Triple-S says will keep looking for purchases

Friday, August 7, 2009

Puerto Rico's Triple-S Management Corporation (NYSE: GTS) is considering additional purchases to further strengthen its position on the island following this year's acquisition of La Cruz Azul, president and CEO Ramon Ruiz-Comas told a conference call.

"Any acquisition must not only be fairly priced, but also adhere to our disciplined strategy of expanding our market leadership in Puerto Rico, enhancing our efficiency by leveraging our well-developed infrastructure and creating long-term value for our shareholders and customers," he said.

Last month, Triple-S's managed care subsidiary completed the purchase of certain managed care assets of La Cruz Azul for US$10.5mn in cash.

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"Not only did we retain almost all of La Cruz Azul's 131,000 members, but we were also able to swiftly and seamlessly integrate the acquired business into our existing infrastructure," he said, adding the company continues to anticipate that La Cruz Azul will be slightly accretive to 2009 and additive on a rolling 12 month basis.

Triple-S reported above-estimate earnings of US$15mn or US$0.51 per share excluding non-recurring items in this year's second quarter, and once again raised its outlook for 2009 earnings reflecting mainly the accretion from the acquisition of La Cruz Azul.

Triple-S is now expecting per share earnings to be in the US$2.03-2.13 range, US$0.10 above its prior guidance.

Consolidated operating revenue is now expected to come in between US$1.92bn and US$1.99bn for 2009, with the consolidated loss ratio standing between 84.8% and 85.8%, Ruiz-Comas said.


Ruiz-Comas said the company is looking very closely at the discussion in the US congress about the federal health reform, to determine the effect it may have on the population of Puerto Rico.

"Today, it's very difficult to predict the outcome... In the case of Puerto Rico, the government and various health organizations are requesting parity of funds in the Medicare and Medicaid programs, which will be very positive for many organizations and for the economy of Puerto Rico," he said

Ruiz-Comas said the company still has capital to be used to complete its investment in its new Managed Care IT system. "We are ahead on that and for 2010 we probably still have about US$20mn in capital investment in the new system."

Puerto Rico's government in July extended until October 31 the two fully insured contracts managed by Triple-S. In July, a request for proposals was issued for all the different regions. Triple-S intends to submit one for those regions, CFO Juan-Jose Roman told the conference call.

Triple-S Management Corporation is an independent licensee of the Blue Cross Blue Shield Association. It is the largest managed care company in Puerto Rico, serving approximately 1.3mn members, or about 34% of the population, and ranks first and fourth in the life and P&C insurance markets, respectively.