A.M. Best Affirms Ratings of Triple-S, Management, Inc. and Affiliates.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength ratings (FSR) of B++ (Good) and issuer credit ratings (ICR) of "bbb+" of Triple-S, Inc. (TSI) and Great American Life Assurance of Puerto Rico (GALPR). Additionally, A.M. Best has affirmed the debt rating of "bbb" on $50 million 6.30% senior unsecured notes due 2019 of TSI. A.M. Best has also affirmed the ICR of "bbb-" of the holding company, Triple-S Management Corporation (TSM). The outlook for all ratings is stable. All companies are domiciled in San Juan, PR.

These rating actions reflect TSI's prominent market presence in Puerto Rico, its diversified product portfolio and the fragmented pressure from its competitors. Additionally, these rating actions reflect GALPR's strong market position, profitable results and a diversified product offering. TSI benefits from strong brand name recognition in its market and has the largest share of all the managed care companies operating in the Puerto Rico market. However, its market share has slightly declined over the last several years. The decline in market share is primarily attributed to the competition in the Medicare Advantage policy offerings and the loss of the Metro-North region in the Government Health Reform market.

In 2006, GALPR was merged with Seguros de Vida Triple-S Inc., an affiliated company. GALPR is the market leader in the life insurance segment and in the home service insurance market in Puerto Rico. Furthermore, GALPR has a stable revenue stream from diversified product offerings, the majority of which is delivered through home service.

Offsetting these positive rating factors is the debt level at TSM and TSI's concentration in the health reform segment. TSM's debt-to-capital level was nearly 35% as of December 31, 2006, a level considered high when compared to its peers. The increase in the level of debt at TSM in 2006 is related to the acquisition of GALPR. In addition, interest coverage at five times is considered low for the managed care industry. The debt and debt service requirements may place additional pressure on the operating results of the insurance subsidiaries.

A large portion of TSI's revenues are generated from the Health Reform business, which is susceptible to state government regulations. Due to the loss of the Metro-North region in this segment, TSI's Health Reform concentration, decreased from 34% of total premiums in 2006 to an estimated 23% in 2007. Earnings on this segment are capped at 2.5% of net income, and the company is required to return to the government 75% of any excess over 2.5%. Moreover, the Commonwealth of Puerto Rico has deferred renewal rate increases on this product in the past, which impacts profitability. Additionally, the loss of the Metro-North Reform business and the reliance on this type of business may challenge TSI in earnings growth in the near term.

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