Kathy Waller – IR Ramon Ruiz-Comas – President and CEO Amilcar Jordan-Perez – VP and CFO

Ralph Giacobbe – Credit Suisse Amílcar Jordán-Pérez Carl McDonald – Citi Tom Carroll – Stifel

Good day everyone and welcome to the Triple-S Management Second Quarter 2014 Conference Call. Today’s conference is being recorded. I would now like to turn the conference over to Kathy Waller. Please go ahead.

Thank you, Karina. Good morning everyone. Welcome to today’s second quarter 2014 earnings conference call. With us today are your hosts Ramon Ruiz-Comas, president and chief executive officer. Amílcar Jordán-Pérez chief financial officer. Also in the room are Bobby Garcia, chief operating officer; Alan Cohen, chief marketing communications officer; and Liliana Rivera-Corcino, corporate controller. 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 a current view of the company’s future. This means that they will share forward-looking information with you. As you know, these statements can be affected by risks and uncertainties involved in the business. Despite management’s best efforts, what actually happens may be materially different from what you hear in today’s call. To get a better understanding of why this may occur please look at the Safe Harbor section in today’s newest release and in the company’s periodic filings with the SEC. In addition, the information shared on this call should be considered current only as of 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 find an archive 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 me, Kathy Waller, at 312-543-6708 and I will get one to you immediately. In addition, you can always make sure 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 want to welcome everyone to this morning call. I will first provide an overview of our second quarter result and then briefly comment on recent corporate development. Amílcar Jordán, our CFO will then offer greater detail about our quarterly performance. Following our formal remarks, we will answer any question you may have. Let me start by saying that we are pleased with our second quarter financial results and the sequential improvement we made. We post pro-forma net income of $24.1 million or $0.89 per diluted share versus $0.53 in 2013 of almost 70%. Both three of our segments generate year-over-year operating income improvement. The Managed Care segment report operating income of $27.9 million versus $13.4 million last year or a 108% increase benefitting from a 340 basis points MLR decline. Moreover, the Property and Casualty segment has a strong quarter, contributing $4.5 million to operating income for a 17.4% margin. We’ve seen from a better than anticipated loss experience in the commercial multi-peril line of business. On our Life segment post operating income of $5.2 million, up 41% from $3.7 million a year ago. Our consolidated operating revenue amount to $586.2 million, 2% lower than prior year. This slight reduction in revenue is in line with our overall corporate strategy. I will elaborate on this later in my comments. The reduction in the MLR was largely attributable to favorable prior previous reserve development for both the December and March quarter, primarily in the commercial segment. Excluding prior period of preserve development and the effect of the Medicare risk score adjustment. The adjusted MLR rose 160 basis points from last year reflecting higher cost range particularly in pharmacy benefits, surgical procedure, laboratory and x-ray service. We were expecting a higher year-over-year MLR for this quarter taking into consideration the pharmacy cost increase in the last quarter of 2013. While we continue to experience higher year-over-year trends, we are addressing this challenging area through our strategic initiative. In previous calls and presentation, I outlined a series of initiatives that are part of a comprehensive strategic review we are undertaking to address the corporation’s financial performance. Allow me to update you on our progress during the second quarter of 2014. Importantly, our effort to reduce administrative expense continue to gain traction. Net of increases in Medicaid and financial cost as a result of the three additional regions contracted effective October 1st 2013. The enactment of new taxes effective July 1, 2013 and regulatory fees effective January 1, 2014, we saw a decline of approximately $10 million in administrative expense compared to the second quarter of 2013. Throughout our financial [ph] strategic review, we have begun garnering [ph] operating efficiencies and averaging [ph] organizational change necessary to compete effectively in the evolving healthcare marketplace of the future. Furthermore, process review in several of our business units [indiscernible] are improving operating efficiency and the realignment of our employee benefit structure to [indiscernible] market trend have been successful. Professional service contracts and corporate projects continue to be evaluated. Other components of a more in depth process review and reorganization including the expansion of share service in our organization to further maximize our resource utilization will begin by the fourth quarter. In our commercial business, membership [ph] continue to decline, falling from 678,500 in 2013 to 619,500 over the last 12 months. This drop is a reflection of the productive weakness in the island economy causing employee reduction in our group account. A very competitive scenario pressured by shrinking market as well as account