (ASES)

TRIPLE-S SALUD, INC.

Account No. 256-5325 to 5330

Page 3

Exhibit A

(Attachment 11)

Page 4

ATTACHMENT 11

EX-10.30

Exhibit 10.30

ATTACHMENT 31

ENROLLEES QUALIFIED FOR THE GOVERNMENT HEALTH PLAN UNDERTEMPORARY EXPANSIONSOF MEDICAID COVERAGE ELIGIBILITY

1. DEFINITIONS

1.1 "Emergency Medical Group ("EMG") A category of Enrollees qualified for GHP under a temporary expansion of Medicaid coverage eligibility requirements during the COVID-19 pandemic.

1.2 Emergency Medical Group Enrollees From November 15, 2020 to September 30, 202J, Potential Enrollees who qualify for the Emergency Medical Group ("EMG") are eligible to participate under the Medicaid and CHIP programs under the GHP.  During this time, EMG Enrollees shall receive the same benefits as the eligible populations as defined in Section 1.3.1.

2. ELIGIBILITY

2.1 EMG potential enrollees shall comply with eligibility requirements as set forth by the Medicaid Program for the establishment of the poverty level for eligibility certification. EMG enrollees may be considered Medicaid, CHIP or State Population according to Medicaid Program's eligibility certification.

3. ENROLLMENT

3.1 Effective Date of Enrollment for EMG. The effective Date of Enrollment for all Emergency  Medical Group Enrollees shall begin no earlier than November 15, 2020. All other Enrollment processes and procedures under Section 5.2 of this Contract shall apply, including those applicable provisions governing notification to Enrollees and Providers on Enrollment and changes in Enrollment status.

3.2 Disenrollment. EMG Enrollees shall have a Term of Enrollment that expires on September 30, 2021. Upon expiration of this term, EMG Enrollees shall undergo the same Disenrollment procedures set forth under Section 5.3 as applicable to Enrollees who are no longer eligible for the GH P.

4. ATTACHMENT APPLICABILITY

This attachment supplements,   and, where   indicated,   supersedes   the   requirements contained in Articles J-61 of this Contract. The Contractor is required to follow all provisions pursuant to Articles J - 6 1 of this Contract unless otherwise stated in this attachment. Hence, all the terms and conditions of this Contract and its Attachments remain in full force and effect.

EX-21

Exhibit 21

LIST OF SUBSIDIARIES OF TRIPLE-S MANAGEMENT CORPORATION (TSM) *

• Triple-S Salud, Inc. (TSS), a wholly-owned subsidiary of TSM.

• Triple-S Advantage, Inc. (TSA), a wholly-owned subsidiary of TSS.

• Triple-S Vida, Inc., a wholly-owned subsidiary of TSM.

• Triple-S Propiedad, Inc., a wholly-owned subsidiary of TSM.

All of these subsidiaries are incorporated under the laws of the Commonwealth of Puerto Rico.

* Pursuant to Item 601(b)(21)(ii) of Regulation S-K, the names of other subsidiaries of Triple-S Management Corporation are omitted because, considered in the aggregate, they would not constitute a significant subsidiary as of the end of the year covered by this report.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-217891 and 333-249373 on Form S-8 of our reports dated February 26, 2021, relating to the financial statements of Triple-S Management Corporation and the effectiveness of Triple-S Management Corporation’s internal control over financial reporting appearing in this Form 10-K for the year ended December 31, 2020.

/s/ DELOITTE & TOUCHE LLP

San Juan, Puerto Rico

February 26, 2021

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Roberto García-Rodríguez, certify that:

1. I have reviewed this Annual Report on Form 10-K of Triple-S Management Corporation (“the registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 26, 2021	By:	/s/ Roberto García-Rodríguez
			Roberto García-Rodríguez
			President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Juan J. Román-Jiménez, certify that:

1. I have reviewed this Annual Report on Form 10-K of Triple-S Management Corporation (“the registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 26, 2021	By:	/s/ Juan J. Román-Jiménez
			Juan J. Román-Jiménez
			Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Triple-S Management Corporation (the “Company”) on Form 10-K for the period ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Roberto García-Rodríguez, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

a) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	February 26, 2021	By:	/s/ Roberto García-Rodríguez
			Roberto García-Rodríguez
			President and
			Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Triple-S Management Corporation (the “Company”) on Form 10-K for the period ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Juan J. Román-Jiménez, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

a) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	February 26, 2021	By:	/s/ Juan J. Román-Jiménez
			Juan J. Román-Jiménez
			Executive Vice President and
			Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2020	Feb. 18, 2021	Jun. 30, 2020
Cover [Abstract]
Entity Registrant Name	TRIPLE-S MANAGEMENT CORPORATION
Entity Central Index Key	0001171662
Current Fiscal Year End Date	--12-31
Document Type	10-K
Amendment Flag	false
Document Annual Report	true
Document Period End Date	Dec. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Document Transition Report	false
Entity File Number	001-33865
Entity Incorporation, State or Country Code	PR
Entity Tax Identification Number	66-0555678
Entity Address, Address Line One	1441 F.D. Roosevelt Avenue
Entity Address, City or Town	San Juan
Entity Address, Country	PR
Entity Address, Postal Zip Code	00920
City Area Code	787
Local Phone Number	749-4949
Title of 12(b) Security	Common Stock Class B, $1.00 par value
Trading Symbol	GTS
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 438,985,592
Entity Common Stock, Shares Outstanding		23,680,932

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Investments and cash
Fixed-maturities available-for-sale, at fair value (amortized cost of $1,227,422 in 2020 and $1,173,043 in 2019)	$ 1,342,465	$ 1,242,883
Fixed-maturities held-to-maturity, at amortized cost (fair value of $2,085 in 2020 and $2,019 in 2019)	1,867	1,860
Equity investments, at fair value (amortized cost of $351,233 in 2020 and $242,069 in 2019)	404,328	287,525
Other invested assets, at net asset value (amortized cost of $112,171 in 2020 and $97,575 in 2019)	114,905	100,508
Policy loans	10,459	10,861
Cash and cash equivalents	110,989	109,837
Total investments and cash	1,985,013	1,753,474
Premium and other receivables, net	488,840	567,692
Deferred policy acquisition costs and value of business acquired	248,325	234,885
Property and equipment, net	131,974	88,588
Deferred tax asset	119,534	77,294
Goodwill	28,614	28,599
Other assets	86,118	68,294
Total assets	3,088,418	2,818,826
Liabilities and Stockholders' Equity
Claim liabilities	787,102	709,258
Liability for future policy benefits	414,997	386,017
Unearned premiums	97,481	93,301
Policyholder deposits	206,109	189,120
Liability to Federal Employees' Health Benefits and Federal Employees' Programs	45,109	47,781
Accounts payable and accrued liabilities	332,699	325,761
Deferred tax liability	15,046	10,257
Short-term borrowings	30,000	54,000
Long-term borrowings	52,751	25,694
Liability for pension benefits	139,611	34,465
Total liabilities	2,120,905	1,875,654
Commitments and contingencies
Triple-S Management Corporation stockholders' equity
Common stock Class B, $1 par value. Authorized 100,000,000 shares; issued and outstanding 23,430,292 and 23,799,633 shares at December 31, 2020 and 2019, respectively	23,430	23,800
Additional paid-in capital	57,399	60,504
Retained earnings	897,221	830,198
Accumulated other comprehensive income, net	(9,820)	29,363
Total Triple-S Management Corporation stockholders' equity	968,230	943,865
Non-controlling interest in consolidated subsidiary	(717)	(693)
Total stockholders' equity	967,513	943,172
Total liabilities and stockholders' equity	$ 3,088,418	$ 2,818,826

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Investments and cash
Fixed maturities available for sale, amortized cost	$ 1,227,422	$ 1,173,043
Fixed maturities held to maturity, fair value	2,085	2,019
Equity investments, cost	351,233	242,069
Other invested assets, amortized cost	$ 112,171	$ 97,575
Common Class B [Member]
Triple-S Management Corporation stockholders' equity
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, issued (in shares)	23,430,292	23,799,633
Common stock, outstanding (in shares)	23,430,292	23,799,633

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Consolidated Statements of Earnings - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenues:
Premiums, net	$ 3,605,450	$ 3,252,880	$ 2,938,591
Administrative service fees	12,585	9,946	14,701
Net investment income	57,547	62,007	61,909
Other operating revenues	8,991	8,553	5,794
Total operating revenues	3,684,573	3,333,386	3,020,995
Net realized investment gains	641	5,843	298
Net unrealized investment gains (losses) on equity investments	7,639	32,151	(36,546)
Other income, net	9,585	4,206	11,312
Total revenues	3,702,438	3,375,586	2,996,059
Benefits and expenses:
Claims incurred, net of reinsurance	2,946,820	2,666,256	2,527,613
Operating expenses	655,899	569,406	554,715
Total operating costs	3,602,719	3,235,662	3,082,328
Interest expense	7,986	7,672	6,903
Total benefits and expenses	3,610,705	3,243,334	3,089,231
Income (loss) before taxes	91,733	132,252	(93,172)
Income tax expense (benefit)	24,568	39,375	(29,866)
Net income (loss)	67,165	92,877	(63,306)
Less: Net loss attributable to non-controlling interest	24	17	4
Net income (loss) attributable to Triple-S Management Corporation	$ 67,189	$ 92,894	$ (63,302)
Earnings per share attributable to Triple-S Management Corporation
Basic net income (loss) per share (in dollars per share)	$ 2.90	$ 3.98	$ (2.76)
Diluted net income (loss) per share (in dollars per share)	$ 2.88	$ 3.97	$ (2.76)

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income (loss)	$ 67,165	$ 92,877	$ (63,306)
Other comprehensive income (loss), net of tax:
Net unrealized change in fair value of available-for-sale-securities, net of taxes	33,859	30,522	(9,048)
Defined benefit pension plan:
Actuarial (loss) gain, net	(73,042)	(4,221)	738
Total other comprehensive (loss) income, net of tax	(39,183)	26,301	(8,310)
Comprehensive income (loss)	27,982	119,178	(71,616)
Comprehensive loss attributable to non-controlling interest	24	17	4
Comprehensive income (loss) attributable to Triple-S Management Corporation	$ 28,006	$ 119,195	$ (71,612)

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Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member] Class A Common Stock [Member]	Common Stock [Member] Class B Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Triple-S Management Corporation [Member]	Noncontrolling Interest in Consolidated Subsidiary [Member]	Total	Cumulative Effect, Period of Adoption, Adjustment [Member] Common Stock [Member] Class A Common Stock [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Common Stock [Member] Class B Common Stock [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Additional Paid-in Capital [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Accumulated Other Comprehensive Income (Loss) [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Triple-S Management Corporation [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Noncontrolling Interest in Consolidated Subsidiary [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance at Dec. 31, 2017	$ 951	$ 22,627	$ 53,142	$ 785,390	$ 51,254	$ 913,364	$ (682)	$ 912,682
Balance (ASU 2016-01 [Member]) at Dec. 31, 2017									$ 0	$ 0	$ 0	$ 39,882	$ (39,882)	$ 0	$ 0	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation	0	287	3,070	0	0	3,357	0	3,357
Repurchase and retirement of common stock	0	(934)	(22,191)	0	0	(23,125)	0	(23,125)
Comprehensive income (loss)	0	0	0	(63,302)	(8,310)	(71,612)	6	(71,606)
Balance at Dec. 31, 2018	951	21,980	34,021	761,970	3,062	821,984	(676)	821,308
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation	0	222	11,383	0	0	11,605	0	11,605
Repurchase and retirement of common stock	0	(534)	(9,573)	0	0	(10,107)	0	(10,107)
Issuance of Common Stock	48	0	1,151	0	0	1,199	0	1,199
Stock dividend	0	1,133	23,522
Stock dividend				(24,655)	0	0	0	0
Dividend	0	0	0	(11)	0	(11)	0	(11)
Common Stock Class A conversion to Class B	(999)
Common Stock Class A conversion to Class B		999	0	0	0	0	0	0
Comprehensive income (loss)	0	0	0	92,894	26,301	119,195	(17)	119,178
Balance at Dec. 31, 2019	0	23,800	60,504	830,198	29,363	943,865	(693)	943,172
Balance (ASU 2016-13 [Member]) at Dec. 31, 2019									$ 0	$ 0	$ 0	$ (166)	$ 0	$ (166)	$ 0	$ (166)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation	0	604	11,285	0	0	11,889	0	11,889
Repurchase and retirement of common stock	0	(974)	(14,390)	0	0	(15,364)	0	(15,364)
Comprehensive income (loss)	0	0	0	67,189	(39,183)	28,006	(24)	27,982
Balance at Dec. 31, 2020	$ 0	$ 23,430	$ 57,399	$ 897,221	$ (9,820)	$ 968,230	$ (717)	$ 967,513

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities
Net income (loss)	$ 67,165	$ 92,877	$ (63,306)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	14,403	14,600	13,535
Net amortization of investments	3,342	2,326	3,976
Provision for doubtful receivables	3,556	18,899	11,321
Deferred tax (benefit) expense	(2,285)	3,661	(32,078)
Net realized investment gains on sale of securities	(641)	(5,843)	(298)
Net unrealized (gains) losses on equity investments	(7,639)	(32,151)	36,546
Interest credited to policyholder deposits	6,383	5,978	5,722
Share-based compensation	11,889	11,605	3,357
Gain on sale of property and equipment	154	0	0
(Increase) decrease in assets
Premium and other receivables, net	83,344	41,853	259,561
Deferred policy acquisition costs and value of business acquired	(15,905)	(21,746)	(12,258)
Deferred taxes	(7)	(226)	946
Other assets	2,827	1,385	(1,470)
Increase (decrease) in liabilities
Claim liabilities	77,844	(227,531)	(170,087)
Liability for future policy benefits	28,980	24,522	21,988
Unearned premiums	4,180	10,311	(3,359)
Liability to FEHBP	(2,672)	2,855	(7,361)
Accounts payable and accrued liabilities	(17,073)	39,799	(59,276)
Net cash provided by (used in) operating activities	257,845	(16,826)	7,459
Securities available-for-sale:
Fixed-maturities sold	149,265	424,239	1,302,810
Fixed-maturities matured	84,416	21,258	24,945
Securities held-to-maturity:
Fixed-maturities matured	1,079	1,708	8,182
Equity investments sold	134,926	169,153	203,841
Other invested assets sold	17,013	4,554	3,714
Securities available-for-sale
Fixed-maturities	(287,998)	(449,043)	(1,343,346)
Securities held-to-maturity
Fixed-maturities	(1,088)	(1,078)	(8,356)
Equity investments	(248,123)	(143,972)	(156,486)
Other invested assets	(30,178)	(28,501)	(47,221)
Other investments	(5,683)	(2,981)	(705)
Net change in policy loans	402	(1,392)	(392)
Net capital expenditures	(57,873)	(20,820)	(19,840)
Capital contribution to equity method investees	(8,184)	(11,418)	0
Net cash (used in) provided by investing activities	(252,026)	(38,293)	(32,854)
Cash flows from financing activities
Change in outstanding checks in excess of bank balances	(3,249)	(2,384)	(22,243)
Net (repayments) proceeds from short-term borrowings	(24,000)	54,000	0
Proceeds of long-term borrowings	30,841	0	0
Repayments of long-term borrowings	(3,883)	(3,236)	(3,236)
Repurchase and retirement of common stock	(14,982)	(9,989)	(22,377)
Dividends paid	0	(11)	0
Proceeds from policyholder deposits	25,740	28,879	18,531
Surrenders of policyholder deposits	(15,134)	(19,847)	(26,677)
Net cash (used in) provided by financing activities	(4,667)	47,412	(56,002)
Net increase (decrease) in cash and cash equivalents	1,152	(7,707)	(81,397)
Cash and cash equivalents
Beginning of year	109,837	117,544	198,941
End of year	$ 110,989	$ 109,837	$ 117,544

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Nature of Business

12 Months Ended

Dec. 31, 2020

Nature of Business [Abstract]

Nature of Business

1. Nature of Business

Triple-S Management Corporation (the Corporation, the Company, Triple-S, or TSM) was incorporated under the laws of the Commonwealth of Puerto Rico to engage among other things, as the holding company of entities primarily involved in the insurance industry. Triple-S is a health services company and one of the top players in the Puerto Rico health care industry. We have the exclusive right to use the Blue Cross Blue Shield (BCBS) name and mark throughout Puerto Rico, the U.S. Virgin Islands (USVI), Costa Rica, the British Virgin Islands (BVI) and Anguilla, and we offer a broad portfolio of managed care and related products in the Commercial, Medicare Advantage and Medicaid markets. Triple-S is also a well-known brand in the life insurance and property and casualty insurance markets, with a significant share in each.

The Company was incorporated under the laws of the Commonwealth of Puerto Rico to engage, among other things, as the holding company of entities primarily involved in the insurance industry. The Company has the following wholly-owned subsidiaries:

• Triple-S Salud, Inc. (TSS) and Triple-S Advantage, Inc. (TSA), which are managed care organizations that provide health benefits services to subscribers through contracts with hospitals, physicians, dentists, laboratories, and other organizations

• Triple-S Vida, Inc. (TSV) and Triple-S Blue, Inc. (TSB), which are engaged in the underwriting of life and accident and health insurance policies and the administration of annuity contracts

• Triple-S Propiedad, Inc. (TSP), which is engaged in the underwriting of property and casualty insurance policies.

The Company, TSS, TSA and TSB are members of the Blue Cross and Blue Shield Association (BCBSA). The Company and the above mentioned subsidiaries are subject directly or indirectly to the regulations of the Commissioner of Insurance of the Commonwealth of Puerto Rico (the Commissioner of Insurance), the General Superintendence of Insurance of Costa Rica, the Office of the Commissioner of Insurance of the government of the U.S. Virgin Islands (USVI), the British Virgin Islands (BVI) Financial Services Commission, and the Anguilla Financial Services Commission.

The Company has begun a program to achieve sustained growth as a leading health services company providing holistic and affordable health care. The Company owns a controlling interest in a health clinic in Puerto Rico, as part of our strategic initiatives, and besides its current operations, this health clinic owns controlling interests in other health clinics throughout the island.

Through our subsidiary TSS, we provide services to participants of the Commonwealth of Puerto Rico Health Insurance Plan (similar to Medicaid) (Medicaid).  On September 21, 2018, TSS entered into a contract with the Puerto Rico Health Insurance Administration (ASES by its Spanish acronym) to offer health care services to Medicaid and Child Health Insurance subscribers for the government of Puerto Rico’s revised Medicaid health insurance program.  The contract is effective from November 1, 2018 to September 30, 2021, which term may be extended an additional year at ASES’s option.  The revised delivery model requires managed care organizations (MCOs) to serve subscribers in an island-wide basis, rather than through the assignment of specific regions within the Island.  Under the new agreement, TSS is responsible for the provision of medical, mental, pharmacy, and dental healthcare services on an at-risk basis to subscribers who enroll with TSS.  ASES pays TSS a per member per month rate that varies depending on the clinical condition or category of the subscriber.  Prior to the effective date of the new contract, TSS provided medical, mental, pharmacy and dental healthcare services to Medicaid subscribers in the Metro-North and West regions of the government of Puerto Rico’s health insurance program on an at-risk basis.

A substantial majority of the Company’s business activity is within Puerto Rico, and as such, the Company is subject to the risks associated with the Puerto Rico economy.

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

The following are the significant accounting policies followed by the Company and its subsidiaries:

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP).  The consolidated financial statements include the financial statements of the Company and its subsidiaries.  Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period.  Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid debt instruments with maturities of three months or less at the date of acquisition to be cash equivalents.  Cash and cash equivalents are recorded at cost, which approximates fair value.  Cash equivalents of $43,032 and $25,060 at December 31, 2020 and 2019, respectively, consist principally of money market funds and certificates of deposit with original maturities of three months or less.

Investments

Fixed-maturities

Investment in debt securities at December 31, 2020 and 2019 consisted mainly of obligations of government‑sponsored enterprises, U.S. Treasury securities and obligations of U.S. government instrumentalities, municipal securities, corporate bonds, residential mortgage-backed securities, and collateralized mortgage obligations.  The Company classifies its debt securities into one of two categories: available-for-sale or held-to-maturity.  Securities classified as held-to-maturity are those securities in which the Company has the ability and intent to hold until maturity.  All other securities not included in held-to-maturity are classified as available-for-sale.

Available-for-sale securities are recorded at fair value.  The fair values of debt securities (both available-for-sale and held-to-maturity investments) are based on quoted market prices for those or similar investments at the reporting date.  Held-to-maturity debt securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums and discounts, respectively.  For available-for-sale securities, unrealized holding gains or losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of Other Comprehensive Income. Realized gains and losses from the sale of available-for-sale securities are included in earnings and determined on a specific‑identification basis.

Transfers of securities between categories are recorded at fair value at the date of transfer.  Unrealized holding gains or losses associated with transfers of securities from held-to-maturity to available-for-sale are recorded as a separate component of Other Comprehensive Income. These are maintained and amortized into earnings over the remaining life of the security as an adjustment to yield in a manner consistent with the amortization or accretion of premium or discount on the associated security.

If a fixed-maturity security is in an unrealized loss position and the Company does not intend to sell the security, or it is more likely than not that the Company will not have to sell the fixed maturity security before recovery of its amortized cost basis, the credit component of the impairment, if any, is recorded as an allowance for credit losses with an offsetting entry in the Company’s Consolidated Statements of Earnings. The non-credit component of the impairment is recognized in Other Comprehensive Income. Furthermore, unrealized losses caused entirely by non-credit related factors associated with fixed-maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in Accumulated Other Comprehensive Income.

If a fixed-maturity security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the fixed-maturity security before recovery of its amortized cost basis, the Company will write off any previously recognized allowance for credit losses and will decrease the amortized cost basis of the security. If the allowance has been fully written off and the fair value is less than its amortized cost basis, the amortized cost basis is written down and an impairment loss is recognized in the Company’s Consolidated Statements of Earnings. As of December 31, 2020, no allowance for credit losses was recorded in the consolidated financial statements.

The credit component of the impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security at the date of acquisition. If there is an increase in the projected future cash flows of the fixed-maturity security in subsequent periods, all or part of the allowance for credit losses may be reversed.

In addition, the Company considers the following factors when evaluating whether or not a credit loss exists: the reasons for the impairment, the severity of the impairment, market conditions, changes in the security’s rating, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates.

Premiums and discounts are amortized or accreted over the life of the related held-to-maturity or available-for-sale security as an adjustment to yield using the effective interest method.  Dividend and interest income are recognized when earned.

The Company regularly invests in mortgaged-backed securities and other securities subject to prepayment and call risk.  Significant changes in prevailing interest rates may adversely affect the timing and amount of cash flows on such securities.  In addition, the amortization of market premium and accretion of market discount for mortgaged-backed securities is based on historical experience and estimates of future payment speeds on the underlying mortgage loans.  Actual prepayment speeds may differ from original estimates and may result in material adjustments to amortization or accretion recorded in future periods.

Equity investments

Investment in equity securities at December 31, 2020 and 2019 consisted of mutual funds whose underlying assets are comprised of domestic equity securities, international equity securities and higher risk fixed income instruments. Equity investments are recorded at fair value.  The fair values of equity investments are mainly based on quoted market prices for those or similar investments at the reporting date.  For a specific equity investment, the fair value is estimated using the net asset value (NAV) of the Company’s ownership interest in the partnership.  Following the implementation on January 1, 2018 of Accounting Standards Update (ASU) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, unrealized holding gains and losses on equity investments are included in earnings.  Realized gains and losses from the sale of equity investments are included in earnings and are determined on a specific‑identification basis.

Other invested assets

Other invested assets at December 31, 2020 and 2019 consisted mainly of alternative investments in partnerships that invest in several private debt and private equity funds.  Portfolios are diversified by vintage year, stage, geography, business sectors and number of investments. These investments are not redeemable with the funds. Distributions from each fund are received as the underlying investments of the fund is liquidated. It is estimated that the underlying assets of the funds will be liquidated in the next 5 to 12 years. The fair value of the investments in this class have been estimated using the net asset value (NAV) of the Company’s ownership interest in the partnerships. Total unfunded capital commitments for these positions was $52,557 as of December 31, 2020.  The remaining average commitments period is approximately three years.

Revenue Recognition

Managed Care

Subscriber premiums on the managed care business are billed in advance of their respective coverage period and the related revenue is recorded as earned during the coverage period.  Managed care premiums are billed in the month prior to the effective date of the policy with a grace period of up to two months.  If the insured fails to pay, the policy can be cancelled at the end of the grace period at the option of the Company.

Premiums for the Medicaid business are based on a bid contract with ASES and billed in advance of coverage period. The Medicaid contract that became effective November 1, 2018 includes a minimum medical loss ratio (MLR) provision that mandates that the Company remit to ASES the excess of the target MLR of 92% over the actual MLR for any given contract year and be reflected as an adjustment to premium revenue in current operations. The target established in the contract follows regulation requirements of the Centers for Medicare and Medicaid Services (CMS) for Medicaid managed care contracts codified in 42 CFR part 438. As of December 31, 2020, and 2019, there was no accrued amount due to ASES related to this provision.

Under the risk-based Medicaid contract that expired on October 31, 2018, an excess profit agreement stipulates that the profit of TSS for a specified period within the contract term shall not exceed two and a half percentage (2.5%) of the fixed amount paid by ASES for each member.  In the event that the profit exceeds this amount, TSS and ASES shall share the excess profit in proportions of fifty percent (50%), subject to the compliance by TSS with certain quality metrics.  ASES retains the right to determine the outcome of the excess profit agreement based on audited financial statements of the contracted services submitted annually by TSS and the validation of the incurred-but-not-reported reserve by ASES’s actuary. We report any estimated net amounts due to ASES within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets. As of December 31, 2020 and 2019, the Company had accrued an estimated profit sharing of $1,948, respectively.

We reassess the profitability on existing medical insurance contracts when current operating results or forecasts indicate probable future losses. We establish a premium deficiency reserve in current operations to the extent that the sum of expected future costs, claim adjustment expenses, and maintenance costs exceeds related future premiums under contracts without consideration of investment income. For purposes of determining premium deficiencies, contracts are grouped in a manner consistent with our method of acquiring, servicing, and measuring the profitability of such contracts. Losses recognized as a premium deficiency result in a beneficial effect in subsequent periods as operating losses under these contracts are charged to the liability previously established. As of December 31, 2020, the Company established a premium deficiency reserve amounting to $9,900 which is included within Accounts Payable and Accrued Liabilities in ther Consolidated Balance Sheets.

Premiums for the Medicare Advantage (MA) business are based on a bid contract with CMS and billed in advance of the coverage period.  We recognize premium revenue in the period in which we are obligated to provide services to our members. We record premiums earned but not received as premiums receivable and record premiums received in advance of the period of service as unearned premiums in the Consolidated Balance Sheets. Unearned premiums are recognized as revenue throughout the related coverage period.  MA contracts are renewed annually and provide for a risk factor to adjust premiums paid for members that represent a higher or lower risk to the Company.  Retroactive rate adjustments are made periodically based on the aggregate health status and risk scores of the Company’s MA membership.  These risk adjustments are evaluated quarterly, based on actuarial estimates.  Actual results could differ from these estimates.  We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured, which is possible as additional diagnosis code information is reported to CMS, when the ultimate settlements are received from CMS, or when we receive notification of such settlement amounts.  The data provided to CMS to determine members’ risk scores is subject to audit by CMS even after the annual settlements occur, which may result in the refund of premiums to CMS. The recorded estimate is revised and reflected in operating results in the period in which additional information becomes available.

Prescription drug coverage is offered to Medicare eligible beneficiaries as part of MA plans (MA-PD).  Premiums are based on a bid contract with CMS that considers the estimated costs of providing prescription drug benefits to enrolled participants.  MA-PD premiums are subject to adjustment, positive or negative, based upon the application of risk corridors that compare the estimated prescription drug costs included in the bids to CMS to actual prescription drug costs.  Variances exceeding certain thresholds may result in CMS making additional payments or in CMS requesting a refund for a portion of the premiums collected.  The Company estimates and records adjustments to earned premiums related to estimated risk corridor payments based on actual prescription drug costs for each reporting period as if the annual contract were to expire at the end of each reporting period.

Administrative service fees include revenue from certain groups that have managed care contracts that provide for the group to be at risk for all or a portion of their claims experience.  For these groups, the Company is not at risk and only handles the administration of managed care coverage for an administrative service fee.  The Company pays claims under commercial self-funded arrangements from its own funds, and subsequently receives reimbursement from these groups.  Claims paid under self-funded arrangements are excluded from the Claims Incurred, Net of Reinsurance in the accompanying Consolidated Statement of Earnings. Administrative service fees under the self-funded arrangements are recognized based on the group’s membership or incurred claims for the period multiplied by an administrative fee rate plus other fees.  In addition, some of these self-funded groups purchase aggregate and/or specific stop-loss coverage.  In exchange for a premium, the group’s aggregate liability or liability on any one episode of care is capped for the year.  Premiums for the stop-loss coverage are actuarially determined based on experience and other factors and are recorded as earned over the period of the contract in proportion to the coverage provided.  This fully insured portion of premiums is included within the Premiums Earned, net in the accompanying Consolidated Statements of Earnings.

Life Insurance

Premiums on life insurance policies are billed in advance of their respective coverage period and the related revenue is recorded as earned when due.  Premiums on accident and health and other short‑term policies are recognized as earned primarily on a pro rata basis over the contract period.  Premiums on credit life policies are recognized as earned in proportion to the amounts of insurance in‑force.  Revenues from universal life and interest sensitive policies represent amounts assessed against policyholders, including mortality charges, surrender charges actually paid, and earned policy service fees. Revenues for limited payment contracts are recognized over the period that benefits are provided rather than on collection of premiums.

Property and Casualty Insurance

Premiums on property and casualty contracts are billed in advance of their respective coverage period and recognized as earned on a pro rata basis over the policy term.  The portion of premiums related to the period prior to the end of coverage is recorded in the Consolidated Balance Sheets as Unearned Premiums and is transferred to premium revenue as earned.

Allowance for Doubtful Receivables

The allowance for doubtful receivables is based on management’s evaluation of the aging of accounts and such other factors that deserve current recognition, including the continued deterioration of the local economy, the exposure to government accounts and the challenging business environment in the island.  This evaluation is performed individually on larger accounts and includes the use of all available information such as the customer’s credit worthiness and other relevant information.  Actual losses could differ from these estimates.  Receivables are charged-off against their respective allowance accounts when deemed to be uncollectible.

Deferred Policy Acquisition Costs and Value of Business Acquired

Certain direct costs of acquiring business in the Life Insurance, and Property and Casualty segments are deferred by the Company.  Substantially all acquisition costs related to the Managed Care segment are expensed as incurred.

In the Life Insurance segment, deferred policy acquisition costs (DPAC) consist of commissions and certain expenses related to the successful acquisition of the production of life, annuity, accident and health, and credit business.  In the event that future premiums, in combination with policyholder reserves and anticipated investment income, could not provide for all future benefits and maintenance and settlement expenses, the amount of DPAC would be reduced to provide for such amount.  The related amortization is provided over the anticipated premium-paying period of the related policies in proportion to the ratio of annual premium revenue to expected total premium revenue to be received over the life of the policies.  Interest is considered in the amortization of DPAC and value of business acquired (VOBA).  For these contracts interest is considered at a level rate at the time of issue of each contract, of 3.90% for 2020,4.40% for 2019 and from 3.90% to 5.75% for 2018, and, in the case of the value of business acquired, at the time of any acquisition.

For certain other long-duration contracts, deferred amounts are amortized at historical and forecasted credited interest rates.  Expected premium revenue is estimated by using the same mortality and withdrawal assumptions used in computing liabilities for future policy benefits.  The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated net realizable value.  In determining estimated net realizable value, the computations give effect to the premiums to be earned, related investment income, losses and loss-adjustment expenses, and certain other costs expected to be incurred as the premium is earned.

Costs deferred on universal life and interest sensitive products are amortized as a level percentage of the present value of estimated gross profits from investment yields, mortality, expenses and surrender charges.  Estimates are based on the Company’s experience as adjusted to provide for possible adverse deviations.  These estimates are periodically reviewed and compared with actual experience.  When it is determined that future expected experience differs significantly from that assumed, the estimates are updated for current and future issues which may result in a change or release of deferred policy acquisition costs amortization through the Consolidated Statements of Earnings.

The VOBA assigned to the life insurance in-force at the date of the acquisition is amortized using methods similar to those used to amortize the DPAC of the life and accident and health segment.

In the Property and Casualty segment, acquisition costs consist primarily of commissions and other cost incurred during the production of business and are deferred and amortized ratably over the terms of the policies.

Property and Equipment

Property and equipment are stated at cost.  Maintenance and repairs are expensed as incurred.  Depreciation is calculated on the straight-line method over the estimated useful lives of the assets.  Costs of computer equipment, programs, systems, installations and enhancements are capitalized and amortized straight-line over their estimated useful lives.  The following is a summary of the estimated useful lives of the Company’s property and equipment:

Asset Category	Estimated Useful Life
Buildings	35 years
Building improvements	5 years
Leasehold improvements	Lesser of lease term or 10 years
Office furniture	7 years
Computer software	3 to 10 years
Computer equipment, equipment, and automobiles	3 to 5 years

Long-Lived Assets, including Goodwill

Long-Lived Assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated future cash flows, we recognize an impairment charge equal to the amount by which the carrying amount of the asset exceeds the fair value of the asset.  The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate Asset and Liability sections of the Consolidated Balance Sheets.  During 2020, 2019, and 2018 impairment tests on intangible assets were performed, and based on the results of the tests no impairment was recorded.

Goodwill and Intangible Assets that have indefinite useful lives are tested at least annually for impairment, and are tested for impairment more frequently if events or circumstances indicate that the asset might be impaired.  An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.  For Goodwill, the impairment determination is made at the reporting unit level.  The Company may perform a qualitative analysis or perform a quantitative analysis.  In the qualitative analysis, the Company determines if it is more likely than not that the fair value of a reporting unit is less than its carrying amount by assessing current events and circumstances. If there are factors present indicating potential impairment, the Company would proceed to the quantitative analysis.  The quantitative analysis is used to identify potential goodwill impairment and measure the amount (if any) of a goodwill impairment loss to be recognized. The goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount and recognizing an impairment charge for the difference by which the carrying amount exceeds the reporting unit’s fair value, up to the carrying amount of the goodwill.

The annual impairment test is based on an evaluation of estimated future discounted cash flows. The Company also uses the market approach as part of their impairment analysis.  The estimated discounted cash flows are based on the best information available, including supportable assumptions and projections we believe are reasonable. Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account the operating plans and strategies of our operating segments. Other key assumptions, including changes in membership, premium, health care costs, operating expenses, fees, assessments and taxes and effective tax rates, are based on estimates consistent with those used in our annual budgeting and planning process that we believe are reasonable. However, if we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion of our goodwill, which would adversely affect our operating results in the period of impairment. Impairments, if any, are classified as an operating expense.

Claim Liabilities

Managed Care claim liabilities mostly represent the Company’s estimate of medical costs incurred but not yet paid to providers based on experience and accumulated statistical data.  Loss-adjustment expenses related to such claims are currently accrued based on estimated future expenses necessary to process such claims.  Claim liabilities are the most significant estimate included in our consolidated financial statements.  Such estimate is developed consistently using standard actuarial methodologies based upon key assumptions, which vary by business segment.  The most significant assumptions used in the development of managed care claim liabilities include current payment experience, trend factors and completion factors.  Managed care trend factors in our standard actuarial methodologies include contractual requirements, historic utilization trends, the interval between the date services are rendered and the date claims are paid, denied claims activity, disputed claims activity, benefit changes, expected health care cost inflation, seasonality patterns, maturity of lines of business, changes in membership and other factors.

Managed care claim liabilities also include a provision for adverse deviation, which is an estimate for known environmental factors that are reasonably likely to affect the required level of reserves. This provision for adverse deviation is intended to capture the potential adverse development from known environmental factors such as our entry into new geographical markets, changes in our geographic or product mix, the introduction of new customer populations, variation in benefit utilization, disease outbreaks, changes in provider reimbursement, fluctuations in medical cost trend, variation in claim submission patterns and variation in claims processing speed and payment patterns, changes in technology that provide faster access to claims data or change the speed of adjudication and settlement of claims, variability in claim inventory levels, non-standard claim development, and/or exceptional situations that require judgmental adjustments in setting the reserves for claims.

The Company contracts with various independent practice associations (IPAs) for certain medical care services provided to certain policies subscribers.  The IPAs are compensated on a capitation basis, and capitation payables are included within claim liabilities. Capitation is amounts paid to IPAs on a fixed-fee per-member per-month basis.

Claim liabilities also include unpaid claims and loss-adjustment expenses of the Life Insurance segment based on a case-basis estimate for reported claims, and on estimates, based on experience, for unreported claims and loss-adjustment expenses.  The liability for policy and contract claims and claims expenses has been established to cover the estimated net cost of insured claims.

Also included within claim liabilities is the liability for losses and loss-adjustment expenses for the Property and Casualty segment, which represents individual case estimates for reported claims and estimates for unreported losses, net of any salvage and subrogation based on past experience modified for current trends and estimates of expenses for investigating and settling claims.

Claim liabilities are necessarily based on estimates and, while management believes that the amounts are adequate, the ultimate liability may be in excess of or less than the amounts provided.  The methods for making such estimates and for establishing the resulting liability are continually reviewed, and any adjustments are reflected in the Consolidated Statements of Earnings in the period determined.

Future Policy Benefits

The liability for future policy benefits has been computed using the level‑premium method based on estimated future investment yield, mortality, morbidity and withdrawal experience.  Mortality has been calculated on select and ultimate tables in common usage in the industry, modified by the Company’s experience.  Morbidity has been calculated based on industry tables, modified by the Company’s experience; as well as, withdrawals that have been estimated principally based on industry tables, modified by Company’s experience.  Assumptions are established at the time the policy is issued and are generally not changed during the life of the policy.  The Company periodically reviews the adequacy of reserves for these policies on an aggregate basis using actual experience. If actual experience is significantly adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DPAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required.  The interest rate assumption was 3.90% for 2020, 4.40% for 2019 and ranged from 3.90% to 5.75%  for 2018.

Policyholder Deposits

Amounts received for annuity contracts are considered deposits and recorded as a liability along with the accrued interest and reduced for charges and withdrawals.  Interest incurred on such deposits, which amounted to $2,946, $2,639, and $2,615, during the years ended December 31, 2020, 2019, and 2018, respectively, is included in Interest Expense in the accompanying Consolidated Statements of Earnings.

Policyholder account balances for universal life and interest-sensitive products are equal to policy account values. The policy account primarily comprises cumulative deposits received and interest credited to the policyholder less cumulative contract benefits, surrenders, withdrawals, maturities and contract charges for mortality or administrative expenses.  Interest rates credited to policyholder account balances during 2020 was approximately 3.7% for interest-sensitive life products and 2.92% for annuities, while for 2019 they ranged from 2.0% to 4.5% for universal life and interest-sensitive products.  The universal life and interest-sensitive products represented $101,310 and $91,694 of the Policyholder Deposits balance on the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

Reinsurance

In the normal course of business, the insurance-related subsidiaries seek to limit their exposure that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers.

Prospective reinsurance premiums, commissions, and expense reimbursements, related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.  Accordingly, reinsurance premiums are reported as prepaid reinsurance premiums and amortized over the remaining contract period in proportion to the amount of insurance protection provided.

Premiums ceded and recoveries of losses and loss-adjustment expenses under prospective reinsurance treaties have been reported as a reduction of premiums earned and losses and loss-adjustment expenses incurred, respectively.  Property and casualty commission and expense allowances received in connection with reinsurance ceded are accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.  Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy and are presented within Premium and Other Receivables, Net in the accompanying Consolidated Balance Sheets.

Retroactive reinsurance reimburses a ceding company for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance.  In certain instances, reinsurance contracts cover losses both on a prospective basis and on a retroactive basis and where practical the Company bifurcates the prospective and retrospective elements of these reinsurance contracts and accounts for each element separately.  Initial gains in connection with retroactive reinsurance contracts are deferred and amortized into income over the settlement period, while losses are recognized immediately.  When changes in the estimated amount recoverable from the reinsurer or in the timing of receipts related to that amount occur, a cumulative amortization adjustment is recognized in earnings in the period of the change so that the deferred gain reflects the balance that would have existed had the revised estimate been available at the inception of the reinsurance transaction.  The Company uses the recovery method to amortize any deferred gain, which is included in Claims Incurred in the accompanying Consolidated Statements of Earnings.  The recovery method provides an amortization in proportion to the estimated recoveries made as of each reporting date as a percentage of total estimated recoveries. No deferred gain was amortized into operations during the years ended December 31, 2020, 2019 and 2018.

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Earnings in the period that includes the enactment date.  The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  Changes in recognition or measurement are reflected in the period in which the change in circumstances occurs.

The Company records any interest and penalties related to unrecognized tax benefits within Operating Expenses in the Consolidated Statement of Earnings.

