Segment Information
 12 Months Ended
Dec. 31, 2016
Segment Information [Abstract]  
Segment Information
26.
Segment Information

The operations of the Company are conducted principally through three reportable business segments: Managed Care, Life Insurance, and Property and Casualty Insurance.  Reportable business segments were identified according to the type of insurance products offered and consistent with the information provided to the chief operating decision maker. These segments and a description of their respective operations are as follows:

·
Managed Care segment – This segment is engaged in the sale of managed care products to the Commercial, Medicare and Medicaid market sectors.  The Commercial accounts sector includes corporate accounts, U.S. federal government employees, individual accounts, local government employees, and Medicare supplement. The following represents a description of the major contracts by sector:

–
The segment is a qualified contractor to provide health coverage to federal government employees within Puerto Rico. Earned premiums revenue related to this contract amounted to $163,556, $155,821, and $152,659 for the three-year period ended December 31, 2016, 2015, and 2014, respectively (see note 12).

–
Under its commercial business, the segment also provides health coverage to certain employees of the Commonwealth of Puerto Rico and its instrumentalities. Earned premium revenue related to such health plans amounted to $29,475, $30,607, and $37,748 for the three-year period ended December 31, 2016, 2015, and 2014, respectively.
 
–
The segment provides services through its Medicare health plans pursuant to a limited number of contracts with CMS. Earned premium revenue related to the Medicare business amounted to $1,023,904, $1,097,657, and $1,013,746 for the three-year period ended December 31, 2016, 2015, and 2014, respectively.

–
The segment also participates in the Medicaid program to provide health coverage to medically indigent citizens in Puerto Rico, as defined by the laws of the government of Puerto Rico.  We served all eight service regions on an administrative service only basis (ASO) until March 31, 2015.  Administrative service fees for each of the years in the two-year period ended December 31, 2015, and 2014 amounted to $24,266, and $95,908, respectively.  Beginning on April 1, 2015, the segment began providing managed care services on a fully-insured basis, earned premium revenue related to this business amounted to $783,231, and $607,216 for the periods ended December 31, 2016, and 2015.

·
Life Insurance segment – This segment offers primarily life and accident and health insurance coverage, and annuity products. The premiums for this segment are mainly subscribed through an internal sales force and a network of independent brokers and agents.

·
Property and Casualty Insurance segment –The predominant insurance insurance products of this segment commercial package, commercial auto, and personal package. The premiums for this segment are originated through a network of independent insurance agents and brokers. Agents or general agencies collect the premiums from the insureds, which are subsequently remitted to the segment, net of commissions. Remittances are generally due 60 days after the closing date of the general agent’s account current.

The Company evaluates performance based primarily on the operating revenues and operating income of each segment.  Operating revenues include premiums earned (net), administrative service fees and net investment income.  Operating costs include claims incurred and operating expenses.  The Company calculates operating income or loss as operating revenues less operating costs.

The accounting policies for the segments are the same as those described in the summary of significant accounting policies included in the notes to consolidated financial statements.  The financial data of each segment is accounted for separately; therefore no segment allocation is necessary. However, certain operating expenses are centrally managed, therefore requiring an allocation to each segment. Most of these expenses are distributed to each segment based on different parameters, such as payroll hours, processed claims, or square footage, among others. In addition, some depreciable assets are kept by one segment, while allocating the depreciation expense to other segments. The allocation of the depreciation expense is based on the proportion of assets used by each segment. Certain expenses are not allocated to the segments and are kept within TSM’s operations.
 
The following tables summarize the operations by operating segment for each of the years in the three‑year period ended December 31, 2016:
 
  
2016
  
2015
  
2014
 
          
Operating revenues
         
Managed care
         
Premiums earned, net
 
$
2,647,169
  
$
2,548,270
  
$
1,894,791
 
Fee revenue
  
17,843
   
44,705
   
119,302
 
Intersegment premiums/fee revenue
  
5,918
   
5,860
   
5,681
 
Net investment income
  
15,102
   
11,779
   
15,010
 
Total managed care
  
2,686,032
   
2,610,614
   
2,034,784
 
Life
            
Premiums earned, net
  
156,140
   
147,864
   
142,245
 
Intersegment premiums
  
716
   
251
   
240
 
Net investment income
  
24,877
   
24,457
   
23,717
 
Total life
  
181,733
   
172,572
   
166,202
 
Property and casualty
            
Premiums earned, net
  
87,332
   
87,020
   
91,530
 
Intersegment premiums
  
613
   
613
   
613
 
Net investment income
  
8,891
   
8,706
   
8,600
 
Total property and casualty
  
96,836
   
96,339
   
100,743
 
Other segments*
            
Intersegment service revenues
  
9,907
   
10,863
   
9,100
 
Operating revenues from external sources
  
3,563
   
3,875
   
4,234
 
Total other segments
  
13,470
   
14,738
   
13,334
 
Total business segments
  
2,978,071
   
2,894,263
   
2,315,063
 
TSM operating revenues from external sources
  
19
   
53
   
95
 
Elimination of intersegment premiums
  
(7,247
)
  
(6,724
)
  
(6,534
)
Elimination of intersegment service revenue
  
(9,907
)
  
(10,863
)
  
(9,100
)
Other intersegment eliminations
  
(78
)
  
23
   
116
 
Consolidated operating revenues
 
$
2,960,858
  
$
2,876,752
  
$
2,299,640
 

*
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinic.
 
  
2016
  
2015
  
2014
 
          
Operating (loss) income
         
Managed care
 
$
(36,777
)
 
$
20,514
  
$
31,445
 
Life
  
21,458
   
20,012
   
22,561
 
Property and casualty
  
12,074
   
8,273
   
10,044
 
Other segments*
  
(1,784
)
  
(301
)
  
(4,440
)
Total business segments
  
(5,029
)
  
48,498
   
59,610
 
TSM operating revenues from external sources
  
19
   
53
   
95
 
TSM unallocated operating expenses
  
(9,739
)
  
(18,858
)
  
(14,571
)
Elimination of TSM charges
  
9,522
   
9,623
   
9,717
 
Consolidated operating (loss) income
  
(5,227
)
  
39,316
   
54,851
 
Consolidated net realized investment gains
  
17,379
   
18,941
   
18,231
 
Consolidated interest expense
  
(7,635
)
  
(8,169
)
  
(9,274
)
Consolidated other income, net
  
6,569
   
7,043
   
2,243
 
Consolidated income before taxes
 
$
11,086
  
$
57,131
  
$
66,051
 
 
   
2016
   
2015
   
2014
 
Depreciation and amortization expense
            
Managed care
 
$
11,114
  
$
13,268
  
$
17,935
 
Life
  
1,030
   
1,094
   
1,394
 
Property and casualty
  
544
   
673
   
994
 
Other segments*
  
645
   
556
   
3,264
 
Total business segments
  
13,333
   
15,591
   
23,587
 
TSM depreciation expense
  
787
   
788
   
813
 
Consolidated depreciation and amortization expense
 
$
14,120
  
$
16,379
  
$
24,400
 

*
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinic.
 
  
2016
  
2015
  
2014
 
          
Assets
         
Managed care
 
$
1,013,872
  
$
1,034,725
  
$
975,999
 
Life
  
816,920
   
770,721
   
764,268
 
Property and casualty
  
349,159
   
350,514
   
362,620
 
Other segments*
  
26,034
   
25,629
   
22,682
 
Total business segments
  
2,205,985
   
2,181,589
   
2,125,569
 
Unallocated amounts related to TSM
            
Cash, cash equivalents, and investments
  
17,033
   
12,304
   
44,157
 
Property and equipment, net
  
22,380
   
23,219
   
20,415
 
Other assets
  
21,646
   
31,732
   
37,851
 
   
61,059
   
67,255
   
102,423
 
Elimination entries – intersegment receivables and others
  
(48,045
)
  
(42,699
)
  
(82,256
)
Consolidated total assets
 
$
2,218,999
  
$
2,206,145
  
$
2,145,736
 
 
   
2016
   
2015
   
2014
 
Significant noncash items
            
Net change in unrealized gain (loss) on securities available for sale
            
Managed care
 
$
104
  
$
(15,505
)
 
$
6,055
 
Life
  
2,659
   
(13,005
)
  
22,349
 
Property and casualty
  
(2,984
)
  
(10,482
)
  
7,789
 
Other segments*
  
105
   
(10
)
  
-
 
Total business segments
  
(116
)
  
(39,002
)
  
36,193
 
Amount related to TSM
  
9
   
13
   
(310
)
Consolidated net change in unrealized gain (loss) on securities available for sale
 
$
(107
)
 
$
(38,989
)
 
$
35,883
 

*
Includes segments that are not required to be reported separately, primarily the data processing services organization and the health clinic.