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ANNUAL 20

REPORT 12


THE COMPANY

MACROECONOMIC PERFORMANCE

Company Identification Ownership of the Company Historical Background Branch Network

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Economic Environment in 2012 Investment Portfolio

2 MANAGEMENT Board of Directors Organization Chart Corporate Governance

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4 ACTIVITIES AND BUSINESS Life Annuities Individual Life Insurances Mass Delivery Insurances Consumer Credit


BUSINESS SUPPORT AREAS Customer Service Digital Media Marketing Operations and Technology Comptroller’s Area and Risk Management Administration and Finance

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CORPORATE SOCIAL RESPONSIBILITY

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8 AUDITED FINANCIAL STATEMENTS

HUMAN RESOURCE AND DEVELOPMENT AREA

Independent Auditors’ Report General Balance Sheets Cash Flow Statements Reconciliation of Net Result and Operating Flow Notes to the Financial Statements


LETTER FROM THE CHAIRWOMAN

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I am pleased to present you with CorpVida’s Annual Report and Financial Statements for the financial period January 1 to December 31, 2012. CorpVida has become one of the most relevant participants in the domestic insurance market, being ranked among the top performers in terms of market share in Life Insurances. The above is the result of a sound and ongoing growth and consolidation process which we will strongly continue pursuing during the coming years. This excellent business result has been achieved thanks to an increase in sales in all the business lines in which we participate, excelling in Life Annuities, with a 27 percent growth, and in Individual Insurances, with a 14 percent increase with respect to the previous year. During the year, we continued working on providing the best service to our customers, incorporating significant improvements into our products, processes, and service and sales channels. We are convinced that only by providing a service of excellence and based on high standards, will we be able to maintain our

leading position. Within the financial investment context, the search for new investment alternatives was furthered, increasing our investment in international debt by 14 percent, especially in Latin American fixed-income instruments. As a result of this, we have been able to reduce risk through wider diversification, concurrently managing to increase portfolio returns. On an overall portfolio basis, we attained an exceptional 90 percent increase in the investment product as compared to the previous year. The real estate investment share in our portfolio continues to increase, with concurrent diversification in different asset classes, generating higher returns. There were important changes in the regulatory area, among which the enactment by the Superintendency of Securities and Insurance (SVS) of General Regulation NCG No. 325 deserves special mention. This regulation issues instructions concerning the risk management system applicable to insurance companies as well as creditworthiness evaluation of insurance companies by the SVS, which is a new development in the implementation of the RiskBased Supervision model. This Board of Directors has addressed these changes with special motivation and interest, by working throughout the year in the different Corporate Governance committees, thereby adhering to the new regulation with strong commitment. I would like to highlight the three big challenges that we have proposed for ourselves as a Company in face of our collaborators. The first one has to do with the generation of actions designed to internalize and strengthen the new


Company values. These are: Orientation to the Customer, Excellence, Responsibility, Team Work Innovation, and Passion. We have structured this plan into three broad phases: value dissemination in 2012, value internalization in everyday work in 2013, and value strengthening in 2014, and we want them to become part of the Company’s culture and identity. We are endeavoring to improve the workplace. We feel very proud of the progress made during 2012, where we showed substantial improvement in the evaluation made by our collaborators concerning their work environment or climate, with 72 percent in Corporate Vision (18.6 percent improvement with respect to 2011) and 79 percent in Vision of the Area (11 percent improvement with respect to 2011), by applying the “Great Place To Work” methodology. Our challenge is to continue implementing enhancements, with the active involvement of all our teams, the same as we did in 2012. Furthermore, we believe that investment in human capital is highly relevant, and consequently, we provided training and professional development to our collaborators with the aim of improving and strengthening their work competencies. This had a positive impact on the organization’s performance. We provided 1,600 training sessions, i.e., more than 40,600 work hours. Likewise, we benefited 7 of our collaborators with scholarships to pursue technical and university degree programs. During this year, the Company made progress in its commitment to the community and sustainability. We continued all the projects implemented during the previous year, and a number of activities were carried out enabling strengthening of our commitment to culture

dissemination, the environment, and the inclusion of people with cognitive disability. In this area, we were recognized by SENCE-Ministry of Labor and Social Security through the “Recognition as Inclusive Company 2011-2012” award and by the Emplea España and Arando Esperanza Foundations through a recognition award for our “Support to Labor Market Inclusion of People with Disabilities”. Finally, I wish to thank the members of the Board of Directors and all our collaborators and their families, who, in their different roles and responsibilities, assumed the Company’s challenges as their own, contributing each day the best of their knowledge, their skills, and their passion to help our Company become not only a relevant participant in the Insurance market, but also an attractive place to work and share goals every day. I feel proud of being able to rely on a professional team of excellence, and I am certain that, based on the aforementioned, we will continue progressing along a path of growth and development. Sincerely, María Catalina Saieh Guzmán Chairwoman

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“Our values are the foundation for our attitudes and motivations, acting as driving forces and becoming the backbone of our performance.�

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MANAGEMENT


THE COMPANY

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THE COMPANY

COMPANY IDENTIFICATION

LEGAL NAME COMPAÑÍA DE SEGUROS CorpVida S.A. LEGAL ADDRESS ROSARIO NORTE N° 660, PISO 21, LAS CONDES, SANTIAGO CHILE TELEPHONE / FAX 2660 3000 - 2660 3189

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WEB SITE www.CorpVida.cl TAX NUMBER 96.571.890-7 TYPE OF CORPORATION CLOSELY HELD CORPORATION, subject to special regulations (Law 18,046, Art. 126). The Incorporation Deed, dated November 14, 1989, was witnessed by the Santiago NOTEry Public Mr. Victor Manuel Correa Valenzuela. Its existence was approved pursuant to Exempt Resolution No. 190 of the Superintendency of Securities and Insurance on December 13, 1989.


THE COMPANY

OWNERSHIP OF THE COMPANY

CORPVIDA SHAREHOLDERS CorpGroup Vida Limitada, Tax Number 76,080,631-5, with 590,695 subscribed and paid-up shares, representing 72.12 percent, and Mass Mutual (Chile) Limitada, Tax Number 76,651,100-7, with 228,300 subscribed and paid-up shares, representing 27.88 percent. REINSURERS Mapfre Re, Hannover Re, RGA Re, Scor, Swiss Re.

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AUDITORS Deloitte Touche Tohmatsu Limitada RISK RATING FIRMS ICR Compañía Clasificadora de Riesgo Ltda. AA (Sept.2012) Feller-Rate Clasificadora de Riesgo Ltda. AA- (June 2012) INSURANCES Fire (Contents) Theft Electronic Equipment Civil Liability G.O. Employee Fidelity C.A. Employee Fidelity

UF 28,200 UF 28,200 UF 55,200 UF 10,000

24 base remunerations 24 base remunerations

DIVIDEND POLICY As regards the dividend policy, the Company is governed by Law 18,046, Article 79.


LA COMPAÑÍA

HISTORICAL BACKGROUND

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Our inception dates back to 1989, when the corporation Compensa Compañía de Seguros de Vida S.A., our first legal name, was created. In 1995, CorpGroup and the U.S. consortium Mass Mutual International incorporated Compañía de Seguros Mass Seguros de Vida S.A.; the following year, they purchased Compensa Compañía de Seguros de Vida S.A., whose name was changed to Compañía de Seguros Vida Corp S.A. With the aim of consolidating its market share, Mass Seguros de Vida S.A. merged with Compañía de Seguros Vida Corp S.A. in 2000, whereby the former was dissolved and the latter became one of the soundest life insurance companies in the country. After the physical merger by mid-2006 of the companies comprising the CorpGroup Holding in its modern corporate building, the decision was made to unify their corporate images in order to strengthen the idea that they are part of a single financial group. And thus, on October 1, 2007, the name of our Company was changed to Compañía de Seguros CorpVida S.A. At the end of 2009, CorpGroup formalized the purchase of ING Chile’s life annuity and mortgage loan note assets within the framework of its business expansion and growth strategy, giving rise to the CorpSeguros S.A. insurance company. The latter was successfully and efficiently incorporated into the Group’s company portfolio, attesting to the Group’s interest in consolidating a leading position in the domestic insurance industry. CorpVida and CorpSeguros comprise one of the

most relevant insurance groups in the country, with more than 340,000 customers and 19 branch offices throughout the country and leading the market with close to US$8 billion in managed assets. As a result of the experience and track record attained over more than 20 years of existence, CorpVida has become a company with an outstanding presence in this business. Its main mission is to ensure the future and tranquility of people, a promise that we can meet because we rely on the commitment and work of a professional team that is highly qualified and motivated to provide to our customers excellence in the consulting, services, and products that they demand from us.


LA COMPAÑÍA

RED DE SUCURSALES

BRANCH NETWORK 800 22 08 08 Fax: 2353 7059 www.CorpVida.cl

Viña del Mar Avenida Libertad 758

SANTIAGO

Curicó Prat 113

Rancagua Coronel Santiago Bueras 614, local 8

Head Office Rosario Norte 660, Piso 21 - Las Condes

Talca Uno Sur 841, Local 5

Santiago Centro Miraflores 222, Pisos 4, 5 y 6

Chillán Constitución 492, of. 302

REGIONS

Concepción Caupolicán 242

Arica 7 de Junio 268, of. 820 Iquique Aníbal Pinto 444 Antofagasta San Martín 2530 Calama Ramírez 1841, of. 201 Copiapó José Joaquín Vallejo 535, of. 404 La Serena Balmaceda 428, Local 1

Los Ángeles Colo Colo 411, of. 405 Temuco Manuel Bulnes 645 Valdivia Independencia 521, of. 307 Osorno O’Higgins 485, of. 308 Puerto Montt Benavente 550, of. 605 - 606 Punta Arenas Roca 975, Local 2

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“All our achievements, no matter how small, require our effort, commitment, and talent; they don’t come about by magic, they are the result of our passion for what we do.”


MANAGEMENT

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BOARD OF DIRECTORS

MANAGEMENT AS OF DECEMBER 31, 2012 CHAIRWOMAN OF THE BOARD María Catalina Saieh Guzmán VICE CHAIRMAN OF THE BOARD Fernando Jorge Siña Gardner

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BOARD MEMBERS Jorge Andrés Saieh Guzmán Alejandro Ferreiro Yazigi Bruce Stanforth Charles Naylor del Río Francis Lucchesi

MANAGEMENT


ORGANIZATION CHART

CHRISTIAN RODRIGO ABELLO PRIETO Chief Executive Officer Commercial Engineer Universidad Católica de Chile

RAÚL ANTONIO AHUMADA HADDAD Technical Manager Industrial Civil Engineer Universidad Católica de Chile

ENRIQUE EDUARDO MARGOTTA SAAVEDRA Comptroller Auditing Accountant Universidad Tecnológica Metropolitana

GERMÁN OSVALDO TAGLE O’ RYAN Investment Manager Commercial Engineer Universidad Católica de Chile

XIMENA ANDREA KAFTANSKI ARANCIBIA Legal Counsel Attorney Universidad Adolfo Ibáñez MAURICIO ANTONIO FASCE PINEDA Commercial Engineer Universidad de Concepción GUILLERMO ALBERTO OSSES GARCÍA Operations and Technology Manager Civil Engineer Universidad de Chile

MANAGEMENT

SYLVIA YAÑEZ MORENO Human Resource Manager Commercial Engineer Universidad Católica de Chile

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CORPORATE GOVERNANCE

CorpVida’s Corporate Governance structure faithfully reflects the spirit of its shareholders. It is based on sustained and effective oversight of the Company’s business, appropriate involvement of Board Members in decision-making, and efficient compliance with the regulatory model. To ensure effective Corporate Governance, the Company has implemented Board and Management Committees:

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MANAGEMENT


BOARD COMMITTEES | GOVERNANCE COMMITTEE This committee oversees compliance with the Corporate Governance structure and the application of the policies governing each Board Committee. | HUMAN CAPITAL COMMITTEE This committee oversees the Company’s overall HR function, ensuring compliance with General Dissemination and Communication Policies, both internally and externally, and the application of the provisions contained in the Code of Ethics and Conduct as well as all other policies defined by the Board of Directors pertaining to this area. | TECHNICAL COMMITTEE This committee supervises the actuarial function and applies and oversees the implementation of the Pricing, Risk Underwriting, Reserve, and Reinsurance Policies. | AUDITING COMMITTEE This committee executes and supervises compliance with the Internal and External Auditing Policy and Plan. It is responsible for the evaluation of the performance of external auditors, and executes and supervises compliance with the Risk Management System defined by the Board of Directors. In addition, it oversees the application and management of the Compliance Policy as well as proper application of the Customer Service and Information Policy together with claim and complaint management. | STRATEGIC DEVELOPMENT COMMITTEE This committee supervises the implementation of the Company’s Annual Plan defined by the Board of Directors and containing the projected strategic direction and market positioning for the current period.

MANAGEMENT

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CORPORATE GOVERNANCE

| INVESTMENT COMMITTEE This committee determines and applies the Investment and Derivative Policy and the Asset and Liability Management Policy (ALM). MANAGEMENT COMMITTEES | MANAGERS COMMITTEE This committee conducts, analyzes, coordinates, receives inquiries, and follows up on the main projects and issues related to the needs and performance of both Company management and the defined strategy.

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| TECHNOLOGY COMMITTEE This committee periodically reviews the status of new developments and establishes priorities in accordance with the Company’s strategy, reviews any incidents and related mitigation actions, and in general, supports the Technology area in all matters under its competence. | ALM COMMITTEE This committee proposes actions and ensures that Company asset and liability management is conducted in a coordinated way, within regulatory limits, and in accordance with the Company’s strategic objectives. | LIFE ANNUITY COMMITTEE This committee analyzes the behavior of Company sales and costs for this line of business, by product and channel, with respect to the budget. It also reviews the behavior of competitors and business main management

MANAGEMENT

variables and reports the status of the main action plans. | INDIVIDUAL LIFE INSURANCE COMMITTEE This committee analyzes the behavior of Company sales, revenue, expenses, staff, persistence, and returns for this line of business, by product and channel, with respect to the budget. It reviews the behavior of competitors and business main management variables and reports the status of the main action plans. | MASS DELIVERY INSURANCE COMMITTEE This committee analyzes the behavior of Company sales, revenue, and claim risk for this line of business, by sponsor, with respect to the budget. It reviews the behavior of competitors and business main management variables and reports the status of the main action plans. | CLAIM COMMITTEE This committee reviews and analyzes all claim cases, based on established and detailed criteria, in order to issue a resolution. It reviews and analyzes the criteria and policies related to claim settlement in order to take the necessary improvement or remedial actions concerning general or particular condition packages or existing settlement standards. | CUSTOMER AND QUALITY COMMITTEE This committee reviews customer satisfaction


levels with the Company in relation to competitors and the main customer satisfaction management variables. It analyzes the behavior of Company service indicators with respect to the standards defined for each channel and reports the status of the main action plans | RISK MANAGEMENT COMMITTEE This committee develops and proposes Risk Management strategies, policy, and methodologies. Additionally, it proposes the acceptable risk level (risk appetite) to be reviewed and approved by the Board of Directors. It ensures compliance with Integral Risk Management policy, methodology, and responsibilities. | PRICE COMMITTEE This committee follows up on key indicators associated with Company sales and its competitive edge. It approves the necessary adjustments to ensure Company objectives are met. | CONSUMER CREDIT COMMITTEE This committee analyzes the behavior of Company sales, costs, and return for this line of business, with respect to the budget. It reviews the behavior of competitors and business main management variables and reports the status of the main action plans. The aforementioned committee structure has enabled strengthening and consolidation of Corporate Governance within the Company

MANAGEMENT

through effective oversight of business and activities by the Board of Directors as an essential element for proper Corporate Governance performance. These committees are a channel for the application of Corporate Governance principles and concepts in accordance with the Company’s standing, recognizing the nature, scope, complexity, and profile of its business. Thanks to this Corporate Governance structure, the Company was able during 2012 to develop and complete several projects and achievements, among which the following are outstanding: the creation and updating of a series of Internal Policies and a Code of Conduct, compliance with regulatory requirements, consolidation of the Risk Management System, and materialization of investment projects.

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TEAM WORK

When you act with PASSION, you are an inspiration to others.


MACROECONOMIC PERFORMANCE

3


MACROECONOMIC PERFORMANCE

ECONOMIC ENVIRONMENT IN 2012

During 2012, the global economy managed to perform better than initially expected. The instability of the Eurozone during the first half of the year, the meager growth of the US economy, and deceleration in China were not good omens for what would occur further ahead and caused uncertainty among investors on a global level.

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However, as the months went by, the doubts haunting markets started to dissipate, and as a result of: the creation and expansion of rescue funds for European countries at risk, the transitory agreement reached at the last moment in the US Congress to avoid the fiscal cliff, and the diversification of the Chinese economy, the year was ended with limited volatility and a promising scenario for the beginning of 2013. Together with the reelection of President Barack Obama in the United Sates, this economic year was marked by the high liquidity still being injected by the Federal Reserve. This expansive monetary policy will continue in place until substantial changes are observed in the labor market and inflation projections do not exceed 2.5 percent over a period of one or two years. Furthermore, at the beginning of the year, all attention within the Eurozone was focused on Greece and its potential exit from the euro, but after the financial assistance package received by the Hellenic country, the focus of attention moved towards other economies facing problems. Unemployment rates and excessive public debt now started to become factors of concern in Spain, France, Italy, and Portugal. In contrast, emerging countries were a surprise in that they became a support and shelter for the world economy. The new growth drive in China brought about an increase in the demand for raw materials, directly and positively impacting on the majority of Latin American economies.


MACROECONOMIC PERFORMANCE

Chile was outstanding in terms of stability despite the fluctuations faced by the global economy. The GDP growth rate attained around 5.5 percent, the labor market continued to show great dynamism with unemployment levels at 6.2 percent, close to its potential, and annual inflation at 1.5 percent reaffirmed the good times facing the domestic economy. The above was recognized not only locally but also on an international level: the fourth quarter, our country was able to obtain financing in US dollars at a historic rate of 2.33 percent at ten years, and some months later, Standard & Poor’s improved Chile’s long-term debt rating in foreign currency from A+ to AA-. In spite of these good macroeconomic results, the Santiago Stock Exchange index (IPSA) showed low return, with only 3 percent in Chilean pesos. Finally, the exchange rate was a significant factor during the year. The Chilean peso parity appreciated by almost 8 percent against the US dollar, recording an average below the barrier of CLP$500 and closing even below CLP$480 in December. Concerning the value of commodities that are relevant for Chile, the average copper price was close to US$3.6 per pound. For its part, oil ended the year below US$95 per barrel, mainly affected by a global demand decrease.

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MACROECONOMIC PERFORMANCE

INVESTMENT PORTFOLIO

As of December 31, 2012, Compañía de Seguros CorpVida S.A.’s investment portfolio amounted to approximately UF 84,185,930 (equivalent to US$4 billion). Investment Portfolio as of December 31, 2012: 4,61%

Others (SIA and others) 1,89%

8,95%

Government Bonds

Foreign Assets

23,99%

Bank Bonds

2,57%

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Mortgage Loan Notes 14,18%

Real Estate 2,82%

Shares

9,43%

Mortgage Bonds

3,22%

Owner’s Equity Invested in Fixed Assets

30,56%

Corporate Bonds INVESTMENT PORTFOLIO

Government Bonds

2008

2009

2010

2011

2012

6,84%

5,76%

6,86%

3,55%

1,89%

Bank Bonds

11,88%

15,92%

15,60%

18,78%

23,99%

Mortgage Bonds

19,66%

16,41%

12,01%

9,43%

7,22%

Corporate Bonds

23,44%

29,00%

25,23%

28,46%

30,57%

3,18%

4,15%

5,29%

4,25%

3,22%

Owner’s Equity Invested in Fixed Assets Shares

2,72%

5,61%

5,11%

3,56%

2,82%

15,61%

10,40%

16,27%

15,74%

14,18%

Mortgage Loan Notes

5,74%

5,20%

4,03%

3,21%

2,57%

Foreign Assets

8,45%

5,31%

4,90%

8,73%

8,95%

Others (SIA and others)

2,47%

2,24%

4,70

4,30%

4,61%

Total

100%

100%

100%

100%

100%

Real Estate


MACROECONOMIC PERFORMANCE

During the year under review, the Life Annuity industry expanded by more than 20 percent. As a result of this explosive sales growth, the search for new and diverse investment opportunities became one of the main challenges in 2012. The domestic market was fairly restricted in terms of new issues which, added to low returns, shifted the investment focus to international markets. The portfolio was significantly increased in this type of asset. The year 2012 was generally highly volatile for global stock markets, for which reason exposure from stocks was limited and quite conservative so as not to assume excessive risks within an environment that was highly unpredictable.

adequate asset and liability gaps were also maintained. As regards real estate investments, these were focused on assets for lease, with commercial properties being the main objective. In particular, 17 Strip Centers were purchased from Inmobiliaria Avantuen S.A. for more than UF 1 million. Additionally, five plots of land were sold in the city of Antofagasta for the Valle del Mar Project, enabling the generation of a profit reaching UF 334,900 and significantly contributing to CorpVida’s result.

Emerging country currencies appreciated throughout the year, which factor was positively exploited in order to obtain additional returns through active hedging management. Creditworthiness indicators continued to improve in an exceptional and ongoing manner. The Company’s Asset Adequacy Ratio (AAR) remained within the desired levels. and

100%

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Others (SIA and others)

90%

Foreign Assets

80%

Mortgage Loan Notes

70%

Real Estate

60%

Shares

50%

Owner’s Equity Invested in Fixed Assets

40%

Corporate Bonds

30%

Mortgage Bonds

20%

Bank Bonds

10%

Government Bonds

0% 2008 2009 2010 2011 2012


INNOVATION

When you act with PASSION, you are constantly focused on improving.


ACTIVITIES AND BUSINESS

4


LIFE ANNUITIES

The year 2012 was an excellent year for the Life Annuity market, with revenue reaching UF 71,884,000, representing a 21.9 percent increase with respect to 2011. The average premium in 2012 was UF 2,474, a figure very similar to that for the previous year. CorpVida attained a 26.9 percent growth in 2012, exceeding market growth, with revenue of UF 9,893,000, and obtained the second place in the corporate ranking, a 13.8 percent market share, and an average premium of UF 2,266.

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During the year, CorpVida managed to strengthen the Pension Fund Consultant channel, reaching the projected staff and a productivity exceeding projections, equivalent to 0.95 monthly average deals closed by consultant, thereby demonstrating that the management model used in this channel was appropriate for the achievement of the proposed goals. Additionally, work with this channel was carried out with special emphasis on market opening and development. Management in relation to the Pension Fund Assistant channel was mainly focused on fidelization, with 60 percent of Assistants having access to the Pension Fund Amount Enquiry and Offer System (SCOMP) in 2012 closing at least one insurance contract with CorpVida during the year. This also considered a price strategy consistent with the needs of this channel. Expectations for the coming year are for the Life Annuity market to drop by approximately 5 percent with respect to 2012, with a market close to UF 67,000,000 being estimated. The challenges for CorpVida in 2013 are to consolidate its leadership in the Life Annuity market and attain a 14 percent market share.

ACTIVITIES AND BUSINESS


INDIVIDUAL LIFE INSURANCES

The year 2012 was a year of adjustments for the Individual Life Insurance market, basically due to the impact of changes to the taxation system applicable to Voluntary Pension Fund Savings (VPFS) instruments with insurance, implemented in December 2011, on VPFS premium revenue. Notwithstanding the above, CorpVida recorded sustained growth in this line of business, mainly driven by strong increase in flexible insurances with savings subject to the 57 BIS taxation regime and an excellent performance in Private Life Annuity sales. Premiums from new business transactions issued during the year grew by 14 percent with respect to the previous year, reaching 25 percent if considered based on their value (weighted premium). This significant growth was due to an increase in the proportion of marketed insurance premiums, growing from 23 percent to 28 percent of total premiums (the remaining portion corresponds to savings premiums). Likewise, the significance of flexible insurances grew to the detriment of the weight of VPFS insurances, which, until 2011, concentrated more than 80 percent of sales. The above is very positive, since flexible insurances are more profitable and have higher exit barriers, enabling expectations of an improvement in customer loyalty during the coming years. It is important to highlight that both sales channels, the Internal Channel (Company’s own sales force) and the External Channel (free agents and brokers), were able to meet their sales goals for the year, with remarkably strong growth in the external agent channel with respect to 2011 (40 percent), consistent with the strategy of continued strengthening of this channel as a way of diversifying insurance delivery through more profitable channels. Another outstanding aspect in annual management was an increase in the sales staff, with a 23 percent increase over the year, achieving a total of nearly 300 insurance and investment executives on a national level. The above was

ACTIVITIES AND BUSINESS

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attained maintaining premium productivity and increasing policy productivity. From a qualitative point of view, 2012 marked the beginning of a strategy oriented to training excellent sales executives with the aim of differentiating us from our competitors and providing customers with the best consulting service in matters of protection and financial planning. Along this line, the executive training study plan was updated, and a certification process covering all Individual Life Insurance sales channels was carried out for the first time in CorpVida’s history. Together with commercial and financial challenges, work will continue during 2013 on developing a competitive edge in this business line, which will be closely linked to the focus on the customer, as the fundamental pillar in CorpVida’s commercial strategy for this year.

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ACTIVITIES AND BUSINESS


MASS DELIVERY INSURANCES

Total revenue from Mass Delivery Insurances in 2012 was CLP$21.1 billion, with premium from the CorpBanca and Banco Condell title insurance business being outstanding, with CLP$17.5 billion. Together with CorpBanca and Banco Condell, the Company had to face big growth challenges arising from insurances associated with bank credit transactions. During 2012, the Bancaseguros (bank insurance) commercial strategies were redesigned, and modifications to products and incentive campaigns were implemented. A new impetus was given to sales results, and the expectations are for this to continue during 2013. In addition, a new strategic alliance was created with the Nuestros Parques Cemetery Company, with expectations being to achieve consolidation of this business during the coming year. Expectations for 2013 are to continue with the development of an interesting supply of mass delivery insurances marketed mainly through the companies that are part of the Group, taking advantage of the excellent profitability results that may be attained by both parties.

ACTIVITIES AND BUSINESS

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CONSUMER CREDIT

Following the previous year’s trend, during 2012 the Company once again showed an outstanding performance in the placement of Consumer Credits to pensioners, exceeding all historical sales levels for this product in terms of both the total amount placed, net sales, and number of transactions. Accordingly, sales levels for the year reached a net placement amount of UF 155,949, with a total of 6,192 transactions, which represented increases as remarkable as 34 percent and 23 percent, respectively, as compared to 2011.

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Important regulatory changes once again affected Consumer Credits in 2012. These changes were introduced by the regulatory authority through the so-called Financial SERNAC Law, a law aimed at providing customers with greater access to information both during the product quotation process and during the entire product validity period. Over the year, the Company had to introduce important changes to its operational and commercial systems in order to successfully adapt them to the new regulations. Among the actions carried out during 2012, the preparation of an internal document denominated “Our View of Consumer Credits” deserves special mention. This was distributed to all the persons in charge of this product marketing and customer service, and establishes the principles and values that must govern the relationship with customers in connection to this product.

ACTIVITIES AND BUSINESS


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ACTIVITIES AND BUSINESS


RESPONSIBILITY

When you act with PASSION, you are committed to your own decisions.


BUSINESS SUPPORT AREAS

5


BUSINESS SUPPORT AREAS

CUSTOMER SERVICE

The Customer Service area was characterized by the enhancement of its professional team of 14 people at the Call Center and the Metropolitan Region branch office, together with the consolidation of the telephone, direct, and remote service technological platforms. Within this consolidation process, one of the main areas developed was the implementation of an appropriate employee training study plan throughout the year. This enabled the delivery of improved decision-making tools at contact points, especially at the Call Center.

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Another primary focus was the implementation and follow-up on Individual Life Insurance and Life Annuity customer satisfaction levels through monthly assessments of customer satisfaction. These assessments were carried out by Ipsos, a company specializing in market surveys and quality models, and covered samples consisting of customers who visited the Miraflores branch office or called the Call Center so as to assess the service received by these customers. Based on these surveys, the more poorly assessed attributes could be identified, to subsequently generate actions towards their improvement. The main examples of these actions are the definition of new service protocols for the Call Center and the appointment of specialized service executives per line of business for each service channel. In addition to the above, CorpVida participated for the second consecutive year in an annual syndicated survey for the Individual Life Insurance product to obtain a benchmark for the insurance industry and its most relevant competitors in relation to customer satisfaction and loyalty. Furthermore, work was continued in the consolidation of traditional indicators for customer service assessment. The Call Center unit is comprised of five inbound positions and answers calls from multi-company and multi-product customers. In addition, it has two outbound positions for customer welcome calls and other commercial campaigns. During 2012, a call recording technology was incorporated in this area. This enabled increased


BUSINESS SUPPORT AREAS

monitoring of customer service as well as the possibility of online listening to calls. This unit answered a monthly average exceeding 3,800 total calls, with an actual 3.5 percent abandonment rate and a 93 percent service level (calls answered within 10 seconds), largely exceeding the goals defined for this year (5 percent and 85 percent respectively). The main Direct Service unit is the branch located on Miraflores street, 6th floor, which has six positions for catering to multi-company and multi-product customers. Its Total Pack platform enabled ongoing online monitoring of calls handled, service and waiting times, abandonment rates and service levels, meeting at the end of the year the goals proposed for this unit (2 percent abandonment rate and 87 percent service level). During 2012, this follow-up was also carried out for the Vi帽a del Mar and Concepci贸n branches. The year 2012 was an excellent year for the sale of Consumer Credits by the Miraflores Direct Service executive team, with 134 percent overcompliance with the annual loan goal, placing UF 32,099 in loans to retirees. In this way, an excellent and economical financing alternative for retirees continued to be integrated into service management.

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BUSINESS SUPPORT AREAS

DIGITAL MEDIA

In order to differentiate us in the market through a digital service platform highly valued by customers and non-customers, a new corporate web page was developed towards the end of the year, with a value proposal based on providing insurance contents and pension fund consulting in a simple, professional, modern, and close manner.

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Its design and construction convey its essence: “Make It and Say It Simply�, providing simple and direct browsing under modern graphic design standards, empathy and user-friendly language, and a clean content structure. It is a site conceived for providing adaptability to multiple devices and improving SEO positioning, multibrowser support, and flexibility to adapt to new web development technologies. During this initial phase, this new public site will enable current and potential customers to become acquainted with the Company and its range of products and solutions available to them together with other online financial and pension fund consulting tools, interactive simulators, and several topics of interest. Likewise, the construction of a new private portal for customers was initiated in 2012. This will provide customers with access to detailed information about their policies, the evolution of their savings, premium payment statements, and claim reporting, among other multiple post-sale services, and will be launched during the first quarter of 2013.


BUSINESS SUPPORT AREAS

MARKETING I HAVE NO FEAR AN INNOVATIVE CAMPAIGN… In order to further our trademark positioning as well as advertise our wide range of products, the selected strategy this year was one focused on reaching our target audience through a different message, with high visual impact and easily remembered. In this way and together with the Dittborn & Unzueta agency, a new and innovative concept was designed with the aim of disseminating the idea that CorpVida offers solutions to the protection needs of its target audience by means of its product supply, such as Life Insurances, VPFS, or Life Annuities. The campaign was developed under the concept “Fears End When You Feel Safe”, where each one of the graphical pieces invited customers to access the official campaign site www. notengomiedo.cl in a ludic, recreational manner. Once at the site, the customer could “live an experience” through a video application that could be personalized and, the same as the rest of the contents in the site, enabled the dissemination of the message through social networks. Accordingly, the dissemination plan for this advertising campaign relied on the digital world, as central platform, through mass media such as Facebook, Twitter, and YouTube, among others, in addition to traditional advertising via broadcast TV, cable TV, press releases, billboards, subway advertisements, and radio. In this way, the message could be disseminated, and there were a high number of hits to the campaign site.

39


BUSINESS SUPPORT AREAS

OPERATIONS AND TECHNOLOGY

40

| OPERATIONS In Traditional Insurances, CorpVida continued working on the implementation of regulatory changes in line with the new Capital Market law, which mainly affected VPFS products. In addition, regulations related to the Financial SERNAC (National Consumer Service) were implemented, mainly focused on Bancaseguros and Mass Delivery Insurance Products. The Company also worked on complying with the resolutions passed by the Self-Regulation Council of the Chilean Insurance Company Association, whose purpose is to provide and ensure service to life insurance beneficiaries by efficiently managing indemnity payment. Concerning ongoing process improvement, the Individual Life Insurance policy collection and revenue process was reviewed and optimized in order to ensure the quality and timeliness of this service. Furthermore, in conjunction with the Commercial and Technical areas, the risk underwriting process was reviewed, generating modifications aimed at improving this process timeliness (fast-track) and efficiency. During the second semester of 2012, the implementation of a new Integral Technological Platform for Traditional Insurances was implemented, including Individual Life Insurances, Bancaseguros, and Title Insurances. This will enable efficient management of all Traditional Insurance products and the delivery of a service of excellence to our customers through the generation

of products in a timely manner (time-to-market) and improvement of collaborator management. This project involved all CorpVida’s management areas. During the last quarter, CorpVida worked jointly with the CorpBanca Insurance Broker in order to consolidate the mass delivery insurance sales channel. As a result, new products, such as Salud Garantizada (Guaranteed Health) and Vida Propia (Own Life), were marketed during the quarter. The Life Annuity Operations–Pension Fund Insurance Operations area strongly focused its activities on internal and external customers and started the year by administering the satisfaction survey denominated “The Voice of the Internal Customer”, addressed to the Sales and Front areas, obtaining 73 percent approval on the service rendered. In addition, in order to strengthen the autonomy and knowledge of the service area in terms of customer service, it developed and launched the “Improve your Knowledge” program, consisting of e-learning training delivered by each owner of the operational process. A bulletin denominated “Más Cerca de Ti” (Closer to You) was created, consisting of a personalized email as a direct, single, and simple channel for the sales and service area, where new matters pertaining to the regulatory and operational areas are communicated. A Panel of Monitoring Indicators was designed for critical processes, using the services agreements


BUSINESS SUPPORT AREAS

as basis, by monthly evaluating deviations and implementing improvement action plans. In the regulatory area, the 2 percent health bonus for retirees (Law No. 20,531) was implemented. This included changes in both pension fund payment channels and coordination with the different supervisory agencies that regulate the Life Annuity product. In addition, an Electronic Insurance Policy was implemented, affecting the entire social security market, Insurance Companies, and Pension Fund Management Companies (AFPs). This new system relies on electronic transmission of information from the Company to the AFP and replaces the issuance of printed insurance policies in accordance with General Regulation No. 43. This innovation implied direct training addressed to the commercial area concerning this new issuance process. Along this same line, electronic transmission of Family Allowance fund reporting to the Superintendency of Social Security (Circular Letter No. 2857) was implemented as well as a new Insurance Inquiry Information System, via WEB Services (Law No. 20,552). A reply to Circular No. 2062 was delivered, requesting matching of the entire customer base with the Civil Registry through a routing process, including both current and noncurrent customers, in order to regularize pension fund deviations

41


BUSINESS SUPPORT AREAS

42

| TECHNOLOGY During 2012, the Technology Management area furthered the process of consolidation of the structure defined in order to provide quality Technological Services to all the organization. As part of this process, the Development SubManagement created the Front Systems area, thereby implementing a structure oriented to the development of new applications and evolutionary support to all the systems that provide services to final customers, regardless of the involved line of business. This was aimed at allowing strong focus on and high efficiency in response times to customer needs.

along with the creation of service agreements (SLA – Service Level Agreement) with critical business areas, thereby ensuring response times consistent with the business needs.

Additionally, the Development SubManagement consolidated the application of systems development and maintenance methodologies, by applying them to all the projects that were addressed in the area. As part of the projects undertaken during the year, the new Company web page, with a focus on user-friendliness for customers, stands out as does the application of regulations related to VPFS and Financial SERNAC, Life Annuity electronic polices, and International Financial Reporting Standards (IFRS).

| COMPTROLLER’S AREA AND RISK MANAGEMENT During 2012, a number of initiatives were implemented with the aim of promoting substantial improvement in Risk Management.

For its part, the Technological Platform SubManagement consolidated its User Support and Technological Infrastructure areas at the service of the entire Company. For this, it developed a remarkable application based on the best practices in the market for this type of activity,

Likewise, within the internal regulatory framework, this unit focused its efforts on formalizing and enhancing a number of initiatives oriented to introducing an operational shift from a vision relying on regulation-based supervision towards risk-based supervision. Concerning Control, the focus during the

As part of the continuous improvement of the services offered by the Technological Platform Sub-Management, renovation and risk mitigation projects were designed to enhance the estimation, communication, and contingency infrastructure providing support to critical Company business processes. This ensures operational continuity and the satisfaction of internal and external customers.

Together with Corporate Governance, internal control, operational management, and the implementation of N.C.G. No. 325 relating to the Risk Management System, these initiatives enabled strengthening of the pillars supporting Risk-Based Supervision.


BUSINESS SUPPORT AREAS

year was mainly oriented to maintaining an adequate internal control level and focusing audits on key Company processes in order to keep ongoing track of the status of our operations and performance. | ADMINISTRATION AND FINANCE MANAGEMENT One of the most relevant projects conducted by the Administration and Finance Management throughout 2012 was the implementation of International Financial Reporting Standards (IFRS). As planned by the Company´s senior management, the Accounting Management area applied the new Accounting and Financial Reporting regulations for Insurance Companies. In addition and as part of the implementation of IFRS procedures, the Risk Sub-Management implemented an asset impairment policy, consisting of proactive determination through a scoring system of eventual decreases in the value of an asset or a group of financial assets in the portfolio in face of events having a probable impact on future cash flows. Moreover, throughout 2012, the Credit Risk area significantly enhanced its evaluation and follow-up procedures for international bonds and local real estate investments. This was implemented along with a more active foreign investment strategy and a growing local real estate market.

43


PASSION

When you act with PASSION, your energy outstands.

44

MANAGEMENT


HUMAN RESOURCE AND DEVELOPMENT AREA

6


HUMAN RESOURCE AND DEVELOPMENT AREA

The Human Resource Management was created in April 2012 as an independent structure for CorpVida, with the aim of providing internal customers a service that is more personalized and in line with the challenges faced by the Company.

46

This Management area is comprised of six functional areas: Development and Selection Sub-Management, Compensations and Processes Sub-Management, Corporate Benefits and Healthy Life Sub-Management, Training Area, Internal Communications Area, and Risk Prevention Area, all of which cater to 683 Collaborators, of which 69 percent are women and 31 percent are men.

HUMAN RESOURCE AND DEVELOPMENT AREA


DEVELOPMENT AND SELECTION SUB-MANAGEMENT

One of the most important milestones for the Organizational Development area was the surveying, analysis, and establishment of new Corporate Values for the Company. This work was aimed at identifying those values representative of the new challenges facing the Company and driving action. The six new Company values are: Orientation to the Customer, Excellence, Innovation, Team Work, Responsibility, and Passion. In November, the official launching of a Value Campaign was carried out on a national level under the slogan “CorpVida is YOURS. A passion for what you do”, and the main guidelines of what values represent and how they must be put into practice in our daily work life were provided. During December, together with the Internal Communications area, this SubManagement conducted a Strategic Alignment workshop, where the main Company leaders were sensitized and motivated to put corporate principles into practice in conjunction with their teams. During 2012, 266 new collaborators were hired, of which 180 are part of the commercial teams and the remaining 86 percent correspond to different positions in the other Company management areas. Moreover, 16 collaborators were promoted, which attests to the conviction that there is internal talent and to a commitment to the professional development of the Company’s human capital.

