Inversiones La Construccion Sa · BCS:ILC
Inversiones La Construccion Sa — LarraínVial Andean Conference 2024
61 slides from Inversiones La Construccion Sa's conference presentation, March 2024
Slide 1: Corporate Presentation
Corporate Presentation LarraínVial Andean MAR Conference /2024 1
Slide 2: Disclaimer
DISCLAIMER MAR /2024 • IR Contact: Gustavo Maturana (ilc_ir@ilcinversiones.cl, +56 2 2477 4680) www.ilcinversiones.cl 2
Slide 3: Agenda
AGENDA 1 • ILC at a Glance 2 • • 3Q23 Results Strategy 3 • Closing Remarks 4 3
Slide 4: ILC at a Glance
Be leaders in the construction of ILC AT A GLANCE social and economic value that improves people's quality of life WHO? WHAT? HOW? + 9 million Beneficiaries 4 Industries 5 Pillars (~1mm people over 60) Growth Profitability 3 COUNTRIES Health Pensions Flexibility Focus on the aging Strong financial p
Slide 5: ILC at a Glance
Lean structure under leading ILC AT A GLANCE position in financial and health sectors Board: Listed at • 5 Controlling Group Members Santiago • 2 Independent Members Endowment Stock Exchange: Management: (~US$550mm) Float • 5 Managers • 17 Employees 67% 33% ✓ + Cash Position ✓ No Debt Risk Ratings I
Slide 6: We have delivered growth and profitability through challenging cycles
We have delivered growth and profitability through challenging economic and political cycles, especially during the last few years MAR. /2024 6
Slide 7: Consistent Growth and Diversification Since Our IPO
CONSISTENT GROWTH AND DIVERSIFICATION SINCE OUR IPO 2012 LTM Sept 2023 ASSETS Ch$ bn 1,055 14.5x 15,273 AUM US$ bn 22.3 3.3x 73.3 EQUITY Ch$ bn 428 2.2x 951 BENEFICIARIES MM 3.9 2.5x 9.6 INDUSTRIES 2 2x 4 EMPLOYEES +10,500 1.4x +14,500 MAR /2024 FX Ch$/US$ = 900 7
Slide 8: Double Digit ROAE Since Our IPO
DOUBLE DIGIT ROAE SINCE OUR IPO ROAE 19.3% 18.4% 14.3% 14.5% 49.6% 18.3% 13.8% 12.0% 12.0% 10.8% 10.6% 17.0% 20.8% Ch$ bn Recurring Profit Extraordinary Profit 14.8% CAGR 2016-2023 -3.5% CAGR 2012-2016 223 2.3X 12 188 21 129 147 INCREASE 83 63 69 73 72 90 91 87 88 IN PROFIT 2012 2013 2014 2015 2016
Slide 9: Consistent and Attractive Dividend Yield
CONSISTENT AND ATTRACTIVE DIVIDEND YIELD Div/Share Dividend yield (over previous year’s closing price) IPSA's Average Dividend Yield 2013-2023 ILC’s Average Ch$ (%) Dividend yield 750 2013-2023 600 631 650 7.6% 518 449 450 19,8% Distributed since 370 350 IPO: 330 8,6% Ch$5,501 8,3% 223 11,7% 7,0% Pe
Slide 10: This Has Been Driven by Our 5 Pillars Strategy
THIS HAS BEEN _- DRIVEN BY OUR 5 PILLARS STRATEGY MAR /2024 10
Slide 11: Our Fundamental Pillars to Achieve Consistency
OUR FUNDAMENTAL GROWTH PILLARS TO ACHIEVE CONSISTENCY ESG PROFITABILITY STRATEGY STRONG FINANCIAL FLEXIBILITY POSITION MAR /2024 11
Slide 12: Presence in Industries Which Outpaced GDP Growth
