United States Securities and Exchange Commission

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

COMMISSION FILE NUMBER 0-49762

Triple-S Management Corporation

1441 F.D. Roosevelt Avenue, San Juan, PR 00920

(787) 749-4949

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $40.00 Par Value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). ¨ YES þ NO

The aggregate market value of common stock held by non-affiliates of the registrant as of December 31, 2004 was $356,160. *

The number of shares outstanding of the registrant’s common stock as of March 15, 2005 was 8,904.

The Articles of Incorporation of Triple-S Management Corporation (TSM) provide for redemption of the common stock of TSM at the original amount paid by the shareholder. There is no established public trading market for TSM’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held April 25, 2005 are incorporated by reference into Part III of this Annual Report on Form 10-K.

Triple-S Management Corporation

FORM 10-K

For The Fiscal Year Ended December 31, 2004

INDEX

Part I

Item 1. Business.

General Description of Business and Recent Developments

Triple-S Management Corporation (TSM) is incorporated under the laws of the Commonwealth of Puerto Rico. It is the holding company of several entities, through which it offers a wide range of insurance products and services. These products and services are offered through the following TSM wholly-owned subsidiaries:

	•	Triple-S, Inc. (TSI), a health insurance company serving two major segments: the Commercial Program and the Commonwealth of Puerto Rico Health Reform Program (the Reform);
	•	Seguros Triple-S, Inc. (STS), a property and casualty insurance company; and
	•	Seguros de Vida Triple-S, Inc. (SVTS), a life and disability insurance and annuity products company.

TSM’s insurance subsidiaries, as well as other insurers doing business in Puerto Rico, are subject to the regulations and supervision of the Office of the Commissioner of Insurance of the Commonwealth of Puerto Rico (the Commissioner of Insurance). The regulations and supervision of the Commissioner of Insurance consists primarily of: the approval of policy forms and rates, when applicable, the standards of solvency that must be met and maintained by insurers and their agents, and the nature of and limitations on investments, deposits of securities for the benefit of policyholders, methods of accounting, periodic examinations and the form and content of reports of financial condition required to be filed, among others. In general, such regulations are for the protection of policyholders rather than security holders.

In addition to the insurance subsidiaries mentioned above, TSM has the following other wholly-owned subsidiaries: Interactive Systems, Inc. (ISI) and Triple-C, Inc. (TCI). ISI provides data processing services to Triple-S Management Corporation and its subsidiaries (the Corporation). TCI is currently engaged as the third-party administrator in the administration of the Corporation’s Reform segment described under “Health Insurance – Reform Segment”. It also provides healthcare advisory services to TSI and other health-related services.

All of the premiums generated by the insurance subsidiaries are generated from customers within Puerto Rico. In addition, long-lived assets, other than financial instruments, including deferred policy acquisition costs and deferred tax assets of the Corporation, are located in Puerto Rico.

TSI was exempt through 2002 from Puerto Rico income taxes under a ruling issued by the Department of the Treasury. On June 18, 2003, the Department of the Treasury notified the TSM and TSI that the ruling recognizing TSI’s exemption was terminated effective December 31, 2002. The termination of the ruling responded to a new public policy set by the Department of the Treasury according to which tax exemptions under Section 1101(6) of the Puerto Rico Internal Revenue Code of 1994 (the P.R. Code), as amended, will not apply to corporations organized as for-profit, which is TSI’s case.

On July 31, 2003, TSM and TSI executed a closing agreement with the Department of the Treasury. In general, the terms of the closing agreement established the termination of TSI’s tax exemption effective December 31, 2002. Accordingly, effective January 1, 2003 TSI is subject to Puerto Rico income taxes as an other-than-life insurance entity, as defined in the P.R. Code.

The closing agreement also stipulates that TSM will pay taxes on TSI’s accumulated statutory net income, in accordance with the income recognition methodology applied by the Secretary of the Treasury in the closing agreement and the ruling mentioned above. This tax ruling established the following methodology for TSM to determine its tax liability:

	•	TSI’s accumulated statutory net income while operating under the tax exemption, amounting to $132.8 million, was deemed distributed to TSM.
	•	For tax purposes, TSM recognized the exempt accumulated statutory net income as gross income. On this amount, TSM recognized an income tax liability amounting to $51.8 million, which was determined by

applying a tax rate of 39% to the exempt accumulated statutory net income deemed distributed to TSM. This income tax liability was recorded by TSM within the current income tax expense in the 2003 consolidated statements of earnings. Of this tax $37.0 million were paid on July 31, 2003, the date of the closing agreement, and $14.8 million on April 15, 2004.

The Corporation has not declared or distributed dividends on its common stock by virtue of an affirmative vote of its stockholders. However, a resolution was approved by the Corporation’s stockholders at the Annual Meeting held on April 27, 2003, acknowledging that the Board of Directors (the Board) of the Corporation may declare dividends subject to the Board’s determination that in its best judgment the payment of dividends is financially and legally feasible.

The amount of TSM’s net income available for distribution to stockholders had excluded TSI’s results of operations for the year 2002 and prior years due to a prohibition on declaring dividends contained in the tax exemption ruling. Since TSI’s tax exemption ended effective December 31, 2002, its earnings are now available for distribution to TSM’s stockholders.

Available Information

TSM files annual, quarterly and current reports and other information with the Securities and Exchange Commission (the SEC). The SEC maintains a website that contains annual, quarterly and current reports and other information that issuers (including TSM) file electronically with the SEC. The SEC’s website is www.sec.gov. The filings of TSM with the SEC are not available in its website address (ssspr.com) since the Corporation’s stock has no established public trading market. The information on our website is not incorporated by reference into this report. The website addresses listed above are provided for the information of the reader and are not intended to be active links. The Corporation will provide free of charge copies of its filings to any shareholder that requests them at the following address: Triple-S Management Corporation; Office of the Secretary of the Board; PO Box 363628; San Juan, P.R. 00936-3628.

Cautionary Statement Regarding Forward-Looking Information

This Annual Report on Form 10-K and other publicly available documents of TSM may include statements that constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, among other things, statements concerning the financial condition, results of operations and business of the Corporation. These statements are not historical, but instead represent TSM’s belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Corporation’s control. These statements may address, among other things, future financial results, strategy for growth, and market position. It is possible that the Corporation’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. The factors that could cause actual results to differ from those in the forward-looking statements are discussed throughout this Form 10-K. TSM is not under any obligation to update or alter any forward-looking statement (and expressly disclaims any such obligations), whether as a result of new information, future events or otherwise. Factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, but are not limited to, rising healthcare costs, business conditions and competition in the different insurance segments, government action and other regulatory issues.

