##### 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, 2007
 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
    
    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 þ
 o þ
  Title of each class
    
    Outstanding at May 4, 2007Common Stock, $1.00 par value
    
    26,709,000




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##### 



Triple-S Management Corporation
 FORM 10-Q
   PAGEPART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of March 31, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Earnings for the three months ended March
31, 2007 and 2006
    
    
    4Consolidated Statements of Stockholders Equity and Comprehensive
Income for the three months ended March 31, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows for the three months ended
March 31, 2007 and 2006
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    19Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4.
    
    Controls and Procedures
    
    
    30PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    30Item 1A
    
    Risk Factors
    
    
    30Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3.
    
    Defaults Upon Senior Securities
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    30Item 5.
    
    Other Information
    
    
    31Item 6.
    
    Exhibits
    
    
    31SIGNATURES
    
    
    32EX-3.(i) AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATIONEX-10.1 BLUE SHIELD LICENSEEX-31.1 SECTION 302 CERTIFICATION OF THE 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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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)March 31,
    
    December 31,2007
    
    2006ASSETSInvestments and cash:Securities held for trading, at fair value:Equity securities
    
    $
    79,589
    
    
    
    83,447Securities available for sale, at fair value:Fixed maturities
    
    
    706,888
    
    
    
    702,566Equity securities
    
    
    61,217
    
    
    
    61,686Securities held to maturity, at amortized cost:Fixed maturities
    
    
    21,319
    
    
    
    21,450Policy loans
    
    
    5,228
    
    
    
    5,194Cash and cash equivalents
    
    
    80,354
    
    
    
    81,320Total investments and cash
    
    
    954,595
    
    
    
    955,663Premiums and other receivables, net
    
    
    184,529
    
    
    
    165,358Deferred policy acquisition costs and value of business acquired
    
    
    112,812
    
    
    
    111,417Property and equipment, net
    
    
    41,346
    
    
    
    41,615Net deferred tax asset
    
    
    9,336
    
    
    
    9,292Other assets
    
    
    59,236
    
    
    
    62,164Total assets
    
    $
    1,361,854
    
    
    
    1,345,509LIABILITIES AND STOCKHOLDERS EQUITYClaim liabilities:Claims processed and incomplete
    
    $
    151,242
    
    
    
    147,211Unreported losses
    
    
    159,812
    
    
    
    150,735Unpaid loss-adjustment expenses
    
    
    16,817
    
    
    
    16,736Total claim liabilities
    
    
    327,871
    
    
    
    314,682Liability for future policy benefits
    
    
    183,568
    
    
    
    180,420Unearned premiums
    
    
    110,377
    
    
    
    113,582Policyholder deposits
    
    
    45,355
    
    
    
    45,425Liability to Federal Employees Health Benefits Program
    
    
    13,619
    
    
    
    13,563Accounts payable and accrued liabilities
    
    
    107,105
    
    
    
    110,609Borrowings
    
    
    182,677
    
    
    
    183,087Income tax payable
    
    
    10,672
    
    
    
    9,242Liability for pension benefits
    
    
    34,437
    
    
    
    32,300Total liabilities
    
    
    1,015,681
    
    
    
    1,002,910Stockholders equity:Common stock
    
    
    9
    
    
    
    356Additional paid-in capital
    
    
    150,755
    
    
    
    150,408Retained earnings
    
    
    213,323
    
    
    
    211,266Accumulated other comprehensive loss
    
    
    (17,914
    )
    
    
    (19,431
    )Total stockholders equity
    
    
    346,173
    
    
    
    342,599Total liabilities and stockholders equity
    
    $
    1,361,854
    
    
    
    1,345,509
  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 31,2007
    
    2006REVENUES:Premiums earned, net
    
    $
    348,465
    
    
    
    380,531Administrative service fees
    
    
    3,509
    
    
    
    3,429Net investment income
    
    
    11,121
    
    
    
    10,050Total operating revenues
    
    
    363,095
    
    
    
    394,010Net realized investment gains
    
    
    1,196
    
    
    
    528Net unrealized investment gain (loss) on trading securities
    
    
    (1,925
    )
    
    
    2,556Other income, net
    
    
    209
    
    
    
    1,199Total revenues
    
    
    362,575
    
    
    
    398,293BENEFITS AND EXPENSES:Claims incurred
    
    
    297,318
    
    
    
