Kathy Waller - IR Ramon Ruiz-Comas - President & CEO Juan-Jose Roman - VP of Finance & CFO

Carl McDonald - Oppenheimer

Ladies and gentlemen thank you for standing by and welcome to the Triple-S Management Corporation 2010 first quarter conference call on the 5 of May, 2010. Throughout today’s recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator Instructions) I will now hand the conference over to Kathy Waller. Please go ahead ma’am.

Thanks Christine. Good morning everyone. Welcome to today’s first quarter conference call. With us today your host, Ramon Ruiz-Comas, President and Chief Executive Officer; and Juan-Jose Roman, Vice President of Finance and Chief Financial Officer. I’m sure all of you have heard the Safe Harbor statements before, but we still need to get this housekeeping issue out of the way. Each quarter Triple-S Management Executives will provide their current view of the company's future. This means that they will share forward-looking information. As you know, these statements can be affected by the risks and uncertainties involved in the business. Despite management's best efforts, what actually happens may be materially different from what you hear today. To get a better understanding of why this might occur, please look at the company’s Safe Harbor section in today's news release and in the company's periodic filings with the SEC. In addition, the information shared on this call should be considered current as of only today. After today, please use this information for your reference only and remember that the company assumes no duty to update it. This call is being webcast. Shortly after it ends, see version on the Investor Relations page of the company's website at www.triplesmanagement.com. If you don't have a copy of today's news release already, you can find one on the company's website or you can call my mobile phone at 312-543-6708 and I’ll make sure you get one immediately and I will also make sure that you're on our distribution list going forward. With that, I’d like to turn the call over to Ramon. Ramon, please go ahead. Ramon Ruiz-Comas: Thank you, Kathy. I would like to welcome everyone to our call today. Let me begin today with reviewing a strong first quarter highlights. Then I will take a few moments to provide our perspective on the newly enact health care reform legislation and its potential impact on our business, and that appears to be the forefront of everyone thought to see. Thereafter, I will turn the call over to Juan-Jose to take you through the details of the quarter. I’m very pleased with the quarter and believe it follows well for the full-year. We post solid revenue on membership growth in our Managed Care segment. We’re especially pleased with the membership increase in our commercial business, which was up 24.5% and we are extremely proud of our nearly 98% retention rate and recording our strong marketplace. Premiums for the first quarter rose to $494.2 million, up 9.5% compared with the prior year. The increase resulted primarily from the higher commercial membership reflecting organic growth on the La Cruz Azul acquisition as well as higher premium rate across all business. Adjusted net income for the quarter rose to $10.8 million or $0.37 per diluted share, compared with $8.2 million or $0.27 per diluted share for the same period last year. The balance sheet remains healthy, our capital is above required on a statutory basis and our cash flow continues to be excellent. On the cost front, we achieved a MLR of 90% in the Managed Care segment, a year-over-year improvement of 150 basis points, which is inline with our internal expectations. Effective March 1, 2010, we introduced new premium for a local government employees, group contracts, which is taking to consideration last year’s experience. The full effect of the reprising will be realized in our second quarter. Our effort to manage pharmacy benefit is also resulting intangible savings by substituting OTC for prescription drugs and increasing generic usage among seven of all our initiative. During the year, we will start reviewing the credentialing of (inaudible) facility and expect to not only scale back our network, but also negotiate lower fees. Lastly, I believe that we are [literally] incorporated the effect of swine flu in our 2010 pricing, not only we have seen leader impact from swine flu so far this year. [Career] reports are underway to restructure our medical division, starting to improve our wellness and disease program, establishing a vocational and media campaign and constantly seeking ways to improve the quality of care for all our members, while most generally keeping cost under the control. I am also please to report that our IT system integration is on schedule. Recently, we went live with our first rollout, which includes our all management team and employee with the no major implementation or operational issues. Our next phase will begin this summer when we expect our migration to include our rollout to small accounts. We continue to expect that the new IT system should be fully implemented by the end of 2011. Let me now switch gears to other healthcare reform. As you know, President Obama signed a bill into law in March. However, there is still a significant lack of clarity of many of the legislation components or more specifically the rules and regulations that will be rolled out in the next two years. Because our business is concentrating Puerto Rico, we believe that many of the change will not affect growth in the same way as our US peers over the affirmation timeframe. For example, the (inaudible) point have been more affordable healthcare for all. In Puerto Rico there are about 350,000 on issuing renewal. Because Medicaid already gone up to 200% of operating level are defined by the Puerto Rican government, about 40% of the population is insured by this program. Patient discrimination or other selection is not a significant issue for us, because most of these are already enrolled in Medicare Advantage. Our Medicaid plan oaring in some type of ordered organized association, with their own healthcare plans for small business, during coverage on their financial plans until the age of 23, is fairly standard in Puerto Rico. Therefore, gaps are not significant problems. Importantly, our regional funding is being allocated for Medicaid for Puerto Rico; and we believe it will be a great benefit to our population. Specifically, Medicaid funding is expected to increase from approximately $220 million in 2010 to an estimated $490 million in 2011 and finally, $1.2 billion in 2019. Another point of differentiation is that a minimum Medical loss ratio of 80% for individual plans and 85% for large groups should not have freight costs because our managed-care MLR is above that ratio. However, as we have constantly stated, one of our primary objective is continuously reducing our MLR, while our Medicare advantage business will be affect by CMS rate reduction in the future years, we are comfortable with full of reimbursement in 2011, and believe we got under proportionate with premium increase and some adjustments to benefit change in subsequent year. Not only there is still a window to weathering the calculation of the traditional fee for service with CMS, which will be used to adjust any premiums going forward. Based on these factors that I just adjured and what know so far, we believe that healthcare reform is new for Triple-S. Finally, I want to conclude by reiterating Triple-S approach to growing its business and managing its cost is positively influenced by our inherent revenue on earnings diversification. By operating across three separate segments I mean the case of Managed-Care where we have three distinct business, this portfolio approach enable us to diversify risk and the meanings thereby volatility that can occur being any of those segment and business. Triple-S has still a leading franchise in Puerto Rico across three business segments, and the volume of the Triple-S brand have been consistently demonstrated by the loyalty of our clients and member as well as the strength of our physician network. All of these elements combined to give a platform from which we can continue to grow. We are confident that we’re focusing on the underlying strength of our three core business and the opportunity with each of them, along with continuing effort to drive costs down and indemnifying our decision that makes strategic spend will be position off for the remainder of 2010 and into the future. In short, we are off to a great start this year and accordingly, we are reaffirming our 2010 per share guidance of $2.05 to $2.15. I will turn the call over to Juan-Jose, who will provide you with additional details of our financial results and performance of each business segment. Juan-Jose Roman: Thank you, Ramon. I would like also to add my welcome to everyone on this call. In the first quarter of 2010, our consolidated net operating revenue of $519.1 million increased 9.8% during a year ago, driven by higher involvement, strong group retention and rate increases. At $425.8 million consolidated claims incurred rose 8.2%, principally due to increase volume in the Managed Care segment. The consolidated loss ratio decreased 100 basis points to 86.2%. Three months consolidated operating expenses were $76.90 million and the operating expense ratio at 15.2% rose 40 basis points above the prior year. Consolidated net investment income fell 0.8%, reflecting reduced investment yields. Let me now focus on the discussion of our segment results. At $443.8 million, our Managed Care premiums rose 10% year-over-year. The majority of the increase came from the commercial business, which grew 23.2%. The gain is attributable to an increase in both increasing both premiums and membership. About 41% of the increasing member month enrollment was due to the La Cruz Azul transaction with a remainder coming from all our groups added during the period. Premiums in our Reform or Medicaid business were up 5.2% from the prior year reflecting an increase in membership. Medicare premiums were 6.4% lower, principally the result of 11.6% decline in member month enrollment in both Medicare Advantage and PDP membership. Our partially offsetting that increase in membership was higher average premium rates, particularly for the dual-eligible product. Our maintenance service fees for the three months rose 41%, boosted by a 215,797 increased in corresponded member month enrollment. This short increase is largely the result of ASO members acquired to the La Cruz Azul transaction and new ASO commercial contracts. Managed Care segment claims a $399.6 million or up 8.2% year-over-year. The MLR for the three month period decreased 150 basis points to 90% primarily the result of higher premium rates and lower utilization trends. In this quarter, changes in reserve estimates did not played a significant role in the MLR situation, when looking at the segment of the whole, excluding the effect of changes in reserve estimates of premium adjustments. The overall MLR will have decreased 120 basis points. When looking at business with the Managed Care, we were able to register an improvement in the adjusted Medicare and commercial MLR’s, but I suspect that we did experienced a higher adjusted MLR in the reform business. The reported commercial MLR increase 40 basis points to 90.5%, however, when both 2010 and 2009 prior period reserve developments, I can’t see there the adjusted MLR decreased by 150 basis points to 90.1% the improvement of MLR reflects average premium rate increases that are about our Kevane across an utilization trends. The reported Reform MLR rose 100%, 13.1 percentage points higher than in 2009, excluding 2010 and 2009 reserve development and premium adjustments, the adjusted MLR increased by 5.5 percentage point to 96.8%. Remaining this segment was not increased in July 2008. We have another upward premium revision this year. A quarterly performance accurately reflects cost and utilization trends. In April 2010, the government of Puerto Rico extended all term of the government reform contract for an additional two months expiring in August 2010. Furthermore, this week they requested proposal for all refund regions We expect to submit our proposals at the beginning of June 2010. Although, the reported Medicare MLR decreased by 14.9 percentage points to 81.7% giving effect to 2010 and 2009 prior period retroactive adjustments and reserve developments, the MLR decline 6.3 percentage point consistent with our expectation after implementation of a new sharing agreement with our IPAs on higher premium rates; the Managed Care operating expense ratio increased by 50 basis points to 10.9% for the three months period mostly reflecting the segment higher (inaudible) business and all that expense that related to implementation of the new core IT system. Operating income for the quarter was up 119%, from a year ago to 12.7 million reflecting the previous improved MLR partially offset by the increase in the operating expenses. In our life insurance segment, the main highlight here is a 26.7% improvement in operating income to 3.8 million, the increase was mostly due to higher volume of business and a 390 basis point reduction in the loss ratio, largely reflecting lower benefit expense in the cancer business. Looking at our property and casualty insurance business, the segment loss on expense ratios rose by 690 basis points and 650 basis points respectively, resulting in a 164.3% decline in operating income or a loss for the period. The higher loss ratio steam from the receipt of two large fire claims and a relative bond claim as well as increased number in reported claims during this quarter. The effective tax rate was 20% for the quarter which is tracking our expectations. Regarding our overall financial condition, total assets were $1.71 billion as of March 31st, 2010, up about $58.7 million on a sequential basis. Total investment and cash were $1.1 billion at the end of the quarter, $47.4 million higher than on December 31st, 2009. As of March 31st we had $41.3 million in cash and cash equivalent compared with $40.4 million at the end of 2009. We continue to invest in high quality fixed income securities with a short-to-medium term maturities which will again impact our invest income in 2010. Our net premium and other receivables were 280.6 million, a $17.7 million increase from December 31st, 2009. The rise is mostly related to higher business volume and receivables from the government of Puerto Rico and through (inaudible). Our medical claims payable were $270.7 million at quarter end, an increase of $34.3 million from December 31st, 2009. Days claims payable was 61, an increase of 4 days from the prior year are mostly due to the timing of pharmacy claims payments. Net cash generated by operating activities amounted to $30.5 million, principally reflecting the increase in premiums collected on higher business volumes. In summary, the financial result for the first quarter of 2010, show our continued solid top line growth on going improvement in the Medicare MLR, a better commercial MLR and positive operating cash flows, offset by higher reforms business MLR. Now that we have shared our results with you, we would like the opportunity to respond to your question.

Thank you, sir. (Operator Instructions) The first question comes from Carl McDonald from Oppenheimer. Carl McDonald - Oppenheimer: Wanted to comeback to your commentary on the Medicare rate outlook so, just sort of in a general sense, as I understand, a lot of the companies in Puerto Rico today get paid somewhere, 150%, 160%, and 170% of fee for service. It looks like that will be going to 115% in most areas. So, can you either correct that math or then just sort of walk through if that is roughly correct, and sort of how you think that plays out? Juan-Jose Roman: Carl, hi, this is Juan Jose, that’s correct, as we have discussed in previous call, a difference between the traditional fee for service and the arrangement for Puerto Rico. The decreasing rates will take a couple of years, as Ramon mentioned, for 2011 we will have a flat premium rate, which is adequate for us or manageable in term of maintaining our margins. Longer term is, probably for 2013 it will decreases, look more significant, but it is too early to get exactly how much will be the differences, because at the same time the traditional fee for service will keep growing. As Ramon mentioned, until our waiting or meeting with CMS to discuss the fee for service base for Puerto Rico, since we understand is understated. Ramon Ruiz-Comas: As a matter of fact Carl, one of the things that we are aware is that the congress recognize the situation of Puerto Rico, and I will say, we think that there is great [probability], these could be workout under Ministry of (inaudible) and this is something that we consider that we have enough time to work with CMS to deal with the situation. So at this point we don’t see any significant problem to 2010, 2011 and 2012. I think that we have enough time and space to deal with this decreasing in rates for 2013 and thereafter. Juan-Jose Roman: Let me add, in term of our product we will be working with our strategies to redesign our products. As you very well mentioned, because of the difference we provide many additional benefits and a very low premiums to the members. What we envision is that in the future we will have to start reducing some of the additional benefits at the same time we need to balance that with premium rate increases.

(Operator Instructions) There appear to be no further questions at this time. Ramon Ruiz-Comas: Well, what I would like to do is I would like to thank you for your participation in the conference call. In closing I will remind you that Triple-S Management has a strong competitive advantage that provides ample room for solid profitable growth as we enter the next dedicate. We will continue to focus on levering our highly efficient cost structure in order to improve the profitability of our business. We have a strong financial position, the capital necessary to fund our growth, outstanding dedicated employees and it’s really coupled with an experienced management team. Juan-Jose and I would like to thank you for joining us today and we look forward to updating you again with our second quarter results. Thank you.

Thank you, this concludes the Triple-S Management Corporation 2010 first quarter conferences call. Thank you for participating, you may now disconnect.