Another relevant milestone led by this area was the selection of two young persons with cognitive disability (Support Administrative Employees), which action was part of the Work Inclusion Program. Strong focus was place on the Work Climate. The “2012 Climate: Be the Best, a Matter of Attitude” program was implemented during the year. The purpose of this program was to motivate participatory work among collaborators to identify improvement focuses in their areas and to proactively work on them. At the same time, corporate actions were developed oriented to improving overall climate indicators such as leadership, communications, training, and benefits. In December 2012, the Great Place to Work survey was applied once again, with results showing 72 percent satisfaction with respect to the Company and 79 percent with respect to the area. The results were significantly better than those obtained in 2011, with an 18 percent increase in Corporate Vision and 11 percent in Vision of the Area. Concerning the Performance Management process, in April 2012 the Bottom-Up Evaluation was carried out for the first time, and personalized consulting was provided to all managers to assist them in more comprehensively analyzing their results and understanding them in a constructive way. Along this same line, those managers with the lowest

HUMAN RESOURCE AND DEVELOPMENT AREA

47


48

results received specialized support in generating and monitoring their improvement plans. During the Intermediate Evaluation phase, a Self-Evaluation was incorporated for the first time as a way of starting to generate a reflexive and proactive view of each one’s own performance. During the annual evaluation period, which started in December 2012, a Self-Evaluation, a Bottom-Up Evaluation, and a Top-Down Evaluation were integrated into the same process in order to objectify and enrich this process as much as possible as well as to motivate a constructive and effective feedback discussion. As for Leadership, the first steps were taken in order to strengthen managers in their role as people leaders, communicators, and managers of a positive work climate. Accordingly, together with the Communications area, a special communication medium for managers, denominated “The Leader’s Path”, was developed. The commercial area progressed along this line and implemented the “Leadership Path” program, through which Life Annuity Agents, Team Heads, and Directors completed a diagnosis and implemented very concrete actions aimed at enabling their respective channels to obtain profitable business results, but with a highly marked emphasis on best leadership and team development practices. Likewise, formal training concerning skills for effective feedback was developed oriented towards all Company managers.

HUMAN RESOURCE AND DEVELOPMENT AREA


COMPENSATIONS AND PROCESSES SUB-MANAGEMENT

One of the most important projects consisted of insourcing remuneration service and payment through a special system (Oracle Personnel and Remuneration Administration System), which personalizes customer service, improves response times, and promotes information control and safety. The Company is actively interested in maintaining competitive compensations and updated market data; therefore, CorpVida once again participated in a salary survey together with other companies in the insurance business. In addition, all job descriptions were reevaluated. This process consisted of a review and validation of job descriptions jointly with personnel assigned to the position as well as the relevant supervisor, with the aim of assessing contribution to business results to subsequently evaluate and value each job description (using the Hay Group job evaluation method). Furthermore, a survey was carried out during the first semester with the purpose of reviewing vacation day balances, which impact on both the quality of life of collaborators and business results (due to provisions) for collaborators to design action plans, as required.

HUMAN RESOURCE AND DEVELOPMENT AREA

49


CORPORATE BENEFITS AND HEALTHY LIFE SUB-MANAGEMENT

The Corporate Benefits and Healthy Life Sub-Management was created this year, focused on improvement of collaborators’ quality of life, considering a wide range of benefits, agreements, and activities, all aimed at generating a company value supply.

50

One of the most relevant actions was to respond to a desire of collaborators, namely the implementation of a family activity centered on their children. Accordingly, the first Family Celebration was carried out at the Mampato amusement park in November, with the attendance of collaborators from Santiago and the Viña del Mar and Rancagua branches. For its part, concerning Corporate Recognition, the bases for Corporate Recognition Awards were redefined in order to align these with the business strategy. From a Healthy Life perspective, several activities were designed with the aim of promoting companionship and integration among collaborators. In addition, CorpVida once again participated with great success in the Insurance Business Olympics, organized every year by the Chilean Insurance Company Association. Among recreational and family activities, the following initiatives were carried out: Fun Vacation Program (for collaborators’ children during their winter holidays), Independence Day celebration, and Company anniversary, among others.

HUMAN RESOURCE AND DEVELOPMENT AREA


TRAINING AREA

Training activities within the Company faced significant challenges during 2012 along three fundamental axes: Corporate Training, Technical Training, and Commercial Training. The purpose of Corporate Training was to develop and strengthen the Organization’s culture. For this purpose, workshops were defined by job levels (administrative personnel, professionals, and managers). During the year, Corporate Induction activities were carried out on a monthly basis, with the purpose of supporting the integration of new Company collaborators. This was made possible by the commitment and active involvement of managers, who made presentations on different topics such as: the Financial Group and CorpVida’s history, culture, values, product lines, and most relevant challenges, among others. The Technical Training plan derived from the needs detection process, which was implemented with each area manager and was focused on reducing gaps by strengthening the performance of each collaborator. Concerning Commercial Training actions, from the beginning of the year, training was provided on a national level to the entire Individual Life Insurance Management with respect to the new CorpFuturo product, which is associated with the 57 BIS tax benefit. Another important landmark was the implementation of a learning Certification Plan for the Individual Life Insurance Management operation, whose purpose was to launch a certification culture relying on well-prepared Insurance Consultants, instrumental in strengthening relationships with customers. This time, 276 collaborators were certified, with an overall result of 76 percent.

HUMAN RESOURCE AND DEVELOPMENT AREA

51


INTERNAL COMMUNICATIONS AREA

At the beginning of 2012, a new Intranet was launched, characterized by renewed design, more well-structured information, and improved web browsability. Additionally and with the purpose of supporting the Leadership Program implemented by the Organizational Development area, a special, monthly communication medium for managers was created in order to strengthen leaders in their management role, aligning the latter with the strategic plan.

52

The Internal Communications area also led the development and implementation of the communications campaign denominated “YOURS - A passion for what to do�, where the new Company values were communicated. During the year, support was provided to the different Company areas through communication media, for them to provide information to collaborators about milestones, activities, and any other relevant issue. In addition, internal Company events were conceptualized and organized.

HUMAN RESOURCE AND DEVELOPMENT AREA


RISK PREVENTION AREA

The provision to collaborators of the knowledge necessary to create a preventive culture was especially noteworthy during 2012. To achieve the above, emergency plans were implemented, informing work-related risks. In addition, preventive training sessions were carried out using a methodology centered on the development of skills from practical experience (proper management and use of fire extinguishers, Heimlich Maneuver, Cardiorespiratory Resuscitation, among others). The result of the work carried out by the area was reflected in a reduction of accident rate indicators (16 percent less than in 2011), with ongoing monitoring of claims and always maintaining the Company below the industry average.

HUMAN RESOURCE AND DEVELOPMENT AREA

53


EXCELLENCE

When you act with PASSION, you care about those details that make the difference.

54

MANAGEMENT


CORPORATE SOCIAL RESPONSIBILITY

7


HUMAN RESOURCE AND DEVELOPMENT AREA

CorpVida has an integrated vision harmonizing economic and sustainable business development with a commitment to environmental protection and the wellbeing of customers, collaborators, suppliers, and the community as a whole.

56

During 2012, the Company made progress in the development of its relationship with social responsibility and sustainability. The main challenge consisted in giving continuity to all the projects implemented during the previous year, for which a number of activities enabling reinforcement of the commitment to culture dissemination, the inclusion of people with cognitive disability, the environment, and all the groups of interest were implemented. This commitment was recognized by the Ministry of Labor and Social Security and the Arando Esperanza Foundation by their presenting CorpVida with two awards, the “Recognition as Inclusive Company 2011-2012” and the “Recognition for its Support to Labor Market Inclusion of People with Disabilities”.

CORPORATE SOCIAL RESPONSIBILITY

| ENVIRONMENT The Company participated for the first time – together with other Group companies, Recycla Chile, and the Ministry of the Environment – in the celebration of National Recycling Day. To celebrate this day, several communication campaigns about the impact of electronic waste on the environment and the benefits of the use of renewable energies were implemented, in addition to the placement of containers for electronic waste collection. | CUSTOMERS This year, the aim was to incorporate customers into the Company’s CSR activities and make them aware of the impact generated by them. By means of an electronic Christmas card, customers were invited to construct a better, more friendly, and more inclusive world as well as to share their own dreams, thereby promoting ongoing dialogue over time. | COLLABORATORS Collaborators are the main engine driving our Company’s compliance with defined objectives, for which this year CorpVida focused on developing corporate volunteer activities strengthening the feeling that one is performing work that is relevant for the successful and sustainable result of the business, while at the same time, contributes to the community’s wellbeing. Accordingly, CorpVida collaborators invited young people from the Corporación Seguir Creciendo Foundation to visit its offices, to participate in painting and dancing


activities, and to share a delicious lunch, especially prepared for the occasion in the corporate dinning hall. Furthermore, CorpVida continued with its work inclusion program, whereby two new collaborators with cognitive disability were hired in 2012. They are currently working at the Miraflores branch.

Likewise, the support for the Corporación Seguir Creciendo Foundation was extended through the incorporation at the Miraflores branch of the sale of products made by the young people with cognitive disability who are members of this foundation.

| SUPPLIERS To offer financial products of excellence, it is necessary to rely on reputable suppliers, both in terms of the quality of the products and services they offer and integrity in providing them. CorpVida promotes good practices and fosters management of the social and environmental impacts of its activities.

57

| COMMUNITY The Company’s commitment to the community spans the cultural, social, and sports spheres. CorpVida continued to provide support to the CorpArtes and Descúbreme Foundations, which enabled collaborators and their families to take part in the different artistic activities and exhibitions implemented, such as “Árbol de los Sueños” (Dream Tree), the “Solidarity Month”, and the celebration of a “Christmas with Sense”. Along this line and to promote the Healthy Life Plan, an “Inclusive Soccer” game was organized during 2012. This was a sports activity in which collaborators could take part in a demanding training session and a contested game with young people from the Amigos por Siempre Foundation.

CORPORATE SOCIAL RESPONSIBILITY


CUSTOMER ORIENTATION

When you act with PASSION, you run the risk.


AUDITED FINANCIAL STATEMENTS

8


INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Board Members of Compañía de Seguros CorpVida S.A.: We have audited the enclosed financial statements of Compañía de Seguros CorpVida S.A. hereinafter “the Company”), including the statement of financial position as of December 31, 2012, the related statements of comprehensive income, changes in equity, and cash flows for the year then ended, and the corresponding notes to the financial statements. Note 6.III has not been audited by us; therefore, this report is not extensive to it.

60

Management’s Responsibility for the Financial Statements The Company’s Management is responsible for the reasonable preparation and presentation of these financial statements in accordance with the accounting standards established by the Superintendency of Securities and Insurance. This responsibility includes the design, implementation, and maintenance of internal control over the reasonable preparation and presentation of the financial statements so that they are free of material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and

AUDITED FINANCIAL STATEMENTS

perform our auditing work to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves the application of procedures to obtain evidence supporting the amounts and disclosures in the financial statements. The selected procedures depend on the auditor’s judgment, including an evaluation of the risks of material misstatement, whether due to fraud or error. In performing these risk evaluations, the auditor considers relevant internal control for the reasonable preparation and presentation of the Company’s financial statements in order to design auditing procedures that are consistent with the circumstances but with no intention of expressing an opinion concerning the effectiveness of the Company’s internal control. Consequently, we express no such opinion. An audit also includes assessing the accounting principles used and significant estimates made by the Company’s Management as well as an evaluation of the overall financial statement presentation. In our opinion, the auditing evidence we have obtained is adequate and appropriate to provide a fair basis for our opinion. Opinion In our opinion, the aforementioned financial statements fairly present, in all material respects, the financial position of Compañía de Seguros CorpVida S.A. as of December 31, 2012 and the


results of its operations and cash flows for the year then ended, in conformity with generally accepted accounting principles in Chile and the regulations of the Superintendency of Securities and Insurance. Other Issues: Additional Information Our audit was carried out with the purpose of obtaining an opinion concerning the overall financial statements. Notes to the financial statements 25.3.2 “Hedging Indices”, 25.3.3 ”Equivalent Cost Rate”, 25.4 “Disability and Survival Insurance (SIS) Reserve”, and 44 “Foreign Currency” and technical charts 6.01 “Contribution Margin Chart”, 6.02 “Premium Reserve Opening Chart”, 6.03 “Claim Cost Chart”, 6.04 “Income Cost Chart”, 6.05 “Reserve Chart”, 6.06 “Pension Fund Insurance Chart”, 6.07 “Premium Chart”, and 6.08 “Data Chart” are presented with the purpose of enabling a more comprehensive analysis than that deriving from the information normally provided in financial statements. This additional information is Management’s responsibility; it was derived from, and is directly related to, accounting records and other underlying records used in the preparation of the financial statements. The aforementioned additional information has been subject to the auditing procedures applied to financial statement auditing and other selective additional procedures, including a direct comparison and reconciliation of this additional information with the accounting records and other underlying records used in the preparation of financial statements or with the financial statements themselves, and other additional procedures in accordance with generally accepted auditing standards in Chile. In our opinion, the aforementioned additional information is reasonably presented in all material respects in relation to the overall financial statements.

61

AUDITED FINANCIAL STATEMENTS


Other Matters: New Accounting Standards As of January 1, 2012, Compaùía de Seguros CorpVida S.A. has adopted the new accounting standards established by the Superintendency of Securities and Insurance, corresponding to new standards for the recognition and measurement of assets and liabilities, as well as new presentation and disclosing requirements for financial information. As a result of the firsttime application of these standards, changes to equity were introduced as of January 1, 2012, for M$ (738,638). Additionally, the enclosed financial statements as of December 31, 2012 do not include comparative information in accordance with Official Circular No. 2,022 issued by the Superintendency of Securities and Insurance.

62

February 28, 2013 Santiago, Chile

Juan Carlos Jara M.

AUDITED FINANCIAL STATEMENTS


63

AUDITED FINANCIAL STATEMENTS


STATEMENT OF FINANCIAL POSITION

64

5.10.00.00

TOTAL ASSETS

2.042.671.519

5.11.00.00

TOTAL FINANCIAL INVESTMENTS

1.671.828.173

5.11.10.00

Cash and Cash Equivalents

5.11.20.00

Financial Assets at Fair Value

5.11.30.00

Financial Assets at Amortized Cost

5.11.40.00

Loans

7.331.294

5.11.41.00

Policyholder Advance

1.081.493

5.11.42.00

Loans Granted

6.249.801

5.11.50.00

Single Investment Account (SIA) Insurance Investments

5.11.60.00

Interests in Group Entities

0

5.11.61.00

Interests in Subsidiary Companies (Affiliates)

0

5.11.62.00

Interests in Associated Companies

0

5.12.00.00

TOTAL REAL ESTATE INVESTMENTS

273.916.624

5.12.10.00

Investment Properties

157.434.265

5.12.20.00

Leasing Accounts Receivable

5.12.30.00

Properties, Plant, and Equipment for Own Use

5.12.31.00

Properties for Own Use

5.12.32.00

Plant and Equipment for Own Use

5.13.00.00

NON-CURRENT ASSETS HELD FOR SALE

AUDITED FINANCIAL STATEMENTS

6.943.880 119.322.227 1.450.709.225

87.521.547

115.177.707 1.304.652 47.117 1.257.535 0


5.14.00.00

TOTAL INSURANCE ACCOUNTS

44.173.056

5.14.10.00

Insurance Accounts Receivable

2.742.286

5.14.11.00

Insured Party Accounts Receivable

2.502.011

5.14.12.00

Debtors from Reinsurance Transactions

5.14.12.10

Claims Receivable from Reinsurers

5.14.12.20

Premiums Receivable from Accepted Reinsurances

5.14.12.30

Assets from Non-Proportional Reinsurances

5.14.12.40

Other Debtors from Reinsurance Transactions

5.14.13.00

Debtors from Coinsurance Transactions

0

5.14.13.10

Premiums Receivable from Coinsurance Transactions

0

5.14.13.20

Claims Receivable from Coinsurance Transactions

0

5.14.20.00

Reinsurance Interest in Technical Reserves

5.14.21.00

Reinsurance Interest in Reserve for Ongoing Risks

5.14.22.00

Reinsurance Interest in Pension Fund Reserves

41.257.606

5.14.22.10

Reinsurance Interest in Reserve for Life Annuities

41.257.606

5.14.22.20

Reinsurance Interest in Disability and Survival Insurance Reserve

0

5.14.23.00

Reinsurance Interest in Reserve for Unexpired Claims

0

5.14.24.00

Reinsurance Interest in Reserve for Private Annuities

5.14.25.00

Reinsurance Interest in Reserve for Claims

5.14.26.00

Reinsurance Interest in Other Technical Reserves

5.15.00.00

OTHER ASSETS

5.15.10.00

Intangible Assets

5.15.11.00

Goodwill

5.15.12.00

Intangible Assets Other than Goodwill

240.275 46.045 0 193.196 1.034

41.430.770 0

143.014 30.150 0 52.753.666 1.660.727 0 1.660.727

AUDITED FINANCIAL STATEMENTS

65


STATEMENT OF FINANCIAL POSITION

66

5.15.20.00

Taxes Receivable

5.15.21.00

Accounts Receivable for Current Taxes

5.15.22.00

Assets from Deferred Taxes

5.15.30.00

Other Assets

5.15.31.00

Personnel Debts

494.081

5.15.32.00

Accounts Receivable from Brokers

235.115

5.15.33.00

Related Debtors

5.15.34.00

Prepaid Expenses

5.15.35.00

Other Assets

5.20.00.00

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (B + C)

2.042.671.519

5.21.00.00

TOTAL LIABILITIES

1.892.411.685

5.21.10.00

FINANCIAL LIABILITIES

5.21.20.00

NON-CURRENT LIABILITIES HELD FOR SALE

5.21.30.00

TOTAL INSURANCE ACCOUNTS

1.843.001.215

5.21.31.00

Technical Reserves

1.842.637.791

5.21.31.10

Reserve for Ongoing Risks

5.21.31.20

Pension Fund Insurance Reserves

1.717.478.111

5.21.31.21

Reserve for Life Annuities

1.717.478.111

5.21.31.22

Disability and Survival Insurance Reserve

5.21.31.30

Reserve for Unexpired Claims

AUDITED FINANCIAL STATEMENTS

5.889.815 711.355 5.178.460 45.203.124

6.152.911 24.049 38.296.968

35.934.587 0

2.697.029

0 15.873.108


5.21.31.40

Fund Value Reserve

86.516.922

5.21.31.50

Reserve for Private Annuities

17.137.636

5.21.31.60

Reserve for Claims

2.929.842

5.21.31.70

Reserve against Earthquakes

5.21.31.80

Reserve for Premium Inadequacy

5.21.31.90

Other Technical Reserves

5.21.32.00

Debts from Insurance Transactions

5.21.32.10

Debts with Insured Parties

5.21.32.20

Debts from Reinsurance Transactions

363.424

5.21.32.30

Debts from Coinsurance Transactions

0

5.21.32.31

Premiums Payable for Coinsurance Transactions

0

5.21.32.32

Claims Payable for Coinsurance Transactions

0

5.21.32.40

Anticipated Revenue from Insurance Transactions

0

5.21.40.00

OTHER LIABILITIES

5.21.41.00

Provisions

5.21.42.00

Other Liabilities

5.21.42.10

Taxes Payable

447.869

5.21.42.11

Account Payable for Current Taxes

447.869

5.21.42.12

Liabilities from Deferred Taxes

5.21.42.20

Debts with Related Parties

5.21.42.30

Debts with Brokers

5.21.42.40

Debts with Personnel

2.556.338

5.21.42.50

Anticipated Revenue

0

0 5.143 0 363.424 0

13.475.883 55.961 13.419.922

0 2.217.402 35.226

AUDITED FINANCIAL STATEMENTS

67


STATEMENT OF FINANCIAL POSITION

68

5.21.42.60

Other Non-Financial Liabilities

5.22.00.00

TOTAL SHAREHOLDERS’ EQUITY

150.259.834

5.22.10.00

Paid-In Capital

151.303.510

5.22.20.00

Reserves

18.603.327

5.22.30.00

Retained Earnings

-19.647.003

5.22.31.00

Accumulated Profit/Loss

-21.885.071

5.22.32.00

Income for the Period

5.22.33.00

(Dividends)

0

5.22.40.00

Other Adjustments

0

AUDITED FINANCIAL STATEMENTS

8.163.087

2.238.068


STATEMENT OF COMPREHENSIVE INCOME

INCOME STATEMENT 5.31.10.00

CONTRIBUTION MARGIN (CM)

-69.652.428

5.31.11.00

Retained Premium

283.232.445

5.31.11.10

Direct Premium

283.392.905

5.31.11.20

Accepted Premium

0

5.31.11.30

Assigned Premium

-160.460

5.31.12.00

Change in Technical Reserves

5.31.12.10

Change in Reserve for Ongoing Risks

5.31.12.20

Change in Reserve for Unexpired Claims

5.31.12.30

Change in Fund Value Reserve

5.31.12.40

Change in Catastrophic Reserve against Earthquakes

5.31.12.50

Change in Reserve for Premium Inadequacy

5.31.12.60

Change in Other Technical Reserves

5.31.13.00

Claim Cost for the Period

-18.650.222

5.31.13.10

Direct Claims

-19.020.025

5.31.13.20

Assigned Claims

369.803

5.31.13.30

Accepted Claims

0

5.31.14.00

Annuity Cost for the Period

5.31.14.10

Direct Annuities

5.31.14.20

Assigned Annuities

2.372.134

5.31.14.30

Accepted Annuities

0

5.31.15.00

Intermediation Income

-21.071.051 -1.851.124 -3.712.558 -15.502.226 0 -5.143 0

-294.903.045 -297.275.179

-16.756.006

AUDITED FINANCIAL STATEMENTS

69


STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

70

5.31.15.10

Direct Agent Fees

-9.476.082

5.31.15.20

Broker Fees and Pension Fund Consultant Compensation

-7.286.922

5.31.15.30

Accepted Reinsurance Fees

0

5.31.15.40

Assigned Reinsurance Fees

6.998

5.31.16.00

Expenses for Non-Proportional Reinsurance

5.31.17.00

Medical Expenses

5.31.18.00

Insurance Impairment

5.31.20.00

ADMINISTRATION COSTS (AC)

-27.958.812

5.31.21.00

Remunerations

-8.339.610

5.31.22.00

Others

-19.619.202

5.31.30.00

INCOME FROM INVESTMENTS (II)

106.051.668

5.31.31.00

Net Income from Realized Investments

39.318.203

5.31.31.10

Real Estate Investments

20.409.785

5.31.31.20

Financial Investments

18.908.418

5.31.32.00

Net Income from Unrealized Investment

-11.557.736

5.31.32.10

Real Estate Investments

5.31.32.20

Financial Investments

5.31.33.00

Net Income from Accrued Investments

5.31.33.10

Real Estate Investments

5.31.33.20

Financial Investments

5.31.33.30

Depreciation

5.31.33.40

Management Expenses

5.31.34.00

Net Income from Investments for Single Investment Account Insurances

5.31.35.00

Investment Impairment

AUDITED FINANCIAL STATEMENTS

-751.038 -63.351 -690.160

7.832 -11.565.568 75.385.219 7.255.274 69.434.226 -1.264.669 -39.612 2.733.991 171.991


STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) 5.31.40.00

TECHNICAL INCOME FROM INSURANCES (CM + II + AC)

8.440.428

5.31.50.00

OTHER INCOME AND EXPENSES

5.31.51.00

Other Income

1.555.412

5.31.52.00

Other Expenses

-1.679.172

5.31.61.00

Exchange Rate Difference

-1.172.909

5.31.62.00

Profit (Loss) from Adjustable Units

5.31.70.00

Income from Continuous Transactions Before Income Tax

5.31.80.00

Profit (Loss) from Discontinuous Transactions and Assets Available for Sale (less Tax)

5.31.90.00

Income Tax

-1.065.483

5.31.00.00

TOTAL INCOME FOR THE PERIOD

2.238.068

-123.760

-3.840.208 3.303.551 0

STATEMENT OF OTHER COMPREHENSIVE INCOME 5.32.10.00

Income from Property, Plant, and Equipment Assessment

5.32.20.00

Income from Financial Assets

5.32.30.00

Income from Cash Flow Hedging

5.32.40.00

Other Income with Adjustment to Shareholders’ Equity

5.32.50.00

Deferred Taxes

5.32.00.00

TOTAL OTHER COMPREHENSIVE INCOME

5.30.00.00

TOTAL COMPREHENSIVE INCOME

0 2.238.068

AUDITED FINANCIAL STATEMENTS

71


STATEMENT OF CHANGES IN EQUITY

Capital Paid-In

Surplus on Stock Price

Reserve for Hedging Adjustment

Reserve for Gap in SIA Insurances

Other Reserves

72

Reserves

127.378.510

400.180

11.748.904

-12.709

0

127.378.510

400.180

11.748.904

-12.709

0

0

0

0

0

0

Transactions with Shareholders

23.925.000

0

0

0

0

8.41.00.00

Capital Increases (Decreases)

23.925.000

8.42.00.00

(-) Dividend Distribution

8.43.00.00

Other Transactions with Shareholders

8.50.00.00

Reserves

6.471.165

-4.213

8.60.00.00

Transfer of Shareholders’ Equity to Income

8.70.00.00

SHAREHOLDERS’ EQUITY AT END OF PERIOD

18.220.069

-16.922

8.11.00.00

Initial Shareholders’ Equity Before Adjustments

8.12.00.00

Previous Period Adjustments

8.10.00.00

Shareholders’ Equity at beginning of Period

8.20.00.00

Comprehensive Income

8.21.00.00

Income for the Period

8.22.00.00

Total Recorded Revenue (Expenses) with Credit (Debit) to Shareholders’ Equity

8.23.00.00

Deferred Taxesv

8.30.00.00

Transfers to Retained Earnings

8.40.00.00

AUDITED FINANCIAL STATEMENTS

151.303.510

400.180

0


Retained Earnings

Other Adjustments Total

Other Income with Adjustment to Shareholders’ Equity

Income from Cash Flow Hedging

Income from Financial Assets

Income for the Period -21.254.083

Income from Property, Plant, and Equipment Assessment

Retained Earnings Previous Periods 107.650

118.368.452

-738.638

-738.638

-630.988

-21.254.083

0

0

0

0

117.629.814

-21.254.083

23.492.151

0

0

0

0

2.238.068

2.238.068

2.238.068 0 0

-21.254.083

21.254.083

0

0

0 0

0

0

0

23.925.000 23.925.000 0 0 6.466.952 0

-21.885.071

2.238.068

0

0

0

0

150.259.834

AUDITED FINANCIAL STATEMENTS

73


NOTE 1. REPORTING ENTITY

74

LEGAL NAME COMPAÑÍA DE SEGUROS CORPVIDA S.A. TAX NUMBER 96.571.890-7 LEGAL ADDRESS ROSARIO NORTE 660 PISO 21 ECONOMIC GROUP CORPGROUP NAME OF PARENT COMPANY CORPGROUP NAME OF GROUP ULTIMATE PARENT COMPANY CORPGROUP MAIN ACTIVITIES LIFE INSURANCE BUSINESS EXEMPT RESOLUTION NO. 190 SVS EXEMPT RESOLUTION DATE DECEMBER 13, 1989 SECURITIES REGISTRY NO 384 MAIN CHANGES IN OWNERSHIP FROM MERGERS AND ACQUISITIONS During the accounting period ending on December 31, 2012, no changes in ownership from mergers and acquisitions were made. SHAREHOLDERS NAME

TAX NUMBER

TYPE OF ENTITY

OWNERSHIP %

Mass Mutual (Chile) Limitada.

76.080.631-5

Domestic Legal Entity

27,88%

Corp Group Vida Limitada.

76.651.100-7

Domestic Legal Entity

72,12%

CREDIT RATING AGENCIES NAME

TAX NUMBER

RISK RATING

REGISTRATION N°

RATING DATE

Feller-Rate Clasificadora de Riesgo Ltda.

79.844.680-0

AA-

9

13-07-2012

ICR International Credit Rating Ltda

76.188.980-K

AA

12

01-08-2012

EXTERNAL AUDITORS Deloitte. SVS EXTERNAL AUDITOR REGISTRY N° 1

AUDITED FINANCIAL STATEMENTS


MANAGEMENT AND OTHER INFORMATION

Abello Prieto Christian Rodrigo Legal Agent ( Surnames / Names )

Tax Number 6376512-0

Abello Prieto Christian Rodrigo Chief Executive Officer ( Surnames / Names )

6376512-0

Reyes Borquez Alvaro Finance Manager ( Surnames / Names )

9211898-3

Saieh Guzman Maria Catalina 15385612-5

Chairwoman ( Surnames / Names )

75

Board Member Names Alejandro Ferreiro Yazigi 6362223-0 Francis Lucchesi Extranjero Bruce Stanforth Extranjero Si単a Gardner Fernando Jorge 7103672-3 Saieh Guzman Jorge Andres 8311093-7 Del Rio Charles Naylor 7667414-0 Saieh Guzman Maria Catalina 15385612-5 Nro of Employees | 685

Ordinary Shareholder Meeting Deadline 30

4

AUDITED FINANCIAL STATEMENTS


NOTE 2. BASIS OF PREPARATION

76

A) Compliance Statement E) New Standards and Interpretations These non-comparative Financial Statements for Future Dates as of 31.12.2012 have been prepared based on In accordance with IFRS 1, the Company has the standards issued by the Superintendency applied the same accounting policies in its of Securities and Insurance (hereinafter SVS), statement of financial position as of December as applicable, in conformity with the provisions 31, 2012 and its opening statement of financial contained in Official Circular No. 2,022, position as of January 1, 2012. These accounting issued by the SVS on May 17, 2011, and any policies comply with each one of the current amendments thereto and International Financial IFRS at the end of its financial statement period, Reporting Standards (IFRS). except for the optional exemptions applicable during its transition to IFRS and the regulations The Financial Statements as of 31.12.2012 were established by the SVS. approved by the Board of Directors on February 28, 2013. Additionally, the Company has opted for early adoption of IFRS 9, Financial Instruments B) Accounting Period (issued in November 2009 and amended in These non-comparative Financial Statements October 2010 and December 2011), as required cover the twelve-month period from January 1 to by General Regulation NCG No. 311 of the December 31, 2012. Superintendency of Securities and Insurance. The Company has chosen January 1, 2012 as its C) Basis of Assessment first-time adoption date. The Financial Statements have been prepared based on amortized cost; as an exception, Specifically, IFRS 9 requires that all financial variable-income instruments have been assets be classified and subsequently assessed accounted for at fair value. at amortized cost or at fair value, based on the entity’s business model for financial asset D) Functional and Presentation Currency management and the characteristics of the The Company has defined the Chilean Peso contractual cash flows associated with financial as its functional and presentation currency, as assets. this is the currency of the primary economic environment in which it operates. Therefore, all balances and transactions denominated in currencies other than the Chilean Peso are considered as “foreign currency”. Financial Statement disclosures are presented in thousands of Chilean pesos.

AUDITED FINANCIAL STATEMENTS


a) The following new Standards and Interpretations have been adopted for these financial statements: AMENDMENTS TO IFRS

MANDATORY APPLICATION DATE

IAS 12, Deferred taxes - Recovery of underlying assets

Effective for annual periods beginning on or after January 1, 2012

IFRS 1 (Revised), First-time adoption of International Financial Reporting Standards – (i) Removal of Fixed Dates for First-Time Adopters – (ii) Severe Hyperinflation

Effective for annual periods beginning on or after July 1, 2011

IFRS 7, Financial Instruments: Disclosures – Financial Asset Transfers

Effective for annual periods beginning on or after July 1, 2011

The application of these standards has had no significant impact on the amounts reported in these financial statements; however, it may affect the accounting of future transactions or agreements. b) The following new Standards and Interpretations have been issued, but their application date is not effective yet: NEW IFRS

MANDATORY APPLICATION DATE

IFRS 10, Consolidated Financial Statements

Effective for annual periods beginning on or after January 1, 2013

IFRS 11, Joint Arrangements

Effective for annual periods beginning on or after January 1, 2013

IFRS 12, Disclosure of Interests in Other Entities

Effective for annual periods beginning on or after January 1, 2013

IAS 27 (2011), Separate Financial Statements

Effective for annual periods beginning on or after January 1, 2013

IAS 28 (2011), Investments in Associates and Joint Ventures

Effective for annual periods beginning on or after January 1, 2013

IFRS 13, Fair Value Measurement

Effective for annual periods beginning on or after January 1, 2013

77

AUDITED FINANCIAL STATEMENTS


78

AMENDMENTS TO IFRS

MANDATORY APPLICATION DATE

IAS 1, Presentation of Financial Statements – Presentation of Other Comprehensive Income Components

Effective for annual periods beginning on or after July 1, 2012

IAS 19, Employee Benefits (2011)

Effective for annual periods beginning on or after January 1, 2013

IAS 32, Financial Instruments: Presentation – Clarification of the Requirements for Offsetting Financial Assets and Liabilities

Effective for annual periods beginning on or after January 1, 2014

IFRS 7, Financial Instruments: Disclosures – Amendments to Disclosures concerning the Offsetting of Financial Assets and Liabilities

Effective for annual periods beginning on or after January 1, 2013

IFRS 10, IFRS 11, and IFRS 12 – Consolidated Financial Statements, Joint Arrangements, and Disclosure of Interests in Other Entities – Guidelines for Transition

Effective for annual periods beginning on or after January 1, 2013

Investment Entities – Amendments to IFRS 10, Consolidated Financial Statements; IFRS 12, Disclosure of Interests in Other Entities; and IAS 27, Separate Financial Statements

Effective for annual periods beginning on or after January 1, 2014

The Company’s Management estimates that the future adoption of the aforementioned Standards and Interpretations will not have a significant impact on Financial Statements.

AUDITED FINANCIAL STATEMENTS


F) Going Concern Assumption The Company’s management believes that there are no significant uncertainties, significant subsequent events, or essential impairment indicators that may affect the going concern assumption as of the non-comparative financial statement presentation date. G) Reclassifications There are no reclassifications for these Financial Statements. H) When an Entity Does Not Apply a Requirement Established by IFRS The Financial Statements are presented under IFRS and the standards issued by the Superintendency of Securities and Insurance. I) Adjustments to Prior Periods and Other Accounting Changes Based on the provisions contained in Official Circular No. 2022 of the Superintendency of Securities and Insurance, this disclosure is applicable to Financial Statements subsequent to first-time adoption.

79

AUDITED FINANCIAL STATEMENTS


NOTE 3. ACCOUNTING POLICIES

80

1. Basis of consolidation The Company does not apply basis of consolidation. 2. Exchange rate difference The Company’s Management has defined the Chilean Peso as its functional currency. Therefore, transactions denominated in currencies other than the Chilean Peso are considered as denominated in foreign currency and shall be recorded based on the closing exchange rates effective as of the date of the relevant transactions. Likewise, assets and liabilities adjustable in foreign currency are shown at the exchange rate effective on the accounting period closing date. For the preparation of the financial statements, monetary assets and liabilities denominated in foreign currency are translated based on the exchange rates effective as of the date of the respective Financial Statements. The generated profits or losses are assigned to the profit and loss account under “Exchange Rate Difference”, its effect being reflected on the Statement of Comprehensive Income, as established in NCG No. 322 of the SVS. 3. Business combinations These correspond to transactions and other events in which an acquirer obtains control over one or more businesses regardless of the legal procedures through which such control is obtained; these are valued based on the standards contained in General Regulation NCG No. 322 of the Superintendency of Securities and Insurance and subsequent amendments thereto. As of financial statement closing date, the Company has not performed any business combinations.

AUDITED FINANCIAL STATEMENTS

4. Cash and cash equivalents Cash: The balances maintained as cash on hand and at banks at the end of the period. Cash Equivalents: Short-term (90-day) investments with high liquidity and readily converted into cash. Cash Flow Statement:The cash flow statement has been prepared based on the direct accounting method and in accordance with the instructions issued by the SVS through Official Circular No. 2,022 of May 17, 2011 and any subsequent amendments thereto. The following definitions are used in the preparation of the cash flow statement: Cash flows: Cash inflows and outflows as cash on hand and at banks and/or cash equivalents, the latter referring to highly liquid short-term investments having a low risk of undergoing changes in value. Operating flows: Cash flows and/or cash equivalents originating from ordinary operations, which are the main income sources in the insurance business. Investment flows: Cash flows and/or cash equivalents originating from the acquisition, sale, or otherwise disposal of long-term assets and other investments not included in the Company’s cash and cash equivalents, such as materials, intangible assets, or financial investments. Financing flows: Cash flows and/or cash equivalents originating from activities generating changes in net equity size and composition and in liabilities that are not part of operating flows. Payments in favor of shareholders on account of dividends are also recorded within this group.


5. Financial Investments equal to or higher than UF 150 has been traded. As established in General Regulation NCG No. 311 iv) Investment funds not meeting the requirement of the Superintendency of Securities and Insurance, stated in the previous paragraph are valued as the Company values its Financial Investments as follows: shown below: - Investment funds periodically submitting an a) Financial Assets at Fair Value economic value to the SVS are valued at such Those financial assets acquired to obtain a shorteconomic value. term benefit from variations in their prices and - Investment funds periodically submitting financial all those instruments not meeting the necessary statements, but not an economic value to the SVS conditions to be valued at amortized cost. Also shall be valued based on installment book value in included are financial derivatives not considered accordance with these financial statements. for hedging. The Company will acquire financial assets for - Investment funds not submitting information to the trading with the purpose of obtaining a short-term SVS shall be valued at book value. profit (less than one year). v) Domestic mutual funds and mutual funds set up Subsequent valuations shall be carried out at fair in the country but with associated assets being value in accordance with current market prices at invested in foreign securities are valued at the the closing of each business day. Profits or losses installment redemption value on financial statement from adjustments for valuation at fair value as closing date. well as results from negotiation activities shall be included under income for the period. vi) Foreign shares held for trading are valued at i) Shares of domestic corporations whose annual their stock exchange trading value. adjusted turnover at financial statement closing date is equal to or higher than 25%, as provided vii) Foreign shares not held for trading are valued in Title II of General Regulation NCG No. 103 of based on general IFRS. January 5, 2001 and any subsequent amendments viii) International investment funds set up abroad thereto, are valued at their stock exchange trading are valued at the installment closing price on the value. last stock exchange trading day in the financial ii) Shares of closely-held domestic corporations statement closing month. not meeting the requirement stated in the previous paragraph shall be carried at book value. b) Financial Assets at Amortized Cost iii) Domestic investment funds and investment funds These are assets with a fixed maturity date and set up in the country but with associated assets payments collected in fixed or determinable being invested in foreign securities which, as of amounts. financial statement closing date, have an annual Criteria used to assess an instrument at amortized adjusted turnover equal to or higher than 20%, cost: computed based on the domestic stock turnover, 1.-Basic loan characteristics. The return for the are valued at the average weighted price on holder is a fixed amount. the last stock exchange trading day prior to financial statement closing date, by the number of 2.-Management based on contractual return. installments agreed. The transactions considered Financial instruments carried at amortized cost are for this calculation are those where a total amount

AUDITED FINANCIAL STATEMENTS

81


82

subject to impairment evaluation. asset exceeds its recoverable amount. An instrument may meet the aforementioned criteria i) Financial Assets to be valued at amortized cost, but the Company A financial asset or group of financial assets is said may value it at fair cost with effect on income to to be impaired, and a loss due to value impairment reduce a given accounting effect. shall have occurred, if and only if there is objective Investments valued at “amortized cost” shall evidence of impairment as a result of one or more recognize accrued interest on income as a function events occurring after the initial recognition of the of their purchase interest rate. Amortized cost shall asset (an “event causing the loss”), with this event or mean the initial cost minus principal payments events that caused the loss having an impact which collected. may be reliably assessed on the estimated future cash flows associated with the financial asset or 6. Hedging transactions group of financial assets. Investments in derivative instruments are valued On financial statement closing date, the Company based on NCG No. 311 of the SVS. The Company evaluates if there is any indication of impairment maintains in its portfolio the following derivative in the value of a financial asset based on the instruments in order to hedge exchange rate and Company’s accounting policy. interest rate variations: cross currency swaps and ii) Non-financial assets forwards associated with fixed-income instruments The Company shall evaluate if there is any valued at amortized cost as backup for life annuity indicator of an impairment in the value of its assets obligations, with flows being matched. Flows if these have a defined useful life, for which it shall expressed in UF are valued at amortized cost, while conduct the corresponding impairment tests. For flows not meeting the aforementioned condition assets with an indefinite useful life, if no impairment are carried at fair value. indicator exists, the Company shall conduct the test All investments in derivative instruments must be on an annual basis. authorized by the Company´s Board of Directors The Company shall apply the Impairment Test and included in the Derivatives Use Policy. to the following Assets as indicated by the Superintendency of Securities and Insurance 7.  Investments in single investment account standards based on the definitions stated for each (sia) insurances one of them: In accordance with the Company’s Investment a) Premiums Receivable from Insured Parties Policy, investments backing up the fund value b)  Accounts Receivable from Reinsurers reserve for SIA insurances shall be comprised of c) Accounts Receivable from Lease Rentals other than two portfolios; the first shall correspond to fixedfrom Leasing income instruments, which shall be valued at d) Intangible Assets and Goodwill originating from amortized cost, and the second portfolio shall Business Combinations correspond to variable-income instruments, which e) Fixed Assets at Amortized Cost shall be valued at market value with effect on income and in accordance with the instructions delivered by the Superintendency of Securities and 9. Real estate investments Insurance through NCG No. 311. a. Investment Properties In accordance with NCG No. 316 of the 8.  Impairment Of Assets An impairment has occurred when the value of an

AUDITED FINANCIAL STATEMENTS


Superintendency of Securities and Insurance and IFRS, investment properties shall be valued at the lower value between the inflation-adjusted cost less accumulated depreciation and the commercial appraisal value based on the lower of two appraisals. i) Domestic Real Estate Investments In accordance with NCG No. 316 of the Superintendency of Securities and Insurance, these investments shall be valued at the lower value between the inflation-adjusted cost less accumulated depreciation and the commercial appraisal value based on the lower of two appraisals to be carried out at least every two years. Notwithstanding the above, if the Company has information indicating a market value potentially lower than the appraised value of a real estate, a new appraisal shall be carried out in order to adjust the value, as applicable. If the appraised value is higher than the inflationadjusted cost less accumulated depreciation, the real estate shall not be subject to any accounting adjustment, this higher value being reflected in disclosures. However, if the appraised value is lower than the inflation-adjusted cost less accumulated depreciation, the Company shall perform an adjustment for the difference through a provision charged against income, which shall be maintained until a new appraisal is carried out, where this adjustment shall be reversed and a new provision shall be set up, as applicable. ii) Foreign Real Estate Investments In accordance with NCG No. 316 of the Superintendency of Securities and Insurance, these investments shall be valued at the lower value between their historical inflation-adjusted cost in the corresponding country, less accumulated depreciation, and the commercial appraisal value based on the lower of two appraisals to be carried out at least every two years.

