##### 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 June 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: 0-49762
 Triple-S Management Corporation
  Puerto Rico
(State or other jurisdiction of incorporation or organization)
    
    66-0555678
(I.R.S. Employer Identification No.)1441 F.D. Roosevelt Avenue 
San Juan, Puerto Rico
(Address of principal executive offices)
    
    00920
(Zip code)
 (787) 749-4949
 Not applicable
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  Title of each class
    
    Outstanding at July 17, 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 Statements
    
    
    3Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Earnings for the three months and six months ended June
30, 2008 and 2007
    
    
    4Consolidated
Statements of Stockholders Equity and Comprehensive Income
(Loss) for the six
months ended June 30, 2008 and 2007
    
    
    5Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item
2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item
3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item
4.
    
    Controls and Procedures

    
    
    33PART II  OTHER INFORMATIONItem
1.
    
    Legal Proceedings
    
    
    34Item 1A
    
    Risk Factors
    
    
    34Item
2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item
3.
    
    Defaults Upon Senior Securities
    
    
    34Item
4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    34Item
5.
    
    Other Information
    
    
    34Item
6.
    
    Exhibits
    
    
    35SIGNATURES
    
    
    36EX-10.1 EXTENSION AGREEMENTEX-31.1 SECTION 302, CERTIFICATION OF CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CFOEX-32.1 SECTION 906, CERTIFICATION OF THE CEOEX-32.2 SECTION 906, CERTIFICATION OF THE CFO
  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)June 30,
    
    December 31,2008
    
    2007AssetsInvestments and cash:Equity securities held for trading, at fair value
    
    $
    45,749
    
    
    
    67,158Securities available for sale, at fair value:Fixed maturities
    
    
    921,348
    
    
    
    823,629Equity securities
    
    
    79,269
    
    
    
    71,050Securities held to maturity, at amortized cost:Fixed maturities
    
    
    24,367
    
    
    
    43,691Policy loans
    
    
    5,377
    
    
    
    5,481Cash and cash equivalents
    
    
    41,283
    
    
    
    240,153Total investments and cash
    
    
    1,117,393
    
    
    
    1,251,162Premiums and other receivables, net
    
    
    237,845
    
    
    
    202,268Deferred policy acquisition costs and value of
business acquired
    
    
    121,453
    
    
    
    117,239Property and equipment, net
    
    
    46,951
    
    
    
    43,415Net deferred tax asset
    
    
    10,211
    
    
    
    6,783Other assets
    
    
    40,529
    
    
    
    38,675Total assets
    
    $
    1,574,382
    
    
    
    1,659,542Liabilities and Stockholders EquityClaim liabilities:Claims processed and incomplete
    
    $
    181,694
    
    
    
    186,065Unreported losses
    
    
    158,898
    
    
    
    149,996Unpaid loss-adjustment expenses
    
    
    18,903
    
    
    
    17,769Total claim liabilities
    
    
    359,495
    
    
    
    353,830Liability for future policy benefits
    
    
    200,619
    
    
    
    194,131Unearned premiums
    
    
    101,666
    
    
    
    132,599Policyholder deposits
    
    
    49,414
    
    
    
    45,959Liability to Federal Employees Health
Benefits Program (FEHBP)
    
    
    15,981
    
    
    
    21,338Accounts payable and accrued liabilities
    
    
    132,719
    
    
    
    228,980Short-term borrowings
    
    
    32,075
    
    
    
    Long-term borrowings
    
    
    170,127
    
    
    
    170,946Liability for pension benefits
    
    
    28,501
    
    
    
    29,221Total liabilities
    
    
    1,090,597
    
    
    
    1,177,004Stockholders equity:Common stock Class A
    
    
    16,043
    
    
    
    16,043Common stock Class B
    
    
    16,286
    
    
    
    16,266Additional paid-in capital
    
    
    190,465
    
    
    
    188,935Retained earnings
    
    
    280,661
    
    
    
    267,336Accumulated other comprehensive loss
    
    
    (19,670
    )
    
    
    (6,042
    )Total stockholders equity
    
    
    483,785
    
    
    
    482,538Total liabilities and stockholders equity
    
    $
    1,574,382
    
    
    
    1,659,542
  3




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Consolidated Statements of Earnings (Unaudited)   (Dollar amounts in thousands, except per share data)
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Revenues:Premiums earned, net
    
    $
    419,157
    
    
    
    377,346
    
    
    $
    823,556
    
    
    
    725,811Administrative service fees
    
    
    3,920
    
    
    
    3,617
    
    
    
    7,633
    
    
    
    7,126Net investment income
    
    
    14,302
    
    
    
    11,047
    
    
    
    27,734
    
    
    
    22,168Total operating revenues
    
    
    437,379
    
    
    
    392,010
    
    
    
    858,923
    
    
    
    755,105Net realized investment gains
    
    
    (1,741
    )
    
    
    3,784
    
    
    
    (1,132
    )
    
    
    4,980Net unrealized investment loss (gain) on trading securities
    
    
    (951
    )
    
    
    573
    
    
    
    (7,201
    )
    
    
    (1,352
    )Other income (expense), net
    
    
    1,360
    
    
    
    2,158
    
    
    
    (161
    )
    
    
    2,367Total revenues
    
    
    (436,047
    )
    
    
    398,525
    
    
    
    850,429
    
    
    
