##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 COMMISSION FILE NUMBER: 001-33865
 Triple-S Management Corporation
  Puerto Rico
    
    66-0555678(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)1441 F.D. Roosevelt AvenueSan Juan, Puerto Rico
    
    00920(Address of principal executive offices)
    
    (Zip code)
 (787) 749-4949
 Not applicable
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Title of each class
    
    Outstanding at September 30, 2008Common Stock Class A, $1.00 par value
    
    16,042,809Common Stock Class B, $1.00 par value
    
    16,286,489




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##### 



Triple-S Management Corporation
 FORM 10-Q
   PAGEPART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of  September 30, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Earnings for the three months and nine months ended September 30, 2008 and 2007
    
    
    4Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) for the nine months ended September 30, 2008 and 2007
    
    
    5Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4.
    
    Controls and Procedures
    
    
    34PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    35Item 1A
    
    Risk Factors
    
    
    35Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 3.
    
    Defaults Upon Senior Securities
    
    
    35Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    36Item 5.
    
    Other Information
    
    
    36Item 6.
    
    Exhibits
    
    
    36SIGNATURES
    
    
    37EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Part I  Financial Information
 
 Item 1. Financial Statements
 TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES
 
 Consolidated Balance Sheets
 (Dollar amounts in thousands, except per share data)
 (Unaudited)September 30,
    
    December 31,2008
    
    2007AssetsInvestments and cash:Equity securities held for trading, at fair value
    
    $
    42,513
    
    
    
    67,158Securities available for sale, at fair value:Fixed maturities
    
    
    903,693
    
    
    
    823,629Equity securities
    
    
    75,372
    
    
    
    71,050Securities held to maturity, at amortized cost:Fixed maturities
    
    
    24,433
    
    
    
    43,691Policy loans
    
    
    5,408
    
    
    
    5,481Cash and cash equivalents
    
    
    43,451
    
    
    
    240,153Total investments and cash
    
    
    1,094,870
    
    
    
    1,251,162Premiums and other receivables, net
    
    
    250,562
    
    
    
    202,268Deferred policy acquisition costs and value of business acquired
    
    
    125,322
    
    
    
    117,239Property and equipment, net
    
    
    50,101
    
    
    
    43,415Net deferred tax asset
    
    
    12,945
    
    
    
    6,783Other assets
    
    
    35,565
    
    
    
    38,675Total assets
    
    $
    1,569,365
    
    
    
    1,659,542Liabilities and Stockholders EquityClaim liabilities:Claims processed and incomplete
    
    $
    191,905
    
    
    
    186,065Unreported losses
    
    
    141,995
    
    
    
    149,996Unpaid loss-adjustment expenses
    
    
    18,656
    
    
    
    17,769Total claim liabilities
    
    
    352,556
    
    
    
    353,830Liability for future policy benefits
    
    
    204,205
    
    
    
    194,131Unearned premiums
    
    
    100,684
    
    
    
    132,599Policyholder deposits
    
    
    48,729
    
    
    
    45,959Liability to Federal Employees Health Benefits Program (FEHBP)
    
    
    15,095
    
    
    
    21,338Accounts payable and accrued liabilities
    
    
    132,356
    
    
    
    228,980Short-term borrowings
    
    
    31,795
    
    
    
    Long-term borrowings
    
    
    169,717
    
    
    
    170,946Liability for pension benefits
    
    
    30,094
    
    
    
    29,221Total liabilities
    
    
    1,085,231
    
    
    
    1,177,004Stockholders equity:Common stock Class A
    
    
    16,043
    
    
    
    16,043Common stock Class B
    
    
    16,286
    
    
    
    16,266Additional paid-in capital
    
    
    191,327
    
    
    
    188,935Retained earnings
    
    
    290,132
    
    
    
    267,336Accumulated other comprehensive loss
    
    
    (29,654
    )
    
    
    (6,042
    )Total stockholders equity
    
    
    484,134
    
    
    
    482,538Total liabilities and stockholders equity
    
    $
    1,569,365
    
    
    
    1,659,542
  3




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##### Table of Contents



TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES
 
 Consolidated Statements of Earnings (Unaudited)
  (Dollar amounts in thousands, except per share data)
 Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Revenues:Premiums earned, net
    
    $
    433,219
    
    
    
    375,803
    
    
    $
    1,256,775
    
    
    
    1,101,614Administrative service fees
    
    
    4,448
    
    
    
    3,908
    
    
    
    12,081
    
    
    
    11,034Net investment income
    
    
    14,072
    
    
    
    11,229
    
    
    
    41,806
    
    
    
    33,397Total operating revenues
    
    
    451,739
    
    
    
    390,940
    
    
    
    1,310,662
    
    
    
    1,146,045Net realized investment (loss) gains
    
    
    (1,101
    )
    
    
    1,183
    
    
    
    (2,233
    )
    
    
    6,163Net unrealized investment (loss) gain on trading
securities
    
    
    (3,605
    )
    
    
    588
    
    
    
    (10,806
    )
    
    
    (764
    )Other income (expense), net
    
    
    (1,147
    )
    
    
    (525
    )
    
    
    (1,308
    )
    
    
    1,842Total revenues
    
    
    445,886
    
    
    
    392,186
    
    
    
    1,296,315
    
    
    
    1,153,286Benefits and expenses:Claims incurred
    
    
    365,585
    
    
    
    310,033
    
    
    
    1,070,572
    
    
    
    915,374Operating expenses
    
    
    63,572
    
    
    
    57,944
    
    
    
    185,002
    
    
    
    173,439Total operating costs
    
    
    429,157
    
    
    
    367,977
    
    
    
    1,255,574
    
    
    
    1,088,813Interest expense
    
    
    3,749
    
    
    
    3,938
    
    
    
    11,348
    
    
    
    11,948Total benefits and expenses
    
    
    432,906
    
    
    
    371,915
    
    
    
    1,266,922
    
    
    
    1,100,761Income before taxes
    
    
    12,980
    
    
    
    20,271
    
    
    
    29,393
    
    
    
    52,525Income tax expense (benefit):Current
    
    
    4,580
    
    
    
    4,575
    
    
    
    8,687
    
    
    
