Estrictamente Privado y Confidencial. Investor Meetings - HSBC Asia & Europe, April 2017

Transcription

1 Investor Meetings - HSBC Asia & Europe, April

2 AGENDA I. ILC at a Glance II. ILC: Value Proposal a. Proven expertise in realizing value b. Industries with growth potential + internal improvement opportunities c. Disciplined capital management and strict corporate governance practices d. Multiple avenues for consolidation & growth III. Closing Remarks IV. Appendix 2 2

3 I. ILC at a Glance 3

4 ILC AT A GLANCE Mission: We aim to improve the quality of life of our clients, by offering them efficient and accessible services, mainly in the financial and health sectors. We favor the creation of value, efficiency and sustainability, guided by the values of our Controller, the Chilean Construction Chamber (CChC). Sectors where ILC participates Financial & Health ROE - Net Income 2016 (1)(2) 12.1% - US$111 m. Dividend Yield % at IPO s price Local Risk Rating AA+ AuM as of December 2016 US$57 bill. (2) in AFP Habitat, Confuturo and Corpseguros Consolidated Employees ~12,300 in Chile and Peru (1) Excluding the extraordinary accounting effect related to the ILC-Prudential association in AFP Habitat for US$343 million (2) FX: CLP$650/USD$ 4 4

5 II. ILC: Value Proposal 5

6 ILC: VALUE PROPOSAL 1. Proven expertise in realizing value 2. Industries with growth potential + internal improvement opportunities 3. Disciplined capital management and strict corporate governance practices 4. Multiple avenues for consolidation & growth 6 6

7 FOCUS ON THE FINANCIAL AND HEALTH SECTORS 2012 Pre-IPO 96% 67.5% 99.9% 89.9% 99.9% 32.9% 99.9% Pension Funds (Chile) Disability & Survivorship Insurance (Chile) Healthcare Network (Chile) Mandatory Health Insurance (Chile) IT Platform (Chile) School Network (Chile) Financial Sector Health Sector IT Education Today 67% 33% Float: ~50% international investors ~50% local investors 40.3% 99.9% 50.6% 99.9% 99.9% 99.9% Partnership Pension Funds (Chile & Peru) Life Insurances (Chile) SME Bank (Chile) Healthcare Network (Chile) Mandatory Health Insurance (Chile) Supplementary Health Insurance (Chile) Financial Sector Health Sector Source: ILC Executed in

8 GREATER DIVERSIFICATION OF RESULTS ILC: Ordinary Net Result Pre-IPO (2010) ILC: Ordinary Net Result (2016) Others 5% 7% 5% 21% 10% 50% 2% 72% 39% -12% (Vida Cámara, Others and ILC Individual) AFP Habitat and Isapre Consalud reduced their impact on results from 93% in 2010 to 55% in 2016 Source: ILC 8 8

9 CONSISTENT RETURN GENERATION Estrictamente Privado y Confidencial Ordinary net result growth ( ) +11% CAGR 1 Dividend yield (1) ( ) ~6% annual 3 Extraordinary net result ( ) US$60 m. annually (average) 2 CAPEX ( ) 450 US$ m. 4 ILC: Net Result and ROE Evolution US$ m (15) 11% 43 (0.9%) 22% % % 19% 18% (3) Ordinary Net Result Extraordinary Net Result ROE (right axis) 96 14% 15% (1) Dividend yield at IPO s price Source: ILC. FX: 650 CLP$ / USD$ % % 50% 40% 30% 20% 10% 0% -10%

10 ILC: VALUE PROPOSAL 1. Proven expertise in realizing value 2. Industries with growth potential + internal improvement opportunities 3. Disciplined capital management and strict corporate governance practices 4. Multiple avenues for consolidation & growth 10 10