    761,100Benefits and expenses:Claims incurred
    
    
    354,780
    
    
    
    308,023
    
    
    
    704,987
    
    
    
    605,341Operating expenses
    
    
    61,399
    
    
    
    59,358
    
    
    
    121,430
    
    
    
    115,495Total operating costs
    
    
    416,179
    
    
    
    367,381
    
    
    
    826,417
    
    
    
    720,836Interest expense
    
    
    3,926
    
    
    
    4,058
    
    
    
    7,599
    
    
    
    8,010Total benefits and expenses
    
    
    420,105
    
    
    
    371,439
    
    
    
    834,016
    
    
    
    728,846Income before taxes
    
    
    15,942
    
    
    
    27,086
    
    
    
    16,413
    
    
    
    32,254Income tax expense (benefit):Current
    
    
    4,291
    
    
    
    5,938
    
    
    
    4,107
    
    
    
    6,998Deferred
    
    
    (486
    )
    
    
    343
    
    
    
    (1,033
    )
    
    
    (54
    )Total income taxes
    
    
    3,805
    
    
    
    6,281
    
    
    
    3,074
    
    
    
    6,944Net income
    
    $
    12,137
    
    
    
    20,805
    
    
    $
    13,339
    
    
    
    25,310Basic net income per share
    
    $
    0.38
    
    
    
    0.78
    
    
    $
    0.41
    
    
    
    0.95Diluted net income per share
    
    $
    0.38
    
    
    
    0.78
    
    
    $
    0.41
    
    
    
    0.95
  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
    
    
    1,530
    
    
    
    Grant of restricted Class B common stock
    
    
    20
    
    
    
    Other
    
    
    (14
    )
    
    
    Comprehensive income (loss):Net income
    
    
    13,339
    
    
    
    25,310Net unrealized change in fair value of available for sale securities
    
    
    (14,012
    )
    
    
    (6,260
    )Defined benefit pension plan:Actuarial loss, net
    
    
    587
    
    
    
    630Prior service (cost) credit, net
    
    
    (147
    )
    
    
    17Net change in fair value of cash flow hedges
    
    
    (56
    )
    
    
    (99
    )Total
comprehensive income (loss)
    
    
    (289
    )
    
    
    19,598Balance at June 30
    
    $
    483,785
    
    
    
    359,749
 5




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Consolidated Statements of Cash Flows (Unaudited)   (Dollar amounts in thousands, except per share data)
 Six months endedJune 30,2008
    
    2007Cash flows from operating activities:Net income
    
    $
    13,339
    
    
    
    25,310Adjustments to reconcile net income to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    3,572
    
    
    
    3,395Net amortization of investments
    
    
    377
    
    
    
    371Provision for doubtful receivables
    
    
    176
    
    
    
    3,981Deferred tax benefit
    
    
    (1,033
    )
    
    
    (54
    )Net (loss) gain on sale of securities
    
    
    1,132
    
    
    
    (4,980
    )Net
unrealized loss on trading securities
    
    
    7,201
    
    
    
    1,352Share-based compensation
    
    
    1,530
    
    
    
    Proceeds from trading securities sold:Equity securities
    
    
    22,094
    
    
    
    32,399Acquisition of securities in trading portfolio:Equity securities
    
    
    (7,766
    )
    
    
    (12,860
    )Loss on sale of property and equipment
    
    
    11
    
    
    
    2(Increase) decrease in assets:Premiums receivable
    
    
    (43,157
    )
    
    
    (43,452
    )Agents balances
    
    
    670
    
    
    
    (2,464
    )Accrued interest receivable
    
    
    (3,720
    )
    
    
    (741
    )Other receivables
    
    
    268
    
    
    
    (4,303
    )Reinsurance recoverable on paid losses
    
    
    10,204
    
    
    
    (18,355
    )Deferred policy acquisition costs and
value of business acquired
    
    
    (4,214
    )
    
    
    (3,031
    )Prepaid income tax
    
    
    (6,796
    )
    
    
    (4,663
    )Other assets
    
    
    4,849
    
    
    
    172Increase (decrease) in liabilities:Claims processed and incomplete
    
    
    (4,371
    )
    
    
    31,197Unreported losses
    
    
    8,902
    
    
    
    (814
    )Unpaid loss-adjustment expenses
    
    
    1,134
    
    
    
    (249
    )Liability for future policy benefits
    
    
    6,488
    
    
    
    6,903Unearned premiums
    
    
    (30,933
    )
    
    
    1,321Policyholder deposits
    
    
    943
    
    
    
    864Liability to FEHBP
    
    
    (5,357
    )
    
    
    (1,511
    )Accounts payable and accrued liabilities
    
    
    (732
    )
    
    
    5,844Income tax payable
    
    
    
    
    
    
    (9,242
    )Net cash (used in) provided by operating activities
    
    $
    (25,189
    )
    
    
    6,392
  6




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Consolidated Statements of Cash Flows (Unaudited)   (Dollar amounts in thousands, except per share data)
 Six months endedJune 30,2008
    
    2007Cash flows from investing activities:Proceeds from investments sold or matured:Securities available for sale:Fixed maturities sold
    
    $
    153,393
    
    
    
    76,904Fixed maturities matured
    
    
    54,166
    
    
    
    10,852Equity securities
    
    
    2,019
    
    
    