Health Insurance Providers Fee

The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act mandates an annual Health Insurance Providers Fee (HIP Fee).  The annual HIP Fee becomes payable to the U.S. Treasury once the entity provides health insurance for any U.S. health risk in each applicable calendar year.  The initial estimated annual fee is accrued as of January 1, with a corresponding deferred cost amortized over 12 months on a straight-line basis. The fee payment is due on September 30 of each year.  The Company incurred approximately $55,500 and $50,100 of such fee in 2020 and 2018,  respectively, which is presented within Operating Expenses in the accompanying Consolidated Statements of Earnings. The HIP Fee was waived for all health insurance providers during the year ended December 31, 2019.  The Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the Further Consolidated Appropriations Act, 2020, signed into law on December 20, 2019, repealed the HIP Fee effective for calendar years beginning after December 31, 2020.

Insurance-Related Assessments

The Company records a liability for insurance-related assessments when the following three conditions are met: (1) the assessment has been imposed or the information available prior to the issuance of the consolidated financial statements indicates it is probable that an assessment will be imposed; (2) the event obligating an entity to pay (underlying cause of) an imposed or probable assessment has occurred on or before the date of the consolidated financial statements; and (3) the amount of the assessment can be reasonably estimated.  A related asset is recognized when the paid or accrued assessment is recoverable through either premium taxes or policy surcharges. The Company had accrued $722 and $1,629 within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.  Legal costs incurred in connection with loss contingencies are expensed as incurred.  Recoveries of costs from third parties, which are probable of realization, are separately recorded as assets, and are not offset against the related liability.

Share‑Based Compensation

Share-based compensation is measured at the fair value of the award and recognized as an expense in the consolidated financial statements over the vesting period.

Earnings per Share

Basic earnings per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period, excluding non-vested restricted stocks.  Diluted earnings per share is computed in the same manner as basic earnings per share except that the number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.  Dilutive common shares are included in the diluted earnings per share calculation using the Treasury stock method.

Recently Adopted Accounting Standards

On June 16, 2016, the Financial Accounting Standards Board (FASB) issued guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In addition, on April 25, 2019, the FASB issued Accounting Standard Update (ASU) 2019-04: Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this update represent changes to clarify, correct errors in or improve the codification. Such amendments should make the codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. Within the clarifications was the FASB’s intent to include all reinsurance recoverables within the scope of ASU 2016-13 (Topic 326). For public companies, the improvements related to ASU 2016-13 (Topic 326) and ASU 2016-01 (Topic 825) are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the standard effective January 1, 2020 and recognized $166, net of deferred tax asset, as a cumulative effect adjustment to the opening balance of retained earnings on the adoption date.

On January 26, 2017, the FASB issued guidance to simplify the manner in which an entity is required to evaluate goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this guidance, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, this guidance removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, these amendments, which should be applied on a prospective basis, are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Upon adoption of this standard, if the carrying amount of any of the reporting units exceeds its fair value, the Company will be required to record an impairment charge for the difference up to the amount of the goodwill. The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the results of the Company’s consolidated financial statements.

 On August 27, 2018, the FASB issued guidance for Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement.  This update focuses on improving the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of each entity’s financial statements.  Specifically, certain disclosure requirements are removed (the amount of, and reasons for, transfer between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements), while certain other disclosures are modified and added (changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements).  The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent period in the initial fiscal year of adoption.  All other amendments should be applied retrospectively to all periods presented upon their effective date.  The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the presentation and disclosures of the Company’s consolidated financial statements.

On August 29, 2018, the FASB issued guidance for Intangibles – Goodwill and Other – Internal-Use Software. Guidance addresses customers’ accounting for implemented costs incurred in a cloud computing arrangement that is a service contract and aims to reduce complexity in the accounting for costs of implementing a cloud computing service arrangement. The amendments require a customer in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense.  Additionally, it requires the customer to expense the capitalized implementation costs over the term of the hosting arrangement. The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the results of the Company’s consolidated financial statements.

Future Adoptions of Accounting Standards

On August 15, 2018, the FASB issued ASU 2018-12: Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts – which provides meaningful improvements to the existing revenue recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity.  The amendments improve the timeliness of recognizing changes in the liability for future policy benefits and modify rate used to discount future cash flows, simplify and improve the accounting for certain market-based options or guarantees associated with deposit contracts, simplify the amortization of deferred acquisition costs, and improves the effectiveness of the required disclosures.  Specifically, this guidance requires an insurance entity to review and update, if needed, the assumptions used to measure cash flows and discount rate at each reporting date; measure all market risk benefits associated with deposit; and disclose liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in measurement, including changes thereto and the effect of those changes on measurement.  Additionally, the amendment simplifies the amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits or gross margins, and requires that those balances be amortized on a constant level basis over the expected term of the related contracts.  On November 5, 2020, the FASB issued ASU 2020-11: Financial Services – Insurance (Topic 944): Effective Date and Early Application – which defer the effective date of ASU 2018-12 by one year for all insurance entities.  For public companies, these amendments will be applied for fiscal years beginning after December 15, 2022.  We are currently evaluating the impact the adoption of this guidance may have on the Company’s consolidated financial statements.

On August 28, 2018, the FASB issued guidance for Compensation – Retirement Benefits – Defined Benefit Plans – General which addresses changes to the disclosure requirement for defined benefit plans. The amendments in this guidance modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  Specifically, the guidance removes certain disclosure requirements, including the amounts of accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, related-party disclosures concerning the amount of future annual benefits covered by an insurance and annuity contracts and significant transactions between the employer and related-parties and the plan, and adds other disclosures including the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and an explanation for the reasons for significant gains and losses related to changes in the benefit obligation for the period.   For public companies, these amendments, will be applied for fiscal years beginning after December 15, 2020.  The adoption of this guidance will not have a material impact on the presentation and disclosures of the Company’s consolidated financial statements.

On December 18, 2019, the FASB issued ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. Also, the amendments simplify the accounting for income taxes by requiring the following: (1) that an entity recognize a franchise tax that is partially based on income in accordance with Topic 740 and account for any incremental amount incurred as a non-income-based tax; (2) that an entity evaluate when a step-up in the tax basis of Goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should instead be considered a separate transaction; and (3) that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that included the enactment date. For public companies, these amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this guidance will not have a material impact on the results of the Company’s consolidated financial statements.

On January 16, 2020, the FASB issued guidance to clarify the interaction between the accounting standards on recognition and measurement of financial instruments in Topic 321: Investments – Equity Securities, the one on equity method investments in Topic 323: Investments – Equity Method and Joint Ventures, and forward contracts and purchased options in Topic 815: Derivatives and Hedging. The amendments clarify that upon an increase or decrease in level of ownership or degree of influence, a company should remeasure the interest held in the investee to take into account observable transactions immediately before applying or discontinuing the equity method of accounting under Topic 323. The guidance also clarifies that an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchase option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option. For public companies, these amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this guidance will not have a material impact on the results of the Company’s consolidated financial statements.

On March 12, 2020, the FASB issued ASU 2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU was issued to provide optional guidance, for a limited time, to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments, which are elective and apply to all entities, provide expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate that is expected to be discontinued as a result of reference rate reform. Because the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect for a limited time, from March 12, 2020 through December 31, 2022. The Company is currently in the process of identifying its LIBOR-based contracts that will be affected by the phase-out of LIBOR and expects to use the optional expedients provided in this ASU.

On January 7, 2021, the FASB issued ASU 2021-01: Reference Rate Reform (Topic 848): Scope Refinement – to clarify the scope of the recent reference reform guidance in Topic 848. This ASU refines the scope of Topic 848 and clarifies that certain optional expedients and exceptions therein for contract modifications and hedge accounting apply to contracts that are affected by the discounting transition. Specifically, modifications related to reference rate reform would not be considered an event that requires reassessment of previous accounting conclusions. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. The amendments in the ASU are effective immediately for all entities. The Company is currently in the process of identifying its LIBOR-based contracts that will be affected by the phase-out of LIBOR and expects to use the optional expedients provided in this ASU.

Other than the accounting pronouncements disclosed above, there were no other new accounting pronouncements issued during the year that could have a material impact on the Corporation’s financial position, operating results or financials statement disclosures.

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Investment in Securities

12 Months Ended

Dec. 31, 2020

Investment in Securities [Abstract]

Investment in Securities

3. Investment in Securities

The amortized cost for debt securities and alternative investments, gross unrealized gains and losses, and estimated fair value for the Company’s investments in securities by major security type and class of security as of December 31, were as follows:

	2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed-maturities available-for-sale
Obligations of government- sponsored enterprises	$	24,496	$	665	$	(9	)	$	25,152
U.S. Treasury securities and obligations of U.S.- government instrumentalities		103,694		7,993		-			111,687
Municipal securities		646,961		54,067		-			701,028
Corporate bonds		189,516		30,280		-			219,796
Residential mortgage-backed securities		249,801		21,487		(57	)		271,231
Collateralized mortgage obligations		12,954		638		(21	)		13,571
Total fixed-maturities available-for-sale	$	1,227,422	$	115,130	$	(87	)	$	1,342,465

	2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises	$	17,209	$	477	$	-		$	17,686
U.S. Treasury securities and obligations of U.S.- government instrumentalities		102,230		4,779		-			107,009
Municipal securities		595,051		34,735		(22	)		629,764
Corporate bonds		187,096		21,721		(74	)		208,743
Residential mortgage-backed securities		262,783		8,073		(320	)		270,536
Collateralized mortgage obligations		8,674		471		-			9,145
Total fixed-maturities available-for-sale	$	1,173,043	$	70,256	$	(416	)	$	1,242,883

	2020
	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	$	614	$	201	$	-	$	815
Residential mortgage-backed securities		164		17		-		181
Certificates of deposits		1,089		-		-		1,089
Total fixed-maturities held-to-maturity	$	1,867	$	218	$	-	$	2,085

	2019
	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 instrumentalties	$	615	$	158	$	-	$	773
Residential mortgage-backed securities		165		1		-		166
Certificates of deposits		1,080		-		-		1,080
Total fixed-maturities held-to-maturity	$	1,860	$	159	$	-	$	2,019

	2020
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Other invested assets - Alternative investments	$	112,171	$	6,119	$	(3,385	)	$	114,905

	2019
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Other invested assets - Alternative investments	$	97,575	$	3,721	$	(788	)	$	100,508

Gross unrealized losses on investment securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, were as follows:

	2020
	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	$	1,539	$	(9	)		1	$	-	$	-			-	$	1,539	$	(9	)		1
Residential mortgage-backed securities		3,624		(57	)		1		-		-			-		3,624		(57	)		1
Collateralized mortgage obligations		6,060		(21	)		2		-		-			-		6,060		(21	)		2
Total fixed-maturities available-for-sale	$	11,223	$	(87	)		4	$	-	$	-			-	$	11,223	$	(87	)		4
Other invested assets - Alternative investments	$	12,584	$	(808	)		4	$	16,396	$	(2,577	)		6	$	28,980	$	(3,385	)		10

	2019
	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
Municipal securities	$	10,656	$	(22	)		3	$	-	$	-			-	$	10,656	$	(22	)		3
Corporate bonds		5,047		(74	)		1		-		-			-		5,047		(74	)		1
Residential mortgage backed securities		79,902		(320	)		16		-		-			-		79,902		(320	)		16
Total fixed-maturities available-for-sale	$	95,605	$	(416	)		20	$	-	$	-			-	$	95,605	$	(416	)		20
Other invested assets - Alternative investments	$	24,437	$	(605	)		8	$	10,580	$	(183	)		1	$	35,017	$	(788	)		9

The Company regularly monitors and evaluates the difference between the amortized cost and estimated fair value of fixed-maturity securities.  For fixed-maturity securities with a fair value below amortized cost, the process includes evaluating: (1) the extent to which the estimated fair value has been less than amortized cost, (2) the financial condition, near-term and long-term prospects for the issuer, including relevant industry conditions and trends, and implications of rating agency actions, (3) the Company’s intent to sell or the likelihood of a required sale prior to recovery, (4) the recoverability of principal and interest, and (5) other factors, as applicable.  This process is not exact and requires further consideration of risks such as credit and interest rate risks.  Consequently, if an investment’s cost exceeds its estimated fair value solely due to changes in interest rates, an allowance for credit losses is not recorded.

Because of the subjective nature of the Company’s analysis and the judgment that must be applied in it, the Company could reach a different conclusion about whether to impair a security if it had access to additional information about the investee.  Additionally, it is possible that the investee’s ability to meet future contractual obligations may be different than what the Company determined during its analysis, which may lead to a different impairment conclusion in future periods.

The Company’s process for identifying and reviewing available-for-sale and other invested assets for impairments during any quarter includes the following:

• Identification and evaluation of securities that have possible indications of impairment, which includes an analysis of all investments with gross unrealized investment losses that represent 20% or more of their cost and all investments with an unrealized loss greater than $100;

• For any securities with a gross unrealized investment loss we might review and evaluate the investee’s current financial condition, liquidity, near-term recovery prospects, implications of rating agency actions, the outlook for the business sectors in which the investee operates and other factors;

• Consideration of evidential matter, including an evaluation of factors or triggers that may or may not cause individual investments to qualify as having a credit-related impairment; and

• Determination of the status of each analyzed security as credit-impaired or not, with documentation of the rationale for the decision.

The Company reviews the available-for-sale and other invested assets portfolios under the Company’s impairment review policy.  Given market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and material allowances for credit losses may be recorded in future periods.  The Company from time to time may sell investments as part of its asset/liability management process or to reposition its investment portfolio based on current and expected market conditions.

• Obligations of government-sponsored enterprises:  The unrealized losses of these securities were mainly caused by fluctuations in interest rates and general market conditions. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment. In addition, they have investment-grade ratings. The Company does not consider these investments to be credit-impaired because of several factors: the decline in fair value is attributable to changes in interest rates and not credit quality; the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.

• Residential mortgage-backed securities and Collateralized mortgage obligations: The unrealized losses on these investments were mostly caused by fluctuations in interest rates and credit spreads. The contractual cash flows of these securities are guaranteed by a U.S. government-sponsored enterprise. Any loss in these securities is determined according to the seniority level of each tranche, with the least senior, typically the unrated residual tranche, taking any initial loss. The investment grade credit rating of our securities reflects the seniority of the securities that the Company owns. The Company does not consider these investments to be credit-impaired because of several factors: the decline in fair value is attributable to changes in interest rates and not credit quality; the Company does not intend to sell the investments and it is more likely than not that the Company will not be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.

• Alternative Investments:  As of December 31, 2020, alternative investments with unrealized losses were not considered credit-impaired based on market conditions.

Maturities of investment securities classified as available-for-sale and held-to-maturity at December 31, 2020 were as follows:

	Amortized Cost		Estimated Fair Value
Securities available-for-sale
Due in one year or less	$	36,645	$	36,935
Due after one year through five years		583,264		628,468
Due after five years through ten years		194,778		209,096
Due after ten years		149,980		183,164
Residential mortgage-backed securities		249,801		271,231
Collateralized mortgage obligations		12,954		13,571
	$	1,227,422	$	1,342,465
Securities held-to-maturity
Due in one year or less	$	1,089	$	1,089
Due after five years through ten years		614		815
Residential mortgage-backed securities		164		181
	$	1,867	$	2,085

Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

Investments with an amortized cost of $6,884 and $6,940 (fair value of $7,526 and $7,274) at December 31, 2020 and 2019, respectively, were deposited with the Commissioner of Insurance to comply with the deposit requirements of the Insurance Code of the Commonwealth of Puerto Rico (the Insurance Code).

Investments with an amortized cost of $227,890 and $145,981 (fair value of $250,088 and $152,916) at December 31, 2020 and 2019, respectively, were pledged with the Federal Home Loan Bank of New York (FHLBNY) to secure short-term borrowings. 

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Realized and Unrealized Gains

12 Months Ended

Dec. 31, 2020

Realized and Unrealized Gains [Abstract]

Realized and Unrealized Gains

4. Realized and Unrealized Gains

Information regarding realized and unrealized gains and losses from investments for the years ended December 31, is as follows:

	2020			2019			2018
Realized gains (losses)
Fixed-maturity securities:
Securities available-for-sale
Gross gains	$	3,943		$	3,844		$	3,730
Gross losses		(488	)		(387	)		(18,627	)
Total fixed-maturity securities		3,455			3,457			(14,897	)
Equity investments:
Gross gains		1,852			3,056			16,045
Gross losses		(5,074	)		(1,669	)		(2,290	)
Gross losses from impaired securities		(678	)		-			-
Total equity investments		(3,900	)		1,387			13,755
Other invested assets:
Gross gains		1,086			1,055			1,492
Gross losses		-			(56	)		(52	)
Total other invested assets		1,086			999			1,440
Net realized gains on securities	$	641		$	5,843		$	298

The gross losses from impaired securities during the year ended December 31, 2020 are related to an equity method investment held by the Company.

	2020			2019		2018
Changes in unrealized gains (losses)
Recognized in accumulated other comprehensive income (loss)
Fixed-maturities – available-for-sale	$	45,203		$	38,807	$	(14,104	)
Other invested assets		(199	)		1,545		1,073
Not recognized in the consolidated financial statements
Fixed-maturities – held-to-maturity	$	59		$	32	$	(29	)

The change in deferred tax asset (liability) on unrealized gains (losses) recognized in Accumulated Other Comprehensive Income during the years 2020, 2019, and 2018 was ($9,160), ($8,206), and $2,292, respectively.

As of December 31, 2020 and 2019 no individual investment in securities exceeded 10% of stockholders’ equity.

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Net Investment Income

12 Months Ended

Dec. 31, 2020

Net Investment Income [Abstract]

Net Investment Income

5. Net Investment Income

Interest and/or dividend income for the years ended December 31 were are as follows:

	2020		2019		2018
Fixed maturities	$	38,919	$	42,005	$	43,873
Equity securities		13,158		12,453		12,261
Other invested assets		3,545		3,436		1,679
Policy loans		809		761		754
Cash equivalents and interest-bearing deposits		483		1,602		1,407
Other		633		1,750		1,935
Total	$	57,547	$	62,007	$	61,909

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Premium and Other Receivables, Net

12 Months Ended

Dec. 31, 2020

Premium and Other Receivables, Net [Abstract]

Premium and Other Receivables, Net

6. Premium and Other Receivables, Net

Premium and Other Receivables, Net as of December 31 were as follows:

	2020		2019
Premium	$	106,322	$	188,861
Self-funded group receivables		26,412		28,672
FEHBP		12,830		13,894
Agent balances		31,509		30,784
Accrued interest		10,418		11,307
Reinsurance recoverable		216,314		239,767
Other		135,774		110,952
		539,579		624,237
Less allowance for doubtful receivables:
Premium		37,231		36,622
Other		13,508		19,923
		50,739		56,545
Premium and other receivables, net	$	488,840	$	567,692

As of December 31, 2020 and 2019, the Company had premiums and other receivables of $53,397 and $49,176, respectively, from the Government of Puerto Rico, including its agencies, municipalities and public corporations. The related allowance for doubtful receivables as of December 31, 2020 and 2019 were $23,752 and $22,091, respectively.

Reinsurance recoverable as of December 31, 2020 and 2019 includes $172,021 and $189,621 related to catastrophe losses covered by the Property and Casualty segment’s reinsurance program.

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Deferred Policy Acquisition Costs and Value of Business Acquired

12 Months Ended

Dec. 31, 2020

Deferred Policy Acquisition Costs and Value of Business Acquired [Abstract]

Deferred Policy Acquisition Costs and Value of Business Acquired

7. Deferred Policy Acquisition Costs and Value of Business Acquired

The change in deferred policy acquisition costs and value of business acquired for the years ended December 31 is summarized as follows:

	DPAC			VOBA			Total
Balance, December 31, 2017		177,721			23,067			200,788
Additions		51,144			-			51,144
VOBA interest at an average rate of 5.11%		-			1,120			1,120
Amortization		(35,005	)		(2,888	)		(37,893	)
Net change		16,139			(1,768	)		14,371
Balance, December 31, 2018		193,860			21,299			215,159
Additions		59,399			-			59,399
VOBA interest at an average rate of 4.53%		-			1,031			1,031
Amortization		(37,496	)		(3,208	)		(40,704	)
Net change		21,903			(2,177	)		19,726
Balance, December 31, 2019	$	215,763		$	19,122		$	234,885
Additions		57,458			3,700			61,158
VOBA interest at an average rate of 4.47%		-			923			923
Amortization		(45,687	)		(2,954	)		(48,641	)
Net change		11,771			1,669			13,440
Balance, December 31, 2020	$	227,534		$	20,791		$	248,325

A portion of the amortization of the DPAC and VOBA is recorded as an amortization expense and included within the operating expenses in the accompanying Consolidated Statements of Earnings.  The remaining portion of the DPAC and VOBA amortization includes the unrealized investment gains and losses that would have been amortized if such gains and losses had been realized, which for the years ended December 31, 2020 and 2019 was ($2,478) and ($2,028), respectively, and is included within the unrealized gains on securities component of other comprehensive income.

The estimated amount of the year-end VOBA balance expected to be amortized during the next five years is as follows:

Year ending December 31:
2021	$	2,683
2022		1,810
2023		1,608
2024		1,430
2025		1,280

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Property and Equipment, Net

12 Months Ended

Dec. 31, 2020

Property and Equipment, Net [Abstract]

Property and Equipment, Net

8. Property and Equipment, Net

Property and Equipment, Net as of December 31 is composed of the following:

	2020		2019
Land	$	15,867	$	10,976
Buildings and leasehold improvements		128,629		92,752
Office furniture and equipment		32,547		27,878
Computer equipment and software		136,801		133,922
Automobiles		667		761
		314,511		266,289
Less accumulated depreciation and amortization		182,537		177,701
Property and equipment, net	$	131,974	$	88,588

The Company recognized depreciation expense on property and equipment of $13,866, $13,880 and $12,583 for the years ended December 31, 2020, 2019, and 2018, respectively.

On June 19, 2020, the Company acquired a nine-story office building (the Building), located at 1451 F.D. Roosevelt Avenue, in San Juan, Puerto Rico, as well as the adjoining multi-level parking structure and a parking lot. See Note 13 for further information on the credit agreement obtained to partially finance the acquisition of the Building.

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Goodwill

12 Months Ended

Dec. 31, 2020

Goodwill [Abstract]

Goodwill

9. Goodwill

Certain business combination transactions have resulted in goodwill, which represents the excess of the acquisition cost over the fair value of net assets acquired and is assigned to reporting units.  Goodwill recorded as of December 31, 2020 and 2019 was $28,614 and $28,599, respectively, which mostly all is attributable to the Medicare Advantage reporting unit within the Managed Care segment.

In an effort to expand the health clinics reporting unit, the Company purchased on April 1, 2019 various health clinics across different municipalities in Puerto Rico, resulting in a recognition of goodwill of $3,217.

As required by accounting guidance, annual goodwill impairment tests were performed and based on the results of the tests no impairment charge was required during the years ended December 31, 2020, 2019, and 2018.  If the Company does not achieve its earnings objectives or the cost of capital rises significantly, the assumptions and estimates underlying these impairment tests could be adversely affected and result in future impairment charges that would negatively impact its operating results.  Cumulative goodwill impairment charges were $2,369 as of December 31, 2020 and 2019, all related to the health clinics reporting unit.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2020

Fair Value Measurements [Abstract]

Fair Value Measurements

10. Fair Value Measurements

Assets recorded at fair value in the Consolidated Balance Sheets are categorized based on the level of judgment associated with the inputs used to measure their fair value.  Level inputs, as defined by current accounting guidance for fair value measurements and disclosures, are as follows:

Level 1 Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.

Level 3 Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The Company uses observable inputs when available. Fair value is based on quoted market prices when available. The Company limits valuation adjustments to those deemed necessary to ensure that the security’s fair value adequately represents the price that would be received or paid in the marketplace. Valuation adjustments may include consideration of counterparty credit quality and liquidity as well as other criteria.  The estimated fair value amounts are subjective in nature and may involve uncertainties and matters of significant judgment for certain financial instruments. Changes in the underlying assumptions used in estimating fair value could affect the results.  The fair value measurement levels are not indicative of risk of investment.

Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company’s best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement.  Transfers between levels, if any, are recorded as of the actual date of the event or change in circumstance that caused the transfer.  There were no transfers between Levels 1 and 2 during the years ended December 31, 2020 and 2019.

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	2020			2019
Balance as of January 1,	$	5,209		$	3,805
Unrealized gain in other accumulated comprehensive income		(107	)		154
Purchases		-			1,250
Balance as of December 31,	$	5,102		$	5,209

The fair value of investment securities is estimated based on quoted market prices for those or similar investments.  Additional information pertinent to the estimated fair value of investment in securities is included in Note 3.

The following table summarizes fair value measurements by level at December 31, for assets measured at fair value on a recurring basis:

	2020
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
Obligations of government-sponsored enterprises	$	-	$	25,152	$	-	$	25,152
U.S. Treasury securities and obligations of U.S.-government instrumentalities		111,687		-		-		111,687
Municipal securities		-		701,028		-		701,028
Corporate bonds		-		219,796		-		219,796
Residential agency mortgage-backed securities		-		271,231		-		271,231
Collaterized mortgage obligations		-		13,571		-		13,571
Total fixed-maturities	$	111,687	$	1,230,778	$	-	$	1,342,465
Equity investments	$	220,118	$	179,108	$	5,102	$	404,328

	2019
	Level 1		Level 2		Level 3		Total
Securities available-for-sale
Fixed-maturity securities
Obligations of government-sponsored enterprises	$	-	$	17,686	$	-	$	17,686
U.S. Treasury securities and obligations of U.S.-government instrumentalities		107,009		-		-		107,009
Municipal securities		-		629,764		-		629,764
Corporate bonds		-		208,743		-		208,743
Residential agency mortgage-backed securities		-		270,536		-		270,536
Collaterized mortgage obligations		-		9,145		-		9,145
Total fixed-maturities	$	107,009	$	1,135,874	$	-	$	1,242,883
Equity securities	$	177,136	$	105,180	$	5,209	$	287,525

The fair value of fixed-maturity and equity securities included in the Level 2 category were based on market values obtained from independent pricing services, which use previously evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information. For structured securities, cash flow and loan performance data, when available, is also used.  Because many fixed income securities do not trade on a daily basis, the models used by independent pricing service providers to prepare evaluations apply available information, such as benchmark curves, benchmarking of like securities, sector groupings and matrix pricing.  For certain equity securities, quoted market prices for the identical security are not always available, and the fair value is estimated by reference to similar securities for which quoted prices are available.  The independent pricing service providers monitor market indicators, industry and economic events, and for broker-quoted only securities, obtain quotes from market makers or broker-dealers that they recognize to be market participants. The fair value of an equity security included in level 3 was based using the NAV of the Company’s ownership interest in the partnership.

In addition to the preceding disclosures on assets recorded at fair value in the Consolidated Balance Sheets, accounting guidance also requires the disclosure of fair values for certain other financial instruments for which it is practicable to estimate fair value, whether or not such values are recognized in the consolidated balance sheets.

Non-financial instruments such as property and equipment, other assets, deferred income taxes and intangible assets, and certain financial instruments such as claim liabilities are excluded from the fair value disclosures. Therefore, the fair value amounts cannot be aggregated to determine our underlying economic value.

The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, receivables, accounts payable and accrued liabilities, and short-term borrowings approximate fair value because of the short-term nature of these items.

To estimate the fair value of each class of these Level 2 financial instruments, the following methods, assumptions and inputs are used:

• Policy loans – these financial instruments have no stated maturity dates and are part of the related insurance contract. The carrying amount of policy loans approximates fair value because their interest rate is reset periodically in accordance with current market rates.

• Policyholder deposits – the fair value of policyholder deposits is the amount payable on demand at the reporting date, and accordingly, the carrying value amount approximates fair value.

• Long-term borrowings – the carrying amount of the loans payable to bank approximates fair value due to its floating interest-rate structure.

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Claim Liabilities and Claim Adjustment Expenses

12 Months Ended

Dec. 31, 2020

Claim Liabilities and Claim Adjustment Expenses [Abstract]

Claim Liabilities and Claim Adjustment Expenses

11. Claim Liabilities and Claim Adjustment Expenses

The tables below present a reconciliation of the beginning and ending balances of Claim Liabilities in 2020, 2019 and 2018:

	2020
	Managed Care		Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	341,277	$	367,981		$	709,258
Reinsurance recoverable on claim liabilities		-		(137,017	)		(137,017	)
Net claim liabilities at beginning of year		341,277		230,964			572,241
Claims incurred
Current period insured events		2,772,084		112,296			2,884,380
Prior period insured events		33,654		(9,765	)		23,889
Total		2,805,738		102,531			2,908,269
Payments of losses and loss-adjustment expenses
Current period insured events		2,408,173		65,414			2,473,587
Prior period insured events		293,187		65,450			358,637
Total		2,701,360		130,864			2,832,224
Net claim liabilities at end of year		445,655		202,631			648,286
Reinsurance recoverable on claim liabilities		-		138,816			138,816
Claim liabilities at end of year	$	445,655	$	341,447		$	787,102

	2019
	Managed Care			Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	394,226		$	542,563		$	936,789
Reinsurance recoverable on claim liabilities		-			(315,543	)		(315,543	)
Net claim liabilities at beginning of year		394,226			227,020			621,246
Claims incurred
Current period insured events		2,556,027			110,513			2,666,540
Prior period insured events		(29,344	)		(5,191	)		(34,535	)
Total		2,526,683			105,322			2,632,005
Payments of losses and loss-adjustment expenses
Current period insured events		2,293,251			61,966			2,355,217
Prior period insured events		286,381			39,412			325,793
Total		2,579,632			101,378			2,681,010
Net claim liabilities at end of year		341,277			230,964			572,241
Reinsurance recoverable on claim liabilities		-			137,017			137,017
Claim liabilities at end of year	$	341,277		$	367,981		$	709,258

	2018
	Managed Care			Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	367,357		$	739,519		$	1,106,876
Reinsurance recoverable on claim liabilities		-			(633,099	)		(633,099	)
Net claim liabilities at beginning of year		367,357			106,420			473,777
Claims incurred
Current period insured events		2,308,516			103,368			2,411,884
Prior period insured events		(36,015	)		120,961			84,946
Total		2,272,501			224,329			2,496,830
Payments of losses and loss-adjustment expenses
Current period insured events		1,982,372			57,260			2,039,632
Prior period insured events		263,260			46,469			309,729
Total		2,245,632			103,729			2,349,361
Net claim liabilities at end of year		394,226			227,020			621,246
Reinsurance recoverable on claim liabilities		-			315,543			315,543
Claim liabilities at end of year	$	394,226		$	542,563		$	936,789

* Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.

The actual amounts of claims incurred in connection with insured events occurring in a prior period typically differ from estimates of such claims made in the prior-period.  Amounts included as incurred claims for prior-period insured events reflect the aggregate net amount of these differences.

The unfavorable development in the claims incurred and loss-adjustment expenses for prior-period insured events for 2020 are primarily due to higher than expected utilization trends in the Managed Care segment. The favorable development in the claims incurred and loss-adjustment expenses for prior-period insured events for 2019 are primarily due to better than expected utilization trends in the Managed Care segment.  The unfavorable developments in the claims incurred and loss-adjustment expenses for prior period insured events in 2018 is driven by an adverse development of approximately $128,678 in the Property and Casualty segment losses related to Hurricane Maria, partially offset by better than expected utilization trends in the Managed Care segment. Reinsurance recoverable on unpaid claims is reported within the premium and other receivables, net in the accompanying consolidated financial statements.

The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $38,551, $34,251, and $30,783 that is included within the consolidated claims incurred during the years ended December 31, 2020, 2019 and 2018, respectively.

The following is information about incurred and paid claims development, net of reinsurance, as of December 31, 2020, as well as cumulative claim frequency.  Additional information presented includes total incurred-but-not-reported liabilities plus expected development on reported claims which is included within the net incurred claims amounts.

The information about incurred and paid claims development for the year ended December 31, 2015 and previous years are presented as supplementary information and are unaudited where indicated.

Managed Care

The Company estimates its liabilities for unpaid claims following a detailed actuarial process that entails using both historical claim payment patterns as well as emerging medical cost trends to project a best estimate of claim liabilities. This process includes comparing the historical claims incurred dates to the actual dates on claims payment.  Completion factors are applied to claims paid through the consolidated financial statements date to estimate the claim expense incurred for the current period.  The liability for claim adjustment expenses consists of adjustments made by our actuaries based on their knowledge and their estimate of emerging impacts to benefit costs and payment speed.

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance					As of December 31, 2020
							(in thousands)
Incurred Year	(unaudited) 2019		2020		Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
2019	$	2,556,027	$	2,568,474	$	10,523		37,971
2020				2,772,084		363,911		35,822
	Total		$	5,340,558

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Incurred Year	(unaudited) 2019		2020
2019	$	2,293,251	$	2,557,951
2020				2,408,173
	Total		$	4,966,124
All outstanding liabilities before 2019, net of reinsurance				71,221
Liabilities for claims and claim adjustment expenses, net of reinsurance			$	445,655

Property and Casualty

Claims liability for Property and Casualty represents individual case estimates for reported claims and estimates for unreported losses, net of any salvage and subrogation based on past experience modified for current trends and estimates of expense for investigating and setting claims.

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31, 2020
Incurred Year	Incurred amount																				Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of reported claims
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	51,315	$	50,287	$	51,105	$	50,776	$	51,895	$	52,099	$	51,729	$	51,684	$	51,771	$	51,807	$	74		20,780
2012				49,040		49,856		48,900		49,817		48,945		48,186		47,731		47,725		47,340		94		21,243
2013						52,343		51,030		49,606		49,168		48,229		47,550		47,104		46,777		173		20,909
2014								48,430		45,410		43,707		42,547		41,457		41,147		40,702		275		19,110
2015										45,067		40,175		37,271		35,505		34,889		34,149		332		18,047
2016												48,127		44,294		41,168		39,488		38,418		443		20,874
2017														60,694		187,376		189,162		195,376		2,406		39,466
2018																40,619		37,603		34,306		1,296		16,381
2019																		43,589		34,373		4,107		10,311
2020																				44,455		18,511		7,595
																	Total		$	567,703

Cumulative Paid claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Incurred Year
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	24,534	$	34,835	$	41,606	$	44,996	$	47,908	$	49,598	$	50,457	$	50,761	$	51,127	$	$51,209
2012				22,677		33,620		40,406		43,663		45,607		46,094		46,441		46,625		46,724
2013						21,376		33,249		38,979		42,840		44,252		45,234		45,502		45,621
2014								18,752		28,657		33,809		36,875		37,857		38,773		39,214
2015										17,063		24,935		28,040		30,729		32,188		32,554
2016												20,099		28,996		32,820		34,546		35,395
2017														28,414		41,855		48,574		83,613
2018																16,555		24,402		26,997
2019																		16,305		22,379
2020																				19,431
																			$	403,137
	All outstanding liabilities before 2011, net of reinsurance																			2,001
	Liabilities for claims and claims adjustment expenses, net of reinsurance																		$	166,567

The table below includes the average annual percentage payout of incurred claims by age, net of reinsurance, for the Property and Casualty segment, presented as required supplementary information as of December 31, 2020:

	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)
	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Average	44.3%	20.7%	10.3%	8.5%	3.6%	1.9%	1.0%	0.4%	0.5%	0.2%

The reconciliation of the net incurred and paid claims development tables, by segment, to the liability for claims and claim adjustment expenses in the Consolidated Balance Sheets is as follows:

	As of December 31, 2020
Net outstanding liabilities
Managed Care	$	445,655
Property and Casualty		166,567
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		612,222
Reinsurance recoverable on unpaid claims - Property and Casualty		126,268
Insurance lines other than short-duration		49,932
Intersegment elimination		(1,320	)
Total gross liability for unpaid claims and claim adjustment expense	$	787,102

Claim Liabilities as of December 31, 2020 and 2019 include approximately $183,023 and $241,663, respectively, of gross losses related to the impact of Hurricanes Irma and Maria, which made landfall in Puerto Rico in September 2017.

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Federal Employees' Health Benefits (FEHBP) and Federal Employees' (FEP) Programs

12 Months Ended

Dec. 31, 2020

Federal Employees' Health Benefits (FEHBP) and Federal Employees' (FEP) Programs [Abstract]

Federal Employees' Health Benefits (FEHBP) and Federal Employees' (FEP) Programs

12. Federal Employees’ Health Benefits (FEHBP) and Federal Employees’ (FEP) Programs

FEHBP

In prior years, TSS entered in a contract, renewable annually, with the Office of Personnel Management (OPM) as authorized by the Federal Employees’ Health Benefits Act of 1959, as amended, to provide health benefits under the FEHBP.  The FEHBP covers postal and federal employees residing in the Commonwealth of Puerto Rico and the USVI, as well as retirees and eligible dependents.  The FEHBP is financed through a negotiated contribution made by the federal government and employees’ payroll deductions.

The accounting policies for the FEHBP are the same as those described in the Company’s summary of significant accounting policies.  Premium rates are determined annually by TSS and approved by the federal government.  Claims are paid to providers based on the guidelines determined by the federal government.  Operating expenses are allocated from TSS’s operations to the FEHBP based on applicable allocation guidelines (such as the number of claims processed for each program) and are subject to contractual expense limitations.

The operations of the FEHBP do not result in any excess or deficiency of revenue or expense as this program has a special account available to compensate any excess or deficiency on its operations to the benefit or detriment of the federal government.  Any transfer to/from the special account necessary to cover any excess or deficiency in the operations of the FEHBP is recorded as a reduction/increment to the premiums earned.  The contract with OPM provides that the cumulative excess of the FEHBP earned income over health benefits charges and expenses represents a restricted fund balance denoted as the special account.  Upon termination of the contract and satisfaction of all the FEHBP’s obligations, any unused remainder of the special reserve would revert to the Federal Employees Health Benefit Fund.  In the event that the contract terminates and the special reserve is not sufficient to meet the FEHBP’s obligations, the FEHBP contingency reserve will be used to meet such obligations.  If the contingency reserve is not sufficient to meet such obligations, the Company is at risk for the amount not covered by the contingency reserve.

The contract with OPM allows for the payment to the Company of service fees as negotiated between TSS and OPM.

The Company also has funds available related to the FEHBP amounting to $58,290 and $65,309 as of December 31, 2020 and 2019, respectively, and are included within Cash and Cash Equivalents in the accompanying Consolidated Balance Sheets.  Such funds are used to cover health benefits charges, administrative expenses and service charges required by the FEHBP.

A contingency reserve is maintained by the OPM at the U.S. Treasury, and is available to the Company under certain conditions as specified in government regulations.  Accordingly, such reserve is not reflected in the Consolidated Balance Sheets.  The balance of such reserve as of December 31, 2020 and 2019 was $99,005 and $76,380, respectively. The Company did not receive contingency reserve payments during 2020, 2019 and 2018.  During the year ended December 31, 2020, 2019 and 2018, the Company returned excess reserves of $13,959, $6,006 and $23,030 to the contingency reserve fund, respectively.

The claim payments and operating expenses charged to the FEHBP are subject to audit by the U.S. government.  Management is of the opinion that an adjustment, if any, resulting from such audits will not have a significant effect on the accompanying consolidated financial statements.  The claim payments and operating expenses reimbursed in connection with the FEHBP have been audited through 2011 by OPM.

FEP

In prior years, TSS entered in a contract with the BCBSA as per Contract No. C.S. 1039 with OPM to provide health benefits under one Government-wide Service Benefit Plan as contemplated in Title 5, Chapter 89, United States Code. The FEP covers employees and annuitants residing in the Commonwealth of Puerto Rico and the USVI as well as eligible dependents. The FEP is financed through a negotiated contribution made by the federal government and employees’ payroll deductions.  The accounting methodology and operations of the FEP are similar to those of the FEHBP as described above.

The claims payments and operating expenses charged to the FEP are subject to audit by the BCBSA. Management is of the opinion that the adjustments, if any, resulting from such audits will not have a significant effect in the accompanying consolidated financial statements. Operating expenses reimbursed in connection with the FEP have been audited through January 2020 by BCBSA.

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Borrowings

12 Months Ended

Dec. 31, 2020

Borrowings [Abstract]

Borrowings

13. Borrowings

Long-Term Borrowings

A summary of the borrowings entered by the Company as of December 31 is as follows:

	2020		2019
Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.15% at December 31, 2020).	$	4,627	$	6,267
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 2.98% at December 31, 2020).		16,204		17,211
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.48% at December 31, 2020).		1,813		2,401
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.25% at December 31, 2020). Last payment of $25,185 due on June 19, 2025.		30,723		-
Total borrowings		53,367		25,879
Less: unamortized debt issuance costs		616		185
	$	52,751	$	25,694

The secured loans payable maturing on 2023 and 2024 are guaranteed by a first mortgage held by the bank on the Company’s land, building and substantially all leasehold improvements, as collateral for the term of the loan under a continuing general security agreement.

On June 19, 2020, TSM entered into a $31,350 Credit Agreement (the Loan) with a commercial bank in Puerto Rico. The Company used the proceeds of the Loan to partially finance the acquisition of the Building (see Note 8).

The Loan is guaranteed by a mortgage over the Building, a pledge of all collateral related to the Building and an assignment of the rents collected for the lease of office space in the Building. Pursuant to the credit agreement, interest is payable on the outstanding principal balance of the Loan at an annual rate equal to the Prime Rate. Monthly interest payments commenced on July 1, 2020, and will continue to be paid each month until the principal of the Loan has been paid in full.