    11,573Deferred
    
    
    (1,071
    )
    
    
    206
    
    
    
    (2,104
    )
    
    
    152Total income taxes
    
    
    3,509
    
    
    
    4,781
    
    
    
    6,583
    
    
    
    11,725Net income
    
    $
    9,471
    
    
    
    15,490
    
    
    $
    22,810
    
    
    
    40,800Basic net income per share
    
    $
    0.29
    
    
    
    0.58
    
    
    $
    0.71
    
    
    
    1.53Diluted net income per share
    
    $
    0.29
    
    
    
    0.58
    
    
    $
    0.71
    
    
    
    1.53
  4




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES
 
 Consolidated Statements of Stockholders Equity and
 Comprehensive Income (Loss) (Unaudited)
   (Dollar amounts in thousands, except per share data)
 2008
    
    2007Balance at January 1
    
    $
    482,538
    
    
    
    342,599Dividends
    
    
    
    
    
    
    (2,448
    )Share-based compensation
    
    
    2,392
    
    
    
    Grant of restricted Class B common stock
    
    
    20
    
    
    
    Other
    
    
    (14
    )
    
    
    1Comprehensive income (loss):Net income
    
    
    22,810
    
    
    
    40,800Net unrealized change in fair value of available for sale
securities
    
    
    (24,210
    )
    
    
    1,137Defined benefit pension plan:Actuarial loss, net
    
    
    874
    
    
    
    935Prior service (cost) credit, net
    
    
    (220
    )
    
    
    27Net change in fair value of cash flow hedges
    
    
    (56
    )
    
    
    (185
    )Total comprehensive income (loss)
    
    
    (802
    )
    
    
    42,714Balance at September 30
    
    $
    484,134
    
    
    
    382,865
  5




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARES
 
 Consolidated Statements of Cash Flows (Unaudited)
  (Dollar amounts in thousands, except per share data)
 Nine months endedSeptember 30,2008
    
    2007Cash flows from operating activities:Net income
    
    $
    22,810
    
    
    
    40,800Adjustments to reconcile net income to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    5,419
    
    
    
    5,413Net amortization of investments
    
    
    739
    
    
    
    556Provision for doubtful receivables
    
    
    (2,243
    )
    
    
    1,902Deferred tax (benefit) expense
    
    
    (2,104
    )
    
    
    152Net loss (gain) on sale of securities
    
    
    2,233
    
    
    
    (6,163
    )Net unrealized loss on trading securities
    
    
    10,806
    
    
    
    764Share-based compensation
    
    
    2,392
    
    
    
    Proceeds from trading securities sold:Equity securities
    
    
    23,480
    
    
    
    38,309Acquisition of securities in trading portfolio:Equity securities
    
    
    (9,367
    )
    
    
    (19,172
    )Loss on sale of property and equipment
    
    
    11
    
    
    
    2(Increase) decrease in assets:Premiums receivable
    
    
    (50,744
    )
    
    
    (21,258
    )Agents balances
    
    
    2,787
    
    
    
    2,084Accrued interest receivable
    
    
    (2,484
    )
    
    
    (1,314
    )Other receivables
    
    
    (4,508
    )
    
    
    (4,289
    )Reinsurance recoverable on paid losses
    
    
    8,924
    
    
    
    (16,409
    )Deferred policy acquisition costs and
value of business acquired
    
    
    (8,083
    )
    
    
    (2,935
    )Prepaid income tax
    
    
    (6,901
    )
    
    
    (2,598
    )Other assets
    
    
    9,918
    
    
    
    2,942Increase (decrease) in liabilities:Claims processed and incomplete
    
    
    5,840
    
    
    
    21,703Unreported losses
    
    
    (8,001
    )
    
    
    11,666Unpaid loss-adjustment expenses
    
    
    887
    
    
    
    508Liability for future policy benefits
    
    
    10,074
    
    
    
    10,088Unearned premiums
    
    
    (31,915
    )
    
    
    (14,744
    )Policyholder deposits
    
    
    1,407
    
    
    
    1,192Liability to FEHBP
    
    
    (6,243
    )
    
    
    6,074Accounts payable and accrued liabilities
    
    
    4,972
    
    
    
    5,459Income tax payable
    
    
    
    
    
    
    (9,242
    )Net cash (used in) provided by operating activities
    
    $
    (19,894
    )
    
    
    51,490
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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Consolidated Statements of Cash Flows (Unaudited)   (Dollar amounts in thousands, except per share data)
 Nine months endedSeptember 30,2008
    
    2007Cash flows from investing activities:Proceeds from investments sold or matured:Securities available for sale:Fixed maturities sold
    
    $
    162,802
    
    
    
    101,828Fixed maturities matured
    
    
    65,088
    
    
    
    25,733Equity securities
    
    
    4,449
    
    
    
    1,000Securities held to maturity:Fixed maturities matured
    
    
    20,107
    
    
    
    7,172Acquisition of investments:Securities available for sale:Fixed maturities
    
    
    (449,515
    )
    
    
    (147,357
    )Equity securities
    
    
    (17,069
    )
    
    
    (16,759
    )Fixed maturity securities held to maturity
    
    
    (554
    )
    
    
    (4,891
    )Net proceeds (disbursements) for policy loans
    
    
    73
    
    
    
    (297
    )Net capital expenditures
    
    
    (12,116
    )
    
    
    (6,329
    )Net cash used in investing activities
    
    
    (226,735
    )
    
    
    (39,900
    )Cash flows from financing activities:Change in outstanding checks in excess of bank balances
    
    
    17,992
    
    
    
    17,477Repayments of short-term borrowings
    
    
    (864,419
    )
    
    
    (43,559
    )Proceeds from short-term borrowings
    
    
    896,214
    
    
    
    43,559Repayments of long-term borrowings
    
    
    (1,229
    )
    
    
    (11,730
    )Dividends paid
    
    
    
    
    
    
    (2,448
    )Proceeds from policyholder deposits
    
    
    7,156
    
    
    
    5,133Surrenders of policyholder deposits
    
    
    (5,793
    )
    
    
    (5,614
    )Other
    
    
    6
    
    
    
    1Net cash provided by financing activities
    
    
    49,927
    
    
    
