the market for retirement products in chile: a review (*) guillermo martínez barros augusto...
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THE MARKET FOR RETIREMENT PRODUCTS IN
CHILE: A REVIEW (*)
Guillermo Martínez Barros Augusto Iglesias Palau
* PrimAmérica Consultores – October 2003* PrimAmérica Consultores – October 2003
Pension Funds and Life Insurance Companies Reserves (MMUS$)
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
-1,02,03,04,05,06,07,08,09,0
Pension Funds Life Insurance Companies Reserves P.F./L.I.R.
Source: PrimAmérica Consultores
Source: SAFP-SVS
Years Value of the Pension Funds Funds/GDP Value of the LICO Reserves Reserves/GDPMillions of US$ Millions of US$
1981 236 0,84% 47 0,17%1982 750 3,29% 224 0,98%1983 1.358 5,86% 228 0,98%1984 1.796 7,73% 255 1,10%1985 2.473 10,03% 309 1,25%1986 3.235 12,67% 422 1,65%1987 3.964 14,20% 579 2,07%1988 4.852 14,97% 760 2,35%1989 5.983 17,65% 965 2,85%1990 7.924 24,21% 1.311 4,01%1991 11.207 31,37% 1.810 5,07%1992 12.488 30,56% 2.537 6,21%1993 16.050 37,02% 3.128 7,21%1994 19.370 40,99% 4.344 9,19%1995 20.590 38,76% 5.554 10,46%1996 21.819 37,44% 6.751 11,58%1997 23.849 39,04% 8.110 13,28%1998 24.734 40,27% 8.735 14,22%1999 30.049 49,21% 8.990 14,72%2000 32.361 50,91% 10.797 16,99%2001 35.562 55,03% 11.056 17,11%2002 36.816 57,31% 11.504 17,91%
Value of the Pension Funds and Life Insurance Companies Reserves(As of December of each year)
i (PW) = 6,00% Individual Account Balance = 1.000
i (A) = 5,00% Man, 54 years old
Evolution of Programmed Withdrawal and Annuities
0
1
2
3
4
5
6
7
Age (Year)
Payou
t
Programmed Withdral Annuity
RV85 PW i = 5,9% Individual Account Balance = 1000 UF
RV85 DA i = 5,6%
Profile of a Programmed Withdrawal with Deferred Annuity
6,0
6,2
6,4
6,6
6,8
7,0
7,2
7,4
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88Age (Year)
Payout
Return of Pension Funds = 7%
PW Initial Pension / Deferred Annuity Pension = 1 /1
(1) Excluding the first pension payment. Source: SAFP
1982 4.343 180 4.5231983 2.020 1 9.150 11.1711984 5.709 27 14.349 20.0851985 7.373 236 18.817 26.4261986 10.386 1.120 24.159 35.6651987 13.257 2.757 29.901 45.9151988 18.134 5.642 8 32.582 56.3661989 27.444 11.267 9 30.715 69.4351990 36.696 20.275 148 29.942 87.0611991 48.794 32.908 1.019 30.091 112.8121992 56.998 44.191 2.303 27.638 131.1301993 68.268 57.906 2.852 26.300 155.3261994 85.205 72.719 4.898 25.192 188.0141995 98.699 84.898 6.803 23.953 214.3531996 105.941 102.130 7.377 23.041 238.4891997 113.251 122.250 7.974 22.126 265.6011998 117.462 146.310 5.063 21.370 290.2051999 128.391 167.743 5.364 20.736 322.2342000 147.532 189.801 6.632 19.358 363.3232001 162.516 213.431 6.829 18.644 401.4202002 171.899 234.117 5.257 17.900 429.173
Jun-2003 175.624 297.355 5.110 17.412 495.501
Years
NUMBER OF PENSIONS BY OPTION (1)
(As of December each year)
Programmed Withdrawal
AnnuityTemporary Income with Deferred Life Annuity
TotalCovered by Old AFP Insurance
(1) Excluding the first pension payment. Source: SAFP
1982 4,5 5,3 4,61983 1,6 3,7 4,8 4,31984 2,0 8,3 4,4 3,71985 1,8 7,9 4,3 3,61986 2,1 7,0 4,4 3,81987 2,0 6,8 4,5 3,91988 2,6 7,5 17,1 4,8 4,31989 3,2 7,4 17,4 5,0 4,71990 2,9 7,4 27,7 5,1 4,71991 3,4 7,7 24,1 5,0 5,21992 3,9 7,6 24,6 5,2 5,81993 4,0 7,5 24,4 5,5 5,91994 4,8 7,5 24,5 5,6 6,41995 5,4 7,4 21,0 5,8 6,71996 4,9 7,5 23,4 5,9 6,71997 5,0 7,5 23,9 6,1 6,81998 4,5 7,6 23,6 6,0 6,51999 4,9 7,8 27,2 6,2 6,92000 5,3 7,9 26,8 6,5 7,12001 5,3 8,2 28,0 6,6 7,32002 5,1 8,3 27,7 6,8 7,2
Jun-2003 5,1 9,0 26,0 7,0 7,3
AVERAGE AMOUNT OF PENSIONS PAID BY OPTION (1)
(As of December each year in UF)
YearsProgrammed Withdrawal
AnnuityTemporary Income with Deferred Life Annuity
AverageCovered by Old AFP Insurance
(1) Excluding the first pension payment.(2) Does not include transitory disability pensions.(3) Correspond to pensions to mothers of offspring from a non-marital relationship, and the parents of themember.