Notwithstanding the above, if the Company has information indicating a market value potentially lower than the appraised value of a real estate, a new appraisal shall be carried out in order to adjust the value, as applicable. If the appraised value is higher than the inflationadjusted cost less accumulated depreciation, the real estate shall not be subject to any accounting adjustment, this higher value being reflected in disclosures. However, if the appraised value is lower than the inflation-adjusted cost less accumulated depreciation, the Company shall perform an adjustment for the difference through a provision charged against income, which shall be maintained until a new appraisal is carried out, where this adjustment shall be reversed and a new provision shall be set up, as applicable. iii) Real Estate under Construction In accordance with NCG No. 316 of the Superintendency of Securities and Insurance, this real estate shall be recorded at its inflationadjusted carrying value, which shall reflect the construction status until completion in a condition enabling commercial appraisal thereof, being valued at that time, as appropriate. Notwithstanding the above, if the Company has information indicating a market value potentially lower than the appraised value of a real estate, a new appraisal shall be carried out in order to adjust the value, as applicable. iv) Awarded Real Estate Awarded real estate shall be valued at the lower value between its book value and its appraised value, with appraisals being carried out at the time of award and before the real estate is sold. b. Leasing Accounts Receivable Based on the provisions issued by the Superintendency of Securities and Insurance and IFRS 1 “First-Time Adoption of International Financial Reporting Standards”, at the time of transition the

AUDITED FINANCIAL STATEMENTS

83


84

Company shall maintain accounts receivable such if and only if: associated with financial leasing (lessor) at their (a) Future economic benefits attributed to it flow to present value. the entity and In accordance with NCG No. 316, the Company (b) The asset cost may be measured in a reliable shall value its financial leasing transactions at the way. lower value among the residual contract value Intangible assets acquired from third parties determined based on the standards issued by the shall be valued at cost and shall be amortized Chilean Accountants Association, the inflationin accordance with the Company’s accounting adjusted cost less accumulated depreciation, and policies, not exceeding 5 years. the commercial appraisal value based on the lower of two appraisals. 11. Non-current assets held for sale c. Properties for own use An entity shall classify a non-current asset (or In accordance with NCG No. 316 of the a group of assets for use) as held-for-sale if its Superintendency of Securities and Insurance and carrying amount will be essentially recovered IFRS, these properties shall be valued at the lower through a sales transaction instead of through value between the inflation-adjusted cost less continued use, i.e., the sale must be highly accumulated depreciation and the commercial probable. The Company has no assets of this type. appraisal value based on the lower of two appraisals. 12. Insurance transactions d. Plant and equipment for own use a.  Premiums Fixed assets are accounted for based on the cost These correspond to the amount owed to the model. The cost model is an accounting method Company by each reinsured party on account under which fixed assets are recorded at cost less of premiums less acceptance discount and accumulated depreciation and less accumulated impairment. impairment losses, as defined in IAS 16. b. Other Assets and Liabilities from Insurance and Maintenance, conservation, and repair expenses Reinsurance Contracts are charged against income, based on the i. Underlying derivatives in insurance contracts accrual criterion, as cost for the accounting year The Insurance Contracts executed by the in which they are incurred. Company have no underlying derivatives. The Company depreciates its assets based on ii. Insurance contracts acquired by means of the linear method as a function of the years of business combinations or portfolio assignments estimated useful life. The Company has no such insurance contracts. Profit or loss from the sale or removal of an asset iii.  Acquisition expenses is calculated as the difference between the selling Acquisition expenses are directly recognized under price and the asset book value and is recognized income on an accrual basis. in income accounts. c.  Technical Reserves 10. Intangible assets i. Reserve for Ongoing Risks An intangible asset is a non-monetary asset This corresponds to the Company’s obligation owned by the Company, which is without physical with insured and reinsured parties originating substance and identifiable. It will be recognized as

AUDITED FINANCIAL STATEMENTS


from premiums from accepted insurance and reinsurance contracts set up to cover outstanding risks on financial statement closing date. This reserve includes the value of the hedging cost reserve that must be set up in accordance with current regulations for life insurances with a single investment account. The Reserve for Ongoing Risks shall be applied to the main hedges with a maturity of up to 4 years or those with higher terms that may have been submitted by the Company and approved by the Superintendency of Securities and Insurance. In the case of additional hedges, the same criterion shall be applied regardless of the validity of the main hedge. The estimation of the Reserve for Ongoing Risks shall be carried out using the methodology indicated in NCG No. 306 for first group insurances or the methodologies submitted by the Company and approved by the SVS, as the case may be. ii. Reserve for Private Annuities The technical reserve set up for the annuity insurance shall be recorded in accordance with current regulations. This reserve must include any monthly payments that, as of estimation date, are due and have not been paid yet. iii. Reserve for Unexpired Claims This corresponds to the reserve for outstanding policies and is equivalent to the difference between the present value of future insurance benefits to be paid by the insurer and the present value of the future premiums to be paid by the insured party in accordance with current regulations. The value of the hedging cost reserve to be set up in accordance with current regulations for life insurances with a single investment account must be recorded in this account. The estimation of the Reserve for Unexpired Claims shall be carried out in accordance with the methodology, technical interest rate, and probability tables indicated in

NCG No. 306 or in accordance with the tables submitted by the Company and approved by the Superintendency of Securities and Insurance, as applicable. The Reserve for Unexpired Claims shall be applied to hedges with a validity exceeding 4 years or those subject to shorter periods that may have been submitted by the Company and approved by the Superintendency of Securities and Insurance. In the case of additional coverages, the previous criterion shall be applied regardless of the main coverage period. iv. Disability and Survival Insurance (SIS) Reserve The Company has no Insurance Contracts originating, or compelling it to set up, this type of reserve. v. Reserve for Life Annuities The Technical Reserve for pension fund life annuity insurances enforced before January 1, 2012 shall be estimated in accordance with the regulations contained in Official Circular No. 1512 of 2001 and General Regulation NCG No. 318 of the Superintendency of Securities and Insurance and any other instructions effective as of September 1, 2011. Based on this: a) On the date of validity or acceptance of an insurance policy, the carrying amount of its Base Technical Reserve shall be reflected under liabilities, charged against the “Annuity Cost” income account. b) On financial statement closing date, the Base Technical Reserves for each of the outstanding policies shall be re-estimated. This will be based on actuarial flows as of estimation date and cost rates or sales rates, as applicable. c) On a monthly basis, on the corresponding financial statement closing date, the Financial Reserve shall be determined. Any differences arising between the Base Technical Reserve and the Financial Reserve shall generate adjustments, the effects of which shall be reported under equity

AUDITED FINANCIAL STATEMENTS

85


86

account “Reserves for Hedging”. d) The change in the Base Technical Reserve shall be recorded in the “Annuity Cost” account. e) In case of outstanding reinsurances, such part of the Base Technical Reserve corresponding to the portion assigned to reinsurers shall be estimated based on the corresponding reinsured liability flows on the date of re-estimation and the Equivalent Cost Rate (CR) or the Selling Rate (SR), as applicable. f) Both the Base Technical Reserve and the Financial Reserve shall be presented in gross terms in the Financial Statements. The amount corresponding to the assigned reserve shall be reported as an asset from an assigned reinsurance. g) Liability flows shall be determined based on current regulations and, if applicable, considering the gradual application of RV-2004, B-2006, and MI-2006 mortality tables in accordance with the gradual recognition mechanism applied by the Company. For policies with a validity starting on January 1, 2012, the Technical Reserve shall be estimated based on the provisions contained in General Regulation NCG No. 318 of the Superintendency of Securities and Insurance for such contracts, not considering the Company’s matching assessment: a) The rate used for discounting expected pension fund flows shall be the lowest value between the Market Rate (MR) and the Selling Rate (SR) as of policy validity date, as defined in Title III of Official Circular No. 1512. b) Only the Base Technical Reserve shall be set up in liabilities, considering the interest rate established on policy validity date in accordance with the previous paragraph. c) Flows from life annuity obligations assigned through reinsurance shall not be discounted for the calculation of the Technical Reserve for the corresponding policies. Assigned flows shall be recognized as an asset from reinsurance,

AUDITED FINANCIAL STATEMENTS

determined based on the same interest rate used for the calculation of the Technical Reserve for the reinsured policy. d) If, at the time of the execution of the reinsurance contract, there is a difference between the reinsurance premium and the asset set up as previously indicated, this shall be immediately recognized under income. e) The estimation of the expected pension fund flows shall be fully based on the mortality tables established by the Superintendency of Securities and Insurance, with their corresponding improvement factors effective as of estimation date. For the acceptance of reinsurances or portfolio transfers effective after January 1, 2012 and regardless of the underlying policy validity date, the Technical Reserve shall be estimated without considering matching assessment, discounting the accepted flows at the lowest interest rate between the MR as of the effective reinsurance contract date and the interest rate implicit in the acceptance of the flows (interest rate determined based on the reinsurance premium). The application of the previous paragraphs shall be carried out without prejudice to the deduction of the reinsurance assignments of the Technical Reserve set up in order to comply with the risk equity and indebtedness limit requirements established in Decree Law DFL No. 25 of 1931, which will be subject to the provisions contained in article 20 of such legal text and the specific regulations issued by the Superintendency of Securities and Insurance. vi. Claim Reserve This is the Company’s obligation towards insured and reinsured parties with respect to the amount of the claims or commitments assumed through insurance policies, for claims occurring and both reported and not reported, including all expenses associated with the settlement that have affected the risk subscriptions of the insurer entity and have


not been paid. The Company conducts a Liability Adequacy Test This reserve must include those payments that, as on each quarterly financial statement closing date of estimation date, are due and have not yet been in order to assess the adequacy of the reserves set paid to the insured party. up in accordance with current regulations issued by The Claim Reserve shall be recorded under a the Superintendency of Securities and Insurance. “Claim Reserve” liability account, segregating the The test is based on current hypothesis rereserve for Reported Claims and the Reserve for estimations assumed by the Company for Claims Occurring But Not Reported (OYNR) on estimating cash flows originating from insurance financial statement closing date. contracts, considering insured party options or The Reported Claim Reserve shall in turn be benefits as well as contracted guarantees. classified as follows: The contract flows indicated in the previous (a)  Claims Settled But Not Paid paragraph consider at least the flows arising from (b)  Claims Settled But Contested by the expected claims and direct expenses related to Insured Party settlement thereof, discounting, if applicable, the (c)  Claims Under Settlement Process future premiums the insured party has agreed to The estimation of the Reserve for Claims Occurring pay as part of the insurance contract. But Not Reported shall be based on the general The Liability Adequacy Test is conducted standard application method provided for in considering flows before taxes. NCG No. 306 (Incurred Claim Triangles) or If, due to the application of this Test, a Technical any of the alternative methods provided for in Reserve inadequacy is verified, the Company the same regulation (Simplified Method and shall set up an additional Technical Reserve in Transition Method), or any methods that have been the statement of income corresponding to the submitted by the Company and approved by the respective closing date. Superintendency of Securities and Insurance, as However, based on the periodical evaluation applicable. of the items analyzed in this Test, the additional  vii. Catastrophic Reserve against Earthquakes Technical Reserve may be reversed in the income This is not applicable to Life Insurance Companies. statement corresponding to the respective viii. Reserve for Premium Inadequacy closing date. The Reserve for Premium Inadequacy corresponds The Liability Adequacy Test recognizes the risk to the amount obtained by multiplying the Reserve assigned to the reinsurer, i.e., when the need to set for Ongoing Risk less the reinsurance portion by the up an additional Technical Reserve is determined, inadequacy factor. The calculation methodology this is recognized in gross terms under liabilities and is indicated in General Regulation No. 6 of the the reinsurer participation under assets. Superintendency of Securities and Insurance. When a Premium Inadequacy Test is conducted, Regardless of the risk grouping method used to the Company evaluates whether this test meets determine the amount of the Reserve for Premium the requirements to be considered in replacement Inadequacy, this is assigned and reported in the of the Liability Adequacy Test. If this is so, the latter financial statements based on the FECU branch Test is not required. classification determined by the Superintendency of The Test is applied for groups of contracts sharing Securities and Insurance. similar risks and jointly managed as part of the ix. Additional Reserve based on Liability Adequacy Test

AUDITED FINANCIAL STATEMENTS

87


same portfolio. Accordingly, both the Test and the reserve inadequacy, as the case may be, are measured on a portfolio basis. However, if an inadequacy is verified as a result of the Test, this is assigned and presented in the financial statements, based on the FECU branch classification determined by the Superintendency of Securities and Insurance.

88

Company shall set up reserves for ongoing risk or reserves for unexpired claims, being able to apply different criteria with respect to the main coverage and additional coverages in accordance with the relevant type of risk. A reserve gap shall be established for the risk assumed by the Company on account of term, interest rate, currency, and type of instrument risks, between the fund value reserves and the If, in accordance with the Superintendency of investments that back up the reserve. The estimation Securities and Insurance regulations, the gradual of this reserve shall be based on the instructions recognition of mortality tables for technical issued by NCG No. 306, and the determined reserve calculation is effective, the Liability amount shall be recorded in the “Gap Reserve” Adequacy Test does not consider the differences equity account, as indicated in Official Circular in reserves accounted for by such gradual process. No. 2022 of the Superintendency of Securities and Consequently, if an inadequacy is verified, an Insurance. additional reserve is set up only for the amount   xi. Other Technical Reserves exceeding the difference in technical reserves The reserve for debts with insured parties and accounted for by the gradual process. other reserves set up by the insurance entity in  x. Reserve for Insurances with a Single Investment accordance with current regulations and any Account additional reserves that must be set up by Mutual In accordance with the instructions issued in Fund Companies according to their by-laws shall NCG No. 306, the deposit and risk components be recorded under this heading. associated with an insurance with SIA shall be xii. Reinsurer Interest in Technical Reserves accounted for on a joint basis. Therefore, the The Company recognizes reinsurer interest total funds transferred to the Company by the in technical reserves on an accrual basis, in contracting party shall be recognized as the accordance with current contracts. insurance premium. d. Matching (to be reported for policies with The deposit component shall be recognized as validity prior to January 1, 2012) a technical reserve denominated “Fund Value For life annuity policies effective prior to January 1, Reserve” and shall correspond to the Policy Value 2012, the Company has valued technical reserves of each contract on the reserve estimation date using matching in accordance with the conditions established in regulations in accordance with General Regulation each contract, without deduction of any potential NCG No. 318 and Official Circular No. 1,512 of redemption charges. the Superintendency In the case of insurances associated with NCG of Securities and Insurance and any subsequent No. 176 of 2005, neither the technical reserve amendments thereto. associated with the deposit component nor the Based on this regulation, as future flows from the contract premium shall be recognized under portfolio of fixed-income instruments and technical liabilities. reserves generated by life annuities are matched Concerning the insurance component, the over time, future flows from eligible technical

AUDITED FINANCIAL STATEMENTS


reserves shall be discounted at a rate closer to the average profitability of the long-term government financial instruments determined in the month where the policy became effective. Any differences arising from the application of this regulation and general liability valuation regulations generate adjustments as of financial statement closing date, the effects of which must be presented as part of shareholders’ equity under the “Reserves for Hedging” account.

a. When the Company has an outstanding obligation (whether statutory or underlying) as a result of past events; b. When, as of financial statement date, it is likely that the Company may have to make use of resources in order to pay the obligation; and c. When the value of the amount may be estimated in a reliable way. The Company recognizes its Provisions for Liabilities on an accrual basis. 13.  Interests in related companies 16. Investment Revenues And Expenses The Company has ownership interests in related Investment revenues and expenses are Companies through stock and current accounts, recognized on an accrual basis in accordance whose balances are disclosed under the heeding with the Company’s contracts or obligations “Financial Assets at Fair Value” and “Related in the Statement of Comprehensive Income in Debtors” respectively. accordance with the following detail: a. Financial Assets at Fair Value 14. Financial liabilities The Company records revenues associated with Financial liabilities are classified either as financial assets at fair value, on an accrual basis, financial liabilities at fair value under income in accordance with the market value of these or are designated as other financial liabilities investments on financial statement closing date and in accordance with IAS 39 under the following the book value thereof . categories. The associated expenses are recognized on an (a) Financial liabilities at fair value under income accrual basis in accordance with the Company’s - Financial liabilities are classified at fair value contracts or obligations. under income when they are held for trade or are b. Financial Assets at Amortized Cost designated at fair value under income. The Company records the revenues associated (b) Other financial liabilities - Other financial with financial assets at amortized cost, on an liabilities, including loans, are initially valued as per accrual basis, estimated in accordance with the amount of cash received, less transaction costs. the same discount rate used to determine the Other financial liabilities are subsequently valued instrument price at the time of purchase. at amortized cost using the effective interest rate The associated expenses are recognized on an method, recognizing interest expenses based on accrual basis in accordance with the Company’s effective profitability. contracts or obligations. 15.  Provisiones. 17. Interest costs Provisions are liabilities with respect of which there Interest costs are recorded on an accrual is uncertainty concerning their amount or validity basis in accordance with the interest rate period. They are recognized in the Statement of agreed upon at the time of the granting of the Financial Position when the following circumstances corresponding credit. are met:

AUDITED FINANCIAL STATEMENTS

89


18. Claim Costs The costs of claims and annuities are recorded on an accrual basis in accordance with the provisions contained in the corresponding Company’s Insurance Contracts. The claim cost includes all direct costs associated with the settlement process, such as payments associated with claimed coverages and expenses incurred in processing, assessing, and resolving the claim and in accordance with the provisions contained in the corresponding insurance contracts. These costs are directly reflected in the Company’s Statement of Comprehensive Income.

90

19.  Intermediation costs Intermediation costs include all fees and expenses associated with the insurance selling activity and reinsurance negotiations. Also included are expenses on account of base remuneration and fees generated by sales agents hired by the Company as well as all fees effectively paid to brokers and pension fund consultants for the contracts marketed by them. These payments are directly reflected on the Company’s Statement of Comprehensive Income for the accounting period in which they were accrued. 20. Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency using the following exchange rates: a) Assets and liabilities based on the observed exchange rate on the last banking day of December 2012 as published by the Chilean Central Bank. b) Income, expenses, and cash flows based on current exchange rates as of transaction dates. Profits and losses in foreign currency resulting from the settlement of these transactions and translation at the closing exchange rates for monetary assets and liabilities denominated in

AUDITED FINANCIAL STATEMENTS

foreign currency are recognized in the Statement of Comprehensive Income. 21. Income tax and deferred tax The first-category income tax was determined based on the net taxable income determined for tax purposes. The Company records the effects of deferred taxes originating from temporary differences and other events generating differences between the accounting income and the taxable income. The expense for corporate income tax for the period is estimated based on the sum of the current tax arising from the application of the corresponding tax rate to the taxable base for the accounting period (after deducting the admissible tax credits) and the variation in assets and liabilities from deferred taxes recognized in the consolidated profit and loss accounts. Assets and liabilities from deferred taxes include temporary differences, identified as those amounts expected to be payable or recoverable on account of differences between the book value of equity elements and their corresponding taxable values as well as the negative taxable bases pending compensation and credits from fiscal deductions not applied. These amounts are recorded by applying the tax rates at which they are expected to be recovered or settled to the corresponding temporary difference. The effects of deferred taxes due to temporary differences between the tax balance and the financial balance are recorded on an accrual basis in accordance with IAS 12 “Income Taxes”. The Company recognizes liabilities from deferred taxes, as applicable, through future estimation of the tax effects attributable to differences between the liability carrying values and taxable values. The assessment of liabilities from deferred taxes is carried out based on the tax rate which, in accordance with current tax


legislation, is to be applied in the year where liabilities from deferred taxes are realized or settled. The future effects of changes in tax legislation or tax rates are recognized under deferred taxes as of the date on which the law approving such changes is published. As of December 31, 2012, the Company has recognized assets from deferred taxes because Management has established the likelihood of obtaining tax benefits in the future enabling the use of temporary differences from fiscal losses existing at the end of each period. Assets and liabilities from deferred taxes may be compensated when the right to compensate the amounts recognized in such items has been legally recognized with the tax authority and when the assets and liabilities from deferred taxes arise from the income tax corresponding to the same tax authority and the Company has the intention to settle its current taxable assets and liabilities on a net basis. Law No. 20,455, published in the Official Gazette on July 31, 2010, established that the first-category income tax rate for corporations would increase from a 17% rate to a 20% rate for commercial year 2011, would then be reduced to 18.5% for commercial year 2012, and would be again reduced to 17% from commercial year 2013 onwards. On September 27, 2012, Law 20,630 was enacted; among other matters, it established a 20% income tax rate, eliminating the transitory status of this rate established in Law 20,455. 22.  Discontinuous Operations As of December 31, 2012, the Company has no discontinuous operations.

and shall be recorded based on current closing values. 24. Dividend policy Based on Company by-laws, every year the Ordinary Shareholder Meeting will set the dividend to be distributed to the Shareholders. At an Ordinary Shareholder Meeting held on April 26, 2012, the decision was made not to distribute any Dividends, with income for 2011 being recorded under Retained Earnings. 25. Others The Company has no other non-disclosed accounting policies.

91

23. Adjustable units These correspond to transactions conducted in adjustable units, such as UFs, UTMs, etc.,

AUDITED FINANCIAL STATEMENTS


NOTE 4. SIGNIFICANT ACCOUNTING POLICIES

All significant accounting policies have been properly disclosed in Note No. 3 Accounting Policies.

92

AUDITED FINANCIAL STATEMENTS


NOTE 5. FIRST-TIME ADOPTION

Guidelines for Transition to IFRS Until December 31, 2011, the Company issued its financial statements in accordance with generally accepted accounting principles in Chile and the standards and instructions issued by the Superintendency of Securities and Insurance (SVS). Starting on January 1, 2012, the financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the standards issued by the Superintendency of Securities and Insurance. NOTE 5.1. EXEMPTIONS a)Business combinations This exemption is not applicable. b)Fair value or revaluation as attributable cost As provided for in IFRS 1 “First-time adoption of International Financial Reporting Standards�, the Company has adopted the exemption provided for in paragraphs 16 to 19 of IFRS, for which the amortized cost of assets corresponding to property, plant, equipment for own use, and intangible assets existing as of transition date was assigned as an attributable cost. c) Employee benefits The Company has no retirement or postemployment plans, as defined in IFRS 19, for which the exemption established in paragraph 20, IFRS 1 is not applicable. d) Currency translation reserve This exemption is not applicable.

e) Composite financial instruments This exemption is not applicable. f) Transition date for subsidiaries, associated companies, and jointly controlled entities This exemption is not applicable. g) Share-based payments This exemption is not applicable. h) Insurance contracts As provided for in paragraph 25D of IFRS 1, the Company has decided to use the exemption contained in such regulation, and therefore, to apply the transition standards established by IFRS 4. i) Liabilities from restoration or dismantling This exemption is not applicable. j) Initial valuation of financial assets and liabilities at fair value As provided for in paragraph 4.1.5 of IFRS 9, the Company has applied the exemption contemplated in that paragraph with respect to initial recognition at fair value with changes in income from financial instruments, since this removes or significantly reduces any assessment or recognition inconsistency. k)Services concessions This exemption is not applicable. l) Comparative information for mineral resource exploration and evaluation businesses This exemption is not applicable. m) Leases This exemption is not applicable because the Company has no underlying leases in its contracts and/or agreements.

AUDITED FINANCIAL STATEMENTS

93


NOTE 5.2. NOTE ON SHAREHOLDERS’ EQUITY RECONCILIATION 5.2.1SUMMARY OF CONSOLIDATED EQUITY RECONCILIATION AS OF JANUARY 1, 2012. M$ Total Shareholders' Equity based on Chilean Accounting Principles:

NOTE

118.368.452

Detail of adjustments: Adjustment to property, plant, and equipment Adjustment for functional currency Accumulated currency translation adjustment Adjustment for deferred expenses and other intangible assets Adjustment for fair value Adjustment to financial instruments

(590.450)

(1)

Adjustment to investments accounted for applying the interest method Accumulated effect from other non-significant items

-114709

(3)

Adjustment for deferred taxes

(33.479)

(2)

Adjustments to real estate investments

94

Adjustments for technical reserves

Adjustment for minority interests Total Shareholders’ Equity pursuant to IFRS

AUDITED FINANCIAL STATEMENTS

117.629.814

(1) Shareholders’ equity adjustment corresponding to impairment of fixed-income instruments and the recognition of variable income marked to market using the average at the closing of the last stock exchange day. (2) Application of deferred taxes for those items recognized at first-time adoption. (3) Shareholders’ equity adjustment corresponding to impairment of accounts receivable from real estate leases.


NOTE 6. RISK MANAGEMENT

I. Financial Risks A Qualitative Information 1.- Credit Risk a) Risk Exposure and Origin Credit Risk refers to potential losses undergone by an investor as a consequence of temporary or indefinite delay in compliance with contractual obligations by its business counterparties. b) Objectives, Policies, and Processes for Risk Management as well as Methods Used to Assess Such Risk i) Considerations and Objectives The objective established in the Investment Policy is to maximize the portfolio risk-return ratio, always maintaining a well-known risk level restricted to the risk appetite defined by the Board of Directors so that shareholders may obtain adequate return for the invested capital and our insured customers are provided with the assurance that the Company will fulfill all commitments with them. ii) General Aspects of the Risk Philosophy The Company considers within its risk philosophy that investments should have a previously identified and determined credit risk. This is defined based on a qualitative and quantitative analysis prior to the execution of each business, which attests to the creditworthiness and nature of each debt issuer. To comply with this, the limits defined by Corporate Governance - concentration by

issuer, economic sector, or group - are reviewed, and ongoing follow-up on the performance of each investment is carried out, generating any necessary alerts through investment committees. iii) Follow-up and Reporting To comply with the above, the Company relies on an Investment Policy approved by the Board of Directors, comprising all the elements necessary to meet the objectives defined by shareholders based on the risk appetite established by the Company. An Investment Committee in charge of reviewing investment/disinvestment proposals and carrying out the credit risk analysis associated with each of them meets on a bi-monthly basis. This Committee also reviews the credit standing of each one of the Company’s financial investments in Chile and abroad and Bank, Mutual Fund, Broker, and counterparty credit lines approved for derivative transactions. The members of this Investment Committee are representatives of the Company’s Board of Directors, its Chief Executive Officer, the Investment Manager, and the Risk SubManager, among other executive officers. iv) Methodology The Company assesses the credit risk associated with its investments based on the rating and research studies carried out by rating agencies as well as a substantial internal analysis by Risk Sub-Management. This study considers the financial standing of each

AUDITED FINANCIAL STATEMENTS

95


2.- Liquidity Risk a) Risk Exposure and Origin Liquidity Risk Definition Liquidity risk refers to the potential loss caused by the advance sale of financial assets, at unusual discounts, in order to face nonv)Impairment Policy scheduled or previously committed cash outflows The determination of a value decrease in the or due to a transaction that could not be timely investment portfolio arises from the economic settled or hedged with available cash. expectation or objective evidence that an asset Due to the particular nature of the Life Annuity or a group of assets, valued at amortized cost, Industry, liabilities generally have a higher will undergo impairment as a consequence of average period than assets, and consequently, one or more events, on a corporate, industry, exposure to a liquidity crisis because of this is or country, after its initial valuation. Such events low. Along the same line, it should be noted that must have an impact on future cash flows that liabilities are concentrated in life annuities with may be reasonably measured. a high degree of diversification without At the closing of each quarter, the Company any possibility of advance enforcement, evaluates if there is any indication of impairment which reduces even more the exposure in the value of an asset. Loss from impairment to a liquidity crisis. of instruments assessed at amortized cost is In addition, given that liabilities associated with equivalent to the positive difference between its SIA accounts are backed up by investments equitable value and its fair value. associated with liquid indices or assets backing c) Changes in a) or b) since the preceding up the offer made by the Company in each period. of its policies, liquidity risk is low. Additionally, As this is first-time adoption, no comparisons these liabilities represent a lower percentage of with prior periods are possible. the portfolio and, even under a stress scenario, the depth of the markets in which the assets backing up these liabilities are located is much greater than the Company’s potential liquidity needs. Within this context, the Company focuses liquidity risk assessment and management on the projection of short-term cash flows under a normal scenario and under a stress scenario, resorting to credit lines with the financial system or amounts defined by sales under repurchase agreements or advance settlement of investments with maturity exceeding 3 months so as not to affect the value of investments, and, consequently, the income statement as a issuer and counterparty for financial and real estate investments, a review of their financial statements, a ratio analysis, and a projection of flows and creditworthiness stress among other methodologies.

96

AUDITED FINANCIAL STATEMENTS


result of the write-offs associated with advance redemptions. b) Risk Management Objectives, Policy, and Processes i) Objectives To directly contribute to ensuring an adequate liquidity level through the anticipation of scenarios enabling the establishment of guidelines that proactively facilitate decisionmaking and assign the corresponding responsibilities to the involved areas in case of this kind of risk. ii) Guidelines Liquidity risk estimation is a function of the projection of the maturities of the investment portfolio, of investments committed in the future, of the sales of Company products, and of liability payments. The projection of net flows from assets and liabilities determines the liquidity risk amount, which is defined as the positive difference between net projected disbursements and earnings for a specific date or period. This information is used to calculate ratios providing the framework for different levels of tolerance and action plans. The main method for managing and assessing liquidity risk is based on the measurement of imminent liquidity needs comparing short-term outstanding liabilities with highly liquid assets. In this way, an adequate position is obtained in highly liquid assets, such as time deposits and government instruments. c) Measurement and Periodicity Liquidity hedging is projected over a quarterly period, considering the following quarters: January to March, April to June, July to September, and October to December. Additionally, there is a monthly review exercise proactively implemented by Management.

d) Liquidity Hedging (Definition and Scenarios) This is the quotient between the positive cash flow from financial investment activities and operating activities and projected cash disbursements from operating or sales activities within a 3-month period. 3.- Market Risk a) Risk Exposure and Origin Market Risk Definition The potential loss arising from factors directly affecting the value of an instrument, of portfolios, or of a firm, such as variations in interest rates, exchange rates, stock prices, etc. Given that a large portion of the investment portfolio (except for variable-income and trading assets) is comprised of instruments classified as “held-to-maturity”, no “mark-tomarket” is carried out on them, and therefore, market risk is not relevant, with credit risk being the main financial risk involved. VaR models are available for the portion of the portfolio that is marked to market. There is a complementary aspect of market risk, namely reinvestment risk. This risk component is especially relevant for insurance companies specializing in life annuities, due to the longterm nature of their liabilities and the need to reinvest the asset flow generated by investments over time. This risk is quantitatively controlled on a monthly basis through the assessment of hedging and the calculation of the AAR, the results of which, as of December 2012, are disclosed in Notes No. 13 and No. 25. i) Risk Management Objectives, Policy, and Processes To directly contribute to the mitigation of market risk associated to the portfolio through the establishment of guidelines that facilitate

AUDITED FINANCIAL STATEMENTS

97


decision-making and assign the corresponding responsibilities to the involved areas in case of this kind of risk. The associated activities and processes are implemented for this purpose.

98

ii) Guidelines Market risk has two relevant dimensions: - Asset sensitivity to market factor movements - Changes in asset sensitivity to a market factor Based on the above, market risk is estimated based on the volatility of asset prices and the Value-at-Risk (VaR) method. Additionally, Hedging and AAR are measured. The main method used by the Company to manage and assess market risk is the Value-atRisk tool, which is a market risk measure widely used in the financial world. This tool provides an estimate of the maximum expected loss for a given confidence level. This confidence level for the Company is defined at 95%. Depending on test results, the Company manages this risk mitigation through appropriate portfolio diversification. 4.- Derivative Product Use As stated in article 21, Decree Law DFL No. 251 of 1931, Insurance and Reinsurance Companies may, under NCG No. 200, perform transactions aimed at hedging both the financial risks that may affect their investment portfolio and their asset and liability structure and investment transactions aimed at increasing the profitability and diversification of the investment portfolio. a) Risk Management Objectives, Policy, and Processes i) Objectives To directly contribute to the mitigation of the financial derivative risk associated with the portfolio through the establishment of guidelines that facilitate decision-making and assign the corresponding responsibilities to the involved areas in case of this kind of risk.

AUDITED FINANCIAL STATEMENTS

Hedging Derivative Objectives: The objective of these derivatives is to hedge exchange rate, interest rate, stock, and inflation fluctuations concerning both a Company’s assets and liabilities or a given target asset, such as international bonds, shares, etc. The detail and type of Hedging Transactions based on derivatives are defined in the Company’s Derivative Policy. Investment Derivative Objectives: The purpose of the use of investment derivatives is to increase the profitability and diversification of the Company’s investment portfolio. By definition, all derivatives not designed for hedging are investment derivatives and are subject to the internal limits provided for in the Derivative Policy as well as regulatory limits. The detail and type of Investment Transactions based on derivatives are defined in the Company’s Derivative Policy. ii) Guidelines Financial derivative risk has several relevant dimensions. In accordance with NCG No. 200 and our existing Derivative Policy, there are two types of derivatives depending on their use: Hedging Derivatives and Investment Derivatives. The detail and types of Derivative Contracts used by the Company as well as by its counterparties are presented in Note No. 8 to the Financial Statements. iii) Measurement Measurement consists of taking each one of the Company’s outstanding contracts with its counterparties and recording the exchange or payment profile, considering the contract term, the involved currencies (exchange rate), and, more importantly, the counterparty. Measurement must be carried out on a monthly basis.


In addition, the contract market value is also recorded in order to assess counterparty risk in more detail. This activity is conducted on a quarterly basis. Finally, investment Derivatives are frequently monitored. One way of doing this is assessing their sensitivity to interest rate and/or exchange rate variations based on the DV01 concept, etc. The Value-at-Risk concept is also applied for these instruments. iv) Mitigation Factors The sum of investment transactions in financial derivative products carried out by the Company may not exceed the lowest amount resulting from the following limits: - Measured as a function of the value of the asset subject to the transactions: 20% of the Company’s Net Shareholders’ Equity. - Measured as a function of the transaction accounting value: 1% of the Company’s Technical Reserves and Risk Equity. Concerning guidelines, the Derivative Policy clearly defines the procedure for entering these into the investment and limit system. b)  Definitions The risk from derivative use may be broken down into the following essential risks: i) Market Risk Market risk is related to the possibility of incurring losses as a consequence of variations in transaction values or in the positions maintained. The value of transactions mainly depends on the market price of underlying assets in each transaction, with prices in turn depending on the evolution of financial markets. The variation in derivative product values is mainly affected by the following kinds of market risks: Price risk: Variations in the prices of the

underlying asset may negatively affect the value of a financial instrument or a portfolio. Volatility risk: Sensitivity of portfolio value to changes in risk factor volatility. Correlation risk: This risk is linked to the existing relationship between risk factors. Liquidity risk: This occurs when, due to financial market conditions, it is not possible to unwind or close a risk position without impacting market price or transaction cost.” ii) Credit Risk Broadly speaking, credit risk is the loss potential whether from the transaction counterparty not meeting in an adequate time and proper manner the contractual obligations agreed upon in the transaction or from a non-compliance for country risk reasons. For financial derivative transactions, this risk is measured as the sum of the transaction or position replacement costs plus an estimate of the future potential risk due to market variations. Based on the way in which the non-compliance may occur, there are two kinds of risks: Counterparty non-compliance risk: This refers to the capacity or intention of the counterparty to meet its agreed upon financial obligations at any time during the life of the contract. Country risk: This refers to the sovereign risk assumed with States or entities guaranteed by States and the transfer risk incurred by a country’s foreign creditors due to an impairment in such country’s capacity to pay its debts or a lack of foreign currencies to perform payments. iii) Liquidity Risk Liquidity risk for derivative products is associated with two types of risks: Market liquidity risk: This occurs when, due to financial market conditions, it is not possible to unwind or close a risk position without impacting market price or the transaction cost.

AUDITED FINANCIAL STATEMENTS

99


100

Financing liquidity risk: This occurs in case of incapacity to obtain financing on the financial market due to a temporary mismatch of cash flows or unforeseen treasury or liquidity needs. iv) Operational and Juridical Risks This refers to the loss potential due to deficiencies or failures in internal processes, personnel, technology, or systems, or deriving from external circumstances. This kind of risks also includes risks of a juridical nature, the legal risk arising from deficiencies in transaction contracts, and regulatory deficiencies as a consequence of non-compliance with legal obligations. 1.- Credit Risk b)     Concerning letter a), description of guarantees set up and other credit improvements: A part of the bond portfolio is subject to financial covenants limiting indebtedness, disinvestment, and ownership changes by issuers, among other safeguards. The mortgage credit portfolio is subject to a guarantee over the underlying immovable assets associated with each debt contract. As of December 2012, the debt to guarantee ratio for the Company’s mortgage loan note portfolio amounted to 62%. The real estate transactions in the portfolio are subject to guarantees such as: land, buildings, and performance bonds, among other safeguards. Within this context, the financial leasing business stock as of September 2012 displayed an outstanding balance to guarantees ratio equivalent to 70%. Total payments of consumer credits offered and outstanding as of the closing of the accounting period are directly discounted from our customers’ life annuity payments.