profitability strategy. As you already know, we have made a conscious decision to sacrifice market share to enhance profitability and continue to believe that this strategy will produce positive results throughout the remainder of this year and into next. The initiative to control overall pharmacy cost including pharmacy network on formulary review are of critical importance to Triple-S and this expense line remains a key driver of total medical cost. We continue to see increases in our pharmacy cost especially in generic drugs. Consequently, we have been revising our pricing and underwriting to account for higher pharmacy and other client cost. In prior calls, we talked about specialty pharmacy cost management, and our commercial business has made headway in moving parts of the business to our exclusive network. We continue to see modest improvement in the US Virgin Islands realigning provider and hospital contracts and increasing premiums as renewal base to more accurately reflect our claims experience. Although these actions are resulting [ph] losses, we continue to monitor this business growth. The result in our Medicare advantage treatment reflect the receipt of both the final 2013 payment and mid-year 2014 adjustment. Amilcar will provide more color in this regard. With the MA, we are concentrating on the pharmacy cost increase this business has experienced as well as reviewing the contractual terms with our provider groups revising our risk-sharing arrangement were necessary and continuing with the transition to a pay-per-performance model which will be completed by the year end. As we discussed last quarter, 2015 MA rates will decline within the range of 0% to 2%, much less than previously anticipated. And we will provide further update on our rate estimate during our third quarter conference call. On the Medicaid front, we currently signed an extension of an existing contract with the Puerto Rico Health Insurance Administration through March 31, 2015. Contract terms include some minor arrangements. However, economic conditions remained linear [ph]. The government has issued their revised RFP for agreed service [ph] from April 1, 2015 to March 31, 2018. This needs to be submitted later this month and as said anticipate [ph] making a decision by the end of the third quarter to allow ample time for a smooth transition. Admittedly [ph], the RFP contractor requirements have become more stringent. While Triple-S observed the Medicaid population for many year and expect to participate in the RFP process, it is important to know that terms and condition must be in the best interest of all our constituents, including our shareholder, if we are to continue providing health care service in this line of business. We remain cautious as we look over the next two years, reflecting the economic environment in Puerto Rico, the possible effect of previously announced pending reduction by the local government, and the final outcome of Medicaid bill. We concur that this [ph] along with the impact of all recent legislation, in the three regulation and taxes, an ongoing prices pressure in the commercial segment remains [ph] from heavy competition continue to suggest to us the operating 2014 guidance will not be prudent. Regarding capital management, we bought back approximately 184,000 shares during the quarter. Under the current program, we still have 5.5 million available for share repurchase. With the ultimate goal of enhancing shareholder value, management and the Board are evaluating the best use of our capital and remain clearly focused on improving the performance of our core business. I will now turn the call over to Amilcar. Amilcar Jordan-Perez: Thank you, Ramon, and good morning everyone. Our net income for the quarter ended June 30, 2014, was $27.4 million compared with net income of $20.1 million in the same quarter last year, and $7 million for the first quarter of 2014. The results reported reflect significant improvements in the profitability of the company’s three business segments. The increase in net income was mainly driven by favorable prior period research [ph] development in the Managed Care segment, and favorable great [ph] experienced [ph] in the Property and Casualty segment. The restructuring claims expense [ph] was partially offset by lower premium revenue and higher operating expenses triggered by the impact of the health insurer provider fees and premium factors as well as the arrangement [ph] of the three [indiscernible] regions in the final quarter of 2013. Last year second quarter also included our non-recurring differed income tax benefit of $7.7 million. Total consolidated revenues amounted to $580.7 million, a decrease of $9.1 million or 1.5% year-over-year. This was mostly driven by a $12.3 million decline in non-premiums reflecting liquidations in [ph] Managed Care and Property and Casualty premiums of $13.7 million and $1.6 million respectively. Life insurance premiums rose by $2.8 million and ASO fees were up $0.9 million or 3.1% mostly in the Americas business reflecting that [indiscernible] Medicaid regions that came on board as October 1, 2013. Gross revenues also include gain from several [ph] securities [ph] of $3.9 million for the quarter. Consolidated claims incurred decreased by $32.2 million during the second quarter. The consolidated loss ratio was 78.8%, a 410 basis points improvement due to lower loss ratios across all our segments. Quarterly operating expenses were $3.4 million higher than a year ago, reflecting $6.8 million