SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Securities registered pursuant to Section 12(b) of the Act:

Part I - Financial Information

Item 1. Financial Statements

Triple-S Management Corporation

Condensed Consolidated Interim Balance Sheets (Unaudited)

(dollar ~~amounts~~ in thousands, except share ~~data)~~information)

Common stock, $1 par value. Authorized 100,000,000 shares;

Triple-S Management Corporation

Condensed Consolidated Interim Statements of Earnings (Unaudited)

(dollar ~~amounts~~ in thousands, except per share ~~data)~~information)

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,					Nine months ended September 30,
	2020			2019			2020			2019			2021			2020		2021		2020
Revenues:
Revenues
Premiums earned, net	$	922,934		$	815,021		$	2,657,366		$	2,442,516		$	1,019,696		$	922,934	$	3,016,012	$	2,657,366
Administrative service fees		3,752			2,607			8,755			7,695			3,875			3,752		9,316		8,755
Net investment income		14,168			15,176			42,294			45,614			17,572			14,168		46,178		42,294
Other operating revenues		2,052			3,167			6,394			6,335			3,925			2,052		8,518		6,394
Total operating revenues		942,906			835,971			2,714,809			2,502,160			1,045,068			942,906		3,080,024		2,714,809
Net realized investment gains (losses)		507			1,087			(180	)		4,766			1,015			507		3,746		(180	)
Net unrealized investment gains (losses) on equity investments		11,040			1,267			(17,428	)		24,259
Net unrealized investment (losses) gains on equity investments														(7,912	)		11,040		13,383		(17,428	)
Other income, net		1,811			485			6,217			3,359			11,085			1,811		19,047		6,217
Total revenues		956,264			838,810			2,703,418			2,534,544			1,049,256			956,264		3,116,200		2,703,418
Benefits and expenses:
Claims incurred		761,792			680,010			2,129,401			2,009,504
Benefits and expenses
Claims incurred, net of reinsurance														878,947			761,792		2,573,569		2,129,401
Operating expenses		158,809			136,882			499,669			403,629			154,526			158,809		456,880		499,669
Total operating costs		920,601			816,892			2,629,070			2,413,133			1,033,473			920,601		3,030,449		2,629,070
Interest expense		2,096			2,062			5,813			5,681			2,016			2,096		6,225		5,813
Total benefits and expenses		922,697			818,954			2,634,883			2,418,814			1,035,489			922,697		3,036,674		2,634,883
Income before taxes		33,567			19,856			68,535			115,730			13,767			33,567		79,526		68,535
Income tax expense		9,989			5,910			27,520			36,075			5,607			9,989		24,505		27,520
Net income		23,578			13,946			41,015			79,655			8,160			23,578		55,021		41,015
Net loss attributable to non-controlling interest		(3	)		(2	)		(20	)		(10	)		7			3		16		20
Net income attributable to Triple-S Management Corporation	$	23,581		$	13,948		$	41,035		$	79,665		$	8,167		$	23,581	$	55,037	$	41,035
Earnings per share attributable to Triple-S Management Corporation
Basic net income per share	$	1.02		$	0.59		$	1.77		$	3.44		$	0.35		$	1.02	$	2.35	$	1.77
Diluted net income per share	$	1.02		$	0.58		$	1.76		$	3.43		$	0.35		$	1.02	$	2.34	$	1.76

~~See~~The accompanying notes toare an integral part of these unaudited condensed consolidated interim financial statements.

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Triple-S Management Corporation

Condensed Consolidated Interim Statements of Comprehensive Income (Loss) (Unaudited)

(dollar ~~amounts~~ in thousands)

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,				Nine months ended September 30,
	2020			2019			2020			2019			2021		2020		2021			2020
Net income	$	23,578		$	13,946		$	41,015		$	79,655		$	8,160	$	23,578	$	55,021		$	41,015
Other comprehensive income, net of tax:
Net unrealized change in fair value of available for sale securities, net of taxes		4,743			9,290			32,023			37,660
Other comprehensive income (loss), net of tax:
Net unrealized change in fair value of available-for-sale securities, net of taxes														421		4,743		(13,869	)		32,023
Defined benefit pension plan:
Actuarial loss, net		247			61			553			173			621		247		1,839			553
Total other comprehensive income, net of tax		4,990			9,351			32,576			37,833
Total other comprehensive income (loss), net of tax														1,042		4,990		(12,030	)		32,576
Comprehensive income		28,568			23,297			73,591			117,488			9,202		28,568		42,991			73,591
Comprehensive loss attributable to non-controlling interest		(3	)		(2	)		(20	)		(10	)		7		3		16			20
Comprehensive income attributable to Triple-S Management Corporation	$	28,571		$	23,299		$	73,611		$	117,498		$	9,209	$	28,571	$	43,007		$	73,611

~~See~~The accompanying notes toare an integral part of these unaudited condensed consolidated interim financial statements.

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Triple-S Management Corporation

Condensed Consolidated Interim Statements of Stockholders’ Equity (Unaudited)

(dollar ~~amounts~~ in thousands)

Balance, December 31, 2020

Triple-S Management Corporation

Condensed Consolidated Interim Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands)

	Nine months ended September 30,
	2021			2020
Cash flows from operating activities:
Net income	$	55,021		$	41,015
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		10,667			10,855
Net amortization of investments		2,290			2,151
(Reversal) provision for doubtful receivables		(340	)		2,229
Deferred tax expense		8,635			2,277
Net realized investment (gains) losses on sale of securities		(3,746	)		180
Net unrealized (gains) losses on equity investments		(13,383	)		17,428
Interest credited to policyholder deposits		4,874			4,788
Share-based compensation		6,964			8,443
Gain on sale of property and equipment		0			154
(Increase) decrease in assets:
Premium and other receivables, net		(7,811	)		26,038
Deferred policy acquisition costs and value of business acquired		(5,474	)		(10,827	)
Deferred taxes		45			(109	)
Other assets		(11,197	)		(29,831	)
Increase (decrease) in liabilities:
Claim liabilities		11,406			77,662
Liability for future policy benefits		23,011			22,099
Unearned premiums		3,850			2,307
Liability to Federal Employees’ Health Benefits and Federal Employees’ Programs		(9,751	)		10,093
Accounts payable and accrued liabilities		25,638			36,729
Net cash provided by operating activities		100,699			223,681

(Continued)

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Triple-S Management Corporation

Condensed Consolidated Interim Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands)

Nine months ended
September 30,

2020 2019
Cash flows from operating activities:
Net income $ 41,015 $ 79,655
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 10,855 10,729
Net amortization of investments 2,151 1,484
Provision for doubtful receivables 2,229 2,476
Deferred tax expense 2,277 14,570
Net realized investment losses (gains) on sale of securities 180 (4,766 )
Net unrealized losses (gains) on equity investments 17,428 (24,259 )
Interest credited to policyholder deposits 4,788 4,414
Share-based compensation 8,443 8,723
Gain on sale of property and equipment 154 0
Decrease (increase) in assets:
Premium and other receivables, net 26,038 17,663
Deferred policy acquisition costs and value of business acquired (10,827 ) (20,004 )
Deferred taxes (109 ) 114
Other assets (29,831 ) (12,428 )
Increase (decrease) in liabilities:
Claim liabilities 77,662 (134,798 )
Liability for future policy benefits 22,099 19,769
Unearned premiums 2,307 5,291
Liability to Federal Employees' Health Benefits and Federal Employees' Programs 10,093 21
Accounts payable and accrued liabilities 36,729 27,891
Net cash provided by (used in) operating activities 223,681 (3,455 )

~~(Continued)~~

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Condensed Consolidated Interim Statements of Cash Flows (Unaudited)~~

~~(Dollar amounts in thousands)~~

	Nine months ended September 30,
	2020			2019			Nine months ended September 30,
							2021			2020
Cash flows from investing activities:
Proceeds from investments sold or matured:
Securities available for sale:
Fixed maturities sold	$	94,557		$	365,383
Fixed maturities matured/called		37,450			19,017
Fixed-maturities sold							$	140,866		$	94,557
Fixed-maturities matured/called								18,271			37,450
Securities held to maturity:
Fixed maturities matured/called		1,079			1,378
Fixed-maturities matured/called								747			1,079
Equity investments sold		80,152			126,134			99,951			80,152
Other invested assets sold		13,231			3,379			19,652			13,231
Acquisition of investments:
Securities available for sale:
Fixed maturities		(206,387	)		(397,956	)
Fixed-maturities								(129,066	)		(206,387	)
Securities held to maturity:
Fixed maturities		(1,087	)		(748	)
Fixed-maturities								(751	)		(1,087	)
Equity investments		(201,324	)		(88,945	)		(199,046	)		(201,324	)
Other invested assets		(25,442	)		(24,233	)		(9,317	)		(25,442	)
Increase in other investments		(3,924	)		(2,710	)		(4,470	)		(3,924	)
Net change in policy loans		240			(1,097	)		(21	)		240
Net capital expenditures		(52,549	)		(14,746	)		(16,948	)		(52,549	)
Capital contribution on equity method investees		(7,083	)		0			0			(7,083	)
Net cash used in investing activities		(271,087	)		(15,144	)		(80,132	)		(271,087	)
Cash flows from financing activities:
Change in outstanding checks in excess of bank balances		16,814			3,808			20,594			16,814
Net change in short-term borrowings		28,500			0			(30,000	)		28,500
Proceeds from long-term borrowings		30,841			0			0			30,841
Repayments of long-term borrowings		(2,760	)		(2,425	)		(3,370	)		(2,760	)
Repurchase and retirement of common stock		(14,980	)		(1	)		0			(14,980	)
Proceeds from policyholder deposits		21,586			15,060			12,594			21,586
Surrenders of policyholder deposits		(12,829	)		(16,455	)		(8,665	)		(12,829	)
Net cash provided by (used in) financing activities		67,172			(13	)
Net increase (decrease) in cash and cash equivalents		19,766			(18,612	)
Net cash (used in) provided by financing activities								(8,847	)		67,172
Net increase in cash and cash equivalents								11,720			19,766
Cash and cash equivalents:
Beginning of period		109,837			117,544			110,989			109,837
End of period	$	129,603		$	98,932		$	122,709		$	129,603

See accompanying notes to unaudited condensed consolidated interim financial statements.

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(1)~~1.

Basis of Presentation

The accompanying condensed consolidated interim financial statements prepared by Triple-S Management Corporation (Triple-S, TSM, the Company, the Corporation, we, us or our) and its subsidiaries are unaudited. ~~In this filing, the “Corporation”, the “Company”, “TSM”, “we”, “us” and “our” refer to Triple-S Management Corporation and its subsidiaries.~~ The condensed consolidated interim financial statements do not include all of the information and the footnotes required by accounting principles generally accepted in the United States of America (GAAP or U.S. GAAP) for complete financial statement presentation pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, these condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

2020.

In the opinion of management, all adjustments, consisting of a normal recurring nature necessary for a fair presentation of such condensed consolidated interim financial statements, have been included. The results of operations for the three ~~months~~ and nine months ended September 30, ~~2020~~2021 are not necessarily indicative of the results for the full year ending December 31, ~~2020.~~

2021.

~~(2)~~2.

Significant Accounting Policies

~~Investments~~

~~Fixed maturities~~

Investment in debt securities at September 30, 2020 and December 31, 2019 consists mainly of obligations of government-sponsored enterprises, U.S. Treasury securities and obligations of U.S. government instrumentalities, municipal securities, corporate bonds, residential mortgage-backed securities, and collateralized mortgage obligations. The Company classifies its debt securities in one of two categories: available-for-sale or held-to-maturity. Securities classified as held-to-maturity are those securities in which the Company has the ability and intent to hold until maturity. All other securities not included in held-to-maturity are classified as available-for-sale.

Available-for-sale securities are recorded at fair value. The fair values of debt securities (both available-for-sale and held-to-maturity investments) are based on quoted market prices for those or similar investments at the reporting date. Held-to-maturity debt securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums and discounts, respectively. Unrealized holding gains and losses, net of the related tax effect, on available-for-sale securities are excluded from earnings and are reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are included in earnings and are determined on a specific identification basis.

Transfers of securities between categories are recorded at fair value at the date of transfer. Unrealized holding gains or losses associated with transfers of securities from held-to-maturity to available-for-sale are recorded as a separate component of other comprehensive income. The unrealized holding gains or losses included in the separate component of other comprehensive income for securities transferred from available-for-sale to held-to-maturity, are maintained and amortized into earnings over the remaining life of the security as an adjustment to yield in a manner consistent with the amortization or accretion of premium or discount on the associated security.

If a fixed maturity security is in an unrealized loss position and the Company does not have the intent to sell the fixed maturity security, or it is more likely than not that the Company will not have to sell the fixed maturity security before recovery of its amortized cost basis, the credit component of the impairment, if any, is recorded as an allowance for credit losses with an offsetting entry in the Company’s consolidated statements of earnings. The non-credit component of the impairment is recognized in other comprehensive income. Furthermore, unrealized losses entirely caused by non-credit related factors related to fixed maturity securities for which the Company expects to fully recover the amortized cost basis continue to be recognized in accumulated other comprehensive income.

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

If a fixed maturity security is in an unrealized loss position and the Company has the intent to sell the fixed maturity security, or it is more likely than not that the Company will have to sell the fixed maturity security before recovery of its amortized cost basis, the Company will write off any previously recognized allowance for credit losses and will decrease the amortized cost basis of the security. If the allowance has been fully written off and the fair value is less than its amortized cost basis, the amortized cost basis is written down and an impairment loss is recognized in the Company’s consolidated statements of earnings. As of September 30, 2020, no allowance for credit losses was recorded in the condensed consolidated interim financial statements.

The credit component of the impairment is determined by comparing the net present value of projected future cash flows with the amortized cost basis of the fixed maturity security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed maturity security at the date of acquisition. If there is an increase in the projected future cash flows of the fixed maturity security in subsequent periods, all or part of the allowance for credit losses may be reversed.

In addition, the Company considers the following factors when evaluating whether a credit loss exist: the reasons for the impairment, the severity of the impairment, market conditions, changes in the security’s rating, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.

Premiums and discounts are amortized or accreted over the life of the related held-to-maturity or available-for-sale security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

The Company regularly invests in mortgaged-backed securities and other securities subject to prepayment and call risk. Significant changes in prevailing interest rates may adversely affect the timing and amount of cash flows on such securities. In addition, the amortization of market premium and accretion of market discount for mortgaged-backed securities is based on historical experience and estimates of future payment speeds on the underlying mortgage loans. Actual prepayment speeds may differ from original estimates and may result in material adjustments to amortization or accretion recorded in future periods.

~~Equity investments~~

Investment in equity securities at September 30, 2020 and December 31, 2019 consists of mutual funds whose underlying assets are comprised of domestic equity securities, international equity securities and higher risk fixed income instruments. Equity investments are recorded at fair value. The fair values of equity investments are mainly based on quoted market prices for those or similar investments at the reporting date. For a specific equity investment, the fair value is estimated using the net asset value (NAV) of the Company’s ownership interest in the partnership. Unrealized holding gains and losses on equity investments are included in earnings. Realized gains and losses from the sale of equity investments are included in earnings and are determined on a specific identification basis.

~~Other invested assets~~

Other invested assets at September 30, 2020 and December 31, 2019 consist mainly of alternative investments in partnerships that invest in several private debt and private equity funds. Portfolios are diversified by vintage year, stage, geography, business sectors and number of investments. These investments are not redeemable with the funds. Distributions from each fund are received as the underlying investments of the funds are liquidated. It is estimated that the underlying assets of the funds will be liquidated in the next 5 to 12 years. The fair value of the investments in this class have been estimated using the net asset value (NAV) of the Company’s ownership interest in the partnerships. Total unfunded capital commitments for these positions as of September 30, 2020 amounted to $57,762. The remaining average commitments period is approximately three years.

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

~~Health Insurance Providers Fee~~

The Patient Protection and Affordable Care Act (ACA) as amended by the Health Care and Education Reconciliation Act mandates an annual Health Insurance Providers Fee (HIP Fee). The annual HIP Fee becomes payable to the U.S. Treasury once the entity provides health insurance for any U.S. health risk each applicable calendar year. The initial estimated annual fee is accrued as of January 1, with a corresponding deferred cost that is amortized over 12 months on a straight-line basis. The fee payment is due on September 30 of each year. The deferred cost is included within the other asset line item and the accrued fee is included within the accounts payable and accrued liabilities line item in the accompanying condensed consolidated balance sheets. The fee is presented within operating expenses in the accompanying condensed consolidated statements of earnings. The HIP Fee was waived for all health insurance providers during the year ended December 31, 2019. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the Further Consolidated Appropriations Act of 2020, signed into law on December 20, 2019, repealed the HIP Fee effective calendar years beginning after December 31, 2020. As of September 30, 2020, the HIP Fee deferred cost amounted to $12,139. During the quarter ended September 30, 2020, the Company made the corresponding payment amounting to $55,514. As of December 31, 2019, 0 balance was deferred or accrued for the HIP Fee.

Recently Adopted Accounting Standards

On ~~June 16, 2016,~~August 28, 2018, the Financial Accounting Standards Board (FASB) issued guidance for Compensation – Retirement Benefits – Defined Benefit Plans – General which addresses changes to ~~provide financial statement users with more decision-useful information about~~ the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In addition, on April 25, 2019, the FASB issued Accounting Standard Update (ASU) 2019-04: Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.disclosure requirement for defined benefit plans. The amendments in this ~~update represent changes~~guidance modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Specifically, the guidance removes certain disclosure requirements, including the amounts of accumulated other comprehensive income expected to ~~clarify, correct errors in or improve~~be recognized as components of net periodic benefit cost over the ~~codification. Such amendments should make~~next fiscal year, related-party disclosures concerning the ~~codification easier to understand~~amount of future annual benefits covered by insurance and ~~easier to apply by eliminating inconsistencies~~annuity contracts and ~~providing clarifications. Within~~significant transactions between the ~~clarifications was~~employer and related-parties and the ~~FASB’s intent to include all reinsurance recoverables within~~plan, and adds other disclosures including the ~~scope of ASU 2016-13 (Topic 326). For public companies,~~weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates, and an explanation for the ~~improvements~~reasons for significant gains and losses related to ~~ASU 2016-13 (Topic 326) and ASU 2016-01 (Topic 825) are effective~~changes in the benefit obligation for ~~fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.~~the period. The Company adopted the standard effective January 1, ~~2020 and recognized $166, net of deferred tax asset, as a cumulative effect adjustment to the opening balance of retained earnings on the adoption date.~~

On January 26, 2017, the FASB issued guidance to simplify the manner in which an entity is required to evaluate goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this guidance, an entity should (1) perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and (2) recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, this guidance removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, these amendments, which should be applied on a prospective basis, are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the standard effective January 1, 2020. Upon adoption of this standard, if the carrying amount of any of the reporting units exceeds its fair value, the Company will be required to record an impairment charge for the difference up to the amount of the goodwill.

