Grupo De Inversiones Suramericana S.a. · BVC:GRUPOSURA
Grupo De Inversiones Suramericana — Grupo SURA — Q2 2020 Earnings Presentation
45 slides from Grupo De Inversiones Suramericana's earnings presentation, September 2020
Slide 1: Grupo SURA Corporate Presentation Q2-2020
Corporate Presentation Grupo SURA Q2-2020
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER The forward-looking statements contained herein are based on Management’s current forecasts and outlook. For better illustration and decision-making, figures for Suramericana, SURA Asset Management and its subsidiaries are administrative rather than accounting, and therefore may dif
Slide 3: Strategy
Corporate Presentation Strategy
Slide 4: Diversified Investment Portfolio
DIVERSIFIED INVESTMENT PORTFOLIO 46.1% stake* 29% 1% and other investments 78% in financial #1 bank in Colombia and a services leader in Central America 20% 81.1% stake 51% 35.2% stake* 11% in publicly listed companies #1 in Colombia y #4 Latin America #1 in Colombia and a leader in the region Note:
Slide 5: History and Growth Stages
HISTORY AND GROWTH STAGES 1944 / 1990 1990 / 2007 2007 / 2016 2017- LEADERSHIP FINANCIAL SERVICES INTERNATIONAL EXPANSION FOOTPRINT OPTIMIZATION IN INSURANCE Leader in Colombia Multi Latin, financial • Divestment of Annuities business in Colombia services group (Ch., Pe., Mx) • Life Insurance (Mexic
Slide 6: Geographic Footprint and Financial Services Drivers
GEOGRAPHIC FOOTPRINT CLIENTS FINANCIAL SERVICES DRIVERS 52MM ECONOMIC IN 11 COUNTRIES GROWTH POPULATION MIDDLE CLASS 520MM FORMATION +1.1% CAGR (2000-2018) DEMOGRAPHICS PENETRATION* UNDERPENETRATED INSURANCE PENSION FUNDS BANKING SECTORS 2.8% vs. 7.8% ~30% vs. >80% ~51% vs. >130% Developed countries
Slide 7: ESG Standards and Ratings
ESG STANDARDS AND RATINGS ESG Ratings Evolution Other Initiatives / Standards Index / Standard 2016 2017 2018 2019 DJSI (max. 100) 83 75 79 73 FTSE4GOOD (max. 5) 3.5 3.9 3.8 4.1 MSCI (max. AAA) BBB BBB BB BBB ISS ESG C+ C+ C DJSI Results 100 90 80 70 60 50 40 Prioritized SDG 30 20 10 0 Total Economi
Slide 8: Evolution Financial Metrics Grupo SURA
EVOLUTION FINANCIAL METRICS GRUPO SURA CONSOLIDATED REVENUES SURAMERICANA OPERATING REVENUES (COP tn) Total revenues (COP trillion) Insurance GWP 17.14 14.63 15.10 Health Care 3.87 22 3.13 revenues 11.95 2.61 19 19 13.27 18 2.19 12.02 11.96 7.70 CAGR 2015-19 14 9.77 1.82 Insurance GWP 5.88 22.5% Hea
Slide 9: Liability Management Holding Company
LIABILITY MANAGEMENT HOLDING COMPANY Successful bond issue allows early management of 2021 maturities DEBT PROFILE AFTER ISSUANCE» » NET DEBT INDICATORS Figures in COP billion 1,859 COP 4.5 bn NET DEBT/ DIVIDENDS (12M) » % USD DEBT 1,022 (NET OF HEDGING) 3.9x 425 718 6% Max. 5x 296 289 300 166 100 1
Slide 10: Cashflow Has Allowed Us to Deleverage After Expansion Phase