11 LIFE INSURANCE INDUSTRY: DEMOGRAPHIC AND ECONOMIC POTENTIAL Interest Rate: Programmed Withdrawal vs. Annuity Retirement Alternative Breakdown Programmed Withdrawal Annuity Annuities Annuity Programmed Withdrawal 3.83% 3.82% 43,693 38,804 39,218 35, % 34,788 29% 37% 39% 3.23% 47% 36% 2.94% 2.85% 2.72% 71% 2.37% 64% 63% 61% 53% 54,051 27% 73% Annuity Industry Gross Premiums (US$ m.) Annuity Mkt. Share (Direct Premiums, 2016) 3,690 4,225 Others 18.4% Consorcio 18.6% 2,379 2,874 2,994 2,773 Sura 8.1% US$4,225 m. Confuturo + Corpseguros 16.6% Bice Vida 9.2% Penta Vida 13.9% Source: AACh, SVS, Superintendencia Pensiones. 11 FX: 650 CLP$ / USD$ Metlife 15.3% 11

12 Leverage (x) Estrictamente Privado y Confidencial CONFUTURO: REFOCUSING ITS INVESTMENT STRATEGY AND CAPITAL STRUCTURE Acquisition: November 2013 Acquisition price US$ 134 m. Participation acquired 67.0% Multiple acquisition (P/B) 0.83x Strategy: Financial turnaround New asset allocation Lower leverage derived from new investment strategy Minority stake acquisition at 0.84x P/B Annuity Direct Premiums (US$ m.) AuM (US$ m.) +79% +20% 702 7, , Portfolio Risk (December 2016) Principal Corpseguros Metlife Confuturo + Corpseguros Confuturo before +K Confuturo Confuturo 2013 Security Bice Vida Penta 0% 2% 4% 6% 8% 10% 12% % Equity / AuM % 6% % Real Estate % Stocks Net Result (US$ m.) Source: AACh, SVS and ILC. FX: 650 CLP$ / US$ % 3% (7.9) ROE % 12

13 CHILEAN BANKING INDUSTRY: PROFITABLE AND GROWING GDP vs Bank Loans Growth (Chile) Internal Credit Provided by Banking Sector 2015 (% GDP) 17.3% 14.3% 13.3% 10.7% 12.2% 194% 190% 174% 147% 134% 119% 111% 7.7% 5.8% 5.8% 5.5% 4.0% 1.9% 2.3% 5.5% 1.6% 68% 47% 37% GDP Growth (real) Loans Growth (nominal) Chilean Banking Industry ROE IGPA Comparative ROE % 17.5% 14.7% 14.8% 17.2% 14.2% Industry 2016 ROE Banking 13.1% 11.0% Retail 12.6% Construction & Real Estate 9.9% Basic Materials 5.8% Industrial 2.4% Source: SBIF, World Bank, Bloomberg, BCS, Banco Central de Chile 13 13

14 BANCO INTERNACIONAL: FROM MACRO TO MICRO Acquisition: November 2015 Acquisition price US$ 100 m. Participation acquired 50.6% Multiple acquisition (P/B) 1.29x Strategy: Turnaround Focus on small and medium size companies Risk and efficiency management New board and management Loans (US$ m.) Risk Expenses (US$ m.) Net Income (US$ m.) 1,285 1, % -46.8% ROE % Efficiency (Dec 2016, %) Reciprocity (1) (Dec 2016, %) Credit Rating (Dec 2016) AAA AA AA AA- A+ AA+ Security BBVA Scotia BICE BBVA BICE Scotia Security Scotia BICE BBVA Security - ILC (1) Time deposits / Total liabilities Source: SBIF, Banco Internacional. FX: 650 CLP$ / USD$ 14 14

15 Per Capita Health Expenditure PPA (US$/hab.) Estrictamente Privado y Confidencial CHILEAN HEALTHCARE INDUSTRY: LACK IN SUPPLY FOR GROWING DEMAND GDP vs. Health Expenditure 2015 (PPA, per Capita) 10,000 Demographic Evolution (Population by Age) 7,500 USA 4% 7% 10% Switzerland 5,000 2 X Germany Japan Australia Spain 2,500 Chile OECD Mexico Turkey 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Per Capita GDP PPA (US$/hab.) Physicians (Every 1,000 Habitants) 56% 64% 69% 40% 29% 21% Beds (Every 1,000 Habitants) Source: OECD Health Statistics 2015, Health at a Glance 2015, World Bank, INE 15 15

