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"While 2007 was a memorable year because we made our debut as a publiccompany in December, we also strengthened the foundation of our business,allowing us to better serve our network of providers and our members goingforward," said Ramon M. Ruiz-Comas, President and Chief Executive Officer.
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Consolidated operating revenues for 2007 were $1.54 billion, 1.5 percentlower than the previous year. The decrease resulted primarily from the changein carrier for the Metro-North Region in the Commonwealth of Puerto RicoHealth Reform business, which is similar to Medicaid (the Reform business)effective November 1, 2006 (which represented premiums of approximately $162million for the ten-month period ended October 31, 2006 and an averageenrollment of 200,000 members). This decline was partially offset bymembership enrollment growth in the Medicare Advantage business, as well aspremium rate increases in the managed care segment. Excluding the effect ofthe Metro-North Region contract, consolidated revenues for 2007 increased by$133.6 million, or 9.4 percent over 2006.
Consolidated claims incurred and operating expenses for the year were$1.46 billion, a decline of 2.3 percent from the prior year. Consolidatedclaims incurred fell due to a lower MLR and a reduction in business volume.Meanwhile, operating expenses remained relatively flat.
Net income for 2007 was $58.5 million, or $2.15 per share based onweighted average shares outstanding of 27.2 million. This compares with netincome for 2006 of $54.5 million, or $2.04 per share based on weighted averageshares outstanding of 26.7 million. The improvement in 2007 reflected higheroperating margins in Triple-S Management's managed care segment. The marginexpansion is primarily the result of a change in the mix of business withinthis segment, a decrease in the MLR in both the Commercial and Reformbusinesses, and continued increases in Medicare Advantage membershipenrollment.
Fourth Quarter Highlights
For the three months ended December 31, 2007, consolidated operatingrevenues were $398.7 million, up 8.3 percent from $368.1 million in the prioryear, primarily reflecting enrollment growth in Medicare Advantage, premiumrate increases across all businesses in the managed care segment, volumeincreases in the P&C segment and the effect of the termination of the Metro-North Region contract in 2006. Consolidated operating costs rose by 6.3percent to $372.5 million largely due to business volume increases. MLRimproved 20 basis points for the quarter year over year. Operating expensesdeclined $1.5 million, or 2.3 percent, to $64.1 million. Net income came inat $17.7 million, or $0.62 per share, 12.8 percent above the $15.7 million, or$0.59 cents per share, recorded for the quarter ended December 31, 2006.Weighted average shares were 28.6 million and 26.7 million during the quartersended December 31, 2007 and 2006, respectively. The 2007 and 2006 resultsincluded a loss of $3.6 million, or ($0.13) per share, and a gain of $3.5million, or $0.13 per share, of realized investment gains/(loss) and netunrealized investment gains/(loss) on trading securities, respectively.
Segment Performance
Triple-S Management operates in three segments: 1) Managed Care, 2) LifeInsurance, and 3) Property and Casualty Insurance. Management evaluatesperformance based primarily on the operating revenues and operating income ofeach segment. Operating revenues include premiums earned, net admini
