Inversiones la Construccion SA

SGO:ILC

Earnings Call Transcript

[Pablo González Figari, executive]

Good morning to everyone, and thank you for joining us on our first semester results presentation. I hope you and your families are doing well with the pandemia. The idea is to go over 3 main chapters. The one -- the first one is talk about the results itself, some focuses on each of the companies and the subsidiaries and then give room and space for conclusions and Q&A that you may have.

During the first half of the year, we would say that there are 6 main trends or drivers that we have seen. The first one is a strong rebound of the financial markets. The second one is that we've been seeing lower risk provisions and expenses on the financial sector subsidiaries; and a strong recovery on the formal labor market; greater demand on the inpatient, outpatient and dental activity; relevant growth from medical leaves, which is a negative trend of the semester; and of course, as you may know, Chile has been working through a very successful vaccination process and solid fiscal aid.

In terms of operating performance, if we compare the first half of 2020 to the first half of 2021, you may see a strong recovery on each of the subsidiaries, starting from Habitat, Confuturo, Banco Internacional, RedSalud and Vida Cámara. And the exception to this strong performance is Isapre Consalud, the mandatory health insurance company that the results are extremely negative during the first semester. And I will go and walk you through the explanation behind that.

This is a waterfall chart that compares the first half 2020 versus 2021. You may see that in terms of bottom line, we more than doubled the result of the company. And the explanations behind that lies from a very strong recovery on Confuturo and RedSalud and a negative comparison in terms of Consalud. This is the summary chart for the period.

If we see the long-term evolution of the results, this is the last 12 months as of June 2021, you may see that our storytelling in terms of the solid performance on the -- what we call the recurrent or the ordinary profits of the company, it's been there. We jumped from a company that was generating around CLP 70 billion in the period 2013 to 2016, and when you see the last 5 years, we are in the area of CLP 100 billion. So this is, again, a graph that shows and reflects what we've been doing in terms of diversification and a company that, even under very stressed scenarios of pandemia last year, generate profits.

Our strategies continue to be the same. We are looking for this chart at the right, we're looking for a balance between the 4 segments of businesses, life insurance, pensions, banking and health. The transit to this challenge or this target is not easy. It depends on the trends year-over-year, but we continue to push for reaching this goal.

Let's talk about the divisions. In each of them, I will remark the key messages, starting from Habitat. The first key message here is in the chart to the left. This chart reflects the, what we call, the salary base. It's the number of formal labor market multiplied by base salaries. In other words, it is our base on which we charge fees. And you may see here that pre-pandemia, this was the level of the salary base month-by-month. This is the peak of the pandemia, and this is June -- last June. So what we are seeing is a very strong recovery on the labor market.

And at the same time, to the right, you see the effect of that, a strong recovery on the operating result of Habitat. So we would say here that the first message is that given the recovery of the labor market, we are reaching again the same levels of operating results that we were getting before the pandemia.

The second message here is efficiency. The pandemia has been an opportunity to gain efficiency in each of the businesses, and Habitat is not a different case. You see here the efficiency in terms of operating expenses over revenues in each of the countries we operate. And you see an improvement in all of them.

And the chart below is the number of sales staff or sales force. And you see that it's continued declining year-on-year. That again is -- it reflects what we are looking for. We're looking for being able to retain our customers without having a huge size of sales force.

Third message in Habitat, diversification. We started a process in 2012, 2013, looking for other sources of revenues out of Chile. And as of June, last 12 months, you may see that 70% of our revenues are coming from Chile, and the rest is coming from Peru and Colombia. In terms of affiliates, we are starting to see 3 colors. And in terms of AUM, the same trend. So again, here, third message is diversification is a process that has continued to evolve in Habitat.

The fourth message here in Habitat is about the announcement we made last Tuesday in terms of the restructuring or division of Habitat -- or split of Habitat, sorry. This is -- this chart is a summary of the ownership structure of Habitat. Habitat is owned by Prudential, by ILC, and almost 20% of the ownership is float -- is free float.

And below Habitat, we operate Chile. We have some investments -- noncontrolling investment in PREVIRED and DCV, which are the Chilean financial stocks and bonds depository company. And PREVIRED is a company which you pay the social security. And then you have the investment in Peru and in Colombia.

