##### 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 March 31, 2009
 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 organization)
    
    (I.R.S. Employer Identification No.)1441 F.D. Roosevelt AvenueSan Juan, Puerto Rico
    
    00920(Address of principal executive offices)
    
    (Zip code)
 (787) 749-4949
 Not applicable
 þ o
 o 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 May 1, 2009Common Stock Class A, $1.00 par value
    
    9,042,809Common Stock Class B, $1.00 par value
    
    20,421,203




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##### 



Triple-S Management Corporation
 FORM 10-Q
   PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Earnings for the three months ended March
31, 2009 and 2008
    
    
    4Consolidated Statements of Stockholders Equity and Comprehensive
Income (Loss) for the three months ended March 31, 2009 and 2008
    
    
    5Consolidated Statements of Cash Flows for the three months ended March
31, 2009 and 2008
    
    
    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
    
    
    31Item 4. Controls and Procedures
    
    
    31PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    33Item 1A.
 Risk Factors
    
    
    33Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior Securities
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    33SIGNATURES
    
    
    34EX-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 (Unaudited)
 (Dollar amounts in thousands, except per share data)
 March 31,
    
    December 31,2009
    
    2008AssetsInvestments and cash:Equity securities held for trading, at fair value
    
    $
    29,751
    
    
    
    32,184Securities available for sale, at fair value:Fixed maturities
    
    
    833,232
    
    
    
    887,684Equity securities
    
    
    59,454
    
    
    
    68,629Securities held to maturity, at amortized cost:Fixed maturities
    
    
    19,174
    
    
    
    21,753Policy loans
    
    
    5,430
    
    
    
    5,451Cash and cash equivalents
    
    
    108,682
    
    
    
    46,095Total investments and cash
    
    
    1,055,723
    
    
    
    1,061,796Premiums and other receivables, net
    
    
    249,532
    
    
    
    237,158Deferred policy acquisition costs and value of business acquired
    
    
    128,442
    
    
    
    126,347Property and equipment, net
    
    
    59,125
    
    
    
    58,448Net deferred tax asset
    
    
    28,425
    
    
    
    25,195Other assets
    
    
    33,097
    
    
    
    39,515Total assets
    
    $
    1,554,344
    
    
    
    1,548,459Liabilities and Stockholders EquityClaim liabilities:Claims processed and incomplete
    
    $
    200,009
    
    
    
    156,137Unreported losses
    
    
    143,982
    
    
    
    150,079Unpaid loss-adjustment expenses
    
    
    18,592
    
    
    
    17,494Total claim liabilities
    
    
    362,583
    
    
    
    323,710Liability for future policy benefits
    
    
    211,522
    
    
    
    207,545Unearned premiums
    
    
    101,940
    
    
    
    110,141Policyholder deposits
    
    
    48,260
    
    
    
    48,684Liability to Federal Employees Health Benefits Program (FEHBP)
    
    
    9,875
    
    
    
    11,157Accounts payable and accrued liabilities
    
    
    146,107
    
    
    
    148,713Long-term borrowings
    
    
    168,897
    
    
    
    169,307Liability for pension benefits
    
    
    42,872
    
    
    
    44,103Total liabilities
    
    
    1,092,056
    
    
    
    1,063,360Stockholders equity:Common stock Class A, $1 par value. Authorized 100,000,000 shares;
issued
and outstanding 9,042,809 at March
31, 2009 and December 31, 2008
    
    
    9,043
    
    
    
    9,043Common stock Class B, $1 par value. Authorized 100,000,000 shares;
issued
and outstanding 20,644,503 and 22,104,989 shares at March 31, 2009 and
December 31, 2008, respectively
    
    
    20,644
    
    
    
    22,105Additional paid-in capital
    
    
    164,555
    
    
    
    179,504Retained earnings
    
    
    296,044
    
    
    
    292,112Accumulated other comprehensive loss
    
    
    (27,998
    )
    
    
    (17,665
    )Total stockholders equity
    
    
    462,288
    
    
    
    485,099Total liabilities and stockholders equity
    
    $
    1,554,344
    
    
    
    1,548,459
  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 endedMarch 31,2009
    
    2008Revenues:Premiums earned, net
    
    $
    452,484
    
    
    
    404,399Administrative service fees
    
    
    8,866
    
    
    
    3,713Net investment income
    
    
    12,541
    
    
    
    13,432Total operating revenues
    
    
    473,891
    
    
    
    421,544Net realized investment loss
    
    
    (1,727
    )
    
