SURA Asset Management

QUARTERLY REPORT
Q1-2014 Results
1
Agenda
SURA ASSET MANAGEMENT
1. Who we are
QUARTERLY RESULTS
2. Economic outlook
3. Financial overview
4. Commercial overview
5. Investment performance
6. Regulatory framework
Additional topics
7. International bond issuance
8. Awards and recognitions
2
SURA ASSET
MANAGEMENT
3
SURA Asset Management
Geographic and product diversification
Nº1 Company
IN PENSION
FUNDS IN
LATINAMERICA
SURA Asset Management emerges as
a company of Grupo SURA in
connection to the acquisition made in
December 2011 of the Pension,
Investment Funds and Life Insurance
businesses in Latin America
This Company is the leader in the
Mandatory Pension Fund sector in the
Region and constitutes an important
player in the Asset Management
Industry
More than 30 years of expertise
The assets in Chile, Mexico, Peru,
Colombia, El Salvador and Uruguay are
backed not only by their performance
in the last 30 years, but also by the
experience that Grupo SURA and its
subsidiaries have established over the
past 70 years
Pension Funds
Asset
Management
Life Insurance
Mortagages
Pension Funds
Asset Management
Life Insurance
Equities
Pensions
Asset
Management
4
Our products
Through the life cycle of our clients
Regional leader in the pension fund sector
Mandatory pensions
Generating value through its range of voluntary products
91% AUM
■ Mandatory pension fund administration
Voluntary savings
■ Voluntary pensions and Asset Management
2% AUM
■ Life Insurance and Annuities
■ Highly regulated market
■ Additional savings for retirement
■ Complementary products
■ Stable cash flows
■ Low penetration with a high
growth potential
■ Customer service
More than 30 years experience in the pension fund sector
1st
Life Insurance &
Annuities
7% AUM
Assets Under Management
AUM
US$115.4 Bn
Geographic diversification
EBITDA
Q1-2014, % of Total
MEXICO
Operating
Revenues
US$ 406.9 MM
EBITDA
US$ 104.7MM
33.2%
1st
AUM Market Share
23.4%
COLOMBIA
8%(2)
EL SALVADOR
1st
Number of clients
1st
Presence
16.6 MM
6 countries
PERU
20.8%
URUGUAY
CHILE
3.3%
34.8%
Notes:
1. Figures as of March 31, 2014. Includes Proteccion´s and AFP Crecer number of clients and AUMs. Those entities are not consolidated under SURA Asset Management consolidated financial statements.
2. SURA Asset Management only accounts for Proteccion´s as a dividend income. This quarterly report does not reflect any equity pick up of Proteccion even though we have a 49.36% stake in the Colombian
AFP
5
ECONOMIC OVERVIEW
6
Economic Landscape
Chile
Mexico
• In March, economic activity expanded 2.8% YoY, having a slight deceleration when
compared to the 2.9% YoY growth registered in February.
• According to the Central Bank the deceleration continues to be provided by the
mining sector as copper prices are falling 7.8% YoY in April.
• Consumer and Business Confidence Indicators for April, showed a monthly decreasing
Reading from 53.4 to 52.6 and from 51.9 to 48.9 respectively.
• The Central Bank preserved its reference interest rate at 4.0% in its April meeting,
after two consecutive cuts of 25 bps each.
• Annual headline inflation reached 4.3% in April (3.5% in the previous month). The
figure exceeded market expectations of 3.9% and CB’s target range (3.0% +/- 1.0%).
• Economic Activity increased 1.7% YoY in February, exceeding market expectations of
a 1.6% increase, and the previous month 1.0% YoY figure.
• Exports grew 4,5% YoY in March, recording a second consecutive month trade
balance surplus, which in March reached US$ 1.03 billion.
• In April 30th, the congress received the proposed energy sector’s reform by-laws,
which include the conversion of 100% state-owned Pemex and CFE into “productive
state companies” and other measures that are expected to enhance private
investments in this sector.
