Triple-S Management Corporation Reports Third Quarter 2018 Results
Quarterly Consolidated and Other Highlights
- During the third quarter of 2018, the Company recorded approximately
$52.3 million of unfavorable prior period reserve development (approximately$35.9 million after-tax impact, or$1.57 per share) as the Property and Casualty segment received additional claim information related to Hurricane Maria that merited increases to its already reported gross reserves; - Net loss of
$17.6 million , or$0.77 loss per share, versus net income of$21.9 million , or$0.91 per diluted share, in the prior-year period; - Adjusted net loss of
$22.2 million , or$0.97 loss per share, versus adjusted net income of$18 .7 million, or$0.77 per diluted share, a year ago, mostly reflecting the after-tax impact of the unfavorable reserve development in the Property and Casualty segment related to Hurricane Maria claims; - Adjusted net income for the third quarter of 2018, excluding the impact of the Property and Casualty segment unfavorable development, would have been
$13 .7 million, or$0.60 per diluted share. Adjusted net income excluding the estimated favorable hurricane-related impact in the Managed Care segment's utilization and the hurricane-related net retained losses recognized by the Property and Casualty segment for the 2017 quarter would have been$13.4 million , or$0.55 per diluted share; - Operating revenues of
$764.0 million , a 4.5% increase from the prior-year period, reflecting higher Managed Care premiums; - Consolidated loss ratio rose 570 basis points to 87.4%, primarily driven by the unfavorable reserve development related to Hurricane Maria claims recognized by the Property and Casualty segment;
- Medical loss ratio ("MLR") rose 80 basis points to 83.2%, primarily driven by hurricane-related lower Managed Care utilization in the 2017 period, offset in part by higher average premium rates in 2018;
- Consolidated operating loss of
$25.6 million compared to operating income of$28.3 million in the prior-year period; - Under the Company's share repurchase program, during the third quarter of 2018, 259,925 shares were repurchased at an aggregate cost of
$6.0 million . As ofNovember 7, 2018 ,$12.5 million remains available in the program.
"Our third quarter results saw continued improvement in our core Managed Care segment, but were clearly impacted by an additional unfavorable prior period reserve development at our Property and Casualty segment, reflecting a significant increase in new claims and claim amendments received shortly before Hurricane Maria's first anniversary," said
"In response to the material increase in estimated gross losses, we recently purchased a multi-year retroactive and prospective reinsurance contract at rates significantly better than those that we were quoted during the second quarter," continued
"With respect to Managed Care, our long-term strategy remains firmly on track," added
Selected Consolidated Quarterly Details
- Consolidated premiums earned were
$742.4 million , up 3.9% from the prior-year period, primarily reflecting higher Medicaid and Medicare premiums within the Managed Care segment. Growth in Medicaid premiums mostly reflects an increase in membership. In the Medicare business, premiums increased due to the Company's achievement of a four-star rated Medicare Advantage HMO contract this year, resulting in a 5% bonus applied to the benchmark used in the premium calculation, as well as an increase in the 2018 Medicare reimbursement rates. These increases were partially offset by lower Commercial and Medicare membership. - Consolidated claims incurred were
$648.6 million , up 11.1% year-over-year, mostly driven by$52.3 million in unfavorable prior period reserve development in the Property and Casualty segment related to Hurricane Maria, as well as significantly lower Managed Care utilization following the hurricanes that occurred in the prior-year period. During the third quarter of 2018, the Property and Casualty segment received significant new claims and additional information on existing claims related to Hurricane Maria, which resulted in the additional unfavorable prior period reserve development. Consolidated loss ratio of 87.4% rose 570 basis points from the prior-year period, primarily driven by this development. - Consolidated operating expenses of
$141.0 million increased by$21.8 million , or 18.3%, from the prior-year period, while the Company's operating expense ratio increased 230 basis points year-over-year to 18.9%. The increase in operating expenses primarily reflected the reinstatement of the Health Insurance Providers fee ("HIP fee") of$13.1 million , higher professional services and personnel costs related to the Company's ongoing Managed Care initiatives, and implementation costs related to the new Medicaid model that became effectiveNovember 1, 2018 . - Consolidated income tax benefit was
$3.4 million , compared to an expense of$11.8 million in the prior-year period, primarily reflecting losses in the Property and Casualty segment.