in health insurer provider fees that became effective at the beginning of this year, $2.4 million of premium factors that [ph] became effective on July 1, 2013, an incremental expenses related to administration of the premium Medicaid service regions effective October 1, 2013. To a later extent, expenses related to the [indiscernible] operation acquired last November, also contributed to the increase in expenses. These increases were substantially offset by the impact of cost co-containment initiative implemented since the beginning of this year. As proving the impact of the health insurer prior fees, premium factors on the operating expenses associated with the [indiscernible] premiums, consolidated operating expenses were approximately $10 million or close to 8% when compared to the second quarter of last year. The consolidated operating expense ratio increased 100 basis points as a result of the slight increase in expenses that results in premiums revenue on a higher proportion of ASO fees in our revenue base. On a sequential basis, operating expenses and the expense ratio decreased $1.8 million, 30 basis points respectively. I will now focus on a few segment highlights and a brief discussion of the changes to our MLR. Managed Care premium for this quarter were $485.6 million, down $13.7 million or 2.7% year-over-year primarily reflecting lower commercial member month enrollment partially offset by average premium increases in the commercial business. Average commercial graded group [ph] PMPM [ph] premiums rose 2.3% compared to a 1% average premium rate increase in the same quarter last year. We mentioned last quarter these higher rate of increase resulted from pricing adjustment to cover [indiscernible] associated with the Health Care Reform. Fully-insured [ph] and upgraded commercial membership fell by approximately 9.7% or 45,000 over the past 12 months. The membership construction has large reflected in our rated groups and individual account products [ph], and reflect most pricing sensitivity and attrition in existing accounts as a result of the island challenging [ph] economic situation. Total Medicare member months enrollment increased by approximately 19,000 members or 5.7% from last year, primarily resulting from a higher standalone PDP membership. Medicaid Advantage enrollment increased by approximately 2,500 member months, and it’s the net result of our 11,000 members month increased in our non-dual eligible products [ph] offset in part by a 9,000 member monthly decline in our dual eligible offerings. Medicaid premiums were up by approximately $2 million, largely reflecting higher risk score adjustments and a changing membership needs in 2014. Medicaid premiums in the second quarter of 2014 were positively impacted by an additional accrual of $12.4 million related to the mid-year risk score adjustments on prior year settlements from CMS. Now, each and all these factor revenue [ph] booking last year’s corresponding quarter was $6.8 million. Medicare PMPM premiums were down 4.7% during this quarter, reflecting the decline in 2014 rates and a change in the Medicare enrollments needs [ph]. Managed Care segment claims for the three-month period were down $28.4 million or 6.6% year-over-year. The segment MLR was 82.4% reflecting a 340 basis points improvement from the same period a year ago. The commercial MLR for this quarter was 83.2%, 430 basis points lower from a year ago, primarily due to favorable prior period reserve development. As growing the effect of prior period reserve developments on all related adjustments, this metric grows 290 basis points when compared to last year. The increase reflects higher cost trends particularly for pharmacy benefits, surgical procedures and laboratory and x-ray services. The Medicare MLR was a 1.6%, 250 basis points lower than last year, primarily resulting from higher risk score revenue and favorable prior period reserve development. Excluding the effect of prior period reserve development and risk score adjustments, this metric increased by 60 basis points largely reflecting higher pharmacy cost. Managed Care operating expenses rose $1.1 million from a year ago. As previously mentioned, expenses in 2014 reflect the impact of the health insurer provider fee that became effective at the beginning of this year, the premium taxes that became effective in May 2013 and incremental expenses related to the administration of the three new service regions of the Medicaid program effective October 1, 2013. Despite a $2 million [ph] increase in our provision on collectible accounts, operating expenses in this segment decreased by $3 million or 3.1% sequentially and the operating expense ratio fell by 70 basis points. A reduction in operating expenses reflect the results of the cost containment initiatives implemented in 2014. Our life insurance segment generated operating income of $5.2 million compared with $3.7 million last year. This improvement reflects the addition on life cancer [ph] and Mayo Medical health premium brought by the Atlantic Southern acquisition effective on November 2013. Our Property and Casualty insurance segment achieved operating income of $4.5 million compared with just $0.2 million in the prior year. The higher Property and Casualty operating income primarily resulted from the segments improved loss experience in the commercial multi-peril line of business together we’re at $2 million or close 16% reduction in operating expenses. Consolidated income tax expense increased $12.4 million from last year. This increase is not only related to the company’s higher net taxable income in the second quarter of 2014 but also a $7.7 million deferred tax benefit adjustments recorded in the same quarter of last year. This adjustment reflect the changes in tax loss and rates that were effective retroactively through January 1, 2013 and the related impact on our deferred taxes at that time. As of July 1, 2014, several amendments to the local tax laws were approved. Among them, an increasing the corporations capital gains tax rate from 15% to 20%; the impact of this change will be reflected in our results for the third quarter of this year. For the three months ended June 30 of this year, net cash generated by operating activities amounted to $3 million, $21.4 million lower than last year. The situation resulted from several factors including an overall increase in premiums receivable and receivables from ASM clients [ph] reflective prevailing economic foundations in the island. And our receivables increased in the Medicaid business, mostly reflecting a payment timing change agreed to in the July 2013 contract renewal. Our investment portfolio total $1.4 billion as of June 30, 2014, with our net unrealized gain of $125 million. Our exposure to Puerto Rico obligations amounts to $47.6 million or 3.5% of the portfolio, including $22 million of escrow bonds collateralized with US obligations. At quarter end, the net unrealized loss on the Puerto Rico position was $373,000. Days claims payable as of the end of the quarter were 61, a one day increase when compared to December 31, 2013. This increase mostly reflect the higher computation [indiscernible] related to a risk score revenue which represent approximately three days. As Ramon mentioned, we are in the midst of our strategic realignments designed to improve our financial performance. This review comprises several operational initiatives as well as our review of our administrative cost structure that should result in further operational cost reductions and incremental efficiencies down the road. The integration and consolidation of certain back office and support functions principally in our Managed Care segment are also expected to provide additional synergies. We feel truly satisfied with the financial result for this quarter. The effort made my management and employees to improve efficiency and reduce operating expenses together with the favorable development in [indiscernible] have helped the corporation generate positive results in a very challenging business environment. We will continue reviewing our processes to implement further efficiencies without compromising quality and customer service. We will now proceed to our Q&A session.

(Operator instructions) And first, we’ll go to Ralph Giacobbe with Credit Suisse. Ralph Giacobbe – Credit Suisse: Thanks. Good morning. I guess, first, can you maybe go into a little more detail of what drove the favorable reserve development in the commercial business in the quarter and whether or not you can sort of breakout the development related to one Q14 versus 2013. Ramon Ruiz-Comas: Okay. I will answer the first part of the question why and may look [ph] for the other part. I will say, Ralph, initially, the reserves are estimates. And they are – and to calculate them, you use a methodology that normally where you have several years to determine whether your methodology is good or not. In our case, our methodology to estimate our reserves has been consistent throughout all the years and there has been no significant change in the methodology that we use. Actually, when we compared the results, the actual results of development throughout the year, our estimate has been proved to be reasonable. Having said that, I will say at the end of last year, we note that there was a significant increase if you recall of our pharmacy cost. So that increasing cost is what’s considered when the development of the reserve when the reserved was estimated at year end. I will say based on the actual results, we have seen that the trends that we’re used to estimate the reserve, now that we have the actual experience works more conservative than the ones that we used to estimate the reserve. But there was nothing unusual when we estimate the amount. When we see the development there is nothing unusual noted, and I feel comfortable. As a matter of fact, I am happy that the development is favorable as compared to unfavorable. I am happy that we have the actual results and that the actual results were better than we were expecting in terms of the trends noted when the estimates were developed. So there is nothing unusual. As a matter of fact, one thing that I think is very important that everybody knows that the reserves – our reserves are reviewed by three independent actuaries. We have our internal actuary. Then on a quarterly basis we’ve used another actuary and that’s something that we normally have considered when evaluating, the reasonability of our estimate. So we feel comfortable with the development that we have. Ralph Giacobbe – Credit Suisse: Okay. And then anything on the 1Q versus 2013, can you break that out for us? Amílcar Jordán-Pérez: Okay. About two-thirds of the favorable development has to do with the first quarter but one-third with 2013. Ralph Giacobbe – Credit Suisse: All right. That’s helpful. And then, you continue to see higher utilization trends in commercial, if you could dig down a little bit more in that as that sort of on the pharmaceutical side specifically there, and