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

Peter Costa - Wells Fargo Carl McDonald - Citigroup Tom Carroll - Stifel Ken Weakley - UBS Investment Bank

Ladies and Gentlemen welcome to the Triple-S Management Corporation Second Quarter 2010 Conference Call on Wednesday 4 of August, 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.

Thank you, Christine. Good morning everyone. Welcome to today's second quarter conference call. With us today we have 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 our 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. And despites 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 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 responsibility to update it. This call is being webcast. Shortly after it ends, you will see an archived version on the Investor Relations page of the company's website at www.triplesmanagement.com.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 either find one on the company's website or you can call my mobile phone at 312-543-6708 and I'll get you 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 review of strong second quarter highlights. Thereafter I will turn the call over to Juan-Jose to take you through the details of our performance. Overall I am pleased with the quarter results, marked by solid revenue our membership grows in our managed care segment. Premiums earned for the second quarter rose to 502.8 million up 8.6% compared with the prior year driven by a 26.4% year-over-year rise in commercial premiums. The increased result from higher commercial membership reflecting organic growth and the La Cruz Azul acquisition as well as higher premium rates across all business. Adjusted consolidated net income for the quarter rose to $19.6 million or $0.67 per diluted share, compared with $15 million or $0.51 per diluted share for the same period last year or as a 1% increase. The balance sheet remains healthy, our capital base exceeds what is required on a statutory basis and our cash flow continues to be strong in this time of the ongoing delay in payment by the Puerto Rico government for our Puerto Rico health reform or Medicaid business for the last several quarters. On the medical cost front, we achieved an MLR of 88.5% in the Managed Care segment, an 80 basis points a year-over-year improvement. The reduction in this metric was driven by a 220 basis point decrease in digested Medicare MLR, offset in part by increase in the commercial and Medicaid MLR. The improvement in the Medicare business reflects lower utilization trends and a new rate sharing arrangements with our providers in our non-dual product. Cost trends are in line with expectations. In our commercial business the increased MLR is mostly due to an upper end shift of utilization to a second quarter. Year-to-date the adjusted commercial MLR was lower than in 2009. I want to remind everyone that the very strong seasonality in this program utilization and historically the MLR in the second half of the year have typically been below that or the first six months. All the utilization trends are somewhat above our expectations; we anticipate that the MLR for all of 2010 will be down from 2009. The Medicaid business continue to be impacted by the action on any rate increase and the lengthy RFP submission and a work process. We expect an improvement in this segment MLR in the fourth quarter, once the new rates become effective. Regarding our reform business, let me briefly update you on the stature of the government of the Puerto Rico bidding process, in May 2010 the government issued an new request for proposal for all eight reform regions. With the contract expected to regarding to a freight on October 1, 2010. We present proposals for all the regions because in this RFP the government required the regions that we bid in groups meaning those parties who works on meeting bids for the current region has also to submit bid for other region. In light of the considerable time needed for the RFP process, the parties agree to extend a current contract on to September 30, 2010. The government is still evaluating the different proposal and expect to make a final announcement later this month. Although we saw meet proposal for all eight regions our expectations is that we will retain the three regions that we manage today. While we anticipate that the fourth quarter reform MLR will improve when this project is completed. Reflecting higher premiums in the rated regions, this means that we will face challenge in the third quarter similar to those encountered in the previous two. We should also note that the matter of North region contract will shift to a fully rated one from the ASO agreement in place today. If we retain these regions, premiums earned will show up significant increase in the first quarter as a result of this change. We will issue a press release once we have more clarity on the situation. I am pleased to report that our IT system integration is progressing smoothly and will remain of schedule. In April, we went live with our management team and employees experiencing non-liner implementation or operational issues. We are moving to the next phase of the integration this month with about 45,000 members of small group accounts and continue to expect that the new IT system should be completely on line by the summer of 2011. By performing this integration new phases by line of business, we have significantly reduced the inherent risk of our system compression of this magnitude. This is a significant strategic project for our corporation with several key benefits. Namely, it will allow us to enhance the efficiency of our operation, to better manage the increasing requirement of our different stakeholders, to develop new health products more quickly and easily, to have greater, more rapid access to key data points and lastly to continue expanding our business. The required change will be done faster and on a lower cost than today. Finally, I want to conclude by reiterating our portfolio approach to growing our business and managing costs. By operating across three separate segments, and in the case of managed care where we have three existing business, we can diversify risk and minimize the variability that can occur in any of those segments of our business. We have a well established franchise in Puerto Rico and a brand, whose value is consistently reinforced by the loyalty of our clients and members as well as the strength of our physician net work. Triple-S has built a platform from which we can continue to profitability broaden our footprint. We are confident that focusing on the underlying strength of our three core business and the opportunity with the initial term along with ongoing effort to become more efficient and identify upper (inaudible) acquisition will allow us to sustain our operational momentum for the remainder of 2010 and into the future. As outlined in our press release, our guidance for this year remains unchanged. I will turn the call over to Juan Jose, who will provide you with the additional details of our financial results and the performance of each business segment. Juan-Jose Roman: Thank you Ramon. I will also like to add my welcome to everyone on this call. In the second quarter of 2010, our consolidated net operating revenues of 527.6 million increased 8.2% from a year ago, driven by higher enrollment, strong group retention and rate increases in our managed care segment. At 424.8 million, consolidated claims incurred rose 7.5%, largely due to increased volume in the managed care segment. The consolidated loss ratio decreased 90 basis points to 84.5%. Three months consolidated operating expenses were 76.7 million and the operating expense ratio of 14.9% was 40 basis points about