SAN JUAN, Puerto Rico,
Nov. 9, 2017 /PRNewswire/
-- Triple-S Management Corporation (NYSE:GTS), a leading
managed care company in Puerto
Rico, today announced its third quarter 2017
results.
Quarterly Consolidated and Other Highlights
- Net income of $21.9 million, or
$0.91 per diluted share, versus net
loss of $1.9 million, or $0.08 per diluted share, in the prior-year
period;
- Adjusted net income of $18.7
million, or $0.77 per diluted
share, versus adjusted net loss of $6.3
million, or $0.26 per diluted
share, a year ago, reflecting ongoing improvements in our Managed
Care operations and the negative impact on the Company's 2016 third
quarter results from unfavorable prior-period reserve developments.
The results also reflect, to a lesser extent, the net impact of the
recent hurricanes, which represented approximately $0.09 of the improvement in the third quarter
diluted earnings per share;
- Total revenues of $738.2 million,
a 0.9% decrease, compared with $744.7
million in the prior-year period;
- Operating revenues of $731.1
million, a 1.0% decrease from the prior-year period,
reflecting lower premiums in the Managed Care segment;
- Consolidated operating income of $28.3
million;
- Consolidated loss ratio of 81.7%;
- Medical loss ratio (MLR) of 82.4% and
- The establishment of a $30.0
million Class B share repurchase program, under which
- 539,034 shares were repurchased during the quarter at an
aggregate cost of $12.6 million and
322,000 shares were subsequently repurchased at an aggregate cost
of $7.7 million.
"The impact of two major hurricanes on Puerto Rico within a two-week period during
the quarter was a historic event with significant economic and
social impact," said Roberto
Garcia-Rodriguez, President and Chief Executive Officer.
"Seven weeks after María, basic infrastructure is not yet fully
functional, with power generation at 42% of average, potable water
at 83% of its capacity and telecommunications bandwidth still
limited in many parts of the island. Despite the hardship, however,
the residents of Puerto Rico have
demonstrated tremendous resolve, working tirelessly to help their
neighbors and communities recover. We are particularly grateful to
our employees and business partners who made it possible for
Triple-S to resume operations within days after María landed, our
medical groups—many of whom are providing services despite
challenging conditions—and the many volunteers who have
crisscrossed the island by our side to reconnect patients with
doctors.
"We have focused our efforts on ensuring the well-being of our
employees, helping our providers resume operations, enabling access
to healthcare services, and promptly processing property insurance
claims to accelerate the rebuilding of our economy," continued Mr.
Garcia-Rodriguez. "Healthcare services are steadily returning to
normal, although still somewhat tied to the recovery of
Puerto Rico's infrastructure. Over
87% of our primary medical groups are now operational, but
utilization of healthcare services overall is below average,
reflecting the general population's continued focus on relief and
recovery. It is still too early to tell how utilization patterns,
the acceleration of outward migration, and reconstruction efforts
will impact future results.
"Our third quarter was also characterized by ongoing improvement
in our Managed Care operations, reflecting continued strides with
our clinical and contracting initiatives. Capitation agreements in
home health care, vision care, and durable medical equipment, as
well as the re-contracting of our ESRD network, are yielding
meaningful savings, and additional initiatives will be implemented
as we enter 2018.
"Hurricanes Irma and María have, of course, caused an unusual
quarter for our P&C segment as well, with a spike in claims in
the quarter for property damage. Given the composition of our
catastrophic coverage portfolio, current modeling estimates and our
robust reinsurance program, however, we believe the financial
impact of these storms has been fully recognized in the third
quarter.
"As Puerto Rico concentrates on its recovery, our goal is to
enhance its health and well-being through the development of
value-based, integrated healthcare delivery models. Our multi-year
transformation is on track, and we have both the management team
and capital resources necessary to support this strategic agenda,"
concluded Garcia-Rodriguez.
