SAN JUAN, Puerto Rico,
Aug. 2, 2018 /PRNewswire/
-- Triple-S Management Corporation (NYSE: GTS), a leading
managed care company in Puerto
Rico, today announced its second quarter 2018
results.
Quarterly Consolidated and Other Highlights
- Net loss of $38.7 million, or
$1.68 loss per diluted share, versus
net income of $12.7 million, or
$0.52 per diluted share, in the
prior-year period;
- During the second quarter of 2018, the Company recorded
approximately $76.4 million of
unfavorable prior period reserve development (approximately
$47.5 million after-tax impact, or
$2.06 per diluted share) in the
Property and Casualty segment as increased gross losses related to
Hurricane Maria claims caused the segment to exceed its catastrophe
reinsurance coverage limit;
- Adjusted net loss of $37.3
million, or $1.62 loss per
diluted share, versus adjusted net income of $9.4 million, or $0.39 per diluted share, a year ago mostly
reflecting the after-tax impact of the unfavorable reserve
development in the Property and Casualty segment related to
Hurricane Maria claims. Excluding the impact of this
unfavorable development, adjusted net income would have been
$10.2 million, or $0.44 per diluted share;
- Operating revenues of $763.1
million, a 3.0% increase from the prior-year period,
reflecting higher Managed Care premiums;
- Consolidated loss ratio rose 870 basis points to 93.3%, mostly
driven by the unfavorable reserve development related to Hurricane
Maria claims recognized by the Property and Casualty segment;
- Medical loss ratio ("MLR") improved to 86.1%, driven primarily
by Managed Care premium trends that are higher than claim
trends;
- Consolidated operating loss of $63.6
million compared to operating income of $11.2 million in the prior-year period.
Excluding the impact of the Property and Casualty unfavorable
development, consolidated operating income for the 2018 period
would have been $12.8 million;
- Under the Company's share repurchase program, during the second
quarter of 2018, 80,404 shares were repurchased at an aggregate
cost of $2.1 million. As of
August 1, 2018, $18.5 million of availability remains in the
program.
"While we continue to execute well on our initiatives to
position the Company for long-term success, our second quarter
performance was clearly affected by the unfavorable prior period
reserve development at our Property and Casualty segment," said
Roberto Garcia-Rodriguez, President
and Chief Executive Officer. "As the quarter progressed, we
received more detailed claim information, allowing us for the first
time to base our reserves on actual data rather than model
projections. This led us to recognize a significant increase
in the estimated gross losses related to Hurricane Maria, which
exceeded the estimates generated by the industry-recognized
post-landfall catastrophic model we had been using to establish our
reserves, as well as our $733 million
catastrophe reinsurance coverage limit."
"Importantly, this development is an isolated event that has no
impact on our ongoing operations—which performed better year over
year—nor on our overall growth strategy," continued Mr.
Garcia-Rodriguez. "We continue investing considerably in our
Managed Care operations and modernizing our infrastructure to
consistently expand our margins over time. We also remain
focused on increasing our share of Medicare Advantage business and
on further expanding our ambulatory clinic network to enable
sustainable growth and long-term value for our shareholders."
Selected Consolidated Quarterly Details
- Consolidated premiums earned were $741.8
million, up 2.6% from the prior-year period, primarily
reflecting higher Medicaid and Medicare premiums within the Managed
Care segment. Increase in Medicaid premiums mostly reflects the
higher premium rates that became effective July 1, 2017, as well as an increase in
membership. In the Medicare business, premiums increased due to the
Company's achievement of a four-star rated Medicare Advantage HMO
contract this year, resulting in a 5% bonus applied to the
benchmark used in premium calculation. These increases were
partially offset by lower Commercial and Medicare membership.
- Consolidated claims incurred were $692.1
million, up 13.2% year-over-year, mostly driven by
$76.4 million in unfavorable prior
period reserve development in the Property and Casualty segment
related to the 2017 Hurricane Maria claims. Gross losses related to
Hurricane Maria increased during the second quarter by
approximately $212.7 million – from
$686.7 million as of March 31, 2018 to $899.4
million as of June 30, 2018 –
causing the Property and Casualty segment to exceed its catastrophe
reinsurance coverage limit and requiring the recording of the
unfavorable reserve development.
As the second quarter progressed,
the segment received significant new information and claim
amendments indicating a worsening of loss expectations related to
this event, which required the substantial increase to reserves
above the gross losses determined by the previously used
industry-recognized model. The delay in receiving the information
is principally the result of the catastrophic damage suffered by
Puerto Rico in its power and
communications infrastructure, causing adjusters and claimants to
submit claims much later than would normally be expected.