    1,011Securities held to maturity:Fixed maturities matured
    
    
    19,526
    
    
    
    1,285Acquisition of investments:Securities available for sale:Fixed maturities
    
    
    (428,476
    )
    
    
    (100,668
    )Equity securities
    
    
    (16,717
    )
    
    
    (14,507
    )Net proceeds (disbursements) for policy loans
    
    
    104
    
    
    
    (145
    )Net capital expenditures
    
    
    (7,119
    )
    
    
    (3,440
    )Net cash used in investing activities
    
    
    (223,104
    )
    
    
    (28,708
    )Cash flows from financing activities:Change in outstanding checks in excess of bank balances
    
    
    15,649
    
    
    
    16,989Repayments of short-term borrowings
    
    
    (474,156
    )
    
    
    (23,110
    )Proceeds from short-term borrowings
    
    
    506,231
    
    
    
    23,110Repayments of long-term borrowings
    
    
    (819
    )
    
    
    (820
    )Dividends paid
    
    
    
    
    
    
    (2,448
    )Proceeds from policyholder deposits
    
    
    5,895
    
    
    
    2,844Surrenders of policyholder deposits
    
    
    (3,383
    )
    
    
    (4,033
    )Other
    
    
    6
    
    
    
    Net cash provided by financing activities
    
    
    49,423
    
    
    
    12,532Net decrease in cash and cash equivalents
    
    
    (198,870
    )
    
    
    (9,784
    )Cash and cash equivalents at beginning of the period
    
    
    240,153
    
    
    
    81,320Cash and cash equivalents at end of the period
    
    $
    41,283
    
    
    
    71,536
  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
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Operating revenues:Managed Care:Premiums earned, net
    
    $
    373,439
    
    
    
    330,712
    
    
    $
    732,550
    
    
    
    635,543Administrative service fees
    
    
    3,920
    
    
    
    3,617
    
    
    
    7,633
    
    
    
    7,126Intersegment premiums /service fees
    
    
    1,660
    
    
    
    1,781
    
    
    
    3,310
    
    
    
    3,408Net investment income
    
    
    6,075
    
    
    
    4,661
    
    
    
    11,677
    
    
    
    9,490Total managed care
    
    
    385,094
    
    
    
    340,771
    
    
    
    755,170
    
    
    
    655,567Life Insurance:Premiums earned, net
    
    
    22,783
    
    
    
    22,483
    
    
    
    44,912
    
    
    
    44,863Intersegment premiums
    
    
    93
    
    
    
    90
    
    
    
    185
    
    
    
    172Net investment income
    
    
    4,057
    
    
    
    3,739
    
    
    
    7,991
    
    
    
    7,359Total life insurance
    
    
    26,933
    
    
    
    26,312
    
    
    
    53,088
    
    
    
    52,394Property and Casualty Insurance:Premiums earned, net
    
    
    22,935
    
    
    
    24,151
    
    
    
    46,094
    
    
    
    45,405Intersegment premiums
    
    
    152
    
    
    
    154
    
    
    
    306
    
    
    
    308Net investment income
    
    
    3,059
    
    
    
    2,527
    
    
    
    6,023
    
    
    
    5,079Total property and casualty insurance
    
    
    26,146
    
    
    
    26,832
    
    
    
    52,423
    
    
    
    50,792Other segments  intersegment service revenues *
    
    
    11,205
    
    
    
    10,602
    
    
    
    22,273
    
    
    
    21,642Total business segments
    
    
    449,378
    
    
    
    404,517
    
    
    
    882,954
    
    
    
    780,395TSM operating revenues from external sources
    
    
    1,111
    
    
    
    120
    
    
    
    2,043
    
    
    
    240Elimination of intersegment premiums
    
    
    (1,905
    )
    
    
    (2,025
    )
    
    
    (3,801
    )
    
    
    (3,888
    )Elimination of intersegment service fees
    
    
    (11,205
    )
    
    
    (10,602
    )
    
    
    (22,273
    )
    
    
    (21,642
    )Consolidated operating revenues
    
    $
    437,379
    
    
    
    392,010
    
    
    $
    858,923
    
    
    
    755,105
 *
    
    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
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Operating income:Managed care
    
    $
    13,970
    
    
    
    17,797
    
    
    $
    19,302
    
    
    
    21,897Life insurance
    
    
    3,200
    
    
    
    2,680
    
    
    
    5,705
    
    
    
    5,655Property and casualty insurance
    
    
    2,271
    
    
    
    3,593
    
    
    
    4,368
    
    
    
    4,986Other segments *
    
    
    179
    
    
    
    140
    
    
    
    288
    
    
    
    278Total business segments
    
    
    19,620
    
    
    
    24,210
    
    
    
    29,663
    
    
    
    32,816TSM operating revenues from external sources
    
    
    1,111
    
    
    
    120
    
    
    
    2,043
    
    
    
    240TSM unallocated operating expenses
    
    
    (2,016
    )
    
    
    (2,447
    )
    
    
    (4,156
    )
    
    
    (4,273
    )Elimination of TSM intersegment charges
    
    
    2,485
    
    
    
    2,746
    
    
    
    4,956
    
    
    
    5,486Consolidated operating income
    
    
    21,200
    
    
    
    24,629
    
    
    
    32,506
    
    
    
    34,269Consolidated
net realized investment (loss) gains
    
    
    (1,741
    )
    