Puerto Rico’s Economy

Key economic indicators published by the government of Puerto Rico for 2003, latest official figures published, suggested that the economy had begun a slow recovery during that year. The indicators published by the government for 2003 presented a growth in the local economy of 0.3%, after three years of economic slowdown. This recovery appears to have gained strength during 2004 but a slower pace than anticipated. In February 2004, the government forecasted that during 2004 the economy would grow by approximately 2.9% which, even when higher than the growth during 2003, is still lower than the growth experienced prior to the 2002 recession. The government’s forecast for 2005 projects an increase in economic growth of approximately 2.7%. The sluggish performance of the Puerto Rico economy during the last several years is due to many factors. First, the slow growth of the United States economy in past years has had a direct impact on the Puerto Rican economy. On a local level, the fiscal crisis of the government of Puerto Rico has led to tax increases and the postponement of several tax-cut measures, which is not only a discouraging factor for economic growth but also creates doubts that tend to slow investments. In addition, due to the fiscal crisis, the government of Puerto Rico is immersed in an analysis of different alternatives to increase its revenues, including the possibility of a tax reform. The real growth rate of the economy in Puerto Rico will be directly affected by the expected U.S. economy growth.

The overall growth of the U.S. economy is the most important variable exerting an impact on Puerto Rico’s economy. The U. S. government reported that its economy grew 4.4% during 2004, following a growth of 3.0% during 2003. The economic growth experienced is the fastest since 1999. The economists believe that the U.S. economy will keep growing at a solid pace in 2005, but at lower rates than during the extraordinary expansion of the second half of the nineties. Even with the apparent rebound in the economy, rising interest rates, the possibility of another terrorist attack, continuing concerns with international politics and corporate and accounting irregularities might damper the economic rebound in the U.S. and Puerto Rico economies.

Insurance Industry

The insurance industry in Puerto Rico is highly competitive and is comprised of both local and foreign entities. The approval of the Gramm-Leach-Bliley Act of 1999, which applies to financial institutions domiciled in Puerto Rico, has opened the insurance market to new competition since financial institutions are permitted to enter into the insurance business. At the moment, several banks in Puerto Rico have established subsidiaries that operate as insurance agencies.

Natural disasters, which have affected Puerto Rico greatly over the past ten years, have prompted local government to create property and casualty insurance reserves through legislation in order to provide coverage for catastrophic events. The auto insurance market has also been affected by government regulation, with the Compulsory Auto Insurance Law, which was passed in 1995. This law requires vehicle owners to maintain a minimum of $3,000 in public liability insurance. Additionally, the healthcare insurance sector has experienced significant changes in the past ten years due to the implementation of the Reform Program (the Program). This Program provides healthcare coverage to Puerto Rico’s medically indigent population (as defined by the law), estimated at over 1.3 million lives as of December 31, 2004.

The Corporation is the leader in the insurance industry in Puerto Rico, as measured by the share of its consolidated premiums of the total insurance premiums subscribed in Puerto Rico. The Corporation’s health insurance company, TSI, is the leader in the health insurance industry. TSI’s participation in the health insurance industry, considering both the Commercial and Reform segments, provide this subsidiary with a market share of approximately 34.8% as of December 31, 2004. The property and casualty and the life insurance subsidiaries also have important positions in their respective markets. As of December 31, 2004, STS had a market share of approximately 7.9% in the property and casualty insurance industry in Puerto Rico. During 2003 SVTS had a market share of approximately 18.0% in the group life insurance market in Puerto Rico.

Almost all of the Corporation’s business is done within Puerto Rico and as such, it is subject to the risks associated with Puerto Rico’s economy and its geographic location.

The operations of the Corporation are conducted principally through three business segments, which are identified according to the type of insurance products offered. These segments and a description of their respective operations are as follows:

Health Insurance – Commercial Segment

The Corporation participates in the commercial health insurance marketplace through TSI. Total premiums in the Commercial segment represented 55.4%, 55.0% and 54.6% of the Corporation’s consolidated total premiums for the years 2004, 2003 and 2002, respectively.

TSI is a Blue Cross and Blue Shield Association large-affiliated licensee, which allows TSI to use the Blue Shield brand in Puerto Rico. TSI’s participation in the health insurance industry with the Commercial and Reform segments provide this subsidiary with a market share of approximately 34.8% as of December 31, 2004. TSI offers a variety of health insurance products, and is the leader by market share in almost every health insurance market sector, as measured by the share of premiums subscribed. Its market share is more than double that of its nearest competitor (Medical Card Systems, which has a market share of approximately 15.1%) and is three times larger than that of its second nearest competitor (Humana, which has a market share of approximately 11.6%). In addition to the Reform segment described below, TSI offers its products to five distinct market sectors in Puerto Rico. During 2004, TSI had the following market share within each sector: Corporate Accounts (groups), 43.3%; Federal Employees, 99.2%; Local Government Employees, 8.1%; Individual Accounts, 56.5%; and approximately 68.7% in the Medicare supplemental sector. Within the Corporate Accounts sector, employer groups may choose various funding options ranging from fully insured to self-funded financial arrangements. While self-funded clients participate in TSI’s networks, the clients bear the claims risk. Through a contract with the United States Office of Personnel Management (OPM), TSI provides health benefits to federal employees in Puerto Rico under the Federal Employees Health Benefits Program. This contract is subject to termination in the event of a noncompliance not corrected to the satisfaction of OPM. TSI also provides health insurance coverage to certain employees of the government of Puerto Rico and its instrumentalities.

Earned premium revenue related to government of Puerto Rico health plans amounted to $67.1 million, $65.9 million and $64.6 million for the three years ended December 31, 2004, 2003 and 2002, respectively. In addition, TSI processes and pays claims as carrier for the Medicare – Part B Program in Puerto Rico and the United States Virgin Islands. As a carrier for Medicare-Part B, TSI allocates operating expenses to determine reimbursement due for services rendered in accordance with the contract.

TSI’s premiums are generated from customers within Puerto Rico. The premiums for the Commercial segment are mainly originated through TSI’s internal sales force and a network of brokers and independent agents. For purposes of segment reporting, the Reform sector is considered a different segment and is separately analyzed. (See “Health Insurance –Reform Segment”.)

TSI’s business is subject to changing federal and local legal, legislative and regulatory environments. Some of the more significant current issues that may affect TSI’s business include:

	•	efforts to expand the tort liability of health plans,
	•	initiatives to increase healthcare regulation,
	•	local government initiatives for mandatory benefits,
	•	Medicare reform legislation.

The U.S. Congress continues to debate legislation containing various patient protection initiatives, including provisions that could expose insurance companies to economic damages, and certain punitive damages, for making a determination denying benefits or for delaying members’ receipt of benefits as well as for other coverage determinations. This situation is also an issue at the local level. Given the political process, it is not possible to determine whether any federal and/or local legislation or regulation will be enacted into law in 2005 or what form any such legislation might take.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) became law in December 2003. With this Act the Federal government, through the Centers for Medicare and Medicaid Services (CMS), will replace the current Title 18 fiscal intermediary (FI) and carrier contracts with competitively procured contracts that conform to the Federal Acquisition Regulation under the new Medicare Administrative Contractor (MAC) contracting authority. CMS has six years, between 2006 and 2011, to complete the transition of Medicare fee-for-service claims processing activities from the FI’s and carriers to the MAC’s. TSI is currently engaged in the analysis and evaluation of this transition process and the effect that it may have in the existing organizational structure as a Medicare carrier.