    
    609Net unrealized investment (loss) gain on trading securities
    
    
    (2,476
    )
    
    
    (6,250
    )Other income (expense), net
    
    
    (379
    )
    
    
    (1,521
    )Total revenues
    
    
    469,309
    
    
    
    414,382Benefits and expenses:Claims incurred
    
    
    394,532
    
    
    
    350,207Operating expenses
    
    
    68,252
    
    
    
    60,031Total operating costs
    
    
    462,784
    
    
    
    410,238Interest expense
    
    
    3,264
    
    
    
    3,673Total benefits and expenses
    
    
    466,048
    
    
    
    413,911Income before taxes
    
    
    3,261
    
    
    
    471Income tax (benefit) expense:Current
    
    
    451
    
    
    
    (184
    )Deferred
    
    
    (1,122
    )
    
    
    (547
    )Total income taxes
    
    
    (671
    )
    
    
    (731
    )Net income
    
    $
    3,932
    
    
    
    1,202Basic net income per share
    
    $
    0.13
    
    
    
    0.04Diluted net income per share
    
    $
    0.13
    
    
    
    0.04
  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)
 2009
    
    2008Balance at January 1
    
    $
    485,099
    
    
    
    482,538Share-based compensation
    
    
    1,619
    
    
    
    738Grant of restricted Class B common stock
    
    
    3
    
    
    
    Repurchase and retirement of common stock
    
    
    (18,032
    )
    
    
    Other
    
    
    
    
    
    
    (14
    )Comprehensive income (loss):Net income
    
    
    3,932
    
    
    
    1,202Net unrealized change in fair value of available for sale
securities
    
    
    (10,599
    )
    
    
    9,350Defined benefit pension plan:Actuarial loss, net
    
    
    331
    
    
    
    296Prior service credit, net
    
    
    (65
    )
    
    
    (70
    )Net change in fair value of cash flow hedges
    
    
    
    
    
    
    (56
    )Total comprehensive (loss) income
    
    
    (6,401
    )
    
    
    10,722Balance at March 31
    
    $
    462,288
    
    
    
    493,984
  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)
 Three months endedMarch 31,2009
    
    2008Cash flows from operating activities:Net income
    
    $
    3,932
    
    
    
    1,202Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    2,047
    
    
    
    1,800Net amortization of investments
    
    
    191
    
    
    
    192Provision for doubtful receivables
    
    
    504
    
    
    
    205Deferred tax benefit
    
    
    (1,528
    )
    
    
    (547
    )Net loss (gain) on sale of securities
    
    
    1,727
    
    
    
    (609
    )Net unrealized loss on trading securities
    
    
    2,476
    
    
    
    6,250Share-based compensation
    
    
    1,622
    
    
    
    738Proceeds from trading securities sold:Equity securities
    
    
    1,311
    
    
    
    20,476Acquisition of securities in trading portfolio:Equity securities
    
    
    (1,351
    )
    
    
    (5,893
    )Loss on sale of property and equipment
    
    
    2
    
    
    
    (Increase) decrease in assets:Premiums receivable
    
    
    (23,541
    )
    
    
    (14,749
    )Agents balances
    
    
    9,362
    
    
    
    6,386Accrued interest receivable
    
    
    2,088
    
    
    
    (1,855
    )Other receivables
    
    
    (1,122
    )
    
    
    (3,589
    )Reinsurance recoverable on paid losses
    
    
    1,844
    
    
    
    4,599Deferred policy acquisition costs and
value of business acquired
    
    
    (2,095
    )
    
    
    (1,748
    )Prepaid income tax
    
    
    (526
    )
    
    
    191Other assets
    
    
    6,944
    
    
    
    6,374Increase (decrease) in liabilities:Claims processed and incomplete
    
    
    43,872
    
    
    
    (16,041
    )Unreported losses
    
    
    (6,097
    )
    
    
    23,758Unpaid loss-adjustment expenses
    
    
    1,098
    
    
    
    1,420Liability for future policy benefits
    
    
    3,977
    
    
    
    2,968Unearned premiums
    
    
    (8,201
    )
    
    
    (29,183
    )Policyholder deposits
    
    
    412
    
    
    
    457Liability to FEHBP
    
    
    (1,282
    )
    
    
    (3,303
    )Accounts payable and accrued liabilities
    
    
    (7,705
    )
    
    
    (109
    )Net cash provided by (used in) operating activities
    
    $
    29,961
    
    
    
