1. Pag : 1 Sergio Baeza Chairman of the Board of SCOMP S.A. May 2010 Reducing the transaction costs of retirement annuities in Chile

2. Pag : 2 Agenda Conditions prior to the reform 1 Goals of the reform 2 Organizational setup 3 Results 4

3. Pag : 3 1. Conditions prior to the reform  Assimetrical information between affiliates and sales agents leading to overweight of agents in the pension decision and choice of annuity company  High sales commissions to the detriment of pensions giving agents the resources to financially influence the individual’s choice of annuity company

4. Pag : 4 1. Conditions prior to the reform  Agents only earned commissions paid by annuity companies having no incentive to present their clients with the option of installment withdrawals from the pension company  Therefore little competition between these two options of retirement

5. Pag : 5 2. Goals of the reform  Provide CLEAR and COMPARABLE information of the two basic retirement options, annuities and installment withdrawals  REDUCTION OF COMMISSIONS puting a ceiling to them at 2.5%

6. Pag : 6 2. Goals of the reform  INCREASE PRICE COMPETITION through a simultaneous biding process  EMPHASIZE SOLVENCY by demanding a claims payment rating no less than BBB  PREVENT PAYMENTS FOR RETIREE INFORMATION by the official disclosure of data on candidates for retirement

7. Pag : 7 3. Organizational setup  By Law in 2004 pension and life insurance company were required to put in place a system to provide information to affiliates on the values of the different pension options  Similarly affiliates were mandated to make inquiries through this system as a requisite for retirement  Thus a corporation was set up, SCOMP S.A., to provide this information system; its owners are the pension companies 50% and the life annuity companies 50%

8. Pag : 8 3. Organizational setup  Access to SCOMP is given to the Pension Companies, the Life Annuity Companies and the Pension Advisors  The system is under the surveillance of both the pension and the annuity regulators  To develop and operate the information system SCOMP hires a systems provider through an open biding process  SCOMP finances itself by charging a fee for each information request and for each closing of a pension decision

9. Pag : 9 3. Organizatioal setup - retirement options  At retirement affiliates have to choose between different pension options: Installement withdrawals from the retirement account Immediate Life Annuity with or without guaranteed term Installment withdrawals plus deferred annuity Immediate Annuity plus Installment Withdrawals

10. Pag : 10 3. Organizational setup - process  The most relevant processes in the system are: Issue of Balance Certificate Request for Pension Offers Issue of Pension Offers Certificate Selection of Pension Option

11. Pag : 11 3. Organizational setup - process

12. Pag : 12 3. Organizational setup - process

13. Pag : 13 3. Organizational setup - process

14. Pag : 14 4. Results  Increase in price competition  Decrease in Agent’s Commisision with the corresponding increase in pensions  Affiliates easily have all relevant information to benefit from good pension advice to make a right choice of pension mode and carrier  The official disclosure of retiree candidates has added transparency to the marketing of pension offers

15. Pag : 15 4. Results – lower commissions Source: SVS

16. Pag : 16 4. Results – Pension Offers Requests

17. Pag : 17 4. Results - Closings

18. Pag : 18 4. Results - Capitals transacted

19. Pag : 19 4. Results – Savings on commissions Average commission before SCOMP: 4,40% ( 1991 - 2003) ( 1991 - 2003) Average commission since inception of SCOMP: 2,07% ( 2004 - 2009) ( 2004 - 2009) Lower commissions of 2,33% on average On Capitals of US$ 1.760 million per year on average Represent savings of US$ 41 million per year

20. Pag : 20 4. Results – Service fees

21. Pag : 21 4. Results - Balance Sheet

22. Pag : 22 4. Results - Profit and Loss

23. Pag : 23 CONCLUSIONS SCOMP produces commission savings of US$ 41 million per year which divided into 17 thousand annuity closings per year represent savings of US$ 2.400 per closing This is achieved with a low initial investment in systems development of US$ 500 thousand The operational cost is very moderate, some US$ 35 per closing Efficiency per closing is great : spending US$ 35 to produce savings of US$ 2.400.