annual repor memor annu t annual repor ia an al repor ual t 2013 t

Transcripción

1 report memoria anu annual report 2013

2 CH. 1 + our company CH. 2 + corporate governance CH. 3 + activities, highlights andaccolades CH. 4 + economic and financial context

3 + TABLE OF CONTENTS annual report 2013 CH. 5 + our business CH. 6 + company information CH. 7 + financial statements

4 commi COM

5 1. OUR COMPANY annual report 2013 tment compromiso MITMEN COMMITMENT

6 1.1. LETTER FROM THE CHAIRMAN DEAR SHAREHOLDERS: In 2013, Grupo Security reported profit for the year of Ch$49,843 million, up 7.0% from The Group s positive performance was driven primarily by growth in the insurance area, which confirms its decision to diversify income sources by expanding into nonbanking services. It is my pleasure to present Grupo Security s 2013 Annual Report. The year 2013 was a period of transition with global economic growth gradually resuming. However, although the more developed countries began to strengthen, emerging nations showed signs of deceleration even beyond expectations. This was precisely the case in Chile, where the growth rate dropped by more than one point with respect to the prior year, from 5.6% in 2012 to 4.1% in In June 2013, Grupo Security acquired the Cruz del Sur companies from the Angelini group. This acquisition strengthened our business structure and consolidated market share in the asset management and life insurance areas. The acquisition of the Cruz del Sur companies was financed with a combination of debt, capital and the Group s own resources. In July 2013, we successfully carried out a capital increase of US$ 109 million and placed 25-year bonds in September 2013 for UF 3,000,000 at a rate of 4.04%. In 2013, Grupo Security reported profit for the year of Ch$49,843 million, up 7.0% from The Company s positive performance was driven primarily by growth in the insurance area, which confirms the Group s policy to diversify income sources initiated when it expanded into non-banking services with the acquisition of Seguros La Previsión in Profit for the year 2013 MCh$49,843

7 grupo security PAGE 05. Banco Security and its subsidiaries (Valores Security Corredores de Bolsa and Administradora General de Fondos Security) contributed profit for the year of Ch$32,798 million, or 6.9% less than in This decrease is mainly attributable to increased credit risk provisions in comparison to the prior year. Grupo Security increased Banco Security s capital by Ch$30,000 million, which is the first stage of a capitalization process totaling Ch$75,000 million approved by the bank s shareholders at an extraordinary meeting in August This process will enable the bank to strengthen its capital base and solvency ratios in order to better address the challenges arising from loan growth. The Group s asset management companies faced a bear market and a fixed-income segment with limited business opportunities given the almost null variation in interest rates. In particular, the brokerage subsidiary, Valores Security Corredores de Bolsa, posted profit for the year of Ch$ 875 million. The Cruz del Sur brokerage subsidiary, Cruz del Sur Corredora de Bolsa, reported a loss for the period from June to December of Ch$268 million, affected mainly by the restructuring costs incurred during the merger with the Security companies. The brokerage subsidiaries in aggregate enjoyed 5.2% market share and ranked fifth in terms of volume of stocks traded on the Santiago Stock Exchange and Electronic Stock Exchange. In 2013, Banco Security was recognized as the best company in Chile in service quality, obtaining first place in the 2013 National Customer Satisfaction Survey conducted by ProCalidad and the magazine Capital. The Bank also ranked first in overall customer satisfaction based on a survey of Chile s main banks conducted each year by Ipsos. This year, Banco Security received authorization to open a representation office in Hong Kong, which will begin operations during the first half of Launching this office will create new business opportunities for the bank and allow it to accompany its customers that actively do business in Asian markets, especially China. It also reflects the bank s interest in strengthening international business and foreign trade. The fund management subsidiary, Administradora General de Fondos Security, reported profit for the year of Ch$4,470 million, which is a 28% increase over the prior year. The Cruz del Sur fund management subsidiary, Cruz del Sur Administradora General de Fondos, posted profit for the period from June to December of Ch$257 million. These subsidiaries boasted aggregate market share of 6.46%, placing fourth in terms of average assets under management. Administradora General de Fondos Security received two Salmón Awards for Latin American Equities Fund, Index Fund Latam Small and Debt Fund < 90 Days, Check and I Series. The insurance area, which represents 34% of the Group s consolidated profit for the year, performed exceptionally. The life

