QUARTERLY REPORT. Q2, 2014 Results

Transcription

1 QUARTERLY REPORT Q2, 2014 Results 1

2 Index SURA ASSET MANAGEMENT 1. Who we are. QUARTERLY RESULTS 2. Economic outlook. 3. Financial overview. 4. Market Overview 5. Investment performance. 6. Regulatory framework. Additional topics 7. Moody s upgrades SURA Asset Management's rating 8. Awards and recognitions 2

3 SURA ASSET MANAGEMENT 3

4 Geographical Diversification and Operating Map SURA Asset Management We first came into being as a subsidiary of Grupo SURA when the pension, life insurance and investment fund assets belonging to the ING Groep were purchased on December 29, 2011 for USD 3.6 billion. We then began to gradually position ourselves as a major player within the region, obtaining international investment grades of BBB+ from Fitch Ratings and a Baa1 from Moody s and taking over the lead in the Latin American pension, savings and investment fund sectors No. 1 Pension Fund Management Firm in Latin America 4

5 Our products Catering to the different stages of our client s life cycles No. 1 in the Latin American pension fund sector Mandatory pensions Providing added value through our range of voluntary products Life Insurance & 91% AUM Voluntary savings 7% AUM 2% AUM Annuities Mandatory pension fund administration Voluntary pensions and Asset Management Life Insurance and Annuities Highly regulated market Stable cash flows Additional savings for retirement Low penetration with a high growth potential Complementary products Customer service More than 30 years experience in the pension fund sector Geographic diversification 1. Assets Under Management AUM USD 123 billion EBITDA Q2, 2014 % of the total Mexico 29.5% EBITDA USD million Operational Income USD million 1 st AUM Market Share 23.4% EL SALVADOR COLOMBIA 17.9% (2) Number of clients 17 million 1 st 1 st Presence 6 countries PERU 19.7% CHILE 30.1% URUGUAY 2.8% Notes: 1. Figures as of June 31st, including the number of clients and AUMs for Protección and AFP Crecer, companies which are not controlled by SURA Asset Management's and therefore do not form part of its consolidated financial statements. 2. We do not consolidate Proteccion nor AFP Crecer even though we have a 49.36% ownership in Proteccion. However said investments are recorded in our dividend income and equity method accounts. Protección obtained USD million in revenues and USD 58 million in net income, producing YoY increases of 37.8% and 309.1% respectively. 5

6 FINANCIAL OVERVIEW 6

7 Geographic diversification Chile Mexico Peru Uruguay Colombia (1) Investment grade Operating Revenue MM Aa3/AA-/A+ A3/BBB+/BBB+ Baa2/BBB+/BBB+ Baa3/BBB-/BBB- Baa3/BBB/BBB % 5% 19% 23% 52% Operating expense MM % 24% 1% 54% Net income before minority interest 63.2 MM % 2% 11% 16% 56% EBITDA 273. MM % 18% 20% 30% 29% Notes: 1. Chile s results includes USD111,548 in subsidiary dividends which were subsequently eliminated in the consolidation process. 2. We do not consolidate Proteccion nor AFP Crecer even though we have a 49.36% ownership in Proteccion. However said investments are recorded in our dividend income and equity method accounts. Proteccion obtained USD million in revenues and USD 58 million in net income, producing YoY increases of 37.8% and 309.1% respectively. Figures in USD million 7

8 Breakdown of our financial performance Operating Revenue Operating Expense Chile Mexico Peru Uruguay Colombia 2013 Q Chile Mexico Peru Uruguay 2013 Q Net Income EBITDA Chile Mexico Peru Uruguay Colombia 2013 Q Chile Mexico Peru Uruguay Colombia 2013 Q Notes: 1. SURA Asset Management (Colombia) consolidated IFRS financial statements 2. The Company does not include Protección (Colombia) and AFP Crecer (El Salvador) in the consolidation of its financial statements. These investments are only reflected in the dividend income and equity method accounts 3. Figures for Q are not available since SURA Asset Management Colombia only began to consolidate its financial statements at year-end Chile s results include USD in subsidiary dividend income which was subsequently eliminated during the consolidation process. Figures in USD million 8

