OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has removed from under review with negative implications
and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the
Long-Term Issuer Credit Ratings (Long-Term ICR) of “bbb+” of Triple-S
Salud, Inc. (TSS) and its affiliate, Triple-S Vida, Inc. (TSV) (Río
Piedras, Puerto Rico). AM Best also has removed from under review with
negative implications and affirmed the FSR of B++ (Good) and the
Long-Term ICR of “bbb” of Triple-S Blue, Inc., I.I. (TSB). Additionally,
AM Best has affirmed the FSR of B+ (Good) and the Long-Term ICR of
“bbb-” of Triple-S Propiedad, Inc. (TSP) (Guaynabo, Puerto Rico).
Furthermore, AM Best has removed from under review with negative
implications and affirmed the Long-Term ICR of “bb+” of Triple-S
Management Corporation (TSM) (NYSE:GTS), the ultimate parent of TSS,
TSV, TSB and TSP. The outlook assigned to these Credit Ratings (ratings)
is stable. All companies are domiciled in San Juan, PR, unless otherwise
specified.
The ratings of TSP were downgraded previously and placed under review
with negative implications on Nov. 16, 2018, in response to TSP
reporting a significant loss in policyholder surplus largely driven by
adverse claims development on Hurricane Maria losses of approximately
$129 million in the second and third quarter of 2018. (See press
release dated Nov. 16, 2018). Concurrent to TSP’s downgrades, TSM’s
life/health subsidiaries were placed under review with negative
implications.
The ratings of TSS and TSV reflect the group’s aggregate balance sheet
strength, which AM Best categorizes as very strong, as well as its
adequate operating performance, limited business profile and appropriate
enterprise risk management (ERM).
The group’s stable outlooks reflect some level of resilience of the
capital balances to withstand deployment to other areas of the Triple-S
organization while its core business of health insurance add generally
favorable earnings stability. AM Best expects the margin from TSM’s
managed care business to improve through projected premium growth,
specifically in Medicare Advantage business, which is expected to
increase driven by membership gains in 2019. AM Best also expects TSV’s
suite of life and ancillary products to contribute to premium growth
over the medium term. Earnings from TSV favorably offset the managed
care earnings decline in 2018, which were due partially to unrealized
losses from the investment portfolio, higher utilization and the
inclusion of the health insurance fee. The Triple-S brand, market
position in key business segments, product offerings and network
strength are all favorable rating attributes; however, the Triple-S
businesses continue to operate in an environment still feeling the
effects of Hurricane Maria in more rural areas of Puerto Rico. More
recently, there are indicators showing migration off the island has
somewhat abated, and the economy is expected to benefit from federal
relief programs and rebuilding projects throughout fiscal-year 2019 and
into 2020.
The ratings of TSP reflect its balance sheet strength, which AM Best
categorizes as adequate, as well as its adequate operating performance,
limited business profile and marginal ERM.
AM Best assesses TSP’s balance sheet strength as adequate, based on its
strong risk-adjusted capitalization, as measured by Best’s Capital
Adequacy Ratio (BCAR). It also reflects TSP’s prudent investment
portfolio, stable loss reserving trends (excluding Hurricane Maria
claims) and strong liquidity measures that are enhanced by generally
positive operating cash flows. The company’s adequate operating
performance reflects its consistently profitable operating results,
again excluding 2018. AM Best categorizes TSP’s ERM assessment as
marginal, as the risk management capabilities do not align fully with
the company’s risk profile. Demonstrated weakness has been observed
given the level of catastrophe losses relative to prior reinsurance
purchasing decisions for the enterprise. While the losses associated
with Hurricane Maria were unprecedented in nature, the size of the loss
lead to a marginal assessment. While management has been refining and
enhancing the overall ERM framework and capabilities, the ultimate
effectiveness of these changes remains uncertain.
The ratings of TSB reflect its balance sheet strength, which AM Best
categorizes as adequate, as well as its marginal operating performance,
limited business profile and appropriate ERM. TSB’s capital has been
supported through capital contributions from parent company, TSV. The
company has not reported an operating profit since reorganizing the
company as TSB; however, its projected trend of favorable premium growth
and favorable earnings projected over the medium term may lessen the
need for parental capital support.
This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Wayne Kaminski
Senior Financial Analyst—L/H
+1
908 439 2200, ext. 5061
[email protected]
Brian O’Larte
Director—P/C
+1 908 439 2200,
ext. 5138
brian.o’[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