8 1.1. LETTER FROM THE CHAIRMAN For more than 13 years in a row, Grupo Security has been recognized by the Great Place to Work Institute as one of the best companies to work for in Chile and recently as one of the 50 best in Latin America. insurance subsidiary, Vida Security, reported profit for the year of Ch$19,286 million, which is a rise of 74% over 2012, driven mainly by two pension-related disability and life insurance policies awarded in mid-2012 that are valid for two years. The Cruz del Sur insurance subsidiary, Compañía de Seguros de Vida Cruz del Sur, posted profit for the period from June to December of Ch$3,151 million. The insurance brokerage subsidiary, Corredora de Seguros Security, recorded brokered premiums of UF 1,938,714 and profit for the year of Ch$612 million. The factoring subsidiary, Factoring Security, increased profit for the year by 35% to Ch$6,527 million. Total factored receivables boasted year-on-year growth of 16.5%, which is well above industry growth figures. The travel subsidiary, Travel Security, which successfully integrated the subsidiary acquired in Peru, reported profit for the year of Ch$3,022 million, or 25% over This subsidiary has made great strides in its regional expansion process. The real estate subsidiary, Inmobiliaria Security, posted sales of UF 953,280 and profit for the year of Ch$549 million. Growth Grupo Security continues to build a corporate culture that balances work and family life for its associates. The entity is a trailblazer in Chile, which is reflected in the accolades it has received from expert Profit for the Year 7% Increase over 2012

9 grupo security PAGE 07. institutions in Chile and abroad. For more than 13 years in a row, Grupo Security has been recognized by the Great Place to Work Institute as one of the best companies to work for in Chile and recently as one of the 50 best in Latin America. I would like to reiterate my gratitude to our shareholders for trusting in us and believing in each of the projects we have undertaken throughout these 22 years, backed by the right combination of capital contributions, debt and an attractive dividend policy. Our main objective for 2014 will be to complete the process of integrating the Cruz del Sur companies and attain income and cost synergies in both the asset management and insurance areas. This acquisition sets the challenge for us to respond to our investors and the market with good returns on this investment. Our commitment is to continue working hard to reach our goals and continue creating value for shareholders. With the effort and loyalty our team is known for, we hope to achieve our objectives. FRANCISCO SILVA S. Chairman, Grupo Security

10 1.2. RESUMEN FINANCIAL FINANCIERO SUMMARY Grupo Security Summarized Individual Financial Statements Figures in millions of nominal Chilean pesos BALANCE SHEET Total current assets 8,172 9,988 12,256 7,194 7,455 13,529 13,550 Total fixed assets ,087 1,482 1,347 1,778 Total other assets 115, , , , , , ,034 TOTAL ASSETS 123, , , , , , ,363 Total current liabilities 6,542 5,173 3,221 8,041 7,672 7,229 6,706 Total long-term liabilities 21,449 28,805 39,150 34,675 68,522 81,641 84,864 Total equity 95, , , , , , ,793 Total equity and liabilities 123, , , , , , ,363 Income Statement OPERATING LOSS -1,740-1,325-1,485-2,508-3,435-4,421-3,404 Sales and administrative expenses -1,740-1,325-1,485-2,508-3,435-4,421-3,404 NON-OPERATING INCOME 9,018 15,368 17,010 22,465 30,092 36,123 20,282 Finance income Profits from investments in related companies 9,940 16,356 19,797 24,343 35,110 42,974 25,774 Amortization of goodwill ,330-1,835-2,290-2,493 Finance costs -1,600-1,496-1,642-1,759-3,029-4,200-3,787 Other non-operating income , ,893 Price-level restatement ,776 Exchange differences INCOME BEFORE INCOME TAX 7,278 14,043 15,525 19,956 26,657 31,702 16,878 Income tax Amortization of negative goodwill NET INCOME 7,344 14,110 15,506 20,210 26,746 32,018 17,785 TOTAL LIABILITIES / EQUITY (TIMES) Number of shares (in millions) 1,655 1,655 2,040 2,040 2,201 2,201 2,201 Earnings per share Return on average equity 7.9% 14.0% 11.7% 12.1% 13.9% 14.2% 7.3% SOURCE: SVS Financial Statements (FECU)

