SAN JUAN, Puerto Rico,
Nov. 8, 2018 /PRNewswire/ -- Triple-S
Management Corporation (NYSE: GTS), a leading managed care company
in Puerto Rico, today announced
its third quarter 2018 results.
Quarterly Consolidated and Other Highlights
- During the third quarter of 2018, the Company recorded
approximately $52.3 million of
unfavorable prior period reserve development (approximately
$35.9 million after-tax impact, or
$1.57 per share) as the Property and
Casualty segment received additional claim information related to
Hurricane Maria that merited increases to its already reported
gross reserves;
- Net loss of $17.6 million, or
$0.77 loss per share, versus net
income of $21.9 million, or
$0.91 per diluted share, in the
prior-year period;
- Adjusted net loss of $22.2
million, or $0.97 loss per
share, versus adjusted net income of $18.7 million, or $0.77 per diluted share, a year ago, mostly
reflecting the after-tax impact of the unfavorable reserve
development in the Property and Casualty segment related to
Hurricane Maria claims;
- Adjusted net income for the third quarter of 2018, excluding
the impact of the Property and Casualty segment unfavorable
development, would have been $13.7 million, or $0.60 per diluted share. Adjusted net
income excluding the estimated favorable hurricane-related impact
in the Managed Care segment's utilization and the hurricane-related
net retained losses recognized by the Property and Casualty segment
for the 2017 quarter would have been $13.4
million, or $0.55 per diluted
share;
- Operating revenues of $764.0
million, a 4.5% increase from the prior-year period,
reflecting higher Managed Care premiums;
- Consolidated loss ratio rose 570 basis points to 87.4%,
primarily driven by the unfavorable reserve development related to
Hurricane Maria claims recognized by the Property and Casualty
segment;
- Medical loss ratio ("MLR") rose 80 basis points to 83.2%,
primarily driven by hurricane-related lower Managed Care
utilization in the 2017 period, offset in part by higher average
premium rates in 2018;
- Consolidated operating loss of $25.6
million compared to operating income of $28.3 million in the prior-year period;
- Under the Company's share repurchase program, during the third
quarter of 2018, 259,925 shares were repurchased at an aggregate
cost of $6.0 million. As of
November 7, 2018, $12.5 million remains available in the
program.
"Our third quarter results saw continued improvement in our core
Managed Care segment, but were clearly impacted by an additional
unfavorable prior period reserve development at our Property and
Casualty segment, reflecting a significant increase in new claims
and claim amendments received shortly before Hurricane Maria's
first anniversary," said Roberto
Garcia-Rodriguez, President and Chief Executive
Officer. "New claims jumped from a three-month average of 160
in June, July and August to 613 in September, and have since
declined sharply to approximately 40 in October – signaling that
September was an outlier rooted in the belief among many that they
had up to a year after the event to file their claims."
"In response to the material increase in estimated gross losses,
we recently purchased a multi-year retroactive and prospective
reinsurance contract at rates significantly better than those that
we were quoted during the second quarter," continued Mr.
Garcia-Rodriguez. "The retroactive reinsurance provides us
with several benefits – it improves our P&C segment's statutory
capital and surplus as well as its risk-based capital ratio, and it
reduces the amount of additional capital infusion required into the
segment, allowing us to preserve capital at the holding company to
continue investing in strategic priorities. Furthermore, the
prospective reinsurance locks in pricing for $180 million of catastrophe protection for the
next five years. Importantly, while reserves can continue to
shift, we believe that we will not experience additional
significant loss reserve developments going forward, based on the
additional reserve taken in the third quarter, the sharp reduction
of new claims in October, the number of cases closed and the status
of individual case reserves."