Source: SAFP
Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount
Dec-82 --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---Dec-83 1 3,68 --- --- --- --- --- --- --- --- --- --- --- --- 1 3,68Dec-84 9 8,47 --- --- 18 8,17 --- --- --- --- --- --- --- --- 27 8,27Dec-85 146 8,43 --- --- 90 6,96 --- --- --- --- --- --- --- --- 236 7,87Dec-86 814 7,33 --- --- 306 5,97 --- --- --- --- --- --- --- --- 1.120 6,96Dec-87 2.179 7,04 --- --- 578 5,97 --- --- --- --- --- --- --- --- 2.757 6,82Dec-88 3.433 7,65 766 9,43 867 7,76 --- --- 233 5,58 338 1,52 5 1,63 5.642 7,45Dec-89 4.705 7,87 2.791 8,18 1.692 9,78 --- --- 765 5,74 1.286 1,71 28 4,53 11.267 7,38Dec-90 6.972 8,21 5.717 8,43 2.645 10,48 --- --- 1.807 6,20 3.050 1,96 84 4,15 20.275 7,43Dec-91 8.428 8,27 14.792 8,62 2.886 10,52 --- --- 2.502 6,22 4.183 1,98 117 3,90 32.908 7,65Dec-92 9.599 8,01 23.461 8,41 2.953 10,49 --- --- 3.037 6,29 4.997 2,01 144 4,01 44.191 7,58Dec-93 11.529 7,69 33.127 8,43 3.005 9,95 --- --- 3.763 6,62 6.274 2,11 208 4,53 57.906 7,55Dec-94 13.261 7,79 43.750 8,29 2.709 9,88 532 7,48 4.621 6,44 7.583 2,21 263 4,41 72.719 7,49Dec-95 14.162 7,89 53.382 8,06 2.774 10,32 548 9,27 5.275 6,33 8.469 2,06 288 4,13 84.898 7,39Dec-96 16.736 8,27 63.831 8,18 3.302 10,19 608 9,06 6.766 6,86 10.499 2,09 388 3,93 102.130 7,54Dec-97 19.723 8,29 75.626 8,17 3.878 10,12 652 8,87 8.656 6,76 13.180 2,05 535 3,75 122.250 7,48Dec-98 21.761 8,55 90.443 8,39 4.640 10,52 709 7,46 10.531 6,81 17.478 2,06 748 3,97 146.310 7,58Dec-99 27.696 8,66 99.127 8,66 6.064 10,60 816 8,64 13.284 6,75 19.827 2,10 929 4,58 167.743 7,78Dec-00 30.726 8,83 111.720 8,85 7.184 10,50 656 9,45 15.342 6,95 23.060 2,23 1.113 4,35 189.801 7,92Dec-01 34.090 9,11 127.636 9,07 8.007 10,66 795 9,74 16.760 7,02 24.915 2,23 1.228 4,43 213.431 8,15Dec-02 37.169 9,25 139.049 9,27 9.239 10,87 1.004 9,90 18.705 7,17 27.560 2,27 1.391 4,38 234.117 8,31Jun-03 46.572 9,56 187.316 10,01 12.242 11,68 1.574 10,66 19.548 6,57 28.640 2,11 1.463 3,83 297.355 8,99
WIDOWS ORPHANDS OTHERS (3) TOTAL
ANNUITIES: NUMBER OF PENSION AND AVERAGE AMOUNT PAID IN U.F.(As of december of each year)
TYPE OF PENSIONRETIREMENT EARLY RETIREMENT TOTAL DISABILITY (1) PARTIAL DISABILITY (2)
Life Insurance Companies
Number of Life Insurance Companies
17 16 16 16
20
25 25 2528 28 29 29
34 33 32 33 32 32
0
5
10
15
20
25
30
35
40
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source: SVS
Number of Insurance Companiesin the Annuities Market
911
1618
20 20 21 22 22 23 23 22 2119
17
0
5
10
15
20
25
N°
Com
pani
es
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: S.V.S. Annuities Statistics
(*) Measured on the basis of Premium
Source: PrimAmérica Consultores
Market Concentration
0,000
0,050
0,100
0,150
0,200
0,250
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
Herfindahl Index (*) 3 largest LICOs
Annuities Market Concentration (%)
47,7
29,9
10,4
47,3 46,4 50,643,5
76,6
98,5
61,8
49,642,8
35,832,032,131,0
86,6
59,1
40,535,1
27,9
14,2
15,814,911,6
46,7
27,0
14,7 14,2 11,2
0
20
40
60
80
100
120
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
5 Largest Companies
3 Largest Companies
Largest Company
% of Market
Source : S.V.S. Annuities Statistics
Annuities Market Concentration (%)
Source : S.V.S. Annuities Statistics
YearLargest
Company3 Largest Companies
5 Largest Companies
1988 46,7% 86,6% 98,5%1989 34,4% 80,7% 90,5%1990 27,0% 59,1% 76,6%1991 15,9% 45,2% 63,8%1992 14,7% 40,5% 61,8%1993 13,2% 37,2% 52,9%1994 14,2% 35,1% 49,6%1995 11,6% 31,4% 47,2%1996 11,6% 31,0% 43,5%1997 14,9% 30,3% 43,5%1998 11,2% 27,9% 42,8%1999 14,90% 32,10% 47,30%2000 14,20% 32,00% 46,40%2001 15,80% 35,80% 50,60%2002 10,40% 29,90% 47,70%
Source: PrimAmérica Consultores
LICO MAIN SHAREHOLDER % BANK AFPABN AMRO ABN-AMRO HOLDING DE NEGOCIOS LIMITADA 99,76% XAGF ALLIANZ AGF CHILE S.A. 88,95%ALTAVIDA TEATINOS SIGLO XXI, S.A. 99,00% XAXA BCI INVERSIONES EJY S.A. 99,99% XBANCHILE SEGUROS DE VIDA INVERSIONES VITA S.A. 66,10% XBBVA SEGUROS VIDA BBVA PENSIONES CHILE S.A. 99,99% X XBICE VIDA BICE CHILECONSULT FINANZAS Y SERVICIOS LTDA. 50,00% XCAJA REAS. INVERSIONES MAPFRE CHILE REASEGUROS S.A. 99,68%CARDIF CARDIF S.A. 99,90%CHILENA INVERSIONES SUIZO CHILENA S.A. 98,94%CIGNA INVERSIONES CIGNA LTDA 99,56%CN LIFE CF BAHAMAS LIMITED 99,99%CONSORCIO CONSORCIO FINANCIERO S.A. 99,78%CORP VIDA INVERSIONES ANGELINI Y CIA. LTDA. 43,65% XCRUZ DEL SUR INVERSIONES SIEMEL S.A. 99,99%EUROAMERICA EUROAMERICA ASESORIAS S.A. 99,99%HUELEN CAJA DE AHORROS DE EMPLEADOS PUBLICOS 99,94%ING VIDA ING S.A. 70,55% XINTER VIDA Y AHORRO INVERSIONES INTERAMERICANA S.A. 99,99%INTERAMERICANA RENTAS INVERSIONES INTERAMERICANA S.A. 99,99%ISE - AMERICAS EMPRESAS PENTA S.A. 77,32% XLA CONSTRUCCION RSA CHILEAN HOLDINGS S.A. 51,00% XLE MANS INVERLINK CAPITALES S.A. 68,65%MAPFRE VIDA MAPFRE CHILE VIDA S.A. 99,98%METLIFE VIDA METLIFE CHILE INVERSIONES LTDA 95,73%METLIFE-RE METLIFE CHILE INVERSIONES LTDA 99,99%MUTUAL CARAB. N/A N/A%MUTUAL EJ Y AV N/A N/A%MUTUAL SEGUROS N/A N/A%OHIO OHIO NATIONAL SUDAMERICA S.A. 99,98%PRINCIPAL PRINCIPAL INTERNATIONAL DE CHILE SA 99,99%RENTA NACIONAL HOLDING S.A. 64,44% XVIDA SECURITY INVERSIONES SEGUROS SECURITY LTDA. 65,34% XVITALIS CONSORCIO FINANCIERO S.A. 99,99%