7
Economic Landscape
Peru
Colombia
• In February Economic Activity accelerated to 5,7% YoY, from 4,2% YoY registered in
January, reaching a 10-month high and ending a downward trend of 4 months.
• April’s Consumer Confidence jumped to 54 points from 51 points the previous month.
• Moreover, Business Confidence reached 54 points in April, higher than the previous
month reading of 53 points.
• According to recent polls, none of the presidential candidates is likely to achieve
50% of the votes required to win the presidential elections on May 25th, in which
case a second round for the two top contenders will occur on June 15th.
• On the economic front, the Central Bank, surprised the market with a 25 bps
increase in its reference interest rate to 3.50%, arguing stability in macroeconomic
data and inflationary pressures.
• The CB also declared that it expects good local and external economic perspectives,
which would enhance an improvement in domestic demand along with a external
sector recovery.
8
Economic Landscape
Uruguay
• In June 1st, Uruguay will have primary elections to choose candidates for its
presidential elections in October. According to recent polls, former president Tabare
Vasquez is expected to be elected for Frente Amplio party and Jorge Larranaga for
opposite Partido Nacional party.
• In the Economic Front, during march the Economic Activity contracted by 6.8% YoY, a
higher setback from previous month of 3.1% and the worst figure registered since
January 2012.
• Economic contraction was mainly caused by a fall in oil-derivative products, coal, food
and beverages and paper products.
El
Salvador
• Economic Activity expanded 2.5% in February, beating the 2.2% YoY growth in
January , and reaching the highest figure since October 2011.
• In Politics, on May 6th the supreme court issued an arrest warrant for former
President Francisco Flores on corruption charges.
9
FINANCIAL OVERVIEW
10
Geographic diversification
Investment
grade
Chile
Mexico
Peru
Uruguay
Colombia (1)
Aa3/AA-/A+
A3/BBB+/BBB+
Baa2/BBB+/BBB+
Baa3/BBB-/BBB-
Baa3/BBB/BBB
2% 2%
193.5
Operating
Revenue
406.9 MM
Operating
expense
338.8 MM
Net income
before minority
interest
63.2 MM
104.7
24%
99.5
6.0
25%
8.5
1%
168.7
83.2
24%
81.0
2.6
-
25%
50%
10%
3%
38.2
36.4
44%
15%
23.6
13.1
2.8
8.5
28%
3%
EBITDA
104.7 MM
47%
34.7
8%
21%
21.8
3.4
Notes:
1. We do not consolidate Proteccion nor AFP Crecer even though we have a 49.36% ownership in Proteccion. We register those investments through dividend income.
8.4
35%
33%
11
Evolution of our financial figures
Operating Revenue
Operating Expense
858
752
399
369
334
193
169
105
99
27
Chile
Mexico
225
Peru
2013
83
6
Uruguay
6
12
Colombia
Chile
Mexico
174
13
Peru
2013
Q1 2014
92
58
Mexico
Uruguay
150
99
Chile
3
EBITDA
143
24
Peru
2013
Q1 2014
Net Income
38
81
9
11
3
Uruguay
6
9
Colombia
36
Chile
35
Mexico
Q1 2014
22
Peru
2013
15
3
Uruguay
6
8
Colombia
Q1 2014
Notes:
1. SURA Asset Management (Colombia) consolidated IFRS financial statements
2. The Company does not account for Colombia and El Salvador figures within its consolidated financial statements. We only account those investments through dividend income
3. Figures for the first quarter of 2013 do not appear because SURA Asset Management Colombia only began its consolidation process for the year end 2013 financial statements.
