Kathy Waller - IR, AllWays Communicate Bobby García - President and CEO Juan Jose Román - EVP and CFO Madeline Hernández - President, Managed Care

Peter Costa - Wells Fargo

Welcome to the Triple-S Management Fourth Quarter 2015 Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Kathy Waller of AllWays Communicate. Please go ahead.

Thank you, Anastasia and good morning. Welcome to today’s fourth quarter 2015 year-end earnings conference call. With us today are your hosts, Bobby García, President and Chief Executive Officer, Juan Jose Román, Executive Vice President and Chief Financial Officer. Also in the room are Madeline Hernández, President of Managed Care, and Liliana Rivera-Corcino, Corporate Controller. I’m sure all of you’ve 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 be sharing 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 on today’s call. To get a better understanding of why this may occur, please look at the Safe Harbor section in today’s news release and on 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 Shortly after it ends, you’ll find an archived version on the Investor Relations page of the Company’s website at www.triplesmanagement.com.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 that same website or you can call me, Kathy Waller, at 312-543-6708 and I will get you a copy immediately and also add you to our distribution list going forward. With that I’d now like to turn the call over to Mr. García. Bobby, please proceed. Bobby García: Thank you, Kathy and good morning everyone. Welcome to our call. I’d like to start by sharing how the management team envisions Triple-S over the next three to five years. I’ll then give you an update on the progress of our strategic transformation and a snapshot of fourth quarter results for our three primary operating segments. Following my comments, Juan Jose Román, our CFO will discuss our quarterly performance. And then we’ll answer any questions you may have. Much has been said in recent years and increasingly in recent months about the state of the Puerto Rico economy, which is entering its 10th year of recession. The local government continues facing significant fiscal and liquidity challenges and is lobbying the U.S. Congress alongside numerous business groups to secure an economic stimulus package and a legal framework to restructures its debt. We’re closely monitoring these developments, participating in its industry efforts to maintain and increase federal funding for healthcare in Puerto Rico and taking actions to mitigate the potential impact of these developments on our business. Meanwhile, the healthcare landscape continues to change dramatically across the nation. Over the next three to five years, we expect to see accelerated growth in value-based payment models, a greater demand for integrated healthcare solutions and more empowered and tax savvy consumers, all powered by advanced healthcare analytics and IT capabilities. Against this backdrop, our management team understands that what made us a market leader historically, will not suffice for us to lead in the future. We are embracing change, repositioning the Company to succeed in a rapidly evolving environment and investing for sustained growth in mid to long-term. We believe Triple-S has a unique opportunity to reaffirm its leadership in a fragile environment. We can play a significant role in reshaping healthcare delivery in Puerto Rico and we’re determined to transform Triple-S from a healthcare insurance company to a healthcare solutions company. We aim to provide and improve the health and wellness of our members and in turn, unlock significant value for our shareholders, as a preferred partner for providers. We have the financial strength, brand recognition, provider network, market presence and executive leadership to do this successfully. This is what our strategic transformation is all about. We began this journey in 2015 by redesigning our organization to become more agile and efficient because accountable and powered and passionate employees are the starting point to win in the marketplace. We have redefined rules, increased spans of control, reduced management layers, and consolidated duplicative functions, generating annual run rate savings of over $10 million. We have also strengthened our executive team and simplified our leadership structure as part of the organizational changes. Shortly after assuming the role of CEO in early January, I announced that Madeline Hernández, who has been instrumental in the reorganization of our Medicare segment would preside over the Company’s entire managed care platform. Madeline brings more than 20 years of healthcare financial and operational expertise in Medicare, Medicaid, commercial and PBM business, primarily in Puerto Rico. With her appointment, we aim to further advance common strategies, improve overall efficiency, and attain functional excellence within our largest and most important market segment. Notably, Madeline has also added depth and expertise to her team by hiring 60 people from outside Triple-S in the last 12 months, bringing fresh perspectives to our Company. With consolidated leadership and a leaner organization, we anticipate generating additional synergies as the year progresses. In early January, I also announced that Juan Jose Román has rejoined Triple-S as Chief Financial Officer. As some of you’ll recall, he had been the Company’s CFO for close to a decade and was part of the team that engineered Triple-S’ initial public offering and helped Triple-S complete several successful strategic acquisitions including like [Indiscernible] and American Health. The former consolidated the Blue Cross and Blue Shield brands in Puerto Rico and the latter firmly positioned Triple-S in the fast growing Medicare Advantaged market. We’re delighted to have him return to the Triple-S family. Our goal with these changes is to build for the future. So, while organizational excellence is necessary for broader transformation, we recognize it is only an enabler. It lays the foundation for growth by reducing by our payroll and creating functional excellence but it is not sufficient on its own. We need a low cost operating model, better processes, and advanced analytics to complete more effectively. We need to better manage the $0.85 to $0.86 of every premium dollar we invest in our members’ health and well being. We must improve the quality of care to our members so we