Source: SVS
1991 1995 2000 2001 2002
Government Sector 38,26% 40,33% 28,65% 21,91% 18,89%Financial Sector 22,99% 28,37% 45,05% 42,17% 41,28%Mortgage-backed securities 13,9% 18,6% 24,2% 22,0% 20,6%Time Deposits 4,0% 1,9% 1,6% 1,6% 1,9%Bonds of Financial Institutions 2,1% 1,9% 9,2% 8,6% 8,3%Endorsable Mortgages 3,0% 6,0% 10,1% 9,9% 10,6%Company Sector 28,98% 22,08% 15,27% 24,47% 28,04%Shares 8,9% 10,2% 3,4% 3,1% 2,7%Bonds 20,1% 10,7% 10,7% 20,3% 24,4%Investment Fund Shares - 1,1% 1,1% 1,0% 1,0%
Real Estate 7,78% 7,71% 7,41% 7,31% 7,28%Others 1,84% 1,31% 1,58% 1,74% 2,16%
Foreing Sector - 0,08% 2,04% 2,40% 2,34%
Disposable Assets 0,15% 0,12% - - -TOTAL ASSETS 100% 100% 100% 100% 100%
(Percentage as of December of each year)LICO RESERVES INVESTMENTS
Profits of Insurance Companies
ROE & ROA of LICOs
-12,13%
-1,26%
12,44%
1,53%
-4,71%
-0,52%
5,30%
0,60%2,69%
0,29%
-15,00%
-10,00%
-5,00%
0,00%
5,00%
10,00%
15,00%
1998 1999 2000 2001 2002
ROE
ROA
Evolution of the Chilean Annuities Market Evolution of the Chilean Annuities Market
The Evolution of Annuity Sales
129236
383
578647
734
849951
1.1251.161
1.1031.176
1.329 1.313
0
200
400
600
800
1.000
1.200
1.400
Gro
ss W
ritt
en P
rem
ium
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Source: S.V.S. Annuities Statistics
US$ 000s
Annuities Sales Growth Rates (%)
7,013,0
-1,0-5,0
18,3
51,0
82,0
12,015,713,511,9
62,6
3,3
-20
0
20
40
60
80
100
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Annual Growth
Source: S.V.S. Annuities Statistics
%
Number of Annuity Policies and Average Premium
48,730 49,010
55,50052,730
49,20045,500 45,475
48,380
43,89045,28045,65044,54044,410
52,37048,920
28,223
22,321
28,42327,521
21,15124,750
21,66618,754
16,07614,520
11,8138,619
4,4982,674
23,082
0
10
20
30
40
50
60
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Average Premium (US$) N° Policies
Source: S.V.S. Annuities Statistics
New Annuities Average PensionNew Annuities Average Pension
Source: S.V.S. Annuities Statistics.
330 335
275 282
354
318
256267281
269
295314 304
200
250
300
350
4001990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
US$ per month
Capital per Unit of Pension
The capital per unit of pension is a measure of the lump-sum savings needed to finance a lifetime pension of one unit per month.
The most important inputs in determining the capital required to purchase a unit of pension are:– the interest rate,
– the life expectancy of the person or group of people that will receive the pensions, and
– the expenses the company expects to incur in meeting the obligations under the policy.
The average ratio of capital per unit of pension has fluctuated between 150 and 175, averaging around 160 over the last twelve years.
Capital per Unit of PensionCapital per Unit of Pension
Source: S.V.S. Annuities Statistics.
160
147
165161150
163
171170162
166166
142
161
100
120
140
160
180
200
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Underwriting Losses
The minimum technical reserve calculation rules issued by the Insurance Superintendency’ effectively mean that every new policy sold gives rise to an underwriting loss of around 117% of premium.
As such, for every US$100 received as single premium from the client, the insurance company is obliged to set up a technical reserve of US$117; the imbalance between assets received (premium) and liabilities assumed (pensions to pay) is covered by a reduction in accounting equity, with this this differential being shown as a technical loss in the income statement.
Underwriting Losses as % of Underwriting Losses as % of PremiumPremium
Source: F.E.C.U.
116,3
117,3
107,2107,7107,3106,7
109,5
107,3108,2
105,7
108,2
104
106
108
110
112
114
116
118
120
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
(% of Premium)
TYPES OF ANNUITYPRODUCTS
Types of Annuity Products
There are four types of annuity product:
i) Old Age Pensions
ii) Early Retirement Pension
iii) Disability Pensions (total and partial)
iv) Survivorship Pensions
Of these four types of annuities, the largest share corresponds to early retirement, which in 2001 accounted for 74% of all annuity sales (US$962 million), followed by old age pensions with 15% (US$192 million).
Annuity Sales by Type of Product
0
200
400
600
800
1000
1200
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Early Retirement
Old Age
Survivorship
Disability
US$ Millions
Source: S.V.S. Annuities Statistics
Annuity Sales by Type of Product (US$ Millions)
Source: S.V.S. Annuities Statistics.
YearEarly
Retirement Old Age Survivorship Disability Total
1991 433 83 42 20 598
1992 541 72 31 3 650
1993 564 113 52 5 739
1994 687 100 41 21 870
1995 790 90 43 28 979
1996 791 185 96 53 1.178
1997 828 188 98 48 1.161
1998 636 257 132 78 1.103
1999 851 177 87 62 1.177
2000 1.032 172 79 70 1.354
2001 962 192 71 69 1.294
Composition of Annuity Salesby Type of Product (%)
0
10
20
30
40
50
60
70
80
90
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Early RetirementOld AgeSurvivorshipDisability
%
Source: S.V.S. Annuities Statistics
Composition of Annuity Salesby Type of Product (%)
Source: S.V.S. Annuities Statistics.