the prior year. Consolidated net investment income fell 6% reflected reduced investment yields. Consolidated operating income was 26 million, up 9.1% from last year. Looking at the consolidated we sold for the six months ended June 30, 2010, our consolidated operating revenue increased 86.1 million or 9% to 1.05 billion. The consolidated trends incurred were 850.7 million, 7.9% higher than a year ago. The consolidated loss ratio for the six months ended June 30, 2010 decreased 90 basis points to 85.3%. Consolidated operating expenses were $153.6 million, or 12.2% above the prior year and the operating expense ratio rose by 40 basis points. Consolidated net investment income for the six months period was 3.1% below last year. Consolidated operating income increased 21.1% to 42.4 million. Let me now focus on the risk caution of our segment results. At 452.5 million, our managed care premiums were up 9.1% year-over-year. The majority of the increase came from the commercial business which grew 26.4%, due to gains in both premiums and memberships. About 34% of the increased experience in the commercial business, member month enrollment reflected the La Cruz Azul transaction with the remainder coming from all our new groups added during the period. Premiums in our Puerto Rico Healthcare Reform or Medicaid business rose 9% from the prior year, reflecting an increase in full insured membership and a 4.2 million premium adjustment recorded in 2009 to provide for an unresolved reconciling items with the government of Puerto Rico. In our Medicare business, premiums were 15.1% lower, principally the result of a lower favorable risk core premium adjustment for 2010. This year the risk core adjustment was approximately 8.9 million, below that of 2009. The business also experienced a 9.4% decline in member month enrollment in both Medicare Advantage and PDP products. Partially offsetting this decrease were higher average premium rates, particularly for the dual-eligible products. Managed care premiums earned for the six months ended June 30, 2010 increased by 78 million or 9.5% to 896.3 million. Our maintenance service fees of 12.9 million rose 7.5%, boosted by the increase in self funded member month enrollment, largely the result of ASO members acquired through the La Cruz Azul acquisition. For the six months ended June 30, 2010, ASO fees were 26.2 million or 21.9% above the prior year. Managed care segment claims of $400.4 million were up 8% year-over-year. The MLR for the three months period decreased 80 basis points to 88.5%. The MLR was affected by changes in reserve estimates and the Medicare and Medicaid premium adjustment related to the 2010 and 2009 period. Excluding the effect of these items the managed care MLR will have increased 140 basis points, primarily the result of higher utilization in the commercial business offset by an improved MLR in our Medicare business. Within the managed care we achieved a 220 basis point improvement in the adjusted Medicare MLR after accounting for 2010 and 2009 prior period interactive premiums adjustment and reserve development. This is consistent with our expectations reflecting our decision to move to a new risk sharing agreement with our providers in the non-dual product, changes in benefits and higher premium rates. As expected we experienced a higher adjusted MLR in the reform business. The reported reform MLR was 89.7% 100 basis point above 2009, excluding 2010 and 2009 reserve developments and premium adjustments the adjusted MLR increased by 410 basis points to 93.3%. Premiums in this segment were less raised in July 2008. Since we have no upward premiums revision this year, the quarterly performance accurately reflects cost and utilization trends. The commercial MLR decreased 40 basis points to 92.1%, adjusting for 2010 and 2009 prior period reserve development the MLR increased by 140 basis points to 92.4% reflecting a higher utilization trend in the carrying quarter. This slight increase in the quarter's commercial MLR this segment had positive improvement year-to-date due to favorable pricing environment allowing for an adjusted MLR reduction of 60 basis points from last year. For the six months ended June 30, 2010 the managed care MLR decreased 110 basis points to 89.3% when adjusting for prior period reserve development and premium adjustments the year-to-date MLR declined 80 basis points. The managed care operating expense ratio increased by 50 basis points to 11.1% for the three months period mostly reflecting the segment higher business volume as well as consulting and depreciation expenses related to the implementation of the new managed care IT system. The operating expense ratio for the six month ended June 30, 2010 also increased by 50 basis points to 11%. The managed care operating income for the quarter was up 14.2% from a year ago to 18.5 million, reflecting the periods improved, MLR partially offset by increasing operating expenses. For the six months ended June 30, 2010, operating income was 31.1 million, up from 22 million for the same period last year. In our life insurance segment, operating income improved 20.5% to 4.7 million, mostly due to higher volume of business and a 600 basis point reduction in the loss ratio, largely reflecting lower benefit in the ordinary life and cancer business. Looking at our property and casualty insurance business the segment loss and expense ratio rose by 130 basis points and 150 basis points respectively. Operating income for the quarter was 2 million resulting in a 28.6% decline for the period. The higher loss ratio stemmed from increased number of reported trends in this quarter, particularly in the commercial (inaudible) business. The consolidated effective tax rate was at [15.2%] for the quarter which was below our expectations. We did not file consolidated income tax returns but we file by individual legal entity. Our effective tax rate reflects the changes in the taxable income of our business unit which are taxed at different rates. The proportion of tax exempting investment income to regular income and any available tax reduction strategies. Regarding our overall financial condition, total assets were 1.77 billion as of June 30, 2010, up 121.9 million when compared with December 31st 2009. Total investment in cash were 1.2 billion, 70.9 million higher than on December 31st 2009. As of June 30 we have 34.3 million in cash and cash equivalents, compared with 40.4 million at the previous year end. We continue to invest in high quality fixed income securities with short to medium term maturities which will again impact our investment income in 2010. Our net premiums and other receivables were 335.1 million, a 62.2 million increase from December 31st 2009. The rise is mostly related to higher volume business volume and receivables from the government of Puerto Rico and its instrumentalities. Our medical claims payable were 282.8 million at quarter end, an increase of 46.4 million from December 31st 2009. Base claims payable was 65, an increase of 4 days during the quarter, mostly due to an arrear caught up date for medical claims payment at the end of this quarter. Net cash generated by over ranging activities amounted to 31.6 million, principally reflecting the increasing premiums collected and higher business volumes. I'm summary, our second quarter and year to date financial results reflected continued solid top line growth, ongoing improvement in the MLR and positive operating cash flows. With these results, we're optimistic that we can achieve our 2010 goals which reflected a first of the buyers initiatives that we have been pursing over the last few years. Now that we have shared our thoughts with you, we would like the opportunity to respond to your questions.