Consolidated loss ratio of 93.3% rose 870 basis points from the
prior-year period, driven by the unfavorable reserve
development.
- Consolidated operating expenses of $134.6 million increased by $15.9 million or 13.4% from the prior-year
period, while the Company's operating expense ratio increased 170
basis points year-over-year to 18.0%. The increase in operating
expenses primarily reflected the reinstatement of the Health
Insurance Providers fee ("HIP fee") of $12.2
million, as well as higher professional services and
personnel costs related to the Company's ongoing Managed Care
initiatives.
- Consolidated income tax benefit was $27.9 million, compared to an expense of
$1.5 million in the prior-year
period, primarily reflecting losses in the Property and Casualty
segment.
Selected Managed Care Segment Quarterly Details
- Managed Care premiums earned were $678.3
million, up 2.5% year over year.
-
- Medicare premiums earned of $279.8
million increased 5.0% from the prior-year period, largely
reflecting an increase in the 2018 Medicare reimbursement rates for
the first time since 2012 and an increase in premium rates as the
result of attaining the four-star rating of the Company's 2018 HMO
product. These increases were partially offset by a decrease in
member month enrollment of approximately 28,000.
- Medicaid premiums earned improved 6.3% from the prior-year
period to $203.8 million, primarily
reflecting higher premium rates that became effective July 1, 2017, an approximate increase of 33,000
in member month enrollment, and $3.6
million associated with the reinstatement of the HIP fee
pass-through in 2018. These increases were partially offset
by the collection in 2018 of one quarter of premiums related to the
Company's achievement of quality incentive metrics versus the
collection of three quarters of premiums related to the metrics in
2017 (a decrease of $7.7 million in
premiums year-over-year).
- Commercial premiums earned of $194.7
million declined 4.2% from the prior-year period, mainly due
to an approximate decline of 61,000 in fully-insured member month
enrollment, partially offset by $3.0
million related to the reinstatement of the HIP fee
pass-through and higher average premium rates in 2018.
- Reported MLR of 86.1% improved 140 basis points from the prior
year. Excluding the impact of prior-period reserve
developments, and moving the Medicare risk score revenue and other
adjustments to their corresponding periods, recasted Managed Care
MLR would have been 88.0%, 80 basis points lower than the
comparable metric a year ago, mostly reflecting claim trends lower
than premium trends, particularly in the segment's Medicaid and
Medicare businesses.
- Managed Care operating expenses were $104.1 million, up $14.6
million, or 16.3%, year over year, primarily reflecting the
reinstatement of the HIP fee, and an increase in professional
services and personnel costs related to the Company's ongoing
clinical and operational initiatives.
Oher Event – Triple-S Selected to Participate in the
Government of Puerto Rico's
Revised Medicaid Health Plan
The Company also announced today that on July 5, the Puerto Rico Health Insurance
Administration (ASES by its Spanish acronym) notified its Managed
Care subsidiary Triple-S Salud, Inc. that it is one of five
companies selected to participate as a managed care organization
(MCO) in the government's revised Medicaid Health Plan.
Contract execution is expected during the month of August and the
new program is scheduled to begin on November 1, 2018.
"We are pleased to be among the MCOs selected to participate in
the revised Medicaid Health Plan," said Mr. Garcia-Rodriguez.
"We're excited to have the opportunity to provide Medicaid services
across the entire island of Puerto
Rico and look forward to implementing our innovative model
focused on ensuring preventive care and improving the health
outcomes of the chronically ill."
Under the revised Medicaid program, MCOs will compete for
membership throughout Puerto Rico. In addition, MCOs are
required to participate in two separate risk pools - a general
population risk pool for which a base premium applies, and a "high
cost, high need" risk pool with adjusted premiums established
according to target populations and medical conditions.
The revised Medicaid program is expected be for a three-year
term with an additional one-year term at ASES' option.
Premium rates will be negotiated for each contract year.
The existing contract with ASES was extended through
October 31, 2018 under the same terms
and conditions.
2018 Outlook
The Company is maintaining its full year 2018 directional
guidance regarding its Commercial business, as well as its Life
Insurance and Property and Casualty segments and its consolidated
operating expenses. Directional guidance regarding its
Medicare segment member enrollment was revised for the full year
2018. More specifically:
- In the Commercial business, the Company continues to expect
full-year at-risk member month enrollment between 3.7 million and
3.8 million, and full-year MLR between 80.5% and 82.5%.
