Puerto Rico
|
|
66-0555678
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(STATE OF INCORPORATION)
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(I.R.S. ID)
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Common Stock Class B, $1.00 par value
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GTS
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New York Stock Exchange (NYSE)
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Large accelerated filer ☐
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Accelerated filer ☑
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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|
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4
|
|
7
|
|
7
|
|
37
|
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57
|
|
57
|
|
57
|
|
58
|
|
58
|
|
58
|
|
61
|
|
62
|
|
88
|
|
90
|
|
92
|
|
94
|
|
96
|
|
96
|
|
96
|
|
96
|
|
96
|
|
96
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|
96
|
|
97
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|
97
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|
97
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|
102
|
• |
Trends in health care costs and utilization rates;
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• |
Ability to secure sufficient premium rate increases;
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• |
Competitor pricing below market trends of increasing costs;
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• |
Re-estimates of our policy and contract liabilities;
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• |
Changes in government laws and regulations of managed care, life insurance or property and casualty insurance;
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• |
Significant acquisitions or divestitures by major competitors;
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• |
Introduction and use of new prescription drugs and technologies;
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• |
A downgrade in our financial strength ratings;
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• |
Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies;
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• |
Ability to contract with providers and government agencies consistent with past practice;
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• |
Ability to successfully implement our disease management and utilization management programs;
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• |
Ability to maintain Federal Employees, Medicare, and Medicaid contracts;
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• |
Volatility in the securities markets and investment losses and defaults; and
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• |
General economic downturns, major disasters, epidemics and pandemics.
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• |
Our inability to contain managed care costs or our current provider agreements, and our inability to enter into other appropriate provider agreements may adversely affect our business and profitability.
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• |
We are dependent on a small number of government contracts to generate a significant amount of the revenues for our Managed Care segment.
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• |
Our failure to accurately estimate incurred but not reported claims would affect our reported financial results.
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• |
The termination or modification of our license agreements to use the Blue Cross and Blue Shield (BCBS) name and mark could have a material adverse effect on our business, financial condition and results of operations.
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• |
Our ability to manage our exposure to underwriting risks in our Life Insurance and Property and Casualty segments depends on the availability and cost of reinsurance coverage.
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• |
We are dependent on the success of our relationships with third parties for various services and functions, including outsourced IT, claims processing and PBM services.
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• |
Significant competition and market conditions in Puerto Rico could negatively affect our ability to maintain or increase our profitability.
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• |
As a holding company, we are largely dependent on rental payments, dividends and other payments from our subsidiaries. The ability of our regulated subsidiaries to pay dividends or make other payments to us is subject to the regulations of the Puerto Rico Office of the Insurance Commissioner (Commissioner of Insurance), including maintenance of minimum levels of capital, as well as covenant restrictions in their indebtedness.
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• |
As an insurance company, we carry out significant investment activities and our investment portfolios are subject to varying economic and market conditions.
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• |
Our business is geographically concentrated in Puerto Rico and weakness in the economy and the fiscal health of the government has adversely affected and may continue to adversely affect us.
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• |
The success of our business is dependent on developing and maintaining effective information systems because we are materially dependent on such systems, including Internet-enabled products and information, for all aspects of our business operations.
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Because of the nature of our business, we are subject to a variety of legal actions relating to our business operations, including claims related to our products and services, claims relating to the denial of benefits or coverage, medical malpractice actions, allegations of anti-competitive and unfair business activities, provider disputes, broker and agent disputes, and claims by regulatory actions by agencies for noncompliance, among others.
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• |
Large-scale natural disasters may have a material adverse effect on our business, financial condition and results of operations, because claims incurred by our Managed Care, Life Insurance and Property and Casualty segments could be materially affected and our properties may incur substantial damage.
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• |
Pandemics, like the COVID-19 pandemic and local, state and federal governments’ response to the pandemics may have a material adverse effect on our business, financial condition and results of operations.
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• |
Changes in public policy, enactment of new laws, changes in governmental regulations, or the application thereof, such as the health care reform law, may adversely affect our business, financial condition and results of operations.
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• |
We are subject to complex regulations under the Medicare Advantage program. If we fail to comply with these regulations, we may be exposed to criminal sanctions and significant civil penalties. Our Medicare Advantage contracts may also be terminated or our operations may be required to change in a manner that has a material adverse impact on our business.
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• |
We may be subject to government audits, regulatory proceedings or investigative actions, that may find our policies, procedures, practices or contracts are not compliant with, or are in violation of, applicable health care regulations.
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• |
Effective prevention, detection and control systems are critical to maintaining regulatory compliance and preventing fraud. Failure of these systems could adversely affect the Company.
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• |
Because of the nature of our business, if we fail to comply with applicable privacy and security laws, regulations and standards, or if we fail to address emerging security threats, including cybersecurity threats, or fail to detect and prevent privacy and security incidents, our business, reputation, results of operations, financial position and cash flows could be materially and adversely affected.
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• |
The revised rate calculation system for Medicare Advantage, the payment system for Medicare Part D and changes in the methodology and payment policies used by Centers for Medicare & Medicaid Services (CMS) to establish rates could reduce our profitability and the benefits we offer our beneficiaries.
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• |
CMS’s risk-adjustment payment system and other Medicare Advantage funding pressures make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.
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• |
The Puerto Rico Health Insurance Administration’s (ASES by its Spanish acronym) risk-adjustment payment system and payment structure, and its dependence on scarce or unavailable data, make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.
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• |
If our Medicare Advantage members enroll in another Medicare Advantage plan during the open enrollment season, they will be automatically disenrolled from our plan, possibly without our immediate knowledge.
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• |
Our insurance subsidiaries are subject to minimum capital requirements. Our failure to meet these standards could expose us to regulatory actions.
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• |
Puerto Rico insurance laws and regulations, our license agreement with the Blue Cross and Blue Shield Association (BCBSA), and provisions of our Articles of incorporation and bylaws could delay, deter or prevent a takeover attempt that shareholders might consider to be in their best interests. It may also make it more difficult to replace members of our Board of Directors and have the effect of entrenching management.
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Item 1. |
Business
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Market Sector
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Enrollment at
December 31, 2020
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Percentage of
Total Enrollment
|
||||||
Commercial
|
419,658
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42.9
|
%
|
|||||
Medicare
|
137,092
|
14.0
|
%
|
|||||
Medicaid
|
422,023
|
43.1
|
%
|
|||||
Total
|
978,773
|
100.0
|
%
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• |
Failure to maintain our total adjusted capital at or above 375% of Health Risk-Based Capital (HRBC) Authorized Control Level (ACL) as defined by the National Association of Insurance Commissioners (NAIC) for the for Primary Licensee (TSM) and Larger BCBS Controlled Affiliate (TSS) and 100% HRBC ACL for the Smaller BCBS Controlled Affiliate (TSA);
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• |
Failure to maintain liquidity of greater than one month of underwritten claims and administrative expenses, as defined by the BCBSA, for two consecutive quarters;
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• |
Failure to satisfy state-mandated statutory net worth requirements;
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• |
Impending financial insolvency; and
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• |
A change of control not otherwise approved by the BCBSA or a violation of the BCBSA voting and ownership limitations on our capital stock.
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• |
Grant, suspend and revoke licenses to transact business;
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• |
Regulate many aspects of the products and services we offer, including the review and approval of health insurance rates in the individual and small group markets;
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• |
Assess fines, penalties and/or sanctions;
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• |
Monitor our solvency and the adequacy of our financial reserves; and
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• |
Regulate our investment activities based on quality, diversification and other quantitative criteria, within the parameters of a list of permitted investments set forth in the insurance laws and regulations.
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• |
Initiatives to provide greater access to coverage for uninsured and under-insured populations without adequate funding to health plans, or to fund such coverage through taxes or other negative financial levies on health plans;
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• |
Other efforts or specific legislative changes to the Medicare or Medicaid program, including changes in the bidding process or other means that materially reduce premiums;
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• |
Local government regulatory changes;
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• |
Increased government enforcement, or changes in interpretation or application of fraud and abuse laws; and
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• |
Regulations that increase the operational burden on health plans or laws that increase a health plan’s exposure to liabilities, including efforts to expand the tort liability of health care plans.
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• |
Part A covers, among other things, inpatient hospital stays, skilled nursing facility stays, home health visits (also covered under Part B), and hospice care. Individuals are automatically enrolled in Part A and inpatient hospital stays are subject to an annual deductible.
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• |
Part B covers physician visits, outpatient services, laboratory services, durable medical equipment, certain preventive services, and home health visits. Enrollment in Part B is voluntary and subject to an annual deductible and monthly premiums.
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• |
Part C, which encompasses Medicare Advantage in addition to other supplemental plans, allows beneficiaries to enroll in private health plans and receive Medicare-covered benefits.
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• |
Part D is the voluntary, subsidized outpatient prescription drug benefit created under the Medicare Modernization Act of 2003 (the MMA). Part D includes subsidies for beneficiaries with low incomes that do not apply to Puerto Rico. Part D is offered through private plans that contract with Medicare, including stand-alone prescription drug plans and Medicare Advantage prescription drug plans. Part D plans are also subject to MLR requirements and their premium varies by plan.
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• |
Offered remote work and hybrid work options for over 92% of our workforce;
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• |
Awarded Company-granted days above regulations;
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• |
Implemented flexible use of PTO according to individual needs;
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• |
Issued a variety of wellness education communications;
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• |
Distributed personal protection equipment;
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• |
Modified workstations and areas of common use to ensure required social distancing;
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• |
Prohibited travelling; and
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• |
Surveyed employees twice to listen to their needs and reaction to company actions, among other initiatives.
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Item 1A. |
Risk Factors
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• |
Commercial: One of our Managed Care subsidiaries is a qualified contractor that provides managed care coverage to federal government employees within Puerto Rico. Such coverage is provided pursuant to a contract with the OPM that is subject to termination in the event of noncompliance not corrected to the satisfaction of the OPM. During each of the years ended December 31, 2020, 2019, and 2018 premiums generated under this contract represented 4.6%, 5.3%, and 5.5% of our consolidated premiums earned, net, respectively.
|
• |
Medicare: We provide services through our Medicare Advantage products pursuant to a limited number of contracts with CMS. These contracts generally have terms of one year and must be renewed annually. Each of our CMS contracts are cancellable for cause if we breach a material provision of the contract or violate relevant laws or regulations. If we are unable to renew, or to successfully re-bid or compete for any of these contracts, or if the process for bidding materially changes or if any of these contracts are terminated, our business could be materially impaired. During each of the years ended December 31, 2020, 2019, and 2018, contracts with CMS represented 42.9%, 43.3%, and 38.5% of our consolidated Premiums Earned, Net, respectively.
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• |
Medicaid: We participate in the government of Puerto Rico Health Reform Program (similar to Medicaid), known as Vital (Vital), to provide health coverage (including medical, mental, pharmacy and dental services) to medically indigent citizens in Puerto Rico. The term of our current agreement with ASES is from November 1, 2018 to September 30, 2021, and may be extended for an additional year at ASES’s option. Premium rates are negotiated for each contract year. Participants may change insurance carriers once every year. Under the previous agreement with ASES, we provided services to eligible members in the Metro North and West regions of Puerto Rico. During the years ended December 31, 2020, 2019, and 2018 Medicaid premiums generated through our agreements with ASES represented 26.3%, 26.5% and 26.4%, respectively.
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• |
Rising levels of actual costs that are not known by companies at the time they price their products;
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• |
Volatile and unpredictable developments, including man-made and natural catastrophes;
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• |
Changes in reserves resulting from the general claims and legal environments as different types of claims arise and judicial interpretations relating to the scope of insurers’ liability develop; and
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• |
Fluctuations in interest rates, inflationary pressures and other changes in the investment environment, which affect returns on invested capital.
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• |
Significantly reducing the value of debt and equity securities we hold in our investment portfolio, and creating net unrealized capital losses that reduce our operating results and/or net realized capital losses in the event we are required to sell some of those investments.
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• |
Lowering interest rates on high-quality short-term debt securities and thereby materially reducing our net investment income and operating results.
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• |
Making it more difficult to value certain of our investment securities. For example, if trading becomes less frequent, it could lead to significant period-to-period changes in our estimates of the fair values of these securities and cause period-to-period volatility in our operating results and shareholders’ equity.
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• |
Reducing our ability to issue other securities.
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• |
Identify profitable growth opportunities in current and new markets where we do not presently participate;
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• |
Transact successful acquisitions, capital investments and other growth initiatives;
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• |
Determine the correct value of assets and investments;
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• |
Implement adequate pricing and operational models and structures, including underwriting and claim management processes;
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• |
Design attractive and profitable insurance and health care products and services;
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• |
Implement new, or modify existing operating models and implement internal monitoring and control systems to manage them;
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• |
Recruit required personnel for expanded operations, including officers, agents, brokers, medical providers, and other key personnel;
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• |
Obtain regulatory permission required to operate in other jurisdictions or lines of business;
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• |
Comply with regulatory requirements;
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• |
Integrate acquired businesses into our operations, including integration of information technology, management and personnel, culture and administrative systems;
|
• |
Acquire business and regulatory knowledge and expertise necessary to manage new lines of business; and
|
• |
Create the expected return over time.
|
• |
Initiatives to provide greater access to coverage for uninsured and under-insured populations without adequate funding to health plans, or to be funded through taxes or other negative financial levy on health plans;
|
• |
Initiatives to limit health plans’ ability to review courses of treatment of patients;
|
• |
Payments to health plans that are tied to the achievement of certain quality performance measures and medical loss ratio requirements;
|
• |
Specific legislative or regulatory changes to the Medicare or Medicaid programs, including changes in the bidding process or other means to materially reduce premiums;
|
• |
Local government regulatory changes;
|
• |
Increased government enforcement actions, or changes in the interpretation or application, of fraud and abuse of health information privacy laws; and
|
• |
Regulations that increase the operational burden on health plans, or that increase a health plan’s exposure to liabilities, including efforts to expand the tort liability of health plans.
|
• |
Recoupment of amounts we have been paid pursuant to our government contracts;
|
• |
Mandated changes in our business practices;
|
• |
Imposition of significant civil or criminal penalties, fines or other sanctions on us and/or our key employees;
|
• |
Additional reporting requirements and oversight and mandated corrective action or remediation plans;
|
• |
Loss or nonrenewal of our government contracts or loss of our ability to participate in Medicare or other federal or local governmental payer programs;
|
• |
Damage to our reputation;
|
• |
Increased difficulty in marketing our products and services;
|
• |
Inability to obtain approval for future services or geographic expansions;
|
• |
Loss of one or more of our licenses to act as an insurance company, preferred provider or managed care organization or other licensed entity or to otherwise provide a service; and
|
• |
Suspension of ability to subscribe members.
|
• |
Permit our Board of Directors to issue one or more series of preferred stock;
|
• |
Divide our Board of Directors into three classes serving staggered three-year terms;
|
• |
Limit the ability of shareholders to remove Directors;
|
• |
Impose restrictions on shareholders’ ability to fill vacancies on our Board of Directors;
|
• |
Impose advance notice requirements for shareholder proposals and nominations of Directors to be considered at meetings of shareholders; and
|
• |
Impose restrictions on shareholders’ ability to amend our Articles and bylaws.
|
Item 1B. |
Unresolved Staff Comments
|
Item 2. |
Properties
|
Item 3. |
Legal Proceedings
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
High
|
Low
|
||||||
2020
|
||||||||
First quarter
|
$
|
19.45
|
$
|
9.13
|
||||
Second quarter
|
21.51
|
11.92
|
||||||
Third quarter
|
20.82
|
17.01
|
||||||
Fourth quarter
|
24.70
|
17.55
|
||||||
2019
|
||||||||
First quarter
|
$
|
26.46
|
$
|
15.93
|
||||
Second quarter
|
26.51
|
19.42
|
||||||
Third quarter
|
27.64
|
13.10
|
||||||
Fourth quarter
|
20.25
|
12.66
|
Ticker
|
Name
|
1/4/2016
|
12/30/2016
|
12/29/2017
|
12/31/2018
|
12/31/2019
|
12/31/2020
|
||||||||||||||||||
GTS US Equity
|
TRIPLE-S MANAGEMENT CORP
|
100.00
|
92.70
|
111.29
|
77.88
|
87.03
|
100.50
|
||||||||||||||||||
SPX Index
|
S&P 500 INDEX
|
100.00
|
111.24
|
132.84
|
124.55
|
160.52
|
186.62
|
||||||||||||||||||
S5MANH Index
|
S&P MHC Index
|
100.00
|
118.29
|
168.48
|
184.73
|
219.08
|
250.49
|
(Dollar amounts in millions, except per
share data)
|
Total Number
of Shares
Purchased (1)
|
Average
Price Paid
per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced
Programs (2)
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the
Programs
|
||||||||||||
October 1, 2020 to October 31, 2020
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||
November 1, 2020 to November 30, 2020
|
446
|
23.62
|
-
|
-
|
||||||||||||
December 1, 2020 to December 31, 2020
|
-
|
-
|
-
|
-
|
|
2020
|
2019
|
2018
|
2017
|
2016
|
|||||||||||||||
(Dollar amounts in millions, except per share data)
|
||||||||||||||||||||
Years ended December 31,
|
||||||||||||||||||||
Premiums earned, net
|
$
|
3,605.5
|
$
|
3,252.9
|
$
|
2,938.6
|
$
|
2,826.9
|
$
|
2,890.6
|
||||||||||
Administrative service fees
|
12.6
|
9.9
|
14.7
|
16.5
|
17.9
|
|||||||||||||||
Net investment income
|
57.5
|
62.0
|
61.9
|
51.6
|
48.9
|
|||||||||||||||
Other operating revenues
|
9.0
|
8.6
|
5.8
|
3.7
|
3.5
|
|||||||||||||||
Total operating revenues
|
3,684.6
|
3,333.4
|
3,021.0
|
2,898.7
|
2,960.9
|
|||||||||||||||
Net realized investments gains
|
0.6
|
5.8
|
0.3
|
10.8
|
17.4
|
|||||||||||||||
Net unrealized investment gains (losses) on equity investments
|
7.6
|
32.2
|
(36.5
|
)
|
-
|
-
|
||||||||||||||
Other income, net
|
9.6
|
4.2
|
11.3
|
6.6
|
6.5
|
|||||||||||||||
Total revenues
|
3,702.4
|
3,375.6
|
2,996.1
|
2,916.1
|
2,984.8
|
|||||||||||||||
Benefits and expenses:
|
||||||||||||||||||||
Claims incurred
|
2,946.8
|
2,666.3
|
2,527.6
|
2,353.1
|
2,472.2
|
|||||||||||||||
Operating expenses
|
655.9
|
569.4
|
554.7
|
477.2
|
493.9
|
|||||||||||||||
Total operating costs
|
3,602.7
|
3,235.7
|
3,082.3
|
2,830.3
|
2,966.1
|
|||||||||||||||
Interest expense
|
8.0
|
7.6
|
6.9
|
6.8
|
7.6
|
|||||||||||||||
Total benefits and expenses
|
3,610.7
|
3,243.3
|
3,089.2
|
2,837.1
|
2,973.7
|
|||||||||||||||
Income (loss) before taxes
|
91.7
|
132.3
|
(93.1
|
)
|
79.0
|
11.1
|
||||||||||||||
Income tax expense (benefit)
|
24.5
|
39.4
|
(29.8
|
)
|
24.5
|
(6.3
|
)
|
|||||||||||||
Net income (loss)
|
67.2
|
92.9
|
(63.3
|
)
|
54.5
|
17.4
|
||||||||||||||
Net loss attributable to non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net income (loss) attributable to TSM
|
$
|
67.2
|
$
|
92.9
|
$
|
(63.3
|
)
|
$
|
54.5
|
$
|
17.4
|
|||||||||
Basic net income (loss) per share (1):
|
$
|
2.90
|
$
|
3.98
|
$
|
(2.76
|
)
|
$
|
2.27
|
$
|
0.71
|
|||||||||
Diluted net income (loss) per share:
|
$
|
2.88
|
$
|
3.97
|
$
|
(2.76
|
)
|
$
|
2.26
|
$
|
0.71
|
|
2020
|
2019
|
2018
|
2017
|
2016
|
|||||||||||||||
Years ended December 31,
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
111.0
|
$
|
109.8
|
$
|
117.5
|
$
|
198.9
|
$
|
103.4
|
||||||||||
Total assets
|
$
|
3,088.4
|
$
|
2,818.8
|
$
|
2,766.5
|
$
|
3,116.8
|
$
|
2,219.0
|
||||||||||
Long-term borrowings
|
$
|
52.8
|
$
|
25.7
|
$
|
28.9
|
$
|
32.1
|
$
|
35.1
|
||||||||||
Total stockholders’ equity
|
$
|
968.2
|
$
|
943.9
|
$
|
821.9
|
$
|
913.4
|
$
|
863.2
|
|
2020
|
2019
|
2018
|
2017
|
2016
|
|||||||||||||||
Years ended December 31,
|
||||||||||||||||||||
Medical loss ratio
|
84.5
|
%
|
84.6
|
%
|
84.5
|
%
|
85.6
|
%
|
88.6
|
%
|
||||||||||
Operating expense ratio
|
15.4
|
%
|
14.5
|
%
|
16.0
|
%
|
13.6
|
%
|
14.0
|
%
|
||||||||||
Medical membership (period end)
|
978,773
|
923,923
|
876,268
|
977,939
|
1,017,372
|
(1) |
Further details of the calculation of basic and diluted earnings per share are set forth in Notes 2 and 22 of the audited Consolidated Financial Statements for the years ended December 31, 2020, 2019 and 2018.