YearEarly
Retirement Old Age Survivorship Disability
1991 72% 14% 7% 3%
1992 83% 11% 5% 1%
1993 76% 15% 7% 1%
1994 79% 12% 5% 2%
1995 81% 9% 4% 3%
1996 67% 16% 8% 4%
1997 71% 16% 8% 4%
1998 58% 23% 12% 7%
1999 72% 15% 7% 6%
2000 76% 13% 6% 5%
2001 74% 15% 5% 6%
200
250
300
350
400
450
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Old Age Early Retirement
Total Disability Partial Disability
Survivorship Total
US$
New Annuities Average Pension byNew Annuities Average Pension by Type of Product Type of Product (US$/month)
Source S.V.S. Annuities Statistics
Source S.V.S. Annuities Statistics
New Annuities Average Pension by New Annuities Average Pension by Type of Product Type of Product (US$/month)
YearEarly
Retirement Old Age Survivorship Disability Total
1991 287 277 398 359 295
1992 269 242 351 294 269
1993 277 258 390 295 281
1994 265 244 347 297 267
1995 253 235 357 284 256
1996 293 296 397 315 304
1997 298 297 323 298 318
1998 351 349 347 351 354
1999 325 320 366 314 330
2000 300 300 361 302 321
2001 265 299 353 303 278
30
40
50
60
70
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Old Age Early Retirement
Total Disability Partial Disability
Survivorship Total
MUS$
Annuities Average Premium byAnnuities Average Premium by Type of Product Type of Product (MUS$/policy)
Source S.V.S. Annuities Statistics
Source S.V.S. Annuities Statistics
Annuities Average Premium byAnnuities Average Premium by Type of Product Type of Product (US$/policy)
YearEarly
Retirement Old Age Survivors Disability Total
1991 49.780 42.260 48.920 52.120 50.615
1992 45.960 35.500 44.540 46.670 44.764
1993 47.060 38.100 45.650 49.140 45.853
1994 46.800 36.980 45.280 65.870 47.163
1995 44.990 35.400 43.890 44.730 45.187
1996 50.280 43.170 48.730 47.720 51.023
1997 48.648 41.339 43.848 48.625 46.876
1998 55.424 47.867 46.541 53.265 52.161
1999 55.444 47.907 43.682 50.790 52.732
2000 50.646 44.119 43.458 50.040 48.636
2001 45.719 45.025 42.324 47.454 45.471
110
130
150
170
190
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Old Age Early RetirementDisability SurvivorsTotal
Capital per Unit of PensionCapital per Unit of Pensionby Type of Productby Type of Product
Source S.V.S. Annuities Statistics
Source S.V.S. Annuities Statistics
Capital per Unit of PensionCapital per Unit of Pensionby Type of Productby Type of Product
TOTAL EarlyRetirementYear
Old Age
1991
1992
1993
1994
1995
152.71
146.86
147.70
151.25
150.96
173.76
171.11
169.87
176.82
177.88
163.44
155.40
154.17
164.49
162.83
Survivorship
131.02
133.03
126.14
126.08
125.20
166.08
165.75
162.40
169.77
171.22
Disability
1996
145.62171.73 159.76 120.11 160.55
1997
147.58173.24 162.29 122.32 162.52
1998
137.15157.90 151.75 134.12 149.50
1999
149.71170.6 161.75 119.35 159.91
2000
147.06168.82 165.70 120.38 146.63
2001
150.59172.52 156.61 119.90 165.26
ANNUITIES DISTRIBUTION AND COMMISSIONS
Annuities Sales by DistributionChannel in 2002
Brokers38%
Agents62%
Source S.V.S.Annuities Statistics.
Annuities Direct Intermediation Cost(% of Immediate Lump-sum Premium)
2,85
4,01
5,89
5,955,455,33
4,98
2,32
1,56
2,93
3,403,62
3,874,26
4,87
0,0
1,0
2,0
3,0
4,0
5,0
6,0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source : S.V.S. Annuities Statistics
(% Gross Written Premium)
ANNUITIES INTEREST RATES
4,93
4,18
5,185,365,28
5,57
5,015,095,015,12 5,16
4,76
4,83
4,0
4,5
5,0
5,5
6,0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
sep-0
3
Total Market (%)
%
The Evolution of Annuity Rates The Evolution of Annuity Rates (%)
Source: S.V.S. Annuities Statistics.
4,0
5,0
6,0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Old Age Early Retirement
Total Disability Partial Disability
Survivorship
%
The Evolution Annuity Rates by The Evolution Annuity Rates by Type of Product Type of Product (%)
Source: S.V.S. Annuities Statistics.
Source: S.V.S. Annuities Statistics
The Evolution of Annuity Rates by Type of Product (%)
Year Old AgeEarly
RetirementTotal
DisabilityPartial
Disability Survivorship
1991 5,15% 4,97% 5,39% 5,05%
1992 5,22% 5,11% 4,51% 5,01%
1993 5,33% 5,12% 5,57% 5,11%
1994 4,87% 4,74% 4,85% 5,00% 4,69%
1995 4,97% 4,82% 4,93% 5,03% 4,76%
1996 5,24% 5,07% 5,15% 5,19% 4,96%
1997 5,17% 5,00% 5,02% 4,96% 4,86%
1998 5,73% 5,54% 5,56% 5,39% 5,37%
1999 5,52% 5,28% 5,38% 5,01% 5,16%
2000 5,58% 5,34% 5,38% 5,26% 5,18%
2001 5,36% 5,20% 5,25% 5,17% 5,24%
2002 5,05% 4,92% 4,96% 4,26% 4,76%
Annuity Rates, CommissionsAnnuity Rates, Commissionsand Premiumand Premium
At the market level, there seems to be a clear trade-off between the technical interest rate and commissions: companies that pay higher interest rates tend to pay lower commissions to brokers and agents, and viceversa.
On the other hand, there also seems to be a positive correlation between level of premium and the interest rate paid on annuities.
Annuity Rates v/s CommissionAnnuity Rates v/s Commission(December 2001)(December 2001)
Source: S.V.S. Annuities Statistics
BICE
OHIO
AGF ALLIANZ
CHILENA
CIGNA
CONSORCIO
CONSTRUCCION
CN LIFE
VIDA CORP
ING
CRUZ DEL SUR
EUROAMERICA
INTERRENTA
ISE
PRINCIPAL
RTANAC
METLIFE
VITALIS
PROMEDIO
5,0% 5,1% 5,2% 5,3% 5,4% 5,5% 5,6% 5,7%
Interest Rate (%)
2,00%
2,50%
3,00%
3,50%
4,00%
Co
mm
iss
ion
(%
)
Annuity Rates v/s PremiumAnnuity Rates v/s Premium(December 2001)(December 2001)
Source: S.V.S. Annuities Statistics (Dic 2002).
