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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 01, 2016 03:28 PM (EST)
A.M. Best has 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). A.M. Best also has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb” of Triple-S Blue, Inc. (TSB), as well as the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Triple-S Propiedad, Inc. (TSP). Concurrently, A.M. Best has 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 of these Credit Ratings (ratings) is stable. All companies are domiciled in San Juan, PR.
The ratings of the TSS and TSV are based on the strength of its business profile and diversification strategy to grow product revenue and earnings. The Triple-S name has strong brand recognition in the Puerto Rico market and TSS is a market leader in its core health insurance operations. TSS’s revenue is diversified across multiple market segments in health lines of business, and supplementary products are sold through TSV, a sister company. TSV possesses a strong market presence in the life and ancillary benefit lines of business. The organization is pursuing a business expansion strategy outside of Puerto Rico, and is focusing on growing operations in Central America by leveraging the capabilities of TSV’s subsidiary, TSB. The organization’s cultural and language strengths may lead to attaining a large underserved population, as well as extend the Blue Cross and Blue Shield brand into Central American.
Offsetting rating factors include pressure on group commercial membership, a declining trend of operating earnings over the medium term and a weakened economic environment in the companies’ core market of Puerto Rico. The organization’s long-term membership has been negatively impacted by attrition within the group commercial market, driven by the economic environment in Puerto Rico. Furthermore, the managed care segment net operating earnings trends are unfavorable, which have been impacted by high utilization rates and unfavorable prior period reserve adjustments.
TSP’s ratings reflect its excellent level of risk-adjusted capitalization, solid operating results primarily driven by investment income and strong market presence in Puerto Rico. Partially offsetting these positive rating factors are the company’s geographic risk concentration, competitive operating environment and above-average underwriting expense ratio relative to the commercial casualty composite. While the underwriting expense ratio reflects high commission costs, the ratio remains in line with its local market peers. With all business written in Puerto Rico, the company remains exposed to the potential for frequent and severe weather-related events, as well as economic, judicial and regulatory concerns. Despite these concerns, the outlook reflects A.M. Best’s expectation for continued strong risk-adjusted capitalization and profitable operating performance over the near term, although at reduced levels relative to prior years.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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.
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