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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 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
(STATE OF INCORPORATION)
    
    66-0555678
(I.R.S. ID)
 1441 F.D. Roosevelt Avenue, San Juan, PR 00920
(787) 749-4949
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
Class B common stock, $1.00 par value
    
    Name of each exchange on which registered
New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
  þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if smaller reporting company)
    
    Smaller reporting company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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Triple-S Management Corporation
 FORM 10-K
  Table of Contents
 Part I
    
    
    3Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    27Item 1B. Unresolved Staff Comments
    
    
    44Item 2. Properties
    
    
    45Item 3. Legal Proceedings
    
    
    45Item 4. Removed and Reserved
    
    
    48Part II
    
    
    48Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
    
    
    48Item 6. Selected Financial Data
    
    
    51Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    52Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    78Item 8. Financial Statements and Supplementary Data
    
    
    81Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    81Item 9A. Controls and Procedures
    
    
    81Item 9B. Other Information
    
    
    82Part III
    
    
    83Item 10. Directors, Executive Officers and Corporate Governance
    
    
    83Item 11. Executive Compensation
    
    
    83Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    83Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    83Item 14. Principal Accountant Fees and Services
    
    
    83Item 15. Exhibits and Financial Statements Schedules
    
    
    83SIGNATURES
    
    
    87EX-21EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1
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Part I
 
 Item 1. Business
 General Description of Business and Recent Developments
 st
       Industry Overview
 Managed Care
  Page 3




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Life Insurance
  Property and Casualty Insurance Segment
   Puerto Ricos Economy
  Page 4




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Products and Services
 Managed Care
    Health Maintenance Organization (HMO).
 Preferred Provider Organization (PPO).
 BlueCard.
 Medicare Supplement.
 Prescription Drug Benefit Plans.
 Page 6




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Administrative Services Only.
 Life Insurance
  Property and Casualty Insurance
    Marketing and Distribution
  Branding and Marketing
  Page 7




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Sales and Marketing
  Distribution
 Managed Care Segment.
  Life Insurance Segment.
 Property and Casualty Insurance Segment.
 Customers
 Managed Care
  Enrollment atMarket Sector
    
    December 31, 2010
    
    
    Percentage of Total EnrollmentCommercial
    
    
    725,328
    
    
    
    91.9
    %Medicare
    
    
    63,553
    
    
    
    8.1Total
    
    
    788,881
    
    
    
    100.0
    %
 Page 8




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Commercial Sector
  Corporate Accounts.
 Federal Government Employees.
 Individual Accounts.
 Local Government Employees.
 Medicare Supplement.
 Medicare Advantage Sector
 Medicare Optimo Medicare Selecto Medicare Platino
 Medicare Selecto Medicare Platino
 FarmaMed
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Life Insurance
  Property and Casualty Insurance
  Underwriting and Pricing
 Managed Care
     Life Insurance
  Property and Casualty Insurance
   Page 10




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Quality Initiatives and Medical Management
    Information Systems
  Page 11




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Provider Arrangements
  Medicare Optimo
   Hospitals.
 Physicians.
  Page 12




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Subcontracting.
  Competition
  Managed Care
    Life Insurance
  Property & Casualty Insurance
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Blue Cross and Blue Shield License
   Events which could result in termination of our license agreements include, but are not limited to:
    
    failure to maintain our total adjusted capital at or above 200% of Health Risk-Based Capital Authorized Control Level, as
defined by the National Association of Insurance Commissioners (NAIC) Risk Based Capital (RBC) Model Act;
    
    failure to maintain liquidity of greater than one month of underwritten claims and administrative expenses, as defined by
the BCBSA, for two consecutive quarters;
    
    failure to satisfy state-mandated statutory net worth requirements;
    
    impending financial insolvency; and
    
    a change of control not otherwise approved by the BCBSA or a violation of the BCBSA voting and ownership limitations on our
capital stock.
     Page 14




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BlueCard.
 Claim Liabilities
  Investments
      Trademarks
  Page 15




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Regulation
  
    
    grant, suspend and revoke licenses to transact business;
 
    
    regulate many aspects of the products and services we offer;
 
    
    assess fines, penalties and/or sanctions;
 
    
    monitor our solvency and adequacy of our financial reserves; and
 
    
    regulate our investment activities on the basis of quality, diversification and other
quantitative criteria, within the parameters of a list of permitted investments set forth in
insurance laws and regulations.
  
    
    initiatives to provide greater access to coverage for uninsured and under-insured populations
without adequate funding to health plans or to be funded through taxes or other negative
financial levy on health plans;
 
    
    payments to health plans that are tied to achievement of certain quality performance
measures;
 
    
    other efforts or specific legislative changes to the Medicare program, including changes in
the bidding process or other means of materially reducing premiums;
 
    
    local government regulatory changes;
 
    
    increased government enforcement, or changes in interpretation or application of fraud and
abuse laws; and
 
    
    regulations that increase the operational burden on health plans or laws that increase a
health plans exposure to liabilities, including efforts to expand the tort liability of
health care plans;
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
    
    Provisions requiring greater access to coverage for certain uninsured and under-insured
populations and the elimination of certain underwriting practices without adequate funding to
health plans or with negative financial levies on health plans such as restrictions in the
ability to charge additional premium for additional risk. These include, among others, (i)
extending dependent coverage for unmarried individuals until age 26 under their parents
health coverage, (ii) limiting a health plans ability to rescind coverage and restrict the
plans ability to establish annual and lifetime financial caps, and (iii) limiting a health
plans ability to deny or limit coverage on grounds of a persons pre-existing medical
condition;
 
    
    Provisions restricting medical loss ratios and imposing significant penalties for
non-compliance beginning in 2011;
 
    
    Provisions requiring health plans to report to their members and HHS certain quality
performance measures and their wellness promotion activities;
 
    
    Provisions that freeze premium payments to Medicare Advantage health plans beginning in 2011
and that tie such premium to the local Medicare fee for service costs. The adjustment will be
phased in over between 3 and 7 years depending on the amount of the eventual adjustment;
 
    
    Provisions that tie Medicare Advantage premiums to achievement of certain quality performance
measures;
 
    
    Provisions requiring non-exempt individuals to maintain minimum essential coverage (i.e. the
individual mandate), whether through a government-sponsored program, an employer-sponsored
program, or an individual market health plan, or pay a penalty. In connection with the
individual mandate provisions, insurers and employers will have reporting obligations to
various federal agencies.
 
    
    Other efforts or specific legislative changes to the Medicare and Medicaid programs,
including changes in the bidding process, authority of CMS to deny bids, or other means of
materially reducing premiums such as through further adjustments to the risk adjustment
methodology;
 
    
    Increased federal funding to the Puerto Rico Medicaid program available for years 2014 
2019;
 
    
    Funding provided to the government of Puerto Rico to either establish health insurance
exchanges or fund the Puerto Rico Medicaid program at the discretion of the Governor;
 
    
    Increased government funding to enforcement agencies and/or changes in interpretation or
application of fraud and abuse laws;
 
    
    Expanded scope of authority and/or funding to audit Medicare Advantage health plans and
recoup premiums or other funds by the government or its representatives; and
 
    
    The increase in persons eligible for coverage under the Medicaid program in Puerto Rico,
which may result in some persons currently insured by us in our Commercial programs becoming
eligible for, and thus moving to, the Medicaid program.
      licensure;
    
        transactions resulting in a change of control;    policy forms, including plan design and
disclosures;
    
        member rights and responsibilities;    premium rates and rating methodologies;
    
        fraud and abuse;    underwriting rules and procedures;
    
        sales and marketing activities;    benefit mandates;
    
        quality assurance procedures;    eligibility requirements;
    
        privacy of medical and other information and
permitted disclosures;
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    security of electronically transmitted
individually identifiable health information;
    
        rates of payment to providers of care;    geographic service areas;
    
        surcharges on payments to providers;    market conduct;
    
        provider contract forms;    utilization review;
    
        delegation of financial risk and other
financial arrangements in rates paid to
providers of care;    payment of claims, including timeliness and
accuracy of payment;
    
        agent licensing;    special rules in contracts to administer
government programs;
    
        financial condition (including reserves);    transactions with affiliated entities;
    
        reinsurance;    limitations on the ability to pay dividends;
    
        issuance of new shares of capital stock;    rates of payment to providers of care;
    
        corporate governance; and    permissible investments.
  Puerto Rico Insurance Laws
     Page 18




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Privacy of Financial and Health Information
  Managed Care Provider Services
  Capital and Reserve Requirements
    Page 19




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Dividend Restrictions
   Guaranty Fund Assessments
  Federal Regulation
  Page 20




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The Medicare Advantage and Medicare Part D Programs
     The 2003 Medicare Modernization Act
     Page 21




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Page 22




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Dual-Eligible Beneficiaries. Platino Platino
 Sales and Marketing.
 Fraud and Abuse Laws.
 Anti-kickback Laws.
 Federal False Claims Act.
 HIPAA and Gramm-Leach-Bliley Act
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Employee Retirement Income Security Act of 1974
  Page 24




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Other Government Programs
  Legislative and Regulatory Initiatives
 Puerto Rico Initiatives
    Federal Initiatives
  Page 25




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Financial Information About Segments
  Employees
  Available Information
  Special Note Regarding Forward-Looking Statements
    Page 26




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
    
    trends in health care costs and utilization rates;
 
    
    ability to secure sufficient premium rate increases;
 
    
    competitor pricing below market trends of increasing costs;
 
    
    re-estimates of our policy and contract liabilities;
 
    
    changes in government regulation of managed care, life insurance or property and casualty
insurance;
 
    
    significant acquisitions or divestitures by major competitors;
 
    
    introduction and use of new prescription drugs and technologies;
 
    
    a downgrade in our financial strength ratings;
 
    
    litigation or legislation targeted at managed care, life insurance or property and casualty
insurance companies;
 
    
    ability to contract with providers and government agencies consistent with past practice;
 
    
    ability to successfully implement our disease management and utilization management programs;
 
    
    volatility in the securities markets and investment losses and defaults;
 
    
    general economic downturns, major disasters and epidemics.
  
 Item 1A. Risk Factors
  Risks Relating to our Capital Stock
 Certain of our current and former providers may bring materially dilutive claims against us.
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Heirs of certain of our former shareholders may bring materially dilutive claims against us.
   The dual class structure may not successfully protect against significant dilution of your
shares of Class B common stock.
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Future sales of our Class B common stock, or the perception that such future sales may occur,
may have an adverse impact on its market price.
  Risks Related to Our Business
 Our inability to contain managed care costs may adversely affect our business and profitability.
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Our inability to implement increases in premium rates on a timely basis may adversely affect
our business and profitability.
   Our profitability may be adversely affected if we are unable to maintain our current provider
agreements and to enter into other appropriate agreements.
  A reduction in the enrollment in our managed care programs could have an adverse effect on our
business and profitability.
  We are dependent on a small number of government contracts to generate a significant amount of
the revenues of our managed care business.
  
    
    Medicare:We provide services through our Medicare Advantage products
pursuant to a limited number of contracts with CMS. These contracts generally have terms
of one year and must be renewed each year. Each of our contracts with CMS is terminable
for cause if we breach a material provision of the contract or violate relevant laws or
regulations. If we are unable to renew, or to successfully re-bid or compete for any of
these contracts, or if the process for bidding materially changes or if any of these
contracts are terminated, our business could be materially impaired. During each of the
years ended December 31, 2010,
2009 and 2008, contracts with CMS represented 24.6%, 27.4% and 25.9% of our consolidated
premiums earned, net, respectively, and 45.2%, 33.9% and 12.4% of our consolidated operating
income, respectively.
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
    
    Commercial:Our managed care subsidiary is a qualified contractor to
provide managed care coverage to federal government employees within Puerto Rico. Such
coverage is provided pursuant to a contract with the OPM that is subject to termination in
the event of noncompliance not corrected to the satisfaction of the OPM. During each of
the years ended December 31, 2010, 2009 and 2008 premiums generated under this contract
represented 6.9%, 6.7% and 7.3% of our consolidated premiums earned, net, respectively.
The operating income generated under this contract represented 1.0%, 1.2% and 1.1% of our
consolidated operating income during the years ended December 31, 2010, 2009 and 2008,
respectively.
   A change in our managed care product mix may impact our profitability.
  Our failure to accurately estimate incurred but not reported claims would affect our reported
financial results.
  The termination or modification of our license agreements to use the BCBS name and mark could
have a material adverse effect on our business, financial condition and results of operations.
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Our ability to manage our exposure to underwriting risks in our life insurance and property
and casualty insurance businesses depends on the availability and cost of reinsurance coverage.
   If our reinsurers do not pay our claims or do not pay them in a timely manner, we may incur
losses.
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A downgrade in our A.M. Best rating or our inability to increase our A.M. Best rating could
affect our ability to write new business or renew our existing business in our property and
casualty segment.
  Significant competition could negatively affect our ability to maintain or increase our
profitability.
 Managed Care
   Complementary Products
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As a holding company, we are largely dependent on rental payments, dividends and other
payments from our subsidiaries, although the ability of our regulated subsidiaries to pay dividends
or make other payments to us is subject to the regulations of the Commissioner of Insurance,
including maintenance of minimum levels of capital, as well as covenant restrictions in their
indebtedness.
     Our results may fluctuate as a result of many factors, including cyclical changes in the
insurance industry.
  
    
    rising levels of actual costs that are not known by companies at the time they price
their products;
    
    volatile and unpredictable developments, including man-made and natural catastrophes;
    
    changes in reserves resulting from the general claims and legal environments as
different types of claims arise and judicial interpretations relating to the scope of
insurers liability develop; and
    
    fluctuations in interest rates, inflationary pressures and other changes in the
investment environment, which affect returns on invested capital.
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If we do not effectively manage the growth of our operations, we may not be able to achieve
our profitability targets.
  
    
    identify profitable new geographic markets to enter;
    
    operate in new geographic areas, as we have very limited experience operating outside
Puerto Rico;
    
    obtain licenses in new geographic areas in which we wish to market and sell our
products;
    
    successfully implement our underwriting, pricing, claims management and product
strategies over a larger operating region;
    
    properly design and price new and existing products and programs and reinsurance
facilities for markets in which we have no direct experience;
    
    identify, train and retain qualified employees;
    
    identify, recruit and integrate new independent agencies and brokers and expand the
range of Triple-S products carried by our existing agents and brokers;
    
    develop a network of physicians, hospitals and other managed care providers that meets
our requirements and those of applicable regulators; and
    
    augment our internal monitoring and control systems as we expand our business.
  We face intense competition to attract and retain employees and independent agents and
brokers.
   Our investment portfolios are subject to varying economic and market conditions.
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The securities and credit markets recently have been experiencing extreme volatility and
disruption.
   
    
    Significantly reducing the value of the debt securities we hold in our investment
portfolio, and creating net realized capital losses that reduce our operating results
and/or net unrealized capital losses that reduce our shareholders equity.
    
    Lowering interest rates on high quality short-term debt securities and thereby
materially reducing our net investment income and operating results.
    
    Making it more difficult to value certain of our investment securities, for example if
trading becomes less frequent, which could lead to significant period-to-period changes in
our estimates of the fair values of those securities and cause period-to-period volatility
in our operating results and shareholders equity.
    
    Reducing our ability to issue other securities.
   The geographic concentration of our business in Puerto Rico may subject us to economic
downturns in the region.
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We may not be able to retain our executive officers and significant employees, and the loss of
any one or more of these officers and their expertise could adversely affect our business.
  The success of our business depends on developing and maintaining effective information
systems.
     Page 37




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We face risks related to litigation.
  
    
    claims relating to the denial of managed care benefits;
    
    medical malpractice actions;
    
    allegations of anti-competitive and unfair business activities;
    
    provider disputes over compensation and termination of provider contracts;
    
    disputes related to self-funded business;
    
    disputes over co-payment calculations;
    
    claims related to the failure to disclose certain business practices;
    
    claims relating to customer audits and contract performance; and
    
    claims by regulatory agencies or whistleblowers for regulatory non-compliance,
including but not limited to fraud and health information privacy (including HIPAA).
  Large-scale natural disasters may have a material adverse effect on our business, financial
condition and results of operations.
  Non-financial covenants in our secured term loan and note purchase agreements may restrict our
operations.
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We may incur additional indebtedness in the future. Covenants related to such indebtedness
could also adversely affect our ability to pursue desirable business opportunities.
   We may pursue acquisitions in the future.
  
    
    disruption of on-going business operations, distraction of management, diversion of
resources and difficulty in maintaining current business standards, controls and
procedures;
    
    difficulty in integrating information technology of an acquired entity and
unanticipated expenses related to such integration;
    
    difficulty in the integration of an acquired entitys accounting, financial reporting,
management, information, human resources and other administrative systems and the lack of
control if such integration is delayed or not implemented;
    
    difficulty in the implementation of controls, procedures and policies appropriate for
filers with the SEC at companies that prior to acquisition lacked such controls, policies
and procedures;
    
    potential unknown liabilities associated with the acquired company;
    
    failure of acquired businesses to achieve anticipated revenues, earnings or cash flow;
    
    dilutive issuances of equity securities and incurrence of additional debt to finance
acquisitions;
    
    other acquisition-related expenses, including amortization of intangible assets and
write-offs; and
    
    competition with other firms, some of which may have greater financial and other
resources, to acquire attractive companies.
  Risks Relating to Taxation
 If the Company is considered to be a controlled foreign corporation under the related person
insurance income rules for U.S. federal income tax purposes, U.S. persons that own the Companys
shares of Class B common stock could be subject to adverse tax consequences.
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If the Company is considered to be a passive foreign investment company for U.S. federal
income tax purposes, U.S. persons that own the Companys shares of Class B common stock could be
subject to adverse tax consequences.
  Risks Relating to the Regulation of Our Industry
 Changes in governmental regulations, or the application thereof, may adversely affect our business,
financial condition and results of operations.
  
    
    initiatives to provide greater access to coverage for uninsured and under-insured
populations without adequate funding to health plan or to be funded through taxes or other
negative financial levy on health plans;
    
    payments to health plans that are tied to achievement of certain quality performance
measures;
    
    other efforts or specific legislative changes to the Medicare or Medicaid programs,
including changes in the bidding process or other means of materially reducing premiums;
    
    local government regulatory changes;
    
    increased government enforcement, or changes in interpretation or application, of fraud
and abuse laws; and
    
    regulations that increase the operational burden on health plans that increase a health
plans exposure to liabilities, including efforts to expand the tort liability of health
plans.
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We may be subject to government audits, regulatory proceedings or investigative actions, which
may find that our policies, procedures, practices or contracts are not compliant with, or are in
violation of, applicable healthcare regulations.
   
    
    recoupment of amounts we have been paid pursuant to our government contracts;
    
    mandated changes in our business practices;
    
    imposition of significant civil or criminal penalties, fines or other sanctions on us
and/or our key employees;
    
    loss of our right to participate in Medicare or other federal or local programs; damage
to our reputation;
    
    increased difficulty in marketing our products and services;
    
    inability to obtain approval for future services or geographic expansions; and
    
    loss of one or more of our licenses to act as an insurance company, preferred provider
or managed care organization or other licensed entity or to otherwise provide a service.
  As a Medicare Advantage program participant, we are subject to complex regulations. If we
fail to comply with these regulations, we may be exposed to criminal sanctions and significant
civil penalties, and our Medicare Advantage contracts may be terminated or our operations may be
required to change in a manner that has a material impact on our business.
  The revised rate calculation system for Medicare Advantage and the payment system for the
Medicare Part D established by the MMA could reduce our profitability.
 Medicare
Selecto Medicare Optimo
  Page 41




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CMSs risk adjustment payment system and budget neutrality factors make our revenue and
profitability difficult to predict and could result in material retroactive adjustments to our
results of operations.
   If during the open enrollment season our Medicare Advantage members enroll in another Medicare
Advantage plan, they will be automatically disenrolled from our plan, possibly without our
immediate knowledge.
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If we are deemed to have violated the insurance company change of control statutes in Puerto
Rico, we may suffer adverse consequences.
   Our insurance subsidiaries are subject to minimum capital requirements. Our failure to meet
these standards could subject us to regulatory actions.
   We are required to comply with laws governing the transmission, security and privacy of health
information.
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Puerto Rico insurance laws and regulations and provisions of our articles and bylaws could
delay, deter or prevent a takeover attempt that shareholders might consider to be in their best
interests and may make it more difficult to replace members of our board of directors and have the
effect of entrenching management.
    
    
    permit our board of directors to issue one or more series of preferred stock;
    
    divide our board of directors into three classes serving staggered three-year terms;
    
    limit the ability of shareholders to remove directors;
    
    impose restrictions on shareholders ability to fill vacancies on our board of
directors;
    
    impose advance notice requirements for shareholder proposals and nominations of
directors to be considered at meetings of shareholders; and
    
    impose restrictions on shareholders ability to amend our articles and bylaws.
    
 Item 1B. Unresolved Staff Comments
  Page 44




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Item 2. Properties
    
 Item 3. Legal Proceedings
    Hau et al Litigation (formerly known as Jordan et al)
  Page 45




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Dentists Association Litigation
      Colón Litigation
  Claims by Heirs of Former Shareholders
  Page 46




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ACODESE Investigation
   Intrusions into Triple-C, Inc. Internet IPA Database
     Page 47




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Item 4.      Removed and Reserved
 
 Part II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 Market Information
   High
    
    
    Low2009First quarter
    
    $
    15.00
    
    
    $
    10.67Second quarter
    
    
    16.23
    
    
    
    12.06Third quarter
    
    
    17.84
    
    
    
    14.50Fourth quarter
    
    
    18.88
    
    
    
    15.522010First quarter
    
    $
    18.67
    
    
    $
    15.85Second quarter
    
    
    20.12
    
    
    
    17.30Third quarter
    
    
    21.34
    
    
    
    14.65Fourth quarter
    
    
    21.23
    
    
    
    16.15
  Holders
  Dividends
    Page 48




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Securities Authorized for Issuance Under Equity Compensation Plan
  Recent Sales of Unregistered Securities
  Purchases of Equity Securities by the Issuer
  ApproximateTotal Number
    
    
    Dollar Value ofof SharesPurchased as
    
    
    Shares thatMay Yet BePart of
    
    
    PurchasedTotal Number
    
    
    
    
    
    
    Publicly
    
    
    Under theof Shares
    
    
    Average Price Paid
    
    
    Announced
    
    
    Programs(Dollar amounts in millions, except per share data)
    
    Purchased
    
    
    per Share
    
    
    Programs1
    
    
    (in millions)October 1, 2010 to
October 31, 2010
    
    
    176,300
    
    
    $
    17.02
    
    
    
    176,300
    
    
    $
    26.6November 1, 2010 to
November 30, 2010
    
    
    60,419
    
    
    $
    18.21
    
    
    
    60,419
    
    
    $
    25.5December 1, 2010 to
December 31, 2010
    
    
    91,672
    
    
    
    18.87
    
    
    
    91,672
    
    
    
    23.8
 
 1
    
    In September 29, 2010, the Board of Directors authorized a $30.0 million share
repurchase program of Class B shares only, which commenced on September 29, 2010. Performance Graph
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Period EndingIndex
    
    12/07/07
    
    
    12/31/07
    
    
    06/30/08
    
    
    12/31/08
    
    
    06/30/09
    
    
    12/31/09
    
    
    06/30/10
    
    
    12/31/10| | | | | | | |Triple-S Management Corporation
    
    
    100.00
    
    
    
    133.40
    
    
    
    107.92
    
    
    
    75.91
    
    
    
    102.90
    
    
    
    116.17
    
    
    
    122.44
    
    
    
    125.94S&P 500
    
    
    100.00
    
    
    
    97.59
    
    
    
    85.07
    
    
    
    60.03
    
    
    
    61.10
    
    
    
    74.11
    
    
    
    68.50
    
    
    
    83.58Morgan Stanley Healthcare Payor Index
    
    
    100.00
    
    
    
    100.38
    
    
    
    58.66
    
    
    
    45.37
    
    
    
    52.42
    
    
    
    69.59
    
    
    
    66.12
    
    
    
    79.94
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##### Table of Contents



Item 6. Selected Financial Data
 Statement of Earnings Data
 2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollar amounts in millions, except per share data)Years ended December 31,Premiums earned, net
    
    $
    1,901.1
    
    
    $
    1,869.1
    
    
    $
    1,692.4
    
    
    $
    1,483.6
    
    
    $
    1,511.6Administrative service fees
    
    
    39.6
    
    
    
    48.6
    
    
    
    19.2
    
    
    
    14.0
    
    
    
    14.1Net investment income
    
    
    49.1
    
    
    
    52.1
    
    
    
    56.2
    
    
    
    47.2
    
    
    
    42.7Total operating revenues
    
    
    1,989.8
    
    
    
    1,969.8
    
    
    
    1,767.8
    
    
    
    1,544.8
    
    
    
    1,568.4Net realized investments gains (losses)
    
    
    2.5
    
    
    
    0.6
    
    
    
    (13.9
    )
    
    
    5.9
    
    
    
    0.8Net unrealized investment gain (loss) on
trading securities
    
    
    5.4
    
    
    
    10.5
    
    
    
    (21.1
    )
    
    
    (4.1
    )
    
    
    7.7Other income (expense), net
    
    
    0.9
    
    
    
    1.3
    
    
    
    (2.5
    )
    
    
    3.2
    
    
    
    2.3Total revenues
    
    
    1,998.6
    
    
    
    1,982.2
    
    
    
    1,730.3
    
    
    
    1,549.8
    
    
    
    1,579.2Benefits and expenses:Claims incurred
    
    
    1,596.8
    
    
    
    1,605.8
    
    
    
    1,431.8
    
    
    
    1,223.8
    
    
    
    1,259.0Operating expenses
    
    
    305.0
    
    
    
    279.4
    
    
    
    251.9
    
    
    
    237.5
    
    
    
    236.1Total operating costs
    
    
    1,901.8
    
    
    
    1,885.2
    
    
    
    1,683.7
    
    
    
    1,461.3
    
    
    
    1,495.1Interest expense
    
    
    12.6
    
    
    
    13.3
    
    
    
    14.7
    
    
    
    15.9
    
    
    
    16.6Total benefits and expenses
    
    
    1,914.4
    
    
    
    1,898.5
    
    
    
    1,698.4
    
    
    
    1,477.2
    
    
    
    1,511.7Income before taxes
    
    
    84.2
    
    
    
    83.7
    
    
    
    31.9
    
    
    
    72.6
    
    
    
    67.5Income tax expense
    
    
    17.4
    
    
    
    14.9
    
    
    
    7.1
    
    
    
    14.1
    
    
    
    13.0Net income
    
    $
    66.8
    
    
    $
    68.8
    
    
    $
    24.8
    
    
    $
    58.5
    
    
    $
    54.5Basic net income per share (1):
    
    $
    2.30
    
    
    $
    2.33
    
    
    $
    0.77
    
    
    $
    2.15
    
    
    $
    2.04Diluted net income per share:
    
    $
    2.28
    
    
    $
    2.33
    
    
    $
    0.77
    
    
    $
    2.15
    
    
    $
    2.04Dividend declared per common
share (2):
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.82
    
    
    $
    0.23
 Balance Sheet Data
 2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006December 31,Cash and cash equivalents
    
    $
    45.0
    
    
    $
    40.4
    
    
    $
    46.1
    
    
    $
    240.2
    
    
    $
    81.6Total assets
    
    $
    1,759.7
    
    
    $
    1,648.7
    
    
    $
    1,559.2
    
    
    $
    1,659.5
    
    
    $
    1,345.5Long-term borrowings
    
    $
    166.0
    
    
    $
    167.7
    
    
    $
    169.3
    
    
    $
    170.9
    
    
    $
    183.1Total stockholders equity
    
    $
    617.3
    
    
    $
    537.8
    
    
    $
    485.9
    
    
    $
    482.5
    
    
    $
    342.6
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Additional Managed Care Data (3)
 2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Years ended December 31,Medical loss ratio
    
    
    88.1
    %
    
    
    89.9
    %
    
    
    88.9
    %
    
    
    87.0
    %
    
    
    87.6
    %Operating expense ratio
    
    
    11.6
    %
    
    
    10.7
    %
    
    
    10.5
    %
    
    
    11.2
    %
    
    
    11.5
    %Medical membership (period end)
    
    
    788,881
    
    
    
    1,347,033
    
    
    
    1,195,450
    
    
    
    977,190
    
    
    
    979,506
 
 (1)
    
    Further details of the calculation of basic earnings per share are set forth in notes 2 and
23 of the audited consolidated financial statements for the years ended December 31, 2010,
2009 and 2008.(2)
    
    Shareowners holding qualifying shares were excluded from dividend payment. See note 20 of
the audited consolidated financial statements for the years ended December 31, 2010, 2009 and
2008.(3)
    
    Does not reflect inter-segment eliminations. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
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Years ended December 31,(Dollar amounts in millions)
    
    2010
    
    
    2009
    
    
    2008Premiums earned, net:Managed care
    
    $
    1,700.3
    
    
    $
    1,677.1
    
    
    $
    1,509.9Life insurance
    
    
    105.8
    
    
    
    100.1
    
    
    
    92.8Property and casualty insurance
    
    
    99.2
    
    
    
    96.2
    
    
    
    93.8Intersegment premiums earned
    
    
    (4.2
    )
    
    
    (4.3
    )
    
    
    (4.1
    )Consolidated premiums earned, net
    
    $
    1,901.1
    
    
    $
    1,869.1
    
    
    $
    1,692.4Administrative service fees:Managed care
    
    $
    43.2
    
    
    $
    51.3
    
    
    $
    22.5Intersegment administrative service fees
    
    
    (3.6
    )
    
    
    (2.7
    )
    
    
    (3.3
    )Consolidated administrative service fees
    
    $
    39.6
    
    
    $
    48.6
    
    
    $
    19.2Operating income:Managed care
    
    $
    63.8
    
    
    $
    57.2
    
    
    $
    52.6Life insurance
    
    
    17.3
    
    
    
    14.6
    
    
    
    12.5Property and casualty insurance
    
    
    3.6
    
    
    
    8.8
    
    
    
    13.1Intersegment and other
    
    
    3.3
    
    
    
    4.0
    
    
    
    5.9Consolidated operating income
    
    $
    88.0
    
    
    $
    84.6
    
    
    $
    84.1
 Results of Operations
 Revenue
 General.
 Managed Care Premium Revenue.
  Page 53




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Administrative Service Fees.
 Other Premium Revenue.
 Investment Income and Other Income.
 Expenses
 Claims Incurred.
  Operating Expenses.
 Page 54




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##### Table of Contents



Membership
    As of December 31,2010
    
    
    2009
    
    
    2008Commercial (1)
    
    
    725,328
    
    
    
    737,286
    
    
    
    592,723Medicare (2)
    
    
    63,553
    
    
    
    69,605
    
    
    
    75,280Medicaid (3)
    
    
    
    
    
    
    540,142
    
    
    
    527,447Total
    
    
    788,881
    
    
    
    1,347,033
    
    
    
    1,195,450
 (1)
    
    Commercial membership includes corporate accounts, self-funded employers, individual
accounts, Medicare Supplement, Federal government employees and local government employees.(2)
    
    Includes Medicare Advantage as well as stand-alone PDP plan membership.(3)
    
    Medicaid membership includes rated and self-funded members. We participated in this sector
up to September 30, 2010. Consolidated Operating Results
  (Dollar amounts in millions)
    
    2010
    
    
    2009
    
    
    2008Years ended December 31,Revenues:Premiums earned, net
    
    $
    1,901.1
    
    
    $
    1,869.1
    
    
    $
    1,692.4Administrative service fees
    
    
    39.6
    
    
    
    48.6
    
    
    