PRESENCE IN INDUSTRIES WHICH Growth OUTPACED GDP GROWTH CAGR 1992-2002 CAGR 2002-2012 CAGR 2012-2023 PENSIONS 18.3% 11.8% 6.8% AUM Chilean pension funds industry ANNUITIES 22.4% 9.9% 9.2% AUM Life Insurance industry BANKING 18.1% 12.2% 9.0% Total Loans HEALTH 8.9%1 10.0% 10.4%2 Current health expend
Slide 13: Inorganic Growth: Successful Acquisitions
Growth INORGANIC GROWTH: SUCCESSFUL ACQUISITIONS 1980 … 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 IPO SUCCESSFUL ACQUISITIONS Acquisition Acquisition Acquisition Acquisition Acquisition Acquisition (2013) (2015) (2016) (2019) (2022) (2023) Multiple (P/B) Multiple (P/B) Spread Multi
Slide 14: Successful Turnarounds
Profitability SUCCESSFUL TURNAROUNDS ILC’s role is in detecting opportunities in efficiency and operational turnaround in our current operations and acquisitions providing strategic guidance to our subsidiaries EXISTING SUBSIDIARIES M&A AND NEW OPPORTUNITIES • Focus on efficiency • Asset allocation
Slide 15: Self-Funded Growth (2013 – Sept. 2023)
Profitability SELF-FUNDED GROWTH (2013 – SEPT. 2023) Sources of Funds Uses of Funds US$ 1,500 MM US$ 1,216 MM Capital Divestments Debt Dividends Dividends Increases in M&A Recieved Paid Out Subsidiaries US$ 315 MM US$ 459 MM US$ 726 MM US$ 566 MM US$ 337 MM US$ 313 MM MAR /2024 15
Slide 16: Preparing Our Businesses for Regulatory Changes
PREPARING OUR BUSINESSES FOR REGULATORY CHANGES Flexibility Regional & Reorganization Focus on financial Health result product business hedging diversification MAR /2024 16
Slide 17: Net Income Diversification: New Industries & Geographies
NET INCOME DIVERSIFICATION: NEW INDUSTRIES & GEOGRAPHIES Flexibility Ch$ 83 bn Pensions Financial 2012 Net 3% Income 96% Health 1% Other Ch$ 147 bn 2022 Net 21% 4% 50% 15% 10%1 Income 30% MAR /2024 Source: ILC (1) Not including Consalud losses 17
Slide 18: Diversified Business Profile and Cash Flow Generation
DIVERSIFIED BUSINESS PROFILE AND CASH FLOW GENERATION Flexibility ILC’S DIVIDENDS RECEIVED (BREAKDOWN BY SUBSIDIARY) AND ILC’S CASH EQUIVALENTS Ch$ bn. 55.6 59.3 67.6 85.0 116.7 303.5 258.7 144,0 18,3 5,1 109,8 76,4 24,5 76,9 9,8 49,2 56,7 56,5 21,1 41,9 6,7 29,7 43,7 48,6 45,8 2017 2018 2019 2020 2
Slide 19: Well-Managed Debt Maturity and Liquidity Position
WELL-MANAGED DEBT MATURITY AND LIQUIDITY POSITION Strong Financial Position ILC’S AMORTIZATION PROFILE (SEPT-2023) LIQUIDITY POSITION (SEPT-2023) Ch$ bn Bank Loans ILC-C ILC-H ILC-I ILC-J ILC-K 144A- Reg S Investment 144A-Reg S Portfolio 300 47.7% 28.8% 225 Ch$ 150 258.7 bn 75 - Cash 23.5% Total Net
Slide 20: Our Sustainability Journey
OUR SUSTAINABILITY ESG JOURNEY Companies inspired by a A calling Mindset STAGE 4 deep sense of purpose Sustaining Operational Maturity Maturity Competitive STAGE 3 Market leadership Accelerating advantage Contribution STAGE 2 To compete, but with a Embedding sense of responsibility. Compliance STAGE
Slide 21: ESG Results Over Time
