AM Best Removes From Under Review With Negative Implications & Affirms Credit Ratings of Triple-S Management Corp. & Its Subs...
May 22 2019 - 3:11PM
Business Wire
AM Best has removed from under review with negative
implications and affirmed the Financial Strength Rating (FSR) of
B++ (Good) and the Long-Term Issuer Credit Ratings (Long-Term ICR)
of “bbb+” of Triple-S Salud, Inc. (TSS) and its affiliate, Triple-S
Vida, Inc. (TSV) (Río Piedras, Puerto Rico). AM Best also has
removed from under review with negative implications and affirmed
the FSR of B++ (Good) and the Long-Term ICR of “bbb” of Triple-S
Blue, Inc., I.I. (TSB). Additionally, AM Best has affirmed the FSR
of B+ (Good) and the Long-Term ICR of “bbb-” of Triple-S Propiedad,
Inc. (TSP) (Guaynabo, Puerto Rico). Furthermore, AM Best has
removed from under review with negative implications and affirmed
the Long-Term ICR of “bb+” of Triple-S Management Corporation (TSM)
(NYSE:GTS), the ultimate parent of TSS, TSV, TSB and TSP. The
outlook assigned to these Credit Ratings (ratings) is stable. All
companies are domiciled in San Juan, PR, unless otherwise
specified.
The ratings of TSP were downgraded previously and placed under
review with negative implications on Nov. 16, 2018, in response to
TSP reporting a significant loss in policyholder surplus largely
driven by adverse claims development on Hurricane Maria losses of
approximately $129 million in the second and third quarter of 2018.
(See press release dated Nov. 16, 2018). Concurrent to TSP’s
downgrades, TSM’s life/health subsidiaries were placed under review
with negative implications.
The ratings of TSS and TSV reflect the group’s aggregate balance
sheet strength, which AM Best categorizes as very strong, as well
as its adequate operating performance, limited business profile and
appropriate enterprise risk management (ERM).
The group’s stable outlooks reflect some level of resilience of
the capital balances to withstand deployment to other areas of the
Triple-S organization while its core business of health insurance
add generally favorable earnings stability. AM Best expects the
margin from TSM’s managed care business to improve through
projected premium growth, specifically in Medicare Advantage
business, which is expected to increase driven by membership gains
in 2019. AM Best also expects TSV’s suite of life and ancillary
products to contribute to premium growth over the medium term.
Earnings from TSV favorably offset the managed care earnings
decline in 2018, which were due partially to unrealized losses from
the investment portfolio, higher utilization and the inclusion of
the health insurance fee. The Triple-S brand, market position in
key business segments, product offerings and network strength are
all favorable rating attributes; however, the Triple-S businesses
continue to operate in an environment still feeling the effects of
Hurricane Maria in more rural areas of Puerto Rico. More recently,
there are indicators showing migration off the island has somewhat
abated, and the economy is expected to benefit from federal relief
programs and rebuilding projects throughout fiscal-year 2019 and
into 2020.
The ratings of TSP reflect its balance sheet strength, which AM
Best categorizes as adequate, as well as its adequate operating
performance, limited business profile and marginal ERM.
AM Best assesses TSP’s balance sheet strength as adequate, based
on its strong risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR). It also reflects TSP’s prudent
investment portfolio, stable loss reserving trends (excluding
Hurricane Maria claims) and strong liquidity measures that are
enhanced by generally positive operating cash flows. The company’s
adequate operating performance reflects its consistently profitable
operating results, again excluding 2018. AM Best categorizes TSP’s
ERM assessment as marginal, as the risk management capabilities do
not align fully with the company’s risk profile. Demonstrated
weakness has been observed given the level of catastrophe losses
relative to prior reinsurance purchasing decisions for the
enterprise. While the losses associated with Hurricane Maria were
unprecedented in nature, the size of the loss lead to a marginal
assessment. While management has been refining and enhancing the
overall ERM framework and capabilities, the ultimate effectiveness
of these changes remains uncertain.
The ratings of TSB reflect its balance sheet strength, which AM
Best categorizes as adequate, as well as its marginal operating
performance, limited business profile and appropriate ERM. TSB’s
capital has been supported through capital contributions from
parent company, TSV. The company has not reported an operating
profit since reorganizing the company as TSB; however, its
projected trend of favorable premium growth and favorable earnings
projected over the medium term may lessen the need for parental
capital support.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Understanding Best’s Credit Ratings. For
information on the proper media use of Best’s Credit Ratings and AM
Best press releases, please view Guide for Media - Proper
Use of Best’s Credit Ratings and AM Best Rating Action Press
Releases.
AM Best is a global rating agency and information provider
with a unique focus on the insurance industry. Visit
www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20190522005788/en/
Wayne KaminskiSenior Financial Analyst—L/H+1
908 439 2200, ext. 5061wayne.kaminski@ambest.com
Brian O’LarteDirector—P/C+1 908 439 2200, ext.
5138brian.o'larte@ambest.com
Christopher SharkeyManager, Public Relations+1
908 439 2200, ext. 5159christopher.sharkey@ambest.com
Jim PeavyDirector, Public Relations+1 908 439
2200, ext. 5644james.peavy@ambest.com
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