    19.2Net investment income
    
    
    49.1
    
    
    
    52.1
    
    
    
    56.2Total operating revenues
    
    
    1,989.8
    
    
    
    1,969.8
    
    
    
    1,767.8Net realized investment gains (losses)
    
    
    2.5
    
    
    
    0.6
    
    
    
    (13.9
    )Net unrealized investment gain (loss) on trading securities
    
    
    5.4
    
    
    
    10.5
    
    
    
    (21.1
    )Other income (expense), net
    
    
    0.9
    
    
    
    1.3
    
    
    
    (2.5
    )Total revenues
    
    
    1,998.6
    
    
    
    1,982.2
    
    
    
    1,730.3Benefits and expenses:Claims incurred
    
    
    1,596.8
    
    
    
    1,605.8
    
    
    
    1,431.8Operating expenses
    
    
    305.0
    
    
    
    279.4
    
    
    
    251.9Total operating costs
    
    
    1,901.8
    
    
    
    1,885.2
    
    
    
    1,683.7Interest expense
    
    
    12.6
    
    
    
    13.3
    
    
    
    14.7Total benefits and expenses
    
    
    1,914.4
    
    
    
    1,898.5
    
    
    
    1,698.4Income before taxes
    
    
    84.2
    
    
    
    83.7
    
    
    
    31.9Income tax expense
    
    
    17.4
    
    
    
    14.9
    
    
    
    7.1Net income
    
    $
    66.8
    
    
    $
    68.8
    
    
    $
    24.8
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Year ended December 31, 2010 compared with the year ended December 31, 2009
 Operating Revenues
    Net Realized Investment Gains
  Net Unrealized Gains on Trading Securities and Other Income, Net
  Claims Incurred
  Operating Expenses
  Income tax expense
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Year ended December 31, 2009 compared with the year ended December 31, 2008
 Operating Revenues
    Net Realized Investment Gains
  Net Unrealized Gains on Trading Securities and Other Income, Net
  Claims Incurred
  Operating Expenses
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Income tax expense
  Managed Care Operating Results
  (Dollar amounts in millions)
    
    2010
    
    
    2009
    
    
    2008Operating revenues:Medical premiums earned, net:Commercial
    
    $
    947.1
    
    
    $
    822.1
    
    
    $
    734.2Medicare
    
    
    468.4
    
    
    
    506.9
    
    
    
    435.6Medicaid
    
    
    284.8
    
    
    
    348.1
    
    
    
    340.1Medical premiums earned, net
    
    
    1,700.3
    
    
    
    1,677.1
    
    
    
    1,509.9Administrative service fees
    
    
    43.2
    
    
    
    51.3
    
    
    
    22.5Net investment income
    
    
    19.8
    
    
    
    21.6
    
    
    
    23.1Total operating revenues
    
    
    1,763.3
    
    
    
    1,750.0
    
    
    
    1,555.5Medical operating costs:Medical claims incurred
    
    
    1,497.8
    
    
    
    1,508.2
    
    
    
    1,342.3Medical operating expenses
    
    
    201.7
    
    
    
    184.6
    
    
    
    160.6Total medical operating costs
    
    
    1,699.5
    
    
    
    1,692.8
    
    
    
    1,502.9Medical operating income
    
    $
    63.8
    
    
    $
    57.2
    
    
    $
    52.6Additional data:Member months enrollment:Commercial:Fully-insured
    
    
    5,982,094
    
    
    
    5,421,586
    
    
    
    4,947,854Self-funded
    
    
    2,966,291
    
    
    
    2,726,036
    
    
    
    2,049,140Total Commercial member months
    
    
    8,948,385
    
    
    
    8,147,622
    
    
    
    6,996,994Medicaid:Fully-insured
    
    
    3,078,288
    
    
    
    4,016,332
    
    
    
    4,101,905Self-funded
    
    
    1,782,426
    
    
    
    2,321,144
    
    
    
    376,975Total Medicaid member months
    
    
    4,860,714
    
    
    
    6,337,476
    
    
    
    4,478,880Medicare:Medicare Advantange
    
    
    670,250
    
    
    
    742,666
    
    
    
    727,274Stand-alone PDP
    
    
    112,297
    
    
    
    117,700
    
    
    
    127,658Total Medicare member months
    
    
    782,547
    
    
    
    860,366
    
    
    
    854,932Total member months
    
    
    14,591,646
    
    
    
    15,345,464
    
    
    
    12,330,806Medical loss ratio
    
    
    88.1
    %
    
    
    89.9
    %
    
    
    88.9
    %Operating expense ratio
    
    
    11.6
    %
    
    
    10.7
    %
    
    
    10.5
    %
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Year ended December 31, 2010 compared with the year ended December 31, 2009
 Medical Operating Revenues
  
    
    Medical premiums generated by the Commercial business increased by $125.0 million, or
15.2%, to $947.1 million. This fluctuation is primarily the result of an increase in
member months enrollment of 560,508, or 10.3%, and higher average premium rates per member
of approximately 4.4%. Increase in member months was mainly attributed to the La Cruz Azul
acquisition and organic growth, mostly in large accounts. Premium rate increases were
consistent with claims trends.
    
    Medicare premiums decreased by $38.5 million, or 7.6%, to $468.4 million, primarily due
to a lower member months enrollment of approximately 77,800 or 9.0%, mostly in our dual
eligible product, particularly during the first half of the year and resulting from changes
in our product offering. In addition, the premiums for the year ended December 31, 2010
reflect a lower final risk score adjustment as compared to 2009. The 2010 and 2009 periods
include the net effect of approximately $3.0 million and $8.7 million in adjustments
related to CMS final risk score adjustment corresponding to prior periods. These
fluctuations were partially offset by higher average premium rates, mostly due to higher
risk scores in our dual-eligible product.
    
    Medical premiums earned in the Medicaid business decreased by $63.3 million, or 18.2%,
to $284.8 million during the year ended December 31, 2010. This fluctuation results from
the termination of the Medicaid contracts effective September 30, 2010. Total Medicaid
enrollment as of September 30, 2010 was 544,448 members. This
decrease is offset in part by an increase in premiums of
$11.7 million as the result of a clean up of accounts receivable
and the reversal of allowances for unresolved reconciling items with the government of
Puerto Rico.
  Medical Claims Incurred
  
    
    The medical claims incurred of the Commercial business increased by $106.9 million
during the 2010 period and its MLR decreased by 0.7 percentage points. The increase in
claims relates primarily to the increase in member month enrollment during this year. The
lower MLR is primarily due to lower utilization trends in 2010 and stable pricing
environment.
    
    The medical claims incurred of the Medicare business decreased by $52.6 million during
the 2010 period primarily due to the lower member months enrollment. The MLR for the year
was 83.9%, 4.1 percentage points lower than 2009. Adjusting the MLR for changes in prior
period reserve developments and risk score premium adjustments, the 2010 MLR would have
decreased by 2.7 percentage points as compared to the adjusted MLR for 2009. The lower
adjusted MLR is primarily the result of the new risk sharing agreement with our providers
in the dual-eligible product, changes in benefits and higher average premium rates.
    
    The medical claims incurred of the Reform business decreased by $64.7 million and its MLR decreased
by 2.3 percentage points during the year ended December 31, 2010. Excluding the effect of prior
period reserve developments and premium adjustments, the MLR would have increased 1.3 percentage
points, mostly resulting from a lower premium yield due to the extension of prior years Medicaid
contracts without premium rate increases until September 2010.
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Medical Operating Expenses
  Year ended December 31, 2009 compared with the year ended December 31, 2008
 Medical Operating Revenues
  
    
    Medical premiums generated by the Commercial business increased by $87.9 million, or
12.0%, to $822.1 million during the year ended December 31, 2009. This fluctuation is
primarily the result of an increase in member months enrollment of 473,732, or 9.6%, and
higher average premium rates per member of approximately 2.9%. Increase in member months
was mainly attributed to new members acquired from LCA effective July 1, 2009, which
represented 49.1% of the increase in member months enrollment during this period, and to
new groups acquired during the period.
    
    Medical premiums generated by the Medicare business increased during the year ended
December 31, 2009 by $71.3 million, or 16.4%, to $506.9 million, primarily due to higher
average premium rates by approximately 11% and an increase in member months enrollment of
5,434 or 0.6%. The fluctuation in member months is the net result of an increase of
15,392, or 2.1%, in the membership of our Medicare Advantage products and a decrease of
9,958, or 7.8%, in the membership of our PDP product. In addition, the premiums for the
year ended December 31, 2009 include the net effect of approximately $8.7 million in
adjustments related to CMS final risk score adjustment for 2008. The premiums for the year
ended December 31, 2008 include the net effect of approximately $1.4 million related to CMS
final risk score adjustments for 2007.
    
    Medical premiums earned in the Medicaid business increased by $8.0 million, or 2.4%, to
$348.1 million during the year ended December 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 85,573, or
2.1% and premium adjustments of approximately $8.3 million to provide for unresolved
reconciling items with the government of Puerto Rico.
  Medical Claims Incurred
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
    
    The medical claims incurred of the Commercial business increased by $99.3 million
during the 2009 period and its MLR increased by 2.8 percentage points during the year ended
December 31, 2009. The increase in claims was partially attributed to the increase in
members. The increase in the MLR is primarily due to the effect of prior period reserve
developments in the 2009 and 2008 periods and higher utilization trends. Excluding the
effect of prior period reserve developments, the MLR increased by 1.6 percentage points.
This variance in the MLR is due to a higher than expected claims experience in the local
government employees policy, mainly in the utilization of pharmacy and in-patient
benefits, and the effect of the AH1N1 flu of approximately $4.4 million, or 0.5 percentage
points.
    
    The medical claims incurred of the Medicare business increased by $55.3 million during
the 2009 period primarily due to the higher member months enrollment of this business. The
MLR for the year ended December 31, 2009 was 88.1%, 1.6 percentage points lower than 2008.
The reduction in MLR is attributed to the effect of risk score premium adjustments recorded
during this period, as well as premium rate increases and lower utilization trends.
Excluding the effect of prior period reserve developments in the 2009 and 2008 periods, as
well as premium adjustments, the MLR decreased by 4.7 percentage points, mostly due to the
effect of lower medical costs resulting from an improvement in utilization trends and
premium rate increases effective January 1, 2009.
    
    The medical claims incurred of the Reform business increased by $11.3 million and its
MLR increased by 1.2 percentage points during the year ended December 31, 2009. The
increase in MLR is primarily due to reserve development in the 2009 and 2008 periods and
the effect of the premium adjustments to provide for unresolved reconciling items with the
government of Puerto Rico. Such increase is also a result of the extension during 2009 of
the current Reform contracts to all the participating insurance companies without the
re-negotiation of premium rates. In addition, during 2008 we recognized a retroactive
adjustment due to a reduction in capitation rates. Excluding the effect of these items in
the 2009 and 2008 periods the MLR increased by 1.9 percentage points.
 Medical Operating Expenses
  Page 61




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Life Insurance Operating Results
 (Dollar amounts in millions)
    
    2010
    
    2009
    
    2008Years ended December 31,Operating revenues:Premiums earned, netPremiums earned, net
    
    $
    111.4
    
    
    $
    106.2
    
    
    $
    100.1Premiums earned ceded
    
    
    (5.6
    )
    
    
    (6.1
    )
    
    
    (7.6
    )Net premiums earned
    
    
    105.8
    
    
    
    100.1
    
    
    
    92.5Commission income on reinsurance
    
    
    
    
    
    
    
    
    
    
    0.3Premiums earned, net
    
    
    105.8
    
    
    
    100.1
    
    
    
    92.8Net investment income
    
    
    17.1
    
    
    
    16.8
    
    
    
    16.5Total operating revenues
    
    
    122.9
    
    
    
    116.9
    
    
    
    109.3Operating costs:Policy benefits and claims incurred
    
    
    49.8
    
    
    
    50.3
    
    
    
    47.4Underwriting and other expenses
    
    
    55.8
    
    
    
    52.0
    
    
    
    49.4Total operating costs
    
    
    105.6
    
    
    
    102.3
    
    
    
    96.8Operating income
    
    $
    17.3
    
    
    $
    14.6
    
    
    $
    12.5Additional data:Loss ratio
    
    
    47.1
    %
    
    
    50.2
    %
    
    
    51.1
    %Expense ratio
    
    
    52.7
    %
    
    
    51.9
    %
    
    
    53.2
    %
 Year ended December 31, 2010 compared with the year ended December 31, 2009
 Operating Revenues
  Policy Benefits and Claims Incurred
  Underwriting and Other Expenses
  Year ended December 31, 2009 compared with the year ended December 31, 2008
 Operating Revenues
  Policy Benefits and Claims Incurred
  Page 62




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Underwriting and Other Expenses
  Property and Casualty Insurance Operating Results
 (Dollar amounts in millions)
    
    2010
    
    2009
    
    2008Years ended December 31,Operating revenues:Premiums earned, net:Premiums written
    
    $
    159.2
    
    
    $
    163.3
    
    
    $
    168.0Premiums ceded
    
    
    (63.7
    )
    
    
    (67.5
    )
    
    
    (72.1
    )Change in unearned premiums
    
    
    3.7
    
    
    
    0.4
    
    
    
    (2.1
    )Premiums earned, net
    
    
    99.2
    
    
    
    96.2
    
    
    
    93.8Net investment income
    
    
    10.1
    
    
    
    11.7
    
    
    
    12.5Total operating revenues
    
    
    109.3
    
    
    
    107.9
    
    
    
    106.3Operating costs:Claims incurred
    
    
    49.2
    
    
    
    47.3
    
    
    
    42.1Underwriting and other operating expenses
    
    
    56.5
    
    
    
    51.8
    
    
    
    51.1Total operating costs
    
    
    105.7
    
    
    
    99.1
    
    
    
    93.2Operating income
    
    $
    3.6
    
    
    $
    8.8
    
    
    $
    13.1Additional data:Loss ratio
    
    
    49.6
    %
    
    
    49.2
    %
    
    
    44.9
    %Expense ratio
    
    
    57.0
    %
    
    
    53.8
    %
    
    
    54.5
    %
 Year ended December 31, 2010 compared with the year ended December 31, 2009
 Operating Revenues
    Claims Incurred
  Page 63




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Underwriting and Other Expenses
  Year ended December 31, 2009 compared with the year ended December 31, 2008
 Operating Revenues
    Claims Incurred
  Underwriting and Other Expenses
  Page 64




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows
  (dollar amounts in millions)
    
    2010
    
    2009
    
    2008Years ended December 31,Sources of cash:Net cash provided by operating activities
    
    $
    37.7
    
    
    $
    72.6
    
    
    $
    Proceeds from annuity contracts
    
    
    10.7
    
    
    
    4.3
    
    
    
    8.0Net proceeds from borrowings
    
    
    40.6
    
    
    
    
    
    
    
    Other
    
    
    0.2
    
    
    
    
    
    
    
    18.3Total sources of cash
    
    
    89.2
    
    
    
    76.9
    
    
    
    26.3Uses of cash:Net cash used in operating activities
    
    
    
    
    
    
    
    
    
    
    (3.0
    )Net purchases of investment securities
    
    
    (23.7
    )
    
    
    (17.3
    )
    
    
    (178.6
    )Capital expenditures
    
    
    (19.2
    )
    
    
    (18.7
    )
    
    
    (22.4
    )Payments of long-term borrowings
    
    
    (26.4
    )
    
    
    (1.6
    )
    
    
    (1.6
    )Surrenders of annuity contracts
    
    
    (9.1
    )
    
    
    (7.1
    )
    
    
    (7.1
    )Repurchase and retirement of common stock
    
    
    (6.2
    )
    
    
    (32.3
    )
    
    
    (7.6
    )Other
    
    
    
    
    
    
    (5.6
    )
    
    
    Total uses of cash
    
    
    (84.6
    )
    
    
    (82.6
    )
    
    
    (220.3
    )Net increase (decrease) in cash and cash equivalents
    
    $
    4.6
    
    
    $
    (5.7
    )
    
    $
    (194.0
    )
 Year ended December 31, 2010 compared to year ended December 31, 2009
       Page 65




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Year ended December 31, 2009 compared to year ended December 31, 2008
       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). The 6.7% notes were privately placed to
various institutional accredited investors. The notes pay interest each month until the
principal becomes due and payable. These notes can be redeemed after five years at par, in
whole or in part, as determined by us. The proceeds obtained from this issuance were used
to finance the acquisition of 100% of the common stock of GA Life effective January 31,
2006.
    
    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). The 6.6% notes were privately placed to various
institutional accredited investors. The notes pay interest each month until the principal
becomes due and payable. These notes can be redeemed after five years at par, in whole or
in part, as determined by us. The proceeds obtained from this issuance were used to pay
the ceding commission to GA Life on the effective date of the coinsurance
funds withheld reinsurance agreement. On October 1, 2010 we repaid $25.0 million of the
principal of these senior unsecured notes.
    
    On September 30, 2004, TSS issued and sold $50.0 million of its 6.3% senior unsecured
notes due September 2019 (the 6.3% notes). The 6.3% notes are unconditionally guaranteed
as to payment of principal and interest by us. The notes were privately placed to various
institutional accredited investors.
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The notes pay interest semiannually until the
principal becomes due and payable. These notes can be prepaid after five years at par, in
whole or in part, as determined by TSS. Most of the proceeds obtained from this issuance
were used to repay $37.0 million of short-term borrowings. The remaining proceeds were
used for general business purposes.
    
    On November 1, 2010, we entered into a $25.0 million arrangement to sell securities
under repurchase agreements that matures on November 2015. The repurchase agreement pays
interest quarterly at 1.96%. The investment securities underlying such agreements were
delivered to the financial institution with whom the agreement was transacted. The dealers
may have loaned, or used as collateral such securities in the normal course of
business operations. We maintain effective control over the
investment securities pledged as collateral and accordingly, such
securities continue to be carried on our consolidated balance sheet. At December 31, 2010 investment securities available
for sale with fair value of $27.2 million (face value of $19.7 million) were pledged as
collateral under this agreement. The proceeds obtained from this agreement were used to
repay $25.0 million of the 6.6% notes.
     Planned Capital Expenditures
  Contractual Obligations
   
    
    Unearned premiums  This amount accounts for the premiums collected prior to the end
of coverage period and does not represent a future cash outflow. As of December 31, 2010,
we had $98.3 million in unearned premiums.
    
    Policyholder deposits  The cash outflows related to these instruments are not
included because they do not have defined maturities, such that the timing of payments and
withdrawals is uncertain. There are currently no significant policyholder deposits in
paying status. As of December 31, 2010, our policyholder deposits had a carrying amount of
$49.9 million.
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##### Table of Contents




    
    Other long-term liabilities  Due to the indeterminate nature of their cash outflows,
$74.9 million of other long-term liabilities are not reflected in the following table,
including $51.2 million of liability for pension benefits and $15.0 million in liabilities
to the Federal Employees Health Benefits Plan Program.
 Contractual obligations by year(Dollar amounts in millions)
    
    Total
    
    2011
    
    2012
    
    2013
    
    2014
    
    2015
    
    ThereafterShort-term borrowings
    
    $
    15.6
    
    
    $
    15.6
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Long-term borrowings (1)
    
    
    266.8
    
    
    
    11.7
    
    
    
    12.1
    
    
    
    12.3
    
    
    
    12.5
    
    
    
    38.8
    
    
    
    179.4Operating leases
    
    
    36.0
    
    
    
    7.5
    
    
    
    7.8
    
    
    
    7.9
    
    
    
    8.1
    
    
    
    1.8
    
    
    
    2.9Purchase obligations (2)
    
    
    151.2
    
    
    
    147.5
    
    
    
    1.8
    
    
    
    1.0
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.3Claim liabilities (3)
    
    
    328.8
    
    
    
    238.2
    
    
    
    59.2
    
    
    
    9.8
    
    
    
    10.4
    
    
    
    3.5
    
    
    
    7.7Estimated obligation for future
policy benefits (4)
    
    
    954.8
    
    
    
    75.6
    
    
    
    64.0
    
    
    
    60.1
    
    
    
    56.7
    
    
    
    53.9
    
    
    
    644.5$
    1,753.2
    
    
    $
    496.1
    
    
    $
    144.9
    
    
    $
    91.1
    
    
    $
    88.0
    
    
    $
    98.3
    
    
    $
    834.8
 (1)
    
    As of December 31, 2010, our long-term borrowings consist of our managed care subsidiarys
6.3% senior unsecured notes payable (which are unconditionally guaranteed as to payment of
principal, premium, if any, and interest by us), our 6.6% senior unsecured notes payable, our
6.7% senior unsecured notes payable, a $25.0 million arrangement to sell securities under
repurchase agreements which requires quarterly interest payments at 1.96%, and a loan payable
to a commercial bank. Total contractual obligations for long-term borrowings include the
current maturities of long term debt. For the 6.3%, 6.6% and 6.7% senior unsecured notes and
the arrangement to sell securities under repurchase agreements, scheduled interest payments
were included in the total contractual obligations for long-term borrowings until the maturity
dates of the notes in 2019, 2020, 2021, and 2015 respectively. We may redeem the senior
unsecured notes starting five years after issuance; however no redemption is considered in
this schedule. The interest payments related to our loan payable were estimated using the
interest rate applicable as of December 31, 2010. The actual amount of interest payments of
the loan payable will differ from the amount included in this schedule due to the loans
variable interest rate structure. See the Financing and Financing Capacity section for
additional information regarding our long-term borrowings.(2)
    
    Purchase obligations represent payments required by us under material agreements to purchase
goods or services that are enforceable and legally binding and where all significant terms are
specified, including: quantities to be purchased, price provisions and the timing of the
transaction. Other purchase orders made in the ordinary course of business for which we are
not liable are excluded from the table above. Estimated pension plan contributions amounting
to $10.0 million were included within the total purchase obligations. However, this amount is
an estimate which may be subject to change in view of the fact that contribution decisions are
affected by various factors such as market performance, regulatory and legal requirements and
plan funding policy.(3)
    
    Claim liabilities represent the amount of our claims processed and incomplete as well as an
estimate of the amount of incurred but not reported claims and loss-adjustment expenses. This
amount does not include an estimate of claims to be incurred subsequent to December 31, 2010.
The expected claims payments are an estimate and may differ materially from the actual claims
payments made by us in the future. Also, claim liabilities are presented gross, and thus do
not reflect the effects of reinsurance under which $31.4 million of reserves had been ceded at
December 31, 2010.(4)
    
    Our life insurance segment establishes, and carries as liabilities, actuarially determined
amounts that are calculated to meet its policy obligations when a policy matures or
surrenders, an insured dies or becomes disabled or upon the occurrence of other covered
events. A significant portion of the estimated obligation for future policy benefits to be
paid included in this table considers contracts under which we are currently not making
payments and will not make payments until the occurrence of an insurable event not under our
control, such as death, illness, or the surrender of a policy. We have estimated the timing
of the cash flows related to these contracts based on historical experience as well as
expectations of future payment patterns. The amounts presented in the table above represent
the estimated cash payments for benefits under such contracts based on assumptions related to
the receipt of future premiums and assumptions related to mortality, morbidity, policy lapses,
renewals, retirements, disability incidence and other contingent events as appropriate for the
respective product type. All estimated cash payments included in this table are not
discounted to present value nor do they take into account estimated future premiums on
policies in-force as of December 31, 2010 and are gross of any Page 68




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##### Table of Contents



reinsurance recoverable. The
$954.8 million total estimated cash flows for all years in the table is different from the
liability of future policy benefits of $236.5 million included in our audited consolidated
financial statements principally due to the time value of money. Actual cash payments to
policyholders could differ significantly from the estimated cash payments as presented in this
table due to differences between actual experience and the assumptions used in the estimation
of these payments. Off-Balance Sheet Arrangements
  Restriction on Certain Payments by the Corporations Subsidiaries
      Solvency Regulation
  Other Contingencies
 Legal Proceedings
   Page 69




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##### Table of Contents



Guarantee Associations
    Critical Accounting Estimates
   Page 70




---



##### Table of Contents



Claim Liabilities
  (Dollar amounts in millions)Managed care
    
    $
    236.2Life insurance
    
    
    41.2Property and casualty insurance
    
    
    82.8Consolidated
    
    $
    360.2
   Managed Care Segment
     Page 71




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##### Table of Contents



Completion Factor1
    
    
    Claims Trend Factor2(Decrease) Increase
    
    
    (Decrease) IncreaseIn unpaid claim
    
    
    In claims trend
    
    
    In unpaid claimIn completion factor
    
    liabilities
    
    
    factor
    
    
    liabilities(0.6)%
    
    $
    8.7
    
    
    
    (0.75
    )%
    
    $
    9.4(0.4)%
    
    
    5.8
    
    
    
    (0.50
    )%
    
    
    6.3(0.2)%
    
    
    2.9
    
    
    
    (0.25
    )%
    
    
    3.20.2%
    
    
    (2.9
    )
    
    
    0.25
    %
    
    
    (3.2
    )0.4%
    
    
    (5.7
    )
    
    
    0.50
    %
    
    
    (6.3
    )0.6%
    
    
    (8.6
    )
    
    
    0.75
    %
    
    
    (9.4
    )
 
 (1)
    
    Assumes (decrease) increase in the completion factors for the most recent twelve months.(2)
    
    Assumes (decrease) increase in the claims trend factors for the most recent twelve months.   Page 72




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##### Table of Contents



(Dollar amounts in millions
    
    2009
    
    
    2008
    
    
    2007Years ended December 31,Total incurred claims:As reported (1)
    
    $
    1,512.1
    
    
    $
    1,348.9
    
    
    $
    1,156.8On a retrospective basis
    
    
    1,506.5
    
    
    
    1,352.0
    
    
    
    1,149.2Variance
    
    $
    5.6
    
    
    $
    (3.1
    )
    
    $
    7.6Variance to total incurred claims as reported
    
    
    0.4
    %
    
    
    -0.2
    %
    
    
    0.7
    %
 (1)
    
    Includes total claims incurred less adjustments for prior year reserve development.   
    
    Through the management of our cash flows and investment portfolio.
    
    We have the ability to increase the premium rates throughout the year in the monthly
renewal process, when renegotiating the premiums for the following contract year of each
group as they become due. We consider the actual claims trend of each group when
determining the premium rates for the following contract year.
    
    We have available short-term borrowing facilities that from time to time address
differences between cash receipts and disbursements.
  Life Insurance Segment
     Page 73




---



##### Table of Contents



Property and Casualty Insurance Segment
       Liability for Future Policy Benefits
   Page 74




---



##### Table of Contents



Deferred Policy Acquisition Costs and Value of Business Acquired
     Impairment of Investments
  Page 75




---



##### Table of Contents




    
    Identification and evaluation of securities that have possible indications of
other-than-temporary impairment, which includes an analysis of all investments with gross
unrealized investments losses that represent 20% or more of cost.
    
    Review and evaluation of any other security based on the investees current financial
condition, liquidity, near-term recovery prospects, implications of rating agency actions,
the outlook for the business sectors in which the investee operates and other factors.
This evaluation is in addition to the evaluation of those securities with a gross
unrealized investment loss representing 20% or more of cost.
    