Title II of MMA established the Medicare Advantage Program, one of the most significant elements in the Medicare reform, which will have a significant impact in the local and national healthcare industry. Under this Title, and subject to a certification process from CMS, private healthcare organizations will be able to provided medical services to the Medicare program beneficiaries. On November 2004, TSI was certified by CMS as a Medicare Advantage Preferred Provider Organization (PPO), being at this time, the only PPO certified in Puerto Rico. TSI’s Medicare Advantage Program, known as Medicare Optimo, was successfully launched in January 2005.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) authorizes the U.S. Department of Health and Human Services (HHS) to issue standards for administrative simplification, as well as privacy and security of medical records and other individually identifiable health information. The regulations under the HIPAA Administrative Simplification section impose a number of additional obligations on issuers of health insurance coverage and health benefit plan sponsors. HIPAA Administrative Simplification section requirements apply to self-funded group plans, health insurers and HMO’s, health care clearinghouses and health care providers who transmit health information electronically (“covered entities”). Regulations adopted to implement HIPAA Administrative Simplification also require that business associates acting for or on behalf of HIPAA-covered entities be contractually obligated to meet HIPAA standards. The regulations of the Administrative Simplification section establish significant criminal penalties and civil sanctions for noncompliance.

HHS has released rules mandating the use of new standard formats with respect to certain health care transactions (e.g. health care claims information, plan eligibility, referral certification and authorization, claims status, plan enrollment and disenrollment, payment and remittance advice, plan premium payments and coordination of benefits). HHS also has published rules requiring the use of standardized code sets and unique identifiers by employers and providers. TSI was required to comply with the transactions and code set standards by October 16, 2003 and with the employer identifier rules by July 2004 and believes that it has met all relevant requirements. TSI is required to comply with provider identifier rules by May 2007.

HHS also sets standards relating to the privacy of individually identifiable health information. In general, these regulations restrict the use and disclosure of medical records and other individually identifiable health information held

by health plans and other affected entities in any form, whether communicated electronically, on paper or orally, subject only to limited exceptions. In addition, the regulations provide patients new rights to understand and control how their health information is used. HHS has also published security regulations designed to protect member health information from unauthorized use or disclosure. TSI is required to comply with these security regulations by April 2005.

TSI is moving forward with implementation efforts to comply with HIPAA regulations on the required due dates.

The most significant challenge facing the healthcare industry continues to be the raising trend of healthcare costs, driven by the direct and indirect effect of legislative and regulatory actions. Insurance companies are focused in developing programs and new strategies that consider a combination of competitive premium pricing to sustain market share and cost reduction initiatives to achieve a satisfactory yield in the healthcare cost inflation scenario. Recently developed models strive for new products that essentially shift costs, and therefore the burden of decision making to the consumer. These new products, through higher deductible and co-payments, try to create consumer’s awareness and control the use of medical services. The development and consistent self-improvement of effectively-designed benefit management programs has become more relevant to the insurance industry profitability model. These trends have caused the health insurance industry to adopt strategies that emphasize benefits management (such as a defined contribution product) and to move away from more restrictive medical management strategies (such as the pre-authorization of certain procedures).

During past years, and as a result of increases in claims costs, TSI implemented procedures to assure that all its businesses are priced with adequate premium rates that reflect the actual claims trend of each particular business. In spite of this, TSI has achieved and exceeded projected retention rates. The retention rate, which is the percentage of existing business retained in the renewal process, was 95.7% in 2004, 95.0% in 2003, and 94.4% in 2002. In addition, TSI has maintained its overall market share during the last three years.

TSI has established healthcare management program strategies that seek to control claims costs while striving to fulfill the needs of highly informed and demanding healthcare consumers. Among these strategies is the implementation of disease and case management programs. These programs empower consumers by providing them with education and engaging them in actively maintaining or improving their own health. Early identification of patients and inter-program referrals are the milestones of these programs, which provide for integrated and optimal service. Other strategies include innovative partnerships and business alliances with other entities to provide new products and services such as: a 24-hour telephone based triage and health information service; an employee assistance program; and, the promotion of evidence-based protocols and patient safety programs among our providers. TSI has also implemented a hospital concurrent review program, the goal of which is to monitor the appropriateness of high admission rate diagnoses and high cost stays. To stem the rising tide in pharmacy benefit costs, TSI has implemented a three-tier formulary product, which has proved to be very effective, an exclusive provider organization and benefits design changes.

TSI expects to remain competitive in the markets in which it operates, particularly the Corporate Groups segment.

Health Insurance –Reform Segment

The Corporation participates in the medically indigent health insurance market through TSI. The Health Insurance - Reform segment comprises TSI’s participation in the Reform. The Reform segment premiums represented 37.1%, 37.5%, and 37.5% of the Corporation’s consolidated total premiums for the years 2004, 2003 and 2002, respectively.

In 1994, the government of the Commonwealth of Puerto Rico (the government) privatized the delivery of services to the medically indigent population in Puerto Rico, as defined by the government, by contracting with private health insurance companies instead of providing health services directly to such population. The government divided the Island into ten geographical areas. By December 31, 2001, the Reform had been fully implemented in each of the geographical areas. Each geographical area is awarded to a health insurer doing business in Puerto Rico through a competitive process requesting proposals from the industry.

The government has been asking insurers to control the increase of Reform expenditures, which represent approximately 13.0% of total government expenditures. Several measures have been undertaken by the government to control Reform costs. Some of these measures include closer and continuous scrutiny of participant’s (members) eligibility, decreasing the number of areas in order to take advantage of economies of scale and establishing disease management programs. Mental health benefits are currently offered to Reform beneficiaries by behavioral healthcare and mental healthcare companies. The government is considering carving-out additional benefits provided by the insurers. Effective July 1, 2003, the government began a pilot project in which it is contracting directly with a provider medical group, instead of through the health insurance companies. This project was not implemented in any of the

areas served by TSI, but the government is not precluded from implementing a similar project in areas served by TSI in the future.

In 2002 the government redistributed the geographical areas, merging two of the existing areas with the remaining ones, thus reducing geographical areas to eight. As a result of the reorganization of the geographical areas, the Northwest area (previously administered by TSI) was merged into the West area. In addition, and as a result of the same reorganization, six new municipalities were merged into areas administered by TSI. Commencing on July 1, 2002, TSI was awarded three of the eight resulting geographical areas: North, Metro-North and Southwest. All Reform contracts were negotiated for a term of three years; the contracts expire on June 30, 2005. The premium rates of each contract, however, are negotiated annually. As part of the annual premiums renegotiation process, effective July 1, 2004 and for a twelve month-period ending June 30, 2005, premium rates under all the contracts were increased by approximately 4.35%. The contracts include a provision, however, that if the net income of a geographical area for any given contract year, as defined, resulting from the provision of services under the contract exceeds 2.5% of earned premiums, the insurance company is required to return 75.0% of the excess to the government. In case the contract renewal process is not completed by a contract’s expiration date, the contract may be extended by the government, upon acceptance by TSI, for any subsequent period of time if deemed to be in the best interests of the beneficiaries and the government. The terms of a contract, including premiums, can be renegotiated if the term of the contract is extended. The Reform contracts negotiation process was scheduled to begin during the month of February 2005. However, on this month TSI was notified of the government’s interest in extending the contracts until December 31, 2005. TSI has agreed to this request and is in the process of determining any contract terms, including premiums, which may need to be modified. TSI expects to participate in the contracts bidding process and to submit proposals to renew each of the existing contracts.