    324,707Operating expenses
    
    
    56,137
    
    
    
    57,730Total operating costs
    
    
    353,455
    
    
    
    382,437Interest expense
    
    
    3,952
    
    
    
    3,798Total benefits and expenses
    
    
    357,407
    
    
    
    386,235Income before taxes
    
    
    5,168
    
    
    
    12,058INCOME TAX EXPENSE (BENEFIT):Current
    
    
    1,060
    
    
    
    2,636Deferred
    
    
    (397
    )
    
    
    41Total income taxes
    
    
    663
    
    
    
    2,677Net income
    
    $
    4,505
    
    
    
    9,381Basic net income per share
    
    $
    505
    
    
    
    1,053
  4




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TRIPLE-S MANAGEMENT CORPORATION AND SUBSIDIARIES
 
 Consolidated Statements of Stockholders Equity and
 Comprehensive Income (Unaudited)
   (Dollar amounts in thousands, except per share data)
 2007
    
    2006BALANCE AT JANUARY 1
    
    $
    342,599
    
    
    
    308,703Dividends
    
    
    (2,448
    )
    
    
    (6,231
    )Comprehensive income (loss):Net income
    
    
    4,505
    
    
    
    9,381Net unrealized change in fair value of available for sale securities
    
    
    1,582
    
    
    
    (6,644
    )Net change in fair value of cash flow hedges
    
    
    (65
    )
    
    
    92Total comprehensive income
    
    
    6,022
    
    
    
    2,829BALANCE AT MARCH 31
    
    $
    346,173
    
    
    
    305,301
  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 31,2007
    
    2006Net income
    
    $
    4,505
    
    
    
    9,381Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    1,716
    
    
    
    1,442Net amortization of investments
    
    
    190
    
    
    
    63Provision for doubtful receivables
    
    
    1,463
    
    
    
    451Deferred tax (benefit) expense
    
    
    (397
    )
    
    
    41Net gain on sale of securities
    
    
    (1,196
    )
    
    
    (528
    )Net unrealized (gain) loss of trading securities
    
    
    1,925
    
    
    
    (2,556
    )Proceeds from trading securities sold:Equity securities
    
    
    9,842
    
    
    
    5,866Acquisition of securities in trading portfolio:Equity securities
    
    
    (6,024
    )
    
    
    (5,762
    )(Increase) decrease in assets:Premiums receivable
    
    
    (19,161
    )
    
    
    (23,969
    )Agent balances
    
    
    4,809
    
    
    
    (94
    )Accrued interest receivable
    
    
    (1,124
    )
    
    
    349Other receivables
    
    
    (4,522
    )
    
    
    1,782Funds withheld reinsurance receivable
    
    
    
    
    
    
    118,635Reinsurance recoverable on paid losses
    
    
    (589
    )
    
    
    (348
    )Deferred policy acquisition costs and
value of business acquired
    
    
    (1,395
    )
    
    
    (698
    )Prepaid income tax
    
    
    
    
    
    
    2,555Other assets
    
    
    2,821
    
    
    
    762Increase (decrease) in liabilities:Claims processed and incomplete
    
    
    4,031
    
    
    
    2,661Unreported losses
    
    
    9,077
    
    
    
    16,475Unpaid loss-adjustment expenses
    
    
    81
    
    
    
    457Liability for future policy benefits
    
    
    3,148
    
    
    
    2,059Liability for future policy benefits related to
funds withheld reinsurance
    
    
    
    
    
    
    (118,635
    )Unearned premiums
    
    
    (3,205
    )
    
    
    585Policyholder deposits
    
    
    428
    
    
    
    416Liability to FEHBP
    
    
    56
    
    
    
    3,741Accounts payable and accrued liabilities
    
    
    (4,320
    )
    
    
    (11,216
    )Income tax payable
    
    
    1,430
    
    
    
    Net cash provided by operating activities
    
    $
    3,589
    
    
    
    3,915
  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 31,2007
    
    2006CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from investments sold or matured:Securities available for sale:Fixed maturities sold
    
    $
    59,497
    
    
    
    4,838Fixed maturities matured
    
    
    5,178
    
    
    
    14,569Equity securities
    
    
    
    
    
    
    360Fixed maturity securities held to maturity
    
    
    209
    
    
    
    122Acquisition of investments:Securities available for sale:Fixed maturities
    
    
    (66,243
    )
    