AUDITED FINANCIAL STATEMENTS

c) Credit quality of assets not in default or subject to value impairment, reporting at least the risk rating by type of instrument:


101

AUDITED FINANCIAL STATEMENTS


OPENING PER ASSET FAMILY AND RISK RATING NOT CONSIDERING IMPAIRED ASSETS Figures expressed as percentages of the total non-impaired local and international bond portfolio

Sin Clasificaci贸n

Porcentaje por Instrumento

0,3% 20,2%

B(cl)

7,4% 23,1%

BB(cl)

1,2%

BBB(cl)

13,4%

A(cl)

AA(cl)

102

Securities issued or guaranteed by the Government or the Chilean Central Bank Mortgage bonds, bonds, and other debt or credit securities issued by banks or financial institutions Bonds, promissory notes, and other debt or credit securities issued by public or private companies Interests in syndicated loans Mortgage loans notes Real estate financial leasing/General purpose leasing Total percentage per local rating

AAA(cl)

December 2012 Local Ratings Without Rating Percentage per Instrument

-

14,7%

-

-

-

-

7,3%

-

-

-

-

37,7%

-

-

-

34,4%

-

-

-

-

1,5%

13,6% 0,3%

-

-

-

-

-

-

-

-

3,5%

3,5%

-

-

-

-

-

-

8,2%

8,2%

-

-

11,7%

100,0%

21,1% 44,6%

1,5%

22,4% 0,3%

Amount UF 61.635.493

AUDITED FINANCIAL STATEMENTS


AA

A

BBB

BB

B

Sin Clasificaci贸n

Porcentaje por Instrumento

Foreign investments Fixed income Total percentage per international rating

AAA

International Ratings Without Rating Percentage per Instrument

-

-

7,7%

71,6%

20,4%

0,2%

-

100,0%

-

-

7,7%

71,6%

20,4%

0,2%

-

100,0%

Amount UF 9.318.135 Total balance of bonds and other securities representing debts as of December 2012, increasing to UF 71,007,024.

d) Book value of financial assets that would be in default or subject to impairment if their conditions had not been renegotiated. No assets in this condition are recorded. e)Seniority analysis by tier of financial assets in default, but not subject to impairment. The stock of mortgage loans and their default condition is presented below. In accordance with NCG No. 311, all credits are provisioned on a decreasing scale in proportion to the default period. No. of Monthly Installments Overdue Debt / 2012 Total Due Portfolio 1- 3 4-6 7- 9 10 - 12 13 - 24 >= 25 Total

8,9% 1,7% 0,6% 0,3% 0,6% 0,8%

Figures expressed as a percentage of the Mortgage Loan portfolio. Default estimated as outstanding balance at par value plus dividends in default. 0.06% of Mortgage Loans in the portfolio have effective payment plans with the Company.

12,9%

AUDITED FINANCIAL STATEMENTS

103


f) Analysis of financial assets individually determined as impaired, including the factors used to determine the impairment. In accordance with the procedures described in the “Impairment Policy”, each financial issue was individually profiled based on: the stability of the issuer’s economic sector and industry, the shareholder profile, management, credit access capacity, profitability and margins, cash flow, payment capacity. equity levels, and leverage. These variables were weighted averaged to obtain a grade or score similar to a credit risk rating scale that, under a certain threshold, determined the instrument or instruments subject to the Impairment Policy. On December 2012, assets subject to deterioration on an individual basis were as follows: Risk Score

Gross Investment

Impairment %

Net Exposure

Transa Securitización CDO Newport

Mnemonic

Issuer

104

BTRA1-B

3,2

11.338

31,45%

7.772

CDOA6A-$L

3,3

42.059

17,83%

34.560

Total Impairment UF

11.065

This asset impairment represents 0.02% of bonds and other securities representing debt as of December 2012.

Concerning bulk instrument evaluation, also defined in the policy, the mortgage, leasing, and consumer credit portfolio yielded the following results: Asset Family Mortgage Loan Notes Leasing Consumer Loans

Portfolio % Impairment 0,70% 0,07% 2,33%

Figures expressed as a percentage of the total portfolio for each family of assets. The total impairment of these three asset families represents 0.04% of bonds and other securities representing debt as of December 2012. Based on the current Impairment Policy, the write-offs to be applied to Consumer Credits shall be estimated based on the instructions issued by the SVS through NCG No. 208 (or any subsequent regulations replacing it). Likewise, for Mortgage Loans, an impairment consistent with the instructions issued by NCG No. 311 (or any subsequent regulations replacing it) is stipulated

AUDITED FINANCIAL STATEMENTS


2.- Liquidity Risk Instrument a) Analysis of Financial Liability CDO Newport Maturities Transa Securitización Financial liability maturities are detailed in Note No. 23 of the Financial Statements as of Total December 31, 2012. The Company’s monthly maturities are mainly Public Investment Fund influenced by the payment of life annuity CFICIMENT pensions, which are fairly stable in the short run, for which projections concerning them can be CFINRAICES readily made. CFIDESIN06 CFIMDI b) Description of how liquidity risk is managed CFISANTDI7 Liquidity is proactively managed through the Total projection of investment maturities, interest and capital payment receipts, prepayments, revenue from sale of Company products, etc., all these Private Investment Fund representing cash inflows. In turn, the same Fondos Kappa y Alpha exercise is carried out projecting cash outflows, CARVAJAL which mostly correspond to pension and benefit IVK payments and investments, in relation to which there is discretionality to adjust the required Total resources. As alternatives to manage potential temporary Overall total liquidity shortage situations, there is the possibility of resorting to credit lines with the financial system, sales transactions under repurchase agreement, or early settlement of liquid investments, which are a relevant part of the Company’s asset portfolio. c) Detail of Illiquid Financial Investments To define illiquid investments, the settlement term for each type of investment, the potential loss in value that the investment may undergo on account of early settlement, and finally, their relationship with the Company’s long-term business are taken into account. Based on the above, the following instruments

UF 34.560 7.772 42.332 UF 89.165 49.320 21.775 19.016 7.205 186.481 UF 1.232.062 3.116 2.651 1.237.828 1.466.641

AUDITED FINANCIAL STATEMENTS

105


d) Asset flow maturity profile

No. of months

Tier 1

Tier 2

Tier 3

1 -24

25 - 48

49 - 72

Months

Tier 4 73 - 96

24

24

24

18.213.094

10.775.507

10.829.595

End of Dic-12

106

t=1

3.- Market Risk Since the major part of the investment portfolio is invested in fixed-income and real estate assets valued at amortized cost, the Company does not face market risk in association with these assets. Accordingly, market risk from exposure to different currencies is also taken care of by the hedges associated with the different positions. It is important to state that all foreign positions are covered by a tactical decision, and therefore, market exposure and risk are marginal or zero. To estimate a sensitivity to market risk for the portfolio portion subject to this type of risk, basically corresponding to variable-income investments, the VaR for this portion of the portfolio was calculated. VaR measurement is an integral part of the Company’s Investment Policy, with calculation of this parameter being carried out on a periodical basis and being reported to the ALM Committee. The “Value-at-Risk (VaR)� is a measure quantifying the maximum potential loss in the value of a financial instrument portfolio, within a given time horizon and confidence level. In 1997,

AUDITED FINANCIAL STATEMENTS

11.963

the US Securities and Exchange Commission established that public corporations should disclose quantitative information concerning their derivative activities. Large banks and licensees opted for applying the standard including VaR information in the notes to their financial statements. Given the theoretical consistency and widespread global acceptance of the VaR, the Company estimates that it is an appropriate tool for market risk assessment and management. Below is an explanation of the VaR methodology used by the Company: parametric VaR: using history to estimate portfolio volatilities and correlations and assuming normal return conditions under a 95% confidence level and a 1-month holding period. After estimating volatilities and correlations, the following formula is applied. In turn, another risk measure is reinvestment risk, which was addressed through AAR estimation and the ICO hedging chart, whose results are disclosed in Notes No. 13 and No. 25 to the Financial Statements as of December 2012. The VaR is shown in the charts below.


Tier 5 97 - 120

Tier 6 121 - 156

Tier 7 157 - 192

Tier 8 193 - 252

Tier 9 253 -336

24

24

36

36

60

3.040

10.164.607

13.606.282

12.157.309

20.126.383

VAR = [Rp - ( z ) ( q )] Vp

Tier 10 337 - end 84 rest

7.905.531

15,931

Evaluation Date: 04-01-2013 Base Currency: CLP Horizon Date: 04-02-2013

Rp = Monthly expected return Vp = Portfolio value z = Significance level q = Monthly standard deviation

Net Equity (31 Dic 2012) 139.028.292.000 CLP

The VaR is presented in the charts below: CorpVida Evaluation Date: 04-01-2013 Base Currency: CLP Horizon Date: 04-02-2013 Total Market Value of included securities: 67.524.463.808 CLP

Probability of Loss 1%

Value At Risk

Equity %

3.673.204.702

2,64%

2% 5%

3.242.782.492 2.597.154.168

2,33% 1,87%

Probability of Value At Risk % of Total Loss Mkt Val 1% 3.673.204.702 5,44% 2% 3.242.782.492 4,80% 5%

2.597.154.168

3,85%

AUDITED FINANCIAL STATEMENTS

107


108

4.- Derivative Product Use - Subscription Policy I.- The derivative position exposed to - Reinsurance Policy counterparty risk is detailed in Note No. 8 to - Investment Policy the Financial Statements as of December 31, The Reserve Policy establishes the criteria and 2012. responsibilities in relation to the calculation of II.-The derivative position exposed to market risk technical reserves, considering compliance with is detailed below: the regulations issued by the Superintendency As of December 31. 2012, there are no of Securities and Insurance as well as the derivatives exposed to market risk. information requirements by Company’s Corporate Governance. II. INSURANCE RISKS 1.- Objectives, Policy, and Processes for The Company’s Fee Policy is based on the Insurance Risk Management principles of equivalence and equality, The Company has set as main objective for considering the competitive environment in insurance risk management the availability of which the insurance business is carried out. adequate resources to guarantee compliance Based on these principles, insurance premiums with the commitments established in insurance are calculated for them to be adequate to contracts. finance claims, operational expenses, and the To meet this objective, the Company has expected profitability, reflecting the risk assumed organized itself considering the following by the Company. functions: II.Technical Management: Reserve calculation, For its part, the Subscription Policy has been fee calculation, subscription guideline definition, designed to ensure appropriate risk rating in withholding limit and reinsurance agreement accordance with medical and non-medical determination, and actuarial analyses and factors, taking into account the level of projections. contracted capital. Subscription guidelines are Operational Management: Implementation of adapted to each type of business depending on subscription, policy issuance, premium collection, its characteristics and marketing method always contract maintenance, and claim and benefit applying the principles of objectivity and nonpayment processes. discrimination. Product Development Management: Detection of market needs, coordination of the adjustment The Company has a Reinsurance Policy defining process, and product development. risk and diversification requirements that must be met by reinsurance companies, in order to The Company has implemented the following minimize the liquidity risk associated with any policies which guide its actions and define potential non-compliance by the latter. the design of the processes associated with The Investment Policy has been described in the insurance risk management: first part of this Note. - Reserve Policy - Fee Policy Additionally, the Company maintains permanent

AUDITED FINANCIAL STATEMENTS


technical training objectives concerning the different Delivery Channels, in accordance with their characteristics, type of product, and target markets. 2.- Objectives, Policy, and Processes for Insurance Contract Market, Liquidity, and Credit Risk Management Within the insurance risk context, market, liquidity, and credit risks arise from the rights granted by policies to policy underwriters.

b) Pension Fund and Private Life Annuities Traditional Insurances This category comprises individual term life and health insurances, insurances with an investment account, and universal life insurances, including VPFS insurances, mass delivery insurance, and title insurances. a) Temporary Life Insurances Concerning the Company, such risks are mainly These pay a principal when the policyholder expressed in insurances with an investment dies. Some plans also involve the payment of account through the right to redemption of a survival capital. The term of these insurances Policy Values, which has an underlying Liquidity may range from 1 to 20 years, and the premium Risk, and investment options with a minimum payment may be a single one or a periodical guaranteed interest rate, which are subject to one. Depending on the product, additional Market Risk. accident, health, and disability coverages may be contracted. The Company has a specific policy and processes for the management of these risks, b) Temporary Health Insurances which have already been described in the first These mainly correspond to catastrophic part of this Note. individual insurances. These insurances are subject to annual renewal and pay a benefit Note No. 25.2.4 presents the hedge for the in the form of a single capital or reimbursement Fund Value Reserve per type of insurance. of medical expenses when these exceed a deductible amount and up to the specified 3.- Exposure to Insurance, Market, Liquidity, capital by product. and Credit Risk from insurance Contracts Concerning insurance contracts, the main risk c) Insurances with an Investment faced by the Company is that both the amount Account of claims and their timing differ with respect These are individual long-term insurances that to underlying expectations when pricing is pay the amount of the agreed benefit in case defined. Any changes that may occur in claim of policy holder-death. The contracting party to frequency, average claim cost, and the return on one of these policies may select the investment investments associated with contracts have an portfolio associated with the reserve fund impact on claim risk. generated by the premiums, opting between The insurances offered by the Company may be classified under the following groups: the investment alternatives that the Company makes available for this purpose. This fund, denominated Policy Value, may be redeemed a) Traditional Insurances by the contracting party on a partial or total basis at any time during the validity of the

AUDITED FINANCIAL STATEMENTS

109


policy, subject to the agreed charges. The total redemption of the Policy Value results in early policy termination. There is no guaranteed profitability on the Policy Value if the selected investment alternative is related to variableincome instruments; however, the Company has a fixed-income investment alternative with a minimum guaranteed profitability. There is no obligation to pay the premiums or the amount of the premiums. The necessary expenses to maintain policy validity are monthly discounted from the Policy Value.

110

single premium, they are irrevocable, and the policyholder pension is expressed as a constant amount in UF (Unidades de Fomento). Pension Fund Life Annuities may be hired with a guaranteed payment period over which the pension shall be provided regardless of the death of the policyholder or the loss of rights by beneficiaries.

These products do not consider interests in profits or redemption values beyond the cash payment for the guaranteed period, if applicable. d) Mass Delivery Insurances These correspond to annual Life and Health b) Private Life Annuities coverages granted to insured groups under a These operate in a way similar to pension fund collective policy. The Company maintains a life annuities, but provide increased flexibility residual portfolio of these products. in the determination of beneficiaries and the determination of surviving beneficiaries. In e) Title Insurances addition, private life annuities may be hired These are insurances associated with credits during temporary terms. issued by financial institutions which, in case of death of the policyholder, pay the outstanding The main insurance risks faced by the Company debt balance to the creditor. These insurances are as follows: may have an annual or bi-annual coverage a) Mortalidad The risk of loss due to a death such as insurances associated with mortgage rate different from expected. loans or coverage during the credit term in the b) Longevidad The risk of loss due to an case of consumer credits. increase in life expectations beyond predictions. c) Inversiones The risk of loss due to lower Life Annuities profitabilities than expected. a) Pension Fund Life Annuities d) Gastos The risk of loss due to an increase in Pension Fund Life Annuities comprise the expenses beyond predictions. payment of a pension to the policyholder until e) Persistencia The risk of loss due to his/her death and thereafter a percentage of deviations in redemptions and early termination the pension to surviving beneficiaries under of policies with respect to expectations. the conditions established by law. In case of In the case of policies with a main death policyholder death, the payment of a capital coverage, the main factors that may increase equivalent to UF 15 for funeral expense funding claim frequency are: epidemics, widespread is considered. changes in life styles, and natural disasters. These contracts are funded by means of a

AUDITED FINANCIAL STATEMENTS


In the case of life insurances with an investment account, the following risks are added to the risk of death: liquidity risk associated with redemptions and the risk related to the profitability of investments in insurances associated with an investment alternative with a guaranteed profitability rate. Concerning Life Annuities, the main risk factors associated with an increase in longevity are advances in medical science and the population’s social conditions. Also highly important for these insurances is investment market risk and the gap risk, which are completely assumed by the Company. The technical reserve by type of product is detailed in Note No. 25 and the charts attached to these Financial Statements. 4.- Insurance Risk Management Methodology To face these risks, the following mitigating activities have been identified: - Product Design - Subscription - Claim Analysis - Reinsurance The Company has defined requirements concerning insurability and subscription for all its traditional product lines, adapted to the characteristic of each product and the mode of distribution. Consequently, for all coverages offered by the Company, limits are established concerning the age of entry and policyholder permanency. Additionally, the subscription contemplates the evaluation of applicant’s medical, financial, and moral aspects. As a result of risk rating, the Company may accept the risk under normal conditions, accept it with

an overpremium or special conditions, or reject the requested coverage. In the case of Pension Fund Life Annuities, where marketing characteristics do not enable a detailed subscription on an individual basis, the pricing mechanism has been strengthened in order to consider in pension calculation the main risk factors determining longevity risk that may be considered in the insurance offering process. In the case of traditional insurances, the claim analysis carried out as part of the regular settlement process is oriented to ensuring compliance with agreed conditions for benefit payment and for proper determination of benefits, thus avoiding the payment of inadmissible or fraudulent claims. The result of these analyses is also applied to adjustment and new product creation processes. As for insurances with an investment account, where insured parties may select the policy investment mode and in addition have a right to redeem part or the total of the Policy Accumulated Value, the Company avoids gaps with respect to the assets backing up the policy, investing the Fund Value reserve in the different selected alternatives in accordance with their proportion of the total. The liquidity risk associated with redemption amounts is mitigated by means of charges associated with these transactions, when current regulations so permit, and by the offer of only highly liquid investment alternatives. Furthermore, the Company maintains proportional and non-proportional reinsurance contracts for all traditional products. In the case

AUDITED FINANCIAL STATEMENTS

111


of Life Annuities, the assignment of risks from new businesses is not considered. 5.- Insurance Concentration per Product and Delivery Channel The detailed premium per product is provided in the charts attached to these Financial Statements. The Company’s direct premium distribution per Delivery Channel is as follows: DIRECT PREMIUM AS OF DECEMBER 31, 2012 Product Internal External Channel Channel

112

Life Annuities Traditional Insurances Bank Insurance Title Insurances

 84.24 % -

AUDITED FINANCIAL STATEMENTS

 100.00% 15.76 % 100,00% 100,00%

6.- Sensitivity Analysis 6.1.- Methods and Hypotheses The Sensitivity Analysis is conducted by measuring the impact on shareholders’ equity from variation in each risk factor on a separate basis, assuming that all the variables are constant. The deviations used for each risk factor correspond to reasonably probable changes which, according to the Company and international experience, may have occurred during the reporting period. For the purpose of the sensitivity analysis, deviations in the considered Mortality and Longevity factors are assumed not to change future projections for these variables with respect to the parameters used in the calculation of technical reserves. Only negative deviations in risk factors are considered. As appropriate, the effects are evaluated based on the outstanding policy portfolio at the beginning of the period and the results are extrapolated to income for the year. The effect of correlations between risk factor movements is not considered. Therefore, partial results for each risk are not considered on an aggregate basis


Note should be taken that, due to the nature of the variables involved in the analysis, the impact from the factors is not linear. 6.2.- Changes in Methods and Hypotheses with Respect to the Previous Period The Sensitivity Analysis is presented for the first time in the Financial Statements as for December 31, 2012. 6.3.- Risk Factors The most relevant risk factors based on which the Sensitivity Analysis is carried out are as follows: Evaluation Assumptions RISK Projection Basis Longevity SVS Mortality Tables Mortality SVS Mortality Tables Expenses

Company Expenses

Persistence

Company Experience Variable-Income and Real Estate Value

Investments

VARIATION -5,0% qx + 5,0% qx + 5,0% Annual -10,00%

113

-5,00%

AUDITED FINANCIAL STATEMENTS


6.4.- Effects on Shareholders’ Equity The result of the Sensitivity Analysis on the Company’s Net Worth is as follows:

SENSITIVITY TEST RESULTS AS OF DECEMBER 31, 2012 Product Longevity Mortality Persistence Expenses Investments

114

Net Worth Variation (%) -0,23% -0,19% -0,05% -0,37% -3,58%

III. INTERNAL CONTROL AND RISK MANAGEMENT The Company has defined an internal control structure based on the relevant policies, regulations, and procedure manuals and/or handbooks aimed at strengthening the internal control culture throughout the organization, including all its stakeholders. Such structure enables the Company to monitor efficient and effective resource use, reinforcing its risk management system, and strengthening the degree of compliance with the legal and regulatory obligations established by all the relevant regulatory agencies related to the organization The effectiveness of the internal control system is supported by the Corporate Governance structure adopted by the Company, which is led by the Board of Directors with the assistance of Board Member Committees as well as Senior

AUDITED FINANCIAL STATEMENTS

Management and its respective Committees. This structure promotes Board of Directors involvement, thereby enabling detection of improvement opportunities associated with the commitments assumed towards the different interest groups. Additionally, the Company has a risk management system sustainable over time and applicable to the entire organization, thereby enabling identification, evaluation, treatment, control, monitoring, and communication of our risks to the different levels of the organization. In this way, the Company, and essentially its Corporate Governance, appropriately understand the risks to which the entity is exposed, including their genesis and interrelations, and potential impacts affecting the business. Concerning Compliance, the Company established such function with the purpose of ensuring that all legal and regulatory obligations are met, as well as internal regulations applicable to insurance companies, and specifically promoting an ethical corporate culture that safeguards the operation of the organization’s values, corporate image, and sound reputation. As regards External Auditing, its main function is to express an opinion concerning the reasonableness of the Financial Statements in all material respects, based on the performance of audits in accordance with current auditing standards, being also charged, as part of its relevant duties, of conducting an evaluation of the Company’s Internal Control structure. In order to verify the level of compliance with the organization’s objectives in terms of internal


control, the Company has established an Internal Audit function within the Comptroller’s Department which is independent from Management and directly reports to the Board of Directors on a periodical basis and through the Auditing Committee. For its part, Internal Auditing examines and evaluates both the relevance and the efficiency and effectiveness of the Company’s Internal Control Structure through the performance of audits to central units and branches in addition to special reviews as required, always within a framework of risk-based supervision and internal and external regulations, and providing objective opinions concerning the corresponding evaluation and review. Among its functions, it must also ensure that all relevant processes within the organization are audited with reasonable frequency and are consistent within an appropriate control environment. The organization is responsible for creating, implementing, and applying the relevant controls during the different relevant processes and sub-processes. For its part, Internal Auditing is responsible for ensuring appropriate internal control as a function of the size and level of complexity and vulnerability of the different business units.

AUDITED FINANCIAL STATEMENTS

115


NOTE 7. CASH AND CASH EQUIVALENTS

Figures in M$

Cash and Cash Equivalents Cash on hand Banks Cash equivalents Total Cash and Cash Equivalents

116

AUDITED FINANCIAL STATEMENTS

CLP USD EUR OTRA Total 980.840 980.840 1.073.392 640.038 1.713.430 4.249.610 4.249.610 6.943.880 6.303.842 640.038


NOTE8. FINANCIAL ASSETS AT FAIR VALUE NOTE 8.1.INVESTMENTS AT FAIR VALUE

117

AUDITED FINANCIAL STATEMENTS


NOTE8. FINANCIAL ASSETS AT FAIR VALUE NOTE 8.1. INVESTMENTS AT FAIR VALUE

AUDITED FINANCIAL STATEMENTS

Level 2

FOREIGN INVESTMENTS Fixed Income Securities issued by Foreign Governments and Central Banks Securities issued by Foreign Banks and Financial Institutions Securities issued by Foreign Companies Fixed Income Shares of Foreign Corporations Foreign investment fund installments

Level 1

118

DOMESTIC INVESTMENTS Fixed Income Government instruments Instruments issued by the financial system Debt or credit instruments Domestic company instruments traded abroad Mortgage loan notes Others Variable Income Shares of publicly traded companies Shares of closely held companies Investment funds Mutual funds Others

50.045.437 -

53.131.573

-

1.622.444 2.104.033


-

-

Effect on OCI (Other Compressive Income)

-

1.073.989 3.225.922

Effect on results

2.644.648

Amortized cost

Total

Level 3 1.073.989 3.225.922 -

-

119

50.045.437 2.644.648 53.131.573 -

50.045.437 2.644.648 53.131.573

2.001.722 1.037.001

2.000.072 965.011

1.622.444 2.104.033

1.622.444 2.104.033

1.650 71.990 -

AUDITED FINANCIAL STATEMENTS


2.366.359 21.237 -

DERIVATIVES Hedging derivatives Investment derivatives Others

47.862 63.546.006

TOTAL

NOTE 8.2. HEDGING AND INVESTMENT DERIVATIVES NOTE 8.2.1. DERIVATIVE USE STRATEGY

120

Level 2

Level 1

Installments of investment funds set up in the country with assets invested abroad Foreign mutual fund installments Installments of mutual funds set up in the country with assets invested in foreign securities Others

53.131.573

The main purpose of the derivative product use policy is the use of derivative products aimed at hedging financial risks as well as conduct investment transactions enabling the Company to increase its profitability and diversify its investment portfolio.

NOTE 8.2.2. POSITION IN DERIVATIVE CONTRACTS Hedging Derivatives

Investment M$ Other derivatives

Type of instrument Hedging M$ Forward Purchase Sale Options Purchase Sale Swaps TOTAL

AUDITED FINANCIAL STATEMENTS

Hedging 1512 M$

(87.097) 134.959

47.862

0 -

10.114.462 10.114.462

0

-

Number of co


2.366.359

-

21.237

21.237

-

-

-

-

-

-

Effect on OCI (Other Compressive Income)

Amortized cost

Effect on results

Total

Level 3

2.366.359

47.862

2.644.648

-

119.322.227

47.862 119.200.725

121.502

-

Likewise, the financial risk policy is aimed at maintaining associated risks (market, liquidity, reinvestment, credit, and operating risks) within predetermined limits.

ontracts

Effect on Income for the Period M$

2 11

(12.252) -28.938

137 150

-394.352 -435.542

Effect on OCI M$

-

121

Asset amounts at Margin (1) M$

-

AUDITED FINANCIAL STATEMENTS


NOTE 8.2.3. POSITION IN DERIVATIVE CONTRACTS (FUTURES)

* As of December 31, 2012, the Company has no positions in Futures Derivative Contracts.

NOTE 8.2.4. SHORT-SELLING TRANSACTIONS

* As of December 31, 2012, the Company has no Short-Selling Transactions.

NOTE 8.2.5. OPTIONS CONTRACTS

* As of December 31, 2012, the Company has no Options Contracts.

NOTE 8.2.6. FORWARD CONTRACTS

Contract Objetive

Type Of Transaction

Item Transaction

Transaction Counterparty

1555 1840

1 1

Goldman Sachs Estados Unidos ABanco De Chile Chile AAA

Nominal

Target Asset

Risk Rating

122

Transaction Characteristics Nationality

Name

Transaction operaci贸n

PURCHASE Hedging UF PROM

200.000 2.000.000

Hedging 1512 Investment

TOTAL

SALE

AUDITED FINANCIAL STATEMENTS

2.200.000

$$ $$


Origin Of Information

Fair Value Of Frw Contract As Of Rep. Date M$ Flow Discount Rate

Forward Price Quoted In M째 As Of Rep. Date Spot Price As Of Reporting Date Market Value Of Target Asset As Of Rep. Date M$

Contract Expiry Date

AUDITED FINANCIAL STATEMENTS

123 Date Transaction

Forward Price

Currency

(87.097) 5.528.070

BLOOMBERG BLOOMBERG (94.872) 7.775 -156,82% 14,00% 22.840,75 0,48 1,00 1,00 4.568.150 959.920 11-04-2012 08-03-2013 20-12-2012 04-01-2013 23.248,00 476,08 $ $

Valuation Reporting


Hedging

124

1005

1

1006

1

1718

1

1727

1

1730

1

1827

1

1828

1

1829

1

1837

1

1843

1

1844

1

BANCO BBVA CHILE BANCO BBVA CHILE HSBC BANK CHILE BANCO DE CHILE BANCO BBVA CHILE MORGAN STANLEY Credit Suisse First Boston Credit Suisse First Boston BANCO SANTANDER JPMORGAN CHASE BANK N.A BANCO SANTANDER

Chile

AA+

UF

65.358 PR

Chile

AA+

UF

65.184 PR

Chile

AAA

$$

1.469.910.000 PR

Chile

AAA

$$

1.469.400.000 PR

Chile

AA+

$$

978.800.000 PR

Estados Unidos A-

$$

953.500.000 PR

Estados Unidos A

$$

1.669.675.000 PR

Estados Unidos A

$$

1.430.400.000 PR

Chile

AAA

$$

1.190.500.000 PR

Chile

AAA

$$

1.199.475.000 PR

Chile

AAA

$$

963.600.000 PR

Investment TOTAL

NOTE 8.2.7. FUTURES CONTRACTS

* As of December 31, 2012, the Company has no Futures Contracts.

AUDITED FINANCIAL STATEMENTS

11.325.390.542


ROM

0,02 18-05-2011 10-06-2013

1.439.880 479,96

0,88

64,00%

48.690

BLOOMBERG

ROM

0,02 19-05-2011 10-06-2013

1.439.880 479,96

0,88

64,00%

44.717

BLOOMBERG

ROM

489,97 27-08-2012 03-01-2013

1.439.880 479,96

0,48

21,00%

30.004

BLOOMBERG

ROM

489,80 03-09-2012 08-01-2013

1.439.880 479,96

0,48

53,00%

29.347

BLOOMBERG

ROM

489,40 04-09-2012 04-01-2013

959.920 479,96

0,48

14,00%

18.865

BLOOMBERG

ROM

476,75 12-12-2012 14-01-2013

959.920 479,96

0,48

73,00%

(6.691)

BLOOMBERG

ROM

477,05 13-12-2012 17-01-2013

1.679.860 479,96

0,48

107,00%

(11.028)

BLOOMBERG

ROM

476,80 12-12-2012 14-01-2013

1.439.880 479,96

0,48

73,00%

(9.886)

BLOOMBERG

ROM

476,20 18-12-2012 04-01-2013

1.199.900 479,96

0,48

28,00%

(9.437)

BLOOMBERG

ROM

479,79 27-12-2012 25-01-2013

1.199.900 479,96

0,48

166,00%

(1.806)

BLOOMBERG

ROM

481,80 27-12-2012 29-01-2013

959.920 479,96

0,48

193,00%

2.184

BLOOMBERG

14.158.820

134.959

AUDITED FINANCIAL STATEMENTS

125


NOTE 8.2.8. SWAP CONTRACTS

Contract Objective

Transaction Number

Transaction Item

Transaction Counterparty

Transaction Characteristics Tipo Cambio Contrato

Currency Short Position

Currency Long Position

Nominal Short Position

Nominal Long Position

Risk Rating

Nationality

Name

HEDGING

126

142

1 Credit Suisse First Boston

Inglaterra A

59.217,00

2.000.000,00 UF

AVE

530,80

5

427

1 Banco Santander

Chile

58.693,00

2.200.000,00 UF

AVE

560,40

4

428

1 Credit Suisse First Boston

Inglaterra A

107.586,00

4.000.000,00 UF

AVE

564,65

4

506

1 Deutsche Bank London

Inglaterra A

26.298,00

1.000.000,00 UF

AVE

549,00

505

1 Deutsche Bank London

Inglaterra A

26.298,00

1.000.000,00 UF

AVE

549,00

504

1 Deutsche Bank London

Inglaterra A

52.596,00

2.000.000,00 UF

AVE

549,00

527

1 Banco Santander

Chile

AAA

102.601,00

4.000.000,00 UF

AVE

536,00

528

1 Banco Santander

Chile

AAA

25.650,00

1.000.000,00 UF

AVE

536,00

538

1 Deutsche Bank London

Inglaterra A

12.662,00

500.000,00 UF

AVE

530,20

5

694

1 Banco BBVA Chile

Chile

AA-

25.804,00

1.000.000,00 UF

AVE

544,25

4

695

1 Banco BBVA Chile

Chile

AA-

12.902,00

500.000,00 UF

AVE

544,25

5

696

1 Credit Suisse First Boston

Inglaterra A

76.367,00

3.000.000,00 UF

AVE

537,00

712

1 Deutsche Bank London

Inglaterra A

125.279,00

5.000.000,00 UF

AVE

530,32

4

713

1 Deutsche Bank London

Inglaterra A

12.528,00

500.000,00 UF

AVE

530,32

4

714

1 Deutsche Bank London

Inglaterra A

25.056,00

1.000.000,00 UF

AVE

530,32

4

731

1 Goldman Sachs

Estados Unidos

A-

50.405,00

2.000.000,00 UF

AVE

534,99

5

732

1 Goldman Sachs

Estados Unidos

A-

12.601,00

500.000,00 UF

AVE

534,99

5

AUDITED FINANCIAL STATEMENTS

AAA


Valuation Reporting Transaction Date

Contract Expiry Date

Market Value Of Target Asset As Of Rep. Date M$

Market Exchange Rate

Market Rate Long Position

Market Rate Short Position

PRESENT VALUE LONG POSITION M$

Present Value Short Position M$

Information Origin

Tasa Posicion Corta

Fair Value Of Swap Contract As Of Rep. Date M$

Tasa Posicion Larga

5.65%

7.375%

09-03-2006

15-12-2014

959.920

479,96

5.65%

7.375%

1.355.857

963.473

392.384 BLOOMBERG

4.15%

6.375%

19-05-2009

09-06-2017

1.055.912

479,96

4.15%

6.375%

1.343.020

1.060.244

282.776 BLOOMBERG

4.78%

7.846%

28-05-2009

01-04-2019

1.919.840

479,96

4.78%

7.846%

2.484.917

1.960.540

524.377 BLOOMBERG

6.6%

9.5%

15-09-2009

23-04-2019

479.960

479,96

6.6%

9.5%

608.460

490.288

118.172 BLOOMBERG

6.6%

9.5%

15-09-2009

23-04-2019

479.960

479,96

6.6%

9.5%

608.460

490.288

118.172 BLOOMBERG

6.6%

9.5%

15-09-2009

23-04-2019

959.920

479,96

6.6%

9.5%

1.216.918

980.576

236.342 BLOOMBERG

4.9%

7.25%

22-10-2009

29-07-2019

1.919.840

479,96

4.9%

7.25%

2.390.594

1.980.964

409.630 BLOOMBERG

4.9%

7.25%

22-10-2009

29-07-2019

479.960

479,96

4.9%

7.25%

597.648

495.241

102.407 BLOOMBERG

5.47%

7.625%

28-10-2009

23-07-2019

239.980

479,96

5.47%

7.625%

296.079

248.396

47.683 BLOOMBERG

4.78%

6.75%

25-05-2010

30-09-2019

479.960

479,96

4.78%

6.75%

596.103

488.523

107.580 BLOOMBERG

5.45%

7.25%

25-05-2010

30-09-2019

239.980

479,96

5.45%

7.25%

298.051

244.261

53.790 BLOOMBERG

4.2%

6.2%

26-05-2010

15-04-2020

1.439.880

479,96

4.2%

6.2%

1.757.765

1.458.880

298.885 BLOOMBERG

4.18%

6.2%

17-06-2010

15-04-2020

2.399.800

479,96

4.18%

6.2%

2.883.429

2.431.466

451.963 BLOOMBERG

4.18%

6.2%

17-06-2010

15-04-2020

239.980

479,96

4.18%

6.2%

288.343

243.147

45.196 BLOOMBERG

4.18%

6.2%

17-06-2010

15-04-2020

479.960

479,96

4.18%

6.2%

576.686

486.293

90.393 BLOOMBERG

5.01%

7%

13-07-2010

20-01-2020

959.920

479,96

5.01%

7%

1.176.261

990.802

185.459 BLOOMBERG

5.01%

7%

13-07-2010

20-01-2020

239.980

479,96

5.01%

7%

294.065

247.700

46.365 BLOOMBERG

AUDITED FINANCIAL STATEMENTS

127


Contract Objective

Transaction Number

Transaction Item

Transaction Counterparty

Transaction Characteristics Tipo Cambio Contrato

Currency Short Position

Currency Long Position

Nominal Short Position

Nominal Long Position

Risk Rating

Nationality

Name

HEDGING

128

740

1 Deutsche Bank London

Inglaterra A

48.852,00

2.000.000,00 UF

AVE

518,50

741

1 Goldman Sachs

Estados Unidos

A-

74.055,00

3.000.000,00 UF

AVE

524,00

746

1 Deutsche Bank London

Inglaterra A

49.012,00

2.000.000,00 UF

AVE

520,20

5

747

1 Deutsche Bank London

Inglaterra A

49.012,00

2.000.000,00 UF

AVE

520,20

5

766

1 Credit Suisse First Boston

Inglaterra A

96.573,00

4.000.000,00 UF

AVE

512,60

4

756

1 Goldman Sachs

Estados Unidos

A-

96.978,00

4.000.000,00 UF

AVE

514,85

863

1 Hsbc Bank Chile

Chile

AAA

44.603,00

2.000.000,00 UF

AVE

477,88

4

864

1 Deutsche Bank London

Inglaterra A

33.738,00

1.500.000,00 UF

AVE

482,00

5

867

1 J.p Morgan & Co.

Estados Unidos

A

45.440,00

2.000.000,00 UF

AVE

486,97

6

866

1 J.p Morgan & Co.

Estados Unidos

A

45.440,00

2.000.000,00 UF

AVE

486,97

4

894

1 Banco De Chile

Chile

AAA

92.636,00

4.000.000,00 UF

AVE

497,00

898

1 Hsbc Bank Usa N.a.

Estados Unidos

A+

46.497,00

2.000.000,00 UF

AVE

498,97

4

897

1 Hsbc Bank Usa N.a.

Estados Unidos

A+

23.248,00

1.000.000,00 UF

AVE

498,97

4

913

1 J.p Morgan & Co.

Estados Unidos

A

22.824,00

1.000.000,00 UF

AVE

489,89

3

915

1 Hsbc Bank Usa N.a.

Estados Unidos

A+

68.415,00

3.000.000,00 UF

AVE

489,50

4

914

1 J.p Morgan & Co.

Estados Unidos

A

11.379,00

500.000,00 UF

AVE

488,49

3

924

1 Banco BBVA Chile

Chile

AA-

80.276,00

3.500.000,00 UF

AVE

492,44

4

929

1 Banco BBVA Chile

Chile

AA-

55.930,00

2.500.000,00 UF

AVE

480,50

4

942

1 Banco BBVA Chile

Chile

AA-

65.388,00

3.000.000,00 UF

AVE

468,70

4

AUDITED FINANCIAL STATEMENTS

5


Valuation Reporting Transaction Date

Contract Expiry Date

Market Value Of Target Asset As Of Rep. Date M$

Market Exchange Rate

Market Rate Long Position

Market Rate Short Position

PRESENT VALUE LONG POSITION M$

Present Value Short Position M$

Information Origin

Tasa Posicion Corta

Fair Value Of Swap Contract As Of Rep. Date M$

Tasa Posicion Larga

5.26%

7.25%

22-07-2010

22-04-2020

959.920

479,96

5.26%

7.25%

1.126.413

974.336

152.077 BLOOMBERG

5.2%

7.25%

28-07-2010

22-04-2020

1.439.880

479,96

5.2%

7.25%

1.707.291

1.461.503

245.788 BLOOMBERG

5.35%

7.25%

02-08-2010

22-04-2020

959.920

479,96

5.35%

7.25%

1.130.366

974.336

156.030 BLOOMBERG

5.35%

7.25%

02-08-2010

22-04-2020

959.920

479,96

5.35%

7.25%

1.130.366

974.336

156.030 BLOOMBERG

4.29%

5.9%

10-08-2010

19-01-2021

1.919.840

479,96

4.29%

5.9%

2.245.300

1.971.387

273.913 BLOOMBERG

4.19%

5.9%

11-08-2010

19-01-2021

1.919.840

479,96

4.19%

5.9%

2.255.830

1.971.387

284.443 BLOOMBERG

4.61%

5.75%

22-11-2010

22-01-2021

959.920

479,96

4.61%

5.75%

1.038.394

983.996

54.398 BLOOMBERG

5.88%

6.75%

24-11-2010

30-09-2019

719.940

479,96

5.88%

6.75%

782.097

732.784

49.313 BLOOMBERG

6.12%

7%

29-11-2010

20-01-2020

959.920

479,96

6.12%

7%

1.066.374

990.802

75.572 BLOOMBERG

4.72%

5.75%

29-11-2010

01-02-2021

959.920

479,96

4.72%

5.75%

1.057.375

982.774

74.601 BLOOMBERG

5.9%

4.3%

07-01-2011

19-01-2021

1.919.840

479,96

5.9%

4.3%

2.154.926

1.971.387

183.539 BLOOMBERG

4.05%

5.625%

10-01-2011

15-01-2021

959.920

479,96

4.05%

5.625%

1.080.415

984.416

95.999 BLOOMBERG

4.05%

5.625%

10-01-2011

15-01-2021

479.960

479,96

4.05%

5.625%

540.208

492.208

48.000 BLOOMBERG

3.91%

5.5%

12-01-2011

15-01-2021

479.960

479,96

3.91%

5.5%

530.217

492.208

38.009 BLOOMBERG

4.04%

5.625%

13-01-2011

20-01-2021

1.439.880

479,96

4.04%

5.625%

1.587.557

1.474.557

113.000 BLOOMBERG

3.88%

5.5%

13-01-2011

20-01-2021

239.980

479,96

3.88%

5.5%

264.085

245.759

18.326 BLOOMBERG

4.57%

5.75%

21-01-2011

22-01-2021

1.679.860

479,96

4.57%

5.75%

1.868.522

1.721.992

146.530 BLOOMBERG

4.39%

5.625%

01-02-2011

15-01-2021

1.199.900

479,96

4.39%

5.625%

1.301.803

1.230.520

71.283 BLOOMBERG

4.47%

6%

18-02-2011

21-01-2020

1.439.880

479,96

4.47%

6%

1.521.707

1.478.238

43.469 BLOOMBERG

AUDITED FINANCIAL STATEMENTS

129


Contract Objective

Transaction Number

Transaction Item

Transaction Counterparty

Transaction Characteristics Tipo Cambio Contrato

Currency Short Position

Currency Long Position

Nominal Short Position

Nominal Long Position

Risk Rating

Nationality

Name

HEDGING

130

948

1

Banco BBVA Chile

Chile

AA-

11.039,00

500.000,00 UF

AVE

475,10

4

971

1

Banco De Chile

Chile

AAA

19.803,00

883.300,00 UF

AVE

483,30

5

1015

1

Banco Bbva Chile

Chile

AA-

107.996,00

5.000.000,00 UF

AVE

470,80

4

1016

1

J.p Morgan & Co.