can achieve our quality metrics in Medicaid, improve our Star ratings in MA and increase retention across all three of our healthcare businesses. Importantly, we need to engage our members, so they assume responsibility for their own health. In short, we need an engine to begin growing again. With these goals in mind and the continued help of BCG, [ph] we began developing a clinical strategy several months ago that capitalizes on the changing dynamics of healthcare delivery and the convergence of the payer and provider markets. While in its early stages, this strategy aims to provide our members seamless access to high-value, integrated care through innovative partnerships with our providers. We expect to build out a set of initiatives to support this strategy and begin implementing them during third quarter of this year. And now, I would like to give you a snapshot of our three primary operating segments. The results of our managed care operation improved significantly in the fourth quarter, reflecting seasonal strength and sustained progress in our transformation program. We were pleased with the ongoing improvement in our Medicare subsidiaries throughout 2015 and believe that we have implemented the necessary corrective measures in this business. Medical cost trends have been negative but pharmacy continued increasing and still represents the largest portion of our claim costs. Retention of existing members during the 2016 annual enrollment period was a primary objective in 2015 because of the high cost of enrolling new members and the investments that must made to improve their quality of care, achieve Star ratings and assure appropriate premium levels for new member conditions through proper physician coding and documentation. Our retention has improved as has our understanding of our membership base. On the commercial front, we’ve maintained our underwriting discipline in what remains a stress market and a sacrifice market share for profitability over the last several years. retention rates of employer groups are running at about 93%. However, we continued to experience member loss in existing groups due to attrition. We believe that in order to grow this business again, we must renegotiate provider contracts, simplify our product design and further rationalize our portfolio, much like we did in the MA segment. Medicaid is profitable and tracking our expectations. Our pharmacy trends are still running fairly high in both of our regions, but this was anticipated during the bidding process. Medical trends, particularly in patients, have been developing better than we projected. Our target MLR is 91.5%. The renewal of this contract comes up on July 1st, so we expect to renegotiate rates early in the second quarter. We do not however, anticipate any changes in regions. Our life insurance franchise continues to represent a growth opportunity for Triple-S. Historically, this business has been expanding at 5% to 7% annual rate and we expect this trend to continue, as the market is far from mature with 50% of the population not currently having life insurance. To see this opportunity, we will cross-sell life and health insurance more aggressively through larger sales force. We’re also looking to strengthen the brand and focus more on customer service. Given the appropriate amount of resources, this business could be a more significant contributor down the line. Our property and casualty segment still faces the soft market, so we’re hitting back to basics, focusing on stricter underwriting discipline and more profitable business. While P&C is not a large component of our revenue stream, our attractive opportunities in compulsory, reinsurance, medical malpractice and personal home owner markets. In summary, we’ve demonstrated solid progress in our operational performance during 2015 and are fully engaged in multi-year strategic transformation. We have the right team making thoughtful, focused strides to improve shareholder returns and are preparing Triple-S for future growth opportunities. I’ll now turn the call over to Juan Jose to give you a brief update on our key business segments. Juan Jose Román: Thank you, Bobby. I would like also to add my welcome to everyone on this call. It is good to be back home at Triple-S. As Bobby mentioned, we finished 2015 with improved results, reflecting progress with initiatives launched last year, specifically in our managed care segment. Let’s look at our fourth quarter 2015 operating performance. Our pro forma net income for the quarter ended December 31, 2015 was $11.2 million or $0.45 per share versus $0.10 per share a year ago. Our net income for the quarter was $14.2 million or $0.57 per share -- per diluted share compared with net income of $36.5 million or $0.97 per diluted share in the same quarter last year. The year-over-year decrease in net income is due to a $17 million non-recurring tax benefit and a $7 million reduction in realized investment gains in 2014. As a reminder, our financial results, particularly the revenues placed in care, member month enrollment as well as the loss and expense ratios are impacted by the change in the Medicaid contract from an ASO agreement with fully insured model effective April 1, 2015. The Medicaid member month numbers also reflect our decision to participate in only two regions when the government of Puerto Rico changed its from an ASO under which we serve all eight regions to one that is at-risk. The quarterly consolidated operation revenues were $768 million, an increase of $203 million or 36% from the same quarter last year. Excluding the impact of the previously mentioned change in the Medicaid service model, consolidated operating revenues grew nearly 5%, mostly reflecting increased Medicare premiums. At $613 million, reported consolidated claims incurred for the quarter were $177 million higher than those of a year ago. Excluding the impact of the change in the Medicaid model, consolidated claims were down 2% from last year. The reported consolidated loss ratio was 81.8%, a 170 basis-point decrease from a year ago, reflecting lower commercial and Medicare MLRs offset in part by the MLR of the new Medicaid at-risk business which at around 91% is higher than our other businesses and in line with our bid estimates. The loss ratio within the property and casualty insurance segment decreased by 290 basis points, while the life insurance segment’s loss ratio increased 390 basis points. Quarterly