    
    (21,844
    )Equity securities
    
    
    (499
    )
    
    
    Acquisition of business, net of $10,403 of cash acquired
    
    
    
    
    
    
    (27,793
    )Net disbursements for policy loans
    
    
    (34
    )
    
    
    (109
    )Capital expenditures
    
    
    (1,447
    )
    
    
    (3,780
    )Proceeds from sale of property and equipment
    
    
    
    
    
    
    3Net cash used in investing activities
    
    
    (3,339
    )
    
    
    (33,634
    )CASH FLOWS FROM FINANCING ACTIVITIES:Change in outstanding checks in excess of bank balances
    
    
    2,140
    
    
    
    2,569Repayments of short-term borrowings
    
    
    
    
    
    
    (8,652
    )Proceeds from short-term borrowings
    
    
    
    
    
    
    6,912Repayments of long-term borrowings
    
    
    (410
    )
    
    
    (273
    )Proceeds from long-term borrowings
    
    
    
    
    
    
    35,000Dividends paid
    
    
    (2,448
    )
    
    
    (6,231
    )Proceeds from policyholder deposits
    
    
    1,440
    
    
    
    2,255Surrenders of policyholder deposits
    
    
    (1,938
    )
    
    
    (1,930
    )Net cash (used in) provided by financing activities
    
    
    (1,216
    )
    
    
    29,650Net decrease in cash and cash equivalents
    
    
    (966
    )
    
    
    (69
    )Cash and cash equivalents at beginning of the period
    
    
    81,320
    
    
    
    48,978Cash and cash equivalents at end of the period
    
    $
    80,354
    
    
    
    48,909
  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 Uncertainty in Income Taxes an Interpretation of FASB
Statement No. 109
 (3) Segment Information
   8




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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 31,2007
    
    2006Operating revenues:Managed Care:Premiums earned, net
    
    $
    304,831
    
    
    
    338,603Administrative service fees
    
    
    3,509
    
    
    
    3,429Intersegment premiums /service fees
    
    
    1,627
    
    
    
    1,398Net investment income
    
    
    4,829
    
    
    
    4,556Total managed care
    
    
    314,796
    
    
    
    347,986Life Insurance:Premiums earned, net
    
    
    22,380
    
    
    
    20,030Intersegment premiums
    
    
    82
    
    
    
    78Net investment income
    
    
    3,620
    
    
    
    3,010Total life
    
    
    26,082
    
    
    
    23,118Property and Casualty Insurance:Premiums earned, net
    
    
    21,254
    
    
    
    21,898Intersegment premiums
    
    
    154
    
    
    
    129Net investment income
    
    
    2,552
    
    
    
    2,364Total property and casualty
    
    
    23,960
    
    
    
    24,391Other segments  intersegment service revenues *
    
    
    11,040
    
    
    
    13,268Total business segments
    
    
    375,878
    
    
    
    408,763TSM operating revenues from external sources
    
    
    120
    
    
    
    120Elimination of intersegment premiums
    
    
    (1,863
    )
    
    
    (1,605
    )Elimination of intersegment service fees
    
    
    (11,040
    )
    
    
    (13,268
    )Consolidated operating revenues
    
    $
    363,095
    
    
    
    394,010
 *
    
    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 31,2007
    
    2006Operating income:Managed care
    
    $
    4,100
    
    
    
    5,606Life insurance
    
    
    2,975
    
    
    
    2,073Property and casualty insurance
    
    
    1,393
    
    
    
    2,436Other segments *
    
    
    138
    
    
    
    284Total business segments
    
    
    8,606
    
    
    
    10,399TSM operating revenues from external sources
    
    
    120
    
    
    
    120TSM unallocated operating expenses
    
    
    (1,826
    )
    
    
    (1,316
    )Elimination of TSM intersegment charges
    
    
    2,740
    
    
    
    2,370Consolidated operating income
    
    
    9,640
    
    
    
    11,573Consolidated net realized investment gains
    
    
    1,196
    
    
    
    528Consolidated net unrealized gain (loss) on
trading securities
    
    
    (1,925
    )
    
    
    2,556Consolidated interest expense
    
    
    (3,952
    )
    
    
    (3,798
    )Consolidated other income, net
    
    
    209
    
    
    
    1,199Consolidated income before taxes
    
    $
    5,168
    
    
    
    12,058Depreciation expense:Managed care
    
    $
    896
    
    
    
    917Life insurance
    
    
    179
    
    
    
    135Property and casualty insurance
    
    
    360
    
    
    
    107Total business segments
    
    
    1,435
    
    
    
    1,159TSM depreciation expense
    
    
    281
    
    
    
    283Consolidated depreciation expense
    
    $
    1,716
    
    
    
    1,442
 
 *
    
    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 31,2007
    
    2006Assets:Managed care
    
    $
    608,340
    
    
    
    600,948Life insurance
    
    
    411,747
    
    
    
    407,994Property and casualty insurance
    
    
    324,442
    
    
    
    326,894Other segments *
    
    
    8,085
    
    
    
    7,807Total business segments
    
    
    1,352,614
    
    
    
    1,343,643Unallocated amounts related to TSM:Cash, cash equivalents, and investments
    
    
    11,687
    
    
    
    11,879Property and equipment,net
    
    
    23,511
    
    
    
    23,792Other assets
    
    
    2,353
    
    
    
    4,09637,551
    
    
    
    39,767Elimination entries-intersegment receivables and others
    
    
    (28,311
    )
    
    
    (37,901
    )Consolidated total assets
    
    $
    1,361,854
    
    
    
    1,345,509Significant noncash items:Net change in unrealized gain on securities available for sale:Managed care
    
    $
    496
    
    
    
    (1,560
    )Life insurance
    
    
    380
    
    
    
    (1,457
    )Property and casualty insurance
    
    
    672
    
    
    
    (183
    )Total business segments
    
    
    1,548
    
    
    
    (3,200
    )Amount related to TSM
    
    
    34
    
    
    
    (12
    )Consolidated net change in unrealized gain on
securities available for sale
    
    $
    1,582
    
    
    
    (3,212
    )
 
 *
    
    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, 2007Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Estimated faircost
    
    gains
    
    losses
    
    valueTrading securities:Equity securities
    
    $
    64,997
    
    
    
    15,693
    
    
    
    (1,101
    )
    
    
    79,589Securities available for sale:Fixed maturities
    
    
    715,487
    
    
    
    895
    
    
    
    (9,494
    )
    
    
    706,888Equity securities
    
    
    50,631
    
    
    
    12,403
    
    
    
    (1,817
    )
    
    
    61,217766,118
    
    
    
    13,298
    
    
    
    (11,311
    )
    
    
    768,105Securities held to maturity:Fixed maturities
    
    
    21,319
    
    
    
    386
    
    
    
    (648
    )
    
    
    21,057$
    852,434
    
    
    
    29,377
    
    
    
    (13,060
    )
    
    
    868,751
 December 31, 2006Gross
    
    GrossAmortized
    
    unrealized
    
    unrealized
    
    Estimated faircost
    
    gains
    
    losses
    
    valueTrading securities:Equity securities
    
    $
    66,930
    
    
    
    17,436
    
    
    
    (919
    )
    
    
    83,447Securities available for sale:Fixed maturities
    
    
    714,113
    
    
    
    590
    
    
    
    (12,137
    )
    
    
    702,566Equity securities
    
    
    50,132
    
    
    
    13,112
    
    
    
    (1,558
    )
    
    
    61,686764,245
    
    
    
    13,702
    
    
    
    (13,695
    )
    
    
    764,252Securities held to maturity:Fixed maturities
    
    
    21,450
    
    
    
    370
    
    
    
    (816
    )
    
    
    21,004$
    852,625
    
    
    
    31,508
    
    
    
    (15,430
    )
    
    
    868,703
   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 31,2007
    
    2006Premium
    
    $
    67,314
    
    
    
    53,377Self-funded group receivables
    
    
    27,761
    
    
    
    24,854FEHBP
    
    
    11,504
    
    
    
    9,187Agents balances
    
    
    24,004
    
    
    
    28,813Accrued interest
    
    
    8,910
    
    
    
    7,786Reinsurance recoverable on paid losses
    
    
    41,474
    
    
    
    40,885Other
    
    
    23,255
    
    
    
    18,686204,222
    
    
    
    183,588Less allowance for doubtful receivables:Premiums
    
    
    14,119
    
    
    
    12,128Other
    
    
    5,574
    
    
    
    6,10219,693
    
    
    
    18,230Total premiums and other receivables
    
    $
    184,529
    
    
    
    165,358
 (6) Claim Liabilities
  Three months endedMarch 31,2007
    
    2006Claim liabilities at beginning of period
    
    $
    314,682
    
    
    
    297,563Reinsurance recoverable on claim liabilities
    
    
    (32,066
    )
    
    
    (28,720
    )Net claim
liabilities at
beginning of period
    
    
    282,616
    
    
    
    268,843Claim liabilities acquired from GA Life
    
    
    
    
    
    
    8,771Incurred claims and loss-adjustment expenses:Current period insured events
    
    
    309,565
    
    
    
    316,804Prior period insured events
    
    
    (16,191
    )
    
    
    4,460Total
    
    
    293,374
    
    
    
    321,264Payments of losses and loss-adjustment expenses:Current period insured events
    
    
    144,814
    
    
    
    167,711Prior period insured events
    
    
    135,636
    
    
    
    133,859Total
    
    
    280,450
    
    
    
    301,570Net claim liabilities at end of period
    
    
    295,540
    
    
    
    297,308Reinsurance recoverable on claim liabilities
    
    
    32,331
    
    
    
    29,031Claim liabilities at end of period
    
    $
    327,871
    
    
    
    326,339
 13




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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)
   (7) Capital Stock
  (8) Comprehensive Income
  AccumulatedUnrealized
    
    Liability for
    
    
    
    
    
    othergain (loss) on
    
    pension
    
    Cash flow
    
    comprehensivesecurities
    
    benefits
    
    hedges
    
    incomeBALANCE AT JANUARY 1
    
    $
    5
    
    
    
    (19,742
    )
    
    
    306
    
    
    
    (19,431
    )Net current period change
    
    
    1,582
    
    
    
    
    
    
    
    (65
    )
    
    
    1,517BALANCE AT MARCH 31
    
    $
    1,587
    
    
    
    (19,742
    )
    
    
    241
    
    
    
    (17,914
    )
 (9) Income Taxes
    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)
  (10) Pension Plan
  Three months endedMarch 31,2007
    
    2006Components of net periodic benefit cost:Service cost
    
    $
    1,356
    
    
    
    1,370Interest cost
    
    
    1,294
    
    
    
    1,175Expected return on assets
    
    
    (1,128
    )
    
    
    (991
    )Prior service cost
    
    
    14
    
    
    
    12Actuarial loss
    
    
    514
    
    
    
    602Net periodic benefit cost
    
    $
    2,050
    
    
    
    2,168
 Employer contributions
  (11) Net Income Available to Stockholders and Net Income per Share
   Three months endedMarch 31,2007
    
    2006Numerator for basic earnings per share:Net income available to stockholders
    
    $
    4,505
    
    
    
    9,381Denominator for basic earnings per share:Weighted average of outstanding common shares
    
    
    8,912
    
    
    
    8,906Basic net income per share
    
    $
    505
    
    
    
    1,053
 (12) Subsequent Events
  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)
   Three months endedMarch 31,2007
    
    2006Numerator for basic earnings per share:Net income available to stockholders
    
    $
    4,505
    
    
    
    9,381Denominator for basic earnings per share:Weighted average of outstanding common shares
giving effect to 3,000-for-one stock split
    
    
    26,735,000
    
    
    
    26,719,000Basic net income per share giving effect to
3,000-for-one stock split
    
    $
    0.17
    
    
    
    0.35
 (13) Contingencies
  Sánchez Litigation
  16




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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)
 Jordán et al Litigation
     Thomas 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)
   18




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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
    19




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##### Table of Contents



Three months endedMarch 31,(Dollar amounts in millions)
    
    2007
    
    2006Premiums earned, netManaged care
    
    $
    305.6
    
    
    
    339.3Life insurance
    
    
    22.5
    
    
    
    20.1Property and casualty insurance
    
    
    21.4
    
    
    
    22.0Intersegment premiums earned
    
    
    (1.0
    )
    
    
    (0.9
    )Consolidated premiums earned, net
    
    $
    348.5
    
    
    
    380.5
 Three months endedMarch 31,(Dollar amounts in millions)
    
    2007
    
    2006Administrative service feesManaged care
    
    $
    4.4
    
    
    
    4.1Intersegment administrative service fees
    
    
    (0.9
    )
    
    
    (0.7
    )Consolidated administrative service fees
    
    $
    3.5
    
    
    