"With respect to Managed Care, our long-term strategy remains
firmly on track," added Mr. Garcia-Rodriguez. "Most
importantly, we are excited that our 2019 Medicare Advantage HMO
contract was recently upgraded to a 4.5-star quality rating for
payment year 2020, confirming the effectiveness of our clinical,
analytical and contracting initiatives. The plan to
consolidate our prescription drug benefits under one pharmacy
benefits manager by January 2019 is
well underway, and is expected to create future operational
efficiencies and cost savings. In addition, the new model for
the Puerto Rico government health
plan was launched last week, and while it's still very early in the
open-enrollment period, we are seeing encouraging signals from our
points of sales and service, suggesting that Medicaid members
recognize the value of the Triple-S brand, the breadth of our
network and the quality of our services. Finally, we continue
to modernize our infrastructure and strengthen our clinic network
to support sustainable growth, expand our margins and create
long-term value for our shareholders."
Selected Consolidated Quarterly Details
- Consolidated premiums earned were $742.4
million, up 3.9% from the prior-year period, primarily
reflecting higher Medicaid and Medicare premiums within the Managed
Care segment. Growth in Medicaid premiums mostly reflects an
increase in membership. In the Medicare business, premiums
increased due to the Company's achievement of a four-star rated
Medicare Advantage HMO contract this year, resulting in a 5% bonus
applied to the benchmark used in the premium calculation, as well
as an increase in the 2018 Medicare reimbursement rates. These
increases were partially offset by lower Commercial and Medicare
membership.
- Consolidated claims incurred were $648.6
million, up 11.1% year-over-year, mostly driven by
$52.3 million in unfavorable prior
period reserve development in the Property and Casualty segment
related to Hurricane Maria, as well as significantly lower Managed
Care utilization following the hurricanes that occurred in the
prior-year period. During the third quarter of 2018, the Property
and Casualty segment received significant new claims and additional
information on existing claims related to Hurricane Maria, which
resulted in the additional unfavorable prior period reserve
development. Consolidated loss ratio of 87.4% rose 570 basis points
from the prior-year period, primarily driven by this
development.
- Consolidated operating expenses of $141.0 million increased by $21.8 million, or 18.3%, from the prior-year
period, while the Company's operating expense ratio increased 230
basis points year-over-year to 18.9%. The increase in operating
expenses primarily reflected the reinstatement of the Health
Insurance Providers fee ("HIP fee") of $13.1
million, higher professional services and personnel costs
related to the Company's ongoing Managed Care initiatives, and
implementation costs related to the new Medicaid model that became
effective November 1, 2018.
- Consolidated income tax benefit was $3.4
million, compared to an expense of $11.8 million in the prior-year period, primarily
reflecting losses in the Property and Casualty segment.
Selected Managed Care Segment Quarterly Details
- Managed Care premiums earned were $680.7
million, up 4.1% year over year.
-
- Medicare premiums earned of $283.6
million increased 7.3% 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 the four-star
rating in the Company's 2018 HMO product, and higher average
membership risk score. These increases were partially offset by a
decrease in member month enrollment of approximately 33,000.
- Medicaid premiums earned improved 4.7% from the prior-year
period to $199.8 million, primarily
reflecting an increase of 54,000 in member month enrollment,
$8.7 million of additional premiums
related to the achievement of the contract's quality incentive
metrics, and $3.6 million associated
with the reinstatement of the HIP fee pass-through in 2018. These
increases were partially offset by the impact of the profit sharing
accrual, which decreased 2018 premiums by approximately
$5.6 million.
- Commercial premiums earned of $197.3
million declined 0.8% from the prior-year period, mainly due
to an approximate decline of 55,000 in fully-insured member month
enrollment, and partially offset by the reinstatement of the HIP
fee pass-through and higher premium rates.
- Reported MLR of 83.2% increased 80 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 third quarter of 2017 by an estimated $32.9 million, or 500 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 84.1% in the third quarter of 2018, 110 basis points
lower than the prior-year period.
Subsequent Event
On November 2, 2018, the Company's
Property and Casualty subsidiary entered into a multi-year high
excess cover reinsurance agreement that includes both retroactive
and prospective covers. The agreement is effective from
April 1, 2018 until March 31, 2023. The retroactive portion is an
adverse development reinsurance cover providing for $50 million of coverage in excess of the
$76.5 million second quarter adverse
reserve development. The prospective portion of the agreement
provides catastrophe umbrella coverage for a five-year period
ending March 31, 2023.