    (610
    )
  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)
 Three months endedMarch 31,2009
    
    2008Cash flows from investing activities:Proceeds from investments sold or matured:Securities available for sale:Fixed maturities sold
    
    $
    56,136
    
    
    
    67,267Fixed maturities matured/called
    
    
    112,042
    
    
    
    48,133Equity securities
    
    
    1,137
    
    
    
    Securities held to maturity:Fixed maturities matured
    
    
    2,666
    
    
    
    22,863Acquisition of investments:Securities available for sale:Fixed maturities
    
    
    (105,263
    )
    
    
    (322,974
    )Equity securities
    
    
    (1,579
    )
    
    
    (12,143
    )Fixed maturity securities held to maturity
    
    
    
    
    
    
    (5,120
    )Net proceeds for policy loans
    
    
    21
    
    
    
    376Net capital expenditures
    
    
    (2,726
    )
    
    
    (1,547
    )Net cash provided
by (used in)
investing
activities
    
    
    62,434
    
    
    
    (203,145
    )Cash flows from financing activities:Change in outstanding checks in excess of bank balances
    
    
    (11,306
    )
    
    
    15,446Change in short-term borrowings
    
    
    
    
    
    
    9,825Repayments of long-term borrowings
    
    
    (410
    )
    
    
    (409
    )Repurchase and retirement of common stock
    
    
    (17,256
    )
    
    
    Proceeds from policyholder deposits
    
    
    1,169
    
    
    
    2,611Surrenders of policyholder deposits
    
    
    (2,005
    )
    
    
    (1,673
    )Other
    
    
    
    
    
    
    (14
    )Net cash (used in)
provided by
financing
activities
    
    
    (29,808
    )
    
    
    25,786Net increase
(decrease) in cash
and cash
equivalents
    
    
    62,587
    
    
    
    (177,969
    )Cash and cash equivalents at beginning of the period
    
    
    46,095
    
    
    
    240,153Cash and cash equivalents at end of the period
    
    $
    108,682
    
    
    
    62,184
  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
 Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That
Arise from Contingencies Business Combinations
 Recognition and Presentation of
Other-Than-Temporary Impairments
 Interim Disclosure about Fair
Value of Financial Instruments Disclosures about Fair
Value of Financial Instruments
 Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly
 8




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES  Notes to Consolidated Financial Statements   (Dollar amounts in thousands, except per share data)
 Fair Value Measurements
  (3) Segment Information
   Three months endedMarch 31,2009
    
    2008Operating revenues:Managed Care:Premiums earned, net
    
    $
    403,671
    
    
    
    359,111Administrative service fees
    
    
    8,866
    
    
    
    3,713Intersegment premiums /service fees
    
    
    1,453
    
    
    
    1,650Net investment income
    
    
    5,142
    
    
    
    5,602Total managed care
    
    
    419,132
    
    
    
    370,076Life Insurance:Premiums earned, net
    
    
    24,405
    
    
    
    22,129Intersegment premiums
    
    
    91
    
    
    
    92Net investment income
    
    
    4,004
    
    
    
    3,934Total life insurance
    
    
    28,500
    
    
    
    26,155Property and Casualty Insurance:Premiums earned, net
    
    
    24,408
    
    
    
    23,159Intersegment premiums
    
    
    153
    
    
    
    154Net investment income
    
    
    2,801
    
    
    
    2,964Total property and casualty insurance
    
    
    27,362
    
    
    
    26,277Other segments  intersegment service revenues *
    
    
    11,904
    
    
    
    11,068Total business segments
    
    
    486,898
    
    
    
    433,576TSM operating revenues from external sources
    
    
    594
    
    
    
    932Elimination of intersegment premiums
    
    
    (1,697
    )
    
    
    (1,896
    )Elimination of intersegment service fees
    
    
    (11,904
    )
    
    
    (11,068
    )Consolidated operating revenues
    
    $
    473,891
    
    
    
    421,544
 
 *
    
    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. 9




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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 endedMarch 31,2009
    
    2008Operating income:Managed care
    
    $
    5,775
    
    
    
    5,332Life insurance
    
    
    3,034
    
    
    
    2,505Property and casualty insurance
    
    
    1,347
    
    
    
    2,097Other segments *
    
    
    127
    
    
    
    109Total business segments
    
    
    10,283
    
    
    
    10,043TSM operating revenues from external sources
    
    
    594
    
    
    
    932TSM unallocated operating expenses
    
    
    (2,304
    )
    
    
    (2,140
    )Elimination of TSM
intersegment charges
    
    
    2,534
    
    
    
    2,471Consolidated operating income
    
    
    11,107
    
    
    
    11,306Consolidated net realized investment (loss) gains
    
    
    (1,727
    )
    
    
    609Consolidated net unrealized loss on trading securities
    
    
    (2,476
    )
    
    
    (6,250
    )Consolidated interest expense
    
    
    (3,264
    )
    
    
    (3,673
    )Consolidated other expense, net
    
    
    (379
    )
    
    
    (1,521
    )Consolidated income before taxes
    
    $
    3,261
    
    
    
    471Depreciation expense:Managed care
    
    $
    1,315
    
    
    
    984Life insurance
    
    
    145
    
    
    
    182Property and casualty insurance
    
    
    372
    
    
    
    372Total business segments
    
    
    1,832
    
    
    
    1,538TSM depreciation expense
    
    
    215
    
    
    
    262Consolidated depreciation
expense
    
    $
    2,047
    
    
    
    1,800
 
 *
    
    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)
 March 31,
    
    December 31,2009
    
    2008Assets:Managed care
    
    $
    690,033
    
    
    
    678,889Life insurance
    
    
    464,847
    
    
    
    460,109Property and casualty insurance
    
    
    333,748
    
    
    
    337,869Other segments *
    
    
    12,306
    
    
    
    12,620Total business segments
    
    
    1,500,934
    
    
    
    1,489,487Unallocated amounts related to TSM:Cash, cash equivalents, and investments
    
    
    51,196
    
    
    
    58,480Property and equipment,net
    
    
    21,447
    
    
    
    21,648Other assets
    
    
    4,313
    
    
    
    4,07976,956
    
    
    
    84,207Elimination entries-intersegment receivables and others
    
    
    (23,546
    )
    
    
    (25,235
    )Consolidated total assets
    
    $
    1,554,344
    
    
    
    1,548,459
 
 *
    
    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
  March 31, 2009Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Estimated Faircost
    
    gains
    
    losses
    
    valueTrading securities:Equity securities
    
    $
    40,890
    
    
    
    1,982
    
    
    
    (13,121
    )
    
    
    29,751Securities available for sale:Fixed maturities
    
    
    829,965
    
    
    
    21,709
    
    
    
    (18,442
    )
    
    
    833,232Equity securities
    
    
    68,599
    
    
    
    1,165
    
    
    
    (10,310
    )
    
    
    59,454898,564
    
    
    
    22,874
    
    
    
    (28,752
    )
    
    
    892,686Securities held to maturity:Fixed maturities
    
    
    19,174
    
    
    
    1,150
    
    
    
    (2
    )
    
    
    20,322$
    958,628
    
    
    
    26,006
    
    
    
    (41,875
    )
    
    
    942,759
 December 31, 2008Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Estimated faircost
    
    gains
    
    losses
    
    valueTrading securities:Equity securities
    
    $
    40,847
    
    
    
    2,781
    
    
    
    (11,444
    )
    
    
    32,184Securities available for sale:Fixed maturities
    
    
    879,663
    
    
    
    24,163
    
    
    
    (16,142
    )
    
    
    887,684Equity securities
    
    
    70,060
    
    
    
    1,752
    
    
    
    (3,183
    )
    
    
    68,629949,723
    
    
    
    25,915
    
    
    
    (19,325
    )
    
    
    956,313Securities held to maturity:Fixed maturities
    
    
    21,753
    
    
    
    1,317
    
    
    
    (7
    )
    
    
    23,063$
    1,012,323
    
    
    
    30,013
    
    
    
    (30,776
    )
    
    
    1,011,560
   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
  March 31,
    
    December 31,2009
    
    2008Premiums
    
    $
    101,534
    
    
    
    90,315Self-funded group receivables
    
    
    46,914
    
    
    
    35,749FEHBP
    
    
    10,757
    
    
    
    9,600Agents balances
    
    
    29,129
    
    
    
    38,491Accrued interest
    
    
    9,714
    
    
    
    11,802Reinsurance recoverable
    
    
    40,337
    
    
    
    42,181Other
    
    
    26,396
    
    
    
    23,765264,781
    
    
    
    251,903Less allowance for doubtful receivables:Premiums
    
    
    12,042
    
    
    
    10,467Other
    
    
    3,207
    
    
    
    4,27815,249
    
    
    
    14,745Total premiums and other receivables
    
    $
    249,532
    
    
    