    Consideration of evidential matter, including an evaluation of factors or triggers that
may or may not cause individual investments to qualify as having other-than-temporary
impairments; and
    
    Determination of the status of each analyzed security as other-than-temporary or not,
with documentation of the rationale for the decision.
     Page 76




---



##### Table of Contents



Allowance for Doubtful Receivables
    Other Significant Accounting Policies
  Recently Issued Accounting Standards
  Subtopic 340-20, Other Assets and Deferred Costs
Capitalized Advertising Costs
  Page 77




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  Market Risk Exposure
       Page 78




---



##### Table of Contents




    
    the market risk information is limited by the assumptions and parameters established in
creating the related sensitivity analysis, including the impact of prepayment rates on
mortgages; and
    
    the model assumes that the composition of assets and liabilities remains unchanged
throughout the year.
  Interest Rate Risk
  Equity Price Risk
  Risk Measurement
 Trading Portfolio
  Other than Trading Portfolio
  Interest Rate Risk
  Page 79




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##### Table of Contents



(Dollar amounts in millions)
 Expected
    
    
    Amount of
    
    
    %Change in Interest Rates
    
    Fair Value
    
    
    Decrease
    
    
    ChangeDecember 31, 2010:Base Scenario
    
    $
    991.6+100 bp
    
    
    940.4
    
    
    
    (51.2
    )
    
    
    (5.2
    )%+200 bp
    
    
    886.1
    
    
    
    (105.5
    )
    
    
    (10.6
    )%+300 bp
    
    
    836.5
    
    
    
    (155.1
    )
    
    
    (15.6
    )%December 31, 2009:Base Scenario
    
    $
    935.5+100 bp
    
    
    885.4
    
    
    
    (50.1
    )
    
    
    (5.4
    )%+200 bp
    
    
    836.2
    
    
    
    (99.3
    )
    
    
    (10.6
    )%+300 bp
    
    
    786.7
    
    
    
    (148.8
    )
    
    
    (15.9
    )%
  Equity Price Risk
  Other Risk Measurement
    Page 80




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 Financial Statements
  Selected Quarterly Financial Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
  Page 81




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##### Table of Contents




    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Company;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect
on the consolidated financial statements.
    Changes in Internal Control Over Financial Reporting
  Report of Independent Registered Public Accounting Firm
  
 Item 9B. Other Information
  Page 82




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##### Table of Contents



Part III
 
 Item 10. Directors, Executive Officers and Corporate Governance
   
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  
 Item 15. Exhibits and Financial Statements Schedules
 Financial Statements and Schedules
 Financial Statements
    
    DescriptionF-1
    
    Reports of Independent Registered Public Accounting FirmsF-2
    
    Consolidated Balance Sheets as of December 31, 2010 and 2009F-3
    
    Consolidated Statements of Earnings for the years ended
December 31, 2010, 2009 and 2008F-4
    
    Consolidated Statements of Stockholders Equity and
Comprehensive Income for the years ended December 31, 2010,
2009 and 2008F-5
    
    Consolidated Statements of Cash Flows for the years ended
December 31, 2010, 2009 and 2008F-7
    
    Notes to Consolidated Financial Statements  December 31,
2010, 2009 and 2008
 Page 83




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##### Table of Contents



Financial StatementsSchedules
    
    DescriptionS-1
    
    Schedule II  Condensed Financial Information of the RegistrantS-2
    
    Schedule III  Supplementary Insurance InformationS-3
    
    Schedule IV  ReinsuranceS-4
    
    Schedule V  Valuation and Qualifying Accounts
  Exhibits
 Exhibits
    
    Description3(i)(a)
    
    Amended and Restated Articles of Incorporation (incorporated herein
by reference to Exhibit 3(i)(d) to TSMs Annual Report on Form 10-K
for the Year Ended December 31, 2007 (File No. 001-33865).3(i)(b)
    
    Amendment to Article Tenth of the Amended and Restated Articles of
Incorporation of Triple-S Management Corporation, incorporated by
reference to Exhibit 3(i)(b) to TSMs Quarterly Report on Form 10-Q
for the quarter ended March 31, 2008 (File No. 001-33865).3(i)(c)
    
    Articles of Incorporation of Triple-S Management Corporation, as
currently in effect, incorporated by reference to Exhibit 3(i)(c)
to TSMs Quarterly Report on Form 10-Q for the quarter ended March
31, 2008 (File No. 001-33865).3(ii)
    
    Amended and Restated Bylaws of Triple-S Management Corporation
(incorporated herein by reference to Exhibit 3.1 to TSMs Current
Report on Form 8-K filed on June 11, 2010 (File No. 001-33865)).10.1
    
    Extension to the agreement between the Puerto Rico Health Insurance
Administration and TSS to act as third party administrator in the
Metro-North Region until September 30, 2010 (incorporated herein by
reference to Exhibit 10.1 to TSMs Quarterly Report on Form 10-Q
for the quarter ended June 30, 2010 (File No. 001-33865)).10.2
    
    Extension to the agreement between the Puerto Rico Health Insurance
Administration and TSS for the provision of health insurance
coverage to eligible population in the North and South-West Regions
until September 30, 2010 (incorporated herein by reference to
Exhibit 10.1 to TSMs Quarterly Report on Form 10-Q for the quarter
ended June 30, 2010 (File No. 001-33865)).10.3
    
    Amendment to the Medicare Platino Contract (Medicare Wraparound)
between the Puerto Rico Health Insurance Administration and TSS for
the provision of wraparound coverage to health insurance
dual-eligible population until December 31, 2011 (incorporated
herein by reference to Exhibit 10.4 to TSMs Quarterly Report on
Form 10-Q for the quarter ended September 30, 2010 (File No.
001-33865)).10.4
    
    Federal Employees Health Benefits Contract (incorporated herein by
reference to Exhibit 10.5 to TSMs General Form of Registration of
Securities on Form 10 (File No. 001-33865)).10.5
    
    Credit Agreement with FirstBank Puerto Rico in the amount of
$41,000,000 (incorporated herein by reference to Exhibit 10.6 to
TSMs General Form of Registration of Securities on Form 10 (File
No. 001-33865)).
 Page 84




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##### Table of Contents



Exhibits
    
    Description10.6
    
    Credit Agreement with FirstBank Puerto Rico in the amount of
$20,000,000 (incorporated herein by reference to Exhibit 10.7 to
TSMs General Form of Registration of Securities on Form 10 (File
No. 001-33865)).10.7
    
    Non-Contributory Retirement Program (incorporated herein by
reference to Exhibit 10.8 to TSMs General Form of Registration of
Securities on Form 10 (File No. 001-33865)).10.8
    
    Blue Shield License Agreement by and between BCBSA and TSM,
including revisions, if any, adopted by Member Plans through the
November 19, 2009 meeting (incorporated herein by reference to
Exhibit 10.11 to TSMs Annual Report on Form 10-K for the year
ended December 31, 2009 (File No. 001-33865)).10.9
    
    Blue Shield Controlled Affiliate License Agreement by and among
BCBSA, TSS and TSM, including revisions, if any, adopted by Member
Plans through the November 19, 2009 meeting (incorporated herein by
reference to Exhibit 10.12 to TSMs Annual Report on Form 10-K for
the year ended December 31, 2009 (File No. 001-33865)).10.10
    
    Blue Cross License Agreements by and between BCBSA and TSM,
including revisions, if any, adopted by Member Plans through the
November 19, 2009 meeting (incorporated herein by reference to
Exhibit 10.13 to TSMs Annual Report on Form 10-K for the year
ended December 31, 2009 (File No. 001-33865)).10.11
    
    Blue Cross Controlled Affiliate License Agreement by and among
BCBSA, TSS and TSM, including revisions, if any, adopted by Member
Plans through the November 19, 2009 meeting (incorporated herein by
reference to Exhibit 10.14 to TSMs Annual Report on Form 10-K for
the year ended December 31, 2009 (File No. 001-33865)).10.12
    
    6.30% Senior Unsecured Notes Due September 2019 Note Purchase
Agreement, dated September 30, 2004, between Triple-S Management
Corporation, Triple-S, Inc. and various institutional accredited
investors (incorporated herein by reference to Exhibit 10.15 to
TSMs Annual Report on Form 10-K for the year ended December 31,
2005 (File No. 001-33865)).10.13
    
    6.60% Senior Unsecured Notes Due December 2020 Note Purchase
Agreement, dated December 15, 2005, between Triple-S Management
Corporation and various institutional accredited investors
(incorporated herein by reference to Exhibit 10.16 to TSMs Annual
Report on Form 10-K for the year ended December 31, 2005 (File No.
001-33865)).10.14
    
    6.70% Senior Unsecured Notes Due December 2021 Note Purchase
Agreement, dated January 23, 2006, between Triple-S Management
Corporation and various institutional accredited investors
(incorporated herein by reference to Exhibit 10.1 to TSMs
Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2006
(File No. 001-33865)).10.15
    
    TSM 2007 Incentive Plan, dated October 16, 2007 (incorporated
herein by reference to Exhibit C to TSMs 2007 Proxy Statement
(File No. 001-33865)).10.16
    
    Software License and Maintenance Agreement between Quality Care
Solutions, Inc, and TSS dated August 16, 2007 (incorporated herein
by reference to Exhibit 10.15 to TSMs Annual Report on Form 10-K
for the year ended December 31, 2007 (File No. 001-33865)).
 Page 85




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##### Table of Contents



Exhibits
    
    Description10.17
    
    Addendum Number One to the Software License and Maintenance
Agreement between Quality Care Solutions, Inc, and TSS
(incorporated herein by reference to Exhibit 10.15(a) to TSMs
Annual Report on Form 10-K for the year ended December 31, 2007
(File No. 001-33865)).10.18
    
    Addendum Number Two to the Software License and Maintenance
Agreement between Quality Care Solutions, Inc, and TSS
(incorporated herein by reference to Exhibit 10.15(b) to TSMs
Annual Report on Form 10-K for the year ended December 31, 2007
(File No. 001-33865)).10.19
    
    Addendum Number Three to the Software License and Maintenance
Agreement between Quality Care Solutions, Inc, and TSS
(incorporated herein by reference to Exhibit 10.15(c) to TSMs
Annual Report on Form 10-K for the year ended December 31, 2007
(File No. 001-33865)).10.20
    
    Work Order Agreement between Quality Care Solutions, Inc. and TSS
(incorporated herein by reference to Exhibit 10.16 to TSMs Annual
Report on Form 10-K for the year ended December 31, 2007 (File No.
001-33865)).10.21
    
    Employment Contract between Ramón M. Ruiz Comas and TSM
(incorporated herein by reference to Exhibit 10.24 to TSMs Annual
Report on Form 10-K for the year ended December 31, 2009 (File No.
001-33865)).11.1
    
    Statement re computation of per share earnings; an exhibit
describing the computation of the earnings per share has been
omitted as the detail necessary to determine the computation of
earnings per share can be clearly determined from the material
contained in Part II of this Annual Report on Form 10-K.12.1
    
    Statement re computation of ratios; an exhibit describing the
computation of the loss ratio, expense ratio and combined ratio 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 II of
this Annual Report on Form 10-K.21*
    
    List of Subsidiaries of TSM.23.1*
    
    Consent of Independent Registered Public Accounting Firm
(PricewaterhouseCoopers LLP).23.2*
    
    Consent of Independent Registered Public Accounting Firm (KPMG LLP).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. Section 1350.32.2*
    
    Certification of the Vice President of Finance and Chief Financial
Officer required pursuant to 18 U.S. Section 1350.99.1*
    
    Incentive Compensation Recoupment
Policy
  *
 Page 86




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##### Table of Contents



SIGNATURES
  Triple-S Management Corporation
  By:
    
    /s/ Ramón M. Ruiz-Comas
    
    Date:
    
    March 9, 2011Ramón M. Ruiz-Comas
President and Chief Executive OfficerBy:
    
    /s/ Juan J. Román
    
    Date:
    
    March 9, 2011Juan J. Román
Vice President of Finance and Chief Financial Officer
Principal Accounting Officer
  By:
    
    /s/ Luis A. Clavell-Rodríguez
    
    Date:
    
    March 9, 2011Luis A. Clavell-Rodríguez
Director and Chairman of the BoardBy:
    
    /s/ Vicente J. León-Irizarry
    
    Date:
    
    March 9, 2011Vicente J. León-Irizarry
Director and Vice-Chairman of the BoardBy:
    
    /s/ Jesús R. Sánchez-Colón
    
    Date:
    
    March 9, 2011Jesús R. Sánchez-Colón
Director and Assistant Secretary of the BoardBy:
    
    /s/ Adamina Soto-Martínez
    
    Date:
    
    March 9, 2011Adamina Soto-Martínez
DirectorBy:
    
    /s/ Carmen Ana Culpeper-Ramírez
    
    Date:
    
    March 9, 2011Carmen Ana Culpeper-Ramírez
Director
 Page 87




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##### Table of Contents



By:
    
    /s/ Jorge L. Fuentes-Benejam
    
    Date:
    
    March 9, 2011Jorge L. Fuentes-Benejam
DirectorBy:
    
    /s/ Antonio F. Faría-Soto
    
    Date:
    
    March 9, 2011Antonio F. Faría-Soto
DirectorBy:
    
    /s/ Manuel Figueroa-Collazo
    
    Date:
    
    March 9, 2011Manuel Figueroa-Collazo
DirectorBy:
    
    /s/ José Hawayek-Alemañy
    
    Date:
    
    March 9, 2011José Hawayek-Alemañy
DirectorBy:
    
    /s/ Jaime Morgan-Stubbe
    
    Date:
    
    March 9, 2011Jaime Morgan-Stubbe
DirectorBy:
    
    /s/ Roberto Muñoz-Zayas
    
    Date:
    
    March 9, 2011Roberto Muñoz-Zayas
DirectorBy:
    
    /s/ Juan E. Rodríguez-Díaz
    
    Date:
    
    March 9, 2011Juan E. Rodríguez-Díaz
Director
 Page 88




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Triple-S Management Corporation
 Consolidated Financial Statements
December 31, 2010, 2009, and 2008




---



##### Table of Contents



Page(s)Reports of Independent Registered Public Accounting Firms
    
    
    1Consolidated Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Earnings
    
    
    4Consolidated Statements of Stockholders Equity and Comprehensive Income
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    863




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
  Internal Control  Integrated Framework
  1.1




---



##### Table of Contents



1.2




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 2




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##### Table of Contents



Triple-S Management Corporation
Consolidated Balance Sheets
December 31, 2010 and 2009  (dollar amounts in thousands, except per share data)
 2010
    
    
    2009AssetsInvestments and cashEquity securities held for trading, at fair value
(cost of $43,832
in 2010 and $42,075 in 2009)
    
    $
    51,099
    
    
    $
    43,909Securities available for sale, at fair value:Fixed maturities (amortized cost of $947,957 in 2010 and
$911,362 in 2009)
    
    
    977,586
    
    
    
    918,977Equity securities (cost of $47,750 in 2010 and
$61,531 in 2009)
    
    
    56,739
    
    
    
    64,689Securities held to maturity, at amortized cost:Fixed maturities (fair value of $15,424 in 2010
and
$16,490 in 2009)
    
    
    14,615
    
    
    
    15,794Policy loans
    
    
    5,887
    
    
    
    5,940Cash and cash equivalents
    
    
    45,021
    
    
    
    40,376Total investments and cash
    
    
    1,150,947
    
    
    
    1,089,685Premium and other receivables, net
    
    
    325,780
    
    
    
    272,932Deferred policy acquisition costs and value of business acquired
    
    
    146,086
    
    
    
    139,917Property and equipment, net
    
    
    76,745
    
    
    
    68,803Deferred tax asset
    
    
    29,445
    
    
    
    37,551Other assets
    
    
    30,367
    
    
    
    39,816Total assets
    
    $
    1,759,370
    
    
    $
    1,648,704Liabilities and Stockholders EquityClaim liabilities
    
    
    360,210
    
    
    
    360,446Liability for future policy benefits
    
    
    236,523
    
    
    
    222,619Unearned premiums
    
    
    98,341
    
    
    
    108,342Policyholder deposits
    
    
    49,936
    
    
    
    47,563Liability to Federal Employees Health Benefits Program
    
    
    15,018
    
    
    
    13,002Accounts payable and accrued liabilities
    
    
    136,567
    
    
    
    139,161Deferred tax liability
    
    
    12,655
    
    
    
    11,088Short term borrowings
    
    
    15,575
    
    
    
    Long term borrowings
    
    
    166,027
    
    
    
    167,667Liability for pension benefits
    
    
    51,246
    
    
    
    41,044Total liabilities
    
    
    1,142,098
    
    
    
    1,110,932Commitments and contingenciesStockholders equityCommon stock Class A, $1 par value. Authorized
100,000,000 shares; issued and outstanding
9,042,809 at December 31, 2010 and 2009
    
    
    9,043
    
    
    
    9,043Common stock Class B, $1 par value. Authorized 100,000,000
shares; issued and outstanding 19,772,614 and 20,110,391
shares at December 31, 2010 and 2009, respectively
    
    
    19,773
    
    
    
    20,110Additional paid-in capital
    
    
    155,299
    
    
    
    159,303Retained earnings
    
    
    427,693
    
    
    
    360,892Accumulated other comprehensive income (loss), net
    
    
    5,464
    
    
    
    (11,576
    )Total stockholders
equity
    
    
    617,272
    
    
    
    537,772Total liabilities and
stockholders equity
    
    $
    1,759,370
    
    
    $
    1,648,704
  3




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##### Table of Contents



Triple-S Management Corporation
Consolidated Statements of Earnings
Years Ended December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2010
    
    
    2009
    
    
    2008RevenuesPremiums earned, net
    
    $
    1,901,100
    
    
    $
    1,869,084
    
    
    $
    1,692,344Administrative service fees
    
    
    39,546
    
    
    
    48,643
    
    
    
    19,187Net investment income
    
    
    49,145
    
    
    
    52,136
    
    
    
    56,253Total operating revenues
    
    
    1,989,791
    
    
    
    1,969,863
    
    
    
    1,767,784Net realized investment gains (losses):Total other-than-temporary impairment
losses on securities
    
    
    (2,997
    )
    
    
    (7,118
    )
    
    
    (16,494
    )Net realized gains, excluding
other-than-temporary impairment
losses on securities
    
    
    5,529
    
    
    
    7,732
    
    
    
    2,554Total net realized investment gains (losses)
    
    
    2,532
    
    
    
    614
    
    
    
    (13,940
    )Net unrealized investment gains (losses) on
trading securities
    
    
    5,433
    
    
    
    10,497
    
    
    
    (21,064
    )Other income (expense), net
    
    
    889
    
    
    
    1,237
    
    
    
    (2,467
    )Total revenues
    
    
    1,998,645
    
    
    
    1,982,211
    
    
    
    1,730,313Benefits and expensesClaims incurred
    
    
    1,596,789
    
    
    
    1,605,872
    
    
    
    1,431,801Operating expenses
    
    
    304,995
    
    
    
    279,418
    
    
    
    251,887Total operating costs
    
    
    1,901,784
    
    
    
    1,885,290
    
    
    
    1,683,688Interest expense
    
    
    12,658
    
    
    
    13,270
    
    
    
    14,681Total benefits and expenses
    
    
    1,914,442
    
    
    
    1,898,560
    
    
    
    1,698,369Income before taxes
    
    
    84,203
    
    
    
    83,651
    
    
    
    31,944Income tax expense (benefit)Current
    
    
    14,348
    
    
    
    19,197
    
    
    
    11,542Deferred
    
    
    3,054
    
    
    
    (4,326
    )
    
    
    (4,388
    )Total income taxes
    
    
    17,402
    
    
    
    14,871
    
    
    
    7,154Net income
    
    $
    66,801
    
    
    $
    68,780
    
    
    $
    24,790Basic net income per share
    
    $
    2.30
    
    
    $
    2.33
    
    
    $
    0.77Diluted net income per share
    
    $
    2.28
    
    
    $
    2.33
    
    
    $
    0.77
  4




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##### Table of Contents



Triple-S Management Corporation
Consolidated Statements of Earnings
Years Ended December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 AccumulatedClass A
    
    
    Class B
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBalance, December 31, 2007
    
    $
    16,043
    
    
    $
    16,266
    
    
    $
    188,935
    
    
    $
    267,336
    
    
    $
    (6,042
    )
    
    $
    482,538Conversion of Class A common stock to
Class B common stock
    
    
    (7,000
    )
    
    
    7,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    3,268
    
    
    
    
    
    
    
    
    
    
    
    3,268Grant of restricted Class B common stock
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Repurchase and retirement of common stock
    
    
    
    
    
    
    (1,181
    )
    
    
    (12,699
    )
    
    
    
    
    
    
    
    
    
    
    (13,880
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,790
    
    
    
    
    
    
    
    24,790Net unrealized change in fair value
of available for sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,952
    )
    
    
    (3,952
    )Defined benefit pension planPrior service credit, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (266
    )
    
    
    (266
    )Actuarial loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,349
    )
    
    
    (7,349
    )Net change in fair value of cash
flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    (56
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,167Balance, December 31, 2008
    
    
    9,043
    
    
    
    22,105
    
    
    
    179,504
    
    
    
    292,112
    
    
    
    (17,665
    )
    
    
    485,099Share-based compensation
    
    
    
    
    
    
    
    
    
    
    3,897
    
    
    
    
    
    
    
    
    
    
    
    3,897Grant of restricted Class B common stock
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27Repurchase and retirement of common stock
    
    
    
    
    
    
    (2,022
    )
    
    
    (24,098
    )
    
    
    
    
    
    
    
    
    
    
    (26,120
    )Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,780
    
    
    
    
    
    
    
    68,780Net unrealized change in fair value
of available for sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,539
    
    
    
    3,539Defined benefit pension planPrior service credit, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (273
    )
    
    
    (273
    )Actuarial gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,823
    
    
    
    2,823Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,869Balance, December 31, 2009
    
    
    9,043
    
    
    
    20,110
    
    
    
    159,303
    
    
    
    360,892
    
    
    
    (11,576
    )
    
    
    537,772Share-based compensation
    
    
    
    
    
    
    
    
    
    
    1,878
    
    
    
    
    
    
    
    
    
    
    
    1,878Grant of restricted Class B common stock
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16Repurchase and retirement of common stock
    
    
    
    
    
    
    (353
    )
    
    
    (5,882
    )
    
    
    
    
    
    
    
    
    
    
    (6,235
    )Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,801
    
    
    
    
    
    
    
    66,801Net unrealized change in fair value
of available for sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,602
    
    
    
    23,602Defined benefit pension planPrior service credit, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (265
    )
    
    
    (265
    )Actuarial loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,297
    )
    
    
    (6,297
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,841Balance, December 31, 2010
    
    $
    9,043
    
    
    $
    19,773
    
    
    $
    155,299
    
    
    $
    427,693
    
    
    $
    5,464
    
    
    $
    617,272
  5




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##### Table of Contents



Triple-S Management Corporation
Consolidated Statements of Earnings
Years Ended December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2010
    
    
    2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    66,801
    
    
    $
    68,780
    
    
    $
    24,790Adjustments to reconcile net income to net cash
provided by (used in) operating activitiesDepreciation and amortization
    
    
    15,500
    
    
    
    9,643
    
    
    
    7,367Net amortization of investments
    
    
    4,511
    
    
    
    744
    
    
    
    952Provision (reversal of provision) for doubtful receivables
    
    
    (5,200
    )
    
    
    10,489
    
    
    
    (1,180
    )Deferred tax expense (benefit)
    
    
    3,054
    
    
    
    (4,326
    )
    
    
    (4,388
    )Net realized investment (gains) losses
    
    
    (2,532
    )
    
    
    (614
    )
    
    
    13,940Net unrealized (gains) losses on trading securities
    
    
    (5,433
    )
    
    
    (10,497
    )
    
    
    21,064Share-based compensation
    
    
    1,894
    
    
    
    3,924
    
    
    
    3,268Proceeds from trading securities soldEquity securities
    
    
    4,871
    
    
    
    4,240
    
    
    
    24,640Acquisition of securities in trading portfolioEquity securities
    
    
    (6,506
    )
    
    
    (6,132
    )
    
    
    (10,737
    )Gain on sale of property and equipment
(Increase) decrease in assets
    
    
    6
    
    
    
    
    
    
    
    11Premium and other receivables, net
    
    
    (47,648
    )
    
    
    (46,263
    )
    
    
    (32,210
    )Deferred policy acquisition costs and value of
business acquired
    
    
    (6,169
    )
    
    
    (13,570
    )
    
    
    (9,108
    )Other deferred taxes
    
    
    6,658
    
    
    
    900
    
    
    
    (8,337
    )Other assets
    
    
    5,223
    
    
    
    (1,593
    )
    
    
    (933
    )Increase (decrease) in liabilitiesClaim liabilities
    
    
    (236
    )
    
    
    36,736
    
    
    
    (30,120
    )Liability for future policy benefits
    
    
    13,904
    
    
    
    15,074
    
    
    
    13,414Unearned premiums
    
    
    (10,001
    )
    
    
    (1,799
    )
    
    
    (22,458
    )Policyholder deposits
    
    
    733
    
    
    
    1,665
    
    
    
    1,902Liability to FEHBP
    
    
    2,016
    
    
    
    1,845
    
    
    
    (10,181
    )Accounts payable and accrued liabilities
    
    
    (3,790
    )
    
    
    3,339
    
    
    
    15,322Net cash provided by (used in)
operating activities
    
    
    37,656
    
    
    
    72,585
    
    
    
    (2,982
    )
  6




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##### Table of Contents



Triple-S Management Corporation
Consolidated Statements of Earnings
Years Ended December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2010
    
    
    2009
    
    
    2008Cash flows from investing activitiesProceeds from investments sold or maturedSecurities available for saleFixed maturities sold
    
    $
    121,968
    
    
    $
    241,368
    
    
    $
    228,436Fixed maturities matured
    
    
    175,483
    
    
    
    189,144
    
    
    
    91,732Equity securities sold
    
    
    41,802
    
    
    
    9,877
    
    
    
    4,450Securities held to maturityFixed maturities matured
    
    
    2,587
    
    
    
    7,819
    
    
    
    22,875Acquisition of investmentsSecurities available for saleFixed maturities
    
    
    (337,569
    )
    
    
    (459,705
    )
    
    
    (505,896
    )Equity securities
    
    
    (26,957
    )
    
    
    (3,684
    )
    
    
    (19,636
    )Securities held to maturityFixed maturities
    
    
    (1,050
    )
    
    
    (1,502
    )
    
    
    (554
    )Net (disbursements) repayment for policy loans
    
    
    53
    
    
    
    (489
    )
    
    
    30Capital expenditures
    
    
    (19,222
    )
    
    
    (18,706
    )
    
    
    (22,411
    )Net cash used in investing activities
    
    
    (42,905
    )
    
    
    (35,878
    )
    
    
    (200,974
    )Cash flows from financing activitiesRepurchase and retirement of common stock
    
    
    (6,235
    )
    
    
    (32,355
    )
    
    
    (7,645
    )Change in outstanding checks in excess of bank balances
    
    
    281
    
    
    
    (5,645
    )
    
    
    18,353Repayments of long-term borrowings
    
    
    (26,367
    )
    
    
    (1,640
    )
    
    
    (1,639
    )Net proceeds from short-term borrowings
    
    
    15,575
    
    
    
    
    
    
    
    Proceeds from long-term borrowings
    
    
    25,000
    
    
    
    
    
    
    
    Proceeds from annuity contracts
    
    
    10,691
    
    
    
    4,307
    
    
    
    8,018Surrenders of annuity contracts
    
    
    (9,051
    )
    
    
    (7,093
    )
    
    
    (7,195
    )Other
    
    
    
    
    
    
    
    
    
    
    6Net cash provided by (used in) financing activities
    
    
    9,894
    
    
    
    (42,426
    )
    
    
    9,898Net increase (decrease) in cash and cash
equivalents
    
    
    4,645
    
    
    
    (5,719
    )
    
    
    (194,058
    )Cash and cash equivalentsBeginning of year
    
    
    40,376
    
    
    
    46,095
    
    
    
    240,153End of year
    
    $
    45,021
    
    
    $
    40,376
    
    
    $
    46,095
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 1.
    
    Nature of Business
 Triple-S Management Corporation (the Company or TSM) was incorporated under the laws of the
Commonwealth of Puerto Rico on January 17, 1997 to engage, among other things, as the holding
company of entities primarily involved in the insurance industry.
 The Company has the following wholly owned subsidiaries that are subject to the regulations
of the Commissioner of Insurance of the Commonwealth of Puerto Rico (the Commissioner of
Insurance): (1) Triple-S Salud, Inc. (TSS) a managed care organization that provides health
benefits services to subscribers through contracts with hospitals, physicians, dentists,
laboratories, and other organizations; (2) Triple-S Vida, Inc. (TSV), which is engaged in the
underwriting of life and accident and health insurance policies and the administration of
annuity contracts; and (3) Triple-S Propiedad, Inc. (TSP), which is engaged in the
underwriting of property and casualty insurance policies. The Company and TSS are members of
the Blue Cross and Blue Shield Association (BCBSA).
 The Company also has two other wholly owned subsidiaries, Interactive Systems, Inc. (ISI) and
Triple-C, Inc. (TC). ISI is mainly engaged in providing data processing services to the
Company and its subsidiaries. TC is mainly engaged as a third-party administrator for TSS in
the administration of the Commonwealth of Puerto Rico Health Insurance Plan (Similar to
Medicaid)(Medicaid) business. Also, TC provides healthcare advisory services to TSS and
other health insurance-related services to the health insurance industry.
 The contract with the Commonwealth of Puerto Rico (the government of Puerto Rico) that
allowed us to provide services to Medicaid enrollees, expired by its own terms on September
30, 2010, thus effective October 1st, 2010 we no longer provide services to these
enrollees. As a result, TC will cease to exist during 2011.
 A substantial majority of the Companys business activity is with insurers located throughout
Puerto Rico, and as such, the Company is subject to the risks associated with the Puerto Rico
economy.
 2.
    
    Significant Accounting Policies
 The following are the significant accounting policies followed by the Company and its
subsidiaries:
 Basis of Presentation
 The accompanying consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America (GAAP).
 The consolidated financial statements include the financial statements of the Company and its
subsidiaries. All significant intercompany balances and transactions have been eliminated in
consolidation.
 Use of Estimates
 The preparation of the consolidated financial statements in conformity with GAAP requires the
Company to make a number of estimates and assumptions relating to the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of
the consolidated financial statements, and the reported amounts of revenue and expenses
during the period. Actual results could differ from those estimates. The most significant
items on the consolidated balance sheets that involve a greater degree of accounting
estimates and actuarial determinations subject to changes in the near future are the
assessment of other-than-temporary
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 impairments, allowance for doubtful receivables, deferred policy acquisition costs and value
of business acquired, claim liabilities, the liability for future policy benefits, and
liability for pension benefits. As additional information becomes available (or actual
amounts are determinable), the recorded estimates are revised and reflected in operating
results of the period they are determined. Although some variability is inherent in these
estimates, the Company believes the amounts provided are adequate.
 Reclassifications
 Certain amounts in the 2009 and 2008 consolidated financial statements were reclassified to
conform to the 2010 presentation.
 Cash Equivalents
 The Company considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents. Cash equivalents of $626 and $920 at December 31,
2010 and 2009, respectively, consist principally of obligations of government-sponsored
enterprises and certificates of deposit with an initial term of less than three months.
 Investments
 Investment in securities at December 31, 2010 and 2009 consists mainly of obligations of
government-sponsored enterprises, U.S. Treasury securities and obligations of U.S. government
instrumentalities, obligations of the Commonwealth of Puerto Rico and its instrumentalities,
municipal securities, obligations of states of the United States and political subdivisions
of the states, corporate bonds, mortgage-backed securities, collateralized mortgage
obligations, and equity securities. The Company classifies its debt and equity securities in
one of three categories: trading, available for sale, or held to maturity. Trading
securities are bought and held principally for the purpose of selling them in the near term.
Securities classified as held to maturity are those securities in which the Company has the
ability and intent to hold the security until maturity. All other securities not included in
trading or held to maturity are classified as available for sale.
 Trading and available-for-sale securities are recorded at fair value. The fair values of
debt securities (both available for sale and held to maturity investments) and equity
securities are based on quoted market prices for those or similar investments at the
reporting date. Held-to-maturity debt securities are recorded at amortized cost, adjusted
for the amortization or accretion of premiums and discounts, respectively. Unrealized
holding gains and losses on trading securities are included in earnings. Unrealized holding
gains
and losses, net of the related tax effect, on available-for-sale securities are excluded from
earnings and are reported as a separate component of other comprehensive income until
realized. Realized gains and losses from the sale of available-for-sale securities are
included in earnings and are determined on a specific-identification basis.
 Transfers of securities between categories are recorded at fair value at the date of
transfer. Unrealized holding gains and losses are recognized in earnings for transfers into
trading securities. Unrealized holding gains or losses associated with transfers of
securities from held to maturity to available for sale are recorded as a separate component
of other comprehensive income. The unrealized holding gains or losses included in the
separate component of other comprehensive income for securities transferred from available
for sale to held to maturity, are maintained and amortized into earnings over the remaining
life of the security as an adjustment to yield in a manner consistent with the amortization
or accretion of premium or discount on the associated security.
 If a fixed maturity security is in an unrealized loss position and the Company has the intent
to sell the fixed maturity security, or it is more likely than not that the Company will have
to sell the fixed
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 maturity security before recovery of its amortized cost basis, the decline in value is deemed
to be other-than-temporary and is recorded to other-than-temporary impairment losses
recognized in earnings in the Companys consolidated statements of earnings. For impaired
fixed maturity securities that the Company does not intend to sell or it is more likely than
not that such securities will not have to be sold, but the Company expects not to fully
recover the amortized cost basis, the credit component of the other-than temporary impairment
is recognized in other-than-temporary impairment losses recognized in earnings in the
Companys consolidated statements of earnings and the non-credit component of the
other-than-temporary impairment is recognized in other comprehensive income. Furthermore,
unrealized losses entirely caused by non-credit related factors related to fixed maturity
securities for which the Company expects to fully recover the amortized cost basis continue
to be recognized in accumulated other comprehensive income.
 The credit component of an other-than-temporary impairment is determined by comparing the net
present value of projected future cash flows with the amortized cost basis of the fixed
maturity security. The net present value is calculated by discounting the Companys best
estimate of projected future cash flows at the effective interest rate implicit in the fixed
maturity security at the date of acquisition.
 The unrealized gains or losses on the Companys equity securities classified as
available-for-sale are included in accumulated other comprehensive income as a separate
component of stockholders equity, unless the decline in value is deemed to be
other-than-temporary and the Company does not have the intent and ability to hold such equity
securities until their full cost can be recovered, in which case such equity securities are
written down to fair value and the loss is charged to other-than-temporary impairment losses
recognized in earnings.
 A decline in the fair value of any available-for-sale or held-to-maturity security below cost
that is deemed to be other-than-temporary results in an impairment to reduce the carrying
amount to fair value. The impairment is charged to earnings and a new cost basis for the
security is established. To determine whether an impairment is other-than-temporary, the
Company considers whether it has the ability and intent to hold the investment until a market
price recovery and considers whether evidence indicating the cost of the investment is
recoverable outweighs evidence to the contrary. Evidence considered in this assessment
includes the reasons for the impairment, the severity and duration of the impairment, market
conditions, changes in value subsequent to year-end, forecasted performance of the investee,
and the general market condition in the geographic area or industry the investee operates in.
 Premiums and discounts are amortized or accreted over the life of the related
held-to-maturity or available-for-sale security as an adjustment to yield using the effective
interest method. Dividend and interest income are recognized when earned.
 The Company regularly invests in mortgaged-backed securities and other securities subject to
prepayment and call risk. Significant changes in prevailing interest rates may adversely
affect the timing and amount of cash flows on such securities. In addition, the amortization
of market premium and accretion of market discount for mortgaged-backed securities is based
on historical experience and estimates of future payment speeds on the underlying mortgage
loans. Actual prepayment speeds will differ from original estimates and may result in
material adjustments to amortization or accretion recorded in future periods.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Revenue Recognitiona.
    