11 grupo security PAGE 09. Grupo Security Summarized Consolidated Financial Statements Figures in millions of nominal Chilean pesos Statement of Financial Position Total current assets 4,294,336 3,967,917 4,752,901 5,181,831 6,370,038 Total non-current assets 182, , , , ,190 Total assets 4,476,556 4,173,242 4,974,611 5,417,186 6,796,228 Total current liabilities 3,908,543 3,582,463 4,319,805 4,696,348 5,917,494 Total non-current liabilities 275, , , , ,500 Total liabilities 4,183,545 3,866,902 4,594,706 5,015,262 6,322,994 Equity attributable to owners of the parent 287, , , , ,004 Non-controlling interest 5,263 5,699 3,163 4,134 6,230 Total equity 293, , , , ,234 Total liabilities and equity 4,476,556 4,173,242 4,974,611 5,417,186 6,796, Income Statement Operating income 307, , , , ,361 Cost of sales -175, , , , ,620 Gross margin 132, , , , ,741 Other income 1,375 1,281 5,047 7,809 6,000 Administrative expenses -90,949-86,934-93, , ,805 Other expenses, by function -21,106-18,059-16,701-18,393-11,211 Other gains (losses) 1,353 2,366 4,385 1,760 2,655 Net operating income 22,711 47,378 60,556 58,195 41,380 Finance income Finance costs -5,807-4,122-4,449-4,950-9,965 Share of profit of associates and joint ventures accounted for using the equity method 2,547 2,758 2,710 1,094 1,387 Exchange differences 12,669 4,583-2,680 5,749 30,373 Gain (loss) on indexed assets and liabilities 7,943-1,980-6,462-2, Gain (loss) from difference between the prior carrying value and the fair value of reclassified financial assets measured at fair value -2, Profit before taxes 37,261 49,183 49,978 57,258 62,152 Income tax expense -6,552-7,327-7,662-10,103-11,181 Profit from continuing operations 30,709 41,856 42,316 47,155 50,971 Profit from discontinued operations Profit for the year 30,709 41,856 42,316 47,155 50,971 Profit attributable to owners of the parent 29,986 40,852 41,883 46,561 49,843 Profit attributable to non-controlling interest 723 1, ,128 Profit for the year 30,709 41,856 42,316 47,155 50,971 Total Liabilities/Equity from Individual Statement of Financial Position (Times) Number of shares (in millions) 2,550 2,550 2,882 2,882 3,184 Earnings per share Return on average equity 11.6% 13.9% 12.4% 12.0% 11.5% SOURCE: SVS Financial Statements (FECU)

12 consolidated assets MCh$6,796,228 Equity ATTRIBUTABLE TO OWNERS OF THE PARENT MCh$467,004 Lending The lending area encompasses subsidiaries that offer lending products and services. It includes Banco Security (excluding its brokerage and mutual fund subsidiaries) and Factoring Security. For the year ended December 31, 2013, the companies reported total profit for the year of Ch$33,982 million, 53% of total Group profit. Asset Management & Stock Brokerage The asset management area includes companies that offer investment products and services and provide comprehensive asset management services. It includes Valores Security S.A. Corredores de Bolsa, Administradora General de Fondos Security S.A. and Securitizadora Security S.A. In order to strengthen its product and service offering for customers, two newly acquired subsidiaries were integrated into the asset management area in June 2013, Cruz del Sur Corredora de Bolsa S.A. and Cruz del Sur Administradora General de Fondos S.A. Together, the asset management area subsidiaries reported profit for the year of Ch$4,791 million, equivalent to 8% of total Group profit.