Aggregate maturities of the Company’s borrowings as of December 31, 2020 are:

Year ending December 31
2021	$	4,490
2022		4,490
2023		4,196
2024		14,484
2025		25,707
	$	53,367

The Company may, at its option and at any time, upon written notice as specified in the credit agreement, prepay prior to maturity all or any part of the Loan upon the payment of a penalty fee of the outstanding principal amount at the time of the prepayment of 3% during the first year, 2% during the second year, 1% during the third year and thereafter at par.

The four term loans under credit agreements with commercial banks in Puerto Rico include certain customary financial and non-financial covenants, including negative covenants imposing certain restrictions on the Company’s business. The Company was in compliance with all these covenants as of December 31, 2020.

Interest expense on the above borrowings amounted to $1,362, $1,320, and $1,375, for the years ended December 31, 2020, 2019, and 2018, respectively.

Short-Term Borrowings 

The Company has several short-term facilities available to address timing differences between cash receipts and disbursements, consisting of collateralized advances from the FHLBNY and a revolving credit facility.

• In August 2019, TSS and TSV became members of the FHLBNY, which provides access to collateralized advances. The borrowing capacity of TSS and TSV is up to 30% of their admitted assets as disclosed in the most recent filing with the Commissioner of Insurance but is constrained by the amount of collateral held at the FHLBNY (see Note 3). As of December 31, 2020 and 2019, the borrowing capacity was approximately $200,338 and $131,100, respectively. The outstanding balance as of December 31, 2020 and 2019 was $30,000 and $54,000, respectively.  The average interest rate of the outstanding balances was 0.33% and 1.79% as of December 31, 2020 and 2019, respectively.

• As of December 31, 2020, TSS has $35,000 of available credit under repurchase agreements with broker-dealers, which are short-term borrowing facilities using securities as collateral. There are no outstanding short-term borrowings under these facilities as of December 31, 2020.

• TSA has a $10,000 revolving loan agreement with a commercial bank in Puerto Rico.  This line of credit has an interest rate of 30-day LIBOR plus 250 basis points and contains certain financial and non-financial covenants that are customary for this type of facility.  This line of credit matures on June 30, 2021 and had no outstanding balance as of December 31, 2020.

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Reinsurance Activity

12 Months Ended

Dec. 31, 2020

Reinsurance Activity [Abstract]

Reinsurance Activity

14. Reinsurance Activity

The effect of reinsurance on premiums earned and claims incurred is as follows:

				Premiums Earned									Claims Incurred(1)
	2020			2019			2018			2020			2019			2018
Gross	$	3,681,830		$	3,316,802		$	3,009,830		$	2,967,719		$	2,645,599		$	2,657,639
Ceded		(76,809	)		(66,320	)		(73,591	)		(60,702	)		(15,924	)		(163,898	)
Assumed		429			2,398			2,352			1,252			2,330			3,089
Net	$	3,605,450		$	3,252,880		$	2,938,591		$	2,908,269		$	2,632,005		$	2,496,830

⁽¹⁾  The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $38,551, $34,251 and $30,783 that is included within the consolidated claims incurred during the years ended December 31, 2020, 2019 and 2018, respectively.

TSS, TSA, TSP and TSV, in accordance with general industry practices, annually purchase reinsurance to protect them from the impact of large unforeseen losses and prevent sudden and unpredictable changes in net income and stockholders’ equity of the Company.  Reinsurance contracts do not relieve any of the subsidiaries from their obligations to policyholders.  In the event that all or any of the reinsuring companies might be unable to meet their obligations under existing reinsurance agreements, the subsidiaries would be liable for such defaulted amounts.  During 2020, 2019, and 2018 TSP placed 19.36%, 21.50%, and 16.45%, respectively of its reinsurance business with one reinsurance company.

TSS has excess of loss reinsurance treaties whereby it cedes a portion of its premiums to third parties.  Reinsurance contracts are primarily for periods of one year and are subject to modifications and negotiations at each renewal date.  Premiums ceded under these contracts amounted to $1,291, $1,446, and $1,524 in 2020, 2019 and 2018, respectively.  Claims ceded amounted to $453, $1,215, and $320, in 2020, 2019, and 2018, respectively.  Principal reinsurance agreements include an organ transplant excess of loss treaty, which covers:

• For group policies, 80% of the claims up to a maximum of $800 (80% of $1,000), per person, per life. For other group policies with other options, the agreement covers 80% of the claims up to a maximum of $400 (80% of $500), per person, per life.

• For policies provided to the active and retired employees of the Commonwealth of Puerto Rico and its instrumentalities, the treaty covers 100% of the claims up to a maximum of $1,000 per person, per life with major medical coverage, only if the covered person uses providers that are members of TSS network.

• For policies provided to the municipalities of Puerto Rico, the treaty covers 100% of the claims up to a maximum of $250, per person, per life, and all other plans with lifetime covers 100% of the claims up to a maximum of $1,000, per person, per life.

TSA has an excess of loss reinsurance treaty whereby it cedes a portion of its premiums to a third party.  This reinsurance contract is for a period of one year and is subject to modifications and negotiations in each renewal date.  Premiums ceded under this contract amounted to $3,050, $2,850, and $2,300 in 2020, 2019, and 2018 respectively. Claims ceded amounted to $3,862, $3,186, and $1,804 in 2020, 2019, and 2018, respectively.  This reinsurance agreement includes an excess of loss reinsurance coverage for certain hospital inpatient, hospital outpatient, ambulance, and physician services as well as pharmaceutical drugs. This agreement covers a maximum of $2,000 per person, in excess of the Specific Deductible and Reimbursement Percentage, per agreement term.

TSP utilized facultative reinsurance, pro rata, and excess of loss reinsurance treaties to manage its exposure to losses, including those from catastrophe events.  TSP has geographic exposure to catastrophe losses from hurricanes and earthquakes.  The incidence and severity of catastrophes are inherently unpredictable.  Under these treaties, TSP ceded premiums written were $61,145, $52,355, and $60,354, in 2020, 2019, and 2018, respectively. TSP ceded (refunded) claims incured were $50,295, ($3,368) and $152,704, in 2020, 2019 and 2018, respectively.

During 2018, as part of the catastrophe program, TSP signed a multiyear reinsurance contract providing for retroactive and prospective reinsurance coverage.  The retroactive coverage resulted in a deferred gain on retroactive reinsurance of $25,000, which is presented within the Accounts Payable and Accrued Liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2020 and 2019.  The deferred gain on the retroactive reinsurance will be amortized using the recovery method.  The recovery method provides for the amortization in proportion to the estimated recoveries made as of the reporting date as a percentage of total estimated recoveries.

Ceded unearned reinsurance premiums arising from TSP reinsurance transactions amounted to $9,101 and $10,427 as of December 31, 2020 and 2019, respectively, and are reported as Other Assets in the accompanying Consolidated Balance Sheets.

Most principal reinsurance contracts are for a period of one year and are subject to modifications and negotiations in each renewal.  Current property and catastrophe reinsurance program was renewed effective April 1, 2020 for the twelve-month period ending March 31, 2021. Other contracts were renewed as expiring on January 1, 2021.

Principal reinsurance agreements are as follows:

• Casualty excess of loss treaty provides reinsurance for losses up to $20,000, subject to a retention of $225.

• Medical malpractice excess of loss treaty provides reinsurance for losses up to $3,000, subject to a retention of $150.

• Property reinsurance treaty includes proportional cessions and a per risk excess of loss contract limiting losses to $400 in $30,000 risks.

• Catastrophe protection limits losses to $5,000 per event with losses up to approximately $809,000 in a $814,000 event.

TSV also cedes insurance with various reinsurance companies under a number of pro rata, excess of loss and catastrophe treaties. Under these treaties, TSV ceded premiums of $9,997, $8,337, and $8,780, in 2020, 2019, and 2018, respectively. Principal reinsurance agreements are as follows:

• Group life insurance facultative agreement, reinsuring risk in excess of $25 of certain group life policies and a combined pro rata and excess of loss agreement effective July 1, 2008, reinsuring 50% of the risk up to $200 and ceding the excess.

• Facultative pro rata agreements for the long‑term disability insurance, reinsuring 65% of the risk.

• For certain policies, all personal accident and certain woman related cancer claims, the treaty covers 100% of the risk and for other cancer claims it covers 65% of the risk.

• Several reinsurance agreements, mostly on an excess of loss basis up to a maximum retention of $200.

• Excess of loss agreement for the major medical business in Costa Rica reinsuring 100% of all claims over $35 for claims incurred up to May 31, 2020 and claims over $50 for claims incurred on or after June 1, 2020.

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Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Taxes

15. Income Taxes

The Company and its subsidiaries are subject to Puerto Rico income taxes. Under Puerto Rico income tax law, the Company is not allowed to file consolidated tax returns with its subsidiaries. The Company’s insurance subsidiaries are also subject to U.S. federal income taxes for foreign source investment income.  The Company is potentially subject to income tax audits in the Commonwealth of Puerto Rico for the taxable year 2016 and after, until the applicable statute of limitations expires. Tax audits by their nature are often complex and can require several years to complete.

Managed Care and Property and Casualty corporations are taxed essentially the same as other corporations, with taxable income primarily determined on the basis of the statutory annual statements filed with the insurance regulatory authorities. The corporations are also subject to an alternative minimum income tax, which is calculated based on the formula established by existing tax laws. Any alternative minimum income tax paid may be used as a credit against the excess, if any, of regular income tax over the alternative minimum income tax in future years up to a limit of 25% of the excess.

The Company, through one of its Managed Care corporations, has a branch in the USVI that is subject to a 5% premium tax on policies underwritten therein. As a qualified foreign insurance company, the Company is subject to income taxes in the USVI, which has implemented a mirror tax law based on the U.S. Internal Revenue Code.  The branch operations in the USVI had certain net operating losses for USVI tax purposes for which a valuation allowance has been recorded.

Companies within our Life Insurance segment operate as qualified domestic life insurance companies and are subject to the alternative minimum tax and taxes on its capital gains.

On December 22, 2017, U.S Government enacted the Tax Cut and Jobs Act (TCJA). The TCJA incorporates a series of changes in tax rates at the federal level applicable for taxable years beginning after December 31, 2017 and before January 1, 2026.  The U.S. federal maximum corporate income tax rate is reduced from 35% to a 21% flat rate. This change did not have a significant impact for the Company and its insurance subsidiaries since they are only taxed in that jurisdiction for passive income earned on investments, which continue to be subject to withholding at source at its gross level. In addition, the TCJA incorporates restrictions on insurance business exception to passive foreign investment company (PFIC) rules, that were taxed under the PFIC’s earnings, subject to an exception for certain income derived in the active conduct of an insurance business. At the moment, no significant impact for the Company has been identified.  We annually test our compliance with the new guidelines for Section 1297 PFIC test, at the insurance subsidiary level.

On December 10, 2018, the Puerto Rico Government signed into Law Act 257 of 2018, better known as the Puerto Rico Tax Reform. With this Law, additional amendments are incorporated to the Puerto Rico Internal Revenue Code. Approved changes include: (i) a decrease in the maximum corporate tax rate from 39% to 37.5%; (ii) an increase from 80% to a 90% in the amount of net operating loss carryover deduction available to be claimed against current year net income for regular tax purposes; (iii) an increase in the withholding at source for services rendered from 7% to 10% ; (iv) a limitation in the amounts of net operating losses generated by a corporate shareholder allowed to be netted against net income distributed from a flow-through investment, not permitted for taxable years beginning after December 31, 2019; and (v) a revised large taxpayer definition to include flow-through entities and extend the determination of audited financial statement requirements at the group level.  The Puerto Rico Tax Reform also adds requirements for the deductibility of certain expenses as well as disclosure requirements related to any uncertain tax position (UTP) recorded following GAAP.  All of these changes are effective for taxable years beginning January 1, 2019.

On April 16, 2020, was signed into Law by the Government of Puerto Rico Act 40 of 2020, which incorporates additional amendments to the Puerto Rico Internal Revenue Code for a New Puerto Rico, as amended. Amendments focused on changes to the audited financial statement threshold requirements; corrects wording on Net Operating Losses to clarify that these will not consider the dividend receipt deduction; and states that for Capital Losses Carryover, they shall only be carried forward as a short term gains up to 90% of net capital gains for the year. In addition, it introduces changes to the filing due date of income tax returns of non-for-profits, exempt (grant) corporations, and insurance companies to June 15, for calendar year entities.

Federal income taxes recognized by the Company’s insurance subsidiaries amounted to approximately $1,981, $2,209, and $1,147, in 2020, 2019, and 2018, respectively.

All other corporations within the group are subject to Puerto Rico income taxes as regular corporations, as defined in the P.R. Internal Revenue Code, as amended.

The components of income tax expense (benefit) consisted of the following:

	2020			2019		2018
Current income tax expense	$	26,853		$	35,714	$	2,212
Deferred income tax (benefit) expense		(2,285	)		3,661		(32,078	)
Total income tax expense (benefit)	$	24,568		$	39,375	$	(29,866	)

The income tax expense (benefit) differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	2020			2019			2018
Income (loss) before taxes	$	91,733		$	132,252		$	(93,172	)
Statutory tax rate		37.50	%		38.00	%		39.00	%
Income tax expense (benefit) at statutory rate		34,400			49,595			(36,337	)
(Decrease) increase in taxes resulting from:
Exempt income, net		(10,510	)		-			(2,330	)
Effect of taxing life insurance operations as a qualified domestic life insurance company instead of as a regular corporation		(3,379	)		(4,823	)		(3,445	)
Effect of taxing capital gains at a preferential rate		1			(743	)		194
Adjustment to deferred tax assets and liabilities for changes in statutory tax rates		-			-			9,217
Other adjustments to deferred tax assets and liabilities		736			(469	)		(43	)
Unrealized gains or losses included in earnings		1,338			(5,627	)		4,625
Effect of extraordinary dividend distribution from the JUA Association - reported net of taxes in other income		-			(55	)		-
Effect of net operating loss limitations		2,369			1,239			-
Tax credit benefit		(1,190	)		(62	)		(306	)
Tax returns to provision true up		922			36			(798	)
Subtotal		(9,713	)		(10,504	)		7,114
Other permanent disallowances, net:
Other		(46	)		37			(229	)
Other adjustments		(73	)		247			(414	)
Total income tax expense (benefit)	$	24,568		$	39,375		$	(29,866	)

Deferred income taxes reflect the tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The composition of the net deferred tax asset at December 31, 2020 and 2019 of the Company and its subsidiaries is as follows:

	2020			2019
Deferred tax assets
Allowance for doubtful receivables	$	16,542		$	18,882
Liability for pension benefits		59,205			15,378
Postretirement benefits		280			415
Deferred compensation		2,106			2,187
Accumulated depreciation		193			920
Impairment loss on investments		648			522
Contingency reserves		10,430			4,063
Share-based compensation		6,880			8,086
Alternative minimum income tax credit		3,998			3,432
Purchased tax credits		286			458
Net operating loss		56,930			51,246
Reinsurance agreement		9,375			9,375
Accrued liabilities		7,069			5,599
Difference in tax basis of investments portfolio		-			77
Other		2,137			1,349
Gross deferred tax assets		176,079			121,989
Less: valuation allowance		(7,765	)		(6,705	)
Deferred tax assets		168,314			115,284
Deferred tax liabilities
Deferred policy acquisition costs		(9,608	)		(8,413	)
Catastrophe loss reserve		(11,693	)		(13,014	)
Unrealized gain on securities available for sale		(23,843	)		(14,965	)
Unrealized gain on equity investments		(10,740	)		(9,091	)
Difference in tax basis of investments portfolio		(306	)		-
Unamortized debt issue costs		(231	)		(69	)
Intangible asset		(492	)		(669	)
Employee benefits plan		(6,913	)		(2,026	)
Gross deferred tax liabilities		(63,826	)		(48,247	)
Net deferred tax asset	$	104,488		$	67,037

The net deferred tax asset shown in the table above at December 31, 2020 and 2019 is reflected in the Consolidated Balance Sheets as $119,534 and $77,294, respectively, in Deferred Tax Assets and $15,046 and $10,257, in Deferred Tax Liabilities, respectively, reflecting the aggregate deferred tax assets or liabilities of individual tax-paying subsidiaries of the Company.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management believes that it is more likely than not that the Company will realize the benefits of these deductible differences.  The valuation allowance is mostly related to the net operating losses generated by the Company’s USVI operations and the health clinic’s operations which based on the available evidence are not considered to be realizable at the reporting dates.

At December 31, 2020, the Company and its subsidiaries have net operating loss carry-forwards for Puerto Rico income tax purposes of approximately $168,800, which are available to offset future taxable income for up to December 2030. The carryforwards generally expire in 2026 through 2030.  Except for the valuation allowance described in the previous paragraph, the Company concluded that as of December 31, 2020, it is more likely than not that the entities that have these net operating loss carry-forwards will generate sufficient taxable income within the applicable net operating loss carry-forward periods to realize its deferred tax asset. This conclusion is based on the historical results of each entity, adjusted to exclude non-recurring conditions, and the forecast of future profitability.  Management will continue to evaluate on a quarterly basis if there are any significant events that will affect the Company’s ability to utilize these deferred tax assets.

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Pension Plans

12 Months Ended

Dec. 31, 2020

Pension Plans [Abstract]

Pension Plans

16. Pension Plans

Non-contributory Defined‑Benefit Pension Plan

The Company sponsors a non-contributory defined-benefit pension plan for its employees and for the employees of certain subsidiaries.  Pension benefits begin to vest after five years of vesting service, as defined, and are based on years of service and final average salary, as defined. The funding policy is to contribute to the plan as necessary to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, as amended, plus such additional amounts as the Company may determine to be appropriate from time to time.  The measurement date used to determine pension benefit for the pension plan is December 31.

In December 2016, the Company announced that effective January 31, 2017, it would freeze the pay and service amounts used to calculate pension benefits for active employees who participated in the pension plan. Therefore, as of the effective date, active employees in the pension plan do not accrue additional benefits for future service and eligible compensation received.

The following table sets forth the plan’s benefit obligations, fair value of plan assets, and funded status as of December 31, 2020 and 2019.

	2020			2019
Change in benefit obligation
Benefit obligation at beginning of year	$	190,555		$	159,477
Interest cost		6,073			6,992
Benefit payments		(9,176	)		(9,672	)
Actuarial loss		17,241			33,758
Benefit obligation at end of year	$	204,693		$	190,555
Accumulated benefit obligation at end of year	$	204,693		$	190,555
Change in fair value of plan assets
Fair value of plan assets at beginning of year	$	163,558		$	134,957
Actual return on assets		(91,542	)		36,273
Employer contributions		10,000			2,000
Benefit payments		(9,176	)		(9,672	)
Fair value of plan assets at end of year	$	72,840		$	163,558
Funded status at end of year	$	(131,853	)	$	(26,997	)

The amounts recognized in the Consolidated Balance Sheets as of December 31, 2020 and 2019 consist of the following:

	2020		2019
Pension liability	$	131,853	$	26,997
Net actuarial loss recognized in accumulated other comprehensive loss, net of a deferred tax of $55,848 and $12,692 in 2020 and 2019, respectively		100,685		27,907

The following assumptions were used on a weighted average basis to determine benefits obligations of the plan as of December 31, 2020 and 2019.

	2020			2019
Discount rate		2.75	%		3.25	%
Expected return on plan assets		5.75	%		6.25	%
Rate of compensation increase		N/A			N/A

The components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income were as follows:

	2020			2019			2018
Components of net periodic benefit cost
Interest cost	$	6,073		$	6,992		$	6,853
Expected return on plan assets		(8,840	)		(8,835	)		(9,020	)
Actuarial loss		1,178			392			961
Settlement loss		-			-			2,110
Net periodic benefit (income) cost	$	(1,589	)	$	(1,451	)	$	904

Net periodic benefit (income) cost includes settlement charges as a result of retirees selecting lump-sum distributions. Settlement charges may increase in the future if the number of eligible participants deciding to receive distributions and the amount of their benefits increases.

The estimated net actuarial loss that will be amortized from Accumulated Other Comprehensive Loss into net periodic pension benefits cost during the next twelve months is $3,893.

The following assumptions were used on a weighted average basis in computing the periodic benefit cost for the years ended December 31, 2020, 2019, and 2018:

	2020			2019			2018
Discount rate		3.25	%		4.50	%		3.75	%
Expected return on plan assets		6.25	%		6.50	%		6.50	%
Rate of compensation increase		N/A			N/A			N/A

The basis of the overall expected long-term rate of return on assets assumption is a forward-looking approach based on the current long-term capital market outlook assumptions of the assets categories in which the trust invests and the trust’s target asset allocation. At December 31, 2020, the assumed target asset allocation for the program is: 45% to 55% in equity securities, 40% to 48% in debt securities, and 2% to 10% in other securities. Using a mean-variance model to project returns over a 30-year horizon under the target asset allocation, the 35 to 65 percentile range of annual rates of return is 5.1% to 6.6%. The Company selected a rate from within this range of 6.25% for 2020 and 6.50% for 2019, which reflects the Company’s best estimate for this assumption based on the data described above, information on the historical returns on assets invested in the pension trust, and expected future conditions. This rate is net of both investment related expenses and a 0.15% reduction for other administrative expenses charged to the trust.

Plan assets

Plan assets recorded at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. For level inputs and input definition, see Note 10.

The tables below summarize fair value measurements by level at December 31, 2020 and 2019 for assets measured at fair value on a recurring basis:

	2020
	Level 1		Level 2		Level 3		Total		NAV
Government obligations	$	-	$	4,127	$	-	$	4,127	$	-
Non-agency backed securities		-		157		-		157		-
Corporate obligations		-		13,134		-		13,134		-
Real estate		-		-		-		-		6,033
Registered investments		1,183		1,886		-		3,069		-
Common/Collective trusts		-		46,006		-		46,006		-
Common stocks		1,196		-		-		1,196		-
Interest-bearing cash		371		-		-		371		-
Derivatives		-		2		-		2		-
	$	2,750	$	65,312	$	-	$	68,062	$	6,033

	2019
	Level 1		Level 2		Level 3		Total		NAV
Government obligations	$	-	$	6,782	$	-	$	6,782	$	-
Non-agency backed securities		-		656		-		656		-
Corporate obligations		-		9,353		-		9,353		-
Limited Liability Corporations		-		-		-		-		126,989
Real estate		-		-		-		-		6,720
Registered investments		3,754		382		-		4,136		-
Common/Collective trusts		-		7,527		-		7,527		-
Common stocks		1,885		-		-		1,885		-
Preferred stocks		-		14		-		14		-
Interest-bearing cash		300		-		-		300		-
	$	5,939	$	24,714	$	-	$	30,653	$	133,709

The Company’s plan assets are invested in the National Retirement Trust. The National Retirement Trust was formed to provide financial and legal resources to help members of the BCBSA offer retirement benefits to their employees.

The investment program for the National Retirement Trust is based on the precepts of capital market theory that are generally accepted and followed by institutional investors, who by definition are long‑term oriented investors. This philosophy holds that:

• Increasing risk is rewarded with compensating returns over time, and therefore, prudent risk taking is justifiable for long-term investors.

• Risk can be controlled through diversification of asset classes and investment approaches, as well as diversification of individual securities.

• Risk is reduced by time, and over time the relative performance of different asset classes is reasonably consistent. Over the long-term, equity investments have provided and should continue to provide superior returns over other security types. Fixed-income securities can dampen volatility and provide liquidity in periods of depressed economic activity.  Lengthening duration of fixed income securities may reduce surplus volatility.

• The strategic of long-term allocation of assets among various asset classes is an important driver of long‑term returns.

• Relative performance of various asset classes is unpredictable in the short‑term and attempts to shift tactically between asset classes are unlikely to be rewarded.

Investments will be made for the sole interest of the participants and beneficiaries of the programs participating in the National Retirement Trust. Accordingly, the assets of the National Retirement Trust shall be invested in accordance with these objectives:

• To ensure assets are available to meet current and future obligations of the participating programs when due.

• To earn the maximum return that can be realistically achieved in the markets over the long‑term at a specified and controlled level of risk in order to minimize future contributions.

• To invest assets with consideration of the liability characteristics in order to better align assets and liabilities.

• To invest the assets with the care, skill, and diligence that a prudent person acting in a like capacity would undertake. In the process, the Administration of the Trust has the objective of controlling the costs involved with administering and managing the investments of the National Retirement Trust.

Cash flows

The Company expects to contribute $10,000 to its pension program in 2021.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Year ending December 31
2021	$	11,805
2022		10,378
2023		10,611
2024		10,664
2025		10,656
2026 – 2029		56,709

Non-contributory Supplemental Pension Plan

In addition, the Company sponsors a non-contributory supplemental pension plan. This plan covers employees with qualified defined benefit retirement plan benefits limited by the U.S. Internal Revenue Code maximum compensation and benefit limits.  At December 31, 2020 and 2019, the Company had recorded a pension liability of $7,758 and $7,468, respectively.  The charge to accumulated other comprehensive loss related to the non-contributory pension plan at December 31, 2020 and 2019 amounted to $828 and $562, respectively, net of a deferred tax asset of $519 and $359, respectively.

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Catastrophe Loss Reserve and Trust Fund

12 Months Ended

Dec. 31, 2020

Catastrophe Loss Reserve and Trust Fund [Abstract]

Catastrophe Loss Reserve and Trust Fund

17. Catastrophe Loss Reserve and Trust Fund

In accordance with Chapter 25 of the Puerto Rico Insurance Code, as amended, TSP is required to record a catastrophe loss reserve. This catastrophe loss reserve is supported by a trust fund for the payment of catastrophe losses. The reserve increases by amounts determined by applying a contribution rate, not in excess of 5%, to catastrophe written premiums as instructed annually by the Commissioner of Insurance, unless the level of the reserve exceeds 8% of catastrophe exposure, as defined. The reserve also increases by an amount equal to the resulting return in the supporting trust fund and decreases by payments on catastrophe losses or authorized withdrawals from the trust fund.  Additions to the catastrophe loss reserve are deductible for income tax purposes.

This trust may invest its funds in securities authorized by the Insurance Code, but not in investments whose value may be affected by hazards covered by the catastrophic insurance losses. The interest earned on these investments and any realized gains (losses) on investment transactions are part of the trust fund and are recorded as income (expense) of the Company. An amount equal to the investment return is recorded as an addition to the trust fund.

During the year ended December 31, 2018, TSP received the approval of the Commissioner of Insurance and withdrew $10,000 from the catastrophe fund following the payment for catastrophe losses related to the impact of Hurricane Maria in September 2017.

In December 2020, TSP received the approval of the Commissioner of Insurance to withdraw $5,000 from the catastrophe fund following the payment of catastrophe losses of the earthquake that hit the southwest part of Puerto Rico in January 2020.  During January 2021, TSP withdrew the $5,000 from the catastrophe fund. Also, TSP presented a petition for approval to the Commissioner of Insurance to withdraw an additional $5,300 from the catastrophe fund covering losses related to Hurricane Irma, which is still under evaluation.

The interest-earning assets in this fund, which amounted to $43,124 and $41,047 as of December 31, 2020 and 2019, respectively, are to be used solely and exclusively to pay catastrophe losses covered under policies written in Puerto Rico.

TSP is required to contribute to the trust fund, if needed or necessary, on or before January 31 of the following year. Contributions are determined by a rate determined or established by the Commissioner of Insurance for the catastrophe policies written in that year. No contribution was required for 2020 and 2019 since the level of the catastrophe reserve exceeded 8% of the catastrophe exposure.

The amount in the trust fund may be withdrawn or released in the case that TSP ceases to underwrite risks subject to catastrophe losses. Also, authorized withdrawals are allowed when the catastrophe loss reserve exceeds 8% of the catastrophe exposure, as defined.

TSP retained earnings are restricted in the accompanying Consolidated Balance Sheets by the total catastrophe loss reserve balance, which as of December 31, 2020 and 2019 amounted to $35,904 and $39,425, respectively.

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Stockholders' Equity

12 Months Ended

Dec. 31, 2020

Stockholders' Equity [Abstract]

Stockholders' Equity

18. Stockholders’ Equity

Common Stock

On July 29, 2019, the Company issued 48,602 Class A shares to the heirs of a former shareholder, as a result of a litigation settlement.  During July 2019, the Board of Directors authorized and approved the conversion (Conversion) of the Company’s remaining issued and outstanding Class A common shares into Class B common shares. Effective on August 7, 2019, all Class A holders of record received one Class B share for each Class A share held. Upon the Conversion, all remaining outstanding Class A shares were automatically cancelled and extinguished, and the Company now maintains a single class of common shares.

Preferred Stock

Authorized capital stock includes 100,000,000 of preferred stock with a par value of $1.00 per share. As of December 31, 2020 and 2019, there are no issued and outstanding preferred shares.

Liquidity Requirements

As members of the BCBSA, the Company, TSS, and TSA are required by membership standards of this association to maintain liquidity as defined by BCBSA. That is, to maintain total adjusted capital at or above 375% of Health Risk-Based Capital (HRBC) Authorized Control Level (ACL) as defined by the National Association of Insurance Commissioners (NAIC) for the for Primary Licensee (TSM) and Larger BCBS Controlled Affiliate (TSS) and 100% HRBC ACL for the Smaller BCBS Controlled Affiliate (TSA).

Dividends

As a holding company, the Company’s most significant assets are the common shares of its subsidiaries.  The principal sources of funds available to the Company are rental income and dividends from its subsidiaries, which are used to fund our debt service and operating expenses.

The Company is subject to the provisions of the General Corporation Law of Puerto Rico, which restricts the declaration and payment of dividends by corporations organized pursuant to the laws of Puerto Rico.  These provisions provide that Puerto Rico corporations may only declare dividends charged to their retained earnings or, in the absence of retained earnings, net profits of the fiscal year in which the dividend is declared and/or the preceding fiscal year.

The Company’s ability to pay dividends is dependent, among other factors, on its ability to collect cash dividends from its subsidiaries, which are subject to regulatory requirements, which may restrict their ability to declare and pay dividends or distributions.  In addition, an outstanding secured term loan restricts our ability to pay dividends in the event of default (see Note 13).

The accumulated earnings of TSS, TSA, TSV, TSB, and TSP are restricted as to the payment of dividends by statutory limitations applicable to domestic insurance companies. Under Puerto Rico insurance regulations, the regulated subsidiaries are permitted, without requesting prior regulatory approval, to pay dividends as long as the aggregate amount of all such dividends in any calendar year does not exceed the lesser of: (i) 10% of its surplus as of the end of the immediately preceding calendar year; or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains).  Regulated subsidiaries will be permitted to pay dividends in excess of the lesser of such two amounts only if notice of its intent to declare such a dividend and the amount thereof is filed with the Commissioner of Insurance and such dividend is not disapproved within 30 days of its filing. As of December 31, 2020, the dividends permitted to be distributed in 2021 by the regulated subsidiaries without prior regulatory approval from the Commissioner of Insurance amounted to approximately $25,619.

The issuance of 48,602 Class A shares entitled all Class B shareholders to certain anti-dilution rights; therefore, all holders of Class B shares at the close of business on July 26, 2019 (Record Date) received a share dividend of 0.051107 Class B shares for every Class B share they owned as of that time. On August 6, 2019, the Company paid the Class B share dividend which amounted to $24,655; cash of $11 was paid in lieu of fractional shares so that shareholders receive a whole number of shares of common stock.

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Stock Repurchase Programs

12 Months Ended

Dec. 31, 2020

Stock Repurchase Programs [Abstract]

Stock Repurchase Programs

19. Stock Repurchase Programs

The Company repurchases shares through open market transactions, in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, under repurchase programs authorized by the Board of Directors.  Shares purchased under share repurchase programs are retired and returned to authorized and unissued status.

In August 2017 the Company’s Board of Directors authorized a $30,000 repurchase program (2017 $30,000 program) of its Class B common stock.  In February 2018 the Company’s Board of Directors authorized a $25,000 expansion of this program.  In October 2019 the Company’s Board of Directors authorized an expansion to this repurchase program increasing its remaining balance up to a total of $25,000, effective November 2019. This program was completed in May 2020.

The stock repurchase activity under active stock repurchase programs for the years ended December 31 was:

	2020						2019						2018
	Shares Repurchased		Average Share Price		Amount Repurchased		Shares Repurchased		Average Share Price		Amount Repurchased		Shares Repurchased		Average Share Price		Amount Repurchased
2017  $30,000 program		952,820	$	15.72	$	14,982		527,881	$	18.92	$	9,989		903,888	$	24.76	$	22,390

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Comprehensive Income

12 Months Ended

Dec. 31, 2020

Comprehensive Income [Abstract]

Comprehensive Income

20. Comprehensive Income

The accumulated balances for each classification of Other Comprehensive Income are:

	Unrealized Gains on Securities			Liability for Pension Benefits			Accumulated Other Comprehensive Income
Beginning balance at December 31, 2019	$	57,830		$	(28,467	)	$	29,363
Net current period change		37,654			(73,807	)		(36,153	)
Reclassification adjustments for gains and losses reclassified in income		(3,795	)		765			(3,030	)
Ending balance at December 31, 2020	$	91,689		$	(101,509	)	$	(9,820	)

The related deferred tax effects allocated to each component of Other Comprehensive Income in the accompanying Consolidated Statements of Stockholders’ Equity and Comprehensive Income in 2020, 2019 and 2018 are:

	2020
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	47,067		$	(9,413	)	$	37,654
Less reclassification adjustment for gains and losses realized in income		(4,541	)		746			(3,795	)
Net change in unrealized gain		42,526			(8,667	)		33,859
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		1,224			(459	)		765
Net change arising from assumptions and plan changes and experience		(118,092	)		44,285			(73,807	)
Net change in liability for pension benefits		(116,868	)		43,826			(73,042	)
Net current period change	$	(74,342	)	$	35,159		$	(39,183	)

	2019
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	42,780		$	(8,556	)	$	34,224
Less reclassification adjustment for gains and losses realized in income		(4,456	)		754			(3,702	)
Net change in unrealized gain		38,324			(7,802	)		30,522
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		396			(149	)		247
Net change arising from assumptions and plan changes and experience		(7,149	)		2,681			(4,468	)
Net change in liability for pension benefits		(6,753	)		2,532			(4,221	)
Net current period change	$	31,571		$	(5,270	)	$	26,301

	2018
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	(24,375	)	$	4,875		$	(19,500	)
Less reclassification adjustment for gains and losses realized in income		13,457			(3,005	)		10,452
Net change in unrealized gain		(10,918	)		1,870			(9,048	)
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		(995	)		373			(622	)
Net change arising from assumptions and plan changes and experience		2,190			(830	)		1,360
Net change in liability for pension benefits		1,195			(457	)		738
Net current period change	$	(9,723	)	$	1,413		$	(8,310	)

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Share-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-Based Compensation [Abstract]

Share-Based Compensation

21. Share-Based Compensation

In December 2007, the Company adopted the 2007 Incentive Plan (the 2007 plan), which permits the Board to grant stock options, restricted stock awards and performance awards to eligible officers, directors and employees. The 2007 plan authorized the granting of up to 4,700,000 of Class B common shares of authorized but unissued stock. The 2007 plan was terminated in April 2017, when the 2017 Incentive Plan (the 2017 plan) was adopted.  The 2017 plan permits the Board to grant stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, performance awards, and other stock-based awards, to our officers and employees.  In addition, the 2017 plan authorizes the grant of equity-based compensation incentives to our directors and to any independent contractor and consultants.  The 2017 plan originally authorized the granting of up to 1,700,000 of Class B common shares plus the number of shares that were subject to any outstanding awards under the 2007 plan that are forfeited, cancelled, expire, terminate or otherwise lapse, in whole or in part, without the delivery of the shares. In October 2020 an additional 1,100,000 of Class B common shares were authorized under the 2017 plan. At December 31, 2020, there were 1,133,224 shares available for the Company to grant under the 2017 Plan.

Stock options and SARs can be granted with an exercise price, which shall not be less than the stock’s fair market value at the grant date. The term of stock options and SARs shall be fixed by the Board of Directors but shall not exceed 10 years from the date of grant.  The restricted stock, restricted stock units and performance awards are issued at the fair value of the stock on the grant date.  Restricted stock awards and restricted stock units vest in installments, as stipulated in each restricted stock agreement. Performance awards vest on the last day of the performance period, provided that at least minimum performance standards are achieved.

There was no stock option activity during the years ended December 31, 2020, 2019 and 2018. No options were granted during the three years ended December 31, 2020, 2019 and 2018.  No cash was received from stock options exercises during the years ended December 31, 2020, 2019 and 2018. During the years ended December 31, 2020, 2019, and 2018, 21,368, 6,124  and 29,779 shares, respectively, were repurchased and retired as the result of non-cash tax withholding upon vesting of shares.

A summary of the status of the Company’s non-vested restricted and performance shares as of December 31, 2020, and changes during the year ended December 31, 2020, are presented below:

	Restricted Awards					Performance Awards
	Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Exercise Price
Outstanding balance at January 1, 2020		308,387		$	24.16		515,688		$	25.60
Granted		228,157			14.89		521,357			14.44
Lapsed		(167,701	)		23.23		(200,801	)		26.50
Forfeited (due to termination)		(5,671	)		19.03		(29,882	)		22.19
Quantity adjusted (due to performance payout more than 100%), net of forfeited		-			-		(32,008	)		26.50
Outstanding balance at December 31, 2020		363,172		$	18.87		774,354		$	18.05

The weighted average grant date fair value of restricted shares granted during the year 2020, 2019 and 2018 were $14.89, $24.53, and $28.49, respectively. Total fair value of restricted stock vested during the year ended December 31, 2020, 2019 and 2018 was $3,896, $2,861 and $2,390, respectively.

At December 31, 2020, there was $11,200 of total unrecognized compensation cost related to non-vested share‑based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 0.95 years. The Company currently uses authorized and unissued Class B common shares to satisfy share award exercises.

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Net Income Available to Stockholders and Basic Net Income per Share

12 Months Ended

Dec. 31, 2020

Net Income Available to Stockholders and Basic Net Income per Share [Abstract]

Net Income Available to Stockholders and Basic Net Income per Share

22. Net Income Available to Stockholders and Basic Net Income per Share

The table below sets forth the computation of basic and diluted earnings per share for the three-year period ended December 31:

	2020		2019		2018
Numerator for earnings per share
Net income (loss) attributable to TSM available to stockholders	$	67,189	$	92,894	$	(63,302	)
Denominator for basic earnings per share – Weighted average of common shares		23,179,544		23,318,742		22,975,385
Effect of dilutive securities		130,198		66,551		-
Denominator for diluted earnings per share		23,309,742		23,385,293		22,975,385
Basic net income (loss) per share attributable to TSM	$	2.90	$	3.98	$	(2.76	)
Diluted net income  (loss) per share attributable to TSM	$	2.88	$	3.97	$	(2.76	)

The Company excluded the effect of dilutive securities during the year ended December 31, 2018 because their effect would have been anti-dilutive given the net loss attributable to stockholders during this year.  If the Company had generated income from continuing operations during the year ended December 31, 2018, the effect of the restricted stock awards on the diluted shares calculation would have been an increase in shares of 81,023 shares.

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Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

23. Leases

The Company’s subsidiaries lease their regional offices, certain equipment and warehouse facilities under non-cancelable operating leases.  These contracts generally do not include purchase options or residual value guarantees.  The remaining lease terms ranges from 0.2 to 13.9 years.  The Company identifies leases when it has both the right to obtain substantially all economic benefits from the use of the asset and the right to direct the use of the asset.

The Company recognizes the right-of-use assets and lease liabilities related to operating leases in its Consolidated Balance Sheets within Other Assets and Accounts Payables and Accrued Liabilities, respectively. As of December 31, 2020, the right-of-use asset and lease liabilities balance was $12,957 and $13,191, respectively.  As of December 31, 2019, the right-of-use asset and lease liabilities balance was $10,438 and $10,586, respectively.  The weighted-average remaining lease term was 5.9 years and 5.8 years as of December 31, 2020 and 2019, respectively.

The Company uses the incremental borrowing rate for purposes of discounting lease payments for our operating leases since our lease agreements do not provide a readily determinable implicit rate. We estimate our incremental borrowing rate using an interest rate index to which we add a credit spread based on financing transactions with a similar credit risk profile.  The weighted-average discount rate of our operating leases was 4.6% and 5.3% as of December 31, 2020 and 2019, respectively.

The Company adopted the following two accounting policies as a result of the adoption of the ASU 2016-02: Leases (Topic 842): (1) to not separate lease components from non-lease components and (2) to not apply the recognition requirements of ASC 842 to short-term leases.

Undiscounted cash flows of operating leases are shown below:

Year ending December 31
2021	$	3,961
2022		3,366
2023		2,330
2024		1,856
2025		709
Thereafter		2,888
Total lease payments		15,110
Less: imputed interest		(1,919	)
Total	$	13,191

The following presents the lease cost recognized by the Company:

For the years ended December 31,
	2020		2019
Operating lease cost	$	4,600	$	4,900
Short-term lease cost		977		509
	$	5,577	$	5,409

The Company leases certain floors of one of its buildings and generates rental income. Maturity analysis of lease payments to be received from its lessees as of December 31, 2020, is summarized as follows:

Year ending December 31,
2021	$	1,909
2022		1,947
2023		1,986
2024		2,026
2025		1,177
Thereafter		1,448
	$	10,493

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Commitments

12 Months Ended

Dec. 31, 2020

Commitments [Abstract]

Commitments

24. Commitments

Pursuant to the provisions of the Puerto Rico Insurance Code and Regulations, TSP is a member of the Compulsory Vehicle Liability Insurance Joint Underwriting Association (JUA).  As a participant, TSP shares the risk, proportionately with other members, based on a formula established by the Puerto Rico Insurance Code, of the results and financial condition of the JUA, and accordingly, may be subject to assessments to cover obligations of the JUA or may receive refund distributions for good experience.  The Company received $212, $172 and $215 in 2020, 2019 and 2018, respectively, as an ordinary dividend.