    
    3,784
    
    
    
    (1,132
    )
    
    
    4,980Consolidated net unrealized gain (loss) on
trading securities
    
    
    (951
    )
    
    
    573
    
    
    
    (7,201
    )
    
    
    (1,352
    )Consolidated interest expense
    
    
    (3,926
    )
    
    
    (4,058
    )
    
    
    (7,599
    )
    
    
    (8,010
    )Consolidated other income (expense), net
    
    
    1,360
    
    
    
    2,158
    
    
    
    (161
    )
    
    
    2,367Consolidated income before taxes
    
    $
    15,942
    
    
    
    27,086
    
    
    $
    16,413
    
    
    
    32,254Depreciation expense:Managed care
    
    $
    1,008
    
    
    
    862
    
    
    $
    1,992
    
    
    
    1,758Life insurance
    
    
    167
    
    
    
    160
    
    
    
    349
    
    
    
    339Property and casualty insurance
    
    
    367
    
    
    
    377
    
    
    
    739
    
    
    
    737Total business segments
    
    
    1,542
    
    
    
    1,399
    
    
    
    3,080
    
    
    
    2,834TSM depreciation expense
    
    
    230
    
    
    
    280
    
    
    
    492
    
    
    
    561Consolidated depreciation expense
    
    $
    1,772
    
    
    
    1,679
    
    
    $
    3,572
    
    
    
    3,395
 *
    
    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.
 10




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 June 30,
    
    December 31,2008
    
    2007Assets:Managed care
    
    $
    690,028
    
    
    
    762,422Life insurance
    
    
    451,946
    
    
    
    430,807Property and casualty insurance
    
    
    341,423
    
    
    
    375,415Other segments *
    
    
    11,042
    
    
    
    11,255Total business segments
    
    
    1,494,170
    
    
    
    1,579,899Unallocated amounts related to TSM:Cash, cash equivalents, and investments
    
    
    83,293
    
    
    
    82,980Property and equipment,net
    
    
    22,031
    
    
    
    22,523Other assets
    
    
    3,261
    
    
    
    2,280108,585
    
    
    
    107,783Elimination entries  intersegment receivables and
others
    
    
    (28,642
    )
    
    
    (28,140
    )Consolidated total assets
    
    $
    1,574,382
    
    
    
    1,659,542Significant noncash items:Net change in unrealized gain on securities available for
sale:Managed care
    
    $
    (5,799
    )
    
    
    2,928Life insurance
    
    
    (3,589
    )
    
    
    3,253Property and casualty insurance
    
    
    (3,930
    )
    
    
    3,085Total business segments
    
    
    (13,318
    )
    
    
    9,266Amount related to TSM
    
    
    (694
    )
    
    
    283Consolidated net change in unrealized gain on
securities available for sale
    
    $
    (14,012
    )
    
    
    9,549Net change in liability for pension benefits:Managed care
    
    $
    295
    
    
    
    2,838Life
    
    
    4
    
    
    
    35Property and casualty
    
    
    36
    
    
    
    275Other segments*
    
    
    95
    
    
    
    844Total business segments
    
    
    430
    
    
    
    3,992Amount related to TSM
    
    
    10
    
    
    
    98Consolidated net change in liability for
pension benefits
    
    $
    440
    
    
    
    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.
 11




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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
  June 30, 2008Gross
    
    Grossunrealized
    
    unrealized
    
    Estimated fairAmortized cost
    
    gains
    
    losses
    
    valueTrading securities:Equity securities
    
    $
    40,549
    
    
    
    9,373
    
    
    
    (4,173
    )
    
    
    45,749Securities available for sale:Fixed maturities
    
    
    924,247
    
    
    
    7,662
    
    
    
    (10,561
    )
    
    
    921,348Equity securities
    
    
    81,618
    
    
    
    2,869
    
    
    
    (5,218
    )
    
    
    79,2691,005,865
    
    
    
    10,531
    
    
    
    (15,779
    )
    
    
    1,000,617Securities held to maturity:Fixed maturities
    
    
    24,367
    
    
    
    174
    
    
    
    (73
    )
    
    
    24,468$
    1,070,781
    
    
    
    20,078
    
    
    
    (20,025
    )
    
    
    1,070,834
 December 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
  June 30,
    
    December 31,2008
    
    2007Premiums
    
    $
    98,359
    
    
    
    54,330Self-funded group receivables
    
    
    31,696
    
    
    
    31,344FEHBP
    
    
    8,978
    
    
    
    10,202Agents balances
    
    
    32,204
    
    
    
    32,874Accrued interest
    
    
    12,083
    
    
    
    8,363Reinsurance recoverable
    
    
    48,553
    
    
    
    58,757Other
    
    
    22,073
    
    
    
    22,323253,946
    
    
    
    218,193Less allowance for doubtful receivables:Premiums
    
    
    11,757
    
    
    
    11,753Other
    
    
    4,344
    
    
    
    4,17216,101
    
    
    
    15,925Total premiums and other receivables
    
    $
    237,845
    
    
    
    202,268
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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 (6) Claim Liabilities
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Claim liabilities at beginning of period
    
    $
    362,967
    
    
    
    327,871
    
    
    $
    353,830
    
    
    
    314,682Reinsurance recoverable on claim liabilities
    
    
    (49,469
    )
    
    
    (32,331
    )
    
    
    (54,834
    )
    