BICE
OHIO
AGF ALLIANZ
CHILENACIGNA
CONSORCIO
CONSTRUCCION
CN LIFE
VIDA CORP
INGCRUZ DEL SUREUROAMERICA
INTERRENTA
ISE
PRINCIPAL
RTANAC
METLIFEVITALIS
PROMEDIO
5,0% 5,1% 5,2% 5,3% 5,4% 5,5% 5,6% 5,7%
Interest Rate (%)
20
30
40
50
60
70
80
Pre
miu
m (
MU
S$
)
ANNUITIES ADMINISTRATION COST
Annuities Administration Cost (%)
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%19
89
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
3 Largest Co.
5 Largest Co.
>50% Market
(% Technical Reserves)%
Source: S.V.S. Insurance Yearbook
Annuities Administration Cost (%)
Source : S.V.S. Insurance Yearbook
Year 3 Largest Co. 5 Largest Co. >50% Market
1989 2,00% 2,30% 1,97%1990 2,22% 2,18% 2,22%1991 2,17% 2,08% 2,10%1992 2,01% 1,85% 1,86%1993 1,91% 2,04% 2,04%1994 2,04% 2,09% 2,15%1995 1,66% 1,73% 1,71%1996 1,61% 1,82% 1,82%1997 1,72% 1,83% 1,79%1998 1,74% 1,64% 1,76%1999 1,40% 1,84% 1,84%2000 1,35% 1,40% 1,82%2001 1,48% 1,57% 1,49%2002 1,55% 1,50% 1,46%
ANNUITY SPREADS
Annuities TheoreticalNet Spread Evolution (%)
-2,0
-1,0
0,0
1,0
2,0
3,0
Administration Cost (*)Financial SpreadNet Spread
%
(*) Includes 5 largest companies.
Annuities TheoreticalNet Spread Evolution (%)
(*) The commission as percentage of on premium has been translated to interest rate by dividing it by 11, the estimated duration of an average annuity.
(**)Includes largest Companies. (***) Average PRC-20.
Year
Market Annuity Discount
Rate
Central Bank Bonds
(PRC 8 & 20)Commissions
Financial Spread
Administration Costs
Net Spread
1991 5,01% 6,56% 0,31% 1,24% 2,08% -0,84%1992 5,12% 6,97% 0,33% 1,52% 1,85% -0,33%1993 5,16% 7,05% 0,35% 1,54% 2,04% -0,50%1994 4,76% 6,30% 0,39% 1,15% 2,09% -0,94%1995 4,83% 6,38% 0,44% 1,11% 1,73% -0,62%1996 5,09% 6,19% 0,45% 0,65% 1,82% -1,17%1997 5,01% 6,39% 0,48% 0,90% 1,72% -0,82%1998 5,57% 7,21% 0,50% 1,15% 1,74% -0,58%1999 5,28% 6,45% 0,54% 0,63% 1,84% -1,21%2000 5,36% 6,40% 0,54% 0,50% 1,82% -1,32%2001 5,18% 5,52% 0,37% -0,03% 1,49% -1,52%
Annuities Actual Net Spread Evolution (%)
-4,0
-3,0
-2,0
-1,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Administration CostFinancial SpreadNet Spread
%
(*) Includes 5 largest companies.
Annuities Actual NetSpread Evolution (%)
(*) The commission as percentage of on premium has been translated to interest rate by dividing it by 11, the estimated duration of an average annuity.
(**) Includes 5 largest companies.
Year
Market Annuity Discount
Rate
Central Bank Bonds
(PRC 8 & 20)Commissions
Financial Spread
Administration Costs
Net Spread
1991 5,01% 10,73% 0,31% 5,41% 2,08% 3,33%1992 5,12% 6,89% 0,33% 1,44% 1,85% -0,41%1993 5,16% 7,52% 0,35% 2,01% 2,04% -0,03%1994 4,76% 9,77% 0,39% 4,62% 2,09% 2,53%1995 4,83% 6,13% 0,44% 0,86% 1,73% -0,87%1996 5,09% 5,19% 0,45% -0,35% 1,82% -2,17%1997 5,01% 5,88% 0,48% 0,38% 1,83% -1,44%1998 5,57% 4,74% 0,50% -1,33% 1,64% -2,96%1999 5,28% 8,27% 0,54% 2,45% 1,84% 0,61%2000 5,36% 5,77% 0,54% -0,13% 1,82% -1,95%2001 5,18% 6,91% 0,37% 1,36% 1,49% -0,13%
INVESTMENTS AND OTHER INFORMATION ABOUT LIFE INSURANCE COMPANIES
The Evolution Investments in theLife Insurance Market
1.0611.323 1.637
2.0222.579
3.3944.034
5.000
6.110 6.970
8.241
9.538
10.38710.127
11.933 12.04413.153
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
Inve
st.
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: S.V.S. Insurance Yearbook
US$ millions
Shareholders’ Equity in theLife Insurance Market
166205 229342
433534
593697
880937 911
1.0761.112
12921364 14281451
0
200
400
600
800
1.000
1.200
1.400
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: S.V.S. Insurance Yearbook
US$ millions
Technical Reserves
1.112 1.3071.654
2.1892.653
3.312
4.018
4.659
5.631
6.453
7.2197.748
9.571
10.708
11.782
0
2.000
4.000
6.000
8.000
10.000
12.000
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
US$ millions
Source: S.V.S. Insurance Yearbook
Ratio of Liabilities to Equity in the Life Insurance Market
7,13
8,40
7,84
8,07
6,44
8,22
5,83
6,53
5,22
5,125,51
6,05 6,25
6,69
8,29
8,65
0
2
4
6
8
10
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: S.V.S. Insurance Yearbook.
N° Times Equity
Total Sales in Life Insurance Market
244 287 333402
527652
722810
9151.024
1.215
1.3541.327
1.562
1.807
1.973
1.812
0
500
1.000
1.500
2.000
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: S.V.S. Fecus
US$ millions
Composition of Sales(December 2002)
Traditional Life
31,6%
Annuities60,8%
AFP 7,6%
Source: S.V.S. Fecus
Evolution of Profits in theLife Insurance Market
-131
161
-64
7639
-51
-131
68 55 89
52
142
4666
181
-10
58
-150
-100
-50
0
50
100
150
200
1986 1988 1990 1992 1994 1996 1998 2000 2002Pro
fits
Source: S.V.S. Fecus
US$ millions
166,20%
-22,63%-50%
0%
50%
100%
150%
200%
1988
1990
1992
1994
1996
1998
2000
2002
RealNominal
Evolution of Stock Market (IPSA) (% Change in Year)
%
Source:Bolsa de Comercio.