The contract for each geographical area is subject to termination in the event of any non-compliance by the insurance company which is not corrected or cured to the satisfaction of the government entity overseeing the Reform, or in the event that the government determines that there is an insufficiency of funds to finance the Reform. This last event will require prior written notice of at least ninety days. The loss of any or all of TSI’s three Reform contracts would have a material adverse effect on the Corporation’s operating results. This could include the downsizing of certain personnel, the cancellation of lease agreements of certain premises and of certain contracts, and severance payments, among others. Also, this would result in a significant decrease in TSI’s volume of premiums, claims and operating expenses.

As of December 31, 2004, three insurance companies were participating in the Reform. The three insurance companies and their related market shares as of June 30, 2004 were the following: TSI (39%), Medical Card System (34%) and Humana (27%). Once the Reform was fully in place, any participating insurance company’s growth in this segment depends on winning a geographical area serviced by another insurance company or through the restructuring of the geographical areas. The health insurance companies that decide to participate in this business compete against each other during the contract adjudication process. Management believes that the Corporation’s Reform segment’s competitive strengths include TSI’s highly efficient administrative structure and quality of services.

To provide services to its Reform membership, TSI established a managed care program, similar to a Health Maintenance Organization (HMO), that integrates both the financing and delivery of services in order to manage the accessibility, cost and quality of care. The established managed care model includes disease and demand management as well as preventive healthcare services. Management believes that all of these programs and TSI’s effective administrative and pricing structure have made TSI one of the most attractive participants in the Reform.

TSI has established a network of Independent Practice Associations (IPA) to provide service to its Reform beneficiaries in the Reform areas serviced by TSI. TSI believes it has designed the economic model that best suits the IPA’s and the primary care physicians (PCP). The risks covered by the Reform policy are divided among those assumed by the IPA’s and those retained by TSI. The IPA receives an amount per capita, and it assumes the costs of services provided and referred by its PCP’s, including procedures and in-patient services not related to risks assumed by TSI. As part of its services, TSI retains a portion of the capitation payments to the IPA’s as a reserve to provide for incurred, but not reported claims (IBNR) for services rendered by providers other than PCP’s. TSI retains the risk associated with services provided to the beneficiaries with special healthcare needs, such as: neonatal, obstetrical, AIDS, cancer, cardiovascular, and dental services, among others. Effective October 1, 2001, mental healthcare services were carved-out by the government and contracted with behavioral healthcare companies.

Reform contracts have generally been for twelve-month periods. Premiums need to be determined taking into consideration future costs of services. Since premium levels for this significant block of business are determined on a yearly basis, TSI is exposed to a significant underwriting risk.

TSI entered into a service agreement with TCI for the administration of the Reform segment operations in exchange for a service fee that will cover TCI’s operating expenses plus a profit.

Property and Casualty Insurance Segment

The Corporation participates in the property and casualty insurance market through STS. The property and casualty insurance segment premiums represented 6.6%, 6.2% and 4.9% of the Corporation’s consolidated total premiums for the years 2004, 2003 and 2002, respectively.

STS is a multiple line insurer that underwrites substantially all lines of property and casualty insurance. Its predominant lines of business are commercial multiple peril, auto physical damage, auto liability and dwelling insurance. The segment’s commercial lines underwriting targets small to medium size accounts with low to average exposures to catastrophe losses and the dwelling portfolio targets rate stability and a very low exposure to catastrophe losses. Business is exclusively subscribed in Puerto Rico through approximately twenty general agencies, including Signature Insurance Agency, Inc. (SIA), and independent insurance agents and brokers. SIA is STS’s wholly-owned subsidiary and placed approximately 53%, 46% and 45% of STS’s total premium volume during 2004, 2003 and 2002.

In 2004, STS’s is in the fifth position in the property and casualty market in Puerto Rico, with a market share of approximately 7.9%. The segment’s nearest competitors and their market share of the property and casualty insurance market in Puerto Rico were: National Insurance Company (5.8%) and ACE Insurance Co. (4.6%). The market leaders in the property and casualty insurance industry in Puerto Rico are the Cooperativa de Seguros Múltiples Group (which now includes Real Legacy Assurance Company, formerly Royal and Sunalliance Insurance PR, Inc.) and Universal Insurance Group, with market shares of 18.6% and 18.2% in 2004, respectively.

The property and casualty insurance market in Puerto Rico is extremely competitive. In addition, soft market conditions prevailed during 2004 in the region, including United States, Puerto Rico and Latin America. In the local market, such conditions mostly affected the commercial risks, precluding rate increases and even provoking lower premiums on both renewals and new business. Due to the slow growth in the economy, there are no new sources that provide continued growth; thus, property and casualty insurance companies tend to compete for the same accounts through price and/or more favorable policy terms and better quality of services. STS competes by reasonably pricing its products and providing efficient services to producers, agents and clients. Management believes that the knowledgeable, experienced personnel employed by the segment is also an incentive for professional producers to conduct business with STS.

The property and casualty insurance market has been affected by increased costs of reinsurance. The international reinsurance market, although affected by catastrophes each year, has experienced stability on reinsurance premium rates. However the Puerto Rico property and casualty insurance market is significantly affected by the reinsurance cost and must pass on these additional costs to its customers, in spite of the economic slowdown.

Due to its geographical location, the property and casualty insurance operations in Puerto Rico are subject to natural catastrophic activity. Puerto Rico is exposed to two major natural perils (hurricanes and earthquakes), which lead local insurers to rely on the international reinsurance market in order to provide enough capacity. Other issues that have plagued the industry over the years, such as asbestos and pollution, have not affected the segment’s portfolio since STS is a young organization and existing policies exclude such hazards. STS maintains a comprehensive reinsurance program as a means of protecting its surplus in the event of a catastrophe.

In addition to its catastrophic reinsurance coverage, STS is required by local regulatory authorities to establish and maintain a trust fund (the Trust) to protect STS from its dual exposure to hurricanes and earthquakes. The Trust is intended to be used as STS’s first layer of catastrophe protection. As of December 31, 2004 and 2003, STS had $23.4 million and $21.8 million, respectively, invested in securities deposited in the Trust (see note 19 of the audited consolidated financial statements).

Considering the significance of reinsurance in protecting its capital base and ensuring ongoing operations, STS is aware of the need to exercise careful business judgment in the selection and approval of its reinsurers. Management believes that a comprehensive and sound reinsurance program has been established to provide the level of protection that STS desires. These reinsurance arrangements do not relieve STS from its direct obligations to its insureds. However, STS believes that the credit risk arising from recoverable balances of reinsurance, if any, is immaterial. STS’ policy is to enter into reinsurance agreements only with reinsurers considered to be financially sound. The segment’s policy is to require an A.M. Best rating of A- or better or an equivalent rating from other rating agencies.

Management believes that STS’ commitment to sound underwriting practices, efficient claims reserve monitoring, extensive catastrophe reinsurance programs, and underwriting expense controls, have enabled it to maintain one of the best combined ratios in the local industry. STS, as well as most of its property and casualty peers, uses the loss ratio, the expense ratio and the combined ratio as measures of performance. A controlled business expansion in the commercial market and better underwriting performance of its auto business, evidenced by declining loss ratios, have

also contributed to such favorable results. In addition, prudent reinsurance utilization through a sound strategy to control exposures by means of a strict underwriting criteria and protection of retained exposures have also enhanced underwriting results.

Financial Information About Segments

Total revenue (with intersegment premiums/service revenues shown separately), net income and total assets attributable to the reportable segments are set forth in note 3 to the consolidated financial statements for the years ended December 31, 2004, 2003 and 2002.

Trademarks

The Corporation considers its trademarks of “Triple-S” and “SSS” very important and material to all segments in which it is engaged. In addition to these, other trademarks used by TSM’s subsidiaries that are considered important have been duly registered with the Department of State of Puerto Rico and the United States Patent and Trademark Office. It is the Corporation’s policy to register all its important and material trademarks in order to protect its rights under applicable corporate and intellectual property laws.

Human Resources and Labor Matters

As of February 28, 2005, the Corporation had 1,457 full-time employees and 279 temporary employees. TSI has a collective bargaining agreement with the Unión General de Trabajadores, which represents 381 of TSI’s 777 regular employees. The collective bargaining agreement expires on July 31, 2006. The Corporation considers its relations with employees to be good.

Item 2. Properties

TSM owns a seven story (including the basement floor) building located at 1441 F.D. Roosevelt Avenue, in San Juan, Puerto Rico where the main offices of TSM, TSI and ISI are located, and two adjacent buildings that houses TCI and certain offices of TSI, as well as the adjoining parking lot. In addition, TSM is the owner of five floors of a fifteen-story building located at 1510 F.D. Roosevelt Avenue, in Guaynabo, Puerto Rico. These floors house the Internal Auditing Office of TSM, the main offices of SVTS and STS and some divisions of TSI. The Corporation is planning the construction, on land already owned, of a new six-story building that will basically house the operations of some divisions of TSI and STS and the operations of ISI, including its mainframe facilities. ISI’s mainframe facilities are currently located in a leased property that will be vacated once the project is completed. In addition, as part of this project the Corporation is also planning the construction of a multi-level parking building which will add approximately 500 parking spaces. The cost of this project is estimated to be approximately $22.0 million. This project is expected to be completed during 2007-2008.

In addition to the properties described above, TSM or its subsidiaries are parties to operating leases that are entered into in the ordinary course of business.

TSM believes that the facilities of the Corporation are in good condition and that the facilities, together with anticipated capital improvements and additions, are adequate to meet its operating needs for the foreseeable future. The need for expansion, upgrading and refurbishment of facilities is continually evaluated in order to remain competitive and to take advantage of market opportunities.

Item 3. Legal Proceedings.

	(a)	As of December 31, 2004, the Corporation is a defendant in various lawsuits arising out of the ordinary course of business. Management believes, based on the opinion of legal counsel, that the aggregate liabilities, if any, arising from such actions would not have a material adverse effect on the Corporation’s consolidated financial position or results of operations.
	(b)	Drs. Carlyle Benavent and Ibrahim Pérez (the plaintiffs) caused the initiation of an administrative proceeding before the Puerto Rico Insurance Commissioner against TSI and TSM alleging the illegality of the repurchase and subsequent sale of 1,582 shares of TSI’s common stock due to the fact that the ultimate purchasers of said shares were selected on an improper and selective basis by the Corporation in violation of the Puerto Rico Insurance Code. The plaintiffs alleged that they were illegally excluded from participation in the sale of

		shares by TSI due to the illegally selective nature of the sale of shares and that, consequently, the sale of shares should be annulled.
		On December 1996, the Commissioner of Insurance issued an order to annul the sale of the 1,582 shares that TSI had repurchased from the estate of deceased stockholders. TSI contested such order through an administrative and judicial review process. Consequently, the sale of 1,582 shares was cancelled and the purchase price was returned to each former stockholder. In the year 2000, the Commissioner of Insurance issued a pronouncement providing further clarification of the content and effect of the order. This order also required that all corporate decisions undertaken by TSI through the vote of its stockholders of record, be ratified in a stockholders’ meeting or in a subsequent referendum. In November 2000, TSM, as the sole stockholder of TSI, ratified all such decisions. Furthermore, on November 19, 2000, TSM held a special stockholders’ meeting, where a ratification of these decisions was undertaken except for the resolution related to the approval of the reorganization of TSI and its subsidiaries. This resolution did not reach the two thirds majority required by the order because the number of shares that were present and represented at the meeting was below such amount (total shares present and represented in the stockholders’ meeting was 64%). As stipulated in the order, TSM began the process to conduct a referendum among its stockholders in order to ratify such resolution. The process was later suspended because upon further review of the scope of the order, the Commissioner of Insurance issued an opinion in a letter dated January 8, 2002 which indicated that the ratification of the corporate reorganization was not required.
		In another letter dated March 14, 2002, the Commissioner of Insurance stated that the ratification of the corporate reorganization was not required and that TSI had complied with the Commissioner’s order of December 6, 1996 related to the corporate reorganization. Thereafter, the plaintiffs filed a petition for review of the Commissioner’s determination before the Puerto Rico Circuit Court of Appeals. Such petition was opposed by TSI and by the Commissioner of Insurance.
		Pursuant to that review, on September 24, 2002, the Puerto Rico Circuit Court of Appeals issued an order requiring the Commissioner of Insurance to order that a meeting of shareholders be held to ratify TSI’s corporate reorganization and the change of name of TSI from Seguros de Servicios de Salud de Puerto Rico, Inc. to Triple-S, Inc. The Puerto Rico Circuit Court of Appeals based its decision on administrative and procedural issues directed at the Commissioner of Insurance. The Commissioner of Insurance filed a motion of reconsideration with the Puerto Rico Circuit Court of Appeals on October 11, 2002. TSM and TSI also filed a motion of reconsideration.
		On October 25, 2002, the Puerto Rico Circuit Court of Appeals dismissed the Commissioner of Insurance’s Motion for Reconsideration and ordered the plaintiffs to reply to TSI’s Motion of Reconsideration.
		On May 18, 2003, the Puerto Rico Circuit Court of Appeals granted TSI’s and TSM’s Motion of Reconsideration. The Puerto Rico Circuit Court of Appeals held that the Commissioner of Insurance had the authority to waive the celebration of a referendum to ratify TSI’s reorganization and that therefore the reorganization of TSI, inasmuch as the 1,582 shares annulled were not decisive, was approved by the stockholders.
		On June 26, 2003, the two stockholders presented a writ of certiorari before the Supreme Court of Puerto Rico. TSI and TSM filed a motion opposing the issuance of the writ. The writ was issued by the Supreme Court on August 22, 2003 when it ordered the Puerto Rico Circuit Court of Appeals to transmit the record of the case. On December 1, 2003, the plaintiffs filed a motion submitting their case on the basis of their original petition. TSI and TSM filed its brief on December 30, 2003, while the Commissioner of Insurance, in turn, filed a separate brief on December 31, 2003. On June 24, 2004 the Supreme Court of Puerto Rico ordered the plaintiffs to file a brief in support of their allegations. The outcome of the case is pending before the Supreme Court of Puerto Rico. It is the opinion of the management and its legal counsels that the corporate reorganization as approved is in full force and effect.
	(c)	On September 4, 2003, José Sánchez and others filed a putative class action complaint against the Corporation, present and former directors of TSM and TSI, and others, in the United States District Court for the District of Puerto Rico, alleging violations under the Racketeer Influenced and Corrupt Organizations Act, better known as the RICO Act. The suit, among other allegations, alleges a scheme to defraud the plaintiffs by acquiring control of TSI through illegally capitalizing TSI and later converting it to a for-profit corporation and depriving the stockholders of their ownership rights. The plaintiffs base their later allegations on the supposed decisions of TSI’s board of directors and stockholders, allegedly made in 1979, to operate with certain restrictions in order to turn TSI into a charitable corporation, basically forever. While this case is still in the very early preliminary stages and has not been certified as a class action, a Motion to Dismiss was

