London, October 14 th, 2014 Jorge Claude Executive Vice President Asociación de Aseguradores de Chile Chilean Insurance Market Overview.

London, October 14th, 2014

Jorge ClaudeExecutive Vice PresidentAsociación de Aseguradores de Chile

Chilean Insurance Market Overview

Agenda

1. Chilean Economy & Insurance Market at a glance

2. Non-Life Insurance Market

3. Life Insurance Market

4. Challenges & Opportunities

5. Conclusions

The Chilean Association of Insurers (AACH) is the voice of the local

industry. It is a 115 year-old institution

representing 53 insurance companies who account for 96% of Chile’s

Insurance Premiums

1. Chilean Economy & Insurance Market at a glance

5

Inhabitants 16,7 Millions GDP US$ 280.7 billions GDP per capita US$ 18,945 PPP US$ 22,500

Main Cities: Santiago (Capital 7,5 Mill.); Concepción (1,5 Mill); Antofagasta ( 1,0 Mill); Temuco (1,0 Mill.)

Main Industrial & Economic Sectors: Mining (Cooper/Iron), Paper Pulp, Fishing, Agro-industry, Wine, Finance.

Economic Freedom Index (1): 78,7 – 7th place

Competivity Index (2): 4,61 – 33rd place

Gini Index: 0,49 pts.

(1) The Heritage Foundation 2014 Index of Economic Freedom(2) World Economic Forum – The Global Competiveness Report 2014-2015

Chilean Economy (2013)

6

2,4

3,7

2,6

7,8 7,8

-1,4

3

4,5

1,5

3

4,5

-2

0

2

4

6

8

10

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Inflation

65,5

4,6 4,6

3,7

-0,9

5,8 5,95,5

4,1

2,8

-2

-1

0

1

2

3

4

5

6

7

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

GDP Growth

109,2

7,87,1

7,8

10

8,37,2

6,45,7

6,7

0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Unemployment

2,7

3,4

2,63

3,4

2,9

1,2

2,4

3,4

4,5

3

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Interest Rate (real)

Chilean Macroeconomic Indexes

Source: Banco Central de Chile

7

The Chilean Insurance Market is the 5th largest in Latin America with the biggest insurance density (premium per capita) & penetration (Premiums in % of GDP) in the region.

It is also an essential part of the Chilean economic strength, managing investments for more than US$ 49 billion (equivalent to 18,9% of GDP)

But it is not only an economically solid market; with a Self-Regulation code in place for over 12 years and an active Council appointing an Ombudsman who receives an average of 1000 cases a year vs. over 15 million claims paid by the industry, it has a strong credibility in the economy.

Chilean Insurance Market (2013)

8

Latin American Insurance Industry (2013)

Source: SIGMA Swiss Re

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%0

100

200

300

400

500

600

700

BrasilD: US$ 443

P: 4,0%MM US$ 88.931

MéxicoD: US$223

P: 2,2%MM US$ 27.354

ArgentinaD: US$ 417

P: 3,6%MM US$ 17.317

VenezuelaD: US$ 452

P: 3,6%MM US$ 13.733

ChileD: US$ 664

P: 4,2%MM US$ 11.712

ColombiaD: US$ 209

P: 2,7%MM US$ 10.070

PerúD: US$ 110

P: 1,6%MM US$ 3.354

EcuadorD: US$ 105

P: 1,8%MM US$ 1.659

PanamáD: US$ 322

P: 3,0%MM US$ 1.244

UruguayD: US$ 356

P: 2,2%MM US$ 1.213

Premiums in % of GDP or Penetration (P)

Premiums per Capitaor Density (D)

9

Insurance Industry & the Economy (2013)

631Premium per capita in USD

4.2%Premium in % of GDP

11,076 Total Premium in Billion of USD

Chilean Insurance Market grew 3,9% (local currency, inflation adjusted) in a scenario of a 4,1% GDP growth and a 3% inflation rate.

Life Insurance Companies

33

Non-life Insurance companies

23

Credit Insurance Companies

6

Total

62Insurance Brokers

2.266

Re Insurance Brokers

60

Adjusters

217

Source: AACH based on SVS data

10

Chilean Insurance Industry (2013)

11

(US$ million)

2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1,228 1,481 1,552 2,056 2,022 2,396 3,060 3,346 3,913 3,6772,799

3,038 3,152

4,114 3,7614,498

5,9686,295

7,519 7,399

Source: AACH based on SVS data

Chile Direct Premiums (Life & Non-life)

Life

Non-Life

12

(Figures in US$; Census 2002)

2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

100

200

300

400

500

600

700

USD$ 630,88

Sources: AACH based on SVS data and INE

Chile Insurance Density (premium per capita)

Life

Non-Life

Total Market

13

2004 2005 2006 2007 2008 2009 2010 2011 2012 20132.5%

3.0%

3.5%

4.0%

4.5%

4.2%

Source: AACH based on SVS data and Central Bank of Chile

Chile Insurance Penetration (% of GDP)

14Source: MAPFRE and Latinoinsurance

Chile: a very competitive market (2012)

Latinoamérica: Concentración de Mercado, Índice Combinado y ROE por País 2012

< 12% Altamente atomizado o desconcentrado

12% - 18% Moderadamente concentrado

> 18% Altamente concentrado

4,2% 5,0% 5,4% 6,7% 7,2% 9,0% 9,2% 10,6% 10,9% 13,7% 14,0% 14,8% 14,6% 14,8% 16,9%21,7% 22,8%