CASHFLOW HAS ALLOWED US TO DELEVERAGE AFTER EXPANSION PHASE GRUPO SURA (HOLDING) 2020 CASHFLOW COP DENOMINATED DEBT Figures in COP billion REDUCTION (in COP tn) 1.76 1,132 109 1,022 COP -202,726 MM 357 364 1.56 11 291 Dividends and Operating Operating Interest expense Paid dividends Investments Avai
Slide 11: COVID-19 Crisis Management
COVID-19 CRISIS MANAGEMENT EMPLOYEES CLIENTS AND SOCIETY RISKS AND FINANCIAL BUSINESSES OPPORTUNITIES Preserve their wellbeing Moment to be Working together Update on risks and Focus on liquidity relevant to be part of the opportunities and solvency solution 11
Slide 12: COVID-19 Crisis Management and Recent Highlights
COVID-19 CRISIS MANAGEMENT AND RECENT HIGHLIGHTS EMPLOYEES CLIENTS AND BUSINESS Preserve their wellbeing Moment to be relevant +1,500 new hires of health professionals in Suramericana Colombia. Covid-19 tests: +200,000 tests processed (~ 13% of the country's total) and a 200% increase in daily proce
Slide 13: COVID-19 Crisis Management and Recent Highlights
COVID-19 CRISIS MANAGEMENT AND RECENT HIGHLIGHTS RISKS AND OPPORTUNITIES FINANCIAL Update on risks and opportunities Focus on liquidity and solvency Increase in sales effectiveness. We maintain capital above regulatory requirements and focus on preserving liquidity Suramericana Grupo SURA • Payment
Slide 14: Resilient Growth in Main Business Lines
RESILIENT GROWTH IN MAIN BUSINESS LINES Despite recovery in Q2, net income is still affected by market returns CONSOLIDATED INCOME STATEMENT jun-20 jun-19 Var$ Var% Retained premiums 5,374 5,329 45 0.9% • Growth in revenues from premiums, commissions Commission income 1,352 1,334 18 1.3% and service
Slide 15: Net Income Adjusted for Market Effects
NET INCOME ADJUSTED FOR MARKET EFFECTS Decreases by 54% due to a lower contribution from the equity method ∆SURA AM ∆Grupo SURA and other COP -310 COP -116 119 951 (83) 723 (228) -54% 335 (398) 245 (89) (2) (24) (0) 2019 Net 2019 Net ∆ Net Income ∆ Net Income ∆ Encaje SURA ∆ Equity ∆ Fx Impact** ∆ A
Slide 16: Evolution of Revenues Shows Partial Recovery in June
EVOLUTION OF REVENUES SHOWS PARTIAL RECOVERY IN JUNE P&C SEGMENT (var% vs. same month of 2019) LIFE SEGMENT (var% vs. same month of 2019) 20% 80% 10% 60% 0% 40% -10% 20% -20% 0% -30% -40% -20% -50% -40% feb-20 mar-20 abr-20 may-20 jun-20 feb-20 mar-20 abr-20 may-20 jun-20 Car Mandatory Car Total P&C
Slide 17: Our Investments
Our Investments Subsidiaries Associates
Slide 18: Suramericana: #4 LATAM Insurance Group
#4 LATAM INSURANCE GROUP #1 INSURANCE COMPANY with an established growth platform in 9 in Colombia with top 5 positions in 4 countries Latam countries MULTICHANNEL APPROACH DIVERSIFIED BUSINESS MODEL developing new channels BY GEOGRAPHY BUSINESS LINES throughout the region 47% P&C 24,800 34% 30% Lif
Slide 19: Suramericana Financials Evolution
SURAMERICANA FINANCIALS EVOLUTION OPERATING REVENUES (COP tn) CLAIMS AND EXPENSE RATIO 13.5% 3.2% 17.14 93% 92% 95% 92% 94% 22.4% 14.63 15.10 Mandatory health 3.87 cost ratio 11.95 2.61 3.13 13.27 Insurance 59% 60% 59% 55.2% 2.19 12.02 11.96 55% 55% GWP 7.70 9.77 Retained claims 1.82 Mandatory 16% 1
