TRIPLE-S MANAGEMENT CORP - 10-K filing on 2017-03-10

Claim Liabilities and Claim Adjustment Expenses

12 Months Ended

Dec. 31, 2016

Claim Liabilities and Claim Adjustment Expenses [Abstract]

Claim Liabilities and Claim Adjustment Expenses

10.	Claim Liabilities and Claim Adjustment Expenses

A reconciliation of the beginning and ending balances of claim liabilities in 2016, 2015 and 2014 is as follows:

	2016
	Managed Care			Other Business Segments *			Consolidated

Claim liabilities at beginning of year	$	348,297		$	143,468		$	491,765
Reinsurance recoverable on claim liabilities		-			(40,714	)		(40,714	)
Net claim liabilities at beginning of year		348,297			102,754			451,051
Claims incurred
Current period insured events		2,356,594			103,049			2,459,643
Prior period insured events		(9,047	)		(7,157	)		(16,204	)
Total		2,347,547			95,892			2,443,439
Payments of losses and loss-adjustment
expenses
Current period insured events		2,083,552			58,091			2,141,643
Prior period insured events		263,245			40,657			303,902
Total		2,346,797			98,748			2,445,545
Net claim liabilities at end of year		349,047			99,898			448,945
Reinsurance recoverable on claim liabilities		-			38,998			38,998
Claim liabilities at end of year	$	349,047		$	138,896		$	487,943

	2015
	Managed Care			Other Business Segments *			Consolidated

Claim liabilities at beginning of year	$	249,330		$	140,756		$	390,086
Reinsurance recoverable on claim liabilities		-			(40,635	)		(40,635	)
Net claim liabilities at beginning of year		249,330			100,121			349,451
Claims incurred
Current period insured events		2,216,330			98,279			2,314,609
Prior period insured events		(19,637	)		(1,211	)		(20,848	)
Total		2,196,693			97,068			2,293,761
Payments of losses and loss-adjustment
expenses
Current period insured events		1,868,607			52,369			1,920,976
Prior period insured events		229,119			42,066			271,185
Total		2,097,726			94,435			2,192,161
Net claim liabilities at end of year		348,297			102,754			451,051
Reinsurance recoverable on claim liabilities		-			40,714			40,714
Claim liabilities at end of year	$	348,297		$	143,468		$	491,765

	2014
	Managed Care			Other Business Segments *			Consolidated

Claim liabilities at beginning of year	$	283,615		$	136,806		$	420,421
Reinsurance recoverable on claim liabilities		-			(37,557	)		(37,557	)
Net claim liabilities at beginning of year		283,615			99,249			382,864
Claims incurred
Current period insured events		1,665,255			95,944			1,761,199
Prior period insured events		(36,160	)		(1,251	)		(37,411	)
Total		1,629,095			94,693			1,723,788
Payments of losses and loss-adjustment
expenses
Current period insured events		1,449,224			50,422			1,499,646
Prior period insured events		214,156			43,399			257,555
Total		1,663,380			93,821			1,757,201
Net claim liabilities at end of year		249,330			100,121			349,451
Reinsurance recoverable on claim liabilities		-			40,635			40,635
Claim liabilities at end of year	$	249,330		$	140,756		$	390,086

Other Business Segments include the Life Insurance and Property and Casualty segments, as well as intersegment eliminations.

As a result of differences between actual amounts and estimates of insured events in prior years, the amounts included as claims incurred for prior period insured events differ from anticipated claims incurred.

The favorable developments in the claims incurred and loss-adjustment expenses for prior period insured events for 2016, 2015 and 2014 are due primarily to better than expected utilization trends mostly in the Managed Care segment. Reinsurance recoverable on unpaid claims is reported as premium and other receivables, net in the accompanying consolidated financial statements.

The claims incurred disclosed in this table exclude the portion of the change in the liability for future policy benefits amounting to $28,752, $24,954, and $23,807 that is included within the consolidated claims incurred during the years ended December 31, 2016, 2015 and 2014, respectively.

The following is information about incurred and paid claims development, net of reinsurance, as of December 31, 2016, as well as cumulative claim frequency. Additional information presented includes total incurred- but- not- reported liabilities plus expected development on reported claims is included within the net incurred claims amounts.

The information about incurred and paid claims development for the year ended December 31, 2015 and previous years are presented as supplementary information and unaudited where indicated.