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Contingencies

12 Months Ended

Dec. 31, 2020

Contingencies [Abstract]

Contingencies

25. Contingencies

The Company’s business is subject to numerous laws and regulations promulgated by Federal, Puerto Rico, USVI, Costa Rica, BVI, and Anguilla governmental authorities. Compliance with these laws and regulations can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. The Commissioner of Insurance of Puerto Rico, as well as other Federal, Puerto Rico, USVI, Costa Rica, BVI, and Anguilla government authorities, regularly make inquiries and conduct audits concerning the Company’s compliance with such laws and regulations. Penalties associated with violations of these laws and regulations may include significant fines and exclusion from participating in certain publicly funded programs and may require the Company to comply with corrective action plans or changes in our practices.

As of December 31, 2020, the Company is involved in various legal actions arising in the ordinary course of business. The Company is also defendant in various other litigations and proceedings, some of which are described below.  Where the Company believes that a loss is both probable and estimable, such amounts have been recorded. Although the Company believes the estimates of such losses are reasonable, these estimates could change as a result of further developments in these matters. In other cases, it is at least reasonably possible that the Company may incur a loss related to one or more of the mentioned pending lawsuits or investigations, but the Company is unable to estimate the range of possible loss which may be ultimately realized, either individually or in the aggregate, upon their resolution. However, there are legal proceedings where a loss is reasonably possible, and for which it is possible to reasonably estimate the amount of the possible loss or range of losses, we currently believe that the range of possible losses in excess of established reserves is, in the aggregate, from $0 to approximately $10,000 at December 31, 2020.  The outcome of legal proceedings is inherently uncertain, and pending matters for which accruals have not been established have not progressed sufficiently to enable us to estimate a range of possible loss, if any.  Given the inherent unpredictability of these matters, it is possible that an adverse outcome in one or more of these matters could have a material effect on the consolidated financial condition, operating results and/or cash flows of the Company.

Joint Underwriting Association Litigation

On August 19, 2011, plaintiffs, purportedly a class of motor vehicle owners, filed an action in the United States District Court for the District of Puerto Rico against the JUA and TSP, alleging violations under the Puerto Rico Insurance Code, the Puerto Rico Civil Code, the Racketeer Influenced and Corrupt Organizations Act (RICO) and the local statute against organized crime and money laundering. JUA is a private association created by law to administer a compulsory public liability insurance program for motor vehicles in Puerto Rico (CLI). As required by its enabling act, JUA is composed of all the insurers that underwrite private motor vehicle insurance in Puerto Rico and exceed the minimum underwriting percentage established in such act. TSP is a member of JUA.

In this lawsuit, entitled Noemí Torres Ronda, et al v. JUA et al., plaintiffs allege that the defendants illegally charged and misappropriated a portion of the CLI premiums paid by motor vehicle owners in violation of the Puerto Rico Insurance Code. Specifically, they claim that because the defendants did not incur in acquisition or administration costs allegedly totaling 12% of the premium dollar, charging for such costs constitutes the illegal traffic of premiums. Plaintiffs also claim that the defendants, as members of JUA, violated RICO through various inappropriate actions designed to defraud motor vehicle owners located in Puerto Rico and embezzle a portion of the CLI premiums for their benefit.

Plaintiffs seek the reimbursement of funds for the class amounting to $406,600 treble damages under RICO, and equitable relief, including a permanent injunction and declaratory judgment barring defendants from their alleged conduct and practices, along with costs and attorneys’ fees.

Since 2011, TSP has been defending this claim and, jointly with other defendants, has filed several pleas in connection with the certification of the class and the dismissal of the claim. On October 7, 2019, defendants’ petition for summary judgment was granted. On December 18, 2019 plaintiffs filed an appeal to contest the Court’s judgment dismissing their complaint.

In re Blue Cross Blue Shield Antitrust Litigation

TSS is a co-defendant with multiple Blue Plans and the Blue Cross Blue Shield Association in a multi-district class action litigation filed by a group of providers and subscribers on July 24, 2012 and October 1, 2012, respectively, that has since been consolidated by the United States District Court for the Northern District of Alabama, Southern Division, in the case captioned In re Blue Cross Blue Shield Association Antitrust Litigation. Essentially, provider plaintiffs allege that the exclusive service area requirements of the Primary License Agreements with the Blue Plans constitute an illegal horizontal market allocation under federal antitrust laws. As per provider plaintiffs, the quid pro quo for said “market allocation” is a horizontal price fixing and boycott conspiracy implemented through BCBSA and whose benefits are allegedly derived through the BCBSA’s BlueCard/National Accounts Program. Among the remedies sought, provider plaintiffs seek increased compensation rates and operational changes. In turn, subscriber plaintiffs allege that the alleged conspiracy to allocate markets have prevented subscribers from being offered competitive prices and resulted in higher premiums for Blue Plan subscribers. Subscribers seek damages for the amounts that the Blue Plan premiums allegedly have been artificially inflated as a result of the alleged antitrust violations. Both actions seek injunctive relief.

Prior to consolidation, motions to dismiss were filed by several plans, including TSS, whose request was ultimately denied by the court without prejudice. On April 6, 2015, plaintiffs filed suit in the United States District Court of Puerto Rico against TSS. Said complaint, nonetheless, is believed not to preclude TSS’ jurisdictional arguments. Since inception, the Company has joined BCBSA and other Blue Plans in vigorously contesting these claims. On April 5, 2018, the United States District Court for the Northern District of Alabama, Southern Division, issued its ruling on the parties’ respective motions for partial summary judgment on the standard of review applicable to plaintiffs’ claims under Section 1 of the Sherman Act and subscriber plaintiffs’ motion for partial summary judgment on the Blue Plan’s single entity defense. After considering the “undisputed” facts (for summary judgment purposes only) and evidence currently on record in the light most favorable to defendants, the court essentially found that: (a) the combination of Exclusive Service Areas and the National Best Efforts Rule are subject to the Per Se standard of review; (b) there remain genuine issues of material fact as to whether defendants’ conduct can be shielded by the “single entity” defense; and (c) claims concerning the BlueCard Program and uncoupling rules are due to be analyzed under the Rule of Reason standard.

On April 16, 2018 Defendants moved the Federal District Court for the Northern District of Alabama to certify for immediate interlocutory appeal the Court’s April 5, 2018 Standard of Review Ruling. On June 12, 2018 Hon. Judge Proctor agreed to grant Defendant’s motion for certification pursuant to 28 U.S.C. §1292(b). Defendants filed their Notice of Appeal on July 12, 2018. On December 12, 2018, the Court of Appeals for the Eleventh Circuit denied Defendants’ petition to appeal the District Court’s Standard of Review Ruling. The parties re-commenced mediation with subscribers in April 2019 and with providers in September 2019. On July 29, 2020, the Defendants reached a settlement agreement with subscribers, which was subject to approval by the BCBSA and Member Plans boards, as well as from the Federal District Court for the Northern District of Alabama. Following the BCBSA Board of Directors and Members Plans’ August 14^th, 2020 approval, on September 30, 2020, the Company’s Board of Directors voted to approve the Settlement Agreement. On November 30, 2020, the Federal District Court for the Northern District of Alabama issued its Memorandum Opinion and Preliminary Order approving settlement terms.  The Settlement Agreement requires a monetary settlement payment from defendants. The Company’s portion of the monetary settlement payment is estimated at $32,000, which was accrued during the year ended December 31, 2020 and is presented within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets.

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Statutory Accounting

12 Months Ended

Dec. 31, 2020

Statutory Accounting [Abstract]

Statutory Accounting

26. Statutory Accounting

TSS, TSA, TSV, TSP and TSB (collectively known as the regulated subsidiaries) are regulated by the Commissioner of Insurance. The regulated subsidiaries are required to prepare financial statements using accounting practices prescribed or permitted by the Commissioner of Insurance, which uses a comprehensive basis of accounting other than GAAP. Specifically, the Commissioner of Insurance has adopted the NAIC’s Statutory Accounting Principles (NAIC SAP) as the basis of its statutory accounting practices, as long as they do not contravene the provisions of the Puerto Rico Insurance Code, its regulations and the Circular Letters issued by the Commissioner of Insurance. The Commissioner of Insurance may permit other specific practices that may deviate from prescribed practices and NAIC SAP. Statutory accounting principles that are established by state laws and permitted practices mandated by the Commissioner of Insurance may cause the statutory capital and surplus of the regulated subsidiaries to differ from that calculated under the NAIC SAP.

Prescribed statutory accounting practices in Puerto Rico allow TSP to disregard a deferred tax liability resulting from additions to the catastrophe loss reserve trust fund that would otherwise be required under NAIC SAP. The use of prescribed and permitted accounting practices, both individually and in the aggregate, did not change significantly the combined statutory capital and surplus that would have been reported following NAIC SAP, which as of December 31, 2020 and 2019 is approximately 1.5% and 1.7%, respectively, lower than the combined reported statutory capital and surplus.

The regulated subsidiaries are required by the NAIC and the Commissioner of Insurance to submit risk-based capital (RBC) reports following the NAIC’s RBC Model Act and accordingly, are subject to certain regulatory actions if their capital levels do not meet minimum specific RBC requirements.  RBC is a method developed by the NAIC to determine the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The RBC is calculated by applying capital requirement factors to various assets, premiums and reserve items. The factor is higher for those items with greater underlying risk and lower for less risky items. The adequacy of an organization’s actual capital can then be measured by a comparison to its RBC as determined by the formula.

The RBC Model Act requires increasing degrees of regulatory oversight and intervention as an organization’s risk-based capital declines. The level of regulatory oversight ranges from requiring organizations to inform and obtain approval from the domiciliary insurance commissioner of a comprehensive financial plan for increasing its RBC, to mandatory regulatory intervention requiring an insurance company to be placed under regulatory control, in a rehabilitation or liquidation proceeding.

The Commissioner of Insurance adopted in 2009 an RBC policy that requires that the regulated entities maintain statutory reserves at or above the “Company Action Level,” in order to avoid regulatory monitoring and intervention.  The Company Action Level is currently set at 200% of the RBC for TSA, since it is organized as a health service organization, and 300% of the RBC for TSS, TSV, and TSB. The RBC requirement for TSP is 300%, but compliance with certain trend analysis can lower this requirement to 200%.  As of December 31, 2020 and 2019, all regulated subsidiaries comply with minimum statutory reserve requirements.

The following table sets forth the combined net admitted assets, capital and surplus, RBC requirement, which is our statutory capital and surplus requirement, and net income (loss) for the regulated subsidiaries at December 31, 2020, 2019 and 2018:

(dollar amounts in millions)	2020		2019		2018
Net admitted assets	$	2,473	$	2,394	$	2,089
Capital and surplus		771		767		602
RBC requirement		641		546		312
Net income (loss)		53		68		(32	)

As more fully described in Note 17, a portion of the accumulated earnings and admitted assets of TSP are restricted by the catastrophe loss reserve and the trust fund balance as required by the Insurance Code.  The total catastrophe loss reserve and trust fund amounted to $35,904 and $43,124 as of December 31, 2020, respectively. The total catastrophe loss reserve and trust fund amounted to $39,425 and $41,047 as of December 31, 2019, respectively.  In addition, the admitted assets of the regulated subsidiaries are restricted by the investments deposited with the Commissioner of Insurance to comply with requirements of the Insurance Code (see Note 3).  Investments with an amortized cost of $6,884 and $6,940 (fair value of $7,526 and $7,274) at December 31, 2020 and 2019, respectively, were deposited with the Commissioner of Insurance. As a result, the combined restricted assets for our regulated subsidiaries were $50,008 and $47,987 as of December 31, 2020 and 2019, respectively.

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Supplementary Information on Cash Flow Activities

12 Months Ended

Dec. 31, 2020

Supplementary Information on Cash Flow Activities [Abstract]

Supplementary Information on Cash Flow Activities

27. Supplementary Information on Cash Flow Activities

	2020			2019			2018
Supplementary information
Non-cash transactions affecting cash flow activities
Change in net unrealized (gain) loss on securities available for sale, including deferred income tax liability (asset) of $8,667, $7,802, and ($1,870) in 2020, 2019, and 2018 respectively	$	(33,859	)	$	(30,522	)	$	9,048
Change in liability for pension benefits, and deferred income tax (asset) liability of ($43,826), ($2,532), $457, in 2020, 2019, and 2018, respectively		73,042			4,221			(738	)
Repurchase and retirement of common stock		(382	)		(119	)		(748	)
Stock dividend		-			(24,655	)		-
Issuance of common stocks		-			1,200			-
Capitalization of lease right of use asset		8,014			10,438			-
Other
Income taxes paid		40,568			3,147			8,978
Interest paid		7,986			7,672			6,903

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Segment Information

12 Months Ended

Dec. 31, 2020

Segment Information [Abstract]

Segment Information

28. Segment Information

The operations of the Company are conducted principally through three reportable business segments: Managed Care, Life Insurance, and Property and Casualty Insurance.  Reportable business segments were identified according to the type of insurance products offered and are consistent with the information provided to the chief operating decision maker. These segments and a description of their respective operations are as follows:

Managed Care Segment

This segment is engaged in the sale of managed care products to the Medicare, Commercial, and Medicaid market sectors. The Commercial accounts sector includes corporate accounts, U.S. federal government employees, individual accounts, local government employees, and Medicare supplement. The following represents a description of the major contracts by sector:

● The segment provides services through its Medicare health plans pursuant to a limited number of contracts with CMS. Earned premium revenue related to the Medicare business amounted to $1,553,455, $1,408,039, and $1,130,226 for the years ended December 31, 2020, 2019, and 2018, respectively.

● Under its Commercial business, the segment also provides health coverage to certain employees of the Commonwealth of Puerto Rico and its instrumentalities. Earned premium revenue related to such health plans amounted to $13,349, $16,805 and $24,186 for years ended December 31, 2020, 2019, and 2018, respectively.

● The segment is a qualified contractor to provide health coverage to federal government employees within Puerto Rico and the USVI. Earned premiums revenue related to this contract amounted to $159,588, $161,716 and $150,232 for the years ended December 31, 2020, 2019, and 2018, respectively (see Note 12).

● The segment also participates in the Medicaid program to provide health coverage to medically indigent citizens in Puerto Rico, as defined by the laws of the government of Puerto Rico.  Earned premium revenue related to this business amounted to $953,208, $778,263, and $776,038 for the years ended December 31, 2020, 2019, and 2018, respectively.

Life Insurance Segment

This segment offers primarily life and accident and health insurance coverage, and annuity products. The premiums for this segment are mainly subscribed through an internal sales force and a network of independent brokers and agents.

Property and Casualty Insurance segment

The predominant insurance products of this segment are commercial package, commercial auto, and personal package. The premiums for this segment are originated through a network of independent insurance agents and brokers. Agents or general agencies collect the premiums from the insureds, which are subsequently remitted to the segment, net of commissions. Remittances are generally due 60 days after the closing date of the general agent’s account current.

The Company 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 less operating costs.

The accounting policies for the segments are the same as those described in the summary of significant accounting policies included in the Notes to Consolidated Financial Statements.  The financial data of each segment is accounted for separately; therefore, no segment allocation is necessary. However, certain operating expenses are centrally managed, therefore requiring an allocation to each segment. Most of these expenses are distributed to each segment based on different parameters, such as payroll hours, processed claims, or square footage, among others. In addition, some depreciable assets are kept by one segment, while allocating the depreciation expense to other segments. The allocation of the depreciation expense is based on the proportion of assets used by each segment. Certain expenses are not allocated to the segments and are kept within TSM’s operations.

The following tables summarize the operations by operating segment for each of the years in the three‑year period ended December 31:

	2020			2019			2018
Operating revenues
Managed care
Premiums earned, net	$	3,320,181		$	2,985,600		$	2,687,773
Fee revenue		12,585			9,946			14,701
Intersegment premiums/fee revenue		2,525			6,269			5,690
Net investment income		20,783			23,468			23,827
Total managed care		3,356,074			3,025,283			2,731,991
Life
Premiums earned, net		193,889			180,204			167,888
Intersegment premiums		2,066			1,987			668
Net investment income		27,317			27,323			25,658
Total life		223,272			209,514			194,214
Property and casualty
Premiums earned, net		91,380			87,076			82,930
Intersegment premiums		613			613			613
Net investment income		8,974			9,773			10,800
Total property and casualty		100,967			97,462			94,343
Other segments*
Intersegment service revenues		10,630			8,836			283
Operating revenues from external sources		8,991			8,553			5,794
Total other segments		19,621			17,389			6,077
Total business segments		3,699,934			3,349,648			3,026,625
TSM operating revenues from external sources		473			1,443			1,624
Elimination of intersegment premiums		(5,204	)		(8,869	)		(6,971	)
Elimination of intersegment service revenue		(10,630	)		(8,836	)		(283	)
Consolidated operating revenues	$	3,684,573		$	3,333,386		$	3,020,995

* Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinics.

	2020			2019			2018
Operating income (loss)
Managed care	$	38,301		$	61,907		$	26,468
Life		27,796			21,912			19,901
Property and casualty		19,829			14,492			(110,119	)
Other segments*		(6,217	)		(3,054	)		8
Total business segments		79,709			95,257			(63,742	)
TSM operating revenues from external sources		473			1,443			1,624
TSM unallocated operating expenses		(7,940	)		(8,588	)		(8,815	)
Elimination of TSM charges		9,612			9,612			9,600
Consolidated operating income (loss)		81,854			97,724			(61,333	)
Consolidated net realized investment gains		641			5,843			298
Consolidated net unrealized investment gains (losses) on equity securities		7,639			32,151			(36,546	)
Consolidated interest expense		(7,986	)		(7,672	)		(6,903	)
Consolidated other income, net		9,585			4,206			11,312
Consolidated income (loss) before taxes	$	91,733		$	132,252		$	(93,172	)

	2020		2019		2018
Depreciation and amortization expense
Managed care	$	10,478	$	11,527	$	10,525
Life		1,226		1,081		1,134
Property and casualty		381		385		384
Other segments*		1,261		910		705
Total business segments		13,346		13,903		12,748
TSM depreciation expense		1,057		697		787
Consolidated depreciation and amortization expense	$	14,403	$	14,600	$	13,535

* Includes segments that are not required to be reported separately, primarily the data processing services  organization and the health clinics.

	2020			2019			2018
Assets
Managed care	$	1,319,389		$	1,190,538		$	1,078,262
Life		1,051,819			981,370			863,470
Property and casualty		583,404			592,758			747,583
Other segments*		34,020			28,346			20,705
Total business segments		2,988,632			2,793,012			2,710,020
Unallocated amounts related to TSM
Cash, cash equivalents, and investments		16,489			28,167			57,818
Property and equipment, net		68,678			25,623			21,733
Other assets		88,684			37,176			22,521
		173,851			90,966			102,072
Elimination entries – intersegment receivables and others		(74,065	)		(65,152	)		(51,844	)
Consolidated total assets	$	3,088,418		$	2,818,826		$	2,760,248

	2020			2019		2018
Significant noncash items
Net change in unrealized gain (loss) on securities available for sale
Managed care	$	12,504		$	9,687	$	2,585
Life		18,336			17,442		(11,285	)
Property and casualty		3,503			3,023		(583	)
Other segments*		-			-		-
Total business segments		34,343			30,152		(9,283	)
Amount related to TSM		(484	)		370		235
Consolidated net change in unrealized (loss) gain on securities available for sale	$	33,859		$	30,522	$	(9,048	)

* Includes segments that are not required to be reported separately, primarily the data processing services  organization and the health clinics.

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Subsequent Events

12 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

29. Subsequent Events

The Company evaluated subsequent events through the date the consolidated financial statements were issued.  No events, other than those described in these notes, have occurred that require adjustment or disclosure pursuant to current Accounting Standards Codification.

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Schedule II - Condensed Financial Information of Triple-S Management Corporation

12 Months Ended

Dec. 31, 2020

Schedule II - Condensed Financial Information of Triple-S Management Corporation [Abstract]

Schedule II - Condensed Financial Information of Triple-S Management Corporation

Triple-S Management Corporation

Schedule II

Condensed Financial Information of Triple-S Management Corporation

(Registrant)

Balance Sheets

(in thousands)

	As of December 31,
	2020			2019
Assets:
Cash and cash equivalents	$	973		$	3,712
Securities available-for-sale, at fair value:
Equity Securities (cost of $5,853 in 2019)		-			5,857
Other invested assets, measured at net asset value (amortized cost of $15,234 in 2020 and $17,711 in 2019)		15,516			18,598
Investment in subsidiaries		957,299			878,695
Notes receivable and accrued interest from subsidiaries		61,479			59,085
Due from subsidiaries		17,521			19,575
Deferred tax asset		63,934			20,701
Other assets		93,428			42,098
Total assets	$	1,210,150		$	1,048,321
Liabilities:
Notes payable and accrued interest to subsidiary		19,876			18,965
Due to subsidiaries		9,657			1,531
Long-term borrowings		52,751			25,694
Liability for pension benefits		139,611			34,465
Other liabilities		20,025			23,801
Total liabilities		241,920			104,456
Stockholders’ equity:
Common stock, class B		23,430			23,800
Additional paid-in-capital		57,399			60,504
Retained earnings		897,221			830,198
Accumulated other comprehensive income, net		(9,820	)		29,363
Total stockholders’ equity		968,230			943,865
Total liabilities and stockholders’ equity	$	1,210,150		$	1,048,321

The accompanying notes are an integral part of these condensed financial statements

Triple-S Management Corporation

Schedule II

Condensed Financial Information of Triple-S Management Corporation

Triple-S Management Corporation

Statements of Earnings

(in thousands)

	2020			2019			2018
Investment income	$	473		$	1,443		$	1,624
Net realized investment gains (losses)		95			(63	)		33
Net unrealized investment (losses) gains on equity investments		(4	)		459			(462	)
Other revenues		13,712			11,613			11,778
Total revenues		14,276			13,452			12,973
Operating expenses:
General and administrative expenses		7,940			8,588			8,815
Interest expense		1,365			1,334			1,375
Total operating expenses		9,305			9,922			10,190
Income before income taxes		4,971			3,530			2,783
Income tax expense		2,208			7			344
Income from parent company		2,763			3,523			2,439
Equity in net income (loss) of subsidiaries		64,426			89,371			(65,741	)
Net income (loss)	$	67,189		$	92,894		$	(63,302	)

The accompanying notes are an integral part of these condensed financial statements

Triple-S Management Corporation

Schedule II

Condensed Financial Information of Triple-S Management Corporation

(Registrant)

Statements of Cash Flows

(in thousands)

	2020			2019			2018
Net income (loss)	$	67,189		$	92,894		$	(63,302	)
Adjustment to reconcile net (loss) income to net cash provided by operating activities:
Equity in net (income) loss of subsidiaries		(64,426	)		(89,371	)		65,741
Net realized investment (gains) losses		(95	)		63			(33	)
Net unrealized investment losses (gains) on equity investments		4			(459	)		462
Depreciation and amortization		1,469			871			961
Net amortization of investments		-			-			53
Shared- based compensation		11,889			11,605			3,357
Deferred income tax expense (benefit)		714			(438	)		(330	)
Dividends received from subsidiaries		20,000			8,750			6,000
Changes in assets and liabilities:
Accrued interest from subsidiaries, net		(1,483	)		(1,876	)		(642	)
Due from subsidiaries		2,054			(11,694	)		1,093
Other assets		(724	)		(357	)		(99	)
Due to subsidiaries		8,126			(4,033	)		5,498
Other liabilities		(15,783	)		4,953			(3,680	)
Net cash provided by operating activities		28,934			10,908			15,079
Cash flows from investing activities:
Acquisition of investment in securities classified as available-for-sale		-			-			(18,007	)
Acquisition of equity investments		-			(13,930	)		(11,856	)
Acquisition of investment in other invested assets, measured at net asset value		(3,562	)		(3,738	)		(10,862	)
Capital contribution to subsidiaries		-			-			(12,189	)
Proceeds from sale and maturities of investment in securities classified as available-for-sale		-			-			17,959
Proceeds from sales of other invested assets		6,166			377			-
Proceeds from sale of equity investments		5,822			32,389			47,506
Issuance of note receivable to subsidiary		-			(12,000	)		-
Capital contribution in equity method investees		(7,551	)		(11,418	)		-
Net acquisition of property and equipment		(44,524	)		(4,761	)		(437	)
Net cash (used in) provided by investing activities		(43,649	)		(13,081	)		12,114
Cash flow from financing activities:
Repayments of long-term borrowings		(3,883	)		(3,236	)		(3,236	)
Proceeds from long-term borrowings		30,841			-			-
Repurchase of common stock		(14,982	)		(9,989	)		(22,377	)
Dividends paid		-			(11	)		-
Net cash provided by (used in) financing activities		11,976			(13,236	)		(25,613	)
Net (decrease) increase in cash and cash equivalents		(2,739	)		(15,409	)		1,580
Cash and cash equivalents, beginning of year		3,712			19,121			17,541
Cash and cash equivalents, end of year	$	973		$	3,712		$	19,121

The accompanying notes are an integral part of these condensed financial statements

The accompanying notes to the condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto included in Item 15 of the Annual Report on Form 10-K.

1. Nature of Business

For purposes of these condensed financial statements, Triple‑S Management Corporation’s (the Company or TSM) investment in its wholly owned subsidiaries is recorded using the equity method of accounting.

2. Significant Accounting Policies

The significant accounting policies followed by the Company are set forth in the Notes to the Consolidated Financial Statements and the accompanying notes thereto.  Refer to Item 15 of the Annual Report on Form 10‑K.

3. Long‑Term Borrowings

A summary of the long‑term borrowings entered by the Company as of December 31 is as follows:

	2020		2019
Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.15% at December 31, 2020).	$	4,627	$	6,267
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 2.98% at December 31, 2020).		16,204		17,211
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.48% at December 31, 2020).		1,813		2,401
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.25% at December 31, 2020). Last payment of $25,185 due on June 19, 2025.		30,723		-
Total borrowings		53,367		25,879
Less: unamortized debt issuance costs		616		185
	$	52,751	$	25,694

The secured loans payable maturing on 2023 and 2024 are guaranteed by a first mortgage held by the bank on the Company’s land, building and substantially all leasehold improvements, as collateral for the term of the loan under a continuing general security agreement.

On June 19, 2020, TSM entered into a $31,350 Credit Agreement (the Loan) with a commercial bank in Puerto Rico. The Company used the proceeds of the Loan to partially finance the acquisition of the Building (see Note 8, Property and Equipment, Net in Item 15 of the Annual Report on Form 10-K).

The Loan is guaranteed by a mortgage over the Building, a pledge of all collateral related to the Building and an assignment of the rents collected for the lease of office space in the Building. Pursuant to the credit agreement, interest is payable on the outstanding principal balance of the Loan at an annual rate equal to the Prime Rate. Monthly interest payments commenced on July 1, 2020 and will continue to be paid each month until the principal of the Loan has been paid in full.

Aggregate maturities of the Company’s long term borrowings as of December 31, 2020 are:

Year ending December 31
2021	$	4,490
2022		4,490
2023		4,196
2024		14,484
2025		25,707
	$	53,367

The Company may, at its option and at any time, upon written notice as specified in the credit agreement, prepay prior to maturity all or any part of the Loan upon the payment of a penalty fee of the outstanding principal amount at the time of the prepayment of 3% during the first year, 2% during the second year, 1% during the third year and thereafter at par.

The four term loans under credit agreements with commercial banks in Puerto Rico include certain customary financial and non-financial covenants, including negative covenants imposing certain restrictions on the Company’s business.  The Company was in compliance with all these covenants as of December 31, 2020.

Interest expense on the above borrowings amounted to $1,362, $1,320, and $1,375, for the years ended December 31, 2020, 2019, and 2018, respectively.

4. Transactions with Related Parties

The following are the significant related parties’ transactions made for the period ended December 31, 2020, 2019 and 2018:

	2020		2019		2018
Rent charges to subsidiaries	$	7,810	$	7,809	$	7,874
Interest charged to subsidiaries on notes receivable		2,672		2,275		1,935
Interest charged from subsidiary on note payable		911		869		829

As of December 31, 2020, and 2019, the Company has three notes receivable from subsidiaries amounting to $37,000  in accordance with the provisions of Article 20.30 of the Puerto Rico Insurance Code. The notes receivable from subsidiaries are due on demand; however, pursuant to the requirements established by the Commissioner of Insurance, the parties agreed that no payment of the total principal nor the interest due on the loans will be made without first obtaining written authorization from the Commissioner of Insurance within at least 60 days prior to the proposed payment date. These notes bear interest at 4.70%. Accrued interest at December 31, 2020 and 2019 amounted to $12,616 and $10,342, respectively.

In addition, as of December 31, 2020 and 2019, the Company has various notes receivable from a subsidiary amounting to $11,214 and $11,405, respectively.  Accrued interest at December 31, 2020 and 2019 amounted to $335 and $338, respectively.  These notes bear an average interest of 5.10%. The Company is in the process of  renewing theses notes for a period of one year .

As of December 31, 2020, and 2019 the Company has a note payable to a subsidiary amounting to $15,000.  The note is due on December 31, 2022 and bears interest at 4.70%.  Accrued interest at December 31, 2020 and 2019 amounted to $4,876 and $3,965, respectively.

Also, the Company leases certain floors of its buildings to subsidiaries and generates rental income. Maturity analysis of lease payments to be received from its subsidiary lessees as of December 31, 2020, is summarized as follows:

Year ending December 31
2021	$	7,810
2022		7,810
2023		7,745
	$	23,365

5. Stockholders’ Equity

a. Common Stock

On July 29, 2019, the Company issued 48,602 Class A shares to the heirs of a former shareholder, as a result of a litigation settlement.  During July 2019, the Board of Directors authorized and approved the conversion (Conversion) of the Company’s remaining issued and outstanding Class A common shares into Class B common shares. Effective on August 7, 2019, all Class A holders of record received one Class B share for each Class A share held. Upon the Conversion, all remaining outstanding Class A shares were automatically cancelled and extinguished, and the Company now maintains a single class of common shares.

b. Preferred Stock

Authorized capital stock includes 100,000,000 of preferred stock with a par value of $1.00 per share. As of December 31, 2020, and 2019, there are no issued and outstanding preferred shares.

c. Dividends

The issuance of 48,602 Class A shares entitled all Class B shareholders to certain anti-dilution rights; therefore, all holders of Class B shares at the close of business on July 26, 2019 (Record Date) received a share dividend of 0.051107 Class B shares for every Class B share they owned as of that time. On August 6, 2019, the Company paid the Class B share dividend which amounted to $24,655; cash of $11 was paid in lieu of fractional shares so that shareholders receive a whole number of shares of common stock.

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Schedule III - Supplementary Insurance Information

12 Months Ended

Dec. 31, 2020

Schedule III - Supplementary Insurance Information [Abstract]

Schedule III - Supplementary Insurance Information

Triple-S Management Corporation and Subsidiaries

Schedule III - Supplementary Insurance Information

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

Segment	Deferred Policy Acquisition Costs and Value of Business Acquired		Claim Liabilities			Liability for Future Policy Benefits		Unearned Premiums		Other Policy Claims and Benefits Payable		Premium Revenue			Net Investment Income		Claims Incurred			Amortization of Deferred Policy Acquisition Costs and Value of Business Acquired		Other Operating Expenses		Net Premiums Written
2020
Managed Care	$	-	$	445,655		$	-	$	1,609	$	-	$	3,322,266		$	20,783	$	2,805,738		$	-	$	512,035	$	3,322,266
Life Insurance		222,703		49,932			414,997		12,190		-		195,955			27,317		107,226			18,567		69,683		195,955
Property and Casualty Insurance		25,622		292,835			-		83,682		-		91,993			8,974		35,140			26,685		19,313		96,777
Other Non-reportable segments, Parent Company operations and net consolidating entries.		-		(1,320	)		-		-		-		(4,764	)		473		(1,284	)		-		9,616		-
Total	$	248,325	$	787,102		$	414,997	$	97,481	$	-	$	3,605,450		$	57,547	$	2,946,820		$	45,252	$	610,647	$	3,614,998
2019
Managed Care	$	-	$	341,277		$	-	$	2,188	$	-	$	2,987,466		$	23,468	$	2,526,682		$	-	$	436,694	$	2,987,466
Life Insurance		212,345		47,095			386,017		10,889		-		182,191			27,323		105,889			14,911		66,802		182,191
Property and Casualty Insurance		22,434		322,018			-		80,224		-		87,689			9,773		39,548			22,742		20,679		98,164
Other Non-reportable segments, Parent Company operations and net consolidating entries.		-		-			-		-		-		-			1,443		(5,863	)		-		7,578		-
Total	$	234,779	$	710,390		$	386,017	$	93,301	$	-	$	3,257,346		$	62,007	$	2,666,256		$	37,653	$	531,753	$	3,267,821
2018
Managed Care	$	-	$	394,226		$	-	$	2,418	$	-	$	2,689,082		$	23,827	$	2,272,501		$	-	$	433,022	$	2,689,082
Life Insurance		198,140		46,157			361,495		9,490		-		168,556			25,658		99,048			11,017		64,248		168,556
Property and Casualty Insurance		17,019		496,876			-		71,082		-		83,543			10,800		159,942			25,756		18,764		79,472
Other Non-reportable segments, Parent Company operations and net consolidating entries.		-		(470	)		-		-		-		(2,590	)		1,624		(3,878	)		-		1,908		-
Total	$	215,159	$	936,789		$	361,495	$	82,990	$	-	$	2,938,591		$	61,909	$	2,527,613		$	36,773	$	517,942	$	2,937,110

See accompanying independent registered public accounting firm’s report and Notes to Consolidated Financial Statements.

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Schedule IV - Reinsurance

12 Months Ended

Dec. 31, 2020

Schedule IV - Reinsurance [Abstract]

Schedule IV - Reinsurance

Triple-S Management Corporation and Subsidiaries

Schedule IV - Reinsurance

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

	Gross Amount (1)		Ceded to Other Companies		Assumed from Other Companies		Net Amount		Percentage of Amount Assumed to Net
2020
Life Insurance in force	$	10,317,331					$	10,317,331		0.0	%
Premiums:
Life Insurance	$	203,818	$	9,997	$	68	$	193,889		0.0	%
Accident and Health Insurance		3,324,161		4,341		361		3,320,181		0.0	%
Property and Casualty Insurance		153,851		62,471		-		91,380		0.0	%
Total premiums	$	3,681,830	$	76,809	$	429	$	3,605,450		0.0	%
2019
Life insurance in force	$	9,739,154					$	9,739,154		0.0	%
Premiums:
Life Insurance	$	186,489	$	8,337	$	2,052	$	180,204		1.1	%
Accident and Health Insurance		2,989,550		4,296		346		2,985,600		0.0	%
Property and Casualty Insurance		140,763		53,687		-		87,076		0.0	%
Total premiums	$	3,316,802	$	66,320	$	2,398	$	3,252,880		0.1	%
2018
Life insurance in force	$	9,158,253					$	9,158,253		0.0	%
Premiums:
Life Insurance	$	174,624	$	8,780	$	2,044	$	167,888		1.2	%
Accident and Health Insurance		2,691,289		3,824		308		2,687,773		0.0	%
Property and Casualty Insurance		143,917		60,987		-		82,930		0.0	%
Total premiums	$	3,009,830	$	73,591	$	2,352	$	2,938,591		0.1	%

(1) Gross premiums amount is presented net of intercompany eliminations of $4,764, $4,466 and $2,590 for the years ended December 31, 2020, 2019, and 2018, respectively.

See accompanying independent registered public accounting firm’s report and Notes to Consolidated Financial Statements.

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Schedule V - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2020

Schedule V - Valuation and Qualifying Accounts [Abstract]

Schedule V - Valuation and Qualifying Accounts

Triple-S Management Corporation and Subsidiaries

Schedule V - Valuation and Qualifying Accounts

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

			Additions
	Balance at Beginning of Period		Charged to Costs and Expenses		Charged (Reversal) To Other Accounts - Describe (1)			Deductions - Describe (2)			Balance at End of Period
2020
Allowance for doubtful receivables	$	56,545		1,841		(5,985	)		(1,662	)	$	50,739
2019
Allowance for doubtful receivables	$	42,042		17,539		1,360			(4,396	)	$	56,545
2018
Allowance for doubtful receivables	$	35,883		4,754		6,569			(5,164	)	$	42,042

(1) Represents premiums adjustment to provide for unresolved reconciliation items with the Government of Puerto Rico and other entities.

(2) Deductions represent the write-off of accounts deemed uncollectible.

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Schedule VI - Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations

12 Months Ended

Dec. 31, 2020

Schedule VI - Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations [Abstract]

Schedule VI - Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations

Triple-S Management Corporation and Subsidiaries

Schedule VI - Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations

For the years ended December 31, 2020, 2019 and 2018

(Dollar amounts in thousands)

	As of December 31,						For the Years Ended December 31,
Year	Deferred Policy Acquisition Costs		Reserve for Unpaid Claims and Claims Adjustment Expenses		Unearned Premiums		Earned Premiums		Net Investment Income		Claims and Claim Adjustment Expenses Incurred Related to					Amortization of Deferred Policy Acquisition Costs		Paid Claims and Claim Adjustment Expenses		Premiums Written
											Current Year		Prior Years
2020	$	25,622	$	292,835	$	83,682	$	91,993	$	8,974	$	44,455	$	(9,315	)	$	26,685	$	65,601	$	157,922
2019	$	22,434	$	322,018	$	80,224	$	87,689	$	9,773	$	43,589	$	(4,041	)	$	22,742	$	36,467	$	150,519
2018	$	17,019	$	496,876	$	71,082	$	83,543	$	10,800	$	40,619	$	119,323		$	25,756	$	40,158	$	139,826

See accompanying independent registered public accounting firm’s report and Notes to Consolidated Financial Statements.

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP).  The consolidated financial statements include the financial statements of the Company and its subsidiaries.  Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period.  Actual results could differ from those estimates.

Cash Equivalents

Cash Equivalents

The Company considers all highly liquid debt instruments with maturities of three months or less at the date of acquisition to be cash equivalents.  Cash and cash equivalents are recorded at cost, which approximates fair value.  Cash equivalents of $43,032 and $25,060 at December 31, 2020 and 2019, respectively, consist principally of money market funds and certificates of deposit with original maturities of three months or less.

Investments

Investments

Fixed-maturities

Investment in debt securities at December 31, 2020 and 2019 consisted mainly of obligations of government‑sponsored enterprises, U.S. Treasury securities and obligations of U.S. government instrumentalities, municipal securities, corporate bonds, residential mortgage-backed securities, and collateralized mortgage obligations.  The Company classifies its debt securities into one of two categories: available-for-sale or held-to-maturity.  Securities classified as held-to-maturity are those securities in which the Company has the ability and intent to hold until maturity.  All other securities not included in held-to-maturity are classified as available-for-sale.

Available-for-sale securities are recorded at fair value.  The fair values of debt securities (both available-for-sale and held-to-maturity investments) are based on quoted market prices for those or similar investments at the reporting date.  Held-to-maturity debt securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums and discounts, respectively.  For available-for-sale securities, unrealized holding gains or losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of Other Comprehensive Income. Realized gains and losses from the sale of available-for-sale securities are included in earnings and determined on a specific‑identification basis.

Transfers of securities between categories are recorded at fair value at the date of transfer.  Unrealized holding gains or losses associated with transfers of securities from held-to-maturity to available-for-sale are recorded as a separate component of Other Comprehensive Income. These are maintained and amortized into earnings over the remaining life of the security as an adjustment to yield in a manner consistent with the amortization or accretion of premium or discount on the associated security.

If a fixed-maturity security is in an unrealized loss position and the Company does not intend to sell the security, or it is more likely than not that the Company will not have to sell the fixed maturity security before recovery of its amortized cost basis, the credit component of the impairment, if any, is recorded as an allowance for credit losses with an offsetting entry in the Company’s Consolidated Statements of Earnings. The non-credit component of the impairment is recognized in Other Comprehensive Income. Furthermore, unrealized losses caused entirely by non-credit related factors associated with fixed-maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in Accumulated Other Comprehensive Income.

If a fixed-maturity security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the fixed-maturity security before recovery of its amortized cost basis, the Company will write off any previously recognized allowance for credit losses and will decrease the amortized cost basis of the security. If the allowance has been fully written off and the fair value is less than its amortized cost basis, the amortized cost basis is written down and an impairment loss is recognized in the Company’s Consolidated Statements of Earnings. As of December 31, 2020, no allowance for credit losses was recorded in the consolidated financial statements.

The credit component of the impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security at the date of acquisition. If there is an increase in the projected future cash flows of the fixed-maturity security in subsequent periods, all or part of the allowance for credit losses may be reversed.

In addition, the Company considers the following factors when evaluating whether or not a credit loss exists: the reasons for the impairment, the severity of the impairment, market conditions, changes in the security’s rating, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates.