|
(2) |
Does not reflect inter-segment eliminations.
|
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Executive Summary
|
61
|
Overview details
|
61
|
Membership
|
64
|
Results of Operations
|
65
|
Consolidated Operating Results
|
65
|
Managed Care Segment Operating Results
|
67
|
Life Insurance Segment Operating Results
|
70
|
Property and Casualty Segment Operating Results
|
71
|
Liquidity and Capital Resources
|
72
|
Critical Accounting Estimates
|
78
|
Recently Issued Accounting Standards
|
87
|
• |
Net income for the year was $67.2 million, a decrease from a net income of $92.9 million for the prior year. The decrease in net income primarily reflects the recognition of a $32 million contingency reserve related to a legal proceeding in our Managed Care segment (see Note 25, Contingencies, of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) and the impact of lower net unrealized gains on equity investments.
|
• |
Consolidated premiums earned, net increased 10.8% year over year, to $3.6 billion, primarily reflecting an increase in membership and higher average premium rates within the Managed Care segment.
|
• |
Consolidated claims incurred for the year were $2.9 billion, up 10.5% over last year, mostly reflecting higher claims incurred in the Managed Care segment by $279.1 million mostly driven by higher enrollment. The consolidated loss ratio decreased 30 basis points, to 81.7%. The Managed Care segment’s MLR was to 84.5%, down 10 basis points year over year.
|
• |
Consolidated operating expenses for the year were $655.9 million and the operating expense ratio was 18.1%, 60 basis points higher than last year mostly driven by the return of the HIP fee.
|
|
Years ended December 31,
|
|||||||||||
(Dollar amounts in millions)
|
2020
|
2019
|
2018
|
|||||||||
Premiums earned, net:
|
||||||||||||
Managed care
|
$
|
3,322.3
|
$
|
2,987.5
|
$
|
2,689.1
|
||||||
Life insurance
|
196.0
|
182.2
|
168.6
|
|||||||||
Property and casualty insurance
|
92.0
|
87.7
|
83.5
|
|||||||||
Intersegment premiums earned
|
(4.8
|
)
|
(4.5
|
)
|
(2.6
|
)
|
||||||
Consolidated premiums earned, net
|
$
|
3,605.5
|
$
|
3,252.9
|
$
|
2,938.6
|
||||||
Administrative service fees:
|
||||||||||||
Managed care
|
$
|
13.0
|
$
|
14.3
|
$
|
19.1
|
||||||
Intersegment administrative service fees
|
(0.4
|
)
|
(4.4
|
)
|
(4.4
|
)
|
||||||
Consolidated administrative service fees
|
$
|
12.6
|
$
|
9.9
|
$
|
14.7
|
||||||
Operating income (loss):
|
||||||||||||
Managed care
|
$
|
38.3
|
$
|
61.9
|
$
|
26.5
|
||||||
Life insurance
|
27.8
|
21.9
|
19.9
|
|||||||||
Property and casualty insurance
|
19.8
|
14.5
|
(110.1
|
)
|
||||||||
Intersegment and other
|
(4.0
|
)
|
(0.6
|
)
|
2.4
|
|||||||
Consolidated operating income (loss)
|
$
|
81.9
|
$
|
97.7
|
$
|
(61.3
|
)
|
|
As of December 31,
|
|||||||||||
2020
|
2019
|
2018
|
||||||||||
Commercial (1)
|
419,658
|
440,669
|
449,047
|
|||||||||
Medicare
|
137,092
|
127,789
|
108,605
|
|||||||||
Medicaid
|
422,023
|
355,465
|
318,616
|
|||||||||
Total
|
978,773
|
923,923
|
876,268
|
(Dollar amounts in millions)
|
2020
|
2019
|
2018
|
|||||||||
Years ended December 31,
|
||||||||||||
Revenues:
|
||||||||||||
Premiums earned, net
|
$
|
3,605.5
|
$
|
3,252.9
|
$
|
2,938.6
|
||||||
Administrative service fees
|
12.6
|
9.9
|
14.7
|
|||||||||
Net investment income
|
57.5
|
62.0
|
61.9
|
|||||||||
Other operating revenues
|
9.0
|
8.6
|
5.8
|
|||||||||
Total operating revenues
|
3,684.6
|
3,333.4
|
3,021.0
|
|||||||||
Net realized investment gains
|
0.6
|
5.8
|
0.3
|
|||||||||
Net unrealized investment gains (losses) on equity investments
|
7.6
|
32.2
|
(36.5
|
)
|
||||||||
Other income, net
|
9.6
|
4.2
|
11.3
|
|||||||||
Total revenues
|
3,702.4
|
3,375.6
|
2,996.1
|
|||||||||
Benefits and expenses:
|
||||||||||||
Claims incurred
|
2,946.8
|
2,666.3
|
2,527.6
|
|||||||||
Operating expenses
|
655.9
|
569.4
|
554.7
|
|||||||||
Total operating costs
|
3,602.7
|
3,235.7
|
3,082.3
|
|||||||||
Interest expense
|
8.0
|
7.6
|
6.9
|
|||||||||
Total benefits and expenses
|
3,610.7
|
3,243.3
|
3,089.2
|
|||||||||
Income (loss) before taxes
|
91.7
|
132.3
|
(93.1
|
)
|
||||||||
Income tax expense (benefit)
|
24.5
|
39.4
|
(29.8
|
)
|
||||||||
Net income (loss) attributable to TSM
|
$
|
67.2
|
$
|
92.9
|
$
|
(63.3
|
)
|
(Dollar amounts in millions)
|
2020
|
2019
|
2018
|
|||||||||
Operating revenues:
|
||||||||||||
Medical premiums earned, net:
|
||||||||||||
Commercial
|
$
|
815.6
|
$
|
801.2
|
$
|
782.8
|
||||||
Medicare
|
1,553.5
|
1,408.0
|
1,130.3
|
|||||||||
Medicaid
|
953.2
|
778.3
|
776.0
|
|||||||||
Medical premiums earned, net
|
3,322.3
|
2,987.5
|
2,689.1
|
|||||||||
Administrative service fees
|
13.0
|
14.3
|
19.1
|
|||||||||
Net investment income
|
20.8
|
23.5
|
23.8
|
|||||||||
Total operating revenues
|
3,356.1
|
3,025.3
|
2,732.0
|
|||||||||
Medical operating costs:
|
||||||||||||
Medical claims incurred
|
2,805.7
|
2,526.7
|
2,272.5
|
|||||||||
Medical operating expenses
|
512.1
|
436.7
|
433.0
|
|||||||||
Total medical operating costs
|
3,317.8
|
2,963.4
|
2,705.5
|
|||||||||
Medical operating income
|
$
|
38.3
|
$
|
61.9
|
$
|
26.5
|
||||||
Additional data:
|
||||||||||||
Member months enrollment:
|
||||||||||||
Commercial:
|
||||||||||||
Fully insured
|
3,882,185
|
3,844,106
|
3,775,441
|
|||||||||
Self-funded
|
1,285,366
|
1,426,353
|
1,732,219
|
|||||||||
Total Commercial member months
|
5,167,551
|
5,270,459
|
5,507,660
|
|||||||||
Medicare member months
|
1,631,059
|
1,540,476
|
1,337,061
|
|||||||||
Medicaid member months
|
4,515,196
|
4,257,181
|
4,555,702
|
|||||||||
Total member months
|
11,313,806
|
11,068,116
|
11,400,423
|
|||||||||
Medical loss ratio
|
84.5
|
%
|
84.6
|
%
|
84.5
|
%
|
||||||
Operating expense ratio
|
15.4
|
%
|
14.5
|
%
|
16.0
|
%
|
• |
Premiums generated by the Medicare business increased by $145.5 million, or 10.3%, to $1.6 billion, mostly due to higher average premium rates, reflecting an increase in the CMS benchmark, and higher member months enrollment by approximately 91,000.
|
• |
Premiums generated by the Medicaid business increased by $174.9 million, or 22.5%, to $953.2 million, primarily reflecting higher average premium rates following the premium rates increases that became effective on November 1, 2019, May 1, 2020 and July 1, 2020, an increase in enrollment of approximately 258,000 member months, the reinstatement of the HIP fee pass-through in 2020, and a profit-sharing accrual recorded in 2019.
|
• |
Premiums generated by the Commercial business increased by $14.4 million, or 1.8%, to $815.6 million. This fluctuation primarily reflects higher fully insured enrollment during the year by approximately 38,000 member months and higher average premium rates, mostly due to the reinstatement of the HIP fee pass-through in 2020.
|
• |
Claims incurred in the Medicare business increased by $132.2 million, or 11.8%, during the 2020 period and its MLR increased 110 basis points, to 80.9%. The increase in claims incurred is due to higher member months, improved benefits in product offerings, and unfavorable prior-period reserve development, partially offset by lower utilization of services as the result of the government-enforced lockdown during the COVID-19 pandemic.
|
• |
Claims incurred in the Medicaid business increased by $162.0 million, or 21.8%, during 2020 and its MLR decreased 50 basis points, to 94.9%. The increase in claim cost is due to higher member months, and unfavorable prior-period reserve development in the 2020 period. Lower MLR, reflected higher premium rates and the reinstatement of the HIP fee pass-through in 2020. In addition, the 2020 MLR reflects lower utilization of services as the result of the government-enforced lockdown during the COVID-19 pandemic.
|
• |
Claims incurred in the Commercial business decreased by $15.1 million, or 2.3%, during 2020 and its MLR decreased 330 basis points, to 79.1%. These decreases mostly result from lower utilization related to the COVID-19 lockdown, partially offset by the higher fully insured enrollment and an unfavorable change in prior-period reserve developments when compared to the 2019 period. In addition, the lower MLR was impacted by the reinstatement of the HIP fee pass-through in 2020.
|
• |
Medical premiums generated by the Medicare business increased by $277.7 million, or 24.6%, to $1,408.0 million, primarily reflecting an increase in enrollment of approximately 203,000 member months and higher average premium rates, mainly reflecting higher membership risk score in 2019 and an increase in reimbursement rates.
|
• |
Medical premiums generated by the Commercial business increased by $18.4 million, or 2.4%, to $801.2 million. This fluctuation primarily reflects higher fully insured member months during the year by approximately 69,000 member months and higher average premium rates, offset in part by $12.1 million related to the suspension of the HIP fee pass-through in 2019.
|
• |
Medical premiums generated by the Medicaid business increased by $2.3 million, or 0.3%, to $778.3 million. This increase primarily reflects higher premiums rates, offset by a decrease of $14.5 million related to the suspension of the HIP fee pass-through in 2019 and lower enrollment by approximately 299,000 member months. The decrease in membership follows the lower membership assigned to us by ASES when implementing the current Medicaid contract, which was effective November 1, 2018.
|
• |
The medical claims incurred of the Medicare business increased by $183.1 million, or 19.5%, during the 2019 period mostly driven by higher enrollment. The MLR at 79.8% was 340 basis points lower than the same period last year, driven by favorable prior period reserve developments in 2019 and the impact of cost containment initiatives. These decreases were partially offset by improved benefits in the 2019 product offerings.
|
• |
The medical claims incurred of the Medicaid business increased by $55.5 million, or 8.1%, during the 2019 period. The MLR at 95.4% was 690 basis points higher than the same period last year. The increased MLR reflects the higher required target MLR of the current Medicaid contract, the impact of the elimination of the HIP fee pass-through in 2019, and a timing difference in the recognition of member acuity in premiums. The current Medicaid contract requires a minimum MLR of 92%, including allocation of health care quality improvements expenses.
|
• |
The medical claims incurred of the Commercial business increased by $15.6 million, or 2.4%, during the 2019 period and its MLR, remained steady at 82.4% despite impact of the elimination of the HIP fee pass-through in 2019. The HIP Fee pass-through lowered the 2018 MLR by approximately 130 basis points.
|
(Dollar amounts in millions)
|
2020
|
2019
|
2018
|
|||||||||
Years ended December 31,
|
||||||||||||
Operating revenues:
|
||||||||||||
Premiums earned, net:
|
||||||||||||
Premiums earned
|
$
|
205.9
|
$
|
188.4
|
$
|
175.3
|
||||||
Assumed earned premiums
|
0.1
|
2.1
|
2.1
|
|||||||||
Ceded premiums earned
|
(10.0
|
)
|
(8.3
|
)
|
(8.8
|
)
|
||||||
Premiums earned, net
|
196.0
|
182.2
|
168.6
|
|||||||||
Net investment income
|
27.3
|
27.3
|
25.6
|
|||||||||
Total operating revenues
|
223.3
|
209.5
|
194.2
|
|||||||||
Operating costs:
|
||||||||||||
Policy benefits and claims incurred
|
107.2
|
105.9
|
99.0
|
|||||||||
Underwriting and other expenses
|
88.3
|
81.7
|
75.3
|
|||||||||
Total operating costs
|
195.5
|
187.6
|
174.3
|
|||||||||
Operating income
|
$
|
27.8
|
$
|
21.9
|
$
|
19.9
|
||||||
Additional data:
|
||||||||||||
Loss ratio
|
54.7
|
%
|
58.1
|
%
|
58.7
|
%
|
||||||
Expense ratio
|
45.1
|
%
|
44.8
|
%
|
44.7
|
%
|
(Dollar amounts in millions)
|
2020
|
2019
|
2018
|
|||||||||
Years ended December 31,
|
||||||||||||
Operating revenues:
|
||||||||||||
Premiums earned, net:
|
||||||||||||
Premiums written
|
$
|
157.9
|
$
|
150.5
|
$
|
139.8
|
||||||
Premiums ceded
|
(61.1
|
)
|
(52.3
|
)
|
(60.4
|
)
|
||||||
Change in unearned premiums
|
(4.8
|
)
|
(10.5
|
)
|
4.1
|
|||||||
Premiums earned, net
|
92.0
|
87.7
|
83.5
|
|||||||||
Net investment income
|
9.0
|
9.8
|
10.8
|
|||||||||
Total operating revenues
|
101.0
|
97.5
|
94.3
|
|||||||||
Operating costs:
|
||||||||||||
Claims incurred
|
35.1
|
39.6
|
159.9
|
|||||||||
Underwriting and other operating expenses
|
46.0
|
43.4
|
44.5
|
|||||||||
Total operating costs
|
81.1
|
83.0
|
204.4
|
|||||||||
Operating income (loss)
|
$
|
19.9
|
$
|
14.5
|
$
|
(110.1
|
)
|
|||||
Additional data:
|
||||||||||||
Loss ratio
|
38.2
|
%
|
45.2
|
%
|
191.5
|
%
|
||||||
Expense ratio
|
50.0
|
%
|
49.5
|
%
|
53.3
|
%
|
(Dollar amounts in millions)
|
2020
|
2019
|
2018
|
|||||||||
Sources (uses) of cash:
|
||||||||||||
Cash provided by (used in) operating activities
|
$
|
257.8
|
$
|
(16.8
|
)
|
$
|
7.5
|
|||||
Net purchases of investment securities
|
(186.4
|
)
|
(4.7
|
)
|
(12.6
|
)
|
||||||
Net capital expenditures
|
(57.9
|
)
|
(20.8
|
)
|
(19.8
|
)
|
||||||
Capital contribution to equity method investees
|
(8.2
|
)
|
(11.4
|
)
|
-
|
|||||||
Proceeds from long-term borrowings
|
30.8
|
-
|
-
|
|||||||||
Payments of long-term borrowings
|
(3.9
|
)
|
(3.2
|
)
|
(3.2
|
)
|
||||||
Proceeds from policyholder deposits
|
25.7
|
28.9
|
18.5
|
|||||||||
Surrenders of policyholder deposits
|
(15.1
|
)
|
(19.9
|
)
|
(26.7
|
)
|
||||||
Repurchase and retirement of common stock
|
(15.0
|
)
|
(10.0
|
)
|
(22.4
|
)
|
||||||
Net change in short-term borrowings
|
(24.0
|
)
|
54.0
|
-
|
||||||||
Other
|
(2.6
|
)
|
(3.8
|
)
|
(22.7
|
)
|
||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
1.2
|
$
|
(7.7
|
)
|
$
|
(81.4
|
)
|
• |
In August 2019, TSS and TSV became members of the FHLBNY, which provides access to collateralized advances. The borrowing capacity of TSS and TSV is up to 30% of their admitted assets as disclosed in the most recent filing with the Commissioner of Insurance but is constrained by the amount of collateral held at the FHLBNY. See Note 3, Investment in Securities of the Notes to Consolidated Financial Statements, in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. As of December 31, 2020 and 2019, the borrowing capacity was approximately $200.3 million and $131.1 million, respectively. The outstanding balance as of December 31, 2020 and 2019 was $30.0 million and $54.0 million, respectively. The average interest rate of the outstanding balances was 0.33% and 1.79% as of December 31, 2020 and 2019, respectively.
|
• |
As of December 31, 2020, TSS has $35.0 million of available credit under repurchase agreements with broker-dealers, which are short-term borrowing facilities using securities as collateral. There were no outstanding short-term borrowings under these facilities as of December 31, 2020.
|
• |
TSA has a $10.0 million revolving loan agreement with a commercial bank in Puerto Rico. This line of credit has an interest rate of 30-day LIBOR plus 250 basis points and contains certain financial and non-financial covenants that are customary for this type of facility. This line of credit matures on June 30, 2021 and had no outstanding balance as of December 31, 2020.
|
• |
Alternative investments – The Company has $52.6 million of unfunded capital commitments related to alternative investments. These commitments were excluded from this disclosure due to the undetermined timing of their cash flows.
|
• |
Unearned premiums – This amount accounts for the premiums collected prior to the end of coverage period and does not represent a future cash outflow. As of December 31, 2020, we had $97.5 million in unearned premiums.
|
• |
Policyholder deposits – The cash outflows related to these instruments are not included because they do not have defined maturities, such that the timing of payments and withdrawals is uncertain. There are currently no significant policyholder deposits in paying status. As of December 31, 2020, our policyholder deposits had a carrying amount of $206.1 million.
|
• |
Other long-term liabilities – Due to the indeterminate nature of their cash outflows, $199.8 million of other long-term liabilities are not reflected in the following table, consisting of $139.6 million of liability for pension benefits, $45.1 million in liabilities to the Federal Employees’ Health Benefits Plan Program and $15.1 million in deferred tax liabilities.
|
|
Contractual obligations by year
|
|||||||||||||||||||||||||||
(Dollar amounts in millions)
|
Total
|
2021
|
2022
|
2023
|
2024
|
2025
|
Thereafter
|
|||||||||||||||||||||
Borrowings (1)
|
$
|
90.5
|
$
|
36.3
|
$
|
6.1
|
$
|
6.5
|
$
|
15.4
|
$
|
26.2
|
$
|
-
|
||||||||||||||
Operating leases
|
15.1
|
4.0
|
3.4
|
2.3
|
1.9
|
0.7
|
2.8
|
|||||||||||||||||||||
Purchase obligations (2)
|
300.4
|
291.8
|
5.1
|
2.7
|
0.6
|
0.1
|
0.1
|
|||||||||||||||||||||
Claim liabilities (3)
|
640.9
|
520.3
|
87.2
|
14.6
|
7.2
|
3.7
|
7.9
|
|||||||||||||||||||||
Estimated obligation for future policy benefits (4)
|
759.3
|
149.9
|
134.2
|
126.6
|
119.6
|
112.8
|
116.2
|
|||||||||||||||||||||
$
|
1,806.2
|
$
|
1,002.3
|
$
|
236.0
|
$
|
152.7
|
$
|
144.7
|
$
|
143.5
|
$
|
127.0
|
(1) |
As of December 31, 2020, our long-term borrowings consist of credit agreements with commercial banks in Puerto Rico. Short-term borrowings represent the outstanding balance of short-term facilities available to address timing differences between cash receipts and disbursements. See the “Financing and Financing Capacity” section for additional information regarding our borrowings
|
(2) |
Purchase obligations represent payments required by us under material agreements to purchase goods or services that are enforceable and legally binding and where all significant terms are specified, including: quantities to be purchased, price provisions and the timing of the transaction. Other purchase orders made in the ordinary course of business for which we are not liable are excluded from the table above. Estimated pension plan contributions amounting to $10.0 million were included within the total purchase obligations. However, this amount is an estimate which may be subject to change in view of the fact that contribution decisions are affected by various factors such as market performance, regulatory and legal requirements and plan funding policy.