    2,819Net (decrease) increase in cash and cash
equivalents
    
    
    (196,702
    )
    
    
    14,409Cash and cash equivalents at beginning of the period
    
    
    240,153
    
    
    
    81,564Cash and cash equivalents at end of the period
    
    $
    43,451
    
    
    
    95,973
  7




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
  (Dollar amounts in thousands, except per share data)
  (1) Basis of Presentation
   (2) Recent Accounting Standards
 Fair Value Measurements
 The Fair Value Option for Financial Assets and Financial
Liabilities  Including an Amendment of FASB Statement No. 115
 Disclosures about Derivative Instruments and Hedging
Activities Accounting for Derivative Instruments and Hedging
Activities
 Accounting for Financial Guarantee Insurance Contracts  an
Interpretation of FASB Statement No. 60 Accounting and Reporting by Insurance
Enterprises
 8




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
   (3) Segment Information
   Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Operating revenues:Managed Care:Premiums earned, net
    
    $
    387,052
    
    
    
    330,366
    
    
    $
    1,119,602
    
    
    
    965,909Administrative service fees
    
    
    4,449
    
    
    
    3,908
    
    
    
    12,082
    
    
    
    11,034Intersegment premiums /service fees
    
    
    1,587
    
    
    
    1,309
    
    
    
    4,897
    
    
    
    4,717Net investment income
    
    
    5,879
    
    
    
    4,848
    
    
    
    17,556
    
    
    
    14,338Total managed care
    
    
    398,967
    
    
    
    340,431
    
    
    
    1,154,137
    
    
    
    995,998Life Insurance:Premiums earned, net
    
    
    23,407
    
    
    
    21,974
    
    
    
    68,319
    
    
    
    66,837Intersegment premiums
    
    
    91
    
    
    
    92
    
    
    
    276
    
    
    
    264Net investment income
    
    
    4,156
    
    
    
    3,695
    
    
    
    12,147
    
    
    
    11,054Total life insurance
    
    
    27,654
    
    
    
    25,761
    
    
    
    80,742
    
    
    
    78,155Property and Casualty Insurance:Premiums earned, net
    
    
    22,761
    
    
    
    23,463
    
    
    
    68,855
    
    
    
    68,868Intersegment premiums
    
    
    152
    
    
    
    154
    
    
    
    458
    
    
    
    462Net investment income
    
    
    2,910
    
    
    
    2,566
    
    
    
    8,933
    
    
    
    7,645Total property and casualty insurance
    
    
    25,823
    
    
    
    26,183
    
    
    
    78,246
    
    
    
    76,975Other segments  intersegment service revenues *
    
    
    11,705
    
    
    
    10,683
    
    
    
    33,978
    
    
    
    32,325Total business segments
    
    
    464,149
    
    
    
    403,058
    
    
    
    1,347,103
    
    
    
    1,183,453TSM operating revenues from external sources
    
    
    1,125
    
    
    
    120
    
    
    
    3,168
    
    
    
    360Elimination of intersegment premiums
    
    
    (1,830
    )
    
    
    (1,555
    )
    
    
    (5,631
    )
    
    
    (5,443
    )Elimination of intersegment service fees
    
    
    (11,705
    )
    
    
    (10,683
    )
    
    
    (33,978
    )
    
    
    (32,325
    )Consolidated operating revenues
    
    $
    451,739
    
    
    
    390,940
    
    
    $
    1,310,662
    
    
    
    1,146,045
 *
    
    Includes segments that are not required to be reported separately. These segments include the
data processing services organization as well as the third-party administrator of managed care
services.
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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Operating income:Managed care
    
    $
    15,114
    
    
    
    17,499
    
    
    $
    34,416
    
    
    
    39,396Life insurance
    
    
    2,906
    
    
    
    2,605
    
    
    
    8,611
    
    
    
    8,260Property and casualty insurance
    
    
    2,884
    
    
    
    1,508
    
    
    
    7,252
    
    
    
    6,494Other segments *
    
    
    31
    
    
    
    509
    
    
    
    319
    
    
    
    787Total business segments
    
    
    20,935
    
    
    
    22,121
    
    
    
    50,598
    
    
    
    54,937TSM operating revenues from external sources
    
    
    1,125
    
    
    
    120
    
    
    
    3,168
    
    
    
    360TSM unallocated operating expenses
    
    
    (1,996
    )
    
    
    (2,006
    )
    
    
    (6,152
    )
    
    
    (6,279
    )Elimination of TSM
intersegment charges
    
    
    2,518
    
    
    
    2,728
    
    
    
    7,474
    
    
    
    8,214Consolidated operating income
    
    
    22,582
    
    
    
    22,963
    
    
    
    55,088
    
    
    
    57,232Consolidated net realized investment (loss) gains
    
    
    (1,101
    )
    
    
    1,183
    
    
    
    (2,233
    )
    
    
    6,163Consolidated net unrealized gain (loss) on
trading securities
    
    
    (3,605
    )
    
    
    588
    
    
    
    (10,806
    )
    
    
    (764
    )Consolidated interest expense
    
    
    (3,749
    )
    
    
    (3,938
    )
    
    
    (11,348
    )
    
    
    (11,948
    )Consolidated other income (expense), net
    
    
    (1,147
    )
    
    
    (525
    )
    
    
    (1,308
    )
    
    
    1,842Consolidated income before
taxes
    
    $
    12,980
    
    
    
    20,271
    
    
    $
    29,393
    
    
    
    52,525Depreciation expense:Managed care
    
    $
    1,093
    
    
    
    1,167
    
    
    $
    3,085
    
    
    
    2,925Life insurance
    
    
    172
    
    
    
    193
    
    
    
    521
    
    
    
    532Property and casualty insurance
    
    
    366
    
    
    
    377
    
    
    
    1,105
    
    
    
    1,114Total business segments
    
    
    1,631
    
    
    
    1,737
    
    
    
    4,711
    
    
    
    4,571TSM depreciation expense
    
    
    216
    
    
    
    281
    
    
    
    708
    
    
    
    842Consolidated depreciation
expense
    
    $
    1,847
    
    
    
    2,018
    
    
    $
    5,419
    
    
    
