Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
|
|
March 31, 2019
|
|
Amortized
cost
|
|
|
Gross
unrealized
gains
|
|
|
Gross
unrealized
losses
|
|
|
Estimated
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other invested assets - Alternative investments
|
|
$
|
80,898
|
|
|
$
|
2,024
|
|
|
$
|
(63
|
)
|
|
$
|
82,859
|
|
|
|
December 31, 2018
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of government-
sponsored enterprises
|
|
$
|
21,470
|
|
|
$
|
120
|
|
|
$
|
(1
|
)
|
|
$
|
21,589
|
|
U.S. Treasury securities and
obligations of U.S.
government instrumentalities
|
|
|
174,675
|
|
|
|
2,349
|
|
|
|
-
|
|
|
|
177,024
|
|
Obligations of the
Commonwealth of Puerto Rico
and its instrumentalities
|
|
|
8,295
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,295
|
|
Municipal securities
|
|
|
692,205
|
|
|
|
18,112
|
|
|
|
(538
|
)
|
|
|
709,779
|
|
Corporate bonds
|
|
|
186,085
|
|
|
|
9,724
|
|
|
|
(239
|
)
|
|
|
195,570
|
|
Residential mortgage-backed securities
|
|
|
75,373
|
|
|
|
1,298
|
|
|
|
-
|
|
|
|
76,671
|
|
Collateralized mortgage obligations
|
|
|
10,266
|
|
|
|
208
|
|
|
|
-
|
|
|
|
10,474
|
|
Total fixed maturities available for sale
|
|
$
|
1,168,369
|
|
|
$
|
31,811
|
|
|
$
|
(778
|
)
|
|
$
|
1,199,402
|
|
|
|
December 31, 2018
|
|
|
|
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 instrumentalities
|
|
$
|
617
|
|
|
$
|
125
|
|
|
$
|
-
|
|
|
$
|
742
|
|
Residential mortgage-backed securities
|
|
|
190
|
|
|
|
2
|
|
|
|
-
|
|
|
|
192
|
|
Certificates of deposit
|
|
|
1,685
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,685
|
|
Total
|
|
$
|
2,492
|
|
|
$
|
127
|
|
|
$
|
-
|
|
|
$
|
2,619
|
|
|
|
December 31, 2018
|
|
|
|
Amortized
cost
|
|
|
Gross
unrealized
gains
|
|
|
Gross
unrealized
losses
|
|
|
Estimated
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other invested assets - Alternative investments
|
|
$
|
72,627
|
|
|
$
|
2,042
|
|
|
$
|
(654
|
)
|
|
$
|
74,015
|
|
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per 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 March 31, 2019 and December 31, 2018 were as follows:
|
|
March 31, 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
|
|
$
|
1,101
|
|
|
$
|
(3
|
)
|
|
|
2
|
|
|
$
|
4,446
|
|
|
$
|
(11
|
)
|
|
|
3
|
|
|
$
|
5,547
|
|
|
$
|
(14
|
)
|
|
|
5
|
|
Residential mortgage-backed
securities
|
|
|
4,256
|
|
|
|
(26
|
)
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,256
|
|
|
|
(26
|
)
|
|
|
1
|
|
Total fixed maturities
|
|
$
|
5,357
|
|
|
$
|
(29
|
)
|
|
|
3
|
|
|
$
|
4,446
|
|
|
$
|
(11
|
)
|
|
|
3
|
|
|
$
|
9,803
|
|
|
$
|
(40
|
)
|
|
|
6
|
|
Other invested assets - Alternative investments
|
|
$
|
19,963
|
|
|
$
|
(63
|
)
|
|
|
5
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
19,963
|
|
|
$
|
(63
|
)
|
|
|
5
|
|
|
|
December 31, 2018
|
|
|
|
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
|
|
$
|
1,469
|
|
|
$
|
(1
|
)
|
|
|
1
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
1,469
|
|
|
$
|
(1
|
)
|
|
|
1
|
|
Municipal securities
|
|
|
62,328
|
|
|
|
(349
|
)
|
|
|
10
|
|
|
|
17,648
|
|
|
|
(189
|
)
|
|
|
3
|
|
|
|
79,976
|
|
|
|
(538
|
)
|
|
|
13
|
|
Corporate bonds
|
|
|
52,539
|
|
|
|
(239
|
)
|
|
|
18
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,539
|
|
|
|
(239
|
)
|
|
|
18
|
|
Total fixed maturities
|
|
$
|
116,336
|
|
|
$
|
(589
|
)
|
|
|
29
|
|
|
$
|
17,648
|
|
|
$
|
(189
|
)
|
|
|
3
|
|
|
$
|
133,984
|
|
|
$
|
(778
|
)
|
|
|
32
|
|
Other invested assets - Alternative investments
|
|
$
|
7,399
|
|
|
$
|
(351
|
)
|
|
|
3
|
|
|
$
|
10,447
|
|
|
$
|
(303
|
)
|
|
|
2
|
|
|
$
|
17,846
|
|
|
$
|
(654
|
)
|
|
|
5
|
|
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 other-than-temporary impairments may be recorded in future periods. The Corporation 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.
Municipal Securities:
The unrealized losses on the Company’s investments in Municipal 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, these investments have investment grade ratings. Because the decline in fair value is attributable to changes in interest rates and not credit quality; because 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 maturity; and because the Company expects
to collect all
contractual cash flows, these investments are not considered other-than-temporarily impaired.
Residential mortgage-backed
securities
: The unrealized losses on investments in residential mortgage-backed securities 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 (or most junior), 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 other-than-temporarily impaired because 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 maturity; and because the Company expects to collect all contractual cash flows.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Alternative investments
:
As of March 31, 2019, alternative investments with unrealized losses are
not considered other-than-temporary impaired based on market conditions and the length of time the funds have been in a loss position.
Maturities of investment securities classified as available for sale and held to maturity were as follows:
|
|
March 31, 2019
|
|
|
|
Amortized
cost
|
|
|
Estimated
fair value
|
|
|
|
|
|
|
|
|
Fixed maturities available for sale
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
15,162
|
|
|
$
|
15,339
|
|
Due after one year through five years
|
|
|
402,032
|
|
|
|
409,445
|
|
Due after five years through ten years
|
|
|
373,778
|
|
|
|
387,506
|
|
Due after ten years
|
|
|
283,789
|
|
|
|
308,480
|
|
Residential mortgage-backed securities
|
|
|
78,625
|
|
|
|
80,420
|
|
Collateralized mortgage obligations
|
|
|
9,882
|
|
|
|
10,201
|
|
|
|
$
|
1,163,268
|
|
|
$
|
1,211,391
|
|
Fixed maturities held to maturity
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
1,071
|
|
|
$
|
1,071
|
|
Due after ten years
|
|
|
616
|
|
|
|
755
|
|
Residential mortgage-backed securities
|
|
|
190
|
|
|
|
193
|
|
|
|
$
|
1,877
|
|
|
$
|
2,019
|
|
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.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(4)
|
Realized and Unrealized Gains
|
Information regarding realized and unrealized gains and losses from investments is as follows:
|
|
Three months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Realized gains (losses)
|
|
|
|
|
|
|
Fixed maturity securities:
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
Gross gains
|
|
$
|
872
|
|
|
$
|
172
|
|
Gross losses
|
|
|
(318
|
)
|
|
|
(7,930
|
)
|
Total debt securities
|
|
|
554
|
|
|
|
(7,758
|
)
|
Equity investments:
|
|
|
|
|
|
|
|
|
Gross gains
|
|
|
1,302
|
|
|
|
8,203
|
|
Gross losses
|
|
|
(637
|
)
|
|
|
(499
|
)
|
Total equity securities
|
|
|
665
|
|
|
|
7,704
|
|
Other invested assets:
|
|
|
|
|
|
|
|
|
Gross gains
|
|
|
132
|
|
|
|
3,207
|
|
Gross losses
|
|
|
(36
|
)
|
|
|
(211
|
)
|
Total other invested assets
|
|
|
96
|
|
|
|
2,996
|
|
Net realized investment gains
|
|
$
|
1,315
|
|
|
$
|
2,942
|
|
|
|
Three months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Changes in net unrealized gains (losses):
|
|
|
|
|
|
|
Recognized in accumulated other comprehensive income:
|
|
|
|
|
|
|
Fixed maturities – available for sale
|
|
$
|
17,090
|
|
|
$
|
(10,222
|
)
|
Other invested assets
|
|
|
573
|
|
|
|
(25
|
)
|
|
|
$
|
17,663
|
|
|
$
|
(10,247
|
)
|
Not recognized in the consolidated financial statements:
|
|
|
|
|
|
|
|
|
Fixed maturities – held to maturity
|
|
$
|
15
|
|
|
$
|
(23
|
)
|
The change in deferred tax liability on unrealized gains (losses) recognized in accumulated other comprehensive income
during the
three months ended March 31, 2019 and 2018
was $3,534 and
$
3,679
, respectively.