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

On August 27, 2018, the FASB issued guidance for Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement. This update focuses on improving the effectiveness of disclosures in the notes to the financial statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of each entity’s financial statements. Specifically, certain disclosure requirements are removed (the amount of, and reasons for, transfer between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements) while certain other disclosures are modified and added (changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements). The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent period in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. For public companies, these amendments will be applied for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the standard effective January 1, 2020.2021. The adoption of this guidance did not have a material impact on the presentation and disclosures of the Company’s ~~condensed~~ consolidated ~~interim~~ financial statements.

On ~~August 29, 2018,~~December 18, 2019, the FASB issued ~~guidance~~Accounting Standards Update (ASU) 2019-12: Income Taxes (Topic 740): Simplifying the Accounting for ~~Intangibles – Goodwill and Other – Internal-Use Software. Guidance addresses customers’ accounting for implemented costs incurred~~Income Taxes. The amendments in ~~a cloud computing arrangement that is a service contract and aims to reduce complexity in~~this update simplify the accounting for ~~costs of implementing~~income taxes by removing certain exceptions to the general principles in Topic 740. Also, the amendments simplify the accounting for income taxes by requiring the following: (1) that an entity recognize a ~~cloud computing service arrangement. The amendments require a customer in a hosting arrangement~~franchise tax that is partially based on income in accordance with Topic 740 and account for any incremental amount incurred as a ~~service contract to determine which implementation costs to capitalize as~~non-income-based tax; (2) that an ~~asset related to~~entity evaluate when a step-up in the ~~service contract and which costs to expense. Additionally, it requires the customer to expense the capitalized implementation costs over the term~~tax basis of Goodwill should be considered part of the ~~hosting arrangement. For public companies, these amendments will~~business combination in which the book goodwill was originally recognized and when it should instead be ~~applied on~~considered a ~~prospective basis, for fiscal years beginning after December 15, 2019, including~~separate transaction; and (3) that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim ~~periods within those fiscal years.~~period that included the enactment date. The Company adopted the standard effective January 1, ~~2020.~~2021. The adoption of this guidance did not have a material impact on the results of the Company’s ~~condensed~~ consolidated ~~interim~~ financial statements.

On January 16, 2020, the FASB issued guidance to clarify the interaction between the accounting standards on recognition and measurement of financial instruments in Topic 321: Investments – Equity Securities, the one on equity method investments in Topic 323: Investments – Equity Method and Joint Ventures, and forward contracts and purchased options in Topic 815: Derivatives and Hedging. The amendments clarify that upon an increase or decrease in level of ownership or degree of influence, a company should remeasure the interest held in the investee to take into account observable transactions immediately before applying or discontinuing the equity method of accounting under Topic 323. The guidance also clarifies that an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchase option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option. The Company adopted the standard effective January 1, 2021. The adoption of this guidance did not have a material impact on the results of the Company’s consolidated financial statements.

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Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

Future ~~Adoption~~Adoptions of Accounting Standards

On ~~March 12, 2020,~~January 7, 2021, the FASB issued ASU ~~2020-04:~~2021-01: Reference Rate Reform (Topic 848): ~~Facilitation~~Scope Refinement – to clarify the scope of the ~~Effects~~recent reference reform guidance in Topic 848. This ASU refines the scope of ~~Reference Rate Reform on Financial Reporting. The ASU was issued~~Topic 848 and clarifies that certain optional expedients and exceptions therein for contract modifications and hedge accounting apply to ~~provide optional guidance, for a limited time,~~contracts that are affected by the discounting transition. Specifically, modifications related to ~~ease the potential burden in accounting for or recognizing the effects of~~ reference rate reform ~~on financial reporting.~~would not be considered an event that requires reassessment of previous accounting conclusions. The ~~amendments, which are elective and apply to all entities, provide~~ASU also amends the expedients and exceptions ~~for applying U.S. GAAP~~in Topic 848 to ~~contract modifications~~capture the incremental consequences of the scope clarification and ~~hedging relationships~~to tailor the existing guidance to derivative instruments affected by ~~reference rate reform if certain criteria are met.~~the discounting transition. The amendments ~~apply only to contracts and hedging relationships that reference LIBOR or another reference rate that is expected to be discontinued due to reference rate reform. Because~~in the ~~guidance is intended to assist stakeholders during the global market-wide reference rate transition period, it is in effect~~ASU are effective immediately for ~~a limited time, from March 12, 2020 through December 31, 2022.~~all entities. The Company is currently in the process of identifying its LIBOR-based contracts that will be ~~impacted~~affected by the phase-out of LIBOR and expects to ~~utilize~~use the optional expedients provided in this ASU.

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Other than the accounting pronouncements disclosed above, there were no other new accounting pronouncements issued during the three ~~months~~ and nine months ended September 30, ~~2020~~2021 that could have a material impact on the Company’s financial position, operating results or financials statement disclosures.

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Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(3)~~3.

Investment in Securities

The amortized cost for debt securities and ~~cost for~~ alternative investments, gross unrealized gains ~~gross unrealized~~and losses, and estimated fair value for the Company’s investments in securities by major security type and class of security atas of September 30, ~~2020~~2021, and December 31, ~~2019,~~2020, were as follows:

	September 30, 2020									September 30, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Amortized cost			Gross unrealized gains			Gross unrealized losses				Estimated fair value

Fixed maturities available for sale
Obligations of government- sponsored enterprises	$	36,762	$	784	$	(29	)	$	37,517
Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises											$	21,303		$	294		$	(53	)		$	21,544
U.S. Treasury securities and obligations of U.S. government instrumentalities		103,483		8,747		0			112,230			104,546			5,367			(4	)			109,909
Municipal securities		628,689		56,009		(126	)		684,572			611,211			40,598			(853	)			650,956
Corporate bonds		195,293		31,863		0			227,156			177,640			23,510			(69	)			201,081
Residential mortgage-backed securities		263,715		17,230		(376	)		280,569			284,745			16,807			(546	)			301,006
Collateralized mortgage obligations		19,275		726		(45	)		19,956			5,301			437			0				5,738
Total fixed maturities available for sale	$	1,247,217	$	115,359	$	(576	)	$	1,362,000
Total fixed-maturities available-for-sale											$	1,204,746		$	87,013		$	(1,525	)		$	1,290,234

	December 31, 2019									December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value

Fixed maturities available for sale
Obligations of government- sponsored enterprises	$	17,209	$	477	$	0		$	17,686
Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises										$	24,496	$	665	$	(9	)	$	25,152
U.S. Treasury securities and obligations of U.S. government instrumentalities		102,230		4,779		0			107,009		103,694		7,993		0			111,687
Municipal securities		595,051		34,735		(22	)		629,764		646,961		54,067		0			701,028
Corporate bonds		187,096		21,721		(74	)		208,743		189,516		30,280		0			219,796
Residential mortgage-backed securities		262,783		8,073		(320	)		270,536		249,801		21,487		(57	)		271,231
Collateralized mortgage obligations		8,674		471		0			9,145		12,954		638		(21	)		13,571
Total fixed maturities available for sale	$	1,173,043	$	70,256	$	(416	)	$	1,242,883
Total fixed-maturities available-for-sale										$	1,227,422	$	115,130	$	(87	)	$	1,342,465

Table of Contents

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

September 30, 2020

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses

Estimated
fair value

Fixed maturities held to maturity
U.S. Treasury securities and obligations of U.S. government instrumentalities $ 614 $ 217 $ 0 $ 831
Residential mortgage-backed securities 165 6 0 171
Certificates of deposit 1,088 0 0 1,088
Total $ 1,867 $ 223 $ 0 $ 2,090

December 31, 2019

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses

Estimated
fair value

Securities held to maturity
U.S. Treasury securities and obligations of U.S. government instrumentalities $ 615 $ 158 $ 0 $ 773
Residential mortgage-backed securities 165 1 0 166
Certificates of deposit 1,080 0 0 1,080
Total $ 1,860 $ 159 $ 0 $ 2,019

September 30, 2020

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses

Estimated
fair value

Other invested assets - Alternative investments $ 110,532 $ 3,795 $ (3,562 ) $ 110,765

December 31, 2019

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses

Estimated
fair value

Other invested assets - Alternative investments $ 97,575 $ 3,721 $ (788 ) $ 100,508

14Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

U.S. Treasury securities and obligations of U.S. government instrumentalities

Table of Contents

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

Gross unrealized losses on investment securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows:

The Company reviews the ~~available for sale~~available-for-sale and other invested assets portfolios under the Company’s impairment review policy. Given market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and material ~~impairments and~~ allowances for credit losses may be recorded in future periods. The ~~Corporation~~Company from time to time may sell investments as part of its asset/liability management process or to reposition its investment portfolio based on current and expected market conditions.

Table of Contents

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(Unaudited)~~

Corporate bonds: The unrealized losses of these bonds were mainly caused by fluctuations in interest rates and general market conditions. All corporate bonds with an unrealized loss have investment grade ratings. The Company does not consider these investments to be credit-impaired because of several factors: the decline in fair value is attributable to changes in interest rates and not credit quality; the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.

Residential mortgage-backed ~~securities and Collateral mortgage obligations~~:securities: The unrealized losses on these investments were mostly caused by fluctuations in interest rates and credit spreads. The contractual cash flows of these securities are guaranteed by a U.S. government-sponsored enterprise. Any loss in these securities is determined according to the seniority level of each tranche, with the least senior, ~~(or most junior),~~ typically the unrated residual tranche, taking any initial loss. The investment grade credit rating of our securities reflects the seniority of the securities that the Company owns. The Company does not consider these investments to be ~~credit impaired~~credit-impaired because of several factors: the decline in fair value is attributable to changes in interest ~~rates;~~rates and not credit quality; the Company does not intend to sell the investments and it is more likely than not that the Company will not be required to sell the investments before recovery of their amortized cost basis, which may be at maturity; and because the Company expects to collect all contractual cash flows.

Alternative ~~investments:~~Investments: As of September 30, ~~2020,~~2021, alternative investments with unrealized losses ~~are~~were not considered ~~credit impaired~~credit-impaired based on market conditions.

Maturities of investment securities classified as ~~available for sale~~available-for-sale and ~~held to maturity~~held-to-maturity were as follows:

September 30, 2020

Amortized
cost

Estimated
fair value

Fixed maturities available for sale
Due in one year or less $ 33,764 $ 34,244
Due after one year through five years 564,825 610,357
Due after five years through ten years 204,234 220,251
Due after ten years 161,404 196,623
Residential mortgage-backed securities 263,715 280,569
Collateralized mortgage obligations 19,275 19,956
$ 1,247,217 �� $ 1,362,000
Fixed maturities held to maturity
Due in one year or less $ 1,088 $ 1,088
Due after ten years 614 831
Residential mortgage-backed securities 165 171
$ 1,867 $ 2,090

	September 30, 2021
	Amortized cost		Estimated fair value
Fixed-maturities available-for-sale
Due in one year or less	$	60,380	$	61,218
Due after one year through five years		572,854		605,722
Due after five years through ten years		149,432		157,360
Due after ten years		132,034		159,190
Residential mortgage-backed securities		284,745		301,006
Collateralized mortgage obligations		5,301		5,738
	$	1,204,746	$	1,290,234
Fixed-maturities held-to-maturity
Due in one year or less	$	1,093	$	1,093
Due after ten years		613		767
Residential mortgage-backed securities		164		172
	$	1,870	$	2,032

Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

~~Investments~~On September 30, 2021 and December 31, 2020 investments with an amortized cost of ~~$232,818~~$207,890 and ~~$145,981 and a fair~~$227,890 (fair value of ~~$252,601~~$223,930 and ~~$152,916 at September 30, 2020 and December 31, 2019,~~$250,088), respectively, were pledged with the Federal Home Loan Bank of New York (FHLBNY) to secure short-term borrowings.

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(4)~~4.

Realized and Unrealized Gains (Losses)

Information regarding realized and unrealized gains and losses from investments is as follows:

Three months ended
September 30,

Nine months ended
September 30,

2020 2019 2020 2019
Realized gains (losses)
Fixed maturity securities:
Securities available for sale:
Gross gains $ 402 $ 950 $ 1,953 $ 3,597
Gross losses (1 ) 0 (7 ) (319 )
Total fixed securities 401 950 1,946 3,278
Equity investments:
Gross gains 67 401 1,057 2,532
Gross losses (479 ) (443 ) (3,249 ) (1,488 )
Gross losses from impaired securities 0 0 (678 ) 0
Total equity investments (412 ) (42 ) (2,870 ) 1,044
Other invested assets:
Gross gains 518 179 744 500
Gross losses 0 0 0 (56 )
Total other invested assets 518 179 744 444
Net realized investment gains (losses) $ 507 $ 1,087 $ (180 ) $ 4,766

	Three months ended						Nine months ended
	September 30,						September 30,
	2021			2020			2021			2020
Realized gains (losses)
Fixed-maturity securities
Fixed-maturities available-for-sale
Gross gains	$	0		$	402		$	90		$	1,953
Gross losses		(138	)		(1	)		(1,104	)		(7	)
Total fixed-maturity securities		(138	)		401			(1,014	)		1,946
Equity investments
Gross gains		238			67			2,121			1,057
Gross losses		(19	)		(479	)		(438	)		(3,249	)
Gross losses from impaired securities		0			0			0			(678	)
Total equity investments		219			(412	)		1,683			(2,870	)
Other invested assets
Gross gains		934			518			3,077			744
Total other invested assets		934			518			3,077			744
Net realized gains (losses) on securities	$	1,015		$	507		$	3,746		$	(180	)

The gross losses from impaired securities during the nine months ended September 30, 2020 isare related to an equity method investment held by the Company.

Three months ended
September 30,

Nine months ended
September 30,

2020 2019 2020 2019
Changes in net unrealized gains (losses):
Recognized in accumulated other comprehensive income (loss):
Fixed maturities – available for sale $ 4,705 $ 11,544 $ 44,943 $ 48,095
Other invested assets 1,498 686 (2,700 ) 1,358
$ 6,203 $ 12,230 $ 42,243 $ 49,453
Not recognized in the consolidated financial statements:
Fixed maturities – held to maturity $ (6 ) $ 14 $ 64 $ 50

	Three months ended September 30,								Nine months ended September 30,
	2021				2020				2021				2020
Changes in net unrealized gains (losses):
Recognized in accumulated other comprehensive income (loss):
Fixed-maturities – available-for-sale		$	(3,742	)		$	4,705			$	(29,555	)		$	44,943
Other invested assets			4,136				1,498				11,511				(2,700	)
		$	394			$	6,203			$	(18,044	)		$	42,243
Not recognized in the consolidated financial statements:
Fixed-maturities – held-to-maturity		$	(11	)		$	(6	)		$	(56	)		$	64

The change in deferred tax ~~liability~~asset (liability) on unrealized gains (losses) recognized in ~~accumulated other comprehensive income~~Accumulated Other Comprehensive Income during the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 was $~~8,446~~3,212 and $~~9,892~~8,446, respectively.

As of September 30, ~~2020,~~2021 and December 31, ~~2019,~~2020, 0 individual investment in securities exceeded 10% of stockholders’ equity.

Table of Contents

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(Unaudited)~~

~~(5)~~5.

Premiums and Other Receivables, Net

Premiums and ~~other receivables, net~~Other Receivables, Net were as follows:

September 30,
2020

December 31,
2019

Premium $ 135,133 $ 188,861
Self-funded group receivables 26,310 28,672
FEHBP 14,499 13,894
Agent balances 34,224 30,784
Accrued interest 9,753 11,307
Reinsurance recoverable 222,966 239,767
Other 153,839 110,952
596,724 624,237
Less allowance for doubtful receivables:
Premium 37,489 36,622
Other 12,276 19,923
49,765 56,545
Total premium and other receivables, net $ 546,959 $ 567,692

	September 30, 2021		December 31, 2020
Premiums	$	177,298	$	106,322
Self-funded group receivables		27,767		26,412
FEHBP		15,002		12,830
Agent balances		30,235		31,509
Accrued interest		9,206		10,418
Reinsurance recoverable		157,665		216,314
Other		128,988		135,774
		546,161		539,579
Less allowance for doubtful receivables:
Premiums		34,433		37,231
Other		15,251		13,508
		49,684		50,739
Total premium and other receivables, net	$	496,477	$	488,840

As of September 30, ~~2020,~~2021 and December 31, ~~2019,~~2020, the Company had premiums and other receivables of ~~$71,322~~$70,372 and ~~$49,176,~~$53,397, respectively, from the Government of Puerto Rico, including its agencies, municipalities and public corporations. The related allowance for doubtful receivables as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$24,268~~$20,164 and ~~$22,091,~~$23,752, respectively.

~~(6)~~

~~Property and Equipment, Net~~

Reinsurance recoverable as of September 30, 2021 and December 31, 2020 includes $115,160 and $172,021, respectively, related to catastrophe losses covered by the Property and Casualty segment’s reinsurance program.

~~Property and equipment, net are composed of the following:~~

September 30, December 31,
2020 2019

Land $ 15,867 $ 10,976
Buildings and leasehold improvements 125,239 92,752
Office furniture and equipment 32,062 27,878
Computer equipment and software 135,456 133,922
Automobiles 671 761
309,295 266,289
Less accumulated depreciation and amortization 179,075 177,701
Property and equipment, net $ 130,220 $ 88,588

On June 19, 2020, the Company acquired a 9-story office building (the Building), located at 1451 F.D. Roosevelt Avenue, in San Juan, Puerto Rico, as well as the adjoining multi-level parking structure and a parking lot. See Note 9 for further information on the credit agreement obtained to partially finance the acquisition of the Building.

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

~~(7)~~6.

Fair Value Measurements

Our condensed ~~consolidated balance sheets~~Consolidated Balance Sheets include the following financial instruments: ~~securities available for sale,~~fixed-maturities available-for-sale, equity investments, policy loans, policyholder deposits, short-term borrowings and long-term borrowings. We consider the carrying amounts of policy loans, policyholder deposits, short-term borrowings and long-term borrowings to approximate their fair value and are considered Level 2 financial instruments. Certain assets are measured at fair value on a recurring basis and are disclosed below. These assets are classified into one of three levels of a hierarchy defined by GAAP. For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see the consolidated financial statements and notes thereto included in our ~~2019~~2020 Annual Report on Form 10-K.