    5,413
 *
    
    Includes segments that are not required to be reported separately. These segments include the
data processing services organization as well as the third-party administrator of managed care
services.
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##### Table of Contents



TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 September 30,
    
    December 31,2008
    
    2007Assets:Managed care
    
    $
    694,321
    
    
    
    762,422Life insurance
    
    
    445,439
    
    
    
    430,807Property and casualty insurance
    
    
    334,799
    
    
    
    375,415Other segments *
    
    
    11,452
    
    
    
    11,255Total business segments
    
    
    1,486,011
    
    
    
    1,579,899Unallocated amounts related to TSM:Cash, cash equivalents, and investments
    
    
    80,495
    
    
    
    82,980Property and equipment, net
    
    
    21,862
    
    
    
    22,523Other assets
    
    
    3,118
    
    
    
    2,280105,475
    
    
    
    107,783Elimination entries-intersegment receivables and others
    
    
    (22,121
    )
    
    
    (28,140
    )Consolidated total assets
    
    $
    1,569,365
    
    
    
    1,659,542Significant noncash items:Net change in unrealized gain on securities available for sale:Managed care
    
    $
    (7,287
    )
    
    
    2,928Life insurance
    
    
    (9,135
    )
    
    
    3,253Property and casualty insurance
    
    
    (6,093
    )
    
    
    3,085Total business segments
    
    
    (22,515
    )
    
    
    9,266Amount related to TSM
    
    
    (1,695
    )
    
    
    283Consolidated net change in unrealized gain on
securities available for sale
    
    $
    (24,210
    )
    
    
    9,549Net change in liability for pension benefits:Managed care
    
    $
    439
    
    
    
    2,838Life
    
    
    6
    
    
    
    35Property and casualty
    
    
    53
    
    
    
    275Other segments*
    
    
    141
    
    
    
    844Total business segments
    
    
    639
    
    
    
    3,992Amount related to TSM
    
    
    15
    
    
    
    98Consolidated net change in liability for
pension benefits
    
    $
    654
    
    
    
    4,090
 *
    
    Includes segments that are not required to be reported separately. These segments include the
data
processing services organization as well as the third-party administrator of managed care services.
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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 (4) Investment in Securities
  September 30, 2008Gross
    
    Grossunrealized
    
    unrealized
    
    Estimated fairAmortized cost
    
    gains
    
    losses
    
    valueTrading securities:Equity securities
    
    $
    40,918
    
    
    
    6,665
    
    
    
    (5,070
    )
    
    
    42,513Securities available for sale:Fixed maturities
    
    
    916,697
    
    
    
    6,541
    
    
    
    (19,545
    )
    
    
    903,693Equity securities
    
    
    79,621
    
    
    
    3,826
    
    
    
    (8,075
    )
    
    
    75,372996,318
    
    
    
    10,367
    
    
    
    (27,620
    )
    
    
    979,065Securities held to maturity:Fixed maturities
    
    
    24,433
    
    
    
    246
    
    
    
    (93
    )
    
    
    24,586$
    1,061,669
    
    
    
    17,278
    
    
    
    (32,783
    )
    
    
    1,046,164December 31, 2007Gross
    
    Grossunrealized
    
    unrealized
    
    Estimated fairAmortized cost
    
    gains
    
    losses
    
    valueTrading securities:Equity securities
    
    $
    54,757
    
    
    
    15,170
    
    
    
    (2,769
    )
    
    
    67,158Securities available for sale:Fixed maturities
    
    
    816,536
    
    
    
    11,583
    
    
    
    (4,490
    )
    
    
    823,629Equity securities
    
    
    66,747
    
    
    
    7,354
    
    
    
    (3,051
    )
    
    
    71,050883,283
    
    
    
    18,937
    
    
    
    (7,541
    )
    
    
    894,679Securities held to maturity:Fixed maturities
    
    
    43,691
    
    
    
    227
    
    
    
    (69
    )
    
    
    43,849$
    981,731
    
    
    
    34,334
    
    
    
    (10,379
    )
    
    
    1,005,686
   12




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
  (5) Premiums and Other Receivables
  September 30,
    
    December 31,2008
    
    2007Premiums
    
    $
    96,844
    
    
    
    54,330Self-funded group receivables
    
    
    40,527
    
    
    
    31,344FEHBP
    
    
    9,249
    
    
    
    10,202Agents balances
    
    
    30,087
    
    
    
    32,874Accrued interest
    
    
    10,847
    
    
    
    8,363Reinsurance recoverable
    
    
    49,833
    
    
    
    58,757Other
    
    
    26,857
    
    
    
    22,323264,244
    
    
    
    218,193Less allowance for doubtful receivables:Premiums
    
    
    10,057
    
    
    
    11,753Other
    
    
    3,625
    
    
    
    4,17213,682
    
    
    
    15,925Total premiums and other receivables
    
    $
    250,562
    
    
    
    202,268
 (6) Claim Liabilities
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Claim liabilities at beginning of period
    
    $
    359,495
    
    
    
    344,816
    
    
    $
    353,830
    
    
    
    314,682Reinsurance recoverable on claim liabilities
    
    
    (39,604
    )
    
    
    (50,003
    )
    
    
    (54,834
    )
    
    
    (32,066
    )Net claim
liabilities at
beginning of period
    
    
    319,891
    
    
    
    294,813
    
    
    
    298,996
    
    
    
    282,616Incurred claims and loss-adjustment expenses:Current period insured events
    
    
    360,013
    
    
    
    311,925
    
    
    
    1,068,339
    
    
    
    931,605Prior period insured events
    
    
    2,592
    
    
    
    (4,815
    )
    
    
    (6,311
    )
    
    
    (25,753
    )Total
    
    
    362,605
    
    
    
    307,110
    
    
    
    1,062,028
    
    
    
    905,852Payments of losses and loss-adjustment expenses:Current period insured events
    
    
    348,382
    
    
    
    288,469
    
    
    
    828,827
    
    
    
    711,175Prior period insured events
    
    
    20,095
    
    
    
    14,776
    
    
    
    218,178
    
    
    
    178,615Total
    
    
    368,477
    
    
    
    303,245
    
    
    