ESG RESULTS OVER TIME ESG Responsible approach for Investment & Loans Inclusion programs for underserved +9 pp groups: +22 pp • Public Health Insurance • Elderly • SMEs 67% 67% 58% 45% Launch of Compromiso Mayor: Impact on ~1mm people over 60 (1/3 of the elderly population in Chile) Active role in p
Slide 22: Agenda
AGENDA 1 • ILC at a Glance 2 • • 3Q23 Results Strategy 3 • Closing Remarks MAR /2024 22
Slide 23: Financial Sector Boost 9M23 Profit
FINANCIAL SECTOR BOOST 9M23 PROFIT ILC 9M23 Profit Breakdown and 9M22 Comparison 3.0 +50.4% 23.2 (0.1) 124.9 9.5 (14.1) 25.4 37.9 83.1 6.9 33.2 ILC Standalone 9M23 9M22 and Others Profit Profit MAR /2024 Source: CMF, ILC 23
Slide 24: Next Phase: Growth in Financial Business
NEXT PHASE: GROWTH IN FINANCIAL BUSINESS Business Consolidation Growth, Diversification Growth in financial business and Turnarounds 2012 2016 2017 2022 2023 2027 Foundation Acquisition (2012) (2013) Acquisition Association (2015) (2016) Increase of Divestment participation MAR /2024 24
Slide 25: From an Equally Weighted Strategy…
FROM AN EQUALLY WEIGHTED STRATEGY… Annuities Pensions Banking Health MAR /2024 25
Slide 26: …To a New Focus
…TO A NEW FOCUS Annuities Growth in financial Pensions business Z Banking Health MAR /2024 26
Slide 27: Banking
(5) 0D Banking Banco . Internacional KC
Slide 28: Banco Internacional: Then and Now
BANCO INTERNACIONAL: THEN AND NOW ILC Entry Risk Expenses 1 Efficiency 2015 2019 -23.2 pp -20.6 pp (%) (%) 66% 39% 45% Acquisition 16% Ch$ 65 bn Ch$ 48 bn Amount 2015 2023 2015 2023 Stake 50.6% 16.6% Net Income Acquired Ch$ bn. Profit ROAE 18,2% 15,8% 18,9% 12,3% 12,7% 13,0% 14,9% 55,4 Multiple 9,8%
Slide 29: Outpacing the Industry with Room to Grow
OUTPACING THE INDUSTRY WITH ROOM TO GROW Total Loans YOY Growth Market Share Total Loans Dec 2023 50% Banco 35% Internacional 24.6% 20% US$ 5% Industry 283 bn 3.9% -10% 2015 2017 2019 2021 2023 Market Share by Segment Dec-15 Dec-23 11% Others 3.8x 11.3x 2.3x US$ 2,18% 35 bn 0,94% 0,75% 0,07% 0,05% 0
Slide 30: Prudent Risk Management Policies Have Supported Consistent Rating Upgrades
PRUDENT RISK MANAGEMENT POLICIES HAVE SUPPORTED CONSISTENT RATING UPGRADES Solvency - Basel Index III Collateral Coverage Non-Performing Loans Risk Ratings Banco Internacional Banco Internacional Banco Internacional Local (ICR/Feller) Industry Industry Industry A AA/AA- 73,8% 75,6% 75,4% 15,8% 15,5%
Slide 31: Digital First, Low-Cost Retail Banking Strategy
DIGITAL FIRST, LOW-COST RETAIL BANKING STRATEGY Organic Growth Inorganic Opportunities Retail Client Base Autofin Loans and Clients 17.446 October 2023 Ch$180.336 bn. 10.667 8.783 7.860 5.633 6.295 5.767 5.686 31.171 2016 2018 10-23 2019 2022 2021 2017 2020 Clients Loans Our products and functionali
Slide 32: Banco Internacional 2027 Target
BANCO INTERNACIONAL 2027 TARGET Ch$ 85-100 bn 2x Loans ~15% ROAE Profit Main topics Plan to Increase Capital 2024 – 2027 next 3-4 years • Growing mainly in Commercial • Approximately Ch$ 100 bn Loans • 30% Payout • Adding inorganic opportunities • Digital approach to consumer loans MAR /2024 32