(Operator Instructions). Thank you. Our first question comes from Peter Costa of Wells Fargo. Please go ahead with your question. Peter Costa - Wells Fargo: Hi, can you hear me? Ramon Ruiz-Comas: Yes. Peter Costa - Wells Fargo: Great. A couple of questions for you guys. First off, can you give us a little more detail on the tax rate and what exactly happened there? Juan-Jose Roman: Yes. Basically these year-to-date tax rates reflects first the operating income of our life insurance subsidiary is higher as a percentage of the total taxable income and that should effect at a much lower tax rate than the managed care business. Secondary in these first six months we used about 8 million in tax credits that we've used our taxable income or reported a taxable expense. So, those two basically are the main items that we've used our effective tax rate for the period. Peter Costa - Wells Fargo: Okay. And the 8 million tax credits will that be going forward is all done at this point? Juan-Jose Roman: No. That will depend on what if available that we're able to purchase in the market. So, it could happen again in the next six months and we're always looking for those opportunities. But it will depend on the availability of those tax credits for us to purchase. Peter Costa - Wells Fargo: And then the Medicare risk score adjustment that you received in this quarter, the 8.9 million, I think you've said -- Juan-Jose Roman: We would say a reduction of… Peter Costa - Wells Fargo: That's a lower? Juan-Jose Roman: It was lower. The total was around 5 million. Peter Costa - Wells Fargo: Okay, the total was 5 million? Juan-Jose Roman: Yeah, which, last year was about 13-14 million. Peter Costa - Wells Fargo: Okay. And so, that's actually higher than going forward from what you were booking before. So, the way you will book numbers going forward, that would actually increase. I guess you didn't get the bump up as much in this quarter. Am I correct? Ramon Ruiz-Comas: Can you repeat the question? Peter Costa - Wells Fargo: All right my understanding is, it was 14 million a year ago and 5 million this quarter for higher risk scores than you were booking revenues had. So, your revenue is going forward on the same book of business would reflect that 5 million additional as oppose to like you were booking at previously, is that correct? Juan-Jose Roman: That's correct. We have adjusted it at July 1st. Peter Costa - Wells Fargo: Okay. Ramon Ruiz-Comas: We want to be sure that part of that the adjustments related to prior year. Okay? Peter Costa - Wells Fargo: Okay. And then the property and casualty businesses performance, can you talk about some of the stuffs you've gone through to try to improve the performance there? Ramon Ruiz-Comas: Yes. Actually this year have been very strange in terms that there has been some unusual casualties in terms of fire that happened during the first semester of this year. We have about three or four or five years that it was not usual and that has affected the profitability of the company. In addition, I will say, their top market continue, although we made the decision that our price will be, the once that should be. We are not going to reduce our price on the Del Monte based on the experience. So, actually these situations normalize in terms of experience, we should be more normal experience on the loss ratio on the property and casualty. Pricing, I would say, will not become worse but will not improve, also significantly. Juan-Jose Roman: See, let me add for the basically what we can right now is to as I mentioned; we have decided to renew the business at the adequate rate. So, we will probably will see some reduction in the premiums earned in that business. Again, it's just a complimentary business. So, our decision is to improve the margins and then necessarily to grow that business. So, we're looking right now in raising the new business, which should, so what we have studied that we will lose some premiums in the next six months. But that will help us improve our margin. The other area where we are working on is reviewing the accumulated exposure that will have an impact in the insurance expense. So if we reduce our premiums earnings, we probably will be able to see somebody's option in their insurance expense. Peter Costa - Wells Fargo: That's all right. And then can you give us a little bit of an update on how that Medicare risk sharing contract is going to work and what that details and how you structured that with the providers? Juan-Jose Roman: Yes, effective January 1st, basically we entered into a new risk sharing agreement with the providers. Basically what we did with them is that now they are assuming, the majority of the premiums cost. So they are at risk for almost the majority of the claim. So we retain the portion that claims that, whether some will be better managed, if the whole population votes for all purposes, that provide us a much stable MLR output of the whole year, different to the previous years, where we have a very high MLR. So, we have a capitation which is running around 85-86% of the premiums. So it's a fixed amount and that's why they have an immediate impact this year in the most of our MLR. So basically it is that they are assuming almost a majority of the risk. Peter Costa - Wells Fargo: Got it, and that contract goes forward. So if your Medicare rates were to come down, that would adjust your rate paid to those providers correct? Juan-Jose Roman: That's correct. Peter Costa - Wells Fargo: Okay, all right thank you. Juan-Jose Roman: Thanks