9 Consolidated Income Statement jun Gross premiums 404, ,662 Premiums ceded to reinsurers -17,991-57,093 Net premiums 386, ,569 Fee and commission income 352, ,408 Investment income 58,814 55,089 Net realized gains and losses on financial assets available for sale 45,782 2,820 Gains and losses at fair value 58,210 87,145 Other operating revenue 36,904 21,836 Total operating revenue 938,792 1,586,867 Claims -129, ,593 Movement in premium reserves -344, ,924 Fee and commission expense -13,869-21,819 Other operating and administrative expense -254, ,547 Total operating expense -742,493-1,403,883 OPERATING INCOME 196, ,984 Financial income 85, ,971 Financial expense -28,628-57,316 TOTAL FINANCIAL INCOME (EXPENSE) 56, ,655 NET INCOME BEFORE INCOME TAX FROM CONTINUING OPERATIONS 252, ,639 Income tax -70, ,424 UTILIDAD (PÉRDIDA) NETA DEL EJERCICIO POR OPERACIONES CONTINUADAS 181, , Utilidad (Pérdida) neta del ejercicio por operaciones discontinuadas NET INCOME 181, ,215 Attributable to: Controlling interest 180, ,966 Non-controlling interest 1,336 5,249 Figures in USD million 9

10 Consolidated Statement of Financial Position jun jun ASSETS NON-CURRENT LIABILITIES NON-CURRENT ASSETS Financial obligations 673, ,887 Financial assets 2,604,003 2,414,854 Technical reserves 2,203,683 1,902,372 Reinsurance assets 30,705 45,055 Deferred tax liabilities 534, ,481 Accounts receivable 119,298 2,601 Accounts payable 60,226 70,074 Investments in associates 533, ,829 Employee benefits 1,614 1,430 Investment properties 258, ,944 Provisions 50,687 87,479 Fixed assets 66,371 56,974 Deferred income liabilities (DIL) 23,770 24,150 Goodwill 1,727,626 1,719,794 TOTAL NON-CURRENT LIABILITIES 3,547,187 3,170,873 Other intabgible assets 1,307,851 1,336,771 Deferred acquisition costs (DAC) 178, ,370 CURRENT LIABILITIES Deferred tax assets 56,012 79,418 Financial obligations 755, ,883 Others 18,712 19,223 Technical reserves 673, ,904 TOTAL NON-CURRENT ASSETS 6,900,868 6,534,833 Current tax liabilities 39,277 34,084 Employee benefits 40,222 47,144 CURRENT ASSETS Accounts payable 144, ,338 Cash and Cash equivalents 306, ,968 Provisions 72,122 96,330 Financial assets 1,929,483 1,197,787 Other liabilities 712 2,649 Accounts receivable 140, ,904 TOTAL CURRENT LIABILITIES 1,725,500 1,147,332 Current tax 69,899 72,120 Other assets 8,868 8,405 TOTAL LIABILITIES 5,272,687 4,318,205 TOTAL CURRENT ASSETS 2,455,803 1,828,184 SHAREHOLDERS EQUITY Subscribed and paid-in capital 1,360 1,360 Share premium 3,781,005 3,785,406 Other capital reserves 78,178-54,868 Net income from the year 180, ,965 Translation differences -40,960 2,196 TOTAL CONTROLLING INTEREST 4,000,013 3,967,059 Non-controlling interest 83,971 77,753 TOTAL EQUITY 4,083,984 4,044,812 TOTAL ASSETS 9,356,671 8,363,017 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 9,356,671 8,363,017 Figures in USD million 10

11 MARKET OVERVIEW 11

12 Regional presence Geographic exposure Assets Under Management (US$Bn) Market share (2) Clients (MM) Mandatory Pension Fund Fee (%) Base Salary USD MM Direct employees (Aa3/AA-/A+) 21.10% % 14, ,516 (A3/BBB+/BBB+) (Baa2/BBB+/BBB) 14.26% % 3, % % 9,906 1,181 1 SURA ASSET MANAGEMENT S.A (Baa3/BBB-/BBB) 36.90% % 14, ,877 AUM per Country Uruguay 3.0% Colombia 13.3% Chile 31.7% (Baa3/BBB-/BBB-) (Ba3/BB-/BB-) 18.20% % 1, % % 2, Peru 20.8% Mexico 31.1% Note 1. Including # Clients and AUM for Proteccion and AFP Crecer 2. Mandatory pension fund market share as of June 31,