IPSA Evolution (%)
Source: Bolsa de Comercio
Year Real Nominal1988 35,7% 52,9%1989 35,9% 65,0%1990 29,6% 65,0%1991 124,3% 166,2%1992 7,5% 21,2%1993 50,3% 68,7%1994 30,4% 42,1%1995 -6,5% 1,2%1996 -17,3% -11,8%1997 6,50% 12,90%1998 -26,08% -22,63%1999 39,82% 43,05%2000 -7,80% -3,63%2001 6,29% 9,10%2002 -17,80% -15,10%2003 46,50% 50,00%
Identifying the Risks in the Market for Retirement Products
A. Risks for the Retirees– Longevity risk
Life Expectation for Men
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91
Edad Rentista
Añ
os
de
Esp
eran
za
El Salvador RVH ES Chile RV85H México EMSSA 97 Hombres
Identifying the Risks in the Market for Retirement Products
A. Risks for the Retirees– Longevity risk
Life Expectation for Women
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91
Edad Rentista
Esp
eran
za d
e V
ida
El Salvador RVM ES Chile RV85M México EMSSA 97 Mujeres
Identifying the Risks in the Market for Retirement Products
A. Risks for the Retirees– Longevity risk
Age Chile RV85H El Salvador RVH ESMéxico EMSSA 97
Hombres
50 28,4 32,1 28,655 24,2 27,5 24,360 20,3 22,9 20,365 16,7 18,4 16,570 13,3 14,0 13,075 10,4 11,0 10,080 7,9 8,4 7,4
Age Chile RV85M El Salvador RVM ESMéxico EMSSA 97
Mujeres
50 33,2 34,1 32,855 28,7 29,5 28,360 24,3 25,2 24,065 20,2 21,0 19,970 16,4 17,1 16,175 12,8 13,5 12,680 9,7 10,3 9,7
Life Expectations in years
Life Expectations in years
(Men)
(Women)
Identifying the Risks in the Market for Retirement Products
A. Risks for the Retirees– Return on Investment
Return on Investment(1981 - jun/2003)
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
Jun
-03
Year
(%)
PRC-20 LICO Pension Funds
Identifying the Risks in the Market for Retirement Products
A. Risks for the Retirees– Purchasing Power Risk
Purchasing Power Risk(Nominal Value of AFP quota v/s CPI)
0
200
400
600
800
1000
1200
1400
1600
1800
Year
Ind
ex
CPI Nominal Value of AFP Habitat QuotaIndex Basis = 100 for 1987
Identifying the Risks in the Market for Retirement Products
A. Risks for the Retirees– Bequests and Beneficiaries benefits Proyección de los retiros programados y herencias
i (PW) = 6,00% Individual Account Balance = 1.000
i (A) = 5,00% Man, 54 years old
Evolution of Programmed Withdrawal and Annuities
0
1
2
3
4
5
6
7
Age (Year)
Payou
t
Programmed Withdral Annuity
Identifying the Risks in the Market for Retirement Products
A. Risks for the Retirees– Bequests and Beneficiaries benefits
Individual Account Balance = 1.000
Profile of the Individual Account Balance under Programmed Withdrawal
0
200
400
600
800
1.000
1.200
53
55
57
59
61
63
65
67
69
71
73
75
77
79
81
83
85
87
89
91
93
AGE (Years)
Indiv
idual
Account
Bala
nce
I ndividual Account Balance
Identifying the Risks in the Market for Retirement Products B. Risks for the Providers (especially for insurers)
– Longevity
Source: INE CELADE. Mortality Tables, 1950 – 2050 (Interpolation)
Life Expectancy at Birth
64
66
68
70
72
74
76
78
80
19
80
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
Years
Ag
e
Men Women
Identifying the Risks in the Market for Retirement Products
B. Risks for the Providers (especially for insurers)– Longevity
Mortality Factor Capital Required (1) Ratio
50% 187.47 113.11
75% 175.61 105.96
100% 165.73 100
125% 158.51 95.64
(1) This is an actuarial calculation which depends on the life expectancy of the family group and the discount rate applied in the exercise. An Interest of 5% was used in these computations for a single man age 54 with the RV85 Mortality Table.
Identifying the Risks in the Market for Retirement Products
B. Risks for the Providers (especially for insurers)– Rate of return on investments
Rate of Return of Investment(1981 - Jun/2003)
0,00%
2,00%
4,00%
6,00%
8,00%
10,00%
12,00%
14,00%
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Year
(%)
Return of Investment (LICO) PRC 8
Identifying the Risks in the Market for Retirement Products
B. Risks for the Providers (especially for insurers)– Asset / Liability management
Asset / Liability ManagementLICO - Jun 2003
-
500.000
1.000.000
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