12
Consolidated Income Statement
Gross premiums
Premiums ceded to reinsurers
Net premiums
Fee and commission income
Investment income
Net realized gains and losses on financial assets available
for sale
Gains and losses at fair value
Other operating revenue
Total operating revenue
Claims
Movement in premium reserves
Fee and commission expense
Other operating and administrative expense
Total operating expense
OPERATING INCOME
Financial income
Financial expense
TOTAL FINANCIAL INCOME (EXPENSE)
NET INCOME BEFORE INCOME TAX FROM CONTINUING
OPERATIONS
Income tax
NET INCOME
Attributable to:
Controlling interest
Non-controlling interest
mar-14
166,138
(12,514)
153,624
2013
772,662
(57,093)
715,569
172,375
13,135
704,408
55,089
21,759
2,820
19,050
23,417
403,360
87,145
21,836
1,586,867
(66,235)
(137,086)
(5,901)
(126,093)
(335,315)
(314,593)
(498,924)
(21,819)
(568,547)
(1,403,883)
68,045
182,984
40,106
(27,474)
12,632
216,971
(57,316)
159,655
80,677
342,639
(17,467)
63,210
(104,424)
238,215
60,803
2,407
232,965
5,249
13
Consolidated Statement of Financial Position
mar-14
2013
ASSETS
NON-CURRENT ASSETS
Financial assets
Reinsurance assets
Accounts receivable
Investments in associates
Investment properties
Fixed assets
Goodwill
Other intabgible assets
Deferred acquisition costs (DAC)
Deferred tax assets
6,598,131
2,398,864
37,121
130,306
447,816
256,522
67,345
1,727,304
1,319,439
158,988
54,426
6,534,833
2,414,854
45,055
2,601
476,829
238,944
56,974
1,719,794
1,336,771
144,370
79,418
CURRENT ASSETS
Cash and Cash equivalents
Financial assets
Accounts receivable
Current tax
Other assets
1,746,142
240,877
1,281,739
129,610
78,213
15,703
1,828,184
245,968
1,197,787
303,904
72,120
8,405
TOTAL ASSETS
8,362,889
8,363,017
NON-CURRENT LIABILITIES
Financial obligations
Technical reserves
Deferred tax liabilities
Accounts payable
Employee benefits
Provisions
Deferred income liabilities (DIL)
mar-14
3,253,651
538,765
2,043,570
538,073
59,299
1,606
49,033
23,305
2013
3,170,873
552,887
1,902,372
532,481
70,074
1,430
87,479
24,150
CURRENT LIABILITIES
Financial obligations
Technical reserves
Current tax liabilities
Employee benefits
Accounts payable
Provisions
Other liabilities
1,241,545
134,765
627,434
11,054
30,816
326,365
110,326
785
1,147,332
149,883
707,904
34,084
47,144
109,338
96,330
2,649
TOTAL LIABILITIES
4,495,196
4,318,205
SHAREHOLDERS´ EQUITY
Subscribed and paid-in capital
Share premium
Other capital reserves
Net income from the year
Translation differences
TOTAL CONTROLLING INTEREST
Non-controlling interest
TOTAL EQUITY
1,360
3,759,345
130,132
60,803
(170,891)
3,780,749
86,944
3,867,693
1,360
3,785,406
(54,868)
232,965
2,196
3,967,059
77,753
4,044,812
8,362,889
8,363,017
TOTAL LIABILITIES AND SHAREHOLDERS´
EQUITY
14
COMMERCIAL
OVERVIEW
15
Regional presence
Geographic exposition