Selected Consolidated Quarterly Details
- Consolidated premiums earned were $714.3
million, down 1.0% from the prior-year period. The decrease
reflects lower premiums in the Managed Care business, primarily due
to the impact of the Medicaid profit sharing accrual recorded in
2016, the suspension of the HIP fee pass-through and lower
additional Medicare risk score revenue, partially offset by higher
average premium rates in the segment's Commercial and Medicaid
businesses. With the Medicaid contract extension that became
effective July 1, 2017, the average
premium rates for this business increased by approximately 9%. In
addition, premiums earned were impacted by approximately
$3.0 million of estimated reinsurance
related costs, including estimates for catastrophe reinsurance
reinstatement costs for the rest of the year.
- Consolidated claims incurred were $583.6
million, down 7.2% year over year, mostly due to lower
claims in the Managed Care segment and partially offset by an
increase in claims in the Property and Casualty business. The
decrease in Managed Care claims primarily reflects lower claims
incurred across all businesses in the segment, mostly driven by
favorable fluctuations in prior-period reserve developments in the
Commercial and Medicare businesses, as well as by the estimated
utilization decrease stemming from Hurricanes Irma and Maria.
Estimated gross Property and Casualty losses related to Hurricanes
Irma and Maria were $5.0 million and
$613.0 million, respectively;
however, after the application of reinsurance, the segment's
estimated net retained losses related to Hurricanes Irma and Maria
were approximately $3.5 million and
$10.5 million, respectively. At
81.7%, the consolidated loss ratio improved 550 basis points from
the prior-year period.
- Consolidated operating expenses decreased $4.2 million, while the operating expense ratio
improved 40 basis points year over year, to 16.6%. The reduction in
operating expenses reflects the $11.6
million decrease in the HIP fee due to the 2017 moratorium,
partially offset by an increase in personnel costs,
hurricane-related expenses, provision for doubtful accounts, and
other general administrative expenses totaling approximately
$7.3 million.
- Consolidated other income increased $2.7
million in 2017, mostly due to a special distribution of
$2.4 million, net of tax, received
from the Puerto Rico Joint Underwriting Association.
- Consolidated income tax expense was $11.8 million, an increase of $19.7 million from the prior-year period,
primarily reflecting a significant increase in the Managed Care
segment's taxable income, which has a higher effective tax rate
than other businesses.
- As of September 30, 2017, the
consolidated balance sheet reflects approximately $614 million within claim liabilities of unpaid
estimated gross losses related to the aforementioned hurricanes, as
well as $604 million within premiums
and other receivables of catastrophe-related losses recoverable
from the Property and Casualty reinsurance program.
Selected Managed Care Segment Quarterly Details
- Managed Care premiums earned were $654.1
million, down 1.0% year over year.
-
- Commercial premiums were down 3.6% when compared with the third
quarter last year, to $198.9 million,
resulting from lower fully-insured member month enrollment offset
by higher average premium rates. Also contributing to the premium
decline was the suspension of $3.6
million in HIP fee pass-throughs in 2017.
- Medicare premiums of $264.3
million rose 3.5% year over year, largely reflecting an
increase in member month enrollment of 24,000 lives, offset, in
part, by a $6.1 million decline in
additional risk score revenue adjustments and a reduction in
Medicare reimbursement rates.
- Medicaid premiums fell 4.3% from the prior-year period to
$190.9 million. The decrease
primarily reflects the 2.5% excess profit sharing accrual that
increased last year's premiums by $15.6
million, a membership decline, and $2.8 million associated with the 2017 HIP fee
suspension; partially offset by the impact of the new rates that
became effective July 2017, which increased average premiums
by approximately 9%.
- Managed Care MLR of 82.4% improved 810 basis points from the
prior year, mostly reflecting the estimated decrease in utilization
caused by Hurricanes Irma and Maria in September 2017 and favorable prior-period reserve
developments. Excluding the impact of prior-period reserve
developments, and moving the Medicare risk score revenue
adjustments and other premium adjustments to the corresponding
period, the Managed Care MLR would have been 83.8%, 260 basis
points lower than the comparable metric a year ago. The estimated
decrease in utilization related to the aforementioned hurricanes
lowered the segment's claims incurred and adjusted MLR by
approximately $28 million and 430
basis points, respectively.