operating expenses were $11 million higher than a year ago, reflecting a $5 million increase to the allowance for doubtful accounts as we continue to prudently strengthen the reserve for Puerto Rico government related accounts, a $4 million rise in payroll and related expenses resulting from recent management changes and retirements and $2 million increase due to the health insurance provider fee. The consolidated operating expense ratio for the quarter decreased 460 basis points to 18.4%, reflecting significantly higher premium revenue. Consolidated income tax expense was up $20 million year-over-year. This increase primarily reflects a $17 million tax benefit recognized in 2014, resulting from the execution of the closing agreement with Puerto Rico Department of Treasury that took advantage of a temporary preferential tax rate window on capital gains. In addition, pretax income for the managed care segment which has a higher effective rate than our other businesses, increased when compared with last year. Now, let me focus discussion on our quarterly results of the managed care segment. Managed care premiums for this quarter were $691 million, up $228 million or 49% from the same period last year, primarily reflecting higher Medicare and Medicaid premiums. Medicare premiums were up $31 million or 12% due to increased member month enrollment in Medicare Advantage products. Our member month enrollment in Medicare Advantage products rose by approximately $57,000 offset by our exit from the standalone PDP business which in the same period last year had 40,000 members. Average per member per month Medicare Advantage premiums posted a 3% year-over-year decrease, mainly driven by a lower premium rates and a change in the membership mix offset by a higher risk score revenues. Our membership now has some more non-dual eligible members which have lower monthly premiums than dual. Higher risk score revenues are the result of the initiatives implemented last year, which ensure the providers are accurately capturing documenting and reporting members’ conditions. Medicaid premiums increased $202 million compared to last year, as a result of the aforementioned change in the contract model effective April 1, 2015. The premiums earned in the commercial business decreased $4 million or 2% when compared with a prior year period reflecting membership decline. The decrease has been largely driven by a reduced number of contracts as we continue focusing on profitability of our volume as well as attrition in existing accounts. The impact of the lower membership was partially offset by higher average commercial per member per month premium, which rose approximately 7% compared to a 4% increase in the same period last year. Managed care claims for the three months ended period were up $177 million while the segment MLR was 84.3% or 320 basis points lower than last year. The Medicaid fully-insured claims amounted to $184 million, resulting in a 91.4% MLR which was, as we mentioned earlier, in line with our expectations. The Medicare MLR was 79.6%, 1,060 basis points lower than the same period a year ago. Adjusting for the effect of prior period reserve development and risk score adjustments, this metric was 81.5%, decreasing 1,000 points when compared with last year. The lower adjusted MLR largely reflects an impact of the initiative implemented last year and a non-recurring adjustment in 2014. The initiative includes provider contracting strategies to ensure quality of care, new compensation models to balance risk and responsibilities with medical groups, renegotiating key vendor contracts and consolidation of contracted medical groups among other initiatives. The underlying claims trend is negative, mostly noted in inpatient and outpatient claims offset by an increase in pharmacy trend. The trend was also impacted by favorable product mix change. The commercial MLR for this quarter was 83.4%, 80 basis points lower than a year ago. Adjusting for the effect of prior period reserve development, this metric was 84.8%, down 180 basis points from prior year, primarily reflecting premium trends that were higher than those of claims. The underlying trend for this quarter has been stable, showing negative trends in inpatient claims offset by an increasing in pharmacy claims trend. In summary, this quarter managed care operating margins expanded by 230 basis points, reflecting higher premiums in the Medicare and Medicaid businesses, and MLR improvement in the Medicare and commercial businesses, partially offset by higher operating expenses. Now, moving to our balance sheet, our investment portfolio totaled $1.3 billion as of December 31, 2015. Unrestricted cash was $198 million at the end of year including $12 million at the barring company level. Our exposure to Puerto Rico government obligations amounts to $25 million or 2% of the portfolio, including $16 million of escrow bonds collateralized with U.S. obligations. It is worth noting that we continue to receive payment from government accounts on a weekly basis and Medicaid payments under the new contract are up-to-date. Days claim payables as of December 31, 2015 were 58, 2 days higher when compared to the end of 2014. Managed Care claim liabilities increased from $249 million as of December 31, 2014, to $348 million a year later, mostly due to a new Medicaid at-risk concept. For the year ended December 31, 2015, net cash generated by operating activities was $233 million, increasing $191 million versus last year, principally reflecting the change in the Medicaid business model and increased collection during 2015. We continue to repurchase our common stock in the open market. In November, our Board of Directors approved a new $25 million repurchase program following the completion of the previous $50 million authorization. During this quarter, we repurchased approximately 346,000 shares between both programs. As of December 31, 2015, we had approximately $21 million remaining under the buybacks program authorized in November. Outstanding shares as of December 31, 2015 were 25 million. As Bobby mentioned before, we’re in the midst of our multi-year strategic transformation which should improve shareholder return and prepare Triple-S for the future growth opportunities. We will now proceed to our Q&A session. Operator, we will now open up the call for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Peter Costa of Wells Fargo. Please go ahead.