2018 Outlook
The Company is maintaining its full year 2018 directional
guidance for its Managed Care Commercial and Medicare Advantage
membership and adjusting its expected Medicare MLR guidance, while
raising directional guidance for premiums earned in its Life
Insurance segment. More specifically:
- In the Commercial business, the Company continues to expect
full-year at-risk member month enrollment between 3.7 million and
3.8 million, and full-year MLR between 80.5% and 82.5%.
- In the Medicare Advantage business, the Company continues to
expect full year member month enrollment to be between 1.25 million
and 1.35 million, and now expects full year MLR for 2018 between
84% and 86%, an improvement from the previous expectation of 85% to
87%.
- The Company has raised expectations for Life insurance premiums
earned for 2018 between $165 million
and $167 million. The Company's
previous outlook for Life insurance 2018 premiums earned was
between $160 million and $164 million.
- The Company continues to expect Property and Casualty premiums
earned for 2018 between $82 million
and $86 million.
- Finally, the Company's expectation for consolidated operating
expenses for the full year 2018 are now between $550 million and $555
million, mostly reflecting higher expenses related to the
Medicare open enrollments and implementation expenses of the new
Medicaid model. The Company's previous outlook was for
consolidated operating expenses for full year 2018 between
$530 million and $545 million.
Conference Call and Webcast
Management will host a conference call and webcast today at
8:30 a.m. Eastern Time to discuss its
financial results for the three months ended September 30, 2018. To participate, callers
within the U.S. and Canada should
dial 1-800-479-1004 and international callers should dial
1-323-794-2597 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 November 22, 2018 by calling 1-844-512-2921 or
1-412-317-6671 and entering passcode 5201960. A replay will also be
available at www.triplesmanagement.com for 30 days.
About Triple-S Management Corporation
Triple-S Management Corporation is an independent licensee of
the Blue Cross Blue Shield Association. It is one of the leading
players in the managed care industry in Puerto Rico. Triple-S Management has the
exclusive right to use the Blue Cross Blue Shield name and mark
throughout Puerto Rico, the
U.S. Virgin Islands, and
Costa Rica. With more than 55
years of experience in the industry, Triple-S Management offers a
broad portfolio of managed care and related products in the
Commercial, Medicare Advantage, and Medicaid markets under the Blue
Cross Blue Shield marks. It also provides non-Blue Cross Blue
Shield branded life and property and casualty insurance in
Puerto Rico. For more information
about Triple-S Management, visit www.triplesmanagement.com or
contact investorrelations@ssspr.com.
Non-GAAP Financial Measures
This earnings release presents information about the Company's
adjusted net income, which is a non-GAAP financial metric provided
as a complement to the results provided in accordance with
accounting principles generally accepted in the United States of America (GAAP). A
reconciliation of adjusted net income to net income, the most
comparable GAAP financial measure, is provided in the accompanying
tables found at the end of this release.
Forward-Looking Statements
This document contains forward-looking statements, as defined in
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include information about possible or
assumed future sales, results of operations, developments,
regulatory approvals or other circumstances. Sentences that include
"believe", "expect", "plan", "intend", "estimate", "anticipate",
"project", "may", "will", "shall", "should" and similar
expressions, whether in the positive or negative, are intended to
identify forward-looking statements.
All forward-looking statements in this news release reflect
management's current views about future events and are based on
assumptions and subject to risks and uncertainties. Consequently,
actual results may differ materially from those expressed here as a
result of various factors, including all the risks discussed and
identified in public filings with the U.S. Securities and Exchange
Commission (SEC).
In addition, the Company operates in a highly competitive,
constantly changing environment, influenced by very large
organizations that have resulted from business combinations,
aggressive marketing and pricing practices of competitors, and
regulatory oversight. The following factors, if markedly different
from the Company's planning assumptions (either individually or in
combination), could cause Triple-S Management's results to differ
materially from those expressed in any forward-looking statements
shared here:
- Trends in health care costs and utilization rates
- Ability to secure sufficient premium rate increases
- Competitor pricing below market trends of increasing costs
- Re-estimates of policy and contract liabilities
- Changes in government laws and regulations of managed care,
life insurance or property and casualty insurance
- Significant acquisitions or divestitures by major
competitors
- Introduction and use of new prescription drugs and
technologies
- A downgrade in the Company's financial strength ratings
- A downgrade in the Government of Puerto Rico's debt
- Litigation or legislation targeted at managed care, life
insurance or property and casualty insurance companies
- Ability to contract with providers consistent with past
practice
- Ability to successfully implement the Company's disease
management, utilization management and Star ratings programs
- Ability to maintain Federal Employees, Medicare and Medicaid
contracts
- Volatility in the securities markets and investment losses and
defaults
- General economic downturns, major disasters, and epidemics
This list is not exhaustive. Management believes the
forward-looking statements in this release are reasonable. However,
there is no assurance that the actions, events or results
anticipated by the forward-looking statements will occur or, if any
of them do, what impact they will have on the Company's results of
operations or financial condition. In view of these uncertainties,
investors should not place undue reliance on any forward-looking
statements, which are based on current expectations. In addition,
forward-looking statements are based on information available the
day they are made, and (other than as required by applicable law,
including the securities laws of the
United States) the Company does not intend to update or
revise any of them in light of new information or future
events.
Readers are advised to carefully review and consider the various
disclosures in the Company's SEC reports.
Earnings Release Schedules and Supplementary
Information
Condensed
Consolidated Balance
Sheets......................................................................................
Exhibit I
|
Condensed
Consolidated Statements of
Earnings.........................................................................
Exhibit II
|
Condensed
Consolidated Statements of Cash
Flows....................................................................
Exhibit III
|
Segment Performance
Supplemental
Information.........................................................................
Exhibit IV
|
Reconciliation of
Non-GAAP Financial
Measures...........................................................................
Exhibit V
|
Exhibit I
Condensed
Consolidated Balance Sheets
|
(dollar amounts in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
1,615,707
|
|
$
|
1,605,477
|
Cash and cash
equivalents
|
|
|
107,091
|
|
|
198,941
|
Premium and other
receivables, net
|
|
|
632,897
|
|
|
899,327
|
Deferred policy
acquisition costs and value of business acquired
|
|
209,205
|
|
|
200,788
|
Property and
equipment, net
|
|
|
78,445
|
|
|
74,716
|
Other
assets
|
|
|
175,083
|
|
|
137,516
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,818,428
|
|
$
|
3,116,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy liabilities
and accruals
|
|
$
|
1,688,030
|
|
$
|
1,761,553
|
Accounts payable and
accrued liabilities
|
|
|
280,879
|
|
|
410,457
|
Long-term
borrowings
|
|
|
29,681
|
|
|
32,073
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
1,998,590
|
|
|
2,204,083
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Common
stock
|
|
|
22,937
|
|
|
23,578
|
Other
stockholders' equity
|
|
|
797,572
|
|
|
889,786
|
|
|
|
|
|
|
|
|
|
|
Total Triple-S
Management Corporation stockholders' equity
|
|
820,509
|
|
|
913,364
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest in consolidated subsidiary
|
|
|
(671)
|
|
|
(682)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
819,838
|
|
|
912,682
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
2,818,428
|
|
$
|
3,116,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit II
Condensed
Consolidated Statements of Earnings
|
(dollar amounts in
thousands, except per share data)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Nine
Months Ended
|
|
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
earned, net
|
|
$
|
742,445
|
|
$
|
714,325
|
|
$
|
$
2,236,249
|
|
$
|
2,139,489
|
Administrative service fees
|
|
|
3,802
|
|
|
3,391
|
|
|
11,216
|
|
|
12,318
|
Net
investment income
|
|
|
16,168
|
|
|
12,395
|
|
|
45,630
|
|
|
37,109
|
Other
operating revenues
|
|
|
1,575
|
|
|
941
|
|
|
4,234
|
|
|
3,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenues
|
|
|
763,990
|
|
|
731,052
|
|
|
2,297,329
|
|
|
2,191,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
realized investment (losses) gains on sale of securities
|
|
|
(956)
|
|
|
3,753
|
|
|
1,065
|
|
|
8,143
|
Net
unrealized investment gains (losses) on equity
investments
|
|
|
5,632
|
|
|
-
|
|
|
(11,343)
|
|
|
-
|
Other
income, net
|
|
|
1,943
|
|
|
3,409
|
|
|
3,600
|
|
|
6,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
770,609
|
|
|
738,214
|
|
|
2,290,651
|
|
|
2,206,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims
incurred
|
|
|
|
648,580
|
|
|
583,625
|
|
|
1,959,707
|
|
|
1,815,785
|
Operating expenses
|
|
|
141,026
|
|
|
119,145
|
|
|
408,772
|
|
|
348,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs
|
|
|
789,606
|
|
|
702,770
|
|
|
2,368,479
|
|
|
2,164,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
2,000
|
|
|
1,709
|
|
|
5,515
|
|
|
5,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits and
expenses
|
|
|
791,606
|
|
|
704,479
|
|
|
2,373,994
|
|
|
2,169,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
taxes
|
|
|
(20,997)
|
|
|
33,735
|
|
|
(83,343)
|
|
|
36,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit) expense
|
|
|
(3,430)
|
|
|
11,824
|
|
|
(30,944)
|
|
|
6,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
|
(17,567)
|
|
|
21,911
|
|
|
(52,399)
|
|
|
30,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income attributable to the non-controlling
interest
|
|
|
-
|
|
|
(1)
|
|
|
1
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Triple-S Management Corporation
|
$
|
(17,567)
|
|
$
|
21,912
|
|
$
|
(52,400)
|
|
$
|
30,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Triple-S Management Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
net (loss) income per share
|
|
$
|
(0.77)
|
|
$
|
0.91
|
|
$
|
(2.27)
|
|
$
|
1.25
|
Diluted
net (loss) income per share
|
|
$
|
(0.77)
|
|
$
|
0.91
|
|
$
|
(2.27)
|
|
$
|
1.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average of common shares
|
|
|
22,895,582
|
|
|
24,142,192
|
|
|
23,058,754
|
|
|
24,177,344
|
Diluted
weighted average of common shares
|
|
|
22,895,582
|
|
|
24,208,022
|
|
|
23,058,754
|
|
|
24,231,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit III
Condensed
Consolidated Statements of Cash Flows
|
(dollar amounts in
thousands)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine
Months Ended
|
|
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
$
|
(3,928)
|
|
$
|
191,849
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Proceeds
from investments sold or matured:
|
|
|
|
|
|
|
Securities available
for sale:
|
|
|
|
|
|
|
Fixed maturities sold
|
|
|
1,042,720
|
|
|
287,223
|
Fixed maturities matured/called
|
|
|
18,133
|
|
|
15,503
|
Securities held to
maturity - fixed maturities matured/called
|
|
|
2,066
|
|
|
1,546
|
Equity investments
sold
|
|
|
150,024
|
|
|
38,318
|
Other invested assets
sold
|
|
|
2,040
|
|
|
-
|
Acquisition of investments:
|
|
|
|
|
|
|
Securities available
for sale - fixed maturities
|
|
|
(1,113,587)
|
|
|
(260,538)
|
Securities held to
maturity - fixed maturities
|
|
|
(2,238)
|
|
|
(1,550)
|
Equity
investments
|
|
|
(113,108)
|
|
|
(75,507)
|
Other invested
assets
|
|
|
(38,501)
|
|
|
-
|
Increase in other
investments
|
|
|
(144)
|
|
|
(2,207)
|
Net change in policy
loans
|
|
|
(603)
|
|
|
(696)
|
Net capital
expenditures
|
|
|
(12,315)
|
|
|
(15,949)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(65,513)
|
|
|
(13,857)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Change
in outstanding checks in excess of bank balances
|
|
|
9,104
|
|
|
8,371
|
Repayments of long-term borrowings
|
|
|
(2,427)
|
|
|
(2,028)
|
Repurchase and retirement of common stock
|
|
|
(22,390)
|
|
|
(12,553)
|
Proceeds
from policyholder deposits
|
|
|
14,726
|
|
|
12,130
|
Surrender of policyholder deposits
|
|
|
(21,422)
|
|
|
(17,398)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(22,409)
|
|
|
(11,478)
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
(91,850)
|
|
|
166,514
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
198,941
|
|
|
103,428
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
107,091
|
|
$
|
269,942
|
|
|
|
|
|
|
|
|
|
|
Exhibit IV
Segment Performance Supplemental Information
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
(dollar amounts in
millions)
|
2018
|
2017
|
Percentage
Change
|
|
2018
|
2017
|
Percentage
Change
|
Premiums earned,
net:
|
|
|
|
|
|
|
|
|
Managed
Care:
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
197.3
|
$
198.9
|
(0.8%)
|
|
$
590.8
|
$
607.4
|
(2.7%)
|
|
|
Medicare
|
283.6
|
264.3
|
7.3%
|
|
851.3
|
788.5
|
8.0%
|
|
|
Medicaid
|
199.8
|
190.9
|
4.7%
|
|
603.9
|
560.3
|
7.8%
|
|
|
|
Total Managed
Care
|
680.7
|
654.1
|
4.1%
|
|
2,046.0
|
1,956.2
|
4.6%
|
|
Life
Insurance
|
42.3
|
40.9
|
3.4%
|
|
125.1
|
121.4
|
3.0%
|
|
Property and
Casualty
|
20.2
|
19.9
|
1.5%
|
|
67.1
|
63.4
|
5.8%
|
|
Other
|
|
|
(0.8)
|
(0.6)
|
(33.3%)
|
|
(1.9)
|
(1.5)
|
(26.7%)
|
|
|
|
|
Consolidated premiums
earned, net
|
$
742.4
|
$
714.3
|
3.9%
|
|
$
2,236.3
|
$
2,139.5
|
4.5%
|
Operating revenues
(loss): 1
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
692.4
|
$
663.0
|
4.4%
|
|
2,077.8
|
$
1,984.6
|
4.7%
|
|
Life
Insurance
|
48.7
|
47.0
|
3.6%
|
|
144.2
|
139.9
|
3.1%
|
|
Property and
Casualty
|
22.7
|
22.0
|
3.2%
|
|
74.8
|
69.6
|
7.5%
|
|
Other
|
|
|
0.2
|
(0.9)
|
122.2%
|
|
0.5
|