13 Breakdown of our market performance Total Assets Under Management (USD billion) AFP Clients (Mandatory) (million) 16.2% % % % % 9.3% % % % % % % 1.3 Chile Mexico Peru Colombia Uruguay El Salvador Q Q %Var Chile Mexico Peru Colombia Uruguay El Salvador Q Q %Var Salary Base (USD million) Mandatory Fees (%) 7.5% 14.8% 14, % 9,906 14, % 1, % 2, % 1.44% 1.15% 1.21% 1.54% 1.68% 0.95% 1.02% 1.99% 1.99% 1.13% 1.10% Chile Peru Colombia Uruguay El Salvador Q Q %Var Chile Mexico (AUM) Peru Colombia Uruguay El Salvador Q Q Notes: 1. Including # Clients and AUM corresponding to Proteccion and AFP Crecer 13

14 No 1 in the Latin American pension fund sector Company Industria de Pensiones (Mandatorias, Voluntarias y Cesantias) Region Chile Mexico Peru Colombia Uruguay El Salvador Market Share % % % % % % % 2 LatAm 10.9% 23,4% 9.7% 11,0% Chile Colombia El Salvador México Perú 21,3% 27.9% 36,8% 3.0% 46,5% 14,1% 41,5% 18,2% % 6.6% 27,9% 3,0% Uruguay 3 9.2% 9,7% 26.1% 0.2% 20,7% 6,7% ,4% 9.2% 9,3% 7.5% 7,4% 26,2% 26.1% 42,6% 26,7% 42.7% 0,1% 7 6.9% 6,8% 17.0% 53,5% 17,0% 53.4% 8 9 4,4% 4.4% 13,2% 26,7% 26.6% 13.2% 4,1% 11,7% 4.3% 12.2% AUM Industria Total industry Number of players Note: 1. Mandatory pension fund market share as of June 31,

15 INVESTMENT PERFORMANCE 15

16 Performance by Country CHILE AFP Fondo Tipo A Más riesgoso Rentabilidad Real Fondo Tipo B Riesgoso Fondo Tipo C Intermedio Fondo Tipo D Conservador Fondo Tipo E Más conservador Capital 11,45% 6 8,84% 5 8,14% 3 7,27% 4 5,71% 4 Cuprum 12,12% 2 9,55% 1 8,98% 1 8,01% 1 6,33% 1 Habitat 11,48% 5 8,75% 6 8,11% 5 7,38% 3 5,93% 2 Modelo 12,36% 1 9,18% 4 7,98% 6 7,23% 6 4,97% 6 Planvital 11,93% 3 9,21% 3 8,13% 4 7,27% 4 5,52% 5 Provida 11,65% 4 9,24% 2 8,45% 2 7,49% 2 5,82% 3 Sistema 11,70% 9,07% 8,38% 7,49% 5,96% Fuente: Superintendencia de pensiones de Chile Source: Chilean Superintendency of Pension Funds Cifras a Junio de Rentabilidades últimos 12 meses. Variación Nominal deflactada por la variación de la UF del Figures período. for the 12-month period ending June 30, 2014 Nominal variation deflated by the change in UF for the period. MEXICO AFORE SB1 Mayores de 60 años Rendimientos de las Siefores Básicas SB años SB años SB4 Menor a 37 años Azteca 7,82% 8 9,02% 10 9,50% 10 10,28% 9 Banamex 9,61% 2 12,52% 2 13,67% 2 15,82% 2 Coppel 0,85% 10 11,69% 5 12,76% 5 13,21% 4 Inbursa 5,86% 9 5,55% 11 6,04% 11 6,54% 10 Invercap 8,41% 7 11,26% 6 12,04% 6 12,67% 6 Metlife 9,13% 3 11,85% 4 12,81% 4 14,04% 3 PensionISSSTE 8,47% 6 11,15% 7 11,17% 8 11,81% 7 Principal 0,81% 11 10,59% 8 11,08% 9 11,28% 8 Profuturo GNP 8,53% 5 12,23% 3 13,63% 3 1,50% 11 SURA 10,15% 1 13,60% 1 15,13% 1 17,36% 1 XXI Banorte 8,54% 4 10,55% 9 11,67% 7 12,74% 5 Pormedio Ponderado 8,72% 11,31% 12,60% 13,96% Fuente: Source: Comisión National Nacional Retirement del Ssitema Savings de Fund Ahorro Commission para el Retiro CONSAR - CONSAR (México) (México) Cifras Figures a Junio for de the month Rendimientos period ending últimos June 12 meses, 30, 2014 Precios Management de Gestión Prices Valores Nominal Nominales. Values. 16