What we announced is basically a split of the company in which, on one side to the left, you will have Habitat Chile, which will concentrate all the business related to Chile, the mandatory contribution business and this minority stake investments in the companies I mentioned; and to the right, you have a company that is called Grupo Inversiones Americana or Americana Inversiones, which will own all the businesses out of the mandatory pension fund business in Chile, in this case, Colombia and Peru. And the idea behind this is that we are looking for more flexibility. We are looking to open new lines of businesses that are out the mandatory -- the pension fund or the mandatory pension fund business in Chile.

The only thing I can mention behind this is that what is public. The Extraordinary Shareholders' Meeting is -- it was called for September 23. This transaction is subject to approvals in Chile and in Colombia. And we are working all the paperwork and requestments made by the regulatory entities to moving forward with this transaction.

So in summary, as I mentioned, Habitat, the first key message is strong recovery on the labor market. The second one is efficiency. The third one is we continue the process of diversification. And the fourth one is that this announcement will give us more flexibility to move on the pension fund management business looking forward.

Confuturo. In Confuturo, the first element that is important to mention is that you may see in these 2 charts, the first one on the top is the gap between programmed withdraw and annuity rates. And you see here that between the end of 2019 and the beginning of 2021, the gap between the programmed withdraw interest rates and the annuities interest rates, it was large. And then the consequence of that is that the preference for annuity went down dramatically during that period. We were used to be in a market in which 70%, more or less, of the people that were able to choose an annuity did that and 30% programmed withdraw.

And the minimum natural ratio in that sense was the first half of last year when less than 10% were choosing annuities. Why? Because of this, this gap of interest rates. So what we are seeing on the last 3, 4 months is a recovery of the preference for annuity, driven by this spread between these 2 rates that are lower -- that is lower. So the first message is that the market is starting to recover in terms of the size for annuities.

Second message, again, flexibility. We switched our commercial strategy from a strategy in which most of the agents or most of the distribution or commercial channels were sales agents in which we, I would say, we didn't have the control we would like to have in terms of how to manage the strategy or the commercial strategy of the company.

Month-by-month, we switched to a strategy in which we put more efforts on the direct sales and pension advisers, so employees of the company doing sales. And today, we have a very flexible model in which this company can sell almost 0 annuities in 1 month and then next month, sell $30 million, $40 million without the need of hiring more sales force. So this is a good news for us because in this market -- these volatile markets, we want to manage and to have full control on the sales.

Third message is asset allocation. You know the story. We've been working on the re-asset allocation of this company since 2013. And I will ask you to focus on the 3 main colors. The gray one, the local fixed income, we reduced the relevance of the local fixed -- the domestic fixed income from 65% of the portfolio in 2013 to 42%. The red area, which is foreign investments, mostly fixed income, but also private equity, and I will talk about private equity later, jumped from 12% to 24% in this period. And real estate and mortgages jumped from 17% to 24%.

So this is the result of a 7- to 8-year strategy in which we've been continuing looking for diversification, for having an asset allocation accordance to the leverage of the company. And I mentioned private equity. Out of that 24% of foreign investments, 4% of that is private equity. It's a program we started in 2014. And now it's mature. And of course, given the performance of the stock markets in the U.S. and globally, it's explaining an important portion of the performance of the company during the first half of the year.

The result of this, you may see in terms of the performance of the company. This was a company very volatile in terms of results before 2014, 2013. And you may see that we are able to generate stable results even under stress scenarios as the pandemia last year. And last 12 months, what you are seeing there is an extraordinary result, mainly driven by the performance of the private equities abroad.

So in summary, in Confuturo, market is starting to recovery. Flexibility is an asset of the company. Asset allocation has continued showing what we were looking for, a stable company that is generating consistent results over the time.

Banco Internacional. First driver or key message here during this period, we were pushing a strategy in which we grew much more than the industry. You have heard about the strategy, it's doubling or growing more than 3, 4x the industry to gain scale, to gain size. We did that. But you may see here in this chart that as soon as the pandemia started, we adjusted that strategy. And we slowed down the rhythm of growth, and we are very close to the industry right now.