16 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 12% 11% 10% 09% 08% 07% 06% 05% Estrictamente Privado y Confidencial RED SALUD: AFTER EXPANSION, FOCUS ON OPERATIONS Red Salud First-class healthcare assets across Chile CAPEX L5Y US$ 300 m. Minority stake acquisition at 0.94x P/B (June 2016) Strategy: Operational turnaround Focus on efficiency and working capital Improve synergies among the network New management / corporate image renewal EBITDA (US$ m.) Net Result (US$ m.) Net Debt / EBITDA 11.0% 9.7% +130 bps % x -30.7% 4.6x EBITDA Margin % EBITDA Mg EBITDA Number of Beds Comparable EBITDA Margins 1, Company EBITDA Mg % 13.2% 11.0% 10.8% Source: ILC, Clínicas de Chile AG (November 2016). FX: 650 CLP$ / USD$ 16 16

17 ILC PRUDENTIAL ASSOCIATION IN AFP HABITAT In March 2016 ILC associated with Prudential in AFP Habitat, in order to expand their footprint in the Latam pension industry Prudential at a glance: Prudential s presence in Latam Founded in 1875 Presence in more than 40 countries Products: Life insurances Annuities Retirement products Mutual funds Investment management 2006 Life insurance Pensions 1997 US$1,264 trillion in AuM / US$3.7 trillion in life insurances 49,000 employees Market cap.: US$45 billion Source: Prudential 17 17

18 Average Taxable Income (US$) Estrictamente Privado y Confidencial HABITAT CHILE: CONSOLIDATION IN THE HIGH-INCOME SEGMENT AFP Habitat has a strong presence and recognition in the Chilean pension industry: Average Taxable Income in Chile (US$) Investment Returns (Chilean Pesos) Additional Taxable Income AFP Habitat Average Taxable Income Industry Rank Annualized Returns (Jan Dec. 2016) 1,300 1, Habitat Capital Cuprum Modelo Planvital Provida Fund A Fund B Fund C Fund D Fund E Market Share by Contributors (December 2016) Market Share by AuM (December 2016) Provida 29.7% Habitat 21.6% 5.3 million Source: Superintendencia de Pensiones. FX: CLP$650 per USD$ Planvital 10.4% Capital 17.2% Cuprum 8.1% Modelo 12.9% Provida 26.2% Habitat 27.3% US$179 billion Modelo 3.1% Cuprum 20.4% Planvital 3.4% Capital 19.6% 18 18

19 PERUVIAN PENSION INDUSTRY: FAVORABLE SCENARIO DRIVEN BY DEMOGRAPHY AND LOW LABOR FORMALITY Peruvian Labor Force Breakdown (2015) Workers: 15.8 m. Investment Returns PPPS (1) (Peruvian Soles) Rank Annualized Returns (Jan Dec. 2016) 36% 27% Habitat Integra Prima Profuturo Fund % 73% Fund Fund Independent Dependent Formal Informal Market Share: AuM and Affiliates (December 2016) AuM per Affiliate December 2016 (US$) AuM: US$ 40,702 m. Affiliates: 6.3 m. 8,109 8,790 Profuturo 26% Habitat 2% Profuturo 29% Habitat 15% 5,879 6,498 Prima 32% Integra 40% Prima 24% Integra 32% 916 Habitat Integra Prima Profuturo PPPS (1) PPPS: Peruvian Private Pension System Source: SUNAT, INEI, CELADE, SBS. FX: 3.35 PEN$ / USD$ 19 19

20 CONSALUD AND VIDA CÁMARA Estrictamente Privado y Confidencial Consalud Adverse regulatory scenario due to judicializations Commercial know-how Currently implementing efficiency improvements Vida Cámara #4 largest company in supplemental health insurances in Chile Experience in collective contracts New CEO and commercial turnaround Market Share Isapres by Contributors (December 2016) Market Share Supplemental Health Insurances by Premiums (December 2016) Masvida 16% Vida Tres 4% Optima 1% Metlife 22% Colmena 18% 1.9 m. Cruz Blanca 21% Others 34% US$700 m. Security 14% Euroamérica 11% Banmédica 20% Consalud 20% BICE Vida 9% Vida Cámara 10% Source: ILC, AACh, Superintendencia Salud. FX: 650 CLP$ / US$ 20 20