Table of Contents

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

The following tables summarize fair value measurements by level for assets measured at fair value on a recurring basis:

	September 30, 2020								September 30, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Fixed maturity securities available for sale
Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises	$	0	$	37,517	$	0	$	37,517	$	0	$	21,544	$	0	$	21,544
U.S. Treasury securities and obligations of U.S government instrumentalities		112,230		0		0		112,230
U.S. Treasury securities and obligations of U.S. government instrumentalities										109,909		0		0		109,909
Municipal securities		0		684,572		0		684,572		0		650,956		0		650,956
Corporate bonds		0		227,156		0		227,156		0		201,081		0		201,081
Residential agency mortgage-backed securities		0		280,569		0		280,569		0		301,006		0		301,006
Collateralized mortgage obligations		0		19,956		0		19,956		0		5,738		0		5,738
Total fixed maturities	$	112,230	$	1,249,770	$	0	$	1,362,000
Total fixed-maturities available-for-sale									$	109,909	$	1,180,325	$	0	$	1,290,234
Equity investments	$	197,864	$	186,048	$	5,166	$	389,078	$	276,531	$	236,893	$	5,341	$	518,765

December 31, 2019
Level 1 Level 2 Level 3 Total

Fixed maturity securities available for sale
Obligations of government-sponsored enterprises $ 0 $ 17,686 $ 0 $ 17,686
U.S. Treasury securities and obligations of U.S government instrumentalities 107,009 0 0 107,009
Municipal securities 0 629,764 0 629,764
Corporate bonds 0 208,743 0 208,743
Residential agency mortgage-backed securities 0 270,536 0 270,536
Collateralized mortgage obligations 0 9,145 0 9,145
Total fixed maturities $ 107,009 $ 1,135,874 $ 0 $ 1,242,883
Equity investments $ 177,136 $ 105,180 $ 5,209 $ 287,525

~~There were 0 transfers between Levels 1 and 2 during the three and nine months ended September 30, 2020 and the year ended December 31, 2019.~~

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months and nine months ended September 30 is as follows:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Three months ended

Nine months ended

September 30, 2020 September 30, 2020
Beginning Balance $ 5,237 $ 5,209
Unrealized in other accumulated comprehensive income (71 ) (43 )
Ending Balance $ 5,166 $ 5,166

	December 31, 2020
	Level 1		Level 2		Level 3		Total

Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises	$	0	$	25,152	$	0	$	25,152
U.S. Treasury securities and obligations of U.S. government instrumentalities		111,687		0		0		111,687
Municipal securities		0		701,028		0		701,028
Corporate bonds		0		219,796		0		219,796
Residential agency mortgage-backed securities		0		271,231		0		271,231
Collateralized mortgage obligations		0		13,571		0		13,571
Total fixed-maturities available-for-sale	$	111,687	$	1,230,778	$	0	$	1,342,465
Equity investments	$	220,118	$	179,108	$	5,102	$	404,328

The fair value of investment securities is estimated based on quoted market prices for those or similar investments. Additional information pertinent to the estimated fair value of investment in securities is included in Note 3.

There were 0 transfers between Levels 1 and 2 during the three and nine months ended September 30, 2021 and the year ended December 31, 2020.

~~(8)~~

~~Claim Liabilities~~

Table of Contents

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

A reconciliation of the beginning and ending balances of ~~claim liabilities~~assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30 is as follows:

Nine months ended
September 30, 2020

Managed
Care

Other
Business
Segments *
Consolidated

Claim liabilities at beginning of period $ 341,277 $ 367,981 $ 709,258
Reinsurance recoverable on claim liabilities 0 (137,017 ) (137,017 )
Net claim liabilities at beginning of period 341,277 230,964 572,241
Claims incurred
Current period insured events 2,000,825 84,358 2,085,183
Prior period insured events 24,297 (7,885 ) 16,412
Total 2,025,122 76,473 2,101,595
Payments of losses and loss-adjustment expenses
Current period insured events 1,678,400 45,815 1,724,215
Prior period insured events 267,427 41,081 308,508
Total 1,945,827 86,896 2,032,723
Net claim liabilities at end of period 420,572 220,541 641,113
Reinsurance recoverable on claim liabilities 0 145,807 145,807
Claim liabilities at end of period $ 420,572 $ 366,348 $ 786,920

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

	Three months ended		Nine months ended
	September 30, 2021		September 30, 2021
Beginning Balance	$	5,199	$	5,102
Unrealized in other accumulated comprehensive income		142		239
Ending Balance	$	5,341	$	5,341

7.	Claim Liabilities

* Other Business Segments include

The tables below present a reconciliation of the ~~Life Insurance~~beginning and ~~Property and Casualty segments, as well as intersegment eliminations.~~ending balances of Claim Liabilities during the nine months ended September 30:

	Nine months ended September 30, 2021
	Managed Care			Other Business Segments *			Consolidated

Claim liabilities at beginning of period	$	445,655		$	341,447		$	787,102
Reinsurance recoverable on claim liabilities		0			(138,816	)		(138,816	)
Net claim liabilities at beginning of period		445,655			202,631			648,286
Claims incurred
Current period insured events		2,485,095			92,526			2,577,621
Prior period insured events		(35,986	)		982			(35,004	)
Total		2,449,109			93,508			2,542,617
Payments of losses and loss-adjustment
expenses
Current period insured events		2,124,676			47,360			2,172,036
Prior period insured events		236,405			63,086			299,491
Total		2,361,081			110,446			2,471,527
Net claim liabilities at end of period		533,683			185,693			719,376
Reinsurance recoverable on claim liabilities		0			79,132			79,132
Claim liabilities at end of period	$	533,683		$	264,825		$	798,508

*	Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Nine months ended
September 30, 2019

Managed
Care

Other
Business
Segments *
Consolidated

Claim liabilities at beginning of period $ 394,226 $ 542,563 $ 936,789
Reinsurance recoverable on claim liabilities 0 (315,543 ) (315,543 )
Net claim liabilities at beginning of period 394,226 227,020 621,246
Claims incurred
Current period insured events 1,934,859 85,726 2,020,585
Prior period insured events (29,038 ) (8,254 ) (37,292 )
Total 1,905,821 77,472 1,983,293
Payments of losses and loss-adjustment expenses
Current period insured events 1,606,458 41,849 1,648,307
Prior period insured events 303,289 32,145 335,434
Total 1,909,747 73,994 1,983,741
Net claim liabilities at end of period 390,300 230,498 620,798
Reinsurance recoverable on claim liabilities 0 181,193 181,193
Claim liabilities at end of period $ 390,300 $ 411,691 $ 801,991

* Other Business Segments include the Life Insurance

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and ~~Property and Casualty segments, as well as intersegment eliminations.~~share information)

(Unaudited)

	Nine months ended September 30, 2020
	Managed Care		Other Business Segments *			Consolidated


Claim liabilities at beginning of period	$	341,277	$	367,981		$	709,258
Reinsurance recoverable on claim liabilities		0		(137,017	)		(137,017	)
Net claim liabilities at beginning of period		341,277		230,964			572,241
Claims incurred
Current period insured events		2,000,825		84,358			2,085,183
Prior period insured events		24,297		(7,885	)		16,412
Total		2,025,122		76,473			2,101,595
Payments of losses and loss-adjustment
expenses
Current period insured events		1,678,400		45,815			1,724,215
Prior period insured events		267,427		41,081			308,508
Total		1,945,827		86,896			2,032,723
Net claim liabilities at end of period		420,572		220,541			641,113
Reinsurance recoverable on claim liabilities		0		145,807			145,807
Claim liabilities at end of period	$	420,572	$	366,348		$	786,920

*	Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.

The actual amounts of claims incurred in connection with insured events occurring in a prior period typically differ from estimates of such claims made in the prior period. Amounts included as incurred claims for prior period insured events reflect the aggregate net amount of these differences.

The ~~unfavorable prior period development~~favorable developments in the claims incurred and loss-adjustment expenses for ~~prior period~~prior-period insured events for the nine months ended September 30, 2021 and 2020 ~~are~~were primarily due primarily to higher than expected utilization trends in the Managed Care segment. The favorable development in the claims incurred and loss-adjustment expenses for prior period insured events for the nine months ended September 30, 2019 are due primarily to better than expected utilization trends. Reinsurance recoverable on unpaid claims is reported as ~~premiums~~Premium and ~~other receivables, net~~Other Receivables, Net in the accompanying condensed consolidated ~~interim~~ financial statements.

The claims incurred disclosed in ~~this~~the table above exclude the portion of the change in the liability for future policy benefits ~~expense, which amounted~~amounting to ~~$27,806~~ $9,539 and ~~$26,211~~ $30,952 during the three months and nine months ended September 30, 2021, respectively, and $13,737 and $27,806 during the three months and nine months ended September 30, 2020, ~~and 2019, respectively.~~respectively, which is included within the consolidated Claims Incurred.

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

The following is information about incurred and paid claims development, net of reinsurance, as of September 30, 2021, as well as cumulative claim frequency. Additional information presented includes total ~~incurred but not reported (IBNR)~~incurred-but-not-reported liabilities plus expected development on reported claims which is included inwithin the ~~liability for unpaid~~net incurred claims ~~adjustment expenses for the Managed Care segment as of September 30, 2020.~~

Incurred Year
Total of IBNR Liabilities Plus Expected
Development on Reported Claims

2019 $ 29,283
2020 322,425
amounts.

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(9)~~8.

Borrowings

~~Long-Term Borrowings~~

~~A summary of the borrowings entered by the Company are as follows:~~

September 30, 2020 December 31, 2019

Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.16% at September 30, 2020). $ 5,037 $ 6,267
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 3.05% at September 30, 2020). 16,456 17,211
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.55% at September 30, 2020). 1,960 2,401
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.22% at September 30, 2020). Last payment of $25,185 due on June 19, 2025. 31,036 0
Total borrowings 54,489 25,879

Less: unamortized debt issuance costs 653 185
$ 53,836 $ 25,694

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

~~Aggregate maturities of the Company’s borrowings as of September 30, 2020 are summarized as follows:~~

Remaining of 2020 $ 1,122
2021 4,490
2022 4,490
2023 4,196
2024 14,484
Thereafter 25,707
$ 54,489

On June 19, 2020, TSM entered into a $31,350 Credit Agreement (the Loan) with a commercial bank in Puerto Rico. The proceeds of the Loan were used by the Company to partially finance the acquisition of the Building (see Note 6).

The Loan is guaranteed by a mortgage over the Building, a pledge of all collateral related to the Building and an assignment of the rents collected for the lease of office space in the Building. Pursuant to the credit agreement, interest is payable on the outstanding principal balance of the Loan at an annual rate equal to the Prime Rate. Interest shall be paid on a monthly basis commencing on July 1, 2020 until the principal of the Loan has been paid in full.

The Company may, at its option and at any time, upon written notice as specified in the credit agreement, prepay prior to maturity, all or any part of the Loan upon the payment of a penalty fee of the outstanding principal amount at the time of the prepayment of 3% during the first year, 2% during the second year and 1% during the third year, and thereafter at par.

~~The four term loans under~~Our credit agreements with commercial banks in Puerto Rico include certain customary financial and non-financial covenants, including negative covenants imposing certain restrictions on the ~~Corporation’s~~Company’s business. ~~The~~For one of our credit agreements, covering 3 term loans, the Company was not in compliance with ~~all these covenants as~~the Debt Service Coverage Ratio covenant of the credit agreement during the quarter ended September 30, 2021. As of September 30, ~~2020.~~2021 and December 31, 2020, the outstanding balance of the debt was $20,217 and $22,644, respectively. On November 1, 2021, the financial banking institution waived the Company’s obligation to comply with this covenant for the quarter ended September 30, 2021 and quarters ending on December 31, 2021 and March 31, 2022.

~~Short-term Borrowings~~

The Company has several short-term facilities available to address timing differences between cash receipts and disbursements, consisting of collateralized advances from FHLBNY and a revolving credit facility.

Triple-S Advantage, Inc. (TSA) has a $10,000 revolving loan agreement with a commercial bank in Puerto Rico. This line of credit has an interest rate of 30-day LIBOR plus 250 basis points and contains certain financial and non-financial covenants that are customary for this type of facility. This line of credit matures on June 30, 2021. As of September 30, 2020, there is 0 outstanding balance.

~~Table of Contents~~

•

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts~~TSA has a $10,000 revolving loan agreement with a commercial bank in ~~thousands, except per share data)~~

~~(Unaudited)~~Puerto Rico. This line of credit has an interest rate of 30-day LIBOR plus 250 basis points and contains certain financial and non-financial covenants that are customary for this type of facility. This line of credit matured on June 30, 2021 and was renewed for an additional year. There was 0 outstanding balance as of September 30, 2021.

~~(10)~~9.

Pension Plan

The components of net periodic benefit cost were as follows:

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Components of net periodic benefit cost (income):
Components of net periodic benefit cost:
Interest cost	$	1,474		$	1,748		$	4,554		$	5,230		$	1,370		$	1,474		$	4,120		$	4,554
Expected return on assets		(2,211	)		(2,209	)		(6,629	)		(6,643	)		(1,098	)		(2,211	)		(3,298	)		(6,629	)
Amortization of actuarial loss		396			98			884			277			994			396			2,944			884
Settlement loss		356			555			1,068			1,305			1,359			356			3,359			1,068
Net periodic benefit cost (income)	$	15		$	192		$	(123	)	$	169		$	2,625		$	15		$	7,125		$	(123	)

Employer Contributions: The Company disclosed in its audited consolidated financial statements for the year ended December 31, ~~2019~~2020 that it expected to contribute ~~$2,000~~$10,000 to the pension program in ~~2020.~~2021. As of September 30, ~~2020,~~2021, the Company has contributed $10,000 to the pension program.

~~(11)~~

~~Stock Repurchase Program~~

The Company repurchases shares through open market transactions, in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, under repurchase programs authorized by the Board of Directors. Shares purchased under share repurchase programs are retired and returned to authorized and unissued status.

In August 2017 the Company’s Board of Directors authorized a $30,000 repurchase program (2017 $30,000 program) of its Class B common stock. In February 2018 the Company’s Board of Directors authorized a $25,000 expansion of this program. In October 2019 the Company’s Board of Directors authorized an expansion to this repurchase program increasing its remaining balance up to a total of $25,000, effective November 2019.

During the three months ended September 30, 2020, 0 stocks were repurchased under a repurchase program. During the nine months ended September 30, 2020, the Company repurchased and retired under this program 952,820 shares at an average per share price of $15.72, for an aggregate cost of $14,982. During the three months and nine months ended September 30, 2019 0 stocks were repurchased under a repurchase program. This program was completed in May 2020.

~~(12)~~10.

Reinsurance

Triple-S Propiedad, Inc. (TSP) uses facultative reinsurance, pro rata, and excess of loss reinsurance treaties to manage its exposure to losses, including those from catastrophe events. TSP has geographic exposure to catastrophe losses from hurricanes and earthquakes. The incidence and severity of catastrophes are inherently unpredictable.

Table of Contents

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

Under these treaties, TSP ceded premiums written were ~~$14,920~~$14,791 and ~~$12,355~~$14,920 for the three months ended September 30, ~~2020~~2021 and ~~2019~~,2020, respectively, and ~~$45,637~~$44,245 and ~~$36,028~~$45,637 for the nine months ended September 30, ~~2020~~,2021 and ~~2019~~,2020, respectively. Ceded incurred losses and loss adjustment expenses during the three months and nine months ended September 30, 2021 and 2020 were $3,926 and ~~2019 were $5,419~~ ~~and $1,089~~,$5,419, respectively, and $~~45,802~~$3,167 and $~~6,531~~,$45,802, respectively. The ceded incurred losses and loss adjustment expenses for the nine months ended September 30, 2020 include $~~40,000~~$40,000 related to earthquake losses ceded under catastrophe reinsurance.

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Principal reinsurance agreements are as follows:

•	~~Casualty excess of loss treaty provides reinsurance for losses up to~~ ~~$20,000,~~ ~~subject to a retention of~~ ~~$225.~~

~~Medical malpractice excess of loss treaty provides reinsurance for losses up to~~ ~~$3,000,~~ ~~subject to a retention of~~ ~~$150.~~

~~Property reinsurance treaty includes proportional cessions and a per risk excess of loss contract limiting losses to~~ ~~$400~~ in ~~$30,000~~ ~~risks.~~

~~Catastrophe protection is purchased limiting losses to~~ ~~$5,000~~ ~~per event with losses up to approximately~~ ~~$809,000~~ ~~in a~~ ~~$814,000~~ ~~event.~~

All principal reinsurance contracts are for a period of one year and are subject to modifications and negotiations in each renewal. TSP’s current property and catastrophe reinsurance program was renewed effective April 1, ~~2020~~2021 for a ~~twelve months~~twelve-month period ending March 31, ~~2021.~~2022. Other contracts ~~were renewed as expiring~~that expired on January 1, ~~2020.~~2021 were renewed.

The Company’s subsidiaries lease their regional offices, certain equipment, and warehouse facilities under non-cancelable operating leases. These contracts generally do not include purchase options or residual value guarantees. The remaining lease terms ranges from 0.2 to 14.2 years. The Company identifies leases when it has both the right to obtain substantially all economic benefits from the use of the asset and the right to direct the use of the asset.

~~The Company recognizes the right-of -use of assets and lease liabilities related to operating leases in its balance sheet statement under the caption of~~ ~~other assets~~21 ~~and~~ ~~accounts payables and accrued liabilities~~, respectively. As of September 30, 2020, the right -of -use asset and lease liabilities balance was $13,929 and $14,171, respectively. As of December 31, 2019, the right-of -use asset and lease liabilities balance was $10,438 and $10,586, respectively. The weighted -average remaining lease term is 5.9 years as of September 30, 2020.

The Company uses the incremental borrowing rate for purposes of discounting lease payments for our operating leases since our lease agreements do not provide a readily determinable implicit rate. We estimate our incremental borrowing rate ~~by using an interest rate index and add a credit spread to this rate~~ ~~based on~~ ~~financing transactions with a similar credit risk profile. The weighted-average discount rate of our operating leases is 5.2% as of September 30, 2020.~~

Table of Contents

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

~~Undiscounted cash flows of operating leases are summarized as follows:~~

Remaning of 2020 $ 1,062
2021 3,998
2022 3,420
2023 2,329
2024 1,855
Thereafter 3,590
Total lease payments 16,254
Less: imputed interest (2,083 )
Total $ 14,171

At December 31, 2019, operating lease commitments under lessee arrangements were $4,713, $3,790, $3,200, $2,171, $1,710 and $2,707 for 2020 through 2024 and thereafter, respectively. The following presents the lease cost recognized by the Company:

Nine months ended
September 30, 2020
Operating lease cost $ 3,570
Short-term lease cost 801
Total lease cost $ 4,371

Also, the Company leases certain floors of one of its buildings and generates rental income. Maturity analysis of lease payments to be received from its lessees as of September 30, 2020, is summarized as follows:

Remaining of 2020 $ 473
2021 1,909
2022 1,947
2023 1,986
2024 2,026
Thereafter 2,624
Total $ 10,965

Triple-S Management Corporation

26Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

~~(14)~~11.