- Managed Care operating expenses were $89.0 million, down $4.8
million, or 5.1%, year over year, primarily reflecting the
HIP fee decrease, partially offset by an increase in personnel
costs, hurricane-related expenses, provision for doubtful accounts
and other general administrative expenses, as discussed above.
Consolidated Nine-Month Recap
For the nine months ended September 30,
2017, consolidated operating revenues decreased 2.2% year
over year, to $2.2 billion, primarily
reflecting a $52.8 million decline in
Managed Care segment premiums. The premium decrease is mainly due
to lower membership in the segment's Medicaid and Commercial
businesses, the impact of the suspension of the HIP fee pass
through, and lower Medicare risk score adjustments. Consolidated
claims for the nine-month period were $1.8 billion, down 3.3% over last year,
mostly due to lower claims in the Managed Care segment offset by
increased claims in the Property and Casualty segment. The decrease
in Managed Care claims primarily reflects lower claims incurred in
all of the segment's businesses, driven by an enrollment decline in
the segment's Commercial and Medicaid businesses and the estimated
decrease in utilization caused by the two hurricanes, as well as
favorable fluctuations in the prior-period reserve developments in
the Commercial and Medicare businesses.
The Property and Casualty segment's estimated net retained
losses related to Hurricanes Irma and Maria were approximately
$3.5 million and $10.5 million, respectively, after the
application of reinsurance. The consolidated loss ratio and MLR
were down 90 basis points and 160 basis points, to 84.9% and 87.2%,
respectively. Consolidated operating expenses for the nine months
ended September 30, 2017 were
$348.8 million and the operating
expense ratio was 16.2%. Adjusted net income for the nine-month
period was $23.4 million, or
$0.97 per diluted share, based on
weighted average shares outstanding of 24.2 million, compared with
a $0.2 million adjusted net
loss, or $0.01 per diluted share,
based on weighted average shares outstanding of 24.6 million, at
the same time last year.
2017 Outlook
Triple-S has previously provided directional guidance for its
Commercial and Medicare businesses and last quarter also provided
directional guidance for its Government Health Plan (GHP), since
the contract extension gives the Company more visibility into the
outlook of that business. The directional guidance provided below
was prepared considering the economic situation in Puerto Rico in the aftermath of Hurricanes
Irma and Maria, as well as the expected impact in the Company's
Managed Care and Property and Casualty segments:
- Commercial—expect full-year at-risk member month enrollment to
be approximately 4.0 million, plus or minus 5%, reflecting
some attrition as well as the addition of new groups. Full-year MLR
is revised from a range of 83% to 85% to between 79% and 81%.
- Medicare Advantage—anticipate full-year member month enrollment
of about 1.5 million, plus or minus 5%. Full-year MLR is unchanged
remaining between 90% and 92%.
- GHP—expect member month enrollment of 4.6 million, plus or
minus 5%. Full-year MLR is expected to be between 91% and
93%.
- Full-year Life insurance and Property and Casualty premiums
have been revised and are now expected to reach $160 million and $81
million, respectively, plus or minus 5%.
- Full-year investment income is expected to be approximately
$50 million and full-year
administrative expenses are revised to a range of $468 million to $472 million.
Conference Call and Webcast
Management will host a conference call and webcast on
November 9, 2017 at 9:00 a.m. Eastern Time to discuss its financial
results for the three months and the nine months ended September 30, 2017. To participate, callers
within the U.S. and Canada should
dial 1-855-327-6837 and international callers should dial
1-631-891-4304 about five minutes before the call.
To listen to the webcast, participants should visit the
"Investor Relations" section of the Company's website at
www.triplesmanagement.com several minutes before the event is
broadcast and follow the instructions provided to ensure they have
the necessary audio application downloaded and installed. This
program is provided at no charge to the user. An archived version
of the call, also located on the "Investor Relations" section of
Triple-S Management's website, will be available about two hours
after the call ends and for at least the following two weeks. This
news release, along with other information relating to the call,
will be available on the "Investor Relations" section of the
website.