    3.4
 Three months endedMarch 31,(Dollar amounts in millions)
    
    2007
    
    2006Operating incomeManaged care
    
    $
    4.1
    
    
    
    5.6Life insurance
    
    
    3.0
    
    
    
    2.1Property and casualty insurance
    
    
    1.4
    
    
    
    2.5Other segments and intersegment eliminations
    
    
    1.2
    
    
    
    1.4Consolidated operating income
    
    $
    9.7
    
    
    
    11.6
    20




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##### Table of Contents



Recent Developments
 Puerto Ricos Economy
  Recent Accounting Standards
  Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109
 Managed Care Membership
 As of March 31,2007
    
    2006Managed care enrollment:Commercial 1
    
    
    579,887
    
    
    
    604,341Reform 2
    
    
    353,460
    
    
    
    595,400Medicare Advantage
    
    
    30,709
    
    
    
    18,221Part D Stand-Alone Prescription Drug Plan
    
    
    11,648
    
    
    
    16,730Total
    
    
    975,704
    
    
    
    1,234,692Managed care enrollment by funding arrangement:Fully-insured
    
    
    814,092
    
    
    
    1,081,274Self-insured
    
    
    161,612
    
    
    
    153,418Total
    
    
    975,704
    
    
    
    1,234,692
 (1)
    
    Commercial membership includes corporate accounts, self-funded employers, individual
accounts, Medicare Supplement, Federal government employees and local government employees.(2)
    
    Enrollment as of March 31, 2006 includes 207,420 members of the Metro-North region.
The contract for this region was not renewed effective November 1, 2006.
 21




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##### Table of Contents



Consolidated Operating Results
  Three months endedMarch 31,(Dollar amounts in millions)
    
    2007
    
    2006Revenues:Premiums earned, net
    
    $
    348.5
    
    
    
    380.5Administrative service fees
    
    
    3.5
    
    
    
    3.4Net investment income
    
    
    11.1
    
    
    
    10.1Total operating revenues
    
    
    363.1
    
    
    
    394.0Net realized investment gains
    
    
    1.2
    
    
    
    0.5Net unrealized (loss) gain on trading securities
    
    
    (1.9
    )
    
    
    2.6Other income, net
    
    
    0.2
    
    
    
    1.2Total revenues
    
    
    362.6
    
    
    
    398.3Benefits and expenses:Claims incurred
    
    
    297.3
    
    
    
    324.7Operating expenses
    
    
    56.1
    
    
    
    57.7Total operating expenses
    
    
    353.4
    
    
    
    382.4Interest expense
    
    
    4.0
    
    
    
    3.8Total benefits and expenses
    
    
    357.4
    
    
    
    386.2Income before taxes
    
    
    5.2
    
    
    
    12.1Income tax expense
    
    
    0.7
    
    
    
    2.7Net income
    
    $
    4.5
    
    
    
    9.4
 Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006
 Operating revenues
   Net realized investment gains
  Net unrealized (loss) gain on trading securities and other income, net
  22




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##### Table of Contents



Claims Incurred
  Operating Expenses
  Income tax expense
  23




---



##### Table of Contents



Managed Care Operating Results
 Three months endedMarch 31,(Dollar amounts in thousands)
    
    2007
    
    2006Medical operating revenues:Medical premiums earned, net:Commercial
    
    $
    180.3
    
    
    
    180.4Reform
    
    
    71.8
    
    
    
    127.5Medicare Advantage
    
    
    51.0
    
    
    
    28.7PDP
    
    
    2.5
    
    
    
    2.7Medical premiums earned, net
    
    
    305.6
    
    
    
    339.3Administrative service fees
    
    
    4.4
    
    
    
    4.1Net investment income
    
    
    4.8
    
    
    
    4.6Total medical operating revenues
    
    
    314.8
    
    
    
    348.0Medical operating costs:Medical claims incurred
    
    
    275.5
    
    
    
    304.7Medical operating expenses
    
    
    35.2
    
    
    
    37.7Total medical operating costs
    
    
    310.7
    
    
    
    342.4Medical operating income
    
    $
    4.1
    
    
    
    5.6Additional data:Member months enrollment:Commercial:Fully-insured
    
    
    1,253,743
    
    
    
    1,367,100Self-funded
    
    
    479,323
    
    
    
    455,909Total commercial member months
    
    
    1,733,066
    
    
    
    1,823,009Reform
    
    
    1,064,846
    
    
    