Selected Managed Care Segment Quarterly Details
- Managed Care premiums earned were
$680.7 million , up 4.1% year over year. - Medicare premiums earned of
$283.6 million increased 7.3% from the prior-year period, largely reflecting an increase in Puerto Rico´s 2018 Medicare fee-for-service benchmark for the first time since 2012, an increase in premium rates as the result of attaining the four-star rating in the Company's 2018 HMO product, and higher average membership risk score. These increases were partially offset by a decrease in member month enrollment of approximately 33,000. - Medicaid premiums earned improved 4.7% from the prior-year period to
$199.8 million , primarily reflecting an increase of 54,000 in member month enrollment,$8.7 million of additional premiums related to the achievement of the contract's quality incentive metrics, and$3.6 million associated with the reinstatement of the HIP fee pass-through in 2018. These increases were partially offset by the impact of the profit sharing accrual, which decreased 2018 premiums by approximately$5.6 million . - Commercial premiums earned of
$197.3 million declined 0.8% from the prior-year period, mainly due to an approximate decline of 55,000 in fully-insured member month enrollment, and partially offset by the reinstatement of the HIP fee pass-through and higher premium rates. - Reported MLR of 83.2% increased 80 basis points from the prior year primarily reflecting lower utilization in the prior-year period related to hurricanes. The impact of the hurricanes reduced claims in the third quarter of 2017 by an estimated
$32.9 million , or 500 basis points of MLR. Excluding this impact on utilization, adjusting for prior period reserve developments and moving risk-score revenue to its corresponding period, Managed Care MLR would have been approximately 84.1% in the third quarter of 2018, 110 basis points lower than the prior-year period.
Subsequent Event
On
2018 Outlook
The Company is maintaining its full year 2018 directional guidance for its Managed Care Commercial and Medicare Advantage membership and adjusting its expected Medicare MLR guidance, while raising directional guidance for premiums earned in its Life Insurance segment. More specifically:
- In the Commercial business, the Company continues to expect full-year at-risk member month enrollment between 3.7 million and 3.8 million, and full-year MLR between 80.5% and 82.5%.
- In the Medicare Advantage business, the Company continues to expect full year member month enrollment to be between 1.25 million and 1.35 million, and now expects full year MLR for 2018 between 84% and 86%, an improvement from the previous expectation of 85% to 87%.
- The Company has raised expectations for Life insurance premiums earned for 2018 between
$165 million and$167 million . The Company's previous outlook for Life insurance 2018 premiums earned was between$160 million and$164 million . - The Company continues to expect Property and Casualty premiums earned for 2018 between
$82 million and$86 million . - Finally, the Company's expectation for consolidated operating expenses for the full year 2018 are now between
$550 million and$555 million , mostly reflecting higher expenses related to the Medicare open enrollments and implementation expenses of the new Medicaid model. The Company's previous outlook was for consolidated operating expenses for full year 2018 between$530 million and$545 million .
Conference Call and Webcast
Management will host a conference call and webcast today at
To listen to the webcast, participants should visit the "Investor Relations" section of the Company's website at www.triplesmanagement.com several minutes before the event is broadcast and follow the instructions provided to ensure they have the necessary audio application downloaded and installed. This program is provided at no charge to the user. An archived version of the call, also located on the "Investor Relations" section of
In addition, a replay will be available through
About
Non-GAAP Financial Measures
This earnings release presents information about the Company's adjusted net income, which is a non-GAAP financial metric provided as a complement to the results provided in accordance with accounting principles generally accepted in
Forward-Looking Statements
This document contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information about possible or assumed future sales, results of operations, developments, regulatory approvals or other circumstances. Sentences that include "believe", "expect", "plan", "intend", "estimate", "anticipate", "project", "may", "will", "shall", "should" and similar expressions, whether in the positive or negative, are intended to identify forward-looking statements.