    237,158
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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 endedMarch 31,2009
    
    2008Claim liabilities at beginning of period
    
    $
    323,710
    
    
    
    353,830Reinsurance recoverable on claim liabilities
    
    
    (30,432
    )
    
    
    (54,834
    )Net claim liabilities at beginning of period
    
    
    293,278
    
    
    
    298,996Incurred claims and loss-adjustment expenses:Current period insured events
    
    
    395,329
    
    
    
    358,324Prior period insured events
    
    
    (3,948
    )
    
    
    (11,241
    )Total
    
    
    391,381
    
    
    
    347,083Payments of losses and loss-adjustment expenses:Current period insured events
    
    
    172,155
    
    
    
    171,599Prior period insured events
    
    
    179,308
    
    
    
    160,982Total
    
    
    351,463
    
    
    
    332,581Net claim liabilities at end of period
    
    
    333,196
    
    
    
    313,498Reinsurance recoverable on claim liabilities
    
    
    29,387
    
    
    
    49,469Claim liabilities at end of period
    
    $
    362,583
    
    
    
    362,967
    (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.
 14




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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)
  March 31, 2009Level 1
    
    Level 2
    
    Level 3
    
    TotalEquity securities held for trading
    
    $
    29,751
    
    
    
    
    
    
    
    
    
    
    
    29,751Securities available for sale:Fixed maturity securities
    
    
    74,676
    
    
    
    757,996
    
    
    
    560
    
    
    
    833,232Equity securities
    
    
    23,202
    
    
    
    35,166
    
    
    
    1,086
    
    
    
    59,454Derivatives (reported within other assets in
the consolidated balance sheets)
    
    
    
    
    
    
    872
    
    
    
    
    
    
    
    872Total
    
    $
    127,629
    
    
    
    794,034
    
    
    
    1,646
    
    
    
    923,309
 December 31, 2008Level 1
    
    Level 2
    
    Level 3
    
    TotalEquity securities held for trading
    
    $
    32,184
    
    
    
    
    
    
    
    
    
    
    
    32,184Securities available for sale:Fixed maturity securities
    
    
    89,985
    
    
    
    796,418
    
    
    
    1,281
    
    
    
    887,684Equity securities
    
    
    31,506
    
    
    
    36,037
    
    
    
    1,086
    
    
    
    68,629Derivatives (reported within other assets in
the consolidated balance sheets)
    
    
    
    
    
    
    1,674
    
    
    
    
    
    
    
    1,674Total
    
    $
    153,675
    
    
    
    834,129
    
    
    
    2,367
    
    
    
    990,171
 15




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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)
  FixedMaturity
    
    EquitySecurities
    
    Securities
    
    TotalBeginning balance
    
    $
    1,281
    
    
    
    1,086
    
    
    
    2,367Total gains or losses:Realized in earnings
    
    
    (1,024
    )
    
    
    
    
    
    
    (1,024
    )Unrealized in other accumulated
comprehensive income
    
    
    303
    
    
    
    
    
    
    
    303Purchases and sales
    
    
    
    
    
    
    
    
    
    
    Transfers in and/or out of Level 3
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    $
    560
    
    
    
    1,086
    
    
    
    1,646
   (8) Share-Based Compensation
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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)
 (9) Comprehensive Loss
  AccumulatedNet unrealized
    
    Liability for
    
    othergain (loss) on
    
    pension
    
    comprehensivesecurities
    
    benefits
    
    lossBalance at January 1
    
    $
    5,602
    
    
    
    (23,267
    )
    
    
    (17,665
    )Net current period change
    
    
    (10,599
    )
    
    
    266
    
    
    
    (10,333
    )Balance at March 31
    
    $
    (4,997
    )
    
    
    (23,001
    )
    
    
    (27,998
    )
 
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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)
 (10) Income Taxes
   (11) Pension Plan
  Three months endedMarch 31,2009
    
    2008Components of net periodic benefit cost:Service cost
    
    $
    1,222
    
    
    
    1,316Interest cost
    
    
    1,330
    
    
    
    1,422Expected return on assets
    
    
    (965
    )
    
    
    (1,225
    )Prior service cost (credit)
    
    
    (107
    )
    
    
    (113
    )Actuarial loss
    
    
    544
    
    
    
    479Net periodic benefit cost
    
    $
    2,024
    
    
    
    1,879
 Employer contributions
  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)
 (12) Net Income Available to Stockholders and Basic Net Income per Share
  Three months endedMarch 31,2009
    