    1,810,361Medicare Advantage
    
    
    93,249
    
    
    
    49,442PDP
    
    
    35,381
    
    
    
    31,622Total member months
    
    
    2,926,542
    
    
    
    3,714,434Medical loss ratio
    
    
    90.2
    %
    
    
    89.8
    %Operating expense ratio
    
    
    11.4
    %
    
    
    11.0
    %
 Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006
 Medical Operating Revenues
  
    
    Medical premiums earned in the Reform business decreased by $55.7 million, or 43.7%, to
$71.8 million during the 2007 period. This fluctuation is due to
a decrease in member months enrollment in the Reform
business by 745,515, or 41.2%, mainly as the result of the loss of the
Metro-North region effective November 1, 2006. In addition, this
business experienced a shift in membership since dual eligibles have transferred to Medicare
Advantage policies offered by us and our competitors, and a tightening of membership
restrictions by the Puerto Rico government. The effect of this decrease in membership was
mitigated by an increase in premium rates, effective July 1, 2006, of approximately 2.0%.
    
    Medical premiums generated by the Commercial sector decreased by $0.1 million, or 0.1%,
to $180.3 million during the 2007 period. This is due to a decrease in fully-insured
member months
of 113,357, or 8.3%, primarily as a result of the loss of several fully-insured accounts
due to
 24




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##### Table of Contents



aggressive marketing and pricing by our competitors as well as qualified enrollees
transferring to our, or our competitors Medicare Advantage policies, offset in part by an
average increase in premium rates of approximately 8.9%.
    
    Medical premiums generated by the Medicare Advantage business increased during the
three months ended March 31, 2007 by $22.3 million, or 77.7%, primarily due to an increase
in member months enrollment of 43,807, or 88.6%, offset in part by
the effect of adjustments amounting to $4.8 million related to
the recording of a reserve to provide for the retroactive
cancellation of contracts by the Centers for Medicare and Medicaid
Services (CMS) and to actuarial risk factors and cost sharing adjustments. We
expect that Medicare Advantage enrollment will continue to experience significant growth,
but at a substantially slower pace than in prior periods.
  Medical Claims Incurred
  Medical Operating Expenses
  25




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##### Table of Contents



Life Insurance Operating Results
  Three months endedMarch 31,(Dollar amounts in thousands)
    
    2007
    
    2006Operating revenues:Premiums earned, net:Premiums earned
    
    $
    24.5
    
    
    
    17.8Premiums earned ceded
    
    
    (2.1
    )
    
    
    (2.2
    )Assumed premiums earned
    
    
    
    
    
    
    4.4Net premiums earned
    
    
    22.4
    
    
    
    20.0Commission income on reinsuarance
    
    
    0.1
    
    
    
    0.1Premiums earned, net
    
    
    22.5
    
    
    
    20.1Net investment income
    
    
    3.6
    
    
    
    3.0Total operating revenues
    
    
    26.1
    
    
    
    23.1Operating costs:Policy benefits and claims incurred
    
    
    11.6
    
    
    
    9.6Underwriting and other expenses
    
    
    11.5
    
    
    
    11.4Total operating costs
    
    
    23.1
    
    
    
    21.0Operating income
    
    $
    3.0
    
    
    
    2.1Additional data:Loss ratio
    
    
    51.6
    %
    
    
    47.8
    %Operating expense ratio
    
    
    51.1
    %
    
    
    56.7
    %
 Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006
 Operating revenues
   Policy Benefits and Claims Incurred
  26




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##### Table of Contents



Underwriting and Other Expenses
  Property and Casualty Insurance Operating Results
 Three months endedMarch 31,(Dollar amounts in thousands)
    
    2007
    
    2006Operating revenues:Premiums earned, net:Premiums written
    
    $
    35.2
    
    
    
    34.7Premiums ceded
    
    
    (15.4
    )
    
    
    (13.7
    )Change in unearned premiums
    
    
    1.6
    
    
    
    1.0Premiums earned, net
    
    
    21.4
    
    
    
    22.0Net investment income
    
    
    2.6
    
    
    
    2.4Total operating revenues
    
    
    24.0
    
    
    
    24.4Operating costs:Claims incurred
    
    
    10.2
    
    
    
    10.3Underwriting and other expenses
    
    
    12.4
    
    
    
    11.6Total operating costs
    
    
    22.6
    
    
    