Estados Unidos

A

86.053,00

4.000.000,00 UF

AVE

469,20

4

1017

1

J.p Morgan & Co.

Estados Unidos

A

32.270,00

1.500.000,00 UF

AVE

469,20

4

1024

1

Banco Santander

Chile

AAA

64.264,00

2.977.330,00 UF

AVE

471,60

4

1031

1

Banco BBVA Chile

Chile

AA-

63.917,00

3.000.000,00 UF

AVE

467,00

5

1034

1

Banco BBVA Chile

Chile

AA-

63.403,00

3.000.000,00 UF

AVE

463,30

10

1036

1

J.p Morgan & Co.

Estados Unidos

A

21.095,00

1.000.000,00 UF

AVE

462,50

4

1045

1

Banco BBVA Chile

Chile

AA-

21.084,00

1.000.000,00 UF

AVE

462,55

10

1046

1

Banco BBVA Chile

Chile

AA-

21.084,00

1.000.000,00 UF

AVE

462,55

10

1061

1

Credit Suisse First Boston

Inglaterra A

86.772,00

4.050.000,00 UF

AVE

470,52

4

1060

1

Hsbc Bank Usa N.a.

Estados Unidos

A+

42.892,00

2.000.000,00 UF

AVE

471,00

4

1070

1

Banco BBVA Chile

Chile

AA-

74.973,00

3.520.000,00 UF

AVE

467,85

1071

1

Banco De Chile

Chile

AAA

42.603,00

2.000.000,00 UF

AVE

467,90

4

1075

1

Banco Santander

Chile

AAA

42.740,00

2.000.000,00 UF

AVE

469,44

4

1076

1

Banco Santander

Chile

AAA

25.680,00

1.200.000,00 UF

AVE

470,10

7

1079

1

Barclays Bank Plc

Estados Unidos

A-

21.300,00

1.000.000,00 UF

AVE

468,00

1083

1

Banco BBVA Chile

Chile

AA-

42.295,00

2.000.000,00 UF

AVE

464,70

1084

1

J.p Morgan & Co.

Estados Unidos

A

19.034,00

900.000,00 UF

AVE

464,75

AUDITED FINANCIAL STATEMENTS

7

6


Valuation Reporting Transaction Date

Contract Expiry Date

Market Value Of Target Asset As Of Rep. Date M$

Market Exchange Rate

Market Rate Long Position

Market Rate Short Position

PRESENT VALUE LONG POSITION M$

Present Value Short Position M$

Information Origin

Tasa Posicion Corta

Fair Value Of Swap Contract As Of Rep. Date M$

Tasa Posicion Larga

4.54%

6%

25-02-2011

21-01-2020

239.980

479,96

4.54%

6%

256.976

246.373

10.603 BLOOMBERG

5.99%

7.373%

16-03-2011

16-06-2022

423.949

479,96

5.99%

7.373%

453.724

425.771

27.953 BLOOMBERG

4.25%

5.95%

25-05-2011

03-06-2021

2.399.800

479,96

4.25%

5.95%

2.471.765

2.410.717

61.048 BLOOMBERG

4.11%

5.7%

26-05-2011

18-05-2021

1.919.840

479,96

4.11%

5.7%

1.972.714

1.932.485

40.229 BLOOMBERG

4.11%

5.7%

26-05-2011

18-05-2021

719.940

479,96

4.11%

5.7%

739.770

724.682

15.088 BLOOMBERG

4.44%

6.223%

16-06-2011

15-12-2026

1.428.999

479,96

4.44%

6.223%

1.468.981

1.433.279

35.702 BLOOMBERG

5.35%

5.25%

11-07-2011

11-02-2016

1.439.880

479,96

5.35%

5.25%

1.489.725

1.468.678

21.047 BLOOMBERG

0.14%

9.5%

13-07-2011

15-08-2014

1.439.880

479,96

10.14%

9.5%

1.505.499

1.493.029

12.470 BLOOMBERG

4.44%

5.95%

13-07-2011

03-06-2021

479.960

479,96

4.44%

5.95%

482.932

482.143

789 BLOOMBERG

0.07%

9.5%

25-07-2011

15-08-2014

479.960

479,96

10.07%

9.5%

500.492

497.676

2.816 BLOOMBERG

0.07%

9.5%

25-07-2011

15-08-2014

479.960

479,96

10.07%

9.5%

500.492

497.676

2.816 BLOOMBERG

4.38%

4.25%

11-08-2011

18-05-2021

1.943.838

479,96

4.38%

4.25%

1.990.075

1.956.641

33.434 BLOOMBERG

4.38%

5.7%

12-08-2011

14-01-2016

959.920

479,96

4.38%

5.7%

999.105

978.347

20.758 BLOOMBERG

7.9%

8.75%

17-08-2011

06-11-2019

1.689.459

479,96

7.9%

8.75%

1.735.995

1.716.551

19.444 BLOOMBERG

4.55%

5.7%

19-08-2011

03-06-2021

959.920

479,96

4.55%

5.7%

977.369

966.243

11.126 BLOOMBERG

4.88%

5.95%

19-08-2011

03-06-2021

959.920

479,96

4.88%

5.95%

979.047

964.287

14.760 BLOOMBERG

7.93%

8.75%

19-08-2011

06-11-2019

575.952

479,96

7.93%

8.75%

594.671

585.188

9.483 BLOOMBERG

4.8%

5.95%

26-08-2011

03-06-2021

479.960

479,96

4.8%

5.95%

487.857

482.143

5.714 BLOOMBERG

7.11%

7.25%

29-08-2011

20-10-2017

959.920

479,96

7.11%

7.25%

980.227

974.366

5.861 BLOOMBERG

6.33%

6.375%

31-08-2011

18-11-2020

431.964

479,96

6.33%

6.375%

436.504

434.576

1.928 BLOOMBERG

AUDITED FINANCIAL STATEMENTS

131


Contract Objective

Transaction Number

Transaction Item

Transaction Counterparty

Transaction Characteristics Tipo Cambio Contrato

Currency Short Position

Currency Long Position

Nominal Short Position

Nominal Long Position

Risk Rating

Nationality

Name

HEDGING

132

1086

1

J.p Morgan & Co.

Estados Unidos

A

42.297,00

2.000.000,00 UF

AVE

464,75

4

1087

1

J.p Morgan & Co.

Estados Unidos

A

35.783,00

1.692.000,00 UF

AVE

464,75

4

1092

1

Deutsche Bank London

Inglaterra A

42.183,00

2.000.000,00 UF

AVE

463,50

7

1096

1

Barclays Bank Plc

Estados Unidos

A-

20.954,00

1.000.000,00 UF

AVE

460,50

4

1109

1

Hsbc Bank Usa N.a.

Estados Unidos

A+

31.630,00

1.500.000,00 UF

AVE

463,51

4

1106

1

Banco Santander

Chile

AAA

21.045,00

1.000.000,00 UF

AVE

462,60

1105

1

Barclays Bank Plc

Estados Unidos

A-

63.632,00

3.000.000,00 UF

AVE

466,25

8

1107

1

Barclays Bank Plc

Estados Unidos

A-

54.064,00

2.500.000,00 UF

AVE

475,50

4

1120

1

Banco Santander

Chile

AAA

66.824,00

3.000.000,00 UF

AVE

490,00

1121

1

Barclays Bank Plc

Estados Unidos

A-

11.364,00

500.000,00 UF

AVE

500,00

5

1126

1

J.p Morgan & Co.

Estados Unidos

A

45.722,00

2.000.000,00 UF

AVE

503,13

4

1127

1

J.p Morgan & Co.

Estados Unidos

A

57.153,00

2.500.000,00 UF

AVE

503,14

4

1141

1

Barclays Bank Plc

Estados Unidos

A-

95.050,00

4.100.000,00 UF

AVE

510,25

4

1142

1

Hsbc Bank Usa N.a.

Estados Unidos

A+

63.282,00

2.730.000,00 UF

AVE

510,19

1143

1

Hsbc Bank Usa N.a.

Estados Unidos

A+

46.361,00

2.000.000,00 UF

AVE

510,19

1144

1

Barclays Bank Plc

Estados Unidos

A-

23.458,00

1.000.000,00 UF

AVE

516,30

1145

1

Barclays Bank Plc

Estados Unidos

A-

115.188,00

5.000.000,00 UF

AVE

507,05

1146

1

Barclays Bank Plc

Estados Unidos

A-

46.916,00

2.000.000,00 UF

AVE

516,30

4

1180

1

Deutsche Bank London

Inglaterra A

70.150,00

3.043.000,00 UF

AVE

508,50

7

1181

1

Deutsche Bank London

Inglaterra A

34.580,00

1.500.000,00 UF

AVE

508,50

4

AUDITED FINANCIAL STATEMENTS

4


Valuation Reporting Transaction Date

Contract Expiry Date

Market Value Of Target Asset As Of Rep. Date M$

Market Exchange Rate

Market Rate Long Position

Market Rate Short Position

PRESENT VALUE LONG POSITION M$

Present Value Short Position M$

Information Origin

Tasa Posicion Corta

Fair Value Of Swap Contract As Of Rep. Date M$

Tasa Posicion Larga

4.39%

5.5%

31-08-2011

09-06-2017

959.920

479,96

4.39%

5.5%

970.008

963.859

6.149 BLOOMBERG

4.39%

5.5%

31-08-2011

09-06-2017

812.092

479,96

4.39%

5.5%

820.626

815.425

5.201 BLOOMBERG

7.96%

8.75%

31-08-2011

06-11-2019

959.920

479,96

7.96%

8.75%

976.900

975.313

1.587 BLOOMBERG

4.48%

5.5%

02-09-2011

18-11-2020

479.960

479,96

4.48%

5.5%

480.609

482.862

(2.253) BLOOMBERG

4.91%

5.95%

08-09-2011

16-09-2020

719.940

479,96

4.91%

5.95%

730.878

730.786

92 BLOOMBERG

4.4%

5.375%

08-09-2011

30-03-2015

479.960

479,96

4.4%

5.375%

491.672

490.106

1.566 BLOOMBERG

8.57%

8%

09-09-2011

16-09-2020

1.439.880

479,96

8.57%

8%

1.470.937

1.461.571

9.366 BLOOMBERG

4.52%

5.375%

13-09-2011

03-06-2021

1.199.900

479,96

4.52%

5.375%

1.238.471

1.205.359

33.112 BLOOMBERG

5%

4.5%

20-09-2011

06-04-2015

1.439.880

479,96

5%

4.5%

1.544.004

1.454.744

89.260 BLOOMBERG

5.15%

5.95%

21-09-2011

03-06-2021

239.980

479,96

5.15%

5.95%

260.405

241.072

19.333 BLOOMBERG

4.29%

5.25%

27-09-2011

16-08-2021

959.920

479,96

4.29%

5.25%

1.059.909

978.284

81.625 BLOOMBERG

4.29%

5.25%

27-09-2011

16-08-2021

1.199.900

479,96

4.29%

5.25%

1.324.898

1.222.855

102.043 BLOOMBERG

4.41%

5.375%

28-09-2011

16-09-2020

1.967.836

479,96

4.41%

5.375%

2.196.400

1.997.481

198.919 BLOOMBERG

4.5%

5.5%

28-09-2011

18-11-2020

1.310.291

479,96

4.5%

5.5%

1.451.537

1.318.214

133.323 BLOOMBERG

4.5%

5.5%

28-09-2011

18-11-2020

959.920

479,96

4.5%

5.5%

1.063.397

965.725

97.672 BLOOMBERG

4.44%

5.375%

28-09-2011

16-09-2020

479.960

479,96

4.44%

5.375%

542.113

487.190

54.923 BLOOMBERG

4.5%

5.375%

28-09-2011

16-09-2020

2.399.800

479,96

4.5%

5.375%

2.662.539

2.435.952

226.587 BLOOMBERG

4.55%

5.5%

28-09-2011

18-11-2020

959.920

479,96

4.55%

5.5%

1.076.214

965.725

110.489 BLOOMBERG

7.72%

8.75%

18-10-2011

06-11-2019

1.460.518

479,96

7.72%

8.75%

1.623.574

1.483.938

139.636 BLOOMBERG

4.31%

5.5%

18-10-2011

18-11-2020

719.940

479,96

4.31%

5.5%

792.919

724.294

68.625 BLOOMBERG

AUDITED FINANCIAL STATEMENTS

133


Contract Objective

Transaction Number

Transaction Item

Transaction Counterparty

Transaction Characteristics Tipo Cambio Contrato

Currency Short Position

Currency Long Position

Nominal Short Position

Nominal Long Position

Risk Rating

Nationality

Name

HEDGING

134

1185

1

Morgan Stanley

Estados Unidos

BBB+

90.706,00

4.000.000,00 UF

AVE

501,00

6

1187

1

Morgan Stanley

Estados Unidos

BBB+

45.353,00

2.000.000,00 UF

AVE

500,84

4

1182

1

Deutsche Bank London

Inglaterra A

22.697,00

1.000.000,00 UF

AVE

501,30

5

1248

1

Morgan Stanley

Estados Unidos

BBB+

89.438,00

4.000.000,00 UF

AVE

495,00

1249

1

Morgan Stanley

Estados Unidos

BBB+

67.079,00

3.000.000,00 UF

AVE

495,00

1246

1

Banco Bbva Chile

Chile

AA-

56.453,00

2.500.000,00 UF

AVE

499,70

5

1247

1

Banco Bbva Chile

Chile

AA-

112.907,00

5.000.000,00 UF

AVE

499,70

5

1281

1

Hsbc Bank Usa N.a.

Estados Unidos

A+

61.312,00

2.000.000,00 UF

EUR

682,00

6

1282

1

Hsbc Bank Usa N.a.

Estados Unidos

A+

153.281,00

5.000.000,00 UF

EUR

682,00

6

1315

1

J.p Morgan & Co.

Estados Unidos

A

115.703,00

5.000.000,00 UF

AVE

515,00

4

1314

1

Banco De Chile

Chile

AAA

115.680,00

5.000.000,00 UF

AVE

514,90

4

1317

1

J.p Morgan & Co.

Estados Unidos

A

93.568,00

4.000.000,00 UF

AVE

520,90

6

1310

1

Barclays Bank Plc

Estados Unidos

A-

46.748,00

2.000.000,00 UF

AVE

520,50

4

1318

1

J.p Morgan & Co.

Estados Unidos

A

46.784,00

2.000.000,00 UF

AVE

520,90

4

1444

1

Banco Bbva Chile

Chile

AA-

21.346,00

1.000.000,00 UF

AVE

478,60

4,

1457

1

Banco Bbva Chile

Chile

AA-

42.691,00

2.000.000,00 UF

AVE

478,60

4,

1458

1

Banco Bbva Chile

Chile

AA-

42.691,00

2.000.000,00 UF

AVE

478,60

4,

1443

1

Banco Santander

Chile

AAA

21.183,00

1.000.000,00 UF

AVE

475,50

4,

1472

1

Banco Bbva Chile

Chile

AA-

121.638,00

5.746.234,00 UF

AVE

475,50

6,

1539

Jpmorgan 1 Chase Bank N.a

Chile

AAA

85.418,00

4.000.000,00 UF

AVE

481,50

4,

AUDITED FINANCIAL STATEMENTS


Valuation Reporting Transaction Date

Contract Expiry Date

Market Value Of Target Asset As Of Rep. Date M$

Market Exchange Rate

Market Rate Long Position

Market Rate Short Position

PRESENT VALUE LONG POSITION M$

Present Value Short Position M$

Information Origin

Tasa Posicion Corta

Fair Value Of Swap Contract As Of Rep. Date M$

Tasa Posicion Larga

6.82%

7.625%

26-10-2011

23-07-2019

1.919.840

479,96

6.82%

7.625%

2.135.498

1.987.169

148.329 BLOOMBERG

4.49%

5.5%

26-10-2011

18-11-2020

959.920

479,96

4.49%

5.5%

1.040.267

965.725

74.542 BLOOMBERG

5.06%

6%

18-10-2011

18-11-2020

479.960

479,96

5.06%

6%

529.732

492.746

36.986 BLOOMBERG

7.03%

7.625%

04-11-2011

10-11-2021

1.919.840

479,96

7.03%

7.625%

2.055.657

1.936.490

119.167 BLOOMBERG

7.03%

7.625%

04-11-2011

10-11-2021

1.439.880

479,96

7.03%

7.625%

1.541.743

1.452.368

89.375 BLOOMBERG

5.06%

6.125%

07-11-2011

29-07-2019

1.199.900

479,96

5.06%

6.125%

1.329.017

1.240.461

88.556 BLOOMBERG

5.06%

6.125%

07-11-2011

29-07-2019

2.399.800

479,96

5.06%

6.125%

2.658.035

2.480.921

177.114 BLOOMBERG

6.29%

6.375%

09-12-2011

05-08-2016

1.268.900

634,45

6.29%

6.375%

1.431.342

1.297.291

134.051 BLOOMBERG

6.29%

6.375%

09-12-2011

05-08-2016

3.172.250

634,45

6.29%

6.375%

3.578.354

3.243.227

335.127 BLOOMBERG

4.93%

6.125%

13-12-2011

15-01-2017

2.399.800

479,96

4.93%

6.125%

2.699.776

2.453.837

245.939 BLOOMBERG

4.81%

5%

13-12-2011

17-01-2017

2.399.800

479,96

4.81%

5%

2.698.988

2.453.837

245.151 BLOOMBERG

6.79%

7.625%

19-12-2011

10-11-2021

1.919.840

479,96

6.79%

7.625%

2.149.988

1.936.490

213.498 BLOOMBERG

4.79%

5%

19-12-2011

29-07-2019

959.920

479,96

4.79%

5%

1.099.222

992.369

106.853 BLOOMBERG

4.93%

6.125%

19-12-2011

10-11-2021

959.920

479,96

4.93%

6.125%

1.074.994

968.245

106.749 BLOOMBERG

,350%

5,375%

03-02-2012

02-02-2022

479.960

479,96

4,350%

5,375%

495.632

490.267

5.365 BLOOMBERG

,350%

5,375%

03-02-2012

02-02-2022

959.920

479,96

4,350%

5,375%

991.263

980.534

10.729 BLOOMBERG

,350%

5,375%

03-02-2012

02-02-2022

959.920

479,96

4,350%

5,375%

991.263

980.534

10.729 BLOOMBERG

,300%

5,375%

09-02-2012

02-02-2022

479.960

479,96

4,300%

5,375%

491.740

490.267

1.473 BLOOMBERG

,950%

7,373%

29-02-2012

15-06-2022

2.757.962

479,96

6,950%

7,373%

2.633.788

2.618.239

15.549 BLOOMBERG

,950%

4,625%

03-04-2012

13-02-2017

1.919.840

479,96

4,950%

4,625%

1.986.707

1.952.408

34.299 BLOOMBERG

AUDITED FINANCIAL STATEMENTS

135


Contract Objective

Transaction Number

Transaction Item

Transaction Counterparty

Transaction Characteristics Tipo Cambio Contrato

Currency Short Position

Currency Long Position

Nominal Short Position

Nominal Long Position

Risk Rating

Nationality

Name

HEDGING

136

1540

1

Deutsche Bank London

Inglaterra A

1638

1

J.p Morgan & Co.

Estados Unidos

1639

1

J.p Morgan & Co.

1671

1

1672

1

1673

21.446,00

1.000.000,00 UF

AVE

483,90

4,9

A

110.928,00

5.000.000,00 UF

AVE

502,00

4,8

Estados Unidos

A

22.186,00

1.000.000,00 UF

AVE

502,00

4,8

Banco Bbva Chile

Chile

AA-

21.843,00

1.000.000,00 UF

AVE

494,20

4,9

Banco Santander

Chile

AAA

10.874,00

500.000,00 UF

AVE

492,00

4,9

1 Banco Santander

Chile

AAA

43.677,00

2.000.000,00 UF

AVE

494,00

5,1

1682

1 Barclays Bank Plc

Estados Unidos

A-

66.162,00

2.500.000,00 UF

EUR

597,90

5,7

1696

1 Deutsche Bank London

Inglaterra A

85.896,00

4.000.000,00 UF

AVE

485,10

4,6

1694

1 Banco Santander

Chile

AAA

64.282,00

3.000.000,00 UF

AVE

484,00

6,9

1695

1 Barclays Bank Plc

Estados Unidos

A-

53.332,00

2.488.000,00 UF

AVE

484,00

6,9

1721

1 Barclays Bank Plc

Estados Unidos

A-

53.359,00

2.000.000,00 UF

EUR

601,88

6,9

1722

1 Barclays Bank Plc

Estados Unidos

A-

42.656,00

2.000.000,00 UF

AVE

481,15

4,6

1724

1 Barclays Bank Plc

Estados Unidos

A-

53.535,00

2.000.000,00 UF

EUR

603,86

7,0

1725

1 Barclays Bank Plc

Estados Unidos

A-

31.919,00

1.500.000,00 UF

AVE

480,05

4,2

1742

1 Banco Santander

Chile

AAA

63.162,00

3.000.000,00 UF

AVE

475,00

5,9

1745

1 Banco Santander

Chile

AAA

42.108,00

2.000.000,00 UF

AVE

475,00

6,5

1744

1 Banco Santander

Chile

AAA

31.581,00

1.500.000,00 UF

AVE

475,00

5,9

1743

1 Banco Santander

Chile

AAA

21.054,00

1.000.000,00 UF

AVE

475,00

5,9

1749

1 Deutsche Bank London

Inglaterra A

42.034,00

2.000.000,00 UF

AVE

474,20

6,5

1750

1 Deutsche Bank London

Inglaterra A

46.868,00

2.230.000,00 UF

AVE

474,20

6,2

AUDITED FINANCIAL STATEMENTS


Valuation Reporting Transaction Date

Contract Expiry Date

Market Value Of Target Asset As Of Rep. Date M$

Market Exchange Rate

Market Rate Long Position

Market Rate Short Position

PRESENT VALUE LONG POSITION M$

Present Value Short Position M$

Information Origin

Tasa Posicion Corta

Fair Value Of Swap Contract As Of Rep. Date M$

Tasa Posicion Larga

910%

4,625%

12-04-2012

13-02-2017

479.960

479,96

4,910%

4,625%

498.714

488.102

10.612 BLOOMBERG

800%

5,875%

29-06-2012

09-07-2022

2.399.800

479,96

4,800%

5,875%

2.589.337

2.467.041

122.296 BLOOMBERG

800%

5,875%

29-06-2012

09-07-2022

479.960

479,96

4,800%

5,875%

517.867

493.408

24.459 BLOOMBERG

970%

5,875%

10-07-2012

11-07-2022

479.960

479,96

4,970%

5,875%

510.420

493.408

17.012 BLOOMBERG

970%

5,875%

11-07-2012

11-07-2022

239.980

479,96

4,970%

5,875%

254.057

246.704

7.353 BLOOMBERG

190%

4,875%

12-07-2012

11-07-2022

959.920

479,96

5,190%

4,875%

1.020.459

986.816

33.643 BLOOMBERG

780%

6,750%

23-07-2012

19-02-2019

1.586.125

634,45

5,780%

6,750%

1.579.335

1.653.275

(73.940) BLOOMBERG

650%

4,250%

26-07-2012

18-06-2019

1.919.840

479,96

4,650%

4,250%

1.968.626

1.926.934

41.692 BLOOMBERG

900%

7,175%

27-07-2012

30-09-2022

1.439.880

479,96

6,900%

7,175%

1.505.821

1.484.425

21.396 BLOOMBERG

960%

7,175%

27-07-2012

18-06-2019

1.194.140

479,96

6,960%

7,175%

1.222.206

1.198.553

23.653 BLOOMBERG

970%

6,999%

30-08-2012

11-10-2018

1.268.900

634,45

6,970%

6,999%

1.226.993

1.276.702

(49.709) BLOOMBERG

685%

4,250%

30-08-2012

04-06-2018

959.920

479,96

4,685%

4,250%

980.072

965.652

14.420 BLOOMBERG

040%

6,999%

31-08-2012

11-10-2018

1.268.900

634,45

7,040%

6,999%

1.231.097

1.276.702

(45.605) BLOOMBERG

280%

5,125%

31-08-2012

04-06-2018

719.940

479,96

4,280%

5,125%

733.452

724.239

9.213 BLOOMBERG

930%

6,750%

10-09-2012

12-09-2022

1.439.880

479,96

5,930%

6,750%

1.459.481

1.461.176

(1.695) BLOOMBERG

500%

7,875%

10-09-2012

30-09-2022

959.920

479,96

6,500%

7,875%

987.173

989.617

(2.444) BLOOMBERG

930%

6,750%

10-09-2012

30-09-2022

719.940

479,96

5,930%

6,750%

740.380

742.213

(1.833) BLOOMBERG

930%

6,750%

10-09-2012

30-09-2022

479.960

479,96

5,930%

6,750%

493.587

494.808

(1.221) BLOOMBERG

500%

7,875%

11-09-2012

01-02-2027

959.920

479,96

6,500%

7,875%

986.570

993.950

(7.380) BLOOMBERG

200%

6,750%

11-09-2012

01-02-2027

1.070.311

479,96

6,200%

6,750%

1.100.025

1.108.254

(8.229) BLOOMBERG

AUDITED FINANCIAL STATEMENTS

137


Contract Objective

Transaction Number

Transaction Item

Transaction Counterparty

Transaction Characteristics Tipo Cambio Contrato

Currency Short Position

Currency Long Position

Nominal Short Position

Nominal Long Position

Risk Rating

Nationality

Name

HEDGING

138

1763

1 Banco Santander

Chile

1764

1 Deutsche Bank London

1776

10.431,00

500.000,00 UF

AVE

471,15

5,3

Inglaterra A

53.779,00

2.000.000,00 UF

EUR

607,34

5,3

1 Banco Santander

Chile

AAA

78.847,00

78.847,00 UF

UF

22.622.040,00

4,8

1778

1 Banco Santander

Chile

AAA

218.443,00

218.443,00 UF

UF

22.645.310,00

4,8

1777

1 Banco Santander

Chile

AAA

31.862,00

1.500.000,00 UF

AVE

482.000,00

5,5

1788

1 Banco Santander

Chile

AAA

105.258,00

5.000.000,00 UF

AVE

479.300,00

5,5

1790

1 Banco Santander

Chile

AAA

42.127,00

2.000.000,00 UF

AVE

479.700,00

3,9

1791

1 Banco Santander

Chile

AAA

84.255,00

4.000.000,00 UF

AVE

479.700,00

3,9

1801

1 Banco Santander

Chile

AAA

42.485,00

2.000.000,00 UF

AVE

484.500,00

5,3

1802

1 Ubs

Estados Unidos

A

125.923,00

6.000.000,00 UF

AVE

479.250,00

4,2

1812

1 Banco Santander

Chile

AAA

209.516,00

10.000.000,00 UF

AVE

479.300,00

4,6

1815

1 Banco Santander

Chile

AAA

209.516,00

10.000.000,00 UF

AVE

479.300,00

4,6

1814

1 Banco Santander

Chile

AAA

209.516,00

10.000.000,00 UF

AVE

479.300,00

4,6

1813

1 Banco Santander

Chile

AAA

209.516,00

10.000.000,00 UF

AVE

479.300,00

4,6

1824

1 Ubs

Estados Unidos

A

62.990,00

3.000.000,00 UF

AVE

481,00

5,0

INVESTMENT TOTAL

NOTE 8.2.9. CREDIT DEFAULT SWAPS (CDS) * As of December 31, 2012, the Company has no Credit Default Swaps.

AUDITED FINANCIAL STATEMENTS

AAA


Valuation Reporting Transaction Date

Contract Expiry Date

Market Value Of Target Asset As Of Rep. Date M$

Market Exchange Rate

Market Rate Long Position

Market Rate Short Position

PRESENT VALUE LONG POSITION M$

Present Value Short Position M$

Information Origin

Tasa Posicion Corta 4,875%

26-09-2012

11-07-2022

239.980

479,96

5,350%

4,875%

244.272

246.704

(2.432) BLOOMBERG

350%

4,875%

27-09-2012

19-02-2019

1.268.900

634,45

5,350%

4,875%

1.285.474

1.322.620

(37.146) BLOOMBERG

850%

14.908,20

12-10-2012

22-06-2026

1.800.925

22.840,75

4,850%

14.908,20

1.814.901

1.800.771

14.130 BLOOMBERG

850%

14.908,20

16-10-2012

22-06-2026

4.989.402

22.840,75

4,850%

14.908,20

5.028.398

4.989.357

39.041 BLOOMBERG

500%

5,500%

24-10-2012

20-01-2021

719.940

479,96

5,500%

5,500%

745.268

737.278

7.990 BLOOMBERG

540%

5,130%

06-11-2012

07-10-2019

2.399.800

479,96

5,540%

5,130%

2.434.376

2.427.013

7.363 BLOOMBERG

990%

4,130%

07-11-2012

09-11-2022

959.920

479,96

3,990%

4,130%

966.233

964.167

2.066 BLOOMBERG

990%

4,130%

07-11-2012

09-11-2022

1.919.840

479,96

3,990%

4,130%

1.932.466

1.928.335

4.131 BLOOMBERG

370%

5,380%

14-11-2012

02-02-2022

959.920

479,96

5,370%

5,380%

991.222

980.534

10.688 BLOOMBERG

220%

4,500%

20-11-2012

21-11-2022

2.879.760

479,96

4,220%

4,500%

2.885.776

2.890.762

(4.986) BLOOMBERG

675%

4,880%

29-11-2012

20-01-2023

4.799.600

479,96

4,675%

4,880%

4.794.884

4.810.317

(15.433) BLOOMBERG

675%

4,880%

29-11-2012

20-01-2023

4.799.600

479,96

4,675%

4,880%

4.794.884

4.810.317

(15.433) BLOOMBERG

675%

4,880%

29-11-2012

20-01-2023

4.799.600

479,96

4,675%

4,880%

4.794.884

4.810.317

(15.433) BLOOMBERG

675%

4,880%

29-11-2012

20-01-2023

4.799.600

479,96

4,675%

4,880%

4.794.884

4.810.317

(15.433) BLOOMBERG

090%

5,130%

06-12-2012

06-12-2022

1.439.880

479,96

5,090%

5,130%

1.437.605

1.438.791

(1.186) BLOOMBERG

186.541.885

176.427.423

173.935.926

Fair Value Of Swap Contract As Of Rep. Date M$

Tasa Posicion Larga

350%

10.114.462

AUDITED FINANCIAL STATEMENTS

139


NOTE 9. FINANCIAL ASSETS AT AMORTIZED COST

N.9.1. INVESTMENTS AT AMORTIZED COST Valor Razonable

Tasa Efectiva Promedio

Costo Amortizado Nto.

Deterioro

Costo Amortizado 37.847.748

37.847.748

53.095.823

4,08

599.054.518

599.054.518

571.311.203

4,55

521.317.116

537.064.580

4,47

41.786.015

21.912.800

5,99

DOMESTIC INVESTMENTS FIXED INCOME Government instruments Instruments issued by the financial system

140

Debt or credit instruments

521.317.116

Domestic debt instruments traded abroad

41.786.015

-

Mortgage loan notes

49.686.943

49.341.663

50.448.773

4,79

Syndicated loans

20.990.389

20.990.389

13.894.948

4,27

11.532.417

11.532.417

12.979.477

Others

345.280

FOREIGN INVESTMENTS

-

FIXED INCOME

-

Securities Issued by Foreign Governments and Central Banks Securities Issued by Foreign Banks and Financial Institutions Securities Issued by Foreign Companies

66.289.306

-

66.289.306

67.059.827

5,85 5,05

102.753.428

203.375

102.550.053

103.957.833

1.451.257.880

548.655

1.450.709.225

1.431.725.264

Others Total

IMPAIRMENT EVOLUTION Impairment Evolution Chart Initial balance as of 01/01 (-) Decrease and increase in impairment provision (-/+)

Total 644.091 (116.954)

Investment write-off (+) Variation due to exchange rate effect (-/+) Others Total

AUDITED FINANCIAL STATEMENTS

21.518 548.655


N.9.2. TRANSACTIONS FOR COMMITMENTS ON FINANCIAL INSTRUMENTS

Agreement Value as of Closing Date (16)

Market Value of Target Asset as of Reporting Date (15)

Agreement Accrued Interest (14)

Contract Expiry Date (13)

Transaction Date (12)

Agreement Interest Rate (11)

1

Currency (10)

1

N

Agreed Upon Value (9)

2

Initial Value (8)

1

Nominal (7)

1

Valuation Information

Target Asset Series (6)

Purchase Agreement

Transaction Counterparties

Target Asset (5)

Transaction Item (2)

Nationality (4)

Transaction Number (1)

Name (3)

Type of Transaction

TOTAL

Purchase Under Resale Agreement

1

1

2

1

N

1

TOTAL

Sale Under Repurchase Agreement

12706

Banco Bilbao Vizcaya Ar.

CL

BCU0300816

30

10000

233.038

233.876

$

0,49

41254

41276

761

234.168

233.800

12706

Banco Bilbao Vizcaya Ar.

CL

BCU0300816

30

70000

1.631.269

1.637.131

$

0,49

41254

41276

5329

1.638.690

1.636.598

12706

Banco Bilbao Vizcaya Ar.

CL

BCU0300517

30

20000

466.183

467.858

$

0,49

41254

41276

1523

470.577

467.705

12706

Banco Bilbao Vizcaya Ar.

CL

BCU0300517

30

23000

536.110

538.036

$

0,49

41254

41276

1751

528.177

537.861

12706

Banco Bilbao Vizcaya Ar.

CL

BCU0300517

30

31000

722.583

725.179

$

0,49

41254

41276

2360

712.033

724.943

12706

Banco Bilbao Vizcaya Ar.

CL

BTU0451023

45

10000

272.486

273.465

$

0,49

41254

41276

890

240.474

273.376

12706

Banco Bilbao Vizcaya Ar.

CL

BTU0451023

45

20000

544.972

546.930

$

0,49

41254

41276

1780

468.729

546.752

12706

Banco Bilbao Vizcaya Ar.

CL

BTU0451023

45

60000

1.634.915

1.640.790

$

0,49

41254

41276

5341

1.414.349

1.640.256

12706

Banco Bilbao Vizcaya Ar.

CL

BTU0451023

45

110000

2.997.345

3.008.115

$

0,49

41254

41276

9791

2.571.670

3.007.136

12706

Banco Bilbao Vizcaya Ar.

CL

BTU0450824

45

30000

827.197

830.169

$

0,49

41254

41276

2702

708.221

829.899

12706

Banco Bilbao Vizcaya Ar.

CL

BTU0450824

45

50000

1.378.662

1.383.616

$

0,49

41254

41276

4504

1.181.416

1.383.165

12706

Banco Bilbao Vizcaya Ar.

CL

BCU0300528

30

100000

2.392.986

2.401.585

$

0,49

41254

41276

7817

2.105.226

2.400.803

12706

Banco Bilbao Vizcaya Ar.

CL

BTU0300329

30

120000

2.890.058

2.900.442

$

0,49

41254

41276

9441

2.523.087

2.899.498

12706

BANCO BILBAO VIZCAYA AR.

CL

BFFCC-H

H

20000

569.533

571.579

$

0,49

41254

41276

1860

458.425

571.393

12706

BANCO BILBAO VIZCAYA AR.

CL

BFFCC-H

H

20000

569.533

571.579

$

0,49

41254

41276

1860

458.425

571.393

12706

BANCO BILBAO VIZCAYA AR.

CL

BFFCC-H

H

20000

569.533

571.579

$

0,49

41254

41276

1860

458.425

571.393

AUDITED FINANCIAL STATEMENTS

141


Valuation Information

41254

41276

1940

441.796

595.968

12706

BANCO BILBAO VIZCAYA AR.

CL

BFFCC-I

I

40000

1.188.055

1.192.324

$

0,49

41254

41276

3881

963.555

1.191.936

12706

BANCO BILBAO VIZCAYA AR.

CL

BMETR-D

D

100000

2.693.839

2.703.519

$

0,49

41254

41276

8800

2.403.866

2.702.639

12707

BANCO BILBAO VIZCAYA AR.

CL

BMETR-F

F

160000

4.379.972

4.395.713

$

0,49

41254

41276

14308

3.919.357

4.394.283

28.800.895

28.904.384

25.275.940

28.894.976

TOTAL

NOTE 10. LOANS 142

Amortized Cost

Impairment

Policyholder Advance

1.081.493

Loans Granted

6.398.905

TOTAL LOANS

7.480.398

Net Amortized Cost -

Non-existent

149.104

6.249.801

Non-existent

149.104

7.331.294

Impairment Evolution (1) Impairment Evolution Chart

Total

Initial balance as of 01/01 (-)

(195.598)

Decrease and increase in impairment provision (+/-)

46.494

Loan write-off (+)

-

Variation due to exchange rate effect (+/-)

-

Others

-

TOTAL IMPAIRMENT

AUDITED FINANCIAL STATEMENTS

Fair Value

1.081.493

(149.104)

Agreement Value as of Closing Date (16)

0,49

Market Value of Target Asset as of Reporting Date (15)

$

Agreement Accrued Interest (14)

596.162

Contract Expiry Date (13)

594.028

Transaction Date (12)

20000

Agreed Upon Value (9)

I

Initial Value (8)

BFFCC-I

Nominal (7)

CL

Target Asset Series (6)

BANCO BILBAO VIZCAYA AR.