About Triple-S Management Corporation
Triple-S Management Corporation is an independent licensee of
the Blue Cross Blue Shield Association. It is one of the leading
players in the managed care industry in Puerto Rico. Triple-S Management has the
exclusive right to use the Blue Cross Blue Shield name and mark
throughout Puerto Rico, the
U.S. Virgin Islands, and
Costa Rica. With more than 55
years of experience in the industry, Triple-S Management offers a
broad portfolio of managed care and related products in the
Commercial, Medicare Advantage, and Medicaid markets under the Blue
Cross Blue Shield marks. It also provides non-Blue Cross Blue
Shield branded life and property and casualty insurance in
Puerto Rico. For more information
about Triple-S Management, visit www.triplesmanagement.com or
contact kwaller@allwayscommunicate.com.
Non-GAAP Financial Measures
This earnings release presents information about the Company's
adjusted net income, which is a non-GAAP financial metric provided
as a complement to the results provided in accordance with
accounting principles generally accepted in the United States of America (GAAP). A
reconciliation of adjusted net income to net income, the most
comparable GAAP financial measure, is provided in the accompanying
tables found at the end of this release.
Forward-Looking Statements
This document contains forward-looking statements, as defined in
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include information about possible or
assumed future sales, results of operations, developments,
regulatory approvals or other circumstances. Sentences that include
"believe", "expect", "plan", "intend", "estimate", "anticipate",
"project", "may", "will", "shall", "should" and similar
expressions, whether in the positive or negative, are intended to
identify forward-looking statements.
All forward-looking statements in this news release reflect
management's current views about future events and are based on
assumptions and subject to risks and uncertainties. Consequently,
actual results may differ materially from those expressed here as a
result of various factors, including all the risks discussed and
identified in public filings with the U.S. Securities and Exchange
Commission (SEC).
In addition, the Company operates in a highly competitive,
constantly changing environment, influenced by very large
organizations that have resulted from business combinations,
aggressive marketing and pricing practices of competitors, and
regulatory oversight. The following factors, if markedly different
from the Company's planning assumptions (either individually or in
combination), could cause Triple-S Management's results to differ
materially from those expressed in any forward-looking statements
shared here:
- Trends in health care costs and utilization rates
- Ability to secure sufficient premium rate increases
- Competitor pricing below market trends of increasing costs
- Re-estimates of policy and contract liabilities
- Changes in government laws and regulations of managed care,
life insurance or property and casualty insurance
- Significant acquisitions or divestitures by major
competitors
- Introduction and use of new prescription drugs and
technologies
- A downgrade in the Company's financial strength ratings
- A downgrade in the Government of Puerto Rico's debt
- Litigation or legislation targeted at managed care, life
insurance or property and casualty insurance companies
- Ability to contract with providers consistent with past
practice
- Ability to successfully implement the Company's disease
management, utilization management and Star ratings programs
- Ability to maintain Federal Employees, Medicare and Medicaid
contracts
- Volatility in the securities markets and investment losses and
defaults
- General economic downturns, major disasters, and epidemics
This list is not exhaustive. Management believes the
forward-looking statements in this release are reasonable. However,
there is no assurance that the actions, events or results
anticipated by the forward-looking statements will occur or, if any
of them do, what impact they will have on the Company's results of
operations or financial condition. In view of these uncertainties,
investors should not place undue reliance on any forward-looking
statements, which are based on current expectations. In addition,
forward-looking statements are based on information available the
day they are made, and (other than as required by applicable law,
including the securities laws of the
United States) the Company does not intend to update or
revise any of them in light of new information or future
events.
Readers are advised to carefully review and consider the various
disclosures in the Company's SEC reports.