    1,047,005
    
    
    
    889,790Net claim liabilities at end of period
    
    
    314,019
    
    
    
    298,678
    
    
    
    314,019
    
    
    
    298,678Reinsurance recoverable on claim liabilities
    
    
    38,537
    
    
    
    49,881
    
    
    
    38,537
    
    
    
    49,881Claim liabilities at end of period
    
    $
    352,556
    
    
    
    348,559
    
    
    $
    352,556
    
    
    
    348,559
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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
    (7) Fair Value Measurements
  Level Input:
    
    Input Definition: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 I 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.
  Level 1
    
    Level 2
    
    Level 3
    
    TotalEquity securities held for trading
    
    $
    42,513
    
    
    
    
    
    
    
    
    
    
    
    42,513Securities available for sale:Fixed maturity securities
    
    
    
    
    
    
    902,126
    
    
    
    1,567
    
    
    
    903,693Equity securities
    
    
    41,240
    
    
    
    34,132
    
    
    
    
    
    
    
    75,372Derivatives (reported within other assets in
the consolidated balance sheets)
    
    
    
    
    
    
    2,419
    
    
    
    
    
    
    
    2,419Total
    
    $
    83,753
    
    
    
    938,677
    
    
    
    1,567
    
    
    
    1,023,997
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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
  FixedMaturitySecuritiesAvailablefor SaleBeginning balance
    
    $
    Total gains or losses:Realized in earnings
    
    
    Unrealized in other accumulated comprehensive income
    
    
    Purchases and sales
    
    
    Transfers in and/or out of Level 3
    
    
    1,567Ending balance
    
    $
    1,567
   (8) Share-Based Compensation
  (9) Comprehensive Income (Loss)
  AccumulatedUnrealized
    
    Liability for
    
    
    
    
    
    othergain (loss) on
    
    pension
    
    Cash flow
    
    comprehensivesecurities
    
    benefits
    
    hedges
    
    income (loss)Balance at January 1
    
    $
    9,554
    
    
    
    (15,652
    )
    
    
    56
    
    
    
    (6,042
    )Net current period change
    
    
    (24,210
    )
    
    
    654
    
    
    
    (56
    )
    
    
    (23,612
    )Balance at September 30
    
    $
    (14,656
    )
    
    
    (14,998
    )
    
    
    
    
    
    
    (29,654
    )
 15




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 (10) Income Taxes
   (11) Pension Plan
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Components of net periodic benefit cost:Service cost
    
    $
    1,385
    
    
    
    1,254
    
    
    $
    4,210
    
    
    
    4,194Interest cost
    
    
    1,429
    
    
    
    1,195
    
    
    
    4,345
    
    
    
    3,916Expected return on assets
    
    
    (1,317
    )
    
    
    (1,034
    )
    
    
    (4,003
    )
    
    
    (3,395
    )Prior service cost (credit)
    
    
    (118
    )
    
    
    14
    
    
    
    (358
    )
    
    
    44Actuarial loss
    
    
    468
    
    
    
    501
    
    
    
    1,423
    
    
    
    1,526Net periodic benefit cost
    
    $
    1,847
    
    
    
    1,930
    
    
    $
    5,617
    
    
    
    6,285
 Employer contributions
  16




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 (12) Net Income Available to Stockholders and Basic Net Income per Share
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Numerator for earnings per share:Net income available to stockholders
    
    $
    9,471
    
    
    
    15,490
    
    
    $
    22,810
    
    
    
    40,800Denominator for basic earnings per share:Weighted average of common shares
    
    
    32,142,809
    
    
    
    26,772,000
    
    
    
    32,142,809
    
    
    
    26,741,333Effect of dilutive securities
    
    
    50,998
    
    
    
    
    
    
    
    42,396
    
    
    
    Denominator for diluted earnings per share
    
    
    32,193,807
    
    
    
    26,772,000
    
    
    
    32,185,205
    
    
    
    26,741,333Basic net income per share
    
    $
    0.29
    
    
    
    0.58
    
    
    $
    0.71
    
    
    
    1.53Diluted net income per share
    
    $
    0.29
    
    
    
    0.58
    
    
    $
    0.71
    
    
    
    1.53
 (13) Contingencies
   Jordán et al Litigation
  17




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
      Thomas Litigation
  18




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
   Lens Litigation
  Colón Litigation
 inter alia
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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 Acevedo Litigation
  Puerto Rico Center for Municipal Revenue Collection
        20




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 Government Investigations
  21




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Cautionary Statement Regarding Forward-Looking Information
  Overview
     22




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##### Table of Contents



Recent Developments
 Healthcare Reform Contracts
   Legislative and Regulatory Initiatives
  Recent Accounting Standards
  23




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##### Table of Contents



Managed Care Membership
 As of September 30,2008
    
    2007Managed care enrollment:Commercial 1
    
    
    588,073
    
    
    
    576,600Reform
    
    
    340,710
    
    
    
    352,722Medicare
    
    
    73,893
    
    
    
    48,291Total
    
    
    1,002,676
    
    
    
    977,613Managed care enrollment by funding arrangement:Fully-insured
    
    
    826,127
    
    
    
    816,068Self-insured
    
    
    176,549
    
    
    
    161,545Total
    
    
    1,002,676
    
    
    
    977,613
 (1)
    
    Commercial membership includes corporate accounts, self-funded employers, individual
accounts, Medicare Supplement, U.S. Federal government employees and local government
employees.
 Consolidated Operating Results
  Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Revenues:Premiums earned, net
    
    $
    433.2
    
    
    
    375.8
    
    
    $
    1,256.8
    
    
    
    1,101.6Administrative service fees
    
    
    4.5
    
    
    
    3.9
    
    
    
    12.1
    
    
    
    11.0Net investment income
    
    
    14.1
    
    
    
    11.2
    
    
    
    41.8
    
    
    
    33.4Total operating revenues
    
    
    451.8
    
    
    
    390.9
    
    
    
    1,310.7
    
    
    
    1,146.0Net realized investment (loss) gains
    
    
    (1.1
    )
    
    
    1.2
    
    
    
    (2.2
    )
    
    
    6.2Net unrealized investment (loss) gain
on trading securities
    
    
    (3.6
    )
    