    
    (32,066
    )Net claim liabilities at beginning of period
    
    
    313,498
    
    
    
    295,540
    
    
    
    298,996
    
    
    
    282,616Incurred claims and loss-adjustment expenses:Current period insured events
    
    
    350,022
    
    
    
    310,115
    
    
    
    708,326
    
    
    
    619,680Prior period insured events
    
    
    2,318
    
    
    
    (4,747
    )
    
    
    (8,903
    )
    
    
    (20,938
    )Total
    
    
    352,340
    
    
    
    305,368
    
    
    
    699,423
    
    
    
    598,742Payments of losses and loss-adjustment expenses:Current period insured events
    
    
    308,846
    
    
    
    277,892
    
    
    
    480,445
    
    
    
    422,706Prior period insured events
    
    
    37,101
    
    
    
    28,203
    
    
    
    198,083
    
    
    
    163,839Total
    
    
    345,947
    
    
    
    306,095
    
    
    
    678,528
    
    
    
    586,545Net claim liabilities at end of period
    
    
    319,891
    
    
    
    294,813
    
    
    
    319,891
    
    
    
    294,813Reinsurance recoverable on claim liabilities
    
    
    39,604
    
    
    
    50,003
    
    
    
    39,604
    
    
    
    50,003Claim liabilities at end of period
    
    $
    359,495
    
    
    
    344,816
    
    
    $
    359,495
    
    
    
    344,816
    14




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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
    
    $
    45,749
    
    
    
    
    
    
    
    
    
    
    
    45,749Securities available for sale:Fixed maturity securities
    
    
    
    
    
    
    921,348
    
    
    
    
    
    
    
    921,348Equity securities
    
    
    43,785
    
    
    
    35,484
    
    
    
    
    
    
    
    79,269Derivatives (reported within other assets in
the consolidated balance sheets)
    
    
    
    
    
    
    3,964
    
    
    
    
    
    
    
    3,964Total
    
    $
    89,534
    
    
    
    960,796
    
    
    
    
    
    
    
    1,050,330
 (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
    
    
    (14,012
    )
    
    
    440
    
    
    
    (56
    )
    
    
    (13,628
    )Balance at June 30
    
    $
    (4,458
    )
    
    
    (15,212
    )
    
    
    
    
    
    
    (19,670
    )
 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
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Components of net periodic benefit cost:Service cost
    
    $
    1,508
    
    
    
    1,584
    
    
    $
    2,825
    
    
    
    2,940Interest cost
    
    
    1,494
    
    
    
    1,427
    
    
    
    2,916
    
    
    
    2,721Expected return on assets
    
    
    (1,461
    )
    
    
    (1,233
    )
    
    
    (2,686
    )
    
    
    (2,361
    )Prior service cost
    
    
    (127
    )
    
    
    16
    
    
    
    (240
    )
    
    
    30Actuarial loss
    
    
    476
    
    
    
    511
    
    
    
    955
    
    
    
    1,025Net periodic benefit cost
    
    $
    1,890
    
    
    
    2,305
    
    
    $
    3,770
    
    
    
    4,355
 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
    
    Six months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Numerator for earnings per share:Net income available to stockholders
    
    $
    12,137
    
    
    
    20,805
    
    
    $
    13,339
    
    
    
    25,310Denominator for basic earnings per share:Weighted average of common shares
    
    
    32,142,809
    
    
    
    26,717,000
    
    
    
    32,142,809
    
    
    
    26,726,000Effect of dilutive securities
    
    
    41,550
    
    
    
    
    
    
    
    38,420
    
    
    
    Denominator for diluted earnings per share
    
    
    32,184,359
    
    
    
    26,717,000
    
    
    
    32,181,229
    
    
    
    26,726,000Basic net income per share
    
    $
    0.38
    
    
    
    0.78
    
    
    $
    0.41
    
    
    
    0.95Diluted net income per share
    
    $
    0.38
    
    
    
    0.78
    
    
    $
    0.41
    
    
    
    0.95
 (13) Contingencies
   Jordán et al Litigation
  17




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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)
     Thomas Litigation
    18




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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)
  Lens Litigation
  Colón Litigation
 inter alia
 Acevedo Litigation
  19




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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)
 Puerto Rico Center for Municipal Revenue Collection
       Government
Investigations
  20




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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
     21




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Recent Developments
 Healthcare Reform Contracts
   Recent Accounting Standards
  22




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##### Table of Contents



Managed Care Membership
 As of June 30,2008
    
    2007Managed care enrollment:Commercial 1
    
    
    577,371
    
    
    
    576,314Reform
    
    
    344,104
    
    
    
    356,737Medicare Advantage
    
    
    72,134
    
    
    
    47,470Total
    
    
    993,609
    
    
    
    980,521Managed care enrollment by funding arrangement:Fully-insured
    
    
    825,187
    
    
    
    818,930Self-insured
    
    
    168,422
    
    
    
    161,591Total
    
    
    993,609
    
    
    
    980,521
 (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
    
    Six months endedJune 30,
    
    June 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Revenues:Premiums earned, net
    
    $
    419.2
    
    
    
    377.3
    
    
    $
    823.6
    
    
    
    725.8Administrative service fees
    
    
    3.9
    
    
    
    3.6
    
    
    
    7.6
    
    
    
    7.1Net investment income
    
    
    14.3
    
    
    
