Grupo SURA Corporate Presentation Q3-2019
Disclaimer The forward- looking statements contained herein are based on Management’s current forecasts and outlook. For better illustration and decision-making, figures for Suramericana, SURA Asset Management and its subsidiaries are administrative rather than accounting, and therefore may differ from those presented to official entities. Thus, Grupo de Inversiones Suramericana assumes no obligation to update or correct the information contained in this presentation. Figures from income statement are converted to USD with an exchange rate of 3,239.6 COP/USD (average exchange rate for 2019), other financial figures are converted to USD with an exchange rate of 3,477.5 COP/USD (rate for end of period Q3-2019) only for re-expression purposes. 2
Leading Financial Services Group in Latam with a solid and diversified portfolio 11 countries 51 million clients #1 PENSION FUND #1 INSURANCE #1 COLOMBIAN INDUSTRIAL MANAGER COMPANY BANK INVESTMENTS in Latam, with a in Colombia, with an with a leading with relevant positions growing voluntary established growth presence in Central in attractive markets savings business platform in Latam America USD 52.9 bn USD 141 bn USD 5.2 bn in AUM in Operating Revenues in loans A S S E T S M A N A G E D B Y O U R M A R K E T C A P I N V E S T M E N T G R A D E : B R A N D E M P L O Y E E S * R E C O G N I T I O N USD 5.4 bn 59,000 S T R A T E G I C I N V E S T M E N T S * FITCH BBB S&P BBB- ~60% USD 220 bn S e p t e m b e r 3 0 , 2 0 1 9 3
Diversified Investment Portfolio and other investments Insurance, trends Cement, energy and risk management and infrastructure 1% 81.1% STAKE 35.2% STAKE* 11% 21% 12% USD Processed food 10.1 b n 35.2% STAKE 26% Pensions, asset and 29% wealth management 83.6% STAKE Universal banking 46.1% STAKE* 76% 49% Note: *SURA AM valued at the last transaction (CDPQ), in financial in publicly Suramericana at 1.8x BV and companies listed at market services listed companies value at the end of the quarter. 4 *Stakes in common shares
History & Growth Stages INSURANCE INTERNATIONAL LEADERSHIP EXPANSION in Colombia Multi Latin, financial services group 1 9 4 4 / 1 9 9 0 2 0 0 7 / 2 0 1 6 2 0 1 7 - 1 9 9 0 / 2 0 0 7 FOOTPRINT FINANCIAL OPTIMIZATION SERVICES divestment of annuities leader in Colombia business (Chile and Peru) 5
Building a Regional Platform with a Long Term View BECOMING THE CREATING LONG AND THE 4TH WITH A FOCUS ON LARGEST PENSION FUND TERM RELATIONS LARGEST LATAM FINANCIAL STRENGTH MANAGER IN LATAM WITH OUR CLIENTS INSURANCE GROUP # of clients AUM Dividends Gross received from from pension written premiums management our portfolio business 14 51 USD 10 bn USD 141 bn USD 90 USD 310 USD 1.2 bn USD 5.2 bn MILLION MILLION MILLION MILLION 2 0 1 0 2 0 1 9 2 0 1 0 2 0 1 9 2 0 1 0 2 0 1 9 E 2 0 1 0 2 0 1 9 SUCCESSFUL % Dividends & Net Income from Colombia # of countries DIVERSIFICATION FROM COLOMBIA 3 100% 45% 11 6 2 0 1 0 2 0 1 9 2 0 1 0 2 0 1 8 Nota: 2019 figures are LTM as of Q1-2019
Geographic Footprint P O P U L AT I O N C L I E N T S F I N A N C I A L S E R V I C E S 520 MM 51 MM + 1 . 1 % C A G R ( 2 0 0 0 - 2 0 1 8 ) I N 11 C O U N T R I E S P E N E T R AT I O N * B A N K I N G I N S U R A N C E P E N S I O N 3.1% vs . 7.8% 31% vs . >80% ~ 4 8 % vs . > 150% f o r a d v a n c e d c o u n t r i e s f o r U S a n d U K f o r U S a n d E U D R I V E R S ECONOMIC MIDDLE UNDER FORMALIZATION DEMOGRAPHICS GROWTH CLASS PENETRATED OF THE FORMATION SECTORS ECONOMY 7 *Penetration as measured by Premiums/GDP of the countries were Suramericana has presence, AUM/GDP in the countries were SURA AM has presence and loans/GDP in Colombia.