|
(3) |
Claim liabilities represent the amount of our claims processed and incomplete as well as an estimate of the amount of incurred but not reported claims and loss-adjustment expenses. This amount does not include an estimate of claims to be incurred subsequent to December 31, 2020. The expected claims payments are an estimate and may differ materially from the actual claims payments made by us in the future. Also, claim liabilities are presented gross, and thus do not reflect the effects of reinsurance under which $344.0 million of reserves had been ceded at December 31, 2020.
|
(4) |
Our Life Insurance segment establishes, and carries as liabilities, actuarially determined amounts that are calculated to meet its policy obligations when a policy matures or surrenders, an insured dies or becomes disabled or upon the occurrence of other covered events. A significant portion of the estimated obligation for future policy benefits to be paid included in this table considers contracts under which we are currently not making payments and will not make payments until the occurrence of an insurable event not under our control, such as death, illness, or the surrender of a policy. We have estimated the timing of the cash flows related to these contracts based on historical experience as well as expectations of future payment patterns. The amounts presented in the table above represent the estimated cash payments for benefits under such contracts based on assumptions related to the receipt of future premiums and assumptions related to mortality, morbidity, policy lapses, renewals, retirements, disability incidence and other contingent events as appropriate for the respective product type. All estimated cash payments included in this table are not discounted to present value nor do they take into account estimated future premiums on policies in-force as of December 31, 2020 and are gross of any reinsurance recoverable. The $759.3 million total estimated cash flows for all years in the table is different from the Liability of Future Policy Benefits of $415.0 million included in our Consolidated Financial Statements principally due to the time value of money. Actual cash payments to policyholders could differ significantly from the estimated cash payments as presented in this table due to differences between actual experience and the assumptions used in the estimation of these payments.
|
(Dollar amounts in millions)
|
||||
Managed care
|
$
|
444.4
|
||
Property and casualty insurance
|
292.8
|
|||
Life insurance
|
49.9
|
|||
Consolidated
|
$
|
787.1
|
(Dollar amounts in millions)
|
2019
|
2018
|
2017
|
|||||||||
Years ended December 31,
|
||||||||||||
Total incurred claims:
|
||||||||||||
As reported (1)
|
$
|
2,556.0
|
$
|
2,308.5
|
$
|
2,231.1
|
||||||
On a retrospective basis
|
2,590.7
|
2,279.2
|
2,195.1
|
|||||||||
Variance
|
$
|
(34.7
|
)
|
$
|
29.3
|
$
|
36.0
|
|||||
Variance to total incurred claims as reported
|
-1.4
|
%
|
1.3
|
%
|
1.6
|
%
|
(1) |
Includes total claims incurred less adjustments for prior year reserve development.
|
• |
Through the management of our cash flows and investment portfolio.
|
• |
In the Commercial business we have the ability to increase the premium rates throughout the year in the monthly renewal process when renegotiating the premiums for the following contract year of each group as they become due. We consider the actual claims trend of each group when determining the premium rates for the following contract year.
|
• |
We have available short-term borrowing facilities to address differences between cash receipts and disbursements.
|
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk
|
• |
The market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis, including the impact of prepayment rates on mortgages; and
|
• |
The model assumes that the composition of assets and liabilities remains unchanged throughout the year.
|
(Dollar amounts in millions)
|
||||||||||||||
Change in Interest Rates
|
Expected
Fair Value
|
Amount of
Decrease
|
%
Change
|
|||||||||||
December 31, 2020:
|
||||||||||||||
Base Scenario
|
$
|
1,343.5
|
||||||||||||
+100
|
bp
|
1,288.6
|
(54.9
|
)
|
(4.1
|
)%
|
||||||||
+200
|
bp
|
1,232.9
|
(110.6
|
)
|
(8.2
|
)%
|
||||||||
+300
|
bp
|
1,178.8
|
(164.7
|
)
|
(12.3
|
)%
|
||||||||
December 31, 2019:
|
||||||||||||||
Base Scenario
|
$
|
1,244.9
|
||||||||||||
+100
|
bp
|
1,187.4
|
(57.5
|
)
|
(4.3
|
)%
|
||||||||
+200
|
bp
|
1,130.8
|
(114.1
|
)
|
(8.5
|
)%
|
||||||||
+300
|
bp
|
1,077.0
|
(167.9
|
)
|
(12.5
|
)%
|
Item 8. |
Financial Statements and Supplementary Data
|
(Dollar amounts in thousands)
|
||||||||||||||||||||
|
2020
|
|||||||||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
Total
|
||||||||||||||||
Revenues
|
||||||||||||||||||||
Premiums earned, net
|
$
|
875,897
|
$
|
858,535
|
$
|
922,934
|
$
|
948,084
|
$
|
3,605,450
|
||||||||||
Administrative service fees
|
2,194
|
2,809
|
3,752
|
3,830
|
12,585
|
|||||||||||||||
Net investment income
|
14,311
|
13,815
|
14,168
|
15,253
|
57,547
|
|||||||||||||||
Other operating revenues
|
4,039
|
303
|
2,052
|
2,597
|
8,991
|
|||||||||||||||
Total operating revenues
|
896,441
|
875,462
|
942,906
|
969,764
|
3,684,573
|
|||||||||||||||
Net realized investment (losses) gains
|
(466
|
)
|
(221
|
)
|
507
|
821
|
641
|
|||||||||||||
Net unrealized investment (losses) gains on equity investments
|
(56,806
|
)
|
28,338
|
11,040
|
25,067
|
7,639
|
||||||||||||||
Other income, net
|
3,605
|
801
|
1,811
|
3,368
|
9,585
|
|||||||||||||||
Total revenues
|
842,774
|
904,380
|
956,264
|
999,020
|
3,702,438
|
|||||||||||||||
Benefits and expenses
|
||||||||||||||||||||
Claims incurred
|
714,522
|
653,087
|
761,792
|
817,419
|
2,946,820
|
|||||||||||||||
Operating expenses
|
162,201
|
178,659
|
158,809
|
156,230
|
655,899
|
|||||||||||||||
Total operating costs
|
876,723
|
831,746
|
920,601
|
973,649
|
3,602,719
|
|||||||||||||||
Interest expense
|
1,853
|
1,864
|
2,096
|
2,173
|
7,986
|
|||||||||||||||
Total benefits and expenses
|
878,576
|
833,610
|
922,697
|
975,822
|
3,610,705
|
|||||||||||||||
(Loss) income before taxes
|
(35,802
|
)
|
70,770
|
33,567
|
23,198
|
91,733
|
||||||||||||||
Income tax (benefit) expense
|
(9,650
|
)
|
27,181
|
9,989
|
(2,952
|
)
|
24,568
|
|||||||||||||
Net (loss) income
|
(26,152
|
)
|
43,589
|
23,578
|
26,150
|
67,165
|
||||||||||||||
Less: Net loss attributable to non-controlling interest
|
7
|
10
|
3
|
4
|
24
|
|||||||||||||||
Net (loss) income attributable to TSM
|
$
|
(26,145
|
)
|
$
|
43,599
|
$
|
23,581
|
$
|
26,154
|
$
|
67,189
|
|||||||||
Basic net (loss) income per share
|
$
|
(1.12
|
)
|
$
|
1.88
|
$
|
1.02
|
$
|
1.13
|
$
|
2.90
|
|||||||||
Diluted net (loss) income per share
|
$
|
(1.12
|
)
|
$
|
1.87
|
$
|
1.02
|
$
|
1.13
|
$
|
2.88
|
|
2019
|
|||||||||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
Total
|
||||||||||||||||
Revenues
|
||||||||||||||||||||
Premiums earned, net
|
$
|
768,002
|
$
|
859,493
|
$
|
815,021
|
$
|
810,364
|
$
|
3,252,880
|
||||||||||
Administrative service fees
|
2,632
|
2,456
|
2,607
|
2,251
|
9,946
|
|||||||||||||||
Net investment income
|
15,376
|
15,062
|
15,176
|
16,393
|
62,007
|
|||||||||||||||
Other operating revenues
|
1,577
|
1,591
|
3,167
|
2,218
|
8,553
|
|||||||||||||||
Total operating revenues
|
787,587
|
878,602
|
835,971
|
831,226
|
3,333,386
|
|||||||||||||||
Net realized investment gains
|
1,315
|
2,364
|
1,087
|
1,077
|
5,843
|
|||||||||||||||
Net unrealized investment gains on equity investments
|
19,669
|
3,323
|
1,267
|
7,892
|
32,151
|
|||||||||||||||
Other income, net
|
1,169
|
1,705
|
485
|
847
|
4,206
|
|||||||||||||||
Total revenues
|
809,740
|
885,994
|
838,810
|
841,042
|
3,375,586
|
|||||||||||||||
Benefits and expenses
|
||||||||||||||||||||
Claims incurred
|
623,190
|
706,304
|
680,010
|
656,752
|
2,666,256
|
|||||||||||||||
Operating expenses
|
132,663
|
134,084
|
136,882
|
165,777
|
569,406
|
|||||||||||||||
Total operating costs
|
755,853
|
840,388
|
816,892
|
822,529
|
3,235,662
|
|||||||||||||||
Interest expense
|
1,788
|
1,831
|
2,062
|
1,991
|
7,672
|
|||||||||||||||
Total benefits and expenses
|
757,641
|
842,219
|
818,954
|
824,520
|
3,243,334
|
|||||||||||||||
Income before taxes
|
52,099
|
43,775
|
19,856
|
16,522
|
132,252
|
|||||||||||||||
Income tax expense
|
17,316
|
12,849
|
5,910
|
3,300
|
39,375
|
|||||||||||||||
Net income
|
34,783
|
30,926
|
13,946
|
13,222
|
92,877
|
|||||||||||||||
Less: Net loss attributable to non-controlling interest
|
3
|
5
|
2
|
7
|
17
|
|||||||||||||||
Net income attributable to TSM
|
$
|
34,786
|
$
|
30,931
|
$
|
13,948
|
$
|
13,229
|
$
|
92,894
|
||||||||||
Basic net income per share
|
$
|
1.53
|
$
|
1.35
|
$
|
0.59
|
$
|
0.55
|
$
|
3.98
|
||||||||||
Diluted net income per share
|
$
|
1.52
|
$
|
1.35
|
$
|
0.58
|
$
|
0.55
|
$
|
3.97
|
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
|
Item 9A. |
Controls and Procedures
|
• |
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
• |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Consolidated Financial Statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
• |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Consolidated Financial Statements.
|
Item 9B. |
Other Information
|
Item 10. |
Directors, Executive Officers and Corporate Governance
|
Item 11. |
Executive Compensation
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13. |
Certain Relationships and Related Transactions, and Director Independence
|
Item 14. |
Principal Accountant Fees and Services
|
Item 15. |
Exhibits and Financial Statements Schedules
|
Financial Statements
|
Description
|
F-1
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets as of December 31, 2020 and 2019
|
F-3
|
Consolidated Statements of Earnings for the years ended December 31, 2020, 2019 and 2018
|
F-4
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
|
F-5
|
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018
|
F-6
|
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
|
F-7
|
Notes to Consolidated Financial Statements for the years ended December 31, 2020, 2019 and 2018
|
Financial Statements
Schedules
|
Description
|
S-1
|
Schedule II – Condensed Financial Information of the Registrant
|
S-2
|
Schedule III – Supplementary Insurance Information
|
S-3
|
Schedule IV – Reinsurance
|
S-4
|
Schedule V – Valuation and Qualifying Accounts
|
S-5
|
Schedule VI – Supplementary Information Concerning Consolidated Property and Casualty Insurance Operations
|
Item 16. |
Form 10-K Summary
|
Exhibits
|
Description
|
Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3(i)(d) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865).
|
|
Amendment to Article Tenth of the Amended and Restated Articles of Incorporation of Triple-S Management Corporation, incorporated by reference to Exhibit 3(i)(b) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 001-33865).
|
|
Articles of Incorporation of Triple-S Management Corporation, as currently in effect, incorporated by reference to Exhibit 3(i)(c) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 001-33865).
|
|
Amendments to Article Tenth and Thirteenth of the Amended and Restated Articles of Incorporation of Triple-S Management Corporation (incorporated herein by reference to Exhibit 3(i)(d) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-33865)).
|
|
Composite Amended and Restated Articles of Incorporation of Triple-S Management Corporation (incorporated herein by reference to Exhibit 3(i)(e) to TSM’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-33865)).
|
|
Amended and Restated Bylaws of Triple-S Management Corporation (incorporated herein by reference to Exhibit 3.1 to TSM’s Current Report on Form 8-K filed on June 11, 2010 (File No. 001-33865)).
|
|
Master Services Agreement, dated as of August 29, 2017, by and between Triple-S Salud, Inc. and OptumInsight, Inc. (incorporated herein by reference to Exhibit 10.2 to TSM’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No. 001-33865)).
|
|
Amendment to Extend Contract for the Provision of Physical & Behavioral Health Services under the Government Health Plan Program dated as of June 30, 2018, by and between the Administracion de Seguros de Salud de Puerto Rico and Triple-S Salud, Inc. (incorporated herein by reference to Exhibit 10.1 to TSM’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-33865)).
|
|
Amendment to the Contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc. to administer the provision of physical and behavioral health services under the Government Health Plan (incorporated herein by reference to Exhibit 10.3 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 001-33865)).
|
|
Federal Employees Health Benefits Contract (incorporated herein by reference to Exhibit 10.5 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).
|
|
Non-Contributory Retirement Program (incorporated herein by reference to Exhibit 10.8 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).
|
Exhibits
|
Description
|
TSM 2007 Incentive Plan, dated October 16, 2007 (incorporated herein by reference to Exhibit C to TSM’s 2007 Proxy Statement (File No. 001-33865)).
|
|
TSM 2017 Incentive Plan (incorporated herein by reference to Exhibit 99.1 to TSM’s Form S-8 dated May 11, 2017 (File No. 001-33865)).
|
|
Blue Shield License Agreement by and between BCBSA and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.11 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
|
|
Blue Shield Controlled Affiliate License Agreement by and among BCBSA, TSS and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.12 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
|
|
Blue Cross License Agreements by and between BCBSA and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.13 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
|
|
Blue Cross Controlled Affiliate License Agreement by and among BCBSA, TSS and TSM, including revisions, if any, adopted by Member Plans through the November 19, 2009 meeting (incorporated herein by reference to Exhibit 10.14 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-33865)).
|
|
Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS dated August 16, 2007 (incorporated herein by reference to Exhibit 10.15 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
|
|
Addendum Number One to the Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS (incorporated herein by reference to Exhibit 10.15(a) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
|
|
Addendum Number Two to the Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS (incorporated herein by reference to Exhibit 10.15(b) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
|
|
Addendum Number Three to the Software License and Maintenance Agreement between Quality Care Solutions, Inc, and TSS (incorporated herein by reference to Exhibit 10.15(c) to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
|
|
Work Order Agreement between Quality Care Solutions, Inc. and TSS (incorporated herein by reference to Exhibit 10.16 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 001-33865)).
|
|
Employment Contract between Roberto García-Rodríguez and TSM (incorporated herein by reference to Exhibit 10.1 to TSM’s Current Report on Form 8-K filed on December 26, 2018 (File No. 001-33865)).
|
|
Credit Agreement with FirstBank Puerto Rico in the amount of $41,000,000 (incorporated herein by reference to Exhibit 10.6 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).
|
Exhibits
|
Description
|
Credit Agreement with FirstBank Puerto Rico in the amount of $20,000,000 (incorporated herein by reference to Exhibit 10.7 to TSM’s General Form of Registration of Securities on Form 10 (File No. 001-33865)).
|
|
Credit Agreement dated December 28, 2016 by and between Triple-S Management Corporation and FirstBank Puerto Rico (incorporated herein by reference to Exhibit 10.1 to TSM’s Current Report on Form 8-K filed on December 30, 2016 (File No. 001-33865)).
|
|
Agreement between the Administracion de Seguros de Salud de Puerto Rico and Triple-S Salud, Inc. for the Provision of Physical & Behavioral Health Services under the Government Health Plan Program dated as of September 21, 2018, (incorporated herein by reference to Exhibit 10.1 to TSM’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (File No. 001-33865)).
|
|
Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of February 21, 2020.
|
|
Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of February 26, 2020.
|
|
Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of May 1, 2020.
|
|
Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of June 29, 2020.
|
|
Amendment to the contract between Administracion de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of July 31, 2020.
|
|
Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of August 28, 2020.
|
|
Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of September 9, 2020.
|
|
Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of September 24, 2020.
|
|
Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Government Health Plan dated as of December 17, 2020.
|
Exhibits
|
Description
|
Statement re computation of per share earnings; an exhibit describing the computation of the earnings per share has been omitted as the detail necessary to determine the computation of earnings per share can be clearly determined from the material contained in Part II of this Annual Report on Form 10-K.
|
|
Code of Ethics for Financial Managers and Supervisors.
|
|
List of Subsidiaries of TSM
|
|
Consent of Independent Registered Public Accounting Firm (Deloitte & Touche LLP).
|
|
Certification of the President and Chief Executive Officer required by Rule 13a-14(a)/15d-14(a).
|
|
Certification of the Vice President of Finance and Chief Financial Officer required by Rule 13a-14(a)/15d-14(a).
|
|
Certification of the President and Chief Executive Officer required pursuant to 18 U.S. Section 1350.
|
|
Certification of the Vice President of Finance and Chief Financial Officer required pursuant to 18 U.S. Section 1350.
|
|
Incentive Compensation Recoupment Policy (incorporated herein by reference to Exhibit 99.1 to TSM’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-33865)).
|
By:
|
/s/ Roberto García-Rodríguez
|
|
Date:
|
February 26, 2021
|
|
|
Roberto García-Rodríguez
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
By:
|
/s/ Juan J. Román-Jiménez
|
|
Date:
|
February 26, 2021
|
|
|
Juan J. Román-Jiménez
|
|
|
|
|
|
Executive Vice President
and Chief Financial Officer
|
|
|
|
By:
|
/s/ Luis A. Clavell-Rodríguez
|
|
Date:
|
February 26, 2021
|
|
|
Luis A. Clavell-Rodríguez
|
|
|
|
|
|
Director and Chairman of the Board
|
|
|
|
By:
|
/s/ Cari M. Domínguez
|
|
Date:
|
February 26, 2021
|
|
|
Cari M. Domínguez
|
|
|
|
|
|
Director and Vice Chairman of the Board
|
|
|
|
By:
|
/s/ David H. Chafey, Jr
|
|
Date:
|
February 26, 2021
|
|
|
David H. Chafey, Jr.
|
|
|
|
|
|
Director
|
|
|
|
By:
|
/s/ Manuel Figueroa-Collazo
|
|
Date:
|
February 26, 2021
|
|
|
Manuel Figueroa-Collazo
Director
|
|
|
|
By:
|
/s/ Joseph A. Frick
|
|
Date:
|
February 26, 2021
|
|
|
Joseph A. Frick
|
|
|
|
|
|
Director
|
|
|
|
By:
|
/s/ Roberto Santa María-Ros
|
|
Date:
|
February 26, 2021
|
|
|
Roberto Santa María-Ros
|
|
|
|
|
|
Director
|
|
|
|
By:
|
/s/ Gail B. Marcus
|
|
Date:
|
February 26, 2021
|
|
|
Gail B. Marcus
|
|
|
|
|
|
Director
|
|
|
|
By:
|
/s/ Stephen L. Ondra
|
|
Date:
|
February 26, 2021
|
|
|
Stephen L. Ondra
|
|
|
|
|
|
Director
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
2
|
Consolidated Financial Statements
|
|
Consolidated Balance Sheets
|
5
|
Consolidated Statements of Earnings
|
6
|
Consolidated Statements of Comprehensive Income
|
7
|
Consolidated Statements of Stockholders’ Equity
|
8
|
Consolidated Statements of Cash Flows
|
9
|
Notes to Consolidated Financial Statements
|
11–75
|
•
|
We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the forecasts and the selection of the discount rates.
|
•
|
We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.
|
•
|
We evaluated the reasonableness of management’s forecasts by comparing forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in press releases, analyst and industry reports of the Company and companies in its peer group.
|
•
|
We considered the impact of changes in the regulatory environment on management’s forecasts.
|
•
|
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, including testing the mathematical accuracy of the calculation and (2) discount rate and company specific risks by:
|
o
|
Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation
|
o
|
Developing a range of independent discount rate estimates and comparing to those selected by management.