Managed Care

The Company estimates its liabilities for unpaid claims following a detailed actuarial process that entails using both historical claim payment patterns as well as emerging medical cost trends to project a best estimate of claim liabilities. This process includes comparing the historical claims incurred dates to the actual dates on claims payment. Completion factors are applied to claims paid through the financial statements date to estimate the claim expense incurred for the current period. The liability for claim adjustment expenses consists of adjustments made by our actuaries based on their knowledge and their estimate of emerging impacts to benefit costs and payment speed.

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance					As of December 31, 2016

	Incurred amount						(in thousands)
Incurred Year	(unaudited) 2015			2016	Total of IBNR Liabilities Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
2015	$	2,216,330		2,207,283		75,431		17,830
2016				2,356,592		273,040		16,633
	Total		$	4,563,875

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Incurred Year	(unaudited) 2015			2016
2015	$	1,868,607		2,131,852
2016				2,083,552
	Total		$	4,215,404
All outstanding liabilities before 2015, net of reinsurance				576
Liabilities for claims and claim adjustment expenses, net of reinsurance			$	349,047

Property and Casualty

Claims liability for property and casualty represents individual case estimates for reported claims and estimates for unreported losses, net of any salvage and subrogation based on past experience modified for current trends and estimates of expense for investigating and setting claims.

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance																					As of December 31, 2016
Incurred Year	Incurred amount																				Total of IBNR Plus Expected Development on Reported Claims		Cumulative Number of reported claims
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	51,531	$	49,555	$	47,673	$	45,836	$	45,380	$	45,654	$	45,534	$	45,534	$	45,515	$	45,604	$	27		15,762
2008				49,095		48,812		46,443		45,941		45,541		47,658		45,909		45,535		45,571		142		16,089
2009						51,778		51,760		50,848		51,298		51,564		51,315		51,485		51,293		177		18,013
2010								54,226		54,090		55,266		56,400		57,115		57,386		57,242		482		20,918
2011										51,315		50,287		51,105		50,776		51,895		52,099		656		20,222
2012												49,040		49,856		48,900		49,817		48,945		1,565		22,366
2013														52,343		51,030		49,606		49,168		2,274		22,045
2014																48,430		45,410		43,707		3,377		20,085
2015																		45,067		40,175		6,160		18,912
2016																				48,127		16,806		19,897
																	Total		$	481,931

Cumulative Paid claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
Incurred Year
	(unaudited) 2007		(unaudited) 2008		(unaudited) 2009		(unaudited) 2010		(unaudited) 2011		(unaudited) 2012		(unaudited) 2013		(unaudited) 2014		(unaudited) 2015		2016
2007	$	20,912	$	31,298	$	36,287	$	39,477	$	41,918	$	43,203	$	44,007	$	44,470	$	44,835	$	45,133
2008				23,715		32,834		37,420		40,332		41,847		43,787		44,426		44,703		44,867
2009						23,843		35,327		41,810		45,838		48,637		49,709		50,196		50,371
2010								27,118		38,964		45,409		49,808		52,890		54,027		54,996
2011										24,534		34,835		41,606		44,996		47,908		49,598
2012												22,677		33,620		40,406		43,663		45,607
2013														21,376		33,249		38,979		42,840
2014																18,752		28,657		33,809
2015																		17,063		24,935
2016																				20,099

																			$	412,255
										All Outstanding liabilities before 2007, net of reinsurance										1,415
										Liabilities for claims and claims adjustment expenses, net of reinsurance									$	71,091

At December 31, 2016 the amounts of unpaid claims and claim adjustment expenses in the accompanying financial statements are $481,931 and $412,255, respectively.

The following table includes the annual percentage payout of incurred claims by age, net of reinsurance, for property and casualty segment as supplementary information as of December 31, 2016:

		(unaudited) 2007				(unaudited) 2008				(unaudited) 2009				(unaudited) 2010				(unaudited) 2011				(unaudited) 2012				(unaudited) 2013				(unaudited) 2014				(unaudited) 2015				(unaudited) 2016
Average			45.6	%			21.6	%			11.9	%			7.1	%			4.8	%			2.9	%			1.5	%			0.7	%			0.6	%			0.7	%

The reconciliation of the net incurred and paid claims development tables, by segment, to the liability for claims and claim adjustment expenses in the consolidated balance sheets is as follows:

	As of December 31, 2016

Net outstanding liabilities
Managed Care	$	349,047
Property and Casualty		71,091
Other short-duration insurance lines		102
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance		420,240

Reinsurance recoverable on unpaid claims - Property and Casualty		25,885

Insurance lines other than short-duration		42,757
Intersegment Elimination		(939	)
Total gross liability for unpaid claims and claim adjustment expense	$	487,943