    2008Numerator for earnings per share:Net income available to stockholders
    
    $
    3,932
    
    
    
    1,202Denominator for basic earnings per share:Weighted average of common shares
    
    
    30,224,103
    
    
    
    32,142,809Effect of dilutive securities
    
    
    50,504
    
    
    
    52,490Denominator for diluted earnings per share
    
    
    30,274,607
    
    
    
    32,195,299Basic net income per share
    
    $
    0.13
    
    
    
    0.04Diluted net income per share
    
    $
    0.13
    
    
    
    0.04
 (13) Contingencies
    Hau et al Litigation (formerly known as Jordan et al)
  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)
  Thomas Litigation
  Colón Litigation
  Puerto Rico Center for Municipal Revenue Collection
   20




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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)
 Dentists Association Litigation
    (14) Subsequent Event
  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
 Acquisition of La Cruz Azul de Puerto Rico
   Legislative
and Regulatory Initiatives
  Recent Accounting Standards
  Managed Care Membership
 As of March 31,2009
    
    2008Managed care enrollment:Commercial 1
    
    
    613,546
    
    
    
    576,209Reform 2
    
    
    521,731
    
    
    
    343,534Medicare3
    
    
    74,186
    
    
    
    65,538Total
    
    
    1,209,463
    
    
    
    985,281Managed care enrollment by funding
arrangement:Fully-insured
    
    
    829,042
    
    
    
    821,764Self-insured
    
    
    380,421
    
    
    
    163,517Total
    
    
    1,209,463
    
    
    
    985,281
 23




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##### Table of Contents



(1)
    
    Commercial membership includes corporate accounts, self-funded employers, individual
accounts, Medicare Supplement, U.S. Federal government employees and local government
employees.(2)
    
    Includes rated and self-funded members.(3)
    
    Includes Medicare Advantage as well as stand-alone PDP plan membership. Consolidated Operating Results
  Three months endedMarch 31,(Dollar amounts in millions)
    
    2009
    
    2008Revenues:Premiums earned, net
    
    $
    452.5
    
    
    
    404.4Administrative service fees
    
    
    8.9
    
    
    
    3.7Net investment income
    
    
    12.5
    
    
    
    13.4Total operating revenues
    
    
    473.9
    
    
    
    421.5Net realized investment (loss) gains
    
    
    (1.7
    )
    
    
    0.6Net unrealized investment loss
on trading securities
    
    
    (2.4
    )
    
    
    (6.2
    )Other expense, net
    
    
    (0.4
    )
    
    
    (1.5
    )Total revenues
    
    
    469.4
    
    
    
    414.4Benefits and expenses:Claims incurred
    
    
    394.5
    
    
    
    350.2Operating expenses
    
    
    68.3
    
    
    
    60.0Total operating expenses
    
    
    462.8
    
    
    
    410.2Interest expense
    
    
    3.3
    
    
    
    3.7Total benefits and expenses
    
    
    466.1
    
    
    
    413.9Income before taxes
    
    
    3.3
    
    
    
    0.5Income tax benefit
    
    
    (0.6
    )
    
    
    (0.7
    )Net income
    
    $
    3.9
    
    
    
    1.2
 24




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##### Table of Contents



Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Operating Revenues
    Net Realized Investment Losses
  Net Unrealized Loss on Trading Securities and Other Expense, Net
  Claims Incurred
  Operating Expenses
  25




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##### Table of Contents



Managed Care Operating Results
 Three months endedMarch 31,(Dollar amounts in millions)
    
    2009
    
    2008Operating revenues:Medical premiums earned, net:Commercial
    
    $
    189.9
    
    
    
    182.0Reform
    
    
    84.9
    
    
    
    81.0Medicare
    
    
    129.7
    
    
    
    96.9Medical premiums earned, net
    
    
    404.5
    
    
    
    359.9Administrative service fees
    
    
    9.5
    
    
    
    4.6Net investment income
    
    
    5.1
    
    
    
    5.6Total operating revenues
    
    
    419.1
    
    
    
    370.1Medical operating costs:Medical claims incurred
    
    
    370.2
    
    
    
    327.9Medical operating expenses
    
    
    43.1
    
    
    
    36.9Total medical operating costs
    
    
    413.3
    
    
    
    364.8Medical operating income
    
    $
    5.8
    
    
    
    5.3Additional data:Member months enrollment:Commercial:Fully-insured
    
    
    1,260,901
    
    
    