17 Performance by Country PERÚ Rentabilidad Real Fondo de Real Return Fondo de Fondo Mixto AFP Preservación Type 1 Fund de Type 2 Fund Type Apreciación 3 Fund de AFP (Tipo 2) Asset Capital Protection (Tipo 1) Mixed Asset Capital Appreciation (Tipo 3) Integra 0,73% 1 3,01% 1 1,87% 3 Integra -4.94% % % 2 Prima 0,28% 2 2,63% 2 2,16% 2 Prima -5.22% % % 3 Profuturo 0,13% 3 2,20% 3 2,88% 1 Profuturo -4.61% % % 1 Promedio 0,43% 2,67% 2,22% Average -4.94% -5.24% -7.26% Fuente: Superintendencia de Banca, Seguros y AFP (Perú) Source: Superintendencia Superintendency of de Banking, Banca, Seguros Insurance y AFP and (Peru) Pension Funds (Peru) Cifras a Junio de Rentabilidad real anualizada últimos 12 meses. Figures Annual as real of rates March of return Annualized for the 12-month real return period for ending the last June 12 months. 30, 2014 URUGUAY AFAP Rentabilidad Real Neta Proyectada (En UR) AFAP Sura -0,81% 1 Integración AFAP -1,13% 4 Republica AFAP -0,96% 2 Unión Capital AFAP -0,96% 2 Fuente: Source: Superintendencia Superintendency de of Financial Servicios Financieros Services - BCU. BCU Cifras Rates a of Junio return de for the Rendimiento 12-month period a últimos ending 12 June meses 30, móviles COLOMBIA AFP Colfondos 7,12% 2 7,30% 1 10,11% 1 7,38% 1 Porvenir (*) 6,74% 4 7,00% 3 8,06% 3 7,10% 3 Protección (*) 6,92% 3 6,82% 4 8,57% 2 7,04% 4 Skandia 7,51% 1 7,01% 2 7,55% 4 7,24% 2 Pormedio Ponderado (**) Rentabilidades de los Fondos de Pensiones Obligatorias Fondo Moderado 6,90% Fondo Conservador Fuente: Superintendencia Financiera de Colombia Source: Colombian Superintendency of Finance Cifras Figures a Mayo as of de June Rentabilidad Returns going desde back 31 de to August agosto de 31, Mayor Riesgo Retiro Programado 7,00% 8,41% 7,14% EL SALVADOR No public information exists for the AFP s belonging the Salvadorean system. The 12-month nominal return for the entire system came to 2.32% at year-end 2013, with the cumulative nominal return from June 1998 to June 2010 reaching 11.85%. Source: ASAFONDOS 17

18 ECONOMIC OVERVIEW 18

19 Regional Outlook Chile Michelle Bachelet signed a bill for subsequent Congressional approval, proposing the creation of a new State-Owned Pension Fund Management firm so as to provide greater market competitiveness and extend overall coverage. The Governors of Central Bank at their monthly meeting on July 15 reduced the benchmark interest rate by 25 bp to 3.75% Monthly inflation for June dropped to 4.3% from 4.7% in May, which although lower than market expectations (4.5%) is still higher than the figure targeted by Central Bank. The results of the latest consumer confidence survey, as published in June, fell back onto negative ground (49.2 points) compared to the 50.3 points recorded in May. Likewise there was a drop in business confidence, which fell from 58.3 points in the first quarter of this year to 54.3 for the second quarter. Mexico The Mexican Congress has just approved the basis for a new reform of its Telecommunications industry, the aim of which is to drive a greater level of competition in a sector dominated by a handful of major players. Economic activity rose slightly by 0.5% YoY at the end of April after a stark drop of 3.2% in May due largely to the Easter Week festivities. Also the Producer Price Index showed a surprising drop from 52.6 points for May to 50.3 in June which is close to the dividing line separating growth from contraction (50.0 points). Central Bank at its monthly meeting of Governors on July 11 held the benchmark interest rate unchanged at 3.00% after an expected cut of 50 bp the previous month. 19