    Managed CareSubscriber premiums on the managed care business are billed in advance of their
respective coverage period. Managed care premiums are billed in the month prior to the
effective date of the policy with a grace period of up to two months. If the insured
fails to pay, the policy can be canceled at the end of the grace period at the option of
the Company. Managed care premiums are reported as earned when due.Premiums for the Medicare Advantage (MA) business are based on a bid contract with the
Centers for Medicare and Medicaid Services (CMS) and billed in advance of the coverage
period. MA contracts provide for a risk factor to adjust premiums paid for members that
represent a higher or lower risk to the Company. Retroactive rate adjustments are made
periodically based on the aggregate health status and risk scores of the Companys MA
membership. These risk adjustments are evaluated quarterly based on actuarial
estimates. Actual results could differ from these estimates. As additional information
becomes available, the recorded estimate is revised and reflected in operating results.TSS offers prescription drug coverage to Medicare eligible beneficiaries as part of its
MA plans (MA-PD) and on a stand-alone basis (stand-alone PDP). Premiums are based on a
bid contract with CMS that considers the estimated costs of providing
prescription drug benefits to enrolled participants. MA-PD and stand-alone PDP premiums
are subject to adjustment, positive or negative, based upon the application of risk
corridors that compare the estimated prescription drug costs included in the bids to CMS
to actual prescription drug costs. Variances exceeding certain thresholds may result in
CMS making additional payments to the TSS or in TSS refunding CMS a portion of the
premiums collected. TSS estimates and records adjustments to earned premiums related to
estimated risk corridor payments based upon actual prescription drug costs for each
reporting period as if the annual contract were to end at the end of each reporting
period.Administrative service fees include revenue from certain groups which has managed care
contracts that provide for the group to be at risk for all or a portion of their claims
experience. For these groups, the Company is not at risk and only handles the
administration of the insurance coverage for an administrative service fee. The Company
pays claims under self-funded arrangements from its own funds, and subsequently receives
reimbursement from these groups. Claims paid under self-funded arrangements are
excluded from the claims incurred in the accompanying consolidated financial statements.
Administrative service fees under the self-funded arrangements are recognized based on
the groups membership or incurred claims for the period multiplied by an administrative
fee rate plus other fees. In addition, some of these self-funded groups purchase
aggregate and/or specific stop-loss coverage. In exchange for a premium, the groups
aggregate liability or the groups liability on any one episode of care is capped for
the year. Premiums for the stop-loss coverage are actuarially determined based on
experience and other factors and are recorded as earned over the period of the contract
in proportion to the coverage provided. This fully insured portion of premiums is
included within the premiums earned, net in the accompanying consolidated statements of
earnings. The Medicaid contract with the Government of Puerto Rico contained a
savings-sharing provision whereby the Government of Puerto Rico shares with TSS a
portion of the medical cost savings obtained with the administration of the region
served on an administrative service basis. Any savings-sharing amount is recorded when
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 earned as administrative service fees in the accompanying consolidated statements of
earnings.
 b.
    
    Life and Accident and Health InsurancePremiums on life insurance policies are billed in advance of their respective coverage
period and the related revenue is recorded as earned when due. Premiums on accident and
health and other short-term policies are recognized as earned primarily on a pro rata
basis over the contract period. Premiums on credit life policies are recognized as
earned in proportion to the amounts of insurance in-force. Revenues from universal life
and interest sensitive policies represent amounts assessed against policyholders,
including mortality charges, surrender charges actually paid, and earned policy service
fees. The revenues for limited payment contracts are recognized over the period that
benefits are provided rather than on collection of premiums.
 c.
    
    Property and Casualty InsurancePremiums on property and casualty contracts are billed in advance of their respective
coverage period and they are recognized as earned on a pro rata basis over the policy
term. The portion of premiums related to the period prior to the end of coverage is
recorded in the consolidated balance sheets as unearned premiums and is transferred to
premium revenue as earned.
 Allowance for Doubtful ReceivablesThe allowance for doubtful receivables is based on managements evaluation of the aging of
accounts and such other factors, which deserve current recognition. Actual results could
differ from these estimates. Receivables are charged against their respective allowance
accounts when deemed to be uncollectible.Deferred Policy Acquisition Costs and Value of Business AcquiredCertain direct costs for acquiring life and accident and health, and property and casualty
insurance business are deferred by the Company. Substantially all acquisition costs related
to the managed care business are expensed as incurred.
 In the life and accident and health business deferred acquisition costs consist of
commissions and certain expenses related to the production of life, annuity, accident and
health, and credit business. In the event that future premiums, in combination with
policyholder reserves and anticipated investment income, could not provide for all future
maintenance and settlement expenses, the amount of deferred policy acquisition costs would be
reduced to provide for such amount. The related amortization is provided over the
anticipated premium-paying period of the related policies in proportion to the ratio of
annual premium revenue to expected total premium revenue to be received over the life of the
policies. Interest is considered in the amortization of deferred policy acquisition cost and
value of business acquired. For these contracts interest is considered at a level rate at
the time of issue of each contract, 5.4% for 2010 and 2009, and, in the case of the value of
business acquired, at the time of any acquisition. For certain other long-duration
contracts, deferred amounts are amortized at historical and forecasted credited interest
rates. Expected premium revenue is estimated by using the same mortality and withdrawal
assumptions used in computing liabilities for future policy benefits. The method followed in
computing deferred policy acquisition costs limits the amount of such deferred costs to their
estimated net realizable value. In determining estimated net realizable value, the
computations give effect to the premiums to be earned, related investment income, losses and
loss-adjustment expenses, and certain other
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 costs expected to be incurred as the premium is earned. Costs deferred on universal life and
interest sensitive products are amortized as a level percentage of the present value of
anticipated gross profits from investment yields, mortality, expenses and surrender charges.
Estimates used are based on the Companys experience as adjusted to provide for possible
adverse deviations. These estimates are periodically reviewed and compared with actual
experience. When it is determined that future expected experience differs significantly from
that assumed, the estimates are revised for current and future issues.
 The value assigned to the insurance in-force of TSV at the date of the acquisition is
amortized using methods similar to those used to amortize the deferred policy acquisition
costs of the life and accident and health business.
 In the property and casualty business, acquisition costs consist of commissions incurred
during the production of business and are deferred and amortized ratably over the terms of
the policies.
 Property and Equipment
 Property and equipment are stated at cost. Maintenance and repairs are expensed as incurred.
Depreciation is calculated on the straight-line method over the estimated useful lives of
the assets. Costs of computer equipment, programs, systems, installations, and enhancements
are capitalized and amortized straight-line over their estimated useful lives. The following
is a summary of the estimated useful lives of the Companys property and equipment:
 EstimatedAsset Category
    
    Useful LifeBuildings 
Building improvements 
Leasehold improvements 

Office furniture 
Computer software 
Computer equipment, equipment,
and automobiles
    
    20 to 50 years
3 to 5 years
Shorter of estimated useful life or lease term
5 years
3 to 10 years

3 years
 Software Development Costs
 Costs related to software developed or obtained for internal use that is incurred in the
preliminary project stage are expensed as incurred. Once capitalization criteria are met,
directly attributable development costs are capitalized and amortized over the expected
useful life of the software. Upgrade and maintenance costs are expensed as incurred. During
the year ended December 31, 2010 and 2009 the Company capitalized approximately $11,647 and
$10,993 associated with the implementation of new software.
 Long-Lived Assets
 Long-lived assets, such as property and equipment, and purchased intangible assets subject to
amortization, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of an asset to
estimated undiscounted future cash flows expected to be generated by the asset. If the
carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the fair value of
the asset. Assets to be
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 disposed of would be separately presented in the balance sheets and reported at the lower of
the carrying amount or fair value less costs to sell, and are no longer depreciated. The
assets and liabilities of a disposal group classified as held for sale would be presented
separately in the appropriate asset and liability sections of the consolidated balance
sheets.
 Goodwill and intangible assets that have indefinite useful lives are tested annually for
impairment, and are tested for impairment more frequently if events and circumstances
indicate that the asset might be impaired. An impairment loss is recognized to the extent
that the carrying amount exceeds the assets fair value. For goodwill, the impairment
determination is made at the reporting unit level and consists of two steps. First, the
Company determines the fair value of a reporting unit and compares it to its carrying amount.
Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment
loss is recognized for any excess of the carrying amount of the reporting units goodwill
over the implied fair value of that goodwill. The implied fair value of goodwill is
determined by allocating the fair value of the reporting unit in a manner similar to a
purchase price allocation. The residual fair value after this allocation is the implied fair
value of the reporting unit goodwill.
 Claim Liabilities
 Claim liabilities for managed care policies represent the estimated amounts to be paid to
providers based on experience and accumulated statistical data. Loss-adjustment expenses
related to such claims are currently accrued based on estimated future expenses necessary to
process such claims.
 TSS contracts with various independent practice associations (IPAs) for certain medical care
services provided to some policies subscribers. The IPAs are compensated on a capitation
basis. In the Medicaid business and one of the MA policies, TSS retains a portion of the
capitation payments to provide for incurred but not reported losses. At December 31, 2010
and 2009, total withholdings and capitation payable amounted to $22,428 and $25,568,
respectively, which are recorded as part of the claim liabilities in the accompanying
consolidated balance sheets.
 Claim liabilities include unpaid claims and loss-adjustment expenses of the life and accident
and health business based on a case-basis estimate for reported claims, and on estimates,
based on experience, for unreported claims and loss-adjustment expenses. The liability for
policy and contract claims and claims expenses has been established to cover the estimated
net cost of insured claims.
 Also included within the claim liabilities is the liability for losses and loss-adjustment
expenses for the property and casualty business which represents individual case estimates
for reported claims and estimates for unreported losses, net of any salvage and subrogation
based on past experience modified for current trends and estimates of expenses for
investigating and settling claims.
 Claim liabilities are necessarily based on estimates and, while management believes that the
amounts are adequate, the ultimate liability may be in excess of or less than the amounts
provided. The methods for making such estimates and for establishing the resulting liability
are continually reviewed, and any adjustments are reflected in the consolidated statements of
earnings in the period determined.
 Future Policy Benefits
 The liability for future policy benefits has been computed using the level-premium method
based on estimated future investment yield, mortality, morbidity and withdrawal
experience. The interest rate assumption ranges between 5.0% and 5.40% for all years in
issue. Mortality has been calculated
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 principally on select and ultimate tables in common usage in the industry. Withdrawals have
been determined principally based on industry tables, modified by Companys experience.
 Policyholder Deposits
 Amounts received for annuity contracts are considered deposits and recorded as a liability
along with the accrued interest and reduced for charges and withdrawals. Interest incurred
on such deposits, which amounted to $1,688, $1,665, and $1,902, during the years ended
December 31, 2010, 2009, and 2008, respectively, is recorded as interest expense in the
accompanying consolidated statements of earnings.
 Reinsurance
 In the normal course of business, the insurance-related subsidiaries seek to limit their
exposure that may arise from catastrophes or other events that cause unfavorable underwriting
results by reinsuring certain levels of risk in various areas of exposure with other
insurance enterprises or reinsurers.
 Reinsurance premiums, commissions, and expense reimbursements, related to reinsured business
are accounted for on bases consistent with those used in accounting for the original policies
issued and the terms of the reinsurance contracts. Accordingly, reinsurance premiums are
reported as prepaid reinsurance premiums and amortized over the remaining contract period in
proportion to the amount of insurance protection provided.
 Premiums ceded and recoveries of losses and loss-adjustment expenses have been reported as a
reduction of premiums earned and losses and loss-adjustment expenses incurred, respectively.
Commission and expense allowances received by TSP in connection with reinsurance ceded have
been accounted for as a reduction of the related policy acquisition costs and are deferred
and amortized accordingly. Amounts recoverable from reinsurers are estimated in a manner
consistent with the claim liability associated with the reinsured policy.
 Derivative Instruments and Hedging Activities
 The Company recognizes all derivative instruments, including certain derivative instruments
embedded in other contracts, whether or not designated in hedging relationships, as either
assets or liabilities in the balance sheet at their respective fair values. Changes in the
fair value of derivative instruments are recorded in earnings, unless specific hedge
accounting criteria are met in which case the change in fair value of the instrument is
recorded within other comprehensive income for cash flow hedges.
 On the date the derivative contract designated as a hedging instrument is entered into, the
Company designates the instrument as either a hedge of the fair value of a recognized asset
or liability or of an unrecognized firm commitment (fair-value hedge), a hedge of a
forecasted transaction or the variability of cash flows to be received or paid related to a
recognized asset or liability (cash-flow hedge), a foreign currency fair-value or cash-flow
hedge (foreign-currency hedge), or a hedge of a net investment in a foreign operation. For
all hedging relationships the Company formally documents the hedging relationship and its
risk-management objective and strategy for undertaking the hedge, the hedging instrument, the
hedged item, the nature of the risk being hedged, how the hedging instruments effectiveness
in offsetting the hedged risk will be assessed, and a description of the method of measuring
ineffectiveness. This process includes linking all derivatives that are designated as
fair-value, cash-flow, or foreign-currency hedges to specific assets and liabilities on the
balance sheet or to specific firm commitments or forecasted transactions. The Company also
formally assesses, both at the hedges inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 offsetting changes in fair values or cash flows of hedged items. Changes in the fair value
of a derivative that is highly effective and that is designated and qualifies as a fair-value
hedge, along with the loss or gain on the hedged asset or liability or unrecognized firm
commitment of the hedged item that is attributable to the hedged risk, are recorded in
earnings. Changes in the fair value of a derivative that is highly effective and that is
designated and qualifies as a cash-flow hedge are recorded in other comprehensive income to
the extent that the derivative is effective as hedge, until earnings are affected by the
variability in cash flows of the designated hedged item. Changes in the fair value of
derivatives that are highly effective as hedges and that are designated and qualify as
foreign-currency hedges are recorded in either earnings or other comprehensive income,
depending on whether the hedge transaction is a fair-value hedge or a cash-flow hedge.
However, if a derivative is used as a hedge of a net investment in a foreign operation, its
changes in fair value, to the extent effective as a hedge, are recorded in the cumulative
translation adjustments account within other comprehensive income. The ineffective portion
of the change in fair value of a derivative instrument that qualifies as either a fair-value
hedge or a cash-flow hedge is reported in earnings. Changes in the fair value of derivative
trading instruments are reported in current period earnings.
 The Company discontinues hedge accounting prospectively when it is determined that the
derivative is no longer effective in offsetting changes in the fair value or cash flows of
the hedged item, the derivative expires or is sold, terminated, or exercised, the derivative
is de-designated as a hedging instrument, because it is unlikely that a forecasted
transaction will occur, a hedged firm commitment no longer meets the definition of a firm
commitment, or management determines that designation of the derivative as a hedging
instrument is no longer appropriate.
 In all situations in which hedge accounting is discontinued and the derivative is retained,
the Company continues to carry the derivative at its fair value on the balance sheet and
recognizes any subsequent changes in its fair value in earnings. When hedge accounting is
discontinued because it is determined that the derivative no longer qualifies as an effective
fair-value hedge, the Company no longer adjusts the hedged asset or liability for changes in
fair value. The adjustment of the carrying amount of the hedged asset or liability is
accounted for in the same manner as other components of the carrying amount of that asset or
liability. When hedge accounting is discontinued because the hedged item no longer meets the
definition of a firm commitment, the Company removes any asset or
liability that was recorded pursuant to recognition of the firm commitment from the balance
sheet, and recognizes any gain or loss in earnings. When it is probable that a forecasted
transaction will not occur, the Company discontinues hedge accounting if not already done and
recognizes immediately in earnings gains and losses that were accumulated in other
comprehensive income.
 Income Taxes
 Income taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
consolidated statements of earnings in the period that includes the enactment date. The
Company recognizes the effect of income tax positions only if those positions are more likely
than not of being sustained. Recognized income tax positions are measured at the largest
amount that is greater than 50% likely of being realized. Changes in recognition or
measurement are reflected in the period in which the change in judgment occurs.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 The Company records any interest and penalties related to unrecognized tax benefits within
the operating expenses in the consolidated statement of earnings.
 Insurance-Related Assessments
 The Company records a liability for insurance-related assessments when the following three
conditions are met: (1) the assessment has been imposed or the information available prior to
the issuance of the financial statements indicates it is probable that an assessment will be
imposed; (2) the event obligating an entity to pay (underlying cause of) an imposed or
probable assessment has occurred on or before the date of the financial statements; and (3)
the amount of the assessment can be reasonably estimated. A related asset is recognized when
the paid or accrued assessment is recoverable through either premium taxes or policy
surcharges.
 Commitments and Contingencies
 Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and
penalties and other sources are recorded when it is probable that a liability has been
incurred and the amount of the assessment and/or remediation can be reasonably estimated.
Legal costs incurred in connection with loss contingencies are expensed as incurred.
Recoveries of costs from third parties, which are probable of realization, are separately
recorded as assets, and are not offset against the related liability.
 Share-Based Compensation
 Share-based compensation is measured at the fair value of the award and recognized as an
expense in the financial statements over the vesting period. The Company recognizes
compensation expense for its stock options based on estimated grant date fair value using the
Black-Scholes option-pricing model.
 Earnings Per Share
 Basic earnings per share excludes dilution and is computed by dividing net income available
to all classes of common stockholders by the weighted average number
of all classes of common
shares outstanding for the period, excluding non-vested restricted stocks. Diluted earnings
per share is computed in the same manner as basic earnings per share except that the number
of shares is increased to include the number of additional common shares that would have been
outstanding if the potentially dilutive common shares had been
issued. Dilutive common
shares are included in the diluted earnings per share calculation using the treasury stock
method.
 Fair Value
 The fair value information of financial instruments in the accompanying consolidated
financial statements was determined as follows:
 a.
    
    Cash and Cash EquivalentsThe carrying amount approximates fair value because of the short-term nature of such
instruments.b.
    
    Investment in SecuritiesThe fair value of investment securities is estimated based on quoted market prices for
those or similar investments. Additional information pertinent to the estimated fair
value of investment in securities is included in note 3 and note 9.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 c.
    
    Policy LoansPolicy loans have no stated maturity dates and are part of the related insurance
contract. The carrying amount of policy loans approximates fair value because their
interest rate is reset periodically in accordance with current market rates.d.
    
    Receivables, Accounts Payable, and Accrued LiabilitiesThe carrying amount of receivables, accounts payable, and accrued liabilities
approximates fair value because they mature and should be collected or paid within 12
months after December 31.e.
    
    Policyholder DepositsThe fair value of policyholder deposits is the amount payable on demand at the reporting
date, and accordingly, the carrying value amount approximates fair value.f.
    
    Short-term BorrowingsThe carrying amount of securities sold under agreements to repurchase approximates fair
value due to its short-term nature.g.
    
    Long-term BorrowingsThe carrying amounts and fair value of the Companys long-term borrowings are as
follows:
 2010
    
    
    2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueLoans payable to bank
    
    
    21,027
    
    
    
    21,027
    
    
    
    22,667
    
    
    
    22,6676.3% senior unsecured notes payable
    
    
    50,000
    
    
    
    49,625
    
    
    
    50,000
    
    
    
    48,0006.6% senior unsecured notes payable
    
    
    35,000
    
    
    
    34,388
    
    
    
    60,000
    
    
    
    57,4206.7% senior unsecured notes payable
    
    
    35,000
    
    
    
    35,000
    
    
    
    35,000
    
    
    
    33,3201.96% repurchase agreement
    
    
    25,000
    
    
    
    24,575
    
    
    
    
    
    
    
    $
    166,027
    
    
    $
    164,615
    
    
    $
    167,667
    
    
    $
    161,407
 The carrying amount of the loans payable to bank approximates fair value due to its
floating interest-rate structure. The fair value of the senior unsecured notes payable and
the repurchase agreement was determined using market quotations. Additional information
pertinent to borrowings is included in Note 13.
 h.
    
    Derivative Instruments
 Current market pricing models were used to estimate fair value of structured notes
agreements. Fair values were determined using market quotations provided by outside
securities consultants or prices provided by market makers. Additional information pertinent
to the estimated fair value of derivative instruments is included in note 14.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Recently Issued Accounting StandardsIn April 2010, the FASB issued guidance to address the classification of an employee
share-based payment award with an exercise price denominated in the currency of a market in
which the underlying equity security trades. The guidance clarifies that a share-based
payment award with an exercise price denominated in the currency of a market in which a
substantial portion of the entitys equity securities trades should not be considered to
contain a condition that is not a market, performance, or service condition. Therefore, such
an award should not be classified as a liability if it otherwise qualifies as equity. This
guidance is effective for fiscal years and interim periods within those fiscal years,
beginning on or after December 15, 2010. We do not expect the adoption of this guidance to
have an impact on our financial position or results of operations.
 In October 2010, the FASB issued guidance to address diversity in practice regarding the
interpretation of which costs relating to the acquisition of new or renewal insurance
contracts qualify for deferral. This guidance specifies that the following costs incurred in
the acquisition of new and renewal contracts should be capitalized: (1) Incremental direct
costs of contract acquisition. Incremental direct costs are those costs that result directly
from and are essential to the contract transaction and would not have been incurred by the
insurance entity had the contract transaction not occurred. (2) Certain costs related
directly
to the following acquisition activities performed by the insurer for the contract: a.
Underwriting, b. Policy issuance and processing, c. Medical and inspection, and d. Sales
force contract selling. Advertising costs should be included in deferred acquisition costs
only if the capitalization criteria in the direct-response advertising guidance in Subtopic
340-20, Other Assets and Deferred Costs Capitalized Advertising Costs, are met. This
guidance is effective for fiscal years and interim periods within those fiscal years,
beginning on or after December 15, 2011. The Company is currently evaluating the impact the
adoption of this guidance will have on its financial position or results of operations.
 In December 2010, the FASB issued guidance to modify Step 1 of the goodwill impairment test
for reporting units with zero or negative carrying amounts. For those reporting units, an
entity is required to perform Step 2 of the goodwill impairment test if it is more likely
than not that a goodwill impairment exists. In determining whether it is more likely than
not that a goodwill impairment exists, an entity should consider whether there are any
adverse qualitative factors indicating that an impairment may exist. This guidance is
effective for fiscal years, and interim periods within those years, beginning after December
15, 2010. We do not expect the adoption of this guidance to have a significant impact on our
financial position or results of operations.
 In December 2010, the FASB issued guidance to require a public entity to disclose pro forma
information for business combinations that occurred in the current reporting period. The
disclosures include pro forma revenue and earnings of the combined entity for the current
reporting period as though the acquisition date for all business combinations that occurred
during the year had been as of the beginning of the annual reporting period for all the
periods presented. This guidance also expands the supplemental pro forma disclosures to
include a description of the nature and amount of material, nonrecurring pro forma
adjustments directly attributable to the business combination included in the reported pro
forma revenue and earnings. This guidance is effective for business combinations for which
the acquisition dates is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2010. We expect to adopt this guidance during 2011 as
part of our disclosures related to our business combination. Additional information
pertinent to the business combination is included in note 28.
 There were no other new accounting pronouncements issued that had or are expected to have a
material impact on our financial position, operating results or disclosures.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 3.
    
    Investment in Securities
 The amortized cost for debt and equity securities, gross unrealized gains, gross unrealized
losses, and estimated fair value for trading, available-for-sale, and held-to-maturity
securities by major security type and class of security at December 31, 2010 and 2009 were as
follows:
 2010Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueTrading securities 

Equity securities
    
    $
    43,832
    
    
    $
    10,738
    
    
    $
    (3,471
    )
    
    $
    51,099
 2009Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueTrading securities 

Equity securities
    
    $
    42,075
    
    
    $
    7,064
    
    
    $
    (5,230
    )
    
    $
    43,909
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities available for saleFixed maturitiesObligations of government-sponsored enterprises
    
    $
    124,735
    
    
    $
    6,650
    
    
    $
    
    
    
    $
    131,385U.S. Treasury securities and
obligations of U.S.
government instrumentalities
    
    
    47,427
    
    
    
    5,451
    
    
    
    
    
    
    
    52,878Obligations of the
Commonwealth of Puerto Rico
and its instrumentalities
    
    
    117,519
    
    
    
    3,115
    
    
    
    (10
    )
    
    
    120,624Municipal securities
    
    
    272,383
    
    
    
    3,979
    
    
    
    (2,798
    )
    
    
    273,564Corporate bonds
    
    
    102,184
    
    
    
    7,698
    
    
    
    (250
    )
    
    
    109,632Residential mortgage-backed securities
    
    
    12,560
    
    
    
    801
    
    
    
    (1
    )
    
    
    13,360Collateralized mortgage obligations
    
    
    271,149
    
    
    
    6,158
    
    
    
    (1,164
    )
    
    
    276,143Total fixed maturities
    
    
    947,957
    
    
    
    33,852
    
    
    
    (4,223
    )
    
    
    977,586Equity securitiesCommon stocks
    
    
    901
    
    
    
    3,430
    
    
    
    
    
    
    
    4,331Preferred stocks
    
    
    4,298
    
    
    
    68
    
    
    
    (737
    )
    
    
    3,629Perpetual preferred stocks
    
    
    1,000
    
    
    
    
    
    
    
    (94
    )
    
    
    906Mutual funds
    
    
    41,551
    
    
    
    6,632
    
    
    
    (310
    )
    
    
    47,873Total equity securities
    
    
    47,750
    
    
    
    10,130
    
    
    
    (1,141
    )
    
    
    56,739Total
    
    $
    995,707
    
    
    $
    43,982
    
    
    $
    (5,364
    )
    
    $
    1,034,325
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities available for saleFixed maturitiesObligations of government-sponsored enterprises
    
    $
    252,513
    
    
    $
    2,240
    
    
    $
    (3,325
    )
    
    $
    251,428U.S. Treasury securities and
obligations of U.S.
government instrumentalities
    
    
    48,190
    
    
    
    3,148
    
    
    
    
    
    
    
    51,338Obligations of the
Commonwealth of Puerto Rico
and its instrumentalities
    
    
    154,754
    
    
    
    3,113
    
    
    
    (1,919
    )
    
    
    155,948Municipal securities
    
    
    107,441
    
    
    
    1,117
    
    
    
    (1,851
    )
    
    
    106,707Corporate bonds
    
    
    102,547
    
    
    
    3,546
    
    
    
    (728
    )
    
    
    105,365Residential mortgage-backed securities
    
    
    16,605
    
    
    
    677
    
    
    
    (1
    )
    
    
    17,281Collateralized mortgage obligations
    
    
    229,312
    
    
    
    4,237
    
    
    
    (2,639
    )
    
    
    230,910Total fixed maturities
    
    
    911,362
    
    
    
    18,078
    
    
    
    (10,463
    )
    
    
    918,977Equity securitiesCommon stocks
    
    
    4,074
    
    
    
    3,435
    
    
    
    
    
    
    
    7,509Preferred stocks
    
    
    4,000
    
    
    
    
    
    
    
    (1,325
    )
    
    
    2,675Perpetual preferred stocks
    
    
    2,849
    
    
    
    
    
    
    
    (270
    )
    
    
    2,579Mutual funds
    
    
    50,608
    
    
    
    4,150
    
    
    
    (2,832
    )
    
    
    51,926Total equity securities
    
    
    61,531
    
    
    
    7,585
    
    
    
    (4,427
    )
    
    
    64,689Total
    
    $
    972,893
    
    
    $
    25,663
    
    
    $
    (14,890
    )
    
    $
    983,666
 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities held to maturityObligations of government-sponsored enterprises
    
    $
    1,793
    
    
    $
    151
    
    
    $
    
    
    
    $
    1,944U.S. Treasury securities and
obligations of U.S.
government instrumentalties
    
    
    1,478
    
    
    
    203
    
    
    
    
    
    
    
    1,681Corporate bonds
    
    
    9,443
    
    
    
    414
    
    
    
    
    
    
    
    9,857Residential mortgage-backed securities
    
    
    660
    
    
    
    41
    
    
    
    
    
    
    
    701Certificates of deposits
    
    
    1,241
    
    
    
    
    
    
    
    
    
    
    
    1,241$
    14,615
    
    
    $
    809
    
    
    $
    
    
    
    
    15,424
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities held to maturityObligations of government-sponsored enterprises
    
    $
    925
    
    
    $
    6
    
    
    $
    
    
    
    $
    931U.S. Treasury securities and
obligations of U.S.
government instrumentalties
    
    
    3,786
    
    
    
    132
    
    
    
    
    
    
    
    3,918Corporate bonds
    
    
    9,063
    
    
    
    534
    
    
    
    
    
    
    
    9,597Residential mortgage-backed securities
    
    
    1,256
    
    
    
    25
    
    
    
    (1
    )
    
    
    1,280Certificates of deposits
    
    
    764
    
    
    
    
    
    
    
    
    
    
    
    764$
    15,794
    
    
    $
    697
    
    
    $
    (1
    )
    
    
    16,490
 Gross unrealized losses on investment securities and the estimated fair value of the
related securities, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position as of December 31, 2010 and 2009
were as follows:
 2010Less than 12 months
    
    
    12 months or longer
    
    
    TotalGross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossEstimated
    
    
    Unrealized
    
    
    Number of
    
    
    Estimated
    
    
    Unrealized
    
    
    Number of
    
    
    Estimated
    
    
    Unrealized
    
    
    Number ofFair Value
    
    
    Loss
    
    
    Securities
    
    
    Fair Value
    
    
    Loss
    
    
    Securities
    
    
    Fair Value
    
    
    Loss
    
    
    SecuritiesSecurites available for saleFixed maturitiesObligations of the Commonwealth of Puerto
Rico and its instrumentalities
    
    $
    2,483
    
    
    $
    (10
    )
    
    
    5
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    2,483
    
    
    $
    (10
    )
    
    
    5Municipal securities
    
    
    105,280
    
    
    
    (2,652
    )
    
    
    53
    
    
    
    692
    
    
    
    (146
    )
    
    
    1
    
    
    
    105,972
    
    
    
    (2,798
    )
    
    
    54Corporate bonds
    
    
    5,828
    
    
    
    (250
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,828
    
    
    
    (250
    )
    
    
    3Residential mortgage-backed
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    (1
    )
    
    
    1
    
    
    
    36
    
    
    
    (1
    )
    
    
    1Collateralized mortgage
obligations
    
    
    77,417
    
    
    
    (1,144
    )
    
    
    12
    
    
    
    1,953
    
    
    
    (20
    )
    
    
    1
    
    
    
    79,370
    
    
    
    (1,164
    )
    
    
    13Total fixed maturities
    
    
    191,008
    
    
    
    (4,056
    )
    
    
    73
    
    
    
    2,681
    
    
    
    (167
    )
    
    
    3
    
    
    
    193,689
    
    
    
    (4,223
    )
    
    
    76Equity securitiesPreferred stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,263
    
    
    
    (737
    )
    
    
    1
    
    
    
    3,263
    
    
    
    (737
    )
    
    
    1Perpetual preferred stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    906
    
    
    
    (94
    )
    
    
    1
    
    
    
    906
    
    
    
    (94
    )
    
    
    1Mutual funds
    
    
    2,337
    
    
    
    (310
    )
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,337
    
    
    
    (310
    )
    
    
    2Total equity securities
    
    
    2,337
    
    
    
    (310
    )
    
    
    2
    
    
    
    4,169
    
    
    
    (831
    )
    
    
    2
    
    
    
    6,506
    
    
    
    (1,141
    )
    
    
    4Total for securities
available for sale
    
    $
    193,345
    
    
    $
    (4,366
    )
    
    
    75
    
    
    $
    6,850
    
    
    $
    (998
    )
    
    
    5
    
    
    $
    200,195
    
    
    $
    (5,364
    )
    