(2.2)
|
122.7%
|
|
|
|
|
Consolidated
operating revenues
|
$
764.0
|
$
731.1
|
4.5%
|
|
$
2,297.3
|
$
2,191.9
|
4.8%
|
Operating income
(loss): 2
|
|
|
|
|
|
|
|
|
Managed
Care
|
$
14.2
|
$
34.8
|
59.2%
|
|
$
26.3
|
$
19.2
|
37.0%
|
|
Life
Insurance
|
5.7
|
4.5
|
26.7%
|
|
14.6
|
13.4
|
9.0%
|
|
Property and
Casualty
|
(46.9)
|
(11.1)
|
(322.5%)
|
|
(114.8)
|
(5.2)
|
(2107.7%)
|
|
Other
|
|
|
1.4
|
0.1
|
1300.0%
|
|
2.7
|
(0.1)
|
2800.0%
|
|
|
|
|
Consolidated
operating (loss) income
|
$
(25.6)
|
$
28.3
|
(190.5%)
|
|
$
(71.2)
|
$
27.3
|
(360.8%)
|
Operating margin:
3
|
|
|
|
|
|
|
|
|
Managed
Care
|
2.1%
|
5.2%
|
-310 bp
|
|
1.3%
|
1.0%
|
30 bp
|
|
Life
Insurance
|
11.7%
|
9.6%
|
210 bp
|
|
10.1%
|
9.6%
|
50 bp
|
|
Property and
Casualty
|
(206.6%)
|
(50.5%)
|
-15,610 bp
|
|
(153.5%)
|
(7.5%)
|
-14,600 bp
|
|
Consolidated
|
(3.4%)
|
3.9%
|
-730 bp
|
|
(3.1%)
|
1.2%
|
-430 bp
|
Depreciation and
amortization expense
|
$
3.0
|
$
3.4
|
(11.8%)
|
|
$
9.9
|
$
9.8
|
1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
September 30,
|
|
Nine months
ended
September 30,
|
(Unaudited)
|
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Managed
Care
|
|
|
|
|
|
Member months
enrollment:
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
Fully-insured
|
939,110
|
994,409
|
|
2,840,884
|
3,009,252
|
Self-insured
|
427,791
|
495,616
|
|
1,317,244
|
1,504,283
|
Total Commercial
|
1,366,901
|
1,490,025
|
|
4,158,128
|
4,513,535
|
Medicare
Advantage
|
|
|
|
334,836
|
368,102
|
|
1,008,063
|
1,095,086
|
Medicaid
|
|
1,191,681
|
1,138,162
|
|
3,564,769
|
3,480,525
|
Total member months
|
2,893,418
|
2,996,289
|
|
8,730,960
|
9,089,146
|
|
|
|
|
|
|
Claim liabilities
(in millions)
|
|
|
|
$
413.3
|
$
356.3
|
Days claim
payable
|
|
|
|
65
|
57
|
|
|
|
|
|
|
Premium
PMPM:
|
|
|
|
|
|
Managed
Care
|
$
276.08
|
$
261.57
|
|
$
275.97
|
$
257.91
|
Commercial
|
210.09
|
200.02
|
|
207.96
|
201.84
|
Medicare
Advantage
|
846.98
|
718.01
|
|
844.49
|
720.03
|
Medicaid
|
167.66
|
167.73
|
|
169.41
|
160.98
|
|
|
|
|
|
|
Medical loss
ratio:
|
83.2%
|
82.4%
|
|
84.7%
|
87.2%
|
Commercial
|
84.5%
|
73.1%
|
|
82.0%
|
79.1%
|
Medicare Advantage
|
80.3%
|
83.3%
|
|
84.4%
|
89.3%
|
Medicaid
|
|
85.9%
|
91.0%
|
|
87.9%
|
92.9%
|
|
|
|
|
|
|
Adjusted medical loss
ratio: 1
|
84.1%
|
80.2%
|
|
85.4%
|
86.4%
|
Commercial
|
83.3%
|
70.9%
|
|
83.5%
|
78.2%
|
Medicare
Advantage
|
82.7%
|
82.0%
|
|
85.1%
|
89.0%
|
Medicaid
|
|
87.3%
|
87.3%
|
|
87.8%
|
91.5%
|
|
|
|
|
|
|
Adjusted medical loss
ratio excluding impact of hurricanes: 2
|
84.1%
|
85.2%
|
|
85.4%
|
88.0%
|
Commercial
|
83.3%
|
79.2%
|
|
83.5%
|
81.0%
|
Medicare Advantage
|
82.7%
|
87.8%
|
|
85.1%
|
91.0%
|
Medicaid
|
|
87.3%
|
87.8%
|
|
87.8%
|
91.6%
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated loss
ratio:
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
|
|
87.4%
|
81.7%
|
|
87.6%
|
84.9%
|
Adjusted loss ratio
1
|
|
|
|
|
88.2%
|
79.6%
|
|
88.3%
|
84.1%
|
Adjusted
loss ratio excluding impact of hurricanes 3
|
80.3%
|
84.0%
|
|
81.9%
|
85.6%
|
|
|
|
|
|
|
|
|
|
|
|
Property and Casualty
loss ratio:
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
|
|
288.1%
|
110.8%
|
|
231.1%
|
68.6%
|
Loss
ratio excluding impact of hurricanes 4
|
23.5%
|
35.0%
|
|
34.6%
|
44.4%
|
|
|
|
|
|
|
Operating expense
ratio:
|
|
|
|
|
|
Consolidated
|
18.9%
|
16.6%
|
|
18.2%
|
16.2%
|
Managed Care
|
16.4%
|
13.5%
|
|
15.4%
|
13.2%
|
|
|
|
|
|
|
|
|
|
|
|
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 them in
the 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.