4.500.000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43
Year
(UF
)
Liability Flows Investment Flows
Identifying the Risks in the Market for Retirement Products
B. Risks for the Providers (especially for insurers)
Market Risk(%)
Factor Volatility VaRBCP02 0,10779 0,251BCP05 0,07510 0,175BCU05 0,06871 0,160BCU10 0,06226 0,145BCU20 0,06269 0,146
Cero(3-4) 0,05962 0,139NOM-090 0,05742 0,134NOM-180 0,05013 0,117NOM-360 0,05101 0,119PDBC090 0,05080 0,118PDBC360 0,06429 0,150
PRC 0,16881 0,393PRC04 0,15094 0,351PRC05 0,18087 0,421PRC08 0,05944 0,138PRC20 0,05570 0,130RE-090 0,06640 0,154RE-180 0,08155 0,190RE-360 0,03867 0,090
Identifying the Risks in the Market for Retirement Products
B. Risks for the Providers (especially for insurers)– Concentration Risk
INSTRUMENT (MM$) (MUF) (MM US$) %
FIXED INCOME INSTRUMENTS 6.551.827 391.291 9.197 83,39%VARIABLE 383.960 22.931 539 4,89%REAL ESTATE 637.300 38.061 895 8,11%FOREIGN INVESTMENT 229.106 13.683 322 2,92%OTHER 55.046 3.287 77 0,70%TOTAL INVESTMENT 7.857.238 469.254 11.030 100,00%
COMPOSITION OF THE INVESTMENT PORTFOLIO OF LICOs
83,39%
8,11%
2,92%
0,70%
4,89%
FIXED INCOME INSTRUMENTS
VARIABLE
REAL ESTATE
FOREIGN INVESTMENT
OTHER
Identifying the Risks in the Market for Retirement Products
B. Risks for the Providers (especially for insurers)– Administrative Efficiency
Administrative Efficiency
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
Year
(%)
Admin. Expenses / Assets Admin. Expenses / Sales
Identifying the Risks in the Market for Retirement Products
C. Risks for the Government– Minimum Pension Guarantee
($) (UF) (A) (UF) (B) ($) (UF) (A) (UF) (B)
From 01-05-81 to 30-09-82 3.683,12 3,17 2,84 3.683,12 3,17 2,84From 01-10-82 to 30-04-83 4219,38 3,25 2,73 4.219,38 3,25 2,73From 01-05-83 to 31-12-83 4.940,47 3,20 2,71 5.505,94 3,56 3,02From 01-01-84 to 30-10-84 5.688,95 3,12 2,81 5.994,64 3,29 2,96From 01-11-84 to 30-04-85 6.826,74 3,37 2,81 7.193,57 3,55 2,96From 01-05-85 to 31-12-85 7.000,14 2,87 2,48 7.376,29 3,03 2,62From 01-01-86 to 30-06-86 7.998,36 2,84 2,60 8.428,15 2,99 2,74From 01-07-86 to 30-04-87 8.702,22 2,83 2,47 9.169,83 2,98 2,60From 01-05-87 to 31-03-88 10.130,25 2,87 2,46 10.824,98 3,07 2,63From 01-04-88 to 31-12-88 11.740,96 2,85 2,62 12.546,15 3,05 2,80From 01-01-89 to 31-05-89 12.844,61 2,86 2,69 13.725,49 3,06 2,88From 01-06-89 to 31-10-89 12.844,61 2,69 2,48 13.725,49 2,88 2,65From 01-06-89 to 31-10-89 13.486,84 (1) 2,83 2,60 14.411,76 (1) 3,02 2,78From 01-11-89 to 30-06-90 15.015,35 2,89 2,49 16.045,10 3,09 2,66From 01-11-89 to 30-06-90 15.766,12 (2) 3,04 2,61 16.847,35 (2) 3,25 2,79From 01-07-90 to 31-01-91 20.877,12 3,46 2,95 21.999,41 3,64 3,10From 01-02-91 to 31-10-91 24.012,86 3,39 3,01 25.303,72 3,57 3,17From 01-11-91 to 30-11-92 27.770,87 3,48 2,99 29.263,75 3,67 3,15From 01-12-92 to 30-11-93 31.950,39 3,44 3,03 33.667,94 3,62 3,20From 01-12-93 to 30-11-94 35.813,19 3,40 3,12 37.738,39 3,58 3,29From 01-12-94 to 31-08-95 39.000,56 3,40 3,23 41.097,11 3,58 3,40From 01-09-95 to 30-11-95 42.900,62 3,55 3,45 45.206,82 3,74 3,63From 01-12-95 to 30-06-96 46.418,47 3,73 3,60 48.913,78 3,93 3,79From 01-06-96 to 30-11-96 46.418,47 3,62 3,51 51.359,47 (3) 4,01 3,89From 01-12-96 to 30-11-97 49.458,88 3,74 3,52 54.723,52 4,14 3,90From 01-12-97 to 30-11-98 55.037,84 3,92 3,76 60.896,33 4,34 4,16From 01-12-98 to 31-12-98 57.393,46 3,92 3,91 63.502,69 4,34 4,32From 01-01-99 to 30-11-99 65.393,46 4,45 4,35 71.502,69 4,87 4,76From 01-12-99 to 30-11-00 67.067,53 4,46 4,27 73.333,16 4,88 4,67From 01-12-00 to 30-11-01 70.206,29 4,47 4,32 76.765,15 4,89 4,72From 01-12-01 to 30-11-02 72.361,62 4,45 4,33 79.121,84 4,87 4,73From 01-12-02 74.503,52 4,46 81.463,85 4,87
(A) Value in UF of the Minimum Pension as of First date of the period(B) Value in UF of the Minimum Pension as of Last date of the period
(2) The D.S. No. 949. adjusted the amounts of all the minimum pensions in 16,9%. (3) Law 19,454 adjusted in 5% the minimum pension of pensioners 70 years old or older.
(1) Law 18,806 adjusted in 5% the pensions of pensioners as of J une 1º, 1989, who as of that date, were older than 65 years (if man) or 60 years (if women).