    1,235,489Self-funded
    
    
    579,092
    
    
    
    496,062Total commercial member
months
    
    
    1,839,993
    
    
    
    1,731,551Reform:Fully-insured
    
    
    978,591
    
    
    
    1,033,660Self-funded
    
    
    560,578
    
    
    
    Total reform member months
    
    
    1,539,169
    
    
    
    1,033,660Medicare
    
    
    228,273
    
    
    
    190,529Total member months
    
    
    3,607,435
    
    
    
    2,955,740Medical loss ratio
    
    
    91.5
    %
    
    
    91.1
    %Operating expense ratio
    
    
    10.4
    %
    
    
    10.1
    %
 Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Medical Operating Revenues
  
    
    Medical premiums generated by the Medicare business increased during the three months
ended March 31, 2009 by $32.8 million, or 33.8%, to $129.7 million, primarily due to an
increase in member months enrollment of 37,744, or 19.8% and higher average premium rates.
The fluctuation in member months is the net result of an increase of 40,825, or 25.9%, in
the membership of our Medicare Advantage products and a decrease of 3,081, or 9.4%, in the
membership of our PDP product.
 
    
    Medical premiums generated by the Commercial business increased by $7.9 million, or
4.3%, to $189.9 million during the three months ended March 31, 2009. This fluctuation is
primarily the result of an increase in member months enrollment of 25,412, or 2.1% and
increase in average premium rates per member of approximately 2.2%.
 26




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##### Table of Contents




    
    Medical premiums earned in the Reform business increased by $3.9 million, or 4.8%, to
$84.9 million during the three months ended March 31, 2009. This fluctuation is due to an
increase in premium rates, effective July 1, 2008, of approximately 10%, offset in part by
a lower member months enrollment in the Reforms fully-insured membership by 55,069, or
5.3%.
  Medical Claims Incurred
  
    
    The medical claims incurred of the Medicare business increased by $36.5 million during
the 2009 period primarily due to the increase in member months of 37,744, or 19.8%, and a
higher MLR by 5.1 percentage points. The increased MLR is primarily due to an unfavorable
reserve development in the 2009 period. Excluding the effect of prior period reserve
developments in the 2009 and 2008 period, the MLR decreased by 2.5 percentage points. This
decrease is mostly due to lower medical cost as a result of better utilization and premium
rate increases.
    
    The medical claims incurred of the Commercial business increased by $6.2 million during
the 2009 period and its MLR decreased by 0.6 percentage points during the three months
ended March 31, 2009. The improvement in the MLR is due to higher premium yield as
compared to medical cost yield.
    
    The medical claims incurred of the Reform business increased by $0.3 million and its
MLR decreased by 4.5 percentage points during the three months ended March 31, 2009. The
lower MLR is primarily due to a favorable reserve development in the 2009 period and an
unfavorable reserve development in the 2008 period. In addition, in 2008 we recognized a
retroactive adjustment reducing capitation rates. Excluding the effect of these items in
the 2009 and 2008 period the MLR of this business increased by 0.7 percentage points,
mainly due to higher utilization trends when compared to the same period of prior year.
 Medical Operating Expenses
  27




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##### Table of Contents



Life Insurance Operating Results
 Three months endedMarch 31,(Dollar amounts in millions)
    
    2009
    
    2008Operating revenues:Premiums earned, net:Premiums earned
    
    $
    26.0
    
    
    
    24.1Premiums earned ceded
    
    
    (1.6
    )
    
    
    (2.0
    )Net premiums earned
    
    
    24.4
    
    
    
    22.1Commission income on reinsuarance
    
    
    0.1
    
    
    
    0.1Premiums earned, net
    
    
    24.5
    
    
    
    22.2Net investment income
    
    
    4.0
    
    
    
    3.9Total operating revenues
    
    
    28.5
    
    
    
    26.1Operating costs:Policy benefits and claims incurred
    
    
    12.7
    
    
    
    12.0Underwriting and other expenses
    
    
    12.8
    
    
    
    11.6Total operating costs
    
    
    25.5
    
    
    
    23.6Operating income
    
    $
    3.0
    
    
    
    2.5Additional data:Loss ratio
    
    
    51.8
    %
    
    
    54.1
    %Operating expense ratio
    
    
    52.2
    %
    
    
    52.3
    %
 Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Operating Revenues
  Policy Benefits and Claims Incurred
  Underwriting and Other Expenses
  28




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##### Table of Contents



Property and Casualty Insurance Operating Results
 Three months endedMarch 31,(Dollar amounts in millions)
    