Assets Under
Management
(US$Bn)
Market share (2)
Base salary
(MM)
Mandatory
Pension Fund Fee
(%)
Direct
employees
2.0
1.44%
14,063
2,569
6.1
1.83%
2.1
1.52%
9,093
1,181
4.9
0.95%
13,589
1,897
0.3
1.99%
1,259
118
1.3
1.13%
2,299
323
Clients
21.10%
36.5
3°
(Aa3/AA-/A+)
14.26%
26.8
3,186
3°
(A3/BBB+/BBB+)
41.30%
16.7
SURA AM´s Presence
1°
(Baa2/BBB+/BBB)
36.90%
30.0
2°
(Baa3/BBB-/BBB)
18.20%
AUM per Country
1.9
Q1 2014
Uruguay
3.3%
2°
(Baa3/BBB-/BBB-)
Colombia
8.0%
Peru
20.8%
46.60%
Chile
34.8%
3.5
(Ba3/BB-/BB-)
Mexico
33.2%
2°
Notes:
1. Proteccion´s and AFP Crecer clients and AUMs are included
2. Mandatory pension fund market share as of March 31, 2014
16
Evolution of our market figures
Total Assets Under Management
AFP Clients (Mandatory)
6.1
36.5
33.1
26.8
30.0 28.5
24.6
3.8
16.7
1.9
12.0
1.9
Chile
Mexico
Peru
1.7
3.5
2.0
1.9
1.3
1.3
0.3
Chile
Mexico
Q1 2013
Peru
1.3
0.3
Colombia Uruguay
Q1 2014
Salary Base
Q1 2013
El
Salvador
Mandatory fees
13,589
12,910
11,844
1.83% 1.80%
9,093
1.52%
1.44% 1.44%
0.95% 0.92%
1,259 1,032
Peru
1.99% 1.99%
1.74%
5,930
Chile
3.6
3.3
Colombia Uruguay El Salvador
Q1 2014
14,063
6.2
Colombia
Q1 2014
Notes:
1. Proteccion´s and AFP Crecer clients and AUMs are included
Uruguay
Q1 2013
1.13% 1.10%
2,299 2,132
El Salvador
Chile
Mexico
(AUM)
Peru
Q1 2014
Colombia
Uruguay El Salvador
Q1 2013
17
Regional leader in the pension fund sector
Company
Industria de Pensiones (Mandatorias, Voluntarias y Cesantias)
Region
Chile
Mexico
23.4% 1°
Market Share
LatAm
1
10.9%
23,4%
1
2
3
4
9.7%
6
7
8
Chile
27.9%
21,3%
3.0%
36,8%
2
3
20.7%
27,9%
9,7%
9.2%
20,7%
26.1%
9,4%
26,2%
AUM Industria
Total industry
Uruguay
36.9% 2°
El Salvador
18.2% 2°
46.6% 2°
El Salvador
México
Perú
Uruguay
46,5%
14,1%
41,5%
18,2%
2
3
2
1
3,0%
0.2%
6,7%
0,1%
26.1%
9,3%
26,7%
7.5%
7,4%
42.7%
42,6%
6,8%
6.9%
17.0%
4,4%
13,2%
53,5%
53.4%
17,0%
26.6%
26,7%
13.2%
4,1%
4.3%
452
460.6
Colombia
41.3% 1°
6.6%
4.4%
9
14.3% 3°
Colombia
11,0%
9.2%
5
21.1% 3°
Peru
11,7%
161.9
12.2%
78
162.8
6
12
161
Number of players
Notes:
1. Mandatory pension fund market share as of March 31, 2014
7
158
36
10
36.8
81.3
10.4
7.5
4
4
4
2
18
INVESTMENT
PERFORMANCE
19
Performance by Country
Real Return
CHILE
AFP
Type A Fund
Higher Risk
Type B Fund
High Risk
Type C Fund
Moderate Risk
Type D Fund
Low Risk
Type E Fund
Lower Risk
Capital
5.09%
6
3.65%
6
4.76%
6
5.91%
6
5.99%
5
Cuprum
5.84%
3
4.27%
2
5.76%
1
6.67%
1
6.39%
2
Habitat
5.69%
4
4.13%
5
5.22%
4
6.41%
3
6.19%
3
Modelo
6.10%
2
4.27%
2
4.92%
5
6.27%
5
5.26%
6
Planvital
6.40%
1
4.65%
1
5.29%
3
6.36%
4
6.15%
4
Provida
5.51%
5
4.16%
4
5.53%
2
6.65%
2
6.49%
1
4.08%
0
5.32%
0
6.42%
0
6.25%
0
Sistem
5.57%
Source: Superintendencia de pensiones de Chile
Figures as of March 2014. Last 12 months performance. Nominal variation deflated by the change in UF for the
period.