Premiums and discounts are amortized or accreted over the life of the related held-to-maturity or available-for-sale security as an adjustment to yield using the effective interest method.  Dividend and interest income are recognized when earned.

The Company regularly invests in mortgaged-backed securities and other securities subject to prepayment and call risk.  Significant changes in prevailing interest rates may adversely affect the timing and amount of cash flows on such securities.  In addition, the amortization of market premium and accretion of market discount for mortgaged-backed securities is based on historical experience and estimates of future payment speeds on the underlying mortgage loans.  Actual prepayment speeds may differ from original estimates and may result in material adjustments to amortization or accretion recorded in future periods.

Equity investments

Investment in equity securities at December 31, 2020 and 2019 consisted of mutual funds whose underlying assets are comprised of domestic equity securities, international equity securities and higher risk fixed income instruments. Equity investments are recorded at fair value.  The fair values of equity investments are mainly based on quoted market prices for those or similar investments at the reporting date.  For a specific equity investment, the fair value is estimated using the net asset value (NAV) of the Company’s ownership interest in the partnership.  Following the implementation on January 1, 2018 of Accounting Standards Update (ASU) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, unrealized holding gains and losses on equity investments are included in earnings.  Realized gains and losses from the sale of equity investments are included in earnings and are determined on a specific‑identification basis.

Other invested assets

Other invested assets at December 31, 2020 and 2019 consisted mainly of alternative investments in partnerships that invest in several private debt and private equity funds.  Portfolios are diversified by vintage year, stage, geography, business sectors and number of investments. These investments are not redeemable with the funds. Distributions from each fund are received as the underlying investments of the fund is liquidated. It is estimated that the underlying assets of the funds will be liquidated in the next 5 to 12 years. The fair value of the investments in this class have been estimated using the net asset value (NAV) of the Company’s ownership interest in the partnerships. Total unfunded capital commitments for these positions was $52,557 as of December 31, 2020.  The remaining average commitments period is approximately three years.

Revenue Recognition

Revenue Recognition

Managed Care

Subscriber premiums on the managed care business are billed in advance of their respective coverage period and the related revenue is recorded as earned during the coverage period.  Managed care premiums are billed in the month prior to the effective date of the policy with a grace period of up to two months.  If the insured fails to pay, the policy can be cancelled at the end of the grace period at the option of the Company.

Premiums for the Medicaid business are based on a bid contract with ASES and billed in advance of coverage period. The Medicaid contract that became effective November 1, 2018 includes a minimum medical loss ratio (MLR) provision that mandates that the Company remit to ASES the excess of the target MLR of 92% over the actual MLR for any given contract year and be reflected as an adjustment to premium revenue in current operations. The target established in the contract follows regulation requirements of the Centers for Medicare and Medicaid Services (CMS) for Medicaid managed care contracts codified in 42 CFR part 438. As of December 31, 2020, and 2019, there was no accrued amount due to ASES related to this provision.

Under the risk-based Medicaid contract that expired on October 31, 2018, an excess profit agreement stipulates that the profit of TSS for a specified period within the contract term shall not exceed two and a half percentage (2.5%) of the fixed amount paid by ASES for each member.  In the event that the profit exceeds this amount, TSS and ASES shall share the excess profit in proportions of fifty percent (50%), subject to the compliance by TSS with certain quality metrics.  ASES retains the right to determine the outcome of the excess profit agreement based on audited financial statements of the contracted services submitted annually by TSS and the validation of the incurred-but-not-reported reserve by ASES’s actuary. We report any estimated net amounts due to ASES within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets. As of December 31, 2020 and 2019, the Company had accrued an estimated profit sharing of $1,948, respectively.

We reassess the profitability on existing medical insurance contracts when current operating results or forecasts indicate probable future losses. We establish a premium deficiency reserve in current operations to the extent that the sum of expected future costs, claim adjustment expenses, and maintenance costs exceeds related future premiums under contracts without consideration of investment income. For purposes of determining premium deficiencies, contracts are grouped in a manner consistent with our method of acquiring, servicing, and measuring the profitability of such contracts. Losses recognized as a premium deficiency result in a beneficial effect in subsequent periods as operating losses under these contracts are charged to the liability previously established. As of December 31, 2020, the Company established a premium deficiency reserve amounting to $9,900 which is included within Accounts Payable and Accrued Liabilities in ther Consolidated Balance Sheets.

Premiums for the Medicare Advantage (MA) business are based on a bid contract with CMS and billed in advance of the coverage period.  We recognize premium revenue in the period in which we are obligated to provide services to our members. We record premiums earned but not received as premiums receivable and record premiums received in advance of the period of service as unearned premiums in the Consolidated Balance Sheets. Unearned premiums are recognized as revenue throughout the related coverage period.  MA contracts are renewed annually and provide for a risk factor to adjust premiums paid for members that represent a higher or lower risk to the Company.  Retroactive rate adjustments are made periodically based on the aggregate health status and risk scores of the Company’s MA membership.  These risk adjustments are evaluated quarterly, based on actuarial estimates.  Actual results could differ from these estimates.  We recognize periodic changes to risk-adjusted premiums as revenue when the amounts are determinable and collection is reasonably assured, which is possible as additional diagnosis code information is reported to CMS, when the ultimate settlements are received from CMS, or when we receive notification of such settlement amounts.  The data provided to CMS to determine members’ risk scores is subject to audit by CMS even after the annual settlements occur, which may result in the refund of premiums to CMS. The recorded estimate is revised and reflected in operating results in the period in which additional information becomes available.

Prescription drug coverage is offered to Medicare eligible beneficiaries as part of MA plans (MA-PD).  Premiums are based on a bid contract with CMS that considers the estimated costs of providing prescription drug benefits to enrolled participants.  MA-PD premiums are subject to adjustment, positive or negative, based upon the application of risk corridors that compare the estimated prescription drug costs included in the bids to CMS to actual prescription drug costs.  Variances exceeding certain thresholds may result in CMS making additional payments or in CMS requesting a refund for a portion of the premiums collected.  The Company estimates and records adjustments to earned premiums related to estimated risk corridor payments based on actual prescription drug costs for each reporting period as if the annual contract were to expire at the end of each reporting period.

Administrative service fees include revenue from certain groups that have managed care contracts that provide for the group to be at risk for all or a portion of their claims experience.  For these groups, the Company is not at risk and only handles the administration of managed care coverage for an administrative service fee.  The Company pays claims under commercial self-funded arrangements from its own funds, and subsequently receives reimbursement from these groups.  Claims paid under self-funded arrangements are excluded from the Claims Incurred, Net of Reinsurance in the accompanying Consolidated Statement of Earnings. Administrative service fees under the self-funded arrangements are recognized based on the group’s membership or incurred claims for the period multiplied by an administrative fee rate plus other fees.  In addition, some of these self-funded groups purchase aggregate and/or specific stop-loss coverage.  In exchange for a premium, the group’s aggregate liability or liability on any one episode of care is capped for the year.  Premiums for the stop-loss coverage are actuarially determined based on experience and other factors and are recorded as earned over the period of the contract in proportion to the coverage provided.  This fully insured portion of premiums is included within the Premiums Earned, net in the accompanying Consolidated Statements of Earnings.

Life Insurance

Premiums on life insurance policies are billed in advance of their respective coverage period and the related revenue is recorded as earned when due.  Premiums on accident and health and other short‑term policies are recognized as earned primarily on a pro rata basis over the contract period.  Premiums on credit life policies are recognized as earned in proportion to the amounts of insurance in‑force.  Revenues from universal life and interest sensitive policies represent amounts assessed against policyholders, including mortality charges, surrender charges actually paid, and earned policy service fees. Revenues for limited payment contracts are recognized over the period that benefits are provided rather than on collection of premiums.

Property and Casualty Insurance

Premiums on property and casualty contracts are billed in advance of their respective coverage period and recognized as earned on a pro rata basis over the policy term.  The portion of premiums related to the period prior to the end of coverage is recorded in the Consolidated Balance Sheets as Unearned Premiums and is transferred to premium revenue as earned.

Allowance for Doubtful Receivables

Allowance for Doubtful Receivables

The allowance for doubtful receivables is based on management’s evaluation of the aging of accounts and such other factors that deserve current recognition, including the continued deterioration of the local economy, the exposure to government accounts and the challenging business environment in the island.  This evaluation is performed individually on larger accounts and includes the use of all available information such as the customer’s credit worthiness and other relevant information.  Actual losses could differ from these estimates.  Receivables are charged-off against their respective allowance accounts when deemed to be uncollectible.

Deferred Policy Acquisition Costs and Value of Business Acquired

Deferred Policy Acquisition Costs and Value of Business Acquired

Certain direct costs of acquiring business in the Life Insurance, and Property and Casualty segments are deferred by the Company.  Substantially all acquisition costs related to the Managed Care segment are expensed as incurred.

In the Life Insurance segment, deferred policy acquisition costs (DPAC) consist of commissions and certain expenses related to the successful acquisition of the production of life, annuity, accident and health, and credit business.  In the event that future premiums, in combination with policyholder reserves and anticipated investment income, could not provide for all future benefits and maintenance and settlement expenses, the amount of DPAC would be reduced to provide for such amount.  The related amortization is provided over the anticipated premium-paying period of the related policies in proportion to the ratio of annual premium revenue to expected total premium revenue to be received over the life of the policies.  Interest is considered in the amortization of DPAC and value of business acquired (VOBA).  For these contracts interest is considered at a level rate at the time of issue of each contract, of 3.90% for 2020,4.40% for 2019 and from 3.90% to 5.75% for 2018, and, in the case of the value of business acquired, at the time of any acquisition.

For certain other long-duration contracts, deferred amounts are amortized at historical and forecasted credited interest rates.  Expected premium revenue is estimated by using the same mortality and withdrawal assumptions used in computing liabilities for future policy benefits.  The method followed in computing deferred policy acquisition costs limits the amount of such deferred costs to their estimated net realizable value.  In determining estimated net realizable value, the computations give effect to the premiums to be earned, related investment income, losses and loss-adjustment expenses, and certain other costs expected to be incurred as the premium is earned.

Costs deferred on universal life and interest sensitive products are amortized as a level percentage of the present value of estimated gross profits from investment yields, mortality, expenses and surrender charges.  Estimates are based on the Company’s experience as adjusted to provide for possible adverse deviations.  These estimates are periodically reviewed and compared with actual experience.  When it is determined that future expected experience differs significantly from that assumed, the estimates are updated for current and future issues which may result in a change or release of deferred policy acquisition costs amortization through the Consolidated Statements of Earnings.

The VOBA assigned to the life insurance in-force at the date of the acquisition is amortized using methods similar to those used to amortize the DPAC of the life and accident and health segment.

In the Property and Casualty segment, acquisition costs consist primarily of commissions and other cost incurred during the production of business and are deferred and amortized ratably over the terms of the policies.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost.  Maintenance and repairs are expensed as incurred.  Depreciation is calculated on the straight-line method over the estimated useful lives of the assets.  Costs of computer equipment, programs, systems, installations and enhancements are capitalized and amortized straight-line over their estimated useful lives.  The following is a summary of the estimated useful lives of the Company’s property and equipment:

Asset Category	Estimated Useful Life
Buildings	35 years
Building improvements	5 years
Leasehold improvements	Lesser of lease term or 10 years
Office furniture	7 years
Computer software	3 to 10 years
Computer equipment, equipment, and automobiles	3 to 5 years

Long-Lived Assets, including Goodwill

Long-Lived Assets, including Goodwill

Long-Lived Assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated future cash flows, we recognize an impairment charge equal to the amount by which the carrying amount of the asset exceeds the fair value of the asset.  The assets and liabilities of a disposal group classified as held-for-sale would be presented separately in the appropriate Asset and Liability sections of the Consolidated Balance Sheets.  During 2020, 2019, and 2018 impairment tests on intangible assets were performed, and based on the results of the tests no impairment was recorded.

Goodwill and Intangible Assets that have indefinite useful lives are tested at least annually for impairment, and are tested for impairment more frequently if events or circumstances indicate that the asset might be impaired.  An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.  For Goodwill, the impairment determination is made at the reporting unit level.  The Company may perform a qualitative analysis or perform a quantitative analysis.  In the qualitative analysis, the Company determines if it is more likely than not that the fair value of a reporting unit is less than its carrying amount by assessing current events and circumstances. If there are factors present indicating potential impairment, the Company would proceed to the quantitative analysis.  The quantitative analysis is used to identify potential goodwill impairment and measure the amount (if any) of a goodwill impairment loss to be recognized. The goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount and recognizing an impairment charge for the difference by which the carrying amount exceeds the reporting unit’s fair value, up to the carrying amount of the goodwill.

The annual impairment test is based on an evaluation of estimated future discounted cash flows. The Company also uses the market approach as part of their impairment analysis.  The estimated discounted cash flows are based on the best information available, including supportable assumptions and projections we believe are reasonable. Our discounted cash flow estimates use discount rates that correspond to a weighted-average cost of capital consistent with a market-participant view. The discount rates are consistent with those used for investment decisions and take into account the operating plans and strategies of our operating segments. Other key assumptions, including changes in membership, premium, health care costs, operating expenses, fees, assessments and taxes and effective tax rates, are based on estimates consistent with those used in our annual budgeting and planning process that we believe are reasonable. However, if we do not achieve the results reflected in the assumptions and estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion of our goodwill, which would adversely affect our operating results in the period of impairment. Impairments, if any, are classified as an operating expense.

Claim Liabilities

Claim Liabilities

Managed Care claim liabilities mostly represent the Company’s estimate of medical costs incurred but not yet paid to providers based on experience and accumulated statistical data.  Loss-adjustment expenses related to such claims are currently accrued based on estimated future expenses necessary to process such claims.  Claim liabilities are the most significant estimate included in our consolidated financial statements.  Such estimate is developed consistently using standard actuarial methodologies based upon key assumptions, which vary by business segment.  The most significant assumptions used in the development of managed care claim liabilities include current payment experience, trend factors and completion factors.  Managed care trend factors in our standard actuarial methodologies include contractual requirements, historic utilization trends, the interval between the date services are rendered and the date claims are paid, denied claims activity, disputed claims activity, benefit changes, expected health care cost inflation, seasonality patterns, maturity of lines of business, changes in membership and other factors.

Managed care claim liabilities also include a provision for adverse deviation, which is an estimate for known environmental factors that are reasonably likely to affect the required level of reserves. This provision for adverse deviation is intended to capture the potential adverse development from known environmental factors such as our entry into new geographical markets, changes in our geographic or product mix, the introduction of new customer populations, variation in benefit utilization, disease outbreaks, changes in provider reimbursement, fluctuations in medical cost trend, variation in claim submission patterns and variation in claims processing speed and payment patterns, changes in technology that provide faster access to claims data or change the speed of adjudication and settlement of claims, variability in claim inventory levels, non-standard claim development, and/or exceptional situations that require judgmental adjustments in setting the reserves for claims.

The Company contracts with various independent practice associations (IPAs) for certain medical care services provided to certain policies subscribers.  The IPAs are compensated on a capitation basis, and capitation payables are included within claim liabilities. Capitation is amounts paid to IPAs on a fixed-fee per-member per-month basis.

Claim liabilities also include unpaid claims and loss-adjustment expenses of the Life Insurance segment based on a case-basis estimate for reported claims, and on estimates, based on experience, for unreported claims and loss-adjustment expenses.  The liability for policy and contract claims and claims expenses has been established to cover the estimated net cost of insured claims.

Also included within claim liabilities is the liability for losses and loss-adjustment expenses for the Property and Casualty segment, which represents individual case estimates for reported claims and estimates for unreported losses, net of any salvage and subrogation based on past experience modified for current trends and estimates of expenses for investigating and settling claims.

Claim liabilities are necessarily based on estimates and, while management believes that the amounts are adequate, the ultimate liability may be in excess of or less than the amounts provided.  The methods for making such estimates and for establishing the resulting liability are continually reviewed, and any adjustments are reflected in the Consolidated Statements of Earnings in the period determined.

Future Policy Benefits

Future Policy Benefits

The liability for future policy benefits has been computed using the level‑premium method based on estimated future investment yield, mortality, morbidity and withdrawal experience.  Mortality has been calculated on select and ultimate tables in common usage in the industry, modified by the Company’s experience.  Morbidity has been calculated based on industry tables, modified by the Company’s experience; as well as, withdrawals that have been estimated principally based on industry tables, modified by Company’s experience.  Assumptions are established at the time the policy is issued and are generally not changed during the life of the policy.  The Company periodically reviews the adequacy of reserves for these policies on an aggregate basis using actual experience. If actual experience is significantly adverse compared to the original assumptions and a premium deficiency is determined to exist, any remaining unamortized DPAC balance would be expensed to the extent not recoverable and the establishment of a premium deficiency reserve may be required.  The interest rate assumption was 3.90% for 2020, 4.40% for 2019 and ranged from 3.90% to 5.75%  for 2018.

Policyholder Deposits

Policyholder Deposits

Amounts received for annuity contracts are considered deposits and recorded as a liability along with the accrued interest and reduced for charges and withdrawals.  Interest incurred on such deposits, which amounted to $2,946, $2,639, and $2,615, during the years ended December 31, 2020, 2019, and 2018, respectively, is included in Interest Expense in the accompanying Consolidated Statements of Earnings.

Policyholder account balances for universal life and interest-sensitive products are equal to policy account values. The policy account primarily comprises cumulative deposits received and interest credited to the policyholder less cumulative contract benefits, surrenders, withdrawals, maturities and contract charges for mortality or administrative expenses.  Interest rates credited to policyholder account balances during 2020 was approximately 3.7% for interest-sensitive life products and 2.92% for annuities, while for 2019 they ranged from 2.0% to 4.5% for universal life and interest-sensitive products.  The universal life and interest-sensitive products represented $101,310 and $91,694 of the Policyholder Deposits balance on the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

Reinsurance

Reinsurance

In the normal course of business, the insurance-related subsidiaries seek to limit their exposure that may arise from catastrophes or other events that cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers.

Prospective reinsurance premiums, commissions, and expense reimbursements, related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.  Accordingly, reinsurance premiums are reported as prepaid reinsurance premiums and amortized over the remaining contract period in proportion to the amount of insurance protection provided.

Premiums ceded and recoveries of losses and loss-adjustment expenses under prospective reinsurance treaties have been reported as a reduction of premiums earned and losses and loss-adjustment expenses incurred, respectively.  Property and casualty commission and expense allowances received in connection with reinsurance ceded are accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly.  Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy and are presented within Premium and Other Receivables, Net in the accompanying Consolidated Balance Sheets.

Retroactive reinsurance reimburses a ceding company for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance.  In certain instances, reinsurance contracts cover losses both on a prospective basis and on a retroactive basis and where practical the Company bifurcates the prospective and retrospective elements of these reinsurance contracts and accounts for each element separately.  Initial gains in connection with retroactive reinsurance contracts are deferred and amortized into income over the settlement period, while losses are recognized immediately.  When changes in the estimated amount recoverable from the reinsurer or in the timing of receipts related to that amount occur, a cumulative amortization adjustment is recognized in earnings in the period of the change so that the deferred gain reflects the balance that would have existed had the revised estimate been available at the inception of the reinsurance transaction.  The Company uses the recovery method to amortize any deferred gain, which is included in Claims Incurred in the accompanying Consolidated Statements of Earnings.  The recovery method provides an amortization in proportion to the estimated recoveries made as of each reporting date as a percentage of total estimated recoveries. No deferred gain was amortized into operations during the years ended December 31, 2020, 2019 and 2018.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Earnings in the period that includes the enactment date.  The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  Changes in recognition or measurement are reflected in the period in which the change in circumstances occurs.

The Company records any interest and penalties related to unrecognized tax benefits within Operating Expenses in the Consolidated Statement of Earnings.

Health Insurance Providers Fee

Health Insurance Providers Fee

The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act mandates an annual Health Insurance Providers Fee (HIP Fee).  The annual HIP Fee becomes payable to the U.S. Treasury once the entity provides health insurance for any U.S. health risk in each applicable calendar year.  The initial estimated annual fee is accrued as of January 1, with a corresponding deferred cost amortized over 12 months on a straight-line basis. The fee payment is due on September 30 of each year.  The Company incurred approximately $55,500 and $50,100 of such fee in 2020 and 2018,  respectively, which is presented within Operating Expenses in the accompanying Consolidated Statements of Earnings. The HIP Fee was waived for all health insurance providers during the year ended December 31, 2019.  The Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the Further Consolidated Appropriations Act, 2020, signed into law on December 20, 2019, repealed the HIP Fee effective for calendar years beginning after December 31, 2020.

Insurance-Related Assessments

Insurance-Related Assessments

The Company records a liability for insurance-related assessments when the following three conditions are met: (1) the assessment has been imposed or the information available prior to the issuance of the consolidated financial statements indicates it is probable that an assessment will be imposed; (2) the event obligating an entity to pay (underlying cause of) an imposed or probable assessment has occurred on or before the date of the consolidated financial statements; and (3) the amount of the assessment can be reasonably estimated.  A related asset is recognized when the paid or accrued assessment is recoverable through either premium taxes or policy surcharges. The Company had accrued $722 and $1,629 within Accounts Payable and Accrued Liabilities in the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

Commitments and Contingencies

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.  Legal costs incurred in connection with loss contingencies are expensed as incurred.  Recoveries of costs from third parties, which are probable of realization, are separately recorded as assets, and are not offset against the related liability.

Share-Based Compensation

Share‑Based Compensation

Share-based compensation is measured at the fair value of the award and recognized as an expense in the consolidated financial statements over the vesting period.

Earnings per Share

Earnings per Share

Basic earnings per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period, excluding non-vested restricted stocks.  Diluted earnings per share is computed in the same manner as basic earnings per share except that the number of shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.  Dilutive common shares are included in the diluted earnings per share calculation using the Treasury stock method.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

On June 16, 2016, the Financial Accounting Standards Board (FASB) issued guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In addition, on April 25, 2019, the FASB issued Accounting Standard Update (ASU) 2019-04: Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this update represent changes to clarify, correct errors in or improve the codification. Such amendments should make the codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. Within the clarifications was the FASB’s intent to include all reinsurance recoverables within the scope of ASU 2016-13 (Topic 326). For public companies, the improvements related to ASU 2016-13 (Topic 326) and ASU 2016-01 (Topic 825) are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the standard effective January 1, 2020 and recognized $166, net of deferred tax asset, as a cumulative effect adjustment to the opening balance of retained earnings on the adoption date.

On January 26, 2017, the FASB issued guidance to simplify the manner in which an entity is required to evaluate goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this guidance, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, this guidance removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, these amendments, which should be applied on a prospective basis, are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Upon adoption of this standard, if the carrying amount of any of the reporting units exceeds its fair value, the Company will be required to record an impairment charge for the difference up to the amount of the goodwill. The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the results of the Company’s consolidated financial statements.

 On August 27, 2018, the FASB issued guidance for Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement.  This update focuses on improving the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of each entity’s financial statements.  Specifically, certain disclosure requirements are removed (the amount of, and reasons for, transfer between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements), while certain other disclosures are modified and added (changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements).  The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent period in the initial fiscal year of adoption.  All other amendments should be applied retrospectively to all periods presented upon their effective date.  The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the presentation and disclosures of the Company’s consolidated financial statements.

On August 29, 2018, the FASB issued guidance for Intangibles – Goodwill and Other – Internal-Use Software. Guidance addresses customers’ accounting for implemented costs incurred in a cloud computing arrangement that is a service contract and aims to reduce complexity in the accounting for costs of implementing a cloud computing service arrangement. The amendments require a customer in a hosting arrangement that is a service contract to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense.  Additionally, it requires the customer to expense the capitalized implementation costs over the term of the hosting arrangement. The Company adopted the standard effective January 1, 2020. The adoption of this guidance did not have a material impact on the results of the Company’s consolidated financial statements.

Future Adoptions of Accounting Standards

Future Adoptions of Accounting Standards

On August 15, 2018, the FASB issued ASU 2018-12: Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts – which provides meaningful improvements to the existing revenue recognition, measurement, presentation and disclosure requirements for long-duration contracts issued by an insurance entity.  The amendments improve the timeliness of recognizing changes in the liability for future policy benefits and modify rate used to discount future cash flows, simplify and improve the accounting for certain market-based options or guarantees associated with deposit contracts, simplify the amortization of deferred acquisition costs, and improves the effectiveness of the required disclosures.  Specifically, this guidance requires an insurance entity to review and update, if needed, the assumptions used to measure cash flows and discount rate at each reporting date; measure all market risk benefits associated with deposit; and disclose liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in measurement, including changes thereto and the effect of those changes on measurement.  Additionally, the amendment simplifies the amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits or gross margins, and requires that those balances be amortized on a constant level basis over the expected term of the related contracts.  On November 5, 2020, the FASB issued ASU 2020-11: Financial Services – Insurance (Topic 944): Effective Date and Early Application – which defer the effective date of ASU 2018-12 by one year for all insurance entities.  For public companies, these amendments will be applied for fiscal years beginning after December 15, 2022.  We are currently evaluating the impact the adoption of this guidance may have on the Company’s consolidated financial statements.

On August 28, 2018, the FASB issued guidance for Compensation – Retirement Benefits – Defined Benefit Plans – General which addresses changes to the disclosure requirement for defined benefit plans. The amendments in this guidance modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  Specifically, the guidance removes certain disclosure requirements, including the amounts of accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, related-party disclosures concerning the amount of future annual benefits covered by an insurance and annuity contracts and significant transactions between the employer and related-parties and the plan, and adds other disclosures including the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and an explanation for the reasons for significant gains and losses related to changes in the benefit obligation for the period.   For public companies, these amendments, will be applied for fiscal years beginning after December 15, 2020.  The adoption of this guidance will not have a material impact on the presentation and disclosures of the Company’s consolidated financial statements.

On December 18, 2019, the FASB issued ASU 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. Also, the amendments simplify the accounting for income taxes by requiring the following: (1) that an entity recognize a franchise tax that is partially based on income in accordance with Topic 740 and account for any incremental amount incurred as a non-income-based tax; (2) that an entity evaluate when a step-up in the tax basis of Goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should instead be considered a separate transaction; and (3) that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that included the enactment date. For public companies, these amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this guidance will not have a material impact on the results of the Company’s consolidated financial statements.

On January 16, 2020, the FASB issued guidance to clarify the interaction between the accounting standards on recognition and measurement of financial instruments in Topic 321: Investments – Equity Securities, the one on equity method investments in Topic 323: Investments – Equity Method and Joint Ventures, and forward contracts and purchased options in Topic 815: Derivatives and Hedging. The amendments clarify that upon an increase or decrease in level of ownership or degree of influence, a company should remeasure the interest held in the investee to take into account observable transactions immediately before applying or discontinuing the equity method of accounting under Topic 323. The guidance also clarifies that an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchase option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option. For public companies, these amendments are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this guidance will not have a material impact on the results of the Company’s consolidated financial statements.

On March 12, 2020, the FASB issued ASU 2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU was issued to provide optional guidance, for a limited time, to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The amendments, which are elective and apply to all entities, provide expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate that is expected to be discontinued as a result of reference rate reform. Because the guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect for a limited time, from March 12, 2020 through December 31, 2022. The Company is currently in the process of identifying its LIBOR-based contracts that will be affected by the phase-out of LIBOR and expects to use the optional expedients provided in this ASU.

On January 7, 2021, the FASB issued ASU 2021-01: Reference Rate Reform (Topic 848): Scope Refinement – to clarify the scope of the recent reference reform guidance in Topic 848. This ASU refines the scope of Topic 848 and clarifies that certain optional expedients and exceptions therein for contract modifications and hedge accounting apply to contracts that are affected by the discounting transition. Specifically, modifications related to reference rate reform would not be considered an event that requires reassessment of previous accounting conclusions. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. The amendments in the ASU are effective immediately for all entities. The Company is currently in the process of identifying its LIBOR-based contracts that will be affected by the phase-out of LIBOR and expects to use the optional expedients provided in this ASU.

Other than the accounting pronouncements disclosed above, there were no other new accounting pronouncements issued during the year that could have a material impact on the Corporation’s financial position, operating results or financials statement disclosures.

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Significant Accounting Policies [Abstract]

Property and Equipment

Property and equipment are stated at cost.  Maintenance and repairs are expensed as incurred.  Depreciation is calculated on the straight-line method over the estimated useful lives of the assets.  Costs of computer equipment, programs, systems, installations and enhancements are capitalized and amortized straight-line over their estimated useful lives.  The following is a summary of the estimated useful lives of the Company’s property and equipment:

Asset Category	Estimated Useful Life
Buildings	35 years
Building improvements	5 years
Leasehold improvements	Lesser of lease term or 10 years
Office furniture	7 years
Computer software	3 to 10 years
Computer equipment, equipment, and automobiles	3 to 5 years

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Investment in Securities (Tables)

12 Months Ended

Dec. 31, 2020

Investment in Securities [Abstract]

Amortized Cost and Estimated Fair Value for Trading, Available-for-Sale and Held-to-Maturity Securities by Major Security Type and Class of Security

The amortized cost for debt securities and alternative investments, gross unrealized gains and losses, and estimated fair value for the Company’s investments in securities by major security type and class of security as of December 31, were as follows:

	2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed-maturities available-for-sale
Obligations of government- sponsored enterprises	$	24,496	$	665	$	(9	)	$	25,152
U.S. Treasury securities and obligations of U.S.- government instrumentalities		103,694		7,993		-			111,687
Municipal securities		646,961		54,067		-			701,028
Corporate bonds		189,516		30,280		-			219,796
Residential mortgage-backed securities		249,801		21,487		(57	)		271,231
Collateralized mortgage obligations		12,954		638		(21	)		13,571
Total fixed-maturities available-for-sale	$	1,227,422	$	115,130	$	(87	)	$	1,342,465

	2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises	$	17,209	$	477	$	-		$	17,686
U.S. Treasury securities and obligations of U.S.- government instrumentalities		102,230		4,779		-			107,009
Municipal securities		595,051		34,735		(22	)		629,764
Corporate bonds		187,096		21,721		(74	)		208,743
Residential mortgage-backed securities		262,783		8,073		(320	)		270,536
Collateralized mortgage obligations		8,674		471		-			9,145
Total fixed-maturities available-for-sale	$	1,173,043	$	70,256	$	(416	)	$	1,242,883

	2020
	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	$	614	$	201	$	-	$	815
Residential mortgage-backed securities		164		17		-		181
Certificates of deposits		1,089		-		-		1,089
Total fixed-maturities held-to-maturity	$	1,867	$	218	$	-	$	2,085

	2019
	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 instrumentalties	$	615	$	158	$	-	$	773
Residential mortgage-backed securities		165		1		-		166
Certificates of deposits		1,080		-		-		1,080
Total fixed-maturities held-to-maturity	$	1,860	$	159	$	-	$	2,019

	2020
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Other invested assets - Alternative investments	$	112,171	$	6,119	$	(3,385	)	$	114,905

	2019
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Other invested assets - Alternative investments	$	97,575	$	3,721	$	(788	)	$	100,508

Securities in Continuous Unrealized Loss Position

Gross unrealized losses on investment securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, were as follows:

	2020
	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	$	1,539	$	(9	)		1	$	-	$	-			-	$	1,539	$	(9	)		1
Residential mortgage-backed securities		3,624		(57	)		1		-		-			-		3,624		(57	)		1
Collateralized mortgage obligations		6,060		(21	)		2		-		-			-		6,060		(21	)		2
Total fixed-maturities available-for-sale	$	11,223	$	(87	)		4	$	-	$	-			-	$	11,223	$	(87	)		4
Other invested assets - Alternative investments	$	12,584	$	(808	)		4	$	16,396	$	(2,577	)		6	$	28,980	$	(3,385	)		10

	2019
	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
Municipal securities	$	10,656	$	(22	)		3	$	-	$	-			-	$	10,656	$	(22	)		3
Corporate bonds		5,047		(74	)		1		-		-			-		5,047		(74	)		1
Residential mortgage backed securities		79,902		(320	)		16		-		-			-		79,902		(320	)		16
Total fixed-maturities available-for-sale	$	95,605	$	(416	)		20	$	-	$	-			-	$	95,605	$	(416	)		20
Other invested assets - Alternative investments	$	24,437	$	(605	)		8	$	10,580	$	(183	)		1	$	35,017	$	(788	)		9

Maturities of Investment Securities Classified as Available for Sale and Held to Maturity

Maturities of investment securities classified as available-for-sale and held-to-maturity at December 31, 2020 were as follows:

	Amortized Cost		Estimated Fair Value
Securities available-for-sale
Due in one year or less	$	36,645	$	36,935
Due after one year through five years		583,264		628,468
Due after five years through ten years		194,778		209,096
Due after ten years		149,980		183,164
Residential mortgage-backed securities		249,801		271,231
Collateralized mortgage obligations		12,954		13,571
	$	1,227,422	$	1,342,465
Securities held-to-maturity
Due in one year or less	$	1,089	$	1,089
Due after five years through ten years		614		815
Residential mortgage-backed securities		164		181
	$	1,867	$	2,085

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Realized and Unrealized Gains (Tables)

12 Months Ended

Dec. 31, 2020

Realized and Unrealized Gains [Abstract]

Realized Gains and Losses from Investments

Information regarding realized and unrealized gains and losses from investments for the years ended December 31, is as follows:

	2020			2019			2018
Realized gains (losses)
Fixed-maturity securities:
Securities available-for-sale
Gross gains	$	3,943		$	3,844		$	3,730
Gross losses		(488	)		(387	)		(18,627	)
Total fixed-maturity securities		3,455			3,457			(14,897	)
Equity investments:
Gross gains		1,852			3,056			16,045
Gross losses		(5,074	)		(1,669	)		(2,290	)
Gross losses from impaired securities		(678	)		-			-
Total equity investments		(3,900	)		1,387			13,755
Other invested assets:
Gross gains		1,086			1,055			1,492
Gross losses		-			(56	)		(52	)
Total other invested assets		1,086			999			1,440
Net realized gains on securities	$	641		$	5,843		$	298

Changes in Net Unrealized Gains (Losses)

The gross losses from impaired securities during the year ended December 31, 2020 are related to an equity method investment held by the Company.

	2020			2019		2018
Changes in unrealized gains (losses)
Recognized in accumulated other comprehensive income (loss)
Fixed-maturities – available-for-sale	$	45,203		$	38,807	$	(14,104	)
Other invested assets		(199	)		1,545		1,073
Not recognized in the consolidated financial statements
Fixed-maturities – held-to-maturity	$	59		$	32	$	(29	)

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Net Investment Income (Tables)

12 Months Ended

Dec. 31, 2020

Net Investment Income [Abstract]

Interest and/or Dividend Income

Interest and/or dividend income for the years ended December 31 were are as follows:

	2020		2019		2018
Fixed maturities	$	38,919	$	42,005	$	43,873
Equity securities		13,158		12,453		12,261
Other invested assets		3,545		3,436		1,679
Policy loans		809		761		754
Cash equivalents and interest-bearing deposits		483		1,602		1,407
Other		633		1,750		1,935
Total	$	57,547	$	62,007	$	61,909

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Premium and Other Receivables, Net (Tables)

12 Months Ended

Dec. 31, 2020

Premium and Other Receivables, Net [Abstract]

Premium and Other Receivables, Net

Premium and Other Receivables, Net as of December 31 were as follows:

	2020		2019
Premium	$	106,322	$	188,861
Self-funded group receivables		26,412		28,672
FEHBP		12,830		13,894
Agent balances		31,509		30,784
Accrued interest		10,418		11,307
Reinsurance recoverable		216,314		239,767
Other		135,774		110,952
		539,579		624,237
Less allowance for doubtful receivables:
Premium		37,231		36,622
Other		13,508		19,923
		50,739		56,545
Premium and other receivables, net	$	488,840	$	567,692

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Deferred Policy Acquisition Costs and Value of Business Acquired (Tables)

12 Months Ended

Dec. 31, 2020

Deferred Policy Acquisition Costs and Value of Business Acquired [Abstract]

Movement of Deferred Policy Acquisition Costs and Value of Business Acquired

The change in deferred policy acquisition costs and value of business acquired for the years ended December 31 is summarized as follows:

	DPAC			VOBA			Total
Balance, December 31, 2017		177,721			23,067			200,788
Additions		51,144			-			51,144
VOBA interest at an average rate of 5.11%		-			1,120			1,120
Amortization		(35,005	)		(2,888	)		(37,893	)
Net change		16,139			(1,768	)		14,371
Balance, December 31, 2018		193,860			21,299			215,159
Additions		59,399			-			59,399
VOBA interest at an average rate of 4.53%		-			1,031			1,031
Amortization		(37,496	)		(3,208	)		(40,704	)
Net change		21,903			(2,177	)		19,726
Balance, December 31, 2019	$	215,763		$	19,122		$	234,885
Additions		57,458			3,700			61,158
VOBA interest at an average rate of 4.47%		-			923			923
Amortization		(45,687	)		(2,954	)		(48,641	)
Net change		11,771			1,669			13,440
Balance, December 31, 2020	$	227,534		$	20,791		$	248,325

Expected Amortized Cost of VOBA

The estimated amount of the year-end VOBA balance expected to be amortized during the next five years is as follows:

Year ending December 31:
2021	$	2,683
2022		1,810
2023		1,608
2024		1,430
2025		1,280

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Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2020

Property and Equipment, Net [Abstract]

Property and Equipment, Net

Property and Equipment, Net as of December 31 is composed of the following:

	2020		2019
Land	$	15,867	$	10,976
Buildings and leasehold improvements		128,629		92,752
Office furniture and equipment		32,547		27,878
Computer equipment and software		136,801		133,922
Automobiles		667		761
		314,511		266,289
Less accumulated depreciation and amortization		182,537		177,701
Property and equipment, net	$	131,974	$	88,588

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2020

Fair Value Measurements [Abstract]

Reconciliation of Assets Measured at Fair Value on Recurring Basis

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	2020			2019
Balance as of January 1,	$	5,209		$	3,805
Unrealized gain in other accumulated comprehensive income		(107	)		154
Purchases		-			1,250
Balance as of December 31,	$	5,102		$	5,209

Fair Value Measurements by Level for Assets Measured at Fair Value on a Recurring Basis

The following table summarizes fair value measurements by level at December 31, for assets measured at fair value on a recurring basis:

	2020
	Level 1		Level 2		Level 3		Total
Fixed-maturity securities available-for-sale
Obligations of government-sponsored enterprises	$	-	$	25,152	$	-	$	25,152
U.S. Treasury securities and obligations of U.S.-government instrumentalities		111,687		-		-		111,687
Municipal securities		-		701,028		-		701,028
Corporate bonds		-		219,796		-		219,796
Residential agency mortgage-backed securities		-		271,231		-		271,231
Collaterized mortgage obligations		-		13,571		-		13,571
Total fixed-maturities	$	111,687	$	1,230,778	$	-	$	1,342,465
Equity investments	$	220,118	$	179,108	$	5,102	$	404,328

	2019
	Level 1		Level 2		Level 3		Total
Securities available-for-sale
Fixed-maturity securities
Obligations of government-sponsored enterprises	$	-	$	17,686	$	-	$	17,686
U.S. Treasury securities and obligations of U.S.-government instrumentalities		107,009		-		-		107,009
Municipal securities		-		629,764		-		629,764
Corporate bonds		-		208,743		-		208,743
Residential agency mortgage-backed securities		-		270,536		-		270,536
Collaterized mortgage obligations		-		9,145		-		9,145
Total fixed-maturities	$	107,009	$	1,135,874	$	-	$	1,242,883
Equity securities	$	177,136	$	105,180	$	5,209	$	287,525

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Claim Liabilities and Claim Adjustment Expenses (Tables)

12 Months Ended

Dec. 31, 2020

Claims Development [Line Items]

Reconciliation of Beginning and Ending Balances of Claim Liabilities

The tables below present a reconciliation of the beginning and ending balances of Claim Liabilities in 2020, 2019 and 2018:

	2020
	Managed Care		Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	341,277	$	367,981		$	709,258
Reinsurance recoverable on claim liabilities		-		(137,017	)		(137,017	)
Net claim liabilities at beginning of year		341,277		230,964			572,241
Claims incurred
Current period insured events		2,772,084		112,296			2,884,380
Prior period insured events		33,654		(9,765	)		23,889
Total		2,805,738		102,531			2,908,269
Payments of losses and loss-adjustment expenses
Current period insured events		2,408,173		65,414			2,473,587
Prior period insured events		293,187		65,450			358,637
Total		2,701,360		130,864			2,832,224
Net claim liabilities at end of year		445,655		202,631			648,286
Reinsurance recoverable on claim liabilities		-		138,816			138,816
Claim liabilities at end of year	$	445,655	$	341,447		$	787,102

	2019
	Managed Care			Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	394,226		$	542,563		$	936,789
Reinsurance recoverable on claim liabilities		-			(315,543	)		(315,543	)
Net claim liabilities at beginning of year		394,226			227,020			621,246
Claims incurred
Current period insured events		2,556,027			110,513			2,666,540
Prior period insured events		(29,344	)		(5,191	)		(34,535	)
Total		2,526,683			105,322			2,632,005
Payments of losses and loss-adjustment expenses
Current period insured events		2,293,251			61,966			2,355,217
Prior period insured events		286,381			39,412			325,793
Total		2,579,632			101,378			2,681,010
Net claim liabilities at end of year		341,277			230,964			572,241
Reinsurance recoverable on claim liabilities		-			137,017			137,017
Claim liabilities at end of year	$	341,277		$	367,981		$	709,258

	2018
	Managed Care			Other Business Segments *			Consolidated
Claim liabilities at beginning of year	$	367,357		$	739,519		$	1,106,876
Reinsurance recoverable on claim liabilities		-			(633,099	)		(633,099	)
Net claim liabilities at beginning of year		367,357			106,420			473,777
Claims incurred
Current period insured events		2,308,516			103,368			2,411,884
Prior period insured events		(36,015	)		120,961			84,946
Total		2,272,501			224,329			2,496,830
Payments of losses and loss-adjustment expenses
Current period insured events		1,982,372			57,260			2,039,632
Prior period insured events		263,260			46,469			309,729
Total		2,245,632			103,729			2,349,361
Net claim liabilities at end of year		394,226			227,020			621,246
Reinsurance recoverable on claim liabilities		-			315,543			315,543
Claim liabilities at end of year	$	394,226		$	542,563		$	936,789

* Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.