So why that is relevant? Because this reflects, again, the strategy. We are flexible. This is a company in which you can switch, you can change the strategy very fast. So we adjust that just in 2, 3 months.

Second message, risk expenses or risk management. This chart shows the risk expense as a percentage of the operating result. And the gray area is the risk expense, and the yellow area is the voluntary provisions. So the first semester, over the last 12 months, you may see that the risk expense is going down. But we still have voluntary provisions for more than CLP 22 billion, which represents basically 1 year of risk expense. So the risk management here has been quite good under the scenario we are facing.

We improved and we increased the collateral coverage, close to 80%, which is a great metric compared to our peers. And in terms of the capital management or the equity-based capital management, we are reaching a Basel index that is the best of the history of the bank and one of the top in terms of the industry. So the bank is very prepared for risk expense, and it's been building a very strong capital base for future challenges.

In summary, in this period, we transformed this bank to a bank that is performing compared to its peers. We have improved a lot the solvency. In terms of risk diversification, we've been trying to diversify the source of revenues of the bank. It's not an easy challenge. It's not a quick challenge. But we have launched asset management business, we have launched factoring, we have launched insurance brokers, which are looking for diversification of revenues again.

Efficiency, you know the story. This is a very efficient bank and is looking for more efficiency. And the managing -- or the management in terms of risk, it's been the one I mentioned, and that's the reason why the risk rating agencies have gave us 2 upgrades over the last couple of years.

In terms of the future, the bank is working in different initiatives, looking for fintech or being a digital bank. Again, the size of the bank allows us to and give more us more flexibility to work on this. We launched the new Internet banking. We launched 3 products, full digital, time deposits, consumer and business loans. We have increased the digital time deposits customers. And we are close to launch online and digital solutions for investment.

So in summary, the bank is flexible. It's a company that is being able to adjust strategy. It's a very strong balance sheet. It's a very strong risk management, and it's continuing to looking forward. One of the elements when you face a period like this, a pandemia and all these volatile markets that we have seen over the last 1.5 years, is that you cannot block the strategy. You cannot shut down the projects. You have to continue working on looking for more solutions, source of revenues for the company.

Let me switch to the health side of the equation, and I will start with Consalud. In Consalud, it's been a cost acceleration and a lot of pressure on the loss ratio. You may see here the evolution in which you see the loss ratio moving up dramatically over the last 12 months. And at the same time, you see that we were not able to adjust prices during 2020 and 2021, basically due to our loss related to the pandemia. So you see in this sector, if you are not able to adjust prices and costs move up, it's very easy, the equation.

When you double click on the cost, the main challenge here and the main explanation behind that is medical leaves. And you see here in the chart an evolution year-over-year in terms of the size of the cost of medical leaves and in terms of the composition. And you see that 2020 and 2021, there are 2 new colors, this light blue and the gray color or the dark-gray color. And those 2 are attributable to the COVID-19 effects.

One is related to COVID-19 medical leaves, and the other one is related to what we call the extended paternity leave. It was a law specific for the pandemia with the paternity leaves were extended, and not only extended, but also covered by the ISAPREs. All the paternity benefits were covered by the government before the pandemia. In this case, for this special occasion, this law is charging the ISAPREs, that effect.

If you put together those 2 effects since March 2020, they are CLP 47 billion, okay? So bear in mind that figure, which is -- because it's very relevant to understand the bottom line results. Of course, we expect those 2 effects to be onetime effects. And we expect that looking forward, the pandemia or the numbers of the pandemia move on a positive trend. This type of leaves will go down. And also the extended paternity leave is related to the exception or the catastrophic exception state declaration, and we expect that to not be more the case after or post September 30.

So CLP 47 billion related just to those 2 effects. When you see the bottom line of Consalud last 12 months is the same. So one way to understand this, you can say, you know what, the explanation or the main explanation behind the negative result of Consalud during the last 12 months is COVID-19, okay?

How we end up the story? Well, a recent new law was approved in June 2021. This new law and regulation was approved with no negative votes, with no disapproval votes, was 140 votes in favor and 0 against in the Low Chamber and 36 votes to 0 in the High Chamber, in the Senate.