Earnings Release
Schedules and Supplementary Information
|
Condensed
Consolidated Balance Sheets
|
Exhibit I
|
Condensed
Consolidated Statements of Earnings
|
Exhibit II
|
Condensed
Consolidated Statements of Cash Flows
|
Exhibit
III
|
Segment Performance
Supplemental Information
|
Exhibit IV
|
Reconciliation of
Non-GAAP Financial Measures
|
Exhibit V
|
Exhibit I
Condensed
Consolidated Balance Sheets
|
(dollar amounts in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
1,468,794
|
|
$
|
1,433,392
|
Cash and cash
equivalents
|
|
|
269,942
|
|
|
103,428
|
Premium and other
receivables, net
|
|
|
930,972
|
|
|
286,365
|
Deferred policy
acquisition costs and value of business acquired
|
|
201,467
|
|
|
194,787
|
Property and
equipment, net
|
|
|
73,609
|
|
|
66,369
|
Other
assets
|
|
|
142,008
|
|
|
134,658
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
3,086,792
|
|
$
|
2,218,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy liabilities
and accruals
|
|
$
|
1,835,042
|
|
$
|
1,102,237
|
Accounts payable and
accrued liabilities
|
|
|
322,150
|
|
|
219,191
|
Long-term
borrowings
|
|
|
32,870
|
|
|
35,085
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
2,190,062
|
|
|
1,356,513
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Common
stock
|
|
|
23,902
|
|
|
24,272
|
|
Other stockholders'
equity
|
|
|
873,507
|
|
|
838,891
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Triple-S
Management Corporation stockholders' equity
|
|
897,409
|
|
|
863,163
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest in consolidated subsidiary
|
|
|
(679)
|
|
|
(677)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
896,730
|
|
|
862,486
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
3,086,792
|
|
$
|
2,218,999
|
|
|
|
|
|
|
|
|
|
|
Exhibit II
Condensed
Consolidated Statements of Earnings
|
(dollar amounts in
thousands, except per share data)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Nine
Months Ended
|
|
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned,
net
|
|
$
|
714,325
|
|
$
|
721,187
|
|
$
|
2,139,489
|
|
$
|
2,188,770
|
|
Administrative
service fees
|
|
|
3,391
|
|
|
4,146
|
|
|
12,318
|
|
|
13,749
|
|
Net investment
income
|
|
|
12,395
|
|
|
12,337
|
|
|
37,109
|
|
|
36,570
|
|
Other operating
revenues
|
|
|
941
|
|
|
871
|
|
|
3,027
|
|
|
2,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenues
|
|
|
731,052
|
|
|
738,541
|
|
|
2,191,943
|
|
|
2,241,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other-than-temporary impairment losses on securities
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,434)
|
|
Net realized gains,
excluding other-than-temporary impairment losses on
securities
|
|
|
3,753
|
|
|
5,376
|
|
|
8,143
|
|
|
8,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment gains on sale of securities
|
|
|
3,753
|
|
|
5,376
|
|
|
8,143
|
|
|
6,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
|
3,409
|
|
|
734
|
|
|
6,521
|
|
|
5,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
738,214
|
|
|
744,651
|
|
|
2,206,607
|
|
|
2,254,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims
incurred
|
|
|
|
583,625
|
|
|
629,169
|
|
|
1,815,785
|
|
|
1,877,950
|
|
Operating
expenses
|
|
|
119,145
|
|
|
123,406
|
|
|
348,811
|
|
|
367,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs
|
|
|
702,770
|
|
|
752,575
|
|
|
2,164,596
|
|
|
2,245,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
1,709
|
|
|
1,893
|
|
|
5,116
|
|
|
5,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits and
expenses
|
|
|
704,479
|
|
|
754,468
|
|
|
2,169,712
|
|
|
2,251,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
taxes
|
|
|
33,735
|
|
|
(9,817)
|
|
|
36,895
|
|
|
2,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
|
11,824
|
|
|
(7,873)
|
|
|
6,622
|
|
|
(2,457)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
|
21,911
|
|
|
(1,944)
|
|
|
30,273
|
|
|
5,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss
attributable to the non-controlling interest
|
|
|
1
|
|
|
3
|
|
|
2
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Triple-S Management Corporation
|
$
|
21,912
|
|
$
|
(1,941)
|
|
$
|
30,275
|
|
$
|
5,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Triple-S Management Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share
|
|
$
|
0.91
|
|
$
|
(0.08)
|
|
$
|
1.25
|
|
$
|
0.22
|
|
Diluted net income
(loss) per share
|
|
$
|
0.91
|
|
$
|
(0.08)
|
|
$
|
1.25
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average of
common shares
|
|
|
24,142,192
|
|
|
24,386,076
|
|
|
24,177,344
|
|
|
24,534,647
|
|
Dilutive weighted
average of common shares
|
|
|
24,208,022
|
|
|
24,386,076
|
|
|
24,231,708
|
|
|
24,605,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit III
Condensed
Consolidated Statements of Cash Flows
|
(dollar amounts in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine
Months Ended
|
|
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
191,849
|
|
$
|
83,011
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Proceeds from
investments sold or matured:
|
|
|
|
|
|
|
|
|
Securities available
for sale:
|
|
|
|
|
|
|
|
|
|
Fixed maturities
sold
|
|
|
287,223
|
|
|
227,631
|
|
|
|
Fixed maturities
matured/called
|
|
|
15,503
|
|
|
32,308
|
|
|
|
Equity securities
sold
|
|
|
38,318
|
|
|
67,054
|
|
|
Securities held to
maturity - fixed maturities matured/called
|
|
|
1,546
|
|
|
1,220
|
|
Acquisition of
investments:
|
|
|
|
|
|
|
|
|
Securities available
for sale:
|
|
|
|
|
|
|
|
|
|
Fixed
maturities
|
|
|
(260,538)
|
|
|
(258,378)
|
|
|
|
Equity
securities
|
|
|
(75,507)
|
|
|
(153,399)
|
|
|
Securities held to
maturity - fixed maturities
|
|
|
(1,550)
|
|
|
(1,124)
|
|
Increase in other
investments
|
|
|
(2,207)
|
|
|
(1,939)
|
|
Net change in policy
loans
|
|
|
(696)
|
|
|
(471)
|
|
Net capital
expenditures
|
|
|
(15,949)
|
|
|
(3,517)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
|
(13,857)
|
|
|
(90,615)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Change in outstanding
checks in excess of bank balances
|
|
|
8,371
|
|
|
(1,035)
|
|
Repayments of
long-term borrowings
|
|
|
(2,028)
|
|
|
(1,230)
|
|
Repurchase and
retirement of common stock
|
|
|
(12,553)
|
|
|
(21,371)