First, congratulations on the quarter; and second, welcome back, Juan Jose. Couple of questions for you all. The first one really about the commercial business, I guess mostly, but perhaps also Medicare Advantage. You talked about some of the improvement in the quarter being tied to value-based contracting and performance incentives. Is this something that we should expect to be at least seasonal impact to improve the fourth quarter, as you true up for the year or should we expect that to be spread through the year? In other words, when I am looking at next year, should I be thinking about this as a run rate medical loss ratio for you guys or should be thinking about it for the whole year as more of a run rate? Madeline Hernández: We should be expecting -- this is Madeline Hernández. Good morning. We should be expecting that for all the year as we are planning to set up the study that we implemented for Medicare to leverage it for the commercial business, going forward.

So, in the quarter, was the improvement specifically tied to some of these performance incentives in one business or the other business, or was it across the board; and then, how much of the quarter’s improvement was tied to sort of the performance incentive? Madeline Hernández: The performance incentives were more related to the Medicare business. And what we’re planning to do before the commercial business is to implement a similar strategy now that we have the provider contracting on the one person and we can leverage the benefit of the whole -- through line of business that we currently manage [indiscernible] Commercial and Medicare. Bobby García: So in short, Peter, the improvement in MLR is not related directly to the increase in these types of contracts. Madeline Hernández: It’s more related to underwriting discipline that we keep maintaining.