13 Profit for the Year by Business Area ASSET MANAGEMENT 8% SERVICES 5% INSURANCE 34% LENDING 53% 1.3. Grupo Security Business Areas annual report 2013 Insurance The insurance area encompasses the Group s subsidiaries that offer insurance products and services. It includes Vida Security Seguros de Vida, Penta Security Seguros Generales, Corredores de Seguros Security, Europ Assistance Chile and, until April 2013, Cooper Gay Chile Corredores de Reaseguros. In June 2013, Compañía de Seguros de Vida Cruz del Sur and its subsidiary Hipotecaria Cruz del Sur Principal (with a 51% interest) were incorporated into the area. For the year ended December 31, 2013, profit for the year for Inversiones Seguros, the parent company for the Group s insurance companies, was Ch$21,723 million, equivalent to 34% of total Group profit. Services The service area includes the Group s subsidiaries that offer products and services that are not directly related to the financial services industry. These companies focus on similar market segments and complement Grupo Security s product offering. For the year ended December 31, 2013, these companies posted total profit for the year of Ch$3,114 million, contributing 5% of total Group profit.

14 Banco Security Banco Security is a niche bank focusing on corporations, large and medium-sized companies, and high-income individuals. It is characterized by excellent service and highly valued product and service offerings for each customer segment. For the year ended December 31, 2013, Banco Security had experienced 10.6% annual growth in loans, while consolidated profit reached Ch$32,798 million (Ch$27,456 million excluding subsidiaries). Factoring Security Factoring Security offers a variety of financing alternatives, including: factoring, leases and collections services. Its target market is small and medium-sized companies in need of lending services beyond those offered by traditional banks. For the year ended December 31, 2013, Factoring Security posted profit for the year of Ch$6,527 million, representing 17% growth in factored receivables. Valores Security S.A. Corredores de Bolsa The stock brokerage subsidiary offers securities brokerage and asset management services specially tailored to each customer, whether high-income individuals, companies or institutional investors. For the year ended December 31, 2013, Valores Security reported profit for the year of Ch$875 million and placed 7th among brokerage houses in terms of traded volumes. Administradora General de Fondos Security S.A. The fund management subsidiary (AGF Security) offers mutual and investment fund management services. For the year ended December 31, 2013, AGF Security posted profit for the year of Ch$4,470 million and assets under management of Ch$988,390 million. Cruz del Sur Corredora de Bolsa S.A. The brokerage subsidiary gives its clients access to a wide array of financial services including portfolio management services and buying and selling equities, fixed-income instruments and foreign currency, among other services. For the year ended December 31, 2013, the brokerage subsidiary posted a loss for the year of Ch$523 million. For the period since being acquired by Grupo Security in June 2013, the subsidiary reported a loss of Ch$268 million. The brokerage house ranked 20th in 2013 in terms of traded volumes. Cruz del Sur Administradora General de Fondos S.A. The fund management subsidiary offers its customers mutual fund, investment fund and portfolio management services. For the year ended December 31, 2013, this subsidiary posted a loss of Ch$231 million. For the period since being acquired by Grupo Security in June 2013, the subsidiary reported profit of Ch$257 million. As of December 31, 2013, the subsidiary has assets under management of Ch$409,214 million. Lending Asset Management & Stock Brokerage