Supplementary Information about Average Percentage Payout of Incurred Claims by Age

The table below includes the average annual percentage payout of incurred claims by age, net of reinsurance, for the Property and Casualty segment, presented as required supplementary information as of December 31, 2020:

	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)	(unaudited)
	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Average	44.3%	20.7%	10.3%	8.5%	3.6%	1.9%	1.0%	0.4%	0.5%	0.2%

Reconciliation of Net Incurred and Paid Claims Development

The reconciliation of the net incurred and paid claims development tables, by segment, to the liability for claims and claim adjustment expenses in the Consolidated Balance Sheets is as follows:

	As of December 31, 2020
Net outstanding liabilities
Managed Care	$	445,655
Property and Casualty		166,567
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		612,222
Reinsurance recoverable on unpaid claims - Property and Casualty		126,268
Insurance lines other than short-duration		49,932
Intersegment elimination		(1,320	)
Total gross liability for unpaid claims and claim adjustment expense	$	787,102

Managed Care [Member]

Claims Development [Line Items]

Incurred and Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

The Company estimates its liabilities for unpaid claims following a detailed actuarial process that entails using both historical claim payment patterns as well as emerging medical cost trends to project a best estimate of claim liabilities. This process includes comparing the historical claims incurred dates to the actual dates on claims payment.  Completion factors are applied to claims paid through the consolidated financial statements date to estimate the claim expense incurred for the current period.  The liability for claim adjustment expenses consists of adjustments made by our actuaries based on their knowledge and their estimate of emerging impacts to benefit costs and payment speed.

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance					As of December 31, 2020
							(in thousands)
Incurred Year	(unaudited) 2019		2020		Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
2019	$	2,556,027	$	2,568,474	$	10,523		37,971
2020				2,772,084		363,911		35,822
	Total		$	5,340,558

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Incurred Year	(unaudited) 2019		2020
2019	$	2,293,251	$	2,557,951
2020				2,408,173
	Total		$	4,966,124
All outstanding liabilities before 2019, net of reinsurance				71,221
Liabilities for claims and claim adjustment expenses, net of reinsurance			$	445,655

Property and Casualty Insurance [Member]

Claims Development [Line Items]

Incurred and Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Claims liability for Property and Casualty represents individual case estimates for reported claims and estimates for unreported losses, net of any salvage and subrogation based on past experience modified for current trends and estimates of expense for investigating and setting claims.

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31, 2020
Incurred Year	Incurred amount																				Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of reported claims
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	51,315	$	50,287	$	51,105	$	50,776	$	51,895	$	52,099	$	51,729	$	51,684	$	51,771	$	51,807	$	74		20,780
2012				49,040		49,856		48,900		49,817		48,945		48,186		47,731		47,725		47,340		94		21,243
2013						52,343		51,030		49,606		49,168		48,229		47,550		47,104		46,777		173		20,909
2014								48,430		45,410		43,707		42,547		41,457		41,147		40,702		275		19,110
2015										45,067		40,175		37,271		35,505		34,889		34,149		332		18,047
2016												48,127		44,294		41,168		39,488		38,418		443		20,874
2017														60,694		187,376		189,162		195,376		2,406		39,466
2018																40,619		37,603		34,306		1,296		16,381
2019																		43,589		34,373		4,107		10,311
2020																				44,455		18,511		7,595
																	Total		$	567,703

Cumulative Paid claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Incurred Year
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	24,534	$	34,835	$	41,606	$	44,996	$	47,908	$	49,598	$	50,457	$	50,761	$	51,127	$	$51,209
2012				22,677		33,620		40,406		43,663		45,607		46,094		46,441		46,625		46,724
2013						21,376		33,249		38,979		42,840		44,252		45,234		45,502		45,621
2014								18,752		28,657		33,809		36,875		37,857		38,773		39,214
2015										17,063		24,935		28,040		30,729		32,188		32,554
2016												20,099		28,996		32,820		34,546		35,395
2017														28,414		41,855		48,574		83,613
2018																16,555		24,402		26,997
2019																		16,305		22,379
2020																				19,431
																			$	403,137
	All outstanding liabilities before 2011, net of reinsurance																			2,001
	Liabilities for claims and claims adjustment expenses, net of reinsurance																		$	166,567

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2020

Borrowings [Abstract]

Summary of Borrowings

A summary of the borrowings entered by the Company as of December 31 is as follows:

	2020		2019
Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.15% at December 31, 2020).	$	4,627	$	6,267
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 2.98% at December 31, 2020).		16,204		17,211
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.48% at December 31, 2020).		1,813		2,401
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.25% at December 31, 2020). Last payment of $25,185 due on June 19, 2025.		30,723		-
Total borrowings		53,367		25,879
Less: unamortized debt issuance costs		616		185
	$	52,751	$	25,694

Aggregate Maturities of Company's Long Term Borrowings

Aggregate maturities of the Company’s borrowings as of December 31, 2020 are:

Year ending December 31
2021	$	4,490
2022		4,490
2023		4,196
2024		14,484
2025		25,707
	$	53,367

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Reinsurance Activity (Tables)

12 Months Ended

Dec. 31, 2020

Reinsurance Activity [Abstract]

Effect of Reinsurance on Premiums Earned and Claims Incurred

The effect of reinsurance on premiums earned and claims incurred is as follows:

				Premiums Earned									Claims Incurred(1)
	2020			2019			2018			2020			2019			2018
Gross	$	3,681,830		$	3,316,802		$	3,009,830		$	2,967,719		$	2,645,599		$	2,657,639
Ceded		(76,809	)		(66,320	)		(73,591	)		(60,702	)		(15,924	)		(163,898	)
Assumed		429			2,398			2,352			1,252			2,330			3,089
Net	$	3,605,450		$	3,252,880		$	2,938,591		$	2,908,269		$	2,632,005		$	2,496,830

⁽¹⁾  The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $38,551, $34,251 and $30,783 that is included within the consolidated claims incurred during the years ended December 31, 2020, 2019 and 2018, respectively.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Tax Expense (Benefit)

The components of income tax expense (benefit) consisted of the following:

	2020			2019		2018
Current income tax expense	$	26,853		$	35,714	$	2,212
Deferred income tax (benefit) expense		(2,285	)		3,661		(32,078	)
Total income tax expense (benefit)	$	24,568		$	39,375	$	(29,866	)

Income Tax Expense (Benefit) Reconciliation

The income tax expense (benefit) differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	2020			2019			2018
Income (loss) before taxes	$	91,733		$	132,252		$	(93,172	)
Statutory tax rate		37.50	%		38.00	%		39.00	%
Income tax expense (benefit) at statutory rate		34,400			49,595			(36,337	)
(Decrease) increase in taxes resulting from:
Exempt income, net		(10,510	)		-			(2,330	)
Effect of taxing life insurance operations as a qualified domestic life insurance company instead of as a regular corporation		(3,379	)		(4,823	)		(3,445	)
Effect of taxing capital gains at a preferential rate		1			(743	)		194
Adjustment to deferred tax assets and liabilities for changes in statutory tax rates		-			-			9,217
Other adjustments to deferred tax assets and liabilities		736			(469	)		(43	)
Unrealized gains or losses included in earnings		1,338			(5,627	)		4,625
Effect of extraordinary dividend distribution from the JUA Association - reported net of taxes in other income		-			(55	)		-
Effect of net operating loss limitations		2,369			1,239			-
Tax credit benefit		(1,190	)		(62	)		(306	)
Tax returns to provision true up		922			36			(798	)
Subtotal		(9,713	)		(10,504	)		7,114
Other permanent disallowances, net:
Other		(46	)		37			(229	)
Other adjustments		(73	)		247			(414	)
Total income tax expense (benefit)	$	24,568		$	39,375		$	(29,866	)

Net Deferred Tax Asset

Deferred income taxes reflect the tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The composition of the net deferred tax asset at December 31, 2020 and 2019 of the Company and its subsidiaries is as follows:

	2020			2019
Deferred tax assets
Allowance for doubtful receivables	$	16,542		$	18,882
Liability for pension benefits		59,205			15,378
Postretirement benefits		280			415
Deferred compensation		2,106			2,187
Accumulated depreciation		193			920
Impairment loss on investments		648			522
Contingency reserves		10,430			4,063
Share-based compensation		6,880			8,086
Alternative minimum income tax credit		3,998			3,432
Purchased tax credits		286			458
Net operating loss		56,930			51,246
Reinsurance agreement		9,375			9,375
Accrued liabilities		7,069			5,599
Difference in tax basis of investments portfolio		-			77
Other		2,137			1,349
Gross deferred tax assets		176,079			121,989
Less: valuation allowance		(7,765	)		(6,705	)
Deferred tax assets		168,314			115,284
Deferred tax liabilities
Deferred policy acquisition costs		(9,608	)		(8,413	)
Catastrophe loss reserve		(11,693	)		(13,014	)
Unrealized gain on securities available for sale		(23,843	)		(14,965	)
Unrealized gain on equity investments		(10,740	)		(9,091	)
Difference in tax basis of investments portfolio		(306	)		-
Unamortized debt issue costs		(231	)		(69	)
Intangible asset		(492	)		(669	)
Employee benefits plan		(6,913	)		(2,026	)
Gross deferred tax liabilities		(63,826	)		(48,247	)
Net deferred tax asset	$	104,488		$	67,037

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Pension Plans (Tables)

12 Months Ended

Dec. 31, 2020

Pension Plans [Abstract]

Plan's Benefit Obligations, Fair Value of Plan Assets, and Funded Status

The following table sets forth the plan’s benefit obligations, fair value of plan assets, and funded status as of December 31, 2020 and 2019.

	2020			2019
Change in benefit obligation
Benefit obligation at beginning of year	$	190,555		$	159,477
Interest cost		6,073			6,992
Benefit payments		(9,176	)		(9,672	)
Actuarial loss		17,241			33,758
Benefit obligation at end of year	$	204,693		$	190,555
Accumulated benefit obligation at end of year	$	204,693		$	190,555
Change in fair value of plan assets
Fair value of plan assets at beginning of year	$	163,558		$	134,957
Actual return on assets		(91,542	)		36,273
Employer contributions		10,000			2,000
Benefit payments		(9,176	)		(9,672	)
Fair value of plan assets at end of year	$	72,840		$	163,558
Funded status at end of year	$	(131,853	)	$	(26,997	)

Amounts Recognized in Balance Sheet

The amounts recognized in the Consolidated Balance Sheets as of December 31, 2020 and 2019 consist of the following:

	2020		2019
Pension liability	$	131,853	$	26,997
Net actuarial loss recognized in accumulated other comprehensive loss, net of a deferred tax of $55,848 and $12,692 in 2020 and 2019, respectively		100,685		27,907

Assumptions Used on Weighted Average Basis to Determine Benefits Obligations and Computing the Periodic Benefit Cost

The following assumptions were used on a weighted average basis to determine benefits obligations of the plan as of December 31, 2020 and 2019.

	2020			2019
Discount rate		2.75	%		3.25	%
Expected return on plan assets		5.75	%		6.25	%
Rate of compensation increase		N/A			N/A

The following assumptions were used on a weighted average basis in computing the periodic benefit cost for the years ended December 31, 2020, 2019, and 2018:

	2020			2019			2018
Discount rate		3.25	%		4.50	%		3.75	%
Expected return on plan assets		6.25	%		6.50	%		6.50	%
Rate of compensation increase		N/A			N/A			N/A

Components of Net Periodic Benefit and Other Amounts Recognized in Other Comprehensive Income

The components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income were as follows:

	2020			2019			2018
Components of net periodic benefit cost
Interest cost	$	6,073		$	6,992		$	6,853
Expected return on plan assets		(8,840	)		(8,835	)		(9,020	)
Actuarial loss		1,178			392			961
Settlement loss		-			-			2,110
Net periodic benefit (income) cost	$	(1,589	)	$	(1,451	)	$	904

Fair Value Measurements by Level

The tables below summarize fair value measurements by level at December 31, 2020 and 2019 for assets measured at fair value on a recurring basis:

	2020
	Level 1		Level 2		Level 3		Total		NAV
Government obligations	$	-	$	4,127	$	-	$	4,127	$	-
Non-agency backed securities		-		157		-		157		-
Corporate obligations		-		13,134		-		13,134		-
Real estate		-		-		-		-		6,033
Registered investments		1,183		1,886		-		3,069		-
Common/Collective trusts		-		46,006		-		46,006		-
Common stocks		1,196		-		-		1,196		-
Interest-bearing cash		371		-		-		371		-
Derivatives		-		2		-		2		-
	$	2,750	$	65,312	$	-	$	68,062	$	6,033

	2019
	Level 1		Level 2		Level 3		Total		NAV
Government obligations	$	-	$	6,782	$	-	$	6,782	$	-
Non-agency backed securities		-		656		-		656		-
Corporate obligations		-		9,353		-		9,353		-
Limited Liability Corporations		-		-		-		-		126,989
Real estate		-		-		-		-		6,720
Registered investments		3,754		382		-		4,136		-
Common/Collective trusts		-		7,527		-		7,527		-
Common stocks		1,885		-		-		1,885		-
Preferred stocks		-		14		-		14		-
Interest-bearing cash		300		-		-		300		-
	$	5,939	$	24,714	$	-	$	30,653	$	133,709

Expected Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Year ending December 31
2021	$	11,805
2022		10,378
2023		10,611
2024		10,664
2025		10,656
2026 – 2029		56,709

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Stock Repurchase Programs (Tables)

12 Months Ended

Dec. 31, 2020

Stock Repurchase Programs [Abstract]

Stock Repurchase Activity

The stock repurchase activity under active stock repurchase programs for the years ended December 31 was:

	2020						2019						2018
	Shares Repurchased		Average Share Price		Amount Repurchased		Shares Repurchased		Average Share Price		Amount Repurchased		Shares Repurchased		Average Share Price		Amount Repurchased
2017  $30,000 program		952,820	$	15.72	$	14,982		527,881	$	18.92	$	9,989		903,888	$	24.76	$	22,390

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Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2020

Comprehensive Income [Abstract]

Accumulated Balances of Other Comprehensive Income

The accumulated balances for each classification of Other Comprehensive Income are:

	Unrealized Gains on Securities			Liability for Pension Benefits			Accumulated Other Comprehensive Income
Beginning balance at December 31, 2019	$	57,830		$	(28,467	)	$	29,363
Net current period change		37,654			(73,807	)		(36,153	)
Reclassification adjustments for gains and losses reclassified in income		(3,795	)		765			(3,030	)
Ending balance at December 31, 2020	$	91,689		$	(101,509	)	$	(9,820	)

Related Deferred Tax Effects Allocated to Each Component of Other Comprehensive Income

The related deferred tax effects allocated to each component of Other Comprehensive Income in the accompanying Consolidated Statements of Stockholders’ Equity and Comprehensive Income in 2020, 2019 and 2018 are:

	2020
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	47,067		$	(9,413	)	$	37,654
Less reclassification adjustment for gains and losses realized in income		(4,541	)		746			(3,795	)
Net change in unrealized gain		42,526			(8,667	)		33,859
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		1,224			(459	)		765
Net change arising from assumptions and plan changes and experience		(118,092	)		44,285			(73,807	)
Net change in liability for pension benefits		(116,868	)		43,826			(73,042	)
Net current period change	$	(74,342	)	$	35,159		$	(39,183	)

	2019
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	42,780		$	(8,556	)	$	34,224
Less reclassification adjustment for gains and losses realized in income		(4,456	)		754			(3,702	)
Net change in unrealized gain		38,324			(7,802	)		30,522
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		396			(149	)		247
Net change arising from assumptions and plan changes and experience		(7,149	)		2,681			(4,468	)
Net change in liability for pension benefits		(6,753	)		2,532			(4,221	)
Net current period change	$	31,571		$	(5,270	)	$	26,301

	2018
	Before-Tax Amount			Deferred Tax (Expense) Benefit			Net-of-Tax Amount
Unrealized holding gains on securities arising during the period	$	(24,375	)	$	4,875		$	(19,500	)
Less reclassification adjustment for gains and losses realized in income		13,457			(3,005	)		10,452
Net change in unrealized gain		(10,918	)		1,870			(9,048	)
Liability for pension benefits:
Reclassification adjustment for amortization of net losses from past experience and prior service costs		(995	)		373			(622	)
Net change arising from assumptions and plan changes and experience		2,190			(830	)		1,360
Net change in liability for pension benefits		1,195			(457	)		738
Net current period change	$	(9,723	)	$	1,413		$	(8,310	)

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

Share-Based Compensation [Abstract]

Status of Non-vested Restricted and Performance Shares

A summary of the status of the Company’s non-vested restricted and performance shares as of December 31, 2020, and changes during the year ended December 31, 2020, are presented below:

	Restricted Awards					Performance Awards
	Number of Shares			Weighted Average Fair Value		Number of Shares			Weighted Average Exercise Price
Outstanding balance at January 1, 2020		308,387		$	24.16		515,688		$	25.60
Granted		228,157			14.89		521,357			14.44
Lapsed		(167,701	)		23.23		(200,801	)		26.50
Forfeited (due to termination)		(5,671	)		19.03		(29,882	)		22.19
Quantity adjusted (due to performance payout more than 100%), net of forfeited		-			-		(32,008	)		26.50
Outstanding balance at December 31, 2020		363,172		$	18.87		774,354		$	18.05

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Net Income Available to Stockholders and Basic Net Income per Share (Tables)

12 Months Ended

Dec. 31, 2020

Net Income Available to Stockholders and Basic Net Income per Share [Abstract]

Computation of Basic and Diluted Earnings per Share

The table below sets forth the computation of basic and diluted earnings per share for the three-year period ended December 31:

	2020		2019		2018
Numerator for earnings per share
Net income (loss) attributable to TSM available to stockholders	$	67,189	$	92,894	$	(63,302	)
Denominator for basic earnings per share – Weighted average of common shares		23,179,544		23,318,742		22,975,385
Effect of dilutive securities		130,198		66,551		-
Denominator for diluted earnings per share		23,309,742		23,385,293		22,975,385
Basic net income (loss) per share attributable to TSM	$	2.90	$	3.98	$	(2.76	)
Diluted net income  (loss) per share attributable to TSM	$	2.88	$	3.97	$	(2.76	)

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Leases (Tables)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Undiscounted Cash Flows of Operating Leases

Undiscounted cash flows of operating leases are shown below:

Year ending December 31
2021	$	3,961
2022		3,366
2023		2,330
2024		1,856
2025		709
Thereafter		2,888
Total lease payments		15,110
Less: imputed interest		(1,919	)
Total	$	13,191

Lease Cost

The following presents the lease cost recognized by the Company:

For the years ended December 31,
	2020		2019
Operating lease cost	$	4,600	$	4,900
Short-term lease cost		977		509
	$	5,577	$	5,409

Maturity Analysis of Lease Payments to be Received

The Company leases certain floors of one of its buildings and generates rental income. Maturity analysis of lease payments to be received from its lessees as of December 31, 2020, is summarized as follows:

Year ending December 31,
2021	$	1,909
2022		1,947
2023		1,986
2024		2,026
2025		1,177
Thereafter		1,448
	$	10,493

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Statutory Accounting (Tables)

12 Months Ended

Dec. 31, 2020

Statutory Accounting [Abstract]

Unassigned Surplus and Net Income (Loss) of the Regulated Subsidiaries

The following table sets forth the combined net admitted assets, capital and surplus, RBC requirement, which is our statutory capital and surplus requirement, and net income (loss) for the regulated subsidiaries at December 31, 2020, 2019 and 2018:

(dollar amounts in millions)	2020		2019		2018
Net admitted assets	$	2,473	$	2,394	$	2,089
Capital and surplus		771		767		602
RBC requirement		641		546		312
Net income (loss)		53		68		(32	)

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Supplementary Information on Cash Flow Activities (Tables)

12 Months Ended

Dec. 31, 2020

Supplementary Information on Cash Flow Activities [Abstract]

Supplementary Information on Cash Flow Activities

	2020			2019			2018
Supplementary information
Non-cash transactions affecting cash flow activities
Change in net unrealized (gain) loss on securities available for sale, including deferred income tax liability (asset) of $8,667, $7,802, and ($1,870) in 2020, 2019, and 2018 respectively	$	(33,859	)	$	(30,522	)	$	9,048
Change in liability for pension benefits, and deferred income tax (asset) liability of ($43,826), ($2,532), $457, in 2020, 2019, and 2018, respectively		73,042			4,221			(738	)
Repurchase and retirement of common stock		(382	)		(119	)		(748	)
Stock dividend		-			(24,655	)		-
Issuance of common stocks		-			1,200			-
Capitalization of lease right of use asset		8,014			10,438			-
Other
Income taxes paid		40,568			3,147			8,978
Interest paid		7,986			7,672			6,903

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2020

Segment Information [Abstract]

Operating Revenues by Major Operating Segment

The following tables summarize the operations by operating segment for each of the years in the three‑year period ended December 31:

	2020			2019			2018
Operating revenues
Managed care
Premiums earned, net	$	3,320,181		$	2,985,600		$	2,687,773
Fee revenue		12,585			9,946			14,701
Intersegment premiums/fee revenue		2,525			6,269			5,690
Net investment income		20,783			23,468			23,827
Total managed care		3,356,074			3,025,283			2,731,991
Life
Premiums earned, net		193,889			180,204			167,888
Intersegment premiums		2,066			1,987			668
Net investment income		27,317			27,323			25,658
Total life		223,272			209,514			194,214
Property and casualty
Premiums earned, net		91,380			87,076			82,930
Intersegment premiums		613			613			613
Net investment income		8,974			9,773			10,800
Total property and casualty		100,967			97,462			94,343
Other segments*
Intersegment service revenues		10,630			8,836			283
Operating revenues from external sources		8,991			8,553			5,794
Total other segments		19,621			17,389			6,077
Total business segments		3,699,934			3,349,648			3,026,625
TSM operating revenues from external sources		473			1,443			1,624
Elimination of intersegment premiums		(5,204	)		(8,869	)		(6,971	)
Elimination of intersegment service revenue		(10,630	)		(8,836	)		(283	)
Consolidated operating revenues	$	3,684,573		$	3,333,386		$	3,020,995

* Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinics.

Operating Income (Loss) and Depreciation and Amortization Expense

	2020			2019			2018
Operating income (loss)
Managed care	$	38,301		$	61,907		$	26,468
Life		27,796			21,912			19,901
Property and casualty		19,829			14,492			(110,119	)
Other segments*		(6,217	)		(3,054	)		8
Total business segments		79,709			95,257			(63,742	)
TSM operating revenues from external sources		473			1,443			1,624
TSM unallocated operating expenses		(7,940	)		(8,588	)		(8,815	)
Elimination of TSM charges		9,612			9,612			9,600
Consolidated operating income (loss)		81,854			97,724			(61,333	)
Consolidated net realized investment gains		641			5,843			298
Consolidated net unrealized investment gains (losses) on equity securities		7,639			32,151			(36,546	)
Consolidated interest expense		(7,986	)		(7,672	)		(6,903	)
Consolidated other income, net		9,585			4,206			11,312
Consolidated income (loss) before taxes	$	91,733		$	132,252		$	(93,172	)

	2020		2019		2018
Depreciation and amortization expense
Managed care	$	10,478	$	11,527	$	10,525
Life		1,226		1,081		1,134
Property and casualty		381		385		384
Other segments*		1,261		910		705
Total business segments		13,346		13,903		12,748
TSM depreciation expense		1,057		697		787
Consolidated depreciation and amortization expense	$	14,403	$	14,600	$	13,535

* Includes segments that are not required to be reported separately, primarily the data processing services  organization and the health clinics.

Assets

	2020			2019			2018
Assets
Managed care	$	1,319,389		$	1,190,538		$	1,078,262
Life		1,051,819			981,370			863,470
Property and casualty		583,404			592,758			747,583
Other segments*		34,020			28,346			20,705
Total business segments		2,988,632			2,793,012			2,710,020
Unallocated amounts related to TSM
Cash, cash equivalents, and investments		16,489			28,167			57,818
Property and equipment, net		68,678			25,623			21,733
Other assets		88,684			37,176			22,521
		173,851			90,966			102,072
Elimination entries – intersegment receivables and others		(74,065	)		(65,152	)		(51,844	)
Consolidated total assets	$	3,088,418		$	2,818,826		$	2,760,248

Significant Noncash Items

	2020			2019		2018
Significant noncash items
Net change in unrealized gain (loss) on securities available for sale
Managed care	$	12,504		$	9,687	$	2,585
Life		18,336			17,442		(11,285	)
Property and casualty		3,503			3,023		(583	)
Other segments*		-			-		-
Total business segments		34,343			30,152		(9,283	)
Amount related to TSM		(484	)		370		235
Consolidated net change in unrealized (loss) gain on securities available for sale	$	33,859		$	30,522	$	(9,048	)

* Includes segments that are not required to be reported separately, primarily the data processing services  organization and the health clinics.

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Significant Accounting Policies (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash Equivalents [Abstract]
Cash equivalents	$ 43,032	$ 25,060
Investments [Abstract]
Allowance for credit losses	$ 0
Revenue Recognition [Abstract]
Managed care premiums grace period	2 months
Profit agreement percentage under risk based Medicaid contract	2.50%
Profit proportion percentage	50.00%
Accrued estimated profit sharing	$ 1,948	1,948
Percentage of excess of target minimum medical loss ratio required to be remitted	92.00%
Accrued amount due to ASES for excess over actual MLR	$ 0	$ 0
Premium deficiency reserve included in accounts payable and accrued liabilities	$ 9,900
Deferred Policy Acquisition Costs and Value of Business Acquired [Abstract]
Interest rate associated with amortization of deferred policy acquisition cost	3.90%	4.40%
Long-Lived Assets, including Goodwill [Abstract]
Impairment charge	$ 0	$ 0	$ 0
Future Policy Benefits [Abstract]
Interest rate for future policy benefits	3.90%	4.40%
Policyholder Deposits [Abstract]
Interest on policy holder deposits	$ 2,946	$ 2,639	2,615
Liability for future policy benefits	414,997	386,017
Health Insurance Providers Fee [Abstract]
Accrued HIP fee	55,500		50,100
Insurance-Related Assessments [Abstract]
Accrued insurance assessments	722	1,629
Recently Adopted Accounting Standards [Abstract]
Stockholders' equity	967,513	943,172	$ 821,308	$ 912,682
Minimum [Member]
Deferred Policy Acquisition Costs and Value of Business Acquired [Abstract]
Interest rate associated with amortization of deferred policy acquisition cost			3.90%
Future Policy Benefits [Abstract]
Interest rate for future policy benefits			3.90%
Maximum [Member]
Deferred Policy Acquisition Costs and Value of Business Acquired [Abstract]
Interest rate associated with amortization of deferred policy acquisition cost			5.75%
Future Policy Benefits [Abstract]
Interest rate for future policy benefits			5.75%
Retained Earnings [Member]
Recently Adopted Accounting Standards [Abstract]
Stockholders' equity	$ 897,221	830,198	$ 761,970	$ 785,390
Building [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	35 years
Building Improvements [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	5 years
Leasehold Improvements [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	10 years
Office Furniture [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	7 years
Computer Software [Member] | Minimum [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	3 years
Computer Software [Member] | Maximum [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	10 years
Computer Equipment, Equipment, and Automobiles [Member] | Minimum [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	3 years
Computer Equipment, Equipment, and Automobiles [Member] | Maximum [Member]
Summary of the estimated useful lives of the entity's property and equipment [Abstract]
Estimated Useful Life	5 years
Interest-Sensitive Life Products [Member]
Policyholder Deposits [Abstract]
Interest rates credited to policyholder account balances	3.70%
Annuities [Member]
Policyholder Deposits [Abstract]
Interest rates credited to policyholder account balances	2.92%
Universal Life and Interest-Sensitive Products [Member]
Policyholder Deposits [Abstract]
Liability for future policy benefits	$ 101,310	$ 91,694
Universal Life and Interest-Sensitive Products [Member] | Minimum [Member]
Policyholder Deposits [Abstract]
Interest rates credited to policyholder account balances		2.00%
Universal Life and Interest-Sensitive Products [Member] | Maximum [Member]
Policyholder Deposits [Abstract]
Interest rates credited to policyholder account balances		4.50%
Other Invested Assets [Member]
Investments [Abstract]
Unfunded capital commitments	$ 52,557
Remaining average commitments period	3 years
Other Invested Assets [Member] | Minimum [Member]
Investments [Abstract]
Estimated liquidation period for underlying assets of funds	5 years
Other Invested Assets [Member] | Maximum [Member]
Investments [Abstract]
Estimated liquidation period for underlying assets of funds	12 years
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Recently Adopted Accounting Standards [Abstract]
Stockholders' equity		$ (166)
ASU 2016-13 [Member] | Retained Earnings [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Recently Adopted Accounting Standards [Abstract]
Stockholders' equity		$ (166)

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Investment in Securities, Fixed Maturities Available for Sale (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Fixed-maturities available-for-sale [Abstract]
Amortized Cost	$ 1,227,422	$ 1,173,043
Gross Unrealized Gains	115,130	70,256
Gross Unrealized Losses	(87)	(416)
Estimated Fair Value	1,342,465	1,242,883
Obligations of Government-sponsored Enterprises [Member]
Fixed-maturities available-for-sale [Abstract]
Amortized Cost	24,496	17,209
Gross Unrealized Gains	665	477
Gross Unrealized Losses	(9)	0
Estimated Fair Value	25,152	17,686
U.S. Treasury Securities and Obligations of U.S.-Government Instrumentalities [Member]
Fixed-maturities available-for-sale [Abstract]
Amortized Cost	103,694	102,230
Gross Unrealized Gains	7,993	4,779
Gross Unrealized Losses	0	0
Estimated Fair Value	111,687	107,009
Municipal Securities [Member]
Fixed-maturities available-for-sale [Abstract]
Amortized Cost	646,961	595,051
Gross Unrealized Gains	54,067	34,735
Gross Unrealized Losses	0	(22)
Estimated Fair Value	701,028	629,764
Corporate Bonds [Member]
Fixed-maturities available-for-sale [Abstract]
Amortized Cost	189,516	187,096
Gross Unrealized Gains	30,280	21,721
Gross Unrealized Losses	0	(74)
Estimated Fair Value	219,796	208,743
Residential Mortgage-backed Securities [Member]
Fixed-maturities available-for-sale [Abstract]
Amortized Cost	249,801	262,783
Gross Unrealized Gains	21,487	8,073
Gross Unrealized Losses	(57)	(320)
Estimated Fair Value	271,231	270,536
Collateralized Mortgage Obligations [Member]
Fixed-maturities available-for-sale [Abstract]
Amortized Cost	12,954	8,674
Gross Unrealized Gains	638	471
Gross Unrealized Losses	(21)	0
Estimated Fair Value	$ 13,571	$ 9,145

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Investment in Securities, Fixed Maturities Held to Maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Fixed-maturities held-to-maturity [Abstract]
Amortized Cost	$ 1,867	$ 1,860
Gross Unrealized Gains	218	159
Gross Unrealized Losses	0	0
Estimated Fair Value	2,085	2,019
U.S. Treasury Securities and Obligations of U.S.-Government Instrumentalities [Member]
Fixed-maturities held-to-maturity [Abstract]
Amortized Cost	614	615
Gross Unrealized Gains	201	158
Gross Unrealized Losses	0	0
Estimated Fair Value	815	773
Residential Mortgage-Backed Securities [Member]
Fixed-maturities held-to-maturity [Abstract]
Amortized Cost	164	165
Gross Unrealized Gains	17	1
Gross Unrealized Losses	0	0
Estimated Fair Value	181	166
Certificates of Deposits [Member]
Fixed-maturities held-to-maturity [Abstract]
Amortized Cost	1,089	1,080
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 1,089	$ 1,080

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Investment in Securities, Other Invested Assets - Alternative Investments (Details) - Other Invested Assets - Alternative investments [Member] - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Other invested assets - Alternative investments [Abstract]
Amortized cost	$ 112,171	$ 97,575
Gross unrealized gains	6,119	3,721
Gross unrealized losses	(3,385)	(788)
Estimated fair value	$ 114,905	$ 100,508

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Investment in Securities, Securities in Continuous Unrealized Loss Position (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Security	Dec. 31, 2019 USD ($) Security
Fixed maturities available for sale, estimated fair value [Abstract]
Less than 12 months	$ 11,223	$ 95,605
12 months or longer	0	0
Total	11,223	95,605
Fixed maturities available for sale, gross unrealized loss [Abstract]
Less than 12 months	(87)	(416)
12 months or longer	0	0
Total	$ (87)	$ (416)
Fixed maturities available for sale, number of securities [Abstract]
Less than 12 months | Security	4	20
12 months or longer | Security	0	0
Total | Security	4	20
Alternative investments, number of securities [Abstract]
Minimum percentage of gross unrealized investment losses as cost	20.00%
Minimum unrealized loss of investment as indicator of other-than-temporary impairment	$ 100
Obligations of Government-sponsored Enterprises [Member]
Fixed maturities available for sale, estimated fair value [Abstract]
Less than 12 months	1,539
12 months or longer	0
Total	1,539
Fixed maturities available for sale, gross unrealized loss [Abstract]
Less than 12 months	(9)
12 months or longer	0
Total	$ (9)
Fixed maturities available for sale, number of securities [Abstract]
Less than 12 months | Security	1
12 months or longer | Security	0
Total | Security	1
Municipal Securities [Member]
Fixed maturities available for sale, estimated fair value [Abstract]
Less than 12 months		$ 10,656
12 months or longer		0
Total		10,656
Fixed maturities available for sale, gross unrealized loss [Abstract]
Less than 12 months		(22)
12 months or longer		0
Total		$ (22)
Fixed maturities available for sale, number of securities [Abstract]
Less than 12 months | Security		3
12 months or longer | Security		0
Total | Security		3
Corporate Bonds [Member]
Fixed maturities available for sale, estimated fair value [Abstract]
Less than 12 months		$ 5,047
12 months or longer		0
Total		5,047
Fixed maturities available for sale, gross unrealized loss [Abstract]
Less than 12 months		(74)
12 months or longer		0
Total		$ (74)
Fixed maturities available for sale, number of securities [Abstract]
Less than 12 months | Security		1
12 months or longer | Security		0
Total | Security		1
Residential Mortgage-Backed Securities [Member]
Fixed maturities available for sale, estimated fair value [Abstract]
Less than 12 months	$ 3,624	$ 79,902
12 months or longer	0	0
Total	3,624	79,902
Fixed maturities available for sale, gross unrealized loss [Abstract]
Less than 12 months	(57)	(320)
12 months or longer	0	0
Total	$ (57)	$ (320)
Fixed maturities available for sale, number of securities [Abstract]
Less than 12 months | Security	1	16
12 months or longer | Security	0	0
Total | Security	1	16
Collateralized Mortgage Obligations [Member]
Fixed maturities available for sale, estimated fair value [Abstract]
Less than 12 months	$ 6,060
12 months or longer	0
Total	6,060
Fixed maturities available for sale, gross unrealized loss [Abstract]
Less than 12 months	(21)
12 months or longer	0
Total	$ (21)
Fixed maturities available for sale, number of securities [Abstract]
Less than 12 months | Security	2
12 months or longer | Security	0
Total | Security	2
Other Invested Assets - Alternative investments [Member]
Alternative investments, estimated fair value [Abstract]
Less than 12 months	$ 12,584	$ 24,437
12 months or longer	16,396	10,580
Total	28,980	35,017
Alternative investments, gross unrealized loss [Abstract]
Less than 12 months	(808)	(605)
12 months or longer	(2,577)	(183)
Total	$ (3,385)	$ (788)
Alternative investments, number of securities [Abstract]
Less than 12 months | Security	4	8
12 months or longer | Security	6	1
Total | Security	10	9

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Investment in Securities, Maturities of Investment Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Securities Available for Sale, Amortized Cost [Abstract]
Due in one year or less	$ 36,645
Due after one year through five	583,264
Due after five year through ten years	194,778
Due after ten years	149,980
Amortized Cost	1,227,422	$ 1,173,043
Securities available for sale, Estimated Fair Value [Abstract]
Due in one year or less	36,935
Due after one year through five	628,468
Due after five years through ten years	209,096
Due after ten years	183,164
Estimated fair value	1,342,465	1,242,883
Securities held to maturity, Amortized Cost [Abstract]
Due in one year or less	1,089
Due after five years through ten years	614
Amortized Cost	1,867	1,860
Securities held to maturity, Estimated Fair Value [Abstract]
Due in one year or less	1,089
Due after five years through ten years	815
Estimated fair value	2,085	2,019
Amortized cost of deposited with commissioner of insurance code	6,884	6,940
Fair value of deposited with commissioner of insurance code	7,526	7,274
Federal Home Loan Bank of New York [Member]
Securities held to maturity, Estimated Fair Value [Abstract]
Amortized cost of investments pledged to secure short term borrowings	227,890	145,981
Fair value of investments pledged to secure short term borrowings	250,088	152,916
Residential Mortgage-backed Securities [Member]
Securities Available for Sale, Amortized Cost [Abstract]
Without single maturity date	249,801
Amortized Cost	249,801	262,783
Securities available for sale, Estimated Fair Value [Abstract]
Without single maturity date	271,231
Estimated fair value	271,231	270,536
Securities held to maturity, Amortized Cost [Abstract]
Without single maturity date	164
Amortized Cost	164	165
Securities held to maturity, Estimated Fair Value [Abstract]
Without single maturity date	181
Estimated fair value	181	166
Collateralized Mortgage Obligations [Member]
Securities Available for Sale, Amortized Cost [Abstract]
Without single maturity date	12,954
Amortized Cost	12,954	8,674
Securities available for sale, Estimated Fair Value [Abstract]
Without single maturity date	13,571
Estimated fair value	$ 13,571	$ 9,145

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Realized and Unrealized Gains (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Investment	Dec. 31, 2019 USD ($) Investment	Dec. 31, 2018 USD ($)
Fixed maturity securities, available for sale [Abstract]
Gross gains	$ 3,943	$ 3,844	$ 3,730
Gross losses	(488)	(387)	(18,627)
Total fixed maturity securities	3,455	3,457	(14,897)
Equity investments [Abstract]
Gross gains	1,852	3,056	16,045
Gross losses	(5,074)	(1,669)	(2,290)
Gross losses from impaired securities	(678)	0	0
Total equity securities	(3,900)	1,387	13,755
Other invested assets [Abstract]
Gross gains	1,086	1,055	1,492
Gross losses	0	(56)	(52)
Total other invested assets	1,086	999	1,440
Net realized gains on securities	641	5,843	298
Recognized in accumulated other comprehensive income (loss) [Abstract]
Unrealized (losses) gains	37,654	34,224	(19,500)
Not recognized in the consolidated financial statements [Abstract]
Fixed maturities - held to maturity	59	32	(29)
Deferred tax liability on unrealized gains	$ (9,160)	$ (8,206)	2,292
Number of individual investment in securities exceeding 10% of stockholders' equity | Investment	0	0
Fixed Maturities - Available for Sale [Member]
Recognized in accumulated other comprehensive income (loss) [Abstract]
Unrealized (losses) gains	$ 45,203	$ 38,807	(14,104)
Other Invested Assets [Member]
Recognized in accumulated other comprehensive income (loss) [Abstract]
Unrealized (losses) gains	$ (199)	$ 1,545	$ 1,073

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Net Investment Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Interest and/or dividend income from [Abstract]
Interest and/or dividend income	$ 57,547	$ 62,007	$ 61,909
Fixed Maturities [Member]
Interest and/or dividend income from [Abstract]
Interest and/or dividend income	38,919	42,005	43,873
Equity Securities [Member]
Interest and/or dividend income from [Abstract]
Interest and/or dividend income	13,158	12,453	12,261
Other Invested Assets [Member]
Interest and/or dividend income from [Abstract]
Interest and/or dividend income	3,545	3,436	1,679
Policy Loans [Member]
Interest and/or dividend income from [Abstract]
Interest and/or dividend income	809	761	754
Cash Equivalents and Interest-Bearing Deposits [Member]
Interest and/or dividend income from [Abstract]
Interest and/or dividend income	483	1,602	1,407
Other [Member]
Interest and/or dividend income from [Abstract]
Interest and/or dividend income	$ 633	$ 1,750	$ 1,935