All forward-looking statements in this news release reflect management's current views about future events and are based on assumptions and subject to risks and uncertainties. Consequently, actual results may differ materially from those expressed here as a result of various factors, including all the risks discussed and identified in public filings with the
In addition, the Company operates in a highly competitive, constantly changing environment, influenced by very large organizations that have resulted from business combinations, aggressive marketing and pricing practices of competitors, and regulatory oversight. The following factors, if markedly different from the Company's planning assumptions (either individually or in combination), could cause
- 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 policy and contract liabilities
- Changes in government laws and regulations 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 the Company's financial strength ratings
- A downgrade in the Government of
Puerto Rico's debt - Litigation or legislation targeted at managed care, life insurance or property and casualty insurance companies
- Ability to contract with providers consistent with past practice
- Ability to successfully implement the Company's disease management, utilization management and Star ratings programs
- Ability to maintain Federal Employees, Medicare and Medicaid contracts
- Volatility in the securities markets and investment losses and defaults
- General economic downturns, major disasters, and epidemics
This list is not exhaustive. Management believes the forward-looking statements in this release are reasonable. However, there is no assurance that the actions, events or results anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on the Company's results of operations or financial condition. In view of these uncertainties, investors should not place undue reliance on any forward-looking statements, which are based on current expectations. In addition, forward-looking statements are based on information available the day they are made, and (other than as required by applicable law, including the securities laws of
Readers are advised to carefully review and consider the various disclosures in the Company's
Earnings Release Schedules and Supplementary Information
Condensed Consolidated Balance Sheets...................................................................................... Exhibit I |
Condensed Consolidated Statements of Earnings......................................................................... Exhibit II |
Condensed Consolidated Statements of Cash Flows.................................................................... Exhibit III |
Segment Performance Supplemental Information......................................................................... Exhibit IV |
Reconciliation of Non-GAAP Financial Measures........................................................................... Exhibit V |
Exhibit I
Condensed Consolidated Balance Sheets |
|||||||||||
(dollar amounts in thousands) |
|||||||||||
Unaudited |
|||||||||||
|
|
||||||||||
Assets |
|||||||||||
Investments |
$ |
1,615,707 |
$ |
1,605,477 |
|||||||
Cash and cash equivalents |
107,091 |
198,941 |
|||||||||
Premium and other receivables, net |
632,897 |
899,327 |
|||||||||
Deferred policy acquisition costs and value of business acquired |
209,205 |
200,788 |
|||||||||
Property and equipment, net |
78,445 |
74,716 |
|||||||||
Other assets |
175,083 |
137,516 |
|||||||||
Total assets |
$ |
2,818,428 |
$ |
3,116,765 |
|||||||
Liabilities and Stockholders' Equity |
|||||||||||
Policy liabilities and accruals |
$ |
1,688,030 |
$ |
1,761,553 |
|||||||
Accounts payable and accrued liabilities |