The summary of this new law or this new modification to price adjustments is the following: no price adjustment during 2021 and 2020. And then since March next year, we have the right to adjust the prices according to the health CPI. March next year is an exception. So it's going to be the average of the CPI of '19, '20 and 2021 with a cap, and that cap is the adjustment for the fiscal budget on health.

What's that number? We still don't know because we need to know -- there are 2 figures missed there: one is what the CPI of -- or the health CPI is going to be in 2021; and the second one is what's the adjustment or the size of the adjustment of the fiscal budget in health. But that number probably would lie between inflation plus 6 and inflation plus 8. And then since March 2023, the price adjustment is going to be the CPI or the health CPI.

If you see this law and you take out this exception on 2022, it's the type of regulation we were looking for. Why? Because we expect that once the price adjustment is in the law, we will not have -- or we should not have any cases in the courts, right? And on the other side, last -- next year is the anniversary of the GES. This is the other fee we charge. Remember that every 3 years, we have the right to adjust the GES, which is a plain price for 85 different indices. And next year is the anniversary of that. So next year, we have new law, new regulation on price adjustment, and also we have the right to adjust the GES.

So what we expect on Consalud? We expect difficult times over the next 9 to 12 months. And then we expect that we put together the price adjustment according to the new law. And the GES, we expect a recovery over the time. This is -- I would say, if we look forward and we were the same of us 2, 3 years from us here, we don't know. But we think on that, I would say that this is a onetime effect attributable to the COVID-19. And we expect to work through that with this new law and also with the GES price adjustment.

The -- one of the things that is challenging here is that besides these negative results, the company has continued to working in a new strategy. We changed the top management at the end of '19. We redefined the strategy. We are reaching -- keeping KPIs according to the best performance of the industry in different areas. But when you put together that with the negative effect of the medical leaves, it's difficult to see all the positive results that the company is performing in different areas of the business.

Vida Cámara, very quick. Vida Cámara is the supplemental health insurance. The only message here probably is that we returned to the loss ratios that we were used to before the pandemia, 81%, 82%. In this case, the supplemental health insurance does not cover medical leaves. So this is a good way to understand that if you split the medical costs from the medical leaves cost in the ISAPRE, the medical costs are performing as expected. But it's not the case with the medical leaves. And Vida Cámara, again, given that it's not covering medical leaves, is a good way to understand that.

Vida Cámara is an almost fully digital company. It's an online company today. We cover 4 million medical services during 2020. And after 9 years of creating this company, we have almost 400,000 beneficiaries, and we are #3 in the industry of supplemental health insurance.

RedSalud is the other or the opposite side of the ISAPRE. What we have seen in RedSalud is a strong -- very, very strong recovery of the demand. But even more important than that is that we have been able to capture that increasing demand. And not only that, we capture the margin according to that increasing activity.

And you see the chart, we suffered from the COVID-19 last year. And the recovery over the last 12 months has been extraordinary in terms of the size of the EBITDA, but also in terms of the margin. And we are happy with this. Why? Because you have heard the story year-by-year. Our strategy was to look for a common network, a unified network. We've been working on that since 2015. And what we are seeing today is that RedSalud is ready to face and to serve more demand. We are talking about increases in terms of 23% compared to a regular year, not the pandemia, but a regular year. But we are being able to capture the margin.

So in summary, the economies of scales driven by a common network strategy is not only a PowerPoint slide, it's a reality. So it's a very relevant and positive message for RedSalud, what we are seeing. The expectation in the coming future in terms of the demand, we expect more demand than a regular year due to the pandemia.

How much? Difficult to say. Probably you will have 2 effects together: one is a rebound on the demand or processes or procedures that were postponed for the pandemia, on one side; and on the other side, you will have that the health of the population, it becomes -- there are negative effects related to the COVID. So we will have a population probably with less quality in terms of health than the pre-pandemia period. So the combination of those 2 effects, of course, is going to be more demand.

But the relevant thing here is that we are able to serve 30%, 40% of an increase in the demand without increasing the capacity, the installed capacity. We don't need to build more hospitals. We don't need to build more medical centers. We are able to serve that demand with the existing capacity we have.

The second message here is again the same, and it's another way to see the same effect in terms of capturing this increase in the demand. This chart reflects that we are facing, in terms of revenues, almost 50% increase if we compare with the first half of 2018 at sort of regular period. And if you compare with the first half of 2019, another regular period, it's more than 30% of increase in the demand. And we are capturing that in the EBITDA margin as we -- as I mentioned.