- In the Medicare Advantage business, the Company now anticipates
full year member month enrollment to be between 1.25 million and
1.35 million. The Company's previous outlook for the Medicare
Advantage business was for full year member month enrollment to be
between 1.35 million and 1.45 million. The Company continues to
expect full year MLR for 2018 between 85% and 87%.
- The Company continues to expect Life insurance premiums earned
for 2018 between $160 million and
$164 million.
- The Company maintains expectations for its Property and
Casualty premiums earned for 2018 to between $82 million and $86
million.
- The Company continues to expect consolidated operating expenses
for full year 2018 between $530
million and $545 million.
Conference Call and Webcast
Management will host a conference call and webcast today at
8:30 a.m. Eastern Time to discuss its
financial results for the three months ended June 30, 2018. To participate, callers within the
U.S. and Canada should dial
1-877-451-6152 and international callers should dial 1-201-389-0879
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.
In addition, a replay will be available through August 16, 2018 by calling 1-844-512-2921 or
1-412-317-6671 and entering passcode 13681830. A replay will also
be available at www.triplesmanagement.com for 30 days.
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 investorrelations@ssspr.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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
1,610,297
|
|
$
|
1,605,477
|
Cash and cash
equivalents
|
|
|
255,979
|
|
|
198,941
|
Premium and other
receivables, net
|
|
|
742,056
|
|
|
899,327
|
Deferred policy
acquisition costs and value of business acquired
|
|
205,268
|
|
|
200,788
|
Property and
equipment, net
|
|
|
78,153
|
|
|
74,716
|
Other
assets
|
|
|
182,501
|
|
|
137,516
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
3,074,254
|
|
$
|
3,116,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy liabilities
and accruals
|
|
$
|
1,866,878
|
|
$
|
1,761,553
|
Accounts payable and
accrued liabilities
|
|
|
328,358
|
|
|
410,457
|
Long-term
borrowings
|
|
|
30,478
|
|
|
32,073
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
2,225,714
|
|
|
2,204,083
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Common
stock
|
|
|
23,194
|
|
|
23,578
|
|
Other stockholders'
equity
|
|
|
826,027
|
|
|
889,786
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Triple-S
Management Corporation stockholders' equity
|
|
849,221
|
|
|
913,364
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest in consolidated subsidiary
|
|
|
(681)
|
|
|
(682)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
848,540
|
|
|
912,682
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
3,074,254
|
|
$
|
3,116,765
|
Exhibit II
|
|
Condensed
Consolidated Statements of Earnings
|
(dollar amounts in
thousands, except per share data)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
|
|
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned,
net
|
|
$
|
741,770
|
|
$
|
722,891
|
|
$
|
1,493,804
|
|
$
|
1,425,164
|
|
Administrative
service fees
|
|
|
4,066
|
|
|
4,548
|
|
|
7,414
|
|
|
8,927
|
|
Net investment
income
|
|
|
15,707
|
|
|
12,698
|
|
|
29,462
|
|
|
24,714
|
|
Other operating
revenues
|
|
|
1,588
|
|
|
1,121
|
|
|
2,659
|
|
|
2,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenues
|
|
|
763,131
|
|
|
741,258
|
|
|
1,533,339
|
|
|
1,460,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment (losses) gains on sale of securities
|
|
|
(921)
|
|
|
4,054
|
|
|
2,021
|
|
|
4,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized
investment losses on equity investments
|
|
|
(776)
|
|
|
-
|
|
|
(16,975)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
|
494
|
|
|
587
|
|
|
1,657
|
|
|
3,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
761,928
|
|
|
745,899
|
|
|
1,520,042
|
|
|
1,468,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims
incurred
|
|
|
|
692,138
|
|
|
611,297
|
|
|
1,311,127
|
|
|
1,232,160
|
|
Operating
expenses
|
|
|
134,612
|
|
|
118,720
|
|
|
267,746
|
|
|
229,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs
|
|
|
826,750
|
|
|
730,017
|
|
|
1,578,873
|
|
|
1,461,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
1,825
|
|
|
1,721
|
|
|
3,515
|
|
|
3,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits and
expenses
|
|
|
828,575
|
|
|
731,738
|
|
|
1,582,388
|
|
|
1,465,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
taxes
|
|
|
(66,647)
|
|
|
14,161
|
|
|
(62,346)
|
|
|
3,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit) expense
|
|
|
(27,901)
|
|
|
1,456
|
|
|
(27,514)
|
|
|
(5,202)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
|
(38,746)
|
|
|
12,705
|
|
|
(34,832)
|
|
|
8,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to the non-controlling interest
|
|
|
1
|
|
|
-
|
|
|
1
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Triple-S Management Corporation
|
$
|
(38,747)
|
|
$
|
12,705
|
|
$
|
(34,833)
|
|
$
|
8,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Triple-S Management Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net (loss)
income per share
|
|
$
|
(1.68)
|
|
$
|
0.52
|
|
$
|
(1.50)
|
|
$
|
0.35
|
|
Diluted net (loss)
income per share
|
|
$
|
(1.68)
|
|
$
|
0.52
|
|
$
|
(1.50)
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average of
common shares
|
|
|
23,016,447
|
|
|
24,246,591
|
|
|
23,146,318
|
|
|
24,195,211
|
|
Diluted weighted
average of common shares
|
|
|
23,016,447
|
|
|
24,283,278
|
|
|
23,146,318
|
|
|
24,245,431
|
Exhibit
III
|
|
Condensed
Consolidated Statements of Cash Flows
|
(dollar amounts in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
|
|
|
|
June
30
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
130,723
|
|
$
|
133,705
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Proceeds from
investments sold or matured:
|
|
|
|
|
|
|
|
|
Securities available
for sale:
|
|
|
|
|
|
|
|
|
Fixed maturities
sold
|
|
$
|
768,789
|
|
|
88,141
|
|
|
Fixed maturities
matured/called
|
|
|
10,656
|
|
|
8,938
|
|
|
Securities held to
maturity - fixed maturities matured/called
|
|
|
728
|
|
|
703
|
|
|
Equity investments
sold
|
|
|
123,197
|
|
|
21,499
|
|
|
Other invested assets
sold
|
|
|
1,788
|
|
|
-
|
|
Acquisition of
investments:
|
|
|
|
|
|
|
|
|
Securities available
for sale - fixed maturities
|
|
|
(829,010)
|
|
|
(141,116)
|
|
|
Securities held to
maturity - fixed maturities
|
|
|
(893)
|
|
|
(703)
|
|
|
Equity
investments
|
|
|
(99,944)
|
|
|
(20,424)
|
|
|
Other invested
assets
|
|
|
(18,649)
|
|
|
-
|
|
Increase in other
investments
|
|
|
1,817
|
|
|
(731)
|
|
Net change in policy
loans
|
|
|
(372)
|
|
|
(152)
|
|
Net capital
expenditures
|
|
|
(9,116)
|
|
|
(8,704)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
|
(51,009)
|
|
|
(52,549)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Change in outstanding
checks in excess of bank balances
|
|
|
(1,564)
|
|
|
(8,545)
|
|
Repayments of
long-term borrowings
|
|
|
(1,618)
|
|
|
(1,212)
|
|
Repurchase and
retirement of common stock
|
|
|
(16,395)
|
|
|
-
|
|
Proceeds from
policyholder deposits
|
|
|
11,606
|
|
|
8,166
|
|
Surrender of
policyholder deposits
|
|
|
(14,705)
|
|
|
(10,467)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
financing activities
|
|
|
(22,676)
|
|
|
(12,058)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
|
57,038
|
|
|
69,098
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
198,941
|
|
|
103,428
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
255,979
|
|
$
|
172,526
|
Exhibit IV
|
Segment
Performance Supplemental Information
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
|
|
2018
|
2017
|
Percentage
Change
|
|
2018
|
2017
|
Percentage
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed
Care:
|
|
|
|
|
|
|
|
|
Commercial
|
$
|
194.7
|
$
|
203.3
|
(4.2%)
|
|
$
|
393.5
|
$
|
408.4
|
(3.6%)
|
|
Medicare
|
279.8
|
266.6
|
5.0%
|
|
567.7
|
524.3
|
8.3%
|
|
Medicaid
|
203.8
|
191.8
|
6.3%
|
|
404.1
|
369.5
|
9.4%
|
|
|
Total Managed
Care
|
678.3
|
661.7
|
2.5%
|
|
1,365.3
|
1,302.2
|
4.8%
|
Life
Insurance
|
41.4
|
40.0
|
3.5%
|
|
82.9
|
80.5
|
3.0%
|
Property and
Casualty
|
22.8
|
21.8
|
4.6%
|
|
47.0
|
43.5
|
8.0%
|
Other
|
|
|
(0.7)
|
(0.6)
|
(16.7%)
|
|
(1.4)
|
(1.0)
|
(40.0%)
|
|
|
Consolidated premiums
earned, net
|
$
|
741.8
|
$
|
722.9
|
2.6%
|
|
$
|
1,493.8
|
$
|
1,425.2
|
4.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
|
689.3
|
$
|
671.6
|
2.6%
|
|
$
|
1,385.5
|
$
|
1,321.6
|
4.8%
|
Life
Insurance
|
48.0
|
46.3
|
3.7%
|
|
95.6
|
92.9
|
2.9%
|
Property and
Casualty
|
25.6
|
23.9
|
7.1%
|
|
52.2
|
47.6
|
9.7%
|
Other
|
|
|
0.2
|
(0.6)
|
133.3%
|
|
-
|
(1.2)
|
100.0%
|
|
|
Consolidated
operating revenues
|
$
|
763.1
|
$
|
741.2
|
3.0%
|
|
$
|
1,533.3
|
$
|
1,460.9
|
5.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
|
1.4
|
$
|
2.9
|
51.7%
|
|
$
|
12.0
|
$
|
(15.7)
|
(176.4%)
|
Life
Insurance
|
5.3
|
5.0
|
6.0%
|
|
9.0
|
8.9
|
1.1%
|
Property and
Casualty
|
(71.0)
|
3.7
|
(2018.9%)
|
|
(67.9)
|
5.8
|
(1270.7%)
|
Other
|
|
|
0.7
|
(0.4)
|
(275.0%)
|
|
1.4
|
0.1
|
(1300.0%)
|
|
|
Consolidated
operating (loss) income
|
$
|
(63.6)
|
$
|
11.2
|
667.9%
|
|
$
|
(45.5)
|
$
|
(0.9)
|
4955.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed
Care
|
0.2%
|
0.4%
|
-20 bp
|
|
0.9%
|
(1.2%)
|
210 bp
|
Life
Insurance
|
11.0%
|
10.8%
|
20 bp
|
|
9.4%
|
9.6%
|
-20 bp
|
Property and
Casualty
|
(277.3%)
|
15.5%
|
-29,280 bp
|
|
(130.1%)
|
12.2%
|
-14,230 bp
|
Consolidated
|
(8.3%)
|
1.5%
|
-980 bp
|
|
(3.0%)
|
(0.1%)
|
-290 bp
|
|
|
|
|
|
$
|
3.6
|
$
|
3.5
|
2.9%
|
|
$
|
7.0
|
$
|
6.5
|
7.7%
|
|
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
June 30,
|
|
Six months
ended
June 30,
|
(Unaudited)
|
|
2018
|
2017
|
|
2018
|
2017
|
Member months
enrollment:
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
Fully-insured
|
940,484
|
1,001,638
|
|
1,901,774
|
2,014,843
|
Self-insured
|
439,675
|
501,500
|
|
889,453
|
1,008,667
|
Total
Commercial
|
1,380,159
|
1,503,138
|
|
2,791,227
|
3,023,510
|
Medicare
Advantage
|
334,887
|
363,257
|
|
673,227
|
726,984
|
Medicaid
|
1,201,743
|
1,169,089
|
|
2,373,088
|
2,342,363
|
Total member months
|
2,916,789
|
3,035,484
|
|
5,837,542
|
6,092,857
|
Claim liabilities
(in millions)
|
|
|
|
$
|
437.5
|
$
|
371.4
|
Days claim
payable
|
|
|
|
68
|
58
|
Premium
PMPM:
|
|
|
|
|
|
Managed Care
|
$
|
273.83
|
$
|
261.13
|
|
$
|
275.92
|
$
|
256.13
|
Commercial
|
207.02
|
202.97
|
|
206.91
|
202.70
|
Medicare
Advantage
|
835.51
|
733.92
|
|
843.25
|
721.20
|
Medicaid
|
169.59
|
164.06
|
|
170.28
|
157.75
|
Medical loss
ratio:
|
86.1%
|
87.5%
|
|
85.5%
|
89.6%
|
Commercial
|
80.2%
|
80.6%
|
|
80.8%
|
82.1%
|
Medicare
Advantage
|
88.4%
|
90.9%
|
|
86.4%
|
92.4%
|
Medicaid
|
88.5%
|
90.3%
|
|
88.9%
|
93.9%
|
Adjusted medical loss
ratio: 1
|
88.0%
|
88.8%
|
|
87.1%
|
89.5%
|
Commercial
|
84.7%
|
81.0%
|
|
83.1%
|
81.8%
|
Medicare
Advantage
|
89.4%
|
90.7%
|
|
88.0%
|
92.6%
|
Medicaid
|
89.4%
|
94.6%
|
|
89.8%
|
93.7%
|
Operating expense
ratio:
|
|
|
|
|
|
Consolidated
|
18.0%
|
16.3%
|
|
17.8%
|
16.0%
|
Managed
Care
|
15.2%
|
13.4%
|
|
15.0%
|
13.0%
|
|
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 June
30,
|
|
|
|
|
|
|
2018
|
2017
|
Members:
|
|
|
|
|
|
Commercial:
|
|
|
|
Fully-insured
|
312,049
|
331,989
|
|
Self-insured
|
145,040
|
166,404
|
|
Total
Commercial
|
457,089
|
498,393
|
|
Medicare
Advantage
|
111,667
|
121,240
|
|
Medicaid
|
404,338
|
386,070
|
|
Total
members
|
973,094
|
1,005,703
|
Exhibit V
|
Reconciliation of
Non-GAAP Financial Measures
|
Adjusted Net
(Loss) Income
|
(Unaudited)
|
Three months
ended
June 30,
|
|
Six months
ended
June 30
|
(dollar amounts in
millions)
|
2018
|
2017
|
|
2018
|
2017
|
Net (loss)
income
|
$
|
(38.7)
|
$
|
12.7
|
|
$
|
(34.8)
|
$
|
8.3
|
Less
adjustments:
|
|
|
|
|
|
|
Net realized
investment (losses) gains, net of tax
|
(0.7)
|
3.3
|
|
1.6
|
3.5
|
|
Unrealized losses on
equity investments
|
(0.6)
|
-
|
|
(13.6)
|
-
|
|
Private equity
investment income (loss), net of tax
|
(0.1)
|
-
|
|
0.4
|
0.2
|
|
|
Adjusted net (loss)
income
|
$
|
(37.3)
|
$
|
9.4
|
|
$
|
(23.2)
|
$
|
4.6
|
|
|
Diluted adjusted net
(loss) income per share
|
$
|
(1.62)
|
$
|
0.39
|
|
$
|
(1.00)
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
(Loss) Income and Operating (Loss)
Income Excluding Property and Casualty
Unfavorable Development
|
(Unaudited)
|
|
|
Three months
ended June 30,
|
|
Six months
ended
June 30,
|
(dollar amounts in
millions)
|
2018
|
2017
|
|
2018
|
2017
|
Adjusted net (loss)
income
|
$
|
(37.3)
|
$
|
9.4
|
|
$
|
(23.2)
|
$
|
4.6
|
Less unfavorable
prior period reserve development, net of tax
|
47.5
|
-
|
|
47.5
|
-
|
|
|
Adjusted net income
excluding Property and Casualty
|
|
|
|
|
|
|
|
|
unfavorable prior
period reserve development
|
$
|
10.2
|
$
|
9.4
|
|
$
|
24.3
|
$
|
4.6
|
|
|
Diluted adjusted net
income per share excluding
|
|
|
|
|
|
|
|
|
Property and Casualty
unfavorable prior period reserve development
|
$
|
0.44
|
$
|
0.39
|
|
$
|
1.05
|
$
|
0.19
|
Operating (loss)
income
|
$
|
(63.6)
|
$
|
11.2
|
|
$
|
(45.5)
|
$
|
(0.9)
|
Less unfavorable
prior period reserve development
|
76.4
|
-
|
|
76.4
|
-
|
|
|
Operating income
(loss) excluding Property and Casualty
|
|
|
|
|
|
|
|
|
unfavorable prior
period reserve development
|
$
|
12.8
|
$
|
11.2
|
|
$
|
30.9
|
$
|
(0.9)
|
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 and unrealized investment
gains or losses, as well as other non-recurring items impacting the
Company's results of operations. We are also including adjusted net
income and operating income excluding the impact of the unfavorable
prior period reserve development recognized by the Property and
Casualty segment as Management believes this metric provides useful
information about the financial performance of the Company's
underlying business. These non-GAAP metrics do 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.
AT THE
COMPANY:
|
INVESTOR
RELATIONS:
|
Juan José
Román-Jiménez
|
Mr. Garrett
Edson
|
EVP and Chief
Financial
Officer
|
ICR
|
(787)
749-4949
|
(787)
792-6488
|
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SOURCE Triple-S Management Corporation