		filed by defendants. On March 15, 2004, plaintiffs filed a response to this motion. On April 30, 2004 defendants filed a reply in support of the Motion to Dismiss. On March 4, 2005 the Court issued an Opinion and Order. In this Opinion and Order, of the twelve counts included in the complaint, eight counts were dismissed for failing to assert an actionable injury; six for lack of standing and two for failing to plead with sufficient particularity in compliance with the Rules. All shareholder allegations, including those described above, were dismissed in the Opinion and Order. The remaining four counts were found standing, in a limited way, in the Opinion and Order. Finally, the Court ordered that by March 24, 2005 one of the counts left standing be replead to conform to the Rules and that by March 28, 2005 a proposed schedule for discovery and other submissions be filed. This case is still pending before the United States District Court for the District of Puerto Rico.
	(d)	On April 24, 2002, Octavio Jordán, Agripino Lugo, Ramón Vidal, and others filed a suit against TSM, TSI and others in the Court of First Instance for San Juan, Superior Section, alleging, among other things, violations by the defendants of provisions of the Puerto Rico Insurance Code, anti-monopolistic practices, unfair business practices and damages in the amount of $12.0 million. They also requested that TSM sell shares to them. After a preliminary review of the complaint, it appears that many of the allegations brought by the plaintiffs have been resolved in favor of TSM and TSI in previous cases brought by the same plaintiffs in the United States District Court for the District of Puerto Rico and by most of the plaintiffs in the local courts. The defendants, including TSM and TSI answered the complaint, filed a counterclaim and filed several motions to dismiss this claim. On February 18, 2005 the plaintiffs informed their intention to amend the complaint and the Court granted then 45 days to do so and 90 days to defendants to file the corresponding motion to dismiss.
	(e)	On May 22, 2003 a putative class action suit was filed by Kenneth A. Thomas, M.D. and Michael Kutell, M.D., on behalf of themselves and all other similarly situated and the Connecticut State Medical Society against the Blue Cross and Blue Shield Association (BCBSA) and multiple other insurance companies including TSI. The case is pending before the U.S. District Court for the Southern District of Florida, Miami District.
		The individual Plaintiffs bring this action on behalf of themselves and a class of similarly situated physicians seeking redress for alleged illegal acts of the defendants which they allege have resulted in a loss of their property and a detriment to their business, and for declaratory and injunctive relief to end those practices and prevent further losses. Plaintiffs alleged that the defendants, on their own and as part of a common scheme, systematically deny, delay and diminish the payments due to doctors so that they are not paid in a timely manner for the covered, medically necessary services they render.
		The class action complaint alleges that the health care plans are the agents of BCBSA licensed entities, and as such have committed the acts alleged above and acted within the scope of their agency, with the consent, permission, authorization and knowledge of the others, and in furtherance of both their interest and the interests of other defendants.
		Management believes that TSI was brought to this litigation for the sole reason of being associated with the BCBSA. However, on June 18, 2004 the plaintiffs moved to amend the complaint to include the Colegio de Médicos y Cirujanos de Puerto Rico (a compulsory association grouping all physicians in Puerto Rico), Marissel Velázquez, MD, President of the Colegio de Médicos y Cirujanos de Puerto Rico, and Andrés Meléndez, MD, as plaintiffs against TSI. Later Marissel Velázquez, MD voluntarily dismissed her complaint against TSI.
		TSI, along with the other defendants, moved to dismiss the complaint under multiple grounds, including but not limited to arbitration and applicability of the McCarran Ferguson Act.
	(f)	On December 8, 2003 a putative class action was filed by Jeffrey Solomon, MD and Orlando Armstrong, MD, on behalf of themselves and all other similarly situated and the American Podiatric Medical Association, Florida Chiropractic Association, California Podiatric Medical Association, Florida Podiatric Medical Association, Texas Podiatric Medical Association, and Independent Chiropractic Physicians, against the BCBSA and multiple other insurance companies, including TSI, all members of the BCBSA.
		The individual plaintiffs bring this action on behalf of themselves and a class of similarly situated physicians seeking redress for alleged illegal acts of the defendants which they allege have resulted in a loss of their property and a detriment to their business, and for declaratory and injunctive relief to end those practices and prevent further losses. Plaintiffs alleged that the defendants, on their own and as part of a common scheme,

		systematically deny, delay and diminish the payments due to doctors so that they are not paid in a timely manner for the covered, medically necessary services they render.
		The class action complaint alleges that the health care plans are the agents of BCBSA licensed entities, and as such have committed the acts alleged above and acted within the scope of their agency, with the consent, permission, authorization and knowledge of the others, and in furtherance of both their interest and the interests of other defendants.
		On June 25, 2004, plaintiffs amended the complaint but the allegations against TSI did not vary.
		Management believes that TSI was made a party to this litigation for the sole reason that TSI is associated with the BCBSA. TSI along with the other defendants, moved to dismiss the complaint under multiple grounds, including but not limited to arbitration and applicability of the McCarran Ferguson Act.

