OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit ratings (ICR) of “bbb+” of Triple-S Salud, Inc. (TSS) and its affiliate, Triple-S Vida, Inc. (TSV). A.M. Best also has affirmed the ICR of “bb+” of Triple-S Management Corporation (TSM) (NYSE:GTS), the ultimate parent of TSS and TSV. Additionally, A.M. Best has affirmed the FSR of B++ (Good) and the ICR of “bbb” of Triple-S Blue, Inc. (TSB) (formerly known as Atlantic Southern Insurance Company) and the FSR of A- (Excellent) and the ICR of “a-” of Triple-S Propiedad, Inc. (TSP). The outlook for all ratings is stable. All companies are domiciled in San Juan, PR.
The ratings of TSS and TSV reflect each entity’s respective business profile, consistent trend of favorable earnings and improved level of risk-adjusted capitalization. TSS is a market leader in Puerto Rico, particularly in the commercial and group lines of business. This is garnered through its retention of large group market share and its deep history of participating in government-sponsored health plans at the local and federal level. TSV has a market niche, particularly with its home service business, its largest segment. Furthermore, through TSV’s subsidiary, TSB, the organization is pursuing a business expansion strategy outside of Puerto Rico with a focus on expanding operations into Central and South America. TSS and TSV have exhibited favorable capital growth trends through their operating results. Furthermore, the health and life entities have reported consistently favorable earnings. The Triple-S organization is focused on retaining margin rather than choosing top-line growth.
Offsetting factors include the weakened economic environment, which has negatively impacted group commercial membership. The pressure on this sector’s growth partially reflects the external economic factors permeating through the business community and stifling any favorable growth potential. In addition, the Triple-S organization continues to have a strong foothold in government business, including Medicaid, Medicare Advantage and government employee contracts. Given the sustained weakness in Puerto Rico’s economy, the organization is exposed to business concentration and credit risk in the public sector. TSB’s rating reflects its strong brand recognition as it carries the Blue Cross Blue Shield trademarks, ownership by a financially stronger parent in TSV and its ultimate parent, TSM, and the benefit of integrating operations in the near to intermediate term. Partially offsetting these strengths are the trend of net losses, economic and operating risk factors inherent in Costa Rica and a decline in risk-adjusted capitalization. A.M. Best notes that while risk-adjusted capitalization has steadily declined, the current level is still more than adequate for its business risks.
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 and ongoing competitive market pressures, 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.
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