Second message, the strategy, flexibility, our capacity to accelerate or to scale the number of critical units during the COVID and then do a de-escalation process after the peaks. It's extremely quick. We are managing the 9 hospitals as a network, and this reflects that. This is something that the public system is very difficult for them to do this in a short period of time. And this is an advantage we have and, again, another sign or another consequence of the strategy we've been pushing for over the last 5 years.

Third, lesson learned here on the pandemia. We are doing changes in terms of systems. We are implementing SAP on our facilities. We are implementing InterSystems. It's a medical and dental centers health system. We are unifying all the network. And some of the new findings on the COVID-19 are different ways to serve our demand.

The first one and the most easy to understand is the telemedicine. This is a very, I mean, amazing chart. Before the pandemia here last year, March, April or February, the number of consultations through telemedicine was 0. We didn't have the channel. And you see the evolution over time. We have a new channel without building any square meter. We are doing 16,000 consultations month-by-month through telemedicine. So again, this is something that, of course, after the pandemia, probably the number is not going to be 16,000, probably it's going to be 10,000. But the size of the telemedicine is equivalent to a large medical center.

And on the right, this is more complex to understand, but it's another effect of the pandemia. There is a product or service we have that is surgery in one day where you enter into a hospital at 8 a.m and you have a surgery and you ended up afternoon, 5, 6 p.m., so you don't spend the night in the hospital. This is a great, great solution for efficiency, for productivity, for medical costs, and we were pushing for this for a long time. Before the pandemia, again, 0 surgery in a day. Now we are doing more than 1,000 surges in a day in month-by-month. So these are things that are positive elements of the pandemia for this company. And of course, we are looking for keeping them on the coming times.

Other key elements of RedSalud and looking forward to potential changes on the way people are insured. Today, almost 50% of our customers are coming from the public insurance. If you compare that figure to our competitors, Banmédica, Bupa, INDISA, Clínica Las Condes, we are the network that is more close to the public insurance. We are the network that is more prepared to serve the public insurance. And this is a key element for the coming future. We are able to manage to have positive margins having this composition of revenues. This is efficiency, and this is again another element behind the strategy. Managing this company as a network, you gain efficiency. If you gain efficiency, you are more attractive to the public insurance.

So in summary, and I have a slide here, in summary, when you see these 3 companies together, in Vida Cámara, 60% of the beneficiaries are in FONASA or in public insurance; in Consalud, 50%, 60% of the newcomers to Consalud are coming from the public insurance; and RedSalud is serving almost 50% of the revenues they have is coming from people insured by the public insurance. So we have 3 companies absolutely ready for a change in the regulatory framework, especially on the insurance side. And again, besides this bad times, I would say, of the ISAPRE, we have a very strong group of companies ready for the coming future.

So with that, I will leave the room for questions. There is a chart here on our structure of future payments compared to our cash. There's nothing different from the last presentations we have made.

So with that, I will leave to any questions you may have.

[Trinidad Monge, executive]

Okay. Thank you, Pablo. [Operator Instructions] We're going to wait a little bit in order to receive questions.

[Trinidad Monge, executive]

Okay. Pablo, here, we have a question regarding dividends, especially considering that AFP Habitat has 3 withdrawals during the last year, so they have -- that they have reduced in cash. So if there is any news regarding that.

[Pablo González Figari, executive]

Well, the announcement we made this week, as you know, when you announce the split of a company, you have to present to the Extraordinary Shareholders' Meeting audited financial statements, in this case, we are going to be as of June. And once you split the company, you can take decisions on that.

Another element that we have to take into account is that there is a special requirement from the Colombian regulatory entity related to the size of the equity of the bank company. So I mean addressing the question, the -- that dividend is expected to come, but I cannot mention when because we are in the middle of a split process.

[Trinidad Monge, executive]

Okay. Thank you, Pablo. And regarding other capital requirements from subsidiaries, what do you say?

[Pablo González Figari, executive]

Yes. We expect to continue supporting the ISAPRE. As I mentioned, the transition period we are facing until the new law or the new regulation is in place, March, June next year, we will have to continue supporting the ISAPRE. We don't see other capital requirements for our subsidiaries. As I mentioned, the bank is in a very strong position. The same thing with Confuturo. And in the case of RedSalud, the EBITDAs we are seeing are absolutely reflecting that there is no capital needs there also. So the answer to the question is Consalud.

[Trinidad Monge, executive]

Okay. And what should happen in order to resume growth for the bank? And if you can give us more color regarding this fintech bank as well.

[Pablo González Figari, executive]

Well, the core strategy of the bank, as we have been mentioning, is to grow more than the market on the commercial segment, on SMEs. And this has continued to be the case. But of course, the moments we are facing in terms of political elections, volatile markets, give us some cautions on play by the year in terms of how to accelerate that.

In terms of the fintech, we are working. This is -- I know that when you compare probably to other banks, to large banks, they are launching and launching solutions. This is a small bank. But we are building. This is a building-block building. This is not a onetime solution or decision. But we expect to show something relevant to the market in the coming 18 months.

[Trinidad Monge, executive]

Okay. And we have here another question that says -- it's related with the retirement of the annuities because U.S. insurers accuse government illegal exportation. Are you going to take legal actions as well?

[Pablo González Figari, executive]

Yes. On this 10% advance on annuities that we had to pay, in our case, in Confuturo, almost 50% of the pensioners, they asked for this, and we already paid for almost all of them. In total, we paid USD 150 million. This is equivalent to 4% of our -- sorry, 2% of our portfolio, more or less.

We -- all the companies presented different legal actions. Of course, depending on the type of company you are is the legal action you can take. What we see in the market is that out of the 3 U.S. companies, MetLife, Principal and Ohio, Ohio activated the dispute earlier, the resolution clause of the free trade agreement signed with the U.S. These processes or the procedure to earlier resolution is a 5-, 6-months process in which you try to solve the problem on a, let's call, friendly way.

On the European case, you have Zurich and MAPFRE, the Spanish company, and Zurich, they activated the same legal clause on the free trade agreement signed with the European community. And the -- in the Chilean -- in the domestic side, you have different strategies. The one we follow, we went to the Supreme Court, asking for the -- I mean arguing that there were constitutional rights that were violated on the -- this law. Our allegation was not admitted. So we are reanalyzing now other strategies.

You have other companies in the Chilean market that follow different strategies. Some of them, they follow the strategy of going to the courts, arguing for the -- that this law was illegal. And with that, once the allegation was admitted, they went to the constitutional court. The constitutional court admitted the allegation, but they have not bought that, and we expect that to happen in the coming months. So that's more or less a summary of what is happening in the different ways in different regions in terms of the legal actions.

The question related to the news that appeared yesterday in the press related to the association of insurance companies or the U.S. association of insurance companies, they send a letter to the authorities in the U.S. to put this topic over the table on the G20 group. It's something that is happening. The effects of that is difficult for me to give an answer what the effects are going to be. But it's over the table, and it's happening now.

[Trinidad Monge, executive]

Okay. Thank you, Pablo. Now we have other question regarding Colfondos. If you can give us more details regarding this acquisition that we started or that we made at the end of 2019. If you can give us more color regarding the strategy, the advances, the challenges, et cetera.

[Pablo González Figari, executive]

Well, in Colfondos, we took control of the company in December 2019. What we have done so far after 1.5 years, we did some changes to the strategy. To implement those changes, we changed the CEO of the company. And those changes are basically focused on the commercial equation. It's very similar to -- we started to do in Habitat 10 years ago in the sense that we are looking for a salary base more than number of contributors. So a simple way to see this is that I prefer to have 1 contributor making $2,000 per month than 2 contributors making $300 or $400 per month, each of them.

Why is that so relevant? Because in Colombia, as -- it's different from Chile and Peru. In Colombia, you charge -- all of the AFPs, they charge 3% on the salary as a fee. But that fee includes the cost of the disability and survivorship insurance. So the business in Colombia is a combination of an asset management business as we understand the business in Chile or in Peru, plus an insurance company, a disability and survivorship insurance company.