Comprehensive Income (Loss)

The accumulated balances for each classification of other comprehensive income (loss), net of tax, are as follows:

Three months ended Nine months ended
September 30, September 30,
2020 2019 2020 2019
Net Unrealized Gain on Securities
Beginning Balance $ 85,110 $ 55,678 $ 57,830 $ 27,308
Other comprehensive income before reclassifications 5,149 10,160 31,879 41,473
Amounts reclassified from accumulated other comprehensive (loss) income (406 ) (870 ) 144 (3,813 )
Net current period change 4,743 9,290 32,023 37,660
Ending Balance 89,853 64,968 89,853 64,968
Liability for Pension Benefits
Beginning Balance (28,161 ) (24,134 ) (28,467 ) (24,246 )
Amounts reclassified from accumulated other comprehensive income 247 61 553 173
Ending Balance (27,914 ) (24,073 ) (27,914 ) (24,073 )
Accumulated Other Comprehensive Income (Loss)
Beginning Balance 56,949 31,544 29,363 3,062
Other comprehensive income before reclassifications 5,149 10,160 31,879 41,473
Amounts reclassified from accumulated other comprehensive (loss) income (159 ) (809 ) 697 (3,640 )
Net current period change 4,990 9,351 32,576 37,833
Ending Balance $ 61,939 $ 40,895 $ 61,939 $ 40,895

~~(15)~~12.

Share-Based Compensation

Share-based compensation expense recorded during the three months ended September 30, ~~2020 and 2019 was~~ ~~$1,849~~2021 and 2020 was $~~2,817,~~3,031 and $1,849, respectively. Share-based compensation expense recorded during the nine months ended September 30, 2021 and 2020 ~~and 2019~~ was $~~$8,443~~6,964 and $~~$8,723,~~8,443, respectively. During the three months ended September 30, 2021, and 2020, 2,063 and 14,040 shares were repurchased and retired as the result of non-cash tax withholdings upon vesting of shares. During the nine months ended September 30, ~~2020 and 2019~~,~~20,922~~2021 and 2020, ~~602~~22,886 and 20,922 shares ~~respectively,~~ were repurchased and retired as the result of non-cash tax withholdings upon vesting of shares. ~~There were~~
0

~~non-cash tax withholdings during the three months ended September 30, 2019~~22.

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Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(16)~~13.

Net Income Available to Stockholders and Net Income per Share

The following table sets forth the computation of basic and diluted earnings per share:

Three months ended
September 30,

Nine months ended
September 30,

2020 2019 2020 2019
Numerator for earnings per share:
Net income attributable to TSM available to stockholders $ 23,581 $ 13,948 $ 41,035 $ 79,665
Denominator for basic earnings per share:
Weighted average of common shares 23,073,511 23,830,106 23,215,840 23,143,361
Effect of dilutive securities 120,469 63,701 102,229 73,937
Denominator for diluted earnings per share 23,193,980 23,893,807 23,318,069 23,217,298
Basic net income per share attributable to TSM $ 1.02 $ 0.59 $ 1.77 $ 3.44
Diluted net income per share attributable to TSM $ 1.02 $ 0.58 $ 1.76 $ 3.43

~~Table of Contents~~

14.

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Contingencies

~~(17) Contingencies~~

The following information supplements and amends, as applicable, the disclosures in Note 2425 to the Consolidated Financial Statements of the Company’s ~~2019~~2020 Annual Report on Form 10-K. The Company’s business is subject to numerous laws and regulations promulgated by Federal, Puerto Rico, U.S. Virgin Islands (USVI), Costa Rica, British Virgin Islands (BVI), and Anguilla governmental authorities. Compliance with these laws and regulations can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. The Commissioner of Insurance of Puerto Rico, as well as other Federal, Puerto Rico, USVI, Costa Rica, BVI, and Anguilla government authorities, regularly make inquiries and conduct audits concerning the ~~Company’s~~Company's compliance with such laws and regulations. Penalties associated with violations of these laws and regulations may include significant fines and exclusion from participating in certain publicly funded programs and may require the Company to comply with corrective action plans or changes in our practices.

The Company is involved in various legal actions arising in the ordinary course of business. The Company is also defendant in various other litigations and proceedings, some of which are described below. Where the Company believes that a loss is both probable and estimable, such amounts have been recorded. Although the Company believes the estimates of such losses are reasonable, these estimates could change as a result of further developments in these matters. In other cases, it is at least reasonably possible that the Company may incur a loss related to one or more of the mentioned pending lawsuits or investigations, but the Company is unable to estimate the range of possible loss which may be ultimately realized, either individually or in the aggregate, upon their resolution. However, there are legal proceedings where a loss is reasonably possible, and for which it is possible to reasonably estimate the amount of the possible loss or range of losses. We currently believe that on September 30, 2021, the range of possible losses for such proceedings in excess of established reserves is, in the aggregate, from $0 to approximately ~~$10,000 at September 30, 2020.~~$10,000. The outcome of legal proceedings is inherently uncertain; pending matters for which accruals have not been established have not progressed sufficiently to enable us to estimate a range of possible loss, if any. Given the inherent unpredictability of these matters, it is possible that an adverse outcome in one or more of these matters could have a material effect on the consolidated financial condition, operating results and/or cash flows of the Company.

Additionally, we may face various potential litigation claims that have not been asserted to date.

~~Claims by Heirs of Former Shareholders~~

The Company and TSS are defending 4 individual lawsuits: Vera Sanchez, et al, v. Triple-S; Olivella Zalduondo, et al, v. Seguros de Servicios de Salud, et al; Cebollero Santamaria v. Triple-S Salud, Inc., et al; and Ruiz de Porras, et al, v. Triple-S Salud, Inc. All claims were filed in the Puerto Rico Court of First Instance by persons who claim to have inherited a total of 41 shares of the Company or one of its predecessors or affiliates (before giving effect to a 3,000-for-one stock split). While each case presents unique facts and allegations, the lawsuits generally allege that the redemption of the shares by the Company pursuant to transfer and ownership restrictions contained in the Company’s (or its predecessors’ or affiliates’) articles of incorporation and bylaws was improper. Consequently, the remedy requested by the plaintiffs is to be recognized as shareholders of the Company in the corresponding proportion.

As a result of the Puerto Rico Supreme Court’s decision to deny the applicability of the statute of limitations contained in the local securities law, these claims are being litigated on their merits.

In Cebollero Santamaria v. Triple-S Salud, Inc., et. al. the Puerto Rico Court of First Instance entered partial summary judgment in favor of plaintiff on June 20, 2019. The Company filed a request for reconsideration that is pending adjudication and intends to continue defending this case vigorously in an appeal stage if necessary.

~~Table of Contents~~

~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

In Vera Sanchez, et. al. v. Triple-S, Inc., the Puerto Rico Court of First Instance entered summary judgment in favor of the Company. Plaintiffs appealed before the Puerto Rico Court of Appeals. The Company filed its opposition on October 31, 2019. On June 24, 2020, the Court of Appeals revoked the summary judgement and remanded the case back to the Court of First Instance on the grounds that summary judgement was inappropriate because there are disputes as to issues of material fact. We will continue to defend this case vigorously.

~~In Ruiz de Porras, et. al. v. Triple-S, Inc. the Company intends to file a motion for summary judgment to dismiss all claims once new discovery matters are completed.~~

In Olivella Zalduondo, et al, v. Seguros de Servicios de Salud, et al, the Court of First Instance entered summary judgment in favor of the Company in November 2019, dismissing the complaint with prejudice. Plaintiffs appealed the decision on January 16, 2020. The Company will continue to defend this case as needed.

In re Blue Cross Blue Shield Antitrust Litigation

TSS is a co-defendant with multiple Blue Plans and the Blue Cross Blue Shield Association in a multi-district class action litigation filed by a group of providers and subscribers on July 24, 2012 and October 1, 2012, respectively, that has since been consolidated by the United States District Court for the Northern District of Alabama, Southern Division, in the case captioned In re Blue Cross Blue Shield Association Antitrust Litigation. Essentially, provider plaintiffs allege that the exclusive service area requirements of the Primary License Agreements with the Blue Plans constitute an illegal horizontal market allocation under federal antitrust laws. As per provider plaintiffs, the quid pro quo for said “market allocation” is a horizontal price fixing and boycott conspiracy implemented through BCBSA and whose benefits are allegedly derived through the BCBSA’s BlueCard/National Accounts Program. Among the remedies sought, provider plaintiffs seek increased compensation rates and operational changes. In turn, subscriber plaintiffs allege that the alleged conspiracy to allocate markets have prevented subscribers from being offered competitive prices and resulted in higher premiums for Blue Plan subscribers. Subscribers seek damages for the amounts that the Blue Plan premiums allegedly have been artificially inflated as a result of the alleged antitrust violations. Both actions seek injunctive relief.

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Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

Prior to consolidation, motions to dismiss were filed by several plans, including TSS, - whose request was ultimately denied by the court without prejudice. On April 6, 2015, plaintiffs filed suit in the United States District Court of Puerto Rico against TSS. Said complaint, nonetheless, is believed not to preclude TSS’ jurisdictional arguments. Since inception, the Company has joined BCBSA and other Blue Plans in vigorously contesting these claims. On April 5, 2018, the United States District Court for the Northern District of Alabama, Southern Division, issued ~~it’s~~its ruling on the parties’ respective motions for partial summary judgment on the standard of review applicable to plaintiffs’ claims under Section 1 of the Sherman Act and subscriber plaintiffs’ motion for partial summary judgment on the Blue Plan’s single entity defense. After considering the “undisputed” facts (for summary judgment purposes only) and evidence currently on record in the light most favorable to defendants, the court essentially found that: (a) the combination of Exclusive Service Areas and the National Best Efforts Rule are subject to the Per Se standard of review; (b) there remain genuine issues of material fact as to whether defendants’ conduct can be shielded by the “single entity” defense; and (c) claims concerning the BlueCard Program and uncoupling rules are due to be analyzed under the Rule of Reason standard.

On April 16, 2018, Defendants moved the Federal District Court for the Northern District of Alabama to certify for immediate interlocutory appeal the ~~court’s~~Court’s April 5, 2018 Standard of Review Ruling. On June 12, 2018 Hon. Judge Proctor agreed to grant Defendant’s motion for certification pursuant to 28 U.S.C. §1292(b). Defendants filed their Notice of Appeal on July 12, 2018. On December 12, 2018, the Court of Appeals for the Eleventh Circuit denied Defendants’ petition to appeal the District Court’s Standard of Review Ruling. ~~The parties re-commenced mediation with subscribers in April 2019 and with providers in September 2019. The~~On July 29, 2020, the Defendants ~~have~~ reached a ~~tentative~~ settlement agreement with ~~subscribers. The agreement remains~~subscribers, which was subject to approval by the BCBSA and Member Plans boards, as well as from the Federal District Court for the Northern District of Alabama. ~~However, based~~Following the BCBSA Board of Directors and Members Plans’ August 14, 2020 approval, on ~~this agreement,~~September 30, 2020, the ~~Company has~~Company’s Board of Directors voted to approve the Settlement Agreement. On November 30, 2020, the Federal District Court for the Northern District of Alabama issued its Memorandum Opinion and Preliminary Order approving settlement terms. The Settlement Agreement requires a monetary settlement payment from defendants. On March 1, 2021, the plans finished producing the data for settlement notice and allocation. The deadline for class members to opt-out or file objections to Settlement was July 28, 2021. The Company's portion of the monetary settlement payment was estimated at $32,000, which was accrued ~~$32,000~~during the year ended December 31, 2020. As of September 30, 2021 the accrued amount related to this ~~legal proceeding during the nine months ended September 30, 2020.~~contingency was $27,364.

Following the suspension of negotiation efforts with providers and the stay of litigation proceedings from July 2019 to October 2020, providers resumed their mediation efforts with Defendants in October 2021.

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

~~Claims Relating to the Provision of Health Care Services~~

~~TSS is a defendant in several claims for collection of monies in connection with the provision of health care services.~~

On January 12, 2015, American Clinical Solutions LLC, a limited liability company that provides clinical laboratory services filed a complaint in Florida state court alleging that TSM and TSS failed to pay certain clinical laboratory services provided to Blue Cross Blue Shield members. TSS and TSM have filed a motion to dismiss alleging lack of jurisdiction. TSM and TSS also requested a transfer of the case to Puerto Rico. Plaintiff has requested jurisdictional discovery, which is ongoing. The claim amounts to $5,000. TSS and TSM will continue to vigorously oppose this claim.

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

~~(18)~~15.

Segment Information

The ~~Company’s~~ operations of the Company are conducted principally through 3 reportable business segments: Managed Care, Life Insurance, and Property and Casualty Insurance. The Company evaluates performance based primarily on the operating revenues and operating income of each segment. Operating revenues include ~~premiums earned, net, administrative service fees, net investment income,~~Premiums Earned, Net, Administrative Service Fees and ~~revenues derived from other segments.~~Net Investment Income. Operating costs include ~~claims incurred~~Claims Incurred and ~~operating expenses.~~Operating Expenses. The ~~Corporation~~Company calculates operating income or loss as operating revenues less operating costs.

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

The following tables summarize the operations by reportable segment for the three months and nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Operating revenues:
Operating revenues
Managed Care:
Premiums earned, net	$	849,529		$	746,043		$	2,447,588		$	2,244,448		$	939,210		$	849,529		$	2,779,869		$	2,447,588
Administrative service fees		3,013			2,607			8,755			7,695			3,875			3,013			9,316			8,755
Intersegment premiums/service fees		644			1,483			2,624			4,612			598			644			2,319			2,624
Net investment income		5,065			5,624			14,763			16,981			8,088			5,065			19,088			14,763
Total managed care		858,251			755,757			2,473,730			2,273,736
Total Managed Care														951,771			858,251			2,810,592			2,473,730
Life Insurance:
Premiums earned, net		49,616			45,365			143,325			133,598			54,394			49,616			159,783			143,325
Intersegment premiums		516			471			1,552			1,457			636			516			1,811			1,552
Net investment income		6,900			6,709			20,625			20,091			6,785			6,900			19,851			20,625
Total life insurance		57,032			52,545			165,502			155,146
Total Life Insurance														61,815			57,032			181,445			165,502
Property and Casualty Insurance:
Premiums earned, net		23,789			23,613			66,453			64,470			26,092			23,789			76,360			66,453
Intersegment premiums		153			153			460			460			153			153			460			460
Net investment income		2,103			2,533			6,551			7,404			2,569			2,103			6,847			6,551
Total property and casualty insurance		26,045			26,299			73,464			72,334
Total Property and Casualty insurance														28,814			26,045			83,667			73,464
Other segments: *
Intersegment service revenues		2,595			2,076			7,637			6,049			2,229			2,595			9,678			7,637
Operating revenues from external sources		2,052			3,167			6,394			6,335			3,925			2,052			8,518			6,394
Total other segments		4,647			5,243			14,031			12,384			6,154			4,647			18,196			14,031
Total business segments		945,975			839,844			2,726,727			2,513,600			1,048,554			945,975			3,093,900			2,726,727
TSM operating revenues from external sources		100			310			355			1,138			130			100			392			355
Elimination of intersegment premiums/service fees		(574	)		(2,107	)		(4,636	)		(6,529	)		(1,387	)		(574	)		(4,590	)		(4,636	)
Elimination of intersegment service revenues		(2,595	)		(2,076	)		(7,637	)		(6,049	)		(2,229	)		(2,595	)		(9,678	)		(7,637	)
Consolidated operating revenues	$	942,906		$	835,971		$	2,714,809		$	2,502,160		$	1,045,068		$	942,906		$	3,080,024		$	2,714,809

*	Includes segments that are not required to be reported separately, primarily the health clinics.

*25 ~~Includes segments that are not required to be reported separately, primarily the health clinics.~~

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Three months ended
September 30,

Nine months ended
September 30,

2020 2019 2020 2019
Operating income (loss):
Managed care $ 13,006 $ 5,393 $ 56,495 $ 56,805
Life insurance 5,682 6,686 20,188 17,541
Property and casualty insurance 4,386 6,620 10,921 14,958
Other segments * (1,639 ) (690 ) (4,552 ) (1,812 )
Total business segments 21,435 18,009 83,052 87,492
TSM operating revenues from external sources 100 310 355 1,138
TSM unallocated operating expenses (1,633 ) (1,643 ) (4,877 ) (6,812 )
Elimination of TSM intersegment charges 2,403 2,403 7,209 7,209
Consolidated operating income 22,305 19,079 85,739 89,027
Consolidated net realized investment gains (losses) 507 1,087 (180 ) 4,766
Consolidated net unrealized investment gains (losses) on equity investments 11,040 1,267 (17,428 ) 24,259
Consolidated interest expense (2,096 ) (2,062 ) (5,813 ) (5,681 )
Consolidated other income, net 1,811 485 6,217 3,359
Consolidated income before taxes $ 33,567 $ 19,856 $ 68,535 $ 115,730

Depreciation and amortization expense:
Managed care $ 2,085 $ 2,931 $ 8,061 $ 8,480
Life insurance 289 268 869 813
Property and casualty insurance 93 86 296 266
Other segments* 240 249 913 627
Total business segments 2,707 3,534 10,139 10,186
TSM depreciation expense 404 150 716 543
Consolidated depreciation and amortization expense $ 3,111 $ 3,684 $ 10,855 $ 10,729

* ~~Includes segments that are not required to be reported separately, primarily the health clinics.~~

September 30,
2020

December 31,
2019

Assets:
Managed care $ 1,406,356 $ 1,190,538
Life insurance 1,039,765 981,370
Property and casualty insurance 603,728 592,758
Other segments * 30,408 28,346
Total business segments 3,080,257 2,793,012
Unallocated amounts related to TSM:
Cash, cash equivalents, and investments 19,881 28,167
Property and equipment, net 67,316 25,623
Other assets 45,927 37,176
133,124 90,966
Elimination entries-intersegment receivables and others (93,094 ) (65,152 )
Consolidated total assets $ 3,120,287 $ 2,818,826

* Includes segments that are not required to be reported separately, primarily the health clinics.

Triple-S Management Corporation

32Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

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~~Triple-S Management Corporation~~

~~Notes to Condensed Consolidated Interim Financial Statements~~

~~(dollar amounts in thousands, except per share data)~~

~~(Unaudited)~~

Triple-S Management Corporation

Notes to Condensed Consolidated Interim Financial Statements

(dollar in thousands, except per share and share information)

(Unaudited)

The Company evaluated subsequent events through the date the unaudited condensed consolidated interim financial statements were issued. No events, other than those described in these notes, have occurred that require adjustment or disclosure pursuant to current Accounting Standard Codification.