15 Vida Security Vida Security offers individual and group insurance products. In 2012, the company became active in the area of pension insurance, offering annuities. For the year ended December 31, 2013, Vida Security reported profit for the year of Ch$19,286 million, representing 23.7% growth in direct premiums. Cruz del Sur Seguros de Vida This insurance subsidiary, Compañía de Seguros de Vida Cruz del Sur, offers pension-related insurance, annuities and traditional insurance policies, including individual saving insurance plans (CUI) and voluntary pension savings insurance (APV) and group health insurance. For the year ended December 31, 2013, this insurance subsidiary posted profit for the year of Ch$303 million. For the period since being acquired by Grupo Security in June 2013, the subsidiary reported profit of Ch$3,151 million. Travel Security Travel Security, a travel agency, offers products and services designed for corporate customers, companies and individuals who demand excellent, comprehensive service. For the year ended December 31, 2013, Travel Security posted profit for the year of Ch$3,022 million, up 25.3% over the prior year. Inmobiliaria Security Inmobiliaria Security has a distinguished track record in the real estate market, where it participates as an investor and developer of both residential and office projects. For the year ended December 31, 2013, Inmobiliaria Security reported profit for the year of Ch$549 million. Penta Security Grupo Security holds a 29.35% interest in Penta Security, which offers general insurance products, primarily fire, earthquake and motor vehicle coverage. For the year ended December 31, 2013, Penta Security posted profit for the year of Ch$2,506 million. Corredora de Seguros The insurance brokerage subsidiary brokers general and life insurance policies, primarily for corporations and companies. For the year ended December 31, 2013, this subsidiary reported profit for the year of Ch$612 million. Insurance Services

16 1.4. BOARD OF DIRECTORS AND MANAGEMENT BOARD OF DIRECTORS CHAIRMAN Francisco Silva Silva Civil Engineering, Universidad Católica de Chile Engineering, Stanford University Master of Science, Stanford University Chilean ID Number: DIRECTORS Hernán de las Heras Marín Business Administration, Universidad de Chile Chilean ID Number: Jorge Marín Correa Technical Degree in Business Administration Chilean ID Number: Naoshi Matsumoto Takahashi Business Administration, Universidad Católica de Chile Chilean ID Number: Horacio Pavez García Civil Construction, Universidad Federico Santa María Chilean ID Number: Juan Cristóbal Pavez Recart Business Administration, Universidad Católica de Chile Master of Business Administration, Massachusetts Institute of Technology Chilean ID Number:

17 grupo security PAGE 15. Bruno Philippi Irarrázabal Civil Engineering, Universidad Católica de Chile Master of Science in Operations Research, Stanford University Ph.D. Engineering- Economic Systems, Stanford University Chilean ID Number: Ana Saínz de Vicuña BSc Honours Degree Agricultural Economics, Reading University U.K. Chilean ID Number: Álvaro Vial Gaete Business Administration, Universidad de Chile Master of Arts in Economics, University of Chicago Chilean ID Number: CORPORATE SERVICES MANAGER Date appointed: 09/01/2005 Gonzalo Ferrer Aladro Civil Engineering and Master of Business Administration, Universidad Católica de Chile Stanford Executive Program, Stanford University Chilean ID Number: PLANNING AND DEVELOPMENT MANAGER Date appointed: 11/01/2005 Fernando Salinas Pinto Business Administration and Master of Business Administration, Universidad Católica de Chile Stanford Executive Program, Stanford University Chilean ID Number: MANAGEMENT AND CHIEF EXECUTIVES CHIEF EXECUTIVE OFFICER Date appointed: 02/01/1996 Renato Peñafiel Muñoz Business Administration, Universidad Católica de Chile Master of Arts in Economics, University of Chicago Chilean ID Number: ASSET MANAGEMENT AREA MANAGER Date appointed: 01/01/2008 Carlos Budge Carvallo Agronomy and Masters in Agrarian Economics, Universidad Católica de Chile Master of Arts and Ph.D. in Applied Economics, Stanford University Chilean ID Number: CORPORATE MARKETING AND QUALITY MANAGER Date appointed: 06/06/2005 Alejandra Zegers Correa Business Administration, Universidad Católica de Chile Chilean ID Number: CHIEF ECONOMIST Date appointed: 06/01/2012 Dalibor Eterovic Maggio Business Administration, Universidad Católica de Chile Master of Science in Economics, University of Birmingham PhD in Economics, University of Cambridge Chilean ID Number: CORPORATE ACCOUNTING MANAGER Date appointed: 01/01/2006 Sergio Candia Aliaga Civil Engineering, Universidad de Chile Chilean ID Number:

18 1981/ /97 In 1981, Banco Urquijo de Chile, a subsidiary of Spain s Banco Urquijo, was created. In April 1987, Security Pacific Corporation, a subsidiary of Los Angeles, Californiabased Security Pacific National Bank, created Agencia de Valores Corredora de Bolsa, a third-party stock brokerage firm. That same year, Security Pacific Corporation purchased 100% of Banco Urquijo de Chile s share capital, renaming the bank Banco Security Pacific. In 1990, Leasing Security was created. It joined Banco Security in April / /99 In 1994, Bank of America, the successor of Security Pacific National Bank, sold the remaining 40% shareholding to Grupo Security. In 1995, Grupo Security became a publicly traded company. After its second capital increase, it acquired a controlling interest in AFP Protección as well as the insurance companies Previsión and Previsión Generales. In 1996, Grupo Security placed series A bonds for UF 1 million. Additionally, the Group purchased 29.35% of Previsión Generales insurance company from Inversiones, Seguros y Previsiones Limitada, thereby giving it a controlling interest in the company (62.69%). Also in 1996, Merchant Security and Inmobiliaria Security joined the Group. In 1991, Security Pacific Overseas Corporation sold 60% of the bank s share capital to Grupo Security s current shareholders, changing the bank s name to Banco Security. Agencia de Valores Corredora de Bolsa became a Banco Security subsidiary, changing its name to Valores Security Corredores de Bolsa. Thus was born Grupo Security. In 1992, Administradora de Fondos Mutuos Security S.A. was created as a subsidiary of Banco Security and Factoring Security was created as a subsidiary of Grupo Security. In 1993, Asesorías Security, the subsidiary that represents US-based, Dean Witter Reynolds & Co, was created. In 1997, Grupo Security carried out a stock swap. In October, the Group revamped its corporate image and Securitizadora Security, a Merchant Security subsidiary, joined the Group. In March 1998, Grupo Security sold its interest in AFP Protección. In December, Previsión Vida and Previsión Generales insurance companies were transferred to the parent company, Inversiones Seguros Security Limitada. In 1999, Grupo Security acquired a controlling interest in the travel agency, Travel Security, and founded Corredora de Seguros Security. 2008/ /2012 In 2008, Grupo Security acquired an interest in Securitizadora Security GMAC- RFC from parent company GMAC RFC Chile. As a result, Grupo Security directly controls 99% of that subsidiary. In July 2009, the Group carried out its sixth capital increase for Ch$40,000 million. Through an alliance with American Express, Travel Security was awarded exclusive representation of the world s largest travel agency in Chile. Corredora de Seguros Security purchased the life and health insurance portfolio from Andueza y Compañía. Grupo Security successfully placed bonds for UF 750,000. Beginning January 1, 2010, Grupo Security adopted International Financial Reporting Standards (IFRS). That year, the three-year work plan to strategically review each subsidiary s business model was put into effect. In 2011, Grupo Security celebrated its 20th anniversary and increased capital for the seventh time. Capital raised totaled Ch$66,452 million, which was used to capitalize some of the subsidiaries in order to support their growth plans and strengthen their competitive advantages. In July 2012, Travel Security acquired a 75% interest in Travex, Peru s third largest travel agency. In August 2012, Grupo Security placed the remaining series F bonds for a total of UF 500,000 at an interest rate of 4.23%.