21 ILC: VALUE PROPOSAL 1. Proven expertise in realizing value 2. Industries with growth potential + internal improvement opportunities 3. Disciplined capital management and strict corporate governance practices 4. Multiple avenues for consolidation & growth 21 21

22 DISCIPLINED CAPITAL MANAGEMENT Estrictamente Privado y Confidencial ILC s debt US$290 million (1) Consolidated net debt US$1,249 million (1) ILC s cash US$140 million (1) Debt: 70% Bonds Banks 30% (1) ILC Rating Risk AA+ Amortization Schedule ILC (December 2016, US$ m.) Bank Loans ILC-C ILC-D ILC-F ILC-H Liquidity (If: Stress Scenario) Stress Scenario: Cash + Dividends from Subsidiaries ILC 30% = ~US$120 m Net Financial Debt / Total Equity 0.38x 0.55x 0.85x 0.69x x 1.0x Dividend Policy by Subsidiary 2016 Distr. Net Income Dividend Pol. % Ownership (%) (US$ m) Habitat % 40.3% Red Salud % 99.9% Consalud 9 100% 99.9% Vida Cámara - 100% 99.9% Inversiones Confuturo 51 30% 99.9% Banco Internacional 15 30% 50.6% NFD/Equity Cov. D,F & H-Series Cov. C-Series (1) ILC Financial data as of December 2016 FX: 650 CLP$ / US$ 22 22

23 STRICT CORPORATE GOVERNANCE STANDARDS 100% The Company is controlled by the Chilean Construction Chamber, a non-profit entity, which annually elects five of the seven directors of ILC during its Shareholders Meeting International Investors 16.1% Local Investors 16.9% ILC elects Board Members 67.0% ILC s Board of Directors ILC s Management The Chairman is elected for one year, renewable for a second period Directors Committee Investment Committee ILC has a Committee of Directors, responsible for reviewing financial information and auditor s reports, related parties transactions, remuneration systems, internal auditing procedures, among others ILC has also an Investment Committee responsible for reviewing financial decisions undertaken by ILC Subsidiary s Board of Directors Subsidiary s Management Each of ILC s subsidiaries has an independent Board of Directors and Management, who maximize the return of its company Other initiatives to enhance ILC s Corporate Governance: Corporate Governance Manual, Ethic Code, Crime Prevention Model, Whistle Blows Channel, Comptroller, Management Control Department, among others 23 23

24 ILC: VALUE PROPOSAL 1. Proven expertise in realizing value 2. Industries with growth potential + internal improvement opportunities 3. Disciplined capital management and strict corporate governance practices 4. Multiple avenues for consolidation & growth 24 24

25 BASED ON S FOCUSES, ILC HAS SEVERAL OPPORTUNITIES: AFP Habitat: Consolidate its association with Prudential Strengthen its regional footprint in Latam Inversiones Confuturo: Maintain its leadership in the annuity industry Further improve returns on investments, maintaining an adequate leverage Banco Internacional: Vida Camara: Consalud: Improve operational and administrative efficiency Focus in medium and small size companies Consolidate its new Management Team Consolidate in Supplemental Health Insurances Red Salud: Improve operational efficiency and synergies between the network Further improve efficiencies in costs and SG&A Continue developing innovative complementary products Consolidate its new Management Team 25 25

26 3. Closing Remarks 26

27 INVESTMENT HIGHLIGHTS Estrictamente Privado y Confidencial One of the largest Asset Managers in Latam Consolidated controlling shareholder Demonstrated trackrecord in nondiscretionary industries Solid and stable credit risk rating Proven access to capital markets Attractive and consistent dividend yield 27 27