Performance - Basic Siefores
MÉXICO
AFORE
Afirme Bajío
Azteca
Banamex
Coppel
Inbursa
Invercap
Metlife
PensionISSSTE
Principal
Profuturo GNP
SURA
XXI Banorte
Weighted average
SB1
More than 60 years
-2.14% 11
0.00% 5
1.07% 3
-0.52% 7
5.33% 1
-1.75% 10
-0.68% 8
1.76% 2
-2.54% 12
-0.27% 6
1.01% 4
-0.86% 9
0.37%
SB2
46 - 59 years
-1.82% 10
0.99% 7
2.13% 4
1.49% 6
5.52% 1
-2.69% 12
-0.33% 9
2.90% 3
-1.91% 11
1.94% 5
3.59% 2
0.31% 8
1.43%
SB3
37 - 45 years
SB4
less than 37 years
-1.70% 10
0.05% 7
2.10% 4
1.75% 5
6.15% 1
-3.02% 12
-0.74% 9
3.78% 2
-1.77% 11
1.74% 6
3.39% 3
-0.16% 8
1.26%
Source: Comision Nacional del Sistema de Ahorro para el Retiro - CONSAR (Mexico)
Figures as of March 2014. Last 12 months performance, Management Prices Nominal Values.
-2.74% 11
1.26% 7
2.49% 4
1.92% 5
6.71% 1
-3.19% 12
-1.10% 9
3.42% 3
-1.67% 10
1.66% 6
3.90% 2
-0.45% 8
1.23%
20
Performance by Country
PERÚ
AFP
URUGUAY
Real Return
Type 1 Fund
Asset Protection
Type 2 Fund
Mixed
AFAP
Type 3 Fund
Asset Appreciation
Estimated Net Real Return
AFAP Sura
-2.93% 2
Integración AFAP
-3.09% 4
Integra
-4.94%
2
-4.27%
1
-6.50%
2
Republica AFAP
-2.90% 1
Prima
-5.22%
3
-6.84%
3
-9.52%
3
Unión Capital AFAP
-2.94% 3
Profuturo
-4.61%
1
-4.95%
2
-5.01%
1
Average
-4.94%
-5.24%
Source: Superintendencia de Servicios Financieros BCU
-7.26%
Figures as of March 2014. Return for the last 12 months.
Source: Superintendencia de Banca, Seguros y AFP (Peru)
Figures as of March 2014. Annualized real return for the last 12 months.
COLOMBIA
EL SALVADOR
Mandatory Pension Fund Returns
AFP
Moderate Fund
Conservative Fund
Higher Risk
Special Retirement
Colfondos
6.99%
2
7.08%
1
9.63%
1
6.90%
1
Porvenir (*)
6.63%
4
6.82%
2
7.96%
3
6.72%
3
Protección (*)
6.72%
3
6.57%
4
8.46%
2
6.68%
4
Skandia
7.49%
1
6.71%
3
7.36%
4
6.78%
2
Weighted average (**)
6.75%
6.78%
8.27%
Public information not available for each
of the AFPs of the System. The total
system nominal return for the last 12
months is 2.32% as of December 2013,
and the cumulative nominal return since
June 1998 to June 2010 was 11.85%.
Source: ASAFONDOS
6.74%
Source: CSuperintendencia Financiera de Colombia
Figures as of March 2014. Return for the last 12 months.
(*) Returns for February were reviewed and verified for Proteccion, Porvenir and the Weighted Average.
(**) Weighted average for the daily balance of the funds.
21
REGULATORY
FRAMEWORK
22
Chile: Reforms of the Pension Fund System
•
•
•
•
•
An advisory Presidential Commission was created to study and comment the
possible reforms that could take place within the pension system.
The commission is comprised of 25 members, chaired by David Bravo and all
members have a distinguished career within the industry.
The commission has already been presented and confirmed.
In January 2015 the committee should produce its first results.
The Committee began meeting on May 28 with all sectors and associations
involved.
23
Chile: Single Funds Act (Ley única de fondos)
Initiative supported by the Ministry of Finance that will allow the Chilean capital market to be more
efficient through a single, common and more tidy legal asset management framework.