|
Assets
|
2020
|
2019
|
||||||
Investments and cash
|
||||||||
Fixed-maturities available-for-sale, at fair value (amortized cost of $1,227,422 in 2020 and $1,173,043 in 2019)
|
$
|
1,342,465
|
$
|
1,242,883
|
||||
Fixed-maturities held-to-maturity, at amortized cost (fair value of $2,085 in 2020 and $2,019 in 2019)
|
1,867
|
1,860
|
||||||
Equity investments, at fair value (amortized cost of $351,233 in 2020 and $242,069 in 2019)
|
404,328
|
287,525
|
||||||
Other invested assets, at net asset value (amortized cost of $112,171 in 2020 and $97,575 in 2019)
|
114,905
|
100,508
|
||||||
Policy loans
|
10,459
|
10,861
|
||||||
Cash and cash equivalents
|
110,989
|
109,837
|
||||||
Total investments and cash
|
1,985,013
|
1,753,474
|
||||||
Premium and other receivables, net
|
488,840
|
567,692
|
||||||
Deferred policy acquisition costs and value of business acquired
|
248,325
|
234,885
|
||||||
Property and equipment, net
|
131,974
|
88,588
|
||||||
Deferred tax asset
|
119,534
|
77,294
|
||||||
Goodwill
|
28,614
|
28,599
|
||||||
Other assets
|
86,118
|
68,294
|
||||||
Total assets
|
$
|
3,088,418
|
$
|
2,818,826
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Claim liabilities
|
$
|
787,102
|
$
|
709,258
|
||||
Liability for future policy benefits
|
414,997
|
386,017
|
||||||
Unearned premiums
|
97,481
|
93,301
|
||||||
Policyholder deposits
|
206,109
|
189,120
|
||||||
Liability to Federal Employees’ Health Benefits and
Federal Employees’ Programs
|
45,109
|
47,781
|
||||||
Accounts payable and accrued liabilities
|
332,699
|
325,761
|
||||||
Deferred tax liability
|
15,046
|
10,257
|
||||||
Short-term borrowings
|
30,000
|
54,000
|
||||||
Long-term borrowings
|
52,751
|
25,694
|
||||||
Liability for pension benefits
|
139,611
|
34,465
|
||||||
Total liabilities
|
2,120,905
|
1,875,654
|
||||||
|
||||||||
Commitments and contingencies
|
|
|
||||||
|
||||||||
Stockholders’ equity
|
||||||||
Triple-S Management Corporation stockholders’ equity Common stock Class B, $1 par value. Authorized 100,000,000 shares; issued and outstanding 23,430,292 and 23,799,633 shares at December 31, 2020 and 2019, respectively
|
23,430
|
23,800
|
||||||
Additional paid-in capital
|
57,399
|
60,504
|
||||||
Retained earnings
|
897,221
|
830,198
|
||||||
Accumulated other comprehensive income, net
|
(9,820
|
)
|
29,363
|
|||||
Total Triple-S Management Corporation stockholders’ equity
|
968,230
|
943,865
|
||||||
Non-controlling interest in consolidated subsidiary
|
(717
|
)
|
(693
|
)
|
||||
Total stockholders’ equity
|
967,513
|
943,172
|
||||||
Total liabilities and stockholders’ equity
|
$
|
3,088,418
|
$
|
2,818,826
|
|
2020
|
2019
|
2018
|
|||||||||
Revenues:
|
||||||||||||
Premiums, net
|
$
|
3,605,450
|
$
|
3,252,880
|
$
|
2,938,591
|
||||||
Administrative service fees
|
12,585
|
9,946
|
14,701
|
|||||||||
Net investment income
|
57,547
|
62,007
|
61,909
|
|||||||||
Other operating revenues
|
8,991
|
8,553
|
5,794
|
|||||||||
Total operating revenues
|
3,684,573
|
3,333,386
|
3,020,995
|
|||||||||
Net realized investment gains
|
641
|
5,843
|
298
|
|||||||||
Net unrealized investment gains (losses) on equity investments
|
7,639
|
32,151
|
(36,546
|
)
|
||||||||
Other income, net
|
9,585
|
4,206
|
11,312
|
|||||||||
Total revenues
|
3,702,438
|
3,375,586
|
2,996,059
|
|||||||||
Benefits and expenses:
|
||||||||||||
Claims incurred, net of reinsurance
|
2,946,820
|
2,666,256
|
2,527,613
|
|||||||||
Operating expenses
|
655,899
|
569,406
|
554,715
|
|||||||||
Total operating costs
|
3,602,719
|
3,235,662
|
3,082,328
|
|||||||||
Interest expense
|
7,986
|
7,672
|
6,903
|
|||||||||
Total benefits and expenses
|
3,610,705
|
3,243,334
|
3,089,231
|
|||||||||
Income (loss) before taxes
|
91,733
|
132,252
|
(93,172
|
)
|
||||||||
Income tax expense (benefit)
|
24,568
|
39,375
|
(29,866
|
)
|
||||||||
Net income (loss)
|
67,165
|
92,877
|
(63,306
|
)
|
||||||||
Less: Net loss attributable to non-controlling interest
|
24
|
17
|
4
|
|||||||||
|
||||||||||||
Net income (loss) attributable to Triple-S Management Corporation
|
$
|
67,189
|
$
|
92,894
|
$
|
(63,302
|
)
|
|||||
|
||||||||||||
Earnings per share attributable to Triple-S Management Corporation
|
||||||||||||
Basic net income (loss) per share
|
$
|
2.90
|
$
|
3.98
|
$
|
(2.76
|
)
|
|||||
Diluted net income (loss) per share
|
$
|
2.88
|
$
|
3.97
|
$
|
(2.76
|
)
|
|
2020
|
2019
|
2018
|
|||||||||
Net income (loss)
|
$
|
67,165
|
$
|
92,877
|
$
|
(63,306
|
)
|
|||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Net unrealized change in fair value of available-for-sale-securities, net of taxes
|
33,859
|
30,522
|
(9,048
|
)
|
||||||||
Defined benefit pension plan:
|
||||||||||||
Actuarial (loss) gain, net
|
(73,042
|
)
|
(4,221
|
)
|
738
|
|||||||
Total other comprehensive (loss) income, net of tax
|
(39,183
|
)
|
26,301
|
(8,310
|
)
|
|||||||
Comprehensive income (loss)
|
27,982
|
119,178
|
(71,616
|
)
|
||||||||
Comprehensive loss attributable to non-controlling interest
|
24
|
17
|
4
|
|||||||||
Comprehensive income (loss) attributable to Triple-S Management Corporation
|
$
|
28,006
|
$
|
119,195
|
$
|
(71,612
|
)
|
|
Class A
Common
Stock
|
Class B
Common
Stock
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Triple-S
Management
Corporation
Stockholders’
Equity
|
Non-controlling
Interest in
Consolidated
Subsidiary
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance, December 31, 2017
|
$
|
951
|
$
|
22,627
|
$
|
53,142
|
$
|
785,390
|
$
|
51,254
|
$
|
913,364
|
$
|
(682
|
)
|
$
|
912,682
|
|||||||||||||||
Share-based compensation
|
-
|
287
|
3,070
|
-
|
-
|
3,357
|
-
|
3,357
|
||||||||||||||||||||||||
Repurchase and retirement of common stock
|
-
|
(934
|
)
|
(22,191
|
)
|
-
|
-
|
(23,125
|
)
|
-
|
(23,125
|
)
|
||||||||||||||||||||
Comprehensive (loss) income
|
-
|
-
|
-
|
(63,302
|
)
|
(8,310
|
)
|
(71,612
|
)
|
6
|
(71,606
|
)
|
||||||||||||||||||||
Cumulative effect adjustment due to implementation of ASU 2016-01
|
-
|
-
|
-
|
39,882
|
(39,882
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||
Balance, December 31, 2018
|
$
|
951
|
$
|
21,980
|
$
|
34,021
|
$
|
761,970
|
$
|
3,062
|
$
|
821,984
|
$
|
(676
|
)
|
$
|
821,308
|
|||||||||||||||
Share-based compensation
|
-
|
222
|
11,383
|
-
|
-
|
11,605
|
-
|
11,605
|
||||||||||||||||||||||||
Repurchase and retirement of common stock
|
-
|
(534
|
)
|
(9,573
|
)
|
-
|
-
|
(10,107
|
)
|
-
|
(10,107
|
)
|
||||||||||||||||||||
Issuance of Common Stock
|
48
|
-
|
1,151
|
-
|
-
|
1,199
|
-
|
1,199
|
||||||||||||||||||||||||
Stock dividend
|
-
|
1,133
|
23,522
|
(24,655
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Dividend
|
-
|
-
|
-
|
(11
|
)
|
-
|
(11
|
)
|
-
|
(11
|
)
|
|||||||||||||||||||||
Common Stock Class A conversion to Class B
|
(999
|
)
|
999
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Comprehensive income (loss)
|
-
|
-
|
-
|
92,894
|
26,301
|
119,195
|
(17
|
)
|
119,178
|
|||||||||||||||||||||||
Balance, December 31, 2019
|
$
|
-
|
$
|
23,800
|
$
|
60,504
|
$
|
830,198
|
$
|
29,363
|
$
|
943,865
|
$
|
(693
|
)
|
$
|
943,172
|
|||||||||||||||
Share-based compensation
|
-
|
604
|
11,285
|
-
|
-
|
11,889
|
-
|
11,889
|
||||||||||||||||||||||||
Repurchase and retirement of common stock
|
-
|
(974
|
)
|
(14,390
|
)
|
-
|
-
|
(15,364
|
)
|
-
|
(15,364
|
)
|
||||||||||||||||||||
Comprehensive income (loss)
|
-
|
-
|
-
|
67,189
|
(39,183
|
)
|
28,006
|
(24
|
)
|
27,982
|
||||||||||||||||||||||
Cummulative effect adjustment due to implementation of ASU 2016-13
|
-
|
-
|
-
|
(166
|
)
|
-
|
(166
|
)
|
-
|
(166
|
)
|
|||||||||||||||||||||
Balance, December 31, 2020
|
$
|
-
|
$
|
23,430
|
$
|
57,399
|
$
|
897,221
|
$
|
(9,820
|
)
|
$
|
968,230
|
$
|
(717
|
)
|
$
|
967,513
|
|
2020
|
2019
|
2018
|
|||||||||
Cash flows from operating activities
|
||||||||||||
Net income (loss)
|
$
|
67,165
|
$
|
92,877
|
$
|
(63,306
|
)
|
|||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
||||||||||||
Depreciation and amortization
|
14,403
|
14,600
|
13,535
|
|||||||||
Net amortization of investments
|
3,342
|
2,326
|
3,976
|
|||||||||
Provision for doubtful receivables
|
3,556
|
18,899
|
11,321
|
|||||||||
Deferred tax (benefit) expense
|
(2,285
|
)
|
3,661
|
(32,078
|
)
|
|||||||
Net realized investment gains on sale of securities
|
(641
|
)
|
(5,843
|
)
|
(298
|
)
|
||||||
Net unrealized (gains) losses on equity investments
|
(7,639
|
)
|
(32,151
|
)
|
36,546
|
|||||||
Interest credited to policyholder deposits
|
6,383
|
5,978
|
5,722
|
|||||||||
Share-based compensation
|
11,889
|
11,605
|
3,357
|
|||||||||
Gain on sale of property and equipment
|
154
|
-
|
-
|
|||||||||
(Increase) decrease in assets
|
||||||||||||
Premium and other receivables, net
|
83,344
|
41,853
|
259,561
|
|||||||||
Deferred policy acquisition costs and value of business acquired
|
(15,905
|
)
|
(21,746
|
)
|
(12,258
|
)
|
||||||
Deferred taxes
|
(7
|
)
|
(226
|
)
|
946
|
|||||||
Other assets
|
2,827
|
1,385
|
(1,470
|
)
|
||||||||
Increase (decrease) in liabilities
|
||||||||||||
Claim liabilities
|
77,844
|
(227,531
|
)
|
(170,087
|
)
|
|||||||
Liability for future policy benefits
|
28,980
|
24,522
|
21,988
|
|||||||||
Unearned premiums
|
4,180
|
10,311
|
(3,359
|
)
|
||||||||
Liability to FEHBP
|
(2,672
|
)
|
2,855
|
(7,361
|
)
|
|||||||
Accounts payable and accrued liabilities
|
(17,073
|
)
|
39,799
|
(59,276
|
)
|
|||||||
Net cash provided by (used in) operating activities
|
257,845
|
(16,826
|
)
|
7,459
|
|
2020
|
2019
|
2018
|
|||||||||
Cash flows from investing activities
|
||||||||||||
Proceeds from investments sold or matured
|
||||||||||||
Securities available-for-sale:
|
||||||||||||
Fixed-maturities sold
|
$
|
149,265
|
$
|
424,239
|
$
|
1,302,810
|
||||||
Fixed-maturities matured
|
84,416
|
21,258
|
24,945
|
|||||||||
Securities held-to-maturity:
|
||||||||||||
Fixed-maturities matured
|
1,079
|
1,708
|
8,182
|
|||||||||
Equity investments sold
|
134,926
|
169,153
|
203,841
|
|||||||||
Other invested assets sold
|
17,013
|
4,554
|
3,714
|
|||||||||
Acquisition of investments
|
||||||||||||
Securities available-for-sale
|
||||||||||||
Fixed-maturities
|
(287,998
|
)
|
(449,043
|
)
|
(1,343,346
|
)
|
||||||
Securities held-to-maturity
|
||||||||||||
Fixed-maturities
|
(1,088
|
)
|
(1,078
|
)
|
(8,356
|
)
|
||||||
Equity investments
|
(248,123
|
)
|
(143,972
|
)
|
(156,486
|
)
|
||||||
Other invested assets
|
(30,178
|
)
|
(28,501
|
)
|
(47,221
|
)
|
||||||
Other investments
|
(5,683
|
)
|
(2,981
|
)
|
(705
|
)
|
||||||
Net change in policy loans
|
402
|
(1,392
|
)
|
(392
|
)
|
|||||||
Net capital expenditures
|
(57,873
|
)
|
(20,820
|
)
|
(19,840
|
)
|
||||||
Capital contribution to equity method investees
|
(8,184
|
)
|
(11,418
|
)
|
-
|
|||||||
Net cash used in investing activities
|
(252,026
|
)
|
(38,293
|
)
|
(32,854
|
)
|
||||||
Cash flows from financing activities
|
||||||||||||
Change in outstanding checks in excess of bank balances
|
(3,249
|
)
|
(2,384
|
)
|
(22,243
|
)
|
||||||
Net (repayments) proceeds from short-term borrowings
|
(24,000
|
)
|
54,000
|
-
|
||||||||
Proceeds of long-term borrowings
|
30,841
|
-
|
-
|
|||||||||
Repayments of long-term borrowings
|
(3,883
|
)
|
(3,236
|
)
|
(3,236
|
)
|
||||||
Repurchase and retirement of common stock
|
(14,982
|
)
|
(9,989
|
)
|
(22,377
|
)
|
||||||
Dividends paid
|
-
|
(11
|
)
|
-
|
||||||||
Proceeds from policyholder deposits
|
25,740
|
28,879
|
18,531
|
|||||||||
Surrenders of policyholder deposits
|
(15,134
|
)
|
(19,847
|
)
|
(26,677
|
)
|
||||||
Net cash (used in) provided by financing activities
|
(4,667
|
)
|
47,412
|
(56,002
|
)
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
1,152
|
(7,707
|
)
|
(81,397
|
)
|
|||||||
Cash and cash equivalents
|
||||||||||||
Beginning of year
|
109,837
|
117,544
|
198,941
|
|||||||||
End of year
|
$
|
110,989
|
$
|
109,837
|
$
|
117,544
|
1. |
Nature of Business
|
•
|
Triple-S Salud, Inc. (TSS) and Triple-S Advantage, Inc. (TSA), which are managed care organizations that provide health benefits services to subscribers through contracts with hospitals, physicians, dentists, laboratories, and other organizations
|
•
|
Triple-S Vida, Inc. (TSV) and Triple-S Blue, Inc. (TSB), which are engaged in the underwriting of life and accident and health insurance policies and the administration of annuity contracts
|
•
|
Triple-S Propiedad, Inc. (TSP), which is engaged in the underwriting of property and casualty insurance policies.
|
2. |
Significant Accounting Policies
|
Asset Category
|
Estimated
Useful Life
|
|
|
Buildings
|
35 years
|
Building improvements
|
5 years
|
Leasehold improvements
|
Lesser of lease term or 10 years
|
Office furniture
|
7 years
|
Computer software
|
3 to 10 years
|
Computer equipment, equipment, and automobiles
|
3 to 5 years
|
3. |
Investment in Securities
|
|
2020
|
|||||||||||||||
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||||
|
||||||||||||||||
Fixed-maturities available-for-sale
|
||||||||||||||||
Obligations of government- sponsored enterprises
|
$
|
24,496
|
$
|
665
|
$
|
(9
|
)
|
$
|
25,152
|
|||||||
U.S. Treasury securities and obligations of U.S.- government instrumentalities
|
103,694
|
7,993
|
-
|
111,687
|
||||||||||||
Municipal securities
|
646,961
|
54,067
|
-
|
701,028
|
||||||||||||
Corporate bonds
|
189,516
|
30,280
|
-
|
219,796
|
||||||||||||
Residential mortgage-backed securities
|
249,801
|
21,487
|
(57
|
)
|
271,231
|
|||||||||||
Collateralized mortgage obligations
|
12,954
|
638
|
(21
|
)
|
13,571
|
|||||||||||
Total fixed-maturities available-for-sale
|
$
|
1,227,422
|
$
|
115,130
|
$
|
(87
|
)
|
$
|
1,342,465
|
|
2019
|
|||||||||||||||
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||||
|
||||||||||||||||
Fixed-maturities available-for-sale
|
||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
17,209
|
$
|
477
|
$
|
-
|
$
|
17,686
|
||||||||
U.S. Treasury securities and obligations of U.S.- government instrumentalities
|
102,230
|
4,779
|
-
|
107,009
|
||||||||||||
Municipal securities
|
595,051
|
34,735
|
(22
|
)
|
629,764
|
|||||||||||
Corporate bonds
|
187,096
|
21,721
|
(74
|
)
|
208,743
|
|||||||||||
Residential mortgage-backed securities
|
262,783
|
8,073
|
(320
|
)
|
270,536
|
|||||||||||
Collateralized mortgage obligations
|
8,674
|
471
|
-
|
9,145
|
||||||||||||
Total fixed-maturities available-for-sale
|
$
|
1,173,043
|
$
|
70,256
|
$
|
(416
|
)
|
$
|
1,242,883
|
|
2020
|
|||||||||||||||
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||||
|
||||||||||||||||
Fixed-maturities held-to-maturity U.S. Treasury securities and obligations of U.S government instrumentalities
|
$
|
614
|
$
|
201
|
$
|
-
|
$
|
815
|
||||||||
Residential mortgage-backed securities
|
164
|
17
|
-
|
181
|
||||||||||||
Certificates of deposits
|
1,089
|
-
|
-
|
1,089
|
||||||||||||
Total fixed-maturities held-to-maturity
|
$
|
1,867
|
$
|
218
|
$
|
-
|
$
|
2,085
|
|
2019
|
|||||||||||||||
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
||||||||||||
|
||||||||||||||||
Securities held-to-maturity
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. government instrumentalties
|
$
|
615
|
$
|
158
|
$
|
-
|
$
|
773
|
||||||||
Residential mortgage-backed securities
|
165
|
1
|
-
|
166
|
||||||||||||
Certificates of deposits
|
1,080
|
-
|
-
|
1,080
|
||||||||||||
Total fixed-maturities held-to-maturity
|
$
|
1,860
|
$
|
159
|
$
|
-
|
$
|
2,019
|
|
2020
|
|||||||||||||||
|
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Estimated
fair value
|
||||||||||||
Other invested assets - Alternative investments
|
$
|
112,171
|
$
|
6,119
|
$
|
(3,385
|
)
|
$
|
114,905
|
|
2019
|
|||||||||||||||
|
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Estimated
fair value
|
||||||||||||
Other invested assets - Alternative investments
|
$
|
97,575
|
$
|
3,721
|
$
|
(788
|
)
|
$
|
100,508
|
|
2020
|
|||||||||||||||||||||||||||||||||||
|
Less than 12 months
|
12 months or longer
|
Total
|
|||||||||||||||||||||||||||||||||
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Fixed-maturities available-for-sale
|
||||||||||||||||||||||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
1,539
|
$
|
(9
|
)
|
1
|
$
|
-
|
$
|
-
|
-
|
$
|
1,539
|
$
|
(9
|
)
|
1
|
|||||||||||||||||||
Residential mortgage-backed securities
|
3,624
|
(57
|
)
|
1
|
-
|
-
|
-
|
3,624
|
(57
|
)
|
1
|
|||||||||||||||||||||||||
Collateralized mortgage obligations
|
6,060
|
(21
|
)
|
2
|
-
|
-
|
-
|
6,060
|
(21
|
)
|
2
|
|||||||||||||||||||||||||
Total fixed-maturities available-for-sale
|
$
|
11,223
|
$
|
(87
|
)
|
4
|
$
|
-
|
$
|
-
|
-
|
$
|
11,223
|
$
|
(87
|
)
|
4
|
|||||||||||||||||||
Other invested assets - Alternative investments
|
$
|
12,584
|
$
|
(808
|
)
|
4
|
$
|
16,396
|
$
|
(2,577
|
)
|
6
|
$
|
28,980
|
$
|
(3,385
|
)
|
10
|
|
2019
|
|||||||||||||||||||||||||||||||||||
|
Less than 12 months
|
12 months or longer
|
Total
|
|||||||||||||||||||||||||||||||||
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
Estimated
Fair Value
|
Gross
Unrealized
Loss
|
Number of
Securities
|
|||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Fixed-maturities available-for-sale
|
||||||||||||||||||||||||||||||||||||
Municipal securities
|
$
|
10,656
|
$
|
(22
|
)
|
3
|
$
|
-
|
$
|
-
|
-
|
$
|
10,656
|
$
|
(22
|
)
|
3
|
|||||||||||||||||||
Corporate bonds
|
5,047
|
(74
|
)
|
1
|
-
|
-
|
-
|
5,047
|
(74
|
)
|
1
|
|||||||||||||||||||||||||
Residential mortgage backed securities
|
79,902
|
(320
|
)
|
16
|
-
|
-
|
-
|
79,902
|
(320
|
)
|
16
|
|||||||||||||||||||||||||
Total fixed-maturities available-for-sale
|
$
|
95,605
|
$
|
(416
|
)
|
20
|
$
|
-
|
$
|
-
|
-
|
$
|
95,605
|
$
|
(416
|
)
|
20
|
|||||||||||||||||||
Other invested assets - Alternative investments
|
$
|
24,437
|
$
|
(605
|
)
|
8
|
$
|
10,580
|
$
|
(183
|
)
|
1
|
$
|
35,017
|
$
|
(788
|
)
|
9
|
• |
Identification and evaluation of securities that have possible indications of impairment, which includes an analysis of all investments with gross unrealized investment losses that represent 20% or more of their cost and all investments with an unrealized loss greater than $100;
|
• |
For any securities with a gross unrealized investment loss we might review and evaluate the investee’s current financial condition, liquidity, near-term recovery prospects, implications of rating agency actions, the outlook for the business sectors in which the investee operates and other factors;
|
• |
Consideration of evidential matter, including an evaluation of factors or triggers that may or may not cause individual investments to qualify as having a credit-related impairment; and
|
• |
Determination of the status of each analyzed security as credit-impaired or not, with documentation of the rationale for the decision.
|
• |
Obligations of government-sponsored enterprises: The unrealized losses of these securities were mainly caused by fluctuations in interest rates and general market conditions. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment. In addition, they have investment-grade ratings. The Company does not consider these investments to be credit-impaired because of several factors: the decline in fair value is attributable to changes in interest rates and not credit quality; the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.
|
• |
Residential mortgage-backed securities and Collateralized mortgage obligations: The unrealized losses on these investments were mostly caused by fluctuations in interest rates and credit spreads. The contractual cash flows of these securities are guaranteed by a U.S. government-sponsored enterprise. Any loss in these securities is determined according to the seniority level of each tranche, with the least senior, typically the unrated residual tranche, taking any initial loss. The investment grade credit rating of our securities reflects the seniority of the securities that the Company owns. The Company does not consider these investments to be credit-impaired because of several factors: the decline in fair value is attributable to changes in interest rates and not credit quality; the Company does not intend to sell the investments and it is more likely than not that the Company will not be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.
|
• |
Alternative Investments: As of December 31, 2020, alternative investments with unrealized losses were not considered credit-impaired based on market conditions.
|
|
Amortized
Cost
|
Estimated
Fair Value
|
||||||
|
||||||||
Securities available-for-sale
|
||||||||
Due in one year or less
|
$
|
36,645
|
$
|
36,935
|
||||
Due after one year through five years
|
583,264
|
628,468
|
||||||
Due after five years through ten years
|
194,778
|
209,096
|
||||||
Due after ten years
|
149,980
|
183,164
|
||||||
Residential mortgage-backed securities
|
249,801
|
271,231
|
||||||
Collateralized mortgage obligations
|
12,954
|
13,571
|
||||||
|
$
|
1,227,422
|
$
|
1,342,465
|
||||
Securities held-to-maturity
|
||||||||
Due in one year or less
|
$
|
1,089
|
$
|
1,089
|
||||
Due after five years through ten years
|
614
|
815
|
||||||
Residential mortgage-backed securities
|
164
|
181
|
||||||
|
$
|
1,867
|
$
|
2,085
|
4. |
Realized and Unrealized Gains
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Realized gains (losses)
|
||||||||||||
Fixed-maturity securities:
|
||||||||||||
Securities available-for-sale
|
||||||||||||
Gross gains
|
$
|
3,943
|
$
|
3,844
|
$
|
3,730
|
||||||
Gross losses
|
(488
|
)
|
(387
|
)
|
(18,627
|
)
|
||||||
Total fixed-maturity securities
|
3,455
|
3,457
|
(14,897
|
)
|
||||||||
Equity investments:
|
||||||||||||
Gross gains
|
1,852
|
3,056
|
16,045
|
|||||||||
Gross losses
|
(5,074
|
)
|
(1,669
|
)
|
(2,290
|
)
|
||||||
Gross losses from impaired securities
|
(678
|
)
|
-
|
-
|
||||||||
Total equity investments
|
(3,900
|
)
|
1,387
|
13,755
|
||||||||
Other invested assets:
|
||||||||||||
Gross gains
|
1,086
|
1,055
|
1,492
|
|||||||||
Gross losses
|
-
|
(56
|
)
|
(52
|
)
|
|||||||
Total other invested assets
|
1,086
|
999
|
1,440
|
|||||||||
Net realized gains on securities
|
$
|
641
|
$
|
5,843
|
$
|
298
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Changes in unrealized gains (losses)
|
||||||||||||
Recognized in accumulated other comprehensive income (loss)
|
||||||||||||
Fixed-maturities – available-for-sale
|
$
|
45,203
|
$
|
38,807
|
$
|
(14,104
|
)
|
|||||
Other invested assets
|
(199
|
)
|
1,545
|
1,073
|
||||||||
Not recognized in the consolidated financial statements
|
||||||||||||
Fixed-maturities – held-to-maturity
|
$
|
59
|
$
|
32
|
$
|
(29
|
)
|
5. |
Net Investment Income
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Fixed maturities
|
$
|
38,919
|
$
|
42,005
|
$
|
43,873
|
||||||
Equity securities
|
13,158
|
12,453
|
12,261
|
|||||||||
Other invested assets
|
3,545
|
3,436
|
1,679
|
|||||||||
Policy loans
|
809
|
761
|
754
|
|||||||||
Cash equivalents and interest-bearing deposits
|
483
|
1,602
|
1,407
|
|||||||||
Other
|
633
|
1,750
|
1,935
|
|||||||||
Total
|
$
|
57,547
|
$
|
62,007
|
$
|
61,909
|
6. |
Premium and Other Receivables, Net
|
|
2020
|
2019
|
||||||
|
||||||||
Premium
|
$
|
106,322
|
$
|
188,861
|
||||
Self-funded group receivables
|
26,412
|
28,672
|
||||||
FEHBP
|
12,830
|
13,894
|
||||||
Agent balances
|
31,509
|
30,784
|
||||||
Accrued interest
|
10,418
|
11,307
|
||||||
Reinsurance recoverable
|
216,314
|
239,767
|
||||||
Other
|
135,774
|
110,952
|
||||||
|
539,579
|
624,237
|
||||||
Less allowance for doubtful receivables:
|
||||||||
Premium
|
37,231
|
36,622
|
||||||
Other
|
13,508
|
19,923
|
||||||
|
50,739
|
56,545
|
||||||
Premium and other receivables, net
|
$
|
488,840
|
$
|
567,692
|
7. |
Deferred Policy Acquisition Costs and Value of Business Acquired
|
|
DPAC
|
VOBA
|
Total
|
|||||||||
|
||||||||||||
Balance, December 31, 2017
|
177,721
|
23,067
|
200,788
|
|||||||||
|
||||||||||||
Additions
|
51,144
|
-
|
51,144
|
|||||||||
VOBA interest at an average rate of 5.11%
|
-
|
1,120
|
1,120
|
|||||||||
Amortization
|
(35,005
|
)
|
(2,888
|
)
|
(37,893
|
)
|
||||||
Net change
|
16,139
|
(1,768
|
)
|
14,371
|
||||||||
Balance, December 31, 2018
|
193,860
|
21,299
|
215,159
|
|||||||||
|
||||||||||||
Additions
|
59,399
|
-
|
59,399
|
|||||||||
VOBA interest at an average rate of 4.53%
|
-
|
1,031
|
1,031
|
|||||||||
Amortization
|
(37,496
|
)
|
(3,208
|
)
|
(40,704
|
)
|
||||||
Net change
|
21,903
|
(2,177
|
)
|
19,726
|
||||||||
Balance, December 31, 2019
|
$
|
215,763
|
$
|
19,122
|
$
|
234,885
|
||||||
|
||||||||||||
Additions
|
57,458
|
3,700
|
61,158
|
|||||||||
VOBA interest at an average rate of 4.47%
|
-
|
923
|
923
|
|||||||||
Amortization
|
(45,687
|
)
|
(2,954
|
)
|
(48,641
|
)
|
||||||
Net change
|
11,771
|
1,669
|
13,440
|
|||||||||
Balance, December 31, 2020
|
$
|
227,534
|
$
|
20,791
|
$
|
248,325
|
Year ending December 31:
|
||||
2021
|
$
|
2,683
|
||
2022
|
1,810
|
|||
2023
|
1,608
|
|||
2024
|
1,430
|
|||
2025
|
1,280
|
8. |
Property and Equipment, Net
|
|
2020
|
2019
|
||||||
|
||||||||
Land
|
$
|
15,867
|
$
|
10,976
|
||||
Buildings and leasehold improvements
|
128,629
|
92,752
|
||||||
Office furniture and equipment
|
32,547
|
27,878
|
||||||
Computer equipment and software
|
136,801
|
133,922
|
||||||
Automobiles
|
667
|
761
|
||||||
|
314,511
|
266,289
|
||||||
Less accumulated depreciation and amortization
|
182,537
|
177,701
|
||||||
Property and equipment, net
|
$
|
131,974
|
$
|
88,588
|
9. |
Goodwill
|
10. |
Fair Value Measurements
|
Level 1 |
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
|
Level 2 |
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
|
Level 3 |
Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
||||||||
|
2020
|
2019
|
||||||
Balance as of January 1,
|
$
|
5,209
|
$
|
3,805
|
||||
Unrealized gain in other accumulated comprehensive income
|
(107
|
)
|
154
|
|||||
Purchases
|
-
|
1,250
|
||||||
Balance as of December 31,
|
$
|
5,102
|
$
|
5,209
|
|
2020
|
|||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
|
||||||||||||||||
Fixed-maturity securities available-for-sale
|
||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
-
|
$
|
25,152
|
$
|
-
|
$
|
25,152
|
||||||||
U.S. Treasury securities and obligations of U.S.-government instrumentalities
|
111,687
|
-
|
-
|
111,687
|
||||||||||||
Municipal securities
|
-
|
701,028
|
-
|
701,028
|
||||||||||||
Corporate bonds
|
-
|
219,796
|
-
|
219,796
|
||||||||||||
Residential agency mortgage-backed securities
|
-
|
271,231
|
-
|
271,231
|
||||||||||||
Collaterized mortgage obligations
|
-
|
13,571
|
-
|
13,571
|
||||||||||||
Total fixed-maturities
|
$
|
111,687
|
$
|
1,230,778
|
$
|
-
|
$
|
1,342,465
|
||||||||
|
||||||||||||||||
Equity investments
|
$
|
220,118
|
$
|
179,108
|
$
|
5,102
|
$
|
404,328
|
|
2019
|
|||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
|
||||||||||||||||
Securities available-for-sale
|
||||||||||||||||
Fixed-maturity securities
|
||||||||||||||||
Obligations of government-sponsored enterprises
|
$
|
-
|
$
|
17,686
|
$
|
-
|
$
|
17,686
|
||||||||
U.S. Treasury securities and obligations of U.S.-government instrumentalities
|
107,009
|
-
|
-
|
107,009
|
||||||||||||
Municipal securities
|
-
|
629,764
|
-
|
629,764
|
||||||||||||
Corporate bonds
|
-
|
208,743
|
-
|
208,743
|
||||||||||||
Residential agency mortgage-backed securities
|
-
|
270,536
|
-
|
270,536
|
||||||||||||
Collaterized mortgage obligations
|
-
|
9,145
|
-
|
9,145
|
||||||||||||
Total fixed-maturities
|
$
|
107,009
|
$
|
1,135,874
|
$
|
-
|
$
|
1,242,883
|
||||||||
|
||||||||||||||||
Equity securities
|
$
|
177,136
|
$
|
105,180
|
$
|
5,209
|
$
|
287,525
|
• |
Policy loans – these financial instruments have no stated maturity dates and are part of the related insurance contract. The carrying amount of policy loans approximates fair value because their interest rate is reset periodically in accordance with current market rates.
|
• |
Policyholder deposits – the fair value of policyholder deposits is the amount payable on demand at the reporting date, and accordingly, the carrying value amount approximates fair value.
|
• |
Long-term borrowings – the carrying amount of the loans payable to bank approximates fair value due to its floating interest-rate structure.
|
11. |
Claim Liabilities and Claim Adjustment Expenses
|
|
2020
|
|||||||||||
|
Managed
Care
|
Other
Business
Segments *
|
Consolidated
|
|||||||||
|
||||||||||||
Claim liabilities at beginning of year
|
$
|
341,277
|
$
|
367,981
|
$
|
709,258
|
||||||
Reinsurance recoverable on claim liabilities
|
-
|
(137,017
|
)
|
(137,017
|
)
|
|||||||
Net claim liabilities at beginning of year
|
341,277
|
230,964
|
572,241
|
|||||||||
Claims incurred
|
||||||||||||
Current period insured events
|
2,772,084
|
112,296
|
2,884,380
|
|||||||||
Prior period insured events
|
33,654
|
(9,765
|
)
|
23,889
|
||||||||
Total
|
2,805,738
|
102,531
|
2,908,269
|
|||||||||
Payments of losses and loss-adjustment expenses
|
||||||||||||
Current period insured events
|
2,408,173
|
65,414
|
2,473,587
|
|||||||||
Prior period insured events
|
293,187
|
65,450
|
358,637
|
|||||||||
Total
|
2,701,360
|
130,864
|
2,832,224
|
|||||||||
Net claim liabilities at end of year
|
445,655
|
202,631
|
648,286
|
|||||||||
Reinsurance recoverable on claim liabilities
|
-
|
138,816
|
138,816
|
|||||||||
Claim liabilities at end of year
|
$
|
445,655
|
$
|
341,447
|
$
|
787,102
|
|
2019
|
|||||||||||
|
Managed
Care
|
Other
Business
Segments *
|
Consolidated
|
|||||||||
|
||||||||||||
Claim liabilities at beginning of year
|
$
|
394,226
|
$
|
542,563
|
$
|
936,789
|
||||||
Reinsurance recoverable on claim liabilities
|
-
|
(315,543
|
)
|
(315,543
|
)
|
|||||||
Net claim liabilities at beginning of year
|
394,226
|
227,020
|
621,246
|
|||||||||
Claims incurred
|
||||||||||||
Current period insured events
|
2,556,027
|
110,513
|
2,666,540
|
|||||||||
Prior period insured events
|
(29,344
|
)
|
(5,191
|
)
|
(34,535
|
)
|
||||||
Total
|
2,526,683
|
105,322
|
2,632,005
|
|||||||||
Payments of losses and loss-adjustment expenses
|
||||||||||||
Current period insured events
|
2,293,251
|
61,966
|
2,355,217
|
|||||||||
Prior period insured events
|
286,381
|
39,412
|
325,793
|
|||||||||
Total
|
2,579,632
|
101,378
|
2,681,010
|
|||||||||
Net claim liabilities at end of year
|
341,277
|
230,964
|
572,241
|
|||||||||
Reinsurance recoverable on claim liabilities
|
-
|
137,017
|
137,017
|
|||||||||
Claim liabilities at end of year
|
$
|
341,277
|
$
|
367,981
|
$
|
709,258
|
|
2018
|
|||||||||||
|
Managed
Care
|
Other
Business
Segments *
|
Consolidated
|
|||||||||
|
||||||||||||
Claim liabilities at beginning of year
|
$
|
367,357
|
$
|
739,519
|
$
|
1,106,876
|
||||||
Reinsurance recoverable on claim liabilities
|
-
|
(633,099
|
)
|
(633,099
|
)
|
|||||||
Net claim liabilities at beginning of year
|
367,357
|
106,420
|
473,777
|
|||||||||
Claims incurred
|
||||||||||||
Current period insured events
|
2,308,516
|
103,368
|
2,411,884
|
|||||||||
Prior period insured events
|
(36,015
|
)
|
120,961
|
84,946
|
||||||||
Total
|
2,272,501
|
224,329
|
2,496,830
|
|||||||||
Payments of losses and loss-adjustment expenses
|
||||||||||||
Current period insured events
|
1,982,372
|
57,260
|
2,039,632
|
|||||||||
Prior period insured events
|
263,260
|
46,469
|
309,729
|
|||||||||
Total
|
2,245,632
|
103,729
|
2,349,361
|
|||||||||
Net claim liabilities at end of year
|
394,226
|
227,020
|
621,246
|
|||||||||
Reinsurance recoverable on claim liabilities
|
-
|
315,543
|
315,543
|
|||||||||
Claim liabilities at end of year
|
$
|
394,226
|
$
|
542,563
|
$
|
936,789
|
* |
Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.