~~Item 2.~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Triple-S ~~Management Corporation~~ is a ~~healthcare~~health services company and one of the top players in the Puerto Rico ~~healthcare~~health care industry. With more than 60 years of experience, we are the premier ~~healthcare~~health care brand and serve more people through the most attractive provider networks on the island. We have the exclusive right to use the Blue Cross and Blue Shield (BCBS) name and mark throughout Puerto Rico, the U.S. Virgin Islands (USVI), Costa Rica, the British Virgin Islands (BVI) and Anguilla, and we offer a broad portfolio of managed care and related products in the Commercial, Medicare Advantage and Medicaid markets. In the Commercial market, we offer products to corporate accounts, U.S. federal government employees, local government employees, individual accounts and Medicare Supplement. We also participate in the Government of Puerto Rico Health Insurance Plan, (aa government of Puerto Rico and U.S. federal government funded managed care program for the medically indigent that is similar to the Medicaid program in the U.S.~~) (Medicaid)~~ (Medicaid or the Government health plan).

~~Legislative Measures and Initiatives~~

~~Puerto Rico Health Insurance Administration (ASES by its Spanish Acronym) Contract Amendment~~

~~Legislative Initiatives~~

~~Acquisition of Life Insurance Portfolio~~

Recent Accounting Standards

For a description of recent accounting standards, see Note 2 toof the unaudited condensed consolidated interim financial statements included in this ~~quarterly report~~Quarterly Report on Form 10-Q.

Managed Care Membership

As of September 30,
2020 2019
Managed care enrollment:
Commercial ¹
429,503 442,069
Medicare 136,135 128,660
Medicaid 385,344 354,230
Total 950,982 924,959
Managed care enrollment by funding arrangement:
Fully insured 843,152 805,882
Self-insured 107,830 119,077
Total 950,982 924,959

	As of September 30,
	2021		2020
Managed Care enrollment:
Commercial ¹		416,033		429,503
Medicare		136,459		136,135
Medicaid		449,474		385,344
Total		1,001,966		950,982
Managed Care enrollment by funding arrangement:
Fully insured		907,705		843,152
Self-insured		94,261		107,830
Total		1,001,966		950,982

(1)	Commercial membership includes corporate accounts, self-funded employers, individual accounts, Medicare Supplement, Federal government employees and local government employees.

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Consolidated Operating Results

The following table sets forth ~~the Corporation’s~~our consolidated operating results. Further details of the results of operations of each reportable segment are included in the analysis of operating results for the respective segments.

	Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,					Nine months ended September 30,
(dollar amounts in millions)	2020		2019		2020			2019
(dollar in millions)										2021			2020		2021		2020
Revenues:
Premiums earned, net	$	923.0	$	815.0	$	2,657.4		$	2,442.5	$	1,019.7		$	923.0	$	3,016.0	$	2,657.4
Administrative service fees		3.7		2.6		8.7			7.7		3.9			3.7		9.3		8.7
Net investment income		14.2		15.2		42.3			45.6		17.6			14.2		46.2		42.3
Other operating revenues		2.0		3.1		6.4			6.3		3.8			2.0		8.5		6.4
Total operating revenues		942.9		835.9		2,714.8			2,502.1		1,045.0			942.9		3,080.0		2,714.8
Net realized investment gains (losses)		0.5		1.1		(0.2	)		4.8		1.0			0.5		3.7		(0.2	)
Net unrealized investment gains (losses) on equity investments		11.1		1.3		(17.4	)		24.3
Net unrealized investment (losses) gains on equity investments											(7.9	)		11.1		13.4		(17.4	)
Other income, net		1.8		0.5		6.2			3.4		11.1			1.8		19.1		6.2
Total revenues		956.3		838.8		2,703.4			2,534.6		1,049.2			956.3		3,116.2		2,703.4
Benefits and expenses:
Claims incurred		761.8		680.0		2,129.4			2,009.5		879.0			761.8		2,573.6		2,129.4
Operating expenses		158.8		136.9		499.7			403.6		154.5			158.8		456.9		499.7
Total operating expenses		920.6		816.9		2,629.1			2,413.1		1,033.5			920.6		3,030.5		2,629.1
Interest expense		2.1		2.1		5.8			5.7		2.0			2.1		6.2		5.8
Total benefits and expenses		922.7		819.0		2,634.9			2,418.8		1,035.5			922.7		3,036.7		2,634.9
Income before taxes		33.6		19.8		68.5			115.8		13.7			33.6		79.5		68.5
Income tax expense		10.0		5.9		27.5			36.1		5.6			10.0		24.5		27.5
Net income attributable to TSM	$	23.6	$	13.9	$	41.0		$	79.7	$	8.1		$	23.6	$	55.0	$	41.0

Three Months Ended September30, ~~2020~~2021 Compared to Three Months Ended September30, ~~2019~~2020

Operating Revenues

Consolidated premiums earned, net increased by ~~$108.0~~$96.7 million, or ~~13.3%~~10.5%, to ~~$923.0 million during the three months ended September 30, 2020.~~$1,019.7 million. This increase primarily reflects higher premiums in the Managed Care segment ~~of $103.5~~by $89.7 million. The growth in Managed Care premiums reflects higher average premium rates ~~and fully insured member months~~ across all ~~Managed Care~~ lines of ~~business.~~business and an increase in Medicaid and Medicare membership.

Net Unrealized Investment (Losses) Gains on Equity Investments

The $7.9 million in consolidated net unrealized investment ~~gains~~losses on equity investments reflect the impact of changes in equity markets.

Claims Incurred

Consolidated claims incurred increased by $117.2 million, or 15.4%, to $879.0 million, and the consolidated loss ratio increased 370 basis points, to 86.2%, when compared to the prior-year period primarily reflecting a more normalized utilization of Managed Care services compared to the lower utilization in the prior-year quarter due to the pandemic, COVID-19-related testing and treatments costs, increased benefits in the Medicare product offering in 2021 and the effect of the elimination of the Health Insurance Providers Fee (HIP fee) pass-through in 2021.

In the 2020 period, following the government-enforced lockdown related to the COVID-19 pandemic, we experienced a decrease in utilization of Managed Care services as members and providers deferred non-emergent or elective health services.

Operating Expenses

Consolidated operating expenses decreased by $4.3 million, or 2.7%, to $154.5 million. The decrease in operating expenses primarily reflects the elimination in 2021 of the HIP fee of $12.1 million and lower business promotion expenses related to COVID-19 relief efforts incurred in 2020, offset in part by higher personnel costs. The consolidated operating expense ratio decreased 200 basis points, to 15.1%.

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Income Taxes

Consolidated income tax expense for the three months ended September 30, 2021 decreased by $4.4 million, to $5.6 million, primarily reflecting lower taxable income in 2021.

Nine Months Ended September30, 2021 Compared to Nine Months Ended September30, 2020

Operating Revenues

Consolidated premiums earned, net increased by $358.6 million, or 13.5%, to $3,016.0 million during the nine months ended September 30, 2021. This increase primarily reflects higher premiums in the Managed Care segment by $332.4 million due to higher average premium rates in all lines of business and an increase in Medicaid and Medicare membership.

Net Unrealized Investment Gains (Losses) on Equity Investments

The ~~$11.1~~$13.4 million in consolidated net unrealized investment gains on equity investments reflect the impact of changes in equity markets.

Claims Incurred

Consolidated claims incurred increased by ~~$81.8~~$444.2 million, or ~~12.0%~~20.9%, to ~~$761.8~~$2,573.6 million, ~~and~~during the nine months ended September 30, 2021. The consolidated loss ratio ~~decreased 90~~increased 520 basis points, to ~~82.5%~~85.3%, ~~when compared to~~from the prior-year ~~period. The increase in claims incurred primarily reflects~~period, reflecting higher ~~claims in the~~ Managed Care ~~segment resulting from an increase in fully insured members, unfavorable prior-period reserve development~~claim trends and ~~other~~utilization of services because of COVID-19-related testing and treatments costs, ~~such as COVID-19 related treatment and testing,~~ the waiver of medical and payment policies ~~and the assistance we are providing to~~(see Recent Developments – COVID-19 – Measures Impacting our ~~elderly population and other vulnerable members. The decrease~~Business included in this quarterly report on Form 10-Q), increased benefits in the ~~consolidated loss ratio reflects lower Managed Care~~2021 Medicare product and a more normalized utilization of services ~~since mid-March as~~compared to the ~~result of the government-enforced lockdown during the COVID-19 pandemic, an increase~~low utilization in the ~~average membership risk score, and~~prior year due to the ~~reinstatement of~~pandemic.

In the ~~HIP fee pass-through in 2020.~~

~~Table of Contents~~

~~Following~~2020 period, following the government-enforced lockdown related to the COVID-19 pandemic, ~~in mid-March,~~ we ~~have seen~~experienced a decrease in utilization of Managed Care services as members and providers deferred non-emergent or elective health services. While this trend has caused, and may continue to cause, a short-term decrease in our claim costs, during this third quarter we saw an increase in utilization closer to normal as demand for deferred non-emergent or elective health services resumed. The access to and demand for care was most constrained from mid-March through April, and began to recover in late May, gradually increasing close to expected levels in the third quarter.

Operating Expenses

Consolidated operating expenses ~~increased~~decreased by ~~$21.9~~$42.8 million, or ~~16.0%~~8.6%, to ~~$158.8~~$456.9 million. The ~~increase~~decrease in operating expenses mostly resulted from the reinstatement in 2020 of the HIP fee of $12.1 million, and higher business promotion expenses, mainly related to COVID-19 relief efforts. For the three months ended September 30, 2020, the consolidated operating expense ratio increased 40 basis points, to 17.1%.

~~Income Taxes~~

Consolidated income tax expense for the three months ended September 30, 2020 increased by $4.1 million, to $10.0 million, primarily reflecting higher taxable income in the Managed Care segment in 2020.

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019~~

~~Operating Revenues~~

~~Consolidated premiums earned, net increased by $214.9 million, or 8.8%, to $2,657.4 million during the nine months ended September 30, 2020. This increase~~ primarily reflects ~~higher premiums in~~ the Managed Care segment by $203.3 million due to higher average premium rates in the Medicare and Medicaid lines of business and an increase in Medicare, Medicaid and Commercial fully insured member months.

~~Net unrealized investment gains (losses) on equity investments~~

~~The $17.4 million in consolidated net unrealized investment losses on equity investments reflect the impact of changes in equity markets.~~

~~Claims Incurred~~

Consolidated claims incurred increased by $119.9 million, or 6.0%, to $2,129.4 million, during the nine months ended September 30, 2020. The consolidated loss ratio decreased 220 basis points, to 80.1%, from the prior-year period, mostly reflecting lower Managed Care utilization of services since mid-March as the result of the government-enforced lockdown during the COVID-19 pandemic and the effect in the MLR of the reinstatement of the HIP fee pass-through in 2020. These decreases were partially offset by the increased benefits in our 2020 Medicare product offering, unfavorable prior-period reserve development in the Managed Care segment and $5 million of earthquake losses recorded by the Property and Casualty segment.

Following the government-enforced lockdown related to the COVID-19 pandemic in mid-March, we have seen a decrease in utilization of Managed Care services as members and providers deferred non-emergent or elective health services. While this trend has caused, and may continue to cause, a short-term decrease in our claim costs, we are experiencing an increase in these costs during the second half of the year, that affect our medical cost trends as the demand for deferred non-emergent or elective health services resumes. The access to and demand for care was most constrained from mid-March through April, and began to recover in late May, gradually increasing close to expected levels in the third quarter.

~~Operating Expenses~~

~~Consolidated operating expenses increased by $96.1 million, or 23.8%, to $499.7 million. The increase in operating expenses mostly results from the reinstatement~~elimination of the HIP fee in ~~2020 of~~2021 by $43.4 million and the ~~recognition~~accrual in the prior year of a ~~$32 million~~ contingency reserve related to a legal proceeding in ~~our~~the Managed Care segment ~~(see Note 17~~amounting to the unaudited condensed consolidated interim financial statements included in this quarterly report on Form 10-Q), higher amortization of deferred acquisition costs and higher business promotion expenses, mainly related to COVID-19 relief efforts.$32.0 million. These ~~increases~~decreases were partially offset by ~~lower~~higher personnel costs and professional ~~fees and provision for doubtful accounts.~~fees. The consolidated operating expense ratio ~~increased 220~~decreased 360 basis points, to ~~18.7%~~15.1%.

Income Taxes

Consolidated income taxes decreased by $3.0 million, or 10.9%, to $24.5 million, primarily reflecting the impact of the unrealized investment gains on equity investments in the 2021 income tax expense compared with the impact of the unrealized investment loss in the 2020 income tax expense.

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~~Income Taxes~~

~~Consolidated income tax expense for the nine months ended September 30, 2020 decreased by $8.6 million to $27.5 million primarily reflecting a lower taxable income in all segments in 2020.~~

Managed Care Operating Results

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
(dollar amounts in millions)	2020			2019			2020			2019
(dollar in millions)													2021			2020			2021			2020
Operating revenues:
Medical premiums earned, net:
Medicare	$	400.7		$	367.1		$	1,160.9		$	1,065.7		$	423.1		$	400.7		$	1,233.8		$	1,160.9
Medicaid		240.9			176.3			682.9			577.7			302.2			240.9			916.7			682.9
Commercial		208.4			203.1			605.3			602.4			214.4			208.4			631.0			605.3
Medical premiums earned, net		850.0			746.5			2,449.1			2,245.8			939.7			850.0			2,781.5			2,449.1
Administrative service fees		3.1			3.6			9.8			10.9			3.9			3.1			10.0			9.8
Net investment income		5.1			5.7			14.8			17.0			8.1			5.1			19.1			14.8
Total operating revenues		858.2			755.8			2,473.7			2,273.7			951.7			858.2			2,810.6			2,473.7
Medical operating costs:
Medical claims incurred		720.3			645.2			2,025.1			1,905.9			833.8			720.3			2,449.1			2,025.1
Medical operating expenses		124.9			105.2			392.1			311.0			109.4			124.9			327.0			392.1
Total medical operating costs		845.2			750.4			2,417.2			2,216.9			943.2			845.2			2,776.1			2,417.2
Medical operating income	$	13.0		$	5.4		$	56.5		$	56.8		$	8.5		$	13.0		$	34.5		$	56.5
Additional data:
Member months enrollment:
Commercial:
Fully insured		966,906			964,321			2,920,460			2,872,836			966,002			966,906			2,871,788			2,920,460
Self-funded		324,372			356,059			981,634			1,072,510			281,153			324,372			875,844			981,634
Total commercial		1,291,278			1,320,380			3,902,094			3,945,346			1,247,155			1,291,278			3,747,632			3,902,094
Medicare		407,170			386,995			1,220,280			1,156,438			410,939			407,170			1,228,732			1,220,280
Medicaid		1,132,626			1,065,885			3,278,098			3,187,753			1,342,953			1,132,626			3,972,136			3,278,098
Total member months		2,831,074			2,773,260			8,400,472			8,289,537			3,001,047			2,831,074			8,948,500			8,400,472
Medical loss ratio		84.7	%		86.4	%		82.7	%		84.9	%		88.7	%		84.7	%		88.0	%		82.7	%
Operating expense ratio		14.6	%		14.0	%		15.9	%		13.8	%		11.6	%		14.6	%		11.7	%		15.9	%

Three Months Ended September30, ~~2020~~2021 Compared to Three Months Ended September30, ~~2019~~2020

~~Managed Care Operating Revenues~~Medical Premiums Earned, Net

~~Managed Care~~Medical premiums earned increased by ~~$103.5~~$89.7 million, or ~~13.9%~~10.6%, to ~~$850.0~~$939.7 million. This increase is principally the result of the following:

Premiums generated by the Medicare business increased by $33.6 million, or 9.2%, to $400.7 million, mostly due to an increase in enrollment by approximately 20,000 member months, primarily reflecting a more competitive product offering, and higher average premium rates due to an increase in the average membership risk score. This quarter we also lowered the estimated MLR rebate accrual as utilization of services have continued to trend up to almost-normal levels following the reduction noted in the second quarter related to the lockdown as the result of the COVID-19 pandemic.

Premiums generated by the Medicaid business increased by ~~$64.6~~$61.3 million, or ~~36.6%~~25.4%, to ~~$240.9~~$302.2 million, primarily reflecting ~~higher~~an increase in enrollment of approximately 210,000 member months ~~of approximately 67,000~~ and higher average premium ~~rates~~rates. In addition, following ~~three separate premium rate~~a reconciliation process with ASES this quarter we recognized premiums corresponding to prior periods. These increases ~~that became effective on November 1, 2019, May 1, 2020 and July 1, 2020.~~

~~Premiums generated~~were partially offset by the Commercial business increased by $5.3 million, or 2.6%, to $208.4 million, mainly reflecting higher average premium rates, an increase in fully insured member months during the quarter by approximately 3,000 and the reinstatementelimination of the HIP fee pass-through in ~~2020.~~2021.

•

Premiums generated by the Medicare business increased by $22.4 million, or 5.6%, to $423.1 million, primarily due to higher average premium rates resulting from an increase in the premium rate benchmark, higher average membership risk score and higher enrollment of approximately 3,800 members months when compared with the prior-year period.

•	Premiums generated by the Commercial business increased by $6.0 million, or 2.9%, to $214.4 million, primarily reflecting higher average premium rates. This increase was partially offset by the elimination of the HIP Fee pass-through in 2021.

Table of Contents

~~Managed Care~~Medical Claims Incurred

~~Managed Care~~Medical claims incurred increased by ~~$75.1~~$113.5 million, or ~~11.6%~~15.8%, to ~~$720.3~~$833.8 million when compared to the three months ended September 30, ~~2019.~~2020. The medical loss ratio (MLR) of the segment ~~decreased 170~~increased 400 basis points during the ~~2020~~2021 period, to ~~84.7%~~88.7%. This fluctuation is ~~primarily~~principally attributed to the net effect of the following:

Claims incurred in the Medicare business increased by $25.5 million, or 8.6%, during the 2020 period and its MLR decreased 50 basis points to 80.6%. The increase in claims incurred is the result of higher membership offset by lower MLR. The lower MLR mostly reflects the increase in the average membership risk score and lower utilization resulting from the government-enforced lockdown during the COVID-19 pandemic, partially offset by unfavorable prior-period reserve development and a more competitive product offering.

Claims incurred in the Medicaid business increased by ~~$50.9~~$61.2 million, or ~~29.0%~~27.1%, during the ~~2020~~2021 period. The MLR, at ~~94.0%~~95.2%, was ~~560~~120 basis points ~~lower~~higher than the same period last year. The increase in claims ~~incurred~~cost is ~~the result~~due to higher member months, a more normalized utilization of ~~higher membership offset by lower MLR. The lower MLR mostly reflects~~services compared to the ~~impact of the premium increases mentioned above,~~ lower utilization ~~resulting from~~experienced in the ~~government-enforced lockdown during~~prior-year quarter due to the ~~COVID-19~~ pandemic, and COVID-19-related testing and treatment costs. In addition, the ~~reinstatement~~2021 MLR was impacted by the elimination of the HIP fee pass-through in ~~2020.~~2021.