Slide 33: Annuities
MAR 024 al p Annuities confuturo iC
Slide 34: Confuturo: Then and Now
CONFUTURO: THEN AND NOW ILC Entry Direct Premiums AUM 2013 2016 2.0x 2.0x US$ MM 557 US$ bn 9,2 283 4,6 Acquisition Ch$ 87.3 bn Ch$ 49.3 bn Amount 2013 Sept-2023 LTM 2013 Sept- 2023 Stake 67.0% 33.0% Net Income Acquired Ch$ bn 123 133 Multiple 81 70 0.83x 0.84x 42 52 38 (P/B) 33 28 (5) 16 2013 2014
Slide 35: Successful Change in Annuity Sales Channels
SUCCESSFUL CHANGE IN ANNUITY SALES CHANNELS INCREASED COMMERCIAL FLEXIBILITY AND EFFICIENCY Annuities Sold by Channel Direct Sales No intermediary 11,0% 7,2% 26,4% 23,8% Brokers 32,9% 32,7% Not linked to any 43,0% insurance company 10,7% 26,8% Independent 50,8% agents 39,9% Linked to a specific 81,8
Slide 36: Flexible Sales Channel Strategy Resulted in Above Industry Cost Efficiency
A FLEXIBLE SALES CHANNEL STRATEGY RESULTED IN ABOVE INDUSTRY COST EFFICIENCY RELATIVE TO AUM SG&As and SG&As over AuM UF$ mm. SG&As Confuturo SG&As over AUM Confuturo SG&As over AUM Industry 1,88% 1,91% 1,93% 1,98% 1,66% 1,65% 1,69% 1,49% 0,62% 0,60% 0,66% 0,57% 0,50% 0,44% 0,42% 0,42% 1,3 1,1 1,0 1
Slide 37: Driving Growth: Market Potential and Economic Value in Spread
DRIVING GROWTH: MARKET POTENTIAL AND ECONOMIC VALUE IN SPREAD Market Growth Chile's population by age Direct Premium MM People >64y 25y to 64y <25y UF MM 1.9x 25 20 1.5x 206 13% 26% 15 10 109 56% 51% 72 5 31% 23% 2050 2027 2012 2017 2037 2022 2032 2042 2047 1990 2050 1950 1970 2010 2030 New Sales Sp
Slide 38: Investment Portfolio Identity – Increased Focus on Alternative Assets
INVESTMENT PORTFOLIO IDENTITY – INCREASED FOCUS ON ALTERNATIVE ASSETS Investment Portfolio Changes Over the Last Years 3% 13% 3% 4% 5% 13% 27% 25% 21% 16% 23% 23% 69% 51% 44% 49% 3% 3% 4% 1% Dec. 2013 Dec. 2016 Dec. 2020 Dec. 2023 Caja y Otros Inversión Inmobiliaria Inversión Extranjera Renta Fija L
Slide 39: Confuturo 2027 Target
CONFUTURO 2027 TARGET US$ 10-11 bn Ch$ 70-80 bn AUM 12-14% ROE Profit Main topics 2024 – 2027 • Continue increasing portfolio leverage in a growing industry • Diversified investment portfolio • Operational leverage: grow revenues with current structure • Continue searching for economic value in spre
Slide 40: Pensions
MAR 024 al pl Pensions Gos KC
Slide 41: Chilean Pension Fund Industry at a Mature Stage
CHILEAN PENSION FUND INDUSTRY AT A MATURE STAGE Chilean Pension Fund Fees1 US$ bn 16.3% 8.5% 5.0% CAGR 1990-1999 CAGR 1999-2009 CAGR 2009-2023 1,154 582 257 67 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Chilean Pension Fund Affiliates 5.6% 3.4% 2.3% MM Peopl
Slide 42: Proposed Pension System Regulatory Changes
PROPOSED PENSION SYSTEM REGULATORY CHANGES Current Situation Pension Reform Bill(2) • State contribution of Ch$ 193,917 to the • PGU of Ch$ 250,0001 poorest 90% (PGU)1 • Mixed Contributive Pillar: • Mandatory: 10% of gross salary — Individual Capitalization (10.5% of Taxable Contribution • Voluntary