|
|
||||||||||||||||
Incurred Claims and Allocated Claim
Adjustment Expenses, Net of Reinsurance
|
As of December 31, 2020
|
|||||||||||||||
(in thousands)
|
||||||||||||||||
Incurred Year
|
(unaudited) 2019
|
2020
|
Total of IBNR Liabilities
Plus Expected
Development on
Reported Claims
|
Cumulative
Number of
Reported Claims
|
||||||||||||
2019
|
$
|
2,556,027
|
$
|
2,568,474
|
$
|
10,523
|
37,971
|
|||||||||
2020
|
2,772,084
|
363,911
|
35,822
|
|||||||||||||
|
Total
|
$
|
5,340,558
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
||||||||
|
||||||||
Incurred Year
|
(unaudited)
2019
|
2020
|
||||||
2019
|
$
|
2,293,251
|
$
|
2,557,951
|
||||
2020
|
2,408,173
|
|||||||
|
Total
|
$
|
4,966,124
|
|||||
All outstanding liabilities before 2019, net of reinsurance
|
71,221
|
|||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
$
|
445,655
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
As of December 31, 2020
|
|||||||||||||||||||||||||||||||||||||||||||||||
Incurred Year
|
Incurred amount
|
Total of IBNR Plus
Expected Development
on Reported Claims
|
Cumulative Number
of reported claims
|
|||||||||||||||||||||||||||||||||||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
||||||||||||||||||||||||||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
|||||||||||||||||||||||||||||||||||||||
2011
|
$
|
51,315
|
$
|
50,287
|
$
|
51,105
|
$
|
50,776
|
$
|
51,895
|
$
|
52,099
|
$
|
51,729
|
$
|
51,684
|
$
|
51,771
|
$
|
51,807
|
$
|
74
|
20,780
|
|||||||||||||||||||||||||
2012
|
49,040
|
49,856
|
48,900
|
49,817
|
48,945
|
48,186
|
47,731
|
47,725
|
47,340
|
94
|
21,243
|
|||||||||||||||||||||||||||||||||||||
2013
|
52,343
|
51,030
|
49,606
|
49,168
|
48,229
|
47,550
|
47,104
|
46,777
|
173
|
20,909
|
||||||||||||||||||||||||||||||||||||||
2014
|
48,430
|
45,410
|
43,707
|
42,547
|
41,457
|
41,147
|
40,702
|
275
|
19,110
|
|||||||||||||||||||||||||||||||||||||||
2015
|
45,067
|
40,175
|
37,271
|
35,505
|
34,889
|
34,149
|
332
|
18,047
|
||||||||||||||||||||||||||||||||||||||||
2016
|
48,127
|
44,294
|
41,168
|
39,488
|
38,418
|
443
|
20,874
|
|||||||||||||||||||||||||||||||||||||||||
2017
|
60,694
|
187,376
|
189,162
|
195,376
|
2,406
|
39,466
|
||||||||||||||||||||||||||||||||||||||||||
2018
|
40,619
|
37,603
|
34,306
|
1,296
|
16,381
|
|||||||||||||||||||||||||||||||||||||||||||
2019
|
43,589
|
34,373
|
4,107
|
10,311
|
||||||||||||||||||||||||||||||||||||||||||||
2020
|
44,455
|
18,511
|
7,595
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Total
|
$
|
567,703
|
Cumulative Paid claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
||||||||||||||||||||||||||||||||||||||||
Incurred Year
|
||||||||||||||||||||||||||||||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||||||||||||||||||||
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
||||||||||||||||||||||||||||||
2011
|
$
|
24,534
|
$
|
34,835
|
$
|
41,606
|
$
|
44,996
|
$
|
47,908
|
$
|
49,598
|
$
|
50,457
|
$
|
50,761
|
$
|
51,127
|
$
|
$51,209
|
||||||||||||||||||||
2012
|
22,677
|
33,620
|
40,406
|
43,663
|
45,607
|
46,094
|
46,441
|
46,625
|
46,724
|
|||||||||||||||||||||||||||||||
2013
|
21,376
|
33,249
|
38,979
|
42,840
|
44,252
|
45,234
|
45,502
|
45,621
|
||||||||||||||||||||||||||||||||
2014
|
18,752
|
28,657
|
33,809
|
36,875
|
37,857
|
38,773
|
39,214
|
|||||||||||||||||||||||||||||||||
2015
|
17,063
|
24,935
|
28,040
|
30,729
|
32,188
|
32,554
|
||||||||||||||||||||||||||||||||||
2016
|
20,099
|
28,996
|
32,820
|
34,546
|
35,395
|
|||||||||||||||||||||||||||||||||||
2017
|
28,414
|
41,855
|
48,574
|
83,613
|
||||||||||||||||||||||||||||||||||||
2018
|
16,555
|
24,402
|
26,997
|
|||||||||||||||||||||||||||||||||||||
2019
|
16,305
|
22,379
|
||||||||||||||||||||||||||||||||||||||
2020
|
19,431
|
|||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
|
$
|
403,137
|
||||||||||||||||||||||||||||||||||||||
|
All outstanding liabilities before 2011, net of reinsurance
|
2,001
|
||||||||||||||||||||||||||||||||||||||
|
Liabilities for claims and claims adjustment expenses, net of reinsurance
|
$
|
166,567
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
Average
|
44.3%
|
20.7%
|
10.3%
|
8.5%
|
3.6%
|
1.9%
|
1.0%
|
0.4%
|
0.5%
|
0.2%
|
|
As of December 31, 2020
|
|||
|
||||
Net outstanding liabilities
|
||||
Managed Care
|
$
|
445,655
|
||
Property and Casualty
|
166,567
|
|||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
|
612,222
|
|||
|
||||
Reinsurance recoverable on unpaid claims - Property and Casualty
|
126,268
|
|||
|
||||
Insurance lines other than short-duration
|
49,932
|
|||
Intersegment elimination
|
(1,320
|
)
|
||
Total gross liability for unpaid claims and claim adjustment expense
|
$
|
787,102
|
12. |
Federal Employees’ Health Benefits (FEHBP) and Federal Employees’ (FEP) Programs
|
13. |
Borrowings
|
|
2020
|
2019
|
||||||
|
||||||||
Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.15% at December 31, 2020).
|
$
|
4,627
|
$
|
6,267
|
||||
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 2.98% at December 31, 2020).
|
16,204
|
17,211
|
||||||
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.48% at December 31, 2020).
|
1,813
|
2,401
|
||||||
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.25% at December 31, 2020). Last payment of $25,185 due on June 19, 2025.
|
30,723
|
-
|
||||||
Total borrowings
|
53,367
|
25,879
|
||||||
Less: unamortized debt issuance costs
|
616
|
185
|
||||||
|
$
|
52,751
|
$
|
25,694
|
Year ending December 31
|
||||
2021
|
$
|
4,490
|
||
2022
|
4,490
|
|||
2023
|
4,196
|
|||
2024
|
14,484
|
|||
2025
|
25,707
|
|||
|
$
|
53,367
|
• |
In August 2019, TSS and TSV became members of the FHLBNY, which provides access to collateralized advances. The borrowing capacity of TSS and TSV is up to 30% of their admitted assets as disclosed in the most recent filing with the Commissioner of Insurance but is constrained by the amount of collateral held at the FHLBNY (see Note 3). As of December 31, 2020 and 2019, the borrowing capacity was approximately $200,338 and $131,100, respectively. The outstanding balance as of December 31, 2020 and 2019 was $30,000 and $54,000, respectively. The average interest rate of the outstanding balances was 0.33% and 1.79% as of December 31, 2020 and 2019, respectively.
|
• |
As of December 31, 2020, TSS has $35,000 of available credit under repurchase agreements with broker-dealers, which are short-term borrowing facilities using securities as collateral. There are no outstanding short-term borrowings under these facilities as of December 31, 2020.
|
• |
TSA has a $10,000 revolving loan agreement with a commercial bank in Puerto Rico. This line of credit has an interest rate of 30-day LIBOR plus 250 basis points and contains certain financial and non-financial covenants that are customary for this type of facility. This line of credit matures on June 30, 2021 and had no outstanding balance as of December 31, 2020.
|
14. |
Reinsurance Activity
|
Premiums Earned
|
Claims Incurred(1)
|
|||||||||||||||||||||||
|
2020
|
2019
|
2018
|
2020
|
2019
|
2018
|
||||||||||||||||||
|
||||||||||||||||||||||||
Gross
|
$
|
3,681,830
|
$
|
3,316,802
|
$
|
3,009,830
|
$
|
2,967,719
|
$
|
2,645,599
|
$
|
2,657,639
|
||||||||||||
Ceded
|
(76,809
|
)
|
(66,320
|
)
|
(73,591
|
)
|
(60,702
|
)
|
(15,924
|
)
|
(163,898
|
)
|
||||||||||||
Assumed
|
429
|
2,398
|
2,352
|
1,252
|
2,330
|
3,089
|
||||||||||||||||||
Net
|
$
|
3,605,450
|
$
|
3,252,880
|
$
|
2,938,591
|
$
|
2,908,269
|
$
|
2,632,005
|
$
|
2,496,830
|
(1) |
The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $38,551, $34,251 and $30,783 that is included within the consolidated claims incurred during the years ended December 31, 2020, 2019 and 2018, respectively.
|
• |
For group policies, 80% of the claims up to a maximum of $800 (80% of $1,000), per person, per life. For other group policies with other options, the agreement covers 80% of the claims up to a maximum of $400 (80% of $500), per person, per life.
|
• |
For policies provided to the active and retired employees of the Commonwealth of Puerto Rico and its instrumentalities, the treaty covers 100% of the claims up to a maximum of $1,000 per person, per life with major medical coverage, only if the covered person uses providers that are members of TSS network.
|
• |
For policies provided to the municipalities of Puerto Rico, the treaty covers 100% of the claims up to a maximum of $250, per person, per life, and all other plans with lifetime covers 100% of the claims up to a maximum of $1,000, per person, per life.
|
• |
Casualty excess of loss treaty provides reinsurance for losses up to $20,000, subject to a retention of $225.
|
• |
Medical malpractice excess of loss treaty provides reinsurance for losses up to $3,000, subject to a retention of $150.
|
• |
Property reinsurance treaty includes proportional cessions and a per risk excess of loss contract limiting losses to $400 in $30,000 risks.
|
• |
Catastrophe protection limits losses to $5,000 per event with losses up to approximately $809,000 in a $814,000 event.
|
• |
Group life insurance facultative agreement, reinsuring risk in excess of $25 of certain group life policies and a combined pro rata and excess of loss agreement effective July 1, 2008, reinsuring 50% of the risk up to $200 and ceding the excess.
|
• |
Facultative pro rata agreements for the long‑term disability insurance, reinsuring 65% of the risk.
|
• |
For certain policies, all personal accident and certain woman related cancer claims, the treaty covers 100% of the risk and for other cancer claims it covers 65% of the risk.
|
• |
Several reinsurance agreements, mostly on an excess of loss basis up to a maximum retention of $200.
|
• |
Excess of loss agreement for the major medical business in Costa Rica reinsuring 100% of all claims over $35 for claims incurred up to May 31, 2020 and claims over $50 for claims incurred on or after June 1, 2020.
|
15. |
Income Taxes
|
2020
|
2019
|
2018
|
||||||||||
|
||||||||||||
Current income tax expense
|
$
|
26,853
|
$
|
35,714
|
$
|
2,212
|
||||||
Deferred income tax (benefit) expense
|
(2,285
|
)
|
3,661
|
(32,078
|
)
|
|||||||
Total income tax expense (benefit)
|
$
|
24,568
|
$
|
39,375
|
$
|
(29,866
|
)
|
2020
|
2019
|
2018
|
||||||||||
|
||||||||||||
Income (loss) before taxes
|
$
|
91,733
|
$
|
132,252
|
$
|
(93,172
|
)
|
|||||
Statutory tax rate
|
37.50
|
%
|
38.00
|
%
|
39.00
|
%
|
||||||
Income tax expense (benefit) at statutory rate
|
34,400
|
49,595
|
(36,337
|
)
|
||||||||
(Decrease) increase in taxes resulting from:
|
||||||||||||
Exempt income, net
|
(10,510
|
)
|
-
|
(2,330
|
)
|
|||||||
Effect of taxing life insurance operations as a qualified domestic life insurance company instead of as a regular corporation
|
(3,379
|
)
|
(4,823
|
)
|
(3,445
|
)
|
||||||
Effect of taxing capital gains at a preferential rate
|
1
|
(743
|
)
|
194
|
||||||||
Adjustment to deferred tax assets and liabilities for changes in statutory tax rates
|
-
|
-
|
9,217
|
|||||||||
Other adjustments to deferred tax assets and liabilities
|
736
|
(469
|
)
|
(43
|
)
|
|||||||
Unrealized gains or losses included in earnings
|
1,338
|
(5,627
|
)
|
4,625
|
||||||||
Effect of extraordinary dividend distribution from the JUA Association - reported net of taxes in other income
|
-
|
(55
|
)
|
-
|
||||||||
Effect of net operating loss limitations
|
2,369
|
1,239
|
-
|
|||||||||
Tax credit benefit
|
(1,190
|
)
|
(62
|
)
|
(306
|
)
|
||||||
Tax returns to provision true up
|
922
|
36
|
(798
|
)
|
||||||||
Subtotal
|
(9,713
|
)
|
(10,504
|
)
|
7,114
|
|||||||
Other permanent disallowances, net:
|
||||||||||||
Other
|
(46
|
)
|
37
|
(229
|
)
|
|||||||
Other adjustments
|
(73
|
)
|
247
|
(414
|
)
|
|||||||
Total income tax expense (benefit)
|
$
|
24,568
|
$
|
39,375
|
$
|
(29,866
|
)
|
2020
|
2019
|
|||||||
|
||||||||
Deferred tax assets
|
||||||||
Allowance for doubtful receivables
|
$
|
16,542
|
$
|
18,882
|
||||
Liability for pension benefits
|
59,205
|
15,378
|
||||||
Postretirement benefits
|
280
|
415
|
||||||
Deferred compensation
|
2,106
|
2,187
|
||||||
Accumulated depreciation
|
193
|
920
|
||||||
Impairment loss on investments
|
648
|
522
|
||||||
Contingency reserves
|
10,430
|
4,063
|
||||||
Share-based compensation
|
6,880
|
8,086
|
||||||
Alternative minimum income tax credit
|
3,998
|
3,432
|
||||||
Purchased tax credits
|
286
|
458
|
||||||
Net operating loss
|
56,930
|
51,246
|
||||||
Reinsurance agreement
|
9,375
|
9,375
|
||||||
Accrued liabilities
|
7,069
|
5,599
|
||||||
Difference in tax basis of investments portfolio
|
-
|
77
|
||||||
Other
|
2,137
|
1,349
|
||||||
Gross deferred tax assets
|
176,079
|
121,989
|
||||||
Less: valuation allowance
|
(7,765
|
)
|
(6,705
|
)
|
||||
Deferred tax assets
|
168,314
|
115,284
|
||||||
|
||||||||
Deferred tax liabilities
|
||||||||
Deferred policy acquisition costs
|
(9,608
|
)
|
(8,413
|
)
|
||||
Catastrophe loss reserve
|
(11,693
|
)
|
(13,014
|
)
|
||||
Unrealized gain on securities available for sale
|
(23,843
|
)
|
(14,965
|
)
|
||||
Unrealized gain on equity investments
|
(10,740
|
)
|
(9,091
|
)
|
||||
Difference in tax basis of investments portfolio
|
(306
|
)
|
-
|
|||||
Unamortized debt issue costs
|
(231
|
)
|
(69
|
)
|
||||
Intangible asset
|
(492
|
)
|
(669
|
)
|
||||
Employee benefits plan
|
(6,913
|
)
|
(2,026
|
)
|
||||
Gross deferred tax liabilities
|
(63,826
|
)
|
(48,247
|
)
|
||||
Net deferred tax asset
|
$
|
104,488
|
$
|
67,037
|
16. |
Pension Plans
|
|
2020
|
2019
|
||||||
|
||||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$
|
190,555
|
$
|
159,477
|
||||
Interest cost
|
6,073
|
6,992
|
||||||
Benefit payments
|
(9,176
|
)
|
(9,672
|
)
|
||||
Actuarial loss
|
17,241
|
33,758
|
||||||
Benefit obligation at end of year
|
$
|
204,693
|
$
|
190,555
|
||||
Accumulated benefit obligation at end of year
|
$
|
204,693
|
$
|
190,555
|
||||
Change in fair value of plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
163,558
|
$
|
134,957
|
||||
Actual return on assets
|
(91,542
|
)
|
36,273
|
|||||
Employer contributions
|
10,000
|
2,000
|
||||||
Benefit payments
|
(9,176
|
)
|
(9,672
|
)
|
||||
Fair value of plan assets at end of year
|
$
|
72,840
|
$
|
163,558
|
||||
Funded status at end of year
|
$
|
(131,853
|
)
|
$
|
(26,997
|
)
|
|
2020
|
2019
|
||||||
|
||||||||
Pension liability
|
$
|
131,853
|
$
|
26,997
|
||||
Net actuarial loss recognized in accumulated other comprehensive loss, net of a deferred tax of $55,848 and $12,692 in 2020 and 2019, respectively
|
100,685
|
27,907
|
|
2020
|
2019
|
||||||
|
||||||||
Discount rate
|
2.75
|
%
|
3.25
|
%
|
||||
Expected return on plan assets
|
5.75
|
%
|
6.25
|
%
|
||||
Rate of compensation increase
|
N/A
|
N/A
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Components of net periodic benefit cost
|
||||||||||||
Interest cost
|
$
|
6,073
|
$
|
6,992
|
$
|
6,853
|
||||||
Expected return on plan assets
|
(8,840
|
)
|
(8,835
|
)
|
(9,020
|
)
|
||||||
Actuarial loss
|
1,178
|
392
|
961
|
|||||||||
Settlement loss
|
-
|
-
|
2,110
|
|||||||||
Net periodic benefit (income) cost
|
$
|
(1,589
|
)
|
$
|
(1,451
|
)
|
$
|
904
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Discount rate
|
3.25
|
%
|
4.50
|
%
|
3.75
|
%
|
||||||
Expected return on plan assets
|
6.25
|
%
|
6.50
|
%
|
6.50
|
%
|
||||||
Rate of compensation increase
|
N/A
|
N/A
|
N/A
|
|
2020
|
|||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
NAV
|
|||||||||||||||
|
||||||||||||||||||||
Government obligations
|
$
|
-
|
$
|
4,127
|
$
|
-
|
$
|
4,127
|
$
|
-
|
||||||||||
Non-agency backed securities
|
-
|
157
|
-
|
157
|
-
|
|||||||||||||||
Corporate obligations
|
-
|
13,134
|
-
|
13,134
|
-
|
|||||||||||||||
Real estate
|
-
|
-
|
-
|
-
|
6,033
|
|||||||||||||||
Registered investments
|
1,183
|
1,886
|
-
|
3,069
|
-
|
|||||||||||||||
Common/Collective trusts
|
-
|
46,006
|
-
|
46,006
|
-
|
|||||||||||||||
Common stocks
|
1,196
|
-
|
-
|
1,196
|
-
|
|||||||||||||||
Interest-bearing cash
|
371
|
-
|
-
|
371
|
-
|
|||||||||||||||
Derivatives
|
-
|
2
|
-
|
2
|
-
|
|||||||||||||||
|
$
|
2,750
|
$
|
65,312
|
$
|
-
|
$
|
68,062
|
$
|
6,033
|
|
2019
|
|||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
NAV
|
|||||||||||||||
|
||||||||||||||||||||
Government obligations
|
$
|
-
|
$
|
6,782
|
$
|
-
|
$
|
6,782
|
$
|
-
|
||||||||||
Non-agency backed securities
|
-
|
656
|
-
|
656
|
-
|
|||||||||||||||
Corporate obligations
|
-
|
9,353
|
-
|
9,353
|
-
|
|||||||||||||||
Limited Liability Corporations
|
-
|
-
|
-
|
-
|
126,989
|
|||||||||||||||
Real estate
|
-
|
-
|
-
|
-
|
6,720
|
|||||||||||||||
Registered investments
|
3,754
|
382
|
-
|
4,136
|
-
|
|||||||||||||||
Common/Collective trusts
|
-
|
7,527
|
-
|
7,527
|
-
|
|||||||||||||||
Common stocks
|
1,885
|
-
|
-
|
1,885
|
-
|
|||||||||||||||
Preferred stocks
|
-
|
14
|
-
|
14
|
-
|
|||||||||||||||
Interest-bearing cash
|
300
|
-
|
-
|
300
|
-
|
|||||||||||||||
|
$
|
5,939
|
$
|
24,714
|
$
|
-
|
$
|
30,653
|
$
|
133,709
|
• |
Increasing risk is rewarded with compensating returns over time, and therefore, prudent risk taking is justifiable for long-term investors.
|
• |
Risk can be controlled through diversification of asset classes and investment approaches, as well as diversification of individual securities.
|
• |
Risk is reduced by time, and over time the relative performance of different asset classes is reasonably consistent. Over the long-term, equity investments have provided and should continue to provide superior returns over other security types. Fixed-income securities can dampen volatility and provide liquidity in periods of depressed economic activity. Lengthening duration of fixed income securities may reduce surplus volatility.
|
• |
The strategic of long-term allocation of assets among various asset classes is an important driver of long‑term returns.
|
• |
Relative performance of various asset classes is unpredictable in the short‑term and attempts to shift tactically between asset classes are unlikely to be rewarded.
|
• |
To ensure assets are available to meet current and future obligations of the participating programs when due.
|
• |
To earn the maximum return that can be realistically achieved in the markets over the long‑term at a specified and controlled level of risk in order to minimize future contributions.
|
• |
To invest assets with consideration of the liability characteristics in order to better align assets and liabilities.
|
• |
To invest the assets with the care, skill, and diligence that a prudent person acting in a like capacity would undertake. In the process, the Administration of the Trust has the objective of controlling the costs involved with administering and managing the investments of the National Retirement Trust.