Slide 20: SURA Asset Management: Mandatory Pension and Savings
MANDATORY SAVINGS AND INVESTMENT PENSION INVESTMENTS MANAGEMENT Stable cash flow Underpenetrated Regional platform business business with high connecting Latam to growth potential the world 88% 6% 6% COP 494 tn AUM AUM AUM AUM AUM AUM AUM 20.5 MM COP 437 tn COP 37.8 tn COP 34.5 tn* CLIENTS CLIENTS C
Slide 21: SURA AM Financials Evolution
SURA AM FINANCIALS EVOLUTION AUM (COP tn) COMMISSION INCOME (COP bn) 474 419 2,292 402 2,089 1,888 1,970 272 325 339 1,799 231 165 207 2,013 144 1,858 1,654 1,722 1,761 CAGR Mandatory 4.4% 18.7% 4.0% 15.5% 4.9% 4.3% 6.1% 9.7% 5.4% Voluntary 18.4% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Man
Slide 22: Investments in Leading Publicly Listed Companies
INVESTMENTS IN LEADING PUBLICLY LISTED COMPANIES #1 BANK IN COLOMBIA STRATEGIC FOCUS LARGEST PROCESSED FOODS with a relevant presence in Central in cement, energy and road and airport GROUP IN COLOMBIA with leading America concessions brands in the main categories +15 MM clients with a strong distri
Slide 23: Results and Appendix
Results and Appendix Q2-2020 Results Appendix
Slide 24: Diversification
DIVERSIFICATION CONSOLIDATED FIGURES DIVERSIFIED SOURCE OF DIVIDENDS (2020E)* By Company By Country Country Clients Revenues Net Income Assets COLOMBIA 28 58.8% 48.9% 54.4% 19% 7% CHILE 4 15.2% 18.6% 21.8% 9% 27% 0% MEXICO 8 10.3% 22.1% 10.9% 10% 34% PERU 2 2.3% 9.3% 4.6% 12% ARGENTINA 1 4.2% -5.2%
Slide 25: Strong Financial Position of Grupo SURA and Subsidiaries
STRONG FINANCIAL POSITION OF GRUPO SURA AND SUBSIDIARIES STEADY GROW TH OF OUR EQUITY CREDIT RATINGS – GRUPO SURA 28,968 28,091 LOCAL INTERNATIONAL INTERNATIONAL 26,901 26,227 25,396 AAA BBB BBB- dic-16 dic-17 dic-18 dic-19 mar-20 Figures in COP billion Stable perspective Negative Perspective Feb-20
Slide 26: Recognized Issuer in Local and International Markets
RECOGNIZED ISSUER IN LOCAL AND INTERNATIONAL MARKETS LOCAL BONDS » INTERNATIONAL BONDS» RATE AMOUNT BID TO AMOUNT BID TO ISSUANCE ISSUER YEAR MATURITY YIELD ISSUER YEAR MATURITY OPTIMIZATION (USD MM) COVER (COP MM) COVER RATE (pbs) 2009 2019 54,500 8.16x IPC + 4.40% 100 2011 2021 300 17.3x 5.79% 200
Slide 27: Resilient Growth in Main Business Lines
RESILIENT GROWTH IN MAIN BUSINESS LINES Despite recovery in Q2, net income is still affected by market returns CONSOLIDATED INCOME STATEMENT jun-20 jun-19 Var$ Var% Retained premiums 5,374 5,329 45 0.9% • Growth in revenues from premiums, commissions Commission income 1,352 1,334 18 1.3% and service
Slide 28: Net Income Reflects Recovery in Q2
NET INCOME REFLECTS RECOVERY IN Q2 Return on encaje and equity method cotinue impacting results for 1H 2020 CONTRIBUTION TO 1H 2020 NET INCOME Grupo SURA and other COP -319 Var% vs. 1H 2019 +68% -39% NA -72% -948% +6% +14% +3% -74% 152 130 (80) (42) (10) 293 245 (194) (3) Suramericana SURA AM excl.
Slide 29: Net Income Adjusted for Market Effects
NET INCOME ADJUSTED FOR MARKET EFFECTS Decreases by 54% due to a lower contribution from the equity method ∆SURA AM ∆Grupo SURA and other COP -310 COP -116 119 951 (83) 723 (228) -54% 335 (398) 245 (89) (2) (24) (0) 2019 Net 2019 Net ∆ Net Income ∆ Net Income ∆ Encaje SURA ∆ Equity ∆ Fx Impact** ∆ A
Slide 30: Results Driven by Lower Claims Ratio
RESULTS DRIVEN BY LOWER CLAIMS RATIO And expense control that compensate impacts associated to the pandemic COP OPERATING REVENUES RETAINED EARNED PREMIUMS REVENUES SERVICES RENDERED 1H 2020 8.8 tn 10.5% CLAIMS RATIO (%REP) % COST OF SERVICES jun-20 jun-19 Var% 53% 55% 55% 54% 54% 93% 97% 93% 92% 94
Slide 31: Positive Contribution from All Operating Segments
POSITIVE CONTRIBUTION FROM ALL OPERATING SEGMENTS To Suramericana’s consolidated net income CONTRIBUTION TO 1H 2020 NET INCOME Var% vs. 1H 2019 -1% +288% N/A +6% +5% +189% +128% +68% 166 1 (45) 20 293 (39) 231 (41) Life P&C Health Care Operating Interest Expense Taxes Other Net Income 2020 Expenses
Slide 32: Increase in Net Income
INCREASE IN NET INCOME Explained by better operating results Var% written premiums +7.0% +7.5% +21.5% HOLDING AND COP -19,653 MM Claims ratio ´19/´20 60.1% / 54.2% 51.5% / 47.7% 90% / 90.1% OTHER +288% +68% 17 123 11 293 (2) (2) (27) -1.0% 174 (2) 2019 NET LIFE P&C HEALTH ADMIN. INTEREST TAXES OTHER
Slide 33: Resiliency in Commission Income Thanks to AUM Growth
RESILIENCY IN COMMISSION INCOME THANKS TO AUM GROWTH Return on legal reserve recovers from Q1-2020 loss, but is still lower than 1H 2019 COMMISSION INCOME INCOME FROM LEGAL RESERVE (ENCAJE) 573 577 597 577 Q2-2020 Q2-2019 Var% Var% LC 544 539 284 Commission income 1,116 1,118 -0.2% -2.0% Income from
Slide 34: Net Income Impacted by Mandatory Pension Business
NET INCOME IMPACTED BY MANDATORY PENSION BUSINESS Due to lower return on legal reserves Var% Commission income -1.8% +14.2% HOLDING AND AUM (COP tn) / Var% 437 / +7.7% 57.5 / +9.3% OTHER +7,475 MM 424 40 133 (19) (293) (14) (6) 2019 Net income Mandatory Voluntary savings Financial result Income tax
Slide 35: Shareholding Structure
SHAREHOLDING STRUCTURE SHAREHOLDERS TOTAL SHARES OUTSTANDING 27.1% Gru po Argos and 33.7% 10.5% subsidiarie s Gru po Nutresa 581,977,548 13.0% Common Preferred 28.7% Colombian Pe nsion (COMMON 20.7% Funds Shares Shares SHARES) (COMM. + PREF.) 12.2% 11.8% Inte rnational Funds 80.6% 19.4% 5.3% Retail
Slide 36: Cross Holding Structure
CROSS HOLDING STRUCTURE FINANCIAL SERVICES 13% 34%* 35% 35% PROCESSED FOODS INFRASTRUCTURE 12% 10% Stakes in common shares *Includes stake held in Grupo SURA by Cementos Argos which owns 6% of Grupo SURA’s common shares. 36
Slide 37: Sustainability Operating Model Aligned with Strategy
SUSTAINABILITY OPERATING MODEL ALLIGNED WITH STRATEGY WE MANAGE RESPONSIBLE STRENGTHEN STAKEHOLDERS CONTRIBUTE risks, trends and business practices public institutions engagement to make to social development opportunities decisions Responsible ▪ Responsible investment ▪ Materiality Analysis Educati
Slide 38: Leaders in Pension Fund Management in the Region
LEADERS IN PENSION FUND MANAGEMENT IN THE REGION 22.8% 19.2% 14.7% 36.7% 38.6% 17.8% 47.5% Ranking 1O Ranking 4O Ranking 3O Ranking 2O Ranking 1O Ranking 2O Ranking 2O Metlife 9.3% 24.9% 0.0% Prudential 10.9% 28.0% 4.4% Principal 9.3% 19.0% 6.8% Banorte 7.4% 22.4% Grupo AVAL 6.8% 42.9% Citibank 5.9%
Slide 39: Ranking Insurance Companies in LATAM
RANKING INSURANCE COMPANIES IN LATAM RKG GROUP COUNTRY 2009 2018 2019 Mkt. Share 2019 Var% 10 yr CAGR 1 Bradesco Brazil 8,041 10,032 10,132 6.6% 1.0% 2.3% 2 Brasilprev1 Brazil 2,106 8,715 9,942 6.5% 14.1% 16.8% 3 Mapfre Spain 5,626 8,421 8,729 5.7% 3.7% 4.5% 4 Zurich Switzerland 1,671 7,608 8,679 5.
Slide 40: Market Share of Suramericana by Country
MARKET SHARE OF SURAMERICANA BY COUNTRY 14.1% Uruguay 16.8% 10.7% Domincan Republic 10.5% 1.3% Mexico 1.5% 19.2% El Salvador 21.3% Colombia Life 28.9% 25.1% 19.7% Colombia P&C 19.8% 14.5% Chile 15.1% 0.7% Brazil 0.8% 3.3% Argentina 2015 2018 3.5% Source: Latinoinsurance 40
Slide 41: Penetration: Insurance Market by Country
PENETRATION INSURANCE MARKET BY COUNTRY Country 2008 2010 2015 2016 2017 2018 ARGENTINA 2.1% 2.0% 2.6% 2.6% 2.6% 2.4% BRAZIL 2.8% 2.9% 3.8% 4.0% 4.1% 3.9% CHILE 3.9% 3.8% 4.6% 4.9% 4.7% 4.6% COLOMBIA 2.2% 2.3% 2.7% 2.8% 2.8% 2.8% MEXICO 1.8% 1.9% 2.2% 2.2% 2.2% 2.2% PANAMA 3.1% 3.1% 2.5% 2.3% 2.3% 2
Slide 42: Penetration: P&C Market by Country
PENETRATION P&C MARKET BY COUNTRY Country 2008 2010 2015 2016 2017 2018 ARGENTINA 1.5% 1.7% 2.2% 2.2% 2.2% 2.0% BRAZIL 1.5% 1.4% 1.8% 1.8% 1.8% 1.8% CHILE 1.6% 1.5% 1.8% 1.8% 1.8% 1.8% COLOMBIA 1.4% 1.6% 1.9% 1.9% 1.9% 1.9% MEXICO 1.0% 1.1% 1.2% 1.2% 1.2% 1.2% PANAMA 2.2% 2.3% 1.9% 1.8% 1.7% 1.9% UR
Slide 43: Penetration: Life Insurance Market by Country
PENETRATION LIFE INSURANCE MARKET BY COUNTRY Country 2008 2010 2015 2016 2017 2018 ARGENTINA 0.5% 0.3% 0.4% 0.4% 0.4% 0.3% BRAZIL 1.3% 1.5% 2.1% 2.3% 2.3% 2.1% CHILE 2.3% 2.3% 2.8% 3.1% 2.8% 2.8% COLOMBIA 0.8% 0.7% 0.8% 0.9% 0.9% 0.9% MEXICO 0.8% 0.8% 1.0% 1.0% 1.0% 1.0% PANAMA 0.9% 0.8% 0.6% 0.6% 0
Slide 44: Penetration and Market Share
PENETRATION AND MARKET SHARE Life Insurance P&C Penetration SURA P&C CAGR 3yr GWP Penetration EVOLUTION OF KPIs 2008 2018 2008 2018 MKT. SHARE RANKING SURA MARKET ARGENTINA 1.5% 2.0% 0.5% 0.3% 3.3% 11 36.0% 33.6% BRAZIL 1.5% 1.8% 1.3% 2.1% 0.9% 20 7.6% 3.5% CHILE 1.6% 1.8% 2.3% 2.8% 14.9% 1 6.7% 5.4
Slide 45: Investor Relations Contact Information
INVESTOR RELATIONS CONTACT INFORMATION IRO: JUAN CARLOS GÓMEZ jcgomez@gruposura.com.co IR Specialist: ANDRÉS ZULUAGA azuluagaa@gruposura.com.co (574) 3197039 https://www.gruposura.com/en/investor-relations/reports/