    
    0.6
    
    
    
    (10.8
    )
    
    
    (0.8
    )Other income (expense), net
    
    
    (1.1
    )
    
    
    (0.5
    )
    
    
    (1.3
    )
    
    
    1.8Total revenues
    
    
    446.0
    
    
    
    392.2
    
    
    
    1,296.4
    
    
    
    1,153.2Benefits and expenses:Claims incurred
    
    
    365.6
    
    
    
    310.0
    
    
    
    1,070.6
    
    
    
    915.4Operating expenses
    
    
    63.6
    
    
    
    58.0
    
    
    
    185.0
    
    
    
    173.4Total operating expenses
    
    
    429.2
    
    
    
    368.0
    
    
    
    1,255.6
    
    
    
    1,088.8Interest expense
    
    
    3.8
    
    
    
    3.9
    
    
    
    11.4
    
    
    
    11.9Total benefits and expenses
    
    
    433.0
    
    
    
    371.9
    
    
    
    1,267.0
    
    
    
    1,100.7Income before taxes
    
    
    13.0
    
    
    
    20.3
    
    
    
    29.4
    
    
    
    52.5Income tax expense
    
    
    3.5
    
    
    
    4.8
    
    
    
    6.6
    
    
    
    11.7Net income
    
    $
    9.5
    
    
    
    15.5
    
    
    $
    22.8
    
    
    
    40.8
 Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007
 Operating Revenues
  24




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Net Realized Investment Losses
  Net Unrealized Loss on Trading Securities and Other Income (Expense), Net
  Claims Incurred
  Operating Expenses
  Income Tax Expense
  Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007
 Operating Revenues
  25




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Net Realized Investment Losses
  Net Unrealized Loss on Trading Securities and Other Income (Expense), Net
  Claims Incurred
  Operating Expenses
  Income Tax Expense
  26




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##### Table of Contents



Managed Care Operating Results
 Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Operating revenues:Medical premiums earned, net:Commercial
    
    $
    184.4
    
    
    
    177.8
    
    
    $
    546.1
    
    
    
    538.7Reform
    
    
    90.4
    
    
    
    85.4
    
    
    
    252.3
    
    
    
    243.8Medicare
    
    
    113.1
    
    
    
    67.9
    
    
    
    323.6
    
    
    
    185.7Medical premiums earned, net
    
    
    387.9
    
    
    
    331.1
    
    
    
    1,122.0
    
    
    
    968.2Administrative service fees
    
    
    5.2
    
    
    
    4.5
    
    
    
    14.5
    
    
    
    13.5Net investment income
    
    
    5.9
    
    
    
    4.8
    
    
    
    17.6
    
    
    
    14.3Total operating revenues
    
    
    399.0
    
    
    
    340.4
    
    
    
    1,154.1
    
    
    
    996.0Medical operating costs:Medical claims incurred
    
    
    343.8
    
    
    
    287.6
    
    
    
    1,002.8
    
    
    
    848.9Medical operating expenses
    
    
    40.1
    
    
    
    35.3
    
    
    
    116.9
    
    
    
    107.7Total medical operating costs
    
    
    383.9
    
    
    
    322.9
    
    
    
    1,119.7
    
    
    
    956.6Medical operating income
    
    $
    15.1
    
    
    
    17.5
    
    
    $
    34.4
    
    
    
    39.4Additional data:Member months enrollment:Commercial:Fully-insured
    
    
    1,234,011
    
    
    
    1,242,254
    
    
    
    3,698,285
    
    
    
    3,743,350Self-funded
    
    
    527,145
    
    
    
    483,459
    
    
    
    1,522,524
    
    
    
    1,447,287Total commercial member months
    
    
    1,761,156
    
    
    
    1,725,713
    
    
    
    5,220,809
    
    
    
    5,190,637Reform
    
    
    1,024,093
    
    
    
    1,066,016
    
    
    
    3,089,384
    
    
    
    3,199,546Medicare
    
    
    221,412
    
    
    
    142,831
    
    
    
    627,769
    
    
    
    407,675Total member months
    
    
    3,006,661
    
    
    
    2,934,560
    
    
    
    8,937,962
    
    
    
    8,797,858Medical loss ratio
    
    
    88.6
    %
    
    
    86.9
    %
    
    
    89.4
    %
    
    
    87.7
    %Operating expense ratio
    
    
    10.2
    %
    
    
    10.5
    %
    
    
    10.3
    %
    
    
    11.0
    %
 Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007
 Medical Operating Revenues
  
    
    Medical premiums generated by the Medicare business increased during the three months
ended September 30, 2008 by $45.2 million, or 66.6%, to $113.1 million, primarily due to an
increase in member months enrollment of 78,581, or 55.0% and a change in the mix of
products and premium rates. The increase in member months is the net result of an increase
of 80,690, or 74.1%, in the membership of our Medicare Advantage products and a decrease of
2,109, or 6.2%, in the membership of our PDP product.
    
    Medical premiums earned of the Commercial business increased by $6.6 million, or 3.7%,
to $184.4 million during the three months ended September 30, 2008. This fluctuation is
the net result of an increase in the average premium rates of corporate accounts of 5.0%
and a decrease in fully-insured member months enrollment of 8,243, or 0.7%.
    
    Medical premiums earned in the Reform business increased by $5.0 million, or 5.9%, to
$90.4 million during the 2008 period. This fluctuation is primarily due to the effect in
the 2008 period of the premium
 27




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##### Table of Contents



rate increase effective on July 1, 2008 of approximately 10%
and a decrease in member months enrollment of 41,923, or 3.9%, when compared to the same
period last year.
 Medical Claims Incurred
  
    
    The medical claims incurred of the Medicare business increased by $45.9 millions during
the 2008 period primarily due to the increase in member months by 78,581 and a higher MLR.
The higher MLR by 10.0 percentage points is in part due to the effect of prior period
reserve developments. Excluding the effect of prior period reserve developments in the
2007 and 2008 periods, the MLR increased by 6.7 percentage points, primarily as the result
of higher utilization of services and mix of business for the period when compared to the
three months ended September 30, 2007. The increase in utilization of services is
primarily the result of higher utilization in outpatient visits and drug benefits for the
dual eligibles product. The higher MLR is also the result of a change in enrollment mix
between dual and non-dual eligible members within the business. Member months during the
three months ended September 30, 2008 has a higher concentration of dual eligible members
than the same period of the prior year. Dual eligible members have higher utilization and
MLR than non-dual eligible members.
    