19 2000/ El año 2000 se crea Global Security, que concentra la fuerza de venta de Grupo Security. La filial Invest Security centraliza a partir de 2001 los servicios de contabilidad, contraloría y desarrollo de la cultura corporativa de las empresas filiales del Grupo. Virtual Security inicia la entrega de servicios tecnológicos para todas las empresas del Grupo. En 2001 se crean dos filiales de Servicios Security S.A. (filial a su vez de Inversiones Seguros Security Limitada): Corredora de Reaseguros Security y Agencia Security. 2002/ /07 In 2004, Grupo Security acquired 99.67% of Dresdner Bank Lateinamerika A.G. and 100% of Dresdner Lateinamerika S.A. Corredora de Bolsa. On October 1, Banco Dresdner merged with Banco Security, an operation financed primarily through a capital increase in June. The merger of Seguros Generales Las Américas and Seguros Security Previsión Generales was finalized under the name Penta Security. In November, Grupo Security increased capital by approximately US$ 58.5 million. An alliance with Europ Assistance was formed, creating Europ Assistance Chile. Grupo Security partnered with English reinsurance brokerage firm, Cooper Gay, and Cooper Gay Chile was born. In 2002, Merchant Security absorbed Asesorías Security s international asset management business and Banco Security s international private banking business, changing its name to Asesorías Security S.A. Inversiones Seguros Security Limitada came to hold a 73.69% interest in Servicios Security, the insurance brokerage firm s parent company. The names of the insurance companies were changed to Seguros Vida Security Previsión S.A. and Seguros Security Previsión. In 2003, Grupo Security successfully placed bonds for UF 1 million. The Chilean Securities and Insurance Supervisor (SVS) approved amendments to the by-laws of Sociedad Administradora de Fondos Mutuos Security S.A., which became Sociedad Administradora General de Fondos. In 2005, GMAC RFC Chile Limitada acquired a 49% interest in Securitizadora Security S.A. In 2006, Interamericana Rentas Seguros de Vida S.A. was purchased and became Rentas Security. Grupo Security increased capital by Ch$19,345 million. In 2007, Grupo Security and Grupo Ultramar merged their travel agencies, Travel Security and Turismo Tajamar, under the name Travel Security S.A. The merger of subsidiaries Vida Security and Rentas Security is finalized. Grupo Security acquires Cigna Compañía de Seguros de Vida and Cigna Asistencia Administrativa Ltda. Later, Vida Security merged with Cigna Seguros de Vida. Grupo Security placed bonds for a total of UF 1,500, OUR HISTORY annual report In April, Grupo Security sold its interest in Cooper Gay Chile. In June, Grupo Security acquired the following companies from the Cruz del Sur group: Cruz del Sur Vida S.A., Cruz del Sur Administradora General de Fondos S.A., Cruz del Sur Capital S.A., Cruz del Sur Corredora de Bolsa S.A., Sociedad de Asesorías e Inversiones Cruz del Sur Ltda. and Hipotecaria Cruz del Sur Principal S.A. In July 2013, Grupo Security successfully completed its eighth capital increase for US$ 109 million, subscribing a total of 301,416,764 shares. In September, 25- year, k-series bonds were placed for a total of UF 3,000,000 at a rate of 4.04%.

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21 2. CORPORATE GOVERNANCE annual report 2013 rency transparencia TRANSPARENCY

22 2.1. CORPORATE GOVERNANCE PRINCIPLES CORPORATE GOVERNANCE PRINCIPLES Corporate governance refers to the set of practices and policies set forth by Grupo Security s board of directors. These corporate governance principles aim to ensure that the Group s objectives are met and its values are upheld. They add value to the Company by encouraging self-regulation and regulatory compliance, and establishing common guidelines for the Group companies. Thus, corporate governance facilitates decision making in Group companies, within a framework of transparency and responsibility, involving all those who participate in the organization: shareholders, employees or other stakeholders. At the same time, corporate governance principles ensure that the activities undertaken by the Group s companies are consistent with its business strategy, institutional values and risk tolerance and aversion. Grupo Security s board of directors is responsible for ensuring that corporate policies are applied at company level. Compliance is monitored by the Corporate CEO and the Directors Committee, as well as various corporate- and company-level committees. Corporate Governance Bodies Shareholders According to Chile s Corporations Law, shareholders meetings provide the highest level of corporate governance. At an ordinary meeting of the shareholders of Grupo Security held on April 30, 2013, the following issues were discussed and approved: The 2012 annual report, balance sheet and financial statements. Distribution and payment of dividends. Dividend policy. Board compensation for 2013 and approval of its budget for accounting, financial, legal and other types of advisory services. Directors Committee compensation and approval of the 2013 budget. Appointment of external auditors. Appointment of risk rating agency. Newspaper in which to publish notices of shareholders meetings. Information on related party transactions in conformity with Art.