A.M. Best Downgrades Ratings of Triple-S and Its Affiliates.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength ratings to B++ (Very Good) from A- (Excellent) and the issuer credit ratings (ICR) to "bbb+" from "a-"for Triple-S, Inc. (TSI) and Great American Life Assurance Company of Puerto Rico (GALPR). Seguros de Vida Triple-S, Inc. (SVTS) was merged into GALPR effective June 30, 2006. As a result, A.M. Best has withdrawn the FSR of A- (Excellent) and the ICR of "a-" of SVTS. A.M. Best has also downgraded the debt rating of TSI to "bbb" from "bbb+" on its $50 million 6.3% senior unsecured notes, due 2019. Additionally, A.M. Best has downgraded the ICR to "bbb-" from "bbb+" on the parent organization, Triple-S Management Corporation (TSM). The ratings of TSI and TSM are being removed from under review and assigned a stable outlook, while GALPR's rating outlook remains stable. All companies are domiciled in San Juan, PR.

These rating actions reflect the increased level of debt at TSM. Due to the acquisition of GALPR, the debt-to-capital level increased to over 35% in first quarter 2006 from just under 25% at year-end 2004. The increased debt and debt service requirements may place additional pressure on the operating results of the insurance subsidiaries.

A.M. Best views TSI's concentration in the health reform business as a weakness due to its susceptibility to state government regulations. Additionally, earnings on the health reform segment are capped at a 2.5% operating margin. Given the large portion of TSI's overall business represented by the health reform segment, the earnings cap limits profitability. Furthermore, TSI represents a significant portion of TSM's consolidated earnings. Moreover, TSI's level of risk-based capitalization, although adequate, is not in line with other Excellent-rated Blue plans and its Best Capital Adequacy Ratio (BCAR) corresponds with its new ratings.

A.M. Best acknowledges TSI's established presence in the health reform market, having participated for many years. However, A.M. Best remains concerned about the concentration of business reliant on government funding and the volatility of earnings from the health reform business.

As a result of the acquisition expenses from a coinsurance agreement implemented in fourth quarter 2005 between GALPR and SVTS, the latter reported a significant one time loss for the year. SVTS issued a surplus note to TSM to offset the decline in capital and surplus.

SVTS was merged into GALPR in June 2006 and the surplus notes carried over to GALPR. Additionally, the surplus notes are expected to exceed the amount of available capital and surplus at GALPR.

Offsetting factors include the strength of the Triple-S brand name and recognition in its market. In January 2006, TSM acquired GALPR, and on June 30, 2006 SVTS was merged into GALPR. This transaction has placed GALPR as the market leader in the life insurance segment in Puerto Rico. The transaction has provided GALPR with a complete and diversified life insurance products portfolio to offer to all markets in Puerto Rico. With the acquisition by TSM, GALPR can benefit from the affiliation with the Triple-S brand name. A.M. Best believes that as the company develops cross-selling strategies, it should be able to further strengthen its current market share and branch out into other lines of business, which could complement the health care products offered by TSI. Consolidated earnings for TSM are expected to improve in 2006. The growth in earnings is largely due to an increase in profitability at TSI in both the commercial and health reform segments. In 2005, results were negatively impacted by adverse development of the claim reserves at December 2004, which were accounted for in first quarter 2005. Additionally, the experience in the health reform business has improved largely due to rate increases implemented in the second half of 2005.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.