As of March 31, 2019 and December 31, 2018, no individual investment in securities exceeded 10% of stockholders’ equity.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(5)
|
Premiums and Other Receivables, Net
|
Premiums and other receivables, net were as follows:
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
Premium
|
|
$
|
170,179
|
|
|
$
|
94,613
|
|
Self-funded group receivables
|
|
|
27,494
|
|
|
|
31,184
|
|
FEHBP
|
|
|
15,479
|
|
|
|
14,030
|
|
Agent balances
|
|
|
31,342
|
|
|
|
30,224
|
|
Accrued interest
|
|
|
11,678
|
|
|
|
12,426
|
|
Reinsurance recoverable
|
|
|
363,407
|
|
|
|
399,202
|
|
Other
|
|
|
89,530
|
|
|
|
88,807
|
|
|
|
|
709,109
|
|
|
|
670,486
|
|
Less allowance for doubtful receivables:
|
|
|
|
|
|
|
|
|
Premium
|
|
|
37,132
|
|
|
|
32,487
|
|
Other
|
|
|
11,768
|
|
|
|
9,555
|
|
|
|
|
48,900
|
|
|
|
42,042
|
|
Total premium and other receivables, net
|
|
$
|
660,209
|
|
|
$
|
628,444
|
|
As of March 31, 2019 and December 31, 2018, the Company had premiums and other receivables of $104,617 and $54,329,
respectively, from the Government of Puerto Rico, including
its agencies, municipalities and public corporations. The
related allowance for doubtful receivables
as of March 31, 2019 and December 31, 2018 were $22,381 and $20,984, respectively.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(6)
|
Fair Value Measurements
|
Our condensed consolidated balance sheets include the following financial instruments: securities available for sale,
equity investments, policy loans, policyholder deposits, and long-term borrowings. We consider the carrying amounts of policy loans, policyholder deposits, and long-term borrowings to approximate their fair value. Certain assets are measured
at fair value on a recurring basis and are disclosed below. These assets are classified into one of three levels of a hierarchy defined by GAAP. For a description of the methods and assumptions that are used to estimate the fair value and
determine the fair value hierarchy classification of each class of financial instrument, see the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K.
The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:
|
|
March 31, 2019
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturity securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of government-sponsored enterprises
|
|
$
|
-
|
|
|
$
|
41,584
|
|
|
$
|
-
|
|
|
$
|
41,584
|
|
U.S. Treasury securities and obligations of U.S government instrumentalities
|
|
|
132,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
132,800
|
|
Municipal securities
|
|
|
-
|
|
|
|
747,352
|
|
|
|
-
|
|
|
|
747,352
|
|
Corporate bonds
|
|
|
-
|
|
|
|
199,034
|
|
|
|
-
|
|
|
|
199,034
|
|
Residential agency mortgage-backed securities
|
|
|
-
|
|
|
|
80,420
|
|
|
|
-
|
|
|
|
80,420
|
|
Collateralized mortgage obligations
|
|
|
-
|
|
|
|
10,201
|
|
|
|
-
|
|
|
|
10,201
|
|
Total fixed maturities
|
|
$
|
132,800
|
|
|
$
|
1,078,591
|
|
|
$
|
-
|
|
|
$
|
1,211,391
|
|
Equity investments
|
|
$
|
149,712
|
|
|
$
|
130,753
|
|
|
$
|
5,049
|
|
|
$
|
285,514
|
|
|
|
December 31, 2018
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturity securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of government-sponsored enterprises
|
|
$
|
-
|
|
|
$
|
21,589
|
|
|
$
|
-
|
|
|
$
|
21,589
|
|
U.S. Treasury securities and obligations of U.S
government instrumentalities
|
|
|
177,024
|
|
|
|
-
|
|
|
|
-
|
|
|
|
177,024
|
|
Obligations of the Commonwealth of Puerto Ricoand its instrumentalities
|
|
|
-
|
|
|
|
8,295
|
|
|
|
-
|
|
|
|
8,295
|
|
Municipal securities
|
|
|
-
|
|
|
|
709,779
|
|
|
|
-
|
|
|
|
709,779
|
|
Corporate bonds
|
|
|
-
|
|
|
|
195,570
|
|
|
|
-
|
|
|
|
195,570
|
|
Residential agency mortgage-backed securities
|
|
|
-
|
|
|
|
76,671
|
|
|
|
-
|
|
|
|
76,671
|
|
Collateralized mortgage obligations
|
|
|
-
|
|
|
|
10,474
|
|
|
|
-
|
|
|
|
10,474
|
|
Total fixed maturities
|
|
$
|
177,024
|
|
|
$
|
1,022,378
|
|
|
$
|
-
|
|
|
$
|
1,199,402
|
|
Equity investments
|
|
$
|
147,348
|
|
|
$
|
128,011
|
|
|
$
|
3,805
|
|
|
$
|
279,164
|
|
There were no transfers between Levels 1 and 2 during the three months ended March 31, 2019 and 2018.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
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 three months ended March 31 is as follows:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
|
|
|
2019
|
|
|
|
|
|
|
Balance as of January 1,
|
|
$
|
3,805
|
|
Realized gains
|
|
|
-
|
|
Unrealized in other accumulated
comprehensive income
|
|
|
(6
|
)
|
Purchases
|
|
|
1,250
|
|
Sales
|
|
|
-
|
|
Capital Distributions
|
|
|
-
|
|
Balance as of March 31,
|
|
$
|
5,049
|
|
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.