    21.9Operating income
    
    $
    1.4
    
    
    
    2.5Additional data:Loss ratio
    
    
    47.7
    %
    
    
    46.8
    %Operating expense ratio
    
    
    57.9
    %
    
    
    52.7
    %Combined ratio
    
    
    105.6
    %
    
    
    99.5
    %
 Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006
 Operating Revenues
   27




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##### Table of Contents



Claims Incurred
  Underwriting and Other Expenses
  Liquidity and Capital Resources
 Cash Flows
  Three months endedMarch 31,(Dollar amounts in thousands)
    
    2007
    
    2006Sources of cash:Cash provided by operating activities
    
    $
    3.6
    
    
    
    3.9Proceeds from long-term borrowings
    
    
    
    
    
    
    35.0Proceeds from short-term borrowings
    
    
    
    
    
    
    6.9Proceeds from policyholder deposits
    
    
    1.4
    
    
    
    2.3Other
    
    
    2.1
    
    
    
    2.6Total sources of cash
    
    
    7.1
    
    
    
    50.7Uses of cash:Net purchases of investment securities
    
    
    (1.9
    )
    
    
    (2.0
    )Acquisition of GA Life, net of cash aquired
    
    
    
    
    
    
    (27.8
    )Capital expenditures
    
    
    (1.4
    )
    
    
    (3.8
    )Dividends
    
    
    (2.4
    )
    
    
    (6.2
    )Payments of long-term borrowings
    
    
    (0.4
    )
    
    
    (0.3
    )Net payments of short-term borrowings
    
    
    
    
    
    
    (8.7
    )Net surrenders of policyholder deposits
    
    
    (1.9
    )
    
    
    (1.9
    )Other
    
    
    
    
    
    
    (0.1
    )Total uses of cash
    
    
    (8.0
    )
    
    
    (50.8
    )Net decrease in cash and cash equivalents
    
    $
    (0.9
    )
    
    
    (0.1
    )
    28




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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
  29




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##### Table of Contents



Item 4. Controls and Procedures
  
 Part II  Other Information
 
 Item 1. Legal Proceedings
  
 Item IA. Risk Factors
  
 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
   30




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##### Table of Contents



Election of Directors
 Votes
    
    VotesNominees for Three-year Term
    
    For
    
    WithheldCarmen Ana Culpeper
    
    
    5,313
    
    
    
    204Antonio Faría-Soto
    
    
    5,296
    
    
    
    221Manuel Figueroa-Collazo
    
    
    5,270
    
    
    
    247Jaime Morgan-Stubbe
    
    
    5,187
    
    
    
    330Roberto Muñoz-Zayas
    
    
    5,266
    
    
    
    251Miguel Nazario-Franco
    
    
    5,251
    
    
    
    266Juan E. Rodríguez-Díaz
    
    
    5,287
    
    
    
    230
 Amendment to Article TENTH A of the Corporations Amended and Restated Articles of
Incorporation
 For:
    
    
    4,557Against:
    
    
    944Abstained:
    
    
    38Broker Non-Votes:
    
    
    0
 Amendment to Article TENTH C of the Corporations Amended and Restated Articles of
Incorporation
 For:
    
    
    4,035Against:
    
    
    1,458Abstained:
    
    
    63Broker Non-Votes:
    
    
    0
 Stockholder proposal to amend the Corporations Amended and Restated Bylaws with respect to
certain rights of stockholders heirs
 For:
    
    
    1,452Against:
    
    
    3,846Abstained:
    
    
    224Broker Non-Votes:
    
    
    0
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibits
    
    Description3(i)
    
    Amendment to Triple-S Management Corporations Amended and
Restated Articles of Incorporation.10.1
    
    Blue Shield License and other Agreements with Blue Cross
Blue Shield Association.11
    
    Statement re computation of per share earnings; an exhibit
describing the computation of the earnings per share for the
three months ended March 31, 2007 and 2006 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
 31




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##### Table of Contents



Exhibits
    
    DescriptionReport 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 ended March 31, 2007 and
2006 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.
  
 SIGNATURES
  Triple-S Management Corporation
RegistrantDate: May 14, 2007
    
    By:
    
    /s/

Ramón M. Ruiz-Comas, CPAPresident and
Chief Executive OfficerDate: May 14, 2007
    
    By:
    
    /s/

Juan J. Román, CPAVice President of Finance
and Chief Financial Officer
 32