280,879 |
410,457 |
|||||||||
Long-term borrowings |
29,681 |
32,073 |
|||||||||
Total liabilities |
1,998,590 |
2,204,083 |
|||||||||
Stockholders' equity: |
|||||||||||
Common stock |
22,937 |
23,578 |
|||||||||
Other stockholders' equity |
797,572 |
889,786 |
|||||||||
|
820,509 |
913,364 |
|||||||||
Non-controlling interest in consolidated subsidiary |
(671) |
(682) |
|||||||||
Total stockholders' equity |
819,838 |
912,682 |
|||||||||
Total liabilities and stockholders' equity |
$ |
2,818,428 |
$ |
3,116,765 |
|||||||
Exhibit II
Condensed Consolidated Statements of Earnings |
||||||||||||||||||
(dollar amounts in thousands, except per share data) |
||||||||||||||||||
Unaudited |
||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||
|
|
|||||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Revenues: |
||||||||||||||||||
Premiums earned, net |
$ |
742,445 |
$ |
714,325 |
$ |
|
$ |
2,139,489 |
||||||||||
Administrative service fees |
3,802 |
3,391 |
11,216 |
12,318 |
||||||||||||||
Net investment income |
16,168 |
12,395 |
45,630 |
37,109 |
||||||||||||||
Other operating revenues |
1,575 |
941 |
4,234 |
3,027 |
||||||||||||||
Total operating revenues |
763,990 |
731,052 |
2,297,329 |
2,191,943 |
||||||||||||||
Net realized investment (losses) gains on sale of securities |
(956) |
3,753 |
1,065 |
8,143 |
||||||||||||||
Net unrealized investment gains (losses) on equity investments |
5,632 |
- |
(11,343) |
- |
||||||||||||||
Other income, net |
1,943 |
3,409 |
3,600 |
6,521 |
||||||||||||||
Total revenues |
770,609 |
738,214 |
2,290,651 |
2,206,607 |
||||||||||||||
Benefits and expenses: |
||||||||||||||||||
Claims incurred |
648,580 |
583,625 |
1,959,707 |
1,815,785 |
||||||||||||||
Operating expenses |
141,026 |
119,145 |
408,772 |
348,811 |
||||||||||||||
Total operating costs |
789,606 |
702,770 |
2,368,479 |
2,164,596 |
||||||||||||||
Interest expense |
2,000 |
1,709 |
5,515 |
5,116 |
||||||||||||||
Total benefits and expenses |
791,606 |
704,479 |
2,373,994 |
2,169,712 |
||||||||||||||
(Loss) income before taxes |
(20,997) |
33,735 |
(83,343) |
36,895 |
||||||||||||||
Income tax (benefit) expense |
(3,430) |
11,824 |
(30,944) |
6,622 |
||||||||||||||
Net (loss) income |
(17,567) |
21,911 |
(52,399) |
30,273 |
||||||||||||||
Net (loss) income attributable to the non-controlling interest |
- |
(1) |
1 |
(2) |
||||||||||||||
Net (loss) income attributable to |
$ |
(17,567) |
$ |
21,912 |
$ |
(52,400) |
$ |
30,275 |
||||||||||
Earnings per share attributable to |
||||||||||||||||||
Basic net (loss) income per share |
$ |
(0.77) |
$ |
0.91 |
$ |
(2.27) |
$ |
1.25 |
||||||||||
Diluted net (loss) income per share |
$ |
(0.77) |
$ |
0.91 |
$ |
(2.27) |
$ |
1.25 |
||||||||||
Weighted average of common shares |
22,895,582 |
24,142,192 |
23,058,754 |
24,177,344 |
||||||||||||||
Diluted weighted average of common shares |
22,895,582 |
24,208,022 |
23,058,754 |
24,231,708 |
||||||||||||||
Exhibit III
Condensed Consolidated Statements of Cash Flows |
|||||||||||
(dollar amounts in thousands) |
|||||||||||
Unaudited |
|||||||||||
For the Nine Months Ended |
|||||||||||
|
|||||||||||
2018 |
2017 |
||||||||||
Net cash (used in) provided by operating activities |
$ |
(3,928) |
$ |
191,849 |
|||||||
Cash flows from investing activities: |
|||||||||||
Proceeds from investments sold or matured: |
|||||||||||
Securities available for sale: |
|||||||||||
Fixed maturities sold |
1,042,720 |
287,223 |
|||||||||
Fixed maturities matured/called |
18,133 |
15,503 |
|||||||||
Securities held to maturity - fixed maturities matured/called |
2,066 |
1,546 |
|||||||||
Equity investments sold |
150,024 |
38,318 |
|||||||||
Other invested assets sold |
2,040 |
- |
|||||||||