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Premium and Other Receivables, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Premium and Other Receivables, Net [Abstract]
Premium	$ 106,322	$ 188,861
Self-funded group receivables	26,412	28,672
FEHBP	12,830	13,894
Agent balances	31,509	30,784
Accrued interest	10,418	11,307
Reinsurance recoverable	216,314	239,767
Other	135,774	110,952
Premiums and other receivables, total	539,579	624,237
Less allowance for doubtful receivables [Abstract]
Premium	37,231	36,622
Other	13,508	19,923
Premiums and other receivables, allowance	50,739	56,545
Total premium and other receivables, net	488,840	567,692
Property and Casualty Insurance [Member]
Premium and Other Receivables, Net [Abstract]
Reinsurance recoverable	172,021	189,621
Government of Puerto Rico [Member]
Premium and Other Receivables, Net [Abstract]
Premiums and other receivables, total	53,397	49,176
Less allowance for doubtful receivables [Abstract]
Premiums and other receivables, allowance	$ 23,752	$ 22,091

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Deferred Policy Acquisition Costs and Value of Business Acquired (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
DPAC [Roll Forward]
Balance, beginning of period	$ 215,763	$ 193,860	$ 177,721
Additions	57,458	59,399	51,144
VOBA interest	0	0	0
Amortization	(45,687)	(37,496)	(35,005)
Net change	11,771	21,903	16,139
Balance, end of period	227,534	215,763	193,860
VOBA [Roll Forward]
Balance, beginning of period	19,122	21,299	23,067
Additions	3,700	0	0
VOBA interest	923	1,031	1,120
Amortization	(2,954)	(3,208)	(2,888)
Net change	1,669	(2,177)	(1,768)
Balance, end of period	20,791	19,122	21,299
TOTAL [Roll Forward]
Balance, beginning of period	234,885	215,159	200,788
Additions	61,158	59,399	51,144
VOBA interest	923	1,031	1,120
Amortization	(48,641)	(40,704)	(37,893)
Net change	13,440	19,726	14,371
Balance, end of period	$ 248,325	$ 234,885	$ 215,159
VOBA interest rate	4.47%	4.53%	5.11%
Portion of DPAC and VOBA amortization recorded within unrealized gains and (losses) on securities component of other comprehensive income	$ (2,478)	$ (2,028)
Value of business acquired future amortization expense [Abstract]
2021	2,683
2022	1,810
2023	1,608
2024	1,430
2025	$ 1,280

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Property and Equipment, Net (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Story	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Components of Property and Equipment, Net [Abstract]
Property and equipment, gross	$ 314,511	$ 266,289
Less accumulated depreciation and amortization	182,537	177,701
Property and equipment, net	131,974	88,588
Depreciation expense on property and equipment	$ 13,866	13,880	$ 12,583
Number of stories in office building acquired | Story	9
Land [Member]
Components of Property and Equipment, Net [Abstract]
Property and equipment, gross	$ 15,867	10,976
Buildings and Leasehold Improvements [Member]
Components of Property and Equipment, Net [Abstract]
Property and equipment, gross	128,629	92,752
Office Furniture and Equipment [Member]
Components of Property and Equipment, Net [Abstract]
Property and equipment, gross	32,547	27,878
Computer Equipment and Software [Member]
Components of Property and Equipment, Net [Abstract]
Property and equipment, gross	136,801	133,922
Automobiles [Member]
Components of Property and Equipment, Net [Abstract]
Property and equipment, gross	$ 667	$ 761

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Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Goodwill [Abstract]
Goodwill	$ 28,614	$ 28,599
Goodwill recognized on purchase	3,217
Goodwill impairment charges	$ 2,369	$ 2,369

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Fair Value Measurements, Reconciliation of Assets Measured at Fair Value Using Significant Unobservable Inputs (Level 3) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Fair Value Measurements [Abstract]
Level 1 to level 2 transfers	$ 0	$ 0
Level 2 to level 1 transfers	0	0
Reconciliation of beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) [Roll Forward]
Beginning Balance	5,209	3,805
Unrealized gain in other accumulated comprehensive income	(107)	154
Purchases	0	1,250
Ending Balance	$ 5,102	$ 5,209

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Fair Value Measurements, Fair Value Measurements by Level for Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	$ 1,342,465	$ 1,242,883
Equity investments	404,328	287,525
Obligations of Government-sponsored Enterprises [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	25,152	17,686
U.S. Treasury Securities and Obligations of U.S.-Government Instrumentalities [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	111,687	107,009
Municipal Securities [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	701,028	629,764
Corporate Bonds [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	219,796	208,743
Residential Agency Mortgage-backed Securities [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	271,231	270,536
Collateralized Mortgage Obligations [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	13,571	9,145
Fair Value, Measurements, Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	1,342,465	1,242,883
Equity investments	404,328	287,525
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	111,687	107,009
Equity investments	220,118	177,136
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	1,230,778	1,135,874
Equity investments	179,108	105,180
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Equity investments	5,102	5,209
Fair Value, Measurements, Recurring [Member] | Obligations of Government-sponsored Enterprises [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	25,152	17,686
Fair Value, Measurements, Recurring [Member] | Obligations of Government-sponsored Enterprises [Member] | Level 1 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Obligations of Government-sponsored Enterprises [Member] | Level 2 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	25,152	17,686
Fair Value, Measurements, Recurring [Member] | Obligations of Government-sponsored Enterprises [Member] | Level 3 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities and Obligations of U.S.-Government Instrumentalities [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	111,687	107,009
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities and Obligations of U.S.-Government Instrumentalities [Member] | Level 1 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	111,687	107,009
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities and Obligations of U.S.-Government Instrumentalities [Member] | Level 2 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities and Obligations of U.S.-Government Instrumentalities [Member] | Level 3 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Municipal Securities [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	701,028	629,764
Fair Value, Measurements, Recurring [Member] | Municipal Securities [Member] | Level 1 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Municipal Securities [Member] | Level 2 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	701,028	629,764
Fair Value, Measurements, Recurring [Member] | Municipal Securities [Member] | Level 3 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	219,796	208,743
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Level 1 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Level 2 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	219,796	208,743
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Level 3 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Residential Agency Mortgage-backed Securities [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	271,231	270,536
Fair Value, Measurements, Recurring [Member] | Residential Agency Mortgage-backed Securities [Member] | Level 1 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Residential Agency Mortgage-backed Securities [Member] | Level 2 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	271,231	270,536
Fair Value, Measurements, Recurring [Member] | Residential Agency Mortgage-backed Securities [Member] | Level 3 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	13,571	9,145
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member] | Level 1 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	0	0
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member] | Level 2 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	13,571	9,145
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member] | Level 3 [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Fixed maturities	$ 0	$ 0

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Claim Liabilities and Claim Adjustment Expenses, Reconciliation of Beginning and Ending Balances of Claim Liabilities (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Reconciliation of beginning and ending balances of claim liabilities [Roll Forward]
Claim liabilities at beginning of year		$ 709,258	$ 936,789	$ 1,106,876
Reinsurance recoverable on claim liabilities		(137,017)	(315,543)	(633,099)
Net claim liabilities at beginning of year		572,241	621,246	473,777
Claims incurred [Abstract]
Current period insured events		2,884,380	2,666,540	2,411,884
Prior period insured events		23,889	(34,535)	84,946
Total		2,908,269	2,632,005	2,496,830
Payments of losses and loss-adjustment expenses [Abstract]
Current period insured events		2,473,587	2,355,217	2,039,632
Prior period insured events		358,637	325,793	309,729
Total		2,832,224	2,681,010	2,349,361
Net claim liabilities at end of year		648,286	572,241	621,246
Reinsurance recoverable on claim liabilities		138,816	137,017	315,543
Claim liabilities at end of year		787,102	709,258	936,789
Change in liability for future policy (benefits) expense		38,551	34,251	30,783
Hurricane [Member]
Reconciliation of beginning and ending balances of claim liabilities [Roll Forward]
Claim liabilities at beginning of year		241,663
Payments of losses and loss-adjustment expenses [Abstract]
Claim liabilities at end of year		183,023	241,663
Hurricane Maria [Member]
Payments of losses and loss-adjustment expenses [Abstract]
Prior period insured events		128,678
Managed Care [Member]
Reconciliation of beginning and ending balances of claim liabilities [Roll Forward]
Claim liabilities at beginning of year		341,277	394,226	367,357
Reinsurance recoverable on claim liabilities		0	0	0
Net claim liabilities at beginning of year		341,277	394,226	367,357
Claims incurred [Abstract]
Current period insured events		2,772,084	2,556,027	2,308,516
Prior period insured events		33,654	(29,344)	(36,015)
Total		2,805,738	2,526,683	2,272,501
Payments of losses and loss-adjustment expenses [Abstract]
Current period insured events		2,408,173	2,293,251	1,982,372
Prior period insured events		293,187	286,381	263,260
Total		2,701,360	2,579,632	2,245,632
Net claim liabilities at end of year		445,655	341,277	394,226
Reinsurance recoverable on claim liabilities		0	0	0
Claim liabilities at end of year		445,655	341,277	394,226
Other Business Segments [Member]
Reconciliation of beginning and ending balances of claim liabilities [Roll Forward]
Claim liabilities at beginning of year	[1]	367,981	542,563	739,519
Reinsurance recoverable on claim liabilities	[1]	(137,017)	(315,543)	(633,099)
Net claim liabilities at beginning of year	[1]	230,964	227,020	106,420
Claims incurred [Abstract]
Current period insured events	[1]	112,296	110,513	103,368
Prior period insured events	[1]	(9,765)	(5,191)	120,961
Total	[1]	102,531	105,322	224,329
Payments of losses and loss-adjustment expenses [Abstract]
Current period insured events	[1]	65,414	61,966	57,260
Prior period insured events	[1]	65,450	39,412	46,469
Total	[1]	130,864	101,378	103,729
Net claim liabilities at end of year	[1]	202,631	230,964	227,020
Reinsurance recoverable on claim liabilities	[1]	138,816	137,017	315,543
Claim liabilities at end of year	[1]	$ 341,447	$ 367,981	$ 542,563

[1] Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.

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Claim Liabilities and Claim Adjustment Expenses, Incurred and Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance (Details) $ in Thousands	Dec. 31, 2020 USD ($) Claim	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Liabilities for claims and claim adjustment expenses, net of reinsurance	$ 612,222
Managed Care [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	5,340,558
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	4,966,124
All outstanding liabilities, net of reinsurance	71,221
Liabilities for claims and claim adjustment expenses, net of reinsurance	445,655
Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	567,703
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	403,137
All outstanding liabilities, net of reinsurance	2,001
Liabilities for claims and claim adjustment expenses, net of reinsurance	166,567
Incurred Year 2011 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	51,807	$ 51,771	$ 51,684	$ 51,729	$ 52,099	$ 51,895	$ 50,776	$ 51,105	$ 50,287	$ 51,315
Total of IBNR liabilities plus expected development on reported claims	$ 74
Cumulative number of reported claims | Claim	20,780
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 51,209	51,127	50,761	50,457	49,598	47,908	44,996	41,606	34,835	$ 24,534
Incurred Year 2012 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	47,340	47,725	47,731	48,186	48,945	49,817	48,900	49,856	49,040
Total of IBNR liabilities plus expected development on reported claims	$ 94
Cumulative number of reported claims | Claim	21,243
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 46,724	46,625	46,441	46,094	45,607	43,663	40,406	33,620	$ 22,677
Incurred Year 2013 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	46,777	47,104	47,550	48,229	49,168	49,606	51,030	52,343
Total of IBNR liabilities plus expected development on reported claims	$ 173
Cumulative number of reported claims | Claim	20,909
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 45,621	45,502	45,234	44,252	42,840	38,979	33,249	$ 21,376
Incurred Year 2014 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	40,702	41,147	41,457	42,547	43,707	45,410	48,430
Total of IBNR liabilities plus expected development on reported claims	$ 275
Cumulative number of reported claims | Claim	19,110
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 39,214	38,773	37,857	36,875	33,809	28,657	$ 18,752
Incurred Year 2015 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	34,149	34,889	35,505	37,271	40,175	45,067
Total of IBNR liabilities plus expected development on reported claims	$ 332
Cumulative number of reported claims | Claim	18,047
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 32,554	32,188	30,729	28,040	24,935	$ 17,063
Incurred Year 2016 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	38,418	39,488	41,168	44,294	48,127
Total of IBNR liabilities plus expected development on reported claims	$ 443
Cumulative number of reported claims | Claim	20,874
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 35,395	34,546	32,820	28,996	$ 20,099
Incurred Year 2017 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	195,376	189,162	187,376	60,694
Total of IBNR liabilities plus expected development on reported claims	$ 2,406
Cumulative number of reported claims | Claim	39,466
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 83,613	48,574	41,855	$ 28,414
Incurred Year 2018 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	34,306	37,603	40,619
Total of IBNR liabilities plus expected development on reported claims	$ 1,296
Cumulative number of reported claims | Claim	16,381
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 26,997	24,402	$ 16,555
Incurred Year 2019 [Member] | Managed Care [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	2,568,474	2,556,027
Total of IBNR liabilities plus expected development on reported claims	$ 10,523
Cumulative number of reported claims | Claim	37,971
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 2,557,951	2,293,251
Incurred Year 2019 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	34,373	43,589
Total of IBNR liabilities plus expected development on reported claims	$ 4,107
Cumulative number of reported claims | Claim	10,311
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 22,379	$ 16,305
Incurred Year 2020 [Member] | Managed Care [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	2,772,084
Total of IBNR liabilities plus expected development on reported claims	$ 363,911
Cumulative number of reported claims | Claim	35,822
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 2,408,173
Incurred Year 2020 [Member] | Property and Casualty Insurance [Member]
Insurance Claims Development, Net of Reinsurance [Abstract]
Incurred claims and allocated claim adjustment expenses, net of reinsurance	44,455
Total of IBNR liabilities plus expected development on reported claims	$ 18,511
Cumulative number of reported claims | Claim	7,595
Cumulative Paid Claims Development, Net of Reinsurance [Abstract]
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance	$ 19,431

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Claim Liabilities and Claim Adjustment Expenses, Supplementary Information about Average Percentage Payout of Incurred Claims by Age (Details) - Property and Casualty Insurance [Member]	Dec. 31, 2020
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance [Abstract]
2011	44.30%
2012	20.70%
2013	10.30%
2014	8.50%
2015	3.60%
2016	1.90%
2017	1.00%
2018	0.40%
2019	0.50%
2020	0.20%

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Claim Liabilities and Claim Adjustment Expenses, Reconciliation of Net Incurred and Paid Claims Development (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net outstanding liabilities [Abstract]
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	$ 612,222
Reconciliation of Claims Development to Liability Reinsurance Recoverable on Unpaid Claims [Abstract]
Total gross liability for unpaid claims and claim adjustment expense	787,102	$ 709,258	$ 936,789	$ 1,106,876
Hurricane Irma and Maria [Member]
Reconciliation of Claims Development to Liability Reinsurance Recoverable on Unpaid Claims [Abstract]
Total gross liability for unpaid claims and claim adjustment expense	183,023	241,663
Intersegment Elimination [Member]
Reconciliation of Claims Development to Liability Reinsurance Recoverable on Unpaid Claims [Abstract]
Reinsurance recoverable on unpaid claims	(1,320)
Insurance Lines Other Than Short-duration [Member]
Reconciliation of Claims Development to Liability Reinsurance Recoverable on Unpaid Claims [Abstract]
Reinsurance recoverable on unpaid claims	49,932
Managed Care [Member]
Net outstanding liabilities [Abstract]
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	445,655
Reconciliation of Claims Development to Liability Reinsurance Recoverable on Unpaid Claims [Abstract]
Total gross liability for unpaid claims and claim adjustment expense	445,655	$ 341,277	$ 394,226	$ 367,357
Property and Casualty Insurance [Member]
Net outstanding liabilities [Abstract]
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	166,567
Reconciliation of Claims Development to Liability Reinsurance Recoverable on Unpaid Claims [Abstract]
Reinsurance recoverable on unpaid claims	$ 126,268

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Federal Employees' Health Benefits (FEHBP) and Federal Employees' (FEP) Programs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Federal Employees' Health Benefits (FEHBP) and Federal Employees' (FEP) Programs [Abstract]
Federal employees health benefits program funds	$ 58,290	$ 65,309
Contingency reserve	99,005	76,380
Proceed from contingency reserve	0	0	$ 0
Federal employees programs funds overdraft	$ 13,959	$ 6,006	$ 23,030

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Borrowings (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Loan	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Summary of long-term borrowings [Abstract]
Borrowings	$ 53,367	$ 25,879
Less: unamortized debt issuance costs	616	185
Long-term borrowings	52,751	25,694
Aggregate maturities of Company's long term borrowings [Abstract]
2021	4,490
2022	4,490
2023	4,196
2024	14,484
2025	25,707
Borrowings	53,367	25,879
Interest expense on borrowings	1,362	1,320	$ 1,375
Maximum borrowing capacity	200,338	131,100
Outstanding balance	$ 30,000	$ 54,000
Average interest rate of outstanding balance	0.33%	1.79%
TSS [Member] | Maximum [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Borrowing capacity of admitted assets percentage	30.00%
TSS [Member] | Repurchase Agreements [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Outstanding balance	$ 0
Available credit	35,000
TSV [Member] | Maximum [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Borrowing capacity of admitted assets percentage		30.00%
Secured Debt [Member] | Term Loan A [Member]
Summary of long-term borrowings [Abstract]
Borrowings	4,627	$ 6,267
Debt instrument, principal amount	11,187
Debt instrument, monthly installment payment	$ 137
Debt instrument, maturity date	Oct. 01, 2023
Basis spread on variable rate	1.00%
Debt instrument, variable interest rate	1.15%
Aggregate maturities of Company's long term borrowings [Abstract]
Borrowings	$ 4,627	6,267
Secured Debt [Member] | Term Loan B [Member]
Summary of long-term borrowings [Abstract]
Borrowings	16,204	17,211
Debt instrument, principal amount	20,150
Debt instrument, monthly installment payment	$ 84
Debt instrument, maturity date	Jan. 01, 2024
Basis spread on variable rate	2.75%
Debt instrument, variable interest rate	2.98%
Aggregate maturities of Company's long term borrowings [Abstract]
Borrowings	$ 16,204	17,211
Secured Debt [Member] | Term Loan C [Member]
Summary of long-term borrowings [Abstract]
Borrowings	1,813	2,401
Debt instrument, principal amount	4,116
Debt instrument, monthly installment payment	$ 49
Debt instrument, maturity date	Jan. 01, 2024
Basis spread on variable rate	3.25%
Debt instrument, variable interest rate	3.48%
Aggregate maturities of Company's long term borrowings [Abstract]
Borrowings	$ 1,813	2,401
Secured Debt [Member] | Term Loan D [Member]
Summary of long-term borrowings [Abstract]
Borrowings	30,723	0
Debt instrument, principal amount	31,350
Debt instrument, monthly installment payment	$ 105
Debt instrument, maturity date	May 01, 2025
Debt instrument, variable interest rate	3.25%
Debt instrument, last payment	$ 25,185
Debt Instrument, last payment maturity date	Jun. 19, 2025
Aggregate maturities of Company's long term borrowings [Abstract]
Borrowings	$ 30,723	$ 0
Commercial Bank in Puerto Rico [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Number of term loans under credit agreements | Loan	4
Commercial Bank in Puerto Rico [Member] | First Year [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Prepayment penalty fee percentage	3.00%
Commercial Bank in Puerto Rico [Member] | Second Year [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Prepayment penalty fee percentage	2.00%
Commercial Bank in Puerto Rico [Member] | Third Year [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Prepayment penalty fee percentage	1.00%
Commercial Bank in Puerto Rico [Member] | TSA [Member]
Aggregate maturities of Company's long term borrowings [Abstract]
Maximum borrowing capacity	$ 10,000
Outstanding balance	$ 0
Expiration date	Jun. 30, 2021
Commercial Bank in Puerto Rico [Member] | TSA [Member] | LIBOR [Member]
Summary of long-term borrowings [Abstract]
Basis spread on variable rate	2.50%
Aggregate maturities of Company's long term borrowings [Abstract]
Variable rate, term	30 days

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Reinsurance Activity, Effect of Reinsurance on Premiums Earned and Claims Incurred (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Premiums Earned [Abstract]
Gross		$ 3,681,830	$ 3,316,802	$ 3,009,830
Ceded		(76,809)	(66,320)	(73,591)
Assumed		429	2,398	2,352
Net		3,605,450	3,252,880	2,938,591
Claims Incurred [Abstract]
Gross	[1]	2,967,719	2,645,599	2,657,639
Ceded	[1]	(60,702)	(15,924)	(163,898)
Assumed	[1]	1,252	2,330	3,089
Net	[1]	2,908,269	2,632,005	2,496,830
Change in the liability for future policy benefits		$ 38,551	$ 34,251	$ 30,783

[1]  The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $38,551, $34,251 and $30,783 that is included within the consolidated claims incurred during the years ended December 31, 2020, 2019 and 2018, respectively.

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Reinsurance Activity (Details) $ in Thousands	5 Months Ended	7 Months Ended	12 Months Ended
	May 31, 2020 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 USD ($) Entity	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Reinsurance Activity [Abstract]
Period of reinsurance contracts			1 year
Ceded premiums written			$ 76,809	$ 66,320	$ 73,591
TSP [Member]
Reinsurance Activity [Abstract]
Percentage of reinsurance business placed with one reinsurance entity			19.36%	21.50%	16.45%
Ceded premiums written			$ 61,145	$ 52,355	$ 60,354
Claims ceded (refunded)			50,295	(3,368)	152,704
Ceded unearned reinsurance premiums		$ 9,101	9,101	10,427
TSP [Member] | Catastrophe [Member]
Reinsurance Activity [Abstract]
Maximum amount of claim to be covered, per person			809,000
Retroactive portion		$ 25,000	25,000
Amount of claim covered after retention			814,000
TSP [Member] | Minimum [Member] | Property Reinsurance Treaty [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			400
TSP [Member] | Minimum [Member] | Casualty Excess of Loss Treaty [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			225
TSP [Member] | Minimum [Member] | Medical Malpractice Excess of Loss [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			150
TSP [Member] | Minimum [Member] | Catastrophe [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			5,000
TSP [Member] | Maximum [Member] | Property Reinsurance Treaty [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			30,000
TSP [Member] | Maximum [Member] | Casualty Excess of Loss Treaty [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			20,000
TSP [Member] | Maximum [Member] | Medical Malpractice Excess of Loss [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			$ 3,000
TSS [Member]
Reinsurance Activity [Abstract]
Number of reinsurance entity with which subsidiary placed reinsurance business | Entity			1
Ceded premiums written			$ 1,291	1,446	1,524
Claims ceded (refunded)			$ 453	1,215	320
TSS [Member] | Organ Transplant Excess of Loss Treaty [Member]
Reinsurance Activity [Abstract]
Percentage of claim covered			80.00%
Maximum amount of claim to be covered per person			$ 800
Maximum amount of claim covered with other options for other groups, per person			$ 400
TSS [Member] | Retired Employees of the Commonwealth of Puerto Rico [Member]
Reinsurance Activity [Abstract]
Percentage of claim covered			100.00%
Maximum amount of claim covered with major medical coverage			$ 1,000
TSS [Member] | Municipalities of Puerto Rico [Member]
Reinsurance Activity [Abstract]
Percentage of claim covered			100.00%
Maximum amount of claim to be covered per person			$ 250
Maximum amount of claim covered with life time limit			1,000
TSS [Member] | Maximum [Member] | Organ Transplant Excess of Loss Treaty [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			1,000
Maximum amount of claim covered with other options for other groups, per person			500
TSV [Member]
Reinsurance Activity [Abstract]
Ceded premiums written			$ 9,997	8,337	8,780
TSV [Member] | Group Life Insurance Facultative Agreement [Member]
Reinsurance Activity [Abstract]
Percentage of risk covered			50.00%
TSV [Member] | Facultative Pro rata Agreements [Member]
Reinsurance Activity [Abstract]
Percentage of risk covered			65.00%
TSV [Member] | All Personal Accident and Certain Woman Related Cancer Claims [Member]
Reinsurance Activity [Abstract]
Percentage of risk covered			100.00%
TSV [Member] | Other Cancer Claims [Member]
Reinsurance Activity [Abstract]
Percentage of risk covered			65.00%
TSV [Member] | Costa Rica reinsuring [Member]
Reinsurance Activity [Abstract]
Percentage of excess of loss agreement	100.00%	100.00%
Amount over excess of loss agreement	$ 35	$ 50
TSV [Member] | Minimum [Member] | Group Life Insurance Facultative Agreement [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			$ 25
TSV [Member] | Maximum [Member] | Group Life Insurance Facultative Agreement [Member]
Reinsurance Activity [Abstract]
Amount of claim covered, per person			200
TSV [Member] | Maximum [Member] | Several Reinsurance Agreements [Member]
Reinsurance Activity [Abstract]
Retention limit amount			200
TSA [Member]
Reinsurance Activity [Abstract]
Ceded premiums written			3,050	2,850	2,300
Claims ceded (refunded)			3,862	$ 3,186	$ 1,804
Maximum amount of claim to be covered per person			$ 2,000

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Income Taxes (Details) - USD ($) $ in Thousands		1 Months Ended	11 Months Ended	12 Months Ended
	Apr. 16, 2020	Dec. 31, 2018	Dec. 09, 2018	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes [Abstract]
Limit on income tax credit for regular income tax in excess of alternative minimum income tax paid				25.00%
Corporate income tax rate				37.50%	38.00%	39.00%
Federal income tax				$ 1,981	$ 2,209	$ 1,147
U.S. Federal [Member]
Income Taxes [Abstract]
Corporate income tax rate				21.00%			35.00%
Puerto Rico [Member]
Income Taxes [Abstract]
Percentage of premium tax on policies underwritten				5.00%
Corporate income tax rate		37.50%	39.00%
Percentage of net operating loss carryover		90.00%	80.00%
Percentage withholding at source for services		10.00%	7.00%
Puerto Rico [Member] | Maximum [Member]
Income Taxes [Abstract]
Net operating losses to be carried forward as percentage of net capital gains for Capital Losses Carryover	90.00%

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Income Taxes, Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Components of income tax expense (benefit) [Abstract]
Current income tax expense	$ 26,853	$ 35,714	$ 2,212
Deferred income tax (benefit) expense	(2,285)	3,661	(32,078)
Total income tax expense (benefit)	$ 24,568	$ 39,375	$ (29,866)

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Income Taxes, Income Tax (Benefit) Expense Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income tax (benefit) expense reconciliation [Abstract]
Income (loss) before taxes	$ 91,733	$ 132,252	$ (93,172)
Statutory tax rate	37.50%	38.00%	39.00%
Income tax expense (benefit) at statutory rate	$ 34,400	$ 49,595	$ (36,337)
(Decrease) increase in taxes resulting from [Abstract]
Exempt income, net	(10,510)	0	(2,330)
Effect of taxing life insurance operations as a qualified domestic life insurance company instead of as a regular corporation	(3,379)	(4,823)	(3,445)
Effect of taxing capital gains at a preferential rate	1	(743)	194
Adjustment to deferred tax assets and liabilities for changes in statutory tax rates	0	0	9,217
Other adjustments to deferred tax assets and liabilities	736	(469)	(43)
Unrealized gains or losses included in earnings	1,338	(5,627)	4,625
Effect of extraordinary dividend distribution from the JUA Association - reported net of taxes in other income	0	(55)	0
Effect of net operating loss limitations	2,369	1,239	0
Tax credit benefit	(1,190)	(62)	(306)
Tax returns to provision true up	922	36	(798)
Subtotal	(9,713)	(10,504)	7,114
Other permanent disallowances, net [Abstract]
Other	(46)	37	(229)
Other adjustments	(73)	247	(414)
Total income tax expense (benefit)	$ 24,568	$ 39,375	$ (29,866)

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Income Taxes, Net Deferred Tax Asset (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Deferred tax assets [Abstract]
Allowance for doubtful receivables	$ 16,542	$ 18,882
Liability for pension benefits	59,205	15,378
Postretirement benefits	280	415
Deferred compensation	2,106	2,187
Accumulated depreciation	193	920
Impairment loss on investments	648	522
Contingency reserves	10,430	4,063
Share-based compensation	6,880	8,086
Alternative minimum income tax credit	3,998	3,432
Purchased tax credits	286	458
Net operating loss	56,930	51,246
Reinsurance agreement	9,375	9,375
Accrued liabilities	7,069	5,599
Difference in tax basis of investments portfolio	0	77
Other	2,137	1,349
Gross deferred tax assets	176,079	121,989
Less: valuation allowance	(7,765)	(6,705)
Deferred tax assets	168,314	115,284
Deferred tax liabilities [Abstract]
Deferred policy acquisition costs	(9,608)	(8,413)
Catastrophe loss reserve	(11,693)	(13,014)
Unrealized gain on securities available for sale	(23,843)	(14,965)
Unrealized gain on equity investments	(10,740)	(9,091)
Difference in tax basis of investments portfolio	(306)	0
Unamortized debt issue costs	(231)	(69)
Intangible asset	(492)	(669)
Employee benefits plan	(6,913)	(2,026)
Gross deferred tax liabilities	(63,826)	(48,247)
Net deferred tax asset	104,488	67,037
Deferred tax assets, net	119,534	77,294
Deferred tax liabilities, net	$ 15,046	$ 10,257

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Income Taxes, Operating Loss Carryforwards (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Operating Loss Carryforwards [Abstract]
Operating loss carryforwards	$ 168,800
Operating loss carryforwards, expiration date	Dec. 31, 2030
Puerto Rico [Member] | Minimum [Member]
Operating Loss Carryforwards [Abstract]
Operating loss carryforwards, expiration date	Dec. 31, 2026
Puerto Rico [Member] | Maximum [Member]
Operating Loss Carryforwards [Abstract]
Operating loss carryforwards, expiration date	Dec. 31, 2030

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Pension Plans, Noncontributory Defined-Benefit Pension Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Summary of amounts recognized in consolidated balance sheets [Abstract]
Accumulated other comprehensive loss, deferred tax	$ 59,205	$ 15,378
Summary of estimated net loss and prior service benefit that will be amortized from accumulated other comprehensive loss into net periodic pension benefits cost during the next twelve months [Abstract]
Estimated net actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic pension benefits cost during the next twelve months	$ 3,893
Noncontributory Defined-Benefit Pension Plan [Member]
Noncontributory Defined-Benefit Pension Plan [Abstract]
Requisite service period	5 years
Change in benefit obligation [Roll Forward]
Benefit obligation at beginning of year	$ 190,555	159,477
Interest cost	6,073	6,992	$ 6,853
Benefit payments	(9,176)	(9,672)
Actuarial loss	17,241	33,758
Benefit obligation at end of year	204,693	190,555	159,477
Accumulated benefit obligation at end of year	204,693	190,555
Change in fair value of plan assets [Roll Forward]
Fair value of plan assets at beginning of year	163,558	134,957
Actual return on assets	(91,542)	36,273
Employer contributions	10,000	2,000
Benefit payments	(9,176)	(9,672)
Fair value of plan assets at end of year	72,840	163,558	134,957
Funded status at end of year	(131,853)	(26,997)
Summary of amounts recognized in consolidated balance sheets [Abstract]
Pension liability	131,853	26,997
Net actuarial loss recognized in accumulated other comprehensive loss, net of a deferred tax of $55,848 and $12,692 in 2020 and 2019, respectively	100,685	27,907
Accumulated other comprehensive loss, deferred tax	$ 55,848	$ 12,692
Weighted average basis on benefits obligations [Abstract]
Discount rate	2.75%	3.25%
Expected return on plan assets	5.75%	6.25%
Components of net periodic benefit cost [Abstract]
Interest cost	$ 6,073	$ 6,992	6,853
Expected return on assets	(8,840)	(8,835)	(9,020)
Actuarial loss	1,178	392	961
Settlement loss	0	0	2,110
Net periodic benefit (income) cost	$ (1,589)	$ (1,451)	$ 904
Weighted average basis on periodic benefit cost [Abstract]
Discount rate	3.25%	4.50%	3.75%
Expected return on plan assets	6.25%	6.50%	6.50%
Period over which annual rates of return are projected under target asset allocation	30 years
Expected rate of return on plan assets	6.25%	6.50%
Reduction in other administrative expenses	0.15%
Noncontributory Defined-Benefit Pension Plan [Member] | Minimum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Percentile range of assets allocation	35.00%
Expected rate of return on plan assets	5.10%
Noncontributory Defined-Benefit Pension Plan [Member] | Maximum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Percentile range of assets allocation	65.00%
Expected rate of return on plan assets	6.60%
Noncontributory Defined-Benefit Pension Plan [Member] | Equity Securities [Member] | Minimum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Target asset allocation	45.00%
Noncontributory Defined-Benefit Pension Plan [Member] | Equity Securities [Member] | Maximum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Target asset allocation	55.00%
Noncontributory Defined-Benefit Pension Plan [Member] | Debt Securities [Member] | Minimum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Target asset allocation	40.00%
Noncontributory Defined-Benefit Pension Plan [Member] | Debt Securities [Member] | Maximum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Target asset allocation	48.00%
Noncontributory Defined-Benefit Pension Plan [Member] | Other Securities [Member] | Minimum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Target asset allocation	2.00%
Noncontributory Defined-Benefit Pension Plan [Member] | Other Securities [Member] | Maximum [Member]
Weighted average basis on periodic benefit cost [Abstract]
Target asset allocation	10.00%

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Pension Plans, Plan Assets (Details) - Noncontributory Defined-Benefit Pension Plan [Member] - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	$ 72,840	$ 163,558	$ 134,957
Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	68,062	30,653
Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	2,750	5,939
Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	65,312	24,714
Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	6,033	133,709
Government Obligations [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	4,127	6,782
Government Obligations [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Government Obligations [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	4,127	6,782
Government Obligations [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Government Obligations [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Non Agency Backed Securities [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	157	656
Non Agency Backed Securities [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Non Agency Backed Securities [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	157	656
Non Agency Backed Securities [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Non Agency Backed Securities [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Corporate Obligations [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	13,134	9,353
Corporate Obligations [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Corporate Obligations [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	13,134	9,353
Corporate Obligations [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Corporate Obligations [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Limited Liability Corporations [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		0
Limited Liability Corporations [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		0
Limited Liability Corporations [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		0
Limited Liability Corporations [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		0
Limited Liability Corporations [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		126,989
Real Estate [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Real Estate [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Real Estate [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Real Estate [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Real Estate [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	6,033	6,720
Registered Investments [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	3,069	4,136
Registered Investments [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	1,183	3,754
Registered Investments [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	1,886	382
Registered Investments [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Registered Investments [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Common/Collective Trusts [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	46,006	7,527
Common/Collective Trusts [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Common/Collective Trusts [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	46,006	7,527
Common/Collective Trusts [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Common/Collective Trusts [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Common Stock [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	1,196	1,885
Common Stock [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	1,196	1,885
Common Stock [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Common Stock [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Common Stock [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Preferred Stock [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		14
Preferred Stock [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		0
Preferred Stock [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		14
Preferred Stock [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		0
Preferred Stock [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value		0
Interest-bearing Cash [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	371	300
Interest-bearing Cash [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	371	300
Interest-bearing Cash [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Interest-bearing Cash [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	0
Interest-bearing Cash [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0	$ 0
Derivatives [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	2
Derivatives [Member] | Level 1 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0
Derivatives [Member] | Level 2 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	2
Derivatives [Member] | Level 3 [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	0
Derivatives [Member] | NAV [Member] | Recurring [Member]
Fair value measurements by level for assets measured at fair value on a recurring basis [Abstract]
Assets, fair value	$ 0

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Pension Plans, Cash Flows (Details) - Noncontributory Defined-Benefit Pension Plan [Member] $ in Thousands	Dec. 31, 2020 USD ($)
Cash Flows [Abstract]
Expected employer future contributions	$ 10,000
Summary of expected benefit payments [Abstract]
2021	11,805
2022	10,378
2023	10,611
2024	10,664
2025	10,656
2026 - 2029	$ 56,709

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Pension Plans, Noncontributory Supplemental Pension Plan (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Summary of amounts recognized [Abstract]
Pension liability	$ 139,611	$ 34,465
Accumulated other comprehensive loss, deferred tax	59,205	15,378
Non-Contributory Supplemental Pension Plan [Member]
Summary of amounts recognized [Abstract]
Pension liability	7,758	7,468
Charge to accumulated other comprehensive loss, net tax	828	562
Accumulated other comprehensive loss, deferred tax	$ 519	$ 359

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Catastrophe Loss Reserve and Trust Fund (Details) - USD ($) $ in Thousands	1 Months Ended		12 Months Ended
	Jan. 31, 2021	Dec. 31, 2020	Dec. 31, 2018	Dec. 31, 2019
Catastrophe Loss Reserve and Trust Fund [Abstract]
Restricted catastrophe loss reserve balance		$ 35,904		$ 39,425
TSP [Member]
Catastrophe Loss Reserve and Trust Fund [Abstract]
Maximum contribution rate which increases catastrophe reserve		5.00%
Minimum percentage of reserve to catastrophe exposure		8.00%
Interest earning assets		$ 43,124		41,047
Restricted catastrophe loss reserve balance		35,904		$ 39,425
TSP [Member] | Subsequent Event [Member]
Catastrophe Loss Reserve and Trust Fund [Abstract]
Amount withdrawn from catastrophe funds upon receipt of approval	$ 5,000
TSP [Member] | Hurricanes Maria [Member]
Catastrophe Loss Reserve and Trust Fund [Abstract]
Amount withdrawn from catastrophe funds upon receipt of approval			$ 10,000
TSP [Member] | Earthquake [Member]
Catastrophe Loss Reserve and Trust Fund [Abstract]
Amount of approval received for withdrawal from catastrophe funds following payment for catastrophe losses		$ 5,000
TSP [Member] | Hurricanes Irma [Member] | Subsequent Event [Member]
Catastrophe Loss Reserve and Trust Fund [Abstract]
Amount of petition for approval presented for withdrawal from catastrophe funds following payment for catastrophe losses	$ 5,300

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Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands				12 Months Ended
	Aug. 06, 2019	Jul. 29, 2019	Jul. 26, 2019	Dec. 31, 2020	Dec. 31, 2019	Aug. 07, 2019
Dividends [Abstract]
Pay surplus value of dividend				10.00%
Period after filing in which dividend not disapproved				30 days
Amount available for dividend distribution without prior approval from regulatory agency				$ 25,619
Dividends payable, record date				Jul. 26, 2019
Number of shares of stock issued for each share in share dividend (in shares)			0.051107
Preferred Stock [Abstract]
Preferred stock, shares authorized (in shares)				100,000,000
Preferred stock, par value (in dollars Per Share)				$ 1.00
Preferred stock, shares issued (in shares)				0	0
Preferred stock, shares outstanding (in shares)				0	0
Primary License (TSM) and Larger BCBS Controlled Affiliates [Member]
Liquidity Requirements [Abstract]
Adjusted capital ratio as defined by (NAIC)				375.00%
Smaller BCBS Controlled Affiliate (TSA) [Member]
Liquidity Requirements [Abstract]
Adjusted capital ratio as defined by (NAIC)				100.00%
Class A Common Stock [Member]
Common Stock [Abstract]
Number of shares of Common Stock issued (in shares)		48,602
Class B Common Stock [Member]
Common Stock [Abstract]
Number of shares of Class B Common Stock to be issued for each Class A share in stock conversion (in shares)						1
Dividends [Abstract]
Share dividend paid	$ 24,655
Cash paid in lieu of fractional shares	$ 11

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Stock Repurchase Programs (Details) - 2017 $30,000 Stock Repurchase Program [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Oct. 31, 2019	Feb. 28, 2018	Aug. 31, 2017
Stock Repurchase Programs [Abstract]
Shares repurchased (in shares)	952,820	527,881	903,888
Average share price (in dollars per share)	$ 15.72	$ 18.92	$ 24.76
Amount repurchased	$ 14,982	$ 9,989	$ 22,390
Class B Common Stock [Member]
Stock Repurchase Programs [Abstract]
Stock repurchase program, authorized amount				$ 25,000	$ 25,000	$ 30,000

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Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Accumulated balances for each classification of other comprehensive income [Roll Forward]
Balance	$ 943,172	$ 821,308	$ 912,682
Balance	967,513	943,172	821,308
Before-Tax Amount [Abstract]
Unrealized holding gains on securities arising during the period	47,067	42,780	(24,375)
Less reclassification adjustment for gains and losses realized in income	(4,541)	(4,456)	13,457
Net change in unrealized gain	42,526	38,324	(10,918)
Liability for pension benefits [Abstract]
Reclassification adjustment for amortization of net losses from past experience and prior service costs	1,224	396	(995)
Net change arising from assumptions and plan changes and experience	(118,092)	(7,149)	2,190
Net change in liability for pension benefits	(116,868)	(6,753)	1,195
Net current period change	(74,342)	31,571	(9,723)
Deferred Tax (Expense) Benefit [Abstract]
Unrealized holding gains on securities arising during the period	(9,413)	(8,556)	4,875
Less reclassification adjustment for gains and losses realized in income	746	754	(3,005)
Net change in unrealized gain	(8,667)	(7,802)	1,870
Liability for pension benefits [Abstract]
Reclassification adjustment for amortization of net losses from past experience and prior service costs	(459)	(149)	373
Net change arising from assumptions and plan changes and experience	44,285	2,681	(830)
Net change in liability for pension benefits	43,826	2,532	(457)
Net current period change	35,159	(5,270)	1,413
Net-of-Tax Amount [Abstract]
Unrealized holding gains on securities arising during the period	37,654	34,224	(19,500)
Less reclassification adjustment for gains and losses realized in income	(3,795)	(3,702)	10,452
Net change in unrealized gain	33,859	30,522	(9,048)
Liability for pension benefits [Abstract]
Reclassification adjustment for amortization of net losses from past experience and prior service costs	765	247	(622)
Net change arising from assumptions and plan changes and experience	(73,807)	(4,468)	1,360
Net change in liability for pension benefits	(73,042)	(4,221)	738
Net current period change	(39,183)	26,301	$ (8,310)
Unrealized Gain on Securities [Member]
Accumulated balances for each classification of other comprehensive income [Roll Forward]
Balance	57,830
Net current period change	37,654
Reclassification adjustments for gains and losses reclassified in income	(3,795)
Balance	91,689	57,830
Liability for Pension Benefits [Member]
Accumulated balances for each classification of other comprehensive income [Roll Forward]
Balance	(28,467)
Net current period change	(73,807)
Reclassification adjustments for gains and losses reclassified in income	765
Balance	(101,509)	(28,467)
Accumulated Other Comprehensive Income [Member]
Accumulated balances for each classification of other comprehensive income [Roll Forward]
Balance	29,363
Net current period change	(36,153)
Reclassification adjustments for gains and losses reclassified in income	(3,030)
Balance	$ (9,820)	$ 29,363