And our next question comes from Carl McDonald of Citigroup. Please go ahead with your question. Carl McDonald - Citigroup: Great. Thank you. First question was on the EPS guidance. Is that a GAAP EPS guidance number or is that an operating guidance number? Since is that differently -- for the second quarter, would that assume $0.51 with the realized losses or is the $0.67 excluded? Juan-Jose Roman: Yeah, full year guidance exclude on realize gain and losses. So is it compatible to the $0.67. Carl McDonald - Citigroup: Okay, and it looks like historically the earnings have been more second half weighted. Roughly about 60% or so of the earnings would come in the second half of the year whereas the guidance that you've given assumes the earnings are going to be more evenly weighted. So could you just talk about some of the factors that you think are going to change the seasonality there. Juan-Jose Roman: Yeah, probably as Ramon mentioned in the commercial business, we do expect this to increase our ability of previous year. However it's important to remember that and the guidance actually reflect the fact, that in the Medicaid business, we still have one more quarter without premium rate increases and that basically, that and certainly of a addictive process that we're cautious with our guidance. So when we said that the impact -- mostly the impact in -- the effective impact in the MLR in the Medicaid business is the third quarter had probably changed, we very well mentioned as compared to previous years and that's why, we see more of a balance this year, our EPS for the second half of the year. Carl McDonald - Citigroup: Okay and then second question. What have you guys seen historically, if anything in terms of a correlation between the economy and utilization in Puerto Rico? Obviously in the U.S. we've seen a pretty significant drop in utilization. How has that played out in the past? Juan-Jose Roman: Actually, we sometimes see a little bit of an increasing utilization, although according to the last year that has been reducing mythically because keep in mind that in Puerto Rico when people loose their job, they can go immediately to the Medicaid or the reform health insurance. So although we usually see some spike in utilization when people are feared that they will lose their job. At the same time during the last year, we have not seen that as important and we attribute that to the fact that people actually that they get immediately into the reforms business. So, what we have seen in the last early two years is that actually the membership in the Medicaid program has been increasing and that is actually related to the increasing the unemployment rate. Carl McDonald - Citigroup: Okay, thank you.