    2009
    
    2008Operating revenues:Premiums earned, net:Premiums written
    
    $
    33.1
    
    
    
    35.5Premiums ceded
    
    
    (12.8
    )
    
    
    (15.6
    )Change in unearned
premiums
    
    
    4.3
    
    
    
    3.4Premiums earned, net
    
    
    24.6
    
    
    
    23.3Net investment income
    
    
    2.8
    
    
    
    3.0Total operating revenues
    
    
    27.4
    
    
    
    26.3Operating costs:Claims incurred
    
    
    11.6
    
    
    
    10.3Underwriting and other expenses
    
    
    14.4
    
    
    
    13.9Total operating costs
    
    
    26.0
    
    
    
    24.2Operating income
    
    $
    1.4
    
    
    
    2.1Additional data:Loss ratio
    
    
    47.2
    %
    
    
    44.2
    %Operating expense ratio
    
    
    58.5
    %
    
    
    59.7
    %Combined ratio
    
    
    105.7
    %
    
    
    103.9
    %
 Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Operating Revenues
    Claims Incurred
  Underwriting and Other Expenses
  29




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
  Three months endedMarch 31,(Dollar amounts in millions)
    
    2009
    
    2008Sources of cash:Net proceeds from short-term borrowings
    
    $
    
    
    
    
    9.8Proceeds from policyholder deposits
    
    
    1.2
    
    
    
    2.6Net proceeds from investment securities
    
    
    65.1
    
    
    
    Cash provided by operating activities
    
    
    29.9
    
    
    
    Other
    
    
    
    
    
    
    15.8Total sources of cash
    
    
    96.2
    
    
    
    28.2Uses of cash:Cash used in operating activities
    
    
    
    
    
    
    (0.6
    )Net purchases of investment securities
    
    
    
    
    
    
    (202.0
    )Capital expenditures
    
    
    (2.7
    )
    
    
    (1.5
    )Repurchase and retirement of common stock
    
    
    (17.2
    )
    
    
    Payments of long-term borrowings
    
    
    (0.4
    )
    
    
    (0.4
    )Surrenders of policyholder deposits
    
    
    (2.0
    )
    
    
    (1.7
    )Other
    
    
    (11.3
    )
    
    
    Total uses of cash
    
    
    (33.6
    )
    
    
    (206.2
    )Net increase (decrease) in cash and cash equivalents
    
    $
    62.6
    
    
    
    (178.0
    )
       30




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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
 Evaluation of Disclosure Controls and Procedures
  31




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##### Table of Contents



Remediation of Material Weakness
   
    
    Improved the governance process over the Corporations investment activities, by
including OTTI analysis on the quarterly agenda of our Investment Committee and by
reporting the results of the OTTI analysis to our Audit Committee.
    
    Amended and expanded the criteria for the selection of impaired investment positions
for OTTI evaluation increasing the scope of our evaluation.
    
    Prepared more robust supporting documentation for the OTTI analysis, including related
reports used when evaluating those impaired investments selected in accordance with our
selection criteria, addressing the reasons for the decline in value, period for which the
decline has been observed, an estimate of the anticipated recovery period and its related
probability of recoverability, credit ratings for the issue and issuer (when available) and
any changes thereto.
    
    Implemented a procedure designed to effectively disseminate the most recent
authoritative accounting pronouncements related to OTTI to ensure that employees involved
in the OTTI evaluation process receive the information on a timely basis.
  Changes in Internal Controls Over Financial Reporting
  32




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##### Table of Contents



Part II  Other Information
 
 Item 1. Legal Proceedings
  
 Item IA. Risk Factors
  Claims by Heirs of Former Shareholders
  
 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
  
 Item 6. Exhibits
 Exhibits
    
    Description11
    
    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 March 31, 2009 and 2008 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.
 33




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##### Table of Contents



Exhibits
    
    Description12
    
    Statements re computation of ratios; an exhibit describing the
computation of the loss ratio, expense ratio and combined ratio for
the three months ended March 31, 2009 and 2008 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. 
 SIGNATURES
  Triple-S Management CorporationRegistrantDate: May 7, 2009
    
    By:
    
    /s/ Ramón M. Ruiz-ComasRamón M. Ruiz-Comas, CPAPresident andChief Executive OfficerDate: May 7, 2009
    
    By:
    
    /s/ Juan J. RománJuan J. Román, CPAVice President of Financeand Chief Financial Officer
 34