    11.0
    
    
    
    27.7
    
    
    
    22.2Total operating revenues
    
    
    437.4
    
    
    
    391.9
    
    
    
    858.9
    
    
    
    755.1Net
realized investment (loss) gains
    
    
    (1.8
    )
    
    
    3.8
    
    
    
    (1.1
    )
    
    
    5.0Net unrealized investment (loss) gain
on trading securities
    
    
    (1.0
    )
    
    
    0.6
    
    
    
    (7.2
    )
    
    
    (1.4
    )Other income (expense), net
    
    
    1.4
    
    
    
    2.2
    
    
    
    (0.2
    )
    
    
    2.4Total revenues
    
    
    436.0
    
    
    
    398.5
    
    
    
    850.4
    
    
    
    761.1Benefits and expenses:Claims incurred
    
    
    354.8
    
    
    
    308.0
    
    
    
    705.0
    
    
    
    605.4Operating expenses
    
    
    61.4
    
    
    
    59.3
    
    
    
    121.4
    
    
    
    115.5Total operating expenses
    
    
    416.2
    
    
    
    367.3
    
    
    
    826.4
    
    
    
    720.9Interest expense
    
    
    3.9
    
    
    
    4.1
    
    
    
    7.6
    
    
    
    8.0Total benefits and expenses
    
    
    420.1
    
    
    
    371.4
    
    
    
    834.0
    
    
    
    728.9Income before taxes
    
    
    15.9
    
    
    
    27.1
    
    
    
    16.4
    
    
    
    32.2Income tax expense (benefit)
    
    
    3.8
    
    
    
    6.3
    
    
    
    3.1
    
    
    
    6.9Net income
    
    $
    12.1
    
    
    
    20.8
    
    
    $
    13.3
    
    
    
    25.3
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
  23




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Net
Realized Investment Losses
  Net Unrealized Loss on Trading Securities and Other Income (Expense), Net
  Claims Incurred
  Operating Expenses
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Operating Revenues
   24




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##### Table of Contents



Net
Realized Investment Losses
  Net Unrealized Loss on Trading Securities and Other Income (Expense), Net
  Claims Incurred
  Operating Expenses
  Income Tax Expense (Benefit)
  25




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##### Table of Contents



Managed Care Operating Results
 Three months ended
    
    Six months endedJune 30,
    
    June 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Operating revenues:Medical premiums earned, net:Commercial
    
    $
    179.7
    
    
    
    180.6
    
    
    $
    361.7
    
    
    
    360.8Reform
    
    
    80.9
    
    
    
    86.6
    
    
    
    161.9
    
    
    
    158.4Medicare
    
    
    113.6
    
    
    
    64.3
    
    
    
    210.5
    
    
    
    117.8Medical premiums earned, net
    
    
    374.2
    
    
    
    331.5
    
    
    
    734.1
    
    
    
    637.0Administrative service fees
    
    
    4.8
    
    
    
    4.6
    
    
    
    9.3
    
    
    
    9.0Net investment income
    
    
    6.1
    
    
    
    4.7
    
    
    
    11.7
    
    
    
    9.5Total operating revenues
    
    
    385.1
    
    
    
    340.8
    
    
    
    755.1
    
    
    
    655.5Medical operating costs:Medical claims incurred
    
    
    331.2
    
    
    
    285.8
    
    
    
    659.0
    
    
    
    561.3Medical operating expenses
    
    
    39.9
    
    
    
    37.2
    
    
    
    76.8
    
    
    
    72.3Total medical operating costs
    
    
    371.1
    
    
    
    323.0
    
    
    
    735.8
    
    
    
    633.6Medical operating income
    
    $
    14.0
    
    
    
    17.8
    
    
    $
    19.3
    
    
    
    21.9Additional data:Member months enrollment:Commercial:Fully-insured
    
    
    1,228,783
    
    
    
    1,247,353
    
    
    
    2,464,272
    
    
    
    2,501,096Self-funded
    
    
    499,317
    
    
    
    484,505
    
    
    
    995,379
    
    
    
    963,828Total commercial member months
    
    
    1,728,100
    
    
    
    1,731,858
    
    
    
    3,459,651
    
    
    
    3,464,924Reform
    
    
    1,031,631
    
    
    
    1,068,684
    
    
    
    2,065,291
    
    
    
    2,133,530Medicare
    
    
    215,828
    
    
    
    136,214
    
    
    
    406,357
    
    
    
    264,844Total member months
    
    
    2,975,559
    
    
    
    2,936,756
    
    
    
    5,931,299
    
    
    
    5,863,298Medical loss ratio
    
    
    88.5
    %
    
    
    86.2
    %
    
    
    89.8
    %
    
    
    88.1
    %Operating expense ratio
    
    
    10.5
    %
    
    
    11.1
    %
    
    
    10.3
    %
    
    
    11.2
    %
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Medical Operating Revenues
  
    
    Medical premiums generated by the Medicare business increased during the three months
ended June 30, 2008 by $49.3 million, or 76.7%, to $113.6 million, primarily due to an
increase in member months enrollment of 79,614, or 58.4% and a change in the mix of
products. The increase in member months is the net result of an increase of 81,384, or
80.0%, in the membership of our Medicare Advantage products and a decrease of 1,770, or
5.1%, in the membership of our PDP product.
    