And our next question comes from Tom Carroll of Stifel. Please go ahead with your question. Tom Carroll - Stifel: Hey, good morning. Can you hear me okay? Juan-Jose Roman: Yes, hi. Tom Carroll - Stifel: Hello, good morning. Of your 18.5 million in operating income for your Managed Care segment, could you parse that between commercial Medicaid and Medicare? Juan-Jose Roman: Yes. Basically in the commercial business, we have 2.6 million loss for the quarter, Medicaid is 15.2 million operating income and the Reform is 6.9 million operating income. Tom Carroll - Stifel: Okay, so the 15.2 is Medicare. Juan-Jose Roman: Yeah, Medicare. Tom Carroll - Stifel: Okay. And then just one clarification on the risk sharing arrangement under your Medicare, the new arrangement with docs, does that apply to your entire Medicare managed book of business? Juan-Jose Roman: No, that is only for dual-eligible. Tom Carroll - Stifel: Oh, I'm sorry, understood. Okay, thank you. Okay.

And the next question comes from Justin Lake of UBS Investment Bank. Please go ahead with your question.

Okay, it's actually Ken Weakley for Justin. Good morning. - UBS Investment Bank: Okay, it's actually Ken Weakley for Justin. Good morning. Juan-Jose Roman: Good morning, Ken.

I was just hoping maybe you could talk to a little bit about the additional funding to be allocated at the Puerto Rico Reform program next year and how you see that flow through the rates and Reform membership, any commentary there on timing for next year? - UBS Investment Bank: I was just hoping maybe you could talk to a little bit about the additional funding to be allocated at the Puerto Rico Reform program next year and how you see that flow through the rates and Reform membership, any commentary there on timing for next year? Ramon Ruiz-Comas: I will say, that instead of forming the government had mentioned will impact positively to the reasons related to the regulated. We expect that there will be increase in rates, from other side the government has recognized that there will be increase in rates therefore, each will have profited impacted. However, it's important to mention that they are also and these are a bit changing a little the model of the Reform. So, the main reason we profited we will be positive because the government will have additional funding to pay for these programs considering the benefit that they have but our expectation is not that the one that we have today because the normal profitability of the comp of these program will be senior to what we have from prior years. Juan-Jose Roman: Ken, adding to that in terms of the regional funding, it is expected that in the next about eight - nine years, it will go from about 262 days to around up to one billion. Ramon Ruiz-Comas: One billion, yeah.

Okay, that's all for current spent about 1.5 million? - UBS Investment Bank: Okay, that's all for current spent about 1.5 million? Juan-Jose Roman: Today, it cost about 1.7.

Okay and for the rate -- for the impact on rates, would this be reflected in the new rates that you're going to see in October of 2010 or we'll have to wait until later until next year kind of see the additional funding go through there? - UBS Investment Bank: Okay and for the rate -- for the impact on rates, would this be reflected in the new rates that you're going to see in October of 2010 or we'll have to wait until later until next year kind of see the additional funding go through there? Juan-Jose Roman: No, it would be reflected in October.

Okay great. That's all I got. Thank you. - UBS Investment Bank: Okay great. That's all I got. Thank you.

(Operator Instructions). We have a question from [Ray Goston] of Brigade. Please go ahead with your question.

Hi thanks. I had a follow-up question with respect to the reform RFP process, you in your prepared remarks you said even though submitted proposals for all of the regions you are really just expected to retain your exciting three regions. Is it your sense that there is unlikely to be a lot of actual transitions to new providers and it's just way to get everybody to adjust their model? What gives you the confidence that you are going to come out of this thing with no change with respect to your existing…? Ramon Ruiz-Comas: We have -- the experience that we have in reform business has been almost for 15 years. Second, we have the financial capability to manage the financial capability infrastructure to manage this type of business. One region it's about approximately 200,000 members. So it's not so easy to change the regions without any prior insurance or operations. Our resolve have been good. As a matter of fact we have the example that in 2006 we lost the (inaudible) region and in 2008 the government has thought to comeback to manage that region because the performance that we have was good and as a matter of fact we thought after one year that we were able to reduce the cost that the government was having in that region related to a ASO agreement. So, that's why we think we have been a stronger performer, that we have the infrastructure. We continue to work with new initiative to continue to enhance the program. As a matter of fact as an example we're working on a initiative of electronic health records that will help that program that is part of the strategy that the government will have to reduce cost of that program. So, that's why we feel confident that we should retain those three regions.

Okay and then just one quick follow-up, same kind of focus. I guess just given the timeline, do you expect that they will really be in a position to have this thing finalized within the context of the current timeline or is there a good probability given just the calendar that this may get delayed again? Ramon Ruiz-Comas: We will say that the government is sticking to a timing. So telling you a different thing, we don't have any reason to relive that there will be an order delay in their work process of these programs.

Thank you.

Thank you. There are no further questions at this time please continue with any further points you wish to raise. Thank you. There are no further questions. Please continue. Ramon Ruiz-Comas: Okay well I first want to thank you for your participation in the conference call. We feel very happy with the results and we feel that we are going to achieve our goal. In closing I will remind you the Triple-S Management has a strong competitive advantage that provides ample room for solid profitable growth going forward. We will continue to focus on leveraging 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 a firmly capable and experienced management team. Juan-Jose and I look forward to updating you again with our current quarter results. Thank you.

Ladies and Gentlemen, that concludes today's Triple-S Management second quarter 2010 conference call. Thank you for participating. You may now disconnect.