maybe what you can do or what you are doing from a medical management and maybe even a pricing perspective on that commercial piece. Ramon Ruiz-Comas: Can you repeat the question? Ralph Giacobbe – Credit Suisse: Sure. So I guess, you’re seeing higher utilization within the commercial segment. I was just hoping you can maybe just delve into more of kind of the drivers there. It sounds like maybe it’s sort of more on the pharmaceutical side. And then, what you’re basically doing from a medical management perspective and I guess, from a pricing perspective to help sort of manage that. Ramon Ruiz-Comas: Okay. If you recall, Ralph, something that really was the cost of the increasing cost that we have in the last quarter of 2014, if you recall, we saw increasing cost in the pharmacy area in the last quarter of 2014 mainly caused by the increasing taxes that were enacted in July 1, 2013. So actually, there was no significant increase in terms of utilization but was as a result of increased in cost. So to deal with that, we have been working in two areas. One of them is that through the renewals of the accounts, we have been increasing the trends that we use to estimate the premium that we provide to our customer on the renewal basis, we have consider the increasing cost that we have experienced in our pharmacy – in pharmacy. Also one of the things that we have been working in the specialty pharmacy that we review our network, and now, we have been changing people that have an open network to a more reduced network where we were able to negotiate our reduced – we have been able to negotiate better prices. And third, we have been increasing then the number of people that are using generics, so they’re generic field have been increasing as compared to last year. So actually we have been working with that, and have been able to manage the increasing trend. But I will say, comparing cost because of the increasing cost, that’s why I told in my portion that we were expecting year-over-year that the cost was going to increase and my expectation in that the quarter also the cost is going to increase as compared year-over-year. Although the impact of those increasing cost have been then managed through the things that I described to you a moment ago. Ralph Giacobbe – Credit Suisse: Okay. All right, that’s helpful. And then maybe can you talk a little bit more about the bidding process you talked in your prepared remarks, about it being a little bit more stringent, just hoping you could sort of talk about what those sort of areas are that they – where changes maybe potential or made? And I guess if you have any sense of how competitive the process is going to be or maybe how many bidders you would expect for that business. Ramon Ruiz-Comas: I will answer the last one. I will expect the same amount of bidders that we have. I will expect between eight bidders. As a matter of fact, the information that we have from a newspaper, that eight companies were interested in participating in this process. So that’s what we expect. I will say – what we have mentioned is that the contractor requirements, we are still reviewing the contractor requirements. And what we want to be sure is that everybody understand that we are very interested in participating in the bid process. I think that we feel that we are a partner of the government, but the condition to participate needs to be reasonable for all the constituents. And when I say to all the constituents, we need to be reasonable to the government, to the providers, to the customer and to us. So all the constituents needs to be – consider and that’s counting that in the process of preparing the bid, we need to ensure that everybody understand that for us, all constituents are important and our shareholders as mentioned also are very important in this process. So we are going to participate in the bid process. We feel confident. However, we need to make sure that people understand that in order for us to participate, we need to be reasonable with all the constituents. Ralph Giacobbe – Credit Suisse: Okay. And then just my last one if you don’t mind, can you maybe talk about what you’re doing to sort of get some of the operational efficiencies and maybe quantify how much of an opportunity there is or how much you can cut from sort of your current cost infrastructure? Thanks. Ramon Ruiz-Comas: Okay. I will tell you Ralph, we continue to work with that. We have not been providing guidance and we are not going to provide guidance. However, as I mentioned, during the second quarter, during the second quarter, our operating efficiencies in dollar amount, amounted to $10 million. That’s also mean that we are going to have the same savings for the next quarter. But we continue to work very hard. We have been looking to the operation. As a matter of fact in terms of employees, we have a reduction in the number of employees in the company of approximately 7%. So we have been working very hard to become more efficient. We are reviewing almost all cost to determine whether they are – they have a return on investment. So every dollar expense, we are looking at in terms of what is the return that it provides to the company. But actually, in the first quarter, we mentioned that the operating efficiencies amounted to almost $6 million, $7 million. And now in the second quarter, we are talking about the expense reduction was approximately $10 million. Ralph Giacobbe – Credit Suisse: Okay. All right, thanks for all the details. Ramon Ruiz-Comas: Okay, perfect.