Target Asset (5)

12706

Nationality (4)

Transaction Counterparties Name (3)

Transaction Item (2)

Agreement Interest Rate (11)

Transaction Number (1)

Currency (10)

Type of Transaction


NOTE 11. INVESTMENTS FROM SIA INSURANCES

Investments backing up fund value reserves for insurances where the company assumes the policy value risk

investments backing up fund value reserves for insurances where insured parties assume the policy value risk

Total Investments On Account Of The Insured Party

Assets At Cost

Assets At Fair Value

Total assets at cost

Deterioro

Cost

Total Assets At Fair Value

Level 3

Total Investments Managed By The Company

Level 2

Total Assets At Cost

Level 1

Total Investments Managed By The Company

Impairment

Cost

Total Assets At Fair Value

Assets At Cost

Assets At Fair Value

Level 3

Level 2

Level 1 DOMESTIC INVESTMENTS

Total Investments From Sia Insurances

-

Fixed Income

-

Government instruments

37.940.030

Instruments issued by the financial system

23.100.228

37.940.030

37.940.030 23.100.228

23.100.228

Debt or credit instruments

258.966

39.231

219.735

219.735

Domestic company instruments traded abroad

-

-

Mortgage loan notes

-

-

Others

-

-

Variable Income

-

-

Shares of publicly traded companies

-

-

Shares of closely held companies

-

-

Investment funds

-

-

Mutual funds

-

-

Others

-

-

-

Other Domestic Investments

-

AUDITED FINANCIAL STATEMENTS

143


NOTE 11. INVESTMENTS FROM SIA INSURANCES Investments backing up fund value reserves for insurances where the company assumes the policy value risk

Total Investments From Sia Insurances Total Investments On Account Of The Insured Party

Assets At Cost

Assets At Fair Value

Total assets at cost

Deterioro

Cost

Total Assets At Fair Value

Level 3

Level 2

Total Investments Managed By The Company

Level 1

Total Investments Managed By The Company

Total Assets At Cost

Impairment

Cost

Total Assets At Fair Value

Assets At Cost

Assets At Fair Value

Level 3

Level 2

Level 1

144

investments backing up fund value reserves for insurances where insured parties assume the policy value risk

FOREIGN INVESTMENTS

-

-

Fixed Income

-

-

Securities issued by Foreign Governments and Central Banks

-

-

Securities issued by Foreign Banks and Financial Institutions

-

Securities issued by Foreign Companies

-

Others

25.875.558

25.875.558

-

-

25.875.558

Fixed Income

-

-

Shares of Foreign Corporations

-

-

-

-

-

-

Foreign mutual fund installments

-

Installments of mutual funds set up in the country with assets invested in foreign securities Others Other Foreign Investments Banks TOTAL

AUDITED FINANCIAL STATEMENTS

25.875.558

-

-

25.875.558

61.299.224

39.231

61.259.993

385.996 -

87.521.547


NOTE 12. INTERESTS IN GROUP ENTITIES

NOTE 12.1. INTERESTS IN SUBSIDIARY COMPANIES (AFFILIATES) *As of December 31, 2012, the Company holds no Interests in Subsidiary Companies. NOTE 12.2. INTERESTS IN ASSOCIATED COMPANIES * As of December 31, 2012, the Company holds no Interests in Associated Companies.

NOTE 13. OTHER NOTES TO FINANCIAL INVESTMENTS NOTE 13.1. INVESTMENT PORTFOLIO MOVEMENTS

145

Fair Value INITIAL BALANCE Additions Sales Maturities Accrued interest

Amortized Cost 120.549.294

1.231.533.446

186.914.480

662.814.451

(186.466.871)

(305.652.752)

(2.449.121)

(213.520.039)

(12.830.153)

60.041.142

Pre-payments

0

(3.105.333)

Dividends

0

0

Ballot

0

(8.873.692)

Fair Value of Profit/Loss recognized in:

0

0

13.070.372

6.388.581

Income Shareholders’ Equity Impairment

(15.901)

0

0

205.620

Exchange Rate Difference

427.808

0

Profit or Loss per adjustable unit

122.319

20.877.801

0

0

Reclassification (1) Others (2) FINAL BALANCE

-

0

119.322.227

1.450.709.225

AUDITED FINANCIAL STATEMENTS


NOTE 13.2. GUARANTEES As of December 31, 2012, the Company has no Guarantees on Liabilities or Contingent Liabilities.

COMPAÑÍA DE SEGUROS CORP VIDA S.A. DIC-12

NOTE 13.3. FINANCIAL INSTRUMENTS COMPRISED OF EMBEDDED DERIVATIVES As of December 31, 2012 the Company has no Composite Financial Instruments.

146

NOTE 13.5. INVESTMENT PORTFOLIO REPORTING Reporting shall be made according to the instructions contained in General Regulation NCG No. 159. (1) Amount per type of investment reported in the Statement of Financial Position for the relevant reporting period. (2) Amount per type of investment reported in the Statement of Financial Position for the relevant reporting period, corresponding to the detail of the SIA Insurance Investment account. This field shall be completed only by the manager of the second group presenting insurances with a single investment account. (3) Total investments, corresponding to the sum of columns (1) and (2). The total in column No. (6)+(10)+(13)+(16) must correspond to the total in column No. (3).

AUDITED FINANCIAL STATEMENTS

Government Bonds Banking System Instruments

Total Investments (1) + (2) (3)

Total (1)

(*) This corresponds to the reinvestment IRR as a result of which the Company’s net present value of asset and liability flows is equal to zero.

Type of Investment (Titles No. 1 and 2 Of Art. 21 Of Decree Law Dfl No. 251)

Fair Value (1)

Reinvestment Rate Applying 100% of Tables 1.6859%

FECU Amount as of 31.12.2012

Amortized Cost (1)

NOTE 13.4. REINVESTMENT RATE-AAR-NCG NO. 209

Fecu Account Amount Per Type Of Inst. (Sia Insurances) (2)

37.847.748

37.847.748

37.940.030

75.787.779

599.054.518

1.073.989

600.128.507

23.100.228

623.228.735

584.093.520

3.225.922

587.319.442

219.735

587.539.177

49.341.663

-

49.341.663

-

49.341.663

Corporate Bonds

Mortgage Loan Notes Shares of Publicly Traded Companies

-

50.045.437

50.045.437

-

50.045.437

Shares of Closely Held Companies

-

2.644.648

2.644.648

-

2.644.648

-

53.131.573

53.131.573

-

53.131.573

-

4.249.610

4.249.610

-

4.249.610

114.371.179

1.384.708.628

61.259.993

1.445.968.622

Investment Funds Mutual Funds Foreign Investment Funds Foreign Shares Bank Syndicated Loans

Total

1.270.337.449


Investments Amenable to Custody M$

% of Invest. Amenable to Custody (4)/(3) (5)

Investment Custody Detail (Column No. 3)

(4)

Securities Deposit and Custody Firm

Bank

Other

Company

0,44%

623.228.735

100,00%

623.228.735

100,00%

100,00%

Central Securities

0

0,00%

512.757.445

87,27%

512.757.445

87,27%

100,00%

Central Securities

41.786.015

7,11%

0

0,00%

47.024.046

95,30%

50.045.437

100,00%

0

0,00%

22.727.149

42,78%

17.098.479

32,18%

75,23%

4.249.610

100,00%

4.249.610

100,00%

100,00%

1.286.184.111

88,95%

1.280.555.441

88,56%

99,56%

100,00%

100,00%

CorpBanca

Central Securities

IPS y Dipreca, Capredena

BBH

Iron Montain Chile S.A

0,00%

%

334.679

(17)

Central Securities

Amount (16)

% (14)

100,00%

Name of Custodian (15)

Amount (13)

96,55%

2,04%

Name of Custodian Bk (12)

Name of Securities Custody Firm (9)

73.175.735

12.005.328

% c/r Total Inv.

% c/r Inv. Amen. To Cust.

96,55%

50.045.437

Amount (10)

% c/r Total Inv. (7)

Amount (6)

73.175.735

2.277.365

3,00%

0

0,00%

20.990.389

3,57%

2.317.617

5,02%

0

0,00%

1.608.917

60,84%

Emisor

1.035.731

39,16%

Central Securities

0

0,00%

Emisor

36.033.094

67,82%

Central Securities

0

0,00%

Emisor

90.753.657

6,28%

12.005.328

1,03%

0,00%

62.654.196

4,13%

AUDITED FINANCIAL STATEMENTS

147


(4) Amount in M$ of total investments per type of instrument that may be safekept by a Securities Deposit and Custody Firm (Law 18,876). (5) % share of investments under custody of total investments reported in the Statement of Financial Position.

148

(6) Amount in M$ of investments that are safekept at Securities Deposit and Custody Firms, only as Depositors. (7) % share of investments safekept by Securities Deposit and Custody Firms with respect to total investments (Column No. 3). (8) % share of investments safekept by Securities Deposit and Custody Firms with respect to total investments under custody (Column No. 4). (9) The name of the Securities Deposit and Custody Firm must be indicated. (10)Amount in M$ of investments under custody at Banks or Financial Institutions. (11) % share of investments in Banks with respect to total investments (Column No. 3). (12) The name of the Bank or Financial Institution acting as Custodian for the insurance company’s investments must be indicated. (13)Amount in M$ of investments under custody at other Custodians different from the Securities Deposit and Custody Firm or Banks. This field must include Chilean Company or Chilean Government investments issued abroad.

AUDITED FINANCIAL STATEMENTS

(14) % share of investments at other Custodians with respect to total investments (Column No. 3). (15) The name of the Custodian must be indicated. (16) Amount in M$ of investments safekept under custody by the insurance company itself. (17)% share of investments safekept at the company with respect to total investments (Column No. 3). NOTE 13.6. INVESTMENT IN FUND INSTALLMENTS ON ACCOUNT OF INSURED PARTIES-NCG No. 176 * As of December 31, 2012, the Company has no Investments in Fund installments on account of insured parties.


NOTE 14. REAL ESTATE INVESTMENTS

NOTE 14.1. INVESTMENT PROPERTIES Items

Land

Buildings

Others

Total

Initial balance as of 01.01.2012

18.277.142

116.627.447

134.904.589

Plus: Additions, improvements, and transfers

19.853.023

10.950.233

30.803.256

Less: Sales, decreases, and transfers

(4.921.018)

(2.379.893)

(7.300.911)

Less: Depreciation for the period

-

(3.955.667)

(3.955.667)

2.685.072

3.071.184

123.927.192

157.522.451

Adjustments for revaluation

386.112

Others

-

Accounting Value of Investment Properties

33.595.259

-

0

-

Fair Value as of Closing Date (1)

184.395.480

Impairment (Provision)

(88.186) 157.434.265

Final Value as of Closing Date

(1) The value of the lowest appraisal must be indicated.

Investment Properties

Land

Final Value domestic real estate

Buildings 33.595.259

Others

149

Total

123.839.006

157.434.265

123.839.006

157.434.265

Final Value foreign real estate Final Value as of Closing Date

32.877.897

-

NOTE 14.2. LEASING ACCOUNTS RECEIVABLE

0

*1-5

995.688

166.235

829.454

*5 y mas

173.785.058

59.360.815

114.424.244

Total

174.780.746

59.527.050

115.253.698

Final Leasing Value

0

0

0

0

0

829.454

1.593.381

1.870.973

829.454

(75.991)

114.348.253

133.040.291

166.935.697

114.348.253

(75.991)

115.177.707

134.633.672

168.806.670

115.177.707

Final Leasing Value

0

Appraisal Value

Cost Value

0

Cost Value Present Value

*0-1

Receivable Interest

Contract Value Nominal Value

Remaining Years of Leasing Contract

AUDITED FINANCIAL STATEMENTS


NOTE 14.3. PROPERTIES FOR OWN USE Items

Land

Buildings

Others

Initial balance as of 01.01.2012

-

-

Plus: Additions, improvements, and transfers

-

-

Less: Sales, decreases, and transfers

-

-

Less: Depreciation for the period

-

-

Adjustments for revaluation

-

-

Others

-

-

48.632 -

Accounting Value of Properties, Plant, and Equipment for Own Use

Fair Value as of Closing Date (1)

Impairment (Provision)

150

TOTAL 48.632

Final Value as of Closing Date

(2.502)

(2.502)

987

987 47.117

54.196

-

47.117

(1) This corresponds to the amount of the lowest appraisal.

NOTE 15. NON-CURRENT ASSETS HELD FOR SALE

* As of December 31, 2012, the Company has no Non-Current Assets Held for Sale.

AUDITED FINANCIAL STATEMENTS


NOTE 16. INSURED PARTY ACCOUNTS RECEIVABLE

NOTE 16.1. INSURED PARTY DUE BALANCES Item

Related Company Balance

Saldos con terceros

TOTAL

3.192.171

3.192.171

Insured party accounts receivable (+)

-

Coinsurance accounts receivable (L铆der)

-

Impairment (-)

-

(690.160)

(690.160)

Total (=)

-

2.502.011

2.502.011

-

-

Current Assets (Short Term)

2.502.011

Non-Current Assets (Long Term)

-

NOTE 16.2. PREMIUM DEBTORS BY MATURITY DATE Balance Maturities

Documented premiums

Insurance premiums Dis. and Surv. DL3500

151 Coinsurance Accounts Receivable (Non-Lider)

Insured party premiums

With specification on payment mode

Otros Deudores

Unspecified Payment Mode

Payment Plan

Payment Plan

Payment Plan

Payment Plan

PAC

PAT

CUP

Company

-

1.490

120.111

-

3.070.570

-

-

851

-

-

419.879

-

215

-

-

268.933

-

198

-

-

536.103

-

-

1.845.655

-

-

688.896

-

REVOCABLE INSURANCES 1. Maturities prior to Financ. Statement date previous months October November December 2. Provisi贸n -Payments due Voluntary 3. Adjustments for nonidentification

226 -

1.264 1.264

-

120.111 -

688.896

-

AUDITED FINANCIAL STATEMENTS


Balance Maturities

Documented premiums

Insurance premiums Dis. and Surv. DL3500

Coinsurance Accounts Receivable (Non-Lider)

Insured party premiums

With specification on payment mode

152

5. Maturities subsequent to Financ. Statement date January February March subsequent months 6. Provision -Payments due -Voluntary 7. Subtotal ( 5-6 ) NONREVOCABLE INSURANCES 8. Maturities prior to 9. Maturities subsequent to Financ. Statement date 10. Impairment 11. Subtotal ( 8+9-10 ) 12. Total Fecu ( 4+7+11 ) 13. Nonenforceable credit row 4 14. Nondue credit revocable insurances ( 7+13 )

Otros Deudores

Unspecified Payment Mode

Payment Plan

Payment Plan

Payment Plan

Payment Plan

PAC

PAT

CUP

Company

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2.381.674

-

226

120.111

TOTAL FECU

-

2.502.011

-

-

-

-

-

-

Domestic / Curr.

-

-

-

-

-

-

2.502.011

-

-

-

-

-

-

Foreign / Curr. 0

NOTE 16.3. EVOLUTION OF INSURED PARTY IMPAIRMENT Impairment Evolution Chart (1) Initial balance as of 01/01 (-) Decrease and increase in impairment provision (-/+)

Insurance Accounts Receivable

Coinsurance Accounts Receivable

TOTAL

2.390.112

2.390.112

(1.699.952)

(1.699.952)

Recovery from insurance accounts receivable (+) Write-offs for accounts receivable (+) Variation due to exchange rate effect (-/+) Total(=)

AUDITED FINANCIAL STATEMENTS

690.160

-

690.160


NOTE 17. DEBTORS FROM REINSURANCE TRANSACTIONS NOTE 17.1. DUE BALANCES FROM REINSURANCES Item

Related Company Balances

Third-Party Balances

TOTAL M$

Premiums receivable from reinsured parties (+)

-

Claims receivable from reinsurers

-

Assets from non-proportional reinsurances

-

Other debts receivable from reinsurances (+)

-

1.034

Impairment (-)

-

0

Total (=)

-

47.079

Assets from non-proportional revocable reinsurances

-

-

Assets from non-proportional nonrevocable reinsurances

-

-

Total Assets from Non-Proportional Insurances

-

-

-

46.045

46.045

-

1.034 47.079 193.196

153

193.196

NOTE 17.2. EVOLUTION OF REINSURANCE IMPAIRMENT Total Impairment

Other debts receivable from reinsurances

Assets from nonproportional reinsurances

Claims receivable from reinsurers

Premiums receivable from reinsurances

Impairment Evolution Chart

Initial balance as of 01/01 (-) Decrease and increase in impairment provision (-/+)

0

-

0

Recovery from reinsurance accounts receivable (+)

-

-

-

-

-

Accounts receivable write-off (+)

-

-

-

-

-

Variation due to exchange rate effect (-/+)

-

-

-

-

-

-

-

Total (=)

0

0

0

AUDITED FINANCIAL STATEMENTS


NOTE 17.3. CLAIMS RECEIVABLE FROM REINSURERS Reinsurers And/Or Reinsurance Brokers

Domestic Risk

Reinsurer 1

Reinsurer 2

Reinsurer Name

Mapfre Re

Hannover

Identification Code

R-101

R-187

R/NR Type of Relationship

NR

NR

Country

Espa単a

Alemania

CRA 1 Code

SP

SP

CRA 2 Code

AMB

AMB

Risk Rating 1

BBB+

AA-

Risk Rating 2

A

A+

Rating Date 1

25-10-2012

19-06-2012

Rating Date 2

26-06-2012

19-09-2012

REINSURER INFORMATION

DUE BALANCES

154

Previous months

-

jul - 12

-

aug - 12

-

sep - 12

-

oct - 12

-

nov - 12

-

dic - 12

-

jan - 13

-

feb - 13

-

mar - 13

-

apr - 13

-

may - 13

-

Subsequent months

-

4.933

3.289

1. TOTAL DUE BALANCES

-

4.933

3.289

-

4.933

3.289

2. IMPAIRMENT 3. TOTAL

AUDITED FINANCIAL STATEMENTS


Reinsurer 3

Reinsurer 4

Reinsurer 5

RGA Re

SCOR Global Lifre SE.

Suiza

R-210

R-252

R-105

NR

NR

NR

Estados Unidos

Francia

Suiza

SP

SP

SP

AMB

AMB

AMB

AA-

A+

AA-

A+

A

A+

31-12-2011

04-06-2012

18-12-2012

31-12-2011

15-03-2012

20-12-2011

Foreign Risk

Overall Total

-

-

-

-

-

-

-

-

-

-

-

-

155

-

-

13.239

24.584 -

13.239

13.239

-

-

24.584

24.584

37.823

37.823

-

-

-

8.222

8.222

46.045

46.045

0

0

46.045

46.045

AUDITED FINANCIAL STATEMENTS


NOTE 18. DEBTORS FROM COINSURANCE TRANSACTIONS

NOTE 18.1. DUE BALANCES FROM COINSURANCES * As of December 31, 2012, the Company has no payable balances from Coinsurances. NOTE 18.2. EVOLUTION OF COINSURANCE IMPAIRMENT * As of December 31, 2012, the Company has no Coinsurance Evolution Impairment.

NOTE 19. REINSURANCE INTEREST IN TECHNICAL RESERVES (ASSETS) AND TECHNICAL RESERVES (LIABILITIES) 156 Item

Direct

Accepted

Total liabilities Reinsurer Interest In reserves

Impairment

Reinsurance Interest in Technical reserves

RESERVE FOR LIFE INSURANCES Reserve for Ongoing Risk

2.697.029

-

2.697.029

Pension Fund Reserves

1.717.478.111

-

1.717.478.111

41.257.606

Reserve for Life Annuities

1.717.478.111

-

1.717.478.111

41.257.606

-

-

Disability and Survival Insurance Reserve Reserve for Unexpired ClaimS

-

-

-

-

15.873.108

Reserve for Private Annuities

17.137.636

-

17.137.636

143.014

Reserve for Claims

2.934.985

-

2.934.985

30.150

320.027

-

320.027

Claims Under Settlement Process Claims Occurring But Not Reported Premium Inadequacy Reserve

-

-

TOTAL

AUDITED FINANCIAL STATEMENTS

143.014 -

30.150

-

-

-

-

2.277.588

-

2.277.588

332.227

-

332.227

-

-

5.143

-

5.143

-

-

-

-

Other Technical Reserves Fund Value Reserve

-

41.257.606

-

-

Claims Settled But Contested by the Insured Party

41.257.606

-

15.873.108

Claims Settled But Not Paid

-

-

-

86.516.922

-

86.516.922

1.842.637.791

-

1.842.637.791

30.150

30.150

41.430.770

-

41.430.770


Main Assumptions Applied, Main maintaining at least one reserve equivalent to Characteristics, and Calibration Frequency one month of premium or, if longer, the premium equivalent for the grace period stated in the Reserve calculation was carried out based policy. on the instructions contained in General This is the case for the following insurances: Regulations NCG No. 306 and No. 318 of the -  Collective life and health insurance policies Superintendency of Securities and Insurance, and collective title insurance policies with a issued on April 14, 2011 and September 1, 2011, validity period equal to or exceeding 1 year respectively. where premium is monthly calculated based on an agreed upon rate over the insured capital All the assumptions used in calculating reserves amounts for policyholders with coverage valid in are reviewed and updated on a quarterly basis, the corresponding month. as applicable. - Coverage cost of insurances with SIA. - Policies or Additional Coverages with annual For the determination of current Financial validity with or without an automatic renewal Statements, the Company exercised clause with a payment frequency less than the following options contained in the its validity. aforementioned regulations: These products are marketed through Individual, Collective, Bank Insurance, and Title Insurance 1. Life Annuities business lines. Pursuant to the provisions contained in NCG No. 318, No. 2, the Company applied the 2.2. Reserve for terms exceeding 4 years instructions in paragraph 2.1 only to policies Pursuant to the final paragraph of No. 1, Title III affective as of January 1, 2012. For life annuity of SVS NCG No. 306, the Company informed policies effective prior to such date, the reserve the Superintendency of its decision to apply was calculated pursuant to the instructions the calculation of the Reserve for Ongoing provided in Official Circular No. 1512 and other Risk based on terms exceeding 4 years for instructions provided by the Superintendency coverages for which there is no probability table of Securities and Insurance, effective on these registered at the registry of the Superintendency financial statement date. of Securities and Insurance for the calculation of Reserves for Unexpired Claims. 2. Reserve for Ongoing Risk 2.1. Exception for a hedging period shorter than 2.3.  Application policy validity In accordance with the transitory provisions contained in Title VI, NCG No. 306, the new The Company adhered to the exception instructions concerning the setup of the Reserve contained in paragraph two, letter b), No. 1, Title for Ongoing Risk, set out in No. 1 of Title II of the III of NCG No. 306, introduced through NCG aforementioned regulation, were applied only to No. 320, with respect to considering, for the policies issued or renewed as of January 1, 2012. purpose of Reserve for Ongoing Risk calculation, the premium hedging and recognition period when this is shorter than policy validity,

AUDITED FINANCIAL STATEMENTS

157


158

3. Reserve for Unexpired Claims The methodology and criteria applied by Pursuant to paragraph 2.1, Title III of General the Company for weighing and segregating Regulation No. 306, the Superintendency of each FECU branch were presented to the Securities and Insurance, through Official Superintendency of Securities and Insurance Circular No. 10,210 of April 20, 2012, authorized and is based on the distribution of incurred the Company to apply a Reserve for Unexpired claims on Financial Statement date. Claims in the following cases: 5. Reserve for Premium Inadequacy - Insurances with a single premium associated The Premium Adequacy Test was conducted in with credits (consumer credit title insurances), accordance with the standard method stated regardless of the coverage term (death risk). in Exhibit 1 to NCG No. 306, which is based on the “Combined Ratio” concept, which relates - Individually subscribed insurances with a the insurance company technical disbursements single or leveled (death risk) premium, marketed with the recognized premium to address the under an individual or collective policy, without former, using the 12-month historical information a renewal clause and regardless of policy contained in the Financial Statements validity. immediately prior to the date of determination thereof. - Products with a leveled (death risk) premium, with premium refund, regardless of policy The Company performed the premium validity. adequacy analysis considering the branches defined by FECU and identifying within each 4. Reserve for Claims Occurring But Not account the component related to insurances Reported (OYNR) generating a Reserve for Ongoing Risk. For the estimation of the OYNR Reserve, the Company used the standard method generally Where disbursements are higher than revenues, applied for all modeled risks. The standard the Company reports a Premium Inadequacy method corresponds to the method based on Reserve additional to the Reserve for Ongoing the development of incurred claims, also called Risk. “Incurred Claim Triangle Method”, whose calculation is indicated in Exhibit 2 to NCG No. 306. Pursuant to the provisions contained in paragraph 3.2, Title II of SVS NCG No. 306, the Company conducted an estimation of OYNR Reserves by product portfolios considering the nature of the risks and similar claim management policies, which resulted in a branch distribution different from that established by FECU.

AUDITED FINANCIAL STATEMENTS


SUMMARY OF IMPACT OF NEW RESERVE STANDARDS The impact of the application of the new reserve standards on income and expense accounts, comparing the reserve set up on December 31, 2011 with that set up on January 1, 2012, implied an income loss equivalent to M$ 1,960,019 on account of greater reserve variation. The summary of this result by branch is as follows: IFRS IMPLEMENTATION IMPACT AS OF JANUARY 1, 2012 CORPVIDA (Figures in thousands of Chilean pesos) Code

Branch

101 102 103 104 105 106 107 108 109 110 111 112 113 114 150 201 202

Full Individual Life Term Individual Life Insurance Other Insurances with Individual SIA Mixed or Total Individual Private Annuities Total Simple or Deferred Capital Family Protection Individual Disability or Incapacity Insurance Individual Health Insurance Individual Personal Accidents Assistance Individual Title Insurance Individual Mandatory Personal Accident Insurance VPFS Insurances Other individual insurances Full Collective Life Insurance Term Collective Life Insurances

203 204 207 209 210 211 212 214

Mixed or Collective Disability or Incapacity Insurance Collective Disability or Incapacity Insurance Family Protection Collective Health Insurance Collective Personal Accident Insurance Collective Assistance Insurance Collective Title Insurance Insurances with Collective VPFS Total

Reserve for Ongoing Risk

Reserve for Unexpired Claims

Fund Value Reserve

OYNR

TSP

Total

TAP

0 0 0 0 0 0 0 45.948 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 -9.653 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 -891 111.224 0 0 0 0 -252 250.257 -13.424 0 0 0 5.421 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 -891 111.224 0 0 0 0 36.043 250.257 -13.424 0 0 0 5.421 0 0

86.233

-36.874

0

-62.687

0

0

-13.328

0 0 0 0 1.800.533 0 391.327 0 2.324.041

0 0 0 0 -349.147 0 -147.720 0 -543.395

0 0 0 0 0 0 0 0 0

0 0 0 -7.333 -9.410 0 -98.949 0 173.956

0 0 0 5.417 0 0 0 0 5.417

0 0 0 0 0 0 0 -1.916 0 1.441.976 0 0 0 144.658 0 0 0 1.960.019

AUDITED FINANCIAL STATEMENTS

159


NOTE 20. INTANGIBLE ASSETS

160

NOTE 20.1 GOODWILL * As of December 31, 2012, the Company has no Goodwill. NOTE 20.2. ACTIVOS INTANGIBLES DISTINTOS A GOODWILL Intangible assets are non-monetary rights owned by the Company, which are identifiable and without physical substance. For an asset to be recognized as intangible, it must meet the following conditions: -It must be identifiable, i.e., it must be possible to clearly distinguish it or separate it from other assets or rights. - Control over the asset must be effective, i.e., the Company must be entitled to obtain the future economic benefits deriving from underlying resources associated with it and must also be able to restrict third-parties from accessing such benefits. - Future economic benefits attributed to it must flow to the entity. - The asset cost may be valued in a reliable way. Software is included among the intangible assets to which this policy is applicable. Assets corresponding to Software These correspond to investments in Software Applications used for Company operations. These assets are classified as follows: Software Use Licenses: The rights over the use of computer programs whose source codes are

AUDITED FINANCIAL STATEMENTS

not owned by the Company and may not be transferred under any title to a third party. This type of assets shall only be capitalized when the validity of the use license exceeds 12 months and the involved amount is higher than UF 500. Otherwise, they shall be debited to income for the financial year, in the period where the respective disbursement occurs. The repayment term may not exceed 3 years. Own Software: Software whose source codes are owned by the Company, which may freely transfer them to a third party. This type of assets shall only be capitalized when their estimated useful life is equal or longer than 12 months and the total effective investment amount involved is higher than UF 500. Otherwise, they shall be debited to income for the financial year, in the period where the respective disbursement occurs. The repayment term may not exceed 5 years. The impairment test applied to this type of assets shall be the present value of future discounted flows whose discount rate shall be used in the initial evaluation, but may in no case be lower than an actual 3%. Accordingly, each asset shall be subject to an initial economic evaluation that will serve as the basis to conduct the Test annually; this shall be documented and the assumptions applied must be duly supported and approved by the Company´s Operations and Technology Management.


The recognition of the loss from impairment shall be debited to income for the financial year, when the cost or carrying value of the asset is higher than the present value of future discounted flows. If, in subsequent periods, the impairment test indicates that the loss is lower than that previously determined, the difference may be reversed credited to income for the financial year, with a maximum amount established by the accumulated impairment balance and provided that the net asset value does not exceed its cost or book value.

830.541

Licenses Remodeling Trademarks AFR TOTAL

117.370

58.840

2.258.772

163.297

6.980

70

101.485

60

2.716.645

1.052.809

-

Final Balance

232.039

Repayment M$

Additions M$

Software

Decreases M$

Initial Balance M$

161

Asset

191.144

871.436

118.380

57.830

1.796.607

625.462

2.596

98.949

2.108.728

1.660.727

7.050 -

AUDITED FINANCIAL STATEMENTS


NOTE 21. TAXES RECEIVABLE

NOTE 21.1. ACCOUNTS RECEIVABLE FOR TAXES Item

M$

Monthly Provisional Payments

-

Income Tax Credit

628.701

Donation Credit

4.741

Credit for Additional 2% Contribution

-

Credit for Training Expenses

77.557

4% Ret. Government Instruments

270

Income Tax Payable

162

86

TOTAL

711.355

NOTE 21.2.1. EFFECT OF DEFERRED TAXES ON SHAREHOLDERS’ EQUITY

Financial Investments with Effect on Shareholders’ Equity

Assets

Liabilities

Net

98.088

131.567

(33.479)

98.088

131.567

(33.479)

Hedges Others Total Debit(Credit) to Shareholders’ Equity

General Information The Company has not set up a provision for firstcategory income tax since there is a negative cumulative Net Taxable Income as of December 31, 2012, amounting to M$ (30.969.558).

AUDITED FINANCIAL STATEMENTS

F.U.T.

Amount M$

Negative balance

(29.844.254)

Credits for Shareholders

Others

Item

A single tax provision was set up on December 31, 2012 according to the regulations stated in article No. 21 of the Income Tax Law, amounting to M$ 14,721. As of December 31, 2012, retained tax losses are broken down as follows:

First-category credits

-

F.U.N.T.

Amount M$

Non-income earnings

383.514

Tax exempt income

-

In addition, the Company’s Monthly Provisional Payments (M.P.P.) have been suspended in accordance with current regulations because it has cumulative firstcategory tax losses.


NOTE 21.2.2. EFFECT OF DEFERRED TAXES ON INCOME

Items Impairment of Uncollectible Accounts

Assets

Liabilities 191.909

Net 191.909

Impairment of Debtors from Reinsurance

0

Impairment of Fixed-Income Instruments

60.546

60.546

Impairment of Mortgage Loan Notes

69.056

69.056

17.637

17.637

Impairment of Real Estate Impairment of Intangible Assets

0

Impairment of Leasing Contracts

15.198

Impairment of Loans Granted

29.821

15.198 29.821

Stock Valuation

1.539.130

(1.539.130)

Investment Fund Valuation

1.527.460

(1.527.460)

Mutual Fund Valuation

1.571

(1.571)

Foreign Investment Valuation

5.366

(5.366)

2.713.524

(2.713.524)

Valuation of Financial Risk Hedging Transactions Valuation or resale and repurchase agreements Remuneration Prov.

0 336.500

336.500

Bonuses Prov.

0

DEF Prov.

0

Vacation Prov.

142.493

142.493

Severance Payment Prov.

0

Prepaid Expenses

0

Activated Expenses

0

Tax Losses Leasing Contracts

6.193.912

6.193.912

4.393.706

4.393.706

Others

17.890

469.678

(451.788)

TOTAL

11.468.668

6.256.729

5.211.939

AUDITED FINANCIAL STATEMENTS

163


NOTE 22. OTHER ASSETS

NOTE 22.1. PERSONNEL DEBTS Items

Asset

Receivable Medical Leave Certificates

80.235

Loans

68.079

Advances

207.400

Others

138.367

TOTAL

494.081

NOTE 22.2. BROKER ACCOUNTS RECEIVABLE

164

Related Company Balances

Third-Party Balances

TOTAL M$

Broker Accounts Receivable (+) Pension fund consultant accounts receivable

-

30.566

30.566

Agents

-

204.549

204.549

Others

-

-

-

Other Insurance Accounts Receivable (+)

-

-

-

Impairment (-)

-

-

-

TOTAL Current Assets (Short Term) Non-Current Assets (Long Term)

AUDITED FINANCIAL STATEMENTS

235.115

235.115 235.115 -


NOTE 22.3. BALANCES WITH RELATED COMPANIES NOTE 22.3.1 BALANCES Related Entity

Tax Number

Related Company Debt

CorpBanca S.A.

97.023.000-9

Soc. Inv. Inmobiliarias Seguras S.A.

76.039.786-5

CAI Gestion Inmobiliaria S.A.

76.058.352-9

Cía. De Seguros CorpSeguros S.A.

76.073.138-2

Inmobiliaria CorpGroup

99.522.360-0

CorpBanca Corredores de Seguros S.A.

78.809.780-8

SMU Corp. S.A.

76.086.272-K

Debt with Related Entities 727.714

6.128.201 24.710 1.489.688

TOTAL

6.152.911

2.217.402

NOTE 22.3.2. COMPENSATIONS TO KEY SENIOR STAFF AND MANAGERS Items

Payable Compensations (M$)

Salaries

-

Other Benefits

-

TOTAL

-

165

Effect on Income (M$) 2.170.489 2.170.489

AUDITED FINANCIAL STATEMENTS


NOTE 22.4. TRANSACTIONS WITH RELATED PARTIES Related Entity

Tax Number

Nature of Relationship

Transaction Description

Transaction Amount M$

Effect on Income Profit(Loss)

Assets

166

Corp. Capital Adm. General de Fondos S.A.

96.513.630-4 Same Holding Company

Contributions

244.457.000

Corp. Capital Corredores de Bolsa S.A.

96.665.450-3 Same Holding Company

Investment Purchases

22.372.255

CorpBanca S.A.

97.023.000-9

Indirect Holding Company

Investment Purchases

54.917.950

CorpBanca S.A.

97.023.000-9

Indirect Holding Company

Office Leases

15.582

15.582

Inmobiliaria Edificio CorpGroup S.A.

99.522.360-0 Same Parent Company

Shared Expenses

151.596

151.596

Inmobiliaria Edificio CorpGroup S.A.

99.522.360-0 Same Parent Company

Office Leases

343.253

343.253

Inmobiliaria Edificio CorpGroup S.A.

99.522.360-0 Same Parent Company

Reserve Fund

24.710

CorpGroup Interhold

96.758.830-K Indirect Holding Company

Financial Consulting Fees

208.392

CAI Gesti贸n Inmobiliaria S.A.

76.058..352-9 Indirect Holding Company

Contributions

780.041

SR Inmobiliaria S.A.

76.002.124-5

Same Parent Company

Leases

129.423

129.423

SR Inmobiliaria S.A.

76.002.124-5

Same Parent Company

Intereses Leasing

551.950

551.950

SR Inmobiliaria S.A.

76.002.124-5

Same Parent Company

Installments Received

962.189

962.189

Inmobiliaria Puente Ltda.

76.046.651-4 Same Parent Company

Intereses Leasing

1.000.423

1.000.423

Inmobiliaria Puente Ltda.

76.046.651-4 Same Parent Company

Installments Received

1.750.549

1.750.549

Soc. de Inv. Inmobiliarias Seguras S.A.

76.039.786-5

Coligada

Contributions

953.534

C铆a. De Seguros CorpSeguros S.A.

76.073.138-2

Same Parent Company

Services Agreement

982.601

Empresas La Polar S.A.

96.874.030-K Same Parent Company

AUDITED FINANCIAL STATEMENTS

Leases

433.917

208.392

982.601 433.917


SubTotal

330.035.365

6.529.875

248.666.407

119.407

Liabilities Corp. Capital Adm. General de Fondos S.A.

96.513.630-4 Same Holding Company

Redemptions

Corp. Capital Corredores de Bolsa S.A.

96.665.450-3 Same Holding Company

Investment Sales

2.410.678

(1.247.741)

CorpBanca S.A.

97.023.000-9 Indirect Holding Company

Investment Sales

42.316.478

(3.503)

CorpBanca S.A.

97.023.000-9 Indirect Holding Company

M.H. Commissions

9.549

(9.549)

CorpBanca S.A.

97.023.000-9 Indirect Holding Company

Claims Paid

2.350.931

(2.350.931)

CorpBanca S.A.

97.023.000-9 Indirect Holding Company

Prov. for Collection Expense and Preferential Use

727.714

727.714

CorpBanca S.A.

97.023.000-9 Indirect Holding Company

Collection Expense and Preferential Use Payment

2.105.883

CorpBanca Corredores de Seguros S.A.

78.809.780-8 Same Holding Company

Commissions Paid

7.467.800

(7.467.800)

CAI Gesti贸n Inmobiliaria S.A.

76.058..352-9 Indirect Holding Company

Real Estate Consulting Fees

694.919

(694.919)

CAI Gesti贸n Inmobiliaria S.A.

76.058..352-9 Indirect Holding Company

Refunds

257.225

C铆a. De Seguros CorpSeguros S.A.

76.073.138-2 Same Parent Company

Investment Purchases

Soc. de Inv. Inmobiliarias Seguras S.A.

76.039.786-5 Coligada

Refund

SubTotal

12.112.166

167

298.946

1.788.447 320.908.197

(10.628.376)

650.943.562

(4.098.501)

650.943.562

(4.098.501)

Others Subtotal TOTAL

AUDITED FINANCIAL STATEMENTS


NOTE 22.5. PREPAID EXPENSES These correspond to disbursements for a software License, which are amortized over a 12-month period; as of December 31, 2012, prepaid expenses did not exceed 5% of total other assets. The balance as of December 31 is M$24,049.

NOTE 22.6. OTHER ASSETS Detail

M$

Accounts Receivable

1.872.540

San Arturo S.A.

7.453.387

Leases Receivable Acoger Santiago

168

64.261 1.077.259

Commercial Store Lease

299.397

Carcava S.A.

822.924

Lease Guarantees

137.285

Pension Fam. Allowance

19.700

VAT Receivable from Insured Parties

34.104

Advance on Purchase Commitment Assets Under Resale or Repurchase Agreements Other Assets Total Other Assets

AUDITED FINANCIAL STATEMENTS

1.039.185 25.275.939 200.987 38.296.968


NOTE 23. FINANCIAL LIABILITIES

NOTE 23.1. FINANCIAL LIABILITIES AT FAIR VALUE WITH CHANGES TO INCOME Liabilities At Fair Value M$

Item Securities representing Debt

-

Investment Derivatives

-

Underlying Derivatives

-

Others

-

Total

Liabilities Carrying Value

Effect On Income

-

0

Effect On Oci (1)

-

-

-

-

-

-

-

-

-

-

-

0

-

NOTE 23.2. FINANCIAL LIABILITIES AT AMORTIZED COST

169

NOTE 23.2.1 DEBT WITH FINANCIAL ENTITIES Name of Bank or Financial Institution

Granting Date

Unsettled Balance

Short Term

Consorcio

12-10-2012

7.080.632.500 UF

3,31000%

Long Term

TOTAL

Market Value

04-10-2013

7.133.692

7.133.692 8,48000%

7.213.270

TOTAL

7.133.692

7.133.692

7.213.270

AUDITED FINANCIAL STATEMENTS


NOTE 23.2.2. OTHER FINANCIAL LIABILITIES AT AMORTIZED COST Item

Liabilities at amortized cost M$

Resale and Repurchase Agreements

28.800.895

TOTAL

28.800.895

Liabilities carrying value

Effect on income

0

Effect on oci (1)

0

0

The detail of resale and repurchase agreements is disclosed in Note No. 9 of these financial statements.