DATE OF USE70 years old and older
AMOUNT OF THE MI NI MUM PENSI ONVALUES I N CHI LEAN PESOS ($) AND UF
AGE OF THE PENSIONERS
Younger than 70 years old
Identifying the Risks in the Market for Retirement Products
C. Risks for the Government– Special annuity guarantee
Flow Stock Flow Stock Flow Stock Flow Stock1985 529 1.610 0 0 0 0 529 1.6101986 1.068 2.367 0 0 0 0 1.068 2.3671987 1.784 4.121 0 0 0 0 1.784 4.1211988 2.100 4.316 322 867 252 277 2.674 5.4601989 3.275 7.632 851 1.704 585 833 4.711 10.1691990 7.031 14.611 1.123 2.780 1.293 2.132 9.447 19.5231991 11.074 25.510 384 3.195 830 2.953 12.288 31.6581992 14.357 39.904 75 3.230 700 3.618 15.132 46.7521993 18.406 58.072 183 3.394 1.132 4.737 19.721 66.2031994 18.746 73.658 453 3.694 933 5.534 20.132 82.8861995 21.715 98.502 648 4.479 1.045 6.748 23.408 109.7291996 18.812 105.093 1.234 5.915 4.506 23.664 24.552 134.6721997 21.376 132.532 1.010 10.604 2.548 20.415 24.934 163.5511998 16.472 147.232 1.505 8.134 3.175 23.718 21.152 179.0841999 13.597 165.619 909 8.689 1.295 16.186 15.801 190.4942000 14.613 202.790 911 14.569 947 19.083 16.471 236.4422001 14.591 223.649 967 11.696 896 20.391 16.454 255.7362002 10.038 241.403 1.128 13.454 855 22.100 12.021 276.957
Number of Policies (Flow and Stock)
OLD AGE DISABILITY SURVIVORSHIP TOTAL
Identifying the Risks in the Market for Retirement Products
C. Risks for the Government– Special annuity guarantee
MMUF MMUS$** MMUF MMUS$** MMUF MMUS$** MMUF MMUS$**1985 1 8 0 0 0 0 1 81986 2 30 0 0 0 0 2 301987 4 66 0 0 0 0 4 661988 6 112 1 27 0 9 8 1471989 11 204 4 67 2 29 16 2991990 20 422 6 123 4 79 30 6241991 37 824 6 140 5 112 49 1.0761992 57 1.406 6 154 6 149 69 1.7091993 78 1.931 6 154 8 190 92 2.2741994 103 2.936 7 194 9 252 119 3.3821995 130 3.993 8 232 10 309 148 4.5331996 161 4.717 9 269 13 385 183 5.3711997 192 6.166 11 338 16 525 219 7.0301998 214 6.642 13 398 20 634 248 7.6741999 231 6.593 14 396 22 636 267 7.6252000 293 8.079 17 471 26 724 337 9.2752001 339 8.393 20 491 29 720 388 9.6042002 365 8.566 23 535 31 731 419 9.832
Source: PrimAmérica - S.V.S.(**) Parity according to exchange rate and value of the UF to december of each year
TOTAL
STOCK OF RESERVES ON ANNUITIES HELD
YEAROLD AGE DISABILITY SURVIVORSHIP
Identifying the Risks in the Market for Retirement Products
C. Risks for the Government– Special annuity guarantee
Evolution of Debt/Equity ratio of LICOs
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
10,00
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Year
Ra
tio
Total (Debt/Equity) Technical (Debt/Equity) Financial (Debt/Equity)
Identifying the Risks in the Market for Retirement Products
C. Risks for the Government– Special annuity guarantee
COMPANY Mar-2003 2002 2001 2000 1999ABN AMRO A- A+ A+ A A- AGF ALLIANZ A+ AA- AA- AA- AIALTAVIDA AA- AA- AA- AA- AI AXA AA- AA- AA- AA- AA- BANCHILE SEGUROS DE VIDA E E E EBBVA SEGUROS VIDA EI EI EI EIBICE VIDA AA AA AA AA AA-CARDIF A A+ A+ A+ EI CHILENA AA AA+ AA+ AA+ AACIGNA A+ AA- AA- AA- AACN LIFE AA- AA- AA- AA- A+ CONSORCIO AA AAA AAA AAA AAA CORP VIDA AA - AA AA AA AA CRUZ DEL SUR AA- AA AA- AA- AA- EUROAMERICA AA- AA- AA- AA- AA- HUELEN A A A A AING VIDA AA AA+ AA AA AA INTER VIDA Y AHORRO AA+ AAA AAA AAA AAAINTERAMERICANA RENTAS AA+ AA+ AA AA- AA- ISE - AMERICAS AA- AA- AA AA AA LA CONSTRUCCION AA+ AAA AAA AAA AAA LE MANS BBB+ A A AMAPFRE VIDA EI EI EI SMETLIFE VIDA AA+ AA+ AA AAMUTUAL SEGUROS A AA- AA- AA- AA- OHIO A+ AA AA AA- AA-PRINCIPAL AA AA+ AA+ AA AA RENTA NACIONAL BB BB A A A+VIDA SECURITY A AA- AA- AA- AA-VITALIS A A+ A+ A A
Evolution of Risk Classification
YEAR
Coping with the Risks: Internal Risk Management by Providers
A. The availability of Financial Instruments for risk management1. Current Diversification of Investment Portfolio (LICO and AFP)
Pension Fund investment by Industrial Sector and Financial Instruments
33,1%
19,0%14,3%
33,3%
0,3%
Financial Sector Company Sector Foreing Sector
State Sector Disposable Assets
LICO Investment by Industrial Sector and Financial Instruments
41,3%
28,0%
2,3%
18,9%
7,3% 2,2%
Financial Sector Company Sector Foreign Sector
State Sector Real Estate Others
Coping with the Risks: Internal Risk Management by Providers
B. Risk Management capacity and strategies adopted by the providers
1. Term (duration) mismatch in LICOs.
COMPANY 1 2 3 4 5 6 7 8 9 10
AXA 100 100 100 100 100 100 82 39 14 0BANCHILE SEGUROS DE VIDA 100 100 100 100 100 100 100 100 100 100BBVA SEGUROS VIDA 100 100 100 100 100 100 100 100 100 100OHIO 100 100 100 100 100 100 100 100 30 4BICE VIDA 100 100 100 100 100 100 100 96 32 0AGF ALLIANZ 100 100 100 100 100 100 100 100 39 18CAJA REAS. 100 100 100 100 100 100 100 100 100 0CARDIF 100 100 100 100 100 100 100 100 100 100CHILENA 100 100 100 100 100 100 100 96 35 0CIGNA 100 100 100 100 100 100 100 71 12 1CN LIFE 100 100 100 100 100 100 100 98 30 14CONSORCIO 100 100 100 100 100 100 98 48 11 1CORP VIDA 100 100 100 100 100 100 99 54 18 0CRUZ DEL SUR 100 100 100 100 100 100 100 100 15 2EUROAMERICA N/A N/A N/A N/A N/A N/A N/A N/A N/A N/AING VIDA 100 100 100 100 100 100 100 78 19 0INTER VIDA Y AHORRO 100 100 100 100 100 100 100 100 64 0INTERAMERICANA RENTAS 97 100 100 100 100 100 100 96 35 1ISE - AMERICAS 100 100 100 100 100 100 100 63 11 0LA CONSTRUCCION 100 100 100 100 100 100 100 84 13 0LE MANS 96 97 90 100 100 99 100 96 4 0MAPFRE VIDA 100 100 100 100 100 100 100 100 100 100VIDA SECURITY 100 100 100 100 100 100 100 100 100 100PRINCIPAL 100 100 100 100 100 100 100 100 10 0RENTA NACIONAL 100 100 100 100 100 100 100 100 24 7METLIFE VIDA 100 100 100 100 100 100 100 83 13 0METLIFE RE 100 100 100 100 100 100 100 82 10 0VITALIS 93 100 100 100 100 100 100 100 28 0
MATCHING RATIO FOR ANNUITIES
CP(k)(December 2002)
Coping with Risks: Qualitative and Quantitative Regulations on Insurance
B. Solvency and Quantitative RegulationLiabilities (actuarial and financial)
Evolution of Debt/Equity ratio of LICOs
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
10,00
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Year
Ra
tio
Total (Debt/Equity) Technical (Debt/Equity) Financial (Debt/Equity)