    Medical premiums earned in the Reform business decreased by $5.7 million, or 6.6%, to
$80.9 million during the 2008 period. This fluctuation is
primarily due to the effect in the 2007 period of
the retroactive premium rate increase recorded in June 2007 for
the period of November 1, 2006 to March 31, 2007 amounting to $8.1 million and a
decrease in member months enrollment by 37,053 or 3.5%. Partially offsetting this decrease
is the increase in premium rates effective July 2007. In the 2007 period this segment
received a retroactive premium rate increase of approximately 6.7% which, even when
effective November 1, 2006, was not received until June 2007.
 26




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##### Table of Contents




    
    Medical premiums earned of the Commercial business decreased by $0.9 million, or 0.5%,
to $179.7 million during the three months ended June 30, 2008. This fluctuation is the net
result of a decrease in fully-insured member months enrollment of 18,570, or 1.5%, and an increase in the
average premium rates of corporate accounts of 4.5%.
 Medical Claims Incurred
  
    
    The medical claims incurred of the Medicare business increased by $63.3 millions during
the 2008 period primarily due to the increase in member months and a higher MLR by 24.5
percentage points. The higher MLR 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 14.3 percentage points, primarily as the result of
higher utilization trends for the period when compared to the three months ended June 30,
2007. The increase in utilization trends is primarily the result of higher utilization in
outpatient visits and drug benefits for dual eligibles. 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 June 30, 2008 has a higher concentration of dual eligible members than the same period
of the prior year. Dual eligible members have a higher utilization than non-dual eligible
members.
    
    The medical claims incurred of the Reform business increased by $3.8 million during the
2008 period and its MLR increased by 10.8 percentage points during the three months ended
June 30, 2008. The higher MLR is primarily the effect of the retroactive premium rate
increase received by this business during June 2007 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 1.9
percentage points during the 2008 period.
 
    
    The medical claims incurred of the Commercial business
decreased by $21.7 million during
the 2008 period and its MLR decreased by 11.6 percentage points during the three months
ended June 30, 2008. The lower 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 1.3 percentage points, primarily as the result of lower
utilization trends in drug and medical claims. Another factor that contributed to the
reduction of the MLR for the period is the re-pricing or termination of less profitable
groups during 2007.
 Medical Operating Expenses
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Medical Operating Revenues
  
    
    Medical premiums generated by the Medicare business increased by $92.7 million, or
78.7%, to $210.5 million, primarily due to an increase in member months enrollment of
141,513, or 53.4% and a change in the mix of products. The increase in member months is
the net result of an increase of 145,926, or 74.9%, in the membership of our Medicare
Advantage products and a decrease of 4,413, or 6.3%, in the membership of our PDP product.
 27




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##### Table of Contents




    
    Medical premiums earned of the Reform business increased by $3.5 million, or 2.2%, to
$161.9 million during the 2008 period. This fluctuation is primarily due to the increases
in premium rates during 2007; these rate increases were mitigated by a decrease in member
months enrollment in the Reform business of 68,239, or 3.2%. The retroactive increase in
premium rates received in June 2007 period corresponding to the period between November 1,
2006 and December 31, 2006 was approximately $2.1 million.
 
    
    Medical premiums generated by the Commercial business increased by $0.9 million, or
0.2%, to $361.7 million during the six months ended June 30, 2008. This fluctuation is the
net result of an increase in the average premium rates of corporate accounts of 5.2% offset
in part by a decrease in fully-insured member months enrollment of 36,824, or 1.5%.
 Medical Claims Incurred
  
    
    The medical claims incurred of the Medicare business increased by $100.6 million during
the 2008 period mainly as the result of the increase in member months and a higher MLR by
17.2 percentage points. The higher MLR 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 10.2 percentage points,
primarily as the result of higher utilization trends when compared to the six month ended
June 30, 2007. The increase in utilization trends is primarily the result of higher
utilization in outpatient visits and drug benefits for dual eligibles. 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 six months ended June 30, 2008 has a higher
concentration of dual eligible members than the same period of the prior year. Dual
eligible members have a higher utilization than non-dual eligible members.
    
    The medical claims incurred of the Reform business increased by $14.1 million during the
2008 period and its MLR increased by 6.8 percentage points during the six months ended June
30, 2008. The higher MLR is primarily the effect of the retroactive premium rate increase
received by this business during June 2007 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 3.8
percentage points during the 2008 period.
 
    
    The medical claims incurred of the Commercial business
decreased by $24.0 million during
the 2008 period and its MLR decreased by 6.8 percentage points during the six months ended
June 30, 2008. The lower 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 3.5 percentage points, primarily as 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
  28




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##### Table of Contents



Life Insurance Operating Results
 Three months ended
    
    Six months endedJune 30,
    
    June 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Operating revenues:Premiums earned, net:Premiums earned
    
    $
    24.6
    
    
    
    24.8
    
    
    $
    48.8
    
    
    
    49.4Premiums earned ceded
    
    
    (1.8
    )
    
    
    (2.3
    )
    
    
    (3.9
    )
    
    
    (4.5
    )Net premiums earned
    
    
    22.8
    
    
    
    22.5
    
    
    
    44.9
    
    
    
    44.9Commission income on reinsurance
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1Premiums earned, net
    
    
    22.9
    
    
    
    22.6
    
    
    
    45.1
    
    
    
    45.0Net investment income
    
    
    4.1
    
    
    
