OLDWICK, N.J.--(BUSINESS WIRE)--AM 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). AM Best also has affirmed the Long-Term ICR of “bb+” of the ultimate parent, Triple-S Management Corporation (TSM) [NYSE: GTS]. The outlook of these Credit Ratings (ratings) is stable.
Furthermore, AM Best has downgraded the FSR to B+ (Good) from B++ (Good) and the Long-Term ICR to “bbb-” from “bbb” of Triple-S Blue, Inc., I.I. (TSB). These outlooks have been revised to negative from stable. All companies are domiciled in San Juan, PR.
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 capital level at TSS has increased over the near term primarily driven by favorable operating results in 2019 from premium growth largely attributed to its Medicare Advantage segment’s membership growth. Its Medicaid segment has also performed well and attracted more members and higher average premium rates. TSS manages the largest provider network in Puerto Rico and markets a broad array of managed care products; however, operating in a single market, which has been depressed for a prolonged period of time, exposes the company to some geographic limitations.
TSM has managed and prioritized its risks to minimize operational downtime. The company has managed operational risk well through two major hurricanes and earthquakes affecting the island’s infrastructure over the past couple of years. More recently, the organization was able to execute its contingency plans around business continuity following the COVID-19 pandemic spread. AM Best notes that the impact to health insurance companies from COVID-19 has been less severe than anticipated. After state and federal agencies requested the deferral of elective surgeries and routine care to limit the spread of the virus, health companies have seen a decline in medical care for non-COVID conditions, which has more than offset the impact from COVID-19 claims. AM Best acknowledges the risk management program for TSS and TSV to be appropriate with a formalized process, containing risk identification, management and mitigation.
TSV continues to have adequate capital capacity supporting its life claims experience. Furthermore, TSV has had a conservative investment portfolio and sustained overall liquidity above 100% during the past five years. A favorable long-term trend of operating results coupled with lower loss ratio has added to steady growth for this company.
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. The Long-Term ICR downgrade for TSB reflects its unfavorable operating results, which has led to the decline in its risk-adjusted capitalization. TSB’s outlook revision to negative is attributed to deterioration in the company’s operating results, as well as sustained decline in capitalization to a level that no longer supported the rating. The balance sheet strength assessment includes the explicit and implicit support of TSB’s parent company (TSV) and ultimate parent company (TSM). AM Best expects capital support from TSV as needed to support the growth of business.
TSB has made investments in its business operations to sustain additional growth and uses its Blue Cross and Blue Shield trademarks effectively to garner a share of the medical market in Costa Rica.
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