28 4. Appendix 28

29 SUMMARIZED FINANCIAL STATEMENTS AND SUBSIDIARIES FIGURES Balance Sheet Th. US$ NON I NSURANCE ACTI VI TY ASSETS 1,392,261 1,691,251 Total Current Assets 382, ,509 Total Non Current Assets 1,009,973 1,302,742 TOTAL I NSURANCE ACTI VI TY ASSETS 8,736,924 8,051,848 TOTAL BANKI NG ACTI VI TY ASSETS 2,064,873 1,811,024 TOTAL ASSETS 12,194,059 11,554,123 NON-I NSURANCE ACTI VI TY LI ABI LI TI ES 1,056,477 1,258,294 Total Current Liabilities 442, ,061 Total Non Current Liabilities 614, ,233 I NSURANCE ACTI VI TY LI ABI LI TI ES 8,127,764 7,492,900 BANKI NG ACTI VI TY LI ABI LI TI ES 1,878,597 1,629,136 TOTAL LI ABI LI TI ES 11,062,839 10,380,330 Equity Attributable to Owners of the Parent Company 1,017, ,689 Non-Controlling Interests 114, ,104 TOTAL EQUI TY 1,131,220 1,173,793 TOTAL LI ABI LI TI ES + EQUI TY 12,194,059 11,554,123 I ncome Statement Th. US$ NON-I NSURANCE ACTI VI TY Operating Result 35,637 34,882 Non Operating Result 13,687 (32,676) Profit (Loss) Before Tax 49,324 2,207 Profit (Loss) from Discontinuing Operations 342, ,641 Non-I nsurance Activity Profit 386, ,698 I NSURANCE ACTI VI TY Operating Result 79,196 35,385 Non Operating Result (19,271) 9,625 Profit (Loss) Before Tax 59,925 45,011 I nsurance Activity Profit 59,096 40,742 BANKI NG ACTI VI TY Operating Result 14,271 (3,881) Non Operating Result Profit (Loss) Before Tax 14,528 (3,876) Banking Activity Profit 12,993 (3,038) PROFI T (LOSS) FOR THE PERI OD Profit Attributable to Owners of the Parent Company 440, ,267 Profit Attributable to Non-Controlling I nterest 18,204 50,135 I ndividual Results (Dec 2016, USD$ Th) AFP Habitat Confuturo Corpseguros Banco I nternacional Red Salud Consalud Vida Camara I ndustry Pension Funds Life I nsurances Life I nsurances Banking Healthcare Pro vider Mandato ry Health I nsurance Vo luntary Health I nsurance Revenues 249, , ,267 72, , , ,440 EBI TDA / EBI TDAE N.A. N.A. N.A. N.A. 55,302 N.A. N.A. Net I ncome 130,935 29,686 33,567 14,115 11,039 5,403 (843) Assets 592,050 5,003,942 3,575,867 2,012, , , ,115 Liabilities 126,319 4,693,486 3,308,502 1,868, , , ,799 Equity 465, , , , ,141 17,803 55,316 % ownership I LC 40.3% 99.9% 99.9% 50.6% 99.9% 99.9% 99.9% Figures as of December 2016 / FX: CLP$ per USD$ 29 Inversiones Confuturo Net Debt: US$164 m./ ILC Net Debt: US$145 m. 29

30 PENSION NET SALARY GROSS SALARY Estrictamente Privado y Confidencial ILC PARTICIPATES IN NON-DISCRETIONARY INDUSTRIES Pension Funds Pensions Health Insurance Healthcare Providers 10% Mandatory contribution: Fee:1.27% of gross salary Voluntary Savings 7% Mandatory contribution Voluntary additional contribution 0% - 40% Taxes Voluntary contribution Programmed withdrawal Annuity 30 30

