SAN JUAN, Puerto Rico,
Feb. 28, 2019 /PRNewswire/
-- Triple-S Management Corporation (NYSE:GTS), a leading
managed care company in Puerto
Rico, today announced its fourth quarter 2018 results.
Quarterly Consolidated and Other Highlights
- Net loss of $10.9 million, or
$0.48 loss per share, versus net
income of $24.2 million, or
$1.03 per diluted share, in the
prior-year period; net loss in the fourth quarter of 2018 was
driven by net unrealized losses on equity investments and a change
in the effective tax rate of certain deferred tax
assets/liabilities, which together impacted after-tax results by
approximately $29.6 million, or
$1.30 per share;
- Adjusted net income of $10.1
million, or $0.44 per diluted
share, versus adjusted net income of $22.1
million, or $0.94 per diluted
share, in the prior-year period.
- Excluding the above mentioned deferred tax adjustment and the
cost of retroactive reinsurance, adjusted net income was
$17.8 million, or $0.78 per diluted share, compared to adjusted net
income of $15.2 million, or
$0.65 per diluted share, in the
fourth quarter of 2017, after excluding the impact of the
hurricanes in that period;
- Operating revenues of $723.7
million, a 2.4% increase from the prior-year period,
primarily reflecting higher Managed Care premiums;
- Consolidated loss ratio rose 270 basis points to 80.9%;
- Medical loss ratio ("MLR") rose 290 basis points to 83.8%,
primarily driven by lower Managed Care utilization in the 2017
period related to the hurricanes.
"The fourth quarter signaled a return to normalcy at Triple-S
after undergoing a couple of quarters of hurricane-related impact,"
said Roberto Garcia-Rodriguez,
President and Chief Executive Officer. "The financial results
of our core Managed Care segment continued improving, driven once
again by our Medicare Advantage offering. We have also fared
well under the revised Medicaid health plan, gaining a significant
amount of membership that was initially assigned to other
carriers. We completed a smooth transition to our new
consolidated pharmacy benefits manager. And perhaps most
importantly, there were no additional adverse reserve developments
in our P&C segment during the quarter."
"Looking forward, our overall strategy remains firmly on track,"
added Mr. Garcia-Rodriguez. "We are focused on growing our
market share in Medicare Advantage, buoyed by our 4.5-star quality
rating in our HMO product and 4.0-star quality rating in our PPO
product for payment year 2020. Additionally, we will
concentrate on further optimizing our infrastructure and developing
both analytical and clinical capabilities to accelerate our
top-line growth, generate operating efficiencies, improve patient
outcomes and create long-term value for our shareholders."
Selected Consolidated Quarterly Details
- Consolidated premiums earned were $702.3
million, up 2.2% from the prior-year period, primarily
reflecting higher Medicare premiums within the Managed Care segment
related to achieving a four-star rated Medicare Advantage HMO
contract in 2018, resulting in a 5% bonus applied to the benchmark
used in the premium calculation, as well as an increase in the 2018
Medicare reimbursement rates. The increase was partially offset by
lower membership.
- Consolidated claims incurred were $567.9
million, up 5.7% year-over-year, mostly driven by
significantly lower utilization experienced in the prior-year
period in the Managed Care segment following the hurricanes.
Consolidated loss ratio of 80.9% rose 270 basis points from the
prior-year period.
- Consolidated operating expenses of $145.9 million increased by $17.5 million, or 13.7%, from the prior-year
period, while the Company's operating expense ratio increased 210
basis points year-over-year to 20.7%. The increase in operating
expenses primarily reflects the reinstatement of the Health
Insurance Providers fee ("HIP fee") of $13.1
million, higher professional services expense related to the
Company's ongoing Managed Care initiatives, as well as
implementation costs related to the new Medicaid model that became
effective November 1, 2018.
- Consolidated income tax expense was $1.1
million, compared to $17.9
million in the prior-year period, primarily due to a change
in the effective tax rate of certain deferred tax liabilities in
the Company's Property and Casualty segment to reflect the expected
tax rate at which they will reverse, and a change in the enacted
tax rate, from 39% to 37.5%, following the Puerto Rico income tax reform enacted in
December 2018. These changes
increased the deferred tax expense by approximately $9.5 million. The consolidated income tax expense
also reflects the tax impact of net unrealized losses on equity
investments and the lower operating income of the Managed Care
segment.
Selected Managed Care Segment Quarterly Details
- Managed Care premiums earned were $643.1
million, up 1.5% year over year.
-
- Medicare premiums earned of $279.0
million increased 13.0% from the prior-year period, largely
reflecting an increase in Puerto
Rico's 2018 Medicare fee-for-service benchmark for the first
time since 2012, an increase in premium rates as the result of
attaining a four-star rating for the Company's 2018 HMO product,
and higher average membership risk score. These increases were
partially offset by a year-over-year decrease in member month
enrollment of approximately 33,000.
- Commercial premiums earned of $192.0
million declined 2.0% from the prior-year period, mainly due
to an approximate year-over-year decline of 38,000 in fully-insured
member month enrollment, and partially offset by the reinstatement
of the HIP fee pass-through and higher premium rates.
- Medicaid premiums earned decreased 9.9% from the prior-year
period to $172.1 million, primarily
reflecting a significant reduction in member month enrollment due
to the commencement of the new Medicaid contract on November 1, and partially offset by $3.6 million associated with the reinstatement of
the HIP fee pass-through in 2018. As of January 31, 2019, the Company had approximately
333,000 Medicaid members enrolled in the Company's program, which
is an increase of 53,000 members from the initial assignment of
approximately 280,000.
- Reported MLR of 83.8% increased 290 basis points from the prior
year, primarily reflecting lower utilization in the prior-year
period related to hurricanes. The impact of the hurricanes reduced
claims in the fourth quarter of 2017 by an estimated $20.7 million, or 320 basis points of MLR.
Excluding this impact on utilization, adjusting for prior period
reserve developments and moving risk-score revenue to its
corresponding period, Managed Care MLR would have been
approximately 85.1% in the fourth quarter of 2018, similar to the
same metric for the prior-year period.
2019 Outlook
The Company is initiating the following full year 2019
consolidated guidance:
- Consolidated operating revenue is expected to be between
$3.04 billion to $3.08 billion, which includes Managed Care
premiums earned, net between $2.71
billion and $2.75
billion;
- Consolidated claims incurred ratio is expected to be between of
81.3% and 83.3%, while the Managed Care MLR is expected to be
between 84.0% and 86.0%;
- Consolidated operating expense ratio is expected to be between
of 17.6% and 18.6%;
- The effective tax rate is expected to be between 25.0% and
30.0%; and
- Adjusted net income per diluted share is expected to be between
$1.85 to $2.05. Adjusted net income per diluted share
guidance does not account for any share repurchase activity during
2019.
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 December 31, 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
at least 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 March 14, 2019 by calling 1-844-512-2921 or
1-412-317-6671 and entering passcode 13687038. 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 60 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
- Adverse regulatory actions, including in connection with
operating challenges arising from the migration of our Medicare
Advantage claims and clinical management platforms
- 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 Supplemental
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
1,564,542
|
|
$
|
1,605,477
|
Cash and cash
equivalents
|
|
|
117,544
|
|
|
198,941
|
Premium and other
receivables, net
|
|
|
628,444
|
|
|
899,327
|
Deferred policy
acquisition costs and value of business acquired
|
|
215,159
|
|
|
200,788
|
Property and
equipment, net
|
|
|
81,923
|
|
|
74,716
|
Other
assets
|
|
|
152,636
|
|
|
137,516
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,760,248
|
|
$
|
3,116,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy liabilities
and accruals
|
|
$
|
1,600,310
|
|
$
|
1,761,553
|
Accounts payable and
accrued liabilities
|
|
|
309,747
|
|
|
410,457
|
Long-term
borrowings
|
|
|
28,883
|
|
|
32,073
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
1,938,940
|
|
|
2,204,083
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Common
stock
|
|
|
22,931
|
|
|
23,578
|
|
Other stockholders'
equity
|
|
|
799,053
|
|
|
889,786
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Triple-S
Management Corporation stockholders' equity
|
|
821,984
|
|
|
913,364
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest in consolidated subsidiary
|
|
|
(676)
|
|
|
(682)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
821,308
|
|
|
912,682
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
2,760,248
|
|
$
|
3,116,765
|
Exhibit II
Condensed
Consolidated Statements of Earnings
|
(dollar amounts in
thousands, except per share data)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Three
Months Ended December 31,
|
|
|
|
|
|
|
|
|
2018
|
2017
|
|
2018
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned,
net
|
|
$
|
702,342
|
$
|
687,443
|
|
$
|
2,938,591
|
$
|
2,826,932
|
|
Administrative
service fees
|
|
|
3,485
|
|
4,196
|
|
|
14,701
|
|
16,514
|
|
Net investment
income
|
|
|
16,279
|
|
14,506
|
|
|
61,909
|
|
51,615
|
|
Other operating
revenues
|
|
|
1,560
|
|
633
|
|
|
5,794
|
|
3,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenues
|
|
|
723,666
|
|
706,778
|
|
|
3,020,995
|
|
2,898,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment (losses) gains on sale of securities
|
|
|
(767)
|
|
2,688
|
|
|
298
|
|
10,831
|
|
Net unrealized
investment losses on equity investments
|
|
|
(25,203)
|
|
-
|
|
|
(36,546)
|
|
-
|
|
Other income,
net
|
|
|
7,712
|
|
12
|
|
|
11,312
|
|
6,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
705,408
|
|
709,478
|
|
|
2,996,059
|
|
2,916,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Claims
incurred
|
|
|
|
567,906
|
|
537,316
|
|
|
2,527,613
|
|
2,353,101
|
|
Operating
expenses
|
|
|
145,943
|
|
128,402
|
|
|
554,715
|
|
477,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs
|
|
|
713,849
|
|
665,718
|
|
|
3,082,328
|
|
2,830,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
1,388
|
|
1,678
|
|
|
6,903
|
|
6,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits and
expenses
|
|
|
715,237
|
|
667,396
|
|
|
3,089,231
|
|
2,837,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
taxes
|
|
|
(9,829)
|
|
42,082
|
|
|
(93,172)
|
|
78,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit) expense
|
|
|
1,078
|
|
17,874
|
|
|
(29,866)
|
|
24,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
|
(10,907)
|
|
24,208
|
|
|
(63,306)
|
|
54,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to the non-controlling interest
|
|
|
(5)
|
|
(3)
|
|
|
(4)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Triple-S Management Corporation
|
$
|
(10,902)
|
$
|
24,211
|
|
$
|
(63,302)
|
$
|
54,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Triple-S Management Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net (loss)
income per share
|
|
$
|
(0.48)
|
$
|
1.03
|
|
$
|
(2.76)
|
$
|
2.27
|
|
Diluted net (loss)
income per share
|
|
$
|
(0.48)
|
$
|
1.03
|
|
$
|
(2.76)
|
$
|
2.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average of
common shares
|
|
|
22,727,997
|
|
23,459,879
|
|
|
22,975,385
|
|
23,996,503
|
|
Diluted weighted
average of common shares
|
|
|
22,727,997
|
|
23,557,197
|
|
|
22,975,385
|
|
24,067,586
|
Exhibit III
Condensed
Consolidated Statements of Cash Flows
|
(dollar amounts in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve
Months Ended
December 31,
|
|
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
7,459
|
$
|
288,918
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Proceeds from
investments sold or matured:
|
|
|
|
|
|
|
|
Securities available
for sale:
|
|
|
|
|
|
|
|
|
Fixed maturities
sold
|
|
|
1,302,810
|
|
463,232
|
|
|
|
Fixed maturities
matured/called
|
|
|
24,945
|
|
18,893
|
|
|
Securities held to
maturity - fixed maturities matured/called
|
|
|
8,182
|
|
2,712
|
|
|
Equity investments
sold
|
|
|
203,841
|
|
59,963
|
|
|
Other invested assets
sold
|
|
|
3,714
|
|
-
|
|
Acquisition of
investments:
|
|
|
|
|
|
|
|
Securities available
for sale - fixed maturities
|
|
|
(1,343,346)
|
|
(560,304)
|
|
|
Securities held to
maturity - fixed maturities
|
|
|
(8,356)
|
|
(2,197)
|
|
|
Equity
investments
|
|
|
(156,486)
|
|
(134,834)
|
|
|
Other invested
assets
|
|
|
(47,221)
|
|
-
|
|
Increase in other
investments
|
|
|
(705)
|
|
(2,064)
|
|
Net change in policy
loans
|
|
|
(392)
|
|
(513)
|
|
Net capital
expenditures
|
|
|
(19,840)
|
|
(21,359)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
|
(32,854)
|
|
(176,471)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Change in outstanding
checks in excess of bank balances
|
|
|
(22,243)
|
|
12,683
|
|
Repayments of
long-term borrowings
|
|
|
(3,236)
|
|
(2,836)
|
|
Net proceeds from
revolving line of credit
|
|
|
-
|
|
1,964
|
|
Repurchase and
retirement of common stock
|
|
|
(22,377)
|
|
(20,220)
|
|
Proceeds from
policyholder deposits
|
|
|
18,531
|
|
13,557
|
|
Surrender of
policyholder deposits
|
|
|
(26,677)
|
|
(22,082)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
financing activities
|
|
|
(56,002)
|
|
(16,934)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
|
(81,397)
|
|
95,513
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
198,941
|
|
103,428
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
117,544
|
$
|
198,941
|
Exhibit IV
Segment Performance Supplemental Information
(Unaudited)
|
|
Three months ended
December 31,
|
|
Twelve months
ended December 31,
|
(dollar amounts in
millions)
|
2018
|
2017
|
Percentage
Change
|
|
2018
|
2017
|
Percentage
Change
|
Premiums earned,
net:
|
|
|
|
|
|
|
|
|
Managed
Care:
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
192.0
|
$
195.9
|
(2.0%)
|
|
$
782.8
|
$
803.3
|
(2.5%)
|
|
|
Medicare
|
279.0
|
246.8
|
13.0%
|
|
1,130.2
|
1,035.3
|
9.2%
|
|
|
Medicaid
|
172.1
|
191.1
|
(9.9%)
|
|
776.0
|
751.4
|
3.3%
|
|
|
|
Total Managed
Care
|
643.1
|
633.8
|
1.5%
|
|
2,689.1
|
2,590.0
|
3.8%
|
|
Life
Insurance
|
43.4
|
40.4
|
7.4%
|
|
168.6
|
161.8
|
4.2%
|
|
Property and
Casualty
|
16.4
|
13.8
|
19.0%
|
|
83.5
|
77.2
|
8.2%
|
|
Other
|
|
|
(0.6)
|
(0.6)
|
0.2%
|
|
(2.6)
|
(2.1)
|
(23.3%)
|
|
|
|
|
Consolidated premiums
earned, net
|
$
702.3
|
$
687.4
|
2.2%
|
|
$ 2,938.6
|
$
2,826.9
|
4.0%
|
Operating revenues
(loss): 1
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
654.2
|
$
643.6
|
1.6%
|
|
2,732.0
|
$
2,628.2
|
3.9%
|
|
Life
Insurance
|
50.0
|
46.7
|
7.0%
|
|
194.2
|
186.6
|
4.1%
|
|
Property and
Casualty
|
19.5
|
17.1
|
14.0%
|
|
94.3
|
86.7
|
8.8%
|
|
Other
|
|
|
0.0
|
(0.6)
|
105.3%
|
|
0.4
|
(2.8)
|
116.0%
|
|
|
|
|
Consolidated
operating revenues
|
$
723.7
|
$
706.8
|
2.4%
|
|
$
3,021.0
|
$
2,898.7
|
4.2%
|
Operating income
(loss): 2
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
0.2
|
$
35.9
|
(99.4%)
|
|
$
26.5
|
$
55.0
|
(51.9%)
|
|
Life
Insurance
|
5.3
|
$
6.0
|
(12.3%)
|
|
19.9
|
19.4
|
2.6%
|
|
Property and
Casualty
|
4.7
|
$
(0.8)
|
687.6%
|
|
(110.1)
|
(6.0)
|
(1735.3%)
|
|
Other
|
|
|
(0.4)
|
-
|
(100.0%)
|
|
2.4
|
-
|
100.0%
|
|
|
|
|
Consolidated
operating income (loss)
|
$
9.8
|
$
41.1
|
(76.1%)
|
|
$
(61.3)
|
$
68.4
|
(189.7%)
|
Operating margin:
3
|
|
|
|
|
|
|
|
|
Managed
Care
|
0.0%
|
5.6%
|
-560 bp
|
|
1.0%
|
2.1%
|
-110 bp
|
|
Life
Insurance
|
10.5%
|
12.8%
|
-230 bp
|
|
10.2%
|
10.4%
|
-20 bp
|
|
Property and
Casualty
|
24.1%
|
(4.7%)
|
2,880 bp
|
|
(116.7%)
|
(6.9%)
|
-10,980 bp
|
|
Consolidated
|
1.4%
|
5.8%
|
-440 bp
|
|
(2.0%)
|
2.4%
|
-440 bp
|
Depreciation and
amortization expense
|
$
3.6
|
$
3.4
|
5.9%
|
|
$
13.5
|
$
13.2
|
2.5%
|
|
|
|
1 Operating revenues include premiums
earned, net, administrative service fees and net investment
income.
|
2 Operating income or loss include
operating revenues minus operating costs. Operating costs include
claims incurred and operating expenses.
|
3 Operating margin is defined as
operating income or loss divided by operating revenues.
|
Additional
Data
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
(Unaudited)
|
|
2018
|
2017
|
|
2018
|
2017
|
Managed
Care
|
|
|
|
|
|
Member months
enrollment:
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
Fully-insured
|
|
|
934,557
|
972,095
|
|
3,775,441
|
3,981,347
|
Self-insured
|
|
|
414,975
|
463,385
|
|
1,732,219
|
1,967,668
|
Total
Commercial
|
|
|
|
1,349,532
|
1,435,480
|
|
5,507,660
|
5,949,015
|
Medicare
Advantage
|
|
|
|
|
328,998
|
362,277
|
|
1,337,061
|
1,457,363
|
Medicaid
|
|
|
990,933
|
1,150,791
|
|
4,555,702
|
4,631,316
|
Total
member months
|
|
|
|
|
2,669,463
|
2,948,548
|
|
11,400,423
|
12,037,694
|
Claim liabilities
(in millions)
|
|
|
|
$
394.2
|
$
367.4
|
Days claim
payable
|
|
|
|
63
|
60
|
Premium
PMPM:
|
|
|
|
|
|
Managed Care
|
|
$
285.26
|
$
255.03
|
|
$
278.14
|
$
257.20
|
Commercial
|
|
|
205.47
|
201.52
|
|
207.34
|
201.77
|
Medicare
Advantage
|
|
|
847.89
|
681.25
|
|
845.31
|
710.39
|
Medicaid
|
|
|
173.71
|
166.06
|
|
170.34
|
162.24
|
|
|
|
|
|
|
Medical loss
ratio:
|
83.8%
|
80.9%
|
|
84.5%
|
85.6%
|
Commercial
|
|
83.6%
|
72.5%
|
|
82.4%
|
77.5%
|
Medicare
Advantage
|
|
79.7%
|
82.3%
|
|
83.2%
|
87.7%
|
Medicaid
|
|
|
90.7%
|
87.6%
|
|
88.5%
|
91.5%
|
|
|
|
|
|
|
Adjusted medical loss
ratio: 1
|
85.1%
|
81.9%
|
|
84.9%
|
85.5%
|
Commercial
|
|
83.6%
|
71.8%
|
|
83.4%
|
76.7%
|
Medicare
Advantage
|
|
82.6%
|
84.2%
|
|
83.9%
|
87.9%
|
Medicaid
|
|
|
90.7%
|
89.4%
|
|
87.8%
|
91.7%
|
|
|
|
|
|
|
Adjusted medical loss
ratio excluding impact of hurricanes: 2
|
85.1%
|
85.1%
|
|
84.9%
|
87.6%
|
Commercial
|
|
83.6%
|
77.4%
|
|
83.4%
|
80.1%
|
Medicare
Advantage
|
|
82.6%
|
87.7%
|
|
83.9%
|
90.3%
|
Medicaid
|
|
|
90.7%
|
89.9%
|
|
87.8%
|
92.0%
|
Consolidated loss
ratio:
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
|
|
|
80.9%
|
78.2%
|
|
86.0%
|
83.2%
|
Adjusted loss ratio
1
|
|
|
|
|
|
82.0%
|
79.1%
|
|
86.4%
|
83.1%
|
Adjusted loss ratio
excluding impact of hurricanes 3
|
|
81.5%
|
81.3%
|
|
81.8%
|
84.2%
|
Property and Casualty
loss ratio:
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
|
|
|
29.3%
|
52.3%
|
|
191.4%
|
65.7%
|
Loss ratio excluding
impact of hurricanes 4
|
|
23.0%
|
32.1%
|
|
35.2%
|
41.6%
|
Operating expense
ratio:
|
|
|
|
|
|
Consolidated
|
|
20.7%
|
18.6%
|
|
18.8%
|
16.8%
|
Managed Care
|
|
17.8%
|
14.9%
|
|
16.0%
|
13.6%
|
|
1 The
adjusted medical loss ratio and adjusted consolidated loss ratio
accounts for subsequent adjustments to estimates, such as
prior-period reserve developments and Medicare premium adjustments,
and presents then in their corresponding period.
|
2 The
adjusted medical loss ratio excluding impact of hurricanes accounts
for subsequent adjustments to estimates, such as prior-period
reserve developments and Medicare premium adjustments, and presents
them in the corresponding period, as well as adjusts the 2017
periods for the estimated impact in utilization following the
hurricanes.
|
3 The
consolidated loss ratio excluding impact of hurricanes accounts for
the Managed Care segment's subsequent adjustments to estimates,
such as prior-period reserve developments and Medicare premium
adjustments, and presents them in the corresponding period, as well
as adjusts the 2017 period for the estimated impact in utilization
following the hurricanes. In addition, it excludes the
adverse reserve development experienced in the Property and
Casualty segment in 2018 periods as well as the net retained losses
incurred in the 2017 period.
|
4 The
Property and Casualty loss ratio excluding impact of hurricanes
excludes the adverse reserve development experienced by this
segment in 2018 periods as well as the net retained losses incurred
in the 2017 period.
|
Exhibit V
Reconciliation of Non-GAAP Financial Measures
|
|
|
|
|
|
Adjusted Net
(Loss) Income
|
(Unaudited)
|
Three months
ended
December
31,
|
Twelve months
ended
December 31,
|
(dollar amounts in
millions)
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Net (loss)
income
|
$
(10.9)
|
$
24.2
|
|
$
(63.3)
|
$
54.5
|
Less
adjustments:
|
|
|
|
|
|
|
Net realized
investment (losses) gains, net of tax
|
(0.6)
|
2.2
|
|
0.2
|
8.7
|
|
Unrealized (losses)
on equity investments
|
(20.2)
|
-
|
|
(29.2)
|
-
|
|
Private equity
investment (loss) income, net of tax
|
(0.2)
|
(0.1)
|
|
1.0
|
0.3
|
|
|
Adjusted net income
(loss)
|
$
10.1
|
$
22.1
|
|
$
(35.3)
|
$
45.5
|
|
|
Adjusted
net income per share
|
$
0.44
|
$
0.94
|
|
$
(1.54)
|
$
1.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income (Loss) and Operating Income
|
|
|
|
|
|
|
(Loss) Excluding Hurricanes
Impact
|
(Unaudited)
|
|
Three months
ended
|
Twelve months
ended
|
|
|
|
|
|
|
December 31,
|
December 31,
|
(dollar amounts in
millions)
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Adjusted net (loss)
income
|
$
10.1
|
$
22.1
|
|
$
(35.3)
|
$
45.5
|
Less hurricanes
impact:
|
|
|
|
|
|
|
2018 Property and
Casualty Hurricane Maria unfavorable prior period
|
|
|
|
|
|
|
|
reserve development,
net of tax
|
-
|
-
|
|
(85.5)
|
-
|
|
Net of tax impact of
retroactive reinsurance agreement and
|
|
|
|
|
|
|
|
hurricane-related tax
adjustment
|
(7.7)
|
-
|
|
(7.7)
|
-
|
|
2017 Hurricanes
impact in Managed Care segment, net of tax
|
-
|
12.2
|
|
-
|
31.4
|
|
2017 Hurricanes Irma
and Maria net retained losses in Property and
|
|
|
|
|
|
|
|
Casualty segment, net
of tax
|
-
|
(5.3)
|
|
-
|
(19.2)
|
|
|
Adjusted net income
excluding hurricanes impact
|
|
|
|
$
17.8
|
$
15.2
|
|
$
57.9
|
$
33.3
|
|
|
Adjusted net income
per share excluding
|
|
|
|
|
|
|
|
hurricanes impacts
|
|
|
$
0.78
|
$
0.65
|
|
$
2.52
|
$
1.38
|
|
|
|
|
|
|
Operating income
(loss)
|
$
9.8
|
$
41.1
|
|
$
(61.3)
|
$
68.4
|
Less hurricanes
impact:
|
|
|
|
|
|
|
2018 Property and
Casualty Hurricane Maria unfavorable prior period
|
|
|
|
|
|
|
|
reserve
development
|
-
|
-
|
|
(128.7)
|
-
|
|
Impact of retroactive
reinsurance agreement
|
(5.0)
|
-
|
|
(5.0)
|
-
|
|
2017 Hurricanes
impact in Managed Care segment
|
-
|
21.5
|
|
-
|
52.9
|
|
2017 Hurricanes Irma
and Maria net retained losses in Property and
|
|
|
|
|
|
|
|
Casualty
segment
|
-
|
(7.1)
|
|
-
|
(24.4)
|
|
|
Operating Income excluding hurricanes impact
|
$
14.8
|
$
26.7
|
|
$
72.4
|
$
39.9
|
|
|
|
|
|
|
|
|
|
|
|
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 of Hurricane Maria reserves recognized
by the Property and Casualty segment in the 2018 periods and the
estimated hurricane-related impact in the Managed Care and Property
and Casualty segments in the 2017 period 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.
|
FOR FURTHER
INFORMATION:
|
|
|
|
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