Triple-S Management Corporation is an independent licensee of the Blue Cross Blue Shield Association. It is the largest managed care company in Puerto Rico serving approximately one million members across all regions. Triple-S offers a broad portfolio of managed care and related products in the commercial Medicare and Reform (similar to Medicaid) markets. In addition to its managed care business Triple-S provides life and property and casualty insurance in Puerto Rico. TRIPLE-S MGMT CL B has a market cap of $415.5 million; its shares were traded at around $13.8 with a P/E ratio of 7.6 and P/S ratio of 0.2.
Highlight of Business Operations:Consolidated net realized investment losses of $1.7 million during the three months ended March 31, 2009 are the result of other-than-temporary impairments related to fixed income and equity securities amounting to $2.7 million. The other-than-temporary impairments were offset in part by $0.9 million of net realized gains from the sale of fixed income and equity securities.
Consolidated claims incurred during the three months ended March 31, 2009 increased by $44.3 million, or 12.6%, to $394.5 million when compared to the claims incurred during the three months ended March 31, 2008. This increase is principally due to increased claims in the managed care segment as a result of higher enrollment. The consolidated loss ratio increased by 0.6 percentage points to 87.2%, primarily due to higher utilization trends in the managed care segment and the effect of changes on the reserve estimates.
Administrative service fees increased by $4.9 million, to $9.5 million during the 2009 period, mainly due to an increase in self-funded member months enrollment of 643,608. Such increase is mainly the result of the contract obtained to administer the Reforms Metro-North region, which began as an ASO contract on November 1, 2008.
Medical operating expenses for the three months ended March 31, 2009 increased by $6.2 million, or 16.8%, to $43.1 million when compared to the three months ended March 31, 2008. This increase is mainly to the higher volume of business of the segment, mostly due to higher member months enrollment of the Medicare business and in self-funded enrollment due to the contract for the Reforms Metro-North region. In addition, a contingency accrual of approximately $5.0 million was recorded during the 2009 period, partially offset by an insurance recovery receivable of legal expenses that amounted to approximately $3.0 million. The segments operating expenses ratio increased by 0.3 percentage points, from 10.1% in 2008 to 10.4% in 2009.
Total premiums written during the three months ended March 31, 2009 decreased by $2.4 million, or 6.8%, to $33.1 million. This fluctuation is primarily due to a decrease in premiums written in the commercial auto, dwelling and property mono-line insurance policies of approximately $2.8 million. The commercial business continues under soft market conditions, thus reducing premiums and increasing competition for renewals and new business. Also, lower activity in auto and mortgage loan origination sectors has affected the volume in the market.
Claims incurred during the three months ended March 31, 2009 increased by $1.3 million, or 12.6%, to $11.6 million. The loss ratio increased by 3.3 percentage points, to 47.2% during the three months ended March 31, 2009, primarily seen in the loss ratios of the commercial multi-peril and medical malpractice lines of business. These fluctuations are attributable to an increase in reported claims and increases in reserves, primarily those related to loss adjustment expenses.
Read the The complete ReportGTS is in the portfolios of David Einhorn of Greenlight Capital Inc.