A summary of the carrying value and fair value by level of financial instruments not recorded at fair value on our
condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 are as follows:
|
|
March 31, 2019
|
|
Carrying
Value
|
|
|
Fair Value
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy loans
|
|
$
|
9,778
|
|
|
$
|
-
|
|
|
$
|
9,778
|
|
|
$
|
-
|
|
|
$
|
9,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policyholder deposits
|
|
$
|
174,543
|
|
|
$
|
-
|
|
|
$
|
174,543
|
|
|
$
|
-
|
|
|
$
|
174,543
|
|
Long-term borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans payable to bank - variable
|
|
|
28,306
|
|
|
|
-
|
|
|
|
28,306
|
|
|
|
-
|
|
|
|
28,306
|
|
Total liabilities
|
|
$
|
202,849
|
|
|
$
|
-
|
|
|
$
|
202,849
|
|
|
$
|
-
|
|
|
$
|
202,849
|
|
|
|
December 31, 2018
|
|
Carrying
Value
|
|
|
Fair Value
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy loans
|
|
$
|
9,469
|
|
|
$
|
-
|
|
|
$
|
9,469
|
|
|
$
|
-
|
|
|
$
|
9,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policyholder deposits
|
|
$
|
174,110
|
|
|
$
|
-
|
|
|
$
|
174,110
|
|
|
$
|
-
|
|
|
$
|
174,110
|
|
Long-term borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans payable to bank - variable
|
|
|
29,114
|
|
|
|
-
|
|
|
|
29,114
|
|
|
|
-
|
|
|
|
29,114
|
|
Total liabilities
|
|
$
|
203,224
|
|
|
$
|
-
|
|
|
$
|
203,224
|
|
|
$
|
-
|
|
|
$
|
203,224
|
|
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
A reconciliation of the beginning and ending balances of claim liabilities is as follows:
|
|
Three months ended
March 31, 2019
|
|
|
|
Managed
Care
|
|
|
Other
Business
Segments *
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim liabilities at beginning of period
|
|
$
|
394,226
|
|
|
$
|
542,563
|
|
|
$
|
936,789
|
|
Reinsurance recoverable on claim liabilities
|
|
|
|
|
|
|
(315,543
|
)
|
|
|
(315,543
|
)
|
Net claim liabilities at beginning of period
|
|
|
394,226
|
|
|
|
227,020
|
|
|
|
621,246
|
|
Claims incurred
|
|
|
|
|
|
|
|
|
|
|
|
|
Current period insured events
|
|
|
626,670
|
|
|
|
28,137
|
|
|
|
654,807
|
|
Prior period insured events
|
|
|
(36,789
|
)
|
|
|
(3,525
|
)
|
|
|
(40,314
|
)
|
Total
|
|
|
589,881
|
|
|
|
24,612
|
|
|
|
614,493
|
|
Payments of losses and loss-adjustment
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Current period insured events
|
|
|
359,788
|
|
|
|
7,190
|
|
|
|
366,978
|
|
Prior period insured events
|
|
|
227,036
|
|
|
|
17,396
|
|
|
|
244,432
|
|
Total
|
|
|
586,824
|
|
|
|
24,586
|
|
|
|
611,410
|
|
Net claim liabilities at end of period
|
|
|
397,283
|
|
|
|
227,046
|
|
|
|
624,329
|
|
Reinsurance recoverable on claim liabilities
|
|
|
-
|
|
|
|
253,635
|
|
|
|
253,635
|
|
Claim liabilities at end of period
|
|
$
|
397,283
|
|
|
$
|
480,681
|
|
|
$
|
877,964
|
|
|
*
|
Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.
|
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
|
|
Three months ended
March 31, 2018
|
|
|
|
Managed
Care
|
|
|
Other
Business
Segments *
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim liabilities at beginning of period
|
|
$
|
367,357
|
|
|
$
|
739,519
|
|
|
$
|
1,106,876
|
|
Reinsurance recoverable on claim liabilities
|
|
|
-
|
|
|
|
(633,099
|
)
|
|
|
(633,099
|
)
|
Net claim liabilities at beginning of period
|
|
|
367,357
|
|
|
|
106,420
|
|
|
|
473,777
|
|
Claims incurred
|
|
|
|
|
|
|
|
|
|
|
|
|
Current period insured events
|
|
|
603,947
|
|
|
|
30,907
|
|
|
|
634,854
|
|
Prior period insured events
|
|
|
(20,226
|
)
|
|
|
(1,818
|
)
|
|
|
(22,044
|
)
|
Total
|
|
|
583,721
|
|
|
|
29,089
|
|
|
|
612,810
|
|
Payments of losses and loss-adjustment
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Current period insured events
|
|
|
322,388
|
|
|
|
7,021
|
|
|
|
329,409
|
|
Prior period insured events
|
|
|
226,246
|
|
|
|
22,746
|
|
|
|
248,992
|
|
Total
|
|
|
548,634
|
|
|
|
29,767
|
|
|
|
578,401
|
|
Net claim liabilities at end of period
|
|
|
402,444
|
|
|
|
105,742
|
|
|
|
508,186
|
|
Reinsurance recoverable on claim liabilities
|
|
|
-
|
|
|
|
526,575
|
|
|
|
526,575
|
|
Claim liabilities at end of period
|
|
$
|
402,444
|
|
|
$
|
632,317
|
|
|
$
|
1,034,761
|
|
|
*
|
Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.
|
As a result of differences between actual amounts and estimates of insured events in prior years, the amounts included as incurred
claims for prior period insured events differ from anticipated claims incurred.
The favorable developments in the claims incurred and loss-adjustment expenses for prior period insured events for the three months
ended March 31, 2019 and 2018 are due primarily to better than expected utilization trends. Reinsurance recoverable on unpaid claims is reported as 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 expense,
which amounted to $8,697 and $6,179 during the three months ended March 31, 2019 and 2018, respectively.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following is information about total incurred but not reported (IBNR) liabilities plus expected development on reported claims
included in the liability for unpaid claims adjustment expenses for the Managed Care segment as of March 31, 2019.
Incurred Year
|
|
|
Total of IBNR Liabilities Plus Expected
Development on Reported Claims
|
|
|
|
|
|
|
|
2018
|
|
|
$
|
62,319
|
|
2019
|
|
|
|
266,882
|
|
The components of net periodic benefit cost were as follows:
|
|
Three months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
Interest cost
|
|
$
|
1,741
|
|
|
$
|
1,693
|
|
Expected return on assets
|
|
|
(2,217
|
)
|
|
|
(2,281
|
)
|
Amortization of actuarial loss
|
|
|
89
|
|
|
|
215
|
|
Settlement loss
|
|
|
375
|
|
|
|
325
|
|
Net periodic benefit cost
|
|
$
|
(12
|
)
|
|
$
|
(48
|
)
|
Employer Contributions:
The Company
disclosed in its audited consolidated financial statements for the year ended December 31, 2018 that it expected to contribute $2,000 to the pension program in 2019. As of March 31, 2019, the Company has not made contributions to the pension
program.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The accumulated balances for each classification of other
comprehensive income, net of tax, are as follows:
|
|
Three months ended
|
|
|
|
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Net Unrealized Gain on Securities
Beginning Balance
|
|
$
|
27,308
|
|
|
$
|
76,238
|
|
Unrealized loss reclassified to beginning
retained earnings as a result of implementation
new accounting pronouncement
|
|
|
-
|
|
|
|
(39,882
|
)
|
Other comprehensive income
before reclassifications
|
|
|
14,493
|
|
|
|
(4,540
|
)
|
Amounts reclassified from accumulated
other comprehensive income
|
|
|
(1,052
|
)
|
|
|
(2,354
|
)
|
Net current period change
|
|
|
13,441
|
|
|
|
(6,894
|
)
|
Ending Balance
|
|
|
40,749
|
|
|
|
29,462
|
|
Liability for Pension Benefits
Beginning Balance
|
|
|
(24,246
|
)
|
|
|
(24,984
|
)
|
Amounts reclassified from accumulated
other comprehensive income
|
|
|
56
|
|
|
|
131
|
|
Ending Balance
|
|
|
(24,190
|
)
|
|
|
(24,853
|
)
|
Accumulated Other Comprehensive Income
Beginning Balance
|
|
|
3,062
|
|
|
|
51,254
|
|
Unrealized loss reclassified to beginning
retained earnings as a result of implementation
new accounting pronouncement
|
|
|
-
|
|
|
|
(39,882
|
)
|
Other comprehensive income
before reclassifications
|
|
|
14,493
|
|
|
|
(4,540
|
)
|
Amounts reclassified from accumulated
other comprehensive income
|
|
|
(996
|
)
|
|
|
(2,223
|
)
|
Net current period change
|
|
|
13,497
|
|
|
|
(6,763
|
)
|
Ending Balance
|
|
$
|
16,559
|
|
|
$
|
4,609
|
|
(10)
|
Share-Based Compensation
|
Share-based compensation expense recorded during the three months
ended March 31, 2019 and 2018 was $1,586 and $391, respectively.
