Triple-S Management first-quarter total consolidated operating revenues increase 9.8% to $519.1 million

Triple-S Management Corporation (NYSE: GTS), the largest managed care company in Puerto Rico, today announced consolidated operating revenues of $519.1 million and operating income of $16.4 million for the three months ended March 31, 2010.  Net income of $11.2 million, or $0.38 per diluted share, includes an after tax net gain of $0.4 million, or $0.01 per share, in net realized and unrealized gains on investments and derivatives.

March-Quarter Consolidated Highlights

• Total consolidated operating revenues increased 9.8% year over year to $519.1 million;
• Operating income was $16.4 million;
• Excluding net realized and unrealized gains and losses on investments and a derivatives loss; included within other income (expenses), net income was $10.8 million, or $0.37 per diluted share;
• Consolidated loss ratio was 86.2% and the medical loss ratio (MLR) was 90.0%;
• Consolidated operating expense ratio increased 40 basis points to 15.2%;
• Commercial member months enrollment, including ASO membership, increased 23.6%.

Ramon M. Ruiz-Comas, President and Chief Executive Officer, stated "We are pleased to report that our first-quarter performance provided us with an excellent start to 2010.  For the period, we recorded solid revenue growth, reflecting very strong gains in our Commercial business and we are extremely proud of the approximately 98% membership retention rate achieved. The improvement in our overall MLR was in line with our expectations and operating profitability in the Managed Care segment nearly doubled from the prior year. We are reaffirming our 2010 earnings-per-share guidance of $2.05-$2.15."

"In March 2010, health care reform was enacted in the United States, significantly broadening the scope of coverage to a larger majority of the population. While there is still uncertainty surrounding many of the legislation's specifics, because our business is concentrated in Puerto Rico, our initial assessment is that for the next two years key components will not affect us in the same way as our U.S. peers.  Moreover, additional funding is anticipated for Medicaid, which would be of significant benefit to our population. We are awaiting further clarification on the regulation.  We remain confident that our business model, which enables us to diversify risk and diminish the variability that can occur in each of our segments, along with ongoing opportunities for expansion, will allow us to sustain our growth," concluded Ruiz-Comas.

Selected Quarterly Details

• Consolidated Premiums Increased 9.5%.  Consolidated premiums were $494.2 million, up 9.5% from a year ago, principally due to increased volume and higher rates in the Managed Care business.  Reported Managed Care net premiums increased to $443.8 million, driven by a 23.2% year-over-year rise in the Commercial business.  The increase resulted primarily from growth in Commercial membership, reflecting new groups acquired during the period and the La Cruz Azul (LCA) acquisition, as well as higher premium rates across all businesses.
• Consolidated Administrative Service Fees Rose 40.4%.  Consolidated administrative service fees increased $3.6 million, to $12.5 million, reflecting the LCA acquisition, which added approximately 70,000 members, and organic growth.
• Managed Care Membership Increased 12.9%.  Total Commercial membership was 763,885, up 24.5% from the prior year, primarily reflecting the addition of LCA members and organic growth.  Reform membership rose 2.4%, to 534,225, and Medicare membership declined 10.0%, to 66,771.
• Consolidated Claims Incurred Rose 8.2%.  Consolidated claims incurred were $425.8 million, an 8.2% increase from a year ago, principally due to more claims in the Managed Care segment resulting from higher enrollment and the addition of LCA's members.  The consolidated loss ratio decreased by 100 basis points, to 86.2%, as premium increases in our Managed Care segment outstripped costs, particularly in the Commercial and Medicare businesses.
• Managed Care MLR Improved 150 Basis Points Year-Over-Year, to 90.0%.  The year-over-year improvement was driven by a decrease in the Medicare MLR, offset by increases in the Reform MLR, and to a lesser degree, in the Commercial MLR.
• Consolidated Operating Expense Ratio Rose 40 Basis Points, to 15.2%.  Consolidated operating expenses increased by $8.7 million, or 12.8%, from the prior year, primarily attributable to a higher volume of business, particularly in the Managed Care segment.
• Consolidated Operating Margins Improved to 3.2%. Driven largely by a 130-basis-point improvement in Managed Care profitability, consolidated operating margins widened by 90 basis points, to 3.2%.  A 210-basis-point expansion in the Life Insurance segment's operating margin also contributed to the increase.  Offsetting these improvements was an 830-basis-point, year-over-year decline in the Property and Casualty business.
• Adjusted Net Income Rose to $10.8 million, or $0.37 Per Diluted Share.  This compares with $8.2 million, or $0.27 per diluted share, in the corresponding quarter of 2009.  Weighted average shares outstanding were 29.2 million and 30.3 million in 2010 and 2009, respectively.
• Parent Company Information.  As of March 31, 2010, Triple-S Management had $44.4 million in parent company cash, cash equivalents, and investments.

Segment Performance

Triple-S Management operates in three segments: 1) Managed Care, 2) Life Insurance, and 3) Property and Casualty Insurance.  Management evaluates performance based primarily on the operating revenues and operating income of each segment.  Operating revenues include premiums earned, net administrative service fees and net investment income.  Operating costs include claims incurred and operating expenses.  The Company calculates operating income or loss as operating revenues minus operating expenses.  Operating margin is defined as operating gain or loss divided by operating revenues.