NOTE 23.2.3. UNPAID ITEMS AND OTHER OUTSTANDING ITEMS

170

* As of December 31, 2012, the Company has no unpaid items or other outstanding items.

NOTE 24. NON-CURRENT LIABILITIES HELD FOR SALE (IFRS 5) * As of December 31, 2012, the Company has no non-current Liabilities held for sale.

AUDITED FINANCIAL STATEMENTS


NOTE 25. TECHNICAL RESERVES

NOTE 25.1. RESERVE FOR GENERAL INSURANCES * This is not applicable to life insurance companies.

NOTE 25.2. RESERVE FOR LIFE INSURANCES NOTE 25.2.1. RESERVE FOR ONGOING RISKS Items

M$

Initial balance as of January 1

3.226.935

Reserve for new sale

7.770.087

Reserve release

0

Release of stock reserve

(1.948.554)

Release of new sale reserve

(6.351.439)

Others

-

Total reserve for ongoing risk

2.697.029

171

NOTE 25.2.2. RESERVE FOR PENSION FUND INSURANCES Reserve For Life Annuities (5.21.31.21) Reserve previous Dec.

M$ 1.543.689.343

Reserves for life annuities contracted during the period

232.146.358

Pensions paid

(111.698.195)

Interest for the period Release for death Subtotal Reserve for Life Annuities for the Period

61.270.953 (10.781.039) 1.714.627.420

Uncollected pensions

187.801

Outdated checks

18.315

Uncollected checks

37.914

Unpaid due guaranteed annuities Others Total Reserve For Life Annuities

123.565 2.483.096 1.717.478.111

AUDITED FINANCIAL STATEMENTS


Disability and survival insurance reserve (5.21.31.22)

M$

Initial balance as of 01.01.XX Claim increase Total disability Partial disability Survival Release for payment of additional contributions (-) Total disability Partial disability Survival Payment of transitory partial disability pensions (-) Interest rate adjustment (+/-) Others Total disability and survival insurance reserve

0

DISCOUNT RATE Mes

172

Tasa

oct-12

2,98%

nov-12

2,99%

dic-12

2,99%

NOTE 25.2.3. RESERVE FOR UNEXPIRED CLAIMS Items

M$

Initial balance as of January 1

11.603.841

Premiums

13.781.671

Interest Reserve released due to death Reserve released due to other expiries

621.245 (2.134.536) (7.999.113)

Reserve for Unexpired Claims for the period Total Reserve for Unexpired Claims

AUDITED FINANCIAL STATEMENTS

15.873.108


NOTE 25.2.4. FUND VALUE RESERVE Fund Value Reserve

Risk Hedging

Fund Value Reserve

Reserve for SIA Insurance Gap

Reserve for Unexpired Claims

Reserve for Ongoing Risk

Life Insurances with Voluntary Pension Fund Saving (VPFS) (The Company assumes the policy value risk)

60.716

-

64.440.940

Other Life Insurances with a Single Investment Account (The Company assumes the policy value risk)

90.843

-

22.059.517

-

16.465

Life Insurances with Voluntary Pension Fund Saving (VPFS) (The insured assumes the policy value risk)

-

-

-

-

Other Life Insurances with a Single Investment Account (The insured assumes the policy value risk)

-

-

-

-

TOTAL

151.559

-

86.500.457

173 16.465

NOTE 25.2.4.1 RESERVE FOR GAPS ASSOCIATED WITH INSURANCES WITH A SINGLE INVESTMENT ACCOUNT (SIA) Fund name

Fund value type

Strategic Distribution

Investment Type of Investment

Conservative

VPFS

100% AIR Market rate:

Recon. Bonuses

Gap reserve Amount 25.527.861

Mortg. Bonds

2.584.115

Corp. Bonds

8.639.544

Bank Term Deposits Total

80.077 4.519.984 41.351.580

AUDITED FINANCIAL STATEMENTS

-


Moderate

VPFS

70% AIR 15% IGPA 15% S&P 500

Recon. Bonuses Mortg. Bonds

30.823

Corp. Bonds

103.051

Bank For. Shares

Moderate Domestic

VPFS

60% AIR 40% IGPA

Total

707.742

Recon. Bonuses

876.161

Mortg. Bonds

88.691

174

VPFS

Term Deposits

155.134

Corp. Bonds

131.604

Term Deposits

Domestic Stock

VPFS

AUDITED FINANCIAL STATEMENTS

25% IGPA 25% MSCI 50% S&P 500

100% IGPA

388.860 39.363

For. Shares

VPFS

2.377.047

Mortg. Bonds Bank

Stock

2.748 957.787

Recon. Bonuses

-

296.524

For. Shares Total Balanced

955 53.913

Bank

-

214.509

Term Deposits

Corp. Bonds

50% AIR 15% IGPA 15% MSCI 20% S&P 500

304.491

-

3.141 634.715 68.852

Total

1.266.537

Bank

2.485

For. Shares

986.561

Total

989.046

Bank

0

-

-


International

VPFS

Fund Value Reserve

Total

Diversified International

Development

Asian

European

Latin American

Technological

VPFS

VPFS

VPFS

VPFS

VPFS

VPFS

50% MSCI 50% S&P 500

35% S&P 500 15% Japan 10% Ex Japan 20% Europe 10% Latam 10% EM

30% Ex Japan 30% Latam 40% EM

60% Japan 40% Ex Japan

100% Europe

100% Latam

Bank

Reserva De Descalce

Reserve for SIA Insurance Gap Reserve for Unexpired Claims

Risk Hedging

Reserve for Ongoing Risk

Fund Value Reserve

5.641.754 594

For. Shares

117.183

Total

117.776

Bank

80

-

-

For. Shares

377.995

Total

378.076

Bank

1.740

For. Shares

2.398.355

Total

2.400.094

Bank

0

For. Shares

67.336

Total

67.336

Bank

0

For. Shares

150.215

Total

150.215

Bank

9.680

For. Shares

3.963.322

Total

3.973.003

100% Technolog Bank

179.000

For. Shares

378.394

Total

557.394

-

-

-

-

-

AUDITED FINANCIAL STATEMENTS

175


Corporate

Domestic Stock Exchange

Conservative

VPFS

VPFS

OTH

50% S&P 500 Bank 50% Invest Corp

100% IPSA

100% TIP Market rate:

For. Shares

61.927

Total

67.427

Bank

4.746.793

Total

4.746.793

Recon. Bonuses

Corp. Bonds CFM Nacional Term Deposits Total OTH

70% AIR 15% IGPA 15% S&P 500

Recon. Bonuses

Mortg. Bonds

176

60% TIP 40% IGPA

Balanced

OTR

AUDITED FINANCIAL STATEMENTS

50% TIP 15% IGPA 15% MSCI 20% S&P 500

2.150.727 16.961.047 27.753

-

2.404

17.232

Domestic MFI

0

Term Deposits

5.637 63.224 78.846

Mortg. Bonds

6.563

Corp. Bonds

25.099

For. Shares

75.539

Domestic MFI

0

Term Deposits

15.393

Bonos de Recon.

16.465

0

9.192

Total

-

3.506.918

1.007

Recon. Bonuses

-

917.033

Bank

Total OTH

10.386.369

Corp. Bonds For. Shares

Moderate Domestic

0

For. Shares

Mortg. Bonds

Moderate

5.500

-

201.440 14.004

-


Fund Value Reserve

Risk Hedging

Fund Value Reserve

4.603

Bank

1.899

25% IGPA 25% MSCI 50% S&P 500

0

Term Deposits

2.823

Recon. Bonuses Bank

Domestic Stock

OTH

100% IGPA

Diversified International

OTH

OTH

50% MSCI 50% S&P 500

35% S&P 500 15% Japan 10% Ex Japan 20% Europe 10% Latam 10% EM

112.853

Bank

Total

2.012.227

Bank

2.484

Recon. Bonuses

17.137

Total

19.621

Recon. Bonuses

-

177

113.400 1.898.827

Total OTH

0

For. Shares

Recon. Bonuses

-

10.168

Total

For. Shares

Development

1.597

101.087

Bank

30% Ex Japan 30% Latam 40% EM

44.196

For. Shares

Recon. Bonuses

International

19.663

Domestic MFI Total OTH

Reserve for Unexpired Claims

Reserve for Ongoing Risk

Corp. Bonds For. Shares

Stock

Reserva De Descalce

Reserve for SIA Insurance Gap

2.999

-

-

4.784 96.425 104.208 66.178

-

AUDITED FINANCIAL STATEMENTS


Asian

OTH

60% Japan 40% Ex Japan

Bank

554.380

Total

620.558

Recon. Bonuses Bank

European

Latin American

OTH

OTH

100% Europe

100% Latam

39.381

Total

44.297

Bank

178

Corporate

Domestic Stock Exchange

OTH

OTH

OTH

97.131

Total

97.131

1.261.032

Total

1.364.136 0

For. Shares

218.931

Total

218.931

50% S&P 500 Bank 50% Invest Corp

1.021

For. Shares

19.668

Total

20.689

Recon. Bonuses Bank

46.123 762.277

Total

884.400

(-) Impairment Total SIA Investments

-

-

-

-

76.000

For. Shares Sub Total

AUDITED FINANCIAL STATEMENTS

0

-

103.104

For. Shares 100% Technolog Bank

100% IPSA

0

For. Shares Bank

-

2.636

For. Shares

Recon. Bonuses

Technological

2.280

87.560.778

16.465

(39.231) 87.521.547

16.465


25.2.5. RESERVE FOR PRIVATE ANNUITIES Reserve for private annuities

Amount m$

Reserve previous Dec.

14.252.862

Reserve for private annuities contracted during the period

3.608.046

Pensions paid

(1.336.796)

Interest for the period

739.649

Release for items other than pensions

(126.125)

Others

-

Total Reserve for Private Annuities for the Period

17.137.636

NOTE 25.2.6. RESERVE FOR CLAIMS Reserve for claims

Initial balance as of january 1

Claims Settled But Not Paid

Increases

Decreases

307.177

Exchange rate difference adjustment

Others Final balance

12.851

320.028

Claims Settled But Contested by the Insured Party

-

Claims Under Settlement Process

1.870.731

Claims Occurring But Not Reported

391.606

Total Reserve for Claims

2.569.514

360.980

360.980

0

45.876

2.277.588

(68.983)

9.603

332.227

(56.132)

55.480

-

2.929.842

NOTE 25.2.7. RESERVE FOR PREMIUM INADEQUACY Premium Inadequacy Test Date 31-12-2012

Result m$ 5.143

AUDITED FINANCIAL STATEMENTS

179


Main Characteristics of the Calculation Model and Hypotheses Used

180

a)  To consider generally accepted principles on an international level and the IFRS concepts associated with this Test. The methodology used corresponds to that b)  To use the Company’s estimates with respect described in Exhibit 1 to NCG No. 306, with the to mortality and interest rate, i.e., to analyze the following considerations: adequacy of the reserve in accordance with the Company’s own experience and portfolio 1. For each FECU branch, the premiums, claims, characteristics. and reserves corresponding to the coverages with a Reserve for Ongoing Risk were identified. c)  To consider the options or benefits for policyholders and the agreed upon guarantees 2. Intermediation costs were assigned based on provided to the former by the Company. the proportion represented by the Branch Direct d)  To recognize the risk assigned to reinsurers Premium with respect to the Earned Premium for for accounting purposes. insurances with a Reserve for Ongoing Risk. For the determination of the Test flows, IFRS 4 3. In those cases where the application of criteria were taken as reference; in its paragraph NCG No. 306 implied a change to the reserve 16 letter (a), these criteria indicate that, as a methodology, the opening reserve was reminimum requirement, current estimates of all estimated for the purpose of recording its variation over the period under analysis. contractual cash flows and related cash flows, such as settlement costs and cash flows from 4. Administration Expenses were assigned options and underlying guarantees, must be by FECU branch in accordance with the considered. Company´s functional expense allocation criteria. For the definition of the technical criteria for this Test, the guidelines contained in International 5. As stated in Regulation No. 1,937 of the Actuarial Standard of Practice No. 6 (IAS 6) of Superintendency of Securities and Insurance, the the International Actuarial Association in relation Company uses FECU account information from to liability adequacy were considered. the quarter prior to financial statement closing date. If, due to the application of this Test, a technical reserve inadequacy is verified, the Company NOTE 25.2.8. OTHER RESERVES shall set up the corresponding additional Liability Adequacy Test technical reserve. Otherwise, no adjustments are applied to the technical reserve already set up. Date Result M$ 31-12-2011

-

31-12-2012

-

Characteristics and Hypotheses for the Calculation Model Used In accordance with the above, when defining and applying this Test, the Company took into account the following requirements:

AUDITED FINANCIAL STATEMENTS


Matching reserve adjustment

Financial technical reserve

Base Technical Reserve

Liabilities

Life Annuities Insurances with Reserves for Unexpired Claims Additionally, concerning application of the Test to Life Annuity Reserves, the following criteria The methodology for this test is based on the were taken into consideration: expected present value of claim flows plus the expense flows associated with their settlement - In accordance with NCG No. 318, only the less premium flows, if applicable. If the result setup of an additional technical reserve in the is less than the reserve estimated based on amount exceeding the difference in technical the instructions issued by NCG No. 306, the reserves accounted for by the gradual process difference shall be reported as an additional was considered. reserve, considering assignments to reinsurers on a proportional basis. - In addition and pursuant to Regulation No. 8,378 of the SVS of April 2, 2012, liability flows from already matched life annuity insurances were discounted using the accrual rate for NOTE 25.3. HEDGING the Company’s asset portfolio. To discount NOTE 25.3.1. HEDGING RESERVE ADJUSTMENT unmatched liability flows, the profitability rate of a portfolio representative of the new Company’s investments under current market conditions was considered. The methodology for this test is based on the expected present value of pension fund flows and the expense flows associated with their Non-Pension Initial Amount 13.662.898 13.558.944 103.954 settlement not considering reinsurances. If the Fund result is less than the reserve estimated based Final Amount 13.496.027 13.386.577 109.450 on the instructions issued by NCG No. 318, the Variation (166.871) (172.367) 5.496 difference shall be reported as an additional Pension Initial Amount 1.475.177.982 1.458.365.034 16.812.948 reserve, considering assignments to reinsurers on Fund a proportional basis. Final Amount 1.461.817.168 1.443.706.549 18.110.619 Variation (13.360.814) (14.658.485) 1.297.671 Insurances with a Single Investment Account Total Initial Amount 1.488.840.880 1.471.923.978 16.916.902 (SIA) Final Amount 1.475.313.195 1.457.093.126 18.220.069 Variation (13.527.685) (14.830.852) 1.303.167 The defined test involved calculating expected flows from the contracts in the portfolio under analysis within a horizon of at least 30 years. Contract flows for each period were estimated based on the characteristics of each policy discounting intermediation expenses, paid claims, reserve variations, and maintenance expenses from the agreed upon premiums. If one or more of the projected flows are negative, an additional reserve equivalent to the present value of the deficits so determined shall be reported, using as discount rate the Market Rate informed by the SVS as of reserve setup date.

AUDITED FINANCIAL STATEMENTS

181


NOTE 25.3.2. HEDGING INDICES Tier K

TIER 1 TIER 2 TIER 3 TIER 4 TIER 5 TIER 6 TIER 7 TIER 8 TIER 9 TIER 10 Total

Nominal Asset Flow In UF

Nominal Insurance Liability Financial Liability Flow Asset Hedging Flow In UF BK(1) CK Index CAK

-

-

-

Liability Hedging Index CPK

-

-

(1) RV-85, B-85, and MI-85, for policies effective prior to 09/03/2005 RV-2004, B-85, and MI-85, for policies effective from 09/03/2005 to 01/02/2008 RV-2009, B-2006, and MI-2006, for policies effective from 01/02/2008 CPK2 TIER K

182

TIER 1 TIER 2 TIER 3 TIER 4 TIER 5 TIER 6 TIER 7 TIER 8 TIER 9 TIER 10 Total

Nominal Asset Flow In UF 229.018.935 217.537.037 226.943.858 261.911.222 228.948.300 304.013.082 273.402.738 457.162.257 160.420.531 336.817 2.359.694.777

Nominal Insurance Liability Financial Liability Asset Hedging Index Liability Hedging Flow In UF Flow CAK Index CPK 219.621.829 7.133.693 0,959 1.000 214.697.001 0,987 1.000 207.054.846 0,912 1.000 197.794.402 0,755 1.000 186.954.771 0,817 1.000 257.322.733 0,846 1.000 225.390.941 0,824 1.000 298.275.038 0,652 1.000 258.781.789 1.000 0,620 175.863.474 1.000 0,002 7.133.693 2.241.756.824

(2) RV-2004, B-85, and MI-85, for policies effective prior to 01/02/2008 RV-2009, B-2006, and MI-2006, for policies effective from 01/02/2008

AUDITED FINANCIAL STATEMENTS


CPK3 Tier K

TIER 1

Nominal Asset Flow In UF AK

Nominal Insurance Liability Flow In UF BK(3)

Financial Asset Hedging Liability Liability Flow CK Index CAK Hedging Index CPK

229.018.935

219.831.575

TIER 2

217.537.037

215.522.291

TIER 3

226.943.858

208.761.173

TIER 4

261.911.222

TIER 5

0,960

1.000

-

0,991

1.000

-

0,920

1.000

200.613.600

-

0,766

1.000

228.948.300

191.093.623

-

0,835

1.000

TIER 6

304.013.082

266.272.870

-

0,876

1.000

TIER 7

273.402.738

237.639.841

-

0,869

1.000

TIER 8

457.162.257

324.466.828

-

0,710

1.000

TIER 9

160.420.531

298.646.802

-

1.000

0,537

336.817

227.933.154

-

1.000

0,001

TIER 10 Total

2.359.694.777

7.133.693

7.133.693

2.390.781.759

(3) RV-2004, B-2006, and MI-2006, for policies effective prior to 01/02/2008 RV-2009, B-2006, and MI-2006, for policies effective from 01/02/2008 CPK4 TIER K

Nominal Asset Flow In UF AK

Nominal Insurance Liability Flow IN UF BK(4)

Financial Asset Hedging Liability Flow CK Index CAK 7.133.693

Liability Hedging Index CPK

TIER 1

229.018.935

219.870.445

0,960

1.000

TIER 2

217.537.037

215.688.515

-

0,992

1.000

TIER 3

226.943.858

209.075.637

-

0,921

1.000

TIER 4

261.911.222

201.077.327

-

0,768

1.000

TIER 5

228.948.300

191.686.896

-

0,837

1.000

TIER 6

304.013.082

267.325.864

-

0,879

1.000

TIER 7

273.402.738

238.753.419

-

0,873

1.000

TIER 8

457.162.257

326.061.280

-

0,713

1.000

TIER 9

160.420.531

299.644.248

-

1.000

0,535

-

1.000

0,001

TIER 10 Total

336.817

227.494.737

2.359.694.777

2.396.678.369

7.133.693

(4) RV-2009, B-2006, and MI-2006, for the entire policy stock

AUDITED FINANCIAL STATEMENTS

183


NOTE 25.3.3. EQUIVALENT ISSUANCE COST RATE Month

Rate

oct-12

3,73%

nov-12

3,73%

dic-12

3,73%

NOTE 25.3.4. APPLICATION OF LIFE ANNUITY MORTALITY TABLES Application of RV-2009, B-2006, and M-2006 Tables

(8)

RV-2009 Unrecognized Difference

( 7)

RTF 2009-2006-2006

(6)

B-2004 and M-2006 Unrecognized Difference

(5)

RTFs 2004-2006-2006

(4)

RTF 2004-2006-2006

(3)

RF-2004 Unrecognized Difference

(2)

RTFs 2004-85-85

184

RTF 2004-85-85

RTF 85-85-85 (1)

( 9)

Policies effective prior to March 9, 2005

671.247.399

721.028.641 683.694.449

37.334.192

723.897.458

2.868.817

Policies effective from March 9, 2005 to January 31, 2008

192.193.652

203.898.719 195.120.328

8.778.391

204.259.111

360.392

Policies effective from February 1, 2008 Total

793.808.924 863.441.051

AUDITED FINANCIAL STATEMENTS

924.927.360

878.814.777

46.112.583 1.721.965.493

3.229.209


(1) RTF 85-85-85

(2) RTF 2004-85-85

(3) RTFs 2004-85-85

(4) Unrecognized DifferenceRV-2004 (5) RTF 2004-2006-2006

(6) RTFs 2004-2006-2006

Financial technical reserve calculated based on RV 85, B 85, and MI 85 mortality tables, hedging indexes calculated with liability flows from those tables as of closing date and using the 0.8 safety factor. Financial technical reserve calculated based on RV 2004, B 85, and MI 85 mortality tables, hedging indexes calculated with liability flows from those tables as of closing date. Financial technical reserve calculated according to the gradual recognition procedure contained in number XI of Official Circular No. 1,512. When the Company has completed recognition of RV 2004 tables, the values shown in columns (2) and (3) will be equal. Unrecognized Difference Difference between columns (2) and (3). Financial technical reserve calculated based on RV 2004, B 2006, and MI 2006 mortality tables, hedging indexes calculated with liability flows from those tables as of closing date. The Company made the decision to recognize B 2006 and MI 2006 tables according to Official Circular No. 1,857 Financial Technical Reserve calculated according to the gradual recognition procedure contained in number XI of Official Circular No. 1512, considering the modifications introduced by Official Circular No. 1,857. When the Company has reached the limit of 0.125 percent of the equivalent technical reserve for the previous period with the recognition of RV 2004 tables, this reserve will be equal to that shown in column (3). When the recognition of RV2004 tables has ended or the amount recognized in one quarter is lower than 0.125 percent of the equivalent reserve for the previous period, this reserve will be different from that stated in column (3). The 0.125 percent factor is the expression of a 0.5 percent factor on a quarterly basis.

AUDITED FINANCIAL STATEMENTS

185


(7)     Unrecognized DifferenceB-2006 y MI-2006 (8)     RTF 2009-2006-2006

(9)     Unrecognized DifferenceRV-2009 (10) For insurance policies effective as of February 1, 2008, values should only be reported in column RTF 2009-2006-2006.

186

The company made the decision to recognize B 2006 and MI 2006 tables according to Official Circular No. 1,874. Financial Technical Reserve calculated based on the alternative recognition procedure contained in Official Circular No. 1874, i.e., through annual installments payable on a quarterly basis. Difference between columns (5) and (6). Financial technical reserve calculated based on RV 2009, B 2006, and MI 2006 mortality tables and hedging indexes calculated with liability flows from those tables as of closing date. - Difference between columns (8) and (5).

Recognition of MI-2006 and B-2006 tables (1)

Amount of annual installment referred to in letter b) of Official Circular No. 1,874

1.918.460

(2)

Value of quarterly installment

(3)

Installment number

(4)

Value of all the installments recognized on financial statement closing date

15.373.725

(5)

Average equivalent cost rate implicit in the calculation of base technical reserves out of the Company’s total life annuity portfolio effective as of January 31, 2008

(*) 3.8949%

479.615 Year 5, quarter 3

* Equivalent Cost Rate based on the recalculation of the Recognition Installment reported as of September 2010.

AUDITED FINANCIAL STATEMENTS


NOTE 25.4. DISABILITY AND SURVIVAL INSURANCE (SIS) RESERVE * As of December 31, 2012, the Company maintains no SIS Reserve. NOTE 25.5. SOAP * This is not applicable to Life Insurance Companies.

187

AUDITED FINANCIAL STATEMENTS


NOTE 26. DEBTS FROM INSURANCE TRANSACTIONS

NOTE 26.1. DEBTS WITH INSURED PARTIES * As of December 31, 2012, the Company has no Debts with insured parties. NOTE 26.2. DEBTS FROM REINSURANCE TRANSACTIONS PREMIUMS PAYABLE TO REINSURERS Balance Maturities

Domestic Risks

Foreign Risks

Overall Total

1. Non-Retained Balance

(363.424)

(363.424)

0

0

jan-13

(12.562)

(12.562)

feb-13

(42.141)

(42.141)

Previous Months sep-12 oct-12 nov-12 dic-12

188

mar-13 Subsequent Months 2 . Retained Funds

(26.086)

(26.086)

(282.635)

(282.635)

-

-

Previous Months jun-12 jul-12 aug-12 sep-12 oct-12 nov-12 dic-12 Subsequent Months Claims TOTAL

(363.424)

NOTE 26.3. DEBTS FROM COINSURANCE TRANSACTIONS * As of December 31, 2012, the Company has no debts from Coinsurance Transactions.

AUDITED FINANCIAL STATEMENTS

(363.424)


NOTE 27. PROVISIONS

ITEM

Balance as of 01.01.2012

Audit Provision

43.488

TOTAL

43.488 NonCurrent

Additional provision during the period

Increases in existing provisions

Current

TOTAL

Audit Provision

55.961

55.961

TOTAL

55.961

55.961

Amounts used during the period

57.665

(45.192)

57.665

(45.192)

Amounts not used during the period

Others

TOTAL

55.961 -

-

55.961

189

AUDIT PROVISION This is a provision arising from future disbursements for expenses incurred in contracting Financial Statement Auditing Services. These disbursements are made on a quarterly basis.

AUDITED FINANCIAL STATEMENTS


NOTE 28. OTHER LIABILITIES

NOTE 28.1.TAXES PAYABLE NOTE 28.1.1. ACCOUNTS PAYABLE FOR TAXES As of December 31, 2012, the detail of accounts payable for taxes is as follows: Item

M$

VAT Payable

265.900

Income Tax (1) Third-Party Tax

179.200

Reinsurance Tax

1.299

Others

1.471

TOTAL

447.869

(1) If the Income Tax payable is higher than associated credits

190

NOTE 28.1.2. LIABILITIES FROM DEFERRED TAXES *See Detail in Note 21.2. NOTE 28.2. LIABILITIES FROM DEFERRED TAXES *See Detail in Note 21.2. NOTE 28.3. NOTE 28.2. DEBTS WITH RELATED ENTITIES As of December 31, 2012, the detail of debts with brokers is as follows: Debts with Brokers

Saldos con empresas relacionadas

Pension fund consultants Agents

Saldos con terceros

TOTAL

4.579

4.579

30.647

30.647

Others

-

Other debts from insurances

-

Total

35.226

35.226

Current Liabilities (Short Term) Non-Current Liabilities (Long Term)

AUDITED FINANCIAL STATEMENTS

35.226 -


NOTE 28.4. DEBTS WITH PERSONNEL As of December 31, 2012, the detail of debts with personnel is as follows: ITEM

Total

Severance payments and others

-

Payable remunerations

44.027

Social Security debts

222.491

Provisions

2.276.730

Others

13.090

Total debts with personnel

2.556.338

NOTE 28.5. ANTICIPATED REVENUE

*As of December 31, 2012, the Company has no anticipated revenue.

NOTE 28.6. OTHER NON-FINANCIAL LIABILITIES

As of December 31, 2012, the detail of other non-financial liabilities is as follows:

Item Pension Fund Management Companies

Total -

Health

883.593

Workers’ Benefit Associations

479.456

Accounts payable Invoices payable

191

4.476.816 310.739

Others

2.012.483

Total Non-Financial Liabilities

8.163.087

AUDITED FINANCIAL STATEMENTS


NOTE 29. SHAREHOLDERS’ EQUITY

192

NOTE 29.1. PAID-IN CAPITAL At least the following must be disclosed: Capital The Corporation maintains a single stock series, without nominal value, in circulation; these shares are fully subscribed and paid-in. The number of shares corresponds to the authorized capital of the Corporation. During the 2012 and 2011 accounting periods, no movements were recorded on account of issues, redemptions, write-offs, reductions, or any other circumstances. On October 18, 2012, an Extraordinary Shareholder Meeting was held, where the decision was made, subject to the approval of the Superintendency of Securities and Insurance, to increase the Company’s capital stock from $127,378,510,653, divided into 681,495 ordinary nominative shares, of the same series, with no nominal value, fully subscribed and paid-in; the amount included $4,781,291,545, corresponding to the revaluation of own capital as of December 31, 2011 to $151,303,510,653, divided into 818,995 shares, through the issuance of 137,500 shares in the amount of $23,925,000,000, to be subscribed and paid-in within 30 days from the date of the SVS resolution approving the capital increase. On December 27, 2012, the capital increase stated in the previous paragraph was subscribed and paid-in, as approved by the Superintendency of Securities and Insurance through Exempt Resolution No. 458 of December 12, 2012. Dividend Policy In accordance with the provisions of Law No. 18,046, except if the Shareholders Meeting adopts a different agreement by unanimity of the issued shares, when there is profit, at least 30% of it must be devoted to dividend distribution.

AUDITED FINANCIAL STATEMENTS


- Shareholders Distribution The shareholders distribution as of December 31, 2011 and 2010, based on their percentage share in the ownership of the Company, is detailed in the table below: Nombre

RUT

Tipo persona

% Propiedad

Mass Mutual (Chile) Limitada. 76.080.631-5 JurĂ­dica Nacional

27,88%

Corp Group Vida Limitada.

72,12%

76.651.100-7

JurĂ­dica Nacional

193

AUDITED FINANCIAL STATEMENTS


Shareholders’ Equity Movement as of December 31, 2012

-

-

-

-

-

151.303.510 400.180

Reserve for hedging

11.748.904

-

-

-

6.471.165

18.220.069

Reserve for SIA gap

(12.709)

-

-

-

(4.213)

(16.922)

Other regulatory reserves Cumulative losses

194

Balances as of 30.09.2012 M$

23.925.000

Adjustments M$

-

Revaluation M$

-

400.180

Dividend Distribution M$

127.378.510

Capital Increase M$

Markup in sale of own shares

Distribution of Previous Acc. Period Income M$

Balances as of 01.01.12 Historical M$

Paid-up capital

0 107.650 (21.254.083)

Profit for the period

(21.254.083)

21.254.083

Shareholders’ Equity

118.368.452

0

NOTE 29.2. DIVIDEND DISTRIBUTION Over the period January 1 to December 31, 2012, the Company has distributed no Dividends.

AUDITED FINANCIAL STATEMENTS

-

-

(738.638)

(21.885.071)

-

-

2.238.068

2.238.068

0

0

7.966.382 150.259.834


NOTE 30. CURRENT REINSURERS AND REINSURANCE BROKERS

As of December 31, 2012, the detail of Reinsurers and Reinsurance Brokers is as follows: Name

Identification Code

Type Of Country Relationship

Assigned Nonpremium Proportional Reinsurance Cost

Total Risk Rating Reinsurance

Rating Agency Code

Risk Rating

Rating Date

C1

c2

c1

c2

c1

c2

1.- Reinsurers 1.1 Subtotal Domestic

-

-

673

448.447

449.120 SP

AMB

A-

A

17-01-2012 14-12-2011

288.631

288.631 SP

AMB

AA-

A

17-06-2011 15-11-2011

13.960

(16.318) SP

AMB

AA-

A+

31-12-2011 31-12-2011

SP

AMB

A

A

28-102011

26-04-2011

SP

AMB

AA-

A+

28-102011

20-12-2011

Mapfre re

R-101

NR

Espa単a

Hannover

R-187

NR

Alemania

Rga re

R-210

NR

EEUU

(30.278)

Scor global lifre se

R-252

NR

Francia

117.060

Suiza

R-105

NR

Suiza

73.005

1.2 Subtotal Foreign

-

117.060 73.005

160.460

751.038

911.498

2.1 Subtotal Domestic

-

-

-

2.2 Subtotal Foreign

-

-

-

2.- Reinsurance Brokers

Total Domestic Reinsurances

-

-

-

Total Foreign Reinsurances

160.460

751.038

911.498

Total Reinsurances

160.460

751.038

911.498

AUDITED FINANCIAL STATEMENTS

195


NOTE 31.TECHNICAL RESERVE VARIATION

As of December 31, 2012, the detail of Technical Reserve variation is as follows: Item Reserve for Ongoing Risk Reserve for Unexpired Claims Fund Value Reserve Catastrophic Reserve against Earthquakes Reserve for Premium Inadequacy Other Technical Reserves Total Technical Reserve Variation

196

AUDITED FINANCIAL STATEMENTS

Direct Assigned (1.851.124) (3.712.558) (15.502.226) -

Accepted -

-

-

-

(5.143) (21.071.051)

-

-

Total (1.851.124) (3.712.558) (15.502.226) (5.143) (21.071.051)


NOTE 32. CLAIM COST

As of December 31, 2012, the detail of Claim Cost is as follows: Item Direct Claims Direct claims paid (+) Direct payable claims (+) Direct payable claims previous period (-)

Amount (19.020.025) (18.864.521) (2.609.808) 2.454.304

Assigned Claims Assigned claims paid (+) Assigned payable claims (+) Assigned payable claims previous period (-)

369.803 474.420 30.152 (134.769)

Accepted Claims Accepted claims paid (+) Accepted payable claims (+) Accepted payable claims previous period (-) Total Claim Cost

(18.650.222)

AUDITED FINANCIAL STATEMENTS

197


NOTE 33. ADMINISTRATION COSTS

As of December 31, 2012, the detail of administration costs is as follows: Item Remunerations Expenses associated with the delivery channel Others Total Administration Costs

198

AUDITED FINANCIAL STATEMENTS

Total 8.339.610 19.619.202 27.958.812


NOTE 34. INSURANCE IMPAIRMENT

As of December, 2012, the detail of insurance Impairment is as follows: Items Premiums Claims Assets from Reinsurance Others Total

M$ (690.160)

(690.160)

199

AUDITED FINANCIAL STATEMENTS


NOTE 35. INVESTMENT INCOME

200

Investment Income Total Net Realized Investment Income Total realized real estate investments Income from sale of properties for own use Income from sale of goods under Leasing Income from sale of investment properties Others Total realized financial investments Income from financial instrument sales Others Total Net Unrealized Investment income Total unrealized real estate investments Variations in market value compared to adjusted cost value Others Total unrealized financial investments Portfolio mark to market Others Total Net Accrued Investment Income Total accrued real estate investments Interest from assets under Leasing Adjustments Others Total accrued financial investments Interest Adjustments Dividends

AUDITED FINANCIAL STATEMENTS

Investments at Amortized Cost 26.298.117 20.409.785 223.658 20.186.127 5.888.333 5.888.333 7.832 7.832 7.832

68.054.128 7.255.274 7.255.274 62.103.135 62.190.405


Investments at Fair Value 13.020.086 -

Total 39.318.203 20.409.785 223.659 -

13.020.086 13.020.086 -11.565.568 -

20.186.127 18.908.418 18.908.418 (11.557.736) 7.832 7.832

201 -

(11.565.568) (11.741.422) 175.853 7.331.091 -

(11.565.568) (11.741.422) 175.853 75.385.219 7.255.274 7.255.274 -

7.331.091

69.434.226 62.190.405 -

7.199.753

7.199.753

AUDITED FINANCIAL STATEMENTS


202

Others Total depreciation Depreciation of properties for own use Depreciation of investment properties Others Total management expenses Investment properties Expenses associated with investment portfolio management Others Income from Investments for Insurances with a Single Investment Account Total Investment Impairment Investment properties Assets under Leasing Properties for own use Financial investments Others Total Investment Income

AUDITED FINANCIAL STATEMENTS

(87.270) (1.264.669) (6.408) (1.258.261) (39.612) (39.612)

982.346 171.991

171.991 95.514.415


131.338 -

44.068 (1.264.669) (3.736) (610.883) -

0

(39.612) (39.612) -

1.751.644

2.733.991

-

171.991 171.991

10.537.253

106.051.668

AUDITED FINANCIAL STATEMENTS

203


NOTE 36. OTHER INCOME

As of December 31, 2012, the detail of Other Income is as follows:

Items Interest from premiums Other income Total Other Income

204

M$ 1.555.412 1.555.412

NOTE 37. OTHER EXPENSES

As of December 31, 2012, the detail of Other Expenses is as follows: Items M$ Financial expenses Bank expenses (adjustment and prov. premium and instrument write-offs ) Impairment Others Total Other Expenses

AUDITED FINANCIAL STATEMENTS

1.639.758 39.415 1.679.172


NOTE 38. EXCHANGE RATE AND ADJUSTABLE UNIT DIFFERENCES

As of December 31, 2012, the detail of Exchange Rate Difference is as follows: Items Assets Financial assets at fair value Financial assets at amortized cost Loans Investments for insurances with a single Investment Account (SIA) Real estate investments Accounts receivable from insured parties Debtors from reinsurance transactions Debtors from coinsurance transactions Reinsurance share of technical reserves Other assets Liabilities Financial liabilities Technical reserves Debts with insured parties Debts from reinsurance transactions Debts from coinsurance transactions Other liabilities Shareholders’ Equity Income Accounts Revenue accounts Expense accounts Investment Income Net debit (credit) to income Profit/loss from exchange rate difference

Debits

Credits 51.418.501 16.943.131 28.296.813

50.245.592 23.301.318 23.269.211

4.974.574

3.090.615

8.916

6.202

3.770

205

1.191.297

578.246

51.418.501

50.245.592

AUDITED FINANCIAL STATEMENTS


NOTE 38.1 PROFIT OR LOSS FOR ADJUSTABLE UNITS As of December 31, 2012, the detail of Adjustable Units is as follows:

206

Items Assets Financial assets at fair value Financial assets at amortized cost Loans Investments for insurances with a single Investment Account (SIA) Real estate investments Accounts receivable from insured parties Debtors from reinsurance transactions Debtors from coinsurance transactions Reinsurance share of technical reserves Other assets Liabilities Financial liabilities Technical reserves Debts with insured parties Debts from reinsurance transactions Debts from coinsurance transactions Other liabilities Shareholders’ equity Income accounts Revenue accounts Expense accounts Investment income Net debit (credit) to income Profit/loss from exchange rate difference

AUDITED FINANCIAL STATEMENTS

Debits

Credits 11.116.437 1.777.449 7.484.918 161.017

48.224.438 2.059.643 39.899.097 6.445

366.768

1.469.733

1.244.266

4.316.118

7.426

6.386

74.593 50.852.843 290.574 50.496.471

467.017 9.904.634 47.752 9.836.391

2.578

6.936

63.220

13.555

61.969.280

58.129.072


NOTE 39. PROFIT (LOSS) FROM DISCONTINUOUS TRANSACTIONS AND TRANSACTIONS WITH ASSETS AVAILABLE FOR SALE * As of December 31, 2012, the Company has no discontinuous transactions or transactions with assets available for sale.

NOTE 40. INCOME TAX

NOTE 40.1. INCOME FROM TAXES Item Expenses from income tax: Tax for the period Credit (debit) for deferred taxes: Generation and reversal of temporary differences Change in temporary differences not previously recognized Fiscal benefit from previous accounting periods Subtotal Taxes for rejected expenses Art. 21 Monthly provisional payments (MPP) for losses Cumulative Article 31, Paragraph 3 Others Net Debit (Credit) to Income for Income Tax

M$

207

2.398.502 (1.347.740) 1.050.762 14.721

1.065.483

AUDITED FINANCIAL STATEMENTS


NOTE 40.2. RECONCILIATION OF EFFECTIVE INCOME TAX Item Profit before tax Permanent differences Additions or deductions Single tax (rejected expenses) Non-deductible expenses (financial and non-tax expenses) Tax incentive not recognized in the income statement Others Effective Rate and Income Tax Expense

Tax Rate

% Amount M$ 20 660.710

0,4

14.721

11,6 32

390.052 1.065.483

NOTE 41. CASH FLOW STATEMENT 208 As of December 31, 2012, the detail of the “Others” heading exceeding 5% is as follows: Other Income Related to Financing Activities Detail Current account revenue Sales under repurchase agreement

Amount M$ 747.670 133.142.019 133.889.689

Totales Other Expenses Related to Financing Activities Detail Credit line use Current account Sale under repurchase agreement maturities Totales

AUDITED FINANCIAL STATEMENTS

Amount M$ 62.549.328 1.378.360 104.435.819 168.363.507


NOTE 42. CONTINGENCIES AND COMMITMENTS

Type of Contingency or Commitment

Commitment Creditor

Committed Assets

Type

Unpaid balance as of Fin. Statement closing date M$

Released Commitment Amount M$

Observations

Carrying Value M$

Legal Procedures

Legal Suits Fundo la CopVida S.A. Villana, Parcela No. 24, ML B-24

Real Estate

184.062

184.062

As of Financial Statement closing date, the Company has a land title registration procedure in process at the Santiago Real Estate Registry.