|
|
Proceeds from
policyholder deposits
|
|
|
12,130
|
|
|
12,488
|
|
Surrender of
policyholder deposits
|
|
|
(17,398)
|
|
|
(13,543)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
financing activities
|
|
|
(11,478)
|
|
|
(24,691)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
166,514
|
|
|
(32,295)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
103,428
|
|
|
197,818
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
269,942
|
|
$
|
165,523
|
|
|
|
|
|
|
|
|
|
|
Exhibit IV
Segment Performance Supplemental Information
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
(dollar amounts in
millions)
|
2017
|
2016
|
Percentage
Change
|
|
2017
|
2016
|
Percentage
Change
|
Premiums earned,
net:
|
|
|
|
|
|
|
|
|
Managed
Care:
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
198.9
|
$
206.3
|
(3.6%)
|
|
$
607.4
|
$
636.8
|
(4.6%)
|
|
|
Medicare
|
264.3
|
255.3
|
3.5%
|
|
788.5
|
789.4
|
(0.1%)
|
|
|
Medicaid
|
190.9
|
199.4
|
(4.3%)
|
|
560.3
|
582.8
|
(3.9%)
|
|
|
|
Total Managed
Care
|
654.1
|
661.0
|
(1.0%)
|
|
1,956.2
|
2,009.0
|
(2.6%)
|
|
Life
Insurance
|
40.9
|
38.9
|
5.1%
|
|
121.4
|
116.8
|
3.9%
|
|
Property and
Casualty
|
19.9
|
22.0
|
(9.5%)
|
|
63.4
|
65.0
|
(2.5%)
|
|
Other
|
|
|
(0.6)
|
(0.7)
|
14.3%
|
|
(1.5)
|
(2.0)
|
25.0%
|
|
|
|
|
Consolidated premiums
earned, net
|
$
714.3
|
$
721.2
|
(1.0%)
|
|
$
2,139.5
|
$
2,188.8
|
(2.3%)
|
Operating revenues
(loss): 1
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
663.0
|
$
669.8
|
(1.0%)
|
|
$
1,984.6
|
$
2,037.5
|
(2.6%)
|
|
Life
Insurance
|
47.0
|
45.3
|
3.8%
|
|
139.9
|
135.5
|
3.2%
|
|
Property and
Casualty
|
22.0
|
24.3
|
(9.5%)
|
|
69.6
|
71.6
|
(2.8%)
|
|
Other
|
|
|
(0.9)
|
(0.8)
|
(12.5%)
|
|
(2.2)
|
(2.9)
|
24.1%
|
|
|
|
|
Consolidated
operating revenues
|
$
731.1
|
$
738.6
|
(1.0%)
|
|
$
2,191.9
|
$
2,241.7
|
(2.2%)
|
Operating income
(loss): 2
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
34.8
|
$
(22.0)
|
258.2%
|
|
$
19.2
|
$
(26.4)
|
172.7%
|
|
Life
Insurance
|
4.5
|
4.2
|
7.1%
|
|
13.4
|
14.9
|
(10.1%)
|
|
Property and
Casualty
|
(11.1)
|
4.0
|
(377.5%)
|
|
(5.2)
|
9.5
|
(154.7%)
|
|
Other
|
|
|
0.1
|
(0.2)
|
150.0%
|
|
(0.1)
|
(1.8)
|
94.4%
|
|
|
|
|
Consolidated
operating income (loss)
|
$
28.3
|
$
(14.0)
|
(302.1%)
|
|
$
27.3
|
$
(3.8)
|
(818.4%)
|
Operating margin:
3
|
|
|
|
|
|
|
|
|
Managed
Care
|
5.2%
|
(3.3%)
|
850 bp
|
|
1.0%
|
(1.3%)
|
230 bp
|
|
Life
Insurance
|
9.6%
|
9.3%
|
30 bp
|
|
9.6%
|
11.0%
|
-140 bp
|
|
Property and
Casualty
|
(50.5%)
|
16.5%
|
-6,700 bp
|
|
(7.5%)
|
13.3%
|
-2,080 bp
|
|
Consolidated
|
3.9%
|
(1.9%)
|
580 bp
|
|
1.2%
|
(0.2%)
|
140 bp
|
Depreciation and
amortization expense
|
$
3.4
|
$
3.3
|
3.0%
|
|
$
9.8
|
$
10.6
|
(7.5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Operating revenues include premiums earned, net, administrative
service fees and net investment income.
|
2
Operating income or loss include operating revenues minus operating
costs. Operating costs include claims incurred and operating
expenses.
|
3
Operating margin is defined as operating income or loss divided by
operating revenues.