On January 7th, 2014, the Single Funds Act was published (Law 20,712) with the intention to
legislate on "Third Party Fund Administration and Individual Portfolios”, and it will become effective
as of May 1st, 2014.
Through this act, the industry will:
• Have a single regulatory framework applicable to Third Party Fund Managers and Individual
Portfolios
• Have high standards for the treatment of potential conflicts of interest
• Incorporate a minimum level of technical expertise and knowledge to those who participate
within the activities and functions of financial advisory and asset management
• Introduce a greater degree of flexibility in investment
• Fix the present taxation of different types of funds and their contributors
• Change the tax treatment currently applicable to foreign investors
24
ADDITIONAL TOPICS
25
International bond issuance
Coupon
4.875%
Yield
4.930% (T+230 pb)
Issue price
99.570%
Securities offered
USD 500MM
Maturity date
April 17, 2024
Bookrunners
Maximum rating of a
Colombian issuer.
Both ratings are one notch
above the Republic of
Colombia.
Double rating: both the issuer and the
notes have the same rating
US$4.3bn ~9x the amount offered
286 orders
Investors per type and region
26
Awards and recognitions
Morningstar 2014 awarded SURA Investment Management Mexico as the best multiasset Mutual Fund company in the country. This award recognizes outstanding funds and
investment managers in the United States, Canada, Europe, Asia, Africa and Latin
America
For the second consecutive year the prestigious British magazine World Finance
recognized AFP Capital (Chile) in the Global Pension Funds Awards, the publication that
annually recognizes major players in the financial service industry
The Legal Counsel and Compliance Officer in SURA Asset Management Peru was
included in the list of the 100 most influential and innovative organizational lawyers in
the region, this assessment highlights the legal leadership and the solution of technical
solutions to complex legal problems.
SURA Asset Management in Mexico was recognized - for the ninth consecutive year as a Socially Responsible Company. This award granted by the Mexican Center for
Philanthropy and the Alliance for Corporate Social Responsibility measured indicators
in five areas: quality of life, ethics and corporate governance, commitment to the
community, care and preservation of the environment, and management of the
Corporate Social Responsibility.
27
ANNEX
28
Exchange Rates
mar-14
Local Currency to USD:
MONEDA
Moneda local a dólar
mar-14
Mexico
Chile
Average.MXN
Average.CLP
Peru
Average.PEN
2.8093
Colombia
Uruguay
Average.COP
Average.UYU
2004.0533
22.1404
Local Currency to USD:
CURRENCY
Moneda local a dólar
13.2342
551.4121
MXN / USD
13.60
13.40
13.20
13.00
12.80
12.60
12.40
12.20
12.00
11.80
11.60
11.40
México Promedio
CLP / USD
México Último
Chile Promedio
560
540
520
500
480
460
440
420
COP / USD
PEN / USD
mar-14
2.85
Perú Promedio
Perú Último
2,100
2.80
2,050
1.3788
2.75
2,000
2.70
1,950
13.0363
550.5500
2.65
1,900
2.60
1,850
2.55
1,800
2.50
1,750
2.45
1,700
2.40
1,650
Euro
Last.EUR
Mexico
Chile
Last.MXN
Last.CLP
Peru
Last.PEN
2.8065
Colombia
Uruguay
Last.COP
Last.UYU
1969.4500
22.7250
Chile Último
580
Colombia Promedio
Colombia Último
UYU / USD
23.00
Uruguay Promedio
Uruguay Último
22.00
21.00
20.00
19.00
18.00
17.00
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Disclaimer
The forward-looking statements contained herein are based on
Management’s current forecasts and outlook. Thus, SURA Asset
Management assumes no obligation to update or correct the
information contained in this presentation.
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Key contacts
Andres Bernal C.
Chief Financial Officer
Email: [email protected]
Tatiana Uribe A.
Corporate Finance & Strategic Development Managing Director
Tel: +57-4-317-7808
Email: [email protected]
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