    
    80
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2009Less than 12 months
    
    
    12 months or longer
    
    
    TotalGross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossEstimated
    
    
    Unrealized
    
    
    Number of
    
    
    Estimated
    
    
    Unrealized
    
    
    Number of
    
    
    Estimated
    
    
    Unrealized
    
    
    Number ofFair Value
    
    
    Loss
    
    
    Securities
    
    
    Fair Value
    
    
    Loss
    
    
    Securities
    
    
    Fair Value
    
    
    Loss
    
    
    SecuritiesSecurites available for saleFixed maturitiesObligations of government-
sponsored enterprises
    
    $
    110,602
    
    
    $
    (2,264
    )
    
    
    21
    
    
    $
    25,468
    
    
    $
    (1,061
    )
    
    
    5
    
    
    $
    136,070
    
    
    $
    (3,325
    )
    
    
    26Obligations of the Commonwealth of Puerto
Rico and its instrumentalities
    
    
    12,944
    
    
    
    (201
    )
    
    
    10
    
    
    
    58,866
    
    
    
    (1,718
    )
    
    
    22
    
    
    
    71,810
    
    
    
    (1,919
    )
    
    
    32Municipal securities
    
    
    62,292
    
    
    
    (1,841
    )
    
    
    39
    
    
    
    173
    
    
    
    (10
    )
    
    
    1
    
    
    
    62,465
    
    
    
    (1,851
    )
    
    
    40Corporate bonds
    
    
    10,997
    
    
    
    (215
    )
    
    
    4
    
    
    
    7,975
    
    
    
    (513
    )
    
    
    6
    
    
    
    18,972
    
    
    
    (728
    )
    
    
    10Residential mortgage-backed
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    (1
    )
    
    
    1
    
    
    
    36
    
    
    
    (1
    )
    
    
    1Collateralized mortgage
obligations
    
    
    101,265
    
    
    
    (1,732
    )
    
    
    21
    
    
    
    7,171
    
    
    
    (907
    )
    
    
    10
    
    
    
    108,436
    
    
    
    (2,639
    )
    
    
    31Total fixed maturities
    
    
    298,100
    
    
    
    (6,253
    )
    
    
    95
    
    
    
    99,689
    
    
    
    (4,210
    )
    
    
    45
    
    
    
    397,789
    
    
    
    (10,463
    )
    
    
    140Equity securitiesPreferred stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,675
    
    
    
    (1,325
    )
    
    
    1
    
    
    
    2,675
    
    
    
    (1,325
    )
    
    
    1Perpetual preferred stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    730
    
    
    
    (270
    )
    
    
    1
    
    
    
    730
    
    
    
    (270
    )
    
    
    1Mutual funds
    
    
    9,994
    
    
    
    (907
    )
    
    
    4
    
    
    
    21,667
    
    
    
    (1,925
    )
    
    
    15
    
    
    
    31,661
    
    
    
    (2,832
    )
    
    
    19Total equity securities
    
    
    9,994
    
    
    
    (907
    )
    
    
    4
    
    
    
    25,072
    
    
    
    (3,520
    )
    
    
    17
    
    
    
    35,066
    
    
    
    (4,427
    )
    
    
    21Total for securities
available for sale
    
    $
    308,094
    
    
    $
    (7,160
    )
    
    
    99
    
    
    $
    124,761
    
    
    $
    (7,730
    )
    
    
    62
    
    
    $
    432,855
    
    
    $
    (14,890
    )
    
    
    161Securities held to maturityResidential mortgage-backed
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    55
    
    
    $
    (1
    )
    
    
    1
    
    
    $
    55
    
    
    $
    (1
    )
    
    
    1
 The Company regularly monitors and evaluates the difference between the cost and
estimated fair value of investments. For investments with a fair value below cost, the
process includes evaluating: (1) the length of time and the extent to which the estimated fair
value has been less than amortized cost for fixed maturity securities, or cost for equity
securities, (2) the financial condition, near-term and long-term prospects for the issuer,
including relevant industry conditions and trends, and implications of rating agency actions,
(3) the Companys intent to sell or the likelihood of a required sale prior to recovery, (4)
the recoverability of principal and interest for fixed maturity securities, or cost for equity
securities, and (5) other factors, as applicable. This process is not exact and further
requires consideration of risks such as credit and interest rate risks. Consequently, if an
investments cost exceeds its estimated fair value solely due to changes in interest rates,
other-than temporary impairment may not be appropriate. Due to the subjective nature of the
Companys analysis, along with the judgment that must be applied in the analysis, it is
possible that the Company could reach a different conclusion whether or not to impair a
security if it had access to additional information about the investee. Additionally, it is
possible that the investees ability to meet future contractual obligations may be different
than what the Company determined during its analysis, which may lead to a different impairment
conclusion in future periods. If after monitoring and analyzing impaired securities, the
Company determines that a decline in the estimated fair value of any available-for-sale or
held-to-maturity security below cost is other-than-temporary, the carrying amount of the
security is reduced to its fair value in accordance with current accounting guidance. The new
cost basis of an impaired security is not adjusted for subsequent increases in estimated fair
value. In periods subsequent to the recognition of an other-than-temporary impairment, the
impaired security is accounted for as if it had been purchased on the measurement date of the
impairment. For debt securities, the discount (or reduced premium) based on the new cost
basis may be accreted into net investment income in future periods based on prospective
changes in cash flow estimates, to reflect adjustments to the effective yield.The Companys process for identifying and reviewing invested assets for other-than temporary
impairments during any quarter includes the following:
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 
    
    Identification and evaluation of securities that have possible indications of
other-than- temporary impairment, which includes an analysis of all investments
with gross unrealized investments losses that represent 20% or more of their cost and all
investments with an unrealized loss greater than $50.
    
    Review and evaluation of any other security based on the investees current
financial condition, liquidity, near-term recovery prospects, implications of rating
agency actions, the outlook for the business sectors in which the investee operates and
other factors. This evaluation is in addition to the evaluation of those securities with
a gross unrealized investment loss representing 20% or more of cost.
    
    Consideration of evidential matter, including an evaluation of factors or triggers
that may or may not cause individual investments to qualify as having
other-than-temporary impairments; and
    
    Determination of the status of each analyzed security as other-than-temporary or
not, with documentation of the rationale for the decision.
 The Company continues to review the investment portfolios under the Companys impairment
review policy. Given the current market conditions and the significant judgments involved,
there is a continuing risk that further declines in fair value may occur and additional
material other-than-temporary impairments may be recorded in future periods.Obligations of States of the United States and Political Subdivisions of the States, and
Obligations of the Commonwealth of Puerto Rico and its Instrumentalities:The unrealized
losses on the Companys investments in obligations of states of the United States and
political subdivisions of the states, and in obligations of the Commonwealth of Puerto Rico
and its instrumentalities were mainly caused by fluctuations in interest rate and general
market conditions. The contractual terms of these investments do not permit the issuer to
settle the securities at a price less than the par value of the investment. In addition, most
of these investments have investment grade ratings. Because the decline in fair value is
attributable to changes in interest rates and not credit quality; because the Company does
not intend to sell the investments and it is not more likely than not that the Company will be
required to sell the investments before recovery of their amortized cost basis, which may be
maturity; and because the Company expects to collect all contractual cash flows, these
investments are not considered other-than-temporarily impaired.Corporate Bonds:The unrealized losses of these bonds were principally caused by fluctuations
in interest rates and general market conditions. All corporate bonds included in this table
have investment grade ratings and have been in an unrealized position for less than three
months. Because the decline in estimated fair value is principally attributable to changes in
interest rate; the Company does not intend to sell the investments and its is not more likely
than not that the Company will be required to sell the investments before recovery of their
amortized cost basis, which may be maturity; and because the Company expects to collect all
contractual cash flows, these investments are not considered other-than-temporarily impaired.Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations:The
unrealized losses on investments in residential mortgage-backed securities and collateralized
mortgage
obligations (CMOs) were caused by fluctuations in interest rates. The contractual cash flows
of these securities, other than private CMOs, are guaranteed by a U.S. government-sponsored
enterprise. The Company also has investments in private CMOs with amortized cost amounting to
$5,785 and $7,608 in 2010 and 2009, respectively (fair value of $6,106 and $6,701,
respectively). Any loss in these securities is determined according to the seniority level of
each tranche, with the
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 least senior (or most junior), typically the unrated residual tranche, taking any initial
loss. The investment grade credit rating of our securities reflects the seniority of the
securities that the Company owns. Because the decline in fair value is attributable to
changes in interest rates and not credit quality; the Company does not intend to sell the
investments and it is not more likely than not that the Company will be required to sell the
investments before recovery of their amortized cost basis, which may be maturity; and because
the Company expects to collect all contractual cash flows, these investments are not
considered other-than-temporarily impaired.Preferred Stocks:Because the estimated fair value of this investment has experienced a
significant improvement in market value during the past year, the issuers capital ratios are
above regulatory levels, this particular instrument has a specified maturity, the issuer has
continued dividend payments on this instrument and in all of its outstanding debt instruments,
the issuer does not have the ability to call the security at a price lower than its stated
value, the Company expects to collect all contractual cash flows, the Company does not have
the intent to sell the investment, and it is not more likely than not that the Company will be
required to sell the investment before market price recovery or maturity and because the
Company expects to collect all contractual cash flows, this investments is not considered
other-than-temporarily impaired.Perpetual Preferred Stocks:Because this security has experienced a significant improvement
during the past year, the issuers capital ratios are above regulatory levels, the Company
does not have the intent to sell the investment, and the Company has the intent and ability to
hold the investments until a market price recovery, this investment is not considered
other-than-temporarily impaired.Mutual Funds:Most of the unrealized losses in the Companys investment in one fund that has
been in an unrealized loss position less than nine months. Because these funds have been in
an unrealized loss position for less than nine months, the Company does not have the intent to
sell these investment, and the Company has the ability to hold the investments until a market
price recovery, these investments are not considered other-than-temporarily impaired.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008(dollar amounts in thousands, except per share data)
 Maturities of investment securities classified as available for sale and held to
maturity were as follows at December 31, 2010:
 Amortized
    
    
    EstimatedCost
    
    
    Fair ValueSecurities available for saleDue in one year or less
    
    $
    10,288
    
    
    $
    10,466Due after one year through five years
    
    
    92,110
    
    
    
    95,731Due after five years through ten years
    
    
    203,723
    
    
    
    213,045Due after ten years
    
    
    358,127
    
    
    
    368,841Residential mortgage-backed securities
    
    
    12,560
    
    
    
    13,360Collateralized mortgage obligations
    
    
    271,149
    
    
    
    276,143$
    947,957
    
    
    $
    977,586Securities held to maturityDue in one year or less
    
    $
    1,241
    
    
    $
    1,241Due after one year through five years
    
    
    9,443
    
    
    
    9,857Due after ten years
    
    
    3,271
    
    
    
    3,625Residential mortgage-backed securities
    
    
    660
    
    
    
    701$
    14,615
    
    
    $
    15,424
 Expected maturities may differ from contractual maturities because some issuers have the
right to call or prepay obligations with or without call or prepayment penalties.Investments with an amortized cost of $4,493 and $4,642 (fair value of $4,702 and 4,758) at
December 31, 2010 and 2009, respectively, were deposited with the Commissioner of Insurance
to comply with the deposit requirements of the Insurance Code of the Commonwealth of Puerto
Rico (the Insurance Code). Investment with an amortized cost of $500 and $577 (fair value of
$500 and $577) at December 31, 2010 and 2009, respectively, were deposited with the
Commissioner of Insurance of the Government of the U.S. Virgin Islands.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Information regarding realized and unrealized gains and losses from investments for the years
ended December 31, 2010, 2009, and 2008 is as follows:
 2010
    
    
    2009
    
    
    2008Realized gains (losses)Fixed maturity securitiesSecurities available for saleGross gains from sales
    
    $
    1,947
    
    
    $
    5,323
    
    
    $
    1,876Gross losses from sales
    
    
    (505
    )
    
    
    (4
    )
    
    
    (225
    )Gross losses from other-than-temporary
impairments
    
    
    (95
    )
    
    
    (1,711
    )
    
    
    (3,872
    )Total fixed maturity securities
    
    
    1,347
    
    
    
    3,608
    
    
    
    (2,221
    )Equity securitiesTrading securities:Gross gains from sales
    
    
    1,083
    
    
    
    717
    
    
    
    3,358Gross losses from sales
    
    
    (961
    )
    
    
    (1,381
    )
    
    
    (3,160
    )122
    
    
    
    (664
    )
    
    
    198Securities available for saleGross gains from sales
    
    
    5,051
    
    
    
    3,468
    
    
    
    881Gross losses from sales
    
    
    (1,086
    )
    
    
    (391
    )
    
    
    (176
    )Gross losses from other-than-temporary
impairments
    
    
    (2,902
    )
    
    
    (5,407
    )
    
    
    (12,622
    )1,063
    
    
    
    (2,330
    )
    
    
    (11,917
    )Total equity securities
    
    
    1,185
    
    
    
    (2,994
    )
    
    
    (11,719
    )Net realized gains (losses) on
securities
    
    $
    2,532
    
    
    $
    614
    
    
    $
    (13,940
    )
 The other-than-temporary impairments on fixed maturity securities are attributable to
credit losses.
 Changes in unrealized gains (losses)Recognized
in incomeEquity securities  trading
    
    $
    5,433
    
    
    $
    10,497
    
    
    $
    (21,064
    )Recognized in accumulated other
comprehensive lossFixed maturities  available for sale
    
    
    22,014
    
    
    
    (406
    )
    
    
    928Equity securities  available for sale
    
    
    5,831
    
    
    
    4,583
    
    
    
    (5,734
    )$
    27,845
    
    
    $
    4,177
    
    
    $
    (4,806
    )Not recognized in the consolidated
financial statementsFixed maturities  held to maturity
    
    $
    113
    
    
    $
    (614
    )
    
    $
    1,152
 The deferred tax liability (asset) on unrealized gains and (losses) recognized in
accumulated other comprehensive income during the years 2010, 2009, and 2008 aggregated
$(4,243), $(638), and $854, respectively.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 As of December 31, 2010 and 2009 no individual investment in securities exceeded 10% of
stockholders equity.
 4.
    
    Net Investment IncomeComponents of net investment income were as follows:
 Years ended December 312010
    
    
    2009
    
    
    2008Fixed maturities
    
    $
    44,371
    
    
    $
    46,285
    
    
    $
    48,197Equity securities
    
    
    3,452
    
    
    
    4,077
    
    
    
    5,451Policy loans
    
    
    441
    
    
    
    411
    
    
    
    387Cash equivalents and
interest-bearing deposits
    
    
    197
    
    
    
    577
    
    
    
    1,003Other
    
    
    684
    
    
    
    786
    
    
    
    1,215Total
    
    $
    49,145
    
    
    $
    52,136
    
    
    $
    56,253
 5.
    
    Premium and Other Receivables, NetPremium and other receivables, net as of December 31 were as follows:
 2010
    
    
    2009Premium
    
    $
    144,501
    
    
    $
    98,429Self-funded group receivables
    
    
    73,750
    
    
    
    70,315FEHBP
    
    
    11,001
    
    
    
    10,297Agent balances
    
    
    37,262
    
    
    
    37,888Accrued interest
    
    
    9,781
    
    
    
    9,287Reinsurance recoverable
    
    
    47,342
    
    
    
    43,951Other
    
    
    22,177
    
    
    
    27,999345,814
    
    
    
    298,166Less allowance for doubtful receivables:Premium
    
    
    13,106
    
    
    
    20,280Other
    
    
    6,928
    
    
    
    4,95420,034
    
    
    
    25,234Premium and other receivables, net
    
    $
    325,780
    
    
    $
    272,932
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 6.
    
    Deferred Policy Acquisition Costs and Value of Business AcquiredThe movement of deferred policy acquisition costs (DPAC) and value of business acquired (VOBA)
for the years ended December 31, 2010, 2009, and 2008 is summarized as follows:
 DPAC
    
    
    VOBA
    
    
    TotalBalance, December 31, 2007
    
    $
    53,215
    
    
    $
    64,024
    
    
    $
    117,239Additions
    
    
    49,470
    
    
    
    
    
    
    
    49,470VOBA interest at an average rate of 5.40%
    
    
    
    
    
    
    3,425
    
    
    
    3,425Amortization
    
    
    (33,442
    )
    
    
    (10,345
    )
    
    
    (43,787
    )Net change
    
    
    16,028
    
    
    
    (6,920
    )
    
    
    9,108Balance, December 31, 2008
    
    
    69,243
    
    
    
    57,104
    
    
    
    126,347Additions
    
    
    55,632
    
    
    
    
    
    
    
    55,632VOBA interest at an average rate of 5.29%
    
    
    
    
    
    
    3,066
    
    
    
    3,066Amortization
    
    
    (35,923
    )
    
    
    (9,205
    )
    
    
    (45,128
    )Net change
    
    
    19,709
    
    
    
    (6,139
    )
    
    
    13,570Balance, December 31, 2009
    
    
    88,952
    
    
    
    50,965
    
    
    
    139,917Additions
    
    
    54,247
    
    
    
    
    
    
    
    54,247VOBA interest at an average rate of 5.24%
    
    
    
    
    
    
    2,752
    
    
    
    2,752Amortization
    
    
    (42,324
    )
    
    
    (8,506
    )
    
    
    (50,830
    )Net change
    
    
    11,923
    
    
    
    (5,754
    )
    
    
    6,169Balance, December 31, 2010
    
    $
    100,875
    
    
    $
    45,211
    
    
    $
    146,086
 The amortization expense of the deferred policy acquisition costs and value of business acquired
is included within the operating expenses in the accompanying consolidated statement of
earnings.
 The estimated amount of the year-end VOBA balance expected to be amortized during the next five
years is as follows:
 Year ending December 31:2011
    
    $
    7,4042012
    
    
    6,6022013
    
    
    5,8952014
    
    
    5,1842015
    
    
    4,561
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 7.
    
    Property and Equipment, NetProperty and equipment, net as of December 31 are composed of the following:
 2010
    
    
    2009Land
    
    $
    7,309
    
    
    $
    7,309Buildings and leasehold improvements
    
    
    45,472
    
    
    
    45,034Office furniture and equipment
    
    
    14,401
    
    
    
    16,821Computer equipment and software
    
    
    89,266
    
    
    
    69,652Automobiles
    
    
    525
    
    
    
    513156,973
    
    
    
    139,329Less accumulated depreciation and amortization
    
    
    80,228
    
    
    
    70,526Property and equipment, net
    
    $
    76,745
    
    
    $
    68,803
 8.
    
    Acquired Intangible AssetOn July 1, 2009, the Company, through TSS, entered into an Asset Purchase Agreement (the
Agreement) to acquire certain managed care assets of La Cruz Azúl de Puerto Rico, Inc. (LCA)
in Puerto Rico and the U.S. Virgin Islands on such date, generating an intangible asset.
Such intangible asset, net as of December 31, 2010 and 2009 amounted to $3.9 and $5.6
million, respectively, and is included within other assets in the accompanying consolidated
balance sheets. Amortization expense recorded during 2010 and 2009 amounted to $3.6 and $1.3
million. The intangible asset is amortized over the expected life of the acquired assets,
which is estimated between 1 and 6 years. The Company may be required to make additional
payments depending upon certain conditions as defined in the Agreement, which would have the
effect of increasing the intangible asset.9.
    
    Fair Value MeasurementsAssets recorded at fair value in the consolidated balance sheets are categorized based upon
the level of judgment associated with the inputs used to measure their fair value. Level
inputs are as follows:
 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 1 that are observable for
the asset or liability through corroboration with market data at the measurement date.Level 3
    
    Unobservable inputs that reflect managements best estimate of what market
participants would use in pricing the asset or liability at the measurement date.
 The Company uses observable inputs when available. Fair value is based upon quoted market
prices when available. If market prices are not available, the Company employs
internally-developed models that primarily use market-based inputs including yield curves,
interest rates, volatilities, and credit curves, among others. The Company limits valuation
adjustments to those
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 deemed necessary to ensure that the security or derivatives fair value adequately represents
the price that would be received or paid in the marketplace. Valuation adjustments may
include consideration of counterparty credit quality and liquidity as well as other criteria.
The estimated fair value amounts are subjective in nature and may involve uncertainties and
matters of significant judgment for certain financial instruments. Changes in the underlying
assumptions used in estimating fair value could affect the results. The fair value
measurement levels are not indicative of risk of investment. The following table summarizes
fair value measurements by level at December 31, 2010 and 2009 for assets measured at fair
value on a recurring basis:
 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalEquity securities held for trading
    
    $
    51,099
    
    
    $
    
    
    
    $
    
    
    
    $
    51,099Securities available for saleFixed maturity securitiesObligations of government-sponsored
enterprises
    
    
    
    
    
    
    131,385
    
    
    
    
    
    
    
    131,385U.S. Treasury securities and obligations
of U.S. government instrumentalities
    
    
    52,878
    
    
    
    
    
    
    
    
    
    
    
    52,878Obligations of the Commonwealth of
Puerto Rico and its instrumentalities
    
    
    
    
    
    
    120,624
    
    
    
    
    
    
    
    120,624Municipal securities
    
    
    
    
    
    
    273,564
    
    
    
    
    
    
    
    273,564Corporate Bonds
    
    
    
    
    
    
    109,632
    
    
    
    
    
    
    
    109,632Residential agency mortgage-backed
securities
    
    
    
    
    
    
    13,360
    
    
    
    
    
    
    
    13,360Collaterized mortgage obligations
    
    
    
    
    
    
    276,143
    
    
    
    
    
    
    
    276,143Total fixed maturities
    
    
    52,878
    
    
    
    924,708
    
    
    
    
    
    
    
    977,586Equity securitiesCommon stocks
    
    
    4,331
    
    
    
    
    
    
    
    
    
    
    
    4,331Preferred stocks
    
    
    3,629
    
    
    
    
    
    
    
    
    
    
    
    3,629Perpetual preferred stocks
    
    
    906
    
    
    
    
    
    
    
    
    
    
    
    906Mutual funds
    
    
    27,858
    
    
    
    18,971
    
    
    
    1,044
    
    
    
    47,873Total equity securities
    
    
    36,724
    
    
    
    18,971
    
    
    
    1,044
    
    
    
    56,739Derivatives (reported within other assets in
the consolidated balance sheets)
    
    
    
    
    
    
    748
    
    
    
    
    
    
    
    748$
    140,701
    
    
    $
    944,427
    
    
    $
    1,044
    
    
    $
    1,086,172
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalEquity securities held for trading
    
    $
    43,909
    
    
    $
    
    
    
    $
    
    
    
    $
    43,909Securities available for saleFixed maturity securitiesObligations of government-sponsored
enterprises
    
    
    
    
    
    
    251,428
    
    
    
    
    
    
    
    251,428U.S. Treasury securities and obligations
of U.S. government instrumentalities
    
    
    51,338
    
    
    
    
    
    
    
    
    
    
    
    51,338Obligations of the Commonwealth of
Puerto Rico and its instrumentalities
    
    
    
    
    
    
    155,948
    
    
    
    
    
    
    
    155,948Municipal securities
    
    
    
    
    
    
    106,707
    
    
    
    
    
    
    
    106,707Corporate Bonds
    
    
    
    
    
    
    105,365
    
    
    
    
    
    
    
    105,365Residential agency mortgage-backed
securities
    
    
    
    
    
    
    17,281
    
    
    
    
    
    
    
    17,281Collaterized mortgage obligations
    
    
    
    
    
    
    230,910
    
    
    
    
    
    
    
    230,910Total fixed maturities
    
    
    51,338
    
    
    
    867,639
    
    
    
    
    
    
    
    918,977Equity securitiesCommon stocks
    
    
    7,509
    
    
    
    
    
    
    
    
    
    
    
    7,509Preferred stocks
    
    
    2,675
    
    
    
    
    
    
    
    
    
    
    
    2,675Perpetual preferred stocks
    
    
    2,579
    
    
    
    
    
    
    
    
    
    
    
    2,579Mutual funds
    
    
    6,961
    
    
    
    44,190
    
    
    
    775
    
    
    
    51,926Total equity securities
    
    
    19,724
    
    
    
    44,190
    
    
    
    775
    
    
    
    64,689Derivatives (reported within other assets in
the consolidated balance sheets)
    
    
    
    
    
    
    1,608
    
    
    
    
    
    
    
    1,608$
    114,971
    
    
    $
    913,437
    
    
    $
    775
    
    
    $
    1,029,183
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 A reconciliation of the beginning and ending balances of assets measured at fair value
on a recurring basis using significant unobservable inputs (Level 3) for the years ended
December 31, 2010 and 2009 is as follows:
 FixedMaturity
    
    
    EquitySecurities
    
    
    Securities
    
    
    TotalBegining balance December 31, 2008
    
    $
    1,281
    
    
    $
    1,086
    
    
    $
    2,367Total gains or losses:Realized in earnings
    
    
    (1,281
    )
    
    
    
    
    
    
    (1,281
    )Unrealized in other accumulated
comprehensive income
    
    
    
    
    
    
    
    
    
    
    Purchases and sales
    
    
    
    
    
    
    (1,086
    )
    
    
    (1,086
    )Transfers in and/or out of Level 3
    
    
    
    
    
    
    775
    
    
    
    775Ending balance December 31, 2009
    
    $
    
    
    
    $
    775
    
    
    $
    775Total gains or losses:Realized in earnings
    
    
    
    
    
    
    
    
    
    
    Unrealized in other accumulated
comprehensive income
    
    
    
    
    
    
    (299
    )
    
    
    (299
    )Purchases and sales
    
    
    
    
    
    
    568
    
    
    
    568Transfers in and/or out of Level 3
    
    
    
    
    
    
    
    
    
    
    Ending balance December 31, 2010
    
    $
    
    
    
    $
    1,044
    
    
    $
    1,044
 Realized gains or losses on Level 3 investments are included within net realized gains,
excluding other-than-temporary impairment losses on securities in the consolidated statements
of earnings.
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 10.
    
    Claim LiabilitiesThe activity in claim liabilities during 2010, 2009, and 2008 is as follows:
 2010
    
    
    2009
    
    
    2008Claim liabilities at beginning of year
    
    $
    360,446
    
    
    $
    323,710
    
    
    $
    353,830Reinsurance recoverable on claim liabilities
    
    
    (30,712
    )
    
    
    (30,432
    )
    
    
    (54,834
    )Net claim liabilities at beginning of year
    
    
    329,734
    
    
    
    293,278
    
    
    
    298,996Claims incurredCurrent period insured events
    
    
    1,594,977
    
    
    
    1,594,814
    
    
    
    1,429,730Prior period insured events
    
    
    (10,067
    )
    
    
    (1,887
    )
    
    
    (9,918
    )Total
    
    
    1,584,910
    
    
    
    1,592,927
    
    
    
    1,419,812Payments of losses and loss-adjustment
expensesCurrent period insured events
    
    
    1,316,321
    
    
    
    1,309,304
    
    
    
    1,192,301Prior period insured events
    
    
    269,562
    
    
    
    247,167
    
    
    
    233,229Total
    
    
    1,585,883
    
    
    
    1,556,471
    
    
    
    1,425,530Net claim liabilities at end of year
    
    
    328,761
    
    
    
    329,734
    
    
    
    293,278Reinsurance recoverable on claim liabilities
    
    
    31,449
    
    
    
    30,712
    
    
    
    30,432Claim liabilities at end of year
    
    $
    360,210
    
    
    $
    360,446
    
    
    $
    323,710
 As a result of differences between actual amounts and estimates of insured events in
prior years, the amounts included as incurred claims for prior period insured events differ
from anticipated claims incurred.The credits in the claims incurred and loss-adjustment expenses for prior period insured
events for 2010, 2009 and 2008 are due primarily to better than expected utilization trends.
Reinsurance recoverable on unpaid claims is reported as premium and other receivables, net in
the accompanying consolidated financial statements.The claims incurred disclosed in this table exclude the
portion of the change in the liability for future
policy benefits amounting to $11,879, $12,945, and $11,989 that is
included within the consolidated claims incurred during the years ended December
31, 2010, 2009 and 2008, respectively.11.
    
    Federal Employees Health Benefits Program (FEHBP)TSS entered into a contract, renewable annually, with the Office of Personnel Management
(OPM) as authorized by the Federal Employees Health Benefits Act of 1959, as amended, to
provide health benefits under the FEHBP. The FEHBP covers postal and federal employees
residing in the
Commonwealth of Puerto Rico and the United States Virgin Islands as well as retirees and
eligible dependents. The FEHBP is financed through a negotiated contribution made by the
federal government and employees payroll deductions.The accounting policies for the FEHBP are the same as those described in the Companys
summary of significant accounting policies. Premium rates are determined annually by TSS and
approved by the federal government. Claims are paid to providers based on the guidelines
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 determined by the federal government. Operating expenses are allocated from TSSs operations
to the FEHBP based on applicable allocation guidelines (such as, the number of claims
processed for each program).The operations of the FEHBP do not result in any excess or deficiency of revenue or expense
as this program has a special account available to compensate any excess or deficiency on its
operations to the benefit or detriment of the federal government. Any transfer to/from the
special account necessary to cover any excess or deficiency in the operations of the FEHBP is
recorded as a reduction/increment to the premiums earned. The contract with OPM provides
that the cumulative excess of the FEHBP earned income over health benefits charges and
expenses represents a restricted fund balance denoted as the special account. Upon
termination of the contract and satisfaction of all the FEHBPs obligations, any unused
remainder of the special reserve would revert to the Federal Employees Health Benefit Fund.
In the event that the contract terminates and the special reserve is not sufficient to meet
the FEHBPs obligations, the FEHBP contingency reserve will be used to meet such obligations.
If the contingency reserve is not sufficient to meet such obligations, the Company is at
risk for the amount not covered by the contingency reserve.The contract with OPM allows for the payment to the Company of service fees as negotiated
between TSS and OPM. Service fees, which are included within the other income (expense), net
in the accompanying consolidated statements of earnings, for each of the years in the
three-year period ended December 31, 2010 amounted to $998, $988, and $931, respectively.The Company also has funds available related to the FEHBP amounting to $28,093 and $22,797 as
of December 31, 2010 and 2009, respectively and are included within the cash and cash
equivalents in the accompanying consolidated balance sheets. Such funds must only be used to
cover health benefits charges, administrative expenses and service charges required by the
FEHBP.A contingency reserve is maintained by the OPM at the U.S. Treasury, and is available to the
Company under certain conditions as specified in government regulations. Accordingly, such
reserve is not reflected in the accompanying consolidated balance sheets. The balance of
such reserve as of December 31, 2010 and 2009 was $28,092 and $20,483, respectively. The
Company received $5,161, $6,343, and $2,540, of payments made from the contingency reserve
fund of OPM during 2010, 2009, and 2008, respectively.The claim payments and operating expenses charged to the FEHBP are subject to audit by the
U.S. government. Management is of the opinion that an adjustment, if any, resulting from
such audits will not have a significant effect on the accompanying financial statements. The
claim payments and operating expenses reimbursed in connection with the FEHBP have been
audited through 2004 by OPM.12.
    
    Short-Term BorrowingsShort-term borrowings of $15,575 at December 31, 2010 represent securities sold under
agreements to repurchase. The agreement outstanding at December 31, 2010 matured in January
3, 2011 and accrued interest at fixed rate of 0.50%. The weighted average interest rate for
short-term borrowings in 2010 amounted to 0.38%.The investment securities underlying such agreements were delivered to the dealers with whom
the agreements were transacted. The dealers may have sold, loaned, or otherwise disposed of
such
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 securities in the normal course of business operations, but have agreed to resell to the
Company substantially the same securities on the maturity dates of the agreements.At December 31, 2010 investment securities available for sale with fair value of $16,199 (face
value of $14,630) were pledged as collateral under these agreements.13.
    