Item 4. Submissions of Matters to a Vote of Security Holders.

Not applicable.

Part II

Item 5. Market for Registrant’s Common Equity and Related Stockholders Matters.

Market Information

There is no established public trading market for TSM’s common stock. Sporadic sales of TSM’s common stock have been limited to redemption sales to TSM at the shares’ $40.00 par value or at the amount originally paid for the stock, since the common stock of TSM is not transferable to the general public. In determining the market value of common stock disclosed in the facing page of this Annual Report on Form 10-K, the Corporation used the shares’ $40.00 par value, which is the per share amount at which the last sales of common stock have been made.

TSM’s Articles of Incorporation and By-Laws establish that only physicians, dentists and certain specified healthcare organizations shall be shareholders of the Corporation. In addition, the Articles of Incorporation and By-Laws establish that no person may own more than 21 shares, or five percent (5%) or more, of the Corporation’s Voting Shares issued and outstanding.

Holders

The only outstanding voting securities of TSM are shares of its common stock, par value $40.00 per share. As of March 15, 2005, there were 8,904 shares of Common Stock outstanding. The number of holders of TSM’s common stock as of March 15, 2005 was 1,768.

Dividends

TSM has not declared nor paid any dividends since its incorporation. A resolution was approved by the Stockholders at the Annual Meeting held on April 27, 2003 acknowledging that the Board of Directors (the Board) may declare dividends on TSM’s common stock, subject to the Board’s determination that in its best judgment the payment of dividends is financially and legally feasible.

Recent Sales of Unregistered Securities

In September 30, 2004, TSI closed the issuance of the sale of $50.0 million of its 6.30% senior unsecured notes due September 2019 (the notes). The notes are unconditionally guaranteed by TSM (the guarantee) and were privately placed to various institutional accredited investors (the purchasers) under a Note Purchase Agreement among TSI, TSM and the purchasers. Neither the notes nor the guarantee have been or will be registered under the U.S. Securities Act of 1933 as amended (the Securities Act) or any state securities laws. The notes were offered in reliance upon the exemption from registration provided by Section 4(2) and Rule 506 of the Securities Act.

Item 6. Selected Financial Data.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information required by this item is incorporated by reference to the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Corporation’s Annual Report.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The information required by this item is incorporated by reference to the section “Quantitative and Qualitative Disclosures About Market Risk” included in the Corporation’s Annual Report.

Item 8. Financial Statements and Supplementary Data.

Financial Statements

For the consolidated financial statements as of December 31, 2004 and 2003 for the three years ended December 31, 2004 see Index to financial statements in “Item 15. Exhibits and Financial Statement Schedules” to this Annual Report on Form 10-K.

Selected Quarterly Financial Data

For the selected quarterly financial data corresponding to the years 2004, 2003 and 2002, see note 24 of the consolidated financial statements as of December 31, 2004, 2003 and 2002.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Corporation’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Corporation’s disclosure controls and procedures as of December 31, 2004. Based on that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of December 31, 2004.

Changes in Internal Controls

There were no significant changes in the Corporation’s disclosure controls and procedures, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed the evaluation referred to above.

Item 9B. Other Information.

Not applicable.

Part III

Item 10. Directors and Executive Officers of the Registrant.

The Board of Directors has determined that at least one member of the Audit Committee is an audit committee financial expert as defined by the SEC rules. Vicente J. León-Irizarry, CPA has been designated as the audit committee financial expert by the Board of Directors.

For the Code of Ethics adopted by Corporation, see Exhibit 14.1 to this Annual Report on Form 10-K.

The remaining information required by this item is incorporated by reference to the sections “Election of Directors,” “Directors and Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Principal Holders of the Shares” included in the Corporation’s definitive Proxy Statement.

Item 11. Executive Compensation.

The information required by this item is incorporated by reference to the section “Executive Compensation,” “Report of the Board of Directors on Executive Compensation” and “Pension Plan” included in the Corporation’s definitive Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated by reference to the section “Principal Holders of the Shares” included in the Corporation’s definitive Proxy Statement.

Item 13. Certain Relationships and Related Transactions.

The information required by this item is incorporated by reference to the section “Certain Relationships and Related Transactions” included in the Corporation’s definitive Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated by reference to the section “Disclosure of Audit Fees” included in the Corporation’s definitive Proxy Statement.

Item 15. Exhibits and Financial Statements Schedules.

Financial Statements and Schedules

A. The following financial statements and reports included on pages 2 through 83 of the Financial Information 2004 section of the Corporation’s Annual Report to Shareholders are incorporated herein by reference:

(1) Financial Statements:

	—	Independent Auditors’ Report
	—	Consolidated Balance Sheets as of December 31, 2004 and 2003
	—	Consolidated Statements of Earnings for the years ended December 31, 2004, 2003 and 2002
	—	Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the years ended December 31, 2004, 2003 and 2002
	—	Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002
	—	Notes to Consolidated Financial Statements — December 31, 2004, 2003 and 2002

(2) Financial Statement Schedules:

	—	Schedule I — Summary of Investments was omitted because the information is disclosed in the notes to the consolidated financial statements of the Corporation.
	—	Schedule II — Condensed Financial Information of the Registrant
	—	Schedule III — Supplementary Insurance Information
	—	Schedule IV — Reinsurance
	—	Schedule V — Valuation and Qualifying Accounts
	—	Schedule VI — Supplemental Information Concerning Property Casualty Insurance Operations was omitted because the schedule is not applicable to the Corporation.

(3) Exhibits:

     The exhibits listed on the Exhibits Index on pages 17 through 18 of this report are filed herewith or are incorporated herein by reference.

Report on Form 8-K

The Corporation filed with the Securities and Exchange Commission the following Current Reports on Form 8-K:

     - Form 8-K dated October 6, 2004 indicating that on September 30, 2004, Triple-S, Inc., a wholly owned subsidiary of Triple-S Management Corporation closed the issuance of the sale of $50,000,000 of its 6.30% Senior Unsecured Notes due September 2019.

     - Form 8-K dated December 27, 2004 indicating that on December 6, 2004, the Board of Directors of Triple-S Management Corporation appointed Mr. Juan E. Rodríguez Díaz, Esq., to serve as director and fill in the vacancy left by Mr. José Davison Lampón. Mr. Rodríguez Díaz will be considered a member of the Board representative of the community, as was the case with Mr. Davison Lampón.

Exhibits

All other exhibits for which provision is made in the applicable accounting regulation of the United States Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Triple-S Management Corporation
Registrant

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Schedule II

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Financial Statements

December 31, 2004, 2003, and 2002

(With Independent Auditors’ Report Thereon)

Independent Auditors’ Report

The Board of Directors and Stockholders
Triple S Management Corporation:

Under date of March 4, 2005, we reported on the consolidated balance sheets of Triple-S Management Corporation and Subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of earnings, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2004 as contained in the 2004 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10K for the year 2004. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedules as listed in the Item 15. These financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

March 4, 2005

Stamp No. 1988694 of the Puerto Rico
Society of Certified Public Accountants
was affixed to the record copy of this report.