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Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	12 Months Ended
	Oct. 31, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2007
Weighted Average Fair Value [Roll Forward]
Total unrecognized compensation cost related to non-vested share-based compensation		$ 11,200
Cost is expected to be recognized over a weighted average period		11 months 12 days
Stock Options [Member]
Share-Based Compensation [Abstract]
Stock option grant in period (in shares)		0	0	0
Cash received from stock options exercises		$ 0	$ 0	$ 0
Number of shares repurchased and retired as a result of non-cash exercise of stock options or non-cash tax withholding upon vesting of shares (in shares)		21,368	6,124	29,779
Restricted Awards [Member]
Number of Shares [Roll Forward]
Outstanding balance, beginning of period (in shares)		308,387
Granted (in shares)		228,157
Lapsed (in shares)		(167,701)
Forfeited (due to termination) (in shares)		(5,671)
Quantity adjusted (due to performance payout more than 100%), net of forfeited (in shares)		0
Outstanding balance, end of period (in shares)		363,172	308,387
Weighted Average Fair Value [Roll Forward]
Outstanding balance, beginning of period (in dollars per share)		$ 24.16
Granted (in dollars per share)		14.89	$ 24.53	$ 28.49
Lapsed (in dollars per share)		23.23
Forfeited (due to termination) (in dollars per share)		19.03
Quantity adjusted (due to performance payout more than 100%), net of forfeited (in dollars per share)		0
Outstanding balance, end of period (in dollars per share)		$ 18.87	$ 24.16
Total fair value of restricted stock vested		$ 3,896	$ 2,861	$ 2,390
Performance Awards [Member]
Number of Shares [Roll Forward]
Outstanding balance, beginning of period (in shares)		515,688
Granted (in shares)		521,357
Lapsed (in shares)		(200,801)
Forfeited (due to termination) (in shares)		(29,882)
Quantity adjusted (due to performance payout more than 100%), net of forfeited (in shares)		(32,008)
Outstanding balance, end of period (in shares)		774,354	515,688
Weighted Average Fair Value [Roll Forward]
Outstanding balance, beginning of period (in dollars per share)		$ 25.60
Granted (in dollars per share)		14.44
Lapsed (in dollars per share)		26.50
Forfeited (due to termination) (in dollars per share)		22.19
Quantity adjusted (due to performance payout more than 100%), net of forfeited (in dollars per share)		26.50
Outstanding balance, end of period (in dollars per share)		$ 18.05	$ 25.60
Stock Options and SARs [Member] | Maximum [Member]
Share-Based Compensation [Abstract]
Term of share-based payment award		10 years
2007 Incentive Plan [Member] | Common Class B [Member] | Maximum [Member]
Share-Based Compensation [Abstract]
Number of shares authorized under the plan (in shares)					4,700,000
2017 Incentive Plan [Member] | Common Class B [Member]
Share-Based Compensation [Abstract]
Number of additional shares authorized under the plan (in shares)	1,100,000
Shares available to grant under the plan (in shares)		1,133,224
2017 Incentive Plan [Member] | Common Class B [Member] | Maximum [Member]
Share-Based Compensation [Abstract]
Number of shares authorized under the plan (in shares)		1,700,000

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Net Income Available to Stockholders and Basic Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Numerator for earnings per share [Abstract]
Net income (loss) attributable to TSM available to stockholders	$ 67,189	$ 92,894	$ (63,302)
Denominator for basic earnings per share [Abstract]
Weighted average of common shares (in shares)	23,179,544	23,318,742	22,975,385
Effect of dilutive securities (in shares)	130,198	66,551	0
Denominator for diluted earnings per share (in shares)	23,309,742	23,385,293	22,975,385
Basic net income (loss) per share attributable to TSM (in dollars per share)	$ 2.90	$ 3.98	$ (2.76)
Diluted net income (loss) per share attributable to TSM (in dollars per share)	$ 2.88	$ 3.97	$ (2.76)
Restricted Stock [Member]
Net Income (Loss) Available to Stockholders and Net Income (Loss) per Share [Abstract]
Anti-dilutive securities excluded from diluted earnings per share calculation (in shares)			81,023

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Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Operating Lease [Abstract]
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssets	us-gaap:OtherAssets
Operating Lease, Liability, Statement of Financial Position [Extensible List]	us-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrent	us-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrent
Right-of-use asset	$ 12,957	$ 10,438
Lease liabilities	$ 13,191	$ 10,586
Weighted-average remaining lease term	5 years 10 months 24 days	5 years 9 months 18 days
Weighted-average discount rate of operating leases	4.60%	5.30%
Minimum [Member]
Operating Lease [Abstract]
Remaining lease term	2 months 12 days
Maximum [Member]
Operating Lease [Abstract]
Remaining lease term	13 years 10 months 24 days

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Leases, Undiscounted Cash Flows of Operating Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Undiscounted Cash Flows of Operating Leases [Abstract]
2021	$ 3,961
2022	3,366
2023	2,330
2024	1,856
2025	709
Thereafter	2,888
Total lease payments	15,110
Less: imputed interest	(1,919)
Total	$ 13,191	$ 10,586

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Leases, Lease Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Lease Cost [Abstract]
Operating lease cost	$ 4,600	$ 4,900
Short-term lease cost	977	509
Total lease cost	$ 5,577	$ 5,409

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Leases, Maturity Analysis of Lease Payments to be Received (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Maturity Analysis of Lease Payments to be Received [Abstract]
2021	$ 1,909
2022	1,947
2023	1,986
2024	2,026
2025	1,177
Thereafter	1,448
Total	$ 10,493

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Commitments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Commitments [Abstract]
Ordinary dividend received	$ 212	$ 172	$ 215

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Contingencies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Minimum [Member]
Contingencies [Abstract]
Loss contingency, possible losses	$ 0
Maximum [Member]
Contingencies [Abstract]
Loss contingency, possible losses	$ 10,000
Joint Underwriting Association Litigation [Member]
Contingencies [Abstract]
Lawsuit filing date	August 19, 2011
Percentage of premium amount charged as acquisition or administrative cost	12.00%
Amount of claims sought for damages	$ 406,600
In re Blue Cross Blue Shield Antitrust Litigation [Member] | Accounts Payable and Accrued Liabilities [Member]
Contingencies [Abstract]
Accrued liability related to legal proceedings	$ 32,000

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Statutory Accounting (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statutory accounting practice [Abstract]
Percentage lower than combined reported statutory capital and surplus	1.50%	1.70%
Net admitted assets	$ 2,473	$ 2,394	$ 2,089
Capital and surplus	771	767	602
RBC requirement	641	546	312
Net income (loss)	53	68	$ (32)
Servicing Assets at Amortized Value [Abstract]
Restricted catastrophe loss reserve balance	35,904	39,425
Catastrophe trust fund	43,124	41,047
Amortized cost	6,884	6,940
Fair value	$ 7,526	7,274
Triple-S Advantage, Inc [Member]
Statutory accounting practice [Abstract]
Statutory reserve specified as percentage of RBC to avoid intervention	200.00%
TSS, TSV and TSB [Member]
Statutory accounting practice [Abstract]
Statutory reserve specified as percentage of RBC to avoid intervention	300.00%
Statutory reserve specified as percentage of RBC to avoid intervention with compliance with certain trend analysis	200.00%
Regulated Subsidiaries [Member]
Statutory accounting practice [Abstract]
Net admitted assets	$ 50,008	$ 47,987

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Supplementary Information on Cash Flow Activities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Non-cash transactions affecting cash flow activities
Change in net unrealized (gain) loss on securities available for sale, including deferred income tax liability (asset) of $8,667, $7,802, and ($1,870) in 2020, 2019, and 2018 respectively	$ (33,859)	$ (30,522)	$ 9,048
Change in liability for pension benefits, and deferred income tax (asset) liability of ($43,826), ($2,532), $457, in 2020, 2019, and 2018, respectively	73,042	4,221	(738)
Repurchase and retirement of common stock	(382)	(119)	(748)
Stock dividend	0	(24,655)	0
Issuance of common stocks	0	1,200	0
Capitalization of lease right of use asset	8,014	10,438	0
Other [Abstract]
Income taxes paid	40,568	3,147	8,978
Interest paid	7,986	7,672	6,903
Change in net unrealized (gain) loss on securities available for sale, deferred income tax liability (asset)	8,667	7,802	(1,870)
Change in liability for pension benefits, deferred income tax (asset) liability	$ (43,826)	$ (2,532)	$ 457

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Segment Information (Details) $ in Thousands		12 Months Ended
		Dec. 31, 2020 USD ($) Segment	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Segment Information [Abstract]
Number of operating segments | Segment		3
Segment Information [Abstract]
Earned premiums revenue		$ 3,605,450	$ 3,252,880	$ 2,938,591
Operating revenues [Abstract]
Premiums, net		3,605,450	3,252,880	2,938,591
Fee revenue		12,585	9,946	14,701
Net investment income		57,547	62,007	61,909
Consolidated operating revenues		3,684,573	3,333,386	3,020,995
Operating income (loss) [Abstract]
Consolidated operating income (loss)		81,854	97,724	(61,333)
Consolidated net realized investment gains		641	5,843	298
Net unrealized investment gains (losses) on equity investments		7,639	32,151	(36,546)
Consolidated interest expense		(7,986)	(7,672)	(6,903)
Consolidated other income, net		9,585	4,206	11,312
Consolidated income (loss) before taxes		91,733	132,252	(93,172)
Depreciation and amortization expense [Abstract]
Depreciation and amortization expense		14,403	14,600	13,535
Assets [Abstract]
Assets		3,088,418	2,818,826	2,760,248
Cash, cash equivalents, and investments		1,985,013	1,753,474
Property and equipment, net		131,974	88,588
Other assets		86,118	68,294
Significant noncash items [Abstract]
Consolidated net change in unrealized (loss) gain on securities available for sale		33,859	30,522	(9,048)
Managed Care [Member]
Segment Information [Abstract]
Earned premiums revenue		953,208	778,263	776,038
Operating revenues [Abstract]
Premiums, net		953,208	778,263	776,038
Managed Care [Member] | Medicare Business [Member]
Segment Information [Abstract]
Earned premiums revenue		1,553,455	1,408,039	1,130,226
Operating revenues [Abstract]
Premiums, net		1,553,455	1,408,039	1,130,226
Managed Care [Member] | Health Plan [Member]
Segment Information [Abstract]
Earned premiums revenue		13,349	16,805	24,186
Operating revenues [Abstract]
Premiums, net		13,349	16,805	24,186
Managed Care [Member] | Contract [Member]
Segment Information [Abstract]
Earned premiums revenue		159,588	161,716	150,232
Operating revenues [Abstract]
Premiums, net		$ 159,588	161,716	150,232
Property and Casualty Insurance [Member]
Segment Information [Abstract]
Term of remittances		60 days
Other Segments [Member]
Operating revenues [Abstract]
TSM operating revenues from external sources	[1]	$ 8,991	8,553	5,794
Consolidated operating revenues	[1]	19,621	17,389	6,077
Operating income (loss) [Abstract]
Operating income (loss)	[1]	(6,217)	(3,054)	8
TSM operating revenue from external sources	[1]	8,991	8,553	5,794
Depreciation and amortization expense [Abstract]
Depreciation and amortization expense	[1]	1,261	910	705
Assets [Abstract]
Assets	[1]	34,020	28,346	20,705
Significant noncash items [Abstract]
Consolidated net change in unrealized (loss) gain on securities available for sale	[1]	0	0	0
Reportable Segments [Member]
Operating revenues [Abstract]
Consolidated operating revenues		3,699,934	3,349,648	3,026,625
Operating income (loss) [Abstract]
Operating income (loss)		79,709	95,257	(63,742)
Depreciation and amortization expense [Abstract]
Depreciation and amortization expense		13,346	13,903	12,748
Assets [Abstract]
Assets		2,988,632	2,793,012	2,710,020
Significant noncash items [Abstract]
Consolidated net change in unrealized (loss) gain on securities available for sale		34,343	30,152	(9,283)
Reportable Segments [Member] | Managed Care [Member]
Segment Information [Abstract]
Earned premiums revenue		3,320,181	2,985,600	2,687,773
Operating revenues [Abstract]
Premiums, net		3,320,181	2,985,600	2,687,773
Fee revenue		12,585	9,946	14,701
Net investment income		20,783	23,468	23,827
Consolidated operating revenues		3,356,074	3,025,283	2,731,991
Operating income (loss) [Abstract]
Operating income (loss)		38,301	61,907	26,468
Depreciation and amortization expense [Abstract]
Depreciation and amortization expense		10,478	11,527	10,525
Assets [Abstract]
Assets		1,319,389	1,190,538	1,078,262
Significant noncash items [Abstract]
Consolidated net change in unrealized (loss) gain on securities available for sale		12,504	9,687	2,585
Reportable Segments [Member] | Life [Member]
Segment Information [Abstract]
Earned premiums revenue		193,889	180,204	167,888
Operating revenues [Abstract]
Premiums, net		193,889	180,204	167,888
Net investment income		27,317	27,323	25,658
Consolidated operating revenues		223,272	209,514	194,214
Operating income (loss) [Abstract]
Operating income (loss)		27,796	21,912	19,901
Depreciation and amortization expense [Abstract]
Depreciation and amortization expense		1,226	1,081	1,134
Assets [Abstract]
Assets		1,051,819	981,370	863,470
Significant noncash items [Abstract]
Consolidated net change in unrealized (loss) gain on securities available for sale		18,336	17,442	(11,285)
Reportable Segments [Member] | Property and Casualty Insurance [Member]
Segment Information [Abstract]
Earned premiums revenue		91,380	87,076	82,930
Operating revenues [Abstract]
Premiums, net		91,380	87,076	82,930
Net investment income		8,974	9,773	10,800
Consolidated operating revenues		100,967	97,462	94,343
Operating income (loss) [Abstract]
Operating income (loss)		19,829	14,492	(110,119)
Depreciation and amortization expense [Abstract]
Depreciation and amortization expense		381	385	384
Assets [Abstract]
Assets		583,404	592,758	747,583
Significant noncash items [Abstract]
Consolidated net change in unrealized (loss) gain on securities available for sale		3,503	3,023	(583)
Unallocated Amount to Segment [Member]
Operating revenues [Abstract]
TSM operating revenues from external sources		473	1,443	1,624
Operating income (loss) [Abstract]
TSM operating revenue from external sources		473	1,443	1,624
TSM unallocated operating expenses		(7,940)	(8,588)	(8,815)
Depreciation and amortization expense [Abstract]
Depreciation and amortization expense		1,057	697	787
Assets [Abstract]
Assets		173,851	90,966	102,072
Cash, cash equivalents, and investments		16,489	28,167	57,818
Property and equipment, net		68,678	25,623	21,733
Other assets		88,684	37,176	22,521
Significant noncash items [Abstract]
Consolidated net change in unrealized (loss) gain on securities available for sale		(484)	370	235
Intersegment Eliminations [Member]
Segment Information [Abstract]
Earned premiums revenue		(5,204)	(8,869)	(6,971)
Operating revenues [Abstract]
Premiums, net		(5,204)	(8,869)	(6,971)
Consolidated operating revenues		(10,630)	(8,836)	(283)
Operating income (loss) [Abstract]
Elimination of TSM charges		9,612	9,612	9,600
Assets [Abstract]
Assets		(74,065)	(65,152)	(51,844)
Intersegment Eliminations [Member] | Managed Care [Member]
Segment Information [Abstract]
Earned premiums revenue		2,525	6,269	5,690
Operating revenues [Abstract]
Premiums, net		2,525	6,269	5,690
Intersegment Eliminations [Member] | Life [Member]
Segment Information [Abstract]
Earned premiums revenue		2,066	1,987	668
Operating revenues [Abstract]
Premiums, net		2,066	1,987	668
Intersegment Eliminations [Member] | Property and Casualty Insurance [Member]
Segment Information [Abstract]
Earned premiums revenue		613	613	613
Operating revenues [Abstract]
Premiums, net		613	613	613
Intersegment Eliminations [Member] | Other Segments [Member]
Operating revenues [Abstract]
Consolidated operating revenues	[1]	$ 10,630	$ 8,836	$ 283

[1] Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinics

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Schedule II - Condensed Financial Information of Triple-S Management Corporation, Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Assets [Abstract]
Cash and cash equivalents	$ 110,989	$ 109,837
Securities available-for-sale, at fair value [Abstract]
Equity Securities (cost of $5,853 in 2019)	404,328	287,525
Other invested assets, measured at net asset value (amortized cost of $15,234 in 2020 and $17,711 in 2019)	114,905	100,508
Deferred tax asset	119,534	77,294
Other assets	86,118	68,294
Total assets	3,088,418	2,818,826	$ 2,760,248
Liabilities [Abstract]
Long-term borrowings	52,751	25,694
Liability for pension benefits	139,611	34,465
Total liabilities	2,120,905	1,875,654
Stockholders' equity [Abstract]
Common stock, class B	23,430	23,800
Additional paid-in-capital	57,399	60,504
Retained earnings	897,221	830,198
Accumulated other comprehensive income, net	(9,820)	29,363
Total Triple-S Management Corporation stockholders' equity	968,230	943,865
Total liabilities and stockholders' equity	3,088,418	2,818,826
Other invested assets, amortized cost	112,171	97,575
Parent Company [Member]
Assets [Abstract]
Cash and cash equivalents	973	3,712
Securities available-for-sale, at fair value [Abstract]
Equity Securities (cost of $5,853 in 2019)	0	5,857
Other invested assets, measured at net asset value (amortized cost of $15,234 in 2020 and $17,711 in 2019)	15,516	18,598
Investment in subsidiaries	957,299	878,695
Notes receivable and accrued interest from subsidiaries	61,479	59,085
Due from subsidiaries	17,521	19,575
Deferred tax asset	63,934	20,701
Other assets	93,428	42,098
Total assets	1,210,150	1,048,321
Liabilities [Abstract]
Notes payable and accrued interest to subsidiary	19,876	18,965
Due to subsidiaries	9,657	1,531
Long-term borrowings	52,751	25,694
Liability for pension benefits	139,611	34,465
Other liabilities	20,025	23,801
Total liabilities	241,920	104,456
Stockholders' equity [Abstract]
Common stock, class B	23,430	23,800
Additional paid-in-capital	57,399	60,504
Retained earnings	897,221	830,198
Accumulated other comprehensive income, net	(9,820)	29,363
Total Triple-S Management Corporation stockholders' equity	968,230	943,865
Total liabilities and stockholders' equity	1,210,150	1,048,321
Securities available for sale, equity securities, amortized cost		5,853
Other invested assets, amortized cost	$ 15,234	$ 17,711

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Schedule II - Condensed Financial Information of Triple-S Management Corporation, Statements of Earnings (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statements of Earnings [Abstract]
Investment income	$ 57,547	$ 62,007	$ 61,909
Net realized investment gains (losses)	641	5,843	298
Net unrealized investment (losses) gains on equity investments	7,639	32,151	(36,546)
Total revenues	3,702,438	3,375,586	2,996,059
Operating expenses [Abstract]
Interest expense	7,986	7,672	6,903
Total operating expenses	655,899	569,406	554,715
Income (loss) before taxes	91,733	132,252	(93,172)
Income tax expense	24,568	39,375	(29,866)
Net income (loss) attributable to Triple-S Management Corporation	67,189	92,894	(63,302)
Parent Company [Member]
Statements of Earnings [Abstract]
Investment income	473	1,443	1,624
Net realized investment gains (losses)	95	(63)	33
Net unrealized investment (losses) gains on equity investments	(4)	459	(462)
Other revenues	13,712	11,613	11,778
Total revenues	14,276	13,452	12,973
Operating expenses [Abstract]
General and administrative expenses	7,940	8,588	8,815
Interest expense	1,365	1,334	1,375
Total operating expenses	9,305	9,922	10,190
Income (loss) before taxes	4,971	3,530	2,783
Income tax expense	2,208	7	344
Income from parent company	2,763	3,523	2,439
Equity in net income (loss) of subsidiaries	64,426	89,371	(65,741)
Net income (loss) attributable to Triple-S Management Corporation	$ 67,189	$ 92,894	$ (63,302)

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Schedule II - Condensed Financial Information of Triple-S Management Corporation, Statements of Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statements of Cash Flows [Abstract]
Net income (loss)	$ 67,189	$ 92,894	$ (63,302)
Adjustment to reconcile net (loss) income to net cash provided by operating activities [Abstract]
Net realized investment (gains) losses	(641)	(5,843)	(298)
Net unrealized investment losses (gains) on equity investments	(7,639)	(32,151)	36,546
Depreciation and amortization	14,403	14,600	13,535
Net amortization of investments	3,342	2,326	3,976
Share-based compensation	11,889	11,605	3,357
Deferred income tax expense (benefit)	(2,285)	3,661	(32,078)
Changes in assets and liabilities [Abstract]
Other assets	2,827	1,385	(1,470)
Net cash provided by (used in) operating activities	257,845	(16,826)	7,459
Cash flows from investing activities [Abstract]
Acquisition of equity investments	(248,123)	(143,972)	(156,486)
Acquisition of investment in other invested assets, measured at net asset value	(30,178)	(28,501)	(47,221)
Capital contribution to subsidiaries	(57,873)	(20,820)	(19,840)
Proceeds from sales of other invested assets	17,013	4,554	3,714
Proceeds from sale of equity investments	134,926	169,153	203,841
Capital contribution in equity method investees	(8,184)	(11,418)	0
Net cash (used in) provided by investing activities	(252,026)	(38,293)	(32,854)
Cash flows from financing activities [Abstract]
Repayments of long-term borrowings	(3,883)	(3,236)	(3,236)
Proceeds from long-term borrowings	30,841	0	0
Repurchase of common stock	(14,982)	(9,989)	(22,377)
Dividends paid	0	(11)	0
Net cash (used in) provided by financing activities	(4,667)	47,412	(56,002)
Net increase (decrease) in cash and cash equivalents	1,152	(7,707)	(81,397)
Beginning of year	109,837	117,544	198,941
End of year	110,989	109,837	117,544
Parent Company [Member]
Statements of Cash Flows [Abstract]
Net income (loss)	67,189	92,894	(63,302)
Adjustment to reconcile net (loss) income to net cash provided by operating activities [Abstract]
Equity in net (income) loss of subsidiaries	(64,426)	(89,371)	65,741
Net realized investment (gains) losses	(95)	63	(33)
Net unrealized investment losses (gains) on equity investments	4	(459)	462
Depreciation and amortization	1,469	871	961
Net amortization of investments	0	0	53
Share-based compensation	11,889	11,605	3,357
Deferred income tax expense (benefit)	714	(438)	(330)
Dividends received from subsidiaries	20,000	8,750	6,000
Changes in assets and liabilities [Abstract]
Accrued interest from subsidiaries, net	(1,483)	(1,876)	(642)
Due from subsidiaries	2,054	(11,694)	1,093
Other assets	(724)	(357)	(99)
Due to subsidiaries	8,126	(4,033)	5,498
Other liabilities	(15,783)	4,953	(3,680)
Net cash provided by (used in) operating activities	28,934	10,908	15,079
Cash flows from investing activities [Abstract]
Acquisition of investment in securities classified as available-for-sale	0	0	(18,007)
Acquisition of equity investments	0	(13,930)	(11,856)
Acquisition of investment in other invested assets, measured at net asset value	(3,562)	(3,738)	(10,862)
Capital contribution to subsidiaries	0	0	(12,189)
Proceeds from sale and maturities of investment in securities classified as available-for-sale	0	0	17,959
Proceeds from sales of other invested assets	6,166	377	0
Proceeds from sale of equity investments	5,822	32,389	47,506
Issuance of note receivable to subsidiary	0	(12,000)	0
Capital contribution in equity method investees	(7,551)	(11,418)	0
Net acquisition of property and equipment	(44,524)	(4,761)	(437)
Net cash (used in) provided by investing activities	(43,649)	(13,081)	12,114
Cash flows from financing activities [Abstract]
Repayments of long-term borrowings	(3,883)	(3,236)	(3,236)
Proceeds from long-term borrowings	30,841	0	0
Repurchase of common stock	(14,982)	(9,989)	(22,377)
Dividends paid	0	(11)	0
Net cash (used in) provided by financing activities	11,976	(13,236)	(25,613)
Net increase (decrease) in cash and cash equivalents	(2,739)	(15,409)	1,580
Beginning of year	3,712	19,121	17,541
End of year	$ 973	$ 3,712	$ 19,121

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Schedule II - Condensed Financial Information of Triple-S Management Corporation, Long-Term Borrowings (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Loan	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Summary of Long-term Borrowings [Abstract]
Borrowings	$ 53,367	$ 25,879
Less: unamortized debt issuance costs	616	185
Long-term borrowings	52,751	25,694
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
2021	4,490
2022	4,490
2023	4,196
2024	14,484
2025	25,707
Borrowings	53,367	25,879
Interest expense on borrowings	1,362	1,320	$ 1,375
Secured Debt [Member] | Term Loan A [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	4,627	6,267
Debt instrument, principal amount	11,187
Debt instrument, monthly installment payment	$ 137
Debt instrument, maturity date	Oct. 01, 2023
Basis spread on variable rate	1.00%
Debt instrument, variable interest rate	1.15%
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 4,627	6,267
Secured Debt [Member] | Term Loan B [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	16,204	17,211
Debt instrument, principal amount	20,150
Debt instrument, monthly installment payment	$ 84
Debt instrument, maturity date	Jan. 01, 2024
Basis spread on variable rate	2.75%
Debt instrument, variable interest rate	2.98%
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 16,204	17,211
Secured Debt [Member] | Term Loan C [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	1,813	2,401
Debt instrument, principal amount	4,116
Debt instrument, monthly installment payment	$ 49
Debt instrument, maturity date	Jan. 01, 2024
Basis spread on variable rate	3.25%
Debt instrument, variable interest rate	3.48%
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 1,813	2,401
Secured Debt [Member] | Term Loan D [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	30,723	0
Debt instrument, principal amount	31,350
Debt instrument, monthly installment payment	$ 105
Debt instrument, maturity date	May 01, 2025
Debt instrument, variable interest rate	3.25%
Debt instrument, last payment	$ 25,185
Debt Instrument, last payment maturity date	Jun. 19, 2025
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 30,723	0
Parent Company [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	53,367	25,879
Less: unamortized debt issuance costs	616	185
Long-term borrowings	$ 52,751	25,694
Debt instrument, maturity date	Dec. 31, 2022
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
2021	$ 4,490
2022	4,490
2023	4,196
2024	14,484
2025	25,707
Borrowings	53,367	25,879
Interest expense on borrowings	1,362	1,320	$ 1,375
Parent Company [Member] | Secured Debt [Member] | Term Loan A [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	4,627	6,267
Debt instrument, principal amount	11,187
Debt instrument, monthly installment payment	$ 137
Debt instrument, maturity date	Oct. 01, 2023
Basis spread on variable rate	1.00%
Debt instrument, variable interest rate	1.15%
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 4,627	6,267
Parent Company [Member] | Secured Debt [Member] | Term Loan B [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	16,204	17,211
Debt instrument, principal amount	20,150
Debt instrument, monthly installment payment	$ 84
Debt instrument, maturity date	Jan. 01, 2024
Basis spread on variable rate	2.75%
Debt instrument, variable interest rate	2.98%
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 16,204	17,211
Parent Company [Member] | Secured Debt [Member] | Term Loan C [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	1,813	2,401
Debt instrument, principal amount	4,116
Debt instrument, monthly installment payment	$ 49
Debt instrument, maturity date	Jan. 01, 2024
Basis spread on variable rate	3.25%
Debt instrument, variable interest rate	3.48%
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 1,813	2,401
Parent Company [Member] | Secured Debt [Member] | Term Loan D [Member]
Summary of Long-term Borrowings [Abstract]
Borrowings	30,723	0
Debt instrument, principal amount	31,350
Debt instrument, monthly installment payment	$ 105
Debt instrument, maturity date	May 01, 2025
Debt instrument, variable interest rate	3.25%
Debt instrument, last payment	$ 25,185
Debt Instrument, last payment maturity date	Jun. 19, 2025
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Borrowings	$ 30,723	$ 0
Commercial Bank in Puerto Rico [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Number of term loans under credit agreements | Loan	4
Commercial Bank in Puerto Rico [Member] | First Year [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Prepayment penalty fee percentage	3.00%
Commercial Bank in Puerto Rico [Member] | Second Year [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Prepayment penalty fee percentage	2.00%
Commercial Bank in Puerto Rico [Member] | Third Year [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Prepayment penalty fee percentage	1.00%
Commercial Bank in Puerto Rico [Member] | Parent Company [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Number of term loans under credit agreements | Loan	4
Commercial Bank in Puerto Rico [Member] | Parent Company [Member] | First Year [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Prepayment penalty fee percentage	3.00%
Commercial Bank in Puerto Rico [Member] | Parent Company [Member] | Second Year [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Prepayment penalty fee percentage	2.00%
Commercial Bank in Puerto Rico [Member] | Parent Company [Member] | Third Year [Member]
Aggregate Maturities of Company's Long Term Borrowings [Abstract]
Prepayment penalty fee percentage	1.00%

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Schedule II - Condensed Financial Information of Triple-S Management Corporation, Transactions with Related Parties (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Note	Dec. 31, 2019 USD ($) Note	Dec. 31, 2018 USD ($)
Summary of Significant Related Party Transactions [Abstract]
Accrued interest	$ 10,418	$ 11,307
Maturity Analysis of Lease Payments to be Received [Abstract]
2021	1,909
2022	1,947
2023	1,986
Total	10,493
Parent Company [Member]
Summary of Significant Related Party Transactions [Abstract]
Rent charges to subsidiaries	7,810	7,809	$ 7,874
Interest charged to subsidiaries on notes receivable	2,672	2,275	1,935
Interest charged from subsidiaries on note payable	911	869	$ 829
Note payable to subsidiary	$ 15,000	15,000
Stated interest rate	4.70%
Accrued interest	$ 4,876	$ 3,965
Debt instrument, maturity date	Dec. 31, 2022
Maturity Analysis of Lease Payments to be Received [Abstract]
2021	$ 7,810
2022	7,810
2023	7,745
Total	$ 23,365
Parent Company [Member] | Notes Receivable from Subsidiaries Pursuant to Provisions of Article 29.30 of Puerto Rico Insurance Code [Member]
Summary of Significant Related Party Transactions [Abstract]
Number of notes receivable from subsidiaries | Note		3
Note receivable from subsidiary		$ 37,000
Stated interest rate		4.70%
Accrued interest		$ 10,342
Parent Company [Member] | Notes Receivable from Subsidiaries Pursuant to Provisions of Article 20.30 of Puerto Rico Insurance Code [Member]
Summary of Significant Related Party Transactions [Abstract]
Number of notes receivable from subsidiaries | Note	3
Note receivable from subsidiary	$ 37,000
Period for obtaining written authorization from the commissioner of insurance prior to proposed payment date	60 days
Stated interest rate	4.70%
Accrued interest	$ 12,616
Parent Company [Member] | Various Notes Receivable from Subsidiary [Member]
Summary of Significant Related Party Transactions [Abstract]
Note receivable from subsidiary	$ 11,214	11,405
Average interest rate	5.10%
Accrued interest	$ 335	$ 338
Renewal term	1 year

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Schedule II - Condensed Financial Information of Triple-S Management Corporation, Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands				12 Months Ended
	Aug. 06, 2019	Jul. 29, 2019	Jul. 26, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Preferred Stock [Abstract]
Preferred stock, authorized (in shares)				100,000,000
Preferred stock, par value (in dollars per share)				$ 1.00
Preferred stock, issued (in shares)				0	0
Preferred stock, outstanding (in shares)				0	0
Dividends [Abstract]
Dividend declared , record date				Jul. 26, 2019
Dividends paid				$ 0	$ 11	$ 0
Class A Common Stock [Member]
Common Stock [Abstract]
Number of shares issued (in shares)		48,602
Class B Common Stock [Member]
Dividends [Abstract]
Cash paid in lieu of fractional shares	$ 11
Parent Company [Member]
Preferred Stock [Abstract]
Preferred stock, authorized (in shares)				100,000,000
Preferred stock, par value (in dollars per share)				$ 1.00
Preferred stock, issued (in shares)				0	0
Preferred stock, outstanding (in shares)				0	0
Dividends [Abstract]
Dividends paid				$ 0	$ 11	$ 0
Parent Company [Member] | Class A Common Stock [Member]
Common Stock [Abstract]
Number of shares issued (in shares)		48,602
Dividends [Abstract]
Dividend declared , record date				Jul. 26, 2019
Dividend paid date				Aug. 06, 2019
Parent Company [Member] | Class B Common Stock [Member]
Dividends [Abstract]
Dividend declared (in shares)			0.051107
Dividends paid	24,655
Cash paid in lieu of fractional shares	$ 11

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Schedule III - Supplementary Insurance Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Supplementary Insurance Information [Abstract]
Deferred policy acquisition costs and value of business acquired	$ 248,325	$ 234,779	$ 215,159
Claim liabilities	787,102	710,390	936,789
Liability for future policy benefits	414,997	386,017	361,495
Unearned premiums	97,481	93,301	82,990
Other policy claims and benefits payable	0	0	0
Premium revenue	3,605,450	3,257,346	2,938,591
Net investment income	57,547	62,007	61,909
Claims incurred	2,946,820	2,666,256	2,527,613
Amortization of deferred policy acquisition costs and value of business acquired	45,252	37,653	36,773
Other operating expenses	610,647	531,753	517,942
Net premiums written	3,614,998	3,267,821	2,937,110
Operating Segments [Member] | Managed Care [Member]
Supplementary Insurance Information [Abstract]
Deferred policy acquisition costs and value of business acquired	0	0	0
Claim liabilities	445,655	341,277	394,226
Liability for future policy benefits	0	0	0
Unearned premiums	1,609	2,188	2,418
Other policy claims and benefits payable	0	0	0
Premium revenue	3,322,266	2,987,466	2,689,082
Net investment income	20,783	23,468	23,827
Claims incurred	2,805,738	2,526,682	2,272,501
Amortization of deferred policy acquisition costs and value of business acquired	0	0	0
Other operating expenses	512,035	436,694	433,022
Net premiums written	3,322,266	2,987,466	2,689,082
Operating Segments [Member] | Life Insurance [Member]
Supplementary Insurance Information [Abstract]
Deferred policy acquisition costs and value of business acquired	222,703	212,345	198,140
Claim liabilities	49,932	47,095	46,157
Liability for future policy benefits	414,997	386,017	361,495
Unearned premiums	12,190	10,889	9,490
Other policy claims and benefits payable	0	0	0
Premium revenue	195,955	182,191	168,556
Net investment income	27,317	27,323	25,658
Claims incurred	107,226	105,889	99,048
Amortization of deferred policy acquisition costs and value of business acquired	18,567	14,911	11,017
Other operating expenses	69,683	66,802	64,248
Net premiums written	195,955	182,191	168,556
Operating Segments [Member] | Property and Casualty Insurance [Member]
Supplementary Insurance Information [Abstract]
Deferred policy acquisition costs and value of business acquired	25,622	22,434	17,019
Claim liabilities	292,835	322,018	496,876
Liability for future policy benefits	0	0	0
Unearned premiums	83,682	80,224	71,082
Other policy claims and benefits payable	0	0	0
Premium revenue	91,993	87,689	83,543
Net investment income	8,974	9,773	10,800
Claims incurred	35,140	39,548	159,942
Amortization of deferred policy acquisition costs and value of business acquired	26,685	22,742	25,756
Other operating expenses	19,313	20,679	18,764
Net premiums written	96,777	98,164	79,472
Other Non-reportable Segments, Parent Company Operations and Net Consolidating Entries [Member]
Supplementary Insurance Information [Abstract]
Deferred policy acquisition costs and value of business acquired	0	0	0
Claim liabilities	(1,320)	0	(470)
Liability for future policy benefits	0	0	0
Unearned premiums	0	0	0
Other policy claims and benefits payable	0	0	0
Premium revenue	(4,764)	0	(2,590)
Net investment income	473	1,443	1,624
Claims incurred	(1,284)	(5,863)	(3,878)
Amortization of deferred policy acquisition costs and value of business acquired	0	0	0
Other operating expenses	9,616	7,578	1,908
Net premiums written	$ 0	$ 0	$ 0

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Schedule IV - Reinsurance (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Reinsurance [Abstract]
Life insurance in force, gross amount		$ 10,317,331	$ 9,739,154	$ 9,158,253
Life insurance in force, net amount		$ 10,317,331	$ 9,739,154	$ 9,158,253
Life insurance in force, percentage of amount assumed to net		0.00%	0.00%	0.00%
Premiums, gross amount	[1]	$ 3,681,830	$ 3,316,802	$ 3,009,830
Premiums, ceded to other companies		76,809	66,320	73,591
Premiums, assumed from other companies		429	2,398	2,352
Premiums, net amount		$ 3,605,450	$ 3,252,880	$ 2,938,591
Premiums, percentage of amount assumed to net		0.00%	0.10%	0.10%
Reinsurance premiums for insurance companies, intercompany elimination		$ 4,764	$ 4,466	$ 2,590
Life Insurance [Member]
Reinsurance [Abstract]
Premiums, gross amount	[1]	203,818	186,489	174,624
Premiums, ceded to other companies		9,997	8,337	8,780
Premiums, assumed from other companies		68	2,052	2,044
Premiums, net amount		$ 193,889	$ 180,204	$ 167,888
Premiums, percentage of amount assumed to net		0.00%	1.10%	1.20%
Accident and Health Insurance [Member]
Reinsurance [Abstract]
Premiums, gross amount	[1]	$ 3,324,161	$ 2,989,550	$ 2,691,289
Premiums, ceded to other companies		4,341	4,296	3,824
Premiums, assumed from other companies		361	346	308
Premiums, net amount		$ 3,320,181	$ 2,985,600	$ 2,687,773
Premiums, percentage of amount assumed to net		0.00%	0.00%	0.00%
Property and Casualty Insurance [Member]
Reinsurance [Abstract]
Premiums, gross amount	[1]	$ 153,851	$ 140,763	$ 143,917
Premiums, ceded to other companies		62,471	53,687	60,987
Premiums, assumed from other companies		0	0	0
Premiums, net amount		$ 91,380	$ 87,076	$ 82,930
Premiums, percentage of amount assumed to net		0.00%	0.00%	0.00%

[1] Gross premiums amount is presented net of intercompany eliminations of $4,764, $4,466 and $2,590 for the years ended December 31, 2020, 2019, and 2018, respectively.

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Schedule V - Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Receivables [Member] - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period		$ 56,545	$ 42,042	$ 35,883
Additions, charged to costs and expenses		1,841	17,539	4,754
Additions, charged (reversal) to other accounts	[1]	(5,985)	1,360	6,569
Deductions	[2]	(1,662)	(4,396)	(5,164)
Balance at end of period		$ 50,739	$ 56,545	$ 42,042

[1] Represents premiums adjustment to provide for unresolved reconciliation items with the Government of Puerto Rico and other entities.

[2] Deductions represent the write-off of accounts deemed uncollectible.

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Schedule VI - Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations [Abstract]
Claims and claim adjustment expenses incurred related to current year	$ 2,884,380	$ 2,666,540	$ 2,411,884
Claims and claim adjustment expenses incurred related to prior years	23,889	(34,535)	84,946
Consolidated Property and Casualty Insurance Operations [Member]
Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations [Abstract]
Deferred policy acquisition costs	25,622	22,434	17,019
Reserves for unpaid claims and claims adjustment expenses	292,835	322,018	496,876
Unearned premiums	83,682	80,224	71,082
Earned premiums	91,993	87,689	83,543
Net investment income	8,974	9,773	10,800
Claims and claim adjustment expenses incurred related to current year	44,455	43,589	40,619
Claims and claim adjustment expenses incurred related to prior years	(9,315)	(4,041)	119,323
Amortization of deferred policy acquisition costs	26,685	22,742	25,756
Paid claims and claims adjustment expenses	65,601	36,467	40,158
Premiums written	$ 157,922	$ 150,519	$ 139,826