|
Year ending December 31
|
||||
2021
|
$
|
11,805
|
||
2022
|
10,378
|
|||
2023
|
10,611
|
|||
2024
|
10,664
|
|||
2025
|
10,656
|
|||
2026 – 2029
|
56,709
|
17. |
Catastrophe Loss Reserve and Trust Fund
|
18. |
Stockholders’ Equity
|
19. |
Stock Repurchase Programs
|
20. |
Comprehensive Income
|
|
Unrealized
Gains on
Securities
|
Liability
for Pension
Benefits
|
Accumulated
Other
Comprehensive
Income
|
|||||||||
|
||||||||||||
Beginning balance at December 31, 2019
|
$
|
57,830
|
$
|
(28,467
|
)
|
$
|
29,363
|
|||||
Net current period change
|
37,654
|
(73,807
|
)
|
(36,153
|
)
|
|||||||
Reclassification adjustments for gains and losses reclassified in income
|
(3,795
|
)
|
765
|
(3,030
|
)
|
|||||||
Ending balance at December 31, 2020
|
$
|
91,689
|
$
|
(101,509
|
)
|
$
|
(9,820
|
)
|
|
2020
|
|||||||||||
|
Before-Tax
Amount
|
Deferred Tax
(Expense)
Benefit
|
Net-of-Tax
Amount
|
|||||||||
|
||||||||||||
Unrealized holding gains on securities arising during the period
|
$
|
47,067
|
$
|
(9,413
|
)
|
$
|
37,654
|
|||||
Less reclassification adjustment for gains and losses realized in income
|
(4,541
|
)
|
746
|
(3,795
|
)
|
|||||||
Net change in unrealized gain
|
42,526
|
(8,667
|
)
|
33,859
|
||||||||
Liability for pension benefits:
|
||||||||||||
Reclassification adjustment for amortization of net losses from past experience and prior service costs
|
1,224
|
(459
|
)
|
765
|
||||||||
Net change arising from assumptions and plan changes and experience
|
(118,092
|
)
|
44,285
|
(73,807
|
)
|
|||||||
Net change in liability for pension benefits
|
(116,868
|
)
|
43,826
|
(73,042
|
)
|
|||||||
Net current period change
|
$
|
(74,342
|
)
|
$
|
35,159
|
$
|
(39,183
|
)
|
|
2019
|
|||||||||||
|
Before-Tax
Amount
|
Deferred Tax
(Expense)
Benefit
|
Net-of-Tax
Amount
|
|||||||||
|
||||||||||||
Unrealized holding gains on securities arising during the period
|
$
|
42,780
|
$
|
(8,556
|
)
|
$
|
34,224
|
|||||
Less reclassification adjustment for gains and losses realized in income
|
(4,456
|
)
|
754
|
(3,702
|
)
|
|||||||
Net change in unrealized gain
|
38,324
|
(7,802
|
)
|
30,522
|
||||||||
Liability for pension benefits:
|
||||||||||||
Reclassification adjustment for amortization of net losses from past experience and prior service costs
|
396
|
(149
|
)
|
247
|
||||||||
Net change arising from assumptions and plan changes and experience
|
(7,149
|
)
|
2,681
|
(4,468
|
)
|
|||||||
Net change in liability for pension benefits
|
(6,753
|
)
|
2,532
|
(4,221
|
)
|
|||||||
Net current period change
|
$
|
31,571
|
$
|
(5,270
|
)
|
$
|
26,301
|
|
2018
|
|||||||||||
|
Before-Tax
Amount
|
Deferred Tax
(Expense)
Benefit
|
Net-of-Tax
Amount
|
|||||||||
|
||||||||||||
Unrealized holding gains on securities arising during the period
|
$
|
(24,375
|
)
|
$
|
4,875
|
$
|
(19,500
|
)
|
||||
Less reclassification adjustment for gains and losses realized in income
|
13,457
|
(3,005
|
)
|
10,452
|
||||||||
Net change in unrealized gain
|
(10,918
|
)
|
1,870
|
(9,048
|
)
|
|||||||
Liability for pension benefits:
|
||||||||||||
Reclassification adjustment for amortization of net losses from past experience and prior service costs
|
(995
|
)
|
373
|
(622
|
)
|
|||||||
Net change arising from assumptions and plan changes and experience
|
2,190
|
(830
|
)
|
1,360
|
||||||||
Net change in liability for pension benefits
|
1,195
|
(457
|
)
|
738
|
||||||||
Net current period change
|
$
|
(9,723
|
)
|
$
|
1,413
|
$
|
(8,310
|
)
|
21. |
Share-Based Compensation
|
|
Restricted Awards
|
Performance Awards
|
||||||||||||||
|
Number of
Shares
|
Weighted
Average
Fair
Value
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
||||||||||||
|
||||||||||||||||
Outstanding balance at January 1, 2020
|
308,387
|
$
|
24.16
|
515,688
|
$
|
25.60
|
||||||||||
Granted
|
228,157
|
14.89
|
521,357
|
14.44
|
||||||||||||
Lapsed
|
(167,701
|
)
|
23.23
|
(200,801
|
)
|
26.50
|
||||||||||
Forfeited (due to termination)
|
(5,671
|
)
|
19.03
|
(29,882
|
)
|
22.19
|
||||||||||
Quantity adjusted (due to performance payout more than 100%), net of forfeited
|
-
|
-
|
(32,008
|
)
|
26.50
|
|||||||||||
Outstanding balance at December 31, 2020
|
363,172
|
$
|
18.87
|
774,354
|
$
|
18.05
|
22. |
Net Income Available to Stockholders and Basic Net Income per Share
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Numerator for earnings per share
|
||||||||||||
Net income (loss) attributable to TSM available to stockholders
|
$
|
67,189
|
$
|
92,894
|
$
|
(63,302
|
)
|
|||||
Denominator for basic earnings per share – Weighted average of common shares
|
23,179,544
|
23,318,742
|
22,975,385
|
|||||||||
Effect of dilutive securities
|
130,198
|
66,551
|
-
|
|||||||||
Denominator for diluted earnings per share
|
23,309,742
|
23,385,293
|
22,975,385
|
|||||||||
Basic net income (loss) per share attributable to TSM
|
$
|
2.90
|
$
|
3.98
|
$
|
(2.76
|
)
|
|||||
Diluted net income (loss) per share attributable to TSM
|
$
|
2.88
|
$
|
3.97
|
$
|
(2.76
|
)
|
23. |
Leases
|
Year ending December 31
|
||||
2021
|
$
|
3,961
|
||
2022
|
3,366
|
|||
2023
|
2,330
|
|||
2024
|
1,856
|
|||
2025
|
709
|
|||
Thereafter
|
2,888
|
|||
Total lease payments
|
15,110
|
|||
Less: imputed interest
|
(1,919
|
)
|
||
Total
|
$
|
13,191
|
For the years ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Operating lease cost
|
$
|
4,600
|
$
|
4,900
|
||||
Short-term lease cost
|
977
|
509
|
||||||
$
|
5,577
|
$
|
5,409
|
Year ending December 31,
|
||||
2021
|
$
|
1,909
|
||
2022
|
1,947
|
|||
2023
|
1,986
|
|||
2024
|
2,026
|
|||
2025
|
1,177
|
|||
Thereafter
|
1,448
|
|||
$
|
10,493
|
24. |
Commitments
|
25. |
Contingencies
|
26. |
Statutory Accounting
|
(dollar amounts in millions)
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Net admitted assets
|
$
|
2,473
|
$
|
2,394
|
$
|
2,089
|
||||||
Capital and surplus
|
771
|
767
|
602
|
|||||||||
RBC requirement
|
641
|
546
|
312
|
|||||||||
Net income (loss)
|
53
|
68
|
(32
|
)
|
27. |
Supplementary Information on Cash Flow Activities
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Supplementary information
|
||||||||||||
Non-cash transactions affecting cash flow activities
|
||||||||||||
Change in net unrealized (gain) loss on securities available for sale, including deferred income tax liability (asset) of $8,667, $7,802, and ($1,870) in 2020, 2019, and 2018 respectively
|
$
|
(33,859
|
)
|
$
|
(30,522
|
)
|
$
|
9,048
|
||||
Change in liability for pension benefits, and deferred income tax (asset) liability of ($43,826), ($2,532), $457, in 2020, 2019, and 2018, respectively
|
73,042
|
4,221
|
(738
|
)
|
||||||||
Repurchase and retirement of common stock
|
(382
|
)
|
(119
|
)
|
(748
|
)
|
||||||
Stock dividend
|
-
|
(24,655
|
)
|
-
|
||||||||
Issuance of common stocks
|
-
|
1,200
|
-
|
|||||||||
Capitalization of lease right of use asset
|
8,014
|
10,438
|
-
|
|||||||||
Other
|
||||||||||||
Income taxes paid
|
40,568
|
3,147
|
8,978
|
|||||||||
Interest paid
|
7,986
|
7,672
|
6,903
|
28. |
Segment Information
|
● |
The segment provides services through its Medicare health plans pursuant to a limited number of contracts with CMS. Earned premium revenue related to the Medicare business amounted to $1,553,455, $1,408,039, and $1,130,226 for the years ended December 31, 2020, 2019, and 2018, respectively.
|
● |
Under its Commercial business, the segment also provides health coverage to certain employees of the Commonwealth of Puerto Rico and its instrumentalities. Earned premium revenue related to such health plans amounted to $13,349, $16,805 and $24,186 for years ended December 31, 2020, 2019, and 2018, respectively.
|
● |
The segment is a qualified contractor to provide health coverage to federal government employees within Puerto Rico and the USVI. Earned premiums revenue related to this contract amounted to $159,588, $161,716 and $150,232 for the years ended December 31, 2020, 2019, and 2018, respectively (see Note 12).
|
● |
The segment also participates in the Medicaid program to provide health coverage to medically indigent citizens in Puerto Rico, as defined by the laws of the government of Puerto Rico. Earned premium revenue related to this business amounted to $953,208, $778,263, and $776,038 for the years ended December 31, 2020, 2019, and 2018, respectively.
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Operating revenues
|
||||||||||||
Managed care
|
||||||||||||
Premiums earned, net
|
$
|
3,320,181
|
$
|
2,985,600
|
$
|
2,687,773
|
||||||
Fee revenue
|
12,585
|
9,946
|
14,701
|
|||||||||
Intersegment premiums/fee revenue
|
2,525
|
6,269
|
5,690
|
|||||||||
Net investment income
|
20,783
|
23,468
|
23,827
|
|||||||||
Total managed care
|
3,356,074
|
3,025,283
|
2,731,991
|
|||||||||
Life
|
||||||||||||
Premiums earned, net
|
193,889
|
180,204
|
167,888
|
|||||||||
Intersegment premiums
|
2,066
|
1,987
|
668
|
|||||||||
Net investment income
|
27,317
|
27,323
|
25,658
|
|||||||||
Total life
|
223,272
|
209,514
|
194,214
|
|||||||||
Property and casualty
|
||||||||||||
Premiums earned, net
|
91,380
|
87,076
|
82,930
|
|||||||||
Intersegment premiums
|
613
|
613
|
613
|
|||||||||
Net investment income
|
8,974
|
9,773
|
10,800
|
|||||||||
Total property and casualty
|
100,967
|
97,462
|
94,343
|
|||||||||
Other segments*
|
||||||||||||
Intersegment service revenues
|
10,630
|
8,836
|
283
|
|||||||||
Operating revenues from external sources
|
8,991
|
8,553
|
5,794
|
|||||||||
Total other segments
|
19,621
|
17,389
|
6,077
|
|||||||||
Total business segments
|
3,699,934
|
3,349,648
|
3,026,625
|
|||||||||
TSM operating revenues from external sources
|
473
|
1,443
|
1,624
|
|||||||||
Elimination of intersegment premiums
|
(5,204
|
)
|
(8,869
|
)
|
(6,971
|
)
|
||||||
Elimination of intersegment service revenue
|
(10,630
|
)
|
(8,836
|
)
|
(283
|
)
|
||||||
Consolidated operating revenues
|
$
|
3,684,573
|
$
|
3,333,386
|
$
|
3,020,995
|
* |
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinics.
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Operating income (loss)
|
||||||||||||
Managed care
|
$
|
38,301
|
$
|
61,907
|
$
|
26,468
|
||||||
Life
|
27,796
|
21,912
|
19,901
|
|||||||||
Property and casualty
|
19,829
|
14,492
|
(110,119
|
)
|
||||||||
Other segments*
|
(6,217
|
)
|
(3,054
|
)
|
8
|
|||||||
Total business segments
|
79,709
|
95,257
|
(63,742
|
)
|
||||||||
TSM operating revenues from external sources
|
473
|
1,443
|
1,624
|
|||||||||
TSM unallocated operating expenses
|
(7,940
|
)
|
(8,588
|
)
|
(8,815
|
)
|
||||||
Elimination of TSM charges
|
9,612
|
9,612
|
9,600
|
|||||||||
Consolidated operating income (loss)
|
81,854
|
97,724
|
(61,333
|
)
|
||||||||
Consolidated net realized investment gains
|
641
|
5,843
|
298
|
|||||||||
Consolidated net unrealized investment gains (losses) on equity securities
|
7,639
|
32,151
|
(36,546
|
)
|
||||||||
Consolidated interest expense
|
(7,986
|
)
|
(7,672
|
)
|
(6,903
|
)
|
||||||
Consolidated other income, net
|
9,585
|
4,206
|
11,312
|
|||||||||
Consolidated income (loss) before taxes
|
$
|
91,733
|
$
|
132,252
|
$
|
(93,172
|
)
|
|
2020
|
2019
|
2018
|
|||||||||
Depreciation and amortization expense
|
||||||||||||
Managed care
|
$
|
10,478
|
$
|
11,527
|
$
|
10,525
|
||||||
Life
|
1,226
|
1,081
|
1,134
|
|||||||||
Property and casualty
|
381
|
385
|
384
|
|||||||||
Other segments*
|
1,261
|
910
|
705
|
|||||||||
Total business segments
|
13,346
|
13,903
|
12,748
|
|||||||||
TSM depreciation expense
|
1,057
|
697
|
787
|
|||||||||
Consolidated depreciation and amortization expense
|
$
|
14,403
|
$
|
14,600
|
$
|
13,535
|
* |
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinics.
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Assets
|
||||||||||||
Managed care
|
$
|
1,319,389
|
$
|
1,190,538
|
$
|
1,078,262
|
||||||
Life
|
1,051,819
|
981,370
|
863,470
|
|||||||||
Property and casualty
|
583,404
|
592,758
|
747,583
|
|||||||||
Other segments*
|
34,020
|
28,346
|
20,705
|
|||||||||
Total business segments
|
2,988,632
|
2,793,012
|
2,710,020
|
|||||||||
Unallocated amounts related to TSM
|
||||||||||||
Cash, cash equivalents, and investments
|
16,489
|
28,167
|
57,818
|
|||||||||
Property and equipment, net
|
68,678
|
25,623
|
21,733
|
|||||||||
Other assets
|
88,684
|
37,176
|
22,521
|
|||||||||
|
173,851
|
90,966
|
102,072
|
|||||||||
Elimination entries – intersegment receivables and others
|
(74,065
|
)
|
(65,152
|
)
|
(51,844
|
)
|
||||||
Consolidated total assets
|
$
|
3,088,418
|
$
|
2,818,826
|
$
|
2,760,248
|
|
2020
|
2019
|
2018
|
|||||||||
Significant noncash items
|
||||||||||||
Net change in unrealized gain (loss) on securities available for sale
|
||||||||||||
Managed care
|
$
|
12,504
|
$
|
9,687
|
$
|
2,585
|
||||||
Life
|
18,336
|
17,442
|
(11,285
|
)
|
||||||||
Property and casualty
|
3,503
|
3,023
|
(583
|
)
|
||||||||
Other segments*
|
-
|
-
|
-
|
|||||||||
Total business segments
|
34,343
|
30,152
|
(9,283
|
)
|
||||||||
Amount related to TSM
|
(484
|
)
|
370
|
235
|
||||||||
Consolidated net change in unrealized (loss) gain on securities available for sale
|
$
|
33,859
|
$
|
30,522
|
$
|
(9,048
|
)
|
* |
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinics.
|
29. |
Subsequent Events
|
|
As of December 31,
|
|||||||
|
2020
|
2019
|
||||||
|
||||||||
Assets:
|
||||||||
Cash and cash equivalents
|
$
|
973
|
$
|
3,712
|
||||
Securities available-for-sale, at fair value:
|
||||||||
Equity Securities (cost of $5,853 in 2019)
|
-
|
5,857
|
||||||
Other invested assets, measured at net asset value (amortized cost of $15,234 in 2020 and $17,711 in 2019)
|
15,516
|
18,598
|
||||||
Investment in subsidiaries
|
957,299
|
878,695
|
||||||
Notes receivable and accrued interest from subsidiaries
|
61,479
|
59,085
|
||||||
Due from subsidiaries
|
17,521
|
19,575
|
||||||
Deferred tax asset
|
63,934
|
20,701
|
||||||
Other assets
|
93,428
|
42,098
|
||||||
Total assets
|
$
|
1,210,150
|
$
|
1,048,321
|
||||
|
||||||||
Liabilities:
|
||||||||
Notes payable and accrued interest to subsidiary
|
19,876
|
18,965
|
||||||
Due to subsidiaries
|
9,657
|
1,531
|
||||||
Long-term borrowings
|
52,751
|
25,694
|
||||||
Liability for pension benefits
|
139,611
|
34,465
|
||||||
Other liabilities
|
20,025
|
23,801
|
||||||
Total liabilities
|
241,920
|
104,456
|
||||||
|
||||||||
Stockholders’ equity:
|
||||||||
Common stock, class B
|
23,430
|
23,800
|
||||||
Additional paid-in-capital
|
57,399
|
60,504
|
||||||
Retained earnings
|
897,221
|
830,198
|
||||||
Accumulated other comprehensive income, net
|
(9,820
|
)
|
29,363
|
|||||
Total stockholders’ equity
|
968,230
|
943,865
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,210,150
|
$
|
1,048,321
|
|
2020
|
2019
|
2018
|
|||||||||
|
||||||||||||
Investment income
|
$
|
473
|
$
|
1,443
|
$
|
1,624
|
||||||
Net realized investment gains (losses)
|
95
|
(63
|
)
|
33
|
||||||||
Net unrealized investment (losses) gains on equity investments
|
(4
|
)
|
459
|
(462
|
)
|
|||||||
Other revenues
|
13,712
|
11,613
|
11,778
|
|||||||||
Total revenues
|
14,276
|
13,452
|
12,973
|
|||||||||
|
||||||||||||
Operating expenses:
|
||||||||||||
General and administrative expenses
|
7,940
|
8,588
|
8,815
|
|||||||||
Interest expense
|
1,365
|
1,334
|
1,375
|
|||||||||
Total operating expenses
|
9,305
|
9,922
|
10,190
|
|||||||||
Income before income taxes
|
4,971
|
3,530
|
2,783
|
|||||||||
Income tax expense
|
2,208
|
7
|
344
|
|||||||||
Income from parent company
|
2,763
|
3,523
|
2,439
|
|||||||||
Equity in net income (loss) of subsidiaries
|
64,426
|
89,371
|
(65,741
|
)
|
||||||||
Net income (loss)
|
$
|
67,189
|
$
|
92,894
|
$
|
(63,302
|
)
|
|
2020
|
2019
|
2018
|
|||||||||
Net income (loss)
|
$
|
67,189
|
$
|
92,894
|
$
|
(63,302
|
)
|
|||||
Adjustment to reconcile net (loss) income to net cash provided by operating activities:
|
||||||||||||
Equity in net (income) loss of subsidiaries
|
(64,426
|
)
|
(89,371
|
)
|
65,741
|
|||||||
Net realized investment (gains) losses
|
(95
|
)
|
63
|
(33
|
)
|
|||||||
Net unrealized investment losses (gains) on equity investments
|
4
|
(459
|
)
|
462
|
||||||||
Depreciation and amortization
|
1,469
|
871
|
961
|
|||||||||
Net amortization of investments
|
-
|
-
|
53
|
|||||||||
Shared- based compensation
|
11,889
|
11,605
|
3,357
|
|||||||||
Deferred income tax expense (benefit)
|
714
|
(438
|
)
|
(330
|
)
|
|||||||
Dividends received from subsidiaries
|
20,000
|
8,750
|
6,000
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Accrued interest from subsidiaries, net
|
(1,483
|
)
|
(1,876
|
)
|
(642
|
)
|
||||||
Due from subsidiaries
|
2,054
|
(11,694
|
)
|
1,093
|
||||||||
Other assets
|
(724
|
)
|
(357
|
)
|
(99
|
)
|
||||||
Due to subsidiaries
|
8,126
|
(4,033
|
)
|
5,498
|
||||||||
Other liabilities
|
(15,783
|
)
|
4,953
|
(3,680
|
)
|
|||||||
Net cash provided by operating activities
|
28,934
|
10,908
|
15,079
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Acquisition of investment in securities classified as available-for-sale
|
-
|
-
|
(18,007
|
)
|
||||||||
Acquisition of equity investments
|
-
|
(13,930
|
)
|
(11,856
|
)
|
|||||||
Acquisition of investment in other invested assets, measured at net asset value
|
(3,562
|
)
|
(3,738
|
)
|
(10,862
|
)
|
||||||
Capital contribution to subsidiaries
|
-
|
-
|
(12,189
|
)
|
||||||||
Proceeds from sale and maturities of investment in securities classified as available-for-sale
|
-
|
-
|
17,959
|
|||||||||
Proceeds from sales of other invested assets
|
6,166
|
377
|
-
|
|||||||||
Proceeds from sale of equity investments
|
5,822
|
32,389
|
47,506
|
|||||||||
Issuance of note receivable to subsidiary
|
-
|
(12,000
|
)
|
-
|
||||||||
Capital contribution in equity method investees
|
(7,551
|
)
|
(11,418
|
)
|
-
|
|||||||
Net acquisition of property and equipment
|
(44,524
|
)
|
(4,761
|
)
|
(437
|
)
|
||||||
Net cash (used in) provided by investing activities
|
(43,649
|
)
|
(13,081
|
)
|
12,114
|
|||||||
Cash flow from financing activities:
|
||||||||||||
Repayments of long-term borrowings
|
(3,883
|
)
|
(3,236
|
)
|
(3,236
|
)
|
||||||
Proceeds from long-term borrowings
|
30,841
|
-
|
-
|
|||||||||
Repurchase of common stock
|
(14,982
|
)
|
(9,989
|
)
|
(22,377
|
)
|
||||||
Dividends paid
|
-
|
(11
|
)
|
-
|
||||||||
Net cash provided by (used in) financing activities
|
11,976
|
(13,236
|
)
|
(25,613
|
)
|
|||||||
Net (decrease) increase in cash and cash equivalents
|
(2,739
|
)
|
(15,409
|
)
|
1,580
|
|||||||
Cash and cash equivalents, beginning of year
|
3,712
|
19,121
|
17,541
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
973
|
$
|
3,712
|
$
|
19,121
|
1. |
Nature of Business
|
2. |
Significant Accounting Policies
|
3. |
Long‑Term Borrowings
|
|
2020
|
2019
|
||||||
|
||||||||
Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.15% at December 31, 2020).