31 CHILEAN PENSION FUNDS REPRESENTED 69% OF GDP IN 2016 Market Players (all private) Fee* (% on gross salary, capped at ~US$2,600) 1.27% 0.41% 0.77% 1.44% 1.48% 1.54% Taxable Income (Average, US$) US$ 1,243 US$ 813 US$ 896 US$ 1,147 US$ 2,023 US$ 899 Affiliates 10.2 million Contributors 5.3 million Pensioners 1.4 million % 20% 1 30% 22% 1 37% 21% 1 5 6% 4 17% 3 15% 11% 2 5 8% 4 17% 13% 3 10% 2 5 8% 4 22% 6% 5% % 20% AuM US$179 Billion % 27% 3% 3% Invested in: Distribution of assets in the Industry by type of fund D D 17% 97% correspond to dependent workers E 21% E C A 12% A C 35% B 14% B With a return of: -0.22% -0.87% Return of Funds 2016 (Real, CLP$) 1.68% 1.07% FX: CLP$650 per USD$. Source: Superintendencia de Pensiones E A A B C D E Lower risk Higher risk 31 *AFP Provida will reduce its fee to 1.45% since June Habitat System 2.48% 1.74% 3.49% 2.60% 4.32% 3.89%

32 97% OF CHILEANS ARE COVERED BY HEALTH INSURANCES, OF WHICH 75% IS MANAGED BY THE PUBLIC SECTOR (FONASA) Supporter (7% on taxable salary, capped at aprox US$3,000; with an average contribution of 10% in the case of Isapres) Government Insurer Isapre Fonasa Others Total Beneficiaries 3.3 M Total Beneficiaries 13.5 M Total Beneficiaries 1.1 M Banmédica 20.7% Consalud 20.7% Armed Forces Chilean Army Masvida 16.8% Optima 0.6% Vida Tres 4.3% Cruz Blanca 20.9% Colmena 15.9% Chilean Navy Chilean Air Force Chilean Police Market share at the level of beneficiaries to open Isapres A - B C - D Provider Private sector, according to chosen plans with Isapres Public sector Public sector and some private providers Private sector, according to chosen plans with Isapres Market Players (Private and open) Average Contribution (Annual, US$) US$ 1,193 E A US$ 1,491 US$ 1,349 US$ 1,519 D US$ 367 * US$ 1,461 US$ 1,365 Loss Ratio 86.7% 87.5% 86.3% 84.9% C 43.2% 88.2% 87.9% Source: Superintendencia de Salud, statistics 2014 FX: CLP$650 per US$ Dimensionamiento del Sector de Salud Privado en Chile

33 THE PRIVATE HEALTHCARE SYSTEM PLAYS AN IMPORTANT ROLE TO MEET CHILEAN DEMAND FOR HEALTH Total Health Expenditure 8.8% of GDP Doctors ~ 30 thousand Geographic Distribution of Doctors in Chile Hospitals and Clinics ~ % Public 48% Geriatric and Phys. Clinics 11.5% Others 8.6% 53.7% Public Hospitals Private Private 52% North 2,418 doctors 83.7 habitants by doctor Mutuals 3.4% Private Clinics 22.7% Center - North 21,899 doctors 47.1 habitants by doctor Red Salud: 11 private clinics Nurses ~99 thousand Public 54% Dentists ~ 16 thousand Public 30% Center - South 4,415 doctors 75.7 habitants by doctor South 1,264 doctors 85.1 habitants by doctor Geriatric and Phys. Clinics Mutuals Private Clinics 2% 4% 18% Beds ~ 38 thousand Others 10% 66% Public Hospitals Private 46% Private 70% Red Salud: 858 beds Source: Dimensionamiento del Sector de Salud Privado en Chile 2014 Health at a Glance

34 Disclaimer: This document provides information about ILC Inversiones S.A. In any case this constitutes a comprehensive analysis of the financial, operational and sales situation of the Company, so to evaluate whether to purchase or sell securities of the Company, the investor must conduct its own independent analysis. In compliance with the applicable rules, ILC Inversiones S.A. publishes this document in its web site ( and submits to the Superintendencia de Valores y Seguros, the financial statements of the company and its corresponding notes, which are available for consultation and review. Contact Information: Trinidad Valdés / IR Department / / tvaldes@ilcinversiones.cl / Camila Tagle / IR Department / / ctagle@ilcinversiones.cl / 34