Next we’ll go to Carl McDonald [ph] with Citi. Carl McDonald – Citi: [Indiscernible] the management and the Board for evaluating the best use of capital. Is that the normal ongoing process or are you trying to signify something different than what you’ve done in the past? Ramon Ruiz-Comas: I think that – I will say that it’s not different. But we are – based on the situation and the amount of capital, we are evaluating alternative to the use of capital. And that’s something that is going on with this [ph]. Carl McDonald – Citi: And if – Amilcar Jordan-Perez: One additional comment that as Ramon mentioned, we’re now in the process of submitting our proposal for the Medicaid higher fee [ph]. And since they are new model, it’s a rated model [ph] that may have a significant impact in terms of regulatory capital, so that is one important consideration that until we have the final outcome of that we’ll have a significant wait [ph] in terms of our capital management process. Ramon Ruiz-Comas: Yes. But maybe Carl, one thing that we have been clear and I will repeat it again, in our prior call, we have mentioned that right now, right now while we speak, we are focused in improving our operating income in the business units that we have today. We know that our capital have been increasing, I would say, during the past year. We have as Amilcar mentioned, we have the change in the model from an ASO to rated [ph] business of the Medicaid. So taking into consideration all that, we have to perform to be responsible the best use of our capital. And we are in that process. And we are working with that as we speak. Carl McDonald – Citi: Okay. And then on the Medicaid RFP, what are the challenges of the last attempt was, the way it was structured, you end up with enough [ph] plans that could have operated in each of the regions? Do you think that structural changes that have been made to this RFP are going to result in the minimum number of bidders qualifying? Ramon Ruiz-Comas: I don’t feel that I can tell you what I feel because it will not be responsible. Unless a company mention that they – and participate in the initial process of this bid, if they are going to submit a bid or not, I cannot tell you that. And whether they are going to get enough competitive bids to get all the regions or the [indiscernible], what we know is that and what I can tell you is that we are going to participate in the process. But as I mentioned, taking to consideration all our constituents in the process. We know that this is an important program to the island. But we need to be sure that we take into consideration our – the government, our providers, the consumers and our shareholders and the company. So what the other guys are going to do? I cannot tell you. Carl McDonald – Citi: And then last question is if you have any estimate of what the recent changes to the tax rate will do in the second half of the year? Ramon Ruiz-Comas: I would say, we are working on that, but it is important. It will be only on capital gain. So actually, the best way to do it if you want to work an estimate is that you estimate any unrealized gain or loss that we have in investment or assets and calculate that, multiply that by the 5%, and you will get the amount. Carl McDonald – Citi: Okay. Thank you.

Moving on to Tom Carroll with Stifel. Tom Carroll – Stifel: Hi, good morning. I wonder if you would quantify for us the impact in the quarter. So the actual dollar amount of deposited PPD [ph] as well as the Medicare risk payments. Ramon Ruiz-Comas: Maybe, Tom, let me see if we can get that information and then we share with you guys. Let me check it out, because I don’t have that information in front of me right now. Tom Carroll – Stifel: Okay. Thank you.

(Operator instructions) Ramon Ruiz-Comas: Is there no more questions?

And we have no more questions in the queue at this time. Ramon Ruiz-Comas: Okay. Then I would want to thank you for participating on our call today. We appreciate your time and interest in our company, and look forward to seeing many of you at our upcoming conference. One thing that I can – I would like to repeat is that we are very pleased with the results that we have for the second quarter and are very happy. So thank you all.

This does conclude today’s conference. We do thank you all for joining us today.