|
$
|
4,627
|
$
|
6,267
|
||||
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 2.98% at December 31, 2020).
|
16,204
|
17,211
|
||||||
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.48% at December 31, 2020).
|
1,813
|
2,401
|
||||||
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.25% at December 31, 2020). Last payment of $25,185 due on June 19, 2025.
|
30,723
|
-
|
||||||
Total borrowings
|
53,367
|
25,879
|
||||||
Less: unamortized debt issuance costs
|
616
|
185
|
||||||
|
$
|
52,751
|
$
|
25,694
|
Year ending December 31
|
||||
2021
|
$
|
4,490
|
||
2022
|
4,490
|
|||
2023
|
4,196
|
|||
2024
|
14,484
|
|||
2025
|
25,707
|
|||
|
$
|
53,367
|
4. |
Transactions with Related Parties
|
|
2020
|
2019
|
2018
|
|||||||||
Rent charges to subsidiaries
|
$
|
7,810
|
$
|
7,809
|
$
|
7,874
|
||||||
Interest charged to subsidiaries on notes receivable
|
2,672
|
2,275
|
1,935
|
|||||||||
Interest charged from subsidiary on note payable
|
911
|
869
|
829
|
5. |
Stockholders’ Equity
|
a. |
Common Stock
|
b. |
Preferred Stock
|
c. |
Dividends
|
Segment
|
Deferred
Policy
Acquisition
Costs and Value
of Business
Acquired
|
Claim
Liabilities
|
Liability for
Future
Policy
Benefits
|
Unearned
Premiums
|
Other
Policy Claims
and Benefits
Payable
|
Premium
Revenue
|
Net
Investment
Income
|
Claims
Incurred
|
Amortization of
Deferred Policy
Acquisition
Costs and Value
of Business
Acquired
|
Other
Operating
Expenses
|
Net
Premiums
Written
|
|||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
2020
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Managed Care
|
$
|
-
|
$
|
445,655
|
$
|
-
|
$
|
1,609
|
$
|
-
|
$
|
3,322,266
|
$
|
20,783
|
$
|
2,805,738
|
$
|
-
|
$
|
512,035
|
$
|
3,322,266
|
||||||||||||||||||||||
Life Insurance
|
222,703
|
49,932
|
414,997
|
12,190
|
-
|
195,955
|
27,317
|
107,226
|
18,567
|
69,683
|
195,955
|
|||||||||||||||||||||||||||||||||
Property and Casualty Insurance
|
25,622
|
292,835
|
-
|
83,682
|
-
|
91,993
|
8,974
|
35,140
|
26,685
|
19,313
|
96,777
|
|||||||||||||||||||||||||||||||||
Other Non-reportable segments, Parent Company operations and net consolidating entries.
|
-
|
(1,320
|
)
|
-
|
-
|
-
|
(4,764
|
)
|
473
|
(1,284
|
)
|
-
|
9,616
|
-
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
248,325
|
$
|
787,102
|
$
|
414,997
|
$
|
97,481
|
$
|
-
|
$
|
3,605,450
|
$
|
57,547
|
$
|
2,946,820
|
$
|
45,252
|
$
|
610,647
|
$
|
3,614,998
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
2019
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Managed Care
|
$
|
-
|
$
|
341,277
|
$
|
-
|
$
|
2,188
|
$
|
-
|
$
|
2,987,466
|
$
|
23,468
|
$
|
2,526,682
|
$
|
-
|
$
|
436,694
|
$
|
2,987,466
|
||||||||||||||||||||||
Life Insurance
|
212,345
|
47,095
|
386,017
|
10,889
|
-
|
182,191
|
27,323
|
105,889
|
14,911
|
66,802
|
182,191
|
|||||||||||||||||||||||||||||||||
Property and Casualty Insurance
|
22,434
|
322,018
|
-
|
80,224
|
-
|
87,689
|
9,773
|
39,548
|
22,742
|
20,679
|
98,164
|
|||||||||||||||||||||||||||||||||
Other Non-reportable segments, Parent Company operations and net consolidating entries.
|
-
|
-
|
-
|
-
|
-
|
-
|
1,443
|
(5,863
|
)
|
-
|
7,578
|
-
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
234,779
|
$
|
710,390
|
$
|
386,017
|
$
|
93,301
|
$
|
-
|
$
|
3,257,346
|
$
|
62,007
|
$
|
2,666,256
|
$
|
37,653
|
$
|
531,753
|
$
|
3,267,821
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
2018
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Managed Care
|
$
|
-
|
$
|
394,226
|
$
|
-
|
$
|
2,418
|
$
|
-
|
$
|
2,689,082
|
$
|
23,827
|
$
|
2,272,501
|
$
|
-
|
$
|
433,022
|
$
|
2,689,082
|
||||||||||||||||||||||
Life Insurance
|
198,140
|
46,157
|
361,495
|
9,490
|
-
|
168,556
|
25,658
|
99,048
|
11,017
|
64,248
|
168,556
|
|||||||||||||||||||||||||||||||||
Property and Casualty Insurance
|
17,019
|
496,876
|
-
|
71,082
|
-
|
83,543
|
10,800
|
159,942
|
25,756
|
18,764
|
79,472
|
|||||||||||||||||||||||||||||||||
Other Non-reportable segments, Parent Company operations and net consolidating entries.
|
-
|
(470
|
)
|
-
|
-
|
-
|
(2,590
|
)
|
1,624
|
(3,878
|
)
|
-
|
1,908
|
-
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Total
|
$
|
215,159
|
$
|
936,789
|
$
|
361,495
|
$
|
82,990
|
$
|
-
|
$
|
2,938,591
|
$
|
61,909
|
$
|
2,527,613
|
$
|
36,773
|
$
|
517,942
|
$
|
2,937,110
|
|
Gross
Amount (1)
|
Ceded to
Other
Companies
|
Assumed
from Other
Companies
|
Net
Amount
|
Percentage
of Amount
Assumed
to Net
|
|||||||||||||||
|
||||||||||||||||||||
2020
|
||||||||||||||||||||
|
||||||||||||||||||||
Life Insurance in force
|
$
|
10,317,331
|
$
|
10,317,331
|
0.0
|
%
|
||||||||||||||
|
||||||||||||||||||||
Premiums:
|
||||||||||||||||||||
Life Insurance
|
$
|
203,818
|
$
|
9,997
|
$
|
68
|
$
|
193,889
|
0.0
|
%
|
||||||||||
Accident and Health Insurance
|
3,324,161
|
4,341
|
361
|
3,320,181
|
0.0
|
%
|
||||||||||||||
Property and Casualty Insurance
|
153,851
|
62,471
|
-
|
91,380
|
0.0
|
%
|
||||||||||||||
Total premiums
|
$
|
3,681,830
|
$
|
76,809
|
$
|
429
|
$
|
3,605,450
|
0.0
|
%
|
||||||||||
|
||||||||||||||||||||
2019
|
||||||||||||||||||||
|
||||||||||||||||||||
Life insurance in force
|
$
|
9,739,154
|
$
|
9,739,154
|
0.0
|
%
|
||||||||||||||
|
||||||||||||||||||||
Premiums:
|
||||||||||||||||||||
Life Insurance
|
$
|
186,489
|
$
|
8,337
|
$
|
2,052
|
$
|
180,204
|
1.1
|
%
|
||||||||||
Accident and Health Insurance
|
2,989,550
|
4,296
|
346
|
2,985,600
|
0.0
|
%
|
||||||||||||||
Property and Casualty Insurance
|
140,763
|
53,687
|
-
|
87,076
|
0.0
|
%
|
||||||||||||||
Total premiums
|
$
|
3,316,802
|
$
|
66,320
|
$
|
2,398
|
$
|
3,252,880
|
0.1
|
%
|
||||||||||
|
||||||||||||||||||||
2018
|
||||||||||||||||||||
|
||||||||||||||||||||
Life insurance in force
|
$
|
9,158,253
|
$
|
9,158,253
|
0.0
|
%
|
||||||||||||||
|
||||||||||||||||||||
Premiums:
|
||||||||||||||||||||
Life Insurance
|
$
|
174,624
|
$
|
8,780
|
$
|
2,044
|
$
|
167,888
|
1.2
|
%
|
||||||||||
Accident and Health Insurance
|
2,691,289
|
3,824
|
308
|
2,687,773
|
0.0
|
%
|
||||||||||||||
Property and Casualty Insurance
|
143,917
|
60,987
|
-
|
82,930
|
0.0
|
%
|
||||||||||||||
Total premiums
|
$
|
3,009,830
|
$
|
73,591
|
$
|
2,352
|
$
|
2,938,591
|
0.1
|
%
|
(1) |
Gross premiums amount is presented net of intercompany eliminations of $4,764, $4,466 and $2,590 for the years ended December 31, 2020, 2019, and 2018, respectively.
|
|
Additions
|
|||||||||||||||||||
|
Balance at
Beginning of
Period
|
Charged to
Costs and
Expenses
|
Charged (Reversal)
To Other Accounts
- Describe (1)
|
Deductions -
Describe (2)
|
Balance at
End of
Period
|
|||||||||||||||
|
||||||||||||||||||||
2020
|
||||||||||||||||||||
|
||||||||||||||||||||
Allowance for doubtful receivables
|
$
|
56,545
|
1,841
|
(5,985
|
)
|
(1,662
|
)
|
$
|
50,739
|
|||||||||||
|
||||||||||||||||||||
2019
|
||||||||||||||||||||
|
||||||||||||||||||||
Allowance for doubtful receivables
|
$
|
42,042
|
17,539
|
1,360
|
(4,396
|
)
|
$
|
56,545
|
||||||||||||
|
||||||||||||||||||||
2018
|
||||||||||||||||||||
|
||||||||||||||||||||
Allowance for doubtful receivables
|
$
|
35,883
|
4,754
|
6,569
|
(5,164
|
)
|
$
|
42,042
|
(1) |
Represents premiums adjustment to provide for unresolved reconciliation items with the Government of Puerto Rico and other entities.
|
(2) |
Deductions represent the write-off of accounts deemed uncollectible.
|
|
As of December 31,
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
Year
|
Deferred
Policy
Acquisition
Costs
|
Reserve for
Unpaid Claims
and Claims
Adjustment
Expenses
|
Unearned
Premiums
|
Earned
Premiums
|
Net
Investment
Income
|
Claims and Claim Adjustment
Expenses Incurred
Related to
|
Amortization of
Deferred Policy
Acquisition
Costs
|
Paid Claims and
Claim Adjustment
Expenses
|
Premiums
Written
|
|||||||||||||||||||||||||||||||
Current
Year
|
Prior
Years
|
|||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
2020
|
$
|
25,622
|
$
|
292,835
|
$
|
83,682
|
$
|
91,993
|
$
|
8,974
|
$
|
44,455
|
$
|
(9,315
|
)
|
$
|
26,685
|
$
|
65,601
|
$
|
157,922
|
|||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
2019
|
$
|
22,434
|
$
|
322,018
|
$
|
80,224
|
$
|
87,689
|
$
|
9,773
|
$
|
43,589
|
$
|
(4,041
|
)
|
$
|
22,742
|
$
|
36,467
|
$
|
150,519
|
|||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
2018
|
$
|
17,019
|
$
|
496,876
|
$
|
71,082
|
$
|
83,543
|
$
|
10,800
|
$
|
40,619
|
$
|
119,323
|
$
|
25,756
|
$
|
40,158
|
$
|
139,826
|
1. |
El Plan de Reorganización Núm. 3 de 29 de julio de 2010 (Plan de Reorganización Núm. 3) faculta a ASES para administrar, negociar, contratar y gestionar los beneficios de salud para los
retirados y empleados públicos del Gobierno de Puerto Rico, conforme a la Ley Núm. 95 del 29 de junio de 1963 (Ley Núm. 95), según enmendada, conocida como Ley de Beneficios de Salud para Empleados Públicos y su Reglamento.
|
2. |
En virtud del Plan de Reorganización Núm. 3, la Junta de Directores de ASES autoriza al Director Ejecutivo a contratar con las aseguradores u organizaciones de servicios de salud que
cualifiquen de acuerdo con la ley y los requisitos al efecto, para que conforme a las normas y fechas establecidas por ASES mercadeen, suscriban y provean a los funcionarios, empleados y pensionados del Gobierno de Puerto Rico, sus municipios e instrumentalidades que deseen acogerse sabre bases
voluntarias, planes de beneficios médico-hospitalarios, que incluyan entre otros, servicios quirúrgicos, dentales, medicamentos y hospitalización, según las cubiertas de beneficios mínimos y uniformes establecidas par ASES.
|
3. |
De conformidad con el Plan de Reorganización Núm. 3 y de las disposiciones de la Ley Núm. 95 y su Reglamento, el
Departamento de Hacienda conserva las funciones de pago de aportaciones patronales del Gobierno Central de Puerto Rico mediante el Sistema de Recursos Humanos y Nóminas (RHUM), incluyendo la participación en el pago de prima, si alguna, del
empleado. En cuanto a las corporaciones públicas y otras instrumentalidades que no sean parte del Gobierno Central, así coma aquellos municipios que se acojan voluntariamente a participar de la Ley Núm. 95, dichas compensaciones de pagos de
primas, incluyendo la aportación del empleado, provendrán del municipio, corporación pública o instrumentalidad, según corresponda. En cuanto a pensionados, los pagos de aportaciones, tanto del patrono coma del Sistema de Retiro, provendrán
directamente de parte de la Administración de los Sistemas de Retiro, o directamente del pensionado, según aplique. En todo caso, ASES no será responsable de forma directa o indirecta sobre la compensación o pago de primas acordadas bajo este Contrato, según enmendado.
|
4. |
En cumplimiento con los propósitos de la Ley Núm. 95, ASES llevó a cabo un Proceso de Solicitud de Propuestas "RFP #EMPU-2019", el cual fue adjudicado a favor de cinco (5) aseguradoras u
organizaciones de servicios de salud, incluyendo la compareciente en este otorgamiento. En virtud de dicho RFP las partes otorgaron el Contrato 2019-000082 con vigencia del 1 de abril de 2019 al 31 de
marzo de 2020.
|
5. |
Las partes comparecen a los fines de formalizar la enmienda al contrato para extender la prestación de servicios de
cuidado de salud mediante un plan de beneficios médico-quirúrgicos, dentales, medicina, hospitalización y beneficios suplementarios para los funcionarios, empleados y pensionados del Gobierno de Puerto Rico, sus instrumentalidades,
municipios participantes no exentos por otras leyes especiales, y para los miembros de sus familias, cohabitantes y dependientes de éstos que sean elegibles de conformidad con lo dispuesto en la Ley Núm. 95; el Reglamento Núm. 8398
conocido como el Reglamenta para la Cantratación de los Planes de Beneficios de Salud para los Empleados Públicos, aprobado el 31 de
octubre de 2013, y según sea enmendado o sustituido; así como de conformidad con cualquier otra reglamentación que durante la vigencia de este Contrato promulgue ASES para la contratación de los planes de beneficios de salud para los empleados públicos. Mediante esta enmienda se extiende el periodo de
cubierta desde el 1 de abril de 2020 al 31 de mayo de 2020.
|
6. |
En virtud de todo lo anterior y de acuerdo con lo dispuesto en el Plan de Reorganización Núm. 3 y en la Ley Núm. 95, los aquí comparecientes otorgan libre y voluntariamente la
presente enmienda al Contrato bajo las siguientes:
|
1. |
Se enmienda la Cláusula 51 del Contrato 2019-000082 para extender el término de vigencia desde el 1 de abril de 2020 al 31 de mayo de 2020.
|
2. |
El resto de las cláusulas y condiciones del Contrato Número 2019-000082 permanecen en efecto e inalteradas.
|
3. |
La vigencia y validez de esta enmienda están supeditadas a la aprobación de las agendas que por ley o reglamento deban intervenirlo.
|
4. |
La presente enmienda no conlleva desembolso de fondos por parte de ASES.
|
5. |
Las partes aceptan y estipulan que ninguna prestación o contraprestación objeto de este Contrato podrá exigirse hasta tanto el mismo se haya presentado para registro en la Oficina
del Contralor de Puerto Rico, conforme a los dispuesto en la Ley 18 de 30 de octubre de 1975, según enmendada.
|
|
|
I. |
AMENDMENTS
|
|
1. |
Attachment 11 of the Contract shall be amended to extend the coverage period until May 31, 2020, with no other changes made to this attachment:
|
Rate Cell
|
PMPM Premium Rate
|
|||
Law 72, Article VI Public Employees and Pensioners*
|
$
|
180.00
|
II. |
RATIFICATION
|
III. |
EFFECT; CMS APPROVAL
|
IV. |
AMENDMENT EFFECTIVE DATE
|
V.
|
ENTIRE AGREEMENT
|
|
[Signature Page Follows]
|
|
1. |
DEFINITIONS
|
|
1.1 |
"Emergency Medical Group ("EMG")
A category of Enrollees qualified for GHP under a temporary expansion
of Medicaid coverage eligibility requirements during the COVID-19 pandemic.
|
|
1.2 |
Emergency Medical Group Enrollees
From November 15, 2020 to September 30, 202J, Potential Enrollees who
qualify for the Emergency Medical Group ("EMG") are eligible to participate under the Medicaid and CHIP programs under the GHP. During this time, EMG Enrollees shall receive the same benefits as the eligible populations as defined in Section 1.3.1.
|
2. |
ELIGIBILITY
|
2.1
|
EMG potential enrollees shall comply with eligibility requirements as set forth by the Medicaid Program for the establishment of the poverty level for eligibility certification. EMG enrollees may be considered Medicaid, CHIP or State Population according to Medicaid Program's eligibility certification.
|
3. |
ENROLLMENT
|
|
3.1 |
Effective Date of Enrollment for EMG.
The effective Date of Enrollment for all Emergency Medical Group Enrollees shall begin no earlier than November 15, 2020. All other Enrollment processes
and procedures under Section 5.2 of this Contract shall apply, including those applicable provisions governing notification to Enrollees and Providers on Enrollment and changes in Enrollment status.
|
|
3.2 |
Disenrollment.
EMG Enrollees shall have a Term of Enrollment that expires on
September 30, 2021. Upon expiration of this term, EMG Enrollees shall undergo the same Disenrollment procedures set forth under Section 5.3 as applicable to Enrollees who are no longer eligible for the GH P.
|
4. |
ATTACHMENT APPLICABILITY
|
• |
Triple-S Salud, Inc. (TSS), a wholly-owned subsidiary of TSM.
|
• |
Triple-S Advantage, Inc. (TSA), a wholly-owned subsidiary of TSS.
|
• |
Triple-S Vida, Inc., a wholly-owned subsidiary of TSM.
|
• |
Triple-S Propiedad, Inc., a wholly-owned subsidiary of TSM.
|
* |
Pursuant to Item 601(b)(21)(ii) of Regulation S-K, the names of other subsidiaries of Triple-S Management Corporation are omitted because, considered in the aggregate, they would
not constitute a significant subsidiary as of the end of the year covered by this report.
|
1. |
I have reviewed this Annual Report on Form 10-K of Triple-S Management Corporation (“the registrant”);
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
|
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 26, 2021
|
By:
|
/s/ Roberto
García-Rodríguez
|
|
Roberto García-Rodríguez
|
||||
President and Chief Executive Officer
|
1. |
I have reviewed this Annual Report on Form 10-K of Triple-S Management Corporation (“the registrant”);
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and
the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
|
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 26, 2021
|
By:
|
/s/ Juan J.
Román-Jiménez
|
|
Juan J. Román-Jiménez
|
||||
Executive Vice President and Chief Financial Officer
|
|
a) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
b) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 26, 2021
|
By:
|
/s/ Roberto
García-Rodríguez
|
|
Roberto García-Rodríguez
|
||||
President and
|
||||
Chief Executive Officer
|
|
a) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
b) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 26, 2021
|
By:
|
/s/ Juan J.
Román-Jiménez
|
|
Juan J. Román-Jiménez
|
||||
Executive Vice President and
|
||||
Chief Financial Officer
|