20 Regional Outlook Peru The Peruvian economy grew by 1.8% in May, which was just under the 2.0% recorded for April, producing a YTD growth of 3.6%. Business confidence fell back on negative ground in June, reaching just 49.7 points, which was much lower than the 52.9 points recorded in May. However the situation was quite the reverse with consumer confidence which rose to 53 points in June compared to 51 points for the previous month. In an attempt to drive the economy and attract greater investment, the Peruvian Congress passed a package of measures on July 3, consisting of streamlining the tax system, reducing bureaucracy and relaxing environmental rules and regulations. Moody s upgraded the country s sovereign debt rating to A3, that is to say two notches above its previous rating, on the basis of its enhanced fiscal position and the oil drilling prospects going forward in the light of the reforms currently being passed. Colombia The country s GDP rose by 6.4% YoY for Q1 2014, surpassing the 5.3% recorded for Q which was the highest level recorded over the last two years. This level of growth is mainly due to a much better domestic demand, especially on the side of private consumption (+5.1% YoY for Q1 2014) as well as Government spending (+7.5% YoY for Q1 2014); this in spite of a more impaired external sector with exports rising by 6.9% compared to a 16.3% growth in imports. Consumer confidence, as published by Fedesarrollo, rose to 26.6 points in June compared to 23.2 points for the previous month. Inflation continues within Central Bank's targeted range and even dropped to 2.8% in June after reaching 2.9% the previous month. The ratings agency, Moody s upgraded the country s sovereign debt rating from Baa3 to Baa2 based on expectations of a sound long-term growth as well as a more enhanced fiscal management entailing only moderate fiscal deficits. 20

21 Regional Outlook Uruguay The country s GDP rose by 2.4% for Q2 2014, having slowed from the 4.6% recorded for Q4 2013, in keeping with a slowing pace of growth going back to Q3 2009, this mainly due to a shrinking external sector. Mario Bergara, Uruguay s Minister of the Economy announced on July 9, that this year s fiscal deficit could reach as much as 3.3% of GDP, thereby surpassing the estimated 2.4%,which was equal to that of This shall be the highest deficit recorded since the crisis and would have been much worse if it not were for the Government s sound handling of its public finances over the last decade. In fact this deficit does not reflect badly on the Government in any way since last year public spending dropped to its lowest level since El Salvador In spite of clear signs of recovery, the country s GDP showed just a 2.0% growth for Q1 2014, with data releases since then showing a mixed bag of results. Economic activity slowed to 1.7% in April after reaching 1.9% the previous month. On the other hand, remittances from abroad, an important source of household income and consumption in El Salvador rose by 10.1% in May, compared to just 2.1% in April. 21

22 ADDITIONAL TOPICS 22

23 Baa1 rating from Moody s The ratings agency, Moody s upgraded its investment grade rating for SURA Asset Management last April, both for the Company as well as its latest issue of international bonds, from Baa2 to Baa1. This was based on a more enhanced credit profile of all those countries in which the Company operates, especially Colombia, where it is headquartered, whose sovereign debt rating was raised to Baa2 with a country ceiling of A3. Also SURA Asset Management's upgrade was justified by its strong level of performance in all those countries where it is present, the good market prospects supporting the positive results expected and the demographic conditions fostering the region s overall development. This new rating highlights our consistent performance on the international markets and brings us closer to becoming a world-class organization. 23

24 Awards and Recognition In April, two of SURA Chile's mutual funds were awarded the Salmon Prize for the second year running. These important awards are given by the fund management industry in conjunction with the financial publication, Diario Financiero. The two prize winners were Renta Bonos Chile and Acciones Chile MID CAP; at the same time we obtained second place in the category Domestic UF-denominated Debt Funds with maturities of more than 365 days/terms of more than 3 years and third place in the National Equity Fund category 24

25 ANNEX 25

26 Exchange Rates jun-14 Local Currency to USD: MONEDA Moneda local a dólar jun-14 Mexico Average.MXN Chile Average.CLP Peru Average.PEN Colombia Average.COP Uruguay Average.UYU MXN / USD México Promedio México Último Chile Promedio CLP / USD Chile Último Local Currency to USD: CURRENCY Moneda local a dólar jun-14 Euro Last.EUR Mexico Last.MXN Chile Last.CLP Peru Last.PEN Colombia Last.COP Uruguay Last.UYU PEN / USD Perú Promedio Perú Último 2,100 2,050 2,000 1,950 1,900 1,850 1,800 1,750 1,700 COP / USD Colombia Promedio Colombia Último UYU / USD Uruguay Promedio Uruguay Último 26

27 Disclaimer The forward-looking statements contained herein are based on Management s current forecasts and outlook. Consequently, SURA Asset Management is under no obligation to update or correct said information. 27

28 Key contacts Andres Bernal C. Chief Financial Officer Tatiana Uribe A. Corporate Finance & Strategic Development Managing Director Tel: