Triple-S Management reports consolidated revenues of $507.3M for the third quarter of 2009

Nov 3 2009

Triple-S Management Corporation (NYSE: GTS), the largest managed care company in Puerto Rico, today announced consolidated revenues of $507.3 million and operating income of $15.4 million for the three months ended September 30, 2009. Net income of $18.1 million, or $0.62 per diluted share, includes an after tax net gain of $6.3 million, or $0.22 per share, in net realized and unrealized gains on investments and derivatives.

Third-Quarter Highlights

• Total consolidated operating revenues increased 10.7 percent year over year to $500.2 million
• Operating income was $15.4 million
• Excluding net realized and unrealized gains on investments and a derivatives gain included within other income (expenses), net income was $11.8 million, or $0.40 per diluted share
• Consolidated loss ratio was 86.6 percent and the medical loss ratio (MLR) was 90.3 percent
• Consolidated operating expense ratio rose 10 basis points to 14.6 percent
• Commercial member months enrollment, including ASO, increased 28.0 percent
• Net cash flow provided by operating activities of $17.5 million

"During the period, we posted double-digit growth in our Commercial membership, registered incremental improvement in the adjusted MLR for our Medicare Advantage segment, and continued to generate positive operating cash flow," said Ramon M. Ruiz-Comas, President and Chief Executive Officer. "As we enter the seasonally strong fourth quarter, the combination of more favorable utilization trends and higher premiums should allow us to reduce our MLR in both the Commercial and Medicare Advantage businesses. However, we were not immune to the impact of swine flu which was particularly noticeable among our younger Commercial members."

Ruiz-Comas added, "Through the first nine months of 2009, we have successfully pursued a simple and straightforward strategy that we initially implemented several years ago. By leveraging our market leadership position, highly efficient cost structure, and healthy capital base, we have created a strong foundation that should sustain solid, profitable growth into 2010 and beyond."

Consolidated operating revenues for the three months ended September 30, 2009, were $500.2 million, 10.7 percent above the prior-year period. The increase resulted primarily from growth in Commercial membership, reflecting, in large part, the acquisition of La Cruz Azul (LCA) and the addition of the Metro-North region in the Reform business, as well as higher premium rates across all businesses.

Consolidated claims incurred and operating expenses for the period were $484.8 million, an increase of 13.0 percent from the same period last year. Consolidated claims incurred were $413.6 million, up 13.1 percent from a year ago, principally due to increased claims in the managed care segment resulting from higher enrollment and the addition of LCA's members. The consolidated loss ratio rose 220 basis points from the prior-year period, to 86.6 percent, largely reflecting the increased utilization among local government employees, the effect of reserve developments in our managed care segment, and the impact of premium adjustments in the Reform business. Excluding the effect of those items, the consolidated loss ratio increased 150 basis points. Operating expenses came in at $71.2 million, an 11.9 percent year-over-year increase, primarily resulting from higher volume in the Commercial business, incremental expenses associated with the acquisition of LCA's membership, and the addition of the Metro-North region ASO contract in November 2008. The consolidated operating expense ratio rose 10 basis points, to 14.6 percent.

Net income for the three months ended September 30, 2009, was $18.1 million, or $0.62 per diluted share, based on weighted average shares outstanding of 29.4 million. This compares with net income for the three months ended September 30, 2008, of $9.5 million, or $0.29 per diluted share, based on weighted average shares outstanding of 32.2 million. The earnings for the three months ended September 30, 2009, include $0.21 per diluted share in after tax net realized and unrealized gains on investments and an increase in the unrealized gain in derivatives of $0.01 per diluted share included within other income (expenses). Excluding the effect of these items for the three months ended September 30, 2009, net income was $11.8 million, or $0.40 per diluted share, compared with $14.9 million, or $0.46 per diluted share, in the comparable 2008 quarter.