So the -- one of the key drivers is to have a low loss ratio on the disability and survivorship insurance, and that is very related to the type of segment you are serving. So the strategy of moving to a higher segment, it's not that we are going to be a high-end AFP or a niche AFP, we are moving to higher segment, is that we are looking for lower loss ratios on the D&S. That's the main and the key element on the change in the strategy on Colombia. And so far, we are doing good. Of course, we would like to accelerate that process, but it's giving results. It's showing and reflecting that we are moving on that growth. And we expect to continue showing performance related to that strategy.

[Trinidad Monge, executive]

Okay, Pablo. Then we have another question asking the main difference of ILC today compared with ILC October 2019 in terms of strategy.

[Pablo González Figari, executive]

Well, on one side, the positive things that have happened is that we, in each of the companies, we adapt our way to work. We adapt the strategies in some of them, but very focused on efficiency and flexibility. One of the key lessons learned over this process is that flexibility is a key asset. And flexibility, meaning that you have companies that you can move the strategy and there is no trauma behind that.

We have found new solutions. RedSalud is a great example, what I mentioned during the presentation. And on the other side, we have learned to be ready for scenarios that we never thought would happen. For example, liquidity. All the withdraws, especially on the annuity side, you need liquidity. The liquidity policies or the cash management policies are completely different today from 2 years ago.

And the third thing that we would say is that the best way to prove a strategy is under these scenarios. And it's not that we have enjoyed this, no. But the best way to prove that you are flexible, to prove that you have the right strategy is under pressure. And all of our subsidiaries, they respond outstandingly to the challenge of the pandemia and the crisis at the end of 2019 in Chile.

[Trinidad Monge, executive]

Okay. Then we have another question regarding the focus for future growth for the coming years.

[Pablo González Figari, executive]

It is difficult to give an answer for ILC as a whole. Maybe the answer is, to be more precise, it's company by company. Habitat is very clear. We want to continue looking for diversification and to grow out of Chile. And what we are doing with our partner is a great sign of that.

In the case of Confuturo, even though we have done a lot in terms of asset allocation over the past 6, 7 years, we have a lot of coming strategy and, again, doing other things. We still have 45% of domestic fixed income, and we want to lower that. When you go to, for example, real estate, we want to diversify our type of real estate. We don't want to be so concentrated in commercial real estate. We want to open lines for logistics, to housing. So in Confuturo, the main drivers for the coming future are in the continued process of looking for more diversification on the portfolio that will give us more yield. And this has been the case over the last 5, 6 years.

In the case of the bank, the potential behind the bank is, I mean, is the subsidiary in which we can put more efforts. Why? Because of the size. Of course, it's impossible to think on continuing growing 30% in the middle of a pandemia, in the middle of a volatile market as the one we are facing. But the company is ready. So as soon as the water or the wind come down, we can -- we take that strategy.

In the case of health insurance, the growth is not by size. We have 1 million people insured. So we don't need more customers. What we need is to offer them different products to bring there more value and to link that more to RedSalud. In RedSalud, only 30% of our revenues are coming from people insured by us.

And in RedSalud, we have a pipeline of investment projects, but most of them or the majority of them are, I would say, related to existing facilities, which is the more secure way to grow in that market. We are starting to see again and to benefit from the results of the change in the strategy we made 5 years ago, and we still have a lot of challenges.

I mean I know this -- sometimes these questions are looking for sort of material growth and showing new facilities and showing a CapEx plan. But let me give you an example, the change in terms of the systems, accountancy systems and management systems in RedSalud is a $30 million project. And it's not only the size of the investment in the project, it's the complexity of the implementation. And we're in the middle of that, so far, successfully.

So those type of things will bring us more tools, technology, data, et cetera, to continue growing our margin. Those are cash-growing projects, but not so visible and so sexy to show in a slide. But trust us that we are -- I mean the strategies are continuing to be the same, very strong behind each of the businesses. And we, of course, as any company, are year-over-year reviewing, growing strategy depending on what we are seeing on the market.

[Trinidad Monge, executive]

Okay. Pablo, thank you very much. That's everything for today.

[Pablo González Figari, executive]

Well, thank you to all the people that joined us today. And as always, very open to address any questions, any doubt you may have with Trinidad and her team and myself whenever you want.

Thank you for joining us, and have a great day and rest of the week.