Got it. And then, can you talk about next year in terms of the rate pressure from Medicare Advantage on yourselves; and this would be 2016 even, not next year. Talk about the rate pressure Medicare Advantage versus the increase in pharmaceutical cost trend. In fact some of your other cost trend being negative but pharmacy is still up and where is Medicare Advantage rates are down; how are you managing through that; what is the place where you are getting the differential there? Bobby García: Okay. As we’ve explained in our prior calls, when we prepare to bid for 2016, we assume that that increase or decrease rather in the rates was going to be around 11%, 12%. So that means we changed our benefit design and we engage in strategies to renegotiate contracts with providers. Madeline Hernández: And we also added additional premiums to partially offset the CMS premium decreases. And that is something that we have built and factored that in our bid that we submitted in July of last year that is effective for January of this year.

Was any of that improvement in provider contracting present in the current quarter’s medical loss ratio or is that all for 2016, so effectively the new renegotiated rates start January 1 or did some start early? Bobby García: Some started earlier. Madeline Hernández: Yes. Remember that we consolidated our IPAs or medical groups to half. We used to have 50 and we got a new half. But also we introduced a new model, PCP model that has helped us in controlling and in anticipation of the reduction in the premiums for this year.

And do you have any idea of how much of that improvement has already taken effect versus what was going be planned to take effect at January 1? Juan Jose Román: Peter, this is Juan Jose. Most of them have been implemented throughout the early 2016, so some of them are already showing progress and that’s part of the improvement in Q4 is that we are starting to see the benefit of many of those of changes. As Madeline mentioned that includes key vendor contracting they have been doing throughout the year. So, you have been seeing some of the benefit, same with the IPAs or the medical group negotiation. And that model continues to be changed or revised. So, we balance the risk and the rewards right from the IPAs. So for next year, the way to look at it is that for 2016, us knowing that increase in the premium rates, what we did is a combination of reviewing benefits, the buyback of the premium as well as how we negotiated the new contracts with the IPAs as well as the new contract with key venders that provide services to us. So, the combination of those is what expect to -- will help us to mitigate the impact of the 11% reduction in premium. Together, let’s not forget, with all the efforts that have been done during the year to improve this coding and the process to get the data from physicians to improve the premiums.

And then regarding the P&C business, for years I’ve been a proponent of you guys selling that business. I’d like to hear your commentary, Bobby, regarding any changes you might have for that business relative to Ramon’s preferred gift? Bobby García: Absolutely, Peter. And my policy growing forward would be to not comment on any potential acquisitions or divestitures or transactions and M&A. I will state however that our focus over the next years will be to continue improving our performance and expanding our core business, which is managed care.

Okay, I appreciate that. And I guess last question is just a detail; what’s cash at the parent? Juan Jose Román: It’s $12 million. [Ph]

[Operator Instructions] There are no more questions at this time. I would like to turn the conference back over to Mr. Robert García for any closing remarks. Bobby García: Okay. Thank you. I am generally excited about leading Triple-S into the future. And I would like to once again publically thank Ramon for his stewardship, dedicated service and contribution to what has been a seamless leadership transition. My executive team and I acknowledge that we will face both, challenges and opportunities as we continue on our journey. But we are confident that by investing in our core markets, we can steadily improve financial results over the next several years. Thanks for all for participating on our call today. We look forward to updating you on our strategic transformation and initiatives as we progress in 2016.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.