43,9%

85,0%

0%

20%

40%

60%

80%

100%

120%

ARG ECU CHI MEX VEN PAR COL BRA PAN GUA SAL DOM HON PRI BOL PER NIC URU CRI

Indi

ceH

erfin

dahl

69% 69%77%

88% 88% 89% 90% 92% 94% 97% 100% 102% 104% 104% 105% 105% 106%114% 116%

84%

23% 18% 20% 20%27% 21%

13%22% 17%

11% 8%17%

8% 14% 11%22% 22%

12%19% 16%

0%

20%

40%

60%

80%

100%

120%

140%

PAR* BRA HON SAL GUA MEX ECU NIC PER PAN CR BOL URU COL PR VEN ARG* CHI DOM REG

Razón Combinada ROE

CountryN° of

companiesShare

largest 5Share

Largest 10Leader share

Uruguay 14 90% 98,60% 65,10%Peru 14 89,80% 99,80% 33,40%

Bolivia 14 85,30% 99,50% 21,70%Brasil 116 65,40% 82,90% 20,40%

Colombia 45 54,20% 76,60% 22,80%Venezuela 47 51,50% 72,20% 13,70%Paraguay 34 47,30% 65,70% 20,10%Ecuador 42 40,40% 59,10% 10,50%

Chile 60 36,90% 58,50% 9,80%Argentina 180 35,30% 53,90% 9,80%

LA Market share by country

2. Chilean Non Life Insurance Market

16

Property33%

Motor28%

Engineering5%

Liability5%

Personal Accident4%

Cargo3%

Theft3%

SOAP3%

Credit2%

Marine Hull1%

Others (1) 13%

Non-Life Insurance Premium (2013)

Sources: AACH based on SVS data and SVS

(1) Surety, unemployment; Extended Warranty, IT Fraud etc.

USD

Property 1.288.424.664

Motor 1.050.727.549

Cargo 144.725.232

Theft 128.544.090

Hull 67.494.420

Liability 194.332.797

Others 1.012.407.198

Total 3.886.655.953

Source : Superintendencia de Valores y Seguros (SVS) FECU 2013(1) Credit companies are not included

Total (USD) (1) %RSA 566.445.436 14,75%

Penta-Security 427.674.051 11,13%

BCI 424.434.263 11,05%

MAPFRE 417.839.719 10,88%

Liberty 342.726.008 8,92%

Magallanes 310.061.606 8,07%

BNP Cardif 251.075.347 6,54%

ACE 232.390.760 6,05%

Chilena (Zurich) 206.951.333 5,39%

AIG 145.772.479 3,80%

Consorcio 106.916.473 2,78%

Zurich Santander 105.266.851 2,74%

HDI 73.554.196 1,91%

Chubb 48.957.721 1,27%

Orion 40.862.754 1,06%

Others 83.649.963 2,15%

Total 3.886.655.953 100,00%

62,8%

37,2% Internacionales

Locales

2,577,4; 71%

256,67; 7%

813,78; 22%

Todo Segmento

Industriales/Comerciales

Personales

Market Share by Company (2013)

All lines

Industrial/commercial

Personal lines

Premium

International Companies

Local Companies

Premium

18

Non-Life: a Reinsured Market

41,6%Out of Gross Premiums are ceded

PropertyThe largest (in premiums) ceded line including CAT coverage

1,529Ceded annual premiums in millions of USD

Retained premiums by lines (% of Gross premiums, 2013)

Property Motor Hull Cargo Engineering Liability0%

20%

40%

60%

80%

100%

120%

Sources: AACH based on SVS data

3. Chilean Life Insurance Market

20Sources: AACH based on SVS data and INE

Life Insurance Premiums (2013)

Social Security / Annuities 45%

Disability and Survival (SIS)12%

Mortage10%

Health9%

Universal Life & Index Life

8%

Life8%

Retirement Savings Insurance5%

Personal Accidents2%

Private Annuities1%

Others0%

4. Challenges & Opportunities

22

Challenges & OpportunitiesNew & upcoming regulatory changes

› Tax reform

› Risk based capital law

› Consumer protection regulation

› Market Conduct regulations

› Personal Data protection act

Approved

In Congress

Under Review

Submitted to market for commentsUnder review

Social

23

A larger middle income country with middle and lower classes demanding immediate benefits.

CAT risks; a new model to calculate PML

Challenges & OpportunitiesChallenges

From an insurance perspective this implies that apart from lower premiums, consumers want insurance products and services delivered as easily and efficiently as other types of online transactions, do not like “small print” and do not hesitate to use social networks to claim their rights

We have been working on this and we expect to have the first operative version by the end this year.

Insurance Industry

24

Challenges & OpportunitiesOpportunities

There is a increasing consciousness of demand for liability products and higher insured amounts in such coverages.

Infrastructure

New concessions programme & insurance solutions for existing infrastructure

Liability growth Liability

The ministry for public works (MOP) has announced a new concessions programme in excess of USD 25 Bio.

Furthermore we are working with the Ministry to provide Surety coverage for existing contracts, business that was exclusive to banks.

5. Conclusions

26

Chilean economy is growing strong with positive macroeconomic indexes, a robust fiscal discipline and a clear legal environment.

Our Insurance Market is an open and sophisticated market exposed to international compliance standards & regulations.

Risk based capital, market conduct acts, personal data & consumer protections acts, among other global trends are main issues in Chile.

Chilean Industry has been tested through natural catastrophes and economic crises and has proven its strength and trustworthiness to its clients.

All this confirms that Chile is a good place to do business.

Conclusions

London, October 14th, 2014

Jorge ClaudeExecutive Vice PresidentAsociación de Aseguradores de Chile

Chilean Insurance Market Overview