    The medical claims incurred of the Commercial business increased by $10.0 million
during the 2008 period and its MLR increased by 2.3 percentage points during the three
months ended September 30, 2008. The higher MLR is primarily the effect of prior period
reserve developments. Excluding the effect of prior period reserve developments in the
2007 and 2008 periods, the MLR decreased by 1.8 percentage points, primarily as the result
of lower utilization trends in drug and medical claims.
    
    The medical claims incurred of the Reform business increased by $0.3 million during the
2008 period and its MLR decreased by 4.8 percentage points during the three months ended
September 30, 2008. The lower MLR is primarily the result of prior period reserve
developments. Excluding the effect of prior period reserve developments in the 2007 and
2008 periods the MLR of this business decreased by 3.2 percentage points, which results
from the increase in premium rates effective on July 1, 2008.
 Medical Operating Expenses
  Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007
 Medical Operating Revenues
  
    
    Medical premiums generated by the Medicare business increased by $137.9 million, or
74.3%, to $323.6 million, primarily due to an increase in member months enrollment of
220,094, or 54.0% and a change in the mix of products. The increase in member months is
the net result of an increase of 226,616, or 74.6%, in the membership of our Medicare
Advantage products and a decrease of 6,522, or 6.3%, in the membership of our PDP product.
    
    Medical premiums earned of the Reform business increased by $8.5 million, or 3.5%, to
$252.3 million during the 2008 period. This fluctuation is primarily due to the increases
in premium rates effective on July 1, 2008 and during 2007, partially offset by a decrease
in member months enrollment in the Reform business of 110,162, or 3.4%.
 28




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##### Table of Contents




    
    Medical premiums generated by the Commercial business increased by $7.4 million, or
1.4%, to $546.1 million during the nine months ended September 30, 2008. This fluctuation
is primarily the net result of an increase in the average premium rates of corporate
accounts of 4.4% offset in part by a decrease in fully-insured member months enrollment of
45,065 or 1.2%.
 Medical Claims Incurred
  
    
    The medical claims incurred of the Medicare business increased by $138.0 million during
the 2008 period mainly as the result of the increase in member months and a higher MLR by
14.7 percentage points. The higher MLR is in part due to the effect of prior period
reserve developments and to higher utilization trends. Excluding the effect of prior
period reserve developments in the 2007 and 2008 periods, the MLR increased by 9.7
percentage. The increase in utilization trends is primarily the result of higher
utilization in outpatient visits and drug benefits for the dual eligibles product. The
higher MLR is also the result of a change in enrollment mix between dual and non-dual
eligible members within the business. Member months during the nine months ended September
30, 2008 has a higher concentration of dual eligible members than the same period of the
prior year. Dual eligible members have higher utilization and MLR than non-dual eligible
members.
    
    The medical claims incurred of the Reform business increased by $14.3 million during
the 2008 period and its MLR increased by 2.7 percentage points during the nine months ended
September 30, 2008. The higher MLR is primarily the effect of the retroactive premium rate
increase received by this business during June 2007 amounting to $2.8 million and prior
period reserve developments. Considering this retroactive premium rate increase and
excluding the effect prior period reserve developments in the 2007 and 2008 periods, the
MLR actually decreased by 1.6 percentage points during the 2008 period.
    
    The medical claims incurred of the Commercial business decreased by $14.0 million
during the 2008 period and its MLR decreased by 3.8 percentage points during the nine
months ended September 30, 2008. The lower MLR is primarily the result of the re-pricing
or termination of less profitable groups, cost containment initiatives and lower
utilization trends in drugs and medical services.
 Medical Operating Expenses
  29




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##### Table of Contents



Life Insurance Operating Results
 Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Operating revenues:Premiums earned, net:Premiums earned
    
    $
    25.2
    
    
    
    24.1
    
    
    $
    74.0
    
    
    
    73.5Premiums earned ceded
    
    
    (1.8
    )
    
    
    (2.1
    )
    
    
    (5.6
    )
    
    
    (6.6
    )Net premiums earned
    
    
    23.4
    
    
    
    22.0
    
    
    
    68.4
    
    
    
    66.9Commission income on reinsuarance
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.2Premiums earned, net
    
    
    23.5
    
    
    
    22.1
    
    
    
    68.6
    
    
    
    67.1Net investment income
    
    
    4.2
    
    
    
    3.7
    
    
    
    12.1
    
    
    
    11.1Total operating revenues
    
    
    27.7
    
    
    
    25.8
    
    
    
    80.7
    
    
    
    78.2Operating costs:Policy benefits and claims incurred
    
    
    12.0
    
    
    
    11.1
    
    
    
    35.2
    
    
    
    34.4Underwriting and other expenses
    
    
    12.7
    
    
    
    12.1
    
    
    
    36.8
    
    
    
    35.5Total operating costs
    
    
    24.7
    
    
    
    23.2
    
    
    
    72.0
    
    
    
    69.9Operating income
    
    $
    3.0
    
    
    
    2.6
    
    
    $
    8.7
    
    
    
    8.3Additional data:Loss ratio
    
    
    51.1
    %
    
    
    50.2
    %
    
    
    51.3
    %
    
    
    51.3
    %Operating expense ratio
    
    
    54.0
    %
    
    
    54.8
    %
    
    
    53.6
    %
    
    
    52.9
    %
 Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007
 Operating Revenues
  Policy Benefits and Claims Incurred
  Underwriting and Other Expenses
  Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007
 Operating Revenues
  30




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##### Table of Contents



Policy Benefits and Claims Incurred
  Underwriting and Other Expenses
  Property and Casualty Insurance Operating Results
 Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Operating revenues:Premiums earned, net:Premiums written
    
    $
    39.5
    
    
    
    39.1
    
    
    
    115.6
    
    
    
    117.3Premiums ceded
    
    
    (17.8
    )
    
    
    (17.0
    )
    