Slide 43: Consolidating a Returns and Efficiency Regional Model
CONSOLIDATING A RETURNS AND EFFICIENCY REGIONAL MODEL AUM Investment Returns Taxable Income Efficiency1 #2 #1 US$ 48.1 bn #2 In 4 funds(L5Y) 35.4% #1 #4 US$ 3.6 bn In 3 funds(L5Y) #3 59.3% #1 #3 US$ 10.5 bn In 1 funds(L5Y) #2 54.5% #2 in Andean Region with 4.6 million affiliates and US$62 bn Improve
Slide 44: Stable Cash Flow Generation and Liquidity Over Time in Chile
STABLE CASH FLOW GENERATION AND LIQUIDITY OVER TIME IN CHILE Available Income1 and Dividends Paid by AFP Habitat2 Available Income Dividends Paid Ch$ bn 1° Habitat Habitat 3° 120,0 28.0% 15.5% 110,0 108,0 96,8 97,2 86,8 70,9 78,5 64,6 59,0 61,0 65,0 53,4 AUM Affiliates 30,5 US$ 172 bn 11.7 MM 2017 2
Slide 45: AFP Habitat Peru and Colombia Expansion
AFP HABITAT PERU AND COLOMBIA EXPANSION Earnings Before Taxes and Legal Reserves AUM and Market Share US$ MM 4° Habitat 4° Habitat 12% 11% 11,5 12,9 9,7 9,0 10,4 6,0 AUM Affiliates 2,2 (2,4) (0,5) US$ 30 bn 9 MM 2015 2016 2017 2018 2019 2020 2021 2022 Sept-23 LTM Earnings Before Taxes and Legal Rese
Slide 46: Expanding LatAm Footprint in Alliance with Prudential
EXPANDING LATAM FOOTPRINT IN ALLIANCE Voluntary products in a regional model WITH PRUDENTIAL Continuously looking for new opportunities… MAR /2024 46
Slide 47: Health
QD VIDACAMARA MAR & | 2024 KC
Slide 48: Healthcare Industry Will Show a Shortfall Between Supply and Demand
HEALTHCARE INDUSTRY WILL SHOW A SHORTFALL BETWEEN SUPPLY AND DEMAND A B C Demographics Public sector Limited capex in and post- unable to meet private sector pandemic effect growing demand boosted demand MAR /2024 48
Slide 49: Regulatory Changes in Healthcare
REGULATORY CHANGES IN HEALTHCARE Base Price Adjustment Risk Factor Table GES Price Adjustment • In 2010, the Supreme Court “froze” the • In October 2022, the Explicit Health • Law No. 21,350 : Factor Table Guarantee (GES) includes 87 (85 + 2) health diseases guaranteed by Law a. Frozen price adjustm
Slide 50: Our Healthcare Model
OUR HEALTHCARE MODEL • Largest private network in Chile • Close relationship with the public insurer • Relevant size in inpatient, outpatient and dental • Know-how in individual and • Know-how in group health supplementary health insurance and relationship insurance with companies • Relationship dev
Slide 51: Anticipating Changes in the Industry's Mix of Beneficiaries
ANTICIPATING CHANGES IN THE INDUSTRY’S MIX OF BENEFICIARIES Total Beneficiaries Th. 1.068 Beneficiaries #3 1.036 1.056 1.058 1.035 1.043 949 976 929 825 347 349 361 Contributors #3 329 282 291 391 263 527 159 666 666 666 685 707 721 708 698 644 517 Beneficiaries #4 2014 2015 2016 2017 2018 2019 2020
Slide 52: Healthcare Industry Has Shown a Consistent and Growing Demand
HEALTHCARE INDUSTRY HAS SHOWN A CONSISTENT AND GROWING DEMAND Private Sector Activity Levels Medical Consultations Millions 9,8 18,5 1.9x Private 2012 2014 2016 2018 2020 Sept-23 LTM activity has Exams Millions doubled 47,0 2.2x over the last 21,3 2012 2014 2016 2018 2020 Sept-23 LTM Surgical Interv
Slide 53: Success in Initial Three Phases of Our 2025 Vision
SUCCESS IN INITIAL THREE PHASES OF OUR 2025 VISION Phase 1 Phase 2 Phase 3 Phase 4 REDESIGN OF INSTITUTIONAL THE NETWORK NETWORK CONSOLIDATION OF ORGANIZATION BUSINESS CONSOLIDATION THE HEALTH NETWORK MEDICAL ROADMAP Ch$ bn Ebitda Ebitda Margin 13,3% 12,2% 11,0% 10,6% 11,2% 10,7% 9,7% 10,0% 7,8% 75,
Slide 54: Reducing Regulatory Risk by Diversifying Sources of Income
REDUCING REGULATORY RISK BY DIVERSIFYING SOURCES OF INCOME Revenue breakdown by insurer EBITDA by center type Out of pocket Regional Hospitals Future growth will Public Health Insurance Outpatient and Dental Centers Private Health Insurance Hospitals in Santiago 13% 20% 22% 21% 29% 25% 15% 23% 19% 1
Slide 55: Strategic Alliances with World-Renowned Partners
STRATEGIC ALLIANCES WITH WORLD- • Providing care since 1921 • Ranked #2 in the world by • Largest Healthcare Network in Chile RENOWNED Newsweek • Care Priorities: Patients, • Vision: To be the benchmark in private medical and dental Caregivers, Community, PARTNERS Organization • Foundation of care:
Slide 56: Healthcare and Insurance Hedging Strategy
HEALTHCARE AND INSURANCE HEDGING STRATEGY Health Sector Net Result Health Sector Vida Cámara Consalud Red Salud 52 3 13 15 18 31 2 2 10 1 10 1 6 2 21 18 17 74 4 7 36 101 (8) (5) (21) (1) (82) Covid-19 (1) Effect (62) 2016 2017 2018 2019 2020 2021 2022 Sept. 2023 LTM MAR /2024 Source: CMF 56
Slide 57: Our Healthcare Model 2027
OUR HEALTHCARE MODEL 2027 Organic growth Consolidation of Insurers serving together with the healthcare demand to the demographics network healthcare facilities Flexible Analyze potential Using and working organizations to alliances with the data adapt to regulatory generated changes MAR /2024 57
Slide 58: Agenda
AGENDA 1 • ILC at a Glance 2 • • 3Q23 Results Strategy 3 • Closing Remarks MAR /2024 58
Slide 59: Strategic Plan and 2027 Goals
STRATEGIC PLAN AND 2027 GOALS Potential 4th Growth in commercial Consolidation of the Organic growth market loans healthcare network Economic value Digital approach in Flexibility to adapt to Voluntary savings in spread consumer loans regulatory changes Andean region Analyze potential Efficiency Ino
Slide 60: Next Phase: Growth in Financial Business
NEXT PHASE: GROWTH IN FINANCIAL BUSINESS Business Consolidation Growth, Diversification Growth in financial business and Turnarounds 2012 2016 2017 2022 2023 2027 target Profit Ch$60- 80 bn Ch$90-120 bn Ch$130-180 bn ROE 15-18% 12-15% 12-15% MAR /2024 60
Slide 61: Corporate Presentation
Corporate Presentation 2023 MAR /2024 61
Inversiones La Construcción S.A. (ILC) — LarraínVial Andean Conference 2024 on 6ix