|
|
|
|
|
|
|
|
Managed Care
Membership by Segment
|
As of September
30,
|
|
|
|
|
|
|
2018
|
2017
|
Members:
|
|
|
|
|
Commercial:
|
|
|
Fully-insured
|
313,729
|
328,777
|
Self-insured
|
140,094
|
163,721
|
Total Commercial
|
453,823
|
492,498
|
Medicare
Advantage
|
|
|
|
|
111,389
|
123,194
|
Medicaid
|
|
394,149
|
379,199
|
Total members
|
959,361
|
994,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit V
Reconciliation of Non-GAAP Financial Measures
|
|
|
|
|
|
Adjusted Net
(Loss) Income
|
(Unaudited)
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
(dollar amounts in
millions)
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Net (loss)
income
|
$
(17.6)
|
$
21.9
|
|
$
(52.4)
|
$
30.3
|
Less
adjustments:
|
|
|
|
|
|
|
Net realized
investment (losses) gains, net of tax
|
(0.8)
|
3.0
|
|
0.8
|
6.5
|
|
Unrealized gains
(losses) on equity investments
|
4.5
|
-
|
|
(9.1)
|
-
|
|
Private equity
investment income (loss), net of tax
|
0.9
|
0.2
|
|
1.3
|
0.4
|
|
|
Adjusted net (loss)
income
|
$
(22.2)
|
$
18.7
|
|
$
(45.4)
|
$
23.4
|
|
|
Adjusted net (loss)
income per share
|
$
(0.97)
|
$
0.77
|
|
$
(1.96)
|
$
0.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
(Loss) Income and Operating (Loss)
Income Excluding Hurricanes Impact
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
(dollar amounts in
millions)
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Adjusted net (loss)
income
|
$
(22.2)
|
$
18.7
|
|
$
(45.4)
|
$
23.4
|
Less hurricanes
impact:
|
|
|
|
|
|
|
2018 Property and
Casualty Hurricane Maria unfavorable prior period
|
|
|
|
|
|
|
|
reserve development,
net of tax
|
(35.9)
|
-
|
|
(85.4)
|
-
|
|
2017 Hurricanes
impact in Managed Care segment, net of tax
|
-
|
19.2
|
|
-
|
19.2
|
|
2017 Hurricanes Irma
and Maria net retained losses in Property and
|
|
|
|
|
|
|
|
Casualty segment, net
of tax
|
-
|
(13.9)
|
|
-
|
(13.9)
|
|
|
Adjusted net income
excluding hurricanes impact
|
|
|
|
$
13.7
|
$
13.4
|
|
$
40.0
|
$
18.1
|
|
|
Adjusted net income
per share excluding
|
|
|
|
|
|
|
|
hurricanes impacts
|
|
|
$
0.60
|
$
0.55
|
|
$
1.73
|
$
0.74
|
|
|
|
|
|
|
Operating (loss)
income
|
$
(25.6)
|
$
28.3
|
|
$
(71.2)
|
$
27.3
|
Less hurricanes
impact:
|
|
|
|
|
|
|
2018 Property and
Casualty Hurricane Maria unfavorable prior period
|
|
|
|
|
|
|
|
reserve
development
|
(52.3)
|
-
|
|
(128.7)
|
-
|
|
2017 Hurricanes
impact in Managed Care segment
|
-
|
31.4
|
|
-
|
31.4
|
|
2017 Hurricanes Irma
and Maria net retained losses in Property and
|
|
|
|
|
|
|
|
Casualty
segment
|
-
|
(17.3)
|
|
-
|
(17.3)
|
|
|
Operating Income excluding hurricanes impact
|
$
26.7
|
$
14.2
|
|
$
57.5
|
$
13.2
|
|
|
|
|
|
|
|
|
|
|
|
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