During the three months
ended March 31, 2019 and 2018 602 and 16,271 shares, respectively, were
repurchased and retired as a result of non-cash tax withholdings upon vesting of shares.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(11)
|
Net Income Available to Stockholders and Net Income per Share
|
The following table sets forth the computation of basic and diluted earnings per share:
|
|
Three months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Numerator for earnings per share:
|
|
|
|
|
|
|
Net income attributable to TSM available to stockholders
|
|
$
|
34,786
|
|
|
$
|
3,914
|
|
Denominator for basic earnings per share:
|
|
|
|
|
|
|
|
|
Weighted average of common shares
|
|
|
22,757,794
|
|
|
|
23,277,633
|
|
Effect of dilutive securities
|
|
|
82,480
|
|
|
|
117,364
|
|
Denominator for diluted earnings per share
|
|
|
22,840,274
|
|
|
|
23,394,997
|
|
Basic net income per share attributable to TSM
|
|
$
|
1.53
|
|
|
$
|
0.17
|
|
Diluted net income per share attributable to TSM
|
|
$
|
1.52
|
|
|
$
|
0.17
|
|
The following information supplements and amends, as applicable, the disclosures in note 24 to the Consolidated Financial Statements
of the Company’s 2018 Annual Report on Form 10-K. The Company’s business is subject to numerous laws and regulations promulgated by Federal, Puerto Rico, U.S. Virgin Islands (USVI), Costa Rica, British Virgin Islands (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.
The Company is involved in various legal actions arising in the ordinary course of business. We are also defendants 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 we believe our 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. 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 adverse effect on the consolidated financial condition, operating results and/or cash flows of the Company.
Additionally, the Company may face various potential litigation claims that have not been asserted to date, including claims from
persons purporting to have rights to acquire shares of the Company on favorable terms pursuant to agreements previously entered by our predecessor managed care subsidiary, Seguros de Servicios de Salud de Puerto Rico, Inc. (SSS), with
physicians or dentists who joined our provider network to sell such new provider shares of SSS at a future date (Share Acquisition Agreements) or to have inherited such shares notwithstanding applicable transfer and ownership restrictions.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Claims by Heirs of Former Shareholders
The Company and TSS are defending six individual lawsuits: Vera Sanchez, et al, v. Triple-S; Olivella Zalduondo, et al, v. Seguros
de Servicios de Salud, et al; Montilla Lopez, et al v. Seguros de Servicio de Salud, et al; Cebollero Santamaria v. Triple-S Salud, Inc., et al; Ruiz de Porras, et al, v. Triple-S Salud, Inc.; and Irizarry Antonmattei, et al, v. Seguros de
Servicio de Salud, et al. All claims were filed in the Puerto Rico Court of First Instance by persons who claim to have inherited a total of 83 shares of the Company of one of its predecessors or affiliates (before giving effect to the
3,000-for-one stock Split). While each case presents unique facts and allegations, the lawsuits generally allege that the redemption of the shares by the Company pursuant to transfer and ownership restrictions contained in the Company’s (or
its predecessors’ or affiliates’) articles of incorporation and bylaws was improper. Consequently, the remedy requested by the plaintiffs to be recognized as shareholders of the Company in the corresponding proportion.
As a result of the Puerto Rico Supreme Court’s decision to deny the applicability of the statute of limitations contained in the
local securities law, these claims are being litigated on their merits.
On January 11, 2019, local Court of Appeals confirmed Court of First Instance’s partial summary judgement in Wanda Irizarry
Antonmattei, et al., v. Seguros de Servicios de Salud de Puerto Rico, Inc., et al. ordering the Company to issue 63,000 stock shares in favor of Plaintiffs. On April 23, 2019, the Supreme Court denied the Company’s petition for certiorari. The
Company will continue to vigorously defend its position on remaining controversies in the Court of First Instance.
In Montilla López, et al. v. Seguros de Servicios de Salud, et al. local Court of First Instance entered summary judgment in favor
of Company dismissing all claims on November 2, 2018. Plaintiffs filed an Appeal before Puerto Rico Court of Appeals which has been denied. Plaintiffs have until May 13, 2019 to appeal to the Supreme Court.
The operations of the Corporation are conducted principally through three business segments: Managed Care, Life Insurance, and
Property and Casualty Insurance. The Corporation evaluates performance based primarily on the operating revenues and operating income of each segment. Operating revenues include premiums earned, net, administrative service fees, net
investment income, and revenues derived from other segments. Operating costs include claims incurred and operating expenses. The Corporation calculates operating income or loss as operating revenues less operating costs.
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following tables summarize the operations by reportable segment for the three months ended March 31, 2019 and 2018:
|
|
Three months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
Managed Care:
|
|
|
|
|
|
|
Premiums earned, net
|
|
$
|
705,050
|
|
|
$
|
686,602
|
|
Administrative service fees
|
|
|
2,632
|
|
|
|
3,348
|
|
Intersegment premiums/service fees
|
|
|
1,484
|
|
|
|
1,348
|
|
Net investment income
|
|
|
5,878
|
|
|
|
4,857
|
|
Total managed care
|
|
|
715,044
|
|
|
|
696,155
|
|
Life Insurance:
|
|
|
|
|
|
|
|
|
Premiums earned, net
|
|
|
43,722
|
|
|
|
41,089
|
|
Intersegment premiums
|
|
|
478
|
|
|
|
381
|
|
Net investment income
|
|
|
6,560
|
|
|
|
6,058
|
|
Total life insurance
|
|
|
50,760
|
|
|
|
47,528
|
|
Property and Casualty Insurance:
|
|
|
|
|
|
|
|
|
Premiums earned, net
|
|
|
19,230
|
|
|
|
24,063
|
|
Intersegment premiums
|
|
|
153
|
|
|
|
153
|
|
Net investment income
|
|
|
2,487
|
|
|
|
2,442
|
|
Total property and casualty insurance
|
|
|
21,870
|
|
|
|
26,658
|
|
Other segments: *
|
|
|
|
|
|
|
|
|
Intersegment service revenues
|
|
|
-
|
|
|
|
239
|
|
Operating revenues from external sources
|
|
|
1,577
|
|
|
|
1,071
|
|
Total other segments
|
|
|
1,577
|
|
|
|
1,310
|
|
Total business segments
|
|
|
789,251
|
|
|
|
771,651
|
|
TSM operating revenues from external sources
|
|
|
451
|
|
|
|
398
|
|
Elimination of intersegment premiums/service fees
|
|
|
(2,115
|
)
|
|
|
(1,602
|
)
|
Elimination of intersegment service revenues
|
|
|
-
|
|
|
|
(239
|
)
|
Consolidated operating revenues
|
|
$
|
787,587
|
|
|
$
|
770,208
|
|
*
|
Includes segments that are not required to be reported separately, primarily the the health clinics and the data processing services organization.