    3.7
    
    
    
    8.0
    
    
    
    7.4Total operating revenues
    
    
    27.0
    
    
    
    26.3
    
    
    
    53.1
    
    
    
    52.4Operating costs:Policy benefits and claims incurred
    
    
    11.2
    
    
    
    11.7
    
    
    
    23.2
    
    
    
    23.3Underwriting and other expenses
    
    
    12.6
    
    
    
    11.9
    
    
    
    24.2
    
    
    
    23.4Total operating costs
    
    
    23.8
    
    
    
    23.6
    
    
    
    47.4
    
    
    
    46.7Operating income
    
    $
    3.2
    
    
    
    2.7
    
    
    $
    5.7
    
    
    
    5.7Additional data:Loss ratio
    
    
    48.9
    %
    
    
    51.8
    %
    
    
    51.4
    %
    
    
    51.8
    %Operating expense ratio
    
    
    55.0
    %
    
    
    52.7
    %
    
    
    53.6
    %
    
    
    52.0
    %
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Operating Revenues
  Policy Benefits and Claims Incurred
  Underwriting and Other Expenses
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Operating Revenues
  29




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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
    
    Six months endedJune 30,
    
    June 30,(Dollar amounts in millions)
    
    2008
    
    2007
    
    2008
    
    2007Operating revenues:Premiums earned, net:Premiums written
    
    $
    40.6
    
    
    
    43.0
    
    
    
    76.1
    
    
    
    78.2Premiums ceded
    
    
    (18.3
    )
    
    
    (17.9
    )
    
    
    (33.9
    )
    
    
    (33.3
    )Change in unearned premiums
    
    
    0.8
    
    
    
    (0.8
    )
    
    
    4.2
    
    
    
    0.8Premiums earned, net
    
    
    23.1
    
    
    
    24.3
    
    
    
    46.4
    
    
    
    45.7Net investment income
    
    
    3.0
    
    
    
    2.5
    
    
    
    6.0
    
    
    
    5.1Total operating revenues
    
    
    26.1
    
    
    
    26.8
    
    
    
    52.4
    
    
    
    50.8Operating costs:Claims incurred
    
    
    12.4
    
    
    
    10.5
    
    
    
    22.7
    
    
    
    20.7Underwriting and other expenses
    
    
    11.4
    
    
    
    12.7
    
    
    
    25.3
    
    
    
    25.1Total operating costs
    
    
    23.8
    
    
    
    23.2
    
    
    
    48.0
    
    
    
    45.8Operating income
    
    $
    2.3
    
    
    
    3.6
    
    
    
    4.4
    
    
    
    5.0Additional data:Loss ratio
    
    
    53.7
    %
    
    
    43.2
    %
    
    
    48.9
    %
    
    
    45.3
    %Operating expense ratio
    
    
    49.4
    %
    
    
    52.3
    %
    
    
    54.5
    %
    
    
    54.9
    %Combined ratio
    
    
    103.1
    %
    
    
    95.5
    %
    
    
    103.4
    %
    
    
    100.2
    %
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
 Operating Revenues
   30




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##### Table of Contents



Claims Incurred
  Underwriting and Other Expenses
  Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
 Operating Revenues
    Claims Incurred
  Underwriting and Other Expenses
  31




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
  Six months endedJune 30,(Dollar amounts in millions)
    
    2008
    
    2007Sources of cash:Proceeds from short-term borrowings
    
    $
    32.1
    
    
    
    Proceeds from policyholder deposits
    
    
    5.9
    
    
    
    2.8Cash provided by operating activities
    
    
    
    
    
    
    6.4Other
    
    
    15.6
    
    
    
    17.0Total sources of cash
    
    
    53.6
    
    
    
    26.2Uses of cash:Cash used in operating activities
    
    
    (25.2
    )
    
    
    Net purchases of investment securities
    
    
    (216.0
    )
    
    
    (25.1
    )Capital expenditures
    
    
    (7.1
    )
    
    
    (3.5
    )Dividends
    
    
    
    
    
    
    (2.4
    )Payments of long-term borrowings
    
    
    (0.8
    )
    
    
    (0.8
    )Surrenders of policyholder deposits
    
    
    (3.4
    )
    
    
    (4.0
    )Other
    
    
    
    
    
    
    (0.2
    )Total uses of cash
    
    
    (252.5
    )
    
    
    (36.0
    )Net decrease in cash and cash equivalents
    
    $
    (198.9
    )
    
    
    (9.8
    )
     32




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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
  33




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##### Table of Contents



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
  
 Item 4.
    
    Submissions of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
  34




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##### Table of Contents



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.
0-49762).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. 0-49762).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. 0-49762).10.1*
    
    
    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.11
    
    
    Statement re computation of per share earnings; an exhibit
describing the computation of the earnings per share for the
three months and six months ended June 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 six months ended June 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).32.1*
    
    
    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. 35




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##### Table of Contents



SIGNATURES
  Triple-S Management CorporationRegistrantDate:
    
    August 6, 2008
    
    By:
    
    /s/ Ramón M. Ruiz-ComasRamón M. Ruiz-Comas, CPAPresident and
Chief Executive OfficerDate:
    
    August 6, 2008
    
    By:
    
    /s/ Juan J. RománJuan J. Román, CPAVice President of Finance
and Chief Financial Officer
 36