Corporate Strategy Purpose: Create well-being and sustainable development for people, organizations and society. Aspiration: to become a referent Latin American Group in the financial services sector, thanks to our ability to evolve and provide superior added value to shareholders and society. STRATEGIC PRIORITIES STRATEGIC PILLARS Financial management ➢ Transformation and evolution of our businesses ➢ Financial strength and investment capacity Human talent and culture ➢ Delivering greater value to our clients Innovation and entrepreneurship Internal and external alliances Trust and reputation Knowledge ALIGNING OUR BUSINESSES WITH METRICS AND GOALS C O N T R I B U T I O N T O S O C I E T Y • T R U S T • S U S T A I N A B I L I T Y V A L U E C R E A T I O N • • Brand and Market development, externalities ROE Dow Jones reputation and contribution to SDG EVA Sustainability Index positioning 8
Portfolio Management Strategy SH AREHOLDER VALUE R ETU RN ON C APITAL GR OW TH S YS TEMATIC C A PITAL MAN AGEMENT AT STRATEGIC PR OACTIVE C OR PORATE A D D IN G AC QUISITIONS D IVESTITURES VALUE TO U N ITS ALLOCATION A GR ANULAR LEVEL BE A BETTER OWNER BE IN GOOD BUSINESSES • Focus on value • After an intensive • Understanding of • Review capital • Position ourselves creation, granular expansion phase, competitive exposure and for future profitable analysis for whole focus on profitability advantages and allocation process growth. portfolio. and organic growth. value creation levers criteria. of each operation. 9 * Source: McKinsey
Grupo SURA’s Financials Evolution CONSOLIDATED REVENUES* HOLDING COMPANY RECEIVED DIVIDENDS 308 310 ~3.4x 11% -0.8% 284 262 6.2% 2010 Dividends 251 6,590 31.2% 5,988 5,939 5,641 185 Bancolombia 169 4,301 SURA AM 137 Grupo Argos 93 Grupo Nutresa 91 Protección Suramericana Other 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E LTM T o t a l r e v e n u e s CONSOLIDATED NET INCOME CONT. OPERATIONS HOLDING COMPANY CASH FLOW (2019E) 33 20.4% -18.0% 7.6% 27.5% 316 492 492 281 554 91 492 434 409 404 91 86 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 OPERATING INTEREST DIVIDEND CASH DIVIDENDS AND OPERATING LTM CASH FLOW PAYMENT AVAILABLE OTHER INCOME EXPENSES & N e t i n c o m e 10 TAXES *Consolidated revenues figure includes Exchange Difference Figures in USD million
ADJUSTED ROE With an upward trend ADJUSTMENTS TO ROE Net Income: • Addback of non-cash expenses related to M&A 12% 10.6% Equity 11% 9.3% 9.1% • Associates and their portfolios, which are valued close to market prices 10.3% 9.7% 9.1% Normalized Adjusted ROE • Returns on legal reserves from mandatory pension funds (“ encaje ”) are normalized to reflect long-term returns on diversified portfolios 17' 18' Sep-19 (LTM) 21' Norm. Adjust. ROE Adjust. ROE ADJUSTED ROTE: 13.0 % 30.5 %
OUR PORTFOLIO Estimated value 10.1 0.1 1.1 1.2 8.3 2.7 -1.8 >30% Discount 5.4 2.1 2.9 GRUPO OTHER PORTFOLIO HOLDCO DEBT + PORTFOLIO SURA AM SURAMERICANA BANCOLOMBIA GRUPO MARKET VALUE NUTRESA ARGOS NPV OF TAXES & VALUE (-) CAP. EXPENSES DEBT M A R K E T C A P I T A L I Z A T I O N Current Market Cap implies S H A R E S A D T V ( S e p . 3 0 , 2 0 1 9 ) non-listed assets valued at: ( C O M M O N + P R E F ) D 5.4 bn 0.62x BV D 4.7MM US US 0.44x Estimated value Average LTM as of Q3-2019 SURA AM valued at the last transaction (CDPQ), Suramericana at 1.8x equity and companies listed at market value at the end of the quarter Portfolio valuation estimated by Grupo SURA. Does not constitute an investment advisory Figures in USD bilion
Grupo SURA Individual Debt D E B T 550 M AT U R I T Y P R O F I L E » C R E D I T R AT I O S » N E T D E B T / 300 D I V I D E N D S ( F T M ) 4.65x 146 136 83 70 48 29 27 28 Max. 5x - - 2019 2020 2021 2022 2023 2024 2026 . 2029 2030 . 2049 I N T E R N A T I O N A L B A N K S L I Q U I D I T Y L O C A L B O N D S R E P O S B O N D S 1.14x USD 1.4 bn » F I N A N C I A L D E B T: Min. 1.2x 14 % 15 % L O A N T O VA L U E B A N K S CURRENCY U S D 13.4% TYPE OF B O N D S C O P EXPOSURE DEBT Max. range 25-30% 86 % 85 % 13 Figures in USD million
EXCELLENT RESULTS WITH POSITIVE OPERATIONAL PERFORMANCE And return on investments that offset specific impacts in some operations OPERATING REVENUES OPERATING INCOME OPERATING EXPENSES USD 748 MM • Double digit growth in main • Focus on efficiency and USD SD USD SD 26.3% businesses cost control 5.0 bn 4.3 bn • Investment income • Sustained claims ratio NET INCOME • Equity method • Investment in projects 14.8% 13.0% • Impacts on some USD 461 MM operations 35.0% CONSOLIDATED RESULTS DRIVEN BY: ECONOMIC AND SOCIAL DYNAMICS IN THE REGION • Focus on organic growth, • Invested capital optimization • Protests in Chile • Political and economic efficiency and profitability of and deleveraging processes situation in Chile operations • Positive return on • Benefits of diversification • Pension reform in • Colombian health care investments Colombia system 14
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