|
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
|
|
Three months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
Managed care
|
|
$
|
22,110
|
|
|
$
|
10,618
|
|
Life insurance
|
|
|
5,640
|
|
|
|
3,625
|
|
Property and casualty insurance
|
|
|
3,554
|
|
|
|
3,079
|
|
Other segments *
|
|
|
(392
|
)
|
|
|
175
|
|
Total business segments
|
|
|
30,912
|
|
|
|
17,497
|
|
TSM operating revenues from external sources
|
|
|
451
|
|
|
|
398
|
|
TSM unallocated operating expenses
|
|
|
(2,032
|
)
|
|
|
(2,210
|
)
|
Elimination of TSM intersegment charges
|
|
|
2,403
|
|
|
|
2,400
|
|
Consolidated operating income
|
|
|
31,734
|
|
|
|
18,085
|
|
Consolidated net realized investment gains
|
|
|
1,315
|
|
|
|
2,942
|
|
Consolidated net unrealized investment gains (losses) on equity investments
|
|
|
19,669
|
|
|
|
(16,199
|
)
|
Consolidated interest expense
|
|
|
(1,788
|
)
|
|
|
(1,690
|
)
|
Consolidated other income, net
|
|
|
1,169
|
|
|
|
1,163
|
|
Consolidated income before taxes
|
|
$
|
52,099
|
|
|
$
|
4,301
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
Managed care
|
|
$
|
2,757
|
|
|
$
|
2,641
|
|
Life insurance
|
|
|
272
|
|
|
|
300
|
|
Property and casualty insurance
|
|
|
94
|
|
|
|
104
|
|
Other segments*
|
|
|
185
|
|
|
|
168
|
|
Total business segments
|
|
|
3,308
|
|
|
|
3,213
|
|
TSM depreciation expense
|
|
|
197
|
|
|
|
197
|
|
Consolidated depreciation and amortization expense
|
|
$
|
3,505
|
|
|
$
|
3,410
|
|
*
|
Includes segments that are not required to be reported separately, primarily the the health clinics and the data processing services organization.
|
Triple-S Management Corporation
Notes to Condensed Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
Managed care
|
|
$
|
1,168,416
|
|
|
$
|
1,078,262
|
|
Life insurance
|
|
|
902,679
|
|
|
|
863,470
|
|
Property and casualty insurance
|
|
|
687,493
|
|
|
|
747,583
|
|
Other segments *
|
|
|
21,418
|
|
|
|
20,705
|
|
Total business segments
|
|
|
2,780,006
|
|
|
|
2,710,020
|
|
Unallocated amounts related to TSM:
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and investments
|
|
|
46,562
|
|
|
|
57,818
|
|
Property and equipment, net
|
|
|
22,158
|
|
|
|
21,733
|
|
Other assets
|
|
|
25,104
|
|
|
|
22,521
|
|
|
|
|
93,824
|
|
|
|
102,072
|
|
Elimination entries-intersegment receivables and others
|
|
|
(77,351
|
)
|
|
|
(51,844
|
)
|
Consolidated total assets
|
|
$
|
2,796,479
|
|
|
$
|
2,760,248
|
|
|
*
|
Includes segments that are not required to be reported separately, primarily the the health clinics and the data processing services organization.
|
The Company evaluated subsequent events through the date the 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.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
In this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), the “Corporation”, the
“Company”, “TSM”, “we”, “us” and “our” refers to Triple-S Management Corporation and its subsidiaries. The MD&A included in this Quarterly Report on Form 10-Q is intended to update the reader on matters affecting the financial condition
and results of operations for the three months ended March 31, 2019. Therefore, the following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form
10-K filed with the United States Securities and Exchange Commission as of and for the year ended December 31, 2018 and the MD&A included therein, and our condensed consolidated financial statements and accompanying notes as of and for the
three months ended March 31, 2019 included in this Quarterly Report on Form 10-Q.
Cautionary
Statement Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q and other of our publicly available documents may include statements that constitute
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, among other things: statements concerning our business and our financial condition and results of operations. These statements
are not historical, but instead represent our belief regarding future events, any of which, by their nature, are inherently uncertain and outside of our control. These statements may address, among other things, future financial results,
strategy for growth, and market position. It is possible that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. The
factors that could cause actual results to differ from those in the forward-looking statements are discussed throughout this form. We are not under any obligation to update or alter any forward-looking statement (and expressly disclaims any
such obligations), whether as a result of new information, future events or otherwise. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, but are not limited to,
rising healthcare costs, business conditions and competition in the different insurance segments, government action and other regulatory issues.
We are one of the most significant players in the managed care industry in Puerto Rico and have 60 years of experience in this
industry. We offer a broad portfolio of managed care and related products in the Commercial, Medicaid and Medicare Advantage 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-funded managed care program for the medically indigent that is similar
to the Medicaid program in the U.S.) (Medicaid), by administering the provision of health benefits. See details of the Medicaid contract in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018 under the
sub-caption “
We are dependent on a small number of government contracts to generate a significant amount of the revenues of our managed care business.
”
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. As of March 31, 2019, we served approximately 921
,000
managed care members across all regions of Puerto
Rico. For the three months ended March 31, 2019 and 2018, our Managed Care segment represented approximately 92% of our total consolidated premiums earned. We also have significant positions in the life insurance and property and casualty
insurance markets.
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 Blue Cross Blue Shield Association (BCBSA) licensees, which provides us with exclusive use of the Blue Cross and Blue Shield name and mark throughout Puerto Rico, the USVI, Costa Rica, the
BVI, and Anguilla.
We participate in the life insurance market through our subsidiary, Triple-S Vida, Inc., and in the property and casualty insurance
market through our subsidiary, Triple-S Propiedad, Inc. (TSP).
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 for each segment presented in this Quarterly Report on Form 10-Q 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. See note 13 of the condensed consolidated financial statements included in Quarterly Report on Form 10-Q.
Our revenues primarily consist of premiums earned, net and administrative service fees. These revenues are derived from the sale of
managed care products in the Commercial market to employer groups, individuals, and government-sponsored programs, principally Medicare and Medicaid. Premiums are derived from insurance contracts and administrative service fees are derived
from self-funded contracts, under which we provide a range of services, including claims administration, billing and membership services, among others. Revenues also include premiums earned from the sale of property and casualty and life
insurance contracts, investment income, and revenues derived from other non-reportable segments. Substantially all of our earnings are generated in Puerto Rico.
Claims incurred include the payment of benefits and losses, mostly to physicians, hospitals and other service providers, and
policyholders. Each segment’s results of operations depend to a significant extent on their ability to accurately predict and effectively manage claims. 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. Operating expenses consist primarily of compensation, commission payments to brokers and other overhead business expenses.
We use operating income as a measure of performance of the underwriting and investment functions of our segments. We also use the
loss ratio and the operating expense ratio as measures of performance. The loss ratio is claims incurred divided by premiums earned, net, multiplied by 100. The operating expense ratio is operating expenses divided by premiums earned; net and
administrative service fees, multiplied by 100.