    Long-Term BorrowingsA summary of the borrowings entered by the Company at December 31, 2010 and 2009 is as
follows:
 2010
    
    
    2009Senior unsecured notes payable of $50,000 issued on
September 2004; due September 2019. Interest is
payable semiannually at a fixed rate of 6.30%.
    
    $
    50,000
    
    
    $
    50,000Senior unsecured notes payable of $60,000 issued on
December 2005; due December 2020. Interest is
payable monthly at a fixed rate of 6.60%.
    
    
    35,000
    
    
    
    60,000Senior unsecured notes payable of $35,000 issued on
January 2006; due January 2021. Interest is payable
monthly at a fixed rate of 6.70%.
    
    
    35,000
    
    
    
    35,000Secured loan payable of $41,000, payable in monthly
installments of $137 through July 1, 2024, plus
interest at a rate reset periodically of 100 basis
points over selected LIBOR maturity (which was
1.29% and 1.28% at December 31, 2010,
and 2009, respectively).
    
    
    21,027
    
    
    
    22,667Repurchase agreement of
$25.0 million entered on
November 2010, due November 2015. Interest is
payable quarterly at a fixed rate of 1.96%.
    
    
    25,000
    
    
    
    Total borrowings
    
    $
    166,027
    
    
    $
    167,667
 Aggregate maturities of the Companys borrowings as of December 31, 2010 are summarized
as follows:
 Year ending December 312011
    
    $
    1,6402012
    
    
    1,6402013
    
    
    1,6402014
    
    
    1,6402015
    
    
    26,640Thereafter
    
    
    132,827$
    166,027
 All of the Companys senior notes may be prepaid at par, in total or partially, five
years after issuance as determined by the Company. The Companys senior unsecured notes
contain certain
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 non- financial covenants with which TSS and the Company have complied with at
December 31, 2010. On October 1, 2010 we repaid $25.0 million of the principal of 6.60%
senior unsecured note.Debt issuance costs related to each of the Companys senior unsecured notes were deferred and
are being amortized over the term of its respective senior note. Unamortized debt issuance
costs related to these senior unsecured notes as of December 31, 2010 and 2009 amounted to
$781 and $1,041, respectively and are included within other assets in the accompanying
consolidated balance sheets.The secured loan payable previously described is guaranteed by a first position held by the
bank on the Companys land, building, and substantially all leasehold improvements, as
collateral for the term of the loan under a continuing general security agreement. This
secured loan contains certain non-financial covenants, which are customary for this type of
facility, including but not limited to, restrictions on the granting of certain liens,
limitations on acquisitions and limitations on changes in control.The repurchase agreement has pledged as collateral investment securities available for sale
with fair value of $28,453 (face value of $23,918). The investment securities underlying
such agreements were delivered to the financial institution with whom the agreement was
transacted. The dealers may have loaned, or used as collateral securities in the normal
course of business operations. We maintain effective control over the investment securities
pledged as collateral and accordingly, such securities continue to be carried on the
accompanying consolidated balance sheets.Interest expense on the above borrowings amounted to $9,210, $9,870, and $10,451, for the
years ended December 31, 2010, 2009, and 2008, respectively.14.
    
    Derivative Instruments and Hedging ActivitiesBy using derivative financial instruments the Company exposes itself to credit risk and
market risk. Credit risk is the failure of the counterparty to perform under the terms of
the derivative contract. When the fair value of a derivative contract is positive, the
counterparty is obligated to the Company, which creates credit risk for the Company. When
the fair value of a derivative contract
is negative, the Company owes the counterparty and, therefore, it does not possess credit
risk. The Company minimizes the credit risk in derivative instruments by entering into
transactions with high-quality counterparties.Market risk is the adverse effect on the value of a financial instrument that results from a
change in interest rates, currency exchange rates, commodity prices, or market indexes. The
market risk associated with derivative instruments is managed by establishing and monitoring
parameters that limit the types and degree of market risk that may be undertaken.The Company has invested in certain derivative instruments in order to diversify its
investment in securities and participate in the foreign stock market.During 2005 the Company invested in two structured note agreements amounting to $5,000 each,
maturing in May 25, 2012, where the interest income received is linked to the performance of
the Dow Jones Euro STOXX 50 and Nikkei 225 Equity Indexes (the Indexes). Under these
agreements the principal invested by the Company is protected, the only amount that varies
according to the performance of the Indexes is the interest to be received upon the maturity
of the instruments. Should the Indexes experience a negative performance during the holding
period of
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 the structured notes, no interest will be received. The contingent interest
payment component within the structured note agreements meets the definition of an embedded
derivative. In accordance with the provisions of current accounting guidance, the embedded
derivative component of the structured notes is separated from the structured notes and
accounted for separately as a derivative instrument.The changes in the fair value of the embedded derivative component are recorded as gains or
losses in earnings in the period of change. During the years ended December 31, 2010, 2009
and 2008 the Company recorded a loss associated with the change in the fair value of this
derivative component of $859, $66, and $4,658, respectively. The change in the fair value of
the embedded derivative component is included within the other income, net in the
accompanying consolidated statement of earnings.As of December 31, 2010 and 2009, the fair value of the derivative component of the
structured notes amounted to $748, and $1,608, respectively, and is included within the
Companys other assets in the accompanying consolidated balance sheets. The investment
component of the structured notes is accounted for as held-to-maturity debt securities and is
included within the investment in securities in the accompanying consolidated balance sheets.
As of December 31, 2010 the fair value and amortized cost of the investment component of
both structured notes amounted to $9,857, and $9,443, respectively. As of December 31, 2009
the fair value and amortized cost of the investment component of both structured notes
amounted to $9,597 and $9,063, respectively.15.
    
    Agency Contract and Expense ReimbursementTSS processed and paid claims as fiscal intermediary for the Medicare  Part B Program until
February 2009, the contract termination date. TSS was reimbursed for administrative expenses
incurred in performing this service. For the years ended December 31, 2010, 2009, and 2008,
TSS billed $21, $1,842, and $8,678, respectively, for such services, which are deducted from
operating expenses in the accompanying consolidated statements of earnings.The operating expense reimbursements in connection with processing Medicare claims have been
audited through 2005 by federal government representatives. Management is of the opinion that
no significant adjustments will be made affecting cost reimbursements through December 31,
2010.On September 12, 2008, the Centers for Medicare and Medicaid Services (CMS) announced that
First Coast Service Options (FCSO), a non-affiliated third party organization based in
Jacksonville, Florida, was awarded the Medicare Administrative Contract (MAC) for Jurisdiction
9 (Florida, Puerto Rico and the U.S. Virgin Islands). FCSO proposed TSS as a subcontractor in
MAC Jurisdiction 9 to perform certain provider customer service functions, subject to terms
and conditions negotiated between FSCO and TSS. Pursuant to this, TSS
billed $2,829
and $2,650 for performing the customer service functions during the years ended December 31,
2010 and 2009, respectively.
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 16.
    
    Reinsurance ActivityThe effect of reinsurance on premiums earned and claims incurred is as follows:
 Premiums Earned
    
    
    Claims Incurred(1)2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Gross
    
    $
    1,981,700
    
    
    $
    1,950,097
    
    
    $
    1,777,652
    
    
    $
    1,611,289
    
    
    $
    1,611,675
    
    
    $
    1,439,933Ceded
    
    
    (80,600
    )
    
    
    (81,013
    )
    
    
    (85,308
    )
    
    
    (26,379
    )
    
    
    (18,748
    )
    
    
    (20,121
    )Net
    
    $
    1,901,100
    
    
    $
    1,869,084
    
    
    $
    1,692,344
    
    
    $
    1,584,910
    
    
    $
    1,592,927
    
    
    $
    1,419,812
 
 (1)
    
    The claims incurred disclosed in this table exclude the
portion of the change in the
liability for future policy benefits amounting to $11,879, $12,945,
and $11,989 that is included within the consolidated claims incurred during
the years ended December 31, 2010, 2009 and 2008, respectively. TSS, TSP and TSV, in accordance with general industry practices, annually purchase
reinsurance to protect them from the impact of large unforeseen losses and prevent sudden and
unpredictable changes in net income and stockholders equity of the Company. Reinsurance
contracts do not relieve any of the subsidiaries from their obligations to policyholders. In
the event that all or any of the reinsuring companies might be unable to meet their
obligations under existing reinsurance agreements, the subsidiaries would be liable for such
defaulted amounts. During 2010, 2009 and 2008 TSP placed 14.37%, 13.53%, and 11.84% of its
reinsurance business with one reinsurance company.TSS has two excess of loss reinsurance treaties whereby it cedes a portion of its premiums to
third parties. Reinsurance contracts are primarily for periods of one year, and are subject
to modifications and negotiations in each renewal date. Premiums ceded under these contracts
amounted to $11,206, $7,341, and $5,623 in 2010, 2009 and 2008, respectively. Claims ceded
amounted to $9,519, $3,870, and $8,407 in 2010, 2009 and 2008, respectively. Principal
reinsurance agreements are as follows:
 
    
    Organ transplant excess of loss treaty covering 100% of the claims up to a maximum of
$1,000 per person, per life.
    
    Routine medical care excess of loss treaty covering 100% of claims from the amount of
$100 and up to a maximum of $900 per covered person, per contract year.
 TSP has a number of pro rata and excess of loss reinsurance treaties whereby the subsidiary
retains for its own account all loss payments for each occurrence that does not exceed the
stated amount in the agreements and a catastrophe cover, whereby it protects itself from a
loss or disaster of a catastrophic nature. Under these treaties, TSP ceded premiums of
$63,746, $67,541, and $72,115, in 2010, 2009, and 2008, respectively.Reinsurance cessions are made on excess of loss and on a proportional basis. Principal
reinsurance agreements are as follows:
 
    
    Property quota share treaty covering for a maximum of $20,000 for any one risk.
Under this treaty 32% of the risk is ceded to reinsurers. The remaining exposure is
covered by a
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 property per risk excess of loss treaty that provides reinsurance in excess
of $500 up to a maximum of $10,000, or the remaining 68% for any one risk. In addition,
TSP has an additional property catastrophe excess of loss contract that provides
protection for losses in excess of $8,000 resulting from any catastrophe, subject to a
maximum loss of $10,000.
    
    Personal property catastrophe excess of loss. This treaty provides protection for
losses in excess of $5,000 resulting from any catastrophe, subject to a maximum loss of
$80,000.
    
    Commercial property catastrophe excess of loss. This treaty provides protection for
losses in excess of $5,000 resulting from any catastrophe, subject to a maximum loss of
$205,000.
    
    Property catastrophe excess of loss. This treaty provides protection for $185,000 in
excess of $80,000 and $205,000 with respect to personal and commercial lines,
respectively, resulting from any catastrophe, subject to a maximum loss of $160,000 in
respect of the ceded portion of the Commercial Lines Quota Share.
    
    Personal lines quota share. This treaty provides protection of 2.3% on all ground-up
losses, subject to a limit of $1,000 for any one risk.
    
    Reinstatement premium protection. This treaty provides a maximum limit of
approximately $5,000 for personal lines and $13,800 in commercial lines to cover the
necessity of reinstating the catastrophe program in the event it is activated.
    
    Casualty excess of loss treaty. This treaty provides reinsurance for losses in
excess of $225 up to a maximum of $12,000.
    
    Medical malpractice excess of loss. This treaty provides reinsurance in excess of
$150 up to a maximum of $1,500 per incident.
    
    Builders risk quota share and first surplus covering contractors risk. This treaty
provides protection on a 20/80 quota share basis for the initial $2,500 and a first
surplus of $10,000 for a maximum of $12,000 for any one risk.
    
    Surety quota share treaty covering contract and miscellaneous surety bond business.
This treaty provides reinsurance of up to $5,000 for contract surety bonds, subject to
an aggregate of $10,000 per contractor and $3,000 per miscellaneous surety bond.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 
    
    Group life pro rata agreement, reinsuring 50% of the risk up to $250 on the life of
any participating individual of certain groups insured. This contract was cancelled on
June 30, 2009.
    
    Group life insurance facultative agreement, reinsuring risk in excess of $25 of
certain group life policies and a combined pro rata and excess of loss agreement
effective July 1, 2008, reinsuring 50% of the risk up to $200 and ceding the excess.
    
    Group life insurance facultative excess of loss agreements in which TSV retains a
portion of the losses on the life of any participating individual of certain groups
insured. Any excess will be recovered from the reinsurer. This agreement provides for
various retentions ($25, $50 and $75) of the losses. The contract was cancelled during
December 2009.
    
    Facultative pro rata agreements for the long-term disability insurance, reinsuring
65% of the risk.
    
    Accidental death catastrophic reinsurance covering each and every accident arising
out of one event or occurrence resulting in the death or dismemberment of five or more
persons. The retention for each event is $250 with a maximum of $1,000 for each event
and $2,000 per year.
    
    Several reinsurance agreements, mostly on an excess of loss basis up to a maximum
retention of $50. For certain new life products that have been issued after 1999, the
retention limit is $175.
 17.
    
    Income TaxesUnder Puerto Rico income tax law, the Company is not allowed to file consolidated tax returns
with its subsidiaries. The Company and its subsidiaries are subject to Puerto Rico income
taxes. The Companys insurance subsidiaries are also subject to U.S. federal income taxes for
foreign source dividend income. As of December 31, 2010, tax years 2005 through 2010 of the
Company and its subsidiaries are subject to examination by Puerto Rico taxing authorities.TSS and TSP are taxed essentially the same as other corporations, with taxable income
primarily determined on the basis of the statutory annual statements filed with the insurance
regulatory authorities. Also, operations are subject to an alternative minimum income tax,
which is calculated based on the formula established by existing tax laws. Any alternative
minimum income tax paid may be used as a credit against the excess, if any, of regular income
tax over the alternative minimum income tax in future years.TSV operates as a qualified domestic life insurance company and is subject to the alternative
minimum tax and taxes on its capital gains.Federal income taxes recognized by the Companys insurance subsidiaries amounted to
approximately $97, $125, and $112, in 2010, 2009, and 2008, respectively.TSM, TC, and ISI are subject to Puerto Rico income taxes as a regular corporation, as defined
in the P.R. Internal Revenue Code, as amended.
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 On July 10, 2009 the Governor of Puerto Rico signed into law Puerto Ricos Act No. 37, which
requires certain corporations to pay a 5% additional special tax over the tax obligation
through December 31, 2011. The effective tax rate includes the additional special tax, as
enacted.Recently, the Government of Puerto Rico adopted a comprehensive tax reform in two phases.
The first phase of the tax reform was enacted in the last quarter of 2010 and was mostly
related to reducing the income tax burden to individuals. In 2010 only, corporations
received an income tax credit amounting to 7% of the tax determined, defined as the tax
liability less certain credits. The second phase of the reform, which was approved on January
31, 2011, provides for the reduction of the maximum corporate income tax rate from 40.95% to
approximately 30%, including the elimination of the above mentioned 5% additional special tax
for corporations, as well as adding several tax credits and deductions, among other tax
reliefs and changes.The income tax expense differs from the amount computed by applying the Puerto Rico statutory
income tax rate to the income before income taxes as a result of the following:
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2010
    
    
    2009
    
    
    2008Income before taxes
    
    $
    84,203
    
    
    $
    83,651
    
    
    $
    31,944Statutory tax rate
    
    
    40.95
    %
    
    
    40.95
    %
    
    
    39.0
    %Income tax expense at statutory rate
    
    
    34,481
    
    
    
    34,255
    
    
    
    12,458Increase (decrease) in taxes resulting fromExempt interest income
    
    
    (11,955
    )
    
    
    (13,201
    )
    
    
    (13,561
    )Effect of taxing life insurance operations
as a qualified domestic life insurance
company instead of as a regular
corporation
    
    
    (5,336
    )
    
    
    (4,759
    )
    
    
    (1,336
    )Effect of using earnings under statutory
accounting principles instead of
GAAP for TSS and TSP
    
    
    (1,430
    )
    
    
    (3,089
    )
    
    
    6,406Effect of taxing capital gains at a
preferential rate
    
    
    907
    
    
    
    446
    
    
    
    (237
    )Dividends received deduction
    
    
    (221
    )
    
    
    (262
    )
    
    
    (810
    )Adjustment to deferred tax assets and
liabilities for changes in effective
tax rates
    
    
    
    
    
    
    (239
    )
    
    
    Other adjustments to deferred tax
assets and liabilities
    
    
    (132
    )
    
    
    (771
    )
    
    
    (300
    )Tax credit benefit
    
    
    (1,569
    )
    
    
    (2,386
    )
    
    
    (1,286
    )Other permanent disallowances, net:Effect of capital gains preferential rate on
impairments
    
    
    
    
    
    
    1,385
    
    
    
    2,916Disallowance of expenses related to exempt
interest income
    
    
    1,115
    
    
    
    871
    
    
    
    1,792Disallowed interest expense
    
    
    597
    
    
    
    730
    
    
    
    1,014Other
    
    
    423
    
    
    
    1,404
    
    
    
    (158
    )Total other permanent differences
    
    
    2,135
    
    
    
    4,390
    
    
    
    5,564Other adjustments
    
    
    522
    
    
    
    487
    
    
    
    256Total Income Tax Expense
    
    $
    17,402
    
    
    $
    14,871
    
    
    $
    7,154
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Deferred income taxes reflect the tax effects of temporary differences between carrying
amounts of assets and liabilities for financial reporting purposes and income tax purposes.
The net deferred tax asset at December 31, 2010 and 2009 of the Company and its subsidiaries
is composed of the following:
 2010
    
    
    2009Deferred tax assetsAllowance for doubtful receivables
    
    $
    7,679
    
    
    $
    9,869Liability for pension benefits
    
    
    17,443
    
    
    
    13,161Employee benefits plan
    
    
    2,509
    
    
    
    3,142Postretirement benefits
    
    
    1,434
    
    
    
    1,668Deferred compensation
    
    
    2,185
    
    
    
    1,952Accumulated depreciation
    
    
    289
    
    
    
    312Impairment loss on investments
    
    
    2,891
    
    
    
    3,654Contingency reserves
    
    
    214
    
    
    
    214Share-based compensation
    
    
    10
    
    
    
    592Unrealized loss on derivative instruments
    
    
    175
    
    
    
    89Alternative minimum income tax credit
    
    
    955
    
    
    
    955Purchased tax credits
    
    
    42
    
    
    
    7,388Other
    
    
    1,135
    
    
    
    754Gross deferred tax assets
    
    
    36,961
    
    
    
    43,750Deferred tax liabilitiesDeferred policy acquisition costs
    
    
    (7,359
    )
    
    
    (8,103
    )Catastrophe loss reserve trust fund
    
    
    (6,247
    )
    
    
    (5,935
    )Unrealized gain upon acquisition of GA Life
    
    
    (539
    )
    
    
    (982
    )Unrealized gain on trading securities
    
    
    (1,135
    )
    
    
    (285
    )Unrealized gain on securities available for sale
    
    
    (4,658
    )
    
    
    (1,626
    )Unamortized bond issue costs
    
    
    (224
    )
    
    
    (318
    )Other
    
    
    (9
    )
    
    
    (38
    )Gross deferred tax liabilities
    
    
    (20,171
    )
    
    
    (17,287
    )Net deferred tax asset
    
    $
    16,790
    
    
    $
    26,463
 The net deferred tax asset shown in the table above at December 31, 2010 and 2009 is
reflected in the consolidated balance sheets as $29,445 and $37,551, respectively, in
deferred tax assets and $12,655 and $11,088, in deferred tax liabilities, respectively,
reflecting the aggregate deferred tax assets or liabilities of individual tax-paying
subsidiaries of the Company.In assessing the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during
the periods in which those temporary differences become deductible. Management believes that
it is more likely than not that the Company will realize the benefits of these deductible
differences.
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 18.
    
    Pension Plans
 Noncontributory Defined-Benefit Pension PlanThe Company sponsors a noncontributory defined-benefit pension plan for all of its employees
and for the employees for certain of its subsidiaries. Pension benefits begin to vest after
five years of vesting service, as defined, and are based on years of service and final
average salary, as defined. The funding policy is to contribute to the plan as necessary to
meet the minimum funding requirements set forth in the Employee Retirement Income Security
Act of 1974, as amended, plus such additional amounts as the Company may determine to be
appropriate from time to time. The measurement date used to determine pension benefit
measures for the pension plan is December 31.The following table sets forth the plans benefit obligations, fair value of plan assets, and
funded status as of December 31, 2010 and 2009, accordingly:
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2010
    
    
    2009Change in benefit obligationProjected benefit obligation at beginning of year
    
    $
    90,888
    
    
    $
    84,776Service cost
    
    
    4,975
    
    
    
    4,912Interest cost
    
    
    6,033
    
    
    
    5,712Benefit payments
    
    
    (3,963
    )
    
    
    (7,004
    )Actuarial losses
    
    
    15,979
    
    
    
    2,492Projected benefit obligation at end of year
    
    $
    113,912
    
    
    $
    90,888Accumulated benefit obligation at end of year
    
    $
    85,858
    
    
    $
    67,825Change in fair value of plan assetsFair value of plan assets at beginning of year
    
    $
    53,433
    
    
    $
    44,100Actual return on assets (net of expenses)
    
    
    8,260
    
    
    
    8,337Employer contributions
    
    
    9,800
    
    
    
    8,000Benefit payments
    
    
    (3,963
    )
    
    
    (7,004
    )Fair value of plan assets at end of year
    
    $
    67,530
    
    
    $
    53,433Funded status at end of year
    
    $
    (46,382
    )
    
    $
    (37,455
    )Amounts in accumulated other comprehensive income not yet
recognized as a component of net periodic pension costDevelopment of prior service creditBalance at beginning of year
    
    $
    (4,922
    )
    
    $
    (5,372
    )Amortization
    
    
    449
    
    
    
    450Net prior service credit
    
    
    (4,473
    )
    
    
    (4,922
    )Development of actuarial lossBalance at beginning of year
    
    
    38,245
    
    
    
    42,559Amortization
    
    
    (2,400
    )
    
    
    (2,487
    )(Gain)/Loss arising during the year
    
    
    11,980
    
    
    
    (1,827
    )Actuarial net loss
    
    
    47,825
    
    
    
    38,245Sum of deferrals
    
    $
    43,352
    
    
    $
    33,323Net amount recognized
    
    $
    (3,029
    )
    
    $
    (4,132
    )
 The amounts recognized in the balance sheets as of December 31, 2010 and 2009 consist of
the following:
 2010
    
    
    2009Pension liability
    
    $
    46,382
    
    
    $
    37,455Accumulated other comprehensive loss, net of a
deferred
tax of $16,373 and $12,944 in 2010 and 2009, respectively
    
    
    27,821
    
    
    
    20,379
 The components of net periodic benefit cost income for 2010, 2009, and 2008 were as
follows:
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2010
    
    
    2009
    
    
    2008Components of net periodic benefit costService cost
    
    $
    4,976
    
    
    $
    4,912
    
    
    $
    5,287Interest cost
    
    
    6,033
    
    
    
    5,712
    
    
    
    5,458Expected return on assets
    
    
    (4,262
    )
    
    
    (4,018
    )
    
    
    (5,027
    )Amortization of prior service (benefit) cost
    
    
    (450
    )
    
    
    (450
    )
    
    
    (450
    )Amortization of actuarial loss
    
    
    2,400
    
    
    
    2,487
    
    
    
    1,788Net periodic benefit cost
    
    $
    8,697
    
    
    $
    8,643
    
    
    $
    7,056
 Net periodic pension expense may include settlement charges as a result of retirees
selecting lump-sum distributions. Settlement charges may increase in the future if the number
of eligible participants deciding to receive distributions and the amount of their benefits
increases.The estimated net loss and prior service benefit that will be amortized from accumulated
other comprehensive loss into net periodic pension benefits cost during the next twelve
months is as follows:
 Prior service cost
    
    $
    (450
    )Actuarial loss
    
    
    3,129
 The following assumptions were used on a weighted average basis to determine benefit
obligations of the plan and in computing the periodic benefit cost as of and for the years
ended December 31, 2010, 2009, and 2008:
 2010
    
    
    2009
    
    
    2008Discount rate
    
    
    6.00
    %
    
    
    6.75
    %
    
    
    6.75
    %Expected return on plan assets
    
    
    7.75
    %
    
    
    7.75
    %
    
    
    8.00
    %Rate of compensation increase
    
    Graded; 3.50
    %
    

    Graded; 3.50
    %
    
    Graded; 3.50
    %to 8.00
    %
    
    to 8.00
    %
    
    to 8.00
    %
 As of December 31, 2010, the basis of the overall expected long-term rate of return on
assets assumption is a forward-looking approach based on the current long-term capital market
outlook assumptions of the assets categories the trust invests in and the trusts target asset
allocation. At December 31, 2010, the assumed target asset allocation for the program is:
44%-56% equity securities, 35%-45% debt securities, and 6%-14% other securities. Using a
mean-variance model to project return over 15-years horizon under the target asset allocation,
the 35% to 65% percentile range of annual rates of return is 6.4%-8.4%. The Company selected a
rate from within this range of 7.75%, which reflects the Companys best estimate for this
assumption based on the data described above, information on the historical returns on assets
invested in the pension trust, and expected future conditions. This rate is net of both
investment related expenses and a 0.10% reduction for other administrative expenses charged to
the trust.The assumed discount rate of 6.00% at December 31, 2010 reflects the hypothetical rate at
which the projected benefit obligations could be effectively settled or paid out to
participants on that date. The Company determined the discount rate based on a range of
factors, including a yield curve comprised of the rates of return on high-quality,
fixed-income corporate bonds available at the measurement date and the related expected
duration for the obligations.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Plan AssetsPlan assets recorded at fair value are categorized based upon the level of judgment
associated with the inputs used to measure their fair value. For level inputs and input
definition, see note 9.The following table summarizes fair value measurements by level at December 31, 2010 for
assets measured at fair value on a recurring basis.
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalEquity InvestmentsDomestic Large Cap
    
    $
    203
    
    
    $
    12,934
    
    
    $
    1,241
    
    
    $
    14,378Domestic Small Cap
    
    
    
    
    
    
    3,760
    
    
    
    
    
    
    
    3,760Global equities
    
    
    2,364
    
    
    
    2,562
    
    
    
    
    
    
    
    4,926International Large Cap
    
    
    2
    
    
    
    8,194
    
    
    
    
    
    
    
    8,196International Small Cap
    
    
    2,700
    
    
    
    
    
    
    
    
    
    
    
    2,700Emerging Markets
    
    
    
    
    
    
    2,871
    
    
    
    
    
    
    
    2,871Fixed Income InvestmentsHigh Yield
    
    
    176
    
    
    
    2,608
    
    
    
    346
    
    
    
    3,130Core
    
    
    (19
    )
    
    
    13,786
    
    
    
    28
    
    
    
    13,795Long Duration
    
    
    51
    
    
    
    7,865
    
    
    
    
    
    
    
    7,916Real Estate InvestmentsREIT
    
    
    (2
    )
    
    
    957
    
    
    
    2,575
    
    
    
    3,530Real Estate Assets
    
    
    21
    
    
    
    2,307
    
    
    
    
    
    
    
    2,328$
    5,496
    
    
    $
    57,844
    
    
    $
    4,190
    
    
    $
    67,530
 A reconciliation of the beginning and ending balances of assets measured at fair value on
a recurring basis using significant unobservable inputs (Level 3) for the year ended December
31, 2010 is as follows:
 Domestic
    
    
    
    
    
    
    FixedLarge
    
    
    Fixed Income
    
    
    Income
    
    
    RealCap
    
    
    High Yield
    
    
    Core
    
    
    Estate
    
    
    TotalBeginning Balance at December 31, 2009
    
    $
    961
    
    
    $
    277
    
    
    $
    28
    
    
    $
    2,290
    
    
    $
    3,556Actual return on program assets:Relating to assets still held at the reporting date
    
    
    180
    
    
    
    (7
    )
    
    
    
    
    
    
    275
    
    
    
    448Relating to assets sold during the period
    
    
    
    
    
    
    (66
    )
    
    
    
    
    
    
    (112
    )
    
    
    (178
    )Purchases
    
    
    100
    
    
    
    147
    
    
    
    
    
    
    
    122
    
    
    
    369Transfer in and/or out
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )Ending balance at December 31, 2010
    
    $
    1,241
    
    
    $
    346
    
    
    $
    28
    
    
    $
    2,575
    
    
    $
    4,190
 The Companys plan assets are invested in the National Retirement Trust. The National
Retirement Trust was formed to provide financial and legal resources to help members of the
BCBSA offer retirement benefits to their employees.The investment program for the National Retirement Trust is based on the precepts of capital
market theory that are generally followed by institutional investors, who by definition are
long-term oriented investors. This philosophy holds that:
 
    
    Increasing risk is rewarded with compensating returns over time, and therefore,
prudent risk taking is justifiable for long-term investors.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 
    
    Risk can be controlled through diversification of asset classes and investment
approaches, as well as diversification of individual securities.
    
    Risk is reduced by time, and over time the relative performance of different asset
classes is reasonably consistent. Over the long-term, equity investments have provided
and should continue to provide superior returns over other security types. Fixed-income
securities can dampen volatility and provide liquidity in periods of depressed economic
activity. Lengthening duration of fixed income securities may reduce surplus
volatility.
    
    The strategic or long-term allocation of assets among various asset classes is an
important driver of long-term returns.
    
    Relative performance of various asset classes is unpredictable in the short-term and
attempts to shift tactically between asset classes are unlikely to be rewarded.
 Investments will be made for the sole interest of the participants and beneficiaries of the
programs participating in the National Retirement Trust. Accordingly, the assets of the
National Retirement Trust shall be invested in accordance with these objectives:
 
    
    Ensure assets are available to meet current and future obligations of the
participating programs when due.
    
    Invest assets with consideration of the liability characteristics in order to better
align assets and liabilities.
    
    Earn the maximum return that can be realistically achieved in the markets over the
long-term at a specified and controlled level of risk in order to minimize future
contributions.
    
    Invest the assets with the care, skill, and diligence that a prudent person acting in
a like capacity would undertake. In the process, the Administration of the Trust has the
objective of controlling the costs involved with administering and managing the
investments of the National Retirement Trust.
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Cash FlowsThe Company expects to contribute $10,000 to its pension program in 2011.The following benefit payments, which reflect expected future service, as appropriate, are
expected to be paid:
 Year ending December 312011
    
    $
    4,3332012
    
    
    4,7912013
    
    
    5,7952014
    
    
    6,3932015
    
    
    7,2122016  2020
    
    
    53,965
 Noncontributory Supplemental Pension PlanIn addition, the Company sponsors a noncontributory supplemental pension plan. This plan
covers employees with qualified defined benefit retirement plan benefits limited by the U.S.
Internal Revenue Code maximum compensation and benefit limits. At December 31, 2010 and
2009, the Company has recorded a pension liability of $4,865 and $3,589, respectively. The
charge to accumulated other comprehensive loss related to the noncontributory pension plan at
December 31, 2010 and 2009 amounted to $498 and 339, respectively, net of a deferred tax
asset of $318 and $217, respectively.19.
    