|
|
|
|
|
|
|
|
|
|
|
Managed Care
Additional Data
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
(Unaudited)
|
|
2017
|
2016
|
|
2017
|
2016
|
|
Member months
enrollment:
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
Fully-insured
|
994,409
|
1,039,842
|
|
3,009,252
|
3,199,546
|
|
|
|
Self-insured
|
495,616
|
534,653
|
|
1,504,283
|
1,617,900
|
|
|
|
|
Total
Commercial
|
1,490,025
|
1,574,495
|
|
4,513,535
|
4,817,446
|
|
|
Medicare
Advantage
|
368,102
|
344,167
|
|
1,095,086
|
1,059,702
|
|
|
Medicaid
|
|
1,138,162
|
1,205,792
|
|
3,480,525
|
3,634,029
|
|
|
|
|
|
Total member
months
|
2,996,289
|
3,124,454
|
|
9,089,146
|
9,511,177
|
|
Claim liabilities
(in millions)
|
|
|
|
$
356.3
|
$
349.1
|
*
|
Days claim
payable
|
|
|
|
57
|
54
|
*
|
Premium
PMPM:
|
|
|
|
|
|
|
|
Managed
Care
|
$
261.57
|
$
255.23
|
|
$
257.91
|
$
254.52
|
|
|
|
Commercial
|
200.02
|
198.40
|
|
201.84
|
199.03
|
|
|
|
Medicare
Advantage
|
718.01
|
741.79
|
|
720.03
|
744.93
|
|
|
|
Medicaid
|
167.73
|
165.37
|
|
160.98
|
160.37
|
|
Medical loss
ratio:
|
82.4%
|
90.5%
|
|
87.2%
|
88.8%
|
|
|
Commercial
|
73.1%
|
87.4%
|
|
79.1%
|
86.4%
|
|
|
Medicare
Advantage
|
83.3%
|
93.6%
|
|
89.3%
|
90.0%
|
|
|
Medicaid
|
|
91.0%
|
89.7%
|
|
92.9%
|
89.7%
|
|
Adjusted medical loss
ratio: 1
|
83.8%
|
86.4%
|
|
88.2%
|
88.6%
|
|
|
Commercial
|
75.7%
|
81.2%
|
|
80.0%
|
84.9%
|
|
|
Medicare
Advantage
|
85.0%
|
87.5%
|
|
90.4%
|
90.4%
|
|
|
Medicaid
|
|
90.6%
|
90.1%
|
|
93.3%
|
90.1%
|
|
Operating expense
ratio:
|
|
|
|
|
|
|
|
Consolidated
|
16.6%
|
17.0%
|
|
16.2%
|
16.7%
|
|
|
Managed
Care
|
13.5%
|
14.1%
|
|
13.2%
|
13.8%
|
|
*Information provided
as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The
adjusted medical loss ratio accounts for subsequent adjustments to
estimates, such as prior-period reserve developments and Medicare
premium adjustments, and presents them in the corresponding
period.
|
|
|
|
|
|
|
|
Managed Care
Membership by Segment
|
As of September
30,
|
|
|
|
|
|
|
2017
|
2016
|
Members:
|
|
|
|
|
|
Commercial:
|
|
|
|
|
Fully-insured
|
328,777
|
344,311
|
|
|
Self-insured
|
163,721
|
177,683
|
|
|
|
Total
Commercial
|
492,498
|
521,994
|
|
Medicare
Advantage
|
|
123,194
|
113,950
|
|
Medicaid
|
|
379,199
|
402,358
|
|
|
|
|
Total
members
|
994,891
|
1,038,302
|
|
|
|
|
|
|
|
|
Exhibit V
Reconciliation of Non-GAAP Financial Measures
|
|
|
|
|
|
Adjusted Net
Income (Loss)
|
(Unaudited)
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
(dollar amounts in
millions)
|
2017
|
2016
|
|
2017
|
2016
|
Net income
(loss)
|
$
21.9
|
$
(1.9)
|
|
$
30.3
|
$
5.4
|
Less
adjustments:
|
|
|
|
|
|
|
Net realized
investment gains, net of tax
|
3.0
|
4.3
|
|
6.5
|
5.6
|
|
Private equity
investment income, net of tax
|
0.2
|
0.1
|
|
0.4
|
-
|
|
|
Adjusted net income
(loss)
|
$
18.7
|
$
(6.3)
|
|
$
23.4
|
$
(0.2)
|
|
|
Diluted adjusted net
income (loss) per share
|
$
0.77
|
$
(0.26)
|
|
$
0.97
|
$
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income is a non-GAAP financial metric and should
not be considered a substitute for, or superior to, financial
measures calculated in accordance with GAAP. Management believes
that the use of this adjusted net income and adjusted net income
per share provides investors and management useful information
about the earnings impact of realized investment gains and other
non-recurring items impacting the Company's results of operations.
This non-GAAP metric does not consider all of the items associated
with the Company's operations as determined in accordance with
GAAP. As a result, one should not consider these measures in
isolation.
View original
content:http://www.prnewswire.com/news-releases/triple-s-management-corporation-reports-third-quarter-2017-results-300552712.html
SOURCE Triple-S Management Corporation