Acquisition of investments: |
|||||||||||
Securities available for sale - fixed maturities |
(1,113,587) |
(260,538) |
|||||||||
Securities held to maturity - fixed maturities |
(2,238) |
(1,550) |
|||||||||
Equity investments |
(113,108) |
(75,507) |
|||||||||
Other invested assets |
(38,501) |
- |
|||||||||
Increase in other investments |
(144) |
(2,207) |
|||||||||
Net change in policy loans |
(603) |
(696) |
|||||||||
Net capital expenditures |
(12,315) |
(15,949) |
|||||||||
Net cash used in investing activities |
(65,513) |
(13,857) |
|||||||||
Cash flows from financing activities: |
|||||||||||
Change in outstanding checks in excess of bank balances |
9,104 |
8,371 |
|||||||||
Repayments of long-term borrowings |
(2,427) |
(2,028) |
|||||||||
Repurchase and retirement of common stock |
(22,390) |
(12,553) |
|||||||||
Proceeds from policyholder deposits |
14,726 |
12,130 |
|||||||||
Surrender of policyholder deposits |
(21,422) |
(17,398) |
|||||||||
Net cash used in financing activities |
(22,409) |
(11,478) |
|||||||||
Net increase in cash and cash equivalents |
(91,850) |
166,514 |
|||||||||
Cash and cash equivalents, beginning of period |
198,941 |
103,428 |
|||||||||
Cash and cash equivalents, end of period |
$ |
107,091 |
$ |
269,942 |
|||||||
Exhibit IV
Segment Performance Supplemental Information
(Unaudited) |
Three months ended |
Nine months ended |
||||||||||
(dollar amounts in millions) |
2018 |
2017 |
Percentage |
2018 |
2017 |
Percentage |
||||||
Premiums earned, net: |
||||||||||||
Managed Care: |
||||||||||||
Commercial |
$ 197.3 |
$ 198.9 |
(0.8%) |
$ 590.8 |
$ 607.4 |
(2.7%) |
||||||
Medicare |
283.6 |
264.3 |
7.3% |
851.3 |
788.5 |
8.0% |
||||||
Medicaid |
199.8 |
190.9 |
4.7% |
603.9 |
560.3 |
7.8% |
||||||
Total Managed Care |
680.7 |
654.1 |
4.1% |
2,046.0 |
1,956.2 |
4.6% |
||||||
Life Insurance |
42.3 |
40.9 |
3.4% |
125.1 |
121.4 |
3.0% |
||||||
Property and Casualty |
20.2 |
19.9 |
1.5% |
67.1 |
63.4 |
5.8% |
||||||
Other |
(0.8) |
(0.6) |
(33.3%) |
(1.9) |
(1.5) |
(26.7%) |
||||||
Consolidated premiums earned, net |
$ 742.4 |
$ 714.3 |
3.9% |
$ 2,236.3 |
$ 2,139.5 |
4.5% |
||||||
Operating revenues (loss): 1 |
||||||||||||
Managed Care |
$ 692.4 |
$ 663.0 |
4.4% |
2,077.8 |
$ 1,984.6 |
4.7% |
||||||
Life Insurance |
48.7 |
47.0 |
3.6% |
144.2 |
139.9 |
3.1% |
||||||
Property and Casualty |
22.7 |
22.0 |
3.2% |
74.8 |
69.6 |
7.5% |
||||||
Other |
0.2 |
(0.9) |
122.2% |
0.5 |
(2.2) |
122.7% |
||||||
Consolidated operating revenues |
$ 764.0 |
$ 731.1 |
4.5% |
$ 2,297.3 |
$ 2,191.9 |
4.8% |
||||||
Operating income (loss): 2 |
||||||||||||
Managed Care |
$ 14.2 |
$ 34.8 |
59.2% |
$ 26.3 |
$ 19.2 |
37.0% |
||||||
Life Insurance |
5.7 |
4.5 |
26.7% |
14.6 |
13.4 |
9.0% |
||||||
Property and Casualty |
(46.9) |
(11.1) |
(322.5%) |
(114.8) |
(5.2) |
(2107.7%) |
||||||
Other |
1.4 |
0.1 |
1300.0% |
2.7 |
(0.1) |
2800.0% |
||||||
Consolidated operating (loss) income |
$ (25.6) |
$ 28.3 |
(190.5%) |
$ (71.2) |
$ 27.3 |
(360.8%) |
||||||
Operating margin: 3 |
||||||||||||
Managed Care |
2.1% |
5.2% |
-310 bp |
1.3% |
1.0% |
30 bp |
||||||
Life Insurance |
11.7% |
9.6% |
210 bp |
10.1% |
9.6% |
50 bp |
||||||
Property and Casualty |
(206.6%) |
(50.5%) |
-15,610 bp |
(153.5%) |
(7.5%) |
-14,600 bp |
||||||
Consolidated |
(3.4%) |
3.9% |
-730 bp |
(3.1%) |
1.2% |
-430 bp |
||||||
Depreciation and amortization expense |
$ 3.0 |
$ 3.4 |
(11.8%) |
$ 9.9 |
$ 9.8 |
1.0% |
||||||
1 |
Operating revenues include premiums earned, net, administrative service fees and net investment income. |
2 |
Operating income or loss include operating revenues minus operating costs. Operating costs include claims incurred and operating expenses. |
3 |