    Catastrophe Loss Reserve and Trust FundIn accordance with Chapter 25 of the Insurance Code, as amended, TSP is required to record a
catastrophe loss reserve. This catastrophe loss reserve is supported by a trust fund for the
payment of catastrophe losses. The reserve increases by amounts determined by applying a
contribution rate, not in excess of 5%, to catastrophe written premiums as instructed
annually by the Commissioner of Insurance, unless the level of the reserve exceeds 8% of
catastrophe exposure, as defined. The reserve also increases by an amount equal to the
resulting return in the supporting trust fund and decreases by payments on catastrophe losses
or authorized withdrawals from the trust fund. Additions to the catastrophe loss reserve are
deductible for income tax purposes.This trust may invest its funds in securities authorized by the Insurance Code, but not in
investments whose value may be affected by hazards covered by the catastrophic insurance
losses. The interest earned on these investments and any realized gains (loss) on investment
transactions are part of the trust fund and are recorded as income (expense) of the Company.
An amount equal to the investment returns is recorded as an addition to the trust fund.The interest earning assets in this fund, which amounted to $35,721 and $33,489 as of
December 31, 2010 and 2009, respectively, are to be used solely and exclusively to pay
catastrophe losses covered under policies written in Puerto Rico.TSP is required to contribute to the trust fund, if any, on or before January 31 of the
following year. Contributions are determined by a rate imposed by the Commissioner of
Insurance for the
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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 catastrophe policies written in that year. Additions in 2010 and 2009, amounting to $761 and
$810, respectively, were determined by applying a rate of 1% to catastrophe premiums written.The amount in the trust fund may be withdrawn or released in the case that TSP ceases to
underwrite risks subject to catastrophe losses. Also, authorized withdrawals are allowed when
the catastrophe loss reserve exceeds 8% of the catastrophe exposure, as defined.Retained earnings are restricted in the accompanying consolidated balance sheets by the total
catastrophe loss reserve balance, which as of December 31, 2010 and 2009 amounted to $35,975
and $34,411, respectively.20.
    
    Stockholders Equity
 a.
    
    Common StockOn December 8, 2008, the Company converted 7 million issued and outstanding Class A
shares into Class B shares, in conjunction with the expiration of the lockup agreements
signed by holders of Class A shares at the time of the Companys initial public offering.For a period of five years after the completion of the IPO on
December 7, 2007, subject to the extension or shortening under
certain circumstances, each holder of Class B common stock will
benefit from anti-dilution protections provided in the Companys
amended and restated certificate of incorporation.b.
    
    Stock Repurchase ProgramThe Company repurchased shares of its common stock under a $40,000 share repurchase
program authorized by the Companys Board in October 2008. Repurchases were conducted
through open-market purchases of Class B shares only, in accordance with Rule 10b-18
under the Securities Exchange Act of 1934, as amended. During 2009 the Company
repurchased and retired 2,021,960 shares at an average per share price of $12.92, for an
aggregate cost of $26,120. This repurchase program was completed during 2009.On September 2010, the Companys Board approved another repurchase program of its common
stock amounting to $30,000. Repurchases were conducted through open-market purchases of
Class B shares only, in accordance with Rule 10b-18 under the Securities Exchange Act of
1934, as amended. During 2010, the Company repurchased and retired 352,791 shares at an
average per share price of $17.80, for an aggregate cost of $6,235.c.
    
    Preferred StockAuthorized capital stock includes 100,000,000 of preferred stock with a par value of
$1.00 per share. As of December 31, 2010 and 2009, there are no issued and outstanding
preferred shares.d.
    
    Liquidity RequirementsAs members of the BCBSA, the Company and TSS are required by membership standards of the
association to maintain liquidity as defined by BCBSA. That is, to maintain net worth
exceeding the Company Action Level as defined in the National Association of Insurance
Commissioners (NAIC) Risk-Based Capital for Insurers Model Act. The companies are in
compliance with this requirement.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 21.
    
    Comprehensive IncomeThe accumulated balances for each classification of other comprehensive income (loss) are as
follows:
 AccumulatedUnrealized
    
    
    Liability
    
    
    OtherGains on
    
    
    for Pension
    
    
    Comprehensivesecurities
    
    
    Benefits
    
    
    IncomeBeginning balance at December 31, 2009
    
    $
    9,141
    
    
    $
    (20,717
    )
    
    $
    (11,576
    )Net current period change
    
    
    25,717
    
    
    
    (6,562
    )
    
    
    19,155Reclassification adjustments for
gains and losses reclassified
in income
    
    
    (2,115
    )
    
    
    
    
    
    
    (2,115
    )Ending balance at December 31, 2010
    
    $
    32,743
    
    
    $
    (27,279
    )
    
    $
    5,464
 The related deferred tax effects allocated to each component of other comprehensive
income in the accompanying consolidated statements of stockholders equity and comprehensive
income in 2010, 2009 and 2008 are as follows:
 2010Deferred TaxBefore-Tax
    
    
    (Expense)
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountUnrealized holding gains on securities
arising during the period
    
    $
    30,255
    
    
    $
    (5,749
    )
    
    $
    24,506Less reclassification adjustment for
gains and losses realized in income
    
    
    (2,410
    )
    
    
    1,506
    
    
    
    (904
    )Net change in unrealized gain
    
    
    27,845
    
    
    
    (4,243
    )
    
    
    23,602Liability for pension benefits
    
    
    (10,844
    )
    
    
    4,282
    
    
    
    (6,562
    )Net current period change
    
    $
    17,001
    
    
    $
    39
    
    
    $
    17,040
 2009Deferred TaxBefore-Tax
    
    
    (Expense)
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountUnrealized holding losses on securities
arising during the period
    
    $
    5,455
    
    
    $
    (825
    )
    
    $
    4,630Less reclassification adjustment for
gains and losses realized in income
    
    
    (1,278
    )
    
    
    187
    
    
    
    (1,091
    )Net change in unrealized loss
    
    
    4,177
    
    
    
    (638
    )
    
    
    3,539Liability for pension benefits
    
    
    4,070
    
    
    
    (1,520
    )
    
    
    2,550Net current period change
    
    $
    8,247
    
    
    $
    (2,158
    )
    
    $
    6,089
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 2008Deferred TaxBefore-Tax
    
    
    (Expense)
    
    
    Net-of-TaxAmount
    
    
    Benefit
    
    
    AmountUnrealized holding losses on securities
arising during the period
    
    $
    (18,944
    )
    
    $
    2,088
    
    
    $
    (16,856
    )Less reclassification adjustment for
gains and losses realized in income
    
    
    14,138
    
    
    
    (1,234
    )
    
    
    12,904Net change in unrealized loss
    
    
    (4,806
    )
    
    
    854
    
    
    
    (3,952
    )Liability for pension benefits
    
    
    (12,411
    )
    
    
    4,796
    
    
    
    (7,615
    )Cash-flow hedges
    
    
    (93
    )
    
    
    37
    
    
    
    (56
    )Net current period change
    
    $
    (17,310
    )
    
    $
    5,687
    
    
    $
    (11,623
    )
 22.
    
    Share-Based Compensation
 In December 2007 the Company adopted the 2007 Incentive Plan (the Plan), which permits the
Board the grant of stock options, restricted stock awards and performance awards to eligible
officers, directors and key employees. The Plan authorizes grants to issue up to 4,700,000 of
Class B common shares of authorized but unissued stock. At December 31, 2010, there were
3,282,969 shares available for the Company to grant under the Plan. Stock options can be
granted with an exercise price at least equal the stocks fair market value at the date of
grant. The stock option awards vest in equal annual installments over 3 years and its
expiration date cannot exceed 7 years. The restricted stock and performance awards are issued
at the fair value of the stock on the grant date with vesting periods ranging from one to
three years. Restricted stock awards vest in installments, as stipulated in each restricted
stock agreement. Performance awards vest on the last day of the performance period, provided
that at least minimum performance standards were achieved.
 The fair value of each option award is estimated on the date of grant using the Black-Scholes
option-pricing model that used the weighted average assumptions in the following table. In
absence of adequate historical data, the Company estimates the expected life of the option
using the simplified method allowed by Staff Accounting Bulletin (SAB) No. 107. Since the
Company was a newly public entity, expected volatility was computed based on the average
historical volatility of similar entities with publicly traded shares. The risk-free rate for
the expected term of the option was based on the U.S. Treasury zero-coupon bonds yield curve
in effect at the time of grant.
 The following assumptions were used in the development of fair value of option awards:
 2010
    
    
    2009
    
    
    2008Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    Expected volatility (per year)
    
    
    43.00
    %
    
    
    53.85
    %
    
    
    Expected term (in years)
    
    
    4.50
    
    
    
    4.50
    
    
    
    Risk-free interest rate
    
    
    1.12
    %
    
    
    1.47
    %
    
    
    
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Stock option activity during the year ended December 31, 2010 is as follows:
 Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueOutstanding balance at January 1, 2010
    
    
    1,012,630
    
    
    $
    14.47Grants
    
    
    4,032
    
    
    $
    16.85Exercised during the year
    
    
    (21,982
    )
    
    $
    14.50Canceled during the year
    
    
    (7,242
    )
    
    $
    14.50Outstanding balance at December 31, 2010
    
    
    987,438
    
    
    $
    14.48
    
    
    
    3.96
    
    
    $
    4,539,767Exercisable at December 31, 2010
    
    
    974,525
    
    
    $
    14.49
    
    
    
    3.94
    
    
    $
    4,472,252
 The weighted average grant date fair value of options granted during 2010 and 2009 was
$6.20 and $5.63, respectively. No options were granted in 2008. There were 21,982 exercised
options during 2010. There were no options exercised during the years ended December 31,
2009 and 2008.
 A summary of the status of the Companys nonvested restricted and performance shares as of
December 31, 2010, and changes during the year ended December 31, 2010, are presented below:
 Restricted Awards
    
    
    Performance AwardsWeighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageNumber of
    
    
    Fair
    
    
    Number of
    
    
    ExerciseShares
    
    
    Value
    
    
    Shares
    
    
    PriceOutstanding balance at January 1, 2010
    
    
    81,675
    
    
    $
    13.77
    
    
    
    167,142
    
    
    $
    14.46Granted
    
    
    16,221
    
    
    
    19.26
    
    
    
    741
    
    
    
    16.85Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lapsed
    
    
    (78,467
    )
    
    
    13.79
    
    
    
    (65,479
    )
    
    
    14.50Forefeited
    
    
    (1,207
    )
    
    
    14.50
    
    
    
    (98,661
    )
    
    
    14.50Outstanding balance at December 31, 2010
    
    
    18,222
    
    
    $
    18.52
    
    
    
    3,743
    
    
    $
    13.35
 The weighted average grant date fair value of restricted shares granted during the year
2010, 2009 and 2008 were $19.26, $12.33, and $18.81, respectively. Total fair value of
restricted stock vested during the year ended December 31, 2010 and 2009 was $1,480 and
$1,158, respectively. There were no restricted shares vested during the year ended 2008.
 At December 31, 2010 there was $240 of total unrecognized compensation cost related to
nonvested share-based compensation arrangements granted under the Plan. That cost is expected
to be recognized over a weighted average period of 0.97 years. The Company currently uses
authorized and unissued Class B common shares to satisfy share award exercises.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 23.
    
    Net Income Available to Stockholders and Basic Net Income per Share
 The following table sets forth the computation of basic and diluted earnings per share for
the three-year period ended December 31, 2010.
 2010
    
    
    2009
    
    
    2008Numerator for earnings per shareNet income available to stockholders
    
    $
    66,801
    
    
    $
    68,780
    
    
    $
    24,790Denominator for basic earnings per share Weighted average of common shares
    
    
    29,034,442
    
    
    
    29,494,468
    
    
    
    32,120,461Effect of dilutive securities
    
    
    207,911
    
    
    
    68,862
    
    
    
    42,094Denominator for diluted earnings per share
    
    $
    29,242,353
    
    
    $
    29,563,330
    
    
    $
    32,162,555Basic net income per share
    
    $
    2.30
    
    
    $
    2.33
    
    
    $
    0.77Diluted net income per share
    
    $
    2.28
    
    
    $
    2.33
    
    
    $
    0.77
 During the years ended December 31, 2010, 2009 and 2008, the weighted average of all
stock option shares of 1,027, 1,012,594, and 999,309, respectively, were excluded from the
denominator for diluted earnings per share because the stock options were anti-dilutive.
 24.
    
    Commitments
 The Company leases its regional offices, certain equipment, and warehouse facilities under
noncancelable operating leases. Minimum annual rental commitments at December 31, 2010 under
existing agreements are summarized as follows:
 Year ending December 312011
    
    $
    7,4612012
    
    
    7,7982013
    
    
    7,9072014
    
    
    8,1092015
    
    
    1,779Thereafter
    
    
    2,993Total
    
    $
    36,047
 Rental expense for 2010, 2009, and 2008 was $4,546, $4,690, and $3,532, respectively,
after deducting the amount of $112, $132, and $265, respectively, reimbursed by CMS for the
administration of the Medicare Part B Program (see note 15).
 25.
    
    Contingencies
 Legal Proceedings
 The Corporation is a defendant in various lawsuits arising in the ordinary course of
business. We are also defendants in various other claims and proceedings, some of which are
described below. Furthermore, the Commissioner of Insurance, as well as other Federal and
Puerto Rico government authorities, regularly make inquiries and conduct audits concerning
the Corporations compliance with applicable insurance and other laws and regulations.
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Management believes that the aggregate liabilities, if any, arising from all such claims,
assessments, audits and lawsuits will not have a material adverse effect on the consolidated
financial position or results of operations of the Corporation. However, given the inherent
unpredictability of these matters, it is possible that an adverse outcome in certain matters
could have a material adverse effect on the financial condition, operating results and/or
cash flows. Where the Corporation believes that a loss is both probable and estimable, such
amounts have been recorded. In other cases, it is at least reasonably possible that the
Corporation may incur a loss related to one or more of the mentioned pending lawsuits or
investigations, but the Corporation is unable to estimate the range of possible loss which
may be ultimately realized, either individually or in the aggregate, upon their resolution.
 Additionally, we may face various potential litigation claims that have not been asserted to
date, including claims from persons purporting to have contractual rights to acquire shares
of the Corporation on favorable terms or to have inherited such shares notwithstanding
applicable transfer and ownership restrictions.
 Hau et al Litigation (formerly known as Jordan et al)
 On April 24, 2002, Octavio Jordán, Agripino Lugo, Ramón Vidal, and others filed a suit
against the Company, the Companys subsidiary TSS and others in the Court of First Instance
for San Juan, Superior Section (the Court of First Instance), alleging, among other things,
violations by the defendants of provisions of the Puerto Rico Insurance Code, antitrust
violations, unfair business practices, RICO violations, breach of contract with providers,
and damages in the amount of $12 million. Following years of complaint amendments, motions
practice and interim appeals up to the level of the Puerto Rico Supreme Court, the plaintiffs
amended their complaint on June 20, 2008 to allege with particularity the same claims
initially asserted but on behalf of a more limited group of plaintiffs, and increase their
claim for damages to approximately $207 million. After extensive discovery, Plaintiffs
amended their complaint for the third time and dropped all claims predicated on violations of
the antitrust and RICO laws and the Puerto Rico Insurance Code. In addition, the Plaintiffs
voluntarily dismissed with prejudice any and all claims against officers of the Corporation
and TSS. Two of the original plaintiffs were also eliminated from the Third Amended
Complaint (TAC). The TAC only alleges breach of seven share acquisition agreements, breach
of the provider contract by way of discriminatory audits and improper payment of services
rendered. Against former President of the Company, Plaintiffs allege a claim for libel and
slander. Discovery is ongoing. The Company intends to vigorously defend this claim.
 Dentists Association Litigation
 On February 11, 2009, the Puerto Rico Dentists Association (Colegio de Cirujanos Dentistas de
Puerto Rico) filed a complaint in the Court of First Instance against 24 health plans
operating in Puerto Rico that offer dental health coverage. The Company and two of its
subsidiaries, TSS and TCI were included as defendants. This litigation purports to be a class
action filed on behalf of Puerto Rico dentists who are similarly situated; however, the
complaint does not include a single dentist as a class representative nor a definition of the
intended class.
 The complaint alleges that the defendants, on their own and as part of a common scheme,
systematically deny, delay and diminish the payments due to dentists so that they are not
paid in a timely and complete manner for the covered medically necessary services they
render. The complaint also alleges, among other things, violations to the Puerto Rico
Insurance Code, antitrust laws, the Puerto Rico racketeering statute, unfair business
practices, breach of contract with providers, and damages in the amount of $150 million. In
addition, the complaint claims that the
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 Puerto Rico Insurance Companies Association is the
hub of an alleged conspiracy concocted by the member plans to defraud dentists. There are
numerous available defenses to oppose both the request for class certification and the
merits. The Corporation intends to vigorously defend this claim.
 Two codefendant plans, whose main operations are outside Puerto Rico, removed the case to
federal court in Florida, which the plaintiffs and the other codefendants, including the
Corporation, opposed. The federal district court in Florida decided that it lacked
jurisdiction under the Class Action Fairness Act (CAFA) and remanded the case to state court.
The removing defendants petitioned to appeal to the First Circuit Court of Appeals. Having
accepted the appeal, the First Circuit Court of Appeals issued an order in late October 2009
which found the lower courts decision premature. The Court of Appeals remanded the case to
the federal district court in Puerto Rico (the DC) and allowed limited discovery to determine
whether the case should be heard in federal court pursuant to CAFA. The parties completed
the limited discovery in August 2010 and supplemented their previous filings.
 On February 8, 2011 the DC issued its Opinion and Order, denying plaintiffs motion to remand
the case to state court because the injuries alleged in the complaint could be suffered
outside Puerto Rico. It also decided to retain jurisdiction.
 The Company plans to petition the DC to reconsider its ruling, pointing to clear evidence
that the removing defendants are not primary defendants for purposes of CAFA and therefore,
the case should be heard in state court.
 Colón Litigation
 On October 15, 2007, José L. Colón-Dueño, a former holder of one share of TSS predecessor
stock, filed suit against TSS and the Puerto Rico Commissioner of Insurance (the
Commissioner) in the Court of First Instance. The sale of that share to Mr. Colón-Dueño was
voided in 1999 pursuant to an order issued by the Commissioner in which the sale of 1,582
shares to a number of TSS shareholders was voided. TSS, however, appealed the Commissioners
order before the Puerto Rico Court of Appeals, which upheld the order on March 31, 2000.
Plaintiff requests that the court direct TSS to return his share of stock and compensate him
for alleged damages in excess of $500,000 plus attorneys fees. On January 13, 2011 case was
dismissed [with prejudice] and plaintiff filed an appeal on the Puerto Rico Court of Appeals.
The Company is vigorously contesting this lawsuit because, among other reasons, the
Commissioners order is final and cannot be collaterally attacked in this litigation.
 Claims by Heirs of Former Shareholders
 The Company and TSS are defending five individual lawsuits, all filed in state court, from
persons who claim to have inherited a total of 71 shares of the Corporation or one of its
predecessors or affiliates (before giving effect to the 3,000-for-one stock split). While
each case presents unique facts and allegations, the lawsuits generally allege that the
redemption of the shares by the Corporation pursuant to transfer and ownership restrictions
contained in the Companys (or its predecessors or affiliates) articles of incorporation
and bylaws was improper. One of the cases is in its initial stage; one case was dismissed
[with prejudice] and plaintiff filed a request for reconsideration; in the other cases,
discovery has been completed and the parties are awaiting trial. Management believes all
these claims are time barred under one or more statutes of limitations and other grounds and
is vigorously defending them. This belief is supported by the outcome of a similar claim
brought by non-medical heirs against us in 2009. The Puerto Rico Court of Appeals
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 dismissed
that case as time barred under the two year statute of limitations contained in the local
securities law, and the Puerto Rico Supreme Court denied the plaintiffs petition for
certiorari in January 2011.
 ACODESE Investigation
 During April 2010, each of the Companys wholly-owned insurance subsidiaries received
subpoenas for documents from the U.S. Attorney for the Commonwealth of Puerto Rico (the U.S.
Attorney) and the Puerto Rico Department of Justice (PRDOJ) requesting information
principally related to the Asociación de Compañías de Seguros de Puerto Rico, Inc. (ACODESE
by its Spanish acronym). Also in April, the Companys insurance subsidiaries received a
request for information from the Office of the Commissioner of Insurance of Puerto Rico
(OCI) related principally to ACODESE. The Companys insurance subsidiaries are members of
ACODESE, an insurance trade association established in Puerto Rico since 1975, and their
current presidents have participated over the years on ACODESEs board of directors.
 The Company believes similar subpoenas and information requests were issued to other member
companies of ACODESE in connection with the investigation of alleged payments by the former
Executive Vice President of ACODESE to members of the Puerto Rico Legislative Assembly
beginning in 2005. The Company, however, has not been informed of the specific subject matter
of the investigations being conducted by the U.S. Attorney, the PRDOJ or the OCI. The Company
is fully complying with the subpoenas and the request for information and intends to
cooperate with any related government investigation. The Company at this time cannot
reasonably assess the outcome of these investigations or their impact on the Company.
 Intrusions into TCIs Internet IPA Database
 On September 21, 2010, the Company learned from a competitor that a specific internet
database managed by our subsidiary TCI, containing information pertaining to individuals
previously insured by TSS under the Government of Puerto Ricos Health Insurance Plan (HIP)
and to independent practice associations (IPAs) that provided services to those
individuals, had been accessed without authorization by certain of the Companys competitors
employees from September 9 to September 15, 2010. TCI served as a third-party administrator
for TSS in the administration of its HIP contracts until September 30, 2010. The Company
conducted a thorough investigation with the assistance of external resources, and identified
the information that was accessed and downloaded into the competitors system. The September
2010 intrusions may have potentially compromised protected health information of
approximately 398,000 beneficiaries in the North and Metro-North regions of the HIP. Our
investigation also revealed that protected health information of approximately 5,500 HIP
beneficiaries, 2,500 Medicare beneficiaries and IPA data from all three HIP regions
previously serviced by TSS was accessed through multiple, separate intrusions into the TCI
IPA database from October 2008 to August 2010. The Company has no evidence indicating that
the stolen information included Social Security numbers. The Company attempted to notify by
mail all such beneficiaries whose information may have been compromised by these intrusions
and established a toll-free call center to address inquiries and complaints from the
individuals to whom notice was provided. The Company has received a total of approximately
1,530 inquiries and no complaints from these individuals.
 The Companys investigation revealed that the security breaches were the result of
unauthorized use of one or more active user IDs and passwords specific to the TCI IPA
database, and not the result of breaches of TCIs, TSSs or the Companys system security
features. Nonetheless, we took measures to strengthen the TCI server security and credentials
management procedures and
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 conducted an assessment of our system-wide data and facility security to prevent the
occurrence of a similar incident in the future.The Company was unable to determine the purpose of these breaches and do not know the extent
of any fraudulent use of the information or its impact on the potentially affected individuals
and IPAs. According to representations made by the Companys competitor, however, the target
was financial information related to IPAs rather than the individuals information.The Company notified the appropriate Puerto Rico and federal government agencies of these
events, including and issued public notice of the breaches as required under Puerto Rico and
federal law. The Company received a number of inquiries and requests for information related
to these events from these government agencies and are cooperating with them.The Puerto Rico government agency that oversees the HIP has levied a fine of $100 on TSS in
connection with these incidents, but following our request for reconsideration, the agency
decided to withdraw the fine until the pertinent federal authorities conclude their
investigations of this matter. The Compnay does not have sufficient information at this time
to predict whether any future action by government entities or others as a result of the data
breaches would adversely affect our business, financial condition or results of operations.26.
    
    Statutory AccountingTSS, TSV and TPS (collectively known as the regulated subsidiaries) are regulated by the
Commissioner of Insurance. The regulated subsidiaries are required to prepare financial
statements using accounting practices prescribed or permitted by the Commissioner of
Insurance, which differ from GAAP.The accumulated earnings of TSS, TSV, and TSP are restricted as to the payment of dividends
by statutory limitations applicable to domestic insurance companies. Such limitations
restrict the payment of dividends by insurance companies generally to unrestricted unassigned
surplus funds reported for statutory purposes. As more fully described in note 19, a portion
of the accumulated earnings of TSP are also restricted by the catastrophe loss reserve
balance (amounting to $35,975 and $34,411 as of December 31, 2010 and 2009, respectively) as
required by the Insurance Code.The combined net admitted assets, unassigned surplus and net income of the regulated
subsidiaries at December 31, 2010, 2009 and 2008 are as follows:
 (dollar amounts in millions)
    
    2010
    
    
    2009
    
    
    2008Net admitted assets
    
    $
    1,347
    
    
    $
    1,298
    
    
    $
    1,197Capital and surplus
    
    
    458
    
    
    
    416
    
    
    
    260Net income
    
    
    58
    
    
    
    43
    
    
    
    30
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 27.
    
    Supplementary Information on Cash Flow Activities
 2010
    
    
    2009
    
    
    2008Supplementary informationNoncash transactions affecting cash
flows activitiesChange in net unrealized gain on
securities available for sale,
including deferred income tax
(asset)/liability of $4,243, $(638), and
$854 in 2010, 2009, and 2008,
respectively
    
    $
    (23,602
    )
    
    $
    3,539
    
    
    $
    (3,952
    )Change in cash-flow hedges,
including deferred income tax
liability of $37
    
    $
    
    
    
    $
    
    
    
    $
    (56
    )Change in liability for pension
benefits, and deferred income
tax (liability)/asset of $(4,282), $(1,520),
$4,796, in 2010, 2009, and 2008,
respectively
    
    $
    (6,562
    )
    
    $
    2,550
    
    
    $
    (7,615
    )Unsettled shares repurchases
    
    $
    
    
    
    $
    
    
    
    $
    6,235Unsettled investment sales
    
    $
    
    
    
    $
    
    
    
    $
    (1,500
    )OtherIncome taxes paid
    
    $
    3,187
    
    
    $
    15,552
    
    
    $
    25,597Interest paid
    
    $
    11,925
    
    
    $
    11,605
    
    
    $
    14,330
 28.
    
    Business CombinationOn February 7, 2011 the Company announced that its subsidiary, TSS, completed the acquisition
of 100% of the outstanding capital stock of Socios Mayores en Salud Holdings, Inc. (SMSH) for
approximately $83.0 million in a transaction funded with unrestricted cash. SMSH is the
parent company of American Health, Inc., a provider of Medicare Advantage managed care
services to over 40,000 dual and non-dual eligible members in Puerto Rico. After this
acquisition the Company expects to be better positioned for continued growth in the Medicare
Advantage business. The results of operations of SMSH are not reflected in the accompanying
consolidated financial statements since the effective date of the transaction is not until
2011. The Company is in the process of obtaining third-party valuations of certain intangible
assets; thus, as of this date it is not possible to determine the allocation of the purchase
price to the net assets acquired.29.
    
    Segment InformationThe operations of the Company are conducted principally through three business segments:
Managed Care, Life Insurance, and Property and Casualty Insurance. Business segments were
identified according to the type of insurance products offered and consistent with the
information
provided to the chief operating decision maker. These segments and a description of their
respective operations are as follows:
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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 
    
    Managed Care segment  TSS is engaged in the sale of managed care products to the
Commercial, Medicare and Medicaid market sectors. The Commercial accounts sector
includes corporate accounts, U.S. federal government employees, individual accounts,
local government employees, and Medicare supplement. The following represents a
description of the major contracts by sector:
 
    
    TSS is a qualified contractor to provide health coverage to federal
government employees within Puerto Rico. Earned premiums revenue related to this
contract amounted to $130,803, $125,994, and $124,239 for the three-year period ended
December 31, 2010, 2009, and 2008, respectively (see note 11).
    
    Under its commercial business, TSS also provides health coverage to certain
employees of the Commonwealth of Puerto Rico and its instrumentalities. Earned
premium revenue related to such health plans amounted to $63,353, $46,114, and
$40,686, for the three-year period ended December 31, 2010, 2009, and 2008,
respectively.
    
    TSS provides services through its Medicare health plans pursuant to a
limited number of contracts with CMS. Earned premium revenue related to the Medicare
business amounted to $468,401, $513,823, and $438,723, for the three-year period
ended December 31, 2010, 2009, and 2008, respectively.
    
    TSS participated in the Medicaid program to provide health coverage to
medically indigent citizens in Puerto Rico, as defined by the laws of the
Commonwealth of Puerto Rico, up to September 30, 2010. TSS provided managed care
services to Medicaid members in the North and Southwest regions on a fully-insured
basis and in the Metro-North region on an Administrative Service Only (ASO) basis.
Earned premium revenue related to this business amounted to $284,815, $348,096, and
$340,123, for three-year period ended December 31, 2010, 2009, and 2008,
respectively. Administrative service fee for the Metro-North Region for the year
ended December 31, 2010 and 2009 amounted to $12,535 and $23,299; which is included
in the Administrative service fee in the accompanying consolidated statement of
earnings.
 
    
    Life Insurance segment This segment offers primarily life and accident and health
insurance coverage, and annuity products. The premiums for this segment are mainly
subscribed through TSVs internal sales force and a network of independent brokers and
agents.
    