    
    (51.7
    )
    
    
    (50.3
    )Change in unearned premiums
    
    
    1.2
    
    
    
    1.5
    
    
    
    5.4
    
    
    
    2.3Premiums earned, net
    
    
    22.9
    
    
    
    23.6
    
    
    
    69.3
    
    
    
    69.3Net investment income
    
    
    2.9
    
    
    
    2.5
    
    
    
    8.9
    
    
    
    7.6Total operating revenues
    
    
    25.8
    
    
    
    26.1
    
    
    
    78.2
    
    
    
    76.9Operating costs:Claims incurred
    
    
    9.8
    
    
    
    11.4
    
    
    
    32.5
    
    
    
    32.1Underwriting and other expenses
    
    
    13.1
    
    
    
    13.3
    
    
    
    38.4
    
    
    
    38.4Total operating costs
    
    
    22.9
    
    
    
    24.7
    
    
    
    70.9
    
    
    
    70.5Operating income
    
    $
    2.9
    
    
    
    1.4
    
    
    
    7.3
    
    
    
    6.4Additional data:Loss ratio
    
    
    42.8
    %
    
    
    48.3
    %
    
    
    46.9
    %
    
    
    46.3
    %Operating expense ratio
    
    
    57.2
    %
    
    
    56.4
    %
    
    
    55.4
    %
    
    
    55.4
    %Combined ratio
    
    
    100.0
    %
    
    
    104.7
    %
    
    
    102.3
    %
    
    
    101.7
    %
 Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007
 Operating Revenues
    31




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##### Table of Contents



Claims Incurred
  Underwriting and Other Expenses
  Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007
 Operating Revenues
    Claims Incurred
  Underwriting and Other Expenses
  32




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
  Nine months endedSeptember 30,(Dollar amounts in millions)
    
    2008
    
    2007Sources of cash:Net proceeds from short-term borrowings
    
    $
    31.8
    
    
    
    Proceeds from policyholder deposits
    
    
    7.1
    
    
    
    5.1Cash provided by operating activities
    
    
    
    
    
    
    51.5Other
    
    
    18.1
    
    
    
    17.4Total sources of cash
    
    
    57.0
    
    
    
    74.0Uses of cash:Cash used in operating activities
    
    
    (19.9
    )
    
    
    Net purchases of investment securities
    
    
    (214.7
    )
    
    
    (33.3
    )Capital expenditures
    
    
    (12.1
    )
    
    
    (6.3
    )Dividends
    
    
    
    
    
    
    (2.4
    )Payments of long-term borrowings
    
    
    (1.2
    )
    
    
    (11.7
    )Surrenders of policyholder deposits
    
    
    (5.8
    )
    
    
    (5.6
    )Other
    
    
    
    
    
    
    (0.3
    )Total uses of cash
    
    
    (253.7
    )
    
    
    (59.6
    )Net (decrease) increase in cash and cash equivalents
    
    $
    (196.7
    )
    
    
    14.4
       33




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##### Table of Contents



Financing and Financing Capacity
   
    
    On January 31, 2006, we issued and sold $35.0 million of our 6.7% senior unsecured
notes payable due January 2021 (the 6.7% notes).
    
    On December 21, 2005, we issued and sold $60.0 million of our 6.6% senior unsecured
notes due December 2020 (the 6.6% notes).
    
    On September 30, 2004, we issued and sold $50.0 million of its 6.3% senior unsecured
notes due September 2019 (the 6.3% notes).
      
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  34




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##### Table of Contents



Changes in Internal Controls Over Financial Reporting
  
 Part II  Other Information
 
 Item 1. Legal Proceedings
  
 Item IA. Risk Factors
  Heirs of certain of our former shareholders may bring materially dilutive claims against us.
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  35




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##### Table of Contents



Item 4. Submissions of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibits
    
    Description3(i)(a)
    
    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).3(i)(b)
    
    Amendment to Article Tenth of the Amended and Restated Articles
of Incorporation of Triple-S Management Corporation, incorporated
herein 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).3(i)(c)
    
    Articles of Incorporation of Triple-S Management Corporation, as
currently in effect, incorporated herein 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).10.1*
    
    Agreement between the Puerto Rico Health Insurance Administration
and Triple-S, Inc. for the provision of health insurance coverage
to eligible population in the North and South-West regions.10.2
    
    Extension to the agreement between the Puerto Rico Health
Insurance Administration and Triple-S, Inc. for the provision of
health insurance coverage to eligible population in the North and
South-West regions, incorporated by reference to Exhibit 10.1 to
TSMs Quarterly Report on Form 10-Q for the quarter ended June
30, 2008 (File No. 001-33865).11
    
    Statement re computation of per share earnings; an exhibit
describing the computation of the earnings per share for the
three months and nine months ended September 30, 2008 and 2007
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 I of this Quarterly Report on Form
10-Q.12
    
    Statements re computation of ratios; an exhibit describing the
computation of the loss ratio, expense ratio and combined ratio for
the three months and nine months ended September 30, 2008 and 2007
has been omitted as the detail necessary to determine the
computation of the loss ratio, operating expense ratio and combined
ratio can be clearly determined from the material contained in Part
I of this Quarterly Report on Form 10-Q.31.1*
    
    Certification of the President and Chief Executive Officer required
by Rule 13a-14(a)/15d-14(a).31.2*
    
    Certification of the Vice President of Finance and Chief Financial
Officer required by Rule 13a-14(a)/15d-14(a).
 36




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##### Table of Contents



Exhibits
    
    Description32.1*
    
    Certification of the President and Chief Executive Officer required
pursuant to 18 U.S.C Section 1350.32.2*
    
    Certification of the Vice President of Finance and Chief Financial
Officer required pursuant to 18 U.S.C Section 1350.
  
 *
    
    Filed herein.
 
 SIGNATURES
  Triple-S Management Corporation
RegistrantDate: October 30, 2008
    By:
    /s/ Ramón M. Ruiz-ComasRamón M. Ruiz-Comas, CPAPresident and
Chief Executive OfficerDate:  October 30, 2008
    By:
    /s/ Juan J. RománJuan J. Román, CPAVice President of Finance
and Chief Financial Officer 37