Operating margin is defined as operating income or loss divided by operating revenues. |
Additional Data |
Three months ended |
Nine months ended |
||||||||
(Unaudited) |
2018 |
2017 |
2018 |
2017 |
||||||
Managed Care |
||||||||||
Member months enrollment: |
||||||||||
Commercial: |
||||||||||
Fully-insured |
939,110 |
994,409 |
2,840,884 |
3,009,252 |
||||||
Self-insured |
427,791 |
495,616 |
1,317,244 |
1,504,283 |
||||||
Total Commercial |
1,366,901 |
1,490,025 |
4,158,128 |
4,513,535 |
||||||
Medicare Advantage |
334,836 |
368,102 |
1,008,063 |
1,095,086 |
||||||
Medicaid |
1,191,681 |
1,138,162 |
3,564,769 |
3,480,525 |
||||||
Total member months |
2,893,418 |
2,996,289 |
8,730,960 |
9,089,146 |
||||||
Claim liabilities (in millions) |
$ 413.3 |
$ 356.3 |
||||||||
Days claim payable |
65 |
57 |
||||||||
Premium PMPM: |
||||||||||
Managed Care |
$ 276.08 |
$ 261.57 |
$ 275.97 |
$ 257.91 |
||||||
Commercial |
210.09 |
200.02 |
207.96 |
201.84 |
||||||
Medicare Advantage |
846.98 |
718.01 |
844.49 |
720.03 |
||||||
Medicaid |
167.66 |
167.73 |
169.41 |
160.98 |
||||||
Medical loss ratio: |
83.2% |
82.4% |
84.7% |
87.2% |
||||||
Commercial |
84.5% |
73.1% |
82.0% |
79.1% |
||||||
Medicare Advantage |
80.3% |
83.3% |
84.4% |
89.3% |
||||||
Medicaid |
85.9% |
91.0% |
87.9% |
92.9% |
||||||
Adjusted medical loss ratio: 1 |
84.1% |
80.2% |
85.4% |
86.4% |
||||||
Commercial |
83.3% |
70.9% |
83.5% |
78.2% |
||||||
Medicare Advantage |
82.7% |
82.0% |
85.1% |
89.0% |
||||||
Medicaid |
87.3% |
87.3% |
87.8% |
91.5% |
||||||
Adjusted medical loss ratio excluding impact of hurricanes: 2 |
84.1% |
85.2% |
85.4% |
88.0% |
||||||
Commercial |
83.3% |
79.2% |
83.5% |
81.0% |
||||||
Medicare Advantage |
82.7% |
87.8% |
85.1% |
91.0% |
||||||
Medicaid |
87.3% |
87.8% |
87.8% |
91.6% |
||||||
Consolidated loss ratio: |
||||||||||
Loss ratio |
87.4% |
81.7% |
87.6% |
84.9% |
||||||
Adjusted loss ratio 1 |
88.2% |
79.6% |
88.3% |
84.1% |
||||||
Adjusted loss ratio excluding impact of hurricanes 3 |
80.3% |
84.0% |
81.9% |
85.6% |
||||||
Property and Casualty loss ratio: |
||||||||||
Loss ratio |
288.1% |
110.8% |
231.1% |
68.6% |
||||||
Loss ratio excluding impact of hurricanes 4 |
23.5% |
35.0% |
34.6% |
44.4% |
||||||
Operating expense ratio: |
||||||||||
Consolidated |
18.9% |
16.6% |
18.2% |
16.2% |
||||||
Managed Care |
16.4% |
13.5% |
15.4% |
13.2% |
||||||
1 |
The adjusted medical loss ratio and adjusted consolidated loss ratio accounts for subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents them in the corresponding period. |
2 |
The adjusted medical loss ratio excluding impact of hurricanes accounts for subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents them in the corresponding period, as well as adjusts the 2017 periods for the estimated impact in utilization following the hurricanes. |
3 |
The consolidated loss ratio excluding impact of hurricanes accounts for the Managed Care segment's subsequent adjustments to estimates, such as prior-period reserve developments and Medicare premium adjustments, and presents them in the corresponding period, as well as adjusts the 2017 period for the estimated impact in utilization following the hurricanes. In addition, it excludes the adverse reserve development experienced in the Property and Casualty segment in 2018 periods as well as the net retained losses incurred in the 2017 period. |
4 |
The Property and Casualty loss ratio excluding impact of hurricanes excludes the adverse reserve development experienced by this segment in 2018 periods as well as the net retained losses incurred in the 2017 period. |
Managed Care Membership by Segment |
As of |
||||||
2018 |
2017 |
||||||
Members: |
|||||||
Commercial: |
|||||||
Fully-insured |
313,729 |