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Balance Sheets

December 31, 2004 and 2003

(Dollar amounts in thousands)

See accompanying independent auditors’ report and notes to financial statements.

2

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Statements of Earnings

Years ended December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

See accompanying independent auditors’ report and notes to financial statements.

3

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Statements of Stockholders’ Equity and Comprehensive Income

Years ended December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

See accompanying independent auditors’ report and notes to financial statements.

4

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Statements of Cash Flows

Years ended December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

See accompanying independent auditors’ report and notes to financial statements.

5

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

(1)	Organization
	Triple-S Management Corporation (the Company or TSM) was incorporated under the laws of the Commonwealth of Puerto Rico on January 17, 1997 to engage, among other things, as the holding company of entities primarily involved in the insurance industry.
	The Company has the following wholly owned subsidiaries that are subject to the regulations of the Commissioner of Insurance of the Commonwealth of Puerto Rico (the Commissioner of Insurance): (1) Triple-S, Inc. (TSI) which provides hospitalization and health benefits to subscribers through contracts with hospitals, physicians, dentists, laboratories, and other organizations located mainly in Puerto Rico; (2) Seguros de Vida Triple-S, Inc. (SVTS), which is engaged in the underwriting of life and disability insurance policies and the administration of annuity contracts; and (3) Seguros Triple-S, Inc. (STS), which is engaged in the underwriting of property and casualty insurance policies. The Company and TSI are members of the Blue Cross and Blue Shield Association (BCBSA).
	The Company also has two other wholly owned subsidiaries, Interactive Systems, Inc. (ISI) and Triple-C, Inc. (TC). ISI is mainly engaged in providing data processing services to the Company and its subsidiaries. TC is mainly engaged as a third party administrator for TSI in the administration of the Commonwealth of Puerto Rico Health Care Reform’s business (the Reform). Also, TC provides health care advisory services to TSI and other health insurance-related services to the health insurance industry.
	A substantial majority of the Company’s business activity is with insureds located throughout Puerto Rico, and as such, the Company is subject to the risks associated with the Puerto Rico economy.
(2)	Significant Accounting Policies
	The significant accounting policies followed by the Company are set forth in the notes to the consolidated financial statements of the Company incorporated by reference into Item 15 to the Annual Report on Form 10K.
(3)	Property and Equipment, Net
	Property and equipment as of December 31 are composed of the following:

(Continued)

6

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

(4)	Investment in Wholly Owned Subsidiaries
	Summarized combined financial information for the Company’s wholly owned subsidiaries as of and for the years ended December 31, 2004 and 2003 is as follows:

The net income of the subsidiaries during the three-year period ended December 31, 2004 was $45,451, $77,736, and $48,405. The Company allocates to its subsidiaries certain expenses incurred in the administration of their operations. Total charges including other expenses paid on behalf of the subsidiaries amounted to $3,945, $3,351, and $4,062 in the three-year period ended December 31, 2004.

7

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

(5)	Loans Payable to Bank
	A summary of the credit agreements entered by the Company with a commercial bank at December 31, 2004 and 2003 is as follows:

Aggregate maturities of the Company’s credit agreements as of December 31, 2004 are summarized as follows:

The proceeds of the $41,000 loan and of the $20,000 note payable were used by the Company for the purchase of real estate properties from subsidiaries and for working capital needs.

8

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

The credit agreement related to the $20,000 calls for repayments of principal amount of not less than $250 and in integral multiples of $50. The aggregate principal amounts shall be reduced annually to the amounts specified on or before the dates described below:

	The loan and note payable previously described are secured by a first position held by the bank on the Company’s land, building, and substantially all leasehold improvements, as collateral for the term of the loans under a continuing general security agreement. These credit facilities contain certain covenants, which are normal in this type of credit facility, which the Company has complied with at December 31, 2004 and 2003.
	Interest expense on the above debts amounted to $1,217, $1,302, and $2,150 in the three-year period ended December 31, 2004.
(6)	Income Taxes
	The Company is subject to Puerto Rico income taxes. Under Puerto Rico income tax law, the Company is not allowed to file consolidated tax returns with its subsidiaries.
	TSI was exempt through 2002 from Puerto Rico income taxes under a ruling issued by the Department of the Treasury. On June 18, 2003, the Department of the Treasury notified the Company that the ruling recognizing TSI’s tax exemption was terminated effective December 31, 2002. The termination of the ruling responds to a new public policy set by the Department of the Treasury according to which tax exemptions under Section 1101(6) of the Puerto Rico Code (P.R. Code) will not apply to corporations organized as for-profit, which is TSI’s case.
	On July 31, 2003, TSM and TSI executed a closing agreement with the Department of the Treasury. In general, the terms of the closing agreement established the termination of TSI’s tax exemption effective December 31, 2002. Accordingly, since TSI’s tax status changed effective January 1, 2003, TSI is subject to Puerto Rico income taxes as an other-than-life insurance entity, as defined in the P.R. Code.

9

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

The closing agreement also stipulated that TSM will pay taxes (Department of the Treasury tax assessment) on TSI’s accumulated statutory net income, in accordance with the income recognition methodology applied by the Secretary of the Treasury in the closing agreement and the ruling mentioned above. This tax ruling established the following methodology for TSM to determine its tax liability:

	•	TSI’s accumulated statutory net income while operating under the tax exemption, amounting to $132,763, was deemed distributed to TSM.
	•	For tax purposes, TSM recognized the exempt accumulated statutory net income as gross income. On this amount, TSM recognized an income tax liability amounting to $51,774, which was determined by applying a tax rate of 39% to the exempt accumulated statutory net income deemed distributed to TSM. The income tax was recorded by TSM within the current income tax expense presented in the consolidated statements of earnings. Of this tax, $37,000 was paid on July 31, 2003, the date of the closing agreement, and $14,774 on April 15, 2004.

The income tax expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to net income before income taxes as a result of the following:

10

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

Deferred income taxes reflect the tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The net deferred tax asset at December 31, 2004 and 2003 is composed of the following:

11

TRIPLE-S MANAGEMENT CORPORATION
(Parent Company Only)

Notes to Financial Statements

December 31, 2004, 2003, and 2002

(Dollar amounts in thousands)

	In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management believes it is more likely than not that the Company will realize the benefits of these deductible differences.
(7)	Transaction with Related Parties
	The following are the significant related-party transactions made for the three-year period ended December 31, 2004:

(8)	Contingencies
	At December 31, 2004, the Company is defendant in various lawsuits in the ordinary course of business. In the opinion of management, with the advice of its legal counsel, the ultimate disposition of these matters will not have a material adverse effect on the consolidated financial position and results of operations of the Company.

12

Schedule III

Triple-S Management Corporation and Subsidiaries
Supplementary Insurance Information
For the years ended December 31, 2004, 2003 and 2002

(Dollar amounts in thousands)