Assets in guarantee

Others

AUDITED FINANCIAL STATEMENTS

209


NOTE 43. SUBSEQUENT EVENTS

Over the period between January 1, 2013 and the date of submission of these financial statements, the following events to be reported occurred: On January 2, 2013, Mr. Miguel Ángel Valdés Jofré joined the Company as Compliance Official. At Board of Director Meeting held on January 31, 2013, he was also appointed as Crime Prevention Supervisor, in accordance with Law 20,393.

210

On February 19, 2013, an essential fact was reported; namely, the incorporation of Mr. José Luis Montero Pérez as new Company Management Control and Financial Manager. The Financial Statements as of December 31, 2012 were approved by the Board of Directors on February 28, 2013. As of the date of issuance of these Financial Statements, the Company’s Management was not knowledgeable of any subsequent events that may have significantly affected the interpretation of these statements.

AUDITED FINANCIAL STATEMENTS


NOTE 44. FOREIGN CURRENCY

1. ASSET AND LIABILITY POSITION IN FOREIGN CURRENCY Assets Investments Deposits Others Premium debtors Insured parties Reinsured parties Claim debtors Other debtors Other assets Total Assets

US Dollar

Liabilities

Currency 1

Reserves Ongoing Risk Unexpired Claims Claims payable Premiums payable Insured parties Reinsured parties Debts with Institutions Financial institutions Hedging transactions Other liabilities Total Liabilities Net Position

Currency 2 Other Currencies Consolidated (M$)

202.971.071

202.971.071

46.046

46.046

1.417.945 950.038 205.385.100

1.417.945 950.038 205.385.100

0

0

Currency 2 Other Currencies

Consolidated (M$)

363.423

363.423

178.248.964

178.248.964

178.612.387

0

0

178.612.387

26.772.713

0

0

26.772.713

AUDITED FINANCIAL STATEMENTS

211


Net Position (Currency of Origin)

55.781

Exchange Rate as of 31.12.2012

479,96

2. FOREIGN CURRENCY MOVEMENT ON ACCOUNT OF REINSURANCES Item

U.S. Dollar Inflows

212

Consolidated (M$) Outflows

Premiums Claims

(654.259) 1.202.153

Net Movement

Inflows

(654.259)

Outflows

(654.259)

1.202.153

1.202.153

547.894

1.202.153

Net Movement

(654.259) 1.202.153

Others Net Movement

1.202.153

AUDITED FINANCIAL STATEMENTS

(654.259)

(654.259)

547.894


3. CONTRIBUTION MARGIN OF FOREIGN CURRENCY INSURANCE TRANSACTIONS

ITEMS

U.S. Dollar

Consolidated M$

Direct Premium Accepted Premium Technical Reserve Adjustment Operating Income

0

0

Intermediation Cost Claim Cost Administration Cost Total Operating Cost

0

0

14.800.577

14.800.577

14.800.577

14.800.577

Investment Proceeds Other Revenue and Expenses Price-level Restatement Income before Tax

213

NOTE 45. SALES CHART BY REGION (GENERAL INSURANCES) *This is not applicable to Life Insurance Companies.

AUDITED FINANCIAL STATEMENTS


NOTE 46. SOLVENCY MARGIN (GENERAL INFORMATION)

COMPAÑÍA DE SEGUROS CORPVIDA S.A. SOLVENCY MARGIN - LIFE INSURANCES (Figures in thousands of Chilean pesos) 1. GENERAL INFORMATION CHART No. 1 Insurances

214

Premium Direct

Accepted

Insured Amount Direct Accepted

Assigned

Assigned

Accidents

138.489

0

0

66.335.248

0

Health

637.699

0

0

1.789.424.298

0

Additional

3.474.597

0

0

1.325.583.323

0

Subtotal

4.250.784

0

0

3.181.342.869

0

W/O Res. Unex. Claims (W/O Additional) W/ Res. Unex. Claims (W/O Additional)

AUDITED FINANCIAL STATEMENTS

930.448.838

2.461.804.221


Reserve Direct

d

Accepted

0

1.471.591

0

144.255

0

1.281.830

0

2.897.676

Risk Capital Direct

Assigned

Assigned

215 0

0

1.611.421

120.620.433

Accepted

928.837.417

(143.014)

AUDITED FINANCIAL STATEMENTS


Insurances

Premium Direct

Accepted

Assigned

Insured Amount Direct Accepted

Assigned

Under DL 3500 AFP Ins. Disab. and Surv. Life Annuities

COMPAÑÍA DE SEGUROS CORPVIDA S.A. SOLVENCY MARGIN - LIFE INSURANCES (Figures in thousands of Chilean pesos) CLAIMS OVER THE LAST THREE YEARS CHART No. 2

216

INSURANCES

Accidents

Health

Additional

Total

AUDITED FINANCIAL STATEMENTS

Claim Cost Over The Last Three Years Year I Direct Accepted Assigned 50.117

0

0

912.119

0

0

825.202

0

0

1.787.438

0

0


d

Reserve Direct

Accepted

Assigned

0 0 1.717.478.111

0 0 0

0 0 (41.257.606)

Year I-1 Direct

Accepted

Risk Capital Direct

Assigned

217

YEAR I-2 Direct

Assigned

Accepted

Accepted

Assigned

66.056

0

0

38.791

0

0

2.036.595

0

0

6.108.880

0

0

1.816.405

0

0

2.052.173

0

0

3.919.056 0

0

8.199.844

0

0

AUDITED FINANCIAL STATEMENTS


COMPAÑÍA DE SEGUROS CORPVIDA S.A. SOLVENCY MARGIN - LIFE INSURANCES (Figures in thousands of Chilean pesos) SUMMARY CHART No. 3 A. ACCIDENT, HEALTH, AND ADDITIONAL INSURANCES Solvency Margin As A Function Of F.P. F.R (%) % Premiums CIA. 14 Accidents 138.489 85

218

S.V.S. 95 18.419

Health

637.699

73

84.814

Additional

3.474.597

98

476.715

Total

B. INSURANCES NOT GENERATING RESERVES FOR UNEXPIRED CLAIMS

Solvency Margin Risk Capital

928.837.417

AUDITED FINANCIAL STATEMENTS

Factor %

0,0005

R. Ratio (%) CIA

S.V.S.

TOTAL

76%

50%

352.958


As A Function Of F.S. % Claims 17 51.655

TOTAL F.R. (%) CIA.

S.V.S. 95

85

8.342

18.419

3.019.198

73

487.600

487.600

1.564.593

98

260.661

476.715 982.734

AUDITED FINANCIAL STATEMENTS

219


C. INSURANCES WITH RESERVES FOR UNEXPIRED CLAIMS

Solvency Margin Total Indirect Insurance Reserves Liabilities Liabilities

Accidents 1.850.980.915

Health

Reserves Letter B Insurances Additional

1.471.591 144.255

Solvency Margin ( A + B + C )

220 NOTE 46.2. SOLVENCY MARGIN - GENERAL INSURANCES

*This is not applicable to Life Insurance Companies.

AUDITED FINANCIAL STATEMENTS

Letter A

1.281.830 2.897.676

1.611.421


Fund Value Reserve

86.516.922

Cpy. Oblig. Less A - B Subtotal (Prev. Subtotal Total -F. V. Res Column / 20) (Fund V. Res. / 140)

1.759.954.896

87.997.745

617.978

88.615.723

221

AUDITED FINANCIAL STATEMENTS


NOTE 47. COMPLIANCE WITH OFFICIAL CIRCULAR NO. 794 (ONLY GENERAL INSURANCES) *This is not applicable to Life insurance

NOTE 48. SOLVENCY NOTE 48.1. COMPLIANCE WITH INVESTMENT AND INDEBTEDNESS REGIME

222

Obligation to invest Technical Reserves and Risk Capital Technical Reserves Risk Capital Investments representing Technical Reserves and Risk Capital Surplus (Deficit) of Investments representing Technical Reserves and Risk Capital Net Worth Shareholders' Equity Non-Cash Assets (-) INDEBTEDNESS Total Financial

AUDITED FINANCIAL STATEMENTS

1.891.472.946 1.801.207.021 90.265.925 1.912.315.533

20.842.587

139.028.292 150.259.834 (11.231.542) 139.028.292 12,83 0,40


NOTE 48.2. INVESTMENT OBLIGATION

Total Pension Fund Insurance Reserves Reserve for Life Annuities 5.31.21.21 Reserve for Life Annuities 5.14.22.10 Reinsurance Interest in Reserve for Life Annuities Disability and Survival Insurance Reserve 5.21.31.22 Disability and Survival Insurance Reserve 5.14.22.20 Reinsurance Interest in Disability and Survival Insurance Reserve Total Non-Pension Fund Insurance Reserves Reserve for Ongoing Risks 5.21.31.00 Reserve for Ongoing Risks 5.14.21.00 Reinsurance Interest in Reserve for Ongoing Risks Reserve for Unexpired Claims 5.21.31.30 Reserve for Unexpired Claims 5.14.23.00 Reinsurance Interest in Reserve for Unexpired Claims 5.21.31.40 Fund Value Reserve

1.676.220.505 1.676.220.505 1.717.478.111 41.257.606

124.981.373 2.697.029 2.697.029

15.873.108 15.873.108

86.516.922

AUDITED FINANCIAL STATEMENTS

223


Reserve for Private Annuities 5.31.21.50 Reserve for Private Annuities 5.14.24.00 Reinsurance Interest in Reserve for Private Annuities Reserve for Claims 5.31.21.60 Reserve for Claims 5.14.25.00 Reinsurance Interest in Reserve for Claims Catastrophic Reserve against Earthquakes 5.21.31.70 Catastrophic Reserve against Earthquakes 5.14.26.00 Reinsurance Interest in Catastrophic Reserve against Earthquakes

224

Total Additional Reserves Reserve for Premium Inadequacy 5.21.31.80 Reserve for Premium Inadequacy 5.14.27.00 Reinsurance Interest in Reserve for Premium Inadequacy Other Technical Reserves 5.21.31.90 Other Technical Reserves 5.14.28.00 Reinsurance Interest in Other Technical Reserves 5.21.32.00 Debts from Insurance Transactions

AUDITED FINANCIAL STATEMENTS

16.994.622 17.137.636 143.014 2.899.692 2.929.842 30.150 -

5.143 5.143 5.143

-

-

-


TOTAL OBLIGATION TO INVEST TECHNICAL RESERVES

1.801.207.021

Risk Capital Solvency Margin Debt Capital ((PE+PI)/5) General Insur. Cps. ((PE+PI-RVF)/20)+(RVF/140) Life Insur. Cps. Current Liabilities + Indirect Liabilities - Technical Reserves Minimum Equity UF 90,000 (UF 120,000 for Reinsurance)

90.265.925

TOTAL INVESTMENT OBLIGATION (TECHNICAL RESERVES + RISK CAPITAL)

90.265.925 86.516.922

56.064.102 2.055.668

1.891.472.946

225

AUDITED FINANCIAL STATEMENTS


NOTE 48.3.NON-CASH ASSETS

226 Non-Proportional Reinsurance Remodeling Current Accounts Others

5.15.12.00

139.725

5.15.12.00

6.980

5.15.12.00

101.485

5.14.12.30

221.641

5.15.12.00

952.419

5.15.35.0015.874.288 5.15.33.00 5.15.12.00

TOTAL NONCASH INVESTMENTS

AUDITED FINANCIAL STATEMENTS

26.949 17.555.525

0904871.436 70.113 2009 300457.829 21.750 2009 31-127.050 2006 300698.949 2011 3006193.196 751.042 2011 31-12625.464 439.657 2007 31-039.353.568 2009 31-1024.050 2011 11.231.542

Repayment Term (months)

Trademark Licenses A.F.R

232.038

Period Repayment M$

Software Use Licenses

5.15.12.00

Asset Balance M$

Software

Initial Date

Initial Asset M$

Financial Statement Account

Non-Cash Assets

36

36 -

12 60 -


NOTE 48.4. INVESTMENT STOCK

Assets Representing Technical Reserves And Shareholders' Equity a) Instruments issued by the Government or the Central Bank b) Term deposits or securities representing deposittaking at Banks and Financial Institutions b.1 Deposits and others b.2 Bank bonds c) Mortgage bonds issued by Banks and Financial Institutions d) Bonds, promissory notes, and debentures issued by public or private comps. dd) Investment fund installments dd.1 Movable assets dd.2 Real estate dd.3 Risk capital e) Shares of admitted publicly traded companies ee) Shares of real estate publicly traded companies f) Credit to insured parties for non-due and nonaccrued premiums (1st group) g) Claims receivable from reinsurers (for claims paid to insured parties), non-due h) Real estate h.1 Non-residential real estate for own use or lease h.2 Non-residential real estate granted under leasing

Partial

Total 75.789.129 480.656.515

82.401.666 398.254.849 142.572.239 573.342.409 24.729.354 12.839.120 9.888.029 2.002.205

227 50.045.436

157.297.315 115.177.705

AUDITED FINANCIAL STATEMENTS


228

h.3 Residential, urban real estate for own use or lease h.4 Residential, urban real estate granted under leasing i) Non-due credit for disability and survival insurance D.L. No. 3500 and credit for individual account balance (2nd group) ii) Life insurance policyholder advance (2nd group) j) International assets k) Credit to assignors from non-due, non-accrued premiums (1st group) l) Credit to assignors from non-due, accrued premiums (1st group) m) Non-accrued acceptance discount n) Endorsable mortgage loan notes 単 ) Banks o ) Short-term fixed-income mutual funds p ) Other financial investments q ) Consumer credit r ) Claims receivable Total Assets Representing Technical Reserves and Equity Assets Representing Uncommitted Equity Shares of closely held companies International assets Non-residential real estate Movable asset investment fund installments Real estate investment fund installments

AUDITED FINANCIAL STATEMENTS

1.081.492 205.278.279

49.341.664 2.099.437 4.249.610 24.359.099 6.249.803 46.047 1.912.315.533

2.644.649 7.373 184.062 28.141.220 131.719


Cash on hand Plant for own use Other real estate investments Software

980.840 1.257.538 129.281

Total Assets Not Representing Technical Reserves and Equity

33.476.682

Total Investments

1.945.792.215

229

AUDITED FINANCIAL STATEMENTS


NOTE 49. RELEVANT EVENTS

230

1) On March 13, 2012 and pursuant to Official UF 50. Circular No. 991 of the Superintendency of - Deloitte were appointed as External Auditors Securities and Insurance, the fact that Ms. Sylvia for the 2012 financial period. Yáñez Moreno assumed the position as Human Resource Manager was reported as a material - Also at this Meeting the decision was made fact. to revoke the current Board of Directors and appoint the following persons. 2) On March 29, 2012, the third Company Regular Members Board of Director Meeting was held, where Maria Catalina Saieh Guzmán the financial statements for the financial period Jorge Andrés Saieh Guzmán ending on December 31, 2011 as reviewed Fernando Siña Gardner by External Auditors were approved, and an Alejandro Ferreiro Yazigi Ordinary Shareholder Meeting was convened Charles Naylor del Rio for April 24, 2012 at 09:30 at the Company’s Francis Lucchesi offices. Bruce Stanforth 3) At an Ordinary Shareholder Meeting held on Alternate Members April 24, 2012, the following agreements were Alvaro Caviedes Barahona made: Pilar Dañobeitía Estades - The Annual Report and Financial Statements for the 2011 financial period were approved. Alvaro Barriga Oliva Felipe Cuadra Campos - It was agreed that Board members were to be Consuelo Gatica remunerated for their duties as follows: MatamalaCharles Naylor del Rio a) Chairman of the Board remuneration: Consuelo Gatica Matamala UF 115 per month. José Tomás Errázuriz Grez b) Regular Board Member remuneration: Carlos Ducci González UF 90 per month. c) Acting Board Member remuneration: UF 15 4) On April 26, 2012 and pursuant to Official per attended session. Circular No. 991 of the Superintendency of d) Remuneration of Board Members who are Securities and Insurance, the fact that, at an part of the Company’s Investment Committee: Ordinary Shareholder Meeting held on April 24, UF 50. 2012 the decision was made to proceed to total e) Remuneration of Board Members who are renovation of the Company’s Board members part of the Company’s Auditing Committee:

AUDITED FINANCIAL STATEMENTS


in accordance with the information provided in that document was reported as a material fact. 5) On May 2, 2012, the Minutes of the Ordinary Shareholder Meeting held on April 24, 2012 was sent to the Superintendency of Securities and Insurance duly signed by the Company’s Chief Executive Officer. 6) At Board of Director Meeting held on May 31, 2012, the subscription of CorpBanca Bank shares was approved, with the Company exercising its preferential purchasing right in face of a capital increase undergone by the Bank. The purpose of the stock subscription was to maintain the Company’s current ownership interest in that banking institution. 7) On October 1, 2012, a material fact, namely that Mr. Alvaro Reyes Bórquez, who held a position as Administration and Finance Manager for the Company, did not longer work for the Company, was reported. 8) On October 18, 2012, an Extraordinary Shareholder Meeting was held, where the decision was made, subject to the approval of the Superintendency of Securities and Insurance, to increase the Company’s capital stock from $127,378,510,653, divided into 681,495 ordinary nominative shares, of the same series, with no nominal value, fully subscribed and paid-in; the amount included $4,781,291,545, corresponding to the revaluation of own capital

as of December 31, 2011 to $151,303,510,653, divided into 818,995 shares, through the issuance of 137,500 shares in the amount of $23,925,000,000, to be subscribed and paidin within 30 days from the date of the SVS resolution approving the capital increase.

231

AUDITED FINANCIAL STATEMENTS


NOTE 50.- REPORT IN RESPONSE TO GENERAL REGULATION NO. 306

232

Accounting Policies The Reserve for Ongoing Risk shall be applied l.-INSURANCE TRANSACTIONS to the main hedges with a maturity of up to 4 a.  Premiums years or those with higher terms that may have These correspond to the amount owed to the been submitted by the Company and approved Company by each reinsured party on account by the Superintendency of Securities and of premiums less acceptance discount and Insurance. impairment. In the case of additional hedges, the same criterion shall be applied regardless of the b. Other Assets and Liabilities from Insurance validity of the main hedge. and Reinsurance Contracts The estimation of the Reserve for Ongoing Risk i. Underlying derivatives in insurance contracts shall be carried out using the methodology The Insurance Contracts executed by the indicated in NCG No. 306 for first group Company have no underlying derivatives. insurances or the methodologies submitted by the Company and approved by the SVS, as the ii. Insurance contracts acquired by means of case may be. business combinations or portfolio assignments The Company has no such insurance contracts. ii. Reserve for Private Annuities The technical reserve set up for the annuity iii.  Acquisition expenses insurance shall be recorded in accordance with Acquisition expenses are directly recognized current regulations. This reserve must include any under income on an accrual basis. monthly payments that, as of estimation date, are due and have not been paid yet. c.  Technical Reserves i. Reserve for Ongoing Risk iii. Reserve for Unexpired Claims This corresponds to the Company’s obligation This corresponds to the reserve for outstanding with insured and reinsured parties originating policies and is equivalent to the difference from premiums from accepted insurance between the present value of future insurance and reinsurance contracts set up to cover benefits to be paid by the insurer and the outstanding risks on financial statement closing present value of the future premiums to be paid date. by the insured party in accordance with current This reserve includes the value of the hedging regulations. cost reserve that must be set up in accordance The value of the hedging cost reserve to be set with current regulations for life insurances with a up in accordance with current regulations for life single investment account. insurances with a single investment account must

AUDITED FINANCIAL STATEMENTS


be recorded in this account. The estimation of the Reserve for Unexpired Claims shall be carried out in accordance with the methodology, technical interest rate, and probability tables indicated in NCG No. 306 or in accordance with the tables submitted by the Company and approved by the Superintendency of Securities and Insurance, as applicable. The Reserve for Unexpired Claims shall be applied to hedges with a validity exceeding 4 years or those subject to shorter periods that may have been submitted by the Company and approved by the Superintendency of Securities and Insurance. In the case of additional hedges, the same criterion shall be applied regardless of the validity of the main hedge. iv. Disability and Survival Insurance (SIS) Reserve The Company has no Insurance Contracts originating, or compelling it to set up, this type of reserve. v. Reserve for Life Annuities The Technical Reserve for pension fund life annuity insurances enforced before January 1, 2012 shall be estimated in accordance with the regulations contained in Official Circular No. 1512 of 2001 and General Regulation NCG No. 318 of the Superintendency of Securities and Insurance and any other instructions effective as of September 1, 2011. Based on this: a) On the date of validity or acceptance of

an insurance policy, the carrying amount of its Base Technical Reserve shall be reflected under liabilities, charged to the “Annuity Cost” income account. b) On financial statement closing date, the Base Technical Reserves for each of the outstanding policies shall be re-estimated. This will be based on actuarial flows as of estimation date and cost rates or sales rates, as applicable. c) On a monthly basis, on the corresponding financial statement closing date, the Financial Reserve shall be determined. Any differences arising between the Base Technical Reserve and the Financial Reserve shall generate adjustments, the effects of which shall be reported under equity account “Reserves for Hedging. d) The change in the Base Technical Reserve shall be recorded in the “Annuity Cost” account. e) In case of outstanding reinsurances, such part of the Base Technical Reserve corresponding to the portion assigned to reinsurers shall be estimated based on the corresponding reinsured liability flows on the date of re-estimation and the Equivalent Cost Rate (CR) or the Selling Rate (SR), as applicable. f) Both the Base Technical Reserve and the Financial Reserve shall be presented in gross terms in the Financial Statements. The amount

AUDITED FINANCIAL STATEMENTS

233


234

corresponding to the assigned reserve shall reinsurance contract, there is a difference be reported as an asset from an assigned between the reinsurance premium and the asset reinsurance. set up as previously indicated, this shall be immediately recognized under income. g) Liability flows shall be determined based on current regulations and, if applicable, e) The estimation of the expected pension fund considering the gradual application of RVflows shall be fully based on the mortality tables 2004, B-2006, and MI-2006 mortality tables established by the Superintendency of Securities in accordance with the gradual recognition and Insurance, with their corresponding mechanism applied by the Company. improvement factors effective as of estimation date. For policies with a validity starting on January For the acceptance of reinsurances or portfolio 1, 2012, the Technical Reserve shall be transfers effective after January 1, 2012 and estimated based on the provisions contained regardless of the underlying policy validity date, in General Regulation NCG No. 318 of the the Technical Reserve shall be estimated without Superintendency of Securities and Insurance for considering matching assessment, discounting such contracts, not considering the Company’s the accepted flows at the lowest interest rate matching assessment: between the MR as of the effective reinsurance contract date and the interest rate implicit a) The rate used for discounting expected in the acceptance of the flows (interest rate pension fund flows shall be the lowest value determined based on the reinsurance premium). between the Market Rate (MR) and the Selling The application of the previous paragraphs Rate (SR) as of policy validity date, as defined in shall be carried out without prejudice to the Title III of Official Circular No. 1512. deduction of the reinsurance assignments of the Technical Reserve set up in order to comply b) Only the Base Technical Reserve shall be with the risk equity and indebtedness limit set up in liabilities, considering the interest requirements established in Decree Law DFL rate established on policy validity date in No. 25 of 1931, which will be subject to the accordance with the previous paragraph. provisions contained in article 20 of such legal text and the specific regulations issued by the c) Flows from life annuity obligations assigned Superintendency of Securities and Insurance. through reinsurance shall not be discounted for the calculation of the Technical Reserve for the vi.  Claim Reserve corresponding policies. Assigned flows shall This is the Company’s obligation towards be recognized as an asset from reinsurance, insured and reinsured parties with respect to the determined based on the same interest rate amount of the claims or commitments assumed used for the calculation of the Technical Reserve through insurance policies, for claims occurring for the reinsured policy. and both reported and not reported, including all expenses associated with the settlement that d) If, at the time of the execution of the have affected the risk subscriptions of the insurer

AUDITED FINANCIAL STATEMENTS


entity and have not been paid. is indicated in General Regulation No. 6 of the This reserve must include those payments that, Superintendency of Securities and Insurance. as of estimation date, are due and have not yet Regardless of the risk grouping method used been paid to the insured party. to determine the amount of the Premium Inadequacy Reserve, this is assigned and The Claim Reserve shall be recorded under a reported in the financial statements based on “Claim Reserve” liability account, segregating the FECU branch classification determined the reserve for Reported Claims and the Reserve by the Superintendency of Securities and for Claims Occurring But Not Reported (OYNR) Insurance. on financial statement closing date.  ix. Additional Reserve based on Liability The Reported Claim Reserve shall in turn be Adequacy Test classified as follows: The Company conducts a Liability Adequacy Test on each quarterly financial statement (a)  Claims Settled But Not Paid closing date in order to assess the adequacy of the reserves set up in accordance with current (b)  Claims Settled But Contested by the Insured regulations issued by the Superintendency of Party Securities and Insurance. The test is based on current hypothesis re(c)  Claims Under Settlement Process estimations assumed by the Company for estimating cash flows originating from insurance The estimation of the Reserve for Claims contracts, considering insured party options or Occurring But Not Reported shall be based benefits as well as contracted guarantees. on the general standard application method The contract flows indicated in the previous provided for in NCG No. 306 (Incurred Claim paragraph consider at least the flows arising Triangles) or any of the alternative methods from expected claims and direct expenses provided for in the same regulation (Simplified related to settlement thereof, discounting, if Method and Transition Method), or any methods applicable, the future premiums the insured that have been submitted by the Company and party has agreed to pay as part of the approved by the Superintendency of Securities insurance contract. and Insurance, as applicable. The Liability Adequacy Test is conducted considering flows before taxes.  vii. Catastrophic Reserve against Earthquakes If, due to the application of this Test, a Technical This is not applicable to Life Insurance Reserve inadequacy is verified, the Company Companies. shall set up an additional Technical Reserve in the statement of income corresponding to the viii. Premium Inadequacy Reserve respective closing date. The Premium Inadequacy Reserve corresponds However, based on the periodical evaluation to the amount obtained by multiplying the of the items analyzed in this Test, the additional Reserve for Ongoing Risk less reinsurance by the Technical Reserve may be reversed in the inadequacy factor. The calculation methodology income statement corresponding to the

AUDITED FINANCIAL STATEMENTS

235


236

respective closing date. total funds transferred to the Company by the The Liability Adequacy Test recognizes the risk contracting party shall be recognized as the assigned to the reinsurer, i.e., when the need insurance premium. to set up an additional Technical Reserve is The deposit component shall be recognized as determined, this is recognized in gross terms a technical reserve denominated “Fund Value under liabilities and the reinsurer participation Reserve” and shall correspond to the Policy under assets. Value of each contract on the reserve estimation When a Premium Inadequacy Test is conducted, date in accordance with the conditions the Company evaluates whether this test established in each contract, without deduction meets the requirements to be considered in of any potential redemption charges. In replacement of the Liability Adequacy Test. If this the case of insurances associated with NCG is so, the latter Test is not required. No. 176 of 2005, neither the technical reserve The Test is applied for groups of contracts associated with the deposit component nor the sharing similar risks and jointly managed as contract premium shall be recognized under part of the same portfolio. Accordingly, both the liabilities. Test and the reserve inadequacy, as the case Concerning the insurance component, the may be, are measured on a portfolio basis. Company shall set up Reserves for Ongoing However, if an inadequacy is verified as a Risk or Reserves for Unexpired Claims, being result of the Test, this is assigned and presented able to apply different criteria with respect to in the financial statements, based on the the main coverage and additional coverages in FECU branch classification determined by the accordance with the relevant type of risk. Superintendency of Securities and Insurance. A reserve gap shall be established for the risk If, in accordance with the Superintendency assumed by the Company on account of term, of Securities and Insurance regulations, the interest rate, currency, and type of instrument gradual recognition of mortality tables for risks, between the fund value reserves and technical reserve calculation is effective, the the investments that back up the reserve. The Liability Adequacy Test does not consider estimation of this reserve shall be based on the differences in reserves accounted for by the instructions issued by NCG No. 306, and such gradual process. Consequently, if an the determined amount shall be recorded inadequacy is verified, an additional reserve in the “Gap Reserve” equity account, as is set up only for the amount exceeding the indicated in Official Circular No. 2022 of the difference in technical reserves accounted for by Superintendency of Securities and Insurance. the gradual process. xi. Other Technical Reserves x. Reserve for Insurances with a Single The reserve for debts with insured parties and Investment Account other reserves set up by the insurance entity In accordance with the instructions issued in in accordance with current regulations and NCG No. 306, the deposit and risk components any additional reserves that must be set up by associated with an insurance with SIA shall be Mutual Fund Companies according to their byaccounted for on a joint basis. Therefore, the laws shall be recorded under this heading.

AUDITED FINANCIAL STATEMENTS


xii. Reinsurer Interest in Technical Reserves of Securities and Insurance, effective on these The Company recognizes reinsurer interest Financial Statement date. in technical reserves on an accrual basis, in accordance with current contracts. 2. Reserve for Ongoing Risk d. Matching (to be reported for policies with 2.1. Exception for a hedging period shorter than validity prior to January 1, 2012) policy validity This value shall be estimated as the difference The Company adhered to the exception between the Base Technical Reserve and the contained in paragraph two, letter b), No. 1, Title Financial Technical Reserve. It shall be applied III of NCG No. 306, introduced through NCG only for policies with validity prior to January 01, No. 320, with respect to considering, for the 2012. purpose of Reserve for Ongoing Risk calculation, the premium hedging and recognition period II.- Technical Reserve Calculation Criteria and when this is shorter than policy validity, Methodology maintaining at least one reserve equivalent to Reserve calculation was carried out based one month of premium or, if longer, the premium on the instructions contained in General equivalent for the grace period stated in the Regulations NCG No. 306 and No. 318 of the policy. Superintendency of Securities and Insurance, issued on April 14, 2011 and September 1, 2011, This is the case for the following insurances: respectively. - Collective life and health insurance policies and collective title insurance policies with a All the assumptions used in calculating reserves validity period equal to or exceeding 1 year are reviewed and updated on a quarterly basis, where premium is monthly calculated based on as applicable. an agreed upon rate over the insured capital amounts for policyholders with coverage valid in For the determination of current Financial the corresponding month. Statements, the Company exercised the following options contained in the - Coverage cost of insurances with SIA. aforementioned regulations: - Policies or Additional Coverages with annual 1.  Life Annuities validity with or without an automatic renewal Pursuant to the provisions contained in NCG clause with a payment frequency less than its No. 318, No. 2, the Company applied the validity. instructions in paragraph 2.1 only to policies affective as of January 1, 2012. For life annuity hese products are marketed through Individual, policies effective prior to such date, the reserve Collective, Bank Insurance, and Title Insurance was calculated pursuant to the instructions business lines. provided in Official Circular No. 1512 and other instructions provided by the Superintendency

AUDITED FINANCIAL STATEMENTS

237


238

2.2. Reserve for terms exceeding 4 years 4. Reserve for Claims Occurring But Not Pursuant to the final paragraph of No. 1, Title III Reported (OYNR) of SVS NCG No. 306, the Company informed For the estimation of the OYNR Reserve, the the Superintendency of its decision to apply Company used the standard method generally the calculation of the Reserve for Ongoing applied for all modeled risks. The standard Risk based on terms exceeding 4 years for method corresponds to the method based coverages for which there is no probability table on the development of incurred claims, also registered at the registry of the Superintendency called “Incurred Claim Triangle Method”, whose of Securities and Insurance for the calculation of calculation is indicated in Exhibit 2 to NCG No. Reserves for Unexpired Claims. 306. 2.3. Application Pursuant to the provisions contained in In accordance with the transitory provisions paragraph 3.2, Title II of SVS NCG No. contained in Title VI, NCG No. 306, the new 306, the Company conducted an estimation instructions concerning the setup of the Reserve of OYNR Reserves by product portfolios for Ongoing Risk, set out in No. 1 of Title II of considering the nature of the risks and similar the aforementioned regulation, were applied claim management policies, which resulted only to policies issued or renewed as of January in a branch distribution different from that 1, 2012. established by FECU. 3.  Reserve for Unexpired Claims The methodology and criteria applied by Pursuant to paragraph 2.1, Title III of General the Company for weighing and segregating Regulation No. 306, the Superintendency of each FECU branch were presented to the Securities and Insurance, through Official Superintendency of Securities and Insurance Circular No. 10,210 of April 20, 2012, authorized and are based on the distribution of incurred the Company to apply a Reserve for Unexpired claims on Financial Statement date. Claims in the following cases: - Insurances with a single premium associated with credits (consumer credit title insurances), 5. Reserve for Premium Inadequacy regardless of the coverage term (death risk). The Premium Adequacy Test was conducted in accordance with the standard method stated - Individually subscribed insurances with a in Exhibit 1 to NCG No. 306, which is based single or leveled (death risk) premium, marketed on the “Combined Ratio” concept, which relates under an individual or collective policy, without the insurance company technical disbursements a renewal clause and regardless of policy with the recognized premium to address the validity. former, using the 12-month historical information contained in the Financial Statements - Products with a leveled (death risk) premium, immediately prior to the date of determination with premium refund, regardless of policy thereof. validity.

AUDITED FINANCIAL STATEMENTS


The Company performed the premium adequacy analysis considering the branches defined by FECU and identifying within each account the component related to insurances generating a Reserve for Ongoing Risk. Where disbursements are higher than revenues, the Company reports a Premium Inadequacy Reserve additional to the Reserve for Ongoing Risk. III.- SUMMARY OF IMPACT OF NEW RESERVE STANDARDS The impact of the application of the new reserve standards on income and expense accounts, comparing the reserve set up on December 31, 2011 with that set up on January 1, 2012, implied an income loss equivalent to M$ 1,960,019 on account of greater reserve variation.

239

AUDITED FINANCIAL STATEMENTS


The summary of this result by branch and type of reserve is as follows: IFRS IMPLEMENTATION IMPACT AS OF JANUARY 1, 2012 CORPVIDA (Figures in thousands of Chilean pesos)

240

Code

Branch

101 102 103 104 105 106 107 108 109 110 111 112 113 114 150 201 202

Full Individual Life Term Individual Life Insurance Other Insurances with Individual SIA Mixed or Total Individual Private Annuities Total Simple or Deferred Capital Family Protection Individual Disability or Incapacity Insurance Individual Health Insurance Individual Personal Accidents Assistance Individual Title Insurance Individual Mandatory Personal Accident Insurance VPFS Insurances Other individual insurances Full Collective Life Insurance Term Collective Life Insurances

203 204 207 209 210 211 212 214

Mixed or Collective Disability or Incapacity Insurance Collective Disability or Incapacity Insurance Family Protection Collective Health Insurance Collective Personal Accident Insurance Collective Assistance Insurance Collective Title Insurance Insurances with Collective VPFS TOTAL

AUDITED FINANCIAL STATEMENTS

Reserve for Ongoing Risk

Reserve for Unexpired Claims

Fund Value Reserve

OYNR

TSP

Total

TAP

0 0 0 0 0 0 0 45.948 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 -9.653 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 -891 111.224 0 0 0 0 -252 250.257 -13.424 0 0 0 5.421 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 -891 111.224 0 0 0 0 36.043 250.257 -13.424 0 0 0 5.421 0 0

86.233

-36.874

0

-62.687

0

0

-13.328

0 0 0 0 1.800.533 0 391.327 0 2.324.041

0 0 0 0 -349.147 0 -147.720 0 -543.395

0 0 0 0 0 0 0 0 0

0 0 0 -7.333 -9.410 0 -98.949 0 173.956

0 0 0 5.417 0 0 0 0 5.417

0 0 0 0 0 0 0 -1.916 0 1.441.976 0 0 0 144.658 0 0 0 1.960.019


IV.-Premium Inadequacy Test Date Result M$ 30-09-2012 434

Characteristics and Hypotheses for the Calculation Model Used The aforementioned General Regulations NCG No. 306 and No. 318 determine the conduction of a Liability Adequacy Test with the purpose The methodology used corresponds to that of assessing the adequacy of the technical described in Exhibit 1 to NCG No. 306, with the reserves set up as of the closing date of each following considerations: quarterly Financial Statement. 1. For each FECU branch, the premiums, claims, In accordance with the above, when defining and reserves corresponding to the coverages and applying this Test, the Company took into with a Reserve for Ongoing Risk were identified. account the following requirements: 2. Intermediation costs were assigned based on a) To consider generally accepted principles the proportion represented by the Branch Direct on an international level and the IFRS concepts Premium with respect to the Earned Premium for associated with this Test. insurances with a Reserve for Ongoing Risk. b) To use the Company’s estimates with respect 3. In those cases where the application of to mortality and interest rate, i.e., to analyze the NCG No. 306 implied a change to the reserve adequacy of the reserve in accordance with methodology, the opening reserve was rethe Company’s own experience and portfolio estimated for the purpose of recording its characteristics. variation over the period under analysis. c) To consider the options or benefits for 4. Administration Expenses were assigned policyholders and the agreed upon guarantees by FECU branch in accordance with the provided to the former by the Company. Company´s functional expense allocation criteria. d) To recognize the risk assigned to reinsurers for accounting purposes. V.- Liability Adequacy Test For the determination of the Test flows, IFRS 4 criteria were taken as reference; in its paragraph 16 letter (a), these criteria indicate that, as a Date Result M$ minimum requirement, current estimates of all 31-12-2011 contractual cash flows and related cash flows, 31-03-2012 such as settlement costs and cash flows from options and underlying guarantees, must be 30-06-2012 considered. 30-09-2012

AUDITED FINANCIAL STATEMENTS

241


242

For the definition of the technical criteria for this Test, the guidelines contained in International Actuarial Standard of Practice No. 6 (IAS 6) of the International Actuarial Association in relation to liability adequacy were considered. If, due to the application of this Test, a technical reserve inadequacy is verified, the Company shall set up the corresponding additional technical reserve. Otherwise, no adjustments are applied to the technical reserve already set up. Life Annuities Additionally, concerning application of the Test to Life Annuity Reserves, the following criteria were taken into consideration: - In accordance with NCG No. 318, only the setup of an additional technical reserve in the amount exceeding the difference in technical reserves accounted for by the gradual process was considered. - In addition and pursuant to Regulation No. 8,378 of the SVS of April 2, 2012, liability flows from already matched life annuity insurances were discounted using the accrual rate for the Company’s asset portfolio. To discount unmatched liability flows, the profitability rate of a portfolio representative of the new Company’s investments under current market conditions was considered. The methodology for this test is based on the expected present value of pension fund flows and the expense flows associated with their settlement not considering reinsurances. If the result is less than the reserve estimated based on the instructions issued by NCG No. 318, the difference shall be reported as an additional reserve, considering assignments to reinsurers on a proportional basis.

AUDITED FINANCIAL STATEMENTS


Insurances with a Single Investment Account (SIA) The defined test involved calculating expected flows from the contracts in the portfolio under analysis within a horizon of at least 30 years. Contract flows for each period were estimated based on the characteristics of each policy discounting intermediation expenses, paid claims, reserve variations, and maintenance expenses from the agreed upon premiums. If one or more of the projected flows are negative, an additional reserve equivalent to the present value of the deficits so determined shall be reported, using as discount rate the Market Rate informed by the SVS as of reserve setup date. Insurances with Reserves for Unexpired Claims The methodology for this test is based on the expected present value of claim flows plus the expense flows associated with their settlement less premium flows, if applicable. If the result is less than the reserve estimated based on the instructions issued by NCG No. 306, the difference shall be reported as an additional reserve, considering assignments to reinsurers on a proportional basis.

243

AUDITED FINANCIAL STATEMENTS


244

AUDITED FINANCIAL STATEMENTS


Memoria ingles cv (completa) 2805  
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