328,777 |
|||||
Self-insured |
140,094 |
163,721 |
|||||
Total Commercial |
453,823 |
492,498 |
|||||
Medicare Advantage |
111,389 |
123,194 |
|||||
Medicaid |
394,149 |
379,199 |
|||||
Total members |
959,361 |
994,891 |
|||||
Exhibit V
Reconciliation of Non-GAAP Financial Measures
Adjusted Net (Loss) Income |
||||||||||
(Unaudited) |
Three months ended |
Nine months ended |
||||||||
(dollar amounts in millions) |
2018 |
2017 |
2018 |
2017 |
||||||
Net (loss) income |
$ (17.6) |
$ 21.9 |
$ (52.4) |
$ 30.3 |
||||||
Less adjustments: |
||||||||||
Net realized investment (losses) gains, net of tax |
(0.8) |
3.0 |
0.8 |
6.5 |
||||||
Unrealized gains (losses) on equity investments |
4.5 |
- |
(9.1) |
- |
||||||
Private equity investment income (loss), net of tax |
0.9 |
0.2 |
1.3 |
0.4 |
||||||
Adjusted net (loss) income |
$ (22.2) |
$ 18.7 |
$ (45.4) |
$ 23.4 |
||||||
Adjusted net (loss) income per share |
$ (0.97) |
$ 0.77 |
$ (1.96) |
$ 0.97 |
||||||
Adjusted Net (Loss) Income and Operating (Loss) |
||||||||||
(Unaudited) |
Three months ended |
Nine months ended |
||||||||
(dollar amounts in millions) |
2018 |
2017 |
2018 |
2017 |
||||||
Adjusted net (loss) income |
$ (22.2) |
$ 18.7 |
$ (45.4) |
$ 23.4 |
||||||
Less hurricanes impact: |
||||||||||
2018 Property and Casualty Hurricane Maria unfavorable prior period |
||||||||||
reserve development, net of tax |
(35.9) |
- |
(85.4) |
- |
||||||
2017 Hurricanes impact in Managed Care segment, net of tax |
- |
19.2 |
- |
19.2 |
||||||
2017 Hurricanes Irma and Maria net retained losses in Property and |
||||||||||
Casualty segment, net of tax |
- |
(13.9) |
- |
(13.9) |
||||||
Adjusted net income excluding hurricanes impact |
$ 13.7 |
$ 13.4 |
$ 40.0 |
$ 18.1 |
||||||
Adjusted net income per share excluding |
||||||||||
hurricanes impacts |
$ 0.60 |
$ 0.55 |
$ 1.73 |
$ 0.74 |
||||||
Operating (loss) income |
$ (25.6) |
$ 28.3 |
$ (71.2) |
$ 27.3 |
||||||
Less hurricanes impact: |
||||||||||
2018 Property and Casualty Hurricane Maria unfavorable prior period |
||||||||||
reserve development |
(52.3) |
- |
(128.7) |
- |
||||||
2017 Hurricanes impact in Managed Care segment |
- |
31.4 |
- |
31.4 |
||||||
2017 Hurricanes Irma and Maria net retained losses in Property and |
||||||||||
Casualty segment |
- |
(17.3) |
- |
(17.3) |
||||||
Operating Income excluding hurricanes impact |
$ 26.7 |
$ 14.2 |
$ 57.5 |
$ 13.2 |
||||||
Adjusted net income is a non-GAAP financial metric and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management believes that the use of this adjusted net income and adjusted net income per share provides investors and management useful information about the earnings impact of realized and unrealized investment gains or losses, as well as other non-recurring items impacting the Company's results of operations. We are also including adjusted net income and operating income excluding the impact of the unfavorable prior period reserve development of Hurricane Maria reserves recognized by the Property and Casualty segment in the 2018 periods and the estimated hurricane-related impact in the Managed Care and Property and Casualty segments in the 2017 period as Management believes this metric provides useful information about the financial performance of the Company's underlying business. These non-GAAP metrics do not consider all of the items associated with the Company's operations as determined in accordance with GAAP. As a result, one should not consider these measures in isolation.
FOR FURTHER INFORMATION: |
|
AT THE COMPANY: |
INVESTOR RELATIONS: |
Juan José Román-Jiménez |
Mr. |
EVP and Chief Financial Officer |
ICR |
(787) 749-4949 |
(787) 792-6488 |
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