Puerto Rico Economy
In August 2016, President Obama appointed the seven voting members of the Oversight Board through the process established in the Puerto Rico Oversight, Management, and Economic Stability Act
(PROMESA), which authorized the President to select the members from several lists required to be submitted by congressional leaders. On February 15, 2019, the First Circuit of the U.S. Court of Appeals (the First Circuit) declared such
appointments unconstitutional upon concluding the they did not comply with the Appointments Clause of the U.S. Constitution, which requires that principal federal officers be appointed by the President, with the advice and consent of the U.S.
Senate. The Oversight Board is seeking review of the First Circuit’s decision by the U.S. Supreme Court. The First Circuit’s decision provided that its mandate would not issue for 90 days, so as to allow the President and the U.S. Senate to
validate the defective appointments or reconstitute the Oversight Board in accordance with the Appointments Clause. The First Circuit extended such period for an additional 60 days, until July 15, 2019. On April 29, 2019, President Donald
Trump nominated the current Oversight Board members to serve their terms through the end of August. Such appointments are pending confirmation by the U.S. Senate.
The Government and the Oversight Board are in the process of developing a further revised fiscal plan. The Government has
submitted several versions of such further revised fiscal plan to the Oversight Board, which the Oversight Board has indicated are not compliant with the requirements of PROMESA. The Oversight Board notified the Government that it expects to
certify a new fiscal plan for the Commonwealth by May 9, 2019.
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 impacted and may continue to adversely impact us, particularly following Hurricanes Irma and Maria.” included in our Annual Report on Form 10-K for the year ended
December 31, 2018.
Property and Casualty Reinsurance Program
The Company’s Property and Casualty segment completed the renewal of its reinsurance property and catastrophe program with an
effective date of April 1, 2019 with a term of twelve-months ending on March 31, 2020. The new reinsurance program considers a change in cessions in the Commercial Property quota share agreement from 35% to 25% and provides the segment with a
catastrophe loss protection of $815 million in excess of $5 million, while cost increased by approximately $1.4 million when compared to the expiring program.
Recent Accounting Standards
For a description of recent accounting standards, see note 2 to the condensed consolidated financial statements included in this
quarterly report on Form 10-Q.
|
|
As of March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Managed care enrollment:
|
|
|
|
|
|
|
Commercial
1
|
|
|
437,200
|
|
|
|
467,896
|
|
Medicare
|
|
|
128,090
|
|
|
|
112,080
|
|
Medicaid
|
|
|
355,694
|
|
|
|
394,454
|
|
Total
|
|
|
920,984
|
|
|
|
974,430
|
|
Managed care enrollment by funding arrangement:
|
|
|
|
|
|
|
|
|
Fully-insured
|
|
|
802,307
|
|
|
|
825,742
|
|
Self-insured
|
|
|
118,677
|
|
|
|
148,688
|
|
Total
|
|
|
920,984
|
|
|
|
974,430
|
|
(1)
|
Commercial membership includes corporate accounts, self-funded employers, individual accounts, Medicare Supplement, Federal government employees and local government employees.
|
Consolidated Operating Results
The following table sets forth the Corporation’s consolidated operating results. Further details of the results of operations of
each reportable segment are included in the analysis of operating results for the respective segments.
|
|
Three months ended
March 31,
|
|
(dollar amounts in millions)
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
Premiums earned, net
|
|
$
|
768.0
|
|
|
$
|
752.0
|
|
Administrative service fees
|
|
|
2.6
|
|
|
|
3.3
|
|
Net investment income
|
|
|
15.4
|
|
|
|
13.8
|
|
Other operating revenues
|
|
|
1.6
|
|
|
|
1.1
|
|
Total operating revenues
|
|
|
787.6
|
|
|
|
770.2
|
|
Net realized investment gains
|
|
|
1.3
|
|
|
|
2.9
|
|
Net unrealized investment gains (losses) on equity investments
|
|
|
19.7
|
|
|
|
(16.2
|
)
|
Other income, net
|
|
|
1.2
|
|
|
|
1.2
|
|
Total revenues
|
|
|
809.8
|
|
|
|
758.1
|
|
Benefits and expenses:
|
|
|
|
|
|
|
|
|
Claims incurred
|
|
|
623.2
|
|
|
|
619.0
|
|
Operating expenses
|
|
|
132.7
|
|
|
|
133.1
|
|
Total operating expenses
|
|
|
755.9
|
|
|
|
752.1
|
|
Interest expense
|
|
|
1.8
|
|
|
|
1.7
|
|
Total benefits and expenses
|
|
|
757.7
|
|
|
|
753.8
|
|
Income before taxes
|
|
|
52.1
|
|
|
|
4.3
|
|
Income tax expense
|
|
|
17.3
|
|
|
|
0.4
|
|
Net income attributable to TSM
|
|
$
|
34.8
|
|
|
$
|
3.9
|
|
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
Operating Revenues
Consolidated premiums earned, net increased by $16.0 million, or 2.1%, to $768.0 million. This increase primarily reflects higher
premiums in the Managed Care segment by $18.6 million due to higher Medicare membership and average premiums rates. The increase was partially offset by lower Medicaid membership.
Net unrealized investment losses on equity investments
The $19.7 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 $4.2 million, or 0.7%, to $623.2 million mostly due to higher claims in the Managed Care
segment. The increase in Managed Care claims primarily reflects higher enrollment in the segment’s Medicare business, offset in part by favorable prior period reserve developments. The consolidated loss ratio decreased by 120 basis points to
81.1%. Adjusting for the effect of the Managed Care prior period reserve developments in 2019 and 2018 and moving the Medicare risk score revenue adjustments to their corresponding period, the consolidated loss ratio would have been
approximately 82.0% this quarter, about 70 basis points higher than last year, mostly driven by the impact of the 2019 suspension of the Health Insurance Providers Fee (HIP fee) pass-through which accounted for approximately 50 basis points of
the increase.
Operating Expenses
Consolidated operating expenses decreased by $0.4 million, or 0.3%, to $132.7 million. The decrease in operating expenses mostly
results from the suspension in 2019 of HIP fee of $11.7 million offset in part by higher personnel costs and professional services as well as to an increase in the provision for doubtful accounts. For the three months ended March 31, 2019, the
consolidated operating expense ratio decreased 40 basis points to 17.2%.
Income Taxes
Consolidated income taxes increased by $16.9 million, to $17.3 million for the three months ended March 31, 2019. The year over
year change in income taxes primarily reflects the increase in income before taxes in the Managed Care segment, which has a higher effective tax rate than our other segments.
Managed
Care Operating Results
|
|
Three months ended
March 31,
|
|
(dollar amounts in millions)
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
Medical premiums earned, net:
|
|
|
|
|
|
|
Medicare
|
|
$
|
332.7
|
|
|
$
|
287.9
|
|
Commercial
|
|
|
198.5
|
|
|
|
198.7
|
|
Medicaid
|
|
|
174.3
|
|
|
|
200.3
|
|
Medical premiums earned, net
|
|
|
705.5
|
|
|
|
686.9
|
|
Administrative service fees
|
|
|
3.7
|
|
|
|
4.4
|
|
Net investment income
|
|
|
5.8
|
|
|
|
4.8
|
|
Total operating revenues
|
|
|
715.0
|
|
|
|
696.1
|
|
Medical operating costs:
|
|
|
|
|
|
|
|
|
Medical claims incurred
|
|
|
589.9
|
|
|
|
583.7
|
|
Medical operating expenses
|
|
|
103.0
|
|
|
|
101.8
|
|
Total medical operating costs
|
|
|
692.9
|
|
|
|
685.5
|
|
Medical operating income
|
|
$
|
22.1
|
|
|
$
|
10.6
|
|
Additional data:
|
|
|
|
|
|
|
|
|
Member months enrollment:
|
|
|
|
|
|
|
|
|
Medicare
|
|
|
383,608
|
|
|
|
338,340
|
|
Commercial:
|
|
|
|
|
|
|
|
|
Fully-insured
|
|
|
953,052
|
|
|
|
961,290
|
|
Self-funded
|
|
|
362,490
|
|
|
|
449,778
|
|
Total Commercial
|
|
|
1,315,542
|
|
|
|
1,411,068
|
|
Medicaid
|
|
|
1,029,736
|
|
|
|
1,171,345
|
|
Total member months
|
|
|
2,728,886
|
|
|
|
2,920,753
|
|
Medical loss ratio
|
|
|
83.6
|
%
|
|
|
85.0
|
%
|
Operating expense ratio
|
|
|
14.5
|
%
|
|
|
14.7
|
%
|
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
Medical Operating Revenues
Medical premiums earned increased by $18.6 million, or 2.7%, to $705.5 million. This increase is principally the result of the
following:
•
|
Medical premiums generated by the Medicare business increased by $44.8 million, or 15.6%, to $332.7
million
, primarily reflecting higher membership by approximately 45,000 member months as well as higher average premium rates.
|
•
|
Medical premiums generated by the Commercial business decreased by $0.2 million, or 0.1%, to $198.5
million. This fluctuation primarily
reflects lower enrollment during the quarter by approximately 8,000 member months and $3.0 million related to the
suspension of the HIP fee pass-through in 2019, offset by higher average premium rates.
|
•
|
Medical premiums generated by the Medicaid business amounted to $174.3 million, $26.0 million, or 13.0%
lower when compared to the prior period. This decrease primarily reflects lower enrollment by approximately 142,000 member months, the $3.8 million collection in 2018 of premiums related to our achievement of the contract’s
quality incentive metrics, the impact of the profit sharing accrual related to the previous contract, which lowered 2019 premiums by $3.7 million, and $3.7 million related to the suspension of the HIP fee pass-through in 2019.
The decrease in membership follows the lower membership assigned to us by ASES when implementing the new Medicaid contract effective November 1, 2018. These decreases are partially offset by higher average premiums rates in 2019.
|
Medical Claims Incurred
Medical claims incurred during the three months ended March 31, 2019 increased by $6.2 million, or 1.1%, to $589.9 million when
compared to the three months ended March 31, 2018. The medical loss ratio (MLR) of the segment decreased 140 basis points during the 2019 period, to 83.6%. This fluctuation is primarily attributed to the net effect of the following:
•
|
The medical claims incurred of the Medicare business increased by $24.6 million, or 10.1%, during the 2019 period mostly driven by higher enrollment. The MLR, at 80.6%
was 400 basis points lower than the same period last year. Adjusting for the effect of prior period reserve developments in 2019 and 2018 and moving the risk score revenue adjustments to their corresponding period, the Medicare MLR
would have been approximately 82.0% this quarter, about 10 basis points lower than last year.
|
•
|
The medical claims incurred of the Commercial business increased by $2.9 million, or 1.8%, during 2019 and its MLR increased 160 basis point, to 82.9%. Adjusting for
the effect of prior period reserve developments, the Commercial MLR would have been 83.6%, 90 basis points higher than the adjusted MLR for last year due to the 2019 suspension of the HIP fee pass-through
and increase in
utilization following a change in utilization patterns due to an early Easter holiday in 2018.
The elimination of the HIP fee pass-through has an MLR impact of 130 basis
points, which lowers the change in the adjusted MLR to a year-over-year decrease of 40 basis points.
|
•
|
The medical claims incurred in the Medicaid business decreased by $21.3 million, or 11.9%, reflecting the lower member months enrollment during the 2019 period. The
MLR, at 90.3%, was 110 basis point higher than the same period last year. Adjusting for the effect of prior period reserve developments, the Medicaid MLR would have been approximately 90.4% this quarter, 290 basis points higher
than the adjusted MLR for last year reflecting the higher required target MLR of the current Medicaid contract and the impact of the elimination in 2019 of the HIP fee.
The current Medicaid contract requires a minimum MLR of
92%, including allocation of healthcare quality improvement expenses.
The suspension of the HIP fee pass-through accounts for 60 basis points of the increase.
|
Medical Operating Expenses
Medical operating expenses increased by $1.2 million, or 1.2%, to $103.0 million. The operating expense ratio decreased by 20 basis
points to 14.5% in 2019. The higher operating expenses mostly result from higher personnel costs and commission expense, as well as to an increase in the provision for doubtful accounts. These increases were partially offset by an $11.7
million decrease in the HIP Fee due to the moratorium of the fee in 2019.
Life
Insurance Operating Results
|
|
Three months ended
March 31,
|
|
(dollar amounts in millions)
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
Premiums earned, net:
|
|
|
|
|
|
|
Premiums earned
|
|
$
|
45.6
|
|
|
$
|
43.0
|
|
Assumed earned premiums
|
|
|
0.7
|
|
|
|
0.8
|
|
Ceded premiums earned
|
|
|
(2.1
|
)
|
|
|
(2.3
|
)
|
Premiums earned, net
|
|
|
44.2
|
|
|
|
41.5
|
|
Net investment income
|
|
|
6.6
|
|
|
|
6.0
|
|
Total operating revenues
|
|
|
50.8
|
|
|
|
47.5
|
|
Operating costs:
|
|
|
|
|
|
|
|
|
Policy benefits and claims incurred
|
|
|
26.0
|
|
|
|
25.0
|
|
Underwriting and other expenses
|
|
|
19.2
|
|
|
|
18.9
|
|
Total operating costs
|
|
|
45.2
|
|
|
|
43.9
|
|
Operating income
|
|
$
|
5.6
|
|
|
$
|
3.6
|
|
Additional data:
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
58.8
|
%
|
|
|
60.2
|
%
|
Operating expense ratio
|
|
|
43.4
|
%
|
|
|
45.5
|
%
|
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
Operating Revenues
Premiums earned, net increased by $2.7 million, or 6.5% to $44.2 million as the result of higher sales in the Individual Life and
Cancer lines of business.
Policy Benefits and Claims Incurred
Policy benefits and claims incurred increased by $1.0 million, or 4.0%, to $26.0 million, mostly as the result of higher actuarial
reserves following improved portfolio persistency during the period.
Underwriting and Other Expenses
Underwriting and other expenses increased $0.3 million, or 1.6%, to $19.2 million mostly reflecting the segment’s higher volume of
business. The segment’s operating expense ratio improved 210 basis points to 43.4%.
Property
and Casualty Insurance Operating Results
|
|
Three months ended
March 31,
|
|
(dollar amounts in millions)
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
Premiums earned, net:
|
|
|
|
|
|
|
Premiums written
|
|
$
|
31.0
|
|
|
$
|
33.6
|
|
Premiums ceded
|
|
|
(13.4
|
)
|
|
|
(14.7
|
)
|
Change in unearned premiums
|
|
|
1.8
|
|
|
|
5.3
|
|
Premiums earned, net
|
|
|
19.4
|
|
|
|
24.2
|
|
Net investment income
|
|
|
2.5
|
|
|
|
2.4
|
|
Total operating revenues
|
|
|
21.9
|
|
|
|
26.6
|
|
Operating costs:
|
|
|
|
|
|
|
|
|
Claims incurred
|
|
|
8.6
|
|
|
|
11.1
|
|
Underwriting and other expenses
|
|
|
9.7
|
|
|
|
12.4
|
|
Total operating costs
|
|
|
18.3
|
|
|
|
23.5
|
|
Operating income
|
|
$
|
3.6
|
|
|
$
|
3.1
|
|
Additional data:
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
44.3
|
%
|
|
|
45.9
|
%
|
Operating expense ratio
|
|
|
50.0
|
%
|
|
|
51.2
|
%
|
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
Operating Revenues
Total premiums written decreased by $2.6 million, or 7.7%, to $31.0 million, mostly driven by lower sales of Commercial Property
products, mainly as a result of selective and disciplined underwriting of Commercial risks. The decrease in sales are partially offset by increases in premium rates for commercial accounts.
The premiums ceded to reinsurers decreased by $1.3 million, or 8.8%, mostly due to a decrease in facultative reinsurance reflecting
the lower premiums written in commercial accounts during 2019, partly offset by higher catastrophe non-proportional reinsurance costs.
The $3.5 million decrease in the change in unearned premiums reflects the segment’s lower premiums written in 2019.
Claims Incurred
Claims incurred decreased by $2.5 million, or 22.5%, to $8.6 million mostly due to an unfavorable reserve development in the 2018
period and to the segment’s lower premiums volume. The loss ratio decreased by 160 basis points, to 44.3% during this period, primarily as the result of favorable loss experience in the Allied line of business.
Underwriting and Other Expenses
Underwriting and other operating expenses decreased by $2.7 million,
or 21.8%, to $9.7 million mostly due to a lower net commission expense following the decrease in premiums earned
. The operating expense ratio was 50.0%, 120 basis points lower than prior year.
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:
|
|
Three months ended
March 31,
|
|
(dollar amounts in millions)
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Sources (uses) of cash:
|
|
|
|
|
|
|
Cash (used in) provided by operating activities
|
|
$
|
(69.9
|
)
|
|
$
|
130.5
|
|
Net proceeds (purchases) of investment securities
|
|
|
16.5
|
|
|
|
(75.9
|
)
|
Net capital expenditures
|
|
|
(3.0
|
)
|
|
|
(4.9
|
)
|
Payments of long-term borrowings
|
|
|
(0.8
|
)
|
|
|
(0.8
|
)
|
Proceeds from policyholder deposits
|
|
|
3.6
|
|
|
|
6.2
|
|
Surrenders of policyholder deposits
|
|
|
(4.6
|
)
|
|
|
(7.2
|
)
|
Repurchase and retirement of common stock
|
|
|
-
|
|
|
|
(14.3
|
)
|
Other
|
|
|
36.5
|
|
|
|
(20.0
|
)
|
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(21.7
|
)
|
|
$
|
13.6
|
|
Decrease in net cash provided by operating activities by approximately $200.4 million mostly reflects the collection in advance of
April CMS premiums in the 2018 period, lower premium collections in the Managed Care segment, and Property and Casualty hurricane related claim payments, offset in part by lower payments to suppliers and employees.
Net proceeds from investments in securities are part our asset/liability management strategy.
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. 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 three months ended March 31, 2018, the Company repurchased and retired under this program 563,559 of our Class B Common Stock shares at an average per share price of $25.10, for an aggregate cost of $14.3
million. No share repurchases were made during the three months ended March 31, 2019.
The fluctuation in the Other sources (uses) of cash is attributed to changes in the amount of outstanding checks over bank balances.
Financing and Financing Capacity
We have several short-term facilities available to address timing
differences between cash receipts and disbursements. These short-term facilities are mostly in the form of arrangements to sell securities under repurchase agreements. As of March 31, 2019, we
had $60.0
million of available credit under these facilities. There are no outstanding short-term borrowings under these facilities as of March 31, 2019.
On December 28, 2016, TSM entered into 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 the 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) 1% over LIBOR for Term Loan A, (ii) 2.75% over LIBOR for Term Loan B, and (iii) 3.25% over LIBOR for Term Loan C. The loan includes certain financial and non-financial covenants, which are
customary for this type of facility, including but not limited to, restrictions on the granting of certain liens, limitations on acquisitions and limitations on changes in control and dividends. Failure to meet these covenants may trigger the
accelerated payment of the outstanding balance.
As of March 31, 2019, we are in compliance with these covenants.
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 25 basis points contains certain financial and non-financial covenants that are customary for this type of facility. This line of credit matured on April 30, 2019 and was renewed for an
additional year
.
We anticipate that we will have sufficient liquidity to support our currently expected needs.
Further details regarding the senior unsecured notes and the credit agreements are incorporated by reference to “Item 7.—Management
Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2018.
Item 3.
|
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 entered into in
the normal course of business. 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. No
material changes have occurred in our exposure to financial market risks since December 31, 2018. A discussion of our market risk is incorporated by reference to “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” included in
our Annual Report on Form 10-K for the year ended December 31, 2018.
Item 4.
|
Controls and Procedures
|
Evaluation of Disclosure Controls and
Procedures
In connection with the preparation of this Quarterly Report on Form 10-Q, management, under the supervision and with the
participation of the chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of the “disclosure controls and procedures” (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 in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to management, including the chief executive officer 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.
Based on this evaluation, our chief executive officer and chief financial officer have concluded that as of March 31, 2019, which is
the end of the period covered by this Quarterly Report on Form 10-Q, 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 chief financial officer completed the evaluation referred to above.
Changes in Internal Controls Over Financial
Reporting
No changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during
the fiscal quarter ended March 31, 2019 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II – Other Information
For a description of legal proceedings that have experienced significant developments during this quarter, see note 12 to the
condensed consolidated financial statements included in this quarterly report on Form 10-Q.
For a description of our risk factors, see Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2018
.
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
Not applicable.
Item 3.
|
Defaults Upon Senior Securities
|
Not applicable.
Not applicable.
Not applicable.
Exhibits
|
Description
|
|
|
|
Statement re computation of per share earnings; an exhibit describing the computation of the earnings per share for the three months ended
March 31, 2019 and 2018 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 I of this Quarterly Report on Form 10-Q.
|
|
|
|
Certification of the President and Chief Executive Officer required by Rule 13a-14(a)/15d-14(a).
|
|
|
|
Certification of the Executive Vice President and Chief Financial Officer required by Rule 13a-14(a)/15d-14(a).
|
|
|
|
Certification of the President and Chief Executive Officer required pursuant to 18 U.S.C Section 1350.
|
|
|
|
Certification of the Executive Vice President and Chief Financial Officer required pursuant to 18 U.S.C Section 1350.
|
All other exhibits for which provision is made in the applicable accounting regulation of the United States Securities and Exchange
Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
* Filed herein.
Pursuant to the requirements of the United States Securities and 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
|
|
|
|
|
|
|
|
Date:
|
May 9, 2019
|
|
By:
|
/s/
Roberto
García-Rodríguez
|
|
|
|
|
|
Roberto García-Rodríguez
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date:
|
May 9, 2019
|
|
By:
|
/s/
Juan
J. Román-Jiménez
|
|
|
|
|
|
Juan J. Román-Jiménez
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
38