    Property and Casualty Insurance segment The predominant insurance lines of business
of this segment are commercial multiple peril, auto physical damage, auto liability, and
dwelling. The premiums for this segment are originated through a network of independent
insurance agents and brokers. Agents or general agencies collect the premiums from the
insureds, which are subsequently remitted to TSP, net of commissions. Remittances are
due 60 days after the closing date of the general agents account current.The Company evaluates performance based primarily on the operating revenues and operating
income of each segment. Operating revenues include premiums earned, net, administrative
service fees and net investment income. Operating costs include claims incurred and
operating
expenses. The Company calculates operating income or loss as operating revenues less
operating costs.The accounting policies for the segments are the same as those described in the summary of
significant accounting policies included in the notes to consolidated financial statements.
The financial data of each segment is accounted for separately; therefore no segment
allocation is
 62




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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008  (dollar amounts in thousands, except per share data)
 necessary. However, certain operating expenses are centrally managed, therefore requiring an
allocation to each segment. Most of these expenses are distributed to each segment based on
different parameters, such as payroll hours, processed claims, or square footage, among
others. In addition, some depreciable assets are kept by one segment, while allocating the
depreciation expense to other segments. The allocation of the depreciation expense is based
on the proportion of asset used by each segment. Certain expenses are not allocated to the
segments and are kept within TSMs operations.
 63




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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
 The following tables summarize the operations by operating segment for each of the years in
the three-year period ended December 31, 2010, 2009, and 2008.
 2010
    
    
    2009
    
    
    2008Operating revenuesManaged carePremiums earned, net
    
    $
    1,697,083
    
    
    $
    1,673,762
    
    
    $
    1,506,665Fee revenue
    
    
    39,546
    
    
    
    48,643
    
    
    
    19,187Intersegment premiums/fee revenue
    
    
    6,852
    
    
    
    5,995
    
    
    
    6,538Net investment income
    
    
    19,799
    
    
    
    21,641
    
    
    
    23,091Total managed care
    
    
    1,763,280
    
    
    
    1,750,041
    
    
    
    1,555,481LifePremiums earned, net
    
    
    105,437
    
    
    
    99,726
    
    
    
    92,469Intersegment premiums
    
    
    382
    
    
    
    386
    
    
    
    374Net investment income
    
    
    17,130
    
    
    
    16,763
    
    
    
    16,482Total life
    
    
    122,949
    
    
    
    116,875
    
    
    
    109,325Property and casualtyPremiums earned, net
    
    
    98,580
    
    
    
    95,596
    
    
    
    93,211Intersegment premiums
    
    
    613
    
    
    
    613
    
    
    
    610Net investment income
    
    
    10,132
    
    
    
    11,679
    
    
    
    12,545Total property and casualty
    
    
    109,325
    
    
    
    107,888
    
    
    
    106,366Other segments*Intersegment service revenues
    
    
    45,852
    
    
    
    52,997
    
    
    
    46,578Operating revenues from external sources
    
    
    2
    
    
    
    
    
    
    
    Total other segments
    
    
    45,854
    
    
    
    52,997
    
    
    
    46,578Total business segments
    
    
    2,041,408
    
    
    
    2,027,801
    
    
    
    1,817,750TSM operating revenues from external sources
    
    
    2,082
    
    
    
    2,053
    
    
    
    4,135Elimination of intersegment premiums
    
    
    (7,847
    )
    
    
    (6,994
    )
    
    
    (7,523
    )Elimination of intersegment service revenue
    
    
    (45,852
    )
    
    
    (52,997
    )
    
    
    (46,578
    )Consolidated operating revenues
    
    $
    1,989,791
    
    
    $
    1,969,863
    
    
    $
    1,767,784
 
 *
    
    Includes segments that are not required to be reported separately, primarily the data
processing services organization as well as the third-party administrator of health
insurance services. 64




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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008Operating incomeManaged care
    
    $
    63,798
    
    
    $
    57,193
    
    
    $
    52,632Life
    
    
    17,334
    
    
    
    14,555
    
    
    
    12,489Property and casualty
    
    
    3,579
    
    
    
    8,746
    
    
    
    13,147Other segments*
    
    
    1,161
    
    
    
    1,482
    
    
    
    985Total business segments
    
    
    85,872
    
    
    
    81,976
    
    
    
    79,253TSM operating revenues from external sources
    
    
    2,082
    
    
    
    2,053
    
    
    
    4,135TSM unallocated operating expenses
    
    
    (9,566
    )
    
    
    (9,004
    )
    
    
    (9,283
    )Elimination of TSM charges
    
    
    9,619
    
    
    
    9,548
    
    
    
    9,991Consolidated operating income
    
    
    88,007
    
    
    
    84,573
    
    
    
    84,096Consolidated net realized investment gains (losses)
    
    
    2,532
    
    
    
    614
    
    
    
    (13,940
    )Consolidated net unrealized gain (loss) on trading
securities
    
    
    5,433
    
    
    
    10,497
    
    
    
    (21,064
    )Consolidated interest expense
    
    
    (12,658
    )
    
    
    (13,270
    )
    
    
    (14,681
    )Consolidated other income (expense), net
    
    
    889
    
    
    
    1,237
    
    
    
    (2,467
    )Consolidated income before taxes
    
    $
    84,203
    
    
    $
    83,651
    
    
    $
    31,944
 2010
    
    
    2009
    
    
    2008Depreciation expenseManaged care
    
    $
    12,282
    
    
    $
    6,640
    
    
    $
    4,339Life
    
    
    674
    
    
    
    663
    
    
    
    656Property and casualty
    
    
    1,680
    
    
    
    1,477
    
    
    
    1,450Total business segments
    
    
    14,636
    
    
    
    8,780
    
    
    
    6,445TSM depreciation expense
    
    
    864
    
    
    
    863
    
    
    
    922Consolidated depreciation expense
    
    $
    15,500
    
    
    $
    9,643
    
    
    $
    7,367
 
 *
    
    Includes segments that are not required to be reported separately, primarily the data
processing services organization as well as the third-party administrator of health insurance
services. 60




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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
 2010
    
    
    2009AssetsManaged care
    
    $
    790,485
    
    
    $
    746,674Life
    
    
    523,246
    
    
    
    487,290Property and casualty
    
    
    339,955
    
    
    
    351,793Other segments*
    
    
    16,842
    
    
    
    14,193Total business segments
    
    
    1,670,528
    
    
    
    1,599,950Unallocated amounts related to TSMCash, cash equivalents, and investments
    
    
    62,841
    
    
    
    39,029Property and equipment, net
    
    
    20,712
    
    
    
    21,577Other assets
    
    
    20,600
    
    
    
    4,780104,153
    
    
    
    65,386Elimination entries  intersegment receivables and others
    
    
    (15,002
    )
    
    
    (16,632
    )Consolidated total assets
    
    $
    1,759,679
    
    
    $
    1,648,704
 2010
    
    
    2009Significant noncash itemsNet change in unrealized gain on securities available for saleManaged care
    
    $
    (8,512
    )
    
    $
    (282
    )Life
    
    
    (7,746
    )
    
    
    (2,427
    )Property and casualty
    
    
    (2,328
    )
    
    
    (489
    )Other segments*
    
    
    (196
    )
    
    
    Total business segments
    
    
    (18,782
    )
    
    
    (3,198
    )Amount related to TSM
    
    
    (4,820
    )
    
    
    (341
    )Consolidated net change in unrealized gain on securities available
for sale
    
    $
    (23,602
    )
    
    $
    (3,539
    )
 
 *
    
    Includes segments that are not required to be reported separately, primarily the
data processing services organization as well as the third-party administrator of
health insurance services. 61




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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
 30. Quarterly Financial Information (Unaudited)
 2010March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    TotalRevenuesPremiums earned, net
    
    $
    494,177
    
    
    $
    502,761
    
    
    $
    496,511
    
    
    $
    407,651
    
    
    $
    1,901,100Administrative service fees
    
    
    12,498
    
    
    
    12,166
    
    
    
    10,195
    
    
    
    4,687
    
    
    
    39,546Net investment income
    
    
    12,423
    
    
    
    12,671
    
    
    
    12,794
    
    
    
    11,257
    
    
    
    49,145Total operating
revenues
    
    
    519,098
    
    
    
    527,598
    
    
    
    519,500
    
    
    
    423,595
    
    
    
    1,989,791Net realized investment
(losses) gains
    
    
    (1,379
    )
    
    
    1,433
    
    
    
    (313
    )
    
    
    2,791
    
    
    
    2,532Net unrealized investment
(losses) gains on trading securities
    
    
    2,030
    
    
    
    (6,010
    )
    
    
    4,611
    
    
    
    4,802
    
    
    
    5,433Other (loss) income, net
    
    
    152
    
    
    
    (324
    )
    
    
    576
    
    
    
    485
    
    
    
    889Total revenues
    
    
    519,901
    
    
    
    522,697
    
    
    
    524,374
    
    
    
    431,673
    
    
    
    1,998,645Benefits and expensesClaims incurred
    
    
    425,828
    
    
    
    424,838
    
    
    
    421,514
    
    
    
    324,609
    
    
    
    1,596,789Operating expenses
    
    
    76,871
    
    
    
    76,720
    
    
    
    74,111
    
    
    
    77,293
    
    
    
    304,995Total operating costs
    
    
    502,699
    
    
    
    501,558
    
    
    
    495,625
    
    
    
    401,902
    
    
    
    1,901,784Interest expense
    
    
    3,228
    
    
    
    3,372
    
    
    
    3,026
    
    
    
    3,032
    
    
    
    12,658Total benefits and
expenses
    
    
    505,927
    
    
    
    504,930
    
    
    
    498,651
    
    
    
    404,934
    
    
    
    1,914,442Income before taxes
    
    
    13,974
    
    
    
    17,767
    
    
    
    25,723
    
    
    
    26,739
    
    
    
    84,203Income tax expense (benefit)Current
    
    
    3,544
    
    
    
    4,877
    
    
    
    6,040
    
    
    
    (113
    )
    
    
    14,348Deferred
    
    
    (762
    )
    
    
    (2,167
    )
    
    
    (805
    )
    
    
    6,788
    
    
    
    3,054Total income taxes
    
    
    2,782
    
    
    
    2,710
    
    
    
    5,235
    
    
    
    6,675
    
    
    
    17,402Net income
    
    $
    11,192
    
    
    $
    15,057
    
    
    $
    20,488
    
    
    $
    20,064
    
    
    $
    66,801Basic net income per share
    
    $
    0.38
    
    
    $
    0.52
    
    
    $
    0.70
    
    
    $
    0.70
    
    
    $
    2.30Diluted net income per share
    
    $
    0.38
    
    
    $
    0.51
    
    
    $
    0.70
    
    
    $
    0.69
    
    
    $
    2.28
 62




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Triple-S Management Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
 2009March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31
    
    
    TotalRevenuesPremiums earned, net
    
    $
    451,438
    
    
    $
    463,072
    
    
    $
    476,269
    
    
    $
    478,305
    
    
    $
    1,869,084Administrative service fees
    
    
    8,866
    
    
    
    11,319
    
    
    
    9,797
    
    
    
    18,661
    
    
    
    48,643Net investment income
    
    
    12,541
    
    
    
    13,360
    
    
    
    12,955
    
    
    
    13,280
    
    
    
    52,136Total operating
revenues
    
    
    472,845
    
    
    
    487,751
    
    
    
    499,021
    
    
    
    510,246
    
    
    
    1,969,863Net realized investment
(losses) gains
    
    
    (1,727
    )
    
    
    (1,625
    )
    
    
    2,150
    
    
    
    1,816
    
    
    
    614Net unrealized investment
(losses) gains on trading securities
    
    
    (2,476
    )
    
    
    5,652
    
    
    
    4,860
    
    
    
    2,461
    
    
    
    10,497Other (loss) income, net
    
    
    (379
    )
    
    
    704
    
    
    
    67
    
    
    
    845
    
    
    
    1,237Total revenues
    
    
    468,263
    
    
    
    492,482
    
    
    
    506,098
    
    
    
    515,368
    
    
    
    1,982,211Benefits and expensesClaims incurred
    
    
    393,486
    
    
    
    395,271
    
    
    
    412,392
    
    
    
    404,723
    
    
    
    1,605,872Operating expenses
    
    
    68,252
    
    
    
    68,603
    
    
    
    71,205
    
    
    
    71,358
    
    
    
    279,418Total operating costs
    
    
    461,738
    
    
    
    463,874
    
    
    
    483,597
    
    
    
    476,081
    
    
    
    1,885,290Interest expense
    
    
    3,264
    
    
    
    3,357
    
    
    
    3,338
    
    
    
    3,311
    
    
    
    13,270Total benefits and
expenses
    
    
    465,002
    
    
    
    467,231
    
    
    
    486,935
    
    
    
    479,392
    
    
    
    1,898,560Income before taxes
    
    
    3,261
    
    
    
    25,251
    
    
    
    19,163
    
    
    
    35,976
    
    
    
    83,651Income tax expense (benefit)Current
    
    
    451
    
    
    
    9,090
    
    
    
    2,096
    
    
    
    7,560
    
    
    
    19,197Deferred
    
    
    (1,122
    )
    
    
    (2,499
    )
    
    
    (1,017
    )
    
    
    312
    
    
    
    (4,326
    )Total income taxes
    
    
    (671
    )
    
    
    6,591
    
    
    
    1,079
    
    
    
    7,872
    
    
    
    14,871Net income
    
    $
    3,932
    
    
    $
    18,660
    
    
    $
    18,084
    
    
    $
    28,104
    
    
    $
    68,780Basic net income per share
    
    $
    0.13
    
    
    $
    0.64
    
    
    $
    0.62
    
    
    $
    0.96
    
    
    $
    2.33Diluted net income per share
    
    $
    0.13
    
    
    $
    0.63
    
    
    $
    0.62
    
    
    $
    0.96
    
    
    $
    2.33
 31.
    
    Subsequent Events
 The Company evaluated subsequent events through the date the financial statements were issued.
No events, other than those described in these notes, have occurred that require disclosure
pursuant to current Accounting Standard Codification.
 63




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##### Table of Contents



Triple-S Management Corporation
Schedule II
Condensed Financial Information of Triple-S Management Corporation
(Registrant)
Balance Sheets
 As of December 31,(in thousands)
    
    2010
    
    
    2009Assets:Cash and cash equivalents
    
    $
    167
    
    
    $
    361Securities available for sale, at fair value:Fixed maturities (amortized cost of $45,753 in 2010 and
$31,914 in 2009)
    
    
    49,649
    
    
    
    32,242Equity Securities (cost of $11,444 in 2010 and $7,800 in 2009)
    
    
    12,172
    
    
    
    6,426Securities held to maturity, at amortized cost:Fixed maturities (fair value of $974 in 2010)
    
    
    1,017
    
    
    
    Investment in subsidiaries
    
    
    661,886
    
    
    
    579,588Note receivable and accrued interest from subsidiary
    
    
    44,140
    
    
    
    46,354Due from subsidiaries
    
    
    
    
    
    
    2,552Deferred tax assets
    
    
    18,829
    
    
    
    14,984Other assets
    
    
    23,139
    
    
    
    24,152Total assets
    
    $
    810,999
    
    
    $
    706,659Liabilities:Due to subsidiary
    
    
    4,182
    
    
    
    4,335Short-term borrowings
    
    
    15,575
    
    
    
    Long-term borrowings
    
    
    116,027
    
    
    
    117,667Liability for pension benefits
    
    
    51,246
    
    
    
    41,044Other liabilities
    
    
    6,697
    
    
    
    5,841Total liabilities
    
    
    193,727
    
    
    
    168,887Stockholders equity:Common stock, class A
    
    
    9,043
    
    
    
    9,043Common stock, class B
    
    
    19,773
    
    
    
    20,110Additional paid-in-capital
    
    
    155,299
    
    
    
    159,303Retained earnings
    
    
    427,693
    
    
    
    360,892Accumulated other comprehensive income (loss), net
    
    
    5,464
    
    
    
    (11,576
    )Total stockholders equity
    
    
    617,272
    
    
    
    537,772Total liabilities and stockholders equity
    
    $
    810,999
    
    
    $
    706,659




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##### Table of Contents



Triple-S Management Corporation
Schedule II
Condensed Financial Information of Triple-S Management Corporation
Triple-S Management Corporation
Statements of Earnings
 (in thousands)
    
    2010
    
    
    2009
    
    
    2008Investment income
    
    $
    4,588
    
    
    $
    5,068
    
    
    $
    7,324Other revenues
    
    
    11,385
    
    
    
    8,690
    
    
    
    8,215Total revenues
    
    
    15,973
    
    
    
    13,758
    
    
    
    15,539Operating expenses:General and administrative expenses
    
    
    9,566
    
    
    
    9,004
    
    
    
    9,283Interest expense
    
    
    6,038
    
    
    
    6,693
    
    
    
    7,301Total operating expenses
    
    
    15,604
    
    
    
    15,697
    
    
    
    16,584(Loss) income before income taxes
    
    
    369
    
    
    
    (1,939
    )
    
    
    (1,045
    )Income tax (benefit) expense
    
    
    529
    
    
    
    (463
    )
    
    
    268(Loss) Income of parent company
    
    
    (160
    )
    
    
    (1,476
    )
    
    
    (1,313
    )Equity in income of subsidiaries
    
    
    66,961
    
    
    
    70,256
    
    
    
    26,103Net income
    
    $
    66,801
    
    
    $
    68,780
    
    
    $
    24,790




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##### Table of Contents



Triple-S Management Corporation
Schedule II
Condensed Financial Information of Triple-S Management Corporation
(Registrant)
Statements of Cash Flows
 (in thousands)
    
    12/31/2010
    
    
    12/31/2009
    
    
    12/31/2008Net income
    
    $
    66,801
    
    
    $
    68,780
    
    
    $
    24,790Adjustment to reconcile net income to net cash (used in)provided by operating activities:Equity in net income of subsidiaries
    
    
    (66,961
    )
    
    
    (70,256
    )
    
    
    (26,103
    )Depreciation and amortization
    
    
    865
    
    
    
    863
    
    
    
    922Shared- based compensation
    
    
    1,894
    
    
    
    3,924
    
    
    
    3,268Deferred income tax (expense) benefit
    
    
    392
    
    
    
    (644
    )
    
    
    (363
    )Dividends received from subsidiary
    
    
    15,000
    
    
    
    
    
    
    
    Other
    
    
    (314
    )
    
    
    934
    
    
    
    1,965Changes in assets and liabilities:Accrued interest from subisidiary
    
    
    2,214
    
    
    
    1,985
    
    
    
    (3,188
    )Due from subsidiaries
    
    
    2,552
    
    
    
    6,404
    
    
    
    (8,359
    )Other assets
    
    
    148
    
    
    
    (175
    )
    
    
    (1,173
    )Due to subsidiary
    
    
    (153
    )
    
    
    4,138
    
    
    
    (5,818
    )Other liabilities
    
    
    (768
    )
    
    
    (85
    )
    
    
    2,343Net cash provided by (used in) operating activities
    
    
    21,670
    
    
    
    15,868
    
    
    
    (11,716
    )Cash flows from
investing
activities:Acquisition of investment in securities classified as available for sale
    
    
    (95,346
    )
    
    
    (40,996
    )
    
    
    (70,684
    )Proceeds from sale and maturities of investment in securitiesclassified as available for sale
    
    
    71,782
    
    
    
    58,324
    
    
    
    45,905Capitalization of subsidiary
    
    
    (6,000
    )
    
    
    
    
    
    
    Net (acquisition) retirement of property and equipment
    
    
    
    
    
    
    (792
    )
    
    
    (47
    )Net cash (used in) provided by investing activities
    
    
    (29,564
    )
    
    
    16,536
    
    
    
    (24,826
    )Cash flow from
financing
activities:Repayments of borrowings
    
    
    (26,640
    )
    
    
    (1,640
    )
    
    
    (1,639
    )Net proceeds from short-term
borrowings
    
    
    15,575
    
    
    
    
    
    
    
    Proceeds from long-term borrowings
    
    
    25,000
    
    
    
    
    
    
    
    Repurchase of common stock
    
    
    (6,235
    )
    
    
    (32,355
    )
    
    
    (7,645
    )Other
    
    
    
    
    
    
    
    
    
    
    6Net cash provided by (used in) financing activities
    
    
    7,700
    
    
    
    (33,995
    )
    
    
    (9,278
    )Net decrease in cash and cash equivalents
    
    
    (194
    )
    
    
    (1,591
    )
    
    
    (45,820
    )Cash and cash equivalents, beginning of year
    
    
    361
    
    
    
    1,952
    
    
    
    47,772Cash and cash equivalents, end of year
    
    $
    167
    
    
    $
    361
    
    
    $
    1,952




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##### Table of Contents



Triple-S Management Corporation     (dollar amounts in thousands)
 The accompanying notes to the condensed financial statements should be read in
conjunction with the consolidated financial statements and the accompanying notes thereto
included in Item 15 to the Annual Report on Form 10-K.(1)
    
    For purposes of these condensed financial statements, Triple-S Management Corporations (the
Company or TSM) investment in its wholly owned subsidiaries is recorded using the equity basis
accounting.(2)
    
    Significant Accounting PoliciesThe significant accounting policies followed by the Company are set forth in the notes to the
consolidated financial statements and the accompanying notes thereto. Refer to Item 15 to the
Annual Report of Form 10-K.(3)
    
    ReclassificationsCertain amounts in the 2009 financial statements were reclassified to
conform to the 2010 presentation. We reclassified certain allocations made to subsidiaries
related to the liability for pension benefits.(4)
    
    Long-Term BorrowingsA summary of the long-term borrowings entered into by the Company at December 31, 2009 and
2008 follows:
 2010
    
    
    2009Senior unsecured notes payable of $60,000 issued on
December 2005; due December 2020. Interest is
payable monthly at a fixed rate of 6.60%.
    
    $
    35,000
    
    
    $
    60,000Senior unsecured notes payable of $35,000 issued on
January 2006; due January 2021. Interest is payable
monthly at a fixed rate of 6.70%.
    
    
    35,000
    
    
    
    35,000Secured loan payable of $41,000, payable in monthly
installments of $137 through July 1, 2024, plus
interest at a rate reset periodically of 100 basis
points over selected LIBOR maturity (which was
1.29% and 1.28% at December 31, 2010,
and 2009, respectively).
    
    
    21,027
    
    
    
    22,667Repurchase agreement of $25.0 million entered on
November 2010, due November 2015. Interest is
payable quarterly at a fixed rate of 1.96%.
    
    
    25,000
    
    
    
    Total borrowings
    
    $
    116,027
    
    
    $
    117,667
 1




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##### Table of Contents



Triple-S Management Corporation     (dollar amounts in thousands)
 Aggregate maturities of the Companys long term borrowings as of December 31, 2010 are
summarized as follows:
 Year ending December 312011
    
    $
    1,6402012
    
    
    1,6402013
    
    
    1,6402014
    
    
    1,6402015
    
    
    26,640Thereafter
    
    
    82,827$
    116,027
 All of the Companys senior notes can be prepaid at par, in total or partially, five
years after issuance as determined by the Company.Debt issuance costs related to each of the Companys senior unsecured notes were deferred and
are being amortized over the term of its respective senior note. Unamortized debt issuance
costs related to these senior unsecured notes as of December 31, 2010 and 2009 amounted to
$431 and $651, respectively, and are included within the other assets in the accompanying
condensed balance sheets.The secured loan note payable previously described is guaranteed by a first position held by
the bank on the Companys and its subsidiaries land, building, and substantially all leasehold
improvements, as collateral for the term of the loans under a continuing general security
agreement. This secured loan contains certain non-financial covenants, which are customary in
this type of facility, including but not limited to, restrictions on the granting of certain
liens, limitations on acquisitions and limitation on changes in control.The repurchase agreement has pledged as collateral investment securities available for sale
with fair value of $28,453 (face value of $23,918). The investment securities underlying such
agreements were delivered to the financial institution with whom the agreement was transacted.
The dealers may have loaned, or used as collateral securities in the normal course of
business operations. We maintain effective control over the investment securities pledged as
collateral and accordingly, such securities continue to be carried on the accompanying
consolidated balance sheets.
 2




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##### Table of Contents



Triple-S Management Corporation     (dollar amounts in thousands)
 (5)
    
    Transactions with Related PartiesThe following are the significant related-party transactions made for the three-year period
ended December 31, 2010, 2009 and 2008:
 2010
    
    2009
    
    2008Rent charges to subsidiaries
    
    $
    7,468
    
    
    $
    7,422
    
    
    $
    7,286Interest charged to subsidiary
on note receivable
    
    
    2,786
    
    
    
    3,015
    
    
    
    3,189Transfers in due to investments
purchased
    
    
    83,502
    
    
    
    3,230
    
    
    
    Transfers out due to investments
sold
    
    
    59,911
    
    
    
    6,274
    
    
    
    
 As of December 31, 2010 the Company has a note receivable from a subsidiary amounting to
$37,000 pursuant to the provisions of Article 29.30 of the Puerto Rico Insurance Code. The
note receivable from subsidiary is due on demand; however, pursuant to the requirements
established by the Commissioner of Insurance, the parties agreed that no payment of the total
principal nor the interest due on the loan will be made without first obtaining written
authorization from the Commissioner of Insurance within at least 60 days prior to the proposed
payment date. This note bears interest at 6.6% at December 31, 2010 and 2009, respectively.
Accrued interest at December 31, 2010 and 2009 amounted to $7,140 and $9,354, respectively.
 3




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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Schedule III  Supplementary Insurance Information
For the years ended December 31, 2010, 2009 and 2008
 (Dollar amounts in thousands)
    
    Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization ofPolicy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred PolicyAcquisition
    
    
    
    
    
    
    Liability for
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AcquisitionCosts and Value
    
    
    
    
    
    
    Future
    
    
    
    
    
    
    Policy Claims
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    Costs and Value
    
    
    Other
    
    
    Netof Business
    
    
    Claim
    
    
    Policy
    
    
    Unearned
    
    
    and Benefits
    
    
    Premium
    
    
    Investment
    
    
    Claims
    
    
    of Business
    
    
    Operating
    
    
    PremiumsSegment
    
    Acquired
    
    
    Liabilities
    
    
    Benefits
    
    
    Premiums
    
    
    Payable
    
    
    Revenue
    
    
    Income
    
    
    Incurred
    
    
    Acquired
    
    
    Expenses
    
    
    Written2010Managed care
    
    $
    
    
    
    $
    236,170
    
    
    $
    
    
    
    $
    4,600
    
    
    $
    
    
    
    $
    1,700,252
    
    
    $
    19,799
    
    
    $
    1,497,756
    
    
    $
    
    
    
    $
    201,726
    
    
    $
    1,700,252Life insurance
    
    
    121,555
    
    
    
    41,179
    
    
    
    236,523
    
    
    
    3,724
    
    
    
    
    
    
    
    105,819
    
    
    
    17,130
    
    
    
    49,804
    
    
    
    15,168
    
    
    
    40,643
    
    
    
    105,819Property and casualty insurance
    
    
    24,531
    
    
    
    82,861
    
    
    
    
    
    
    
    90,017
    
    
    
    
    
    
    
    99,193
    
    
    
    10,132
    
    
    
    49,229
    
    
    
    32,861
    
    
    
    23,656
    
    
    
    95,508Other non-reportable segments, parent
company operations and net
consolidating entries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,164
    )
    
    
    2,084
    
    
    
    
    
    
    
    
    
    
    
    (9,059
    )
    
    
    Total
    
    $
    146,086
    
    
    $
    360,210
    
    
    $
    236,523
    
    
    $
    98,341
    
    
    $
    
    
    
    $
    1,901,100
    
    
    $
    49,145
    
    
    $
    1,596,789
    
    
    $
    48,029
    
    
    $
    256,966
    
    
    $
    1,901,5792009Managed care
    
    $
    
    
    
    $
    236,366
    
    
    $
    
    
    
    $
    6,996
    
    
    $
    
    
    
    $
    1,677,080
    
    
    $
    21,641
    
    
    $
    1,508,185
    
    
    $
    
    
    
    $
    184,663
    
    
    $
    1,677,080Life insurance
    
    
    112,908
    
    
    
    40,100
    
    
    
    222,619
    
    
    
    4,163
    
    
    
    
    
    
    
    100,112
    
    
    
    16,763
    
    
    
    50,353
    
    
    
    16,844
    
    
    
    35,123
    
    
    
    100,112Property and casualty insurance
    
    
    27,009
    
    
    
    83,980
    
    
    
    
    
    
    
    97,183
    
    
    
    
    
    
    
    96,209
    
    
    
    11,679
    
    
    
    47,334
    
    
    
    28,284
    
    
    
    23,524
    
    
    
    95,817Other non-reportable segments, parent
company operations and net
consolidating entries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,317
    )
    
    
    2,053
    
    
    
    
    
    
    
    
    
    
    
    (9,020
    )
    
    
    Total
    
    $
    139,917
    
    
    $
    360,446
    
    
    $
    222,619
    
    
    $
    108,342
    
    
    $
    
    
    
    $
    1,869,084
    
    
    $
    52,136
    
    
    $
    1,605,872
    
    
    $
    45,128
    
    
    $
    234,290
    
    
    $
    1,873,0092008Managed care
    
    $
    
    
    
    $
    201,849
    
    
    $
    
    
    
    $
    5,585
    
    
    $
    
    
    
    $
    1,509,912
    
    
    $
    23,091
    
    
    $
    1,342,258
    
    
    $
    
    
    
    $
    160,591
    
    
    $
    1,509,912Life insurance
    
    
    101,243
    
    
    
    39,948
    
    
    
    207,545
    
    
    
    3,370
    
    
    
    
    
    
    
    92,843
    
    
    
    16,482
    
    
    
    47,432
    
    
    
    16,404
    
    
    
    33,000
    
    
    
    92,843Property and casualty insurance
    
    
    25,104
    
    
    
    81,913
    
    
    
    
    
    
    
    101,186
    
    
    
    
    
    
    
    93,821
    
    
    
    12,546
    
    
    
    42,111
    
    
    
    27,383
    
    
    
    23,725
    
    
    
    95,867Other non-reportable segments, parent
company operations and net
consolidating entries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,232
    )
    
    
    4,134
    
    
    
    
    
    
    
    
    
    
    
    (9,216
    )
    
    
    Total
    
    $
    126,347
    
    
    $
    323,710
    
    
    $
    207,545
    
    
    $
    110,141
    
    
    $
    
    
    
    $
    1,692,344
    
    
    $
    56,253
    
    
    $
    1,431,801
    
    
    $
    43,787
    
    
    $
    208,100
    
    
    $
    1,698,622




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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Schedule IV  Reinsurance
For the years ended December 31, 2010, 2009 and 2008
 PercentageCeded to
    
    
    Assumed
    
    
    
    
    
    
    of AmountGross
    
    
    Other
    
    
    from Other
    
    
    Net
    
    
    Assumed(Dollar amounts in thousands)
    
    Amount
    
    
    Companies (1)
    
    
    Companies
    
    
    Amount
    
    
    to Net2010Life insurance in force
    
    $
    8,926,668
    
    
    $
    2,987,054
    
    
    $
    
    
    
    $
    5,939,614
    
    
    
    0.0
    %Premiums:Life insurance
    
    $
    111,085
    
    
    $
    5,648
    
    
    $
    
    
    
    $
    105,437
    
    
    
    0.0
    %Accident and health insurance
    
    
    1,708,289
    
    
    
    11,206
    
    
    
    
    
    
    
    1,697,083
    
    
    
    0.0
    %Property and casualty insurance
    
    
    162,326
    
    
    
    63,746
    
    
    
    
    
    
    
    98,580
    
    
    
    0.0
    %Total premiums
    
    $
    1,981,700
    
    
    $
    80,600
    
    
    $
    
    
    
    $
    1,901,100
    
    
    
    0.0
    %2009Life insurance in force
    
    $
    10,714,252
    
    
    $
    2,937,377
    
    
    $
    
    
    
    $
    7,776,875
    
    
    
    0.0
    %Premiums:Life insurance
    
    $
    106,243
    
    
    $
    6,131
    
    
    $
    
    
    
    $
    100,112
    
    
    
    0.0
    %Accident and health insurance
    
    
    1,680,496
    
    
    
    7,341
    
    
    
    
    
    
    
    1,673,155
    
    
    
    0.0
    %Property and casualty insurance
    
    
    163,358
    
    
    
    67,541
    
    
    
    
    
    
    
    95,817
    
    
    
    0.0
    %Total premiums
    
    $
    1,950,097
    
    
    $
    81,013
    
    
    $
    
    
    
    $
    1,869,084
    
    
    
    0.0
    %2008Life insurance in force
    
    $
    10,503,170
    
    
    $
    2,823,647
    
    
    $
    
    
    
    $
    7,679,523
    
    
    
    0.0
    %Premiums:Life insurance
    
    $
    100,413
    
    
    $
    7,570
    
    
    $
    
    
    
    $
    92,843
    
    
    
    0.0
    %Accident and health insurance
    
    
    1,509,257
    
    
    
    5,623
    
    
    
    
    
    
    
    1,503,634
    
    
    
    0.0
    %Property and casualty insurance
    
    
    167,982
    
    
    
    72,115
    
    
    
    
    
    
    
    95,867
    
    
    
    0.0
    %Total premiums
    
    $
    1,777,652
    
    
    $
    85,308
    
    
    $
    
    
    
    $
    1,692,344
    
    
    
    0.0
    %
 
 (1)
    
    Premiums ceded on the life insurance business are net of commission income on reinsurance
amounting to $42 and $287 for the years ended December 31, 2009 and 2008. None for the year
ended December 31, 2010.




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##### Table of Contents



Triple-S Management Corporation and Subsidiaries
Schedule V  Valuation and Qualifying Accounts
For the years ended December 31, 2010, 2009 and 2008
 (Dollar amounts in thousands)
 AdditionsBalance at
    
    
    Charged to
    
    
    Charged (Reversal)
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    To Other Accounts
    
    
    Deductions -
    
    
    End ofPeriod
    
    
    Expenses
    
    
    - Describe (1)
    
    
    Describe (2)
    
    
    Period2010Allowance for doubtful receivables
    
    $
    25,234
    
    
    
    7,118
    
    
    
    (9,967
    )
    
    
    (2,351
    )
    
    $
    20,0342009Allowance for doubtful receivables
    
    $
    14,745
    
    
    
    2,149
    
    
    
    10,065
    
    
    
    (1,725
    )
    
    $
    25,2342008Allowance for doubtful receivables
    
    $
    15,925
    
    
    
    821
    
    
    
    
    
    
    
    (2,001
    )
    
    $
    14,745
 
 (1)
    
    Represents premiums adjustment to provide for unresolved reconciliation
items with the Government of Puerto Rico and other entities.(2)
    
    Deductions represent the write-off of accounts deemed uncollectible.