Claims incurred in the Medicare business increased by $26.1 million, or 8.1%, during the 2021 period and its MLR increased 190 basis points to 82.5%. These ~~effects were~~increases reflect a more normalized utilization of services compared to the lower utilization experienced in the prior-year quarter due to the pandemic, improved benefits in the 2021 product offerings, COVID-19-related testing and treatment costs and the waiver of medical and payment policies, partially offset by ~~unfavorable prior-period~~favorable prior period reserve ~~development.~~development in the 2021 period.

Claims incurred in the Commercial business ~~decreased~~increased by ~~$1.3~~$26.2 million, or ~~0.7%~~15.3%, during ~~2020~~2021 and its MLR ~~decreased 280~~increased 1,000 basis points, to ~~81.9%~~91.9%. The ~~lower~~higher MLR ~~mostly~~principally reflects higher claim trends, a more normalized utilization of services compared to the ~~reinstatement~~low utilization experienced in the prior-year quarter due to the pandemic, COVID-19-related testing and treatment costs and the elimination of the HIP fee pass-through in ~~2020, offset in part by unfavorable prior-period reserve development.~~2021.

~~Managed Care~~Medical Operating Expenses

~~Managed Care~~Medical operating expenses ~~increased~~decreased by ~~$19.7~~$15.5 million, or ~~18.7%~~12.4%, to ~~$124.9 million.~~$109.4 million, primarily reflecting the elimination of the HIP fee in 2021 and lower business promotion expenses driven by the COVID-19 relief efforts incurred in 2020, partially offset by higher personnel costs. The operating expense ratio ~~increased 60~~decreased 300 basis points to ~~14.6%~~11.6% in 2020. The higher operating expenses and expense ratio are mostly driven by a $12.1 million increase in the HIP fee following the reinstatement of the fee in 2020 and expenses related to providing much-needed assistance to seniors to help them manage through the COVID-19 pandemic.2021.

Nine Months Ended September30, ~~2020~~2021 Compared to Nine Months Ended September 30, ~~2019~~2020

~~Managed Care Operating Revenues~~Medical Premiums Earned, Net

~~Managed Care~~Medical premiums earned increased by ~~$203.3~~$332.4 million, or ~~9.1%~~13.6%, to ~~$2,449.1~~$2,781.5 million. This increase is principally the result of the following:

Premiums generated by the Medicare business increased by $95.2 million, or 8.9%, to $1,160.9 million, mostly due to higher average premium rates, reflecting an increase in the average membership risk score revenue in 2020, and higher member months enrollment by approximately 64,000. These increases were partially offset by the recognition of an MLR rebate related to lower utilization following the government-enforced lock-down during the COVID-19 pandemic.

Premiums generated by the Medicaid business increased by ~~$105.2~~$233.8 million, or ~~18.2%~~34.2%, to ~~$682.9~~$916.7 million, primarily reflecting higher average premium rates following ~~the~~two premium rates increases that were effective in May 2020 ~~mentioned above,~~and July 2020 and an increase in enrollment of approximately ~~90,000~~694,000 member ~~months,~~months. In addition, following a reconciliation process with ASES this year, we recognized premiums corresponding to prior periods in the ~~reinstatement~~first and third quarter of 2021. These increases were partially offset by the elimination of the HIP fee pass-through in ~~2020, and a profit-sharing accrual recorded in 2019.~~2021.

•

Premiums generated by the Medicare business increased by $72.9 million, or 6.3%, to $1,233.8 million, primarily due to higher average premium ratesreflecting an increase in the premium rate benchmark and membership risk score. Member months increased by approximately 8,500 when compared with the prior-year period.

•

Premiums generated by the Commercial business increased by $25.7 million, or 4.2%, to $631.0 million, mainly reflecting higher average premium rates in the 2021 period. This increase was partially offset by the elimination of the HIP fee pass-through in 2021 and a decrease of approximately 49,000 fully insured member months.

Premiums generated by the Commercial business increased by $2.9 million, or 0.5%, to $605.3 million. This fluctuation primarily reflects higher fully insured enrollment during the year by approximately 48,000 member months and the reinstatement of the HIP fee pass-through in 2020. These increases were partially offset by lower average premium rates and the recognition of an MLR rebate related to lower utilization following the government-enforced lockdown during the COVID-19 pandemic.

~~Table of Contents~~

~~Managed Care~~Medical Claims Incurred

~~Managed Care~~ Medical claims incurred increased by ~~$119.2~~$424.0 million, or ~~6.3%~~20.9%, to ~~$2,025.1~~$2,449.1 million when compared to the nine months ended September 30, ~~2019.~~2020. The MLR of the segment ~~decreased 220~~increased 530 basis points during ~~2020,~~2021, to ~~82.7%~~88.0%. This fluctuation is ~~primarily~~principally attributed to the net effect of the following:

Claims incurred in the ~~Medicare~~Medicaid business increased by ~~$64.3~~$211.7 million, or ~~7.4%~~33.4%, during ~~the 2020 period~~2021 and its MLR decreased ~~120~~60 basis points, to ~~80.2%~~92.1%. The increase in claim cost is due to higher member months, improved benefits in product offerings, and unfavorable prior-period reserve development, partially offset by the lower MLR. The lower MLR mostly reflects lower utilization of services as the result of the government-enforced lockdown during the COVID-19 pandemic, which was in force from mid-March to mid-June, when it was significantly reduced.

Claims incurred in the Medicaid business increased by $93.2 million, or 17.3%, during 2020 and its MLR decreased 70 basis points, to 92.7%. The increase in claim cost is due to higher claims trend and member months and an unfavorable prior-period reserve development in 2020, partially offset by the lower MLR.months. The lower MLR reflects the ~~higher~~ premium rates inincreases and prior period premiums recognized this year, partially offset by COVID-19-related testing and treatment costs, the ~~2020 period as well as~~waiver of medical and payment policies and the ~~reinstatement~~elimination of the HIP fee pass-through in ~~2020. In addition,~~2021.

Table of Contents

Claims incurred in the ~~2020~~Medicare business increased by $118.3 million, or 12.7%, during the 2021 period and its MLR increased 490 basis points, to 85.1%. The higher MLR reflects ~~lower~~a more normalized utilization of services ascompared to the ~~result~~low utilization experienced in the prior-year period due to the pandemic, improved benefits in the 2021 product offerings, COVID-19-related testing and treatment costs and the waiver of medical and payment policies. These increases were partially offset by favorable prior period reserve development in the ~~government-enforced lockdown during the COVID-19 pandemic.~~2021 period.

Claims incurred in the Commercial business ~~decreased~~increased by ~~$38.3~~$94.0 million, or ~~7.7%~~20.4%, during ~~2020~~2021 and its MLR ~~decreased 670~~increased 1,180 basis points, to ~~76.1%~~87.9%. These ~~decreases mostly~~increases primarily result from ~~lower~~higher claim trends, a more normalized utilization ~~related~~of services compared to low utilization in the prior year due to the ~~COVID-19 lockdown~~pandemic, COVID-19-related testing and treatment costs, the waiver of medical and payment policies and the ~~impact in the MLR of the reinstatement~~elimination of the HIP fee pass-through in 2020. These decreases were partially offset by the impact of the previously mentioned estimated premium rebates, higher fully insured enrollment and an unfavorable change in prior-period reserve developments when compared to the 2019 period.2021.

~~Managed Care~~Medical Operating Expenses

~~Managed Care~~Medical operating expenses ~~increased~~decreased by ~~$81.1~~$65.1 million, or ~~26.1%~~16.6%, to ~~$392.1 million. The operating expense ratio increased 210 basis points to 15.9% in 2020. The higher operating expenses mostly result from~~$327.0 million, primarily reflecting the ~~reinstatement in 2020~~elimination of the HIP fee ~~of $43.4 million,~~in 2021, the ~~recognition~~accrual in prior year of a contingency reserve related to a legal proceeding and lower business promotion expenses ~~related to providing much-needed assistance to seniors to help them manage through~~driven by the COVID-19 ~~pandemic,~~relief efforts incurred in 2020, offset in part by ~~a decrease~~an increase in ~~the provision for doubtful accounts and professional fees.~~personnel costs. The operating expense ratio decreased 420 basis points to 11.7% in 2021.

Table of Contents

Life Insurance Segment Operating Results

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
(dollar amounts in millions)	2020			2019			2020			2019
(dollar in millions)													2021			2020			2021			2020
Operating revenues:
Premiums earned, net:
Premiums earned	$	52.6		$	47.3		$	152.2		$	139.7		$	57.9		$	52.6		$	170.0		$	152.2
Assumed earned premiums		0.1			0.6			0.1			1.6			-			0.1			-			0.1
Ceded premiums earned		(2.6	)		(2.1	)		(7.4	)		(6.2	)		(2.8	)		(2.6	)		(8.4	)		(7.4	)
Premiums earned, net		50.1			45.8			144.9			135.1			55.1			50.1			161.6			144.9
Net investment income		6.9			6.7			20.6			20.0			6.8			6.9			19.9			20.6
Total operating revenues		57.0			52.5			165.5			155.1			61.9			57.0			181.5			165.5
Operating costs:
Policy benefits and claims incurred		30.6			25.9			78.6			79.2			30.8			30.6			89.8			78.6
Underwriting and other expenses		20.7			20.0			66.7			58.4			25.5			20.7			73.9			66.7
Total operating costs		51.3			45.9			145.3			137.6			56.3			51.3			163.7			145.3
Operating income	$	5.7		$	6.6		$	20.2		$	17.5		$	5.6		$	5.7		$	17.8		$	20.2
Additional data:
Loss ratio		61.1	%		56.6	%		54.2	%		58.6	%		55.9	%		61.1	%		55.6	%		54.2	%
Operating expense ratio		41.3	%		43.7	%		46.0	%		43.2	%		46.3	%		41.3	%		45.7	%		46.0	%

Three Months Ended September30, ~~2020~~2021 Compared to Three Months Ended September30, ~~2019~~2020

Operating Revenues

Premiums earned, net increased by ~~$4.3~~$5.0 million, or ~~9.4%~~10.0%, to ~~$50.1~~$55.1 million, ~~mainly~~primarily as the result of higher sales across all lines of business, ~~mainly~~particularly in the ~~Cancer,~~ Individual Life and ~~Group~~Cancer lines of ~~business, aided by~~business. Last year premium growth slowed down due to the ~~acquisition of an insurance portfolio during the second quarter of 2020.~~COVID-19 government-enforced lockdown and restrictions, which severely affected sales and increased policy cancellations.

Policy Benefits and Claims Incurred

Policy benefits and claims incurred increased by ~~$4.7~~$0.2 million, or ~~18.1%~~0.7%, to ~~$30.6~~$30.8 million, mostly as the result of higher actuarial reserves following an increase in collections and policy retention efforts that resulted in the reinstatement of most policies that were cancelled during the second quarter of 2020 due to the COVID-19 lockdown. As a result,while the segment’s loss ratio ~~increased 450~~decreased 520 basis points, to ~~61.1%.~~55.9% following the segment’s increased premiums.

Underwriting and Other Expenses

Underwriting and other expenses increased ~~$0.7~~$4.8 million, or ~~3.5%~~23.2%, to ~~$20.7~~$25.5 million, ~~while the segment’s operating~~primarily reflecting an increase in commissions expense ~~ratio decreased 240 basis points to 41.3%.~~

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019~~

~~Operating Revenues~~

~~Premiums earned, net increased by $9.8 million, or 7.3%, to $144.9 million, mainly as the result of~~resulting from higher sales ~~across all lines of business, mainly in the Individual Life and Cancer lines of business aided by the acquisition of an insurance portfolio~~ during the ~~second quarter of 2020.~~

~~Policy Benefits~~period, and ~~Claims Incurred~~

Policy benefits and claims incurred decreased by $0.6 million, or 0.8%, to $78.6 million, mostly as the result of a slowdown in claim trends in the Cancer line of business due to the COVID-19 lockdown. As a result, the segment’s loss ratio decreased 440 basis points to 54.2%.

~~Table of Contents~~

~~Underwriting and Other Expenses~~

~~Underwriting and other expenses increased $8.3 million, or 14.2%, to $66.7 million, mostly reflecting~~ higher amortization of deferred acquisition costs. The segment’s operating expense ratio increased ~~280~~500 basis points, to ~~46.0%~~46.3%.

Nine Months Ended September30, 2021 Compared to Nine Months Ended September30, 2020

Operating Revenues

Premiums earned, net increased by $16.7 million, or 11.5%, to $161.6 million, primarily as the result of increased persistency and new sales across all lines of business, particularly in the Individual Life, Cancer and Group Life lines of business. In addition, during the second quarter of 2020, this segment acquired an insurance portfolio that contributed additional premiums in the Cancer and Group Life lines of business.

Policy Benefits and Claims Incurred

Policy benefits and claims incurred increased by $11.2 million, or 14.2%, to $89.8 million, primarily as the result of higher actuarial reserves, due to improved persistency during the period, and higher benefits paid driven by the lower volume of claim submissions in the prior year following the government-enforced lockdown due to COVID-19 pandemic. As a result, the segment’s loss ratio increased 140 basis points, to 55.6%.

Table of Contents

Underwriting and Other Expenses

Underwriting and other expenses increased $7.2 million, or 10.8%, to $73.9 million, primarily reflecting an increase in commissions expense resulting from higher sales during the period and higher amortization of deferred acquisition costs. The segment’s operating expense ratio decreased 30 basis points to 45.7%.

Property and Casualty Insurance Operating Results

	Three months ended September 30,						Nine months ended September 30,						Three months ended September 30,						Nine months ended September 30,
(dollar amounts in millions)	2020			2019			2020			2019
(dollar in millions)													2021			2020			2021			2020
Operating revenues:
Premiums earned, net:
Premiums written	$	44.0		$	40.0		$	115.6		$	107.4		$	46.0		$	44.0		$	123.8		$	115.6
Premiums ceded		(14.9	)		(12.3	)		(45.6	)		(36.0	)		(14.8	)		(14.9	)		(44.2	)		(45.6	)
Change in unearned premiums		(5.2	)		(4.0	)		(3.1	)		(6.5	)		(4.9	)		(5.2	)		(2.7	)		(3.1	)
Premiums earned, net		23.9			23.7			66.9			64.9			26.3			23.9			76.9			66.9
Net investment income		2.2			2.5			6.6			7.4			2.5			2.2			6.8			6.6
Total operating revenues		26.1			26.2			73.5			72.3			28.8			26.1			83.7			73.5
Operating costs:
Claims incurred		10.4			10.2			27.8			28.3			13.5			10.4			34.6			27.8
Underwriting and other expenses		11.3			9.4			34.8			29.1			13.3			11.3			41.3			34.8
Total operating costs		21.7			19.6			62.6			57.4			26.8			21.7			75.9			62.6
Operating income	$	4.4		$	6.6		$	10.9		$	14.9		$	2.0		$	4.4		$	7.8		$	10.9
Additional data:
Loss ratio		43.5	%		43.0	%		41.6	%		43.6	%		51.3	%		43.5	%		45.0	%		41.6	%
Operating expense ratio		47.3	%		39.7	%		52.0	%		44.8	%		50.6	%		47.3	%		53.7	%		52.0	%

Three Months Ended September30, ~~2020~~2021 Compared to Three Months Ended September30, ~~2019~~2020

Operating Revenues

Total premiums written increased by ~~$4.0~~$2.0 million, or ~~10.0%~~4.5%, to ~~$44.0~~$46.0 million, ~~mainly~~primarily driven by higher premiums in Personal Package, Commercial Liability, Commercial Auto ~~Personal Package~~ and Commercial Property ~~policies,~~products, partially offset by a decrease in Commercial Package ~~policies.~~products.

~~The premiums ceded to reinsurers~~Claims Incurred

Claims incurred increased by ~~$2.6~~$3.1 million, or ~~21.1%~~29.8%, to $13.5 million, primarily resulting from lower losses in the 2020 period in the segment’s on-going business as a result of the two-month government-enforced lockdown because of the COVID-19 pandemic and an increase in ~~premiums written and the impact of an unfavorable reinsurance premium~~loss adjustment ~~in the current period when compared~~expenses related to ~~the same period last year.~~

The change in unearned premiums is $1.2 million higher than the same period in the prior year mostly resulting from the higher volume of premiums, and the effect of changes in the current year’s reinsurance program.

~~Claims Incurred~~

~~Claims incurred increased by $0.2 million, or 2.0%, to $10.4 million, and as~~catastrophe claims. As a result, the loss ratio increased 50780 basis points, ~~from 43.0%~~ to ~~43.5%.~~51.3% during this period.

Underwriting and Other Expenses

Underwriting and other operating expenses increased by ~~$1.9~~$2.0 million, or ~~20.2%~~17.7%, to ~~$11.3~~$13.3 million ~~mostly~~primarily due to higher net commission expense following the increase in net premiums earned. The net commission expense for the current period iswas also unfavorably impacted by a lower capitalization of deferred acquisition costs. The operating expense ratio was ~~47.3%~~50.6%, ~~760~~330 basis points higher than ~~the~~ prior year.

Nine Months Ended September30, ~~2020~~2021 Compared to Nine Months Ended September30, ~~2019~~2020

Operating Revenues

Total premiums written increased by $8.2 million, or ~~7.6%~~7.1%, to ~~$115.6~~$123.8 million, ~~mostly~~primarily driven by higher premiums, particularly in Personal Package, Commercial Property, Commercial Auto and Commercial Liability products, partially offset by a decrease in Commercial Package products.

The premiums ceded to reinsurers ~~increased~~decreased by ~~$9.6~~$1.4 million, or ~~26.7%~~3.1%, ~~mostly~~primarily due to ~~approximately~~ $3.0 million of reinsurance reinstatement premiums in 2020 following the losses recorded after the earthquakes in the southwest region of Puerto Rico in January 2020, ~~as well as higher premiums written and the impact of~~offset in part by an ~~unfavorable reinsurance premium adjustment~~increase in the ~~current period when compared to the same period last year.~~cost of catastrophe reinsurance protection.

Table of Contents

The lower change in unearned premiums had a favorable impact on premiums earned of $3.4 million when compared to prior year, mostly reflecting higher premiums written and the effect of changes in the current year’s reinsurance program.

Claims Incurred

Claims incurred ~~decreased~~increased by ~~$0.5~~$6.8 million, or ~~1.8%~~24.5%, to ~~$27.8~~$34.6 million ~~mostly~~primarily resulting from lower losses in the 2020 period because of ~~better~~the COVID-19 pandemic and an increase in loss ~~experience~~adjustment expenses related to catastrophe claims, offset in ~~the segment’s on-going business from the effects of COVID-19 measures and lockdown, partially offset~~part by the recognition of $5.0 million of earthquake losses after the January 2020 events. As a result, the loss ratio ~~improved~~increased by ~~200~~340 basis points, to ~~41.6%~~45.0% during this period.

Underwriting and Other Expenses

Underwriting and other operating expenses increased by ~~$5.7~~$6.5 million, or ~~19.6%~~18.7%, to ~~$34.8~~$41.3 million, mostly because of higher net commission expense following the increase in net premiums earned. Current year net commission expense iswas also affected by a lower capitalization of deferred acquisition costs. The operating expense ratio was ~~52.0%~~53.7%, ~~720~~170 basis points higher than ~~the~~ prior year.

Liquidity and Capital Resources

Cash Flows

A summary of our major sources and uses of cash for the periods indicated is presented in the following table:

	Nine months ended September 30,						Nine months ended September 30,
(dollar amounts in millions)	2020			2019
(dollar in millions)							2021			2020
Sources (uses) of cash:
Cash provided by (used in) operating activities	$	223.7		$	(3.5	)
Net (purchases) proceeds of investment securities		(211.7	)		0.7
Cash provided by operating activities							$	100.7		$	223.7
Net purchases of investment securities								(63.2	)		(211.7	)
Net capital expenditures		(52.5	)		(14.7	)		(16.9	)		(52.5	)
Capital contribution on equity method investees		(7.1	)		-			-			(7.1	)
Proceeds from long-term borrowings		30.9			-			-			30.9
Net change in short-term borrowings		28.5			-			(30.0	)		28.5
Payments of long-term borrowings		(2.8	)		(2.4	)		(3.4	)		(2.8	)
Proceeds from policyholder deposits		21.6			15.1			12.6			21.6
Surrenders of policyholder deposits		(12.8	)		(16.5	)		(8.7	)		(12.8	)
Repurchase and retirement of common stock		(14.9	)		-			-			(14.9	)
Other		16.9			2.7			20.6			16.9
Net increase (decrease) in cash and cash equivalents	$	19.8		$	(18.6	)
Net increase in cash and cash equivalents							$	11.7		$	19.8

The ~~increase~~decrease of approximately ~~$227.2~~$123 million in net cash provided by operating activities is mostly due to higher claims paid in the ~~result of higher premium collections, partially~~Managed Care segments, offset in part by higher premiums collections, lower income taxes paid, and lower cash paid to suppliers and ~~employees and income taxes paid.~~employees.

~~Net (purchases) proceeds from investment~~The net purchases of investments in securities are part of our asset/liability management strategy.

On June 19, 2020, TSM entered into a $31.4 million Credit Agreement (the Loan) with a commercial bank in Puerto Rico. The proceeds of the Loan were used by the Company to partially finance the acquisition of a building, and the acquisition is included in the capital expenditures in the statement of cash flows. For further details, see Note 9 to the unaudited condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q.

The ~~increase~~decrease in capital contribution reflects capital contributions made in the 2020 period in exchange for a participation in equity method investees.

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The net change in short-term borrowings represents ~~the proceeds from~~repayments of short-term facilities available to address timing differences between cash receipts and disbursements.

The fluctuation in other sources of cash principally reflects the $3.8 million change in outstanding checks in excess of bank balances.

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Stock Repurchase Program

In August 2017 the Company’s Board of Directors authorized a $30.0 million repurchase program of its Class B common stock and in February 2018 the Company’s Board of Directors authorized a $25.0 million expansion of this program. In October 2019 the Company’s Board of Directors authorized an additional expansion to this program increasing its remaining balance up to a total of $25.0 million, effective November 2019. Repurchases were conducted through open-market purchases of Class B shares only, in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the Company repurchased and retired under this program ~~952,820~~577,447 shares at an average per share price of ~~$15.72,~~$15.57, for an aggregate cost of ~~$15.0 million, completing the amount available for repurchases under this program.~~$9.0 million. The program was completed in 2020.

~~The fluctuation in other sources of cash mostly reflects the $13.0 million change in outstanding checks in excess of bank balances.~~

Financing and Financing Capacity

Long-Term Borrowings

TSM has a $35.5 million credit agreement (the Loan) with a commercial bank in Puerto Rico. The agreement consists of three term loans: (i) Term Loan A in the principal amount of $11.2 million, (ii) Term Loan B in the principal amount of $20.2 million, and (iii) Term Loan C in the principal amount of $4.1 million. Term Loan A matures in October 2023 while Term Loans B and C mature in January 2024. ~~Term Loan A was used to refinance a previous $41.0 million secured loan payable with the same commercial bank.~~ Pursuant to the credit agreement, interest is payable on the outstanding balance of the ~~loan~~Loan at the following annual rate: (i) 100 basis points over LIBOR for Term Loan A, (ii) 275 basis points over LIBOR for Term Loan B, and (iii) 325 basis points over LIBOR for Term Loan C. The loan includes certain financial and non-financial covenants, which are customary for this type of facility, including negative covenants imposing certain restrictions on the Company’s business. Failure to meet these covenants may trigger the accelerated payment of the outstanding balance. The Company was not in compliance with the Debt Service Coverage Ratio covenant of the credit agreement during the quarter ended September 30, 2021. As of September 30, 2021 and December 31, 2020, ~~we are in compliance~~the outstanding balance of the debt was $20,217 and $22,644, respectively. On November 1, 2021, the financial banking institution waived the Company’s obligation to comply with ~~these covenants.~~this covenant for the quarter ended September 30, 2021 and quarters ending on December 31, 2021 and March 31, 2022.

As detailed above, the three term loans under our credit agreement with a commercial bank in Puerto Rico bear interest rates in relation to 1-month and 3-month LIBOR, a widely used interest rate benchmark.

In July 2017, the Financial Conduct Authority (FCA) in the United Kingdom, which regulates LIBOR, announced that it would phase out this benchmark by the end of 2021. In response, the U.S. Federal Reserve convened the Alternative Reference Rates Committee (ARRC), a working group comprised of private market participants, to ensure a transition to a new reference rate.

The ARRC has recommended the use of the Secured Overnight Financing Rate (SOFR), which is an index based on the cost of borrowing overnight cash collateralized by U.S. Treasury securities. Currently, there is no definitive information regarding the future use of SOFR as a widely accepted benchmark or any other replacement rate.

If LIBOR rates are no longer available and we have not agreed with the bank on a replacement rate, we are subject to an alternative benchmark rate, as defined in the credit agreement of our long-term bank loan. At this time we cannot assess the impact, if any, on the interest paid on this loan. We are in regular contact with the lender about this subject, but at this point the bank has not yet determined a course of action. Alternatively, the loan could be refinanced by us without prepayment penalties.

We will closely follow any new developments regarding the LIBOR ~~phase-out.~~phase out.

On June 19, 2020, TSM entered into a $31.4 million Credit Agreement with a commercial bank in Puerto Rico. The proceeds were used by the Company to partially finance the acquisition of ~~the Building.~~a building. The Credit Agreement is guaranteed by a mortgage over the ~~Building,~~building, a pledge of all collateral related to the ~~Building~~building and an assignment of the rents collected for the lease of office space in the ~~Building.~~building. Approximately 64.25% of the acquired ~~Building~~building is currently leased to third parties. The Company ~~expects to move within~~is in the ~~next year~~process of moving some of its offices currently leased to third parties to the new ~~Building~~building and ~~together with the leased space~~expects to fully occupy the new ~~facilities.~~facilities together with the leased space. Pursuant to the Credit Agreement, interest is payable on the outstanding principal balance of the Loan at an annual rate equal to the Prime Rate. ~~Interest shall be paid on a monthly basis which~~Monthly interest payments commenced on July 1, 2020 and will continue to be paid each month until the principal of the Loan has been paid in full.

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The Company may, at its option and at any time, upon notice as specified in the Credit Agreement, prepay prior to maturity, all, or any part of the ~~Term~~ Loan upon the payment of a penalty fee of the outstanding principal amount at the time of the prepayment of 3% during the first year, 2% during the second year, ~~and~~ 1% during the third year and thereafter at par.

The Credit Agreement includes certain customary financial and non-financial covenants, including negative covenants imposing certain restrictions on the Corporation’s business. The Company was in compliance with these covenants as of September 30, ~~2020.~~2021.

~~See~~For further details, see Note 913, Borrowings, of the Notes to ~~the unaudited condensed consolidated interim financial statements included~~Consolidated Financial Statements in ~~this Quarterly~~Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form ~~10-Q~~10-K for ~~a summary of long-term borrowings.~~the year ended December 31, 2020.

Short-Term Facilities

We have several short-term facilities available to address timing differences between cash receipts and disbursements, consisting of collateralized advances from the Federal Home Loan Bank of New York (FHLBNY) and a revolving credit facility. See Note ~~9 to~~8 of the unaudited condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for details of available short-term facilities.

We anticipate that we will have sufficient liquidity to support our currently expected needs.

For further details, see Note 13, Borrowings, of the Notes to the Consolidated Financial Statements, included in “Item 8, Financial Statements and Supplementary Data”, of our Annual Report on Form 10-K for the year ended December 31, 2019.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

~~Item 3.~~ ~~Quantitative and Qualitative Disclosures about Market Risk~~

We are exposed to certain market risks that are inherent in our financial instruments, which arise from transactions entered into in the normal course of business. We have exposure to market risk mostly in our investment activities. For purposes of this disclosure, “market risk” is defined as the risk of loss resulting from changes in interest rates and equity prices. No material changes have occurred in our exposure to financial market risks since December 31, ~~2019.~~2020. A discussion of our market risk is incorporated by reference to ~~“Item~~Item 7A. Quantitative and Qualitative Disclosures about Market ~~Risk”~~Risk included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Item 4.

Controls and Procedures

~~Item 4.~~ ~~Controls and Procedures~~

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, ~~management,~~Management, under the supervision and with the participation of the ~~chief executive officer~~President and ~~chief financial officer,~~Chief Executive Officer and Executive Vice President and Chief Financial Officer, conducted an evaluation of the effectiveness of the “disclosure controls and procedures” (as such term is defined under Exchange Act Rule 13a-15(e)) of the Corporation and its subsidiaries. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to ~~management,~~Management, including the ~~chief executive officer~~President and ~~chief financial officer,~~Chief Executive Officer and Executive Vice President and Chief Financial Officer, to allow timely decisions regarding required disclosures. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility that judgments in decision-making can be faulty, and breakdowns as a result of simple errors or ~~mistakes.~~mistake. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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Based on this evaluation, our ~~chief executive officer~~President and ~~chief financial officer~~Chief Executive Officer and Executive Vice President and Chief Financial Officer have concluded that as of September 30, ~~2020,~~2021, which is the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective to a reasonable level of assurance.

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There were no significant changes in our disclosure controls and procedures, or in factors that could significantly affect internal controls, subsequent to the date the ~~chief executive officer~~President and ~~chief financial officer~~Chief Executive Officer and Executive Vice President and Chief Financial Officer completed the evaluation referred to above.

Changes in Internal Controls Over Financial Reporting

No changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the fiscal quarter ended September 30, ~~2020~~2021 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

P~~art~~Part II – Other Information

Item 1.

Legal Proceedings

~~Item 1. Legal Proceedings~~

For a description of legal proceedings that have experienced significant developments during this quarter, see Note 1714 to the unaudited condensed consolidated interim financial statements included in this quarterly report on Form 10-Q.

Item 1A.

Risk Factors

~~Item 1A. Risk Factors~~

For a description of our risk factors, see Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The following risk factor was ~~updated~~added during the three months ended September 30, ~~2020.~~2021.

The ~~COVID-19 pandemic and local, state and federal governments’ response~~conditions to Merger may not be met, or the ~~pandemic~~Merger Agreement may ~~have a material adverse effect on our business, financial condition and results of operations.~~

On March 11, 2020, the World Health Organization characterized the outbreak of a novel strain of coronavirus (COVID-19) as a global pandemic. In response, the Puerto Rico Governor issued a stay at home order (as amended and extended, the “Order”) from March 15, 2020 until June 16, 2020. The Order required the closure of non-essential businesses for the same period of time. On May 1, 2020, the Governor issued a new order providing for the gradual re-opening of the economy beginning on May 4, 2020, provided that the risk of contagion does not increase significantly. The Governor has issued several other executive orders establishing the rules to continue the gradual re-opening of the economy, the latest ofbe terminated, which ~~is effective until November 13, 2020.~~

At this point it is not possible to reliably estimate the length or severity of this outbreak, the length and effectiveness of government and private sector mitigation measures, and other variables that will determine the ultimate financial impact of the pandemic on the Company. Additionally, the situation is rapidly developing and evolving. We are therefore unable to reliably estimate the ultimate impact of the COVID-19 pandemic on the Company. However, certain risks discussed in our 2019 Annual Report on Form 10-K may increase or materialize. We are closely monitoring the development of the situation to assess its impact on our business. New sales were affected in all our segments and lines of business during the lockdown given that sales functions of all our businesses were not considered essential under the Order and therefore had to be performed remotely. Even though the government-mandated lockdown has been relaxed and most of our sales force has returned to our offices, new sales continue to be affected as social distancing measures continue to restrict certain sales activities. We have experienced a temporary decrease in utilization caused by postponement or cancelation of elective services and medical appointments driven by the Order, which could cause our MLR to temporarily drop below the Affordable Care Act (ACA) and Medicare required ratios. Conversely, the pandemic could result in the Merger not being completed and a ~~material increase~~decline in ~~medical claims~~ the share price of the Company, as COVID-19 cases increase and the return of deferred utilization. In addition, the postponement or cancellation of medical appointments, treatments and evaluations in our High Cost High Needs (HCHN) Medicaid membership during the pandemic has and may continue to affect our ability to provide qualifying encounter or utilization data to certify themwell as ~~such, which has and may continue to result in assignment of such members to a different rate cell with lower premium payments and retroactive premium adjustments by ASES. See~~ Item 1A. Risk Factors – Risks Relating to the Regulation of Our Industry– “ASES’s risk adjustment payment system and payment structure, and its dependence on scarce or unavailable data, make our revenue and profitability difficult to predict and could result in material retroactive adjustments to our results of operations.”

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Furthermore, COVID-19 related federal and state legislation and regulation may adversely impact our business, financial condition and results of operations. For example, the U.S. and Puerto Rico legislatures have enacted or are contemplating measures requiring health care insurers to cover and/or waive pre-authorization and cost-sharing for COVID-19 related testing, vaccines, treatment or services, which may adversely affect our profitability. In addition, any legislation requiring insurance companies to make advance payments to providers not linked to services previously provided increases our credit risk and could have a material impact on our financial condition and results of operations.

~~See Item 1A.~~ Risk Factors – Risks Related to our Business – “Our inability to contain managed care costs may adversely affect our business and profitability” included in our Annual Report on Form 10-K for the year ended December 31, 2019.

~~Our Property & Casualty business interruption policies include an exclusion~~If the Company fails to obtain shareholder approval of ~~coverage due~~the Merger Agreement, or fails to ~~virus~~obtain the required regulatory or ~~bacteria. However, there~~Blue Cross and Blue Shield Association approvals, or other conditions to the closing of the Merger are ~~federal~~not met, the Merger may not be consummated or may be significantly delayed, which could result in a decline in the price of our shares and local legislative efforts to retroactively eliminate such exclusions or otherwise require property and casualty insurers to cover COVID-19 losses under their business interruption policies. While we believe this type of legislative measure could ~~be challenged on constitutional and other grounds, if successfully implemented, it would~~ have a material and adverse effect on our ~~Property~~results of operations, financial position and ~~Casualty Insurance segment. With respect~~cash flows. The Merger Agreement provides for the payment of a termination fee of $17,985,000 by the Company should the Merger Agreement be terminated pursuant to ~~our Life segment, there is a risk that~~certain provisions. Should the ~~pandemic~~Merger Agreement be terminated pursuant to an event triggering the payment of the termination fee by the Company, the termination of the Merger Agreement and the payment of such termination fee could result in a ~~higher number of deaths,~~material and ~~therefore a higher number of claims for death benefits than assumed in our actuarial models.~~

~~See Item 1A.~~ ~~Risk Factors – Risks Related to our Business – “Large-scale natural disasters may have a material~~ adverse effect on our ~~business, financial condition and~~ results of ~~operations” included in our Annual Report on Form 10-K for the year ended December 31, 2019.~~operations, financial position and cash flows.

Finally, while estimates vary, the COVID-19 pandemic is widely considered to have had and continue to have a significant effect on the Puerto Rico, U.S. and global economies. Financial market volatility caused by the pandemic may decrease the value of our investment portfolios, including our pension plan asset portfolio. Furthermore, as the financial capacity of our customers is adversely affected, we may experience delinquency in premium payments and ultimately a decrease in insured customers in our commercial line of business and premiums earned, net, or other adverse effects. See Item 1A. ~~Risk Factors – Risks Related to our Business – “Our investment portfolios are subject to varying economic and market conditions.”~~ ~~See also~~ ~~“The securities and credit markets could experience extreme volatility and disruption.”~~ ~~and~~ “Our business is geographically concentrated in Puerto Rico and weakness in the economy and the fiscal health of the government has adversely impacted and may continue to adversely impact us.” included in our Annual Report on Form 10-K for the year ended December 31, 2019.

These and other risks, some of which we may be unable to identify at this time due to the evolving and highly uncertain nature of this event, could adversely impact our business, financial condition and results of operations.

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

Purchases of Equity Securities by the Issuer

The following table presents information related to our repurchases of common stock for the period indicated:

(Dollar amounts in millions, except per share data) Total Number of Shares Purchased (1) Average Price Paid per Share
Total Number of
Shares Purchased as Part of Publicly Announced Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs

July 1, 2020 to July 31, 2020 - $ - - $ -
August 1, 2020 to August 31, 2020 - - - -
September 1, 2020 to September 30, 2020 14,040 18.85 - -

(Dollar amounts in millions, except per share data)	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs

July 1, 2021 to July 31, 2021		-	$	-		-	$	-
August 1, 2021 to August 31, 2021		-		-		-		-
September 1, 2021 to September 30, 2021		2,063		21.90		-		-

(1) Represents shares repurchased and retired as the result of non-cash tax witholdings upon vesting of shares of participants under the Company’s equity compensation plans. In September 2021, 2,063 shares were repurchased and retired as the result of non-cash tax witholdings upon vesting of shares.

Item 3.

Defaults Upon Senior Securities

~~Item 3. Defaults Upon Senior Securities~~

Not applicable.

Item 4.

Mine Safety Disclosures

~~Item 4. Mine Safety Disclosures~~

Not applicable.

Item 5.

Other Information

~~Item 5. Other Information~~

Not applicable.

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Item 6.

Exhibits

~~Item 6. Exhibits~~

	Exhibits	Description

	10.1*	Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the Provision of Physical and Behavioral Health Services Under the Government Health Plan dated as of ~~August 28, 2020.~~September 9, 2021.

	10.2*	Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the Provision of Physical & Behavioral Health Services under the ~~Government Health Plan dated as of September 9, 2020.~~

10.3*	~~Amendment to the contract between Administración de Seguros de Salud de Puerto Rico (ASES) and Triple-S Salud, Inc., to administer the~~ Provision of Physical &and Behavioral Health Services ~~under~~Under the Government Health Plan dated as of September ~~24, 2020.~~29, 2021.

	11	Statement re computation of per share earnings; an exhibit describing the computation of the earnings per share for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 has been omitted as the detail necessary to determine the computation of earnings per share can be clearly determined from the material contained in Part I of this Quarterly Report on Form 10-Q.

	31.1*	Certification of the President and Chief Executive Officer required by Rule 13a-14(a)/15d-14(a).

	31.2*	Certification of the Executive Vice President and Chief Financial Officer required by Rule 13a-14(a)/15d-14(a).

	32.1*	Certification of the President and Chief Executive Officer required pursuant to 18 U.S.C Section 1350.

	32.2*	Certification of the Executive Vice President and Chief Financial Officer required pursuant to 18 U.S.C Section 1350.

All other exhibits for which provision is made in the applicable accounting regulation of the United States Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

* Filed herein.

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SIGNATURES~~SIGNATURES~~

Pursuant to the requirements of the United States Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Triple-S Management Corporation

			Registrant

Date:	November ~~6, 2020~~4, 2021	By:	/s/ Roberto García-Rodríguez
					Roberto García-Rodríguez
				President and Chief Executive Officer

Date:	November ~~6, 2020~~4, 2021	By:	/s/ ~~Juan~~Victor J. ~~Román-Jiménez~~Haddock-Morales
					~~Juan~~Victor J. ~~Román-Jiménez~~	Haddock-Morales
				Executive Vice President and Chief Financial Officer

5347

Puerto Rico		66-0555678
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1441 F.D. Roosevelt Avenue
San Juan, Puerto Rico		00920
(Address of principal executive offices)		(Zip code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, ~~Class B,~~ $1.00 par value	GTS	New York Stock Exchange (NYSE)

Large accelerated filer ☑☐	Accelerated filer ☐☑
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

Title of each class	Outstanding at September 30, ~~2020~~2021

Common Stock, ~~Class B,~~ $1.00 par value	~~23,430,222~~23,794,612

Part I – Financial Information	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3428
Cautionary Statement Regarding Forward-Looking Information	3428
Overview	3428
Recent Developments	3529
Recent Accounting Standards	3833
Managed Care Membership	3833
Consolidated Operating Results	3934
Managed Care Operating Results	4136
Life Insurance Operating Results	4439
Property and Casualty Insurance Operating Results	4540
Liquidity and Capital Resources	4641
Item 3. Quantitative and Qualitative Disclosures about Market Risk	4843
Item 4. Controls and Procedures	4843
Part II – Other Information	4944
Item 1. Legal Proceedings	4944
Item 1A. Risk Factors	4944
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5145
Item 3. Defaults Upon Senior Securities	5145
Item 4. Mine Safety Disclosures	5145
Item 5. Other Information	5145
Item 6. Exhibits	5246
SIGNATURES	5347

	September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
Assets
Investments and cash:
Fixed maturities available for sale, at fair value	$	1,362,000		$	1,242,883
Fixed maturities held to maturity, at amortized cost		1,867			1,860
Fixed-maturities available-for-sale, at fair value							$	1,290,234		$	1,342,465
Fixed-maturities held-to-maturity, at amortized cost								1,870			1,867
Equity investments, at fair value		389,078			287,525			518,765			404,328
Other invested assets, at net asset value		110,765			100,508			119,396			114,905
Policy loans		10,621			10,861			10,480			10,459
Cash and cash equivalents		129,603			109,837			122,709			110,989
Total investments and cash		2,003,934			1,753,474			2,063,454			1,985,013
Premiums and other receivables, net		546,959			567,692			496,477			488,840
Deferred policy acquisition costs and value of business acquired		243,663			234,885			255,010			248,325
Property and equipment, net		130,220			88,588			137,762			131,974
Deferred tax asset		68,637			77,294			111,206			119,534
Goodwill		28,614			28,599			28,614			28,614
Other assets		98,260			68,294			99,143			86,118
Total assets	$	3,120,287		$	2,818,826		$	3,191,666		$	3,088,418
Liabilities and Stockholders' Equity
Liabilities and Stockholders’ Equity
Claim liabilities	$	786,920		$	709,258		$	798,508		$	787,102
Liability for future policy benefits		408,116			386,017			438,008			414,997
Unearned premiums		95,608			93,301			101,331			97,481
Policyholder deposits		202,663			189,120			214,912			206,109
Liability to Federal Employees' Health Benefits and Federal Employees' Programs		57,874			47,781
Liability to Federal Employees’ Health Benefits and Federal Employees’ Programs								35,358			45,109
Accounts payable and accrued liabilities		387,465			325,761			389,918			332,699
Deferred tax liability		12,254			10,257			13,533			15,046
Short-term borrowings		82,500			54,000			0			30,000
Long-term borrowings		53,836			25,694			49,498			52,751
Liability for pension benefits		23,364			34,465			133,659			139,611
Total liabilities		2,110,600			1,875,654			2,174,725			2,120,905
Stockholders’ equity:
Triple-S Management Corporation stockholders' equity
Common stock Class B, $1 par value. Authorized 100,000,000 shares; issued and outstanding 23,430,222 and 23,799,633 shares at September 30, 2020 and December 31, 2019, respectively		23,430			23,800
Triple-S Management Corporation stockholders’ equity
Common stock, $1 par value. Authorized 100,000,000 shares;
issued and outstanding 23,794,612 and 23,430,292 shares at
September 30, 2021 and December 31, 2020, respectively								23,795			23,430
Additional paid-in capital		53,964			60,504			63,471			57,399
Retained earnings		871,067			830,198			952,258			897,221
Accumulated other comprehensive income		61,939			29,363
Total Triple-S Management Corporation stockholders' equity		1,010,400			943,865
Accumulated other comprehensive loss, net								(21,850	)		(9,820	)
Total Triple-S Management Corporation stockholders’ equity								1,017,674			968,230
Non-controlling interest in consolidated subsidiary		(713	)		(693	)		(733	)		(717	)
Total stockholders' equity		1,009,687			943,172
Total liabilities and stockholders' equity	$	3,120,287		$	2,818,826
Total stockholders’ equity								1,016,941			967,513
Total liabilities and stockholders’ equity							$	3,191,666		$	3,088,418

																								Class A Common Stock			Class B Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Triple-S Management Corporation Stockholders’ Equity			Non-controlling Interest in Consolidated Subsidiary			Total Stockholders’ Equity

Balance, December 31, 2020																								$	0		$	23,430		$	57,399		$	897,221		$	(9,820	)	$	968,230		$	(717	)	$	967,513
Share-based compensation																									0			250			932			0			0			1,182			0			1,182
Comprehensive income (loss)																									0			0			0			23,310			(15,944	)		7,366			(3	)		7,363
Balance, March 31, 2021																								$	0		$	23,680		$	58,331		$	920,531		$	(25,764	)	$	976,778		$	(720	)	$	976,058
Share-based compensation																									0			137			2,614			0			0			2,751			0			2,751
Repurchase and retirement of common stock																									0			(21	)		(461	)		0			0			(482	)		0			(482	)
Comprehensive income (loss)																									0			0			0			23,560			2,872			26,432			(6	)		26,426
Balance, June 30, 2021																								$	0		$	23,796		$	60,484		$	944,091		$	(22,892	)	$	1,005,479		$	(726	)	$	1,004,753
Share-based compensation																									0			1			3,030			0			0			3,031			0			3,031
Repurchase and retirement of common stock																									0			(2	)		(43	)		0			0			(45	)		0			(45	)
Comprehensive income (loss)																									0			0			0			8,167			1,042			9,209			(7	)		9,202
Balance, September 30, 2021																								$	0		$	23,795		$	63,471		$	952,258		$	(21,850	)	$	1,017,674		$	(733	)	$	1,016,941
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income		Triple-S Management Corporation Stockholders’ Equity			Non-controlling Interest in Consolidated Subsidiary			Total Stockholders’ Equity
Balance, December 31, 2019	$	0		$	23,800		$	60,504		$	830,198		$	29,363	$	943,865		$	(693	)	$	943,172		$	0		$	23,800		$	60,504		$	830,198		$	29,363		$	943,865		$	(693	)	$	943,172
Share-based compensation		0			590			1,769			0			0		2,359			0			2,359			0			590			1,769			0			0			2,359			0			2,359
Repurchase and retirement of common stock		0			(584	)		(8,511	)		0			0		(9,095	)		0			(9,095	)		0			(584	)		(8,511	)		0			0			(9,095	)		0			(9,095	)
Comprehensive (loss) income		0			0			0			(26,145	)		16,032		(10,113	)		(7	)		(10,120	)
Cummulative effect adjustment due to implementation of ASU 2016-13		0			0			0			(166	)		0		(166	)		0			(166	)
Comprehensive income (loss)																									0			0			0			(26,145	)		16,032			(10,113	)		(7	)		(10,120	)
Cumulative effect adjustment due to implementation of ASU 2016-13																									0			0			0			(166	)		0			(166	)		0			(166	)
Balance, March 31, 2020	$	0		$	23,806		$	53,762		$	803,887		$	45,395	$	926,850		$	(700	)	$	926,150		$	0		$	23,806		$	53,762		$	803,887		$	45,395		$	926,850		$	(700	)	$	926,150
Share-based compensation		0			7			4,228			0			0		4,235			0			4,235			0			7			4,228			0			0			4,235			0			4,235
Repurchase and retirement of common stock		0			(375	)		(5,618	)		0			0		(5,993	)		0			(5,993	)		0			(375	)		(5,618	)		0			0			(5,993	)		0			(5,993	)
Comprehensive income (loss)		0			0			0			43,599			11,554		55,153			(10	)		55,143			0			0			0			43,599			11,554			55,153			(10	)		55,143
Balance, June 30, 2020	$	0		$	23,438		$	52,372		$	847,486		$	56,949	$	980,245		$	(710	)	$	979,535		$	0	��	$	23,438		$	52,372		$	847,486		$	56,949		$	980,245		$	(710	)	$	979,535
Share-based compensation		0			7			1,842			0			0		1,849			0			1,849			0			7			1,842			0			0			1,849			0			1,849
Repurchase and retirement of common stock		0			(15	)		(250	)		0			0		(265	)		0			(265	)		0			(15	)		(250	)		0			0			(265	)		0			(265	)
Comprehensive income (loss)		0			0			0			23,581			4,990		28,571			(3	)		28,568			0			0			0			23,581			4,990			28,571			(3	)		28,568
Balance, September 30, 2020	$	0		$	23,430		$	53,964		$	871,067		$	61,939	$	1,010,400		$	(713	)	$	1,009,687		$	0		$	23,430		$	53,964		$	871,067		$	61,939		$	1,010,400		$	(713	)	$	1,009,687

Balance, December 31, 2018	$	951		$	21,980		$	34,021		$	761,970		$	3,062	$	821,984		$	(676	)	$	821,308
Share-based compensation		0			177			1,409			0			0		1,586			0			1,586
Repurchase and retirement of common stock		0			(1	)		(15	)		0			0		(16	)		0			(16	)
Comprehensive income (loss)		0			0			0			34,786			13,497		48,283			(3	)		48,280
Balance, March 31, 2019	$	951		$	22,156		$	35,415		$	796,756		$	16,559	$	871,837		$	(679	)	$	871,158
Share-based compensation		0			44			4,276			0			0		4,320			0			4,320
Comprehensive income (loss)		0			0			0			30,931			14,985		45,916			(5	)		45,911
Balance, June 30, 2019	$	951		$	22,200		$	39,691		$	827,687		$	31,544	$	922,073		$	(684	)	$	921,389
Share-based compensation		0			1			2,816			0			0		2,817			0			2,817
Issuance of Common Stock		48			0			1,151			0			0		1,199			0			1,199
Stock dividend		0			1,133			23,522			(24,655	)		0		0			0			0
Dividend		0			0			0			(11	)		0		(11	)		0			(11	)
Common Stock Class A conversion to Class B		(999	)		999			0			0			0		0			0			0
Comprehensive income (loss)		0			0			0			13,948			9,351		23,299			(2	)		23,297
Balance, September 30, 2019	$	0		$	24,333		$	67,180		$	816,969		$	40,895	$	949,377		$	(686	)	$	948,691

	September 30, 2020																					September 30, 2021
	Less than 12 months							12 months or longer							Total							Less than 12 months							12 months or longer							Total
	Estimated Fair Value		Gross Unrealized Loss			Number of Securities		Estimated Fair Value		Gross Unrealized Loss			Number of Securities		Estimated Fair Value		Gross Unrealized Loss			Number of Securities		Estimated Fair Value		Gross Unrealized Loss			Number of Securities		Estimated Fair Value		Gross Unrealized Loss			Number of Securities		Estimated Fair Value		Gross Unrealized Loss			Number of Securities

Fixed maturities available for sale
Fixed-maturities available-for-sale
Obligations of government-sponsored enterprises	$	9,511	$	(29	)		1	$	0	$	0			0	$	9,511	$	(29	)		1	$	4,665	$	(22	)		4	$	1,518	$	(31	)		1	$	6,183	$	(53	)		5
U.S. Treasury securities and obligations of U.S. government instrumentalities																							983		(4	)		1		0		0			0		983		(4	)		1
Municipal securities		21,832		(126	)		4		0		0			0		21,832		(126	)		4		70,535		(853	)		16		0		0			0		70,535		(853	)		16
Corporate bonds																							3,931		(69	)		1		0		0			0		3,931		(69	)		1
Residential mortgage-backed securities		22,551		(376	)		8		0		0			0		22,551		(376	)		8		48,592		(546	)		13		0		0			0		48,592		(546	)		13
Collateralized mortgage obligations		8,847		(45	)		2		0		0			0		8,847		(45	)		2
Total fixed maturities	$	62,741	$	(576	)		15	$	0	$	0			0	$	62,741	$	(576	)		15
Total fixed-maturities available-for-sale																						$	128,706	$	(1,494	)		35	$	1,518	$	(31	)		1	$	130,224	$	(1,525	)		36
Other invested assets - Alternative investments	$	12,873	$	(1,933	)		4	$	16,308	$	(1,629	)		6	$	29,181	$	(3,562	)		10	$	2,439	$	(105	)		2	$	18,022	$	(3,558	)		7	$	20,461	$	(3,663	)		9

	September 30, 2020		December 31, 2019
Premium	$	135,133	$	188,861
Self-funded group receivables		26,310		28,672
FEHBP		14,499		13,894
Agent balances		34,224		30,784
Accrued interest		9,753		11,307
Reinsurance recoverable		222,966		239,767
Other		153,839		110,952
		596,724		624,237
Less allowance for doubtful receivables:
Premium		37,489		36,622
Other		12,276		19,923
		49,765		56,545
Total premium and other receivables, net	$	546,959	$	567,692

	September 30,		December 31,
	2020		2019

Land	$	15,867	$	10,976
Buildings and leasehold improvements		125,239		92,752
Office furniture and equipment		32,062		27,878
Computer equipment and software		135,456		133,922
Automobiles		671		761
		309,295		266,289
Less accumulated depreciation and amortization		179,075		177,701
Property and equipment, net	$	130,220	$	88,588

	Nine months ended September 30, 2019
	Managed Care			Other Business Segments *			Consolidated


Claim liabilities at beginning of period	$	394,226		$	542,563		$	936,789
Reinsurance recoverable on claim liabilities		0			(315,543	)		(315,543	)
Net claim liabilities at beginning of period		394,226			227,020			621,246
Claims incurred
Current period insured events		1,934,859			85,726			2,020,585
Prior period insured events		(29,038	)		(8,254	)		(37,292	)
Total		1,905,821			77,472			1,983,293
Payments of losses and loss-adjustment expenses
Current period insured events		1,606,458			41,849			1,648,307
Prior period insured events		303,289			32,145			335,434
Total		1,909,747			73,994			1,983,741
Net claim liabilities at end of period		390,300			230,498			620,798
Reinsurance recoverable on claim liabilities		0			181,193			181,193
Claim liabilities at end of period	$	390,300		$	411,691		$	801,991

Incurred Year	Total of IBNR Liabilities Plus Expected Development on Reported Claims
2019	$	29,283
2020		322,425

	September 30, 2020		December 31, 2019

Secured loan payable of $11,187, payable in monthly installments of $137 through October 1, 2023, plus interest at a rate reset periodically of 100 basis points over selected LIBOR maturity (which was 1.16% at September 30, 2020).	$	5,037	$	6,267
Secured loan payable of $20,150, payable in monthly installments of $84 through January 1, 2024, plus interest at a rate reset periodically of 275 basis points over selected LIBOR maturity (which was 3.05% at September 30, 2020).		16,456		17,211
Secured loan payable of $4,116, payable in monthly installments of $49 through January 1, 2024, plus interest at a rate reset periodically of 325 basis points over selected LIBOR maturity (which was 3.55% at September 30, 2020).		1,960		2,401
Secured loan payable of $31,350, payable in monthly installments of $105 through May 1, 2025, plus interest at prime rate (which was 3.22% at September 30, 2020). Last payment of $25,185 due on June 19, 2025.		31,036		0
Total borrowings		54,489		25,879

Less: unamortized debt issuance costs		653		185
	$	53,836	$	25,694

Remaining of 2020	$	1,122
2021		4,490
2022		4,490
2023		4,196
2024		14,484
Thereafter		25,707
	$	54,489

Remaning of 2020	$	1,062
2021		3,998
2022		3,420
2023		2,329
2024		1,855
Thereafter		3,590
Total lease payments		16,254
Less: imputed interest		(2,083	)
Total	$	14,171

	Nine months ended
	September 30, 2020
Operating lease cost	$	3,570
Short-term lease cost		801
Total lease cost	$	4,371

Remaining of 2020	$	473
2021		1,909
2022		1,947
2023		1,986
2024		2,026
Thereafter		2,624
Total	$	10,965

	September 30, 2020			December 31, 2019
Assets:
Managed care	$	1,406,356		$	1,190,538
Life insurance		1,039,765			981,370
Property and casualty insurance		603,728			592,758
Other segments *		30,408			28,346
Total business segments		3,080,257			2,793,012
Unallocated amounts related to TSM:
Cash, cash equivalents, and investments		19,881			28,167
Property and equipment, net		67,316			25,623
Other assets		45,927			37,176
		133,124			90,966
Elimination entries-intersegment receivables and others		(93,094	)		(65,152	)
Consolidated total assets	$	3,120,287		$	2,818,826

(Dollar amounts in millions, except per share data)	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs

July 1, 2020 to July 31, 2020		-	$	-		-	$	-
August 1, 2020 to August 31, 2020		